EN Official Journal of the European Union C 175/53

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Regulation laying down specific rules as regards the fruit and vegetable sector and amending certain Regulations’

COM(2007) 17 final — 2007/0012 (CNS)

(2007/C 175/14)

On 14 February 2007 the Council decided to consult the European Economic and Social Committee, under Articles 36 and 37 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 8 May 2007. The rapporteur was Mr Campli.

At its 436th plenary session, held on 30 May 2007, the European Economic and Social Committee adopted the following opinion unanimously.

1. Conclusions and recommendations

1.1 The EESC believes that the aims of the reform, if they are pursued as a whole, can form the basis for a coherent policy for developing this important sector of the European Union's agricultural, industrial and food economy.

1.2 The EESC welcomes the confirmation of the pivotal role of producer organisations in the Common Market Organisation of the fruit and vegetable sector.

1.3 The EESC considers financing to be an essential part of a coherent policy capable of ensuring the competitiveness of the European fruit and vegetable sector; it therefore calls on the Commission to think more carefully about the financial impact of the innovations it is introducing, positive and laudable though these are.

1.4 The EESC believes that the introduction of new and significant measures into the operational programmes will lead to an objective reduction in resources available for investment and employment.

1.5 The EESC supports the Commission's strategy aimed at turning the entire first pillar into a consistent and balanced whole by 2013; to this end, it calls on the Commission to put in place an appropriate transition programme for the fruit and vegetable sector so as to bring all the operators in the sector up to speed with the new system and, at the same time, to ensure that European consumers enjoy security of adequate supply in terms of quality and quantity.

1.6 The EESC welcomes the Commission's policy aimed at actively protecting the environment; with this in mind, it recommends flexible measures that reward the practices and approaches of the various operators. As regards promoting the consumption of fruit and vegetables by certain categories of consumer, it recommends a more definite strategy as part of the horizontal support policy.

1.7 The EESC recommends that the marketing standards aimed at protecting consumers be maintained, in particular those on food hygiene and the origin of produce.

2. The Commission's arguments and proposals

2.1 The Commission sets out the following objectives: — encourage competitiveness and market orientation of EU fruit and vegetable production: in other words, help to make production sustainable and competitive both in the internal market and on foreign markets; — reduce the fluctuations in producers' incomes due to crises; — increase the consumption of fruit and vegetables in the EU; — emphasise the sector's duty to conserve and protect the environment; — simplify and, if possible, reduce the administrative burden for all stakeholders.

2.2 The architecture of the reform is based on three key pillars: — budget neutrality; — bringing the Common Market Organisation (CMO) into line with the 2003 CAP reform and subsequent regulations; — consolidation of the structure of the CMO by strengthening producer organisations (POs).

2.2.1 The Commission states that the above-mentioned objectives have been identified taking into account the need for WTO (World Trade Organisation) compatibility; consistency with the reformed CAP, and conformity with the financial perspectives.

2.2.2 The Commission points out that EU-27 fruit and vegetable production accounts for 3.1 % of the Community budget and 17 % of total EU agricultural production.

2.2.3 The resources the proposed reform allocates to fresh fruit and vegetables remain at 4.1 % of the value of the marketed production of the PO, whilst the national maxima for processed produce are transferred to the Single Farm Payment (SFP) in accordance with the historical values for each country and, for the new Member States, in accordance with those set by the accession treaties.

2.2.4 In regions where the degree of organisation of producers is particularly low, additional national financial assistance may be authorised.

2.2.5 The co-financing rate of operational programmes is maintained at 50 %, except for some particular cases, where it may rise to 60 % (transnational actions, schemes operated on an interbranch basis, organic production, producers in new Member States, mergers of POs, outermost regions, regions where less than 20 % of production is organised).

2.2.6 Withdrawals of up to 5 % of production, for distribution to charitable organisations and foundations, penal institutions, schools, children's holiday camps, hospitals and old people's homes, may be 100 % financed by the Commission.

2.2.7 Provision is made for abrogating Article 51 of Regulation 1782/2003 and thus for the eligibility of fruit and vegetables for the SFP.

2.2.8 Member States are to establish reference amounts and eligible hectares under the single payment scheme (SPS) on the basis of a representative period appropriate to the market of each fruit and vegetable product and of appropriate objective and non-discriminatory criteria.

2.2.9 The Commission provides that at least 20 % of the total expenditure of each operational programme must be dedicated to agro-environmental measures.

2.2.10 The proposal does not affect the existing rules on external trade; however, it does propose the abolition of export refunds.

2.2.11 Part of the regulation of the fruit and vegetable sector provided for in the proposal was previously included in the proposed regulation on a single CMO (currently being considered by the Council).

2.2.12 In its proposed reform, the Commission also provides for a subsequent review of marketing standards, relating in particular to quality, grading, weight, sizing, packaging, wrapping, storage, transport, presentation, marketing and labelling. The Commission proposal confirms the key role of producer organisations in the fresh fruit and vegetable sector by: — changing the list of products for which a PO may be established; — conferring on POs the responsibility for crisis management not exceeding one-third of the expenditure under the operational programme; — providing for levels of direct sales fixed by Member States, the minimum level being 10 %.

2.2.13 The proposal recognises interbranch organisations and provides for the rules for members of POs to be extended to producers who are not members of POs if the latter cover at least 60 % of the production of the area in question.

2.2.14 The Commission proposes that Member States establish a national strategy to enable POs to assess the effectiveness of the operational programmes.

2.2.15 Obligatory promotion actions targeted towards young people under 18 are proposed within each operational programme.

3. General comments

3.1 The EESC believes that the aims of the reform, if they are pursued as a whole, can form the basis for a coherent policy for developing this important sector of the European Union's agricultural, industrial and food economy. Indeed, the Commission itself, in its ‘reasons for reform’, states that ‘of the 9.7 million agricultural holdings in the European Union (EU) of 25, 1.4 million produce fruit and vegetables. The sector farms 3 % of the cultivated area and produces 17 % of the value of EU's [sic] agricultural production. The sector is faced with pressure from the highly concentrated retail chains and with increased competition from third country products. […] The sector receives about 3.1 % of the Common Agriculture's [sic] budget.’ (1) For its part, the EESC points out that the fruit and vegetable sector provides the highest level of employment in proportion to surface area used. Moreover, the fruit and vegetable sector faces an internationally competitive environment (WTO negotiations, Euromed free trade area in 2010), which will have an increasing impact on the development of European fruit and vegetable production.

3.2 In addition, the European Court of Auditors, in its special report 8/2006 entitled Growing success? The effectiveness of the European Union support for fruit and vegetable producers' operational programmes, whilst taking a critical look at the operation of producer organisations and also finding a ‘significant advance on the initial situation’, called for better monitoring of the effectiveness of aid, and asked for ‘better target[ing of] the policy’ so as to strengthen POs.

3.3 The EESC points out the discrepancy between the stated objectives and the financial resources — a key component of a coherent policy — made available for the realisation of those objectives; this confirms an imbalance in the CAP as regards production in the Mediterranean. The EESC notes that the Commission has made its proposals within the constraints of a budget that has not been increased. It also notes that by abolishing market withdrawals and export refunds, the Commission is bringing about an increase in the resources potentially available for future operational programmes, but that these resources risk being left unused and will not be available for investment by more efficient POs.

3.4 The EESC further notes that the proposal a) introduces new, politically and economically highly significant measures (management of market crises, environment policy, promoting consumption) into operational programmes and b) raises (to 60 %) the co-financing of certain measures that are considered strategic. This innovative policy, combined with the maintenance of the upper limit to Community aid for operational programmes of 4.1 % of the value of the production marketed by each PO, results, de facto, in a reduction in the resources available for investment.

3.5 The Committee also notes that the introduction of total decoupling of support for processed products could very likely lead to a reduction in the value of marketed production and, consequently, a reduction of aggregate financial resources compared to the current situation.

3.6 For all these reasons, the EESC believes it necessary to introduce at least three corrections, whilst keeping to the principle of genuine budget neutrality: — leaving the management of market crises out of the accounts relating to the PO's operational programme; — derogating from the 4.1 % limit when actions are co-financed at 60 %, inter alia to allow POs that are already consolidated to continue fulfilling their role as a counterweight to ‘the buying power of the Large Multiples’ (2); — including joint measures by two or more producer organisations among those which receive 60 % Community co-financing, so as to promote cooperation between producer organisations and group supply.

3.7 However, the EESC notes the Commission proposal to entrust crisis management to POs and calls on the Commission to put in place transparent criteria for crisis management to support non-member producers and ensure that the instruments made available for this purpose can be used by all producers, so that any intervention in the event of a crisis will be effective and enable the markets in question to recover.

3.8 The EESC is aware that the Commission has repeatedly stated its long-term strategy aimed at bringing all the CMOs into the SFP scheme by 2013. The Committee believes that it would be possible, inter alia in keeping with the reforms approved to date, to have an adequate transition period, taking into account the specifics of each Member State and of the various products. The EESC is well aware of the consequences of a hasty approach, which would be disruptive to employment and to the processing industry, which needs to embark upon a complex restructuring strategy — possibly including plant closures — for which the proposed reform does not provide for any specific support measures.

3.9 The Committee also notes that the Commission, in order to comply with the WTO, considers it necessary to replace Article 51 of Regulation 1782/2003. This will bring about additional competition within the sector between established fruit and vegetable producers and potential new producers. In order to avoid artificial distortions of the profitability of the sector, the EESC considers it essential to allow — for a transitional period — Member States to keep Article 51 in force selectively for certain sensitive products, or to provide for new rights for those fruit and vegetable producers whose past production did not generate any.

3.10 The EESC notes that the Commission, in the context of trade with third countries, proposes the abolition of export refunds for the sector, and points out that this is another aspect of EU policy that takes a generally piecemeal, not entirely consistent approach to the various sectors of agriculture. It also calls on the Commission to avoid making any commercial concessions that would weaken the principle of Community preference, and to ensure that tariff quotas are administered rigorously and maintain the special safeguard clause, not least because the EU is the world's biggest importer of fruit and vegetables, over 70 % of its imports come from countries that benefit from preferential trade agreements, and the sector includes so-called sensitive products.

3.11 The EESC, whilst it supports the aim of moving towards simplification, believes that maintaining marketing standards is vital, both for the protection they afford to consumers in terms of the safety and origin of the product, and because of the important role that they play in regulating the market. To this end, the EESC stresses the importance of the EU successfully introducing traceability, as a basic measure for managing risks to public health and plant protection, into the standards governing international trade.

3.12 The EESC also highlights the need for the European Union to promote, at international level, the introduction and recognition of environmental and social standards with respect to workers employed in the production process.

3.13 The EESC welcomes the Commission's policy aimed at actively protecting the environment. In this regard, the EESC believes that, rather than setting limits and fixed percentages, it would be more effective to use an incremental co-financing method, starting from a mandatory minimum, aimed at rewarding operational programmes oriented towards those objectives.

3.14 As regards promoting the consumption of fruit and vegetables by certain categories of consumer, the EESC supports the emphasis placed on this objective by the Commission. It therefore calls on the Commission to draw up a specific promotion strategy within the scope of horizontal support policy, but is doubtful as to the effectiveness of making promotional measures, which will inevitably be limited in scope, mandatory within operational programmes.

4. Specific comments

4.1 The Committee points out that the Commission's proposal does not resolve the problem facing producers of red fruit for processing. The EESC believes it would be useful to create a system of direct support for producers of red fruit for processing, as is the case for other fruit and vegetables grown for processing (e.g. dried fruit).

4.2 The EESC welcomes the inclusion of culinary herbs among the products for which a PO may be set up and calls upon the Commission to ascertain whether the list set forth in its proposal meets the needs of all EU regions.

4.3 Based on comparable past experience in distribution for charity, the Committee would call the Commission's attention to the need to provide for fast and effective implementing measures.

4.4 The EESC calls on the Commission also to consider including non-food uses in measures relating to free distribution.

4.5 The EESC calls on the Commission to consider the particular difficulties faced by producers in the new Member States in co-financing crisis management.

4.6 The EESC believes that setting a minimum limit of direct sales by producers is contrary to the aims of the reform, and suggests that the wording of the previous regulation be kept.

4.7 The EESC is not opposed to the idea of the Member States framing a national strategy for operational programmes, inter alia to make best use of existing public bodies; however, it believes that these national strategies should be voluntary for the Member State concerned and should not lead to the drawing-up of new lists of positive actions at national level.

4.8 In addition, the EESC notes that, in some cases, Community policy facilitating group supply, including by merging POs, may prove to be in conflict with Community or national authorities' measures to safeguard competition. It therefore calls for the European dimension of the fruit and vegetable market to be taken into account when implementing competition rules.

4.9 The EESC proposes that the Commission set up a Community observatory on pricing and marketing practices, with the aim of improving market transparency for the benefit of all stakeholders.

4.10 Given that the proposed reform establishes an independent Common Market Organisation for the sector, the EESC calls on the Commission not to include additional standards relating to the fruit and vegetable sector in the regulation on the Single CMO.

Brussels, 30 May 2007. The President of the European Economic and Social Committee Dimitris DIMITRIADIS

(1) Commission Staff Working Document SEC(2007) 75 — Towards a reform of the fresh and processed fruit and vegetables common market organisations. Impact analysis summary.

(2) OJ C 255, 14.10.2005, p. 44 — Opinion CESE 381/2005 — The Large retail sector — trends and impacts on farmers and consumers.