French farmers reject EU call to pay back aid

04.08.09 @ 09:30

  1. By Lucia Kubosova

French farmers have refused the government's call to pay back €330 million of state aid distributed to fruit and vegetable producers between 1992 to 2002 and later ruled illegal by the European Commission.

  • Fruit and vegetable producers in France refuse to pay back state aid deemed illegal by Brussels (Photo: Wikipedia.org)

"It's clear we must get farmers to start reimbursing the funds," French agriculture minister Bruno Le Maire said in an interview with Le Parisien newspaper published on Monday (3 August).

Promising he would "do nothing that could compromise the future of the sector," Mr Le Maire explained that the government would have to start collecting the money from September, so as to complete the task by the commission's January 2010 deadline.

The EU executive earlier this year ruled that the state aid, initially introduced at a time of poor weather conditions, turned into a source of secure finance for investments in tractors and marketing schemes.

The commission highlighted "subsidising sales prices, storage or the destruction of part of the crop as well as financial incentives for processing the fresh product" as examples of illegal measures which harmed farmers from other countries. It also mentioned "export subsidies based on prices and quantities produced."

The EU regulator said that "such measures are clearly likely to distort competition on the community market by promoting the disposal of French fruit and vegetables to the detriment of produce from other member states."

In Monday's interview, minister Le Maire reassured farmers that the agriculture ministry would proceed on a "case-by-case basis so that the land holdings of the weakest farmers would not be jeopardised." He said that it is better for Paris to tackle the situation now rather than see farmers pay even higher penalties in five or six years' time.

Francois Lafitte, the president of agro-economic federation Fedecom, said it is "impossible" for farmers to pay back the sum, however.

"It's not up to the producers to pay for the fallout from a policy which they did not devise," Mr Lafitte told French magazine Le Point.

Fruit and vegetable producers – currently facing economic hardship - are expected to stage protests against the pending government move. Last Thursday, fruit farmers already blocked trucks crossing the border from Spain.

France is the biggest recipient of EU agriculture subsidies, cashing in about €9 billion in farm aid last year.

But French farmers say they are at a disadvantage to their Spanish couterparts because Spanish labour is cheaper, while farming in Belgium and the Netherlands is more industrialised.

More fruit and vegetables from Spain, Belgium and the Netherlands have recently ended up in France as eastern European markets sag in the economic downturn, the Wall Street Journal says.