THE ANNUAL REPORT OF THE EUROPEAN COURT
OF AUDITORS FOR 1996
THE COMMON
AGRICULTURAL POLICY
21. The Court's Annual Report drew attention to the
way in which some agricultural regulations failed to take account
of movements in world market prices resulting in unnecessary expenditure.
In particular, the Court estimated that farmers were overcompensated
under the arable aid programme by some £2.2 billion in 1995-96,
and that producers had been overcompensated by at least £0.6
billion under beef and veal premium schemes over a four year period
ending in 1996. The Commission proposed to the Council to reduce
aid payments to cereal producers under the arable aid programme
in order to finance measures relating to Bovine Spongiform Encephalopathy,
but the Council decided not to adopt the Commission's proposals.
22. The Court found that tobacco grown in the European
Union remains a highly subsidised product but that the effectiveness
of the subsidy in terms of improving product quality was limited.
The total tobacco subsidy for 1996 was some £760 million.
The aggregate subsidy paid represented more than five times the
market value of the product. The Court noted that most Community
tobacco remained of low quality, indicating that the aid had had
little effect on improving quality. The Court concluded by questioning
whether direct subsidies constituted the best form of support
for tobacco growers and suggested that some form of direct income
aid should be considered as an alternative.
Conclusions
23. We are disturbed at the significant level of
unnecessary expenditure resulting from the failure of agricultural
compensation scheme regulations to take account of movements in
world market prices. We urge the Government, through the Council
of Ministers and other Community links, to press for regular review
of such schemes in future to ensure that they provide only the
level of subsidy intended.
24. We support the Court's concern about the high
levels of subsidies paid to tobacco growers, which had little
effect on tobacco quality. We encourage the Government to press
for the effectiveness of current tobacco subsidies to be assessed,
and for reconsideration of whether it is appropriate for there
to be such subsidies given the consequences of tobacco use.
| 
