Animal welfare in EBRD investment areas

19 June 2013    
Andreas Mölzer (NI)

The European Bank for Reconstruction and Development (EBRD) is said to have made funds of EUR 218 million available between 2002 and 2011 for investment in intensive livestock farming projects. In this way, EU Member States are seemingly helping to finance farming methods and support business practices that have been prohibited within the EU.

Animal welfare organisations criticise the supporting of battery and caged livestock farming (which are banned in the EU) with these subsidies in far off countries. The EBRD maintains however that the investments are intended to make improve standards and therefore bring them closer to EU standards.

One problem in this regard is that the regulations in third countries are not as strict as they are in the EU, and so the companies based there are able to operate more profitably. The subsidies therefore attract low cost competitors that do not have to conform to our standards.

1. To what extent has it actually been possible to achieve conformity to EU standards in third countries within the framework of the funding made available by the EBRD?

2. What is the Commission’s view of the problem that, because of the subsidies, EU farmers are faced with low cost competitors who are of course able to operate more profitably due to the less stringent regulations in the third countries?

7 August 2013    
Answer given by Mr Rehn on behalf of the Commission

1. Although the EBRD is not an EU body, EU rules and principles generally set the standard for EBRD interventions, and many of the Bank’s policies make direct reference to the EU policy framework and acquis. In non-EU countries, the EBRD endeavours to get their projects to meet or approximate to EU requirements, but not all of the Bank’s countries of operations are able to do so from the outset, mainly owing to affordability constraints. This has been the case in recent EBRD operations that have financed egg production facilities in Ukraine and in Turkey, where the Bank ensured that a greater proportion of production achieved steps towards compliance with EU standards than would have been the case without EBRD financing.

2. The EBRD supports mainly private sector companies via loans, equity investments or the provision of guarantees. These are normally priced at market rates in order for the Bank to meet its ‘Additionality’ principle of not crowding out private investors. Although grant funding is available for Technical Cooperation and other activities, the EBRD does not provide subsidies. The Commission is aware that in May 2013, animal welfare organisations published a report on international finance institutions, export credit agencies and farm animal welfare(1). In this context, the Commission will, within the limits of its legal competences explore the possibility of extending discussion of these issues with other EU and international institutions, including with the EBRD.