FOOD PROCESSING INDUSTRY : SUBSIDIES POORLY TARGETED, SAYS COURT OF AUDITORS.

Member states are not steering funds in the agribusiness sector to projects for which there is a demonstrated need for public support. They are consequently turning a targeted measure into a general subsidy to companies that invest in this sector, with the attendant risks of distortion of competition and waste of scarce public funds. This is the EU Court of Auditors' key criticism of this chapter of the Common Agricultural Policy (CAP), the subject of a report entitled Has the EU support to the food-processing industry been effective and efficient in adding value to agricultural products?', published on 10 April(1).

Under the CAP's rural development pillar, subsidies are granted to companies that process and market agricultural products through a measure called Adding value to agriculture and forestry products', aiming to improve the competitiveness of agriculture and forestry. For the years 2007-2013, the EU budget earmarked 5.6 billion for such aid. This is complemented with national funds, brining public funding to 9 billion. The member states are required to draw up rural development programmes to tailor the aid to their needs through national or regional objectives and to set the scope of the measure to guarantee efficient use of available funds.

The court's audit covered six national and regional rural development programmes, selected mainly for their size: Spain (Castilla y Leon), France, Italy (Lazio), Lithuania, Poland and Romania. It 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. In spite of this lack of targeting, the Commission approved the programmes. Nearly 20% of the EU budget allocated to improving the competitiveness of agriculture is paid to food processing companies, but the monitoring and evaluation arrangements do not collect information on the...