Report for the Hearing in Case C-190/91

I — Legal framework

1. Community legislation

1. The first subparagraph of Article 1b(l1 of Regulation (EEC) No 797/85, as amended by Council Regulation (EEC) No 1094/88 of 25 April 1988 amending Council Regulations No 797/85 of 12 May 1985 and No 1760/87 of 15 June 1987 as regards the set-aside of arable land and the extensification and conversion of production, provides that Member States shall introduce an aid scheme to promote extensification for surplus products, that is to say for products for which there are consistently, at Community level, no normal, unsubsidized outlets. Article 1b(2) specifies that extensification shall be defined as a reduction of at least 20%, for a period of at least five years, in the output of the product concerned without any increase in other surplus production capacity. In the words of Article 1b(3)(a), Member States are to determine the conditions for granting the aid, including those for reducing output of the various products. In order to achieve that reduction in output in the case of beef and veal, it may be stipulated [by the Member States] that ... the number of livestock units must be reduced by at least 20%.

2. Commission Regulation (EEC) No 4115/88 of 21 December 1988 laying down detailed rules for applying the aid scheme to promote the extensification of production lists in Annex I the products eligible for the aid (including cattle (beef/veal)) and determines in Annex II the maximum amounts eligible per year. In addition, it specifies the various criteria which the Member States must observe, in particular the methods of evaluating reductions, certain information which applicants for the aid must provide, the undertakings which they must give, various other conditions for eligibility and also detailed rules for differentiating the rate of aid and for carrying out inspections.

2. National rules

1. In Italy, a decree of the Minister of Agriculture and Forestry of 12 September 1985 (GURI No 223 of 2 September 1985), subsequently amended by Ministerial Decrees of 26 September 1985 (GURI No 231 of 1 October 1985) and of 26 March 1986 (GURI No 80 of 7 April 1986), lays down the criteria and the rules for applying the aforementioned Regulations.

2. Ministerial Decree No 34 of 8 February 1990 (GURI Ordinary Supplement No 48 of 27 February 1990) lays down the provisions for applying the aid scheme for extensification of production, specifying in particular that all agricultural producers who, either independently or in association with others, farm the products listed in Annex I to Regulation (EEC) No 4115/88 may benefit from aid for the extensification of production.

3. In Circular No 24486 of 5 September 1990, which was sent to the regions, the competent authorities and the Commission, the Minister of Agriculture and Forestry set out a number of specific points including, in particular, with regard to the measures dealing with extensification of production, the following provisions:

4. The Regione Veneto, after taking note of those points, adopted, by Decision No 4258 of the Giunta of 19 July 1990, criteria for determining applications for aid.

5. According to the Decision of the Giunta, only farmers who operate an agricultural holding with cultivation of the land are entitled to benefit from those measures, so that factory farms may not benefit from the aid scheme. In its decision, the Regione Veneto gave the following explanations:

II — Facts and procedure

1. The dispute in the main proceedings arose from the rejection by the Italian regional authorities of an application for aid for extensification of the production of cattle submitted by Mr Antonio Lante on 28 March 1990 pursuant to Regulation No 797/85, as amended, and the implementing Italian legislation. Mr Lante owns an establishment for the intensive rearing of beef cattle in the Cariano di Albaredo d'Adige area, in the province of Verona. The Regione Veneto refused Mr Lante's application of 19 September 1990 on the ground that aid cannot be paid to an intensive rearing establishment in which the cattle are reared on feed less than one quarter of which is obtained from the holding.

2. Against that decision, Mr Lante contended, in the statement of claim in the proceedings which he brought in the Tribunale Amministrativo Regionale per il Veneto that the exclusion from the benefit of extensification aid of rearing establishments using little or no feed produced by the rearer himself is unlawful because it is contrary to Regulation (EEC) No 797/85. Mr Lante also took the view that, pursuant to Regulation (EEC) No 4115/88, the products of livestock rearing are eligible for extensification aid as such, and not according to the fodder obtained from the holding. According to Mr Lante, Article 10(3) of that Regulation simply means that a livestock rearer who intends to take advantage of extensification aid may not use any unused fodder production areas to increase other livestock rearing or to produce other surplus products.

3. According to the Regione Veneto, the exclusion from the system of extensification aid of rearing establishments not possessing an agricultural holding or in which the cattle are reared on feed less than one quarter of which comes from the agricultural holding is lawful in the light of the concept of a farmer practising farming as his main occupation which is to be found in the various provisions in Regulation (EEC) No 795/85 and its subsequent amendments and in Regulation (EEC) No 4115/88.

4. The national court has explained that the crux of the instant proceedings lies essentially in the interpretation by the Regione Veneto of Regulation (EEC) No 797/85, as amended by Regulation (EEC) No 1094/88, since Mr Lante contends that he meets the conditions laid down by the Community rules for entitlement to the aid for which they make provision.

5. The national court then points out that Regulation (EEC) No 797/85, as amended and supplemented, constitutes an essential normative reference point in the revision of the objectives of the common agricultural policy which the Community institutions have undertaken in recent years. With regard in particular to agricultural structures, that regulation significantly alters the previous approach, by instituting common action expressly intended to improve the efficiency of holdings and to assist the development of their structures. The main purpose of the various provisions of that regulation is to adjust production in line with market demand.

6. The Tribunale Amministrativo per il Veneto has therefore referred to the Court the following questions for a preliminary ruling:

7. The order of the Tribunale Amministrativo Regionale per il Veneto of 3 May 1991 was lodged at the Court Registry on 25 July 1991.

8. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, written observations were submitted by the applicant in the main proceedings, represented by Viscardini Dona, of the Padua Bar, by the Italian Government, represented by O. Fiumara, Avvocato dello Stato, acting as Agent, and by the Commission of the European Communities, represented by E. de March and F. Santaolalla, of the Legal Service, acting as Agents, assisted by A. Carnelutti, of the Paris Bar.

9. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry and to assign the case to the Sixth Chamber.

III — Written observations submitted to the Court

1. The applicant in the main proceedings points out that the first question is intended essentially to establish whether exclusion from the benefit of extensification aid of livestock rearing establishments which do not operate in conjunction with an agricultural holding, decided unilaterally by a Member State, is compatible with Regulation (EEC) No 797/85 as amended by Regulation (EEC) No 1094/88. The problem which arises is that of the extent of the discretion allowed to the Member States in the determination of the conditions for granting the aid referred to in Article 1b(3)(a) of Regulation (EEC) No 797/85.

2. The Italian Government points out that Regulation (EEC) No 1094/88 is intended to secure a gradual drop in output in those agricultural sectors where there is a surplus and to improve the efficiency of those structures. To that end, it provides that the Member States shall introduce an aid scheme to promote extensification for products for which there are consistently no normal unsubsidized outlets, with a view to reducing by at least 20%, for a period of at least five years, the output of the product concerned. Regulation (EEC) No 4115/88 has laid down detailed rules for applying the aid scheme to promote the extensification of production, by providing in particular that it shall be carried out by the producer according to the detailed rules laid down by the Member States.

3. The Commission points out that, by its questions, the national court wishes to know whether a Member State is justified in excluding intensive factory farms from the benefit of the system of extensification aid on the ground that Regulation (EEC) No 797/85 refers only to agricultural holdings, that concept necessarily implying the availability of land. The second question, although referring to a provision of the Regulation adopted by the Commission for applying the aid scheme, contains the same question with regard to undertakings whose cattle are fed on fodder less than 25% of which is obtained from the holding.

1 Language of the case: Italian.