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EU extends deadline for French farmers' subsidy payback


Latest update : 2009-08-05

The European Commission said its agriculture chief would give France up until September 29 to decide how to recover some 340 million euros in subsidies granted to fruit and vegetable farmers, which the EU now says were illegal.

REUTERS - Europe’s farm chief has allowed France more time to explain how it will retrieve hefty subsidies paid to its fruit and vegetable farmers that are deemed illegal by EU regulators, the European Commission said on Wednesday.

In January, the Commission—the EU’s executive arm—ruled that national funding amounting to some 338 million euros ($486.4 million) paid out by the French government between 1992 and 2002 to support producer prices and incomes had contravened EU farm and state aid policy.

France has already been given a deadline extension to July 29 for notifying Brussels as to how it planned to recover the cash. This week, EU Agriculture Commissioner Mariann Fischer Boel granted a French request for another extension to Sept. 29.

“There’s no questioning of the fact that this was unlawful aid,” Commission spokesman Amadeu Altafaj Tardio said, calling the funding “a parallel aid system to the fruit and vegetable sector in addition to what was available in the Community”.

“It’s the French authorities that will have to recover this money, this is French money—not European subsidies. European subsidies did exist but this was on top of that,” he said.

In its original decision, the Commission said the payments favoured France’s fruit and vegetable sector to the detriment of that of other EU countries, so creating a national market policy superimposed over the EU’s own policy, and interfering with it.

“It’s very difficult for the producer, it’s not his fault—he has just accepted aid which was made available to him,” Altafaj Tardio told a daily news briefing. “It’s going to be difficult and in some cases, it will be painful,” he said.


The Commission’s demands have sparked anger in France, among fruit and vegetable producers as well as farm organisations and unions. Agriculture Minister Bruno Le Maire has promised to try and negotiate with Brussels a reduction in the final amount of cash to be returned..

But that, EU officials say, will depend on the report that Paris will have to submit to the Commission by the end of September and would have to be analysed on a case-by-case basis.

“If that report convinces us that part of the aid does not have to be repaid ... then these are elements that can be taken into account,” one Commission official told Reuters. France’s fruit and vegetable sector is Europe’s third largest.

In its decision taken earlier this year, the Commission said France would have to recover all cash paid out, plus interest.  It also has to provide full details of beneficiaries and cash amounts, as well as proof that the beneficiaries have been ordered to repay.

The amount that Paris will have to recover is unclear although interest payments may bring the sum to 500 million euros, or possibly more, EU officials say.

“We are interested in having a proper and open debate with the French authorities,” Altafaj Tardio said.

“The amount is something that will emerge from the report which the French authorities have to provide to us by September 29,” he said. “But this situation was not created by Brussels”.

Date created : 2009-08-05