The European Commission has today [Wednesday] authorised Germany (Bavaria) to pay national aid worth a total of €335m (US$329m) over four years for the introduction of a new investment programme.

Its aim is to promote investments on farms which help to stabilise and improve farm incomes and improve living, working and production conditions. The duration of the programme is limited until 31 December 2005.

The three main objectives of the programme are the improvement of the production and working conditions on farms, the promotion of environmentally friendly production methods or more ethologically sound livestock farming and the diversification of farm incomes, the Commision said.

The measure will benefit agricultural holdings. Investment measures in agricultural holdings can be co-financed by the Community under the Rural Development Regulation (1257/99). The Bavarian authorities, however, have decided to finance this programme solely out of their own resources. The Commission therefore has authorised this aid on the basis of the Community Guidelines for state aid in the agriculture sector.

The aid is in the form of direct grants or interest-rate subsidies for loans on the capital market. The maximum overall aid intensity is 40% (percentage of the eligible costs). In the case of investments made by young farmers within five years start-up, an additional 5% may be granted according to the provisions for rural development.

The text of the decisions will be made available on the Internet here once Member States have indicated whether they want parts of the decisions deleted for reasons of confidentiality.