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KMÉÉS CQMVIISSION OF THE EUROPEAN COMMUNITIES 
C0M(93) 297 final 
Brussels, 9 July 1993 
Proposal for a 
INC IL REGULATION (EEC! 
on the grant of agri-monetary aid 
(presented by the Commission) 
Sit 
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EXPLANATORY MEMORANDUM 
Agricultural prices, expressed in national currencies, may be reduced 
due to Community agricultural monetary rules^). These rules 
stipulate that when certain price cuts occur "compensatory" (and 
"national compensation") aids may be granted in essence to take account 
of their negative impact on farm incomes. 
When the reductions are only in national currencies regulation 3813/92 
has already laid down certain rules under which compensatory aid may be 
granted. When the reductions involve prices both in ecu and in national 
currency no such rules have yet been laid down. The purpose of the 
current proposal is to enable detailed implementing rules to be laid 
down for compensatory aid provided for in article 8 of regulation 
3813/92 as well as for national compensation aid provided for in 
article 9 of that regulation. 
The Commission is of the view that the implementing provisions for the 
two types of aid involved should differ only when a uniform approach 
would go against the basic concepts underlying articles 8 and 9 of 
régulât ion 3813/92. 
This proposal sets out how the ceiling on the total amount of aid would 
be determined to avoid over-compensation but within the real and 
practical constraint of assessing, with a degree of accuracy, the 
impact on incomes of the price reductions. It also provides for a 
minimum level of losses to be experienced before aid may be granted, 
how aid could be paid to avoid market disruption and to ensure, where 
appropriate, its decrease over time. The procedures to be followed have 
been defined to ensure that all aid granted pursuant to the provisions 
of articles 8 and 9 of regulation 3813/92 is in strict conformity with 
Community rules. 
(1) Council regulation (EEC) N' 3813/92, OJ L 387/1 of 31.12.92 
^ 
Three aspects of the current proposal require particular comment. One 
is the requirement in regulation 3813/92 for national compensation aid 
to be directed towards the socio-structural field. A similar condition 
was set in an earlier agri-monetary regulation (N* 1677/85) which also 
required a Commission proposal to define this field. That proposal, 
C0M(89) 382, failed to be adopted by the Council and is in the process 
of being withdrawn. The Commission is now of the opinion that, for 
purposes of the current proposal, the delimitation of "socio-
structural" must be wider than in its proposal tabled some four years 
ago. The definition must be sufficiently wide to allow the aid to 
fulfil the underlying objective of attenuating the short term negative 
impact on incomes of the price reductions, within the constraint of 
avoiding market disruption. 
The second aspect concerns avoidance of market disruption. To achieve 
this vital end the proposal restricts aid only to production de­
coupled cash grants without any obligation upon the beneficiary 
regarding their use, and for certain defined "socio-structural" 
measures. These restrictions avoid aid being granted for actions 
which could cause market disruption. It is therefore proposed that 
Member states would be free to decide which farmers would receive aid, 
and how much, subject only to respect of the ceiling on the total 
amount of aid. 
The third aspect concerns the maximum levels of aid. These levels 
differ as between Member states because, and only to the extent that, 
a given reduction in support prices affects income from farming to a 
greater or lesser degree in the different parts of the Community. For 
certain products a given reduction in support prices has a more marked 
effect on overall producer income than is the case for other products. 
Consequently, the differences in coefficients reflect the lack of 
uniformity in the product mixes between Member States. The differences 
also reflect the un-even impact on incomes between Member States of 
other, technical factors, such as intermediate consumption, when 
support prices are cut. 
Since these provisions are directly linked to Community agricultural 
monetary rules, action is required at Community level. 
Proposal for a 
Council Regulation (EEC) N* /93 
of 1993 
on the grant of agri-monetary aid 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community; 
Having regard to Council regulation (EEC) N" 3813/92 of 28 December 
1992 on the unit of account and the conversion rates to be applied for 
the purposes of the common agricultural policy^1), and in particular 
Articles 8(4) and 9(2) thereof, 
Having regard to the proposal from the Commission, 
Whereas Member States with floating currencies have been authorized by 
Article 8 of Regulation (EEC) N" 3813/92 to grant compensatory aid when 
prices in their national currencies are reduced due to the application 
of the provisions of Article 4 of that regulation provided the 
conditions set in its Article 8 (1) are fulfilled; whereas Article 8(4) 
of that regulation requires the Council to determine, on the basis of a 
Commission proposal, the parameters within which such aid may be 
granted; 
Whereas all Member States have been authorized by Article 9(2) of 
Regulation (EEC) N" 3813/92 to grant national compensation aid when 
prices in their national currencies are cut due to an increase in the 
correcting factor resulting from the application of the provisions of 
Article 9(1) of that regulation; whereas Article 9(2) of Regulation 
(EEC) N" 3813/92 specifies that such aid must be directed towards the 
"socio-structural" field and may not be linked to production; whereas 
there is no established Community definition of the term "socio-
structural" and consequently limits need to be set within which aid may 
be granted pursuant to the provisions of Article 9 (2) of that 
régulât ion; 
(1) O.J. n' L 387 of 31.12.92, p. 1 
-6~-
Whereas in order to respect the requirements of Article 8 (4) of 
Regulation (EEC) N" 3813/82, minimum limits and maximum amounts of aid 
need to be determined by the Council; whereas Article 9 (2) of that 
regulation requires the Council to determine a procedure under which 
national compensation aid may be granted; whereas although there is 
difference between the conditions which give rise to national 
compensation aid provided for in Article 9 (2) of Regulation (EEC) N* 
3813/92, and to compensatory aid provided for in Article 8 (2) of that 
regulation, it is not necessary for such aids to be treated 
differently as regards the conditions for their grant to beneficiaries; 
whereas it is in the interests of clarity and legal certainty for the 
Council now to determine the implementing provisions for both the 
compensatory aid and for the national compensation aid provided for in 
Articles 8 and 9 of Regulation (EEC) N" 3813/92; whereas that 
regulation may have effects on producer incomes in both the agriculture 
and the fisheries sector ; 
Whereas these implementing provisions must, within the limit of the 
practical difficulty of quantifying the income loss flowing from price 
reductions, except in terms of an approximation, set out how the 
maximum level of aid shall be determined so as to avoid the risk of 
over-compensation at the level of each Member State; whereas these 
provisions must in addition set the minimum threshold of income loss 
below which it would be unnecessary to permit aid, the time limits 
within which aid may be requested and granted that reflect the 
temporary nature of the impact of agri-monetary developments upon 
incomes; whereas these provisions must also define the means by which 
aid may be granted so as to avoid market distortions, and the 
procedures for authorization of aid which ensure its compatibility with 
Community provisions, 
Whereas, to facilitate implementation of certain aspects of this 
Regulation, provision should be made for a procedure instituting close 
cooperation between the Member States and the Commission, 
Whereas, since these provisions are directly linked to Community 
agricultural monetary rules, action is required at Community level. 
-I. -
HAS ADOPTED THIS REGULATION : 
Article 1 
1. This Regulation defines the limits, conditions and procedures to be 
applied in order that a Member State may grant compensatory aid due 
to the application of Article 8 of Regulation (EEC) N* 3813/92 and 
national compensation aid due to the application of Article 9 of 
that Regulation. 
2. References in this Regulation to agriculture, farming and to 
farmers shall be taken to include analogous activities and 
operators in the fisheries sector. 
Art icle 2 
1. The total level of aid granted by a Member State over the entire 
period of its application shall in no case exceed double the annual 
agricultural income loss estimated in accordance with the 
provisions of Article 3. 
2. A Member State may grant aid through : 
a) annual payments to beneficiaries without conditions relating to 
its use and/or : 
b) the measures listed in annex I. 
3. Aid granted under the provisions of point 2.a) shall, as regards 
each beneficiary: 
be reduced for each annual instalment by at least one third of 
the initial amount. No capitalization is permitted; 
be unrelated to their current or future levels of production, 
sales or purchases, but may be linked to total area of a farm 
or to its total labour units. Differentiation of amounts 
between beneficiaries shall be permitted. 
-y-
4. Aid may be granted only to farmers the definition of a farmer being 
established by the Member State concerned on the basis of objective 
and non-discriminatory criteria. However, aid for measures listed 
in Annex I shall be deemed to be granted to farmers irrespective of 
the status of the recipient. 
5. A Member State intending to grant aid must adopt the national 
implementing measure within the following periods after the date of 
completion of the relevant procedure provided in Article 4 : 
one year for aid referred to In point 2.a), 
two years for aid referred to in point 2.b). 
6. The total aid granted shall be calculated taking : 
all amounts subject to the provisions of point 2.a), plus 
that part of the amounts subject to the provisions of point 
2.b) which exceed the intensities normally accepted by the 
Commission in the context of State aid policy. 
Article 3 
1. The calculation of the loss of annual agricultural income shall in 
no case exceed the net Agricultural Income of Farm Labour for the 
Member State concerned multiplied by the price reduction in this 
Member State adjusted so as to reflect the impact on agricultural 
incomes of reductions in the agricultural conversion rates. The 
calculation of the loss of annual agricultural income shall be 
determined by the Commission in accordance with the procedure 
provided in Art ice 12 of Council Regulation (EEC) No 3813/92. 
2. For the purposes of paragraph 1 the following definitions shall 
appI y : 
a) the net agricultural income shall be the annual average 
calculated using data published by the Statistical Office of 
the European Communities for the last three years available, 
expressed in ecu multiplied by the average correction factor 
provided for in Article 1 (c) of Regulation (EEC) N' 3813/92 
for the relevant year. 
b) the price reduction in the national currency of the Member 
State concerned shall, subject to the provisions of paragraph 
3, correspond to the percentage decrease in prices in ecu 
resulting from the application of the provisions of Article 9 
(1) of Regulation (EEC) N' 3813/92 taking effect on 1st July, 
adjusted by an amount cot responding to : 
for fixed currencies, the percentage change in agricultural 
conversion rate on July 1st in relation to the rate one 
year ear Iier, 
for floating currencies, the percentage change in the 
average agricultural conversion rate over the 12 months 
immediately preceding the date of the request referred to 
in Article 4 (1), in relation to the corresponding average 
of the 12 months preceding that period, 
using the formula in Annex II. 
3. When the loss of annual agriculture income referred to in 
paragraph 1 of the Member State concerned is less than 1% no aid 
shall be granted. However, the price reduction upon which this loss 
was calculated shall be carried forward for inclusion in a 
subsequent income loss determination, in full for one year 
following the date of the request referred to in Article 4 (1) and 
to the extent of two thirds for the second, and one third for the 
third such year. No account shall be taken of losses prior to the 
third year. 
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Art icle 4 
1. A request for aid must be made by a Member State within the 
fol lowing t ime Iimi ts : 
for those with a fixed currency, by 30th June of the year 
subsequent to that of the 1st July referred to in Article 3 
(2)b. This request shall, subject to the provisions of Article 
3 (3), relate only to the impact of realignments over a 12 
month period after 1st July of the preceding year. 
for those with a floating currency, for the first time on or 
after 1st January 1994 and subsequently least 12 months after 
tabling a request for aid in application of the provisions of 
Article 8 (1) of Regulation (EEC) N" 3813/92. 
2. The Council decision provided for in Article 8 (4) of Regulation 
(EEC) N* 3813/92 shall be preceded by a request for aid tabled in 
conformity with the provisions of paragraph 1. 
3. The Commission shall decide the maximum level of national 
compensation aid which may be granted due to the application of 
the provisions of Article 9 (2) of Regulation (EEC) N' 3813/92, at 
the request of the Member State concerned, in conformity with the 
procedure provided for in Article 93 (3) of the Treaty and in 
accordance with the provisions of this Regulation. No national 
compensation aid may be granted until the Commission has 
ascertained its compatibility with the provisions of this 
régulât ion. 
The Commission shall decide on whether to approve a national 
compensation aid within two months of receipt of the request 
referred to in paragraph 1. In the event that the Commission does 
not take a position within this time limit the measures envisaged 
may be implemented provided the Member State has given prior notice 
to the Commission of its intention so to act. In the event of a 
Member State seeking to grant aid under a measure involving both 
compensatory aid and national compensation aid, this decision may 
not be taken until the Council has acted in accordance with the 
provisions of paragraph 2 and, for the purposes of applying Article 
2 (5), the date of the Commission decision shall be deemed to be 
that of the Council decision. 
At -
Article S 
This Regulation shall enter into force on the third day following its 
publication in the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member States. 
Done at For the Council 
The President 
ANNEX I 
Measures referred to in Article 2 (2) b) 
a) farm level aid measures : 
to improve agricultural product quality by quality control; 
to encourage and develop the joint use of machines 
for insurance against extraordinary weather conditions 
for combating animal and plant diseases 
b) agricultural product marketing aids for : 
launching producer groups; 
publicity for agricultural products. 
C) aid for agricultural research in the following areas . 
computerization 
protection of the environment 
product diversification in line with CAP reform aims. 
- Ai .-
ANNEX I I 
Formula referred to in Article 3 (2) b) 
The price reduction in national currency is defined as: 
II x ( c + 1) -1 
To 100 
where: 
c is the percentage reduction of prices in ecu on 1st July of 
the year concerned, in application of Article 9 (1) of 
Regulation (EEC) no 3813/92; 
For fixed currencies, Ti and To are the agricultural conversion 
rates on 1st July, respectively, of the year concerned and of 
the preceding year; 
For floating currencies, Ti and To are the average agricultural 
conversion rates over 12 months preceding, respectively, the 
date of the request for aid, and the 12 months preceding that 
per iod. 
— -v*>. 
FINANCIAL STATEMENT 
1. BUDGET HEADING: miuts/mnmst? 
DATE: 9 Jure 1993 
APPROPRIATIONS: 
2. TITLE: 
Council Regulation (EEC) No /93 on the grant of agrlmonetary aid. 
3. LEGAL BASIS: Articles 8 and 9 of Regulation (EEC) No 3813/92 of 28.12.1992 
4. AIMS OF PROJECT: 
Lays down the rules for granting national or Ccmumity aid to compensate for the negative effects of the 
monetary real Ignments on farm inccmes. 
5. FINANCIAL IMPLICATIONS 
5.0 EXPENDITURE 
- CHARGED TO THE EC BUDGET 
- (REFUNDS/INTERVENTION) 
- NATIONAL ADMINISTRATION 
-OTHER 
5.0.1 ESTIMATED EXPENDITURE Period of 12 months 
(ECU mi 11 ion) Current Financial Year 
1993 
(ECU mi 11 ion) 
(1) Following Financial Year 
1994 
(ECU mi 11 Ion) 
(1) 
1995 
(1) 1996 
(1) 1997 
(1) 1998 
(1) 
5.2 METHOD OF CALCULATION: 
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET? 
YES/NO 
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? 
YES/NO 
6.2 IS A SUPPLEMENTARY BUDGET NECESSARY? 
YES/ND 
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 
YES/NO 
OBSERVATIONS: 
(1) It is not yet possible to calculate the financial impact of this proposal since it depends on future 
currency trends and on how Member States apply the measure. 
In the case of fixed currencies, the aid is national aid. In the case of floating currencies (draclma, 
peseta, I ira, escudo and pound sterling), expenditure wi11 only occur if they are revalued. If alI the 
floating currencies revalue in the future, we estimate that the aid equivalent to a price reduction of 
1% as a result of the revaluations would give rise to maxinun expenditure of the order of 
ECU 260 mi 11 ion charged to the Oonmunity budget in the first year of application. 
However, it is very uniikely that there wi 11 be any expenditure prior to the 1995 budget. 
-Til, 
ISSN 0254-1475 
COM (93) 297 final 
DOCUMENTS 
EN 03 
Catalogue number : CB-CO-93-333-EN-C 
ISBN 92-77-57195-0 
Office for Official Publications of the European Communities 
L-2985 Luxembourg