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EU States Censored for Abuse of Food Processing Subsidies

11 April 2013

The European Court of Auditors has hit out at some EU states for using food processing subsidies as a general support and not as a means of supporting value-added measures.

Now, it has called on the European Commission to tighten up the way the subsidies are handed out and monitored top prevent further abuse of the system.

Under the Common Agricultural Policy, EU rural development policy grants are made available to enterprises that process and market agricultural products through a measure called ‘Adding value to agricultural and forestry products’ that aims to improve the competitiveness of agriculture and forestry.

The EU budget has earmarked €5.6 billion in aid for 2007-2013.

This financing is complemented by national spending, which brings the total public funding to €9.0 billion.

Member States have to draw up Rural Development Programmes, tailoring the aid to their needs through national or regional objectives and setting the scope of the measure to ensure that efficient use is made of the funding.

However, the auditors found that only general objectives were set, which did not demonstrate how the funding was intended to add value to agricultural products or improve the competitiveness of agriculture.

Despite this lack of targeting, the Commission approved the programmes.

The audit covered six national and regional rural development programmes, selected mainly for their size: Spain (Castilla y León), France, Italy (Lazio), Lithuania, Poland and Romania.

The EU auditors found that Member States were not directing the funds to projects for which there was a demonstrable need for public support.

Without this, the auditors said that the measure became a general subsidy to enterprises investing in food-processing – with the risks of distortion of competition and waste of scarce public money.

Almost 20 per cent of the EU money set aside for improving the competitiveness of agriculture is paid to food-processing companies, but the monitoring and evaluation arrangements do not collect information on the added value achieved or on the indirect effects on the competitiveness of agriculture.

The court of auditors said that the current arrangements are unlikely to provide the necessary information to demonstrate the success of the funding or to improve its effectiveness and efficiency for the period 2014-20.

“Member States are not clearly identifying the need for funding or setting meaningful objectives”, said Jan Kinšt, the ECA member responsible for the report.

“The Commission should only approve programmes that do so, otherwise this measure just becomes a handout to the food-processing companies”.

Now the European Court of Auditors has recommended that Member States’ programmes clearly identify the need for funding and set objectives that are meaningful and measurable; the Commission should only approve programmes that do so.

The court has also said that the selection criteria should be defined that enable the most effective projects to be identified. To ensure that the EU funds are used efficiently, these criteria should be rigorously applied, even when there is sufficient budget available to finance all eligible projects.

It has also called on the Commission and Member States to promote the adoption of best practices in respect of the mitigation of deadweight and displacement risks and that the monitoring and evaluation of the framework for the projects financed should be improved for the forthcoming programming period to ensure that the effectiveness of the funds spent can be properly measured.

TheMeatSite News Desk

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