The special report published by the European Court of Auditors (ECA) highlights that the modernisation of agricultural holdings has greater potential if funds were better targeted to EU priorities and Member States’ specific needs. In addition to this, it concludes that the procedures for establishing the viability and sustainability of a holding or investment project were not effective in all Member States.

The measure 121 “modernisation of agricultural holdings” has the potential to provide greater value for money if the funds available were better targeted, according to the European Court of Auditors special report Nº 8/2012. Furthermore, the report also shows that although the measure was achieving its nominal objective of modernisation, this is almost inevitable as any investment or purchase of new equipment results in some degree of modernisation. In October 2011, Eurostat reported that agricultural holdings in the European Union fell by 20% between 2003 and 2010.

In the light of these results, the European Court of Auditors (ECA) made recommendations to the Commission to improve the effectiveness of measure 121 such as not approving rural development programmes (RDPs) unless they demonstrate that the aid is targeted and include clear and relevant selection criteria addressing EU priorities and national or regional needs; ensuring that for the forthcoming programming period relevant and reliable information is obtained; and proposing legislation to earmark funding for specific priorities in underlying EU Regulations, where appropriate, to ensure that the funding has an additional effect.

ECA also recommends to the Member States to put effective procedures in place, proportionate to the risks, to ensure that grants are not given to projects where the financial viability of the investment or the sustainability of the holding is in doubt. Measure 121 finances investments in agricultural holdings. These investments may range from simple items such as farm tools and wooden fruit boxes up to complex projects such as biogas installations. Its specific EU budget totals €11,1 billion, financed through the EAFRD.