No C 47/26 Official  Journal  of the European  Communities 27. 2. 75 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the Commission  proposal  to the Council  on the fixing  of prices  for certain 
agricultural  products  and  connected  measures 
The text  referred  to the  Committee  has  not  been  published  in the  Official  Journal  of 
the European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 9 December  1974,  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  under  Articles  47 and  198  of the  Treaty  establishing 
the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  drew  up its Opinion  at its 126th  plenary  session, 
held in Brussels  on 19 December  1974. 
The Opinion  is published  below: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the referral  on 9 December  1974  by 
the Council; 
Having  regard  to Articles  47 and  198  of the  Treaty 
establishing  the European  Economic  Community; 
Having  regard  to the decision  taken  by its Chairman 
under  the  urgency  procedure  (Articles  46 and  47 of 
the Rules  of Procedure)  instructing  the  Section  for 
Agriculture  to prepare  the Committee's  work  on the 
matter; 
Having  regard  to the  study  entitled  'progress  report 
on the  common  agricultural  policy'  and  to the 
Committee's  other  work  in this  field; 
Having  regard  to the  oral  report  made  by  the 
Rapporteur,  Mr Rainero; Having  regard  to the  Opinion  adopted  by  the 
Section  for  Agriculture  at  its  meeting  on  16 
December  1974; 
Having  regard  to the discussions  at its 126th  plenary 
session,  held  on 19 December  1974, 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 41 votes  to 22, with  five  abstentions: 
The Economic  and  Social  Committee  stresses  the 
importance  of  the  Commission's  farm  price 
proposals  to everybody  in the  Community,  and 
especially  those  who  depend  on farming  for  their 
livelihood.  In view  of the  consequent  responsibility 
that devolves  on it, the Committee,  when  it draws  up 
the Opinion  pertaining  to these  proposals,  deplores 
the fact  that  it has  not  had  enough  time  to make  a 
thorough  examination  of the relevant  documents. 
27.2.75 Official  Journal  of the  European  Communities No C 47/27 
Owing  to the lack  of time,  the Committee  is forced 
to confine  itself  in the  present  Opinion  to the 
essential  aspects  of the Commission's  proposals.  The 
Committee  reserves  the  right  to give  more  detailed 
consideration  to the  Commission's  proposals,  with 
special  reference  to the  implications  for  individual 
sectors  of production,  the  improvement  of the 
market  organizations  and  related  measures. 
The Committee  would  like  the Commission  and  the 
Council  to improve  procedures  for  consulting  all 
interested  circles  at European  level. 
1. State  of farming 
1.1. The  Committee  has  chosen  as the  starting 
point  the findings  reached  by the Commission  in its 
1974  report  on  the  agricultural  situation  in the 
Community: 
— Over  the 1968  to 1972  period,  final  production  in 
the Six  increased  by 1-9  °/o yearly  in volume 
terms.  In 1973  final  production  in the  Six  rose 
5-6 %>, that  is to say at a much  higher  rate; 
— Between  1968  and  1972  the number  of persons 
working  in agriculture  fell  at an annual  average 
rate of 4-6 °/o; 
— Despite  the  inherent  rigidity  of the  agricultural 
production  process,  between  1968  and  1972 
agricultural  manpower  productivity,  calculated 
on the  basis  of constant  prices  and  costs  per 
person  employed,  increased  by 6-6  °/o in the Six. 
As against  this  the overall  rate  of increase  in the 
gross  domestic  product  was  4-7 %>; 
— The  increase  in agricultural  wages  ranged  in 1973 
from  24 % in Italy  to 10-7  °/o in Germany.  The 
spurt  in  the  upward  movement  of  non-
agricultural  wages,  which  has  clearly  occurred  in 
1974  (16-2  %> as against  13-5  °/o in 1973)  suggests 
that agricultural  wages  will  turn  out  to have 
moved  up even  more  sharply  than  in 1973; 
— Furthermore,  in the Six input  costs  — calculated 
on a basis  of data  supplied  by the  Member 
States,  expressed  in national  currencies  and 
weighted  according  to the relative  importance  of 
the inputs  — climbed  about  5 % in 1970,  in 1971 
and in 1972.  The  average  increase  in 1973  was 
13 °/o and in 1974  18 °/o. In other  words,  there  was 
an overall  increase  of approximately  one-third  in 
the 1973/74  period; 
— 1973  saw  an increase  in the Six's  farmgate  prices 
(expressed  in national  currency)  of approximately 15 °/o with  crop  products  advancing  more  strongly 
(25 °/o) than  animal  products  (9 °/o).  In 1974  this 
trend  was  reversed;  a comparison  of July  1974 
with  July  1973  shows  a drop  of 4-6 % in France, 
7-7 °/o in Germany  and  11-4  % in Belgium.  In the 
United  Kingdom  and  Ireland,  however,  the climb 
continued,  although  it was  less  marked  than  in 
the previous  year; 
— In 1974,  the  discrepancy  between  the  trends  of 
input-costs  and  farmgate  prices  had  a decidedly 
adverse  impact  on incomes  earned  in agriculture. 
This  contrasts  with  progress  made  in 1972/73. 
The Committee  points  out,  to quote  from  its 
Opinion  on the  proposed  farm  prices  for  the 
1974/75  marketing  year,  that  'when  assessing  the 
situation,  it is essential  to allow  for the fact  that 
there  is still  a certain  need  for  agriculture  to 
catch  up, given  the income  parity  objective'; 
— There  were  also  marked  income  disparities 
between  farms  operating  in different  production 
sectors  and  different  Community  regions; 
— Generally  speaking,  consumer  food  prices  lagged 
behind  the general  consumer  price  index  in 1974. 
But the fact  remains  that  food  prices  increased  in 
the EEC,  even  though  the  general  index  of 
farmgate  prices  fell  off  substantially  in the 
Community  as a whole; 
— World  stocks  of  most  basic  agricultural 
commodities  have  fallen  to their  lowest  level  for 
25 years,  world  effective  demand  is climbing 
steadily  and  requirements  not  backed  by 
purchasing  power  are  increasingly  remaining 
unsatisfied; 
— In the  case  of a large  number  of  basic 
agricultural  products  (cereals,  oil seeds,  sugar, 
rice),  ruling  world  market  prices  are  markedly 
higher  than  Community  threshold  and 
intervention  prices.  In view  of the  disquieting 
level  of  stocks  and  forecasts  of increased 
consumption,  there  is every  reason  to believe  that 
this will  remain  the case. 
1.2. The  Committee  has  been  unable  to subject 
these  data  to detailed  analysis  or make  comparisons. 
In particular,  owing  to lack  of time,  it was  unable  to 
take account  of the impact  of monetary  fluctuations. 
But it finds  that  the data  point  to a difficult  state  of 
affairs  which  in many  cases  is liable  to discourage 
farmers.  This  point  stands  out all the more  clearly  if 
account  is taken  of  the  social  structure  of 
Community  farming  and  the  vast  problem  areas  in 
which  it is forced  to operate. 
No C 47/28 Official  Journal  of the  European  Communities 27. 2. 75 
1.3. The  Committee  was  not  able  to ascertain  to 
what  extent  the deterioration  of average  incomes  is 
influenced  by  an  even  more  pronounced 
deterioration  of the situation  in certain  sectors  such 
as beef  and  veal,  wine,  etc. 
In view  of the  fact  that  the  Commission  refers  to 
'the movement  in milk  production  costs  during  1973 
and 1974',  and  to the movement  in production  costs 
of tobacco,  etc.,  the Committee  would  like  to receive 
data on the  different  kinds  of farms  and  products 
(trends  in market  prices,  production  costs,  yield  per 
acre,  etc.)  so that  it can  formulate  its comments  with 
a full  knowledge  of the facts,  which  it does  not have 
at present. 
2. General  comments 
2.1. The  Commission  is putting  forward  its farm 
price  proposals  for the 1975/76  marketing  year  at a 
time  when  severe  economic  and  social  difficulties  are 
being  caused  by the  general  monetary  crisis  and 
inflation.  At the same  time,  there  are energy  supply 
difficulties,  a world  shortage  of some  foodstuffs  of 
agricultural  origin  and  a tendency  for unemployment 
to rise. 
2.2. The  socio-economic  importance  of 
Community  agriculture  is thus  far  greater  than  is 
suggested  by farming's  current  share  of the  gross 
national  product,  or the  numbers  employed  in 
agriculture  in the Member  States. 
2.3. The  Community  must  pursue  an agricultural 
production  policy  which  not  only  increases  the 
incomes  earned  in agriculture,  but also  seeks  — with 
due regard  for  commercial  relations  — to contain 
balance-of-payments  deficits,  to safeguard  the  flow 
of appropriately  priced  supplies  to consumers  and  to 
secure  a healthy  level  of employment  in the 
agricultural  sector. 
Lastly,  the  Community  should  contribute,  within  a 
framework  of international  consultation,  to solving 
world  food  problems. 
2.4. As  the  Committee  has  stated  on  other 
occasions,  the definition  of production  targets  must 
constitute  a basic  and  innovative  component  of the 
common  agricultural  policy. 
There  are  a number  of obstacles  to farmers' 
achieving  the abovementioned  aim. 2.5. If  we are  to attenuate  the  adverse  effects  of 
these  obstacles  we must  take  effective  measures  in 
the sphere  of regional  development,  and  launch  an 
overall  and  diversified  drive  at  the  level  of 
agricultural  production,  processing  and  marketing 
structures. 
2.6. It  is vital  to remedy  the present  situation  by 
fixing,  on the basis  of a sufficiently  large  number  of 
farms,  prices  which  genuinely  take  account  of the 
production  costs  of modern  farms  and  which  allow 
other  farms  to modernize.  The  range  of prices 
adopted  must  meet  the  needs  of  individual 
production  sectors,  while  market  organization  and 
management  must  be improved  in order  to ensure 
that producers  always  obtain  the prices  laid  down  by 
the Council.  In addition  loans  on special  terms  could 
be used  to reduce  the factors  of production  costs. 
2.7. The  Committee  is alive  to the socio-structural 
situation  of the  large  majority  of farms,  which 
cannot  be modernized  quickly.  It considers  that  all 
the possible  forms  of  degressive,  temporary 
Community  intervention  should  be employed. 
2.8. In  the  case  of other  farms  to which  special 
circumstances  apply,  it would  be appropriate  to 
apply  the Directive  on agriculture  in mountain  areas 
and in certain  other  poorer  farming  areas.  This  is 
necessary  to ensure  that  all  people  working  in 
farming  can  expand  their  activities  within  the sector 
or obtain  outside  sources  of income. 
3. General  comments  on the Commission's  proposals 
3.1. The  medium-  and  long-term  measures  must 
be backed  in the  near  future  by immediate-term 
measures.  Here  the  prices  and  markets  policy  is 
fundamental,  as the  Commission  stressed  when  it 
presented  its proposals. 
3.2. Basically,  the Commission  is proposing  a set 
of measures  which  operate  on various  time  scales. 
The Commission  proposes  changes  in general  price 
levels,  improvements  in the  organization  of the 
markets,  measures  for the phased  reintroduction  of a 
single  common  agricultural  market,  and  medium-
and long-term  measures  of a socio-structural  nature. 
The present  state  of Community  agriculture  is so 
serious  that  priority  must  be given  to studying  and 
evaluating  measures  which  will  guarantee  people 
employed  in agriculture  better  employment,  higher 
production  and  improved  social  advancement.  Such 
27. 2. 75 Official  Journal  of the  European  Communities No C 47/29 
measures  are  in  the  general  interest  of  the 
Community's  economy. 
3.3. The  Committee  emphasizes  the  value  of the 
draft  Directive  which  makes  provision  for  personal 
aid to young  farmers  who  have  had  a development 
plan  approved.  This  draft  Directive  should  be 
implemented  as swiftly  as possible  in all the Member 
States.  The  aid  will  provide  an incentive  and  help  to 
offset  the  teething  troubles  of development  plans. 
The aid  in question  will  also  enhance  the  status  of 
the farming  profession. 
The Committee  points  out  that  these  measures, 
although  important,  are  of a limited  scope  and 
cannot  replace  the prices  and  markets  policy. 
4. Calculation  method  used  by the Commission 
4.1. The  Committee  is  gratified  that  the 
Commission  has  calculated  the  requisite  increase  in 
overall  common  price  levels  on the basis  of the trend 
in production  costs  over  the  past  two  years,  as it 
requested  in its Opinion  on the  fixing  of farm  prices 
for the 1974/75  marketing  year. 
4.2. But  in view  of the  extreme  cost  volatility 
caused  by inflation,  the Committee  considers  that  the 
proposed  prices  should  be brought  closer  into  line 
with  actual  cost  trends.  The  Council  should  specify 
that prices  are  to be reviewed  during  the  marketing 
year  if inflation  makes  this  necessary. 
4.3. The  proposed  prices  were  calculated  on the 
basis  of 2 000  farms  (out  of a total  of 20 000  in the 
Commission's  data  accountancy  network),  which 
have  achieved  adequate  incomes  comparable  with 
those  in the non-agricultural  sector.  The  2 000  farms 
are insufficiently  representative,  given  the  total 
number  of farms  in the Community  (5 400  000). 
The Committee  urges  that  the  sample  be enlarged 
and that  there  should  be greater  continuity  with 
respect  to the  farms  included  in it. The  prices 
calculated  using  the  present  system  are  not  in 
themselves  sufficient  to ensure  attainment,  with 
respect  to the  various  types  of farm  and  especially 
those  located  in  less-favoured  regions,  of  the 
objectives  laid  down  in Article  39 of the Treaty. 
4.4. The  Committee  has  reservations  about  the 
feasibility  of  deductions  to  offset  increases  in 
biotechnical  productivity,  given  the  productivity 
differences  between  Community  farms,  the  current high  cost  of biotechnical  increases  in productivity, 
and the  element  of uncertainty  due  to the  weather 
and other  natural  factors. 
In a situation  of decreasing  receipts  from  various 
farm  prices  and  an abrupt  upsurge  of production 
costs  — as has  been  the case  in 1974  — it may  well 
be humiliating  and  socially  unacceptable  for farmers 
to see  farmgate  prices  reduced  at a time  when  the 
income  disparity  has  widened,  in order  to offset  a 
biotechnical  increase  in output  which  has  required 
increased  efforts  on their  part. 
Similarly,  greater  attention  should  be paid  to the 
need  to  stimulate  the  quality  of  agricultural 
production. 
4.5. The  Committee  notes  that  efforts  to achieve 
higher  biotechnical  productivity  may  promote 
products  which  are  of a lower  quality  but  more 
profitable. 
The Committee  wonders  if the  time  is not  ripe  to 
examine  the  case  for  introducing,  in  certain 
instances,  price  differentials  geared  to the  quality  of 
products.  Such  differentials  could  encourage  the  use 
of certain  high-quality  products. 
4.6. The  Committee  nevertheless  wonders  how  the 
Commission,  basing  itself  on the  total  rise  in input 
costs  (33-3  %) and  non-agricultural  earned  incomes 
(31-3  %) in the two  years  1973  and  1974  and  after  a 
deduction  to allow  for  biotechnical  progress  and  the 
price  rise  fixed  by the Council  in 1974  (14-5  %),  can 
argue  that  a rise  of only  9 °/o in the  general  price 
level  would  allow  an increase  in the  incomes  of 
those  who  work  in agriculture  which  is equivalent  to 
that obtained  in the other  sectors. 
4.7. On  the  basis  of the  documents  available  to it, 
the Committee  has  been  unable  to assess  whether  the 
price  increases  proposed  by  the  Commission  are 
appropriate  to the  needs  and  cost  trends  of modern 
farms. 
4.8. Farmworkers  should  receive  their  fair  share  of 
the increase  in agricultural  prices. 
5. Market  organizations 
5.'1. The  Committee  stresses  that  whether  farmers 
actually  receive  the  common  prices  depends  on 
proper  application  of the  market  machinery,  the 
presence  of adequate  technical  infrastructure,  the 
flexibility  of  market  management  and  effective 
No C 47/30 Official  Journal  of the  European  Communities 27. 2. 75 
respect  for  Community  preference  in international 
agreements. 
The Committee  therefore  stresses  the  need  to 
strengthening  the market  organizations  and  increase 
the participation  of the socio-occupational  groups  in 
market  management. 
5.2. The  Committee  would  make  the  following 
comments  on the price  relationships: 
— The  Commission  arrived  at the  proposed  price 
pattern  mainly  on a basis  of the current  situation 
where  very  short-term  movements  on the markets 
concerned  have  reversed  the  trends  affecting 
certain  products.  Livestock  products,  in 
particular,  have  been  hit by the trend  turnaround. 
The price  movements  in question  should  be 
better  adjusted  so as to take  into  account,  inter 
alia, the  state  of farm  incomes  and  the  longer-
term  market  trends. 
— The  beef  and  veal  measures  should  be 
reappraised  from  this  angle  (respective  levels  of 
the various  prices  and  assistance  to certain 
categories).  This  reappraisal  must  be conducted  in 
the light  of the market  difficulties  resulting  from 
the temporary  fall  in meat  consumption  caused 
by the economic  and  social  situation  and  in this 
connection  account  should  also  be taken  of the 
need  to maintain  the  Community's  cattle  stock, 
given  the  prospect  of an ultimate  recovery  in 
meat  consumption.  The  Committee  considers  that 
the difficulties  can be resolved  only  by vigorous 
action  based  on appropriate  intervention  price, 
appropriate  stockpiling  machinery  and 
supplementary  aids. 
5.3. The  Committee  regrets  that  it has  lacked  the 
prerequisite  time  for a sufficiently  in-depth  appraisal 
of the  problems  involved  in the  price  relationships 
between  products,  their  impact  on farm  incomes  and 
their  financial  effects  on the  Community's  budget 
and elsewhere. 
In view  of the  fundamental  importance  of these 
questions,  the  Committee  reserves  the  right  to 
amplify  its comments  in an appropriate  document. 
5.4. The  Committee  notes  that  for certain  sectors 
in which  there  is a surplus  or a shortfall,  the price 
proposals  diverge  sharply  from  the average. 
The Commission  should  therefore  as far as possible: 
— try to avoid  an overly  abrupt  reversal  of the 
trend  for  these  products,  which  would  turn 
shortfalls  into  surpluses  or vice  versa; — in future  take  appropriate  measures  to ensure 
that such  situations  do not arise. 
6. Farm  prices  and  consumers 
6.1. The  Committee  notes  that  the CAP  machinery 
has recently  shielded  European  consumers  from  the 
high level  of world  market  prices. 
6.2. Finally,  the  Committee  notes  that  although 
farmgate  prices  have  sagged  seriously,  or at least 
been  frozen,  consumers  do not  seem  to have  derived 
any particular  benefits.  It is therefore  necessary  to 
further  the  rationalization  of the  stages  between 
production  and  consumption  by  promoting  the 
implementation  of the  Commission's  proposals  for 
(a) improved  market  transparency  and 
administration  and  (b) stepping  up the development 
of producers'  associations. 
The Committee  points  out  that  last  spring  the 
Council  called  upon  the  Commission  to submit  its 
proposals  for  improving  market  structures  by the 
autumn  of 1974. 
6.3. Encouragement  should  be given  to a more 
systematic  link-up  between  production,  processing 
and distribution,  while  maintaining  a fair  balance  of 
the effective  contractual  representation  of the parties 
concerned. 
7. Monetary  problems  and  agriculture 
7.1. The  Committee  endorses  the  Commission's 
desire  for  a phased  return  to a single  common 
market  in the  agricultural  sector.  At all  events, 
agricultural  producers  must  be protected  against  any 
risk of competition  distortions  or unfair  decreases  in 
their  income  due to monetary  policy  decisions. 
7.2. The  Committee  reiterates  that  it  is 
increasingly  difficult  to achieve  the  objectives  of 
Article  39 of the  Treaty  by means  of a common 
agricultural  policy,  and  in particular  by means  of a 
common  prices  and  market  policy,  in the absence  of 
progress  towards  establishment  of common  policies 
in the economic,  monetary,  regional,  social  and  other 
sectors. 
Done  at Brussels,  19 December  1974. 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
27. 2. 75 Official  Journal  of the  European  Communities No C 47/31 
ANNEX 
to the Opinion  of the Economic  and  Social  Committee 
Rejected  amendments 
The following  amendments,  tabled  in accordance  with  the  Rules  of Procedure,  were  rejected 
during  the discussion. 
Page  1 
Delete  the second  sentence  of the second  paragraph. 
Result  of the vote: 
For: 34, Against:  54, Abstentions:  6. 
Page  2 
Delete  the fourth  indent. 
Result  of the vote: 
For: 42, Against:  49, Abstentions:  2. 
Page  3 
Replace  the second  sentence  of the second  indent  by the following: 
'Likewise  it is socially  unacceptable  that  income  disparity  within  the  agricultural 
Community  has also  widened.' 
Result  of the vote: 
For: 43, Against:  46, Abstentions:  3. 
Page  4 (1.2) 
Amend  the  sentence  'But  it finds  that  the  data  point  to a difficult  state  of affairs  which  in 
many  cases  is liable  to discourage  farmers'  to read: 
'But it finds  that  the  data  point  to a difficult  situation  which  has  already  discouraged 
farmers  producing  certain  products  and  farmers  in certain  regions.  This  disenchantment  is 
liable  to spread.' 
Result  of the vote: 
For: 33, Against:  37, Abstentions:  9. 
Page  8 
Delete  point  4.4. 
Result  of the vote: 
For: 25, Against:  46, Abstentions:  11. 
Page  9 
Replace  point  4.6 by: 
'In conclusion,  taking  into  account  the effect  which  inflation  will  have  had  by the beginning 
of the  marketing  years  for the individual  products  and  the need  to facilitate  a progressive 
return  to a single  market,  the  Section  wonders  whether  it would  not  be advisable  to 
improve  both  the price  levels  and the breakdown  between  individual  sectors.' 
Result  of the vote: 
For: 9, Against:  large  majority,  Abstentions:  4.