L 23/78 Official Journal of the European Union 27.1.2006 (Acts whose publication is not obligatory) COUNCIL COUNCIL DECISION of 23 January 2006 on the approval of exceptional national aid by the Republic of Cyprus to Cypriot farmers for the purpose of repaying part of agricultural debts created long before accession of Cyprus to the European Union (2006/39/EC) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 88(2), third subparagraph, thereof, Having regard to the request made by the Republic of Cyprus on 21 November 2005, Whereas: 1 On 21 November 2005, Cyprus presented to the Council a request for a decision in accordance with the third subparagraph of Article 88(2) of the Treaty declaring that the plan of Cyprus to grant national aid to Cypriot farmers for the purpose of repaying part of agri- cultural debts created long before the accession of Cyprus to the European Union as a result of exceptional circum- stances is compatible with the common market. Intensive efforts have been made by the Cypriot Government to put back to work the many tens of thousands of farmers and rural people who were forced to abandon their farms and households after the Turkish invasion in 1974. In order to enable these farmers and rural people to pursue their activities in Cyprus, Government-guaranteed loans were issued for the acquisition of machinery and livestock andfor the realisation of other investments in agriculture. In the 1990’s, Cyprus was hit by an unprecedented and severe drought which lasted for seven years, with devas- tating consequences for agricultural production and farm incomes. In the hope of a better harvest in the following year, many Cypriot farmers hit by the drought resorted to borrowing in order to buy farm inputs, thus falling into a trap of accumulated debt year after year. The extent of the losses suffered by the Cypriot farmers and the accumulation of their debts affected their ability to repay existing loans. A political commitment to deal with the accumulated farm debt problem was given by the Government early in 1999, but through failure to reach an agreement with the unions of farmers the proposed debt repayment scheme was not implemented before accession to the Union. It was only after long discussion and the pressure of the serious challenges facing the agricultural sector of Cyprus after accession that farmers unions came to revise their positions. After the accession of Cyprus to the Union, the agri- cultural sector of Cyprus entered into a period of extended crisis and farm incomes registered a decline unlike in all the other new Member States. Farm gate prices of cereals and of fruit other than citrus went down substantially. A considerable share of the grape harvest could not find normal market outlets and Cyprus requested and was granted Community aid to implement an immediate grubbing-up scheme. Antici- pating the needs for adjustment, conversion and diversi- fication, the national Rural Development Plan for the period 2004 to 2006 incorporated a number of schemes and programmes requiring considerable investment by farmers and other rural people. However, the accumulated farm debt from the period before accession proved to be a major stumbling block to the implementation of that Plan, with Banks and other financial institutions requiring repayment of previous loans before issuing new ones.