CELEX: 31972D0251
Language: en
Date: 1972-05-26 00:00:00
Title: Commission Decision of 26 May 1972 on granting aid to establish a reserve to cover apple and pear producers in the Netherlands against the risk of hail damage

Official Journal of the European Communities                                    43
 19.7.72                              Official Journal of the European Communities                         No L 163/19
                                               COMMISSION DECISION
                                                     of 26 May 1972
                on granting aid to establish a reserve to cover apple and pear producers in the Nether­
                                          lands against the risk of hail damage
                                                      (72/251 /EEC)
                                             (Only the Dutch text is authentic^
 THE COMMISSION OF THE EUROPEAN                                  management, thereby bringing these measures within
 COMMUNITIES,                                                    the scope of the derogations provided for in Article
                                                                 92(3) (c) of the Treaty; whereas, for this incentive to
 Having regard to the Treaty establishing the Euro­              be a genuine one, the aid granted or envisaged should
 pean Economic Community, and in particular Article             meet the following three criteria : the subsidy should
 93 ( 1 ), the first subparagraph of Article 93 (2), and         be relatively low at the outset (for example, not more
 Article 93 (3) thereof;                                         than 30 % of the insurance premiums) and it should
             \
                                                                 be degressive and of limited duration, for example
 Having regard to Regulation No 231 of 4 April 1962              seven years ; whereas, in the letter of 26 September
 on the progressive establishment of a common organi­            1970 addressed to the Netherlands Government, it
 zation of the market in fruit and vegetables, and in            was stated that the measure proposed by that Govern­
 particular Article 7 thereof;                                  ment in the letter of 31 July 1970 from the Office
                                                                of its Permanent Representative was of this kind;
 Having regard to the comments submitted by those
 concerned ;                                                    Whereas, by letter of 1 December 1970 from the Of­
                                                                fice of its Permanent Representative to the European
 Whereas the Netherlands Government, by letter of                Communities, the Netherlands Government informed
 31 July 1970 from the Office of its Permanent Re­               the Commission of the ' Order of 1970 on insurance
presentative to the European Communities, notified              against hail damage' decided upon by the Minister
 the Commission, in accordance with Article 93 (3)              for Agriculture and Fisheries and which was to enter
 of the EEC Treaty, of its intention to pay by way of           into force by 15 December 1970; whereas this Or­
 subsidy part of the premium of the company for                 der provided for the granting of a subsidy to fruit
 mutual insurance against hail in the fruit sector;             growers cultivating apple and pear orchards of not
 whereas this subsidy would be degressive and of                less than three hectares (later reduced to two hec­
limited duration; whereas its amount and duration                tares2) and of not less than three years' standing, to
 would be fixed as soon as the Commission had
                                                                reduce the costs of covering hail damage risk for the
 reached a decision on the general issue;                       year 1970; whereas both the premium payable by the
                                                                fruit grower in respect of insurance against hail dam­
 Whereas the Commission, by its letter of 26 Septem­            age and the sums set aside by him to establish a
ber 1970 on the application of Article 93 ( 1 ) and             reserve to cover the risk of hail damage were
  (3 ) of the EEC Treaty to certain aid granted or pro­         considered as costs of covering hail damage risk;
vided for in the fruit and fruit preparations sector,           whereas the subsidy had been fixed at a flat rate of
excluding citrus fruit, informed all the Member Sta­             140 florins per hectare, an amount corresponding to
tes that aid covering part of the insurance premium          »  30 % of the annual premium normally payable in
 for natural disasters may be an incentive to the tak­           respect of insurance against hail damage;
ing out of insurance for natural disasters of a kind
 against which crops cannot be totally protected;               Whereas the Commission, having learned in May
whereas, since in most Member States only a rela­                1971 that the subsidy would again be paid from 1
tively small proportion of farmers are insured against          May 1971 until 1975 at annual rates of 115 , 90, 70,
 such risks, it appeared that the aim of improving the          50 and 25 florins per hectare respectively, initiated
efficiency of agricultural production would be served           the procedure provided for in Article 93 (2) of the
by thus encouraging a practice of modern farm
                                                                2 Notice in the Nederlandse Staatscourant of 2 March
' OJ No 30, 20.4.1962, p. 265/62.                                  1971 .
 ---pagebreak--- 44                                    Official Journal of the European Communities "
Treaty to oppose this measure, seeing that it included           justified under one of the derogations provided for
provision for granting aid for the establishment of              in paragraphs 2 and 3 of that Article, nor in parti­
reserves to cover the hail damage risk; whereas the              cular under Article 92 (3 ) (c) , since the conditions
Commission gave notice to the parties concerned to               stated by the Commission in its letter of 26 Septem­
submit their comments, as regards Member States by               ber 1970 for bringing the aid then envisaged within
a letter of 17 September 1971 , and as regards other             the scope of that paragraph assumed that it would
interested parties by a notice published in the Offi­            help to popularize a practice of modern farm man­
cial Journal of the European Communities1;                       agement, that is to say the taking out of insurance,
                                                                 whereas the measure now complained of offers no
Whereas the granting of this aid is not subject to any           guarantee as to how the money granted will be spent;
conditions and therefore constitutes an advantage to
apple and pear producers in the Netherlands of the               Whereas the Netherlands Government urges in sup­
same kind as an increase in the selling price; whereas           port of its measure of aid the fact that many Nether­
this advantage might induce a certain number of                  lands fruit growers are opposed, on principle, to cov­
those producers to lower their selling price or to in­           ering the risk by a contract of insurance ; whereas,
crease production; whereas this measure could in any             however, the Government does not require the reci­
case tend to lower prices ;                                      pient to show proof that the aid granted is actually
                                                                 used to establish a reserve to cover the hail damage
 Whereas this advantage to apple and pear producers               risk and has made no provision for government con­
in the Netherlands is likely to favour the production             trol over the way the recipient uses the aid ; whereas,
 and marketing of their fruit in competition with fruit           in these circumstances, there is no guarantee that the
 of other Member States and possibly even with pro­               amounts granted will be used for the purposes for
 ducts which, within the Community, are in competi­               which the aid measure was intended;
 tion with apples and pears;
                                                                  Whereas the Netherlands Government also urges in
 Whereas the subsidy granted by the Netherlands                   support of its measure of aid that the establishment
 Government not only distorts competition but also                of a reserve to cover the hail damage risk must be
 affects trade between Member States ; whereas there              equated, from an economic point of view, with the
is substantial trade in apples and pears within the               payment to a mutual insurance company of an in­
Community (in 1969/70 about 600 000 metric tons                   surance premium against hail damage; according to
of apples in a market totalling 5-6 million metric                that Government, it is then difficult to maintain that
 tons, and 260 000 metric tons of pears in a market               one form of risk cover is a more modern form of
 totalling 21 million metric tons); whereas exports               management than another; whereas, even allowing
 of apples and pears from the Netherlands to other                that the establishment by an undertaking of its own
 Member States exceed, on average, the quantities ex­             reserve would be economically advantageous if, for
 ported by Member States to the. Netherlands and                  example, it carried interest and taking into account
 whereas during the 1968/69 and 1969/70 marketing                 also that the aid is degressive, the fact remains that
 years such exports represented on average 15 % of                this method provides insufficient security for it to be
 the pear sales and 1 1 % of the apple sales of Nether­           generally equated with insurance cover; whereas the
 lands fruit growers; whereas the continuing surplus              taking out of insurance cover against hail damage
 of these products on the Community market has led                 offers fruit growers greater . economic advantages,
 the Council to adopt special , measures for reorganiz­            particularly in the long term; whereas, by taking out
 ing fruit production2; whereas, therefore, the grant­            insurance, fruit growers run smaller economic and
 ing of a subsidy, which could constitute an incentive             financial risks than by establishing their own re­
 to the expansion of apple and pear production in the              serves ; whereas, therefore, such insurance is to be
 Netherlands, is likely to increase the imbalance of the           considered as a practice of modern farm management
 market and to reduce the share of the Community                   which should be encouraged; whereas only regularly
 market available to producers of other Member Sta­                recurring charges resulting from obligations under­
 tes under conditions of free competition within the               taken (payment of premium) can justify the limited
  common market;                                                   granting of degressive aid; whereas, although in cer­
                                                                   tain cases the establishment of individual reserves
  Whereas the subsidy granted by the Netherlands                   may seem preferable, it does not however lend itself
  Government distorts or threatens to distort competi­             in the same way as insurance to verification that
 tion and affects trade between Member States, and                 funds granted by way of aid are actually used to­
 whereas it therefore comes under the prohibition set              gether with the grower's own contribution to provide
  out in Article 92 ( 1 ) of the Treaty;                           effective security against these risks;
  Whereas exemption from this prohibition cannot be                Whereas , finally, the measure of aid of the Nether­
                                                                   lands Government which provides for granting to
  1 O J No C 95 , 28.9.1971 , p . 1 .                              apple and pear growers aid to establish reserves to
 2 Council Regulation ( EEC) No 2517 /69 of 9 December             cover the risk of hail damage is incompatible with
    1969 (OJ No L 318, 18.12.1969, p. 15 .).                       the common market,
 ---pagebreak---                                   Official Journal of the European Communities                                 45
HAS ADOPTED THIS DECISION :                                 the establishment by the fruit grower of a reserve to
                                                             cover the risk of hail damage.
                       Article 1
                                                                                     Article 2
The Kingdom of the Netherlands shall, not later than
1 August 1972 , abolish the aid provided for by Ad­          This Decision is addressed to Kingdom of the Nether­
ministrative Decision No 83 on fixing a contribution         lands.
towards the cost of covering the risk of hail damage
 (Decision of 1 April 1971 of the Development and            Done at Brussels, 26 May 1972 .
Improvement Fund) - Bestuursbesluit nr 83 inzake
de vaststelling van een bijdrageregeling in de dekking                         For the Commission
van de kosten van de risico's van hagelschade (Be­
sluit van het ontwikkelings- en saneringsfonds van                                The President
1 April 1971 ) - in so far as this aid is granted for                           S. L. MANSHOLT