OPINION OF ADVOCATE GENERAL

delivered on 27 May 2004(1)

(Reference for a preliminary ruling from the Verwaltungsgericht Halle (Germany))

(Common agricultural policy – Support system for producers of arable crops – Compensatory payments for areas down to arable crops or subject to set-aside – Exclusion for land under ‘permanent crops’ – Definition)

These proceedings concern the interpretation of the term ‘land under … permanent crops’ within the meaning of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops, (2) and Council Regulation (EC) No 1251/99 of 17 May 1999 establishing a support system for producers of certain arable crops. (3)

I – Legal context

Within the framework of the common agricultural policy reforms, implemented in 1992, the Community legislature set up a new support system for producers of arable crops. This system aims to avoid over-production within the sector, to ensure better market balance by approximating Community prices to the prices of the world market, and to compensate the loss of income resulting from the reduction of the Community prices by a compensatory payment for producers. (4)

The principles governing the grant of aid for arable crops have therefore been changed. Thus, since 1992, compensatory payments are no longer linked to volume of production, but to the land area and to the yield capacity of the different regions of the Community. (5) Furthermore, the Community legislature has made the grant of compensatory payments subject to the requirement that producers set aside part of their land.

Under the 1992 basic regulation, a compensatory payment may be granted for areas down to arable crops or subject to set-aside. However, Article 9 of this provision excludes certain land from qualifying for compensatory payments. It prescribes:

‘Applications for the compensatory payment and for fulfilling the set-aside obligations may not be made in respect of land which was under permanent pasture, permanent crops, forest, or non-agricultural uses on 31 December 1991.’

Under Regulation (EEC) No 2780/92, (6) as amended by Regulation (EC) No 1959/94, (7) the term ‘permanent crops’ (8) is defined in the following way:

‘Non-rotational crops other than permanent pasture that occupy the ground for five years or longer and yield repeated harvests with the exception of the multi–annual arable crops referred to in Annex II.’

This provision been replaced by Regulation (EC) No 658/96, (9) but the definition of the term ‘permanent crops’ has remained identical, as it refers to: (10)

‘Non-rotational crops other than permanent pasture that occupy the ground for five years or longer and yield repeated harvests, with the exception of multi-annual crops.’

Subsequently, the 1992 basic regulation and Regulation No 658/96 were replaced by, respectively, Regulation No 1251/1999 and Regulation (EC) No 2316/1999. (11) These regulations have however retained the exclusion of compensatory payments for land which, on 31 December 1991, was under permanent crops or was used for non-agricultural purposes (12) and have also retained the definition of the term ‘permanent crops’ as cited in point 6 of this Opinion. (13)

II – The reference for a preliminary ruling

In the present case, the Verwaltungsgericht Halle (Administrative Court, Halle) (Germany) seeks clarification of this term ‘land under … permanent crops … or non-agricultural uses’. That court is hearing proceedings between Mr Gerd Gschoβmann, a farmer, and the Amt für Landwirtschaft und Flurneuordnung Süd (the Office for Agriculture and Land Reorganisation South) (14) concerning a claim for repayment of compensatory payments made.

The issue here is whether Mr Gschoβmann is eligible for compensatory payments in respect of land which used to have apple trees on it and which was being farmed as a fruit plantation. The order for reference states that the land is divided into three categories:

– on 31 December 1991, the first area of land was still planted with apple trees, which were no longer being sprayed with insecticides, and the apples were not picked in 1991. It had already been decided that this land was to be cleared, and the clearance was subsequently carried out.

– in the second area of land, the trees had already been felled by the qualifying date. However, they were still on the land, which prevented the land from being used. They were not cleared until later, and

– in the third area of land, the trees had already been felled and cleared, but these areas of land had not yet been allocated to any other use.

The national court states that Mr Gschoβmann will lose the compensatory payments which he has received from the Office, if this land is held to be ‘land which was under … permanent crops … or non-agricultural uses on 31 December 1991’, within the meaning of the basic regulations. On the other hand, if this land is held not to have been under permanent crops or used for non-agricultural purposes at the qualifying date, Mr Gschoβmann will be able to keep the compensatory payments which he received.

However, having some doubts as to the interpretation to be given to the relevant provisions, the Verwaltungsgericht Halle decided to refer the following questions to the Court for a preliminary ruling:

III – Analysis of the questions submitted by the national court

In my opinion, the questions submitted by the Verwaltungsgericht Halle may be divided into three categories, which should be looked at in turn.

The first set of questions concerns the sort of cultivation which is required by the term ‘land under … permanent crops’. The national court asks whether this term requires that the land in question is being cultivated and, more specifically, being cultivated for a lucrative purpose (first question), that insecticides are being used or that the crops are being harvested (second question).

In that context, the national court cited a decision of the Oberverwaltungsgericht (Higher Administrative Court) Sachsen-Anhalt (Germany) of September 2001, which held that the term ‘land under … permanent crops’ presupposes that the land is cultivated for a lucrative purpose and that the fact of merely allocating the land to permanent crops, without cultivating it, was not sufficient for it to fall within the scope of Article 9 of the 1992 basic regulation. Through its first set of questions the national court therefore wishes to satisfy itself as to the correctness of the definition given by the appellate court.

On that point, I think, as does the Commission of the European Communities, that the term ‘land allocated … to permanent crops’ does not require that the land be cultivated and that the non-cultivation of this land, without particular maintenance, is sufficient to bring the land within the exception provided for in the basic regulations.

In fact, Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation require only that the land is ‘under’ (in French: ‘consacrées aux’) permanent crops at the qualifying date.

In a literal sense, the verb ‘consacrer’ means ‘to intend (something) to be used for a purpose’. (15) The adjective ‘consacrées’ used in the basic regulations therefore requires that the land has been given a particular purpose or a specific intended use, in this case, permanent crops. On the other hand, this adjective does not express the further idea that the land must be cultivated or maintained in a particular way.

Thus the expression ‘land under … permanent crops’ may require that an individual has, at a given time, taken the necessary steps to enable the land to have permanent crops on it and that he has actually given over that land to such crops. On the other hand, the expression does not require that this land, once given over to permanent crops, must be cultivated. Moreover, the other linguistic versions of the provisions in question use terms that also evoke a lack of cultivation of the land, not active maintenance (‘tierras dedicadas’ in Spanish, ‘Flächen, die genutzt wurden’ in German, ‘land which was under’ in English, and ‘terreni destinati’ in Italian).

The logic of Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation seems to confirm this literal analysis. In fact, besides land down to permanent crops, other land does not qualify for compensatory payments: this includes land under permanent pasture and forest. Now, as the Commission has pointed out, permanent pasture and forest do not presuppose that the land on which they grow has been cultivated: it may consist of a purely natural growth of pasturage (for the former) or of trees (for the latter). (16) It would therefore be illogical to require such a condition for permanent crops, which are excluded from compensatory payments in the same way as are permanent pasture and forest.

Finally, I find it difficult to reconcile the aims of Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation with a requirement to cultivate the land.

21. The aim of these provisions is to prevent land which was not sown with arable crops prior to the entry into force of the 1992 basic regulation then beginning to be so sown, simply in order to obtain the compensatory payments. (17) However, if one were to concede the point at issue in the circumstances of this case, then land which had been down to arable crops only after 31 December 1991 might fall outside the exclusion of Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation, on the ground that it was not being cultivated or maintained in any particular way. In other words, the land deemed ineligible according to the spirit of the basic regulations might be able to obtain the funds on the ground that it was not being cultivated for a lucrative purpose, being sprayed with pesticides or having its crops harvested.

22. The second set of questions concerns the circumstances that may be capable of causing the land to cease to be under permanent crops. The national court asked whether this ceases at the time the farmer makes the decision to fell the apple trees, or to entrust this task to an undertaking (the third question), at the time of the actual felling of the apple trees (fourth question) or at the time of the clearing of the felled trees (fifth question).

23. These questions ought not to raise any particular difficulties. Indeed, in so far as Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation require only the presence of permanent crops on the land, and not that they be cultivated, it may be considered that the land ceases to be under permanent crops at the time when the crops disappear irremediably. The mere decision to fell the trees, without carrying this out, is therefore insufficient. On the other hand, it is not required that the trees, once felled, be cleared, since, from a biological point of view, they disappeared at the moment they were felled.

24. Finally, the last question concerns the category the land ought to fall into once it has ceased to be allocated to permanent crops. The national court asks whether, where the trees have been felled and the land has thus ceased to be under permanent crops, this land ought to be considered as being used for ‘non-agricultural purposes,’ within the meaning of Article 9 of the 1992 basic regulation and Article 7 of the 1999 basic regulation (sixth question).

IV – Conclusion

26. In view of these factors, I propose that the Court should reply in the following way to the questions referred by the Verwaltungsgericht Halle:

‘The first subparagraph of Article 9 of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops and the first subparagraph of Article 7 of Council Regulation (EC) No 1251/1999 of 17 May 1999 establishing a support system for producers of certain arable crops should be interpreted as meaning that:

– the expression “land under … permanent crops” does not require the land to be cultivated and, in particular, to be cultivated with a lucrative aim, the use of insecticides or the crops to be harvested;

– the land ceases to be under permanent crops for the purpose of those provisions at such time as the plants growing on the land are cut down; and

– land which, after the abovementioned plants have been cut down, is not intended for the production of other plants or the production of animals constitutes “land … used for non-agricultural purposes” within the meaning of these provisions.’

1 – Original language: French.

2 – OJ 1992 L 181, p. 12 (hereinafter referred to as ‘the 1992 basic regulation’).

3 – OJ 1999 L 160, p. 1 (hereinafter referred to as ‘the 1999 basic regulation’).

4 – See, in particular, second recital in the preamble to the 1992 basic regulation.

5 – Ibidem (fifth recital and the first subparagraph of Article 2(2)).

6 – Commission Regulation (EEC) No 2780/92 of 24 September 1992 on the conditions for the grant of compensatory payments under the support system for producers of certain arable crops (OJ 1992 L 281, p. 5).

7 – Commission Regulation (EC) No 1959/94 of 27 July 1994 (OJ 1994 L 198, p. 93).

8 – See Annexe I, point II.

9 – Commission Regulation (EC) No 658/96 of 9 April 1996 on certain conditions for granting compensatory payments under the support system for producers of certain arable crops (OJ 1996 L 91, p. 46).

10 – See Annexe I, point 2.

11 – Commission Regulation (EC) No 2316/1999 of 22 October 1999 (OJ 1999 L 280, p. 43).

12 – First subparagraph of Article 7 of the 1999 basic regulation.

13 – Annexe 1, point 2, to Regulation No 2316/99.

14 – Hereinafter ‘the Office’.

15 – See Le Petit Robert, Dictionnaire de la langue française, Paris, Éditions Dictionnaires Le Robert, 1999.

16 – See, to that effect, the definition of the term ‘permanent pasture’, as set out in Regulation No 2780/92, as amended by Regulation No 1959/94 (Annexe I, point 1); Regulation No 658/96 (Annexe I, point 1); and Regulation No 2316/1999 (Annexe I, point 1).

17 – See, in particular, the 17th recital in the preamble to the 1992 basic regulation and the 26th recital in the preamble to the 1999 basic regulation.

18 – See Le Petit Robert, Dictionnaire de la langue française, cited above.