July 5, 2006

EU probes Italian aid to farmers affected by bird flu

The European Commission said Tuesday (Jul 4) it was launching an investigation into whether Italy's aid to farmers hit by bird flu violated EU rules.

"At this stage the aid provided for the scheme seems difficult to justify in the light of state aid rules," the EU head office said in a statement.

The probe, which could see Italy dragged to the EU high court, will focus on Italian measures to pay for 17,000 tonnes of poultry meat and other poultry products in wake of the drop in consumption of such products during the bird flu crisis this past winter.

The investigation will also look at payments by the government to farmers to cover social security contributions, suspension of tax payments, and the granting of aid for loans for the restructuring of farms.

"The Italian authorities have one month to transmit their comments and to provide all necessary details," the Commission said.

The EU agreed earlier this month to provide up to US$81.6 million in aid to poultry farmers affected by bird flu outbreaks across Europe earlier this year, which led to falling prices and demand.

To get the aid, member states will have to submit plans for approval to ensure the aid does not unfairly discriminate against other poultry farmers in other EU nations.

Between January and April more than 320,000 tonnes of unmarketable poultry meat was put in cold storage across the 25-nation EU. On average, prices for poultry products fell by 13 percent and consumption was down by as much as 70 percent in Greece, and 50 percent in Italy, both of which were hit by outbreaks.