The European Commission (EC) has authorised Austria to pay income aid worth a total of some €8.94m (US$m) to beef farmers who have suffered losses between January and June 2001 because of the consequences of the BSE crisis.

Normally, Member States may not pay such income aid. However, the EC recognised that the current crisis in the beef market is exceptional, and therefore justifies such aid.

The EC has also authorised other BSE-related state aids in Belgium and Germany, like BSE tests and the destruction of risk material. For Germany these state aids amount to around €51m. The Belgian measure is a fee, which partially covers the costs of BSE-tests.

The following aid schemes have been authorised by the EC:

Austria

The state aid is granted in form of an income aid in the following three Bundesländer (states): Lower Austria, approximately €3.3m aid; Styria, about €1.94m aid; Upper Austria, approximately €3.7m aid.

Belgium

The slaughterhouse has to charge the owners of slaughtered bovine animals a fee amounting to €0.18/kg carcass weight. The fee is in fact a tax, whose proceeds are used to cover the costs of the BSE-tests.

Germany

The state aid is effectively granted in Bavaria. The aid is given to partially cover the costs of burning meat and bone meal (MBM) and animal fats as well as the transportation of these risk materials to incineration facilities. The aid is limited to approximately €112.5 per ton of MBM or animal fat, and the budget for the aid measure amounts to around €51m.

State aid rules introduced by Member States, and applied by the EC, normally prevent Member States from paying income aid to farmers because this could distort competition and interfere with the functioning of the Community market organisations. Only in the case of exceptional situations such aid may be given to compensate the damages caused by these situations. The EC recognises that the ongoing crisis in the beef market, which has been caused by a BSE scare at the end of 2000, is such an exceptional occurrence.

The EC points out that it is not the drop in sales or turnover that has been considered exceptional. Fluctuating prices are a well-known cyclical phenomenon of certain agricultural sectors. The EC regards the drop in sales and the farmers' income losses as a consequence of an exceptional and rare combination of circumstances, i.e. the closure of export markets to Community beef and the extent of the negative reaction of European consumers. These circumstances were preceded and accompanied by a series of incidents like the first cases of BSE detected in countries such as Germany, Italy and Spain, the ban at Community level of the marketing of any type of meat and bone meal as animal feed, and the sometimes controversial management of the crisis at national level.

In its examination of the income aid, the EC verified whether the volume of aid corresponded to the losses of the beef sector, as demonstrated by the Member States concerned. Losses were measured by comparing sales and slaughter prices during the crisis with those of the corresponding period in 2000. The EC also examined whether the conditions of paying the aid to farmers could lead to overcompensation at individual level and received assurances that this will not be the case.

For the other authorised aids regarding BSE-tests and the disposal of risk materials, the EC has verified that the aid will not exceed the costs and that the aid is granted as part of a comprehensive programme to fight the disease. Moreover, the EC required that the Community legislation on waste handling be respected when disposing of the risk materials in question.

Member States have determined the conditions for application for and payment of these aids, and are solely responsible for handling the payments. They may impose additional eligibility conditions. Not all of these state aids will necessarily be paid out. Member States are not obliged under Community law to grant such state aids.

The text of the decisions will be made available on the Internet, once Member States have indicated whether they want parts of the decisions deleted for reasons of confidentiality, at:
http://europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm#aides

The decisions can be found under the aid numbers N 787/01 (Lower Austria), N 35/02 (Styria), N 744/01 (Upper Austria), N 21/02 (Belgium), N 203/2001 (Bavaria).