Notwithstanding the right to grant subsidies indicated in Article 118, a Member State shall not use such subsidies in a manner to distort the production of and intra-regional trade in the product or products benefiting from such subsidies.
Accordingly, subsidies provided by a Member State to agriculture shall not involve transfers from consumers, or direct payments to producers or processors which would have the effect of providing price support to producers.
Subsidies provided by a Member State to agriculture shall be made through publicly funded programmes which benefit the agricultural sector generally, in areas such as research, training, extension and advisory services, pest and disease control, inspection services, marketing and promotion services and infrastructural services.
Where a Member State makes direct payments of a subsidy to agricultural producers or processors through such schemes as crop insurance, disaster relief, income safety-net programmes, regional assistance programmes and structural adjustment assistance programmes, the Member State shall ensure that these payments, whether financial or otherwise, have no or minimal production and trade distortion effect and do not constitute price support to producers of the product or products benefitting from the use of such schemes.
