A GOVERNMENT department facing budget cuts of up to 40 per cent has been handed a fine of more than £23m for failing to properly administer a programme designed to help fruit and vegetable growers to expand their businesses.
Defra has been fined a total of £23.8m by the European Commission for failing to properly recognise so-called Producer Organisations – cooperatives of farmers who were encouraged to pool their resources in order to qualify for funding to help them invest.
The fine was part of more than £468m which the European Union is clawing back from member states which it says has been “unduly spent”. Countries affected include Romania, Spain, Bulgaria, the Netherlands and Greece – with the latter the most heavily fined, to the tune of £121m.
An EC statement said: “£23.8m (has been) charged to the United Kingdom with regard to weaknesses in recognition of Producer Organisations and related weaknesses and deficiencies in verifying the Value of Marked Production in the area of fruit and vegetables.”
The fine has prompted anger from farming leaders who said that farmers in Producer Organisations had long been concerned about the situation.
Late last year the Government announced it was delaying payments to farmers after European auditors raised issues with the way the scheme was being organised.
The National Farming Union’s head of food and farming, Phil Hudson, said: “News that the UK has been fined as a result of weaknesses in the administration of the fruit and vegetable regime will not come as a surprise to producer organisations (POs) or their grower members because of the discussions that were on-going between Defra and the RPA.
“The NFU had called on Defra to restore confidence in the scheme and it is to its credit that Defra established a working group last autumn to produce clarified guidance on the rules of the scheme. The NFU was a member of that working group, along with representatives of Producer Organisations.
“We hope the issuing of clarified guidance this spring marks the start of a new chapter for the producer organisation aid scheme. We also hope Defra, the RPA and POs work together to ensure that the scheme’s administration is fit for purpose and restores the confidence that has been lost over the past five years.”
Godfrey Bloom, United Kingdom Independence Party MEP for Yorkshire and Humber, told the Yorkshire Post: “Defra are very much a belt-and-braces department and I have never known them to under-regulate.
“You have to question whether or not this could have been remedied with a warning.” Mr Bloom also speculated whether cash-strapped Greece would be able to pay the fine at all.
Producer Organisations were designed to motivate growers of a particular fruit or vegetable to work collectively so as to enhance their businesses, increase competitiveness, concentrate supply and improve the environmental sustainability of that sector.
A total of 46 such organisations exist in the UK and draw on EU support of around £27m a year. This aid is match-funded by the organisations and their members.
The scheme has met with some success, with English strawberry production having increased markedly in recent years as a result of the programme.
However, problems arose when the EC began to raise issue with the way Defra and the Rural Payments Agency were administering the scheme, particularly regarding criteria that the bodies were using when recognising Producer Organisations.
In response to the problem Defra and the RPA, alongside members of the Producer Organisations, formed a working group to clarify guidance for the sector.
A spokeswoman for Defra said the group would “ensure that recognised Producer Organisations meet the complex EU regulatory requirements covering the Fruit and Vegetables Aid scheme”.
She continued: “The Producer Organisation working party, consisting of Defra, the RPA and representatives of Producer Organisations, has looked at guidance for the scheme to and has now clarified rules the sector to ensure that they meet the EU requirements for the fruit and vegetables regime.”