COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 11,11.1997 
COM(97) 576 final 
97/0300 (CNS) 
REPORT FROM THE COMMISSION TO THE COUNCIL 
on the quota system for the production of potato starch 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Regulation (EC) No 1868/94 establishing a quota system 
in relation to the production of potato'starch 
(presented by the Commission) 

REPORT FROM THE COMMISSION TO THE COUNCIL 
ON THE QUOTA SYSTEM FOR THE PRODUCTION 
OF POTATO STARCH 
1. INTRODUCTION: The need for the Report 
Article 3(1} of Council Regulation (EC) No 1868/941 stipulates that on or before 
3! October 1997 the Commission must present to the Council' a report on the 
aliocLtion cf quota within the Community, accompanied if necessary by 
appropriate proposals. The report must take account cf the development of the 
potato-starch market as well as that of the cereal-starch market. 
Article 3(2) of Council Regulation (EC) No 186S/94 stipulates that on or before 
30 November 1997 and thereafter at three-yearly intervals the Council, acting on 
the basis of Article 43 cf the Treaty, must allocate quota between. Member States 
on the basis of the report referred to in Article 3(1). 
Quotas were established for the 1995/96, 1996/97 and 1997/98 marketing years 
for the following Member States: Denmark, Germany, Spain, France and 
the Netherlands. 
The expansion of the Union on 1 January 1995 required the amendment of 
Regulation (EC) No ÎS68/942 so as to grant quotas to Austria, Finland and 
Sweden, the three new Member States ai2 being potato-starch producers. 
2. The quota system 
Council Regulation (EEC) No 1543/93 fixing the amount of the premium paid to 
producers of potato starch during the 19=93/94, 1994/95 and 1995/96 marketing 
years3 provided for the Council to decide what measures to take if the production 
of potato starch within the Community exceeded 1.5 million tonnes in the 
1993/94 or 1994/95 marketing year. 
Production in 1993/94 did in fact exceed that figure. As a result the Council 
decided, in July 1994, to introduce a quota system for the production cf" potato 
starch so as to restrict the amount of Community potato-starch production 
eligible for Community aid, while taking account of the fact that the potato starch 
sector is not subject to the restrictions on production, and in particular set-feside, 
applying in the cereals sector. In addition, the product does not come under thz 
support system for producers of certain arable crops. 
OJNoL197, 30.7.1994, p. 4. 
Regulation (EC) No 1863/95 (OJ No L 179, 29.7.1995, p. 1). 
OJNoL154, 25.6.1993, p. 4. 
Originally, quotas were allocated to producer Member States in the Community 
of 12 on the basis of the average amount of starch produced by those countries 
during the 1990/91, 1991/92 and 1992/93 marketing years for which a premium 
had been paid; the quotas were subject to a proportional adjustment so as to 
obtain a total Community quota of 1.5 million tonnes. 
One exception was Germany, for which the selected reference period was 
1992/93 because of restructuring of agricultural production in the new Lander as 
a result of unification. In addition, the Council deemed it necessary to increase the 
quantity resulting from the choice of that reference period (501 717 tonnes) by 
90 000 tonnes. 
Also, an additional reserve of 110 000 tonnes was created for Germany to cover 
production in 1996/97 in that country resulting from irreversible investments 
made before 31 January 1994. 
Lastly, the Council decided to grant a quota of 2 000 tonnes to Spain after that 
country was also judged to be a starch producer. 
The total amount of quotas allocated to the Community of 12, taking account of 
the German reserve, was a maximum 1 702 000 tonnes compared to the quota of 
1 500 000 tonnes initially proposed by the Commission. 
For the Community of 15, the quota system was expanded to cover Austria, 
Finland and Sweden on the basis of the quantity of potato starch produced by 
undertakings in the new Member States during the 1993 calendar year for which 
state aid was paid. 
However, in 1995 the Council decided to increase by 11000 tonnes the 
Commission's initial proposal; this made the total amount of Community quotas 
for the enlarged Union 1 759 750 tonnes without the German reserve and a 
maximum 1 869 750 tonnes with it. 
The resulting total national quotas were distributed by each Member State to 
existing starch-producing undertakings for use in the 1995/96, 1996/97 and 
1997/98 marketing years. Where necessary, account was taken of investments 
carried out by the undertakings before 31 January 1994. 
The purpose of the system is solely to cover potato starch production eligible for 
Community assistance; starch obtained without assistance (for example, as a 
by-product) is excluded from the quota system. 
The management tools in force before 1992 have been retained under the quota 
system, having been adapted to take account of the CAP reform. They are: 
the minimum potato price: This price is equivalent to the price of cereals, in 
particular maize (indicative October price); the price has fallen at the rate 
set by the reform, so that, after agrimonetary correction, it was ECU 209.78 
per tonne of potato starch from 1 July 1995 on. 
the compensatory payment to farmers. This is granted to producers of 
potatoes intended for starch production. It is applied to the quantity of 
potatoes required to produce one tonne of starch and was set at ECU 86.94 
on the same date. 
the special starch producer's premium: Introduced about 20 years ago, the 
premium was set at ECU 22.25 per tonne of starch; it is paid to 
starch-producing undertakings for the quantity of starch corresponding to 
their quota provided that the minimum price is paid to the farmer. It was 
intended to offset certain structural disadvantages in the starch industry, in 
particular special anti-pollution investments, the lack of by-products and the 
seasonal nature of production. 
The rules also include a compulsory system of cultivation contracts between 
potato growers and starch producers. The compensatory payment and the 
starch-producer's premium are only granted within the strict quota limit, with the 
exception of a 5% degree of flexibility allowing a starch producer to exceed his 
quota by a maximum of that percentage provided that the quota for the following 
marketing year is reduced accordingly. 
Lastly, any starch produced in excess of quota, plus the 5% flexibility, must be 
exported as such from the Community before 1 January of the following 
marketing year without being ehgible for any compensation, premium or 
export refund. 
The Commission's detailed implementing rules are set out in Regulation (EC) 
No 97/954 which explains various matters, such as the subject of cultivation 
contracts, the minimum starch content, verification and penalties relating to h, 
rules relating to exports without refund and penalties for non-compliance, rules 
applicable to mergers, changes of ownership and the commencement or 
termination of commercial activities by starch-producing undertakings. 
3. Operation of the quota system: report and rliture prospects 
3.1. Report on 1995/96 and 1996/97 marketing years 
OJ No L 16, 24.1.1995, p. 3. 
Table 1 shows quotas allocated and production during the 1995/96 and 1996/97 
marketing years. 
Table 1 Quotas and starch production for which aid was 2ranted 
{tonnes) 
Member State 
Denmark 
Germany 
. quota 
. reserve 96/97 
Spain 
France 
Netherlands 
Austria 
Finland 
Sweden 
Sub-total 
(without 
reserve) 
Reserve 
TOTAL 
Expenditure Basic quota 
178 460 
591 717 
110 OOO1 
2 000 
281 516 
538 307 
49 100 
54 750 
63 900 
1 759 750 
110 000 
1 869 750 Production 
1995/96 
154 312 
498 067 
250 967 
543 9052 
29 412 
54 8512 
46 470 
1 577 984 
1 577 984 
ECU 177.1 million Available 
quota 1996/97 
178 460 
591 717 
104 5541 
2 000 
281 516 
532 709 
49 100 
54 577 
63 900 
1 753 979 
104 554 
1 858 533 Production 
1996/973 
183 1142 
} 710 0052 
269 704 
535 2892 
48 100 
57 3152 
58 720 
1 862 247 
ECU 205 
million* 
104 5541 out of 110 000 were allocated. 
Including the maximum 5% flexibility, not including quantities exported without refund. 
Including German reserve. 
Source: Member State communications. 
Estimate based on 1997 budget year expenditure up to August 1997. 
During the 1995/96 marketing year overall production was below the quota level 
(90%) as a result of average to poor weather conditions. 
At Member State level, the Netherlands exceeded the quantity of starch produced 
under Annex II to Regulation (EC) No 97/95 by 1.046%, still less than the 
maximum 5% allowed under the flexibility clause in Article 6(2) of Regulation 
(EC) No 1868/94, and Finland exceeded it by 0.184%. 
In the 1996/97 marketing year total production was 0.2% above the overall quota 
(including the German reserve and corrected to take account of the overruns in 
1995/96); quotas were exceeded in Denmark, Germany, Finland and the 
Netherlands. In the other producer Member States there was an increase which 
stayed within the quota limit. This was the result of particularly good weather 
conditions in summer 1996 which increased per hectare potato yields and also 
increased potatoes' average starch content. 
In 1996/97 some starch-producing undertakings which had exhausted their quotas 
even after partly using up the 5% flexibility, chose to export quantities of starch 
without refund and without compensation or premium before 1 January 1998 
(Germany 11118 tonnes, Finland 3 048 tonnes). 
3.2. Treatment of the German reserve 
For the 1996/97 marketing year Germany was authorised to use the reserve of up 
to 110 0001 on condition that: 
its initial quota was fully allocated in accordance with Article 2 of 
Regulation (EC) No 97/95 no later than 8 March 1995, 
the sub-quotas which became available after 8 March as a result of the 
cessation of trading were fully utilised before 31 March 1996, 
the reserve was used only in respect of irreversible investments made before 
31 January 1994 in conformity with the conditions laid down. 
On the basis of information supplied by the German authorities, the Commission 
had no reason to doubt that the conditions had been satisfied. 
Taking account of these now completed investments the German authorities 
distributed an additional quota of 104 554 tonnes of starch. 
In fact, the starch-producing undertakings concerned produced more starch in 
1996/97 than their basic quota plus the quantities allocated from the reserve. 
3.3. Development of the cereal and non-cereal starch market 
The starch product industry covers three main activities: maize starch, wheat 
starch and potato starch. Apart from those three production sources, there are the 
following forms of production for special and marginal applications: rice starch 
(using broken rice), barley starch in Sweden and Finland, which is in decline to 
the benefit of wheat starch, and, to a lesser extent (for experimental research) 
oats starch. 
The industry manufactures unprocessed and modified starches, hydrolysis 
products (glucose) and products produced after the crystallisation, isomerisation 
and fermentation of hydrolysates. 
It remains to be seen to what extent the allocated quota quantities can be 
absorbed by the cereal and potato starch market, which has been expanding by 
some 2-3% per year. Industry sources state that there were no difficulties in the 
1995/96 marketing year in selling at relatively high prices and relatively low 
year end stocks. During the 1996/97 marketing year cereal and potato starch 
availability was greater than in the previous year (potato starch: some 
30 000 tonnes more) and this led to a levelling-off of prices. Larger quantities of 
the starches were exported with refund: 385 000 tonnes of unprocessed 
non-cereal starch (67% more than in 1995/96) and 400 000 tonnes of 
cereal-based starch and glucose (40% more than in 1995/96). However, these 
quantities were lower than those exported during the 1994/95 marketing year 
(394 000 tonnes of non-cereal starch and 588 000 tonnes of cereal 
starch/glucose). 
Table 2 Non-cereal and cereal starch exports (unprocessed product 
equivalent) ('000 t) 
1993/94 
1994/95 
1995/96 
1996/97 Non-cereal starch 
354 
394 
232 
384 Maize/wheat 
starch 
458 
588 
300 
417 Total 
812 
982 
532 
801 
Table 3 shows actual production of non-cereal and cereal starch and thç quantities 
forecast for future years. 
Table 3 Production of cereal and non-cereal starch 
(million tonnes) 
Maize1 
Wheat1 
Barley/oats 
Non-cereal 
TOTAL 
Proportion of non-
cereal starch as a % 1993/94 
3.4 
1.5 
0.05 
1.7 
6.65 
25.6 1994/95 
3.6 
1.6 
0.Ô5 
1.5 
6.75 
22.2 1995/96 
3.6 
1.7 
0.05 
1.73 
7.05 
24.1 1996/97 
3.6 
1.8 
0.05 
23 
7.45 
26.8 1997/98 
3.7 
2.2 
0.05 
1.9 
7.85 
24.2 1998/99 
3.4 
2.2 
0.05 
1.92 
7.55 
25,2 
1 Source: AAC (Association des Amidonneries de Céréales de l'TJE). 
2 Assuming no change for quota system. 
Including non-quota production, in particular production losses not incurred. 
Table 3 shows that production of non-cereal starch as a proportion of cereal 
starch went from 24.1% in 1995/96 to 26.8% in 1996/97. In future marketing 
years the proportion of non-cereal starch, assuming no change in quotas, should 
show a slight levelling-off in view of the likely increase in starch production based 
on wheat. 
3.4. 5% flexibility 
This is a flexibility of 5% in excess of the quota granted to starch-producing 
undertakings on condition that the quota for the following marketing year is 
reduced accordingly. Proposals to improve the clause have been put by the trade, 
mainly consisting in an increase in the percentage. 
In 1995/96, a small number of undertakings used this facility, whereas in 1996/97 
a larger number used it for a total of about 24 000 tonnes (1.3% of the 
total quota). 
In 1995/96 no undertaking exceeded 105% of its quota. In 1996/97, 
four undertakings out of 16 did so, albeit for small quantities (a total of about 
14 000 tonnes). 
3.5. Agenda 2000 
The Commission has just proposed an adjustment to the cereal prices and 
compensation arrangements as part of its Agenda 2000 proposals. It is also 
proposing to maintain the set-aside instrument, but at a level of 0%. 
Since the non-cereal starch price and compensation arrangements have always 
been governed by the basic cereals Regulation (link to maize), the adjustment of 
those arrangements will follow the measures taken for maize as part of the 
Agenda 2000 decisions. 
4. CONCLUSION 
In view of the arguments put forward in this report, particularly with regard to the 
equilibrium in the internal cereal/non-cereal starch market coupled with the 
exports in the period under review, the Commission recommends no change in the 
size of quotas and renewal for three years of the current quotas as resulting from 
Regulation (EC) No 1868/94, except in the case of Germany whose reserve 
should be definitively included at a volume of 104 554 tonnes, thereby setting the 
new German quota at 696 271 tonnes. 
However, if a disequilibrium occurs in the next three-year period between 
non-cereal starch production and outlets for it in the internal market, thus causing 
an appreciable increase in quantities exported with refund, the Commission 
reserves the right to propose to the Council an adjustment in the prevailing 
quotas. 
where the percentage and rules of application of the flexibility clause are 
concerned, the commission also recommends no change, particularly since the 
improvement proposed by the trade is likely to lead to a maximising of production 
and therefore to an additional quantity for sale on a market already 
relatively saturated. 
10 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Regulation (EC) No 1868/94 establishing a quota system 
in relation to the production of potato starch 
11 
1. EXPLANATORY MEMORANDUM 
The purpose of this Regulation is to amend Regulation (EC) No 1868/94 so as to 
allocate the three-year quota between starch producer Member States for the 1998/99, 
1999/2000 and 2000/01 marketing years on the basis of the Commission's report to 
the Council on the quota system for potato starch. 
This Regulation renews the existing quotas for three years, taking account of the 
definitive inclusion in the quota for Germany of the reserve of 104 554 tonnes referred 
to in the original second subparagraph of Article 2(1) of Regulation (EC) No 1368/94. 
Where necessary, any amounts utilised in excess of quota by starch producers in the 
Member States under the flexibility clause in Article 6(2) during the 1997/98 marketing 
year will be taken into account. 
12 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Regulation (EC) No 1868/94 establishing a quota system 
in relation to the production of potato starch 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in particular 
Articles 42 and 43 thereof, 
Having regard to the proposal from the Commission5, 
Having regard to the opinion of the European Parliament6, 
Having regard to the opinion of the Economic and Social Committee7, 
Whereas Article 2 of Council Regulation (EC) No 1868/948 of 27 July 1994, as last 
amended by Regulation (EC) No 1863/959, fixes the potato starch quotas for producer 
Member States for the 1995/96, 1996/97 and 1997/98 marketing years; 
Whereas Article 3(2) of Regulation (EC) No 1868/94 provides that the Council must 
allocate the three-year quota between the producer Member States on the basis of the 
Commission's report to the Council; whereas, to that end, the existing quotas should 
be renewed for three years taking account of the definitive inclusion in the quota for 
Germany of the reserve of 104 554 tonnes referred to in the second subparagraph of 
Article 2(1) of that Regulation; 
Whereas the producer Member States should allocate their quotas for a period of three 
years between all undertakings producing potato starch on the basis of the quotas used 
for the 1995/96 marketing year, with the exception of Germany, for which account will 
be taken of the quota transfers resulting from mergers and supplementary quota 
allocations from the reserve made in 1997/98; 
Whereas calculation of the sub-quotas to be used for each undertaking producing 
potato starch will take account of the possible use of the flexibility clause during the 
1997/98 marketing year, 
OJNoC 
OJNoC 
OJNoC 
OJ No LI 97, 30.7.1994, p. 4. 
OJNoL179, 29.7.1995, p. 1. 
13 
HAS ADOPTED THIS REGULATION: 
Article 1 
Article 2 of Regulation (EC) No 1868/94 shall be replaced by the following: 
"Article 2 
1. The following producer Member States are hereby allocated quotas for the 
production of potato starch within the following limits for the 1998/99, 
1999/2000 and 2000/01 marketing years: 
Denmark 178 460 tonnes 
Germany 696 271 tonnes 
Spain 2 000 tonnes 
France 281 516 tonnes 
Netherlands 538 307 tonnes 
Austria 49 100 tonnes 
Finland 54 750 tonnes 
Sweden 63 900 tonnes 
1 864 304 tonnes. 
2. Each producer Member State shall allocate the quota referred to in paragraph 1 
to undertakings producing potato starch for use in the 1998/99, 1999/2000 and 
2000/01 marketing years on the basis of the sub-quotas used for the 1995/96 
marketing year, with the exception of Germany, for which account shall be 
taken of transfers of sub-quotas as a result of mergers and of additional 
allocations of sub-quotas from the reserve made in 1997/98. 
The sub-quotas used for each undertaking producing potato starch shall be 
adjusted to take account of any amount utilized in excess of quota during the 
1997/98 marketing year under Article 6(2)." 
Article 2 
This Regulation shall enter into force on the seventh day following that of its 
publication in the Official Journal of the European Communities. 
It shall apply from 1 July 1998. 
This Regulation shall be binding in its entirety and directly applicable in all 
Member States. 
Done at Brussels, For the Council 
The President 
14 
FINANCIAL STATEMENT 
BUDGET HEADING: Bl - 1021 APPROPRIATIONS: ECU 182.6 million 
2. TITLE: 
Council Regulation amending Regulation (EC) No 1868/94 establishing a quota system in relation to the production of 
potato starch. 
LEGAL BASIS: Articles 42 and 43 of the Treaty 
AIMS: 
'lb allocate the three-year quota between potato starch producing Member States for 1998/99, 1999/2000 and 2000/2001. 
FINANCIAL IMPLICATIONS PERIOD OF 
12 MONTHS 
(ECU million) CURRENT 
FINANCIAL 
YEAR (98) 
(ECU million) FOLLOWING 
FINANCIAL 
YEAR (99) 
(ECU million) 
5.0 EXPENDITURE 
- CHARGED TO THE EC BUDGET 
(REFUNDS/INTERVENTION) 
- NATIONAL AUTHORITIES 
- OTHER 205.4 
5.1. REVENUE 
- OWN RESOURCES OF THE EC 
(LEVIES/CUSTOMS DUTIES) 
- NATIONAL 
2000 
ECU million 
5.0.1 ESTIMATED EXPENDITURE 
5.1.1 ESTIMATED REVENUE 205.4 2001 
ECU million 
205.4 2002 
ECU million 2003 
ECU million 
5.2 METHOD OF CALCULATION: 
Potato starch premium: I 864 304 1 x ECU 22.25/t x 1.009 (DR) 
Compensatory payment: I 864 304 t x ECU 86.94/t x 1.009 (DR) 
Payments will commence in 1999. ECU 41.9 million 
ECU 163.5 million 
ECU 205.4 million 
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 WILL A SUPPLEMENTARY BUDGET BE NECESSARY? YES/NO 
WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? YES/N© 
OBSERVATIONS: 
The measure is restricted to the years 1998/99, 1999/2000 and 2000/2001 
15 

ISSN 0254-1475 
COM(97) 576 final 
DOCUMENTS 
EN 03 08 10 
Catalogue number : CB-C0-97-592-EN-C 
ISBN 92-78-26901-8 
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