EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 26/08/2008 
SEC(2008) 2382 
  
COMMISSION STAFF WORKING DOCUMENT 
The agricultural situation in the European Union – 2006 Report 
{COM(2008) 525} 
EN 2   EN COMMISSION STAFF WORKING DOCUMENT 
The agricultural situation in the European Union – 2006 Report 
TABLE OF CONTENTS 
1. Economic situation and farm income........................................................................... 6 
1.1. Overview.................................................................................................................. .... 6 
1.2. Production ................................................................................................................ .. 10 
1.3. Prices.................................................................................................................... ...... 13 
1.4. Input prices.............................................................................................................. ... 16 
1.5. Farm income............................................................................................................... 16 
1.6. Farm accountancy data network (FADN) .................................................................. 26 2. Policy developments and legislative initiatives in 2006 ............................................ 32 2.1. CAP Reform............................................................................................................... 3 2 
2.2. Quality policy............................................................................................................ . 33 
2.3. Organic farming ......................................................................................................... 36  
2.4. Promotional measures ................................................................................................ 37 2.5. Simplification of agricultural legislation ................................................................... 38 2.6. State aids in the agricultural sector ............................................................................ 39 2.7. Assistance to the needy .............................................................................................. 47 2.8. The Outermost Regions.............................................................................................. 48 2.9. Information measures concerning the CAP ............................................................... 49 2.10. Information and communication technology (ICT) ................................................... 51 2.11. Inter-institutional and NGO relations......................................................................... 52 3. Agricultural markets................................................................................................... 53 3.1. Market developments — Crop products .................................................................... 53 3.1.1. Cereals................................................................................................................. ....... 53 
3.1.2. Oilseeds................................................................................................................ ...... 54 
3.1.3. Peas, field beans and sweet lupins ............................................................................. 55 3.1.4. Linseed ................................................................................................................. ...... 55 
3.1.5. Grain legumes (chick peas, lentils and vetches) ........................................................ 56 
EN 3   EN 3.1.6. Non-food production.................................................................................................. 56 
3.1.7. Rice .................................................................................................................... ........ 57 
3.1.8. Starch.................................................................................................................. ........ 57 
3.1.9. Sugar ................................................................................................................... ....... 57 
3.1.10. Potatoes ............................................................................................................... ....... 61 
3.1.11. Dried fodder ........................................................................................................... .... 62 
3.1.12. Fibre flax and fibre hemp........................................................................................... 64 3.1.13. Cotton................................................................................................................. ........ 65 
3.1.14. Silkworms .............................................................................................................. .... 65 
3.1.15. Olive Oil.............................................................................................................. ....... 65 
3.1.16. Fresh fruit and vegetables .......................................................................................... 67 3.1.17. Bananas ................................................................................................................ ...... 68 
3.1.18. Processed fruit and vegetables ................................................................................... 69 3.1.19. Wine ................................................................................................................... ........ 71 
3.1.20. Tobacco................................................................................................................ ...... 73 
3.1.21. Seeds .................................................................................................................. ........ 74 
3.1.22. Hops ................................................................................................................... ........ 74 
3.1.23. Flowers and live plants............................................................................................... 7 5 
3.1.24. Animal feed (EU-25).................................................................................................. 77  
3.2. Market developments — Animal products ................................................................ 79 3.2.1. Milk and milk products .............................................................................................. 79 3.2.2. Beef and veal........................................................................................................... ... 81 
3.2.3. Sheep meat and goat meat.......................................................................................... 84 3.2.4. Pigmeat................................................................................................................. ...... 85 
3.2.5. Poultry meat ............................................................................................................ ... 86 
3.2.6. Eggs.................................................................................................................... ........ 87 
3.2.7. Honey ................................................................................................................... ...... 88 
4. The CAP Reform in 2006 .......................................................................................... 89 5. Agrimonetary arrangements....................................................................................... 94 6. Rural development in 2006 ........................................................................................ 94 6.1. Belgium................................................................................................................... ... 96 
EN 4   EN 6.2. Czech Republic .......................................................................................................... 98  
6.3. Denmark................................................................................................................... .. 99 
6.4. Germany................................................................................................................... 101 
6.5. Estonia................................................................................................................... ... 102 
6.6. Greece .................................................................................................................... .. 103 
6.7. Spain..................................................................................................................... .... 105 
6.8. France.................................................................................................................... ... 107 
6.9. Ireland ................................................................................................................... ... 109 
6.10. Italy .................................................................................................................... ...... 110 
6.11. Cyprus ................................................................................................................... ... 112 
6.12. Latvia................................................................................................................... ..... 113 
6.13. Lithuania ................................................................................................................ .. 114 
6.14. Luxemburg ............................................................................................................... 1 16 
6.15. Hungary.................................................................................................................. .. 117 
6.16. Malta .................................................................................................................... .... 118 
6.17. The Netherlands ....................................................................................................... 120  
6.18. Austria.................................................................................................................. .... 121 
6.19. Poland................................................................................................................... .... 124 
6.20. Portugal ................................................................................................................. ... 125 
6.21. Slovenia................................................................................................................. ... 126 
6.22. Slovakia................................................................................................................. ... 128 
6.23. Finland.................................................................................................................. .... 129 
6.24. Sweden ................................................................................................................... .. 131 
6.25. United Kingdom....................................................................................................... 132 7. Environment and forestry......................................................................................... 134 7.1. Environmental measures .......................................................................................... 134 
7.2. Forestry measures..................................................................................................... 137 
8. Proposal for financing the CAP in 2006 .................................................................. 137 8.1. EAGGF Guarantee Section...................................................................................... 138 8.2. EAGGF Guidance Section ....................................................................................... 141 8.3. Evaluation ................................................................................................................ 148 
EN 5   EN 9. Enlargement ............................................................................................................. 149 
10. International relations............................................................................................... 150 10.1. International organisations and agreements............................................................. 150 10.1.1. World Trade Organisation (WTO)........................................................................... 150 10.1.2. Organisation for Economic Cooperation and Development (OECD)...................... 151 10.1.3. Generalised System of Preferences (GSP)............................................................... 153 10.1.4. United Nations Food and Agricu ltural Organisation (FAO).................................... 153 
10.1.5. Commodities and international commodity agreements.......................................... 154 10.2. Bilateral and regiona l trade relations ....................................................................... 154 
10.2.1. ACP countries .......................................................................................................... 154 
10.2.2. EFTA countries and EEA Agreement...................................................................... 155 10.2.3. Asia ................................................................................................................... ....... 156 
10.2.4. Middle East and Mediterranean Region................................................................... 157 10.2.5. Western Balkans and Turkey ................................................................................... 158 10.2.6. Latin America.......................................................................................................... . 159 
10.2.9 NIS countries........................................................................................................... . 159 
10.2.7. North America: USA, Canada.................................................................................. 160 10.2.8. Oceania................................................................................................................ ..... 162 
EN 6   EN 1. ECONOMIC SITUATION AND FARM INCOME  
1.1. Overview 
1. The 2006 agricultural year was marked by a decrease in the production of both crops 
and livestock products, though in conjunction with very  favourable prices for 
livestock products and higher prices for crops . Input prices were somewhat higher in 
2006 on average in the EU-25 as substantial in creases in energy prices were not offset 
by decreases in prices for other inputs. However, price developments were highly 
variable across sectors and countries. The fi rst estimates sent by Member States show 
a slight increase of + 0.4% in agricultural in comes in real terms as compared to 2005 
in the European Union as a whole. The actual figures by country varied from – 10.2% 
for Ireland to + 14.3% for the Netherlands. 
2. As far as the weather was concerned, weather conditions  in the autumn of 2005 had 
been generally favourable for winter crop so wings. However, crops were sown later 
than normal in many eastern European countri es as a result of rain-delayed summer 
harvests. A mild autumn helped to acceler ate sowings and plant emergence, with 
seasonably cold weather returning in  November. Winter and spring were 
characterised by relatively low seasonal te mperatures for most EU regions, with 
particularly difficult conditions in the Bl ack Sea region. During the summer, all of 
western and central Europe (from northern Sp ain to the Baltic countries) registered 
temperatures well above the normal seasonal values. Frequent and persistent heat waves accompanied by dry conditions character ised the whole month of July. At the 
same time, the drought moved northward acros s the continent, part icularly affecting 
those areas where winter crops were still  at their sensitive stage. Registered 
temperatures were the highest for the last th irty years. In August, the weather turned 
abnormally cold, especially in France, Ge rmany, the Czech Republic and Austria. In 
June, recorded precipitation was above aver age in Spain, central and northern France, 
the Czech Republic, Bulgaria, Greece and Ukra ine, whereas in other countries rainfall 
was below the normal seasonal levels. Well below normal rainfall was recorded in 
July throughout Europe ex cept in northern Spain, north ern and south-east France, 
southern Italy and Greece. During this  period (June-July), the United Kingdom, 
Ireland, eastern France, Germany, Poland, th e Baltic countries and northern Italy 
were particularly hit by the drought. In c ontrast, August saw abundant rainfall across 
all of Europe except in southern Spain a nd Portugal. By the end of September dry 
weather returned to central Eur ope, Germany and north-east France. 
3. In 2006/07, demand for cereals within the European Union was expected to remain 
stable with a slight increase in industrial  use (biofuels) and a moderate decrease in 
feed use. As regards livestock products , EU-25 meat consumpti on slightly declined 
as decreases in poultry and sheep and goat consumption were not fully offset by increases in beef, veal and pork consump tion. Total EU-25 beef consumption saw an 
overall increase of 2.0% compared to the previous year, driven by increased availability and lower prices . Greater availability on the domestic market and a partial 
shift in consumer preferences from poultry m eat to pigmeat in the course of the avian 
flu scare led to an increase in pigmeat consumption throughout the EU. Due to the 
avian influenza scare, overall EU- 25 poultry meat consumption decreased 
considerably (–
 2.6%) in 2006. The temporary drop in demand at the peak of the scare 
was especially high in Greece, France and Italy. Sheep meat consumption declined by 
EN 7   EN 2.1% in 2006, as higher imports attracted by relatively favourable domestic prices 
were offset by lower net domestic producti on. Overall consumption of milk products 
continued to grow slightly. Demand for ch eese and fresh dairy pr oducts increased in 
the EU-25, while butter consumption decreas ed slightly and sk immed milk powder 
consumption remained relatively stable in  2006 in both the new and old EU Member 
States. 
4. As regards the global economic situa tion, the outlook for the world economy 
remained positive in 2006, with solid growth of 5.1% expected. After several years of strong growth, the US economy began to slow, as a result of a cooling residential 
housing market and lower consumer spending. However, growth in other regions, in 
particular Asia, was set to remain robust. The positive outlook was also supported by the fall in energy prices in autumn 2006, following the dramatic price hikes in 
summer 2006 due to geopolitical tensions in  the Middle East. Despite high oil prices, 
GDP growth in the first half of 2006 was su rprisingly strong, tha nks to stronger than 
expected growth in the United States, Asia  (excluding Japan) and the oil-exporting 
countries. Economic growth was accompan ied by a stronger expansion in world 
trade, with global imports of goods and serv ices (excluding the EU ) set to grow by an 
average 8.8% in 2006. Movements in equity pr ices also supported the positive growth 
outlook. Following a sharp correction in e quity prices in mid-May, global equity 
markets then resumed their long-term upward  trend and some equ ity indices reached 
all-time highs. Oil prices continued to surge over the summer reaching new record 
levels of just below USD 80 per barrel (Bre nt crude futures) in early August. This 
increase was mainly driven by concerns a bout supply disruptions due to geopolitical 
tensions in the Middle East along with s upply disruptions in Al aska. The easing of 
these tensions, combined with downward ad justments in demand growth projections 
by the International Energy Agency (IEA), a m ilder than usual hurricane season in the 
Gulf of Mexico, and higher than expected oil stocks in the OECD  countries, led to a 
significant drop in oil prices to below USD 60 per barrel in October. The downward 
adjustment in oil prices was expected to prove favourable for the growth outlook in 
the oil-importing countries and the US econom y in particular. Neve rtheless, oil prices 
were expected to remain relatively high, in view of the continuing tight balance 
between supply and demand, with additional supply coming on stream only slowly. 
5. In the European Union, economic activity accelerated strongly and economic growth 
reached +
 2.8% in 2006, marking the strong est expansion since 2000. Economic 
growth was underpinned by robust growth  in domestic demand, especially 
investment, which rose in response to steady increases in capacity utilisation, improved corporate balance sheets, benign financial conditions and wide profit 
margins. Exports, in turn, continued to be supported by the strong world economy. 
The euro started at relatively moderate le vel against the dollar at  the beginning of the 
year, standing at USD 1.21, followed then by a gradual increase from April 2006, and 
closed the year at USD 1.33. 
6. Global meat and dairy product prices were  well above 2005 le vels. The year 2006 
was marked by an exceptional increase in th e prices of cereals, in particular wheat 
and maize, which, by November 2006, reached levels not seen for a decade. Poor 
harvests in key producing c ountries and fast-growing demand for biofuel production 
were the main drivers of grain prices. A sharp drop in world wheat production in 
2006, due to lower outputs in nearly all majo r exporting countries, resulted in one of 
the tightest periods for world wheat suppl y and demand in more than two decades. 
EN 8   EN While international wheat prices cont inued upward during 2006, production prospects 
deteriorated, especially in several wheat -exporting countries. Concerns about the 
prospects for wheat crops in major produci ng countries in the southern hemisphere 
(especially drought-devastated Australia), and limited expo rts from Ukraine, raised 
prices still further. Risi ng world prices boosted sales from the European Union 
despite the strong euro and th e absence of export refunds. The production shortfalls in 
many parts of the world during 2006 were exp ected to result in a large drop in world 
wheat inventories to their lowest levels since the early 1980s. The main reductions 
were expected among major exporters, na mely the United States, Australia, the 
European Union, Canada and Ukraine. In c ontrast, ending stocks increased in India 
following large-scale imports, and in Chin a, where wheat production reached high 
levels, wheat stocks were expected to stabi lise. Total cereal utilisation was forecast to 
increase in 2006 due mainly to higher f ood consumption and feed use, as weaker 
prices in previous years encouraged greater  use of low-quality wheat for animal feed. 
7. The upward movements in international maize prices since September 2006 were 
mainly influenced by the tighter domestic situation on the United States market, which is the most critical given that the Un ited States is the world’s largest producer 
as well as the largest consumer and exporter of maize. In addition, the trade situation 
was marked by reduced exports from Argentina and China. In November 2006, the United States maize export price stood around 70% higher than in the corresponding 
period in 2005. Global rice pric es were up since the begi nning of 2006 and increased 
continually until the end of the year. The arri val of the new harvest eased the situation 
only temporarily, and firm prices were expect ed to continue, refl ecting generally tight 
supplies in exporting countries.  
8. World market prices for soybean st rengthened at the beginning of 2006 but 
subsequently weakened, mainly due to a re cord world soybean output, with a record 
crop harvested in the Unite d States and Argentina. 
9. After three years of deficit, global suga r production recovered in 2006, with record 
production forecast in Brazil and India a nd a recovery to normal output levels, 
particularly in Thailand and the United Stat es. In contrast, EU sugar production was 
expected to decline by 23% due to the s ugar reform, which however was partially 
offset by increases elsewhere in Europe. Wh ile world sugar prices largely retreated 
from the highs reached in February 2006 and were approaching their long-term trend by the end of October 2006, the sugar market remained part icularly prone to large 
demand fluctuations and price volatility. 
10. Global meat markets were expected to r ecover gradually in the aftermath of the 
animal disease outbreaks that had plagued th e sector over the past four years. Global 
meat output was set to rise by nearly 6 million tonnes to almost 276 million tonnes in 
2006. However, global poultry prices plum meted by nearly 20% since mid-2005 as 
avian influenza outbreaks were reported in more than 40 previously unaffected 
countries in Europe, the Middl e East and Africa. Poultry pr ices in the United States 
and Brazil, the main suppliers of the global trade, dropped significantly. Rebounding 
import demand, however, allowed export prices to recover by the end of the year. Low demand and prices depressed output grow th to its lowest level in two decades. 
For the Russian Federation, the world’s larges t importer, poultry imports were set to 
decline due to uncertainty about the issui ng of import licenses and a strong recovery 
in domestic production. However, global demand was forecast to recover soon, with 
EN 9   EN Africa and Middle East resuming traditiona l importing patterns, while Brazil, the 
United States and Europe were set to increase exports. 
11. Despite tight world beef supplies, brought  about by foot-and-mouth disease (FMD) 
outbreaks in Brazil, bovine spongiform en cephalopathy (BSE) trade bans on North 
American beef, and Argentinean export bans, beef prices were only marginally down 
from 2005 levels. Supported by a recovery in North America and Asia, global beef 
output was forecast to incr ease by 2.5% in 2006. Production in developed countries 
was projected to increase by ove r 2%, reversing the decline over the past four years. 
Meanwhile, EU beef supplies were expected to rise with the a bolition of the BSE-
related ‘over-thirty month’ slaughter policy. The beef trade was expected to rise by 
3% to 6.7 million tonnes. South American beef exports declined in 2006 on account 
of Argentina’s export ban, afte r major gains over the past five years. However, this 
gave a boost to exports from other beef exporters such as the United States.  
12. Abundant supplies in 2006 put pressure on pigmeat prices, which fell by 16% in 2006 
compared with 2005. In particular, high stoc ks in Japan, the recipient of nearly one-
quarter of the global trade in pigmeat, led to a considerable decline in Japanese 
import prices. Global pigmeat production wa s expected to expa nd by 5%, with a 
favourable outlook in China, Brazil, Mexico  and Vietnam. In developed countries, 
output expanded only marginally, as only th e United States was expected to expand 
output in response to steady returns. The pi gmeat trade was expected to increase by 
4%, supported by strong demand in Asia and the Russian Federation. This was 
despite lower imports by Japan. While shipments from Brazil and the United States were expected to rise, exports from Canada  and the European Union were restrained 
by less competitive prices due to their strong currencies. 
13. Sheep meat prices remained competitive re lative to other meat s, prompting higher 
growth in Asia, in particular China, Indi a, Iran and Pakistan. Production in the main 
exporting region of Oceania rose, due to drought-induced slaughtering, and output 
also recovered in Argentina and Urugua y, reflecting government programmes aimed 
at reviving the sector. 
14. International prices for the major traded dairy products softened over most of 2006, 
due to increased exports by Oceania and some emerging Latin American countries. By the end of the year, however, dairy product prices show ed some signs of 
strengthening. Further prospects depended larg ely on the export situation in Australia, 
which experienced drought problems in 2006, and on the export position of the European Union, mainly characterised by si gnificantly reduced intervention stocks 
and lower export refunds since 2005. Compar ed with 2005, prices for whole milk 
powder, cheese and butter were down by 6%, 9% and 21%, respectively. Reflecting 
lower supplies, skim powder prices were up slightly compared with 2005. World milk 
production grew by an estimated 2.2%, thanks  mainly to production expansion in 
developing countries in As ia (China, India and Pakist an) and countries in South 
America. On the other hand, developed count ries recorded near-zero growth in 2006, 
with lower production in Australia and the European Union, but increased output in 
New Zealand and the United States. 
15. In the first nine months of 2006 the overall value of Community agricultural exports  
increased strongly by 8%, with wide di vergences across ag ri-food products. The 
increase was particularly marked for sugar and sugar confectionery (+
 21%), coffee 
and tea (+ 17%), animal or vegetable fats and oils (+ 15%), tobacco (+ 14%), 
EN 10   EN preparations of vegetables, fruit and nuts (+ 12%), and beverages and spirits (+ 10%). 
Exports only fell for lacs, gums, resins and vegetable saps (– 11%). Cereal exports 
were forecast to remain close to the previous year’s level. Given firm demand on the domestic market and the import restrictio ns imposed by the EU on Brazil following 
the outbreak of foot-a nd-mouth disease (FMD), EU-25 b eef exports were expected to 
fall considerably in 2006. In 2006, EU-25 pigmea t exports were expect ed to rise, with 
relatively favourable conditions on the Ru ssian market. In contrast, poultry meat 
exports were projected to decline again in 2006. The overall value of agricultural 
imports  rose by 6% in the first nine months of 2006 as compared to the same period 
in 2005. However, the European Union re mained a net exporte r of agricultural 
products, with its agricultural trade bala nce improving signifi cantly due to higher 
exports. The overall trade surplu s in agricultural pr oducts in the first nine months of 
2006 increased to EUR 6 976 million as against EUR 3 008 million in 2005. 
16. Intervention stocks of cereals were expect ed to decrease for the second consecutive 
year in 2006 (–
 5 million tonnes), a sign of improved market conditions on the world 
market and relatively stable domestic de mand. Difficult climatic conditions in the 
southern hemisphere and higher demand on th e world market led to a strong increase 
in cereal prices and conseque ntly to lower public stocks. Pu blic stocks of soft wheat 
and barley fell to 1.0 and 1.5 million tonnes respectively. On the other hand, maize stocks, mainly in the landlocked regions  of central Europe, grew (+0.9 million 
tonnes) for the third consecutive year to 6.5 million tonnes. Rice stocks fell strongly 
due to reduced imports from third countries to the new Member States and were estimated at 430 000 tonnes at the end of th e year 2006. Table wine stocks in July 
2006 stood at 69 million hectolitres, of whic h 45 million hectolitres were at producer 
level. The intervention measures decided in 2006 were desi gned to decrease stocks by 
4 million hectolitres to the average for the previous five years (41 million hectolitres). 
Compared to the period 2002–2004, when EU  table wine stocks stood at  
33–37 million hectolitres, table wine stocks remained high, especially in France. Stocks of quality wine amounted to 99 million hectolitres, of which 72 million 
hectolitres were at producer  level. The intervention measures decided in 2006 were 
intended to decrease stock levels by 1.4 m illion hectolitres. Stocks of quality wine 
remained high (+4%), particularly in It aly (+20%) and Portugal (+9%) compared to 
the average stock levels over the previous  five years. As from 2005, intervention 
buying-in, hardly ever used for sugar si nce the introduction of  the common market 
organisation in 1968, became an important in strument for regulating the market. A 
total of 0.55 million tonnes was taken into intervention in 2006, but offers practically 
stopped from May 2006. Tenders for the resale of intervention stocks attracted higher 
interest than in 2005 and consequently 850 000 tonnes were sold. By the end of 2006 
about 900 000 tonnes remained in intervention.  Intervention stocks of beef had all 
been disposed of since the beginning of 2004. Inte rvention stocks of dairy products in 
EU-25 fell to their lowest levels since th e autumn of 2002. No skimmed milk powder 
stocks remained as from the beginning of 2006 while butter stocks fell by 60 000 tonnes to 70 000 tonnes at the end of the year. 
1.2. Production 
17. According to the latest  information, the EU-25 cereal area is estimated to have 
declined by 1.9% to about 50.5 million ha in  2006. The main reasons for this decrease 
were less favourable climatic conditions in some EU regions, especially in spring and 
summer, which had a strong impact on yields , and continuing implementation of the 
EN 11   EN 2003 CAP reform (in particular ‘decoupling’).  Looking at individu al cereals, areas 
fell particularly for durum wheat (– 11%), triticale (– 8.8%), maize (– 4.8%), and oats 
(– 4.0%). On the other hand, the areas under common wheat (– 0.4%), barley (+ 0.0%) 
and rye (– 0.4%) remained relatively stable in 2006. 
18. Total cereal production is estimated at 245 million tonnes for the 2006/07 marketing 
year, a decrease of 5% (about 13 million tonnes) compared to 2005/06. Cereal production stood at nearly 191 million t onnes in the old Member States (–
 3.5% in 
comparison to 2005/06) and 54 million t onnes in the new Member States (– 9.7%). 
This was mainly due to the less favourab le climatic conditions and to the full 
implementation of the CAP reform. The dec line in cereal production ranged from 5% 
for common wheat to 13% for triticale. Sign ificant decreases are also estimated for 
durum wheat (– 12%), maize (– 10%), oats (– 7%), rye (– 7%), and soft wheat  
(– 8.9%). Only barley production increased slightly (+ 2%). 
19. All cereals had lower yields in comparison to 2005. Average cereal yields were about 
4.85 t/ha, 3.1% lower than in 2005. The highest  yield declines are estimated for rye  
(– 6.7%), maize (– 5.4%) and common wheat (– 4.5%). However, barley yields 
increased by an estimated 2%, leading to higher production. 
20. France remained the leading cereal produ cer in the EU with 61 million tonnes (– 4%). 
It was followed by Germany with 44 million tonnes (– 5%) and Poland with 
24 million tonnes (– 8%). Due to favourable weather conditions, cereal production is 
estimated to have increased in Sp ain (+ 25%) and Portugal (+ 55%). 
21. Rice  production was slightly lower in 2006 as  compared with the previous year, 
mainly due to due to a switc h in the types of rice sow n, as around 9% of the areas 
sown in the previous year with indica ri ce were sown with th e lower-yield japonica 
variety in 2006. The first production estimat e for 2006 was about 2% lower at around 
1.53 million tonnes (milled equivalent). The to tal area under rice remained stable at 
around 410 000 ha. 
22. The total  EU-25  oilseed  area increased in 2006 (+6.7%  compared to 2005) with 
rapeseed up by 7.8% to 5.1 million ha, while the soybean area remained almost unchanged at 286
 000 ha. The sunflower seed area also increased by 7% to 
2.16 million ha. The rapeseed area increased due to a favourable price outlook at the time of sowing and the prospects of greater use of rapeseed for biodiesel production. 
The total oilseed area increased to an estimated 7.5 million ha, including 0.8 million 
ha for non-food set aside and 0.8 million ha for energy crops. With less favourable 
weather conditions, yields were lower compared to the yields recorded in 2005, by  –
 8.3% for rapeseed, – 0.5% for sunflower seed and – 5.6% for soybean, although the 
total production of 20.1 million tonnes wa s 0.5% higher than in 2005/06. The 2006/07 
crop was expected to comprise 15.3 million tonnes of rapeseed, 3.9 million tonnes of 
sunflower seed and 828 000 tonnes of soybean. Rapeseed accounted for about 95% of 
the 2.6 million tonnes of non-food oilseed production. 
23. The EU-25 linseed area remained at a very low level (112 000 hectares) and 2006 
production is estimated to have reached 140 000 tonnes.  
24. The protein crop  area was expected to decrease so mewhat to 1.4 million hectares in 
2006 (– 4%). A limited increase in pea yield (2.9 t/ha) combined with yield stability 
EN 12   EN for beans and sweet lupins (2.7 t/ha) led to a slightly lower total protein crop 
production of 4.0 million tonnes as co mpared to the previous year. 
25. The introduction of the sugar sector reform  on 1 July 2006 had an important effect on 
EU-25 sugar  production. The area sown dropped by nearly 20% from 2.2 million ha 
in 2005/06 to 1.77 million ha in 2006/07. This  substantial reduction reflected the 
1.2 million tonnes of sugar quota eliminated for the marketing year 2006/07 and the 
‘preventive withdrawal’ of  2.5 million tonnes of s ugar quota in 2006/07. This 
‘preventive withdrawal’ was an exceptional measure to facilitate the transition from 
the previous sugar regime to the reformed regime. The beet area decreased in all producing Member States by about 10–15%, with  some countries seeing even larger 
decreases such as Italy (more than –
 50%), Greece (– 35%) and Finland (– 20%). Due 
to closure of the only suga r factory in Ireland, no sugar beet was sown there. 
Therefore, sugar production is estim ated to have been 16.5 million tonnes 
(16.2 million tonnes from beet, and 0.3 millio n tonnes from cane or molasses) in 
2006, substantially below the 20.3 million tonn es in 2005. As in the previous year, 
weather conditions were fairly  favourable in 2006 for mo st beet-growing regions of 
the enlarged EU, which had a positive effect  on the sugar content of the beet. Sugar 
production fell to 3.3 million tonnes in Germany (– 0.8 million tonnes) and 
3.4 million tonnes in France (– 0.7 million tonnes).  
26. Olive oil production in 2006 (marketing year 2 005/06) is estimated at 1.965 million 
tonnes (825 000 tonnes in Spain, 673 000 tonnes in Italy, 424 000 tonnes in Greece, 
32 000 tonnes in Portugal, 6 000 tonnes in Cyprus, 4 500 tonnes in France and 
500 tonnes in Slovenia). This represented a 15 % decline compared to the harvest of 
2005, mainly due to unfavourable climatic conditions. Following th e cessation of the 
production aid scheme from the market ing year 2005/06, production figures were 
based on Member State estimations. 
27. Initial estimates point to very different developments in fruit production across all 
sectors. A production increase was forecast fo r citrus (+8%), with total production to 
reach a record 11 million tonnes, with the highest increases in oranges (+10%) and 
small citrus fruit (+12%). For peaches a nd nectarines, figures indicate relatively 
stable production (+0.4%) in comparison to 2005. The production of pears was 
expected to have increased (+2%), whereas  the production of apples declined by an 
estimated 6% for the second c onsecutive year. As regards vegetables , only few data 
were available. No consolid ated figures are yet forthcom ing on the total production of 
fresh tomatoes, but considerable production decreases were registered in the two 
largest producer countries: Italy (– 12%) and Spain (– 21%) in comparison with 2005. 
The production of tomatoes for industria l processing decreased for the second 
consecutive year by almost 25% to 8 million tonnes in 2006 compared to 2005, after 
record production in 2004.  
28. Initial estimates show that EU wine production in 2006 remained almost the same as 
the previous year at about 173 million hectol itres. Production fell si gnificantly in Italy 
(– 6%), Hungary (–  16%) and Slovenia (–  16%), but increased in Spain (+  5%). 
29. Beef and veal production in the EU-25  is estimated to have increased in 2006 to 
8.0 million tonnes, up by 2%. This increase was due mainly to the end of the ‘over-thirty months scheme’ (OTMS) in the UK with more beef entering the market. 
EN 13   EN 30. According to the most recent estimates, pigmeat  production was expected to have 
increased slightly (+ 0.3%) to 21.2 million tonnes in 2006, mainly due to growing 
production in Spain, the Ne therlands and Poland. 
31. Due to the drop  in poultry meat consumption provoked by the avian influenza 
scare , poultry meat production in the EU-25 is estimated to have declined by 2.3% to 
10.7 million tonnes in 2006. 
32. For the EU-25, sheep/goat meat production  decreased by an estimated 2.5% overall 
in 2006, with considerable falls in th e United Kingdom and Ireland following the 
implementation of the CAP reform. 
33. The downward trend in dairy cow numbers c ontinued in the EU-25, with an estimated 
22.3 million head at the end of the year, a 2.6% fall compared to the end of 2005. The 
average milk yield on the other hand increas ed to an estimated 6 300 kilos, up 1.8%. 
This gives a milk production figure of 140 million tonnes, down 1.6% compared to 
2005. Deliveries to dairie s in EU-25 are estimated to ha ve fallen by almost 1.2% to 
130 million tonnes in 2006. Deliveries were pr ojected to decrease more in the EU-15 
(– 1.2%) than in the new Member States (– 0.8%) compared to 2005. After two 
consecutive years of strong increases in milk  deliveries in the new Member States, the 
quota ceilings were reached in some count ries, leading to a slowdown in milk 
production. Only the United Kingdom, Sweden and possibly Hungary had a 
production pattern structurally below thei r quotas over the previous few years. 
34. Butter production is estimated to have decreased by 5.2% to slightly below 
2.1 million tonnes in 2006. Cheese production continued to increase: an overall 
increase of 2.8% resulted in a production of 8.4 million tonnes. For milk powder a decrease of about 8–9% to 1.9 million to nnes in 2006 was expected, due to a 
reduction in skimmed milk powder produc tion by 10% and whole milk powder by 
7% in the previous year. At the milk pr oduction levels in 2006, the protein supply in 
the EU-25 was becoming rather  tight, although EU fat need s were still sufficiently 
covered. 
1.3. Prices 
Producer prices 
35. The first estimates available in December 2006 indicated different developments in 
agricultural producer prices across the EU in nominal terms. Producer prices were 
expected to have increased most in Latvia (+
 15.5%) and Lithuania (+ 12.0%), but 
also in Poland (+ 9.4%), Hungary (+ 8.4%), the Netherlands (+ 7.1%), Belgium 
(+ 6.9%), Cyprus (+ 5.8%), Austria (+ 5.7%), Slovenia (+ 5.4%), Sweden (+ 5.4%), 
Germany (+ 4.9%), Ireland (+ 4.5%), Luxembourg (+ 3.3%), Estonia (+ 4.0%), 
Denmark (+ 3.0%), the Czech Republic (+ 1.4%) and the United Kingdom (+ 1.2%). 
They remained relatively stable in Italy (+ 0.9%) and Slovakia (– 0.6%), but declined 
in Finland (– 9.4%), Spain (– 7.5%), Greece (– 7.1%), France (– 2.8%), Malta (– 2.3%) 
and Portugal (– 1.3%).  
36. The prices of cereals showed no uniform tre nd as they increased in several Member 
States, sometimes strongly, but continued to  decrease in others. High price drops 
were expected in Spain (– 35.7%), Finland (– 34%), Portugal (– 33.1%), Greece  
(– 31.3%), but also in Cyprus (– 14.1%), France (– 11.6%) and Slovakia (– 3.2%). 
EN 14   EN Other countries registered rising prices, with the highest increases in Belgium 
(+ 27.3%), Austria (+ 26.7%), the Netherlands (+ 26.6%), Estonia (+ 19.3%) and 
Sweden (+ 19.1%). In contrast, sugar beet prices were estimated to have decreased in 
most Member States with the exception of Slovakia (+ 11.4%) and Portugal (+ 4.9%). 
Wine prices increased in nominal terms in most wine-produci ng countries, except 
Italy, Portugal and Slovenia, where prices decreased, and Spain, where they remained 
stable. Consequently, the overall price inde x for crop products increased in most EU 
Member States, except in Spain, Finla nd, Greece, Malta, Fr ance and Italy, where 
nominal prices went down.  
37. The overall price index for animal products ro se in most EU Member States in 2006, 
but this masked wide-ranging changes by sector and by Member States. Pigmeat 
prices increased in most  EU Member States by + 5.6% on average, except for Poland 
(– 5.5%), Slovakia (– 3.5%), Malta (– 2.2%), Finland (– 2.2%), the Czech Republic  
(– 1.7%) and the United Kingdom (– 0.6%), where nominal prices were down. Beef 
and veal prices increased on average by + 1.1% in most EU countries, but declined 
sharply in Portugal (– 18.8%), Greece (– 13.7%), Finland (– 9.4%), the United 
Kingdom (– 5.6%), France (– 5.3%) and Slovakia (– 2.7%). Poultry meat prices 
showed no uniform trend: they declined in most Member States, most notably in the 
Czech Republic (– 20.1%), but increased in Spain, It aly, France, Cyprus, Latvia and 
Portugal and remained nearly unchanged in  Malta, Hungary, Austria and Slovenia. 
Sheep and goat meat prices fell on average across the EU-25 (– 5.0%), but this masks 
significant differences: they were down in Greece, Spain, France, Cyprus, Lithuania, 
the Netherlands, Poland, Portugal, Finland and Sweden, but increased in other Member States. Milk price changes in nominal terms compared with 2005 varied significantly between countries: while the pri ce of milk declined in some EU Member 
States, it increased significantly in Cyprus (+
 24.0%) and Latvia (+ 14.8%), also rising 
in Lithuania (+ 7.8%), Austria (+ 5.4%), Slovakia (+ 5.1%), Hungary (+ 3.8%), Greece 
(+ 2.8%), Slovenia (+ 1.9%) and the Netherlands (+ 1.4%). Egg prices increased in 
most Member States but fell in Malta (– 5.1%), Slovakia (– 4.3%), the Czech 
Republic (– 3.3%), Slovenia (– 2.4%), Greece (– 1.6%) and Austria (– 1.2%), while 
remaining relatively stable  in Ireland and Luxembourg. 
Market prices 
38. In general, cereal prices increased substantially in 2006, particularly at the end of the 
year. During the first three months of the year, the price for bread-making common 
wheat was around EUR 116 per tonne, for durum wheat EUR 158-160 per tonne, for maize EUR 120 per tonne, for feed wheat  EUR 102-104 and for malting barley 
EUR 130-133. Cereal prices then  increased slightly over th e next months , registering 
some sharp increases starting from Septem ber-October, and were still increasing at 
the end of the year. In December 2006, pric es reached EUR 155 per tonne for bread-
making common wheat and EUR 159 per tonne for feed maize, whereas durum wheat and malting barley prices were about EUR 180 per tonne. These prices were 
considerably higher compared to previous years as a consequence of firm demand on 
the world market, slightly lower produc tion and stable demand on the domestic 
market. 
39. Paddy rice prices remained high in 2006, well above the intervention prices, and even 
increased after the beginning of the new ma rketing year in September. Indica rice 
EN 15   EN prices ranged between 13% and 66% above th e intervention price, while japonica rice 
prices were even higher, ranging between 25% and 98% ab ove the intervention price. 
40. During 2006, rapeseed prices continued to rise: in January 2005 rapeseed was quoted 
at about EUR 190 per tonne (in Rouen), but  in January 2006 went up to EUR 215 per 
tonne and in December 2006 up to EUR 275 per tonne. Sunflower seed saw considerable fluctuations: in  June 2005 the price peaked at EUR 260 per tonne, then 
fell to EUR 200 per tonne in January 2006, but by the end of 2006 went up again to EUR 250 per tonne. The prices quoted for s oybeans in Chicago were relatively stable, 
but in the last quarter of 2006 rose  sharply to about USD 250 per tonne. 
41. In view of the large quantitie s of sugar sold ou t of intervention in 2006, market prices 
were above the white-sugar reference pri ce of EUR 632 per tonne in most Member 
States. Under the sugar reform, the referen ce price replaced the previous intervention 
price. 
42. In 2006  olive oil prices increased strongly (+
 22%) compared to 2005 and reached 
historically record levels. 
43. Prices for table wine remained relatively st able at a low level in Spain and Italy, with 
average producer prices between EUR 2 a nd 2.4 per hectolitre for white table wines 
and between EUR 2.5 and 2.8 per hectolitre fo r red table wines. At the end of 2006 a 
slight increase was recorded  in Italy. In France the prices for table wine decreased 
until August but increased slightly afterw ards. In December 2006 producer prices 
stood at EUR 3.4 per hectolitre for white ta ble wines and EUR 2.7 per hectolitre for 
red table wines. These prices were about  13% lower compared to the previous 
marketing year. 
44. In general, bovine meat prices were relatively high in 2006 (even above the already 
steep 2005 prices). For young bulls (category A R3), prices followed a comparable 
seasonal pattern to 2005, but were around 9% higher in absolute terms, peaking at 
EUR 331 per 100 kg in March 2006. The price of cows (category D O3) was about 
2.5% higher than in 2005, after a continuous increase during the first half of the year. Peaking at EUR 250 per 100 kg in July 2006, th e price started to decline in late 
summer following the seasonal patte rn. Steer prices (category C
 R3) were 
considerably higher compared to 2005, reaching EUR 306 per 100 kg in late spring followed by a less pronounced seasonal decline during the summer. 
45. Pigmeat prices continued to develop relativ ely favourably, achieving the 
exceptionally high prices of the year 2001 at EUR 164 per 100 kg in summer 2006. 
Due to the avian influenza scare, poultry meat prices  were well under their 
(relatively high) 2005 level in  the first half of 2006, re aching a low point at around 
EUR 130 per 100 kg in March 2006. During the second half of the year, however, prices improved progressively to reach a remarkable EUR 165 per 100 kilo in late 
summer 2006.  
46. Due to lack of availability, sheep meat prices stayed relatively high in 2006, 
reaching extraordinarily high levels dur ing the summer period. For heavy lamb, 
prices fluctuated above the levels of 2005, between EUR 404 and EUR 467 per kilo, 
following the seasonal pattern. Fo r light lamb, prices were in  general also higher than 
in 2005, varying between EUR 575 and EUR 688 per kilo. 
EN 16   EN 47. Prices for milk products , which were relatively str ong in 2005, remained firm in 
2006. As in the previous year, the introduction of the second step in the support price 
cuts agreed under the 2003 CAP reform had no immediate effect on prices, except for 
butter, where prices were already below the intervention buying-in level before the 
intervention price cut. To wards the end of 2006, domestic prices for butter and 
skimmed milk powder increased sharply to well above the bu ying-in price. At the end 
of the year, skimmed milk  prices were 30% and but ter prices 10% above the 
intervention price level. A similar trend was observed for whole milk powder prices. 
Meanwhile, cheese prices remained relativ ely high throughout the whole year. This 
favourable price environment allowed substantial sales out of butter intervention. 
Consequently, aid levels were reduced fo r most refunds and internal disposal 
measures. Only the refund for butter was increased. All aids for skimmed milk 
powder were fixed at zero.  
1.4. Input prices 
48. In 2006 the purchase price index for standa rd consumption goods and services in 
agriculture rose in nominal terms in most EU Member States compared with 2005. Prices were particularly higher for energy a nd fertilisers. Total input prices increased 
most in Latvia (8.8%), Portugal (6.6%), the Netherlands (5.9%), Hungary (5.4%) and 
Slovakia (5.2%). In other countries, they ro se more slowly: 4.5% in Finland, 4.2% in 
Ireland, 3.8% in Greece and in the Unite d Kingdom, 3.7% in Slovenia, 3.4% in 
France, 3.3% in Spain, 2.5% in both Sweden and the Czech Republic, 2.3% in Luxembourg and Austria, 2.2% in Belgium and 0.8% in Denmark. Only Cyprus and 
Malta registered a slight fall in nominal  input prices by 0.5% and 0.7%, respectively. 
1.5. Farm income 
49. The first estimates for farm income in 2006, provided by Eurostat on the basis of 
information sent by the Member States in  December 2006, show an average increase 
of +
 2.6% in income from agricultural activitie s (measured, in real terms, as the net 
value added at factor cost per annual work unit) compar ed to 2005 for the European 
Union as a whole. Incomes were up in 15 Me mber States, with th e strongest increases 
observed in the Netherlands  (+14.6%), France (+8.6%), Au stria (+4.1%), the Czech 
Republic (+6.4%), Latvia (+3.3%), and Po land (+1.5%). Income was down in ten 
Member States. It is estimated to have fallen in Lithuania (– 2.0%), Ireland (–  10.2%), 
Finland (– 6.2%), Malta (– 5.5%), Estonia (– 4.4%), Italy (– 4.2%), Slovenia (– 2.7%), 
Hungary (– 0.6%), Luxembourg (– 2.9%) and Slovakia (– 0.8%). 
50. The main factors behind these changes were: a sharp decrease in agricultural output 
quantities as compared to 2005, notably for cereals, industrial crops, potato, olive oil 
and wine, resulting in an overall drop in  the total volume of crop production by  
– 3.9%, whereas crop prices fell by – 1.7% in real terms. In  addition, animal output 
decreased slightly (– 0.7%), while animal prices were down (– 1.7%) in real terms. 
Crop and animal production stabilised in nom inal terms thanks to strong nominal 
prices. However, the continued introduction of the CAP in the new Member States 
led to a further rise in th e subsidies granted to the fa rm sector, to EUR 5.4 billion 
(including national top-ups), up from EUR 1.2 billion in 2003, EUR 3.8 billion in 
2004 and EUR 4.7 billion in 2005. The strong rise in oil prices drove up prices for energy, lubricants, fertilisers, feed and se rvices for agriculture. Total input costs 
increased on average in real terms (+
 1.7%), mainly due to a significant surge in 
EN 17   EN energy, lubricant and fertiliser prices, despite falling prices for financial 
intermediation services and a furt her reduction in quantities used. 
51. Lastly, the structural declin e in the agricultural labour force, the final fundamental 
factor affecting income movements, is estimated at – 2.2% in 2006 compared to 2005 
for the whole EU. This moderate reduction constitutes a marked slowdown compared to the early 2000s. The largest reduction in  agricultural labour was recorded in 
Lithuania (–
 7.9%), Luxembourg (– 6.6%), the Czech Republic (– 5.7%), and Hungary 
(– 4.8%). The agricultural labour fo rce increased only in Italy (+ 1.1%) and remained 
unchanged in Malta and Ireland. 
EN 18   EN Changes in nominal farm- gate prices in 2006 and 2005 (%) 
Crop products Livestock products Total 
Member States 2006/05 (p) 2005/04 2006/05 (p) 2005/04 2006/05 (p) 2005/04 
EU-25 0.5 9.9 0.6 –1.2 0.5 4.8 
Belgique/België 8.0 1.5 6.1 0.9 6.9 1.1 
Česká Republika 4.3 –20.7 –1.6 1.9 1.4 –6.8 
Danmark 1.6 –5.2 3.7 0.2 3.0 –1.4 
Deutschland 8.0 –4.2 2.2 1.3 4.9 –0.9 
Eesti 9.9 –3.0 0.7 3.8 4.0 2.7 
Elláda –8.5 2.4 –3.4 5.2 –7.1 3.1 
España –13.5 4.3 3.7 1.5 –7.5 3.2 
France  –1.7 –8.5 –4.3 0.3 –2.8 –4.6 
Ireland  8.7 7.3 3.1 –0.7 4.5 0.5 
Italia –0.4 –4.6 3.7 –2.4 0.9 –3.8 
Kypros/K ıbrıs 1.8 0.2 11.4 1.5 5.8 0.7 
Latvija 21.0 8.6 10.4 15.7 15.5 13.1 
Lietuva 18.0 12.8 6.7 13.5 12.0 13.1 
Luxembourg  10.1 –3.8 0.1 –0.1 3.3 –0.9 
Magyarország 11.0 –0.6 4.5 1.8 8.4 0.7 
Malta –4.0 –0.4 –1.1 –2.9 –2.3 –1.8 
Nederland  10.6 0.7 2.9 2.5 7.1 1.4 
Österreich 7.5 –2.4 4.1 3.1 5.7 1.1 
Polska 8.9 –2.7 –1.9 –1.0 9.4 –1.9 
Portugal 0.6 10.6 –3.8 –1.3 –1.3 5.1 
Slovenija 8.6 1.3 2.5 1.3 5.4 1.3 
Slovensko 0.7 –10.8 –1.9 1.4 –0.6 –2.4 
Suomi/Finland –14.2 –7.5 –5.6 –0.6 –9.4 –3.0 
Sverige 8.3 –4.7 3.5 0.6 5.4 –1.4 
United Kingdom  7.0 –5.7 –2.3 –1.4 1.2 –3.2 
(p) provisional — Source: Eurostat  
EN 19   EN Changes in nominal purchase prices for agricultural inputs in 2006 and 2005 (%) 
Intermediate 
consumption Investment Total 
Member States 2006/05 (p) 2005/04 2006/05 (p) 2005/04 2006/05 (p) 2005/04 
EU-25 : –2.2 : 2.3 : –1.6 
Belgique/België –0.1 5.3 2.9 10.0 2.2 3.7 
Česká Republika 2.7 –0.1 1.3 3.2 2.5 0.4 
Danmark 0.5 1.1 2.2 4.0 0.8 1.7 
Deutschland : –0.1 : 1.6 : 0.4 
Eesti 3.3 5.1 : : : : 
Elláda 3.9 5.6 3.6 3.8 3.8 5.1 
España 3.1 1.5 3.6 4.7 3.3 1.9 
France  3.4 1.5 3.4 3.0 3.4 1.8 
Ireland  4.5 4.3 2.5 2.7 4.2 4.0 
Italia : –2.2 : 3.6 : 0.1 
Kypros/K ıbrıs –0.4 8.3 –1.2 3.6 –0.5 7.9 
Latvija 9.5 17.1 5.2 23.2 8.8 18.0 
Lietuva 5.9 8.7 : : : : 
Luxembourg  2.8 3.7 1.5 0.6 2.3 2.5 
Magyarország 5.3 –1.2 6.3 4.5 5.4 –0.4 
Malta –0.7 2.8 1.3 –3.6 –0.7 2.7 
Nederland  6.7 0.5 2.8 2.3 5.9 1.0 
Österreich 2.0 –0.2 2.7 3.8 2.3 1.3 
Polska : 2.4 : –5.0 : 2.3 
Portugal  7.4 –4.5 1.2 1.9 6.6 –3.6 
Slovenija 4.9 0.0 1.2 4.3 3.7 1.3 
Slovensko 6.3 0.3 1.0 2.9 5.2 0.9 
Suomi/Finland 4.9 2.9 3.8 4.5 4.5 3.5 
Sverige 2.3 1.0 3.1 3.9 2.5 1.6 
United Kingdom  4.0 1.8 2.4 4.1 3.8 2.0 
(p) provisional — Source: Eurostat  
EN 20   EN Nominal output price indices for ag ricultural products over the 2002–2006  (p) period 
(2000 = 100) 
Member States 2002 2003 2004 2005 2006 (p) 
EU-25 101.8 105.2 105.1 103.9 104.5 
Belgique/België 94.7 97.7 99.7 100.8 107.7 
Česká Republika 100.1 96.4 102.9 95.9 97.3 
Danmark 96.9 92.5 94.9 93.6 96.6 
Deutschland 100.0 101.3 99.7 98.8 103.7 
Eesti : : 127.4 130.8 134.8 
Elláda 113.6 123.6 121.2 125.0 117.9 
España 100.3 105.8 106.8 110.2 102.7 
France  99.9 103.6 101.9 97.2 94.4 
Ireland  100.0 99.6 101.8 102.3 106.8 
Italia 106.4 112.0 109.7 105.5 106.4 
Kypros/K ıbrıs : : 121.0 121.9 127.7 
Latvija 106.7 104.7 124.1 140.3 155.8 
Lietuva 114.2 101.9 102.9 116.4 128.4 
Luxembourg 99.5 100.5 103.6 102.7 106.0 
Magyarország 104.3 110.5 104.5 105.2 113.6 
Malta 110.3 106.1 98.8 97.0 94.7 
Nederland  103.7 104.9 99.6 101.0 108.1 
Österreich 101.7 102.1 101.5 102.6 108.3 
Polska 94.8 96.6 105.7 103.7 113.1 
Portugal  101.8 105.2 97.5 102.5 101.2 
Slovenija 109.9 113.5 112.2 113.7 119.1 
Slovensko 106.8 101.5 103.8 101.3 100.7 
Suomi/Finland 103.7 99.0 102.0 98.9 89.5 
Sverige 102.1 100.6 99.2 97.8 103.2 
United Kingdom  103.3 109.9 113.2 109.6 111.8 
(p) provisional — Source: Eurostat  
EN 21   EN Indices of nominal purchase prices for goods and services consumed  
in agriculture over the 2002–2006 (p) period (2000 = 100) 
Member States 2002 2003 2004 2005 2006 (p) 
EU-25 105.8 107.8 113.0 112.8 116.6 
Belgique/België 102.8 102.7 102.6 108.0 109.4 
Česká Republika 103.4 101.3 108.8 108.7  
Danmark 107.7 105.5 108.8 110.0 110.8 
Deutschland 104.1 104.2 108.6 108.5 113.5 
Eesti   114.8 120.6 123.2 
Elláda 103.7 108.1 117.8 124.4 129.3 
España 102.9 104.1 108.3 109.9 112.8 
France  103.2 104.2 107.9 109.5 112.7 
Ireland  106.1 108.8 113.1 118.0 121.7 
Italia 105.5 107.4 112.6 110.1 112.4 
Kypros/K ıbrıs   144.7 156.7 157.7 
Latvija 102.0 106.5 115.2 134.9 147.6 
Lietuva 100.8 96.0 92.9 101.0 104.7 
Luxembourg  104.5 105.6 105.6 109.5 111.6 
Magyarország 113.1 119.8 131.0 129.4 134.7 
Malta 101.8 101.5 108.0 111.0 108.3 
Nederland  107.2 109.0 111.1 111.5 115.9 
Österreich 100.5 102.8 106.8 106.6 110.0 
Polska 109.5 113.0 121.0 123.9 130.1 
Portugal  103.3 107.6 113.0 107.9 110.2 
Slovenija 116.1 121.5 131.8 131.8 134.4 
Slovensko   114.7 115.1 121.0 
Suomi/Finland 101.5 102.5 105.1 108.2 112.6 
Sverige 107.2 109.3 113.5 114.6 116.4 
United Kingdom  103.7 106.5 114.0 116.0 122.0 
(p) provisional — Source: Eurostat  
 
EN 22   EN Development of agricultural in come in the EU-25 over the 2000–2006 (p) period — annual change (%)  
and cumulative growth (2000=100) 
5,2%
-7,2%2,6%
-3,4%3,3%
2,5%5,5%
-8%-6%-4%-2%0%2%4%6%8%
1999 2000 2001 2002 2003 2004 2005 20069095100105110115
annual growth cummulative Annual growth Cumulative growth
 
(p) provisional — Source: Eurostat 
 
EN 23   EN Development of agricultural income in the EU-25 Member States in 2006 (p) (% change versus 2005), part 1 
6,4%
5,1%
1,7%
0,3%
-10,2%2,0%2,6%
-4,2% -4,4%2,6%8,6%
3.3%5,8%
-15%-10%-5%0%5%10%
BE CZ DK DE EE EL ES FR IE IT CY LV EU-25
 
(p) provisional — Source: Eurostat  
 
EN 24   EN Development of agricultural income in the EU-25 Member States in 2006 (p) (% change versus 2005), part 2 
-2,0%
-2,9%-0,6%
-5,5%14,3%
4,1%
1,5%0,8%
-3,8% -3,6%
-9,2%-0,1%
-2,8%2,6%
-15%-10%-5%0%5%10%15%20%
LT LU HU MT NL AT PL PT SI SK FI SE UK EU-25
 
(p) provisional — Source: Eurostat  
 
EN 25   EN Development of agricultural inco me in the EU Member States  
over the 2001–2006 (p) period (average 2000 = 100) 
Member States 2001 2002 2003 2004 2005  2006 (p) 
EU-25 105.2 101.6 104.1 109.8 101.8 104.5 
Belgique/België 96.7 86.6 89.5 89.8 88.6 90.9 
Česká Republika 127.2 99.6 87.3 138.8 143.3 152.5 
Danmark 115.3 81.6 79.6 91.0 95.0 100.5 
Deutschland 127.0 108.9 83.0 125.2 113.8 119.7 
Eesti 116.7 109.2 154.8 226.5 237.1 226.7 
Elláda 103.8 100.6 93.5 85.3 81.7 83.1 
España 108.0 104.8 118.3 110.6 99.4 99.6 
France  100.9 97.7 95.9 93.5 87.4 94.9 
Ireland  98.6 93.7 92.9 90.4 104.1 93.4 
Italia 98.0 96.6 96.7 98.0 94.0 89.9 
Kypros/K ıbrıs 112.1 112.3 107.5 96.9 94.9 96.8 
Latvija 120.5 116.0 126.2 206.7 212.3 222.6 
Lietuva 92.6 86.0 96.6 150.4 191.4 203.8 
Luxembourg  100.8 101.9 93.8 91.0 86.3 89.7 
Magyarország 107.9 91.4 93.4 148.6 153.9 160.8 
Malta 113.5 113.8 109.2 110.7 109.1 103.3 
Nederland  93.4 79.6 85.5 80.1 84.4 99.0 
Österreich 113.9 107.2 107.2 107.5 107.2 114.2 
Polska 115.0 103.9 102.9 199.6 163.4 170.0 
Portugal  106.4 101.4 123.0 142.5 128.8 130.4 
Slovenija 86.3 117.6 88.9 141.3 143.9 140.0 
Slovensko 113.6 106.7 100.3 129.7 120.9 119.9 
Suomi/Finland 98.6 97.5 96.9 95.3 108.5 101.7 
Sverige 107.8 119.2 118.0 106.4 99.1 100.3 
United Kingdom  107.0 118.1 137.6 128.1 123.5 123.8 
(p) provisional, (e) estimate — Source: Eurostat  
 
EN 26   EN 1.6. Farm accountancy data network (FADN) 
52. The FADN is used to calculate the output, costs and incomes of commercial farms in 
the EU from observed data collected in a survey of harmonised farm accounts. The 
survey provides valuable information on how farm incomes vary according to type of 
farming and location, which is not apparent from the global averages for the agricultural sector as a whole. This sec tion presents some information by type of 
farming and by country.  
53. When looking at following tables, it is impor tant to take into account that FADN uses 
a threshold and collects information only fo r commercial farms. This means that it 
covers only farms that exceed a minimum economic size, measured in European Size Units (ESU), which differs from country to country, ranging from 1 ESU to16 ESU 
for the years 2004 and 2005. 
54. Table 1 shows the wide range of results among Member States for each type of 
farming, as measured by the Farm Net Value Added (FNVA).  
55. The large differences in average income am ong Member States are inherent in the 
structure of their agriculture. The Member States with the highest average incomes are in general those with a significant number of large- sized farms specialising in 
arable crops, dairy produce or the less regu lated sectors of production (pigs, poultry, 
horticulture, etc.). Those Member States with a large number of small farms have 
average incomes usually below the EU average. 
56. Table 2 shows the contribu tion of subsidies and taxes to FNVA. In 2004, the 
proportion of subsidies net of taxes in FNVA for the EUR-25 was slightly above 
36%. However, the differences among Memb er States and among types of farming 
were considerable. 
57. In 2004, Finland, Slovenia and Sweden had an average FNVA lower than subsidies 
net of taxes. This means that revenues from the market were not enough to cover production costs. On the other hand, the shar e of subsidies in FNVA was the lowest 
in the Netherlands, Italy, Spain and Belgium.  
58. Regarding types of farming, the differences are also considerable. Net subsidies for 
drystock, mixed and arable farm types were  the highest as a proportion of FNVA. The 
horticulture and vineyard types we re by far the least subsidised.  
59. In 2005, Finland had an average FNVA lower than  subsidies net of taxes. In contrast, 
the Netherlands was the country with th e lowest share of subsidies in FNVA, 
followed by Italy, Belgium and Spain.  
60. FADN data can also be used to analyse th e degree of concentrati on in the agricultural 
sector. This is shown in Tables 3 and 4 with data for 2005. In order to avoid the 
problems caused by the presence of some negative values for FNVA, the variable used is total receipts from fa rming, i.e. receipts from market sales and from subsidies. 
61. Table 3 shows the top 20% of farms with the highest total receipts per type of 
farming, per country and for the EU as a whole. 
 
EN 27   EN 62. For the EU and for all types of farming, th e 20% of farms with the highest receipts 
account for 72% of total receipts. However, th e degree of concentr ation varies across 
countries. Luxembourg, Austria, Belgium, Fr ance and Finland have the lowest degree 
of concentration with 41, 41, 48, 48 and 49 percent, respectively. Furthermore, the 
average receipts per farm are usually higher for these countries. In contrast, the Czech 
Republic, Hungary, Cyprus and Estonia have the highest degree of concentration with 
87, 84, 80 and 79 percent, respectively. 
63. For individual types of farming, the degree of  concentration at EU level is highest for 
mixed livestock (mainly granivores) with  80% —, followed closely by various crops 
and livestock and combined and specialist horticulture. The lowest concentration of 54% can be found in specialist olives, spec ialist cattle reari ng and fattening, and 
specialist dairy farming. 
64. However, the types of farming with the highest degree of concentration vary 
considerably from country to country. Conversely, specialist cattle rearing and 
fattening is one of the least c oncentrated in practically all countries except for Italy.  
65. Table 4 shows the degree of concentration fo r the 50% of farms with the highest total 
receipts. 
66. At EU level, for all types of farming, th is figure is 92%, ra nging at country level 
between 73% in Luxembourg and 96% in the Czech Republic. Where individual 
types of farming are concerned, the combina tion of field crops and grazing livestock 
is the most concentrated with 94%, follo wed closely by various  crop and livestock 
combinations and specialist granivores. On the other hand, the lowest concentration, 
80%, is found in specialist olives, followed by specialist cattle rearing and fattening, 
specialist dairy farming, sheep/goa ts and other grazing livestock. 
 
EN 28   EN Table 1 — FARM NET VALUE ADDED (in EUR )
 All farms Arable Horticulture Vineyards Other 
permanent crops Dairy Drystock Pigs / poultry Mixed 
 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 
B* 68 787 71 311 63 946 63 639 88 864 92 903 . . 127 136 151 434 53 809 60 335 58 258 53 678 84 362 91 136 64 967 70 276 
CYP 6 566 5 629 8 878 5 950 . . 4 541 2 846 740 1 431 . . 17 100 18 931 83 966 . 15 896 . 
CZ 90 648 85 319 85 267 73 276 56 619 46 629 19 773 28 083 14 413 27 218 73 490 75 762 36 073 43 168 113 787 102 995 161 049 16 0 986 
DK 66 481 74 985 36 084 50 207 301 218 270 321 . . 83 147 98 521 107 745 113 894 . . 164 458 181 056 83 207 77 741 
D 63 290 59 046 73 755 59 682 93 756 99 871 58 113 49 889 56 108 64 057 49 723 50 718 43 039 44 614 79 962 77 877 72 738 67 746  
EL 11 883 13 558 10 897 11 493 30 385 30 071 13 997 15 745 9 097 11 756 . . 20 345 21 623  . .  15 979 17 610 
E 29 297 24 652 28 914 18 899 73 815 46 406 22 892 15 826 17 846 17 508 41 391 50 452 37 918 37 012 80 583 73 148 49 187 40 918  
EE 22 217 25 992 11 327 15 116 8 802 10 907 . . . . 54 617 54 238 . 20 856     18 553 22 575 
F 50 835 50 756 47 788 44 622 80 667 90 064 94 407 85 351 76 518 69 712 37 460 41 256 29 189 32 264 45 542 64 349 50 542 51 709  
HU 18 913 18 415 18 509 15 513 5 335 13 241 20 742 19 223 4 610 5 338 36 910 53 683 9 462 16 770 50 170 43 276 23 802 28 352 
IRL 20 488 21 273 38 486 35 012 . . . . . . 47 110 48 372 12 551 13 426 . . 35 730 39 589 
I 29 743 29 210 24 686 22 141 93 409 90 724 24 500 26 254 19 115 18 399 66 634 75 621 32 717 32 220 229 450 235 203 32 271 31 9 84 
LT 11 131 10 623 13 661 11 637 10 024 16 902 . . . 4 520 10 693 11 244 7 762 . . . 8 941 9 270 
L 53 967 52 902 12 425 . . . 77 419 64 261 . . 56 646 60 383 50 748 50 676 . . 41 632 36 709 
LV 11 792 12 755 12 419 11 326 .  . . . . 15 015 11 417 13 085 20 355 17 737 95 256 227 381 8 089 8 492 
MT** . 22 481 . 12 468 . 25 034  . .  . 6 123 . 38 335 .  . . 45 622 . . 
NL 90 825 101 452 58 484 85 030 203 948 219 699 . . 180 288 137 454 79 771 91 720 32 561 21 297 77 586 105 003 39 189 61 214 
A 31 398 33 013 37 837 35 391 .   35 113 30 901 49 028 34 374 26 733 29 829 29 493 28 947 32 804 48 082 31 557 33 554 
PL 7 558 8 976 8 830 9 169 16 460 18 517 . . 8 876 11 212 7 036 9 993 8 650 11 877 14 029 20 655 4 878 5 429 
P* 8 805 8 585 6 217 5 463 9 299 10 077 10 274 8 239 5 308 8 271 20 668 20 703 11 112 9 062 32 900 71 278 7 695 5 935 
FIN 29 973 29 550 16 535 14 934 74 797 76 782 . . . . 40 792 39 866 27 552 31 449 53 178 68 455 27 937 28 873 
S 29 744 34 345 22 586 21 452 . 116 854 . . . . 42 027 51 512 25 016 30 622 35 379 80 705 24 386 32 927 
SK 67 390 100 158 52 619 63 510 . . . . . . 35 205 115 405 32 826 86 200 . . 181 954 238 177 
SI* 4 895 7 957 2 031 3 778 . . 5 553 5 602 14 350 4 558 6 204 17 181 5 961 6 323 . . 3 603 5 123 
UK* 69 137 79 250 71 084 85 159 175 226 244 728 . . 205 149 185 867 81 786 90 785 36 070 37 874 151 520 179 668 64 806 70 198 
EUR-25 27 802 27 787 25 583 23 441 69 364 66 809 38 519 34 957 17 164 17 490 42 688 46 799 24 222 25 591 52 515 62 020 21 178 2 1 198 
Source: FADN results 2004, 2005 (weighted: population FSS 2005, classification SGM 2002 ) *2005 data for B, UK, P, PL and SI are provisional. **2004 data for MT are not available 
 
EN 29   EN Table 2 —CURRENT SUBSIDIES NET OF TAXES AS % OF FARM NET VALUE ADDED  
 All farms Arable Horticulture Vineyards Other 
permanent crops Dairy Drystock Pigs / poultry Mixed 
 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 
B* 22.6 23.7 23.9 26.2 0.9 2.1 . . 3.3 3.1 25.4 27.3 52.2 54. 2 5.2 5.4 28.6 29.1 
CYP 46.5 55.3 59.8 72.5 . . 52.4 117.4 186.2 101.6 . . 45.0 49.9 0.5 . 31.5 . 
CZ 37.1 51.7 32.3 52.1 7.9 4. 7 2.2 9.3 4.8 12.2 51.8 60.4 118.0 125.7 6.6 3.9 40.4 53.1 
DK 36.2 31.6 55.3 37.9 2.1 3.3 . . 0.7 3.6 33.8 33.2 . . 15.0 13.4 37.3 39.2 
D 46.6 47.3 55.7 59.4 2.9 3.4 14.7 16.2 10.2 7.1 44.1 46.8 87.3 81.6 26.0 23.6 53.0 54.2 
EL 32.1 30.8 37.4 37.5 2.8 4.2 34.5 32.4 27.7 25.7 . . 37.5 36.2 . . 35.4 34.8 
E 21.6 25.3 36.1 50.0 1.6 1.7 6.4 6.4 17.7 18.3 13.1 17.9 36.4 38.6 3.4 7.0 32.3 38.2 
EE 53.5 51.5 80.3 60.0 14.5 19.4 . . . . 39.6 44.4   90.3 . . 54.2 56.8 
F 48.7 50.1 73.7 77.1 2.5 2.6 1.4 1.2 9.5 12.7 49.4 53.4 107.6 101.2 24.8 15.1 67.3 68.9 
HU 47.4 52.2 52.9 77.0 11.3 7.6 3.7 –17.5 49.9 42.5 51.8 37.7 112.4 85.3 26.4 19.2 49.0 51.3 
IRL 76.2 79.8 59.6 59.7 . . . . . . 34.0 41.2 118.1 116.8 . . 66.8 71.2 
I 18.0 19.6 27.6 30.9 1.1 1.1 8.4 8.8 13.4 12.5 14.3 22.5 34.0 35.9 7.9 9.8 29.8 31.0 
LT 40.7 48.6 45.9 58.2 5.3 4.8 . . . 36.8 38.0 38.6 47.0 . . . 44.7 49.6 
L 77.1 80.5 189.2 . . . 16.6 18.0 .   78.4 78.0 106.3 105.3 . . 103.2 113.5 
LV 62.9 62.2 68.3 83.7 . . . . . 28.5 69.8 60.5 47.3 94.6 15.8 6.3 73.8 71.5 
MT** . 39.6 . 31.6 . 16.3 . . . 29.3 . 61.4 . . . 70.5 . . 
NL 6.8 10.2 17.3 14.3 –1.5 –1.3 . . 0.1 13.9 12.1 19.0 33.5 52. 7 –0.3 –1.2 12.1 13.3 
A 67.7 69.1 75.2 84.6 . .  36.6 59.5 27.4 33.0 73.1 70.5 85.3 85. 7 42.4 34.8 74.3 70.9 
PL 25.2 33.7 31.9 45.6 –4.3 –2.6 . . 6.4 9.1 28.9 31.7 26.3 33. 0 17.0 17.7 33.2 49.1 
P* 48.5 50.8 75.3 72.7 –0.3 0. 0 10.3 16.8 31.7 40.3 32.0 35.5 92.8 102.0 –0.9 –0.6 79.8 110.7 
FIN 139.7 150.8 201.4 229.4 45.2 44.8 . . . . 112.0 128.7 253.2 235.4 123.6 100.8 187.2 186.2 
S 100.6 91.7 113.8 107.2 . 4.8 . . . . 74.6 81.1 228.7 177.9 49.1 22.6 142.0 105.7 
SK 64.9 82.2 51.1 75.9 . . . . . . 180.2 121.7 175.8 151.5 . . 49.3 63.4 
SI* 100.7 63.1 161.8 95.9 . . 22.9 –3.6 11. 0 48.6 72.5 29.6 131.5 125.6 . . 160.4 114.3 
UK* 59.1 56.4 76.2 65.8 0.8 1.1 . . 1.2 1.7 28.5 36.6 126.5 127. 2 3.8 2.9 78.5 78.5 
EUR-25 36.3 38.5 49.9 54.3 1.5 1.8 6.2 6.4 15.8 17.1 37.6 41. 6 72.6 73.1 13.1 12.4 50.3 53.8 
 
EN 30   EN Source: FADN results 2004, 2005 (weighted: population FSS 2005, classification SGM 2002)*2005 data for B, UK, P, PL and SI are provisional.**2004 data for MT are not available 
TABLE 3  — SHARE OF TOTAL RECEIPTS ( OUTPUT + SUBSIDIES) IN 2005  
THE 20% OF FARMS WITH THE HIGHEST RECEIPTS  
  B CYP CZ DK D EL E EE F HU IRL I LT L LV MT NL A PL P FIN S SK SI UK EU-25 
Sp. cereals, oilseed and protein crops     74 72 67 49 57 68 44 77   70 67   73    43 69 46 44 57 79   53 69 
General field cropping 51 61 87 65 55 51 57 52 45 82   69 75   77   52 41 58 74 51 56 79   59 72 
Specialist horticulture 57   69 74 51 54 58   58 55  75 71    72 57   63 51 54      82 76 
Specialist vineyards       46 49 58  58    70        47  52        72 
Specialist fruit and citrus fruit 49 51     47 44 56  52 80  58 80         47 48 60          65 
Specialist olives       44 58     56                 54 
Various permanent crops combined         61 45 58   60 74  70              48         72 73 
Specialist dairying 37   77 40 50   47 80 38 89 40 62 52 36 67   40 37 45 51 41 49   62 45 54 
Sp. cattle rearing and fattening combined 42   63   46   51   39   48 70          37   58   41   41 48 54 
Cattle dairying, rearing and fattening  41      53       37     64           38 52             64 
Sheep, goats and other grazing livestock         42 43 49   45   49 51         62     54     73   44 55 
Specialist granivores 43     43 42   58   49 87  76       56 46 43 73           63 70 
Mixed cropping   69 62 63 71 49 64   51 80  66 46   63 46   37 49 53       56   73 
Mixed livestock, mainly grazing 
livestock         51 44     41 86   67 37   51       50 57          73 
Mixed livestock, mainly granivores        40   56  39     78             49            80 
Field crops/grazing livestock combined 41   84 72 72 43 45 78 42 90 47 65 64 55 66     41 56 65 44 53 61   53 73 
Various crops and livestock combined     88 47 45 49 50   45 84  60 74   65     40 60 59 43 54   53   77 
All types of farming 48 80 87 64 56 51 64 79 48 84 57 73 59 41 74 73 57 41 61 65 49 56 77 58 59 72 
1. Where no figures are indicated the sample size is too small for the relevant category 2. Data for B, UK, P, PL and SI are provisional  
 
EN 31   EN TABLE 4  — SHARE OF TOTAL RECEIPTS (OUTPUT + SUBSIDIES) IN 2005  
THE 50% OF FARMS WITH THE HIGHEST RECEIPTS   
 B CYP CZ DK D EL E EE F HU IRL I LT L LV MT NL A PL P FIN S SK SI UK EU-25 
Sp. cereals, oilseed and protein crops   91 91 89 78 84 88 78 91  88 87  90   75 87 77 75 83 93  82 91 
General field cropping 82 90 96 91 81 80 84 80 76 95  88 90  91  82 74 83 91 82 84 93  86 91 
Specialist horticulture 85  88 94 81 80 83  84 83  92 76   89 87  87 82 81 93   96 92 
Specialist vineyards   86  76 78 84  86 96  88  78    75  80    85  91 
Specialist fruit and citrus fruit 80 81 83 85 81 76 80  81 96  84     83 80 79 86    91 86 86 
Specialist olives  76    74 84     80        88      80 
Various permanent crops combined  78  92 86 76 81  86 91  88     86  91 78     94 89 
Specialist dairying 70  92 74 79  78 93 71 98 73 86 74 68 86 76 72 70 76 81 73 78 90 85 77 84 
Sp. cattle rearing and fattening combined 73  85  75 86 81  72  78 89  70   79 70  84 73 75  73 77 84 
Cattle dairying, rearing and fattening  72    79  76  71  83 87  67    69 81 92      88 
Sheep, goats and other grazing livestock  87   72 76 81  75 83 79 81     89  80 82   93 77 74 84 
Specialist granivores 78  97 76 74  86  80 97  93   99 82 79 73 91 94 76 81   87 93 
Mixed cropping  87 98 89 87 79 89  81 93  87 70  86 76  72 77 80   92 80 95 90 
Mixed livestock, main ly grazing livestoc k  82  79 75 79  73   87 65  77   68 77 83    81  89 
Mixed livestock, mainly granivores 73    73  86  72   92     89 76 77       92 
Field crops/grazing livestock combined 74  98 89 88 76 80 91 75 96 79 87 82 85 86   73 80 83 77 80 92 85 81 94 
Various crops and livestock combined 83  96 80 79 78 82  77 95  85 86  83  86 73 82 83 74 87  79  93 
All types of farming 78 93 96 92 83 80 87 92 79 94 84 90 80 75 89 90 84 73 84 87 79 84 95 84 84 92 
1. Where no figures are indicated the sample size is too small for the relevant category 2. Data for B, UK, P, PL and SI are provisional 
 
EN 32   EN 2. POLICY DEVELOPMENTS AND LEGISLATIVE INITIATIVES IN 2006 
2.1. CAP Reform 
67. The year 2006 saw a number of key initia tives in both pillars of the CAP. Although 
the Doha Round of world trade talks encount ered major obstacles in July, a number 
of the Commission’s 5-year strategic objectives for the CAP were achieved. 
CAP Reform  
68. As regards CAP reform, the Commission broug ht two more sectors into the reform 
process. In June 2006, the Commission called for a compre hensive reform of the wine 
sector with the aim of increasing the co mpetitiveness of EU wine producers and 
winning back market share, while preservi ng the best traditions of EU wine 
production and reinforcing the social and environmental fabric of rural areas. 
69. This was followed in September by a proposal  for reform of the banana sector, which 
was adopted by the Council in December. Th e aim of the reform was to bring the 
former aid scheme for banana producers into line with reforms in the other 
agricultural sectors, while ensuring a fair standard of  living for EU banana producers 
and taking account of the pa rticularities of the regions  where bananas are grown. 
70. The first step towards reform of the fruit and vegetables sector  began in May 2006, 
with the launching of a consultation doc ument on options for the reform. The 
Commission’s approach was to seek ways of aligning the instruments for the common 
market organisation in fruit and vegetables closer to the approach of the reformed 
CAP, strengthening the coherence between the structural measures in the sector and 
corresponding measures in rural developmen t policy; and re-orienting the sector’s 
marketing standards towards promotion of quality and sustainable development. 
Cereals intervention 
71. In December 2006, the Commission made a proposal to abolish the system of public 
intervention purchases for maize from th e 2007/08 marketing year. At the end of the 
2005/06 marketing season, EU maize intervention stocks had spiralled to 5.6 million tonnes, or 40 percent of total intervention stocks. The current system needed to be 
changed in order to prevent stocks, which are bought and stored at  public expense, 
rising even more in future (forecast to reach as much as 15.6 million tonnes by 2013). 
Ending intervention for maize was intended to allow the EU cereals market to find a new balance and ensure that intervention regain ed its original purpose as a safety net.  
Preparation for the ‘Health Check’ of the 2003 CAP Reform 
72. At the time of the adoption of the 2003 and 2004 CAP reform package, a series of 
review clauses, covering the period 2007 to 2009, were introduced in the final 
agreements, with the Council asking the Commission to report on both the decoupling instrument behind the new single payment sc heme and certain agricultural markets. 
The preparatory analytical work for carryi ng out these reviews, collectively termed 
the ‘Health Check’ of the 2003 CAP Reform, began in 2006. 
 
EN 33   EN Simplification 
73. In 2006, the Commission’s Directorate- General for Agriculture and Rural 
Development — DG AGRI — took forward its programme for simplification of the 
CAP with the presentation in  October of an Action Plan containing 24 proposals for 
legislative change, and the adoption in De cember of a proposal for a single common 
market organisation to regulate the market s for the different products covered by the 
hitherto 21 separate common market organi sations,. The aim of these initiatives was 
to cut the red tape associated with the cu rrent CAP and provide professionals working 
with the legislation a text that  was clearer and more accessible. 
2.2. Quality policy 
PDO-PGI regulation adopted on 20 March 2006 — TSG regulation adopted on 20 March 
2006  
74. On 20 March 2006, the Council adopted Counc il Regulation (EC) No 510/2006 on 
the protection of geographical indications and designations of origin for agricultural 
products and foodstuffs (OJ L93, 31.3.2006). Th e Regulation is designed to clarify 
and streamline the rules for the registrati on of protected geographical indications 
(PGIs) and protected designations of origin  (PDOs) and to ensure full compatibility 
with the findings of two WTO panels (complaints WT/DS174 and WT/DS290 lodged 
by the United States and Australia). 
75. In order to make the registration process mo re efficient, the new regulation simplifies 
procedures and clarifies th e role of the Member States and the Commission in 
approving applications. The centrepiece of th e regulation is the establishment of a 
well-defined ‘single document’ for appli cations, containing all the information 
needed for registration, public ity and inspection purposes. This document will also be 
published. The regulation also seeks to increa se the use of the official abbreviations 
(such as ‘PGI’) and the EU logos with a view to improving consumer recognition. 
76. Regulation (EC) No 510/2006 on protect ion of geographical indications and 
designations of origin will bring the scheme into conformity in the two areas criticised by the WTO: firstly, by formally  deleting the requirement for ‘reciprocity 
and equivalence’ from the regulations and, secondly, by allo wing third country 
operators to submit applica tions and objections directly rather than through their 
governments.  
77. Following the adoption of the regulation, the Commission ma de a declaration on the 
future policy review of the ge ographical indications policy. With this declaration, the 
Commission undertook to carry out a review of  the operation of the regulation and its 
future development. Some particular items for consideration are identified in the declaration: 1. Identification of PDO and PGI products as ingredients. 2. Use of 
alternative instruments such as trademar ks (e.g. collective or certification TM) to 
protect geographical indications. 3. Scope of  products covered by the regulation with 
particular attention to salt, mixed herb s, wicker products and condiments. 4. 
Identification of the origin of raw material s. 5. Criteria used to  assess the generic 
status of a name. 6. Design of the Co mmunity symbols identifying geographical 
indications and protected designations of origin.  
 
EN 34   EN 78. On 14 December, the Commission adopted Regulation (EC) No 1898/2006 laying 
down detailed rules of implementation of Council Regulation (EC) No 510/2006. 
Rules on the use of names and their linguistic versions ar e clarified. The geographical 
area is to be delimited without ambiguities. In order to guarantee origin, measures to 
ensure proof of origin should be included in the specifications. The Regulation also 
sets out criteria to justify packaging. Fina lly, it contains models for applications, 
objections, amendments and cancellations.  
79. On 20 March, the Council also adopted Council Regulation (EC) No 509/2006 on 
agricultural products and foodstuffs as ‘tra ditional specialities guaranteed’, replacing 
Regulation (EC) No 2082/92. Although the latte r was not the subject of a WTO panel 
ruling, the new Regulation includes similar ch anges regarding third countries as in the 
case of the PDO/PGI Regulation.  
80. At the time of the adoption of the Regul ation, the Commission ma de a declaration on 
a future policy review to address the scope of product designations, the use of 
geographical terms and the possibility of representative bodies. In addition, 
registration and objection procedur es were to be streamlined. 
81. During 2006, Commission tabled a proposal for a Regulation laying down detailed 
rules for the implementation of Regul ation (EC) No 509/2006. The proposal was 
discussed in the Standing Committee on Tr aditional Specialities Guaranteed on 
several occasions. 
New products names on the list 
82. As provided for in Regulations (EEC ) No 2081/92, (EC) No 510/2006 and (EC) 
No 509/2006, the Commission has added 7 names (listed in the Annex) to the list of 
protected designations of origin and prot ected geographical indications, which now 
currently comprises a total of  712 entries. One amendment to the specifications of a 
registered PGI name is also listed in the Annex. 
83. The Commission has rejected one applicati on for registration, deciding not to enter 
the name in the ‘Register of protected  designations of origin and protected 
geographical indications’, also listed in the Annex. 
84. The relative small number of names added to the list was because the period of 
6 months for objections was extended fo r 28 applications already published under 
Regulations (EEC) No 2081/92 and No  2082/92, having regard to Council 
Regulations (EC) No 510/2006 and No 509/2006 of 20 March 2006. 
International issues 
Panel result and implementation time 
85. The Commission presented a proposal to the Council in December 2005 for a new 
Council Regulation in order to  take into acco unt the findings of the WTO panel 
(WT/DS 174 and WT/DS 290) on Regul ation (EEC) No 2081/92. The Council 
adopted a new Council Regulation (EC) No 510/06 on 20 March 2006, therefore 
within the ‘reasonable period of time’ due to expire on 3 April 2006. This regulation 
takes into account the panel’s findings, in pa rticular by allowing dir ect applications or 
objections to the Commission by operators  in third countries and by repealing 
 
EN 35   EN provisions on the reciprocity of legislation, and at the same time simplifies and 
streamlines the general registration procedures. 
Codex Alimentarius 
86. The Commission took part in the meeting of  the Codex Committee on Milk and Milk 
Products in Queenstown, New Zealand, on 27 March to 1 April 2006 concerning a 
proposal to commence work on a Parmesan  cheese standard. In 2005, the Codex 
Alimentarius Commission (CAC) had deci ded that work on a new ‘Parmesan’ 
standard would not be star ted. The CAC’s conclusion s were addressed to the 
CCMMP. The EC thereupon agreed not to la unch work under the title ‘Parmesan’. 
The point was not discussed and no conclu sions were drawn. However, statements 
made by the US and EC delegations were noted. No further discussions in other Codex Committee meetings took place in 2006.  
EC/Switzerland  
87. During 2006, the working group on PDO/PGI i ssues did not meet. Several meetings 
on legal issues relating to the form of a fu ture agreement on reci procal protection of 
geographical indications were held dur ing 2006. At the sixth meeting of the 
EC/Switzerland Joint Committee on Agriculture on 8 December 2006, preparatory discussions on the protection of geographical indications were held. A draft mandate 
including negotiations on PG I was prepared by the Commission for the European 
neighbourhood countries to be transmitted for approval to the Council.  
Pilot project on Food Quality  Assurance and Certification Schemes managed within an 
Integrated Supply Chain — Phase 2 
88. Following the first phase of the pilot project, which focused mainly on national 
reviews of quality assurance and certification schemes in  7 European countries, the 
second phase concentrated on an in-depth analysis of selected quality assurance 
schemes by way of 9 case studies. This wor k, undertaken by JRC-IPTS (Seville), was 
concluded in December 2006. It aimed to asse ss the costs and bene fits of food quality 
assurance schemes to farmers, processors, retailers and consumers, with a special 
focus on small-scale farmers, and to analys e the contribution of these schemes to the 
development of rural areas. The final reports on the project found that, while data are scarce, the results showed that food quality assurance can add valu e at various stages 
in the integrated supply chain. However, existing schemes have a wide variety of 
objectives, rules and organisati onal structures, which made it difficult for the project 
to draw generally applicable conclusions. It was noted that some only cover very 
small niche markets, while others operate at the business-to-business level without 
any consumer interface. Mo st certified products command a price premium according 
to the project reports, but this is not always  sufficient to compensate for the additional 
costs of complying with the specifications.  
Database of Origin and Registration (DOOR)  
89. The IT project DOOR (Database of Origin and Registration) was launched in 2005 to 
support agricultural product quality policy by providing a modern information system 
to manage the entire registration proce ss for PDO/PGI and TSG. DOOR will allow 
on-line applications (from Member States and third countries), workflow 
management within DG AGRI, and dissemination of public data.  
 
EN 36   EN 90. In 2006 a study on the project’s feasibility was carried out and a system prototype 
was delivered. The project’s global imple mentation plan (GIP) was endorsed by the 
Regulatory Committee on designat ions of origin and geogra phical indications and the 
Regulatory Committee on certificat es of specific character. 
New names entered in the Registers of Designations of Origin and 
Geographical Indications and of Trad itional Specialities Guaranteed  
and amendments since the 2005 Annual Report  
Member 
State Product Type of product PDO/PGI/TSG
    
ES ‘Montes de Granada’ Oils and fats PDO 
ES ‘Acete de la Rioja’ Oils and fats PDO 
ES ‘Antequera’ Oils and fats PDO 
FR ‘Huile d’olive de Nice’ Oils and fats PDO 
ES ‘Pimiento Asado del Bierzo’ Fruits, vegetables and cereals PGI 
IT ‘Fico Bianco del Cilento’ Fruits, vegetables and cereals PDO 
IT ‘Melannurca Campana’ Fruits, vegetables and cereals PGI 
IT ‘Nocciola di Giffoni’* Fruits, vegetables and cereals PGI 
FR ‘Choucroute d’Alsace’ ** Vegetable preparations PGI 
* Amendments to the Register made in accordance with Article 9 of Regulation (EEC) No 2081/92. 
** Commission Decision to reject an application in accordance with Article 2(2)(b) of Regulation (EEC) 
No 2081/92. 
2.3. Organic farming 
New regulations 
91. In December the Council reached an agr eement on a ‘general approach’ on the 
proposal for a Council Regulation on organic production and labelling (COM(2005) 671 – 2005/278 (CNS)). The new Regulation is to repeal Council 
Regulation (EEC) No 2092/91 and w ill apply as of 1 January 2009.  
92. The new Regulation is a cornerstone of th e Community Action Plan for Organic Food 
and Farming (EAP) and represents a major st ep forward towards ensuring the further 
development of the organic sector by:  
– implementing the EAP for organic food and farming; 
– contributing to simplification and better regulation; 
– promoting the ‘common concept’ of organic production;  
– providing for a permanent import regime. 
93. The Council also adopted a tr ansitional regulation on th e import of organic products 
(Council Regulation (EC) No 1991/2006), ensu ring the continuity of organic trade 
with third countries. 
 
EN 37   EN The following application rules we re adopted by Commission Regulations : 
94. Regulation (EC) No 592/2006 amending A nnex II of Regulation (EEC) No 2092/91 
by deleting the expiry date of the author isation to use composted or fermented 
household waste in organic products. 
95. Regulation (EC) No 699/2006 amending Anne x I of Regulation (EEC) No 2092/91 as 
regards conditions of access fo r poultry to open-air runs. 
96. Regulation (EC) No 780/2006 amending Anne x VI of Regulatio n (EEC) No 2092/91 
by introducing a harmonised list of additives and processing aids that can be used in 
the processing of organic livestock products. 
97. Regulation (EC) No 956/2006 amending Re gulation (EEC) No 94/92 by entering 
India in the list of third countries offe ring equivalent guarantees on organic products. 
98. Regulation (EC) No 1851/2006 amending A nnex I to Council Regulation (EEC) 
No 2092/91 as regards uptake of conventiona l feed during periods of transhumance 
Further issues 
99. Work on the assessment of equivalence under Article 11(1) of  Regulation (EEC) 
No 2092/91 on organic farming continued fo r several third count ries. Progress was 
made on the technical assessment of Guatemala, Tunisia, Chile, Colombia and Turkey. New requests were received fr om Mexico, Nicaragua, Uruguay, Bolivia, 
Canada, Paraguay and El Salvador. 
100. The Commission contributed to the further development of the Codex Alimentarius 
guidelines on organic labelling 
2.4. Promotional measures 
101. Council Regulations (EC) No 2702/95
1 and (EC) No 2826/20002 provide for 
Community support for measures to provide  information on and promote agricultural 
products in third countries and on the internal market. Community promotion policy 
covers a number of products, stressing th eir general characteristics and common 
themes such as quality, safety, labelling a nd particular production methods as well as 
respect for animal welfare and the envir onment in their production. It aims to add 
value to national and private initiatives by supporting or encouraging the Member 
States and private companies in their own promotion measures.  
102. Programmes are proposed by professional orga nisations representa tive of the product 
sector concerned, and are pre-selected by the competent authorities of the Member 
States, who are responsible for the ma nagement and control of the approved 
programmes. The total annual budget for Community co-financing for approved programmes was EUR 42 million in 2006. 
103. In 2006, the Commission approved co-financi ng for 10 new programmes outside the 
EU. The main target countries include China, India, Russia and the USA. The 
                                                
 
1 OJ L 327, 21.12.1999, p. 7. 
2 OJ L 328, 23.12.2000, p. 2. 
 
EN 38   EN products promoted include quality wines, o live oil, cheeses, meat products and fruit 
and vegetables. Most programmes last for three years. Total EU co-financing for 
these programmes amounts to EUR 9.08 million. 
104. For the EU internal market, the Commission approved 32 new co-financing 
programmes with a total budget of EUR 30.4 million. Most programmes last for three 
years. The promoted products include fruit and vegetables, organi c products, products 
with a PDO or PGI designation, flowers and plants, milk products, olive oil and a newly eligible product, poultry meat. 
105. In 2006, the Commission continued with the implementation of action 1 of the 
European Action Plan on organic food a nd farming, aiming to launch a coordinated 
campaign to promote organic farming. The fi rst year of this contract was 2006-07. A 
contractor was selected and the terms of the first annual specific contract were agreed. 
The campaign aims to provide various material s free of charge to actors in the EU’s 
organic farming sector: a website , radio spots, TV spots, broc hures, etc. It is to last 
for three years. 
2.5. Simplification of agr icultural legislation 
106. Simplification continued to be an important  objective in 2006, as  ‘better regulation’ 
continues to increase in polit ical importance within the context of the Lisbon Agenda. 
The first ‘delivery year’, following the publication of the Communication
3 on 
simplification of the CAP, was particular ly successful. In 2006, DG AGRI developed 
different simplification activities: the Acti on Plan for the Simplification of the CAP 
(20 projects), the Conference ‘A Simple CA P for Europe — a challenge for all’, and 
other supporting initiative s such as the publication of the Fact Sheet on the 
simplification of the CAP and the Communication4 from the Commission formally 
recognising that some Community  legislation in the field of agriculture has become 
obsolete.  
107. Stakeholders from the private sector a nd national administrations were consulted 
within the Simplification Experts Group, chaired by DG AGRI and composed of 
Member State representatives, and th e CAP Advisory Group, composed of NGO 
representatives. In addition, DG AGRI launched a study to measure the 
administrative burden on farms resulting from the 2003 CAP reform. 
108. Last but not least, DG AGRI contributed so me important simplification proposals to 
the Commission’s Simplification Rolling Pr ogramme to implement the commitments 
made in the Commission’s Communications5 on simplification of the regulatory 
environment.  
109. As regards the ‘Single CMO’ outlin ed in a Commission Communication6, the 
Commission adopted a legislative propos al on 18 December 2006 providing for one 
common legislative framework for all 21 exis ting common market organisations. This 
proposal complements existing policies intende d to streamline and harmonise the vast 
existing legislation. 
                                                 
3 COM(2005) 509. 
4 OJ C 148, 24.6.2006, p. 29. 
5 COM(2005) 535 and COM(2006) 690.  
6 COM(2005) 509. 
 
EN 39   EN 2.6. State aids in the agricultural sector 
Policy developments and legi slative initiatives in 2006 
Overall workload 
110. The Commission received 319 notifications of draft state aid measures in the 
agricultural and agro-industria l sector. It also started the examination of 27 aid 
measures that had not been notified before  under Article 88(3) EC Treaty. No review 
of existing aid measures under Article 88(1) EC Treaty was commenced or 
concluded. Overall, the Commission rais ed no objections to 268 measures. Several 
measures were approved after the Member States concerned either amended them or undertook to amend them in order to bring them into line with Community state aid 
rules. The Commission started the procedure under Article 88(2) EC Treaty in respect 
of 3 measures that raised serious doubts as  to compatibility with  the common market.  
111. Under Articles 3 and 19 of Regulation No 1/2004
7, certain types of state aid to small 
and medium-sized agricultural enterprises ar e exempted from the state aid rules. In 
2006, Member States communicated to th e Commission the summaries of 118 such 
measures. The Commission publishes thes e summaries on the internet at the 
following address: http://ec.europa.eu/ag riculture/stateaid/ex emption/index_en.htm. 
State aid — type of aid measure used 
112. Between 1 January and 31 December 2006, 268 decisions (on 241 new notifications 
and 27 non-notified aid measures) were take n. Though these notifications frequently 
cover more than one type of aid (for inst ance investment aid may be combined with 
aid for consultancy costs, or technical support with aid for encouraging quality 
products), an analysis of the amounts spen t on the different types of aid provides a 
useful overview of the aid instruments us ed by the various Member States in the 
agriculture sector. 
                                                 
7 Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State a id to small and medium-sized 
enterprises active in the production, processing and marketing of agricultural products (OJ L 1, 3.1.2004, p. 1). 
 
EN 40   EN Table 1: Total expenditure by primary ob jective in the agric ulture sector, EU-25, 
notifications 2006 (in million euros) 
Type of Aid Notified aid¹ Non-notified aid¹ 
Advertising 2.15 2.50 
Animal diseases 157.26 2.35 
Conservation of traditional landscapes 43.38  
Culture and heritage conservation 16.06 1.26 
Early retirement 16.06  
Encouraging quality products 40.10  
Environmental protection 327.13 7.03 
Fallen stock 0.90 14.64 
Innovation 258.55  
Insurance premiums 289.81  
Diversification of farm activities 111.52  
Investment in agricultural holdings 293.83 28.00 
Investment in proc. & marketing 1 147.11  
Livestock sector 37.77  
Natural disasters 755.44  
Plant diseases 10.21  
Relocation of farm buildings 16.06  
R & D 414.70  
Setting up of young farmers 17.06  
Start-up of producer groups 25.88  
Technical support for consultancy 69.37 33.6 
Technical support for promotion etc. 25.27 2.15 
TSE tests 77.91 93.6 
Other 68.23  
¹ The amounts given here were not spent in 2006 but were notifie d (or registered as non-notified) in 2006 and would / could be spent 
in the coming years.  
 
 
EN 41   EN Table 2: Overview per Member State of the mo st important types of measures in 2006  
(in percentages, figures in bold above the EU-25 average) 
Type of aid as 
% of all 
measures / 
Measures per 
Member State Aid for 
investments¹ Aid to 
compensate for 
damage to 
agricultural 
production or 
means of 
agricultural 
production² Aid to 
encourage the 
production and 
marketing of 
quality 
agricultural 
products Aid for 
Research and 
Development 
EU (268) 12.18 31.82 26.36 13.15 
AT (11) 39.64 2.97 41.73 0 
BE (4) 0 1.32 0 98.68 
CY (3) 62.98 0 32.02 0 
CZ (16) 2.08 28.44 13.15 33.52 
DE (30) 9.78 35.06 6.09 9.79 
DK (6) 2.67 0 0 0 
EE (2) 0 38.00 0 0 
EL (3) 0 31.74 68.26 0 
ES (26) 69.35 16.05 3.97 0 
FI (3) 0 100.00 0 0 
FR (13) 28.58 0.45 6.09 9.79 
HU (6) 8.54 91.46 0 0 
IE (2) 49.80 0 50.20 0 
IT (82) 2.99 26.47 1.47 40.62 
LV (4) 0 35.88 0 28.07 
LT (7) 46.02 13.11 0 0 
LX (0) – – – – 
MT (0) – – – – 
NL (9) 15.63 6.62 0.40 1.33 
PL (3) 0 99.78 0 0.22 
PT (4) 0 57.28 0 0 
SE (2) 0 100.00 0 0 
SL (1) 0 100.00 0 0 
SK (4) 0 0 100.00 0 
UK (26) 21.67 41.95 4.73 0 
¹ = Conservation of traditional landscapes, Diversificatio n of farm activities, Investment in agricultural 
holdings and Relocation of farm buildings. 
² = Animal diseases, Insurance premiums, Natural disasters, Plant diseas es and Adverse weather 
conditions.  
 
 
EN 42   EN New Legislation 
113. On 6 December 2006, the Commission adopted new rules on the granting of state aid 
in agriculture. These rules consist of tw o parts, namely an Exemption Regulation8, 
under which Member States do not have to notify state aid to sm all and medium-sized 
farms provided that certain requirement s are met, and State Aid Guidelines9, which 
complement the Exemption Regulation and la y down the rules applicable to notified 
aid.  
114. The two documents cover the period from 2007 to 2013 and have been designed as 
part of the Commission’s stat e aid action plan to achieve less and better targeted state 
aid. The main changes that the new rules introduce are greater coherence with the Commission’s rural development policy and a more differentiated approach towards 
small and medium-sized enterprises on one hand  and large enterprises on the other. In 
line with the Lisbon agenda aim to move to  more horizontal types of aid, support for 
companies active in processing and marketing will be largely aligned with the general 
rules for non-agricultural enterprises. Hori zontal legal texts, such as the Exemption 
Regulation (EC) No 70/2001
10 or the ‘ de minimis ’ Regulation (EC) No 1998/200611, 
are from 2007 onwards applicable to companies active in the processing and 
marketing of agricultural products.  
115. Quicker crisis support for farmers and simp lified administration of agricultural state 
aids — this is the objective of the new Exemption Regulation. In particular, the inclusion for the first time of compensati on for animal and plant diseases and bad 
weather losses will greatly speed up the granting of state aid in crisis situations. At the same time, the new regulation will enc ourage better risk management. From 2010 
onwards, bad weather aid will be reduced if the farmer has not taken out insurance against such risks and drought compensati on will be conditional upon implementation 
of the Water Framework Directive
12, which requires an adeq uate contribution from 
the sector. The new Block Exemption Regula tion applies only to primary agricultural 
production and no longer covers the pro cessing and marketi ng of agricultural 
products13. 
116. The new Guidelines furthermore introduce so me additional aid categories as of 2007. 
These new categories comprise aid for comp liance with demanding national standards 
that go beyond Community requirements,  ‘Natura 2000’ payments and payments 
linked to Directive 2000/60/EC  (Water Framework Directive), aid in the form of 
exemption from excise duties under Directive 2003/96/EC14 (taxation of energy 
products and electricity), and aid to the forestry sector. 
                                                 
8 Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State a id to small and medium-sized 
enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001 (OJ L 358, 16.12.2006, p.  3). 
9 Community Guidelines for State Aid in the Agriculture and Forestry Sector 2007 to 2013 (OJ C 319, 27.12.2006, p. 1). 10 Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized 
enterprises (OJ L 10, 13.1.2001, p. 33). 
11 Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de min imis aid, OJ L 379, 
28.12.2006, p. 5. 
12 Directive 2000/60/EC of the European Parliament and of the Council (Water Framework Directive), OJ L 327, 22.12.2000, p. 1. 13 With the exception of Article 9 (Aid for producer groups). 
14 Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products an d electricity, OJ L 238, 
31.10.2003, p. 51. Directive as last amended by Directive 2004/75/EC (OJ L 157, 30.4.2004, p. 100). 
 
EN 43   EN 117. Following the adoption of the new State Aid Guidelines, the rules applied by the 
Commission in assessing the compatibility of state aid measures with the common 
market have changed. Since the notification form is a detailed questionnaire based on 
the rules now in force, some parts have ha d to be amended. New compulsory state aid 
notification forms15 were thus likewise adopted  in December 2006, modifying 
Regulation (EC) No 794/2004. 
Outlook for 2007 
118. Under Commission Regulation (EC) No 1860/200416, national support for farmers is 
considered ‘ de minimis ’, and thus not subject to Commission approval, if it does not 
exceed €3  000 per farmer over any period of three years and does not breach the 
overall ceiling on total ‘ de minimis ’ support for each Member State (this ceiling is 
fixed at around 0.3% of the overall agricu ltural production of each Member State).  
119. This ‘ de minimis ’ rule was introduced on 1 Janua ry 2005. The experience gained 
subsequently indicated that an incr ease in the indi vidual amount of €3  000 per farmer 
over three years and/or an increase in th e overall ceiling per Member State would 
contribute to further s implification of the ‘ de minimis ’ rule and therefore to better 
regulation for the common agricultural polic y., The Commission th erefore decided to 
increase the ‘ de minimis ’ thresholds and to modify the existing Regulation in 2007. 
Overview of cases 
120. The following overview of cases looks at some of those cases that raised the most 
interesting issues of state aid policy in th e agricultural and agro-industrial sector in 
2006. 
France 
Rescue aid to poultry companies hit by the avian flu crisis 
121. On the 15 May and 1 June 2006, the Commissi on decided not to raise objections to 
three rescue aid measures aiming to provide  liquidity support fo r 6 months to the 
French poultry companies Hubbard SAS (€4.5m), SA Tilly-Sabco (€3.6m), and 
DUC SA (€6.5m) in the form of reimbursable advances by the French state. The poultry companies were found to be in difficulty  due to the avian flu crisis that broke 
out in October 2005 and the embargo placed on French poultry products by several of their main export markets. The Commission concluded that the ai d was in line with 
Community legislation, in particular the Community guidelines on state aid for 
rescuing and restructuring firms in di fficulty (2004/C 244/02), for the following 
reasons: 
– the rescue aid was limited to the minimum necessary; 
– the reimbursable advances were provided at  an interest rate comparable to those 
for loans to healthy firms and in partic ular the reference rate adopted by the 
Commission; 
                                                
 
15 The new notification forms can be found in the Annex to Commission Regulation (EC) No 1935/2006 of 20 December 2006 (OJ L 40 7, 30.12.2006, p. 1). 
16 Commission Regulation (EC) No 1860/2004 of 6 December 2004 on the application of Articles 87 and 88 of the EC Treaty to de m inimis aid in the agriculture 
and fisheries sectors (OJ L 325, 28.10.2004, p. 4). 
 
EN 44   EN – the companies undertook to submit a restructuring plan  by the end of the six-
month period. 
Germany 
Transfer of nature protection land 
122. On 26 April 2006, the Commission authorised Germany to transfer ownership of land 
for free for the development of sustainable nature protection areas. The authorisation opened the way for the development of sust ainable nature prot ection areas (mostly 
Natura 2000 areas) with  a total size of 32
 000 hectares in the Länder  of Mecklenburg-
Western Pomerania, Brandenburg, Saxony- Anhalt, Saxony, Thuringia and Lower 
Saxony.  
123. Only land in nature protection areas, nati onal parks, and biosphere reservations is 
eligible for this transfer. The new owners — the Länder  or the environmental 
protection foundations and associations — mu st maintain and develop these areas in 
line with nature protection goals.  
124. Only transfers to environmental protec tion foundations and associations were 
considered as state aid, as these organi sations practice, at least marginally, an 
economic activity. Most of the land was transferred to the Länder . These transfers 
were regarded as transactions  between different levels of a federal state and therefore 
not as state aid. 
125. The transfer is for free and strict nature prot ection restrictions have to be respected at 
all times. These nature protection obligations give rise to significant costs, severely 
limiting the economic use of the forest areas. Support will not be given for these areas 
under the first and second pillars of  the Common Agricultural Policy.  
126. As the economic value of the land has not been established by te nder or an evaluation 
by independent valuers, the Commission as sumed a residual value to exist even 
where the nature protection ob ligations are taken into acc ount. The aid was authorised 
following existing practice that considers fore stry measures positively on the basis of 
the social benefit, the positive effects on the environment, the enhanced value of the forest, and the new products made possible. Therefore, investment  aid for sustainable 
forestry is allowed up to 100% of the value of the land.  
127. Some small areas are still used for agricultu ral purposes on a lease basis up to the end 
of the contract. Thereafter, no agricultural activity will be allowed. The lease income is within the limits of ‘de minimis’ aid. 
Bavarian Animal Health Service 
128. Following a complaint, the Commission launc hed a procedure under Article 88(2) EC 
Treaty regarding a measure under Article 14 (1) of the Law on support for Bavarian 
agriculture ( Gesetz zur Förderung der bayerischen Landwirtschaft  — LwFöG). These 
measures (‘general measures’) are of a pr ecautionary nature rela ting to the production 
of milk and meat and to the rearing of pigs, poultry, sheep and fish. The Commission 
has no evidence whatsoever th at in the past only 100%, and not possibly more, of 
actual (and necessary) expenditure has been reimbursed in all cases. Besides farmers, 
a possible recipient of aid might be also the Bavarian Animal Health Service. 
 
EN 45   EN 129. The complainant states that, through the ve terinary surgeons it employs, the Bavarian 
Animal Health Service not only takes pr ecautionary measures but also provides 
veterinary care services. 
130. According to the complainant, this distor ts competition becaus e the support provided 
for the ‘general measures’ enables the Bavarian Animal Health Service to offer competitive (i.e. care) services more cheaply. 
Financing of Hessische Staatsweingüter 
131. By decision of 20 December 2006, the Co mmission opened a formal investigation 
procedure under Article 88(2)  EC Treaty to look into th e financing of Hessische 
Staatsweingüter (the bigg est vineyard in Germany and 100% owned by the Land  of 
Hessen). 
132. Hessische Staatsweingüter was loss-making for a long time. Until the end of 1992 the 
losses were borne by the Land  of Hessen. The Commission presumed that this loss 
coverage might constitute operating aid, whic h would be incompatible with state aid 
rules. The amount involved seemed to be some €2.3 million. 
133. In 2003 the Hessische Staatsweing üter GmbH was created. The Land  of Hessen 
injected equity capital amounting to €2.225 m illion into this newly created company 
in 2003 and 2004. The Commission assumed th at the capital wa s provided by the 
Land  of Hessen on excessively favourable term s (not asking for a minimum rate of 
return) and therefore contai ned a state aid element. 
134. A new wine cellar is being built with  an equity contribution from the Land  of Hessen 
amounting to €7.5 million, to be provided in th e form of an equity-like shareholder 
loan ( Partiarisches Darlehen ). The Commission is to investigate whether this 
measure constitutes State aid.  
Netherlands 
Holland Malt — negative decision 
135. On 26 September 2006 the Commission gave a negative decision following its formal 
investigation in case C 14/2005. The planned intervention in the Dutch malt sector 
consisted of a subsidy amounting to some €7.4 million for an investment project of 
Holland Malt BV (a collaboration between  Bavaria NV and Agrifirm, a cereal 
farmers’ cooperative) for the establishment of a production plant in the north of the 
Netherlands. The aim of this project was to integrate the entire chain in the storage and processing of malting barley and the production and tr ading of malt.  
136. The Commission decided that the planned assistance was not compatible with the 
common market as, on the basis of the info rmation available to it, there was over-
capacity on the malt market between 2003 (w hen the aid was granted) and 2006 (the 
date of the decision, at which time  the factory was fully operational). 
137. The claim by Holland Malt regarding the segmentation of the malt market — high-
quality ‘premium malt’ for the productio n of ‘premium beer’ — was not accepted. 
The Commission saw the malt market as a single market, as th e products on the 
market are interchangeable.  
 
EN 46   EN 138. On 12 December 2006 Holland Malt appealed ag ainst this Decision before the Court 
of First Instance of the European Community.  
Green Fund Midden Delfland  
139. The Green Fund Midden-Delfland is an environm ental fund that aims to maintain an 
open agricultural landscape with a high e nvironmental and cultural value. Different 
municipalities in this area cont ribute to the fund. From the y early return of this fund, 
payments are made to farmers for a total of 20 services, from which the farmers can 
choose. These services concern nature, biod iversity, landscape a nd cultural heritage. 
For every service performed, a farmer receives a certain number of points. For every 
point, an allowance of €10 is paid. The fund has a yearly b udget of €400 000. The 
contracts with individual farmers for their environmental and lands cape services last 
5 to 10 years.  
United Kingdom 
Extension to the Farm Nutrient Management Scheme  
140. On 7 December 2006, the Commission authorised  the United Kingdom to grant aid of 
€224 million for investment in manure storag e facilities in order to help ensure 
compliance with action programme measures  to be introduced under the Nitrates 
Directive. 
141. Due to the special situation in Northe rn Ireland, the long ne gotiations with the 
Commission on the Nitrate Action Programme  and the difficulties in implementing 
previous schemes, the Commission grante d a further extension up to 31 December 
2008. The UK authorities agreed that only a reasonable period could be accepted as a 
period of grace for investment to comply with Community standards, i.e. up to 36 
months from the date on which the standards become mandatory.  
Cattle Compensation Scheme 
142. On 7 December 2006, the Commission authorised  the United Kingdom to grant aid of 
€147 million as compensation for the animal diseases bovine brucellosis, bovine 
tuberculosis, enzootic bovine  leukosis and bovine s pongiform encephalopathies 
(BSE) from 1 February 2006 to 31 January 2012.  
143. As the European Court of Justice has held that clear and precise  obligations arising 
from acts of the Community legislature are not ‘imputable to the [Member] State’17, 
support for BSE under Article 13(4) of Regulation (EC) No 999/2001 was not considered to be state aid. 
Court of First Instance 
T 146/03 
144. The Court of First Instance partially a nnulled Commission Deci sion 2003/293/CE on 
measures adopted in 2002 by Spain in the ag ricultural sector following the increase in 
fuel prices. 
                                                
 
17 CFI case T-351/02, Deutsche Bahn v Commission, judgment of 5 April 2006, [2006] ECR 2006 Page II-01047, paras 101 et seq.  
 
EN 47   EN 145. This decision was also appealed by th e Kingdom of Spain rega rding the measures 
considered to be incompatible state aids. Th e Court of Justice rej ected the appeal and 
confirmed the Commission Decision (J udgment of 11/11/2004) on this point. 
146. The judgment of the Court of Justice onl y annulled that part of the decision 
concerning the measure authorising cooperatives to distribute a certai n type of fuel to 
non-member third parties, w ithout being subject to the limit of 50% of the total 
amount of transactions with members and w ithout having to set up a legal entity. The 
Commission took the view th at this measure did not  constitute state aid. 
147. The reason for annulling this part of the decision was the lack of justification. The 
Court held that the Commission decision fa iled to state clearly and unequivocally the 
reasons why the tax arrangements applicable  to agricultural cooperatives did not 
constitute an advantage for the purposes of state aid and did not give sufficient 
reasons for the assessment that the meas ures concerned were  not state aid. 
2.7. Assistance to the needy 
148. The European Union continued to imple ment its aid programme for the needy18. This 
action consists of distributing agricultural products (processed or  otherwise) from 
intervention stocks in the EU to associa tions working with de prived people on the 
ground in the Member States. 
149. The table below shows the breakdown of th is amount and the quantities that can be 
withdrawn from stocks in each participating Member State. 
                                                 
18 Council Regulation (EEC) No 3730/87 of 10 December 1987 (OJ L 352, 15.12.1987, p. 1) and Commission Decision 2004/766/EC of 5 November 2002 (OJ 
L 339 of 16.11.2004, p. 13). 
 
EN 48   EN Free distribution of agricultural products 
(2006) 
Member States Quantities (tonnes) Grants for 
purchase on 
the market 
(EUR) 
Appropriations allocated 
(EUR)  Cereals Rice Butter Sugar Skimmed 
milk powder 
Belgium 3 064 940  12121 2 800 450   
Greece 7 127 822   15 000   4 538 402 
Spain 53 793 470  73726 28 000 13 560 2 000  
France 48 059 949  75 851 55 000 10 564   
Ireland 355 874    120   
Italy 73 538 420  115 253 20 000 6 833 3 500 33 849 510 
Latvia 2 096 236  19 706     
Lithuania 2 489 508  16 000 5 000    
Luxembourg 34 959      33 295 
Hungary 6 764 115  63 587     
Malta 401 030  1 877 600   101 734 
Poland 43 408 602  85 608 20 000 7 230 4 847 6 185 397 
Portugal 13 306 532  17 287 14 000 2 743 1 700  
Slovenia 1 334 827  1 262 600  300 863 810 
Finland 3 637 860  18 500   500 1 274 443 
Total 259 414 143 500 778 161 000 41 500 12 847 46 846 591 
2.8. The Outermost Regions 
Reform of the POSEI arrangements (agriculture) 
150. Following detailed discussions over the course of 2005, the reform of the POSEI19 
arrangements was finalise d with the adoption and publ ication in early 2006 of a 
Council Regulation laying down specific measur es for agriculture in the outermost 
regions of the Union20. A few weeks later the Commi ssion adopted an implementing 
Regulation21.  
151. The reform changed the approach to providi ng assistance to the outermost regions by 
encouraging participation in decision-making and by allowing more flexibility in adapting the support actions to their specific needs, while ensuring a sufficient level of monitoring and control.  
                                                
 
19 POSEI — Programme d’Options Spécifiques pour l’Éloignement et l’Insularité. 
20 Council Regulation (EC) No 247/2006 of 30 January 2006 (OJ L 42, 14.2.2006, p. 1). 
21 Commission Regulation (EC) No 793/2006 of 12 April 2006 (OJ L 145, 31.5.2006) laying down certain rules for applying Council  Regulation (EC) 
No 247/2006 laying down specific measures for agriculture in the outermost regions of the Union. 
 
EN 49   EN 152. The Regulation provided for the submission of programmes by the Member States to 
be approved by the Commission and implemen ted in the course of 2006. The three 
Member States concerned submitted draft POSEI programmes in April 2006. The French programme was approved in Oc tober and the Spanish programme in 
November 2006, while the Portuguese progra mme was approved a few months later 
(April 2007). 
153. These programmes include a section on sp ecific supply arrangements for those 
agricultural products that are essentia l in the outermost regions for human 
consumption, agricultural inputs or pro cessing, and another section on support for 
local production. 
154. The Regulation establishes annual budgetary ceilings for each of the Member States, 
including the maximum amount to be alloca ted for the specific supply arrangements, 
as from the financial year 2007. The Comm unity finances the programme under the 
EAGGF Guarantee Section at 100% up to the annual ceiling. The amounts are calculated on the basis of the average expe nditure to finance the specific supply 
arrangements during the reference peri od 2001–2003 and on the basi s of expenditure 
ceilings on support for local production. 
The inclusion of banana aid in POSEI 
155. The reform of the banana sector was adopted by the Council at the end of 2006
22. The 
previous common market orga nisation for bananas was abolished and a new scheme 
was created with most of the banana ai d transferred to the POSEI regime, whose 
annual budget almost doubled from the ini tially allocate d €338.8m to €617.6m for the 
financial year 2008. 
156. This reform was to enter into force as  from 1.1.2007 and the POSEI Member States 
were requested to submit to the Commissi on in early 2007 the draft amendments to 
their overall programmes in order to  introduce the new banana scheme. 
2.9. Information measures concerning the CAP 
157. Council Regulation (EC) No 814/200023 provides for informati on measures relating 
to the common agricultural policy, intende d for both Member States and the outside 
world. Commission Regulat ion (EC) No 2208/200224 (which replaced Commission 
Regulation (EC) No 1557/200125 and was modified by Co mmission Regulation (EC) 
No 1820/200426) lays down detailed rules for applying Regulation (EC) No 814/2000 
and introduces signifi cant improvements to the scheme: simplification, transparency, 
better evaluation of the information acti ons proposed, and better definition of the 
messages to communicate and the means of distribution.    The objectives of the CAP information m easures as defined by Regulation (EC) 
No 814/2000 are to: 
                                                
 
22 Council Regulation (EC) No 2013/2006 of 19 December 2006 (OJ L 384, 29.12.2006, p. 13) amending Regulation (EEC) No 404/93, (EC) No 1782/2003 and 
(EC) No 247/2006 as regards the banana sector. 
23 OJ L 100, 20.4.2000, p. 7. 24 OJ L 337, 13.12.2002, p. 21. 
25 OJ L 205, 31.7.2001, p. 25. 
26 OJ L 320, 21.10.2004, p. 14. 
 
EN 50   EN – help explain the CAP as well as implement and develop it, 
– promote the European model of agricu lture and help people understand it, 
– provide information for farmers a nd others living in rural areas, 
– raise public awareness of the issu es and objectives of the CAP. 
158. An evaluation of the measures under this Regulation was carried out as part of the 
Commission’s evaluation policy for the period 2000–2005 and completed in 
December 200627. The full text as well as the su mmary are to be found on the Europa 
website:  http://ec.europa.eu/agriculture/e val/reports/cap_info/index_en.htm
  
Grants 
159. A large number of applications for gran ts were again forthcoming under the 2006 
exercise — for CAP information measures  between 1 July 2006 and 30 June 2007. A 
total of 101 applications we re received, 42 for annual prog rammes and 59 for specific 
measures. 
160. In the budgetary year 2006, gr ants were awarded to 36 be neficiaries for 20 specific 
measures and 16 annual programmes (containi ng 47 actions). Co-financed measures 
included seminars, conferences, printed publications and audiovisual media 
productions. The main topics included: CA P and CAP reform; rural development; the 
WTO; questions relating to enlargement, quality, food safety, sust ainability and the 
environment; and organic farming;  
161. Individual organisations that were succe ssful in obtaining co -financing for their 
information programmes in 2006 included NGOs  at European, national and regional 
level, representing farming, rural development, and environmental protection interests. In addition, beneficiaries include d regional public author ities and the media. 
Conferences, events and fairs 
162. During 2006 the Commission organised a c onference on the simplification of 
agricultural legislation and held several sm aller events on current topics such as 
organic farming and rural development on it s stands at various  agricultural fairs 
during the year. There were also 208 inform ation visits where presentations were 
provided for visitor groups from within Eur ope or from the rest of the world. Topics 
ranged from general information on the CAP to requests for deta ils on specific areas 
of its application. 
163. The Commission was represen ted at various agricultur al fairs, including Grüne 
Woche in Berlin, Salon de l’Agriculture in  Paris, Roskilde in Denmark, Farmari in 
Finland, the World Ploughing Championships  in Ireland, Hungexpo in Hungary and 
Libramont in Belgium. Support was also give n to Fieragricola in Verona, Agrotika in 
Thessaloniki and Agrocomplex in Slovakia. 
                                                
 
27 European Commission, DG AGRI Contract AGRI 2005/0421, Evaluation of the Information Policy on the Common Agricultural Policy , December 2006. 
 
EN 51   EN Publications 
164. The regular publications program me was maintained with the help of the Publications 
Office and an external contractor. A number of  specific fact sheets,  reports, leaflets, 
bookmarks, postcards, posters, conferen ce proceedings and newsletters on 
international and rural is sues were published.  
Access to documents 
165. In 2006, the interest manifested by EU citizen s in obtaining intern al documents from 
DG AGRI continued to rise, although not as significan tly as in 2005. Compared to 
2005, the number of requests made by EU citizens under Regulation (EC) 
No 1049/2001 on access to Council, Europ ean Parliament and Commission 
documents in the area of agriculture and rural development rose by around 8% in 
2006, to about 200. 
Missions 
166. Various missions were carried out duri ng 2006, following requests from regional 
and/or specialised organisations (cooperati ves, farmers, various intermediary bodies) 
to explain the new CAP regulations, the consequences of enlargement or the 
evolution of the WTO negotiations. In most  cases, round tables were held with the 
national heads of these organisations, MEPs, journalists and the public. These 
activities were sometimes prepared or followed by visits to Brussels for further discussion and information. 
2.10. Information and communication technology (ICT) 
167. DG AGRI makes use of up-to-date info rmation and communication technologies 
(ICT) to support its administrative and operational needs and to improve and reinforce the exchange and processing of da ta and information in order to enhance 
CAP management and facilitate the shar ing of information between the Member 
States and the European administration. 
168. Accordingly, investments were made in 2006 to maintain and further develop DG 
AGRI’s information services and systems, to  keep pace with the CAP reform and the 
new Commission accounting system. The analysis and development of new information systems continued (AGREX 3,  ISAMM, RDIS, see below), along with 
further work on additional secu rity layers (SESAD) for tr ansmission of data between 
DG AGRI and its Member State partners. Other activities worth noting were the 
progress made on Disaster Recovery  (see below) and ICT Governance. 
Information Systems 
169. The year 2006 saw the continued renewal of the main financial management 
information system (AGREX 3 for the guarantee funds and ISAMM for market 
mechanism management). As regards the RD IS project for the development of an 
information system to support the new ru ral development programme, the core 
system was delivered in 2006, with furt her work required into 2007 and beyond. The 
major priority was to align these new system s to user requirements. There was further 
development of AMIS QUOTA for the mana gement of agricultu ral import tariff 
quotas, ANGE BLEU for compiling consolidated  agricultural legi slation, DG AGRI’s 
 
EN 52   EN data warehouse for analysis (AGRIVIEW) , and various other information system 
areas (CATS for clearance of accounts data , APA for the publication of periodical 
acts, DOOR for an origin and registration database, etc.). 
Infrastructure and DRP (D isaster Recovery Plan). 
170. In 2006 DG AGRI’s main information system servers were further aligned with DG 
DIGIT’s Data Centre infrastructure. On the basis of the Service Level Agreement with DIGIT concerning DG AGRI’s disaster  recovery procedures, a successful test 
was held of the DRP for DG AGRI’s financial information systems. 
ICT Governance in DG AGRI 
171. In line with the Commission Comm unications on ICT Governance and 
Interoperability, work has continued to bring DG AGRI’s ICT systems into line with DIGIT standards and internal control re quirements, such as the Commission’s 24 
Internal Standards, in or der to improve the governan ce of ICT-related services, 
investments and procedures. 
2.11. Inter-institutional and NGO relations 
172. DG AGRI participated actively in committee discussions on agricultu ral issues in the 
Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions. In Parlia ment, the main political discussions on 
agricultural matters are held in the Comm ittee on Agriculture and Rural Development 
and in the plenary sessions. Important subjec ts debated in 2006 were the reforms of 
the CMO for bananas and the CMO for wine, exceptional market support for the poultry sector following the avian flu outbr eaks, PGI/PDO, organic farming, market 
support measures, risk management, the 2007 budget (in particular  the discussions on 
voluntary modulation in rural developmen t), and the ongoing WTO negotiations. As 
in previous years, DG AGRI was called upon to reply to a larg e number of written 
and oral questions. Furthermore, 98 letters from MEPs were answered. 
YEAR ‘H’ 
Questions 
AGRI-
Leader ‘H’ 
Questions 
AGRI-
Associated ‘O’ 
Questions 
AGRI-
Leader ‘O’ 
Questions 
AGRI-
Associated Written 
Questions 
AGRI-
Leader Written 
Questions 
AGRI-
Associated 
2006 33 57 4 6 244 800 
173. DG AGRI was represented at all meetings of the European Parliament’s Committee 
on Agriculture and Rural Development and at  some meetings of other Parliament 
Committees such as Budget, Budget Control,  Environment, Public Health and Food 
Safety, Petitions and Interna tional Trade. It also atte nded the plenary sessions of 
Parliament. 
174. Following the 2005 Interinstitutional Ag reement, DG AGRI continued its close 
collaboration with the European Econom ic and Social Committee and the Committee 
of the Regions, actively participating in their agricultural policy deliberations, in 
particular in their study groups, hearings, and the NAT  (EESC) and DEVE (COR) 
Committees. 
 
EN 53   EN Consultations with agricultural non-governmental organisations and the socio-economic 
sector 
175. DG AGRI has the longest-established an d most comprehensive stakeholder 
consultation process in the Commission. A major means of consultation is the 
Advisory Group structure, comprising bot h sectoral and horizontal groups. The 
structure and focus of the Advisory Groups has evolved over the years to take account 
of CAP reforms and the broade r interest shown in agricult ural policy beyond its food 
production role.  
176. In 2006, DG AGRI organised 77 meetings with CAP stakeholders, involving the 
participation of 2  600 experts representing a broa d range of interests.  
3. AGRICULTURAL MARKETS  
3.1. Market developments — crop products 
3.1.1.  Cereals 
World market 
177. World cereal production (excluding rice) in the 2006/07 marketing year declined 
compared with the previous year. The EU -27’s total cereal ha rvest in 2006/07 was 
266 million tonnes, 17 million tonnes (or 6%) lower than the 2005/06 crop. The area under cereals decreased by 1.9 million ha and the cereal yield d ecreased by 0.17 t/ha, 
or 3%. All EU cereals apart from barl ey (+2.5%) saw production decline from 
2005/06, ranging from a 1.5% decrease for dur um wheat to 10% and 15% decreases 
for barley and maize, respectively. Average cereal yields compared to the previous 
year were slightly higher for the EU- 15 (5.58 t/ha vs 5.50 t/ha) but lower for the 
EU-10 (3.23 t/ha vs 3.86 t/ha). 
178. According to International Grains Counc il (ICG) figures, the 2006/07 world harvest, 
at the end of November 2007, was 1 567 million tonnes as against 1 602 million 
tonnes for the previous marketing year. 
179. World wheat production according to the IG C decreased from 620 million tonnes in 
2005/06 to 591 million tonnes in 2006/07. The European Union (EU-25) harvested 
126 million tonnes of common and durum wheat (135 million tonnes in 2005/06). 
Wheat production in the CIS countries decreased from 92 million tonnes in 2005/06 to 85.5m t in 2006/07. Production in Argent ina, a traditional exporter of wheat, 
increased from 12.6 million tonnes in 2005/ 06 to 14.6 million tonnes in 2006/07. The 
wheat crop in the United States decr eased from 57.3 million tonnes in 2005 to 
49.3m t in 2006. In Canada, production fell as well from 26.8 million tonnes in 2005 
to 25.3m t. Due to adverse climatic conditi ons, Australia harvested a significant lower 
wheat crop of only 9.8 million tonnes (25.4 in 2005). 
180. World wheat consumption in 2006/07 was 609 million tonnes (624 million tonnes in 
2005/06), i.e. 18 million tonnes greater than production. Feed grain consumption was 
1014 million tonnes (991 million tonnes in 2005/ 06), due to significant maize demand 
for bioethanol in the US. 
 
EN 54   EN 181. The ICG’s harvest data for 2006/07 indicate a stable world coarse grain production, at 
around 980 million tonnes. The United States maize harvest decreased slightly from 282 million tonnes to 268 million tonnes. Prod uction of feed grains in all the CIS 
countries increased from 58.8 million tonnes in 2005/06 to 62.4 million tonnes in 2006/07. 
182. World cereal stocks decreased signifi cantly, the 2006/07 estimate being 263 million 
tonnes (as against 316 million tonnes in 2005/06 and 329 million tonnes in 2004/05), 
comprising only 119 million tonnes of wheat  (137 last year) and 144 million tonnes 
of feed grains (182 last year).  In the EU, stocks held by the intervention agencies on 
1 November 2007 totalled 0.5 million tonnes, mainly maize. 
183. The total volume of world trade in cereals in 2006/07 was 222 million tonnes 
(111 million tonnes of wheat and 111 million tonnes of coarse grains) as against 
215 million tonnes the previous year. 
184. World cereal production in 2007 is estim ated at 1659 million tonnes (+79 million 
tonnes compared to 2006). Wheat producti on increased only slightly to 603 million 
tonnes in 2007, due to smaller crops in the EU and Australia. Feed grain production increased significantly from 979 million tonnes in 2006/07 to an estimated 1056 million tonnes in 2007/08, due to a record US crop. For the world cereal trade, IGC 
2007/08 estimates are 104 million tonnes for wheat (111 the previous year) and 121 million tonnes for coarse grain (111). 
Community market 
185. The EU-27’s total cereal harv est in 2006/07 is estimated (as at November 2007) at 
266 million tonnes, 17 million tonnes or 6% lower than the 2005/06 crop. The cereal 
area decreased by 1.9 million ha to 56.8 m ha and the cereal yield decreased by 0.17 t/ha, or 3%, to 4.69 t/ha. All EU cereals apart from barley (+2.5%) saw production decline from 2005/06, ranging from a 1.5% decrea se for durum wheat to 
10% and 15% decreases for barley and maize, respectively. Average cereal yields compared to the previous year were s lightly higher for the EU-15 (5.58 t/ha vs 
5.50 t/ha) but lower for the EU-10 (3.23 t/ha vs 3.86 t/ha). 
186. Utilisable cereal production in the EU-27 was 264 million t. In 2007/08 the forecast is 
for the EU-27 cereal area to shrink marg inally by 0.4% to about 56.5 million ha.  
187. This forecast, combined with today’s yiel d estimates, would l ead to a production of 
256 million tonnes, 10 million tonnes (or 3. 4%) lower compared to the modest 
2006/07 crop. Due to adverse climatic c onditions during spring and harvest, the 
average yield is estimated to be 4.55 t/h a, a decrease of 2.5%  compared to the 
previous year. 
3.1.2.  Oilseeds 
188. Oilseeds are used for producing oil, intend ed for human and industrial consumption, 
and oil cakes, intended for animal feed. Th e economic situation of  the oilseed sector 
depends on seed, oil and oil cake prices. Vegetable oil can be consumed without modification or in the form of oil or artificial fats, such as margarine.  
 
EN 55   EN 189. The total oilseed area in the EU-25 was quite stable in 2006 (+ 6% compared to 2005) 
with rapeseed up 15% to 5.9 million ha, sunf lower seed decreasing slightly to 2.00 
million ha and soybeans increasing by 1.4% to 257 000 ha. The total oilseed area is currently estimated at 7.7 million ha, including 833 000 ha under the non-food set-
aside scheme and 677 500 ha under the energy crop scheme. Under good weather conditions, total production was about 20.5 m illion tonnes, slightly higher than in 
2005/06. The 2006/07 crop was expected to  comprise 15.6 million tonnes of 
rapeseed, 4.1 million tonnes of sunflowe r seed and 839 000 tonnes of soybeans. 
190. The European Union is a net importer of oilseeds, vegetable oil and oil cakes. The 
annual imports of these products depend largely on the relati onship between the 
prices for oilseeds, oil cak es and oil and the prices of other competing products 
intended for animal feed (such as cereals,  foodstuffs containing maize gluten feed, 
etc.) and also on the market for exports of oil and oil cakes from the European Union. 
Total imports of oilseeds remained stab le at 17.1 million tonnes in 2006, mostly 
soybeans (84%).  
191. The total quantity of crushed oilseeds in the European Union (EU-25) came to 
35 million tonnes in 2005/6, compared with 31 million tonnes in 2004/5. This mainly comprised soybeans (39%), rapeseed (42%) and sunflower seed ( 15%). 
192. Total EU-25 imports of oil cakes came to 31.4 million tonnes in 2006, as against 
31.7m t in 2005. 
193. European consumption is currently characterised mainly by the growing use of 
oilseed oils in the non-food sector. Rapeseed  oil constitutes the prime example: only 
39% of the total quantity of ra pe oil available on the Europe an market is used in the 
food sector while 61% goes to the non-food sector, in particular  for the production of 
bio-diesel. The boom in the demand for rape oil as renewable energy and the resulting 
high prices will probably contribute to a slight  decline in rape oil consumption within 
the food sector.  
3.1.3.  Peas, field beans and sweet lupins 
194. These products, the principa l outlet for which is the an imal feed industry, compete 
with a broad range of other raw materials.  
195. The area benefiting from compensatory  aid in 2005/06 came to about 1.4 million 
hectares. Total production amounted to  approximately 4.7 million tonnes. 
3.1.4.  Linseed  
196. Flax is farmed in the European Union for fi bre flax (especially for fibre but also for 
seeds) and linseed (only for seeds). Seeds are used directly or are crushed to obtain oil 
(for industrial use) and o il cake for animal feed.  
197. According to Oil World, the European Un ion imports large quantities of linseed 
(500 000 tonnes in 2005/06 as against 480 000 tonnes in 20 04/05), Canada being the 
largest supplier (85%). 
 
EN 56   EN 198. The EU linseed area has been quite small in recent years,  but in 2006 increased in 
comparison to the previous year to 133 000 ha. European production in 2006 is 
estimated at 192 000 tonnes. 
3.1.5.  Grain legumes (chick peas, lentils and vetches)  
199. A specific measure was introduced by Counc il Regulation (EC) No 762/89 for grain 
legumes in 1989. It provides for aid per h ectare within a maximu m guaranteed area 
(MGA), in addition to arable crop suppor t. Regulation (EC) No 811/2000 subdivided 
this MGA between chick peas and lentils, which are used for human consumption, 
and vetches, which are used for animal feed.  
200. The aid per hectare is fixed at EU R 181. The MGAs were originally 160  000 hectares 
for chick peas and lentils and 240 000 hectares  for vetches, but were raised with the 
accession of the new Member States to 162  529 ha and 259  473 ha, respectively. 
When one of these MGAs is not reached during a marketing year, the unused balance has to be reallocated to the other MGA fo r that marketing year before an overrun 
occurs.  
201. The aid for grain legumes was affected by the 2003 CAP reform as well. Those 
Member States deciding to apply the Single Payment Scheme (SPS) after a 
transitional period in accordance with Article 71 of Counc il Regulation (EC) 
No 1782/2003 could continue to grant coupled aid for grain legumes up to a certain 
national financial ceiling. If this ceiling wa s breached, the aid per farmer had to be 
reduced proportionately for that year. This option could be used until the end of 2006.  
202. Support for grain legumes was taken up by Au stria, France, Greece, Italy, Spain and 
UK in 2004. In 2005, only 3 countries decided to make use of this aid — France, 
Greece and Spain. In France, there was an  overshoot of the area, so a reduction 
coefficient (0.64) was applie d. In 2006, no Member State c hose to apply the scheme 
and to give coupled aid fo r grain legumes. As from 2007, due to the expiry of the 
transitional period under Article 71 of  Council Regulation (EC) No 1782/2003, 
Member States can no longer apply this scheme.  
3.1.6.  Non-food production 
203. The non-food set-aside regime has been in force since th e 1992 CAP reform. The area 
payment for set-aside land has been EUR 63 per tonne multiplied by the cereal yield, 
from 2001/02 onwards. The 2003 CAP reform integrated the set-aside obligation 
within the single payment scheme and allowed set-aside land to be used for non-food production. The new Member States are exempt ed from obligatory set-aside in as far 
as they apply the single area payment scheme (SAPS). 
204. In 2006, the compulsory set-aside area was about 3.8m ha. Around 1m hectares of 
this area was used for non-food producti on (mainly oilseeds for biodiesel). 
205. Under the CAP reform, a new aid of EUR 45 per hectare is granted for areas sown 
with energy crops. The support was limited to a maximum guaranteed area (MGA) of 
1.5m ha for the period 2004-2006. This regime was applied in 2004 for the first time, 
supporting an area of 0.31m ha. According to data from the Member States, this area 
was about 0.55m ha in 2005 and 1.23m ha in 2006. 
 
EN 57   EN 3.1.7.  Rice 
206. During the 2005/06 marketing year, some 2 635 000 tonnes of paddy rice were 
harvested, which is above average. Mil ling yields were 59% on average, and 
production for sale was some 1 564 000 t onnes of milled rice. The areas sown 
decreased compared to the previ ous year, down to around 412 000 ha (–  4%). 
207. EU paddy rice prices were even higher than  in the previous marketing year, well 
above the intervention price (EUR 150/t). In dica rice prices were commonly between 
16% and 74% above the intervention price, while japonica rice prices were even 
higher, between 20% and 92% a bove the intervention price. 
208. Intervention stocks amount ed to around 300 000 t of paddy rice at the beginning of 
the marketing year but were reduced to  about 60 000 t at the end of August 2006, 
through sales on the internal market and also through aid for the most needy. No 
stocks were bought by the inte rvention agencies during the buying-in period (April to 
July). The intervention buyi ng-in ceiling is fixed at 75 000 t per marketing year.  
209. Based on the licences issued, imports increased compared to the previous year by 
12%, to around 732 000 t in milled rice equiva lent, including 656 000 t of indica rice. 
Broken rice imports also increased markedly (+  52%) to around 189 000 tonnes. 
Conversely, exports decreased by 13%, to about 121 000 t in milled equivalent, including 95 000 t of japonica rice. 
3.1.8.  Starch 
210. In 2005/06, the cereal starch market was re latively stable, for both maize-based and 
wheat-based products. Total EU-27 produc tion was estimated at around 7.8 million 
tonnes, produced from 13.9 million tonnes of cereals. 
211. EU-27 potato starch production, which is quota-restricted, was 2.6% above quota in 
2005/06, due to excellent weather conditions , making use of the 5% flexibility 
margin. In accordance with Council Regul ation (EC) No 1868/94 establishing a quota 
system in relation to th e production of potato starch
28, a new Council Regulation was 
published in June 2007 to extend the cu rrent quotas to the two marketing years 
2007/08 and 2008/09, so as to incl ude the quota system for potato starch in the Health 
Check review29. 
212. In 2005/06, export refunds for products based on maize and potato starch (receiving 
the same amount as maize starch) and pr oduction refunds (differentiated between 
cereal and potato starch) both showed an upward trend. As in the previous marketing year, no export refunds were needed for wheat starch. 
3.1.9.  Sugar 
World market 
213. 2006 started with high hopes on the part of  sugar producers but ended with major 
disappointment and concerns for the futu re. Early 2006 was characterised by strong 
                                                
 
28 OJ L 197, 30.7.1994, p. 4.  
29 OJ L 156, 16.6.2007, p. 1. Regulation amending Regulation (EC) No 1868/1994 (OJ L 197, 30.7.1994, p. 4). 
 
EN 58   EN optimism in the sugar markets, as many we re expecting raw sugar prices to reach 
$cts 20/lb and white sugar prices to rise to  $500/t, not seen for more than 20 years. 
Raw sugar prices finally peaked at close to $cts 19/lb in February and white sugar at 
$484/t. The positive sentiment was encouraged by  the deficits of the preceding years, 
along with increasing oil pr ices and intense investment  in commodity markets. 
However, all changed when the initial forecasts of a large crop in India were announced and the probability of a global surplus increased, not only for 2005/06 but 
also for 2006/07. In consequence, prices  were highly volatile throughout 2006, and by 
December raw sugar prices had fallen belo w $cts 12/lb and white sugar prices to 
$350/t. In addition to the price volatili ty, the white sugar premium increased 
significantly, reflecting the — temporarily — tight white sugar supply caused by the 
sharp reduction in EU sugar exports. At  the end of 2006, the white sugar premium 
(i.e. the difference between white sugar a nd raw sugar prices) was quite firm at 
around $100/t. 
214. Initially, the sugar balance at global level, as in preceding years, was expected to 
continue to be slightly in deficit or at most in equilibrium in 2005/06 (Oct/Sept). By 
the summer of 2006, however, forecasts were revised and it became clear that sugar 
markets were heading towards surplus on ce again. Production reached 152.5m t (raw 
value), representing an increase of more than 10m t from the previous year, while 
consumption grew only moderately by about 1% to 146.2m t. As a result, especially 
in view of another major surplus expected for 2006/07, it  came as no surprise that 
sugar prices collapsed by the end of 2006 a nd continued to decrease further in 2007 
as well.  
October/September Pr oduction* Consumption*Surplus or 
deficit* Stock / 
consumption ratio 
(%) 
 (1) (2) (3)=(1)-(2) (4) 
2003/04 
2004/05 2005/06 
2006/07 143 751.8 
141 089.5 152 587.3 
167 274.2 141 504.3 
144 063.4 146 196.2 
150 406.0 + 2.25 
- 2.97 
+ 6.39 
+ 16.86 47.2 
42.1 44.1 
50.8 
* in million tonnes, raw value; Source: F. O. Licht (24.7.2007). 
The surplus/deficit excludes unrecorded consump tion, which is estimated  at around 2-4m t/year.  
215. The main reason behind th e 2005/06 surplus was increasing Indian sugar production. 
While the sugar output of 14.6m t and 13.7 m t in 2003/04 and 2004/05, mainly due to 
adverse weather conditions, lagged well be hind the domestic demand of 18-20m t, 
production jumped by 7m t in 2005/06 to 21m  t. Production increased radically in 
2006/07 as well, to over 30m t. In Brazil,  sugar production was somewhat lower in 
2005/06 (27.8m t) than in the previous year (28.7m t). Ho wever exports continued to 
increase and reached 19.2m t (+ 1.4m t). As  for 2006/07, output is e xpected to exceed 
30m t and exports 20m t. Brazil thus contin ues to dominate the global sugar trade. 
Russian beet sugar production saw impre ssive growth in 2005/06 with output 
reaching 2.7m t (raw value). Beet sugar output  increased in 2006/07 as well to 3.7m t. 
These improvements are due to considerable investment in technology both at field 
and factory level. In consequence, raw s ugar imports are decreasing, and fell by 1m t 
 
EN 59   EN to 3m t in 2005/06. Chinese sugar output fe ll below 10m t in 2005/06 to 9.8m t. 
However, production was expected to grow to  a record 13m t (raw value) in 2006/07. 
Production in Australia remained roughly unc hanged at 5.4m t in  2005/06 and exports 
reached 4.5m t. For 2006/07 output was expected to remain below 5m t, and exports below 4m t. Sugar production fell to a part icularly low level in Thailand with only 
5m t. Due to stable consumption, exports fell by more than one million t to only 2.3m t. The situation is likely to impr ove considerably in 2006/07, when production 
should reach 7m t, with exports exceeding 4m t. 
216. The price situation in 2005–2006 (average of qua rters) is shown in the following table 
together with the longer-term outlook.  
Quarter Raw sugar ($cts/lb) 
(New York No 11) White sugar ($/t) 
(London No 5) 
2005. Q1 
2005. Q2 2005. Q3 2005. Q4 8.91 
8.62 9.97 
12.46 262.1 
251.5 295.8 308.2 
Average 2005 9.99 279.3 
2006. Q1 2006. Q2 2006. Q3 2006. Q4 17.06 
16.43 13.40 11.64 427.0 
465.6 417.9 376.7 
Average 2006 14.63 421.9 
2007. Q1 
2007. Q2 
2007. Q3* 2007. Q4*  10.65 
9.18 9.70 8.85 336.8 
322.5 286.4 265.2 
Average 2007* 9.60 302.7 
* forecast; Source: LMC (Sugar& Sw eeteners Quarterly: Sept. 2007)  
217. The USD continued to decline, not only agai nst the EUR but also the Brazilian real, 
reducing the profitability of  Brazilian sugar exports.  
Community market 
218. In the 2005/06 marketing year, the sugar b eet area remained practically unchanged 
compared to the previous year at 2.163m ha. Due to fairly good weather conditions, 
Community sugar production exceeded 20m t to reach 20.3m t, representing a 
moderate increase. Of this quantity, 275 000 t was produced from sugar cane (France 
DOM and Spain) and 40 000 t from mola sses (Austria and Germany). Production 
exceeded 4m t in both Germany and France, while sugar output reached 2m t in Poland, 1.3m t in the UK, 1.8m t in Italy an d 1.1m t in Spain. The average yield was 
9.27 t per ha, slightly up on the previous year, ranging from 5.2 t/ha in Latvia to 12 t/ha in France. 
219. Taking into account both the sugar carried forward from 2004/05 to 2005/06 and that 
carried forward from 2005/06 to 2006/07,  total production reached 20.2m t, 
 
EN 60   EN comprising 15.45m t under quota and 4.7m t of ‘C’ sugar. All ‘C’ sugar had to be 
exported without refund. 
220. Total exports of sugar as such reached re cord levels during 2005/06 due to the large 
quantity of ‘C’ sugar exports, as the EU star ted to comply with the findings of a WTO 
panel on the Community suga r export policy. Altogeth er, 8.5m t of sugar was 
exported during 2005/06 (July/June), co mprising 2.7m t with refund and 5.8m t 
without refund. Furthermore, an estimated 0.9m t was exported in  processed products. 
After careful analysis of the sugar balanc e for 2005/06, it was decided to reduce the 
guaranteed quantity under the production quo ta by 1.89m t in order to ensure a 
balanced market (see Regulation (EC) No 1609/2005). 
221. Consumption in 2005/06 is estimated at  16.2m t in the EU-25, excluding the 
quantities used by the chemical industry. 
222. In the common market organisation for suga r, the production of isoglucose and inulin 
syrup for marketing in the Community is also limited by production quotas. The 
production of isoglucose was 478 000 t, including 455 000 t under quota and 23 000 t 
of ‘C’ isoglucose. Inulin syrup was produced in 3 Member States with a total output 
of 248 400 t. (Under the sugar reform, as from the 2006/07 marketing year, all the 
inulin syrup quota was withdrawn, so this product is no longer produced in the EU.) 
223. Offers into intervention continued in 2006. Although interven tion buying-in had 
hardly ever been used previously for suga r, operators offered significant quantities for 
intervention in 2005 due to a major surp lus on the Community sugar market. In 
addition to the 1 324 286 t bought in during 2005 a further 572 143 t was offered in 
2006. In all, 1 896 429 tonnes of sugar was thus bought in by the Community. This 
indicated a price level below the €631.9/t in tervention price. However, the monthly 
quantities offered into intervention starte d to decrease as from April 2006 and only 
3 000 t was accepted into intervention  during the second half of 2006.  
224. Following the sugar reform, the intervention option became more restricted and less 
attractive. Consequently, no offers were made from October 2006. When tenders were opened for the resale of the interv ention sugar on the Community market, 
842 770 t were sold.  
225. For the 2006/07 marketing year, Commun ity sugar production is estimated at 
16.2 million tonnes (white value), representing a major decline compared to the previous marketing year. The area sown with sugar beet dropp ed significantly to 
1.7m ha, indicating the success of the prev entive measures introduced by Regulation 
(EC) No 493/2006. 
Legislative framework — major developments 
226. The sugar CMO was substantially reformed in 2006: following the political decision 
in November 2005 the new provisions entered into force on 1 July 2006. Since then, the basic regulation for the sugar regime has been Council Regulation (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the 
sugar sector. Under the sugar reform, the institutional prices will decrease considerably over a 3-year transitional peri od. The white sugar reference price, which 
replaces the previous intervention price,  will be reduced to €404.4/t as from the 
2009/10 marketing year from €631.9/t in 2006/07. 
 
EN 61   EN 227. One aim of the sugar reform is to achi eve a sustainable balance on the Community 
sugar market. Sugar production and consequent ly sugar quotas therefore have to be 
reduced. To this end, a temporary restru cturing scheme was introduced by Council 
Regulation (EC) No 320/2006 of 20 February  2006 establishing a temporary scheme 
for the restructuring of the sugar i ndustry in the Community and amending 
Regulation (EC) No 1290/2005 on the financing of the common agricultural policy. 
To implement the sugar reform the followi ng Commission Regulations  were adapted:  
– Regulation (EC) No 950/2006 — on pr eferential imports (non-LDC); 
– Regulation (EC) No 951/ 2006 — external trade; 
– Regulation (EC) No 952/2006 — mana gement of the quota system; 
– Regulation (EC) No 967/2006 — out-of-quota production; 
– Regulation (EC) No 968/2006 — restructuring scheme; 
– Regulation (EC) No 1100/2006 — on impo rts from the least developed 
countries (LDC) during 2006/07–2008/09. 
228. In order to facilitate the transition from the old sugar regime to the reformed CMO, 
Commission Regulation (EC) No 493/2006 was amended to include, among other 
things, a provision for preventive withdraw al. This aimed to reduce sugar production 
under quota by 2.5 million tonnes. 
229. Following the conclusions of a WTO panel on the EU’s sugar export policy, it was 
decided that applications for export licences for ‘C’ sugar should no longer be 
accepted even before the entry into force of the reform. This was implemented by Commission Regulati on (EC) No 769/2006. 
230. As with the 2004 enlargement, specific provisi ons needed to be adapted in the sugar 
sector to integrate Bulgaria and Romania,  but also to avoid possible speculative 
stockpiling. These amendments were in troduced by Commission Regulation (EC) 
No 1832/2006 of 13 December 2006 laying down transitional measures in the sugar 
sector by reason of the accession of Bulgar ia and Romania. Among other things, the 
Regulation established raw s ugar tariff quotas for the acced ing countries and defined 
their isoglucose quota for the period from 1 January to 30 September 2007. 
231. Regarding the sugar trade with Western Ba lkan countries, discus sions were finally 
concluded with Croatia. Commission Regulation (EC) No 2006/2006 fixed the sugar 
export quota for Croatia at 180
 000 t as from the 2007/08 marketing year. 
3.1.10.  Potatoes 
232. In 2006, the area under potatoes in the EU- 27 totalled 2.24 million hectares, i.e. 2% 
less than the year before. In the EU-15, th is area was 1.15 milli on hectares, or 1.8% 
less than in 2005. The entry of Romania a nd Bulgaria added over 300 000 ha to the 
EU potato area (278 000 ha in Romani a and 24 000 ha in Bulgaria).  
233. The feared increase in the potato area as a consequence of the sugar reform did not 
materialise. Overall, the pressures caused  by the conversion of sugar land in some 
regions were offset by the reduction in po tato land observed in other areas. At the 
 
EN 62   EN same time, exceptionally high cereal prices  did not encourage new potato planting 
while the high price of seeds also emerged as an important factor constraining new 
planting.  
234. The production of potatoes in the EU-27 d ecreased from 32.3 million tonnes in 2005 
to 56.7 million tonnes in 2006 (-8.9%). Bad weather resulted in lower yields 
(25.3 t/ha, down by -7% compared with 2005 levels). Most Member States reported 
lower stocks of ware potatoes while quali ty problems were observed in the main 
producing areas. Weather was favourable in  Romania and Bulgaria and the potato 
harvest increased in these two countries (4 million tonnes in Romania and 386 000 tonnes in Bulgaria in 2006). 
235. As a consequence of the drop in production, potato prices increased  significantly in 
2006, although the weather did not greatly encourage pot ato consumption. Producer 
prices for ware potatoes were as much as  2-3 times higher than those recorded in 
2005.  
236. Interestingly, new investment in potato land in southern Europe focused particularly 
on processing varieties in 2006. This was due to the production fall in northern continental Europe (temporary effect), but  could also represent the beginning of a 
structural shift towards processing variet ies in southern Eur ope too (where the 
consumption of table potatoes still represents 70-80% of total potato consumption).  
237. In continental Europe, the specialisation process continued stead ily. Despite the fall 
in production, French operators strengthened their position as the main EU suppliers of potatoes for table use. Their shipments to southern Europe, especially to the 
Iberian peninsula, increased in 2006. On th e other hand, French manufacturers were 
tending to use more and more Belgian pot atoes for making Fren ch fries and potato 
chips (crisps). 
238. The low production of raw potatoes in 2006 di d not affect the market shares of EU 
potato manufacturers. There are many factors constraining imports so as to ‘protect’ 
the EU market from products originating in  Canada or the US. The main factors are 
transport costs (€0.25/kg for frozen potatoe s, even higher for chips) and consumer 
tastes. 
239. A focal point for future development is ea stern and central Europe. More and more, 
operators prefer to locate processing plants there rather than ship from western 
Europe. As result, the processing industr y is strongly expanding, although storage 
capacity remains a limiting factor.  
240. Big countries such as China and India are still importing frozen potatoes from the EU 
and North America and are likely to continue  to do so for the next 5-10 years because 
of structural constraints.  However, consumption is increasing ther e and production 
sites are destined to expand in these areas as well. 
3.1.11.  Dried fodder 
241. Dried fodders are protein-rich products (m inimum 15%) obtained by artificial drying 
(dehydration) or natural (sun) drying of lucerne, other leguminous crops and certain 
grasses. 
 
EN 63   EN 242. As part of the CAP reform, the Council adopted a new aid scheme for the dried 
fodder sector, to apply as from the 2005/06 mark eting year with part of the current aid 
being replaced by decoupled aid to farmers. 
Partial decoupling30 
243. The total amount to be decoupled under th e single payment scheme is limited to 
EUR 132 million. The amount for each Member State will be allocated according to the quantities of green fodder produced during the reference period (2000/01, 2001/02 
and 2002/03). 
Simplification of the aid scheme
31: 
244. Single aid rate: the aid payable to processi ng undertakings is fi xed as a single amount 
for the two sub-sectors (dehydrated fodder or sun-dried fodder) at EUR 33 per tonne 
of dried fodder. 
245. Single MGQ: a single maximum guaranteed quantity (MGQ) is fixed for the two sub-
sectors (dehydrated fodder and sun-dried f odder), equal to the sum of the old MGQs 
for each sub-sector. The new MGQ is divided into national guaranteed quantities (NGQ) for each Member State. The aid is paid  in full if Community  production is less 
than or equal to the MGQ. If there is an overrun on the MGQ the aid will be reduced in each Member State that has exceeded its NGQ so as to avoid any overrun on forecast budget expenditure. 
Dried fodder Aid 
(EUR/tonne ) MGQ 
(tonnes ) 
Dehydrated fodder  
and sun-dried fodder 33 4 960 723 
246. The following table shows the eligible quantities for 2005/06. 
EU-25 production of dried fodder 
(tonnes ) 
2005/06  
EU-25 MGQ32 Production Stocks % MGQ 
Dried fodder 4 960 723 4 347 553 189 829 88% 
247. Evaluation and report: by the end of Sept ember 2008 the Commission is to present a 
report on this sector, base d on an evaluation of the common organisation of the 
market in dried fodder, looking in particul ar at the development of the areas of 
leguminous and other green fodder, the produc tion of dried fodder and the fossil fuel 
savings achieved. The report is  to be accompanied, if necessary, by appropriate 
proposals. 
                                                 
30 Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the com mon agricultural policy and 
establishing certain support schemes for farmers (OJ L 270, 21.10.2003, p. 1), Annex VII-D. 
31 Council Regulation (EC) No 1786/2003 of 29 September 2003 on the common organisation of the market in dried fodder (OJ L 270 , 21.10.2003, p. 114). 
32 Maximum guaranteed quantity, Council Regulation (EC) No 1786/2003 of 29 September 2003. 
 
EN 64   EN 3.1.12.  Fibre flax and fibre hemp 
Fibre flax 
248. In 2006, the EU continued to play a central role in world flax production. Even 
though the EU-25 accounted for only 20% of the world flax area, its high yields 
(1.14 tonne/ha) meant that Eu ropean production represented as much as 53% of world 
production. Due to modest yields, Chinese and Russian flax pr oduction is relatively 
small taking into account the areas cultivated. In 2006, 173 000 tonnes of both long and short fibres were produced in the European Union under contract (112 000 tonnes of long flax fibres and 31 000 tonnes of shor t flax fibres). In Europe, flax-growing 
areas were concentrated in five main producing countries: France (74%), Belgium 
(15%), the Netherlands (4.2%). and the Czech Republic (2.6%). According to the 
French General Association of Flax Producer s (AGPL) the total world area sown with 
fibre flax in 2006 was 539 000 ha, of which 200  000 ha were cultivated in China. In 
the European Union, the area sown was 107 570 ha (including 102 740 ha sown under 
contract). The EU imports medium- and lo w-quality fibres from  Egypt, but supplies 
the whole world with high-quality and very high-quality fibres, since these are not produced anywhere else. According to  Eurostat/Comext, the EU exported 
77 300 tonnes of flax fibre in 2004. European  exports to China have grown by about 
10% every year since 2001 — th e lower costs of spinning in China playing a key role.  
249. Market prices (in euros) for fibre flax  fell by around 10% in 2006 as against 2005 and 
by as much as 40% over the previous 4 years.  This was due partly to the rise in the 
euro against the US dollar and also to  the increase in pr oduction after the poor 
production levels in the year 2001/02 due to  bad weather conditions. On the other 
hand, sales of long-fibre flax in France a nd in Belgium increased compared to the 
previous year. At the beginning of 2007, howev er, prices went up ag ain (in particular 
for long flax). 
Fibre hemp 
250. The EU has a relatively small share of world hemp production with 14 250 ha (among 
which 13 910 ha under contract). The world ar ea planted with fibre hemp was around 
168 000 hectares in 2006. The EU accounted for only 6% of the world hemp area, 
with China cultivating about 150 000 ha. Fibre production under contract in the 
European Union decreased in 2006 to  21 650 tonnes compared to 2005 levels 
(26 700 tonnes). Traditionally, it has been concentrated in France and, to a lesser 
extent, in the United Kingdom, Germa ny, the Czech Republic, Poland, Italy and 
Hungary. Trade with third countries is very limited. 
Legislative framework:  main developments 
251. In 2006/07, processing aid was EUR 160 per tonne for long flax fibre and 
EUR 90 per tonne for short flax fibre and fo r hemp fibre. For long flax fibre, there 
was an EU maximum guaranteed quantity of 80 878 tonnes, shar ed out between the 
Member States in the form of nationa l guaranteed quantities . The corresponding 
figure for short flax fibre and hemp fi bre was 146 265 tonnes, also shared out 
between the Member States in the form of national guaranteed quantities. Each 
Member State may transfer part of its nati onal short flax fibre a nd hemp fibre quantity 
to its national long flax fibre quantity  and vice versa, using a coefficient of 
equivalence. 
 
EN 65   EN 3.1.13.  Cotton 
252. The world area under cotton in 2005/06 was estimated at around 34.62 million 
hectares, with production estimated at  some 25.20 million tonnes, as against 
36.00 million hectares and 26.00 million t onnes, respectively, in 2004/05. 
253. Unginned cotton is not traded  internationally, but the Eu ropean Union, whose cotton-
spinning capacity by far exceeds its fibre produ ction, imports substantial quantities of 
ginned cotton — around 400 000 to nnes in 2005. The countrie s of central Asia, the 
ACP countries, Egypt, Turkey and the United States are the main suppliers.  
254. In the European Union, the scale of cotton cu ltivation is limited, both in terms of the 
area planted and the number of producers. Howe ver, it is concentrated in certain areas 
of Greece and Spain, where it plays a major socio-economic role, and is also grown 
on a very small scale in Portugal. The EU area planted with cotton decreased in 2005: 450 000 hectares (as against 460 000 hectar es in 2004) producing 1 478 232 tonnes of 
unginned cotton (1 122 445 tonnes in Greece and 355 348 tonnes in Spain) as against 1 504 600 tonnes in 2004. The European Union is about 81% self-sufficient in cotton fibres, its consumption in 2005 having been around 620 000 tonnes. 
255. The Community aid scheme provides for a guide price (EUR 106.30/100 kg). An aid 
equivalent to the difference between the guide  price and the world price is granted to 
ginners who pay a minimum price to the gr ower. If the producti on of unginned cotton 
exceeds a maximum guaranteed quantity (M GQ), the guide price and the minimum 
price are reduced. The reduction is lower if the world pri ce level allows expenditure 
on the aid scheme to be cut. 
256. The guide price is reduced by 50% for production over and above the national 
guaranteed quantity (249 000 tonnes fo r Spain and 782 000 tonnes for Greece), 
provided that it remains lower than 362 000 tonnes in Spain and 1 138 000 tonnes in 
Greece. Beyond that level, the reduction is increased by 2% for each step of 
4 830 tonnes in Spain and 15 170 tonnes in Greece. In the 2005/06 marketing year, the guide price was reduced by 21.9% in Greece, 21.40% in Spain and 0% in Portugal.  
3.1.14.  Silkworms 
257. Silkworm rearing is practised in Greece, It aly and, to a lesser extent, France, Spain 
and Bulgaria. It accounts for only a tiny part of the EU’s agricultu ral activity and of 
world silk production. In ce rtain regions such as Th race, Veneto and Marche, 
however, it represents an important activity. 
258. Due to an increase in Italy and Greece, Community production went up again in 
2006: 5 667 boxes were produced, compared to 3 520 boxes in 2005 and 3 043 in 2004. They yielded 96 367 kilograms of cocoons in 2006 compared to 79 186 kilograms in 2005. As from the 2000/01  marketing year, aid is permanently 
fixed at EUR 133.26 per box. 
3.1.15.  Olive oil 
259. According to the Internati onal Olive Council (I.O.C.), wo rld production of virgin 
olive oil reached some 2 600 000 tonne s during the 2005/06 marketing year 
 
EN 66   EN (1/10/2005–30/9/2006). About 75% of this quantity was produced in the European 
Union, other major producer countries be ing Tunisia (220 000 tonnes), Turkey 
(115 000 tonnes), Syria (100 000 tonnes) a nd Morocco (75 000 tonnes). A specific 
feature of olive oil production is its very  marked volatility, both in space and time. 
Yields on the same holding can vary sharpl y from one year to another, depending 
especially on weather conditi ons and biological variations in the olive trees. The 
world market therefore fluctuates as a direct result of the Community market 
situation. 
260. Based on production declarations by th e Member States under the new CMO 
(Regulation (EC) No 865/2004), Comm unity production for 2005/06 (1/11/2005–
30/6/2006) was 1 919 000 tonnes compared  to 2 329 000 tonnes in 2004/05 (–  18%). 
Spain, Italy and Greece we re the three major producer s in the Community, with 
825 000 t (43% of the total), 636 000 t ( 33%) and 424 000 t (22%), respectively. 
261. Spain, Italy and Greece were the two majo r Community olive oil suppliers on the 
internal market: their in tra-EU exports were 330 000 t, 136 000 t and 122 000 t 
respectively (53%, 22% and 20%, respectivel y, of total intra-EU trade). Italy and 
France remained the Community’s main cons umers (42% and 16% of total intra-EU 
trade). 
262. During 2005/06, extra-EU imports totalled 164 000 tonnes while extra-EU exports for 
the same period reached 352 000 tonnes (119 000 tonnes under the inward processing 
scheme). Italy is the main exporter (52% of  total extra-EU exports), while the main 
destination is the United States (44% of total extra-EU exports). As from 2005/06, the 
export refund system has been abolished.  
263. For the 2005/06 marketing year, Community olive oil consumption is estimated at 
1 885 000 tonnes (or 71% of total world consumption).  
264. During the 2005/06 marketing year, prices re mained significantly  above the average 
price levels for previous marketing year s. Depending on the categories of olive oil 
and the Member States, average 2005/06 pr ices were 50 to 70% above the average 
prices for the five previous marketing years.  
265. Forecasts for 2006/07 point to a clear incr ease in production of  more than 10%, 
mainly in Spain. As a consequence, 2006/ 07 may see consumption increase by 12%. 
266. Council Regulation (EC) No 865/2004 of 29 April 2004 on the new common 
organisation of the market in olive oil and table olives applied from the 2005/06 
marketing year. Following adoption of the implementing Commission Regulation 
(EC) No 2080/2005, laying down detailed rules for operators’ organisations in the 
olive sector, their work programmes and th e financing thereof, two programmes were 
approved in 2006 and started to be implem ented in Italy and Greece, providing for 
EU support of €36 million and €11 million per year, respectively, until 2009. Another 
programme for France was to be approved in 2007. The measures to be financed 
cover five areas: market follow-up and admi nistrative management in the olive oil 
and table olives sector; improvement of th e production quality of olive oil and table 
olives; improvement of the environmental im pacts of olive cultiv ation; traceability, 
certification and quality prot ection; and finally the dissemination of information.  
 
EN 67   EN 3.1.16.  Fresh fruit and vegetables 
World markets and international trade33 
267. World production of fresh fruit and vegetables34 has steadily increased in recent 
years. It grew by 34% in volume over th e period 1997-2006. 67% of this growth was 
in China, where production increased by a remarkable 83% from 296 million tonnes 
in 1997 to 542 million tonnes in 2006. Growth  among the other large producers was 
more modest: 27% in India and 3% in the EU. In the USA, production fell by 7% 
over the same period. World production of fruit and vegetables reached 1 430 million 
tonnes in 2006, an increase of 1.3% compared with 2005. The share of vegetables was 63.2% (50.2% in the EU). With 122.3 m illion tonnes, the EU was the world’s 
third largest producer of fruit and vegeta bles after China (542 million tonnes) and 
India (125.4 million tonnes), followed by the USA with 64.4 million tonnes.  
268. Total EU imports of fresh fruit and ve getables amounted to 16.0 million tonnes in 
2006, with a value of €14.5 billion. Total EU exports of fresh fruits and vegetables totalled 5.8 million tonnes, with a value of €3.7  billion. The EU runs a trade deficit in 
fresh fruit and vegetables: in 2006, exports  were only 36.6% of im ports in terms of 
volume. The main suppliers of fresh fruit and vegetables are Costa Rica, Ecuador and 
South Africa. The main destinations fo r EU exports are Russia, Switzerland and 
Egypt. 
Community market 
269. In the period 2003-2006, the fruit and ve getables sector in the Community 
represented 12.3% of total agricultura l production. In the period 2003-2005, the 
annual production of vegetables (potatoe s excluded) stood at 36.1 million tonnes, 
including 17.1 million tonnes of tomato es. Fruit production stood at 26.4 million 
tonnes, including 10.6 million t onnes of citrus fruits.  
270. Community production of apples was 9.0 million tonnes in the 2005/06 marketing 
year (a drop of 11.9% compared with the previous year). Withdrawn quantities have 
been significantly reduced in recent years. They decreased from 3% in 2000/01 to 0.39% in 2005/06. 
271. Community production of pears stood at 2.3 million tonnes in 2005/06, a decrease of 
17% compared with the previous ma rketing year. In 2005/06, the quantities 
withdrawn from the market acc ounted for 0.81% of production.  
272. In 2005/06, the production of peaches was 3.1 million tonnes, a small decrease of 
0.4% compared with 2004/05. Withdrawal s represented 2.37% of Community 
production in 2005/06, as against 2.2% in the previous year. 
273. The production of nectarines in 2005/06 st ood at 0.7 million tonnes, a decrease of 
46.1% in comparison with 2004/05. Withdr awals accounted for 3.86% of total 
production in 2005/06 (4.0% in 2004/05). 
                                                
 
33 Source: FAO: http://www.fao.org. 
34 FAO aggregates exclude potatoes but include all kinds of grapes. 
 
EN 68   EN 274. In 2005/06, the production of table grap es in the Community stood at 2.1 million 
tonnes, a decrease of 10.3% in compar ison with 2004/05. Products withdrawn from 
the market (0.001% in 2005/06) represen ted a negligible share of production. 
275. The production of apricots was 538 000 t onnes in 2005/06, a decrease of 24.9% in 
comparison with the previous marketing year. Products withdrawn from the market represented 0.47% of Community pr oduction in 2005/06 (0.1% in 2004/05). 
276. The Community produced 6.8 million tonnes of  oranges in 2005/06, 16% more than 
in 2004/05. With 1.5 million tonnes in 2005/06,  the production of lemons increased 
by 7% in comparison with 2004/05. 
277. Cauliflower production was 2.3 million tonn es, a decrease of 3.5% in comparison 
with the previous marketing year. The qua ntities of cauliflower withdrawn from the 
market in the 2005/06 year accounted fo r 0.31% of Community production (1% in 
2004/05). 
278. Tomato production was 14.6 million tonne s in 2005/06, a decrease of 12.2% in 
comparison with 2004/05. Production in It aly, the main producer, was 6.4 million 
tonnes (43.6% of all Community production), a decrease of 11.5% from the previous 
marketing year. Withdrawals represented 0.46% of the total production of tomatoes 
for the fresh market (4.6% in 2004/05). 
Main legal and policy changes 
279. In 2006, apple producers in the Community found themselves in a difficult situation, 
due, among other things, to a significant in crease in imports of apples from certain 
countries in the southern hemisphere. To  improve the monitoring of apple imports, 
the Community adopted Commission Re gulation (EC) No 179/2006 introducing a 
system of import licences for apples imported from third countries. 
280. The Community also adopted Commi ssion Regulations (EC) Nos 430/2006, 
431/2006 and1790/2006 approving operations in Se negal, Kenya and Turkey to check 
conformity with the marketing standards app licable to fresh fruit and vegetables prior 
to import into the Community. As a result,  imports of fresh fruit and vegetables 
checked at the time of export by the authorities  of one of these count ries will in future 
be checked only on the basis of a reduced num ber of lots when they are imported into 
the Community. 
281. In 2006, the Community also adopted Commission Regulation (EC) No 2000/2006 
amending Regulation (EC) No 1870/2005 by reason of the accession of Bulgaria and Romania to the European Union. This Re gulation contains sp ecial provisions to 
ensure that importers in Bu lgaria and Romania have acce ss to the import tariff quotas 
for garlic.  
3.1.17.  Bananas 
Community production 
282. In 2006, banana production in the Community was 641
 754 tonnes, a decrease of 1% 
in comparison with 2005. 
 
EN 69   EN 283. The compensatory aid for 200635 was fixed at EUR 18.56 per 100 kg, plus a further 
EUR 15.42 per 100 kg for bananas produced in Guadeloupe, EUR 13.95 per 100 kg 
for Martinique and EUR 3.58 per 100 kg for Greece. The cost of compensatory aid for 2006 totalled EUR 156.2 million, compared with EUR 70.2 million in 2005.  
Imports 
284. In 2006, the overall volume of bana nas imported into the EU-25 was 
4
 185 018 tonnes, compared to 3 727 014 in 2005, which represents an increase of 
12.3% with respect to 2005. Exports by MFN countries to the EU rose by 10.7% in 
comparison with 2005 (from 2 963 339 to 3 279 276 tonnes), while imports from ACP 
countries were 18.6% higher than in 2005 (rising from 763 675 to 905 742 tonnes). 
Main legislative and policy developments 
285. On 29 November 200536, the Council adopted a regul ation introducing a new import 
regime for bananas from 1 January 2006. Th e new regime consists of an autonomous 
MFN tariff37 of EUR 176 per tonne and a duty-free TRQ38 for bananas of ACP origin 
up to 775 000 tonnes.  
286. After having published a report to the Eu ropean Parliament and the Council on the 
operation of the common organisation of the market in bananas (CMO)39, and having 
launched a wide-ranging debate on the reform of the intern al aspects of the CMO (in 
particular the aid to European producers,  supported by an independent evaluation on 
the operation of the banana CMO40 published in autumn 2005), the Commission 
prepared an impact assessment of this reform and adopted a proposal. This proposal led to a Council Regulation
41 replacing the current aid scheme for banana producers 
in the outermost regions with a budget transfer of EUR 278.8 million to the POSEI 
scheme. For banana-growing areas outside the outermost regions, aid totalling EUR 
1.2 million is now included in the single payment scheme. 
3.1.18.  Processed fruit and vegetables 
World markets and international trade 
287. The information available on processed frui t and vegetables remains incomplete. For 
the Community, a large part of this inform ation concerns only products that receive 
processing aid.  
288. World production of tomatoes for processing stood at 30.5 million tonnes in 2006, 
5.3% lower than in 2005 (32.2 million tonnes). The main producers were the USA (9.6 million tonnes as against 9.2 million in 2005), the EU (8 million tonnes as 
                                                
 
35 Commission Regulation (EC) No 485/2007 of 30 April 2007 (OJ L 114, 1.5.2007, p. 3).  
36 Council Regulation (EC) No 1964/2005 of 29 November 2005 (OJ L 316, 2.12.2005, p. 1). 
37 Commission Regulation (EC) No 2014/2005 of 9 December 2005 (OJ L 324, 10.12.2005, p. 3). 
38 Commission Regulation (EC) No 2015/2005 of 9 December 2005 (OJ L 324, 10.12.2005, p. 5) and Commission Regulation (EC) No 21 9/2006 of 8 February 
2006 (OJ L 38, 9.2.2006, p. 22). 
39 COM(2005) 50 final, February 2005. 40 Evaluation of the common organisation of the market in bananas, carried out by COGEA, 
http://europa.eu.int/comm/agriculture/eval/reports/bananas/index_fr.htm. 
41 Council Regulation (EC) No 2013/2006 of 19.12.2006 (OJ L384, 29.12.2006, p. 13). 
 
EN 70   EN against 10.1 in 2005), China (4.3 million tonnes as against 3.2 in 2005) and Turkey 
(1.4 million tonnes as against 1.6 million tonnes in 2005). 
Community market 
289. In 2006, Community production of tomatoes for processing decreased by 24% in 
comparison with 2005. The largest fall was in Spain, where production decreased by 
1.2 million tonnes from 2.6 to 1.4 million tonnes.  
290. In 2006, the production of peaches for processi ng into preserved peaches decreased in 
comparison to 2005 by 13.3% to 502 000 tonnes. 
291. Community production of preserved Rocha and Williams pears stood at 112 000 
tonnes in 2006/07, a slight increase of 1.4% from 2005/06. Italy was the main 
producer with 56 500 tonnes (around 50% of  total Community production), followed 
by Spain (25%) and France (13%). 
292. For 2006/07, Community thresholds for pr ocessing were exceeded for tomatoes 
(19.7%), pears (6.2%), ora nges (24.8%) and small citrus (26.9%). Community aid 
was consequently cut for 2007/08 in the Memb er States where the national thresholds 
were exceeded: 
Decrease in Community processing aid for 2005/ 06, compared with the levels fixed by 
Council Regulations (EC) No 2201/96 and (EC) No 2202/96 
MS Small citrus Oranges Pears Tomatoes (1) 
Greece  8% 68.47%  
Spain 12%   9.29% 
Italy 62.3% 55.91% 4.76%  
Portugal 80.66% 52.88%   
Cyprus 53.27%    
Netherlands   94.15%  
(1) The reduction does not apply to processing into whole peeled tomatoes. 
For dried grapes, the base amount of aid is €3 569 per hectare. This aid is only 
granted to specialised areas that  meet certain yield criteria. 
Main legal and policy changes 
293. In 2005, in order to amend some anomalie s in counting processed raw material 
against the processing thresholds of Member States, notably in the case of tomatoes, 
the Commission adopted Regulation (E C) No 1663/2005 of 11 October 2005 
amending Regulation (EC) No 1535/2003 layi ng down detailed rules for applying 
Council Regulation (EC) No 2201/96 as regards the aid scheme for products 
processed from fruit and vegetables. In add ition, to expand the range of possible uses 
of the products to be sold from storag e, the Commission adopted Regulation (EC) 
No 1051/2005 of 5 July 2005 to amend Regulation (EC) No 1622/1999 by adding 
direct animal feed and use in co mposting and biodegrading processes. 
294. In 2007, the Council adopted the reform of  the fruit and vegetables CMO. For 
processed products, the production aid sche mes are replaced by the single payment 
 
EN 71   EN scheme with the possibility of  leaving part of the aid coupl ed to the processing of raw 
material for a transitional period. 
3.1.19.  Wine 
295. The Commission launched a public debate on future policy by holding a wine 
seminar with stakeholders on 16 Februa ry 2006. The Advisory Group on Wine has 
also discussed potential reform scenarios.  In addition, many bilateral meetings have 
been organised with a wide range of stak eholders. Two working papers on the Wine 
CMO and on the wine economy in the EU42 explain the current situation, including 
the difficulties and problems of the wine sector. 
296. On 22 June 2006, the Commission adopted a Communication to the Council, the 
European Parliament, the European Economic and Social Committee and the Committee of the Regions entitled ‘Towards  a sustainable European wine sector’
43. 
297. This Communication presents the Commissi on’s current assessment of the existing 
wine CMO in the light of the realities of th e European and international markets, aims 
to identify the problems and offers a number of possible ways forw ard. Its purpose is 
to formally initiate discussi on with all stakeholders and Eu ropean institutions with a 
view to making legislative proposals to ad dress, among other issu es, excessive wine 
stocks, overproduction, and th e need for a simpler, more transparent and more 
market-oriented policy, and furthermore to contribute to a culture of responsible drinking and to reducing alcohol -related harm throughout the EU. 
298. This Communication is in line with the prin ciples agreed for the common agricultural 
policy (CAP) reform of 2003, the Göteborg European Council
44 conclusions calling 
for more sustainable developm ent, and the Lisbon Strategy45 to strengthen 
competitiveness and ensure simplification and better regulation. 
299. It is accompanied by an impact assessment to ensure compatibil ity with relevant 
Community policies46. 
300. At 169.5m hl, Commun ity wine production  in 2006 (excluding grape must not 
processed into wine) was sli ghtly above the average produc tion level for the previous 
five years:  
Year Wine production Average 5 years Average 10 years 
2002-2003 150.9m hl 164.5m hl 162.0m hl 
2003-2004 154.2m hl 163.9m hl 161.4m hl 
2004-2005 186.0m hl 165.2m hl 164.8m hl 
2005-2006 165.7m hl 163.3m hl 166.1m hl 
2006-2007 169.5m hl 165.3m hl 166.2m hl 
                                                 
42 Available on the internet at: ec.europa.eu/agriculture/capreform/wine/index2_en.htm. 
43 COM(2006) 319 final, 22.6.2006. 44 Presidency Conclusions, 15-16 June 2001. 
45 COM(2005) 24 final. 
46 SEC(2006) 770, 22.6.2006. 
 
EN 72   EN 301. As regards the Community harvest  (including grape must not processed into wine) for 
the 2006/07 marketing year, Member Stat es have communicated the following 
estimates. 
Total production 
’000 hl 
Member State  2002/03 2003/04 2004/05 2005/06 2006/07 
provis. Diff. 
2006//05  
Czech Republic 495 540 605 439 432 –2% 
Germany 9 984 8 291 10 107 9 256 8 995 –3% 
Greece 3 098 3 804 4 295 3 997 3 938 –1% 
Spain 39 419 48 620 50 062 40 466 43 081 +6% 
France 51 966 47 519 58 845 52 553 53 300 +1% 
Italy 46 200 44 087 53 135 53 062 54 535 +3% 
Cyprus 240 400 282 197 220 +12% 
Luxemburg 154 123 156 135 124 –8% 
Hungary 3 500 3 800 5 272 3 567 3 271 –8% 
Malta 62 100 70 70 65 –7% 
Austria 2 599 2 556 2 734 2 264 2 269 0% 
Portugal 6 677 7 283 7 481 7 254 7 532 +4% 
Slovenia 900 671 944 886 829 –6% 
Slovakia 340 540 410 302 320 +6% 
Other EU-25 13 18 23 25 26 +4% 
Total EU-15 
Total EU-25 160 111 
165 648 162 300 
168 351 186 838 
194 420 169 012 
174 473 173 800 
178 936 +3% 
+3% 
 
302. Contracts concluded in 2006/07 for the distillation of potab le alcohol under Article 29 
of Regulation (EC) No 1493/1999 came to 14.9 million hectolitres of wine, exceeding 
the available budget resources and the abso rption capacity of the potable alcohol 
sector, so were reduced to 11 million hl.47 
303. Due the excellent harvest of 2004/05, interven tion was needed in the wine sector to 
reduce stocks of table and quality wines. Cr isis distillations were again decided in 
order to eliminate 5.4m hl of wine, stor ed mainly in France (2.6m hl) and Italy 
(1.9m hl). 
304. Sales of wine alcohol from public interven tion stocks for other ‘new’ industrial uses 
were phased out in 2006. Due to increasing demand for bio-ethanol, the price of wine 
alcohol went up from approx. €38/hl in  January to €50/hl in December 2006. 
305. The European Union is the world’s main exporter with 16.8 million hl valued at 
€5 450m. The main buyers of Community wine48 in 2006 were the United States 
(4.3m hl), Russia (3.3m hl), Switzerland (1.6m hl), Canada (1.5m hl) and Japan 
(1.1m hl). During the same period, the Eu ropean Union imported 11.5m hl with a 
value of €2 435m mainly from  Australia (3.2m hl), Chil e (2.2m hl), South Africa 
(2.1m hl) and the United States (2.0m hl). 
                                                 
47 OJ L 23, 27.1.2006, p. 10. 
48 Source: EC-COMEXT EEC Special trade since 1988. 
 
EN 73   EN 306. In 2006, EU budget expenditure on measures for the wine sector rose to €1 487 m, 
with restructuring measures and dis tillation aid accounting for 30% and 33%, 
respectively. 
Measures 2005 ( €m) 2006 (€m) in % Diff. 
Restructuring of vineyards 446 441 30% –1% 
Grubbing-up 31 67 4.5% +116% 
Distillation (all) 321 486 33% +51% 
Public storage alcohol 185 198 13% +7% 
Must aid 198 185 12% –7% 
Private storage wine & must 70 90 6% +29% 
Export refunds 17 19 1.5% +12% 
TOTAL 1 269 1 487 100% +17% 
307. With a view to restructuring and conver ting vineyards under Council Regulation (EC) 
No 1493/1999, the Commission approved financia l allocations to Member States for 
a specified number of hect ares, taking account of compen sation paid to winegrowers 
for loss of income during periods wh en vineyards are not in production. 
Decision 2006/701/EC laid down indicative financial allocations for 2006/07 as 
follows49: 
Member State Area (ha)* Financial allocation (EUR) 
Czech Republic  1 214  2 869 670  
Germany 1 906 12 690 042 
Greece 1 118 8 725 230 
Spain  19 567 159 524 473 
France 12 734 110 973 729 
Italy 13 056 99 825 428 
Cyprus 150 2 033 953 
Luxembourg 11 84 000 
Hungary 1 211 9 688 862 
Malta 16 107 545 
Austria 1 066 6 449 988 
Portugal 3 918 32 626 123 
Slovenia 122 2 400 955 
Slovakia 400 2 000 000 
TOTAL  56 489  450 000 000  
* Member States have the possibility to spread this amount over a larger area.  
3.1.20.  Tobacco 
Market developments 
308. Compared with 2005 prices, EU market prices  were similar or hi gher for tobaccos of 
most groups in 2006. 
                                                 
49 OJ L 290, 20.10.2006, p. 41. 
 
EN 74   EN 309. EU imports of raw tobacco amounted to  about 555 000 tonnes in 2005 and 550 000 
tonnes in 2006 (decrease of 5 000 tonnes) . EU exports were approx. 192 000 tonnes 
in 2005 and 198 000 tonnes in 2006 (increase of 6 000 tonnes). 
Main legislative and policy developments 
310. In April 2004, the Council decided that d ecoupling would be carried out gradually 
over a four-year transition peri od, starting in 2006. Over th ese four years, at least 
40% of the tobacco premiums  would have to be include d in the decoupled single 
payment for farmers. Member States may d ecide to retain up to 60% as a coupled 
payment. The coupled payment may be rese rved for producers in Objective-1 regions 
or for farmers producing varieties of a certa in quality. After the four-year transition 
period, from 2010, tobacco aid will be comp letely uncoupled from production. 50% 
will be transferred to the single farm payment and the remaining 50% will be used for restructuring programmes under rural development policy. 
311. For 2005 the old tobacco regime, including th e aids fixed for 2004, still applied. In 
2006, the reform started with the transfer of all or part of the tobacco premium to entitlements for the single payment.  
3.1.21.  Seeds 
Market developments 
312. In the 2006/07 marketing year, total certi fied seed production covered by the CMO 
for seeds (excluding hybrid maize) was an  estimated 559 055 tonnes. The total seed 
area was 421 239 hectares.  
313. In 2006 the volume of Graminae  seed grown was approximately 258 507 tonnes and 
the volume of Leguminosae  seed about 193 315 tonnes. Graminae  accounted for 
247 358 hectares and Leguminosae  for 131 627 hectares. 
314. Rice seed production in 2006 went down to 76 605 tonnes as estimated by the 
Member States compared to 2005, and th e area also shrank to 12 804 hectares. 
315. Fibre flax seed was grown on 21 258 hectar es in 2006, with an estimated production 
of 16 420 tonnes. The linseed area was 5 567 and linseed production was 
approximately 6 151 tonnes in 2006. 
Main legislative and policy developments 
316. Following the integration of seed support in the 2003 CAP reform as from the 2005/6 
marketing year, detailed rules were laid  down in Regulations (EC) Nos 796/2004 and 
1973/2004.  
3.1.22.  Hops 
World market 
317. In 2006 the total world hop area was about 49
 526 hectares (a mi nor decrease of 1.6% 
compared to 2005). The larges t growers were the EU (30 000 hectares, including 
Germany with 17 170 hectares, the Czech Republic with 5 414 hectares and Poland 
 
EN 75   EN with 2 234 hectares), the USA (approx. 11 884 hectares) and China (about 
3 544 hectares). 
318. World production in 2006 amounted to approx. 85 570 tonnes, around 9% down from 
the year 2005. The 7 102 tonnes of alpha acid produced (7 903 tonnes in 2005) was 
equivalent to an alpha acid yield of 8.3%. The average yield per hectare was 
1.73 tonnes. 
Community market 
319. Hops are grown in twelve Member States  (Belgium, the Czech Republic, Germany, 
Spain, France, Hungary, Austria, Poland, Po rtugal, Slovenia, Slovakia and the United 
Kingdom). The total area in 2006 was 29 983 hectares, of which 57% was in 
Germany. 
320. The 2006 harvest of 43 062 tonnes was 20% lower than in 2005. The average yield 
was also lower: 1.4 tonnes/hectare as  against 1.8 tonnes /hectare in 2005. 
321. The 2006 harvest had an average alpha acid co ntent of 7.1% for al l varieties in the 
Community. This was equivalent to 3 046 t onnes of alpha acid fo r beer production in 
2006. 
Main legislative and policy developments 
322. The hop sector is affected by the CAP re form in that, from 1 January 2005, it was 
integrated into the single farm payment system. The comp lete decoupling of aid will 
enable producers to switch to other pr oduction while receivin g a stable income. 
323. Flexibility is nevertheless possible at Memb er State level in order to be able to 
respond to specific regional pr oduction characteristics: Memb er States can thus opt to 
keep part of the aid coupled (up to 25%), which may be paid di rectly to individual 
hop producers or producer groups. The latter  will manage that budget in line with 
collective needs in te rms of variety conversion, market  support, research, promotion, 
investment in equipment, etc. 
3.1.23.  Flowers and live plants 
World markets and international trade 
324. The information on world markets in flower s and live plants in 2006 is incomplete. 
World production of flowers and pot plants represents only part of floricultural 
production. The world area devoted to flow ers and pot plants in 2005 was approx. 
495 000 hectares. With 49%, China held the largest share of this area. The EU 
accounted for around 19%, while India, US A, Japan and Mexico were other major 
flower-producing countries.  
325. World production of flowers and pot pl ants in 2005 was valued at around €26 000 
million. The EU’s share in the world production of flowers and pot plants was approx. 38%. The United States (17%), Japan (12%) and Taiwan (9%) were also 
major producers.  
 
EN 76   EN Community market 
326. In 2006, the total area for the production of  flowers and live plants (including cut 
flowers and cut foliage, potted plants, beddi ng and balcony plants and nursery plants, 
conifers and hardy perennial plants, bulbs and corms) in the EU was an estimated 
178.3 thousand hectares. Production is highly co ncentrated in the Netherlands, where 
the area devoted to the production of flow ers and ornamental plants in 2006 was 
41.8 thousand ha. In Germany, flowers and or namental plants were cultivated on 
28.0 thousand ha. With 26.7 thousand ha, France came in third place followed by the United Kingdom (25.8 thousand ha) a nd Italy (11.1 thousand ha).  
327. The production value of flowers and live plants in the EU in 2006 is estimated at 
€1920.8 million. The Netherlands, Italy, Germ any, France and the United Kingdom 
had the highest market values for flowers and ornamental plants within the EU. The 
Netherlands had the largest production value in the EU, their share in total EU production of flowers and ornamental plants  being about 31%. Italy came second in 
the EU with 15%, while Germany (14%) a nd France (13%) ranked third and fourth 
followed by the United Kingdom (6%). In mo st EU Member States the production of 
flowers and ornamental plants in 2006 was stable in comparison with the previous 
year. 
328. The value of total imports of flowers and ornamental plants in 2006 was almost 
€1365 million. Cut flowers and cut foliage re presented 77% of total imports of 
flowers and ornamental plan ts in 2006. Potted plants, be dding and balcony plants and 
nursery plants came second with 18%, followed by bulbs and corms (4%) and conifers and hardy perennial plants (1%).  
329. Cut flowers and cut foliage were imported mainly from Kenya (30% of imports from 
third countries), Colombia (11%), Isra el (10%) and Ecuador (10%). The main 
countries of origin for potted plants, be dding and balcony plants and nursery plants 
were China (14%), Kenya (13%) and Costa Ri ca (13%). Conifers and hardy perennial 
plants were imported mainly from Egypt (16%), Israel (12%), China and Japan 
(11%). Chile was the country of origin for 16% of bulbs and corm s imported into the 
EU. Bulb and corms were also imported from Israel (12%), China and Japan (11%).  
330. In 2006, the value of exports of  ornamental flowers and plants from the EU to third 
countries came to €1560.5 million. Cut flower s and cut foliage represented 32% of 
total exports of flowers a nd ornamental plants. Bulbs and corms came second with 
31% followed by potted plants, bedding and ba lcony plants and nursery plants with 
30%. Conifers and hardy perennial plants represented 7% of the total exports of 
flowers and ornamental plants.  
331. The main EU export destination for cut fl owers and cut foliage in 2006 was Russia, 
representing 29% of total EU  exports. Other destinations were Switzerland  (24%), the 
USA (19%) and Norway (8%). Potted plan ts, bedding and balcony plants and nursery 
plants were exported mainly to Switzerland (30%), Russia (12%), Norway (11%) and 
the USA (8%). Conifers and hardy perenn ial plants were exported mainly to 
Switzerland (26%), Russia (14%), Turkey (11%) and Norway (11%). The main EU 
export destination for bulbs and corms in  2006 was the USA (33%), followed by 
Japan (14%), Switzerland (7%) and Russia (7%). 
 
EN 77   EN Main legal and policy changes 
332. There were no legal or policy changes in th e flower and live plants sector in 2006. 
3.1.24.  Animal feed (EU-25) 
333. Animal feed uses large quantitie s of agricultural products. It  is the main outlet for the 
Community production of cerea ls and oil seeds and virtuall y the only use for permanent 
grassland and fodder from arable land.  
334. About half of the total supply comes from feedstuffs generally no t marketed (pasture, 
hay, silage), which is used mainly for ruminants.  The other half, which can be used by 
all livestock, consists of f eedstuffs such as cereals,  substitutes and oil meals. 
335. For 2005/06, the total consumption by an imals of the key marketable products50 in the 
European Union is estimated at 246 million tonnes. 
336. Consumption comprised: 
– domestically produced products estimate d at 188.0 million tonnes, mainly from 
the cereal sector, 
– net imports estimated at 61.1 million tonnes, mainly because of higher imports 
of soya. 
337. Total consumption of cereals by animal s in 2005/06 was expected to reach 
155.5 m illion tonnes. 
338. Industrial production of  compound feedingstuffs  for animals in the European Union51 
is estimated at 142.0 million tonnes in 2005 and 141.7 million tonnes in 2006. 
EU-25 industrial production of compo und feedingstuffs by animal category 
(million tonnes )
Compound feedingstuffs for 2005 2006 difference % variation 
all bovine animals (dairy and beef) 37.9 38.2 +0.3 +0.8 
pigs 47.2 48.1 +0.9 +1.9 
poultry 45.5 44.0 –1.5 –3.3 
other 11.3 11.4 +0.1 +0.9 
TOTAL  compound feedingstuffs  141.9 141.7 –0.2 –0.1 
                                                 
50 Covering most marketable feed used in the Community by the compound feedingstuffs industry and on the farm (own consumption and purchases of raw 
materials) and estimated in the detailed table below ‘Animal consumption of key marketable products (estimates EU-25)’ Source: DG AGRI. 
51 Provisional figures for EU-25 excluding Greece and Luxembourg; source: European Feed Manufacturers’ Federation (FEFAC). 
 
EN 78   EN Animal consumption of key marketable products 
(estimates EU-25) 
(million tonnes )
2005/06 
ANIMAL CONSUMPTION KEY PRODUCTS Import 
duty rate
EU IMP EXP TOTAL 
GRAIN CEREALS      
Common wheat T 53.2 3.5 – 56.7 
Barley T 35.4 0.1 – 35.5 
Maize T 37.0 1.5 – 38.5 
Others T 23.9 0.9 – 24.8 
TOTAL CEREALS   149.5 6.0 – 155.5 
TOTAL SUBSTITUTES ex–Annex D of which:  20.3  9.1  0.0  29.4  
Manioc 6% C/T – 0.3 – 0.3 
Sweet potatoes 0% C/T – – – – 
CGF (corn gluten feed) 0% C 1.7 5.3 – 7.0 
Brans T 10.4 – – 10.4 
MGC (maize germ cake) 0% C 0.2 0.1 – 0.3 
Citrus pellets 0% C – 1.5 – 1.5 
Dried sugar beet pulp 0% C 5.5 0.5 – 6.0 
Brewing and distilling residues 0% C 2.0 0.9 – 2.9 
Various fruit waste 0% C 0.5 0.5 – 1.0 
TOTAL OTHER ENERGY FEEDS, of which:  2.0  3.2  0.0  5.2  
Molasses T 0.6 2.6 – 3.2 
Animal and vegetable fats (added to feed) 4–17% C 1.4 0.6 – 2.0 
TOTAL  HIGH -ENERGY FEEDS    22.3 12.3 – 34.6 
OILCAKE  AND  SEEDS  (oilcake equivalent), of which:  6.5  40.9  2.4  45.0  
Soya 0% C 0.5 32.5 2.0 31.0 
Rape 0% C 4.7 1.0 0.2 5.5 
Sunflower 0% C 1.3 2.4 0.1 3.6 
Other 0% C – 5.0 0.1 4.9 
OTHER  PROTEIN  FEEDS, of which:  9.7  1.9  0.5  11.1  
Protein crops 2–5% C 3.5 1.1 – 4.6 
Dried fodder and related 0–9% C 4.8 0.1 0.2 4.7 
Fish meal and meat meal 0–2% C 1.0 0.7 0.3 1.4 
Skimmed-milk powder T 0.4 – – 0.4 
TOTAL  HIGH -PROTEIN FEEDS   16.2 42.8 2.9 56.1 
GRAND TOTAL , KEY PRODUCTS   188.0 61.1 2.9 246.1 
EU-25 Key products index 2002/03 = 100 [244.9m t]  
* consumption index  100.5 
* livestock demand index  100.5 
Notes: T = Tariff since 1.7.1995; C = bound under GATT; % = import duty as at 1.7.1995; 0 = exempt.  
 
EN 79   EN 3.2. Market developments — Animal products 
3.2.1.  Milk and milk products 
Milk in the world 
339. Initial estimates suggest that world milk  production (including cow’s milk, buffalo 
milk, sheep’s milk and goat’s milk) reached 653 million tonnes in 2006, which represents an increase of 1.5% compared to  2005. Cow’s milk represents 84% of total 
production and buffalo milk 12%. The rema ining 4% comes from sheep, goats and 
camels. 
340. Within Asia, production in India, which derives more than half its milk from 
buffaloes, continues to grow. In 2006, I ndia produced 96 million tonnes, confirming 
its place as the world’s second largest producer after the European Union. Production is expected to increase further, based on rising domestic demand. Pakistan and China 
are other major producers in the region. China produced 36 million tonnes and Pakistan 31 million tonnes. Pakistan is exp ected to increase production at the same 
rate as India. However, China saw an in crease of only 13% in 2006, less than in the 
previous years when growth was more th an 20%. China is now the second largest 
producer in the region and number four in the world. In South East Asia, demand for 
dairy products continues to grow due to increases in family income and a more 
western diet, including more dairy products. 
341. Latin America had a production of 66 milli on tonnes in 2006, an increase of 0.6% 
compared to 2005. Further increases are expect ed, particularly in Mexico, Argentina, 
Brazil and Chile. These four countries account for 70% of milk output in this region. 
Elsewhere in the region, milk production continues to increas e as well, though 
remaining small in absolute terms. Brazil is the largest producer of milk in the region 
(seventh in the world). Production in Brazil reached 25.5 million tonnes in 2006, an 
increase of 3% compared to the year before . So far, Brazil is not  developing as a large 
exporter of milk products. Chile on the othe r hand is increasing its dairy exports. 
342. The former Soviet republics saw their m ilk production increas e in 2006 by 0.8% to 
65 million tonnes, but with some variation from  one country to another. In the former 
Soviet Union, production increased 0.6%. A further increase is  expected with 
government support to help restructure th e industry. In Russia, the fifth largest 
producer in the world, production was expect ed to reach 31.3 million tonnes in 2006. 
In the Ukraine, the other large producing country in the region, production decreased 
by 3.2% to 13.3 million tonnes. 
343. In 2006, milk production in the United States grew by 2.8% to 82.4 million tonnes, 
the second year of growth in a row afte r three years of stagnation. In Canada, 
production remained stable at 7.8 million tonnes. 
344. In Oceania, weather conditions played an important role in production levels, though 
with different results in New Zealand a nd Australia. Milk production in New Zealand 
increased by 3% to 15 million tonnes, while in Australia production in the 2006/07 
milking season fell by 5% to 9.5 million t onnes due to drought. New Zealand, the 
largest dairy exporter in the world, is expect ed to continue its gradual growth, while 
Australia’s production is expected to decline further. 
 
EN 80   EN 345. World market prices fell slightly after high levels in 2005. However, the reduced 
production in Australia, one of the main expo rting countries in th e world, and reduced 
availability from the EU, combined w ith continued strong demand on the world 
market, resulted in increasing prices for dairy commodities at the end of 2006. From 
August to December, prices for WMP and SMP increased from $2000/tonne to 
$3000/tonne. For Cheddar, prices increased from $2600/tonne to $2800/tonne. Butter prices increased from $1600/tonne to $1800/tonne. 
The Community market 
346. The dairy herd fell by 2.8% to 22.3 million. Yields, however, increased by 1.5% to 
6 225 kg per animal per year. 
347. Milk production decreased by 0.8% to 141.4 million tonnes (including deliveries to 
industry, direct sales and use on the farm ). Milk deliveries decreased to 130.7 million 
tonnes. In 2006, the first signs of struct ural under-quota production appeared. Before 
2006, quotas were always more or less fill ed in each Member State. There was a 
structural decline in Sweden, UK and Hungar y, but milk production fell in France as 
well.  
348. Drinking milk production remained fairly stable at around 33.5 million tonnes in the 
EU-25. Production of cream for consumption increased by 1.4% to 2.5 million tonnes, while yoghurt showed a 2.4% increase. 
349. Butter production decreased by 4.8%, or 107 000 tonnes, to 2.07 million tonnes. 
350. Consumption of butter increased in 2006 to 1.97 million tonnes. Per capita 
consumption was 4.3 kg per year, although there was a wide range between the 
various Member States, with France accoun ting for 8.2 kg per y ear per person while 
the average Greek only consumed 600 grams. 
351. Total cheese production increased again in 2006, by 2.2% or 180 000 tonnes. 
Production rose in the dair ies but not on the farms. 
352. In 2006, per capita consumption of ch eese increased by 1.8% per year to 
17.9 kg/person. This divided into 18.2 kg/pers on in the EU-15 a nd 11.9 kg/person in 
the 10 new Member States (NMS). 
353. As regards milk powder, production decr eased by 7.2% to 1.87 million tonnes. The 
production of skimmed milk powder decr eased to 0.86 million tonnes while whole 
milk, semi-skimmed milk and butter milk powder together fell to 1 million tonnes. 
354. Production of casein in 2006 is likely to have fallen. In 2005 5.9 million tonnes of 
skimmed milk were processed into 175 000 tonnes of casein. 
355. At the end of 2006 the EU had 1.3 million dairy farmers, 157 000 fewer than in 2005. 
The number of farmers is falling gradually  in all Member States, but Poland alone 
saw a drop of 100 000 in 2006. The average numb er of cows per holding rose to 16 
(ranging from 2.0 in Latvia to 252 in the Czech Republic). The amount of milk delivered per holding was 90 000 kg. Howe ver the average for the EU-15 was 
252 000 and for the 10 NMS only 20 000. Again, th ere was a very wide variation in 
 
EN 81   EN the average quantity delivered per farm, ra nging from 7 600 tonnes in Lithuania to 
1 569 600 tonnes in the Czech Republic. 
356. Total consumption of milk produ cts, defined as the total of all uses made of milk in 
the European Union, has risen since 2003 by 1% per year. 
357. In 2006, only SMP was bought into interven tion. Intervention stocks were empty 
halfway through 2006. This is evidence of a rather tight supply-demand situation in 
2006 for the milk protein market in the EU. 
358. For butter, 61 500 tonnes were bought into in tervention. Despite th is rather large 
increase, 119 000 tonnes were so ld from intervention, mainly  at the end of the year. 
Stocks were reduced by the end of the ye ar to 62 000 tonnes. Th is shows that the 
EU-25 market for milk fat was also getting tighter.  
359. On 1 July 2006 institutional prices were reduced by 7%  for butter and by 5% for 
skimmed milk powder, to €259.50/100  kg and €174.70/100  kg, respectively. 
Domestic prices for milk products decrea sed for butter and WM P in line with the 
intervention price cuts. Prices for SMP resi sted the intervention price cut. Prices for 
cheeses decreased slightly af ter three years of stability. 
360. Exports showed a mixed picture in 2006. 252 000 tonnes of butter and butter oil were 
exported. This was a big decrea se compared to previous y ears, where exports were far 
above 300 000 tonnes. For skimmed milk pow der, exports were down by more than 
55%, caused by limited availability. Exports  of WMP and casein fell by 15% and 
32%, respectively. Exports of  whey powder developed mo re positively, growing by 
+3.4% to 320 000 tonnes, while cheese exports also increased by 5% to 
586 000 tonnes. Lactose exports in creased by 27% to 94 000 tonnes. 
361. It should be noted that these exports we re achieved with much reduced refunds. 
Between 2004, the start of the dairy reform , and the end of 2006, WMP refunds were 
reduced by 78%, butter refunds by 45% a nd cheese refunds by 59%. Refunds for 
SMP were even cut to zero in June 2006. Internal disposal aids for casein production and SMP in animal feed were reduced to zero in Octobe r 2006. Whey powder and 
lactose never were eligible for export refunds.  
3.2.2.  Beef and veal 
Community market 
362. Based on the November/December 2006 survey, the total EU-25 bovine herd 
amounted to 84.7 million head. This was a decrease of 1.1% compared with the 
preceding year. The bovine herd increased in Denmark (+
 0.5%), Greece (+  2.6%) 
and Lithuania (+4.8%), but decreased in se veral Member States, particularly in 
Germany (–  2.5%), Italy (–  1.8%), the Netherlands (–  1.9%), Poland (–  1.9%) and the 
United Kingdom (–  2.6%). 
363. In 2006, net beef and veal production in the EU-25 was an estimated 7.89 million 
tonnes, an increase of 0.4% compared w ith 2005. This slight increase was primarily 
due to more slaughtering of cows in the UK following the return of over-thirty month cattle to the normal commercial market. 
 
EN 82   EN 364. In 2006, beef and veal consumption in the EU-25 was an estimated 8.19 million 
tonnes. Consumption was around 0.3% up on 2005. Average per capita consumption is estimated at 17.7 kilograms, although th e level in the 10 new Member States 
(6.3 kilograms) remained well below that in the EU-15 (19.9 kilograms). 
365. As regards external trade, the EU-25 exported around 239 000 tonnes of beef (meat 
and live animals in carcass weight equivale nt) in 2006. This was 16.3% lower than in 
2005. The majority of exports were for the Russian market (62.7%) along with 
Switzerland (4.4%), Croatia (4.2%) and Angola (3.4%). The general decrease in 
exports to third countries can be explaine d by several factors, including tight supply 
on the Community market, the strong competiti ve position of third country suppliers 
(in particular from South America) on th e world market and the unfavourable euro-
dollar exchange rate. Moreover,  in view of prevailing ma rket circumstances, export 
refund levels were reduced on various occasions. 
366. EU-25 beef imports in 2006 amounted to  around 510 000 tonnes, corresponding to a 
3.8% decrease compared with 2005. Over 90% of imports came from Brazil (64.6% 
of total imports), Argentina (16.2%) and Ur uguay (8.8%). This decrease contrasts 
with the upward trend seen in recent year s. However, following the outbreak of foot-
and-mouth disease in Brazil in late Se ptember 2005, the EU introduced import 
restrictions on three main beef-producing st ates in Brazil. More over, the Argentine 
government decided in spring 2006 to susp end temporarily its b eef exports, in an 
attempt to curb inflation on the domestic  market. As both count ries are by far the 
most important third-country s uppliers of beef to the EU market, this affected beef 
supplies in the Community.  
367. From 2003, the Community became a net importer of beef. Despite the slight 
decrease in EU beef imports  in 2006, the overall trade defi cit in the beef and veal 
sector increased further to around 265 000 tonnes.  
368. Due to tight supply on the market, reinfor ced by reduced supplies from Brazil and 
Argentina, EU beef producer prices were very firm in 2006. During the first half of 
2006, the avian influenza scare in some Member States boosted demand for beef and 
particularly veal, which pushe d prices further upwards. Ov erall, average EU-25 prices 
for the carcasses of adult bovines in 2006 were as follows: 
 Average price in EUR/100  kg 
carcass weight % change 2006/05 
Young bulls 315.8 + 4.2% 
Steers  299.5 + 3.9% 
Cows 237.8 + 7.9% 
Heifers 314.2 + 7.0% 
Producer prices for carcasses of adult ma le bovines were around 4% higher than in 
2005, while prices for cow and heifer car casses were between 7 and 8% up on the 
preceding year. 
 
EN 83   EN 369. Following the introduction of the UK’s olde r-cattle disposal scheme (OCDS) on 
23 January 2006, a total of 150 000 bovines bor n before August 1996 were disposed 
of52. This compares with th e total of around 706 000 cattle disposed of during 2005, 
the last full year of the operation of the former over-thirty month scheme (OTMS) in 
the UK. 
370. For OCDS disposals during 2006, the comp ensation paid was €360/head, of which 
50% was financed by the EU and the re maining 50% by the UK authorities. The 
scheme will remain in place until the end of 2008. 
Main legislative and policy developments 
371. Regulation (EC) No 1760/2000 of the Europe an Parliament and the Council lays 
down provisions for the compulsory labelling of the origin (country of birth, fattening 
and slaughtering) of beef animals and for voluntary labelling indicating breeds, types 
of production, feedingstuffs, extensive breeding,  etc. Three years af ter the entry into 
force of this Regulation, the Commission published in 2004 a report on the application of the beef labelling sche me, which was discussed in the Council. 
Subsequently, the Commission prepared a draft regulation amending Commission 
Regulation (EC) No 1825/2000, with the aim of  simplifying some of the compulsory 
labelling requirements (scrap trimmings, cu t meat and meat from bovine heads). This 
draft was discussed with the Member States  in the course of 2006. In addition, the 
text was presented for consultati on to the European Parliament.  
372. During the discussion of this report, severa l Member States asked the Commission to 
come forward with a proposal to introduce a harmonised definition of veal at EU 
level. In order to prepare for this wo rk, the Commission launched an internet 
consultation on the subject in spring 2005 and organised a public hearing with all 
interested stakeholders in June 20 05. Against this back ground, the Commission 
prepared its proposal for a Council regulation on the na mes under which meat from 
bovine animals up to 12 months of age should be marketed in the EU
53. The names to 
be used in each of the Member States are listed in the annex to the proposed 
regulation. A distinction is ma de between sales descriptions to be used for meat 
obtained from bovine animals aged 8 months  or less and those for meat from animals 
aged over 8 months but not  older than 12 months. 
373. Following the 2004 enlargement of the EU, th e Community had to negotiate with the 
WTO adjustments to its import tariff regi mes for an expanded EU of 25 Member 
States. As a result, various ta riff quotas in the beef and v eal sector were amended in 
the course of 2006 (see table below). 
                                                 
52 Regulation (EC) No 716/96, as amended by Regulation (EC) No 2109/2005. 
53 COM(2006) 487 final of 8 September 2006. 
 
EN 84   EN Import quotaPrevious 
quantityNetted-out 
quantityApplies from
LIVE ANIMALS
erga omnes Live bovines for fattening 169000 24070 1.7.2006
erga omnes Cows, heifers, bulls of 
mountain breeds5000 710 1.7.2006
5000 711
BEEF
erga omnes Frozen beef for processing 50700 54703 1.7.2006
(+ 4003)
Import quotaPrevious 
quantityAdditional 
quantityApplies from
New Zealand High-quality beef 300 1000 + 500 t from 01.01.2006
+1000 t from 01.07.2006
Australia High-quality beef 7000 150 +75 t for 2005-2006
+ 150 t from 01.07.2006
Brazil High-quality beef 5000 adjust definition 1.1.2007 
3.2.3.  Sheep meat and goat meat 
374. The overall situation on the EU sheep and goat market in 2006 was characterised by a 
reduced flock size and a Bluetongue outbreak further north than ever before in the 
Benelux countries, France and Germany. Howe ver, this had a relatively weak market 
impact with visible price reductions onl y in the Netherlands . The overall price 
situation was satisfactory.  
375. Heavy54 lamb prices in 2006 followed a seasonal pattern and were high throughout 
the Community. The average price was EUR 419/100 kg carcass weight, 5.2% higher 
than in 2005. However, prices were unexp ectedly low in November-December (4.4% 
down on the previous year). The high average was driven by firm prices in the UK, France and Germany. Light
55 lamb prices developed similarly to heavy lamb, but the 
annual average (EUR 589/100 kg carcass weight) remained 3% lower than in 2005. A major factor in the low average price wa s Spain, the biggest light lamb producer, 
where prices were 6.4% lower than in 2005. 
376. The world’s main sheep meat and goat m eat producer is China, accounting for a 
quarter (26%) of world production. In  2006, total world pr oduction was 12 016 000 
tonnes with China accounting for 3 250 000 tonnes. China is followed by the EU 
(1 032 000 tonnes or 9%), Australia (6%) and New Zealand (5%). A large share of 
sheep meat is produced by African countries (17%), mainly Nigeria and Algeria, but 
their individual production is relatively marginal in comparison with the big producers
56. 
377. Although Chinese output is by fa r the largest, the country s till has little  presence in 
the world market due to the fact that domestic consump tion absorbs most of national 
                                                 
54 Heavy lambs are lambs weighing 13.1 kg (carcass weight) or more. 
55 Light lambs are lambs weighing 13 kg (carcass weight) or less. 
56 FAO statistics 156, 25.6.2003. 
 
EN 85   EN production. World trade in shee p meat is dominated by New Zealand and Australia, 
accounting for more than 80% of worl d exports (452 000 and 390 000 tonnes, 
respectively, in 2006). 
378. Community exports remained almost non-ex istent. The European Union imports over 
one fifth of its needs, making it one of th e world’s leading importers next to the 
Asian/Pacific countries. The main suppliers  of sheep and goat meat are New Zealand 
and Australia, which accounted for 78% a nd 6.9% of total Community imports in 
2006, respectively. New Zealand’s share incr eased from 72% in 2005. In contrast, 
Uruguay’s and Argentina’s sh ares dropped from nearly  5% to 3.1% and 2.6%, 
respectively. Live animals were primarily  imported from Romania (3.6% of total 
imports) and Bulgaria (2.2%). The principa l destinations of sheep meat from New 
Zealand were the UK, Germany and France. The share of chilled meat in imports in 2006 was 22%.  
379. Imports enter the Community mainly under tariff rate quotas exempt from import 
duties. For market management reasons, th ese quotas are managed on a calendar year 
basis. New Zealand has the largest tariff rate quota with 227 854 tonnes in carcass 
weight equivalent, followed by Arge ntina (23 000 tonnes) and Australia 
(18 786 tonnes). In 2006, New Zealand, Australia and Uruguay all met 99% of the quota. Chile and Iceland were also above  50% (82% and 51% respectively), while 
only 35% of the quota available for Argentina was imported.  
380. According to the livestock surveys, the sheep and goat population in the European 
Union with 25 Member States was 98 milli on head. Five Member States, the United 
Kingdom, Spain, Greece, France and Italy, accounted for about 85% of total sheep 
and goat numbers. The proportion of goats in the EU is about 12%, of which nearly 
half are found in Greece, a quarter in Spai n and significant numbers in France, Italy 
and Portugal. In 2006, the sheep flock contr acted in most Member States, the drop 
being dramatic in Ireland (–
 10% compared to 200 5) but also noteworthy in Spain and 
France (–  3% in both). At the same time, sheep numbers increased in Italy (+  3.4%). 
These changes are related to structural adjustments in the sector, with farms 
concentrating into bigger and more effi cient units and small farms going out of 
business. In Italy, pr ices were good in 2006, which enco uraged the expansion of the 
sheep flock. 
Main legislative and policy developments 
381. In 2006, there were no major legislative or po licy developments in the sheep and goat 
sector. 
3.2.4.  Pigmeat 
382. In 2006, world production of pigmeat rose by  1.9% to 105.5 million tonnes (source: 
FAO). China remained the leading producer  in the world with 52.9 million tonnes, 
3.4% more than the previous year. The Eu ropean Union was second with an annual 
production of 21.4 million tonnes. This was an increase of 1.2% compared to the 
previous year. In 2007, EU pigmeat production  was expected to increase by 2% to 
21.7 million tonnes, plus 360 000 t due to th e accession of Bulgaria and Romania. 
The United States was the third largest pr oducer of pigmeat with  9.6 million tonnes in 
2006, 1.8% more than in 2005. 
 
EN 86   EN 383. The average EU price for 2006 was EU R 145.3/100kg (+4.5% up on the previous 
year), which was relatively positive for pi g producers. In 2007, the average price was 
expected to be lower at around EU R 135/100 kg, with feed costs increasing 
considerably after the summer. An aid sche me for private storage was introduced on 
29 October 2007.  
384. EU per capita consumption of pigmeat remained stable in 2006 at 43.0 kg per 
capita/year. 
385. In 2006, the European Union exported 1.59 m illion tonnes of pigmeat (carcass weight 
equivalent). In the same year, imports increased to 20 000 tonnes. 
386. The main destination for EU pigmeat expor ts in 2006 was Russia (33% of the EU’s 
exports), followed by Japan with 12% and Hong Kong and China with 9%. In 2006, the share of exports receiving refunds was estimated at about 5% of total pigmeat 
exports.  
3.2.5.  Poultry meat 
World production of poultry meat (1000 t) 
 United 
States Brazil China Japan Russia India Thai-
land Argen-
tina UE-25 World 
2000 16 416 6 125 12 873 1 195 754 1 081 1 194  10 235 69 156
2001 16 761 6 380 12 866 1 216 861 1 250 1 336  10 777 71 643
2002 17 268 7 239 13 262 1 229 937 1 401 1 414  10 971 74 377
2003 17 468 7 967 13 687 1 218 1 034 1 600 1 291 781 10 719 75 823
2004 18 007 8 895 14 170 1 237 1 030 1 715 0 964 906 11 140 78 559
2005 18 506 8 724 14 628 1 338 1 345 1 973 1 036 1 050 11 091 84 186
%TAV 
2005/00 12.7 42.4 13.6 11.9 78.3 82.5 –149 34 8.4 21.7 
Source: FAO, European Union  
387. Since 2000, world production of poultry meat has increased regularly and 
substantially (+ 21%). The overall increase has b een slowing down since 2001, with 
growth varying widely among producing countries. Among the larger producing 
nations, production increased faster than average in India, Brazil, Russia, and 
Argentina.  
388. The European Union’s production d ecreased considerably in 2003 (– 6%) due to the 
avian influenza scare in the Netherlands and Belgium, and the production cutbacks in 
several Member States (France, Italy, Sw eden). Production in the EU-25 started to 
recover in 2004 (+ 1.4% compared to 2000) without, how ever, attaining the level of 
2002. In 2005, production started to  decrease again due to the avian influen za crisis in 
the last quarter. Both the production a nd consumption of poultry meat dropped 
substantially during the first half of 2006 due to media coverage of the avian 
influenza situation (by up to 70% in certa in Member States) and then recovered 
during the latter part of the year. 
389. In 2006, EU imports of poultry meat decr eased by 5% to 580 000 tonnes mainly due 
to lower demand for poultry meat in the EU. At the same time, EU exports remained 
 
EN 87   EN stable at 975000 tonnes thanks to high e xport refund rates and exceptional use of 
refunds for poultry cuts. 
390. There is no direct support for poultry m eat on the internal market. However, the 
poultry CMO was modified at the beginning of 2006 in order to introduce a legal 
basis to provide financial support to th e sector, which was strongly affected by 
consumer concerns about avian influenza.  
391. During the GATT year 2005/06, 226 500 tonnes of  poultry were exported with export 
refunds. It should be noted that export refunds were exceptionally provided for 
poultry cuts between November 2005 and Oc tober 2006 in order to shift quantities 
from the EU market. 
392. In 2006, 15 500 tonnes of de-boned poultry meat and 2 500 tonnes of turkey meat 
could be imported duty-free, along with a further 10 400 tonnes subject to a reduced 
rate of duty under minimum access quotas and 11 900 tonnes under other bilateral 
agreements (Turkey, Israel, Chile).  
393. During the year 2005, poultry meat prices we re fairly good during the 9 first months 
of the year, fluctuating between EUR 145 and 160/100 kg. However, prices dropped 
sharply between September 2005 and April 2006 (down to €130/100 kg) because of the drop in consumption caused by media coverage of avian influenza. Prices 
recovered only in the second half of 2006. Since then they have remained at 
historically high levels. 
3.2.6.  Eggs 
World production of eggs in shells (1
 000 t) 
 United 
States Mexico Brazil Japan Russia India China EU-25 World 
2000 4 998 1 788 1 539 2 535 1 894 1 749 19 433 6 185 55 405 
2001 5 164 1 892 1 606 2 514 1 960 1 870 20 229 6 302 52 766 
2002 5 131 1 900 1 547 2 529 2 032 2 190 25 009 6 602 59 667 
2003 5 180 2 063 1 632 2 530 2 044 2 222 26 446 6 324 61 581 
2004 5 278 2 198 1 682 2 480 2 005 4 486 27 612 6 475 63 358 
2005 5 329 2 276 1 749 2 482 2 080 2 539 28 645 6 279 65 156 
% 
2005/00 6.7 27.2 13.6 –2 10 46 47 1.6 17.5 
Source: European Union, FAO  
394. World production of eggs in shell increased by 17.5% between 2000 and 2005. 
Although the average incr ease in the United States was hi gher than in the European 
Union, the EU-25 still holds second place af ter China. China has experienced very 
strong growth, +  47% between 2000 and 2005, and is th e world’s leading producer of 
eggs. India also saw a sharp increas e in production betw een 2000 and 2005 (+  46%). 
395. The principal importing countries remain the EU and Japan (egg products) and Hong 
Kong (eggs in shell). The volume of Comm unity (EU-25) exports  decreased in 2005 
(– 5%) to 259 000 t, due to relative high prices within the EU. Imports also decreased 
 
EN 88   EN by 6% in 2005 (46 000 t). In 2006, imports in creased by 2% s and exports increased 
by 8%. 
396. Prices were exceptionally low during the firs t half of 2005, recoveri ng only slightly in 
the summer. In 2006, since EU production continued to decrease (–  2%), leading to 
limited supply, prices increas ed further to recover thei r long-term average level. 
397. The common market organisation is si milar to that for poultry meat.  
398. Regarding exports with refunds, 50 000 t were exported in the GATT year 2006/07, 
representing 44.7% of the GATT ceilings . Since December 2006, export refunds for 
eggs in shell have been fixed at zero. 
3.2.7.  Honey 
World situation 
399. In 2005, world honey production reached 1.41 milli on t, which represents an increase 
of 2.6% in relation to the previous year (FAO source). China remained the world’s 
main producer with 299 000 t. The EU-25 re mained in second place with 174 000 t. 
Honey world production by country (1000 t) 
 2001 2002 2003 2004 2005 
China 254 268 295 298 299 
EU 15-25 123 117 126 170 174 
United States 84 78 82 83 79 
Argentina 80 83 75 88 93 
Turkey 60 75 70 74 82 
Ukraine 60 51 54 58 71 
Mexico 59 59 57 57 51 
WORLD (total) 1 264 1 284 1 338 1 380 1 417 
European market 
400. Self-sufficiency in the European Union (EU-25) was 55% during the marketing year 
2004/05, which represents a shar p increase in relation to th e previous marketing year 
due to EU enlargement. Human consumpti on remains stable at 0.7 kg per capita per 
year.  
401. EU imports decreased slightly in 2006 (–  0.8%) to 146 500 tonnes. Argentina remains 
the EU’s leading supplier, accounting for 50% of total Community honey imports in 
2006 (66 000 t out of 135 000 t).  
Despite increasing during 2006 (8  000 t as against 6 700 t), EU exports remained very 
low. 
402. Compared to 2005, EU import prices increas ed in 2006 (€1.47/kg as against €1.3/kg) 
but remained very low compar ed to export prices (€4.77/kg). 
 
EN 89   EN 4. THE CAP  REFORM IN 2006 
403. The Single Payment Scheme entered its second year of implementation in 2006.  
404. From 1 January 2005, all EU farmers receiving direct payments have to comply with 
the cross-compliance conditions. Cross-comp liance links the full payment of support 
to compliance with certain rules relating to agricultural land and to agricultural production and activity in the areas of th e environment, public, animal and plant 
health, animal welfare, and good agricu ltural and environmental condition of the 
land
57.. 
Entries in the SPS  
405. Ten Member States implemented the Single Payment Scheme in the first year, while 
five more introduced it in 2006. France, Spain, the Netherlands and Greece have chosen the historical model, which dist ributes the reference amounts based on the 
support received by individual farmers over a reference period. Finland has opted for 
the regional model, which allocates at leas t part of the reference amount according to 
the area farmed in the year of implementation.  
406. The table gives an overview of the implemen tation of the CAP in the Member States, 
including the recoupling op tions chosen, which vary significantly among Member 
States depending on the specific s ituation of the s ectors involved. 
Integration of the sugar sector  
407. The sugar sector was decoupled in 2006
58, leading to the integration of sugar beet, 
cane and chicory support within the Single Payment Scheme.  
408. Among the countries applying the Single Ar ea Payment Scheme (SAPS), separate 
sugar payments are made to farmers by the Czech Republic, Latvia, Lithuania, Hungary, Poland and Slovakia. 
                                                
 
57 Articles 4 and 5 of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support s chemes under the common 
agricultural policy and establishing certain support schemes for farmers (OJ L 270, 21.10.2003, p. 1). 
58 Commission Regulation (EC) No 658/2006 of 27 April 2006 amending Regulation (EC) No 795/2004 laying down detailed rules for the implementation of the 
Single Payment Scheme provided for in Council Regulation (EC) No 1782/2003 (OJ L 116, 29.4.2006, p. 14). 
 
EN 90   EN Overview of the implementation of direct payments under the CAP in Member States 
Annual Report 2006 
MS Start 
SPS Regions Model 
SPS / SAPS Decoupling 
of dairy 
payment Which sectors remain coupled Implementation of the second wave  of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 
2005 North: Flanders 
+ Brussels SPS historical 2006 – suckler cow premium 100% 
– slaughter premium calves 100% 
– seeds (some species) 100% – tobacco coefficient for decoupling: 1 Belgium 
2005 South: Wallonia SPS historical 2006 – suckler cow premium 100% 
– seeds (some species) 100% – tobacco coefficient for decoupling: 1 
Czech 
Republic   SAPS   – separate sugar payments 
Denmark 2005 One region SPS static 
hybrid 2005 – special male bovine premium 75% 
– sheep and goat premium 50% – 
Germany 2005 Länder  
(Berlin included 
in Brandenburg, 
Bremen in Lower Saxony 
and Hamburg in 
Schleswig-Holstein) SPS dynamic 
hybrid moving 
to a flat-rate 
model 2005  – hop payments 25% coupled 
– tobacco coefficient for decoupling: 0.4 
Estonia   SAPS   – 
 
EN 91   EN MS Start 
SPS Regions Model 
SPS / SAPS Decoupling 
of dairy 
payment Which sectors remain coupled Implementation of the second wave  of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 
Greece 2006 – SPS historical 2007  – seeds  
– Article 69 application:  = 10% of the ceiling for arable crops, = 10% of the ceiling for the beef sector, 
= 5% of the ceiling for the sheep and  
goat sector – Article 69 application: 
2% of the ceiling for tobacco, = 4% of the ceiling for olive oil, = 10% of the ceiling for sugar 
– 2% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003). 
Annex VII, points H and I:  
– tobacco and olive oil coefficient for decoupling: 1 
Spain 2006 – SPS historical 2006 – seeds 100% 
– arable crops 25% – sheep and goat premiums 50% – suckler cow premium 100% – slaughter premium calves 100% – slaughter premium bovine adults 40% – Article 69 application: = 7% of the ceiling for the bovine sector, = 10% of the ceiling for dairy payments – outermost regions 100% – tobacco coefficient for decoupling: 0.4 
– olive oil coefficient for decoupling: 0.936 – Article 69 application: = 5% of the ceiling for the tobacco sector, = 10% of the ceiling for the cotton sector, = 10% of the ceiling for sugar 
France 2006 – SPS historical 2006 – arable crops 25% 
– sheep and goat premium 50% – suckler cow premium 100% – slaughter premium calves 100% – slaughter premium bovine adults 40% – seeds (some species) – outermost regions 100% – 10% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003) 
– hop payments 25% coupled Annex VII, points H and I: – olive oil coefficient for decoupling: 1 – tobacco coefficient for decoupling: 0.4 
Ireland 2005 – SPS historical 2005 None – 
 
EN 92   EN MS Start 
SPS Regions Model 
SPS / SAPS Decoupling 
of dairy 
payment Which sectors remain coupled Implementation of the second wave  of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 
Italy 2005 – SPS historical 2006 – seeds 100% 
– Article 69 for quality production = 8% of the ceiling for the arable sector, = 7% of the ceiling for the bovine sector, 
= 5% of the ceiling for the sheep and 
goat sector – Article 69 application:  
= 8% of the ceiling for sugar  
– 5% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003) 
Annex VII, points H and I: 
– olive oil coefficient for decoupling is increased to 1 – tobacco coefficient for decoupling: 0.4 
– for the region Puglia, the deco upling coefficient for tobacco is 
100% 
Cyprus   SAPS   – 
Latvia   SAPS   – separate sugar payments 
Lithuania   SAPS   – separate sugar payments 
Luxemburg 2005 one region SPS static 
hybrid 2005 None – 
Hungary   SAPS   – separate sugar payments 
Netherlands 2006 – SPS historical 2007 – slaughter premium calves 100% 
– slaughter premium bovine adults 100% 
– seeds for fibre flax 100% – 
Austria 2005 – SPS historical 2007 – suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% – tobacco 100% decoupled 
– hop payments 25% coupled 
Poland   SAPS   – separate sugar payments 
Portugal 2005 – SPS historical 2007 – suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% – sheep and goat premium 50% 
– seeds 100% 
– outermost regions 100% 
– Article 69 application:  
= 1% (arable crops, rice, bovine and  
 ovine sectors) – Article 69 application: 
= 10% of the ceiling for the olive oil sector, = 10% of the ceiling for sugar – tobacco coefficient for decoupling 0.5 – olive oil coefficient for decoupling: 1 
 
EN 93   EN MS Start 
SPS Regions Model 
SPS / SAPS Decoupling 
of dairy 
payment Which sectors remain coupled Implementation of the second wave  of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 
Slovakia    SAPS   – separate sugar payments 
Finland 2006 three regions 
(based on 
reference yield) SPS dynamic 
hybrid moving 
to a flat-rate 
model 2006 – sheep and goat premium 50% 
– special male bovine premium 75% – Article 69 application: = 2.1% of the ceiling for arable crops, = 10% of the ceiling for the bovine sector – seeds (timothy seed)  – 
Sweden 2005 five regions 
(based on 
reference yield) SPS static 
hybrid 2005 – special male bovine premium 74.55% 
– Article 69 application:  
= 0.45% of total ceiling – 
2005 England normal SPS dynamic 
hybrid moving 
to flat-rate 
payment 2005 None – 
2005 England — 
moorland SPS dynamic 
hybrid moving 
to flat-rate 
payment  None – 
2005 England — SDA 
minus moorland SPS dynamic 
hybrid moving 
to flat-rate 
payment  None – 
2005 Scotland SPS historical  – Article 69 application:  
= 10% of the ceiling for the bovine sector – 
2005 Wales SPS historical  None – United 
Kingdom 
2005 Northern Ireland SPS static 
hybrid  None – 
Abbreviations: SPS = Single Payment Scheme, SAPS = Single Area Payment Scheme 
 
EN 94   EN 5. AGRIMONETARY ARRANGEMENTS  
Developments in 2006 
409. The agrimonetary arrangements apply to payments to beneficiaries by Member States 
that have not adopted the euro. A new Commission Regulation was adopted in 2006 
and has applied from 1 January 2007.  
410. The main aims of the new Regulation are:  
– to simplify the procedure for establis hing the exchange rates for certain 
measures (measures of a structural or environmental character, the apiculture programme, and certain prices and amount s in the sugar sector) by removing 
the need for the Commission to determine the average exchange rates. The exchange rate to be used is the rate most recently fixed by the European Central 
Bank prior to the ‘operative  event’ in question. The Me mber States do not need 
to await a Commission Regulation fi xing the average exchange rates; 
– to establish the operative event on the first day of the month for legal acts 
coming into force during that month for a number of prices, in order to ensure certainty for the operators concerned and reduce the administrative burden for the paying agencies concerned; 
– furthermore, to harmonise operative even ts and exchange rates in the relevant 
sector legislation in course of the codification procedure. 
6. RURAL
 DEVELOPMENT  IN 2006 
411. Rural development programming for the period 2000–2006 consists of the following: 
68 Rural Development Programmes — RDPs — (co-financed by EAGGF 
Guarantee), 69 Objective-1 region pr ogrammes — operational programmes and 
single programming documents — with rural development measures (EAGGF 
Guidance co-financed) and 20 Objective-2 region programmes with rural 
development measures (EAGGF Guarantee co-financed). 
412. With the enlargement of the Europ ean Union on 1 May 2004, a special rural 
development regime was introduced for th e new Member States  — ‘Temporary Rural 
Development Instrument (TRDI)’. Acro ss the EU-10, there are two types of 
programming: 10 RDPs co-financed by th e TRDI and 9 Objective-1 region 
programmes, covering most of the new Member States (co-financed by EAGGF 
Guidance).  
413. In 2006, Community expenditure on rural development amounted to 
EUR 9 199.2 million (Guarantee and Guidance combined).  
414. Payments for EAGGF Guarantee amounted  to EUR 5 610.2 million in the 2006 
financial year (from October 2005 to  October 2006). The Community average 
execution (compared to annual appropriations ) reached 98.1%, meaning that almost 
all the budget available for 2006 was spent. By Member State, there was overspending (Member States that spent more  than their annual financial allocation) 
in Belgium, Greece, Spain, France, Ireland, Luxembourg, the Netherlands, Austria, 
 
EN 95   EN Finland and Sweden, and underspending in the remaining countries. EAGGF 
Guarantee spending in 2006 accounted for 99. 7% of financial allocations for the 
2000–2006 programming period. 
415. Payments for EAGGF Guidan ce reached EUR 3 589 million in 2006 (calendar year): 
3 562.1 million for 2000–2006 programmes (Obj ective 1: 3 192.9; Leader+: 361.1; 
PEACE: 8.1) and EUR 26.9 million for the closure of 1994–1999 programmes.  
416. In 2006 (calendar year), payments for the ‘Temporary Rural Development Instrument 
(TRDI)’ amounted to EUR 2 115.7 million and for SAPARD to EUR 213.7 million (EUR 12.7 million for Romania and Bu lgaria and EUR 201 million for the 
completion of pre-accession assistance for ei ght new Member Stat es). For the three 
financial instruments together (Obj. 1, SAPARD and TRDI), EUR 2 943.9 million 
was paid to the new Member States. 
417. 45 of the 1994–1999 programmes were closed  in 2006 and 39 programmes remained 
open at the end of 2006 (out of the 402 received in March 2003). Of the 39 programmes still open, 11 of them are closed in practice but the final decommitment is awaiting the end of judi cial procedures at national level or a 
Commission decision regardi ng the Article 24 procedure.  For 11 other programmes, 
the pre-closure letter has b een sent to the Member St ate proposing the outstanding 
sum to be paid. Closure of the other 17  is in hand. Outstanding commitments for 
these programmes at the end of 2006 amounted to EUR 347.6 million, some of them significant: Spain (EUR 138 million), Portugal (EUR 91 million) and Italy 
(EUR 76 million). 
418. At the end of 2006, total payments for the 2000–2006 programmes financed by 
EAGGF Guidance accounted for 68% of  the financial plan for the 2000–2006 
programming period. Under the n+2 rule  established in Regulation (EC) 
No 1260/1999, EUR 9.3 million was decommi tted in 2006. These decommitments 
affected fifteen Leader+ programmes (E UR 7.8 million) and four Objective-1 
programmes (EUR 1.5). The Member States  affected are Spain (9 programmes), 
Greece (4 programmes), Germany (3 programme s), Italy (2 programmes) and France 
(1 programme). 
419. In 2006, the Commission approved 32 RDP amendments, one of them through 
written consultation of the STAR Committee, and 6 amendments to SAPARD programmes.  
420. Three legislative documents were approve d: the Transition rules, the Control 
regulation and the Implementing rules. 
421. Monitoring indicators for the executio n of Leader+ in 2004 show a total of 
28 052 projects over the period 2000–2004. The t op five fields of assistance are:  
– physical investment (assistance to SME and handicraft) — 9.4%;  
– physical investment in tourism — 9.1%; 
– renovation and development of villages a nd protection and conservation of the 
rural heritage — 9.0%; 
– non-physical investment in tourism — 8.4%;  
– encouragement of tourism activities — 7%. 
 
EN 96   EN 422. By mid-2006, 231 transnational cooperation pr ojects had been notified to the Leader+ 
European Observatory. At least 369 Local action groups are involve d in transnational 
cooperation, on average 4 per project. The Predominant theme (34% of projects) is 
best use of natural and cultu ral resources. Another two them es chosen by a quarter of 
projects are quality of life and use of new know-how and new technologies. 
423. Leader+ measures are applied in 6 ne w Member States (under Objective-1 
programmes for the period 2004–2006), with 257 existing Local Action Groups and 
190 Local Action Groups implementing local development strategies. 
6.1. Belgium 
Rural development programme s (EAGGF Guarantee) 
424. Three Rural Development Programmes fo r the period 2000–2006 were approved for 
Belgium: one federal and two regional (F landers and Wallonia) programmes. The 
total public cost for these three progr ammes amounted to EUR 842.6 million, of 
which the EAGGF contributed EUR 332.7 million. 
Amendments to RDPs 
425. In 2006, three amendments to the Belgia n Rural Development Programmes were 
submitted and approved by the Commission. The amendments only concerned the financial plans and all related to the increase in the EAGGF allocation for Belgium, pursuant to Decision 2006/289/EC. 
426. Under the notification procedure, no amendmen ts to Belgian RDPs were received in 
2006. Under the information procedure, the Commission received two amendments to 
the financial plan of the Flemish RDP (on 28 September and 10 October) and three 
amendments to the financial plan of the Walloon RDP (on 12 May, 27 September and 
11 October).  
Level of payments in the period fr om 16 October 2005 to 16 October 2006 
427. The total 2006 budgetary allocation for Belgium amounted to EUR 75.9 million. The 
level of payments for the three programmes amounted to EUR 73.6 million, which is 96.9% of the annual allocation.  
428. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 99.3% of the total budget for 2000–2006, i.e. 
EUR 330.4 million out of a total of EUR 332.8 million. 
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Programming Documents 
429. A Single Programming Document was appr oved for Belgium: phasing-out of the 
Objective-1 SPD for the Hainaut province (Wallonia). Total public expenditure for this SPD amounted to EUR 1 357.9 millio n, of which the Structural Funds 
contributed EUR 671.2 million. The EAGG F Guidance contribution amounts to 
EUR 43.1 million, which is 6.4% of the total Community contribution. These 
amounts take account of indexation, of the performance reserve allowances and of mid-term transfers between F unds (approved in 2004), of tw o transfers from the IFOP 
 
EN 97   EN in 2004 and 2005 and one transfer back to  the IFOP in 2006 (for an amount of 
EUR 1 million). 
Level of payments in 2006 
430. Global financial execution for EAGGF-Gu idance since the beginning of the 
programming period to the end of 2006 ha s been 52.6% of the total budget for 2000–
2006, i.e. EUR 22.6 million out of a total of EUR 43.1 million.  
Leader+ programme 
431. Belgium has two Leader+ programmes: one  for Flanders, invo lving total public 
expenditure of EUR 8.0 million, of whic h EUR 4.0 million EAGGF Guidance, and 
one for Wallonia, involving total public expenditure of EUR 20.7 million, of which 
EUR 10.3 million EAGGF Guidance. These am ounts include the indexations of EU 
contributions adopted by Decisions C( 2005) 489 and C(2005) 488, respectively, and 
of decommitments pursuant to the N+2 ru le adopted by Decisions C(2005) 3077 and 
C(2005) 5594, respectively. 
432. In Flanders, five Local Ac tion Groups were selected, covering 12% of the Region’s 
territory and 6% of its population. For Wa llonia, fifteen Local Action Groups were 
selected, covering 32% of the Region’s te rritory and 12% of its population. The two 
regional Leader+ network units became fully operational in 2004, and the two 
Regions have agreed that the Walloon netw ork unit would act as the national contact 
point where appropriate.  
433. By Decision C(2006) 4832 of 6 Octobe r 2006, the Commission approved an 
amendment to the Flemish Leader+ programme , namely, to the financial plan and in 
particular a shift in funding from axes 2, 3 and 4 to axis 1. 
434. At the end of 2006, after seven years of im plementation, the total financial execution 
for the two programmes was 46% of tota l EAGGF Guidance expenditure for the 
period 2000–2006, i.e. EUR 6.6 million out of a total of EUR 14.3 million (total EU 
contribution after decommitments). 
Rural development policy 2007–2013 
National Strategy Plan 
435. A first version of the NSP for Belg ium was submitted on 15 November 2006. The 
NSP focuses objectives on improving the co mpetitiveness of the agro-food sector, 
diversifying the economy in rural areas, increasing the employment rate, improving 
the environmental situation and preserving the rural heritage. The planned breakdown 
by axis of the EAFRD allocation (EUR 418.6 million) for Belgium as a whole is as 
follows: 48.1% for axis 1; 35.9% for axis  2; 8.7% for axis 3; 5.0% for axis 4 
(Leader); and 2.3% for technical assistance. 
Rural Development Programmes 2007–2013 
436. For the programming period 2007–2013, Ru ral Development policy will be 
implemented in Belgium through two RDPs : one for Flanders, with an EAFRD 
allocation of EUR 224.5 million, and one for Wa llonia, with an EAFRD allocation of 
 
EN 98   EN EUR 194.1 million. The first version of the Flemish RDP was officially submitted on 
8 December 2006. The Walloon RDP was not submitted in 2006.  
6.2. Czech Republic 
Rural development programme s (EAGGF Guarantee) 
437. The Czech Horizontal Rural Developm ent Plan was approved by Decision 
C(2004) 3290 of 3 September 2004. The EAGGF contribution was EUR 542.8 million for the period 2004–2006, to which is added national public co-financing of EUR 135.7 million. The horiz ontal rural development plan aims to 
mitigate the differences in farm profitabil ity in less favoured areas that result from 
natural conditions, to improve the unfavourable age structure of farmers, to reduce the 
share of arable land in total agricultural  land area and to provide for farming of 
agricultural land in conform ity with the principles of Good Farming Practice. 
Amendments to the RDP 
438. On 1 March 2006, DG AGRI received a propos al to amend the Horizontal Rural 
Development Plan of the Czech Republic  for 2004–2006. The Czech authorities have 
so far reimbursed beneficiaries of two agri-environmental measures, integrated 
production of vine and fruits and organic farming, at a certain percentage of the 
income foregone/cost incurred. To provi de more of an incentive, the Czech 
authorities intend to increas e this percentage, without impacting on the financial 
table. The Commission took note of this amendment on 2 May 2006. 
439. On 30 October 2006, DG AGRI received a proposal for an amendment to the 
Horizontal Rural Development Plan of the Czech Republic for 2004-2006, namely, to 
the financial table of the HRDP, w ithout impacting on the overall EAGGF 
contribution and without exceeding the 20% of total eligible public expenditure 
threshold, as stipulated by Article 51 (2) of Commission Regulation (EC) 
No 817/2004. The Commission took note of this amendment on 22 December 2006. 
440. On 22 December 2006, the Czech authorities notified an amendment to the 
Horizontal Rural Development Plan for 2004
–2006. The proposal changes several 
conditions relating to agri-environmental measures designed to make for smoother 
implementation of the programme. The Co mmission took note of this amendment on 
2 March 2007. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
441. Since the beginning of the programming period, payments have amounted to 
EUR 408 million, i.e. 75% of the tota l budget allocation for that period. 
Objective-1 Programmes (EAGGF Guidance) 
442. The Operational Programme for Rural De velopment and Multifunctional Agriculture 
was approved by Commission Decision C( 2004) 2689 of 2 July 2004. The financial 
contribution from EAGGF amounted to  EUR 173.9 million for the period 2004–2006, 
which is complemented by national public  funding of EUR 76.7 million. As regards 
measures, special emphasis is laid on the replacement of outdated technologies, 
 
EN 99   EN increased competitiveness, consolidation of land ownership, protection of the 
environment and the stabilisation of existing workplaces in Czech rural areas. 
Amendments to the OP 
443. The Czech authorities decided to transfer  allocations from FIFG to EAGGF, to 
transfer the allocation of t echnical assistance to severa l measures, and to perform 
other transfers. The proposal was r eceived on 27 September 2006, and approved by 
Decision C(2006) 7276 of 27 December 2006. 
Level of payments in 2006 
444. Since the beginning of the programming period, payments have amounted to 
EUR 73 million, i.e. 43% of the total budget allocation for that period. 
Annual Report 
445. The 2006 Annual Report for the RDP was r eceived on 28 June 2007 and approved by 
letter of 29 August 2007.  
446. The 2006 Annual Report for the OP was received on 28 June 2007 and approved by 
letter of 14 September 2007 
Rural development policy 2007–2013 
National Strategy Plan  
447. The draft NSP was received on 20 Septem ber 2006. The Commissi on sent the final 
assessment letter on 6 December 2006. All the main comments in the letter were taken into account when preparing the RDP 2007–2013.  
Rural Development Programmes 2007–2013 
448. The Czech Republic submitted the first admissible version of the RDP on 
7 December 2006. The total public contri bution amounts to EUR 3 615.8 million. The 
anticipated breakdown per ax is is as follows: Axis 1 – 22%, Axis 2 – 55%,  
Axis 3 – 17% and Axis 4 – 5%.  
6.3. Denmark 
Rural development programme  (EAGGF Guarantee) 
449. The total public cost of  the Danish Rural Develo pment Programme for 2000–2006 
was EUR 725.9 million, including an EU c ontribution of EUR 330.1 million from the 
EAGGF, Guarantee Section. The programme  includes support for investments in 
holdings, organic farming, training, less favour ed areas, agri-environment, processing 
and marketing of agricultural products, f ood quality schemes, and the adaptation and 
development of rural areas and forestry.  
Amendments to the RDP 
450. Under the notification procedure, the Dani sh authorities notified the Commission of 
one amendment in February 2006 concerni ng changes in support rates for a number 
 
EN 100   EN of measures under agri-environment. A fi nancial communication was submitted to the 
Commission in October 2006.  
451. In June 2006, the Commission received a request for financial amendments to the 
programme. This amendment was appr oved by Commission Decision C(2006) 4006 
of 31 August 2006. By this decision, the init ial financial contri bution was decreased 
from a total public amount of EUR 829.6 million to EUR 725.9 million, and the 
EAGGF part from EUR 348.8 m illion to EUR 330.1 million.  
Level of payments in the period fr om 16 October 2005 to 15 October 2006  
452. The 2006 plan provides for total public expenditure of EUR 136.2 million, including 
an EU contribution of EUR 74.4 million, of which EUR 74.1 million was paid out, 
leading to 99.6% utilisation of  the funds under the programme. 
453. Over the period 2000–2006, the global fi nancial execution was 99.9%, or 
EUR 329.9 million out of EUR 330.1 million in total. 
Annual report 
454. The annual report for 2006 was exp ected to be received in 2007. 
Leader+ Programme 
455. The total public allocation for the Da nish Leader+ Programme (2000–2006) was 
increased in 2004 following indexation and now amounts to EUR 34.6 million, 
including an EU contribution of EUR 17.3 million.  
456. By Commission Decision C(2006) 5035 of 19 October 2006, the programme was 
amended to reflect the request from the Danish authorities to change the allocation between Priorities. The programming complement was amended accordingly. 
Payments in 2006 amounted to EUR 1.4 m illion. After six years of implementation, 
financial execution remained at 70.4% of the amount earmarked for the programming 
period 2000–2006. 
Rural development policy 2007–2013 
National Strategy Plan  
457. The Danish NSP sets four major objectives for the programme, these being: 
1) more entrepreneurs and local jobs in ru ral areas, 2) greater competitiveness in the 
food and forestry sector, 3) varied landscap es, rich nature and a clean environment, 
and 4) attractive liv ing conditions in rural areas. The NSP was not officially 
submitted in 2006. 
Rural Development Programmes 2007–2013 
458. Denmark will have a single rural development programme. The total public cost for 
the Rural Development Programme is  EUR 830.3 million, including an EU 
contribution of EUR 444.7 million. The RDP was not officially submitted in 2006.  
 
EN 101   EN 6.4. Germany 
Rural development programme s (EAGGF Guarantee) 
Amendments to the RDP 
459. In 2006, Germany introduced seven amendments concerning the German Framework 
Regulation and five request s to amend the regional pr ogrammes. A further two 
amendments to the German Framework Re gulation and one regional programme were 
also notified by Commission decision. 
460. All amendments were approved before  the end of the financial year. 
Level of payments in the period fr om 16 October 2005 to 15 October 2006  
461. The consolidated financial table for 2006 sp ecifies an EU contribution of EUR 940.6 
million. For the period from 16 October 2005 to 15 October 2006, the EU contribution to the plan came to EUR 938.5 million, showing underspending of EUR 2.1 million. 
462. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 99.97% of  the budget for 2000–2006, i.e. EUR 5 463.0 
million out of a total of EUR 5 465.1 million. 
Objective-1 programmes (EAGGF Guidance) 
Operational programmes on Single Programming Documents 
463. Six German Länder  are classified as Objective 1 regions: Berlin, Brandenburg, 
Mecklenburg-Western Pomerania, Saxony, Sa xony-Anhalt and Thuringia. In 2006, 
the four regional OPs of Berlin, Meck lenburg-Western Pomerania, Saxony and 
Thuringia were amended. All amendments were approved before the end of the 
financial year. 
Level of payments in 2006 
464. Measures other than accompanying measur es are paid from the EAGGF Guidance 
Section for these regions. The total elig ible costs for 2006 were EUR 635.6 million, 
including an EAGGF Guidance contribu tion of EUR 500.1 million. In 2006, EUR 
509.2 million was paid, of which EUR 64.6 million on 2006 commitments. Taken over the period 2000–2006, almost 85.6% of EAGGF funds have been used. 
Annual Reports 
465. In 2006, the first version of one annual re port was not admissible. All the other 
annual reports were satisfactory and matche d the forecasts. All annual reports were 
approved before the end of the financial year.  
Leader+ Programme 
466. In 2006, eleven German regional programme s were amended. The rather low demand 
for Action 2 (Support for cooperation between  rural territories) resulted in a budget 
 
EN 102   EN transfer to Action 1 (Integrated territorial rural development strategies of a pilot 
nature). Leader+ measures were ra rely the subject of amendments. 
Rural development policy 2007 – 2013 
National Strategy Plan 
467. The German Framework Regulation was not submitted in 2006.  
Rural Development Programmes 2007–2013 
468. Eight of the 14 German regional rural development programmes were submitted at 
the end of 2006.  
6.5. Estonia 
Rural development plan (EAGGF Guarantee) 
469. The programme consists of the following m easures: support for less favoured areas, 
agri-environmental support, support for affo restation of agricultural land, support for 
semi-subsistence farms undergoing restructurin g, meeting standards, complements to 
direct payments and technical assistan ce. The total EAGGF (Guarantee) budget for 
2004–2006 for the Estonian Rural Development Programme amounted to EUR 150.5 million. The total eligible public cost of the programme was EUR 188.2 million. 
Amendments to the RDP 
470. An amendment to the RDP was approved by the Commission by Decision 
C(2005) 5541 in December 2005. The amendment introduces a compensatory payment to farmers in areas with envi ronmental restrictions (NATURA 2000 areas) 
and increases the budget for agri-envir onmental measures. Another amendment 
notification not requiring a Commission de cision was received by the Commission on 
19 October 2007. It concerns changes to the Financial Table accord ing to the actual 
take-up of RDP measures. Unspent budget on the measures mentioned will be 
channelled to finance mainly applicati ons for agri-environment support (but also 
support for semi-subsistence farms) for the year 2007.  
Level of payments in the period from 16 October 2006 to 15 October 2006 (EAGGF 
Guarantee) 
471. The total amount spent during the pe riod on measures in the RDP was 
EUR 105.2 million. The level of payments in the period up to 15 October 2006 was 
70%. 
Objective-1 Programmes (EAGGF Guidance) 
472. The whole of Estonia is classified as an  Objective-1 region. The total EAGGF budget 
for 2004–2006 amounted to EUR 56.8 million and the total eligible public expenditure of EAGGF-related measures was EUR 78.8 million.  
473. The Commission received a request fo r an amendment to the Programme 
Complement on 29 May 2007 concerning ch anges to the Financial Table. The 
 
EN 103   EN changes concern the use of funds from measures where take-up was lower than 
expected to finance the mo st popular measure — 3.1 Inve stment in agricultural 
holdings. 
474. The Leader approach was first applie d in autumn 2006 through measure 3.6 Local 
initiative-based development projects — Leader. Action groups to prepare local 
development strategies were selected, as  were three action groups to implement 
existing strategies. The Leader informati on centre was established as a support 
structure for LAGs. By the beginning of 2007, 24 LAGs had been chosen (three of 
them started to implement their strategies).  LAG activities cover 85% of the Estonian 
territory. 
Level of payments in 2006 
475. In 2006, payments amounted to EUR 13.6 m illion, i.e. 24.0% of the total Community 
budget for the period 2004–2006.  
Rural development policy 2007–2013 
National Strategy Plan 
476. On 22 September 2006, the Commission acknowledged receipt of the NSP.  
477. The main objective of axis 1 (40% of funds ) is to improve the competitiveness of 
most agricultural holdings and the processi ng industry to such an extent that, by the 
end of the programming period (2013), farmers will be able to manage on reduced market support and direct payments. The objectiv e in the forestry sector is to raise the 
long-term competitiveness of forestry to a le vel that ensures the restoration of forest 
potential in areas damaged by natural disasters and fires. 
478. The main objective of axis 2 (39% of funds ) is to ensure agricultural land use and the 
preservation of traditional landscapes and high nature value ar eas by environmentally 
sound farming practices and sust ainable forest management.  
479. The main objective of axis 3 ( 21% of funds) is th e diversification of  rural enterprise 
and improvement in the quality of life in rural areas. 
480. The main objective of axis 4 (10% of funds) is to promot e local initiative. 
Rural Development Programmes 2007–2013 
481. Public expenditure to implement the Est onian rural development programme is EUR 
924.9 million for the whole period, the maximum contribution from the EAFRD being EUR 714.7 million. 
6.6. Greece 
Rural development programme  (EAGGF Guarantee) 
482. The Rural Development Programme (RDP) for Greece amounts to 
EUR 2 138.1 million, with an EU cont ribution of EUR 1 030.4 million from the 
EAGGF Guarantee Section. It is structured over six m easures: early retirement, 
 
EN 104   EN compensation for less favoured areas, agri-e nvironmental aid, fore stry support, food 
quality and meeting standards.  
483. In 2006, a considerable number of new contra cts were signed; indeed 67% of active 
contracts were signed in 2006. Most of th ese contracts were for the protection of 
agricultural land from  nitrate pollution, organic farm ing and the protection of the 
traditional olive grove of Amfissa in mainland Greece.  
484. In 2006, payments totalled EUR 226.9 million, including payments in accordance 
with Article 39 of Regulation (EC) No  1290/2005. Accumulated payments since the 
beginning of the 2000–2006 programming period amount to EUR 1  028.8 million. 
Amendments to the RDP 
485. Τhere has been one request for a Commi ssion amending decision to take account of 
Commission Decision 2006/289/EC amending the allocations by Member State under 
the EAGGF Guarantee Fund for the pe riod 2000–2006, including the amount from 
modulation. Furthermore, there have been  financial amendments to the financial 
tables in the programme and an amen dment communicated to the Commission by 
notification.  
Level of payments in the period fr om 16 October 2005 to 15 October 2006  
486. In 2006, payments totalled EUR 226.9 milli on (i.e. 99.3% of the EAGGF Guarantee 
budget for the period).  
487. Overall financial implementation of EAGG F Guarantee since the beginning of the 
programming period has been 99.8% of the amount for 2000–2006, i.e. EUR 1 028.8 million out of the amount  scheduled of EUR 1 030.4 million.  
Objective-1 programme (EAGGF Guidance) 
Operational programmes or Single Programming Documents 
488. The national mono-fund EAGGF Guidan ce Section programme for Greece was 
approved by the Commission on 6 April 2001. The Community contribution to this 
programme is EUR 1
 482.7 million. On 24 November 2004, the Commission 
approved a decision for a mid-term review  of this programme, which included an 
additional amount of EUR 250  000 from the programming and performance reserves. 
On 15 December 2005, the Commission approved a decision for an amendment to the programme designed mainly to address the needs of the rural population more 
effectively, to restore the damage caused by the adverse weather conditions that have 
afflicted Greece since 2003 and to include pr ovisions in Technical Assistance for the 
preparation of the new programming period.  
489. The regional multi-fund programmes approve d during the first half of 2001 and 
amended in 2004 in the light of the mid-term review cover a total cost of EUR 10
 914.4 million, with a total Comm unity contribution of EUR 7  041.7 million, 
to which the EAGGF Guidance Section contributes EUR 1  026.9 million. All the 
programming complements were also adopted by the monitoring committees. These committee meetings took place during November-December 2006 and some projects facing implementation difficulties had to be reconsidered with the competent authorities of the Member States as part of the mid-term review.  
 
EN 105   EN 490. On 7 December 2006, a common amendment was approved by the Commission, 
amending the 25 Operational Programmes of Greece, including the national mono-fund programme for Greece and the EAGGF co mponent of the 13 regional multi-fund 
programmes consisting both of financial re-profiling and of new eligibilities.  
Level of payments in 2006 
491. In 2006, payments totalled EUR 219.1 million. The accumulated payments of the 
EAGGF Guidance Section (EUR 786.6 milli on) since the beginning of the 2000–
2006 programming period account for 53% of the scheduled budget.  
Leader+ Programme 
492. There is only one Leader+ programme fo r Greece. It was approved on 19 November 
2001 with a total cost, after the 2004 i ndexation, of EUR 368.7 million, of which 
EUR 186.1 million is the EAGGF Guidance Section contribution. In 2002, the managing authority selected 40 local action groups as provided for by the 
programme. The programme was amended in August 2004 following the mid-term 
evaluation and planned indexation. The monitoring committee met twice in 2005.  
493. For 2006, payments amounted to EUR 28.2 million.  
494. The accumulated EAGGF Guidance Section payments (EUR 97.3 million) since the 
beginning of the 2000–2006 programming pe riod account for 52.3% of the total 
budget of the programme. 
Rural development policy 2007–2013 
National Strategy Plan  
495. Increasing the competitiveness of the prim ary sector is the main objective of the 
Greek National Strategy Plan. Other strategi c objectives involve the protection of the 
environment, the sustainable development of natural resources, an improvement in 
the quality of life in  rural areas and diversificati on of the rural economy. The NSP 
was not officially submitted in 2006. 
Rural Development Programmes 2007–2013 
496. The Rural Development Programme for Greece (2007–2013) describes the situation 
in the rural areas of the Region and puts fo rward a strategy to address the strengths 
and weaknesses found, along with the axes an d measures to implement the strategy. 
The total public cost of the plan is EUR 5
 077 million, of which the contribution of 
EAFRD is EUR 3  707 million. The RDP was not officially submitted in 2006. 
6.7. Spain 
Rural development programme  (EAGGF Guarantee) 
497. In 2000, the Commission approved two horiz ontal plans (“accompanying measures” 
and “improvement of structures”) and seven regional programmes (Aragon, 
Catalonia, Basque Country, Navarre , Balearics, Rioja, Madrid).  
 
EN 106   EN Amendments to the RDP 
498. In 2006, the last year of the 2000–2006 pr ogramming period, the Commission 
approved 11 Decisions amending Spanish RDPs  (nine of them ma king changes to the 
financial tables of each PDR as a resu lt of new funds provi ded by Commission 
Decisions 2006/289/EC and 2006/332/EC). In ad dition, two notifications of technical 
changes were made in the CAP accompanyi ng programme. Finally, in order to make 
up the budgetary allocations up to the e nd of the programming period, 15 financial 
Communications were approve d by the Commission in September and October 2006. 
Level of payments in the period fr om 16 October 2005 to 15 October 2006 
499. The 2006 EAGGF Guarantee allocation for Spain was set at EUR 692.2 million 
(which includes EUR 107 million from modulation). Payments for the same period 
amounted to EUR 678.7 million, i.e. 98.1% of  that allocation. After 7 years of 
implementation, the global financial expenditure amounts to EUR 3 608.4 million, 
which accounts for 99.6% of the EUR 3 621.8 million expenditure planned for 2000–
2006. 
Objective-1 programmes 
Operational programmes or Single Programming Documents 
500. In 2000 and 2001, the Commission approved two horizontal programmes (one mono-
fund for “Improvement of Structure”’ in  Objective-1 areas and one multi-fund for 
“Technical Assistance”) and ten multi-f und regional programmes (Andalucia, 
Asturias, Cantabria, Castile-la Mancha, Castile-Leon, Extremadura, Galicia, Murcia, 
Canary Islands and Valencia), suppleme nted by their programme complement.  
501. During 2006, the majority of the Opera tional programmes were amended by the 
Commission, accompanied by adaptations to th eir programme complement as part of 
the update of the financial tables and n ecessary final technical changes to such 
programmes. It should be mentioned that no further decisions may be adopted after 
the end of 2006. 
Level of payments in 2006 
502. After seven years of implementation, globa l financial expenditure amounts to EUR 
4 281 million, which is 82% of the EUR 5 233 million of expenditure planned for 
2000–2006.  
Leader+ Programme 
503. By the end of 2002, the Commission had approved 18 Leader+ programmes (one 
horizontal programme and 17 regional programmes). 
504. Seventeen programmes are currently im plemented under global grants, and one 
(Basque Country) under a common Oper ational Programme with a programme 
complement. A total of 145 Local Action Groups have been created. 
505. During 2006, the Commission adopted am ending decisions for 15 Spanish 
programmes, nine to decommit the part of the funds committed in 2004 and not settled at the end of 2004 (N+2 Rule). At the same time, several of these programmes 
 
EN 107   EN have been financially reprogrammed. The other six decisions were for financial 
changes between axes designed to finalise the 2000–2006 programming period. Finally, financial changes between measures  (not requiring a Commission decision) 
were made to several Leader+ programme s (Aragon, Castile-la Mancha, Castile-Leon 
and Basque Country).  
506. After seven years of implementation, globa l financial expenditure amounts to EUR 
276 million, which is 55% of the EUR 500 million of expenditure planned for 2000–
2006 (after indexation). 
Rural development policy 2007–2013 
National Strategy Plan 
507. The Spanish NSP was not officially submitted in 2006.  
Rural Development Programmes 2007–2013 
508. Due to its political structure, Spain imp lements its rural development policy through 
rural development programmes (RDPs) established at regional level by the 
Autonomous Communities. In this resp ect, 17 regional programmes and two 
horizontal programmes relating to the framew ork and the rural network are expected 
to be submitted. 
509. The total Spanish budget for the 2007–2013 programming period is EUR 13 814.1 
million (EUR 15 800.2 million taking into acc ount national aid), of which EAFRD 
support amounts to EUR 7 213.9 million (C onvergence regions: EUR 4 943.6 
million).  
6.8. France 
Rural development programme  (EAGGF Guarantee) 
510. One national Rural Development Progr amme (RDP) for the period 2000–2006 was 
approved for France. The total public co st of this programme amounted to 
EUR 9
 671.1 million, of which the EAGGF contributed EUR 4  821.2 million. 
Furthermore, a rural development axis wa s included in each of the 20 Objective-2 
regional programmes. The total public co st for these 20 programmes amounted to 
EUR 1  570.2 million, of which the EAGG F contributed EUR 679.3 million. 
Amendments to the RDP and rural development axis of Objective-2 programmes 
511. On 25 April 2006, the Commission received a re quest from the French Authorities for 
an amendment to the RDP, which was approved on 3 November 2006. The amendments introduce new actions under the “investments in farms” measure and a 
new agri-environmental measure called “ Plan végétal pour l’environnement ”. 
512. This decision also covered the amendment of the Financial Plan to include both the 
national RDP and the rural development axis of the 20 Objective-2 regional 
programmes. Following this amendment, the maximum total public expenditure and EAGGF contribution are set at EUR 11
 241.4 million and EUR 5  500.5 million, 
respectively. 
 
EN 108   EN 513. In 2006, the Monitoring Committees approved dr aft SPD amendments for most of the 
regions. These amendments were forwarded to the Commission and were adopted as formal amendments to the SPDs. 
Level of payments in the period fr om 16 October 2005 to 15 October 2006
59 
514. During this period, payments totalled EUR 1 189.1 million of the EAGGF Guarantee 
Section budget for 2006 (EUR 1 197 million).  
515. After six years of implementation, overall financial implementation for EAGGF 
Guarantee is 99.9% of the allocation for 2000–2006. 
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Programming Documents 
516. Six French regions are classified under Ob jective 1: the four overseas departments 
(Guadeloupe, Martinique, French Guiana, Ré union), Corsica and, in  part, the region 
of Nord/Pas-de-Calais (the three Doua i, Valenciennes and Avesnes-sur-Helpe 
districts). The latter two are receiving phasing-out support.  
Level of payments in 2006 
517. Payments for 2006 amounted to EUR 82.5 million, taking the total payments for the 
2000–2006 period to EUR 450.4 million. 
Leader+ Programme 
518. The French National Programme of the Co mmunity Initiative Leader+ was adopted 
on 8 August 2001 in the form of a global gran t. Accordingly, CNASEA (the National 
Centre for Farm Planning) was designated as the management authority. The total 
Community contribution amounts to EUR 263.6 million.  
519. The programme is implemented by 140 Local Action Groups (LAGs), which were 
selected in 2002. Their action plans were  set up in 2003, following the signing of 
bilateral agreements with CNASEA. 
520. Payments totalled EUR 39.2 million in 2006,  although the expenditure statements 
made it impossible to avoid N+2 deco mmitments. By Commission Decision 
C(2006) 2039 of 26 May 2006, the EAGGF cont ribution to this programme was 
reduced by EUR 5.5 million. Funding sinc e 2000 has totalled EUR 137.3 million, 
which accounts for 52.1% of the total budget appropriations for 2000–2006. 
Rural development policy 2007–2013 
National Strategy Plan  
521. A first version of the NSP for France wa s submitted on 23 November 2006. The NSP 
focuses objectives on improving the comp etitiveness of the agro-food sector, 
diversifying the economy in rural areas, increasing the employment rate, improving 
                                                 
59 Payments in accordance with Article 39 of Regulation (EC) No 1290/2005 are included for 2006. 
 
EN 109   EN the environmental situation and preserving the rural heritage. The planned breakdown 
by axis of the EAFRD allocation (EUR 6.4 billion) for France as a whole is as 
follows: 35% for axis 1; 55% for axis 2; 10% for axis 3; 5% for axis 4 (Leader) and 2% for technical assistance. 
Rural Development Programmes 2007–2013 
522. For the programming period 2007–2013, Ru ral Development policy will be 
implemented in France through six RDPs: one for mainland France, one for each 
overseas department (Guadeloupe, French Guiana, Martinique, Réunion) and one for 
the island of Corsica. The RDPs were not officially submitted in 2006. 
6.9. Ireland 
Rural development programme  (EAGGF Guarantee) 
523. The total public expenditure  of the programme is EU R 3 675.1 million, including an 
EU contribution of EUR 2 388.9 million from the European Agricultural Guidance 
and Guarantee Fund, Guarantee Section. The programme covers all rural areas and 
includes support for early retirement, le ss favoured areas, ag ri-environment and 
afforestation. 
Amendments to the RDP 
524. In 2006, the Irish Authorities notified the Co mmission of amendmen ts to their Rural 
Development Programme. These changes incl uded the Early Retirement Scheme and 
Afforestation measures. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
525. For the period from 16 October 2005 to 15 October 2006, EU expenditure for the 
programme amounted to EUR 378.3 million, which is in line with the spending 
profile of the programme. 
Over the period 2000–2006 all funds were completely utilised. 
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
526. The EAGGF Guidance Section contributes to Rural Development measures under 
two Operational Programmes (Operational Pr ogrammes for the Border, Midlands and 
Western region and the Southern and Ea stern region) in the Community Support 
Framework (2000–2006). The EAGGF Guidance Section amounts to EUR 153.6 million. In addition, EAGGF Guidance has contributed to the special programme PEACE II for the border count ies of Ireland and Northern Ireland. 
Level of payments in 2006 
527. In 2006, payments (excluding PEACE II) totalled EUR 34.4 million. Cumulative 
EAGGF Guidance payments up to the e nd of 2006 amounted to EUR 105.3 million, 
or 68.5% of the amount scheduled for the 2000–2006 programming period. 
 
EN 110   EN 528. By the end of 2006, the total amount paid out  of EAGGF Guidance to Ireland for the 
2000–2004 PEACE II Programme (managed jointly with Northern Ireland) was 
EUR 9.2 million (73% of the al location of EUR 12.6 million). 
Leader+ Programme 
529. The allocation from EAGGF Guidance for 2000–2006 amounted to 
EUR 48.7 million, 65% of the total public expe nditure for the period. By the end of 
2006, a total amount of EUR 26.4 million had b een paid (54% of the total EAGGF 
allocation for the 2000–2006 programming period).  
Rural development policy 2007–2013 
National Strategy Plan 
530. In 2006, the Irish authorities formally submitted to the Commission their National 
Strategy Plan for rural development for the 2007–13 programming period. Discussions took place between the Commi ssion and the Irish authorities throughout 
2006 on the analysis, strategy and prio rities identified  in the NSP. 
Rural Development Programmes 2007–2013 
531. Discussions were held with the Irish managing authorities concerning the preliminary 
submission of the Rural Development Progr amme. Total expenditu re over the period 
was EUR 4 298.8 million, of which th e EAFRD contribution should be 
EUR 2 339.9 million. 
6.10. Italy 
Rural development programme  (EAGGF Guarantee) 
532. In Italy, 21 rural development programme s are co-financed by EAGGF. Total public 
expenditure on rural development program mes for Italy amounts to EUR 8 744.3 
million, including a Community contribution of EUR 4 512.3 million
60 provided by 
the EAGGF Guarantee Section.  
Amendments to the RDP 
533. The Commission approved amendments to  the following RDPs: Friuli-Venezia 
Giulia, Trento, Veneto. The amendments concerned primarily the adaptation of 
several measures of the programme to ta ke account of effective implementation and 
reprogramming of the financial scheme. The amendment to the RDPs of the Regions 
of Friuli-Venezia Giulia and Trento refers to the introduction of a measure designed as a compensatory payment for Less Favour ed Areas. The amendment to the RDP of 
the Region of Veneto concerned the in troduction of a specific measure for 
consultancy services. 
534. In 2006, the Commission approved the single financial table for all Italian RDPs, as 
presented in accordance to Article 48(1) of Regulation (CE) 817/04. 
                                                
 
60 Data refer to the Total Allocation “Berlin”; contribution of EUR 4 624.2 million represents the Total Allocation 2006/289/EC (m odulation included). 
 
EN 111   EN Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
535. As at 15 October 2006, expenditure in the current financial year for all 21 rural 
development programming documents fina nced by EAGGF Guarantee amounted to 
EUR 590.9 million of Community contri bution, which accounts for 99.7% of the 
annual budget earmarked. 
536. Overall financial implementation for EAGGF  Guarantee since the beginning of the 
programming period has been 99.9% of  the amount planned for 2000–2006, i.e. 
EUR 4  622.5 million against an amount earmarked of EUR 4 624.2 million61. 
Operational programmes or Single Programming Documents 
Amendments to the OPs or SPD 
537. The seven Objective-1 regions (Sicily, Sa rdinia, Calabria, Basilicata, Campania, 
Apulia and Molise) are covered by mu lti-fund operational progr ammes. After the 
distribution of the performan ce reserve at Community (+ 4%) and national level 
(+ 6%), the total EAGGF contribution (Guidance section) in the Operational 
Programmes amounts to EUR 3 292.3 million for the entire programming period 
(2000–2006). 
Level of payments in 2006 
538. The seven Objective-1 regions benefited from an EAGGF contribution of EUR 513.5 
million in terms of payments in 2006. Si nce the beginning of the programming 
period, the paid amounts (EUR 2 140.7 million) have accounted for 65.6% of the 
amount of the EAGGF Guidance Section pl anned for the whole programming period.  
Leader+ Programme 
539. For the 2000–2006 programming period, Ital y approved 21 Regional Programmes 
and one National Network Programme. In 2006, three programmes (Apulia, Liguria 
and Sicily) were amended by Commission deci sion to adapt certain measures of the 
programmes to take account of their e ffective implementation, with slight 
reprogramming of their financial scheme. 
540. Following indexation, the total amounts of  public expenditure planned for the 
Leader+ programmes for Italy amounts to  EUR 490.3 million for the programming 
period, including a Community c ontribution of EUR 281.6 million. 
541. For the 22 Leader+ programmes, the Ital ian regions benefited from an EAGGF 
contribution of EUR 64.1 million in terms of  payments in 2006. Since the beginning 
of the programming peri od, the paid amounts (EUR 165.9 million) have accounted for 
58.9% of the amount of the EAGGF Guidance Section planned for the whole programming period.  
                                                
 
61 Total execution includes expenditure/reimbursement based on Decision C(2006) 4368 of 6.10.2006. 
 
EN 112   EN Rural development policy 2007–2013 
National Strategy Plan 
542. The NSP indicates priorities in the light of the Community strategic guidelines and 
ensures coherence and coordination with  national and regi onal priorities: 
– increasing the competitiveness of the agricultural and forestry sector,  
– sustainable use of natural resources and landscape conservation, maintaining 
agricultural activ ities and decreasing th e risk of abandonment, 
– promoting the diversification of the rural economy and local development. 
543. The NSP includes an overall socio-economic and environmental analysis. It covers 
thematic and territorial priorities and major quantified objectives, including 
monitoring and evaluation indicators. 
544. In addition, the NSP provides a brea kdown of EAFRD reso urces between the 
21 regions, and indication to guarantee co mplementarity with the CAP and the 
Structural Funds. 
Rural Development Programmes 2007–2013 
545. For the period 2007–2013, the national rural deve lopment plan consists of 21 rural 
development programmes (EAFRD co-financi ng) for each of the 19 Italian regions 
and for the two autonomous provinces of Trento and Bolzano, and a network 
programme. The EAFRD contribution amounts to EUR 8  292 million. 
6.11. Cyprus 
Rural development plans (EAGGF Guarantee) 
546. Cyprus is the only country among the new Member States to benefit from 
Community solidarity as define d for Objective-2 regions.  
547. The Commission approved in 2004 the Rural Development Plan (2004–2006) for 
Cyprus, to be co-financed by the “European Agricultur e Guarantee and Guidance 
Fund” (EAGGF) — Guarantee Section. The Rural Development Plan (2004–06) for Cyprus covers the areas of the country unde r effective control of  the internationally 
recognised government of the Republic of Cyprus. 
548. The Rural Development Plan (2004–06) for C yprus accounts for 58% of the overall 
Community financial contri bution during the current programming period. The 
EAGGF contributed a total amount of EU R 74.8 million during this period, which 
will be complemented by national public funding of EUR 69.1 million and by EUR 14.4 million of additional State aid. In a ddition, the private sector is expected to 
contribute EUR 33.9 million.  
549. The programme includes a broad range of rural development measures, which give 
special emphasis to improving the infrastructure and the competitiveness of the rural economy of the country, conso lidating and diversifying rura l areas and protecting the 
environment. The Department of Agriculture  of the Ministry of  Agriculture, Natural 
Resources and Environment of Cyprus is the Managing Authority, and a Paying 
 
EN 113   EN Agency (CAPO) has been established. Most of  the calls for expression of interest for 
the various measures of the Rural Development Plan (2004–06) of Cyprus have been published. 
Amendments to the RDP 
550. Two financial notifications not requiring a Commission Decision were submitted in 
2006. 
Level of payments in the period fr om 16 October 2005 to 15 October 2006 
551. Over the period, payments amounted to EUR 22.9 million and accumulated payments 
since the beginning of the programme, incl uding advance payments, amount to EUR 
39.9 million, or 53% of the EAGGF contribution. 
Rural development policy 2007–2013 
National Strategy Plan  
552. The National Strategy for Cyprus was o fficially received on 15 December 2006. The 
main objectives are to increase the competitiveness of the primary and secondary agricultural sector in Cyprus  and revive the Cypriot count ryside, while protecting the 
environment and supporting the indigenous de velopmental potential of rural regions 
by adopting a bottom-up approach. 
Rural Development Programmes 2007–2013 
553. The Cypriot Rural Development Programme for 2007–2013 was submitted on 
22 December 2006. It describes th e situation in the rural ar eas of the Region and sets 
out the strategy chosen to address the st rengths and weaknesses found, along with the 
axes and measures to implement that strategy. The total public cost of the plan is EUR 325 million, of which the contribu tion of EAFRD is EUR 162.5 million. 
6.12. Latvia 
Rural development plan (EAGGF Guarantee) 
554. Total public costs amount to EUR 410.1 million, including a contribution of 
EUR 328.1 million from EAGGF Guarantee. The programme includes support for 
producer groups, meeting standards, support for farmers in less favoured areas, agri-
environment, early retirement and support for semi-subsistence farms. 
Amendments to the RDP 
555. There were two notifications and one am endment requiring a Commission decision 
submitted during 2006. Notifications concerne d amendments to the measures “Agri-
environment”, “LFA”, “Meeting standards” , “Early retirement”, and “Technical 
assistance”. The amendment requiring a Co mmission decision concerned the transfer 
of funds to the measures “Agri-envir onment” and “Support for semi-subsistence 
farms”, where commitments exceeded the budget that had been earmarked. Amendments to financing were made within  the priority and th erefore do not affect 
the financial table. 
 
EN 114   EN Level of payments from 16 October 2005 to 15 October 2006 (EAGGF Guarantee) 
556. The level of payments in the period  from 16 October 2005 to 15 October 2006 
reached EUR 215.0 million, i.e. 65.5% of the total Community budget for the period 2004–2006.  
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
557. The Latvian Single Programming Document  (SPD) for Objective 1 includes support 
for investments in agricultural holdi ngs, setting-up of young farmers, training, 
improving processing and marketing of agricultural products, promoting the 
adaptation and development of rural areas and forestry an d developing local actions 
(Leader+ measures).  
558. The total public cost of the EAGGF Guidance part of the Latvian Single 
Programming Document for 2004–2006 was EUR 138.6 million, including an EU 
contribution of EUR 91.9 million. 
Level of payments in 2006 
559. In 2006, payments reached a level of EU R 24.8 million, i.e. 27.0% of the total 
Community contribution for the period 2004–2006. 
Rural development policy 2007–2013 
National Strategy Plan  
560. The Latvian National Strategic Plan was re ceived officially on 8 December 2006. The 
financial breakdown by axis is 50% for Axis  1, 30% for Axis 2, 20% for Axis 3 and 
2.5% for Axis 4. The strategy defines four priorities for Latvia: 
– development of capacities of rural people 
– enhancement of labour-generated income in rural territories 
– sustainable management of rural natural resources 
– development of rural living environment. 
Rural Development Programmes 2007–2013 
The Latvian rural development programme was not officially submitted in 2006. 
6.13. Lithuania 
Rural development plans (EAGGF Guarantee) 
561. Total public expenditure for the Rural Development Plan (2004–2006) was 
EUR 611.9 million, and the maximum contri bution from the EAGGF Guarantee 
section EUR 489.5 million. The programme covers the whole of the country. 
562. The Plan contains the following nine m easures: Early retirement, LFA, Agri-
environment, Afforestation of agricultura l land, Support for semi-subsistence farms 
undergoing restructuring, Meeting standard s, Technical assistance, Complementary 
national direct payments and the Ca rry-over of SAPARD overcommitments. 
 
EN 115   EN Amendments to the RDP 
563. In 2006, Lithuania submitted three notifications  of amendments to the RDP, none of 
which required a Commission decision. These amendments concerned inheritance of 
entitlement under the Early retirement meas ure, sanctions for the LFA measure, and 
provisions for replanting forest in case of natural disasters within the Afforestation 
measure. All the notifications have already come into force.  
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
564. EAGGF Guarantee expenditure for the pe riod from 16 October 2005 to 15 October 
2006 amounted to EUR 140.0 million, or  78.6% of the annual allocation 
(EUR 178.1 million for 2006). 
565. Cumulative EAGGF Guarantee payments fr om the start of the programming period 
(2004) amount to EUR 248.8 million, or 50.8% of the total Community budget 
earmarked for the 2004–2006 programming period. 
Operational programmes or Single Programming Documents 
566. Within the Objective-1 programme for Lit huania, which covers the whole country, 
the EAGGF Guidance contribution amounted  to EUR 122.9 million, which is 13.7% 
of the total Structural Fund allocation for the period 2004–2006. 
567. The seven EAGGF-funded measures included in the SPD are: Investments in 
agricultural holdings, Setting-up of young farm ers, Training, Improving processing 
and marketing of agricultural products, Forestry, Promoting the adaptation and development of rural areas and the Leader+ measure. 
Level of payments in 2006 
568. The total EAGGF-Guidance expenditure declared by Lithuania for 2006 was EUR 
45.1 million. Cumulative EAGGF Guidance payments amounted to 
EUR 52.5 million, or 42.7% of the allocation earmarked for the 2004–2006 
programming period. 
Rural development policy 2007–2013 
National Strategy Plan 
569. The NSP for Lithuania was officially submitted to DG AGRI on 7 August 2006. 
Rural Development Programmes 2007–2013 
570. There is one Rural Development Programme for the whole of Lithuania, with total 
public expenditure of EUR 2.26 billion for the period 2007–2013. This includes a 
contribution from the EAFRD of EUR 1.74 billion for the programming period. The 
RDP was not formally submitted in 2006. 
 
EN 116   EN 6.14. Luxembourg 
Rural development programme  (EAGGF Guarantee) 
571. The total public cost for the National Rural Development Programme amounted to 
EUR 294.1 million, of which the EAGG F contributed EUR 92.6 million.  
Amendments to the RDP 
572. The STAR Committee of July 2006 endo rsed an amendment to the Rural 
Development Plan for Luxemburg. Th e Commission Decision  approving this 
amendment was issued on 30 August 2006 (reference C(2006) 3969).  
Level of payments in the period fr om 16 October 2005 to 15 October 2006  
573. The 2006 allowance of the EAGGF Guarantee Section for the Grand Duchy of 
Luxembourg amounted to EUR 14.5 million. EU expenditure was EUR 11.9 million, 
which is 81.8% of the total. 
574. Global financial execution for the period 2000–2006 is now 97.2%, or 
EUR 90.0 million out of a total of EUR 92.6 million. 
Leader+ Programme 
575. The programme involves total public e xpenditure of EUR 9.27 million, including 
EUR 2.14 million for the EAGGF contribution.  This amount includes the indexation 
approved on 30 November 2004 (C(2005) 4673) . Four LAGs were selected in 
Luxembourg, covering 90 000 inhabitants, and a fifth is financed by national funds. 
576. At the end of 2006, after six years of im plementation, the total financial execution 
was 41.8% of the total amount of EAGGF Guidance expenditure planned for the 
period 2000–2006, i.e. EUR 0.9 million out of a total of EUR 2.1 million. 
577. The national Leader network unit became fully operational in 2004, but had been 
restructured by the beginning of 2006. 
Rural development policy 2007–2013 
National Strategy Plan  
578. The first version of the NSP for the Gr and Duchy of Luxembourg was submitted on 
16 October 2006. The NSP focuses objectives  on improving the competitiveness of 
the agro-food sector , sustaining farmers’ incomes and improving the environmental 
situation. The planned breakdown by axis of  the EAFRD allocation (EUR 90 million) 
for Luxembourg as a whole is as follows: 29%  for axis 1; 59% for axis 2; and 12% 
for axis 3. The Leader approach axis acc ounts for 5.9% of the EAFRD contribution. 
Luxembourg will not use EAFRD fu nds for technical assistance 
Rural Development Programmes 2007–2013 
579. For the programming period 2007–2013, Ru ral Development policy will be 
implemented in Luxembourg with an EA FRD allocation of EUR 90 million. The 
RDP was not formally submitted in 2006. 
 
EN 117   EN 6.15. Hungary 
Rural development plans (EAGGF Guarantee) 
580. There is one Rural Development Plan for the whole of Hungary, with total public 
expenditure of EUR 754.1 million for the period 2004 to 2006. This includes a 
contribution from the EAGGF, Guar antee Section, of EUR 602.3 million.  
Amendments to the RDP 
581. The plan was amended by Commission Decision C(2006) 7301 of 29 December 
2006. The amendment concerned a reduction in the financial allocation for the 
measures “Meeting standards”, “Less favour ed areas” and “Semi-subsistence farms” 
in favour of greater funding for the measures  “Complements to direct payments” and 
“Agri-environment” in 2006.  
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
582. In the decision approving the programm e, the Commission made a Community 
budget commitment of EUR 219.2 million for 2006. In 2006, the Commission made interim payments of EUR 233.1 million.  
583. Financial execution from the beginning of the programming period amounted to EUR 
429.7 million, i.e. 71.3% of the EAGGF budget for 2004–2006.  
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Programming Documents  
584. There is one Agriculture and Rural Development Operational Programme for 
Community structural assistance under Obje ctive 1, covering the whole of Hungary. 
Total public expenditure for the operational programme was set at EUR
 428.5 million 
for the period 2004–2006. This includes a contribution of EUR 317.2 million from the 
European Union: EUR 312.8 million from the EAGGF, Guidance Section, and 
EUR 4.4 million from the Financial Instruments for Fisheries Guidance, respectively.  
Amendments to the OP 
585. The operational programme was amended by Commission Decision C(2006) 2204 of 
30 May 2006. The amendments involve adju stments to the Leader+ measure, for 
which implementing tasks have been reas signed to the regional offices of the 
Intermediate Body further to the reorgani sation of the Ministry of Agriculture. 
Secondly, the beneficiaries of the Leader+ measure have been changed with the 
addition of the Managing Authority for Activity 1 − Acquisition of skills. The 
adjustment did not involve any financial amendment.  
Level of payments in 2006 
586. In the decision approving the programm e, the Commission made a Community 
budget commitment of EUR 135.3 million for the EAGGF. 
 
EN 118   EN 587. The Commission made an interim payment of EUR 146.1 million for EAGGF part-
financed measures. 
588. Financial execution for EAGGF part-financed  measures from the beginning of the 
programming period amounted to EUR 220.1 m illion, which is 70% of the budget for 
2004–2006.  
Rural development policy 2007–2013 
National Strategy Plan 
589. The NSP sets the development priorities for agriculture and rural development in line 
with the Community Strategy Guidelines: 1) contributing to the competitiveness of agriculture, food production and forestry (axis 1), 2) obs erving the principles of 
sustainable development and the protection of  natural values and biodiversity (axis 2), 
and 3) enhancing entrepreneurship and pr oviding access to services throughout rural 
areas (axis 3). The document was not formally submitted in 2006. 
Rural Development Programmes 2007–2013 
590. There is one Rural Development Programme  for the whole of Hungary, with total 
public expenditure of EUR 5.1 billion for the period 2007–2013. This includes a contribution from the EAFRD of EUR 3.8 billion for the programming period. The document was not formally submitted 2006. 
6.16. Malta 
Rural development plans (EAGGF Guarantee) 
591. There is one Rural Development Programme covering all rural areas of Malta. The 
total cost of the programme was EU R 33.6 million. The contribution of EAGGF, 
Guarantee Section, amounted to EUR 26.9 million.  
Amendments to the RDP 
592. There have been two amendments to the Plan. The first concerned the transfer of 
EUR 400 000 from the “Producer Groups” to  the “Less favoured areas” budget and 
the second involved the establishment of ne w aid rates and a new investment period 
of two years for applications to be recei ved under the “Meeting Standards” measure 
in 2007. 
Level of payments in 2006 
593. In the decision approving the programm e, the Commission made a Community 
budget commitment of EUR
 9.8 million. The Commission made two interim 
payments amounting to EUR 7.9 million.  
594. Financial execution since the beginning of the programming  period has amounted to 
EUR 18.7 million, which is 69.5% of the budget earmarked for 2004–2006.  
 
EN 119   EN Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
595. The Single Programming Document under Obj ective 1 of the Structural Funds, for 
which Malta as a whole is eligible, cont ains two measures part-financed by the 
EAGGF Guidance Section: I nvestments in Agricultural Holdings and Improving the 
Marketing and Processing of Agricultural Pr oducts. The total publ ic expenditure for 
these measures was EUR 6 million, of whic h an EU contribution of EUR 4.2 million. 
Amendments to the OP 
596. No amendments were submitted in 2006.  
Level of payments in 2006 
597. In the decision approving the programme, in 2006 the Commission made a 
Community budget commitment of EUR 1.8 million. 
598. In 2006, the Commission made four interi m payments amounting to EUR 0.9 million.  
599. Financial execution for EAGGF part-financed  measures from the beginning of the 
programming period amounted to EUR 1.5 million, which is 36.5% of the budget earmarked for 2004–2006.  
Rural development policy 2007–2013 
National Strategy Plan 
600. The NSP sets the development priorities for agriculture and rural development in line 
with the Community Strategy Guidelines:  
1) Improving the competitiveness of th e agricultural sector by focusing on the 
priorities of knowledge tr ansfer, modernisation of holdings, adding value to 
agricultural products in terms of quality a nd competitiveness in an effort to offer 
more diverse, higher quality products and se rvices to domestic consumers and foreign 
tourists, thus making farming a viable and more attractive career choice for younger 
people. 
2) Improving the environment and the count ryside by encouraging the retention of 
agricultural activity and promoting environmentally friendly production methods in 
line with rural heritage. 
3) Improving the quality of life in rural ar eas through the conservation and utilisation 
of the rural, natural and cultural heritage, thereby enhancing the multifunctional role of rural areas.  
The document was not formally submitted in 2006. 
Rural Development Programmes 2007–2013 
601. There is one Rural Development Programme for the whole of Malta, with total public 
expenditure of EUR 100.3 million for the period 2007–2013. This includes a 
contribution from the EAFRD of EUR 76.7  million for the programming period. The 
document was not formally submitted in 2006. 
 
EN 120   EN 6.17. The Netherlands 
Rural development programme  (EAGGF Guarantee) 
602. The total public cost of the rural development programme for the Netherlands was 
EUR 1 042.6 million, including an EU cont ribution of EUR 435.1 million from the 
EAGGF Guarantee Section. 
Amendments to the RDP 
603. The STAR Committee of March 2006 endorse d an amendment to the Dutch Rural 
Development Plan. The amendment consis ted of adopting good farming practice, 
adapting methods for the calculation of ai d for agri-environmental measures, adding 
two new agri-environmental packages and a measure in support of voluntary 
participation in food quality schemes.  The Commission Deci sion approving this 
amendment was issued on 15 May 2006 (reference C(2006) 2028).  
604. The STAR Committee of June 2006 endorsed an amendment of  the financial plan to 
increase the EAGGF allocation for the Netherlands, pursuant to Decision 2006/289/EC. The Commission Decision approvi ng this amendment was issued on 
1 July 2006 (reference C(2006) 3574). 
605. Furthermore, six financial communications, including a revised financial table, were 
received in 2006. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
606. The 2006 budgetary allocation for the Netherlands amounted to EUR 71.1 million. 
The level of payments for the programme amounted to EUR 68.3 million, which is 96.1% of the allocation.  
607. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 99.3% of the total budget for 2000–2006, i.e. 
EUR
 435.1 million.  
Objective-1 Programmes (EAGGF Guidance) 
Operational Programmes or Si ngle Programming Documents 
608. One Single Programming Document was approved for the Netherlands: the phasing-
out of the Objective-1 SPD for Flevoland. An update of the mid-term review was 
completed, which meant a transfer of EUR 2.1 million EAGGF from measure 2.1 
(consolidating the agricultura l sector) to 2.3 (enhancing ru ral areas). A proposal for 
an amendment was submitted to the Commission at the end of the year. 
Level of payments in 2006 
609. Global financial execution for EAGGF Guidance since the beginning of the 
programming period has been 69% of  the total budget for 2000–2006, i.e. 
EUR 7.2 million out of a total of EUR 10.4 million. 
 
EN 121   EN Leader+ Programme 
610. In the Netherlands, four Leader+ program mes were approved: one for the South 
region, involving total expenditure of EUR 48.4 million, of which EUR 19.6 million 
EAGGF Guidance; one for the Randstad regi on, involving total expenditure of EUR 
39.5 million, of which EUR 19.6 million EAGGF Guidance; one for the East region, 
involving total expenditure of EUR 46.7 m illion, of which EUR 18.9 million EAGGF 
Guidance, and one for the North regi on, involving total expenditure of 
EUR 71.7 million, of which EUR 25.5 million EAGGF Guidance. 
611. For the Randstad Leader+ programme, it was found that the declaration of 
expenditure transmitted to the Commission was incorrect and consequently a recovery note amounting to EUR 1.1 million was issued by the Commission in February 2006.  
612. Since the approval of the Leader+ program mes, a total amount of EUR 48.6 million 
of EU contribution has been paid (5 8% of the total budget for the period). 
Rural development policy 2007–2013 
National Strategy Plan 
613. The first version of the NSP for the Ne therlands was submitted on 17 August 2006 
and, following discussions with the Netherla nds and interservice  consultations, an 
amended version was submitted on 27 November 2006. The NSP focuses objectives on promoting innovation and structural ad justments, reducing the environmental 
pressure resulting from agriculture and horticulture production, diversifying the 
economy in rural areas, boosting micro-enterp rises and providing better services for 
and accessibility to rura l areas. The breakdown by axis of the EAFRD allocation 
(EUR 486.5 million) for the Netherlands is as follows: 30% for axis 1; 30% for axis 2; 30% for axis 3 and 10% for axis 4. 
Rural Development Programmes 2007–2013 
614. For the programming period 2007–2013, Ru ral Development policy will be 
implemented in the Netherlands through a si ngle RDP, with an EAFRD allocation of 
EUR 486.5 million. The first version of the Dutch RDP was officially submitted on 
27 December 2006. 
6.18. Austria 
Rural development programme  (EAGGF Guarantee) 
615. The total public cost of the Austri an Rural Development Programme (2000–2006) 
was EUR 6 811.0 million, including an EU contribution of EUR 3 258.6 million from 
the EAGGF Guarantee Section. The programme  prevailingly supports investments in 
agricultural holdings, setting-up of young farmers, tr aining, less favoured areas, agri-
environment, improving processing and ma rketing of agricultural products, and 
promoting the adaptation and developm ent of rural areas and forestry. 
 
EN 122   EN Amendments to the RDP 
616. In 2006, Austria proposed three amendments  to the Austrian RDP, which were 
approved. Two amendments concerned measures  and were introduced as notifications 
pursuant to Article 51(5) of Regulati on (EC) No 817/2004. The third amendment 
concerned a revision of the overall financ ial table and required a new Commission 
Decision C(2006) 4114 of 7 September 2006. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
617. The plan provided for total public expenditure of EUR 1 008 million in 2006, 
including an EU contribution of EUR 500 million. For the period from 16 October 
2005 to 15 October 2006, EAGGF Guarantee payments amounted to approximately 
EUR 499.4 million, which is 99.9% of the annual Community contribution. 
618. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 99.9% of the total budget for 2000–2006, i.e. 
EUR 3 257.9 million out of a total of EUR 3 258.6 million.  
Annual Report 
619. The monitoring tables for 2006 showed th at measures had been implemented 
satisfactorily and in accordance with forecasts.  
Objective-1 Programmes (EAGGF Guidance) 
620. The total public cost of the Austri an Objective-1 ope rational programme 
(Burgenland) for the programming period 2000–2006 was EUR 389.9 million, including an EU contribution of EUR 282.9 million. Of this, the agricultural 
fund/total public expenditure amounted to EUR 162.7 million, including an EU contribution (EAGGF) of EUR 43.7 million. 
Operational programmes or Single Programming Documents 
621. In 2006, one amendment to the Austrian Objective-1 operational programme was 
introduced and approved in 2007 by D ecision C(2007) 1409 of 23 March 2007. The 
amendment concerned financial and non-financial aspects. 
Level of payments in 2006 
622. The programme provided for public expendi ture for RDP measures (EAGGF) in 2006 
totalling EUR
 8.9 million and an EU (EA GGF) contribution of EUR 6.7 million. 
Since the adoption of the Objective-1 pr ogramme for Burgenland, an amount of 
EUR 36.3 million (EU contribution) has been paid (around 83% of the total budget 
for the whole period), of which EUR 4.9 million in 2006. 
Annual Report 
623. The annual report includes a brief analysis and tables on priority and measure 
indicators. There have been no major change s in socio-economic trends or national, 
regional and sectoral policies.  
 
EN 123   EN Leader+ Programme 
624. The Leader+ programme for Austria was approved by Decision C(2001) 820 of 
26 March 2001. During the period 2001–2006, total expenditure under the programme amounted to EUR 164.4 million. Th is includes an EU contribution of 
EUR 76. 8 million and a contribution of EUR 59 million from the private sector (these figures already in clude indexation amounts). 
625. The Austrian Leader+ programme covers eigh t regions of Austria, with the exception 
of the urban area of Vienna. 
626. Following a public tender, 56 local actions  groups have been selected under the 
programme. The groups cover 46 996 sq. km or approximately 45% of the territory, 
with a population of 2 175 079 inhabitant s or about 23% of the total population. 
627. The programme provided for expenditure in 2006 amounting to EUR 32.3 million. 
This includes an EU contribution of  EUR 15.1 million and a contribution of 
EUR 11.6 million from the private sector. 
628. Since the adoption of the Austrian Leader+ programme, an amount of 
EUR 50.6 million has been paid (65.8% of the EAGGF budget for the period 2000–
2006), of which EUR 19.5 million in 2006. No problems were encountered regarding 
the n+2 rule during the current period or in 2006 . 
629. In 2006, one amendment was proposed. It co ncerned financial amendments within 
each Title and required a new Commissi on Decision (C(2006) 4830 of 6 October 
2006). 
Rural development policy 2007–2013 
National Strategy Plan 
630. The Austrian national strategy plan lays down Austria’s primary aim of continuing 
with the previous overall st rategy of ensuring sustai nable agriculture, supporting 
farmers and foresters in extensive manageme nt of agricultural and forestry land, and 
of maintaining rural landscap es. Thus, emphasis is put on axis 2 measures. To ensure 
competitiveness for Austrian farmers and foresters, support for investment in the food sector was increased appreciably compar ed to the previous programming period. 
Support for the diversification of rural economy, especially  for micro-enterprises and 
local tourism, will be raised considerably . Another strategic goal is the improvement 
of the quality of life by safe guarding the rural heritage. 
Rural Development Programmes 2007–2013 
631. Austria implements one Rural Devel opment Programme 2007–2013 for its entire 
territory. Total public expenditure am ounts to EUR 7 822.0 million and the EAFRD 
contribution is EUR 3 911.4 million (average  EAFRD co-financing is 50% in non-
convergence regions and 75% in the conve rgence region of Burgenland). The RDP 
was not officially submitted in 2006. 
 
EN 124   EN 6.19. Poland 
Rural development plans (EAGGF Guarantee) 
632. The Rural Development Plan for Poland was approved on 6 September 2004. The 
total public expenditure earmarked for the period 2004–2006 was EUR 3 571.8 
million, of which the EU-contribution amounted to EUR 2 866.4 million.  
Amendments of the RDP 
633. In 2006, the Polish authorities forwarded tw o notifications of amendments and two 
financial notifications.  
634. The first amendment notification concerned the specification of periods when a 
payment claim can be submitted by beneficiaries of the agri-environment measure. To rationalise the handling of applications, the Polish authorities have decided to change 
this period. 
635. The second amendment notification concerne d two amendments: for the meeting EU 
standards measure the maximum time to comp lete projects for natural fertiliser 
storage was extended to 31 December 2007;  the second amendment concerned the 
extension of the producers’ group list to in clude red deer and fallow deer producers 
636. Two small financial reallocations coveri ng 1.55% of the total budget entered into 
force on 17 July and 29 December 2006. 
Level of payments in the period fr om 16 October 2005 to 15 October 2006 
637. Payments for the financial year 2006 amounted to EUR 901 million.  
Objective-1 programme (EAGGF Guidance)  
Operational programmes or Single Programming Documents 
638. One Sectoral Operational Programme (SOP − “Restructuring and modernisation of 
the food sector and rural development 2004–2006 ”) was approved for Poland. Total 
public expenditure amounted to EUR 1.8 million, of which the EAGGF Guidance 
contribution was EUR 1.2 million. 
Level of payments in 2006 
639. The total EAGGF Guidance expenditure declared by Poland and paid by the 
European Commission in 2006 was EUR 192.4 million (or 16% of the EAGGF allocation for 2004–2006). Cumulative EAGGF Guidance payments until the end of 2006 amounted to EUR 869.2 million (includi ng advance payments of EUR 190.8 
million). 
Amendments to the operational programmes 
640. One amendment was approved on 14 D ecember 2006 by Commission Decision 
C(2006) 6884. It concerned the transfer of fu nding between the tw o priorities of the 
Programme. 
 
EN 125   EN Rural development policy 2007–2013 
National Strategy Plan  
641. After a series of working meetings, the offi cial version of the National Strategy Plan 
was received on 22 August 2006. This document was subjected to interservice consultation, as a result of which the Co mmission sent an assessment and several 
recommendations for adjustments in Oct ober 2006. The document was adjusted in 
December 2006.  
Rural Development Programmes 2007–2013 
642. One national programme covers the whole of Poland. The contribution of the EAFRD 
budget to the programme is EUR 13.2 billion. An official admissible version of the 
Rural Development Programme 2007–2013 was not submitted in 2006. 
6.20. Portugal 
Rural development programme  (EAGGF Guarantee) 
643. The total public expenditure for the thr ee Rural Development Programmes (Mainland 
Portugal, Azores and Madeira) was set at EUR 1 982.2 million for the period 2000–
2006. This includes a contribution from the EAGGF, Guaran tee Section, of 
EUR 1 275.6 million. 
Amendments to the RDP 
644. In 2006, there were three amendments to the decisions approving the RDP and 
three financial communications. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
645. The 2006 EAGGF Guarantee allocation for Portugal was set at EUR 252.1 million 
(which includes EUR 22.9 million from modul ation). Payments for the same period 
amounted to EUR 232.3 million, i.e.  92.2% of that allocation. 
646. Overall financial execution for EAGGF Guarantee since the beginning of the 
programming period in Portugal has am ounted to EUR 1 256.1 million, i.e. 98.5% of 
the total allocation for 2000–2006. 
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
Amendments to the operational programmes 
647. Reprogramming of the Community S upport Framework for Portugal (2000–2006): 
amendments in all OPs with EAGGF allocations, except OP Algarve: (OP 
Agriculture and Rural Devel opment, OP North, OP Centre, OP Lisboa e Vale do 
Tejo, OP Alentejo, OP Azores, OP Made ira and OP Technical Assistance). Global 
EAGGF decommitment due to transfers to other Structural Funds: EUR 24 659 835. 
 
EN 126   EN 648. The OP Lisboa e Vale do Tejo has also be en amended to include an increase in the 
EAGGF contribution of EUR 6 319 736 (SEC (2006) 173 final — Article 157 of the 
Financial Regulation).  
Level of payments in 2006 
649. As from the beginning of the programm ing period, payments have amounted to 
EUR 1.5 million, i.e. 66% of the total budget (EUR 2.3  million) for the period 2000–
2006. 
Leader+ Programme 
650. Portugal has a single national Leader+ Pr ogramme. The total EAGGF contribution, 
Guidance Section , amounts to EUR 164 million. 
651. Since the beginning of the programming period, payments have amounted to 
EUR 114 million, i.e. 69% of the tota l budget allocation for that period. 
652. In 2006, the Leader+ Programme was amended once. 
Rural development policy 2007–2013 
National Strategy Plan  
653. An official version of the NSP was not submitted in 2006. 
Rural Development Programmes 2007–2013 
654. There will be four rural development programmes for the period 2007–2013: RDP for 
Mainland Portugal, RDP Azores, RDP Madeira and the National Network Programme. The total EAFRD contribution for the four programmes for the whole 
period is set at EUR 3 .93 billion. None of the four RDPs for 2007–2013 was 
submitted to the Commission in 2006. 
6.21. Slovenia 
Rural development plans (EAGGF Guarantee) 
655. The Slovene Rural Development Plan was approved by Co mmission Decision 
C(2004) 3224 of 24 August 2004. The financia l contribution from EAGGF amounted 
to EUR 281.6 million during the period 2004–2006, which will be complemented 
with national public funding of EUR
 71.5 million. The Rural Development Plan aims 
to ensure the goals of rural development policy through two main priorities: sustainable development of agriculture a nd the countryside, and economic and social 
restructuring of agriculture. The first objective will be achieved through agri-
environmental measures and support for less favoured areas, while measures aiming at early retirement and meeting standard s will contribute to economic and social 
restructuring.  
Amendments to the RDP 
656. One amendment to the Slovene RDP was submitted in 2006. This amendment 
concerned the reallocation of funds from measures for less favoured areas, early 
 
EN 127   EN retirement, complements to direct payments  and the SAPARD programme to the agri-
environment measure. This amendment di d not require a new Commission Decision.  
Level of payments in the period fr om 16 October 2005 to 15 October 2006 
657. The consolidated financial table for 2006 lays down an EU contribution of EUR 
102.5 million, while an amount of EUR 118.9 million was paid out in the period from 16 October 2005 to 15 October 2006.  
658. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been approximately 84.4% of the total budget for 2004–2006, i.e. EUR 237.6 million out of a total of EUR 281.6 million.  
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
659. The Slovene Single Programming Docume nt was approved by Commission Decision 
C(2004) 2122 of 18 June 2004, which wa s amended in 2006 by Commission 
Decision C(2006) 3673 of 8 August 2006. This  amendment did not concern EAGGF 
funds. One of the four identified priorities  of this Programme is restructuring of 
agriculture, forestry and fisheries. Within th is priority, the financial contribution from 
EAGGF amounted to EUR 23.6 million for the period 2004–2006, which will be complemented by national public funding of EUR
 23.6 million. As regards measures 
supported through EAGGF, emphasis is laid on increasing economic efficiency and 
competitiveness and meeting demands for food safety and quality. Importance is also 
attached to forest management in order to improve the economi c and ecological value 
and functions of forests. Th is is closely connected with support for the development 
of tourism and the promotion of alternative sources of income in rural areas. The 
whole territory of Slovenia is clas sified as an Objective-1 area.  
Amendment to the OP or SPDs 
660. No amendments were submitted in 2006. 
Level of payments in 2006 
661. The consolidated financial table for 2006 lays down an EU contribution of 
EUR 10.2 million and total public cost s of EUR 20.4 million, while an EU 
contribution of EUR 5.2 million was paid out. 
662. Global financial execution for EAGGF Guidance since the beginning of the 
programming period has been approximately 38.8% of the total budget for 2004–2006, i.e. EUR 9.2 million out of a total of EUR 23.6 million.  
Annual Reports 
663. The annual reports for 2006 showed that in  general implementation of the measures 
of Rural Development Plan is well advan ced, while implementation of the measures 
of the Single Programming document is satisfactory. 
 
EN 128   EN Rural development policy 2007–2013 
National Strategy Plan 
664. The National Strategy Plan sets out to strengthen the multifunctional role of 
agriculture and at the same time to empha sise the need for re structuring of the 
agriculture and food proce ssing industry. The National Strategy Plan pays special 
attention to maintenance of the cultural landscape and environmental protection and 
to the maintenance of settlement and rural id entity in the countryside. It addresses the 
multifunctional role of forests. Its prioritie s will also contribute to the economic and 
social enhancement of the countryside a nd introduce new approaches for increasing 
employment opportunities  in rural areas.  
Rural Development Programmes 2007–2013 
665. Slovenia will implement one Rural Deve lopment Programme 2007–2013 for its entire 
territory, the whole of which is classified  under the convergence objective. Total 
public expenditure amounts to EUR 1 159 million and the EAFRD contribution is 
EUR 900 million (average EA FRD co-financing: 77.7%). 33 % of total public funds 
have been earmarked (axis 1) for the objective of improving the competitiveness of 
agriculture and forestry. As regards the objective of improving the environment and 
the countryside, 52% of total public funds are to be spent (axis 2). In addition, 11% of 
total public funds have been se t aside to improve the quality of life in rural areas (axis 
3).  
6.22. Slovakia 
Rural development plans (EAGGF Guarantee) 
666. The Rural Development Plan of Slovak ia (2004–2006) was approved in July 2004 by 
Commission Decision C(2004) 3238. The EA GGF contribution to the programme 
amounted to EUR 397.1 million, to which EUR 123.5 million of national public co-
financing and EUR 41.1 million of privat e co-financing were added. The overall 
amount allocated for the rural developm ent plan is EUR 561.8 million. The global 
objective is to improve efficiency in the agricultural production se ctor and the quality 
of life of rural populations — “Multifuncti onal agriculture and sustainable rural 
development”.  
667. The specific objectives of the Plan are:  
– to support the development of the rura l economy and to guarantee improvement 
in the standard of livi ng of rural populations;  
– to improve the development of rural areas through access to infrastructure 
services, thus retaining the popul ation of rural communities;  
– to guarantee environmental protection a nd biodiversity of rural environments, 
while taking account of the sustainability of the utilisation of  rural resources. 
Amendments to the RDP 
668. On 6 July 2006, the Slovak authorities submitted amendments, making financial 
reallocations, which reduce the overall mi nimum total eligible  public expenditure 
 
EN 129   EN established in Decision C(2004)3238. This proposal was approved by Commission 
Decision C(2006) 6475 of 5 December 2006. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
669. Since the beginning of the programming period, payments have amounted to 
EUR 272 million, i.e. 69% of the tota l budget allocation for that period. 
Objective-1 Programmes (EAGGF Guidance) 
670. The Slovak Operational Programme Agri culture and Rural Development was 
approved by Commission Decision C(2004)  2791 of 12 July 2004. The financial 
contribution from EAGGF amounted to  EUR 181.2 million for the period 2004–2006, 
to which national public f unding of EUR 72.8 million is a dded. Major attention has 
been given to the maintenance and creati on of competitive jobs in rural areas. The 
Slovak Operational Programme thus focuses on investment in the farming sector 
(including the diversification of farm activities), the processing and marketing sector, 
and the fisheries and the forestry sector. 
Level of payments in 2006 
671. Since the beginning of the programming period, payments have amounted to 
EUR 106 million, i.e. 58% of the tota l budget allocation for that period. 
Rural development policy 2007–2013 
National Strategy Plan  
672. The NSP for Slovakia 2007–2013 was received on 18 December 2006. 
Rural Development Programmes 2007–2013 
673. Slovakia will have one Rural Developmen t programme for the next programming 
period 2007–2013. The total public contri bution amounts to EUR 2 562.6 million. 
6.23. Finland 
Rural development programme  (EAGGF Guarantee) 
674. In 2000, the Commission approved three ru ral development programmes, two for 
Mainland Finland and one for the Åland Isla nds, which is an autonomous province of 
Finland.  
Amendments to the RDP 
675. Proposals to amend three Finnish Rura l Development Programmes (Horizontal, 
Regional and Åland Islands) were approve d by Commission Decisions in October 
2006. The proposals for amendments concerned adjustments to the financial tables of these Rural Development Programmes.  
 
EN 130   EN Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
676. For 2006, the total expenditure under EAGGF Guarantee for Finland amounted to 
EUR 247.8 million, which is 100.0% utilisation of the funds planned for this period. 
677. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 99.9% of the total budget for 2000–2006, i.e. 
EUR 2 229.1 million out of a total of EUR 2 230.7 million. 
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
678. In 2000, the Commission approved two Singl e Programming Documents (SPDs) for 
Objective-1 regions in Finland: Ea stern Finland and Northern Finland. 
Level of payments in 2006  
679. After six years of implementation, an am ount of EUR 138.2 million (68.5%) has been 
paid out of the total budget for 2000–2006. 
Leader+ Programme 
680. In 2001, the Commission approved one Lead er+ programme for Finland; 25 Local 
Action Groups (LAGs) were selected and are supported by a national network. 
681. After five years of implem entation of the programme, an  amount of EUR 37.1 million 
(65.9%) has been paid out of the EUR 56.4 million committed for 2001–2006. 
Rural development policy 2007–2013 
National Strategy Plan 
682. The National Strategic Plan for Finland was submitted on 23 August 2006. Financial 
allocation by axis is 11% for Axis 1, 78% fo r Axis 2, 11% for Axis 3 and 6% for Axis 
4. The strategy defines three priorities for Finland:  
– Agriculture and Forestry are practised in an econom ically and ecologically 
sustainable and ethical wa y throughout the country. 
– Rural economies should be divers ified and employment improved by 
competitive businesses, new enterprises and networking. 
– Local initiative should be encouraged to  guarantee viability and quality of life 
in rural areas.  
Rural Development Programmes 2007–2013 
683. Finland is covered by two programmes: Mainland Finland and Åland Islands. The 
Åland Islands RDP was not officially submitted in 2006. 
684. The Mainland Finland RDP was officia lly submitted on 23 December 2006. Total 
financing envisaged for the Mainland RDP accounts for EUR 6.6 billion of public 
 
EN 131   EN financing, of which EUR 2.1 billion is  EAFRD funding. Financial allocations 
between axes are largely in line with the National Strategic Plan. 
6.24. Sweden 
Rural development programme  (EAGGF Guarantee) 
685. In 2000, the Commission approved one  rural development programme 
(accompanying measures covering the entire  country, other measures covering non-
Objective-1 regions). The total public co st of the Swedish Rural Development 
Programme for 2000–2006 was EUR 2 558.7 million, including a contribution of EUR 1 129.9 million from EAGGF Guarantee. After modulation and redistribution of 
available surpluses, the total EAGGF allocation was increased by a further 
EUR 24.1 million. The programme includes su pport for investments in agricultural 
holdings, setting-up of young farmers, traini ng, less favoured areas, agri-environment, 
improving processing and marketing of agri cultural products, afforestation of non-
agricultural land and promoting the adapta tion and development of rural areas and 
forestry. From 2005, commitments relating to modulation started to be used. 
Amendments to the RDP 
686. Two notifications and one amendment requiring a Commission decision were 
submitted during 2006. Both the notifications and the amendment concerned adjustments to the financial table. The amendment requiring a Commission decision 
was due to modulation and redistribution stemming from available surpluses. The 
Decision was taken on 19 October 2006. 
Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
687. The level of payment for the period is  100.0% (expenditure/allocation), with 
expenditure and allocation amounting to EUR 164.2 million.  
688. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 100.0% of the total budget for 2000–2006, i.e. EUR
 1 154.0 million out of a total of EUR 1 154.04 million. 
Operational programmes or Single Pr ogramming Documents (EAGGF Guidance) 
689. In 2000, the Commission approved the Obje ctive-1 programmes for the Norra 
Norrland and Södra Skogsläns regions. 
Level of payments in 2006  
690. After six years of implemen tation, the financial executi on is 72.9% of  the funds 
committed at the beginning of the programming period for the Objective-1 Norra Norrland region. The corresponding figure for the Objective-1 Södra Skogsläns 
region amounts to 69.7%. This means that an amount of EUR
 38.1 million has been 
paid out of the EUR 52.3 million available for the period 2000–2006 for the 
Objective-1 Norra Norrland region. The corresponding figures for the Objective-1 
Södra Skogsläns region amount to EUR 44.4 million out of EUR 63.7 million.  
 
EN 132   EN Leader+ Programme 
691. In 2001, the Commission approved one Lead er+ programme. In total, 12 Local 
Action Groups have been selected.  
692. After six years of implementation, fi nancial execution is 57.5% of the amount 
available for the whole of the programmi ng period, i.e. EUR 23.7 million paid out of 
the EUR 41.2 million (incl uding indexation 2004–2006). 
Rural development policy 2007–2013 
National Strategy Plan 
693. The National Strategy for Sweden was offi cially received on 22 September 2006. The 
NSP needed to be updated by letter on 21 December 2006. The breakdown between 
axes is 15% for axis 1, 70% fo r axis 2 and 12% for axis 3. Th e Leader axis is set to be 
6%. The main objectives are economic growth  and entrepreneurship, environment as 
a resource, sound development in rural area s and an integrated approach. There are 
five additional horizontal pr iorities, such as Organic fa rming, Renewable energy, etc. 
Rural Development Programmes 2007–2013 
694. The Swedish Rural Development Programme was submitted on 22 September 2006. 
The programme comprised EUR 3 917 million of public expenditure for the period, of which EUR 1 826 million in Community support. The programme is in line with 
the financial allocation and priorities set out  in the NSP. In total, EUR 64.8 million of 
payments were made in 2007 relating to payments for the fourth quarter of 2006. 
6.25. United Kingdom 
Rural development programme  (EAGGF Guarantee) 
695. There are four Rural Development Progr ammes for the period 2000–2006: England, 
Northern Ireland, Scotland and Wales. The total cost for these programmes was 
EUR 3 200 million, of which the EAGGF Guar antee section contributed EUR 1 243 
million. 
Amendments to the RDP 
696. The respective authorities of the United Kingdom notified the Commission of several 
amendments to their Rural Development Programmes. These changes included the measures for less favoured areas, agri-env ironment, animal welfare and financial 
issues. 
697. In 2006, there were no proposals submitted to  the Commission to amend the Rural 
Development Programmes for which a Comm ission decision would be required. The 
Northern Ireland 2005 amendment to the agri-environment and animal welfare 
measures was approved by Commission Deci sion of 30 January 2006. The England 
2005 amendment to agri-environment measures was approved by Commission 
Decision of 14 February 2006. 
 
EN 133   EN Level of payments in the period from 16 October 2005 to 15 October 2006 (EAGGF 
Guarantee) 
698. The level of payment for all UK Rural Development Programmes is 81% of the 
EAGGF allocation for the period. Th e total expenditu re amounted to 
EUR 233.5 million compared to an allocation of EUR 288.8 million. 
699. Global financial execution for EAGGF Gu arantee since the beginning of the 
programming period has been 95.5% of the total budget for 2000–2006, i.e. 
EUR 1 187 million out of a total of EUR 1 243 million. 
Objective-1 programmes (EAGGF Guidance) 
Operational programmes or Single Programming Documents 
700. EAGGF Guidance support is available only in regions eligible for Objective 1 (or 
regions in transition): Cornwa ll and the Scilly Isles, Merseyside, Northern Ireland (in 
transition), South Yorkshire, Highlands a nd Islands (in transition) and West Wales 
and the Valleys. In addition, EAGGF Guid ance has contributed to the special 
programme PEACE II for Northern Ireland and the Border Counties of Ireland.  
Level of payments in 2006 
701. The total amount (excluding PEACE II) paid by the end of 2006 was EUR 266 
million (74.7% of the total budget pl anned for the 2000–2006 programming period, 
i.e. EUR 357 million). Further claims for payment were made before the end of December 2006 and these will be paid in  2007. All the programmes, with the 
exception of the transitional programme for the Highlands and Islands, achieved their 
respective N+2 targets. 
702. By the end of 2006, the total amount paid  out of EAGGF Guidance to Northern 
Ireland for the 2000–2004 PEACE
 II Programme (managed jointly with Ireland) was 
EUR 28.4 million ( 91% of the allocation of EUR 31.2 million). 
Leader+ Programme 
703. The UK has four Leader+ programmes: England, Northern Ireland, Scotland and 
Wales, with 55 Local Action Groups. The total cost of the four programmes 
amounted to EUR 266 million, of which th e EAGGF contributed EUR 115 million.  
704. By the end of 2006, a total amount of EUR 72 mi llion had been paid (63% of the total 
budget for the 2000–2006 programming period). 
705. All the programmes achieved their respective N+2 targets. 
Rural development policy 2007–2013 
National Strategy Plan  
706. In 2006, the UK authorities submitted inform ally to the Commission a first draft of 
the National Strategy Plan for rural development for the 2007–2013 programming period. Discussions took pl ace between the Commissi on and the UK authorities 
throughout 2006 on the analysis, strategy and priorities identifi ed in the NSP. 
 
EN 134   EN Rural Development Programmes 2007–2013 
707. Discussions were held with the respect ive managing authorities concerning the 
preliminary submissions of the Rura l Development Programmes for England, 
Northern Ireland, Scotland and Wales. 
7. ENVIRONMENT AND FORESTRY  
7.1. Environmental measures 
708. In the wake of its January 2000 and March 2001 Communications en titled ‘Indicators 
for the integration of environmental conc erns into the common agricultural policy’62 
and ‘Statistical information needed for i ndicators to monitor the integration of 
environmental concerns into the common agricultural policy’63, the Commission 
launched the IRENA64 operation for the development of a set of 35 agri-
environmental indicators to monitor progress towards th e integration of 
environmental concerns within the CAP. IRENA was a joint exercise between several Commission services and the European Envi ronment Agency. It was completed at the 
end of 2005, resulting in fact sheets for 40 (sub-)indicators and their corresponding 
data sets, an Indicator Repor t (‘Agriculture and environmen t in EU-15’), an Indicator-
Based Assessment Report, and an Eval uation Report. In September 2006, the 
Commission issued a Communication entitle d ‘Development of agri-environmental 
indicators for monitoring the integration of  environmental concerns into the CAP’ 
[COM(2006) 508]. The Communi cation reviewed the progress made with the 
development of agri-environmental indica tors through IRENA, and identified key 
challenges and actions for future work. In December 2006, the Agriculture and Fisheries Council adopted conclusions we lcoming the progress made with IRENA 
and giving a broad mandate to  the Commission to continue work on the indicators 
along the lines proposed in COM(2006) 508, in close cooperation w ith the relevant 
institutions of the Member States. A Memorandum of Understanding is under 
preparation to lay down the basis for coopera tion amongst the partners involved in the 
future work, with a view to meeting the Council’s requests.  
709. Under Council Regulation (EC) No 1782/2003, Member States must implement cross 
compliance with statutory management requi rements, including in  the area of the 
environment, and minimum standards fo r good agricultural and environmental 
conditions. Moreover, Member States were required by 1 January 2007 to set up farm 
advisory systems covering at least those requi rements and standards. In this context, a 
two-year (2005-2006) study en titled ‘Study on enviro nmental Cross-compliance 
Indicators in the context of  the Farm Advisory System’ (CIFAS study) was launched 
at the beginning of 2005. The study was car ried out by the European Environment 
Agency (EEA) under the guidance of a st eering group with representatives of 
different Commission services. The study’ s primary aim was to help in the 
development of the farm advisory syst ems and to support the implementation of 
environmental cross compliance in the Member  States. Special attention was given to 
the development of farm-level indicators.  The study was completed in March 2007. 
                                                
 
62 COM(2000) 20 final. 
63 COM(2001) 144 final. 
64 IRENA is the acronym for ‘Indicator Reporting on the integration of ENvironmental concerns into Agriculture policy’. 
 
EN 135   EN The main study outputs were: a database cont aining the standards and other relevant 
information on environmental cross-complia nce requirements applicable at farm 
level; an inventory of the farm advisory tools and systems developed to help farmers 
meet these requirements; and a platform  for the exchange of information and 
experiences between Member States. The in formation gathered in the project was 
disseminated to the Member States and to other relevant actors via an interactive 
website ( www.ewindows.eu.org/cifas ) and through seminars and workshops 
organised in nine Member  States between November 2006 and March 2007. The full 
study report (‘Report on recommended farm a dvisory tools’) is available on the above 
website. 
710. The implementation of the ‘Biodiversity action plan for agriculture65, adopted by the 
Council in June 2001 and by the European Parliament in March 2002, continued in 
2006. The main instruments to support the conservation of farm-dependent biodiversity and habitats are integrated with in the first and second pillars of the CAP. 
The Commission presented a Communication on ‘Halting the loss of  biodiversity by 
2010 and beyond — sustaining ecosystem services for human well-being’
66. This 
Communication includes an EU action pl an up to 2010 and beyond, which contains 
measures considered necessary to halt the loss of biodivers ity, and to restore 
biodiversity in the longer term. 
711. Council Regulation (EC) No 870/2004 establ ishing a Community programme on the 
conservation, characterisation, collection a nd utilisation of genetic resources in 
agriculture6 was adopted in April 2004. The Comm unity programme includes actions 
to support, complement or coordinate at Community level work undertaken at local, 
regional, or Member State level in line w ith the aims of the CAP and sustainable 
agriculture. The measures may also cover in situ /on-farm genetic resource 
conservation activities (reproduction of ge netic resources by farmers on their own 
farms). The actions must be trans-nationa l, taking into account , where appropriate, 
bio-geographic regional as pects. Two calls for pr oposals for the Community 
programme were published, one in July 20057 and the other in April 20068. The 
72 proposals received in response to these two calls were assessed by the 
Commission against the eligibility criteria, and by independent experts on the basis of 
published award criteria. As a result, 17 actions involving 179 or ganisations in the 
EU-25 as well as in 12 non-EU count ries were selected for co-funding. 
712. Agriculture plays a crucial role in other Community initiatives aimed at safeguarding 
the environment. The current measures to protect surface water and groundwater67 are 
one example of this. Under the Nitrates Di rective, Member States must draw up and 
implement action plans in designated vulne rable zones in orde r to reduce nitrate 
pollution at source. The 1979 Birds Direc tive is another relevant Community 
initiative, which obliges Member States to protect the habitats of their wild bird 
populations. Lastly, an ecologi cal network (the ‘Natura 200 0’ network) has been set 
up under the 1992 Habitats Directive. The lists  of sites of Community importance for 
the Macaronesian68, Alpine69, Continental70, Atlantic71, Boreal72 and Mediterranean73 
                                                 
65 COM(2001) 162 final, volume III. 
66 COM(2006) 216 final. 67 COM(2003) 550 final. 
68 OJ L 5, 9.1.2002, p. 16. 
69 OJ L14, 21.1.2004, p. 21. 
 
EN 136   EN bio-geographical regions were adopt ed by the Commission in 2001, 2003, 2004, 2005 
and 2006, respectively. In order to addre ss the issue of appropriate Community 
financial support for the implementation of  the Natura 2000 network, the Commission 
adopted a Communication on financing Natura 200074 in July 2004. The funding of 
Natura 2000 was further integrated with in the Common Agricu ltural Policy through 
the adoption of a new Rural Development Regulation75 for the period 2007–2013, 
which provides financing opportunities for agri cultural and forestry activities that are 
beneficial for biodiversity protection. 
713. The Sixth Environment Action Programme (6th EAP) remains the main driver of EU 
environment policy until 2012. In addition to  providing the basis for environmental 
policy initiatives, this Acti on Programme takes into account  the obligation laid down 
in the Treaty to integrate environmental pr otection requirements within the definition 
and implementation of other Community polic ies and activities. For its environmental 
policy instruments, the Commission thus set out to develop seven thematic strategies, 
most of them having strong links with ag riculture. In 2006, the Commission adopted 
the last three of these strategies: the thematic strategy on the urban environment76, the 
thematic strategy on the sustainable use of pesticides77 and the thematic strategy for 
soil protection78. The strategy on the sustainable us e of pesticides is intended to 
complement the existing legislative fram ework, which focuses on the beginning and 
end of the pesticide lifecycle. The them atic strategy for soil protection is both 
descriptive and action-oriente d, thus providing a full picture of this complex issue so 
as to serve as a basis for future work.  
714. Following the adoption in 2003 of Commission Recomm endation 2003/556/EC79 on 
guidelines for the development of national stra tegies and best prac tices to ensure the 
co-existence of genetically modified crops  with conventional and organic farming, a 
number of Member States have notifie d national or regional measures to the 
Commission. The Commission has evaluated these notificati ons in accordance with 
the principles set out in the Reco mmendation. In March 2006, the Commission 
adopted a report to the Council and the Eur opean Parliament, based on information 
from Member States, on the experience ga ined in the Member States with the 
implementation of measures to address co-e xistence. In this report, the Commission 
proposed a number of future actions that c ould be taken in this  area. The Commission 
then organised, jointly with the Council Presidency, a stakeholder conference on 
co-existence, which took place in Vi enna on 4–6 April 2006. In May 2006, the 
Council adopted conclusions calling on the Commission to engage in a series of 
actions in relation to co-exi stence. In particular, the C ouncil invited the Commission: 
to come forward, as soon as possible, with  Community labelling thresholds for seeds; 
to develop guidelines for crop-specific co-e xistence measures; to intensify the use of 
COEX-NET for information exchange among th e Member States; to explore ways of 
                                                                                                                                                          
70 OJ L 382, 28.12.2004, p. 1. 
71 OJ L 387, 29.12.2004, p. 1. 72 OJ L 40, 11.2.2005, p. 1. 
73 OJ L 259 , 21.9.2006 , p. 1. 
74 COM(2004) 431 final. 
75 OJ L 277, 21.10.2005, p. 1. 
76 COM(2005) 718 final. 77 COM(2006) 372 and 373 final. 
78 COM(2006) 231 and 232 final. 
79 OJ L 189, 29.7.2003, p. 36. 
 
EN 137   EN minimising potential cross-border problems related to co-existence; to explore 
solutions for areas where farm-level co-exi stence is difficult to achieve; to strengthen 
research on co-existence and make research re sults available to the Member States; to 
study the national civil liability systems with regard to co-existence; and to explore if 
further steps towards common principl es for co-existence should be taken. 
7.2. Forestry measures 
715. The Commission Communication to the Council and the Eu ropean Parliament on an 
EU Forest Action Plan, COM(2006) 302 fina l, was adopted on 15 June 2006. Council 
Conclusions on the EU Forest Action Plan  were adopted by th e Agriculture and 
Fisheries Council on 25 October 2006. 
716. Cooperation and coordination with the Member States continued through the 
Standing Forestry Committee. In the course of 2006, the Committee met 6 times. Two Working Groups within the Standing Fore stry Committee were established for the 
implementation of specific actions in th e EU Forest Action Plan. Similarly, 3 
meetings of the advisory group on forestry and cork were held during the year. 
717. The implementation of the preparatory act ion on the developmen t of an internet-
based European Forest Information and Communication Platform (EFICP) continued 
during 2006. 
718. Concerning the implementation of project s and programmes for the protection of 
forests against atmospheric pollution and fires under Council Regulation (EC) No 3528/86
80 and Council Regulation (EC) No 2158/9281, a total of 8 projects and 
programmes were closed, reducing the number of open contracts to 1 by the end of 
the year. 
8. PROPOSAL FOR FINANCING OF THE CAP  IN 2006 
719. CAP expenditure is funded under the Financ ial Perspective decided at the Berlin 
Summit in 1999 and adjusted at the Cope nhagen Summit at the end of 2002 to take 
account of the financial effects of the enlarg ement of the Union to include the ten new 
countries. Thus, new ceilings apply to the EU-25 as of the budget year 2006.  
720. The Financial Perspective for the EU-15 and EU-25 for the budget years 2005-2006  
was as follows: 
 2000 
current 
prices 2001 
current 
prices 2002 
current 
prices 2003 
current 
prices 2004 
current 
prices 2005 
current 
prices 2006 
current 
prices  
Total for CAP under 
Agenda 2000 41 738 44 530 46 587 47 378 49 305 51 439 52 618 
a) markets 
(sub-ceiling 1(a)) 37 352 40 035 41 992 42 680 42 769 44 598 44 847 
b) rural development 
(sub-ceiling 1(b)) 4 386 4 495 4 595 4 698 6 536 6 841 7 771 
                                                 
80 OJ L 326, 21.11.1986, p. 2-4 (Finnish and Swedish special editions, Chapter 3, Volume 22, p. 59). 
81 OJ L 217, 31.7.1992, p. 3 (Finnish and Swedish special editions, Chapter 3, Volume 44, p. 3). 
 
EN 138   EN 8.1. EAGGF Guarantee Section 
Budgetary procedure Stages of the budgetary procedure 
721. The 2006 Preliminary Draft Budget (PDB ) was adopted by the Commission and 
proposed to the Budgetary Authority in April 2005. The appropriations proposed for 
the EAGGF Guarantee Section totalled EUR
 51 412.3 million, i.e. EUR 43 641.3 
million for subheading 1a and EUR 7 771.0 million for subheading 1b.  
722. The Council adopted the 2006 Draft Budget in July 2005. The appropriations in 
subheading 1a were reduced by EUR 150.0 m illion as compared to the PDB, while 
the appropriations for subheading 1b remained unchanged from the PDB. EAGGF Guarantee Section appropriations accord ingly totalled EUR 51 262.3 million, 
comprising EUR 43 491.3 million for subh eading 1a and EUR 7 771.0 million for 
subheading 1b. 
723. In November 2005, the Commission adopted Letter of Amendment No 2/2006 to the 
Preliminary Draft Budget in order to take ac count of developments on the agricultural 
markets and recent agricultural legislati on. The Amending Letter to the PDB reduced 
the appropriation requirements for the 2006 financial year to EUR 51
 050.7 million, 
of which EUR 43  279.7 million was allocated to subheading 1a and 
EUR 7  771.0 million to subheading 1b. 
724. In December 2005, following the consultation procedure between the Council and the 
European Parliament, the Budget for 2006 was adopted by the European Parliament as follows:  
– for subheading 1a, appropriations for 2006 were fixed at EUR 43
 279.7 million, 
i.e. EUR 1  567.3 million below the ceiling. 
– for subheading 1b, appropriations for 2006 were fixed at EUR 7  771.0 million, 
equal to the ceiling. 
725. In December 2006, the European Parliament reduced, through AB 6/2006, the initial 
budget appropriations for subheading 1a by EUR 860.0 million to EUR 42  419.7 
million. 
The appropriations for subheading 1b were unchanged. 
The EAGGF Guarantee Section in th e context of the general budget 
726. Of the overall initial commitment appropriations of EUR 121  190.9 million entered in 
the 2006 general budget, an amount of EUR 51  050.7 million, i.e. 42.1%, was 
allocated to the EAGGF Guarantee Secti on. In 2005, Guarantee Section commitments 
accounted for 42.6% of commitments in the general budget. 
 
EN 139   EN The EAGGF and its financial resources 
727. Agricultural policy also generates revenue in the form of sums  collected under the 
common market organisations. This revenue , which forms part of the Union’s own 
resources82, consists of: 
– levies, which are variable charges on imports from non-member countries of 
agricultural products cove red by the common market organisations; such 
charges are intended to compensate for the difference between prices on the world market and prices agreed with in the Union. Under the Agreement on 
Agriculture following the Uruguay Round of multilateral trade negotiations, 
levies have been replaced by fixed import duties since 1995; 
– levies collected under the common organisation of the market in sugar; these 
are divided into production levies on s ugar and isoglucose, s ugar storage levies 
and additional elimination levies to ensu re that farmers and sugar manufacturers 
finance the cost of disposing of any suga r that is surplus to Community internal 
consumption requirements. 
Revenue 
Charges accruing to the Union’s own resources under the common agricultural policy 
(EUR million) 
Type of charge 2000 2001 2002 2003 2004 2005 2006 
Agricultural levies 
Sugar levies  1 198.4 
1 196.8 1 132.9 
840.0 1 180.2 
864.8 1 011.8 
383.2 1 313.4 
401.6 1 350.8 
695.1 1 291.8 
151.6 
Total 2 395.2 1 972.9 2 045.0 1 395.0 1 715 .0 2 045.9 1 443.4 
728. It should be noted that th ere are other sources of agri cultural revenu e. Under the 
common organisation of the market in m ilk and milk products, producers pay an 
additional levy if milk quotas are exceed ed. This revenue does not, however, form 
part of the Union’s own resources and is considered to constitute part of the measures to stabilise agricultural markets. It is offset against the additional expenditure brought about by production overruns on the quotas. 
EAGGF Guarantee Section expenditure 
Expenditure 
729. EAGGF Guarantee Section expenditure comprises: 
– export refunds (EUR 3 051.9 million in 2005);  
– public and private storage (EUR 851.5 million in 2005); 
– direct aids (EUR 33 700.8 million in 2005); 
– other intervention relati ng to the common market organisations (EUR 4 496.6 
in 2005); 
                                                
 
82 The Union’s other own resources are: the levy on VAT, customs duties collected under the common customs tariff, and Member S tates’ contributions. 
 
EN 140   EN – other expenditure, principally rura l development (EUR 6 827.3 million in 
2005). 
730. Direct aid payments to producers ar e by far the largest type of aid. 
731. Furthermore, the EAGGF Guarantee Section has been used to finance, in whole or in 
part, various specific measures  for the management of agri cultural markets, such as 
the distribution of agricultural products to  the needy in the Community, measures to 
combat fraud, measures to promote quality, and measures designed to compensate for 
the geographical isolation of the French overseas departments (Poseidom), Madeira 
and the Azores (Poseima), the Canary Is lands (Poseican) and the Aegean islands. 
Public stocks 
732. Between 1 October 2004 and 30 September 2005, when the public storage accounts 
were closed, the book value of products in storage increased from EUR 798.24 
million to EUR 1 747.11 million. The share of  cereals and rice accounted for around 
73.5% of the total value of products in storage, milk products accounted for 11.0%, 
sugar for 10.8% and alcohol for 4.8%. 
Expenditure on agricultural markets in 2006 
733. The uptake of EAGGF Guarantee Section a ppropriations for the 2006 financial year 
(expenditure by the Member States fr om 16 October 2005 to 15 October 2006) 
amounted to EUR 49 865.2 million, i.e. 99.3% of the appropriations entered under 
Titles 05, 11 and 17 of the budget. 
734. Total expenditure under subheading 1a (the CAP, covering Titles 05, 11 and 17) 
amounted to EUR 42 175.3 million, i.e. EUR 1 104.4 million below the initial 
appropriations. 
735. Total expenditure for subheading 1b (Rur al Development) amounted to EUR 7 689.9 
million, i.e. EUR 124.5 million below the init ial appropriations. (An amount of EUR 
43 400 000 was carried over from budget ye ar 2005 and was committed in budget 
year 2006). 
Clearance of accounts 
736. The Commission adopted the following decisi ons on the financial and conformity 
clearance of the EAGGF Guarantee Section accounts and for SAPARD: 
– Decision 2006/322/EC of 28 April 2006 in respect of the 2005 financial year;83 
– Decision 2006/334/EC of 28 April 2006 unde r Article 5(2)(c) of Regulation 
(EEC) No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 – 
21st Decision84; 
– Decision 2006/554/EC of 27 July 2006 unde r Article 5(2)(c) of Regulation 
(EEC) No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 – 
22nd Decision85;  
                                                 
83 OJ L 118, 3.5.2006, p. 20. 
84 OJ L 124, 11.5.2006, p. 21. 
 
EN 141   EN – Decision 2006/4329/EC of 29 September 2006 in respect of the 2005 financial 
year relating to the clearance of th e accounts presented by the Czech Republic, 
Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia on the one 
hand and Bulgaria and Romania on the ot her, for expenditure financed under 
the special accession programme for agriculture and rural development (SAPARD) in 2005; 
– Decision 2006/5928/EC of 7 December 2006 relating to the clearance of the 
final balance of the special accession programme for agriculture and rural 
development (SAPARD) in the Czech Republic; 
– Decision 2006/932/EC of 14 December 2006 under Article 5(2)(c) of 
Regulation EEC No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 
– 23rd Decision
86;  
– Decision 2006/936/EC of 14 December 2006 in respect of the 2003 financial 
year as regards certain paying agenci es in Germany and the United Kingdom87. 
737. The expenditure recovered from Member  States under deci sions 21, 22 and 23 
amounted to EUR 555.5 million in the financial years 1998 to 2005. 
738. In 2006, the Commission services  responsible for the audit of agricultura l expenditure 
performed 184 audits with missions to the 25 Member States and 2 SAPARD 
countries and held 85 bilateral meetings w ith the Member States on the findings of 
audit missions for the years 1997–1999 and 2001–2005. 
8.2. EAGGF Guidance Section 
739. In accordance with the conclusions of th e Berlin European Council in 1999, a third 
programming period for the Structural F unds was introduced to run from 2000 to 
2006. Support from the EAGGF Guidance Section during this period under Council Regulations (EC) No 1260/1999 (the gene ral Structural F und Regulation) and 
No 1257/1999 (support for rural development) only covered Objective-1 areas, the 
Community Initiative Leader+ programme a nd technical assistance. Objective-1 areas 
in the new Member States also began to  receive EAGGF Guidance assistance in 
2004. 
740. For the period from 2000 to 2006, there was no decrease in Community support for 
rural areas, although the EAGGF Guidance Se ction allocations for the period might 
give such an impression. In fact, measures  targeting agricultura l structures and the 
diversification of rural areas  (former Objectives 5(a) and 5(b)) outside Objective-1 
regions and compensatory allowances, which up to 1999 were funded by the EAGGF Guidance Section, are now covered by th e EAGGF Guarantee Section. Since 2004, 
the EAGGF Guarantee section has also c overed the support received by new Member 
States under the Transitional Instrument for Rural Development 
741. Consequently, Community support for th e four accompanying measures, i.e. 
compensatory allowances for less-favoured areas and areas subjec t to environmental 
constraints (funded up to 1999 by the EAGGF Guidance Section), early retirement, 
                                                                                                                                                         
 
85 OJ L 218, 9.8.2006, p. 12. 
86 OJ L 355, 15.12.2006, p. 95. 
87 OJ L355, 15.12.2006, p. 107. 
 
EN 142   EN agri-environmental measures and woodland management, is funded out of the 
EAGGF Guarantee Section th roughout the Community. Community support for other 
rural development measures in areas outside Objective 1 is also funded from the 
EAGGF Guarantee Section.  
Funding in the 2000–2006 programming period 
742. In the 2000–2006 programming period, the EAGGF  Guidance Section contributed to 
Objective-1 regions (‘regions whose develo pment is lagging behind’), the Leader+ 
Initiative and technical assi stance as indicated above. It  also continued to cover 
payment commitments under programmes from  previous periods which were wound 
up by 31 December 2001 and where the final balance was in principle to be paid by the end of 2005.  
743. However, by way of exception, an amount of EUR 148 milli on was committed in 
2000 to cover the outstanding part of th e last ‘tranche’ (1999) of the 1994–99 
programming period. This was because, as a result of the lack of budget allocations at the end of the 1999 financial year and the late adoption of the final programming 
adjustment decisions after the accounting d eadline, it was not possible to commit all 
the spending under the 1994–99 Structural Fund CSF programmes and Community 
Initiative programmes by the end of 1999 (Tables 7.2.1a and 7.2.1b). 
744. The programmes for the EAGGF Guidance pa rt of Objective 1 and PEACE comprise 
70 single programming documents and opera tional programmes (EU 15), of which 
only 35 were adopted by a Commission d ecision in time to be covered by 
commitments/payments in the 2000 financ ial year, on account of delays in the 
approval procedure in 2000. For the new Member States (EU 10), 9 other 
programmes were adopted. 
745. As regards the Leader+ Initiative, on account  of the lengthier procedure following the 
adoption of the guidelines, none of the 73 programmes was adopted by the end of 
2000, so a request was made in 2001 to tran sfer all the appropria tions from the year 
2000 to the years 2000–06. Seventy progra mmes were adopted in 2001 and the 
remaining three were adopted in 2002. 
 
EN 143   EN Table 7.2.1a — Expenditure by Objective, 2000–06 period 
(Commitment appropriations, EUR million)  
Objective 2000 2001 2002 2003 2004 2005 2006 
Community Support Frameworks  
Objective 1: 2000–06 
period (regions 
lagging behind) 1 239.3 3 237.2 2 639.1 2 764.1 3 311.5 3586.7  
Former Objectives 1 
and 6  
(1994–1999 period) 76.9 ****** ****** ***** ***** ****** ****** 
Former Objective 5(a) 
(1994–1999 period) 29.4 ****** ****** ****** ****** ****** ****** 
Former Objective 5(b) 
(1994–1999 period) 1.0 ****** ****** ****** ****** ****** ****** 
Community Initiatives  
Leader+: 
2000–2006 period 0.0 271.3 356.8 346.6 355.3 375.9  
Previous CIPs  
(1994–1999 period) 37.0 ****** ****** ****** ****** ****** ****** 
Technical assistance  
2000–2006 period: 
innovative measures and technical 
assistance 0.0 0.0 1.1 1.4 1.7 2.4  
Previous transitional 
measures/technical assistance  (1994–1999 period) 3.7 0.3 ****** ****** ****** ****** ****** 
TOTAL 1 387.3 3 508.8 2 997.0 3.112.1 3 668.5 3965.0  
 
EN 144   EN Table 7.2.1b — Expenditure by Objective, 2000–06 period 
(Payment appropriations, EUR million)  
Objective 2000 2001 2002 2003 2004 2005 2006 
Community Support Frameworks  
Objective 1: 2000–06 
period (regions lagging 
behind) 587.6 1 276.9 1 474.7  2 166.9 2 709.0 2764.6  
Former Objectives 1 and 6 
(1994–99 period) 1 353.2 488.3 5.1 176.5 235.3 221.4  
Former Objective 5(a) 
(1994–99 period) 803.1 69.4 79.2 89.2 67.7 190.2  
Former Objective 5(b) 
(1994–99 period) 629.9 142.9 26.1 66.2 53.6 17.5  
Community Initiatives  
Leader+: 
2000–06 period  0.0 81.9 74.9 87.6 238.8 334.5  
Previous CIPs 
(1994–99 period ) 178.4 79.8 10.3 17.3 106.7 58.3  
Technical assistance  
2000–06 period: innovative 
measures and technical 
assistance 0.0 0.0 0.2 1.7 1.7 2.4  
Previous transitional 
measures/technical assistance (1994–99 period) 6.5 5.8 1.6 7.5 0.6 0.0  
TOTAL 3 558.7 2 145.0 1 672.1 2.612.9 3 413.4 3588.9  
Execution of 2005 budget 
746. In terms of the appropriations  available in 2005, including those originally entered in 
the budget together with transfers and ca rryovers, the execution of the 2005 budget 
for the whole of the EAGGF Guidance Section was 98.5% and 99.9% for commitment (EUR 3965.0 million) and payment appropriations (EUR 3589.9 
million), respectively. 
747. The year 2005 was the sixth in the 2000–06 programming period. During this period, 
the source of funding for rural developm ent programmes depended on the type of 
measure and the geographical area. 
748. The source of financing for rural development measures differed according to 
geographical area as follows: 
– in regions eligible under Objective 1 (regions whose development is lagging 
behind), the EAGGF Guidance Section continued to finance rural development measures integrated within developmen t programmes, in combination with the 
other Structural Funds; 
– outside the Objective-1 regions, the sour ce of financing for rural development 
measures was the EAGGF Guarantee Section. 
 
EN 145   EN Community Initiatives are funded und er the EAGGF Guidance section. 
749. For Objective 1, payments (EUR 2753.1 million) executed in 2005 were 
reimbursements made for the 79 current programmes, representing 77% of the instalment committed in 2005.  
750. For the Leader+ Initiative, payments (EUR 375.8) made in 2005 were 
reimbursements, representing 88.9% of the instalment committed in 2005. 
751. For programmes from previous programming  periods, payments executed in 2005 
amounted to EUR 487.4 million. These payments constituted the final balance payable under these programmes, for wh ich rather complex final implementing 
reports had to be submitted giving the results of the checks carried out. 
 
EN 146   EN Table 7.2.2 — Implementation of the EA GGF Guidance Section budget in 2004 
2000–06 programming period  Previous programming periods  
 
Total Objective 1 PEACE 
(Objective 1)LEADER+ Innovative measures/ 
Technical assistance  Former Objectives 1 
and 6  Former 
Objective 5(a)Former 
Objective 5(b)Former CIPs  Former transitional 
measures  
A — Commitments  
Belgique/België 8.071 7.193 – 0.878 – – – – – – 
Ceská republika 55.634 55.634 – – – – – – – – 
Danmark 3.098 – – 3.098 – – – – – – 
Deutschland 511.284 469.007 – 42.277 – – – – – – 
Eesti 18.621 18.621 – – – – – – – – 
Elláda 521.865 487.611 – 34.255 – – – – – – 
España 935.168 845.519 – 89.649 – – – – – – 
France 137.106 89.980 – 47.125 – – – – – – 
Ireland 20.913 11.937 – 8.976 – – – – – – 
Italia 580.402 533.158 – 47.244 – – – – – – 
Kypros/K ıbrıs 0.000 – – – – – – – – – 
Latvija 33.026 33.026 – – – – – – – – 
Lietuva 41.786 41.786 – – – – – – – – 
Luxembourg 0.412 – – 0.412 – – – – – – 
Magyarország 104.415 104.415 – – – – – – – – 
Malta 1.400 1.400 – – – – – – – – 
Nederland 17.538 2.270 – 15.268 – – – – – – 
Österreich 20.572 6.537 – 14.035 – – – – – – 
Polska 398.156 398.156 – – – – – – – – 
Portugal 341.428 311.196 – 30.232 – – – – – – 
Slovenija 7.868 7.868 – – – – – – – – 
Slovensko 60.477 60.477 – – – – – – – – 
Suomi/Finland 44.599 34.180 – 10.419 – – – – – – 
Sverige 24.899 17.163 – 7.736 – – – – – – 
United Kingdom 70.732 49.535 – 21.197 – – – – – – 
Other 5.424 – – 3.056 2.369 – – – – – 
Total 3964.894  3586.668  0.000  375.858  2.369  0.000  0.000  0.000  0.000  0.000  
 
EN 147   EN  
2000–06 programming period  Previous programming periods  
 
Total Objective 1 PEACE 
(Objective 1)LEADER+ Innovative measures/ 
Technical assistance  Former Objectives 1 
and 6  Former 
Objective 5(a)Former 
Objective 5(b)Former CIPs  Former transitional 
measures  
B — Payments 
Belgique/België 7.668 4.973 – 2.695 – – – – – – 
Ceská republika 16.503 16.503 – – – – – – – – 
Danmark 11.110 – – 2.792 – – – 6.896 1.423 – 
Deutschland 611.068 477.877 – 36.623 – 48.068 35.310 – 13.191 – 
Eesti 20.960 20.960 – – – – – – – – 
Elláda 374.695 272.237 – 29.523 – 63.798 – – 9.136 – 
España 949.057 770.884 – 97. 925 – 57.275 4.405 – 18.569 – 
France 289.313 103.587 – 36.108 – – 147.279 1.433 0.906 – 
Ireland 40.505 22.846 11.547 6.113 – – – – – – 
Italia 544.776 437.234 – 40.065 – 44.489 2.865 6.816 13.307 – 
Kypros/K ıbrıs 0.000 – – – – – – – – – 
Latvija 32.351 32.351 – – – – – – – – 
Lietuva 7.547 7.547 – – – – – – – – 
Luxembourg 0.593 – – 0.140 – – 0.379 – 0.073 – 
Magyarország 42.842 42.842 – – – – – – – – 
Malta 0.252 0.252 – – – – – – – – 
Nederland 13.615 1.269 – 9.742 – – – 2.323 0.281 – 
Österreich 20.785 8.620 – 12.165 – – – – – – 
Polska 137.048 137.048 – – – – – – – – 
Portugal 251.938 229.704 – 22.234 – – – – – – 
Slovenija 1.615 1.615 – – – – – – – – 
Slovensko 31.152 31.152 – – – – – – – – 
Suomi/Finland 28.626 21.799 – 6.802 – – – – – 0.025 
Sverige 22.529 13.623 – 6.558 – 2.132 – – 0.215 – 
United Kingdom 127.570 98.152 – 22.616 – 5.588 – – 1.213 – 
Other 4.752 – – 2.383 2.369 – – – – – 
Total 3588.869  2753.074 11.547 334.483 2.369 221.351 190.238 17.469 58.315 0.025  
 
EN 148   EN 8.3. Evaluation 
752. The Directorate-General for Agriculture a nd Rural Development carries out regular 
evaluations of measures applicable to agri culture. The purpose of those evaluations is 
to contribute to policy preparation and decision making by providing information on 
the effectiveness, efficiency, and relevance of measures under the CAP. In particular, 
the evaluations examine the impacts of CAP measures on market equilibrium, 
producer incomes, production structures, ru ral development, and the environment; 
they may be retrospective and/or prospect ive. Evaluation reports are made publicly 
available on the Europa website. 
Evaluation of measures relating to markets and income support 
753. In the field of market policies, four ev aluation projects were  completed during 2006: 
three concerned measures under the comm on market organisation for fruit and 
vegetables (citrus, processed tomatoes, peach es, nectarines and pears) and the fourth 
analysed CAP support measures for energy crops. 
754. Contracts were signed at the end of the year for seven new evaluation projects 
concerning: support measures for dried f odder; market-related measures under the 
common market organisation for beef and veal; beef extensification premiums; 
crisis-management for fruits and vegetabl es; cross-compliance; the environmental 
effects of support measures for arable crops; and the environmental impact of 
support measures targeting beef and dairy products. 
Evaluation of structural and rural development measures 
755. In the field of rural development policie s, two evaluation projects were completed 
during 2006. These concerned measures in Less Favoured Areas (LFA) and a 
‘synthesis’ study on Leader+ evaluations carri ed out by Member States. At the end of 
2006, a new contract was signed for an ev aluation project to examine Nordic 
measures. 
756. In the field of rural development, intensive work was carried out to build up the new 
Common Monitoring and Evaluation Fram ework (CMEF) for the programming 
period 2007–2013, including the preparation of  an evaluation network for rural 
development policies. 
Cross-cutting evaluation projects 
757. Two cross-cutting evaluations were carried out in 2006: these were an evaluation of 
the impact of export support measures on food security and an evaluation of the 
information policy of the Directorat e-General for Agri culture and Rural 
Development (DG AGRI). 
Prospective evaluations 
758. Four impact assessments were carried out in 2006 to prepare po licy proposals. These 
concerned measures relating to bananas, fruit and vegetables, wine, and biofuels. 
 
EN 149   EN 9. ENLARGEMENT 
Bulgaria and Romania 
759. For Bulgaria and Romania (the two new acced ing countries), a rein forced monitoring 
exercise was held in 2006. DG AGRI cont ributed to two Commission monitoring 
reports (May and September 2006) on the pr ogress made by these countries towards 
accession. It assessed the state of prepara tion for the agricultural common market 
organisations, in particular the esta blishment of paying agencies/IACS. 
760. The Commission also adopted an ad-hoc regulation on the basis of the Accession 
Treaty to establish a ‘mechanism for appropria te measures in the field of agricultural 
spending in respect of Bulgaria and Romania’. This mechanism allows the 
Commission to reduce monthl y and intermediate payments to these two Member 
States by 25% in the event of seri ous deficiencies in their IACS. 
761. The Commission introduced transitional measures in order to help the new Member 
states prevent surplus stocks  and avoid the risk of defl ection of trade, and thus 
adverse effects on the common organisation of agricultural markets due to the 
accession of the new Member States. 
762. DG AGRI prepared an amendment to th e Act of Accession with Bulgaria and 
Romania in order to  ensure the application of the new acquis  in the rural 
development and sugar sector adopted af ter signature of the Accession Treaty. 
Croatia and Turkey 
763. Substantial contributions were made by DG AGRI to the screening exercise on 
Chapter 11 ‘Agriculture and Rural Developm ent’ for Croatia and Turkey. The first 
part of the screening was multilateral, with Croatia and Turkey together for the presentation of the acquis , and took place in December 2005. The second part of the 
screening exercise was conducted bilaterally  with the two candidate countries in 
January and February 2006. Croatia and Turkey presented their agricultural 
legislation and the gaps with the acquis  were discussed.  
764. Following the screening report, the Member States did not consider Croatia to be 
sufficiently prepared for negotiations on this Chapter, and established an initial benchmark for agricultural statistics: Croa tia was requested to prepare a strategy 
paper with the aim of reinforcing the collection and proce ssing of agricultural 
statistics. Together with DG ESTAT and DG ELARG, DG AGRI prepared a ‘Guidance document’ in order to help Croatia meet the benchmark. 
Enlargement package 2006 
765. DG AGRI contributed substantially to th e 2006 enlargement package of reports on 
the candidate countries (Croatia, Turkey  and the Former Yugoslav Republic of 
Macedonia) and the potential candidate countri es (Albania, Bosnia and Herzegovina, 
and Serbia including Kosovo and Montenegro).  It also contributed  considerably to 
the comprehensive monitoring reports on th e preparedness of Bu lgaria and Romania 
for accession, which identified the areas wh ere increased efforts were required and 
which would be subject to  reinforced monitoring. 
 
EN 150   EN Pre-accession assistance 
766. DG AGRI supported DG ELARG in the gr anting of pre-accession support — 
PHARE (for Bulgaria, Romania and Croa tia) — and in Transition Facility 
programming (i.e. support for institution bui lding) for the ten new Member States in 
relation to agriculture and rural developmen t. Technical advice was also provided to 
TAIEX for short-term activities. 
10. INTERNATIONAL RELATIONS  
10.1. International organisations and agreements 
European Neighbourhood Policy 
767. The Commission attaches particular impor tance to development and implementation 
of the European Neighbourhood Policy (E NP). DG AGRI contributed to the 
communication adopted by the Commissi on on 9 November 2006 on proposals for 
trade and rural development aspects of the Action Plans agreed with various 
countries.  
10.1.1.  World Trade Organisation (WTO) 
WTO dispute settlement  
768. A second public hearing in the cases against the Un ited States and Canada 
concerning their continued suspension of obligations in the hormones dispute 
(WT/DS320; WT/DS321) took place on 2 and 3 October 2006. The final report to the 
three parties was expected at the end of November 2007. 
769. The report of the panel requested by th e United States (WT/DS291), Canada 
(WT/DS292) and Argentina (WT/DS293) conc erning certain EC measures affecting 
the approval and marketing of biotech pr oducts (GMOs) was adopted at the Dispute 
Settlement Body (DSB) meeting on 21 Nove mber 2006. The EC agreed with the 
three complaining parties that the reasonabl e period of time for the EC to implement 
the recommendations and rulings of the DS B should be 12 months from the date of 
adoption of the report, thus 21 November 2007 at the latest. 
770. Following an ad hoc arbitration procedure under the terms of the Annex to the Doha 
waiver for the Cotonou Agreement, Honduras , Nicaragua and Panama requested on 
30 November 2005 consultations on the new EC import regime for bananas applying as from 1 January 2006 under Article 21.5. Consultations were held on 19 January 
2006. 
771. Following the entry into force of the current import regime for bananas on 1 January 
2006, the EC and several Latin American s uppliers (Ecuador, Costa Rica, Colombia 
and Guatemala) participat ed in a monitoring and re view process under the good 
offices of Norway to seek a mutually agreed solution to the banana dispute. This process was suspended upon Ecuador’s decisi on to request WTO dispute settlement 
consultations on 16 November 2006. The cons ultations with Ecuador were held on 
14 December 2006.  
 
EN 151   EN 772. Consultations requested by Argentina on EC  measures concerni ng garlic took place 
on 5 October 2006. 
773. At the request of the EC, consultations  with Mexico took place on 5 May 2006 on 
Mexico’s ‘definitive countervailing measures’ on olive oil from the EC. 
774. At the request of the EC, consultations t ook place with India on 20 and 21 December 
2006 on Indian measures affecting the importation and sale of wines and spirits from the EC. 
Doha Development Agenda 
775. The first half of 2006 was a period of intense activity, following the Hong Kong 
Ministerial Meeting in December 2005. Key players, including the EC, pursued a 
large number of contacts at both technica l and political levels. These contacts 
culminated in the 29 June–1 July minister ial meetings in Geneva, where ministers 
met in various formats: G6 (EC, US, India,  Brazil, Japan and Australia), the ‘Green 
Room’ (about 30 countries together) a nd the WTO Trade Negotiations Committee 
(entire WTO membership). 
776. The objective was to find a common platform  for the triangle ‘agricultural market 
access — domestic support — NAMA’. The EU played a constructive part in the 
discussions, which however ended in deadlock because of lack of progress on US 
domestic support and agricultural market ac cess in developing countries. Eventually, 
Members formally invited the WTO Direct or-General Pascal Lamy to act as a 
facilitator and consult members intensiv ely and widely in order to establish 
modalities. Following a failed meeting of th e Heads of State and Government among 
six major participants, Pascal Lamy announced in July 2006 the indefinite 
suspension of negotiations. Concluding the Doha round by  the end of 2006, the goal 
set in 2005, was now impossible. 
777. In the second half of 2006, during the hiatus , the EU established several bilateral and 
multilateral contacts with our main trading partners with the view to resuming the 
negotiations in the beginning of 2007. 
10.1.2.  Organisation for Economic Coope ration and Development (OECD) 
778. EU Member States account for 19 of the OECD’s members and are the major 
contributors to the OECD budget, in cluding voluntary contributions. The 
Commission participates actively in the work of this organisation, in  particular, as far 
as agriculture is concerned, in the Comm ittee for Agriculture (CoAg), its working 
parties, and at the interface with the Committees on Trade and the Environment 
(Joint working parties). 
779. CoAg’s core activities include the annual preparation of a mid-term market outlook 
for the main OECD agricultural commodities (the ‘Agricultural Outlook’ report) and 
the yearly review of the main developments in the agricultural policies of member countries (‘Agricultural Policies, Markets and Trade in OECD Countries’, generally 
known as the ‘Monitoring Report’). A si milar review focuses on the main 
developments in major non-OECD members,  whether economies in transition or 
emerging countries. These reviews include in particular the calcul ation of aggregated 
 
EN 152   EN estimates of support for farmers, the ‘Pr oducer Support Estimate’  (PSE), expressed 
as the percentage share of public fina ncing (budgetary payments and economic 
transfers from consumers and taxpayers as a result of policy measures) in the overall 
income of the farming sector, and the ‘T otal Support Estimate’ (TSE) for the whole 
agriculture and food sector, which indica tes the degree of support in the OECD 
economies expressed as a percentage share of GDP. 
780. The 2005-2006 working programme continued to focus on the cause-effect 
relationship between policies (e.g. decoupl ing and appropriate targeting), i.e. 
objectives and outcomes (economic and other effects). 
781. 2006 was the second year of the two-year  working programme , starting with a 
substantial carry-over of studies from the previous year. 
782. In 2006, the Committee for Agriculture (CoAg)  also discussed for the first time a 
multi-year programme of outreach activities  for non-member economies together 
with an outreach strategy, for which two events  were held in the same year in Buenos 
Aires, Argentina, for Latin America and in Dakar, Senegal, for Africa. While the Commission participated in the South America event, its absence in Dakar was noted. CoAg also held a fruitful joint meeting with the Development Assistance 
Committee Poverty Network on policy cohere nce, as a precursor to the Global 
Forum on Africa, which drew on new joint projects for Africa with IFAD and DAC, 
the NEPAD review and the Sahel and West Africa Club. 
783. Another key area was economic impact measuring , involving essentially the 
updating of the in-depth Screening of China’s, Brazil’s and South Africa’s and 
India’s agricultural policies and a Study on the distributional  effects of trade and 
agricultural policy reform based on informat ion from Brazil, Mexi co, Italy, Malawi 
and the US , a document that was released in the early 2006.  
784. The analysis of changes in the food econom y continued with a further set of three 
studies on: the future role a nd likely impacts of private an d public food standards; the 
economic impacts of market concentra tion in the food chain; and corporate 
responsibility challenges and business practices in the agro-food sector. 
785. In 2006, OECD continued with core activi ties such as the outlook report and the 
report on the monitoring and evaluation of agricultural policies in its abbreviated 
version called ‘At a Glance’. Part of this latter report (the Commodity PSE) came under heavy criticism from the European Commission since it contained information 
no longer warranted by the support figures supplied — €17bn of decoupled payments 
could no longer be earmarked for commodity  allocation. CoAg agreed to suspend the 
Commodity PSE and to accelerate work on the new PSE classification, which was approved in its basic outline by the APM (Working Party on Agricultural Policies and Markets) in the same year. 
786. OECD carried out a number of analytical studies on: the impact of policies on land 
prices and mobility; the role of compensa tion in the reform process; information 
deficiencies and non-market valuation and its policy responses; and finally on the 
degree of ‘jointness’ with re gard to rural development and food security, which was 
followed by a workshop on jointness, recogn ising the general existence of this 
phenomenon and offering new approaches to deal with it.  
 
EN 153   EN 787. The Joint Working Party on Agriculture and Trade continued with impact studies 
looking into the level and dist ribution of trade liberalisati on effects and the effect on 
trade and trade policy of policy re sponses to societal concerns. 
788. Finally, the Joint Working Party on Agricu lture and Environment continued with its 
study of the relationship between agricultu ral and environmenta l outcomes, through 
an analysis of linkages and policy instrume nts such as cross-compliance, and with 
the editing discussion on the fourth volum e of the Agri-Environmental Indicator 
Series, now scheduled for the end of 2007. (A workshop held in Washington in 
March 2007 looked at the challenges of how to incorporate agro-environmental 
indicators within policy-making.) 
789. With the acceptance of the Economic Poli cy Development Review process by the 
Commission, a new chapter of relations  with the OECD was opened, with 
agricultural policy follow-up bei ng an important part of this . (The first report of this 
kind on the European Union was st arted and published in 2007).  
10.1.3.  Generalised System of Preferences (GSP) 
790. The aim of the GSP is to foster the inte gration of developing countries within the 
world economy and the multilateral trading system. The GSP focuses on the needs of 
the poorest beneficiary countries, in part icular through the ‘Everything But Arms’ 
initiative, which is incorporated in the GSP. 
791. A new GSP scheme was adopted on 27 J une 2005, through Council Regulation (EC) 
No 980/2005. This regulation applies from 1 January 2006 to 31 December 2008, but the provisions concerning the special incen tive scheme for sustainable development 
and good governance (also known as ‘GSP-plus ’) have already applied since 1 July 
2005. The special arrangements to combat drug production and trafficking under Regulation No 2501/2001 were repeal ed from that same date.  
792. From 1 January 2006 to 31 December 2008, ther e are three types of arrangement for 
beneficiary countries under the EU’s  GSP in Regulation (EC) No 980/2005: 
793. all beneficiary countries can bene fit from the general arrangement; 
794. the special incentive arrangement for su stainable development and good governance 
(‘GSP+’) provides additional benefits for countries implementing certain 
international standards in human and la bour rights, environmental protection, the 
fight against drugs, and good govern ance (Commission Decision 2005/924/EC 
contains the list of GSP+ beneficiary countries
); 
795. the special arrangement for the least-deve loped countries (LDCs), which provides the 
most favourable treatment of all, with th e aim of granting the LDCs ‘duty-free and 
quota-free’ access to the EU’s market (with phase-in peri ods for sugar and rice).  
10.1.4.  United Nations Food and Agricultural Organisation (FAO) 
796. As a member of FAO, the EC took part in the work of the various technical 
committees. The EC attended in particular: 
 
EN 154   EN – the 34th session of the European Co mmission on Agriculture (ECA) (Riga, 
Latvia, 7 June 2006);  
– the International Conference on Agrari an Reform and Rural Development 
(ICARRD) — Puerto Alegre , Brazil, 6–10 March 2006; 
– the 131st session of the FAO Council — November 2006; 
– the 32nd session of the Committee on World Food Security October–
November 2006. 
10.1.5.  Commodities and international commodity agreements  
797. The Food Aid Convention (FAC), at its 96th session on 1 June 2007, was extended 
for one year until 30 June 2008, with the possi bility of further extension subject to 
the 1995 Grains Trade Convention remaining in  force. Due to th e links between the 
FAC and the negotiation of food aid disc iplines within the chapter on export 
competition at the WTO, the re-ne gotiation of the FAC was postponed.  
798. At its 25th Session on 11 June 2007, the International Grains Council agreed  that the 
1995 Grains Trade Convention would be exte nded for a further two years until 30 
June 2009. 
799. The International Sugar Agreement remain ed in force until 31 December 2005 after 
being extended for two years at the end of 2003. 
800. The new International Agreement on Olive Oil and Table Olives , 2005, entered into 
force provisionally on 1 January 2006. A new management team took office at the 
end of 2004. An administrative, operationa l and financial rest ructuring of the 
organisation is under way.  
801. Concerning the management of this organi sation, a round of negotiations held in 
2004 led to a complete renewal of the management staff as of the end 2004, 
including a new Executive Director. The new Financial Delegate, who took up his 
post in April 2004, together w ith the new management team appointed in October 
2004, will manage the organisation as a college on the basis of the new rules. 
10.2. Bilateral and regional trade relations 
10.2.1.  ACP countries 
802. Economic Partnership Agreement (EPA ) negotiations: the Commission was 
involved, as planned, in negotiations with  the six different regional EPA groupings, 
i.e. Central Africa, West Africa, Eastern and Southern Africa (ESA), the Southern 
Africa Development Community (SADC) region, the Pacific region and the 
Caribbean region.  
South Africa  
803. Further discussions resulted in progress on the resolution of certain outstanding 
agricultural issues with the EU/South Afri ca TDCA. Specific discussions were held 
on TDCA preferences that South Africa shou ld apply to certain Community cheeses, 
 
EN 155   EN in particular the opening of the cheese TRQ that South Africa had committed to 
under the TDCA. 
804. In the context of the EU/South Africa ag reement on trade in wine and spirits, 
meetings between the parties provided an opportunity to discu ss a wide range of 
issues of interest to both sides. In particular, followi ng agreement by the parties in 
2006 to give priority to setting up the Joint Committee envisaged in the wines and spirit agreement, work towards finalisi ng the rules of procedure of the Joint 
Committee made progress.  
805. [The Commission reiterated the importance of the ratification of the agreement on 
trade in wine and spirits by South Africa,  but South Africa noted that due to the 
outstanding issues concerning trademarks and geographic indicators it was not in a 
position to submit the agreement to its parliament fo r ratification.] 
10.2.2.  EFTA countries and the EEA Agreement 
EEA 
806. The European Economic Area (EEA) comprise s the EC, EU Member States and the 
following EFTA states: Norway, Iceland and Liechtenstein. The regular uptake of the 
acquis  by the EFTA states as regards the intern al market included, as usual, the latest 
EC legal acts in domains such as organi c agriculture, veterina ry and phytosanitary 
measures, food, biotechnology, etc
88. Protocol 47 of the Agreement on the EEA89, on 
the abolition of technical barriers to trade in wine, was also significantly revised in 
200688. 
Norway 
807. Bilateral trade negotiations on agriculture under Article 19 of the EEA agreement 
finally resumed in 2006, following undertakings  by the Parties in the Exchange of 
Letters of 20 June 2003 concerning addi tional trade preferences for agricultural 
products90. 
808. A Norwegian proposal aiming to modify the domestic regime for the outward 
processing of agricultural products was subjec t to vigorous internal debate in Norway 
and to intense bilateral contacts in 2006, b ecause of its potential damaging effects on 
consumers, bilateral trade, i ndustry and regional integration.  
Iceland 
809. Bilateral negotiations under Article 19 of th e EEA agreement, with a view to further 
liberalising bilateral tr ade in agricultural products betw een the parties on a reciprocal 
and mutually beneficial basis, were fina lised at the end of 2006. The Exchange of 
Letter was signed on 22 February 200791. 
                                                 
88 http://secretariat.efta.int/Web/EuropeanEconomicArea/introduction. 
89 OJ L 1, 3.1.1994, p. 3. 
90 OJ L 156, 25.6.2003, p. 49. 
91 OJ L 61, 28.2.2007, p. 29. 
 
EN 156   EN Liechtenstein 
810. Given the strong ties between  Liechtenstein and Switzerland, notably the Customs 
Union between these two countries, Liechte nstein asked to be included in the 
Agreement between the EC and the Swiss Confederation on trade in agricultural 
products92. The EC and Switzerland were both in  favour, and tripartite negotiations 
were finalised at the end of 2006. It also  proved necessary to prepare a Decision of 
the EEA Joint Committee in order to clarif y the triangular relationship between the 
EC, Switzerland and Liechtenstein in the fi eld of agriculture, both for tariff and non-
tariff issues, due to the fact that Liechte nstein is part of the EEA Agreement but 
Switzerland is not. Both texts are to  be adopted in parallel, in 2007.  
Switzerland 
811. The Joint Committee on Agriculture, created  by the Agreement between the EC and 
the Swiss Confederation on tr ade in agricultural products93, met for the sixth time on 
6 December 2006. It reviewed bilateral trade conditions and addressed in particular 
the following issues: respective developm ents in the field of geographical 
indications, with the focus on the registra tion of the name ‘Emmentaler’ on Swiss 
territory, import certificat e requirements for cheeses and organic products, 
preferential trade in sausage products, ad aptation of the Agreem ent to take into 
account the enlargement of the EU to 27 Members and, more generally, future developments in preferential trade. The parties further worked towards the opening in 2007 of bilateral negotiations on th e mutual recognition of geographical 
indications and for updates and improvements to  the text of the b ilateral Agriculture 
Agreement and its Annexes. The evolution of  bilateral trade in agricultural products 
was regarded as favourable by both parties.  Also worth noting were two decisions 
adopted by the Joint Committee on Agri culture late in 2005: Decision 3/2005
94 on 
trade adaptation following EU enlargemen t to 25 Members and Decision 4/200595 on 
organic products, updating the Agreement to reflect the evolution of the EC acquis  
and Swiss legislation. 
812. At the request of Switzerland, explorator y talks on the possibilities for ambitious 
bilateral trade liberalisati on in the agro-food sector t ook place at the end of 2006. A 
decision by the Swiss Federal Council on su ch possibilities was expected in 2007. 
10.2.3.  Asia 
ASEAN 
813. In 2006, contacts were pursued with Tha iland on possible future cooperation on 
geographical indications and on manioc. Following a mandate from the Council to 
start negotiations with Thailand to change  the regime for importing manioc into the 
Community to a ‘first come first served’ system, preparat ory consultations were held 
with Thailand.  
                                                 
92 OJ L 114, 30.4.2002, p. 132. 
93 OJ L 114, 30.4.2002, p. 132. 
94 OJ L 346, 29.12.2005, p. 33. 
95 OJ L 346, 29.12.2005, p. 44. 
 
EN 157   EN 814. The Vision Group (EU–ASEAN) agreed that there was a solid case for a bi-regional 
Free Trade Agreement between the EU and ASEAN and suggested that negotiations 
could start in 2007.  
China 
815. In November 2006, DG AGRI and the Chinese Mi nistry of Agriculture held the first 
meeting under the ‘dialogue on agriculture’ between the EU and China. The meeting 
covered trade in agricultural products, including market access issues, quality 
products, policy information and food technologies. 
816. Under the EU-China arrangements on san itary and phytosanitary (SPS) issues, 
discussions were held with China on overc oming non-tariff barriers to EU agriculture 
exports to China. 
817. In the context of the EU-China Memo randum of Understanding on Geographical 
Indications (GIs), DG AGRI and AQSIQ ex changed views on their respective GI 
legislations and the procedures for regi stering GIs in each other’s territories. 
India 
818. In June, India was included in Commi ssion Regulation (EC) No 94/1992 on the 
equivalence of organic produc tion methods for certain agricultural products. This 
was a major achievement for India, openi ng the door for Indian quality products on 
the EC market. 
819. In collaboration with the authorities of India (and Pakistan) work continued on the 
development of the DNA protocol for basm ati rice; it involved sampling missions to 
both countries during the harvesting period. 
820. Talks and coordination took place on the es tablishment of a revised Working Group 
on Agriculture and Marine Products and arra ngements were made for a meeting of 
this Group in early 2007. 
Japan 
821. At their annual meeting in Tokyo on 1 June 2006, the EC and Japan exchanged 
information on their respective pigmeat ma rkets. These exchanges of information 
aim to avoid any disruption of trade. The Japanese authorities have recourse to 
safeguard measures when pigmeat imports reach a trigger level. Japan is a major 
market for EU pigmeat producers. These sa feguard measures were not applied in 
2006. 
10.2.4.  Middle East and Mediterranean Region 
822. On the basis of a mandate for ambitious tr ade liberalisation with the Mediterranean 
partners adopted by the Council in Novemb er 2005, negotiations have started with 
Morocco (February 2006 in Rabat), Israel (June 2006 in Tel-Aviv) and Egypt (February 2007 in Cairo). The negotiations  are progressing satisfactorily with good 
prospects of success in the first qua rter of 2008. Tunisia undertook to open 
negotiations before the end of 2007. Informal  talks with Algeria have been initiated 
 
EN 158   EN in order to establish a di alogue and cooperation on matters  of common interest in 
agriculture. For Jordan, the new concessi ons entered into fo rce in January 2006. 
10.2.5.  Western Balkans and Turkey 
823. Negotiations on an SAA (Stabilisation and Association Agreement) were conducted 
with several Western Balkan countries (A lbania, Bosnia and Herzegovina (BiH), 
Serbia and Montenegro). The provisions of  the SAA on trade in agricultural products 
fully incorporate all the provisions in th e Autonomous Trade Preferences already 
granted to all Western Balkans countri es on a unilateral basis under Council 
Regulation (EC) No 2007/2000. The SAA also  includes agricultu ral concessions 
given to the EU on a more gradual and as ymmetric basis, along with a protocol on 
reciprocal preferential concessions for cer tain wines and the re ciprocal recognition, 
protection and control of wine, spirit dr inks and aromatised wine names.  
824. The SAA negotiations with Albania were fi nalised in early 2006. In addition to the 
general provisions described above, Al bania undertook to uni laterally invalidate 
trade marks that coincided with Commun ity geographical indications (GIs). The 
Interim Agreement on the SAA, covering trad e and trade-related issues, entered into 
force on 1 December 2006. 
825. The SAA negotiations with Bosnia and Herzegovina (BiH) were launched on 
25 November 2005 and were finalised at a technical level on  13-14 December 2006. 
826. Negotiations for an SAA with Serbia a nd Montenegro were put on hold in May 2006 
on account of non-cooperation with the Inte rnational Criminal Tribunal for the 
former Yugoslavia. Following the 21 Ma y 2006 referendum and Montenegro’s 
independence, the General Affairs and Ex ternal Relations Council (GAERC) decided 
on 12 June 2006 to separate SAA negotia ting directives for Serbia and for 
Montenegro. Negotiations with Serbia remain suspended until the political criteria are met.  
827. Negotiations with Montenegro were resume d in September 2006 and were finalised 
at a technical level on 1 December 2006.  
828. Drafts of an SAA with BiH and Monteneg ro include the unila teral protection of 
geographical indications for ag ricultural and fishery produc ts and for foodstuffs other 
than wine and spirits. 
829. Ahead of the accession of Bulgaria and Romania to the EU, the Council gave the 
Commission a mandate to negotiate the technical adaptation of bilateral trade agreements. Preparatory work and consultati ons with certain count ries to prepare the 
exercise were launche d at the end of 2006. 
830. DG AGRI finalised negotiations with Croa tia on a quota for duty-free imports of 
180 000 tonnes of sugar (with some recipr ocal concessions fo r the EU) through an 
Additional Protocol to the Stabilisation and Association Agreement (SAA). This new 
arrangement, applicable from 1 January  2007, permits Croatia to export sugar duty-
free under a TRQ and replaces the previ ous unlimited duty-free access under the 
SAA. DG AGRI also addressed the issue of the increase in imports of a mixture of 
 
EN 159   EN cocoa powder with a high sugar content from Croatia, in order to prevent 
circumvention of the sugar quota.  
831. The process of adapting the bilateral trade agreement between the EU and Turkey to 
take into account the accession of the 10 new Member States wa s finally concluded. 
Decision 2/06 of the EC-Turkey Associa tion Council was issu ed on 17 October 
2006, updating the trade concession s on agricultura l products.  
10.2.6.  Latin America 
Mercosur 
832. During 2006, both parties agreed to wait for fu rther clarification in the DDA before 
actively resuming the negotiations on a bi-regional EU-Mercosur association 
agreement.  
Chile 
833. Exploratory talks on possible further trad e liberalisation on agricultural products 
(‘Evolution clause’) of the A ssociation Agreement were initiated. The Commission 
also asked to discuss issues relating to th e protection of EU ge ographical indications.  
Mexico 
834. Talks on the review clause on agriculture and the standstill clause of the FTA 
continued in 2006.  
Central America/Andean Community 
835. Based on a joint assessment of the economic integration process in both regions, and 
following the conclusions of the May 2006 EU-LAC Summit in Vienna, the EU 
prepared for the start of negotiati ons on comprehensive EU-CAN and EU-CA 
Association Agreements, including political dialogue, cooperation and a trade chapter. The first negotiation rounds were  expected to take place in late 2007. 
10.2.9 NIS countries Russia 
836. The Memorandum of Understanding establ ishing the principles, objectives and 
structure of dialogue in the field of agriculture and ru ral development between the 
Ministry of Agriculture of the Russian  Federation and the European Commission’s 
Directorate-General of Agriculture a nd Rural Development was signed by the 
Russian Minister of Agriculture and Co mmissioner Fischer Boel in Moscow on 
13 April 2006. This dialogue establishes the framework for future cooperation 
between the two sides. 
837. The first meeting under the EU-Russia Agricu lture Dialogue was held in Brussels on 
19-20 October 2006, with the fo llowing technical structur e: (i) agricultural rural 
development, (ii) markets for agricultu ral products and (iii) innovation and new 
technologies. 
 
EN 160   EN Ukraine 
838. The Memorandum of Understanding establ ishing the principles, objectives and 
structure of a dialogue in the field of ag riculture and rural development between the 
Ukrainian Ministry of Agrarian Policy a nd the European Comm ission’s Directorate 
General of Agriculture and Rural Developm ent was signed by the Ukrainian Minister 
of Agriculture and Commissioner Fischer Bo el in Brussels on 19 October 2006. This 
dialogue establishes the framework for fu ture cooperation between the two sides. 
839. The first meeting under the EU-Ukraine Agri culture Dialogue was held in Kiev on 
14 December 2006, with the following technical  structure: (i) agricultural rural 
development, (ii) markets fo r agricultural products.  
Georgia 
840. The first exploratory talks were held with  the Georgian author ities on a bilateral 
agreement on the protection of geographical indications for wines and spirits. This 
agreement is one of the topics and activ ities envisaged in the EU-Georgia ENP 
Action Plan. 
10.2.7.  North America: USA, Canada 
United States 
841. On 10 March 2006, the bilateral EU-US agr eement on trade in wine entered into 
force. The agreement followed 20 years of ne gotiations and aimed to facilitate trade 
in wine while improving protection for European and American names used in 
winemaking and guaranteeing reciprocal a cceptance of oenological standards used 
by winemakers. 
842. This first-phase agreement provided that the parties were to begin negotiations within 
90 days of the date of entry into force of  the agreement with a view to concluding 
one or more further agreements to facilita te trade in wine between the parties.  
843. Consequently, negotiations on the second-pha se agreement were formally launched 
in Washington on 5 June 2006. Further progress and a common understanding were reached at the meetings on 20–21 September in Brussels and on 6–7 December 2006 in Washington, where issues concerning the implementation by both sides of the 
first-phase agreement and the identificati on of common interests for a second-phase 
agreement were addressed. 
844. .In the ‘hormones’ case, the EU continues to challenge the United States’ continued 
imposition of sanctions against EU exports  because of the EU’s ban on hormone 
beef. The EU believes these sanctions ar e illegal since the EU has removed the 
measures found to be non-compliant with WTO rules in the WTO dispute on hormone beef dating back to 1998. These ‘consultations’ failed to resolve the 
dispute, so panels (with the USA but al so with Canada) were established on 17 
February 2005. The first hearing took place in September 2005, but the report by the panels, expected by summer 2006, was postponed to 2007. 
845. In August 2006 the Commission was inform ed that GM rice LL601 from Bayer, 
which was not intended to be commercialised and was supposed to be grown only in 
 
EN 161   EN field trials in the US, had entered the f ood and feed supply chain. After the detection 
of the unapproved GM LL601 rice in US bulk rice exports, the Commission adopted 
emergency measures requiring that all shipme nts of long-grain rice originating from 
the US be tested and accompanied by a certif icate attesting that the product is free 
from GM rice LL601. Following positive tests on  imports that were actually certified 
free from LL601, the emergency m easures were intensified.  
846. Following the emergency measures, imports of rice from the USA almost totally 
stopped in August 2006. This created problems in particular for the use of import 
licenses issued in Ju ly and August for approximately 30 000 tones of rice originating 
in the USA, as part of th e July tranches of the impor t quotas agreed following WTO 
negotiations (Regulation (EC) n° 327/98).  
847. To resolve this situation, the Commission adopted at the end of October Regulation 
(EC) No 1610/2006 to extend until the end of 2006 the validity of these import 
licenses, as well as to al low imports from all third countries under licenses for erga 
omnes  (all-country) quotas even if  the licenses were originally issued for rice of US 
origin, and to allow flexible use of the certificat es regarding the type of rice to be 
imported, where it corresponded to the same processing stage. 
848. The Corn Gluten Feed Monitoring Group continued to meet. 
Canada 
849. The EC-Canada Agreement on trade in wines an d spirit drinks officially entered into 
force on 1 June 2004. It provides for an end to  the generic use of EU wine and spirits 
names in Canada in three phases, beginning for most names with the entry into force 
of the Agreement and lasting up to 31 December 2013 when the last four names (Chablis, Champagne, Port and Sherry) will  be no longer classe d as generic. The 
parties also agreed on compositional stan dards for wines and spirit drinks. Trade 
disciplines applicable to Ca nada’s Provincial Liquor Bo ards were strengthened by a 
series of amendments to a 1989 agr eement following a successful WTO Panel 
requested by the EC. The parties also es tablished a framework for continuing 
discussions on matters such as the rules on labelling wines and spirits. Canada is a 
key market for EC wine and spirit e xports, importing products worth over EUR
 500 
million a year. After entry into force and during 2006, initiatives were taken to set up a Joint Committee for monitoring the agreement. The rules of procedure of this Joint Committee were adopted by a Counc il Decision of 12 October 2006. On 
29 November 2006 the Commission decided to request WTO consultations with 
Canada on its new fiscal measures affec ting wine and beer. The draft Canadian 
measures provide excise tax relief to Ca nadian wine and beer, while leaving the 
excise tax on imported EU wine and beer intact.  
850. For the Commission this tax discrimina tion amounts to a breach of the 1989 
EU-Canada agreement on trade in alcoholic beverages, as last amended by the 2003 
EU-Canada agreement on trade in wine and spirits. These proposals are also inconsistent with Canada’s obligations  under the WTO and in particular GATT 
Article III. 
851. Canada continued to apply 100% ad va lorem tariffs to EU exports worth 
CAD 11.3 million on account of the ‘hormones’ case. 
 
EN 162   EN 852. As part of the ongoing negotiations on a Trade and Investment Enhancement 
Agreement, the EU and Canada continued regular discussions on the improvement of 
the protection granted to geographical indications. 
853. In the dairy sector, Canada established speci fic border controls and taxes on EU milk 
ingredients and, despite EU enlargement, Canada did not took account of traditional 
cheese exports from the ten new Member States. Regular exchanges on these issues took place during 2006, although no sp ecific results were achieved. 
10.2.8.  Oceania 
Australia 
854. At the annual EC/Australia ATMEG meeti ng, views were exchanged on the market 
situation for major commodities, market  access issues, the WTO agricultural 
negotiations, and recent policy developments in the EU and Australia. An in-depth 
discussion was held on rural development. 
855. Negotiations on a new EC/Australia agreement on trade in wine continued in 2006 
on the one remaining outstanding issue, i.e. a limited number of trademarks registered in one party but containing or  consisting of geographical indications 
protected by the other party. It was hoped to conclude these negotiations at the 
beginning of 2007. 
New Zealand 
856. During the annual EC/New Zealand agri-tra de talks, views were exchanged on the 
market situation of dairy and meat products as well as on the state of play with the 
agriculture negotiations in the WTO. An in-depth discussion was held on rural development. 
857. Consultations were held with New Zeal and on a new arrangement for the EC’s 
current access tariff quota for New Zealand bu tter in order to bring the management 
system for this quota into line with the ruli ng of the European Cour t of Justice in the 
Egenberger  case. This new arrangement entered into force at the beginning of 2007.