Growing Success? The Effectiveness of the European Union Support for Fruit and Vegetable Producers' Operational Programmes
European Court of Auditors, 2006
Background
- fruit and vegetable producers who form producer organizations receive a start-up aid and subsidies for 50% of the costs of ‘operational programs’
- the operational programs mostly aim at objectives (such as boosting products’ commercial value) and consist of measures (such as investments in machinery, greenhouses and irrigation) that have no link to public goods
Findings
- member states grant EU subsidies without rigorously evaluating applications or monitoring results (lacking detail in farmers’ applications and progress reports, lacking criteria for evaluation, superficial evaluation practice (para 38): ‘Consideration of factors specifically required by the regulation, such as the initial situation and objectives, the technical quality and economic consistency of the programme, has become redundant and has only been done to the extent necessary to demonstrate compliance with the letter of the regulation.’)
- as a result, farmers may cover normal operating costs through subsidies rather than investing in measures that serve the program objectives, or they may replace existing machinery without significantly advancing towards the program objectives
- of 104 measures audited, 55% were classed as ‘low effectiveness’; only in about 10% of the cases was organic production increased
- the situation combines the worst of two worlds: the low effectiveness of blanket subsidies and the transaction costs for farmers and administrators that come with the programming approach (which is formally upheld)
Comments
- the program objectives of support to fruit and vegetable producers are already unreasonable – market-oriented investments at the levels of producers/producer organizations that do not serve the delivery of public goods should not be borne by the state. But the EU-funded programs are even ineffective in enhancing productivity.