ANNOUNCED AS TEMPORARYNo
Interest payment subsidy
The French fruits and vegetables sector is said to face problems of overproduction and international competition. According to Reuters (4 August 2009), prices decreased 17.6 % between June 2008 and June 2009. A vegetable farmer was quoted as saying that the relevant workforce in France is twice as expensive as in Germany. Mr. Le Maire, the French Minister of Agriculture, has claimed thatlabour costs are as much as 50-60 % of final costs in the fruit and vegetable sector. France is, behind Italy and Spain, the third biggest European producer of fruits and vegetables.
Responding to the producers' anger at the possibility of repaying previous subsidies (that the European Commission had found illegal), Mr. Le Maire announced in the press conference on 6 August 2009 immediate financial support for the sector amounting to EUR 15 million. The Minister of Agriculture argued that it is indispensable that France produces fruits and vegetables, and that the sector's workforce has to be remunerated appropriately.
The financial assistance is targeted towards those farmers whose half or more of whose output is in fruit or vegetables that were heavily hit by the crisis (notably producers of tomatoes, peaches, nectarines, and apricots). There are two principal forms of assistance:
(i) The state will bear part of interest payments on loans in 2009 (10% of annuities in general; and 20% for young farmers or farmers that have invested for less than five years).
(ii) The state will pay the social insurance contributions for the farmers, if the contributions are still outstanding.
Moreover, Mr. Le Maire recalled that further measures to improve the competitiveness of the sector would be announced around 22 September 2009.
Several representatives of the fruits and vegetables industry were cited in a Reuters article on 6 August 2009 to be unhappy about the level of financial support, EUR 15 million.
In our assessment the new measures provide selected support to producers in a sector where international trade is possible. The measures financially favour one group of producers over others not eligible for financial assistance, including foreign farmers of fruit and vegetables.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
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