CT and Ferme de la Sarte SPRL v Région wallonne (C-726/20)

Contents

Judgment of the Court (Eighth Chamber)24 March 2022^note(Reference for a preliminary ruling — Common agricultural policy (CAP) — European Agricultural Fund for Rural Development (EAFRD) funding — Regulation (EU) No 1305/2013 — Article 17(1)(b) — Investment support concerning the processing, marketing and/or development of agricultural products covered by Annex I to the TFEU — Concept of agricultural products — Concept of live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage — Turf rolls for the fitting-out of green roofs)In Case C‑726/20,REQUEST for a preliminary ruling under Article 267 TFEU from the Conseil d’État (Council of State, Belgium), made by decision of 4 December 2020, received at the Court on 29 December 2020, in the proceedingsCT,Ferme de la Sarte SPRLvRégion wallonne,THE COURT (Eighth Chamber),composed of: N. Jääskinen, President of the Chamber, M. Safjan and N. Piçarra (Rapporteur), Judges,Advocate General: A.M. Collins,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– CT and Ferme de la Sarte SPRL, by A. Grégoire, avocat,– the Belgian Government, by C. Pochet and M. Van Regemorter, and by P. Cottin, acting as Agents,– the Polish Government, by B. Majczyna, acting as Agent,– the European Commission, by A. Dawes and M. Kaduczak, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 17 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487, and corrigendum OJ 2016 L 130, p. 1), as amended by Regulation (EU) 2017/2393 of the European Parliament and the Council of 13 December 2017 (OJ 2017 L 350, p. 15) (‘Regulation No 1305/2013’).

2The request has been made in proceedings between CT and Ferme de la Sarte SPRL and Région wallonne (Belgium) concerning the rejection of an application for setting-up aid and two applications for investment aid submitted by Ferme de la Sarte.

Legal context

Regulation No 1305/2013

3Article 4 of Regulation No 1305/2013, entitled ‘Objectives’, provides:‘Within the overall framework of the [common agricultural policy (CAP)], support for rural development, including for activities in the food and non-food sector and in forestry, shall contribute to achieving the following objectives:…(b) ensuring the sustainable management of natural resources, and climate action;…’

4Under the heading ‘Investments in physical assets’, Article 17 of that regulation, which is found in Chapter I of Title III on rural development support measures, provides in paragraph 1 thereof:‘Support under this measure shall cover tangible and/or intangible investments which:…(b) concern the processing, marketing and/or development of agricultural products covered by Annex I to the TFEU or cotton, except fishery products; the output of the production process may be a product not covered by that Annex; where support is provided in the form of financial instruments, the input may also be a product not covered by that Annex on condition that the investment contributes to one or more of the [European] Union priorities for rural development;…’

The CN

5Chapter 6 of Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1; ‘the CN’), as amended by Commission Implementing Regulation (EU) 2017/1925 of 12 October 2017 (OJ 2017 L 282, p. 1), which is applicable ratione temporis to the dispute in the main proceedings, is entitled ‘Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage’ and includes Note 1 which is worded as follows:‘Subject to the second part of heading 0601, this chapter covers only live trees and goods (including seedling vegetables) of a kind commonly supplied by nursery gardeners or florists for planting or for ornamental use; …’

6Heading 0602 of Chapter 6 covers ‘Other live plants (including their roots), cuttings and slips; mushroom spawn …’.

7Subheading 06029050 refers to ‘other outdoor plants’. According to the Explanatory Notes to the CN (OJ 2015 C 76, p. 1), adopted pursuant to Article 9(1) of Regulation No 2658/87, ‘this subheading also includes turf rolls and turf slabs for making lawns’.

The dispute in the main proceedings and the question referred for a preliminary ruling

8In order to become part of the family agricultural holding, CT acquired 25.20% of the shares of Ferme de la Sarte, before being appointed as manager. On 23 February 2018, he concluded a takeover agreement with his father in respect of the holding in order to develop the production of turf rolls for making green roofs.

9On 21 March 2018, Ferme de la Sarte submitted an application to the Walloon Region for set-up aid for the takeover of an existing operation and submitted two applications for investment aid concerning the construction of a storage barn, in order to provide temporary storage for the turf rolls harvested, and the purchase of a cylinder mower, respectively.

10Since those three applications were rejected by decisions of 20 and 28 June 2018, CT and Ferme de la Sarte lodged an appeal against those decisions to the Walloon Paying Agency on 31 July 2018.

11By decisions of 26 and 30 November 2018 (‘the contested decisions’), the director of the Walloon Paying Agency dismissed that appeal, taking the view that the aid requested was intended not to take over an agricultural holding, but to develop within it a secondary activity, namely the production of turf or green roofs, which does not fall within the agricultural sector.

12As regards, in particular, the two applications for investment aid, since, according to the information provided by Ferme de la Sarte, those applications related only to the production of turf, they could not be regarded as being linked to agricultural activity, having regard in particular to the fact that such a product is not referred to in Annex I to the FEU Treaty. The applications at issue, therefore, did not fall within Article 17 of Regulation No 1305/2013, as implemented by the Walloon Region.

13On 25 January 2019, CT and Ferme de la Sarte brought an action for annulment of the contested decisions before the Conseil d’État (Council of State, Belgium), arguing that turf constitutes an agricultural product falling within Annex I to the TFEU. CT and Ferme de la Sarte take the view that those decisions adopt a restrictive interpretation of Article 38 TFEU, by limiting the concept of ‘agricultural products’ in that article to that which forms part of the food sector, whereas the ‘live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage’ referred to in Chapter 6 of that annex, to which Article 38 TFEU refers, do not fall within that sector. Turf is a living plant requiring horticultural work and may be intended for ornamental use.

14The Walloon Region states that, according to the information on the official website of the European Commission, Chapter 6 of Annex I to the TFEU covers only ‘live trees, shrubs and bushes and other goods commonly supplied by nursery gardeners or florists for planting or ornamental use’, therefore excluding turf.

15The referring court states that the decisive ground for the contested decisions is based on an interpretation of Article 17 of Regulation No 1305/2013 as excluding from its scope the production of turf and green roofs. Since the aid applications at issue fall within the CAP, it is necessary, according to that court, to avoid developing case-law concerning the concept of ‘agricultural products’ which might not be in accordance with EU law.

16In those circumstances the Conseil d’État (Council of State) decided to stay proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:‘Is Article 17 of [Regulation No 1305/2013] to be interpreted as excluding from its scope the production of turf or of green roofs?’

Consideration of the question referred

17By its question, the referring court asks, in essence, whether Article 17(1)(b) of Regulation No 1305/2013 must be interpreted as meaning that the concept of ‘agricultural products covered by Annex I to the TFEU’ in that provision covers plants used for making green roofs, such as turf rolls, so that tangible investments concerning them are eligible for aid under the rural development support measure referred to in that provision.

18It follows from Article 17(1)(b) of Regulation No 1305/2013 that support under the ‘investments in physical assets’ measure covers tangible and/or intangible investments which ‘concern the processing, marketing and/or development of agricultural products covered by Annex I to the TFEU or cotton, except fishery products’.

19The second subparagraph of Article 38(1) TFEU defines, in general terms, the concept of ‘agricultural products’ as including the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products. Agricultural products, within the meaning of that provision, are listed in Annex I to the TFEU, to which Article 38(3) TFEU refers.

20Annex I to the TFEU includes Chapter 6, entitled ‘Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage’. Since that chapter, which covers the same products as Chapter 6 of the CN, contains no explanation of those terms, it is appropriate to refer to the established interpretations and the methods of interpretation relating to the CN in order to interpret them (see, to that effect, judgment of 25 February 1999, Parliament v Council, C‑164/97 and C‑165/97, EU:C:1999:99, paragraph 18 and the case-law cited).

21Chapter 6 of the CN, entitled ‘Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage’, contains a heading 0602, referred to as ‘Other live plants (including their roots), cuttings and slips; mushroom spawn …’, with a subheading 06029050 entitled ‘other outdoor plants’. In accordance with Note 1 to that chapter, that heading and subheading comprise products commonly supplied by nursery gardeners or florists for planting or for ornamental use.

22According to the explanatory notes to the CN concerning tariff subheading 06029050, that subheading covers, inter alia, turf rolls and turf slabs for making lawns. While those explanatory notes do not have binding force, they are, however an important means of ensuring the uniform application of the CN and are useful aids to its interpretation (see, to that effect, judgment of 10 March 2021, Samohýl group, C‑941/19, EU:C:2021:192, paragraph 30 and the case-law cited).

23It follows that turf rolls are capable of falling within Chapter 6 of Annex I to the TFEU and, consequently, within the concept of ‘agricultural products’ within the meaning of Article 17(1)(b) of Regulation No 1305/2013.

24That finding is supported by the objectives of Regulation No 1305/2013. In so far as the production of turf for the purposes of installing it on building roofs contributes to the objective referred to in Article 4(b) of that regulation, which is to ensure the sustainable management of natural resources and climate action, an interpretation of the concept of ‘agricultural products’ as covering turf rolls and that, consequently, investments concerning it are capable of benefiting from aid under Article 17(1)(b) of that regulation is consistent with that objective.

25In the light of the foregoing considerations, the answer to the question referred is that Article 17(1)(b) of Regulation No 1305/2013 must be interpreted as meaning that the concept of ‘agricultural products listed in Annex I to the TFEU’ in that provision covers plants used for making green roofs, such as turf rolls, so that tangible investments concerning them are eligible for aid under the rural development support measure referred to in that provision.

Costs

26Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Eighth Chamber) hereby rules: Article 17(1)(b) of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 must be interpreted as meaning that the concept of ‘agricultural products covered by Annex I to the TFEU’ in that provision covers plants used for making green roofs, such as turf rolls, so that tangible investments concerning them are eligible for aid under the rural development support measure referred to in that provision.