Statement by Jan Kinšt, Member of the European Court of Auditors, on food-processing subsidies
Brussels - International Press Centre
On 10 April 2013, Jan Kinšt, Member of the European Court of Auditors, answered questions on the Court's Special Report No 1/2013 "Has the EU support to the food-processing industry been effective and efficient in adding value to agricultural products?".
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 euro in aid for 2007-2013. This financing is complemented by national spending, which brings the total public funding to 9.0 billion euro.
Member States must 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.
EU auditors found that Member States do not direct the funding to projects for which there is a demonstrable need for public support. Without this, the measure becomes a general subsidy to enterprises investing in food-processing – with the attendant risks of distortion of competition and waste of scarce public money.
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Question: Is public money being wasted?
||SOUNDBITE by Jan Kinšt, Member of the European Court of Auditors (ECA), (in ENGLISH) saying that the ECA didn't find any cases, for instance, of irregularities or any suspicions of fraud but the purpose of this audit was to assess the value for money provided by this measure under the EU rural development policy; they have to conclude that the value for money provided by this measure is rather limited because the support is not targeted directly or systematically to the projects which are efficient and effective in providing the added value to the agricultural products; it means that you can see in all Member States where they visited cases or good projects that the added value was very questionable.
||Question: What sort of things is going wrong?
||SOUNDBITE by Jan Kinšt (in ENGLISH) saying that the problem is that the Court found shortcomings in all phases of the intervention cycle, starting with the design of this measure, especially at the level of Member States, and in the quality of their rural development programmes which are usually very general and very weak; they are not based on well identified needs in the country or region and they do not set a clear meaningful and measurable objective which should be achieved by this measure; indeed f you don't have clearly set objectives it is then quite difficult to compensate these shortcomings by eligibility in the selection criteria which the Court, by the way, also found very weak, allowing many types of industries, sectors, to apply for the subsidy and again they didn't lead to the assurance that the money is provided to projects which are directed to achieve the objectives of the rural development programme; in the end the Court also concluded that unfortunately this measure evolved with a limited value for money and also with a risk of distortion of free market competition.
||Question: What can the Commission and the Member States do to improve things?
||SOUNDBITE by Jan Kinšt (in ENGLISH) saying that the Commission and the Member States are now at a crucial time because the old programming period is coming to an end and they are preparing the new programming period after 2014; so he does hope that they learned the lessons from a number of shortcomings observed in this programme and that the Court's special report will be a good guidance to improve this programme; first of all, it should be ensured that clear objectives are set by the Member States in the rural development programme; the Commission shouldn't approve such a weak and general development programme lacking this kind of objectives; they should also ensure that the eligibility and selection criteria which are imposed by the Member States should guarantee that there is a good competition in order to ensure that only the projects leading to the achievement of the objectives and which are efficient are selected; last but not least, there is room for improvement in the monitoring and evaluation system and they are sure that the Commission is aware of that; the present system doesn't provide the necessary and the timely management of information needed for both the Member States and the Commission.