8. 3*. 78 Official  Journal  of the European  Communities No C 59/25 
Opinion  on the amended  proposal  for a Council  Regulation  concerning  producer  groups 
and associations  thereof 
The text  referred  to the Committee  has been  published  in Official  Journal  of the European 
Communities  No  C 146  of 22 June  1977,  page  2. ( 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 7 June  1977  the Council  referred  the abovementioned  proposal  to the Economic  and 
Social  Committee  in accordance  with  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  prepared  its opinion  on the above  matter  at its 153rd 
plenary  session  held  in Brussels  on 23 and  24 November  1977. 
The full text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the European 
Economic  Community,  and in particular  Articles  47 and 
198 thereof, 
Having  regard  to the request  made  by the Council  of 
the European  Communities  on 7 June  1977  for an opin-
ion on the amended  proposal  for a Council  Regulation 
concerning  producer  groups  and  associations  thereof, 
Having  regard  to the decision  taken  by its Bureau  on 21 
June  1977  instructing  the Section  for  Agriculture  to 
prepare  the Committee's  work  on the matter, 
Having  regard  to its earlier  work  on the matter,  and  in 
particular  its opinion  of 27 and 28 October  1967  on the 
proposal  for a Council  Regulation  concerning  producer 
groups  and associations  thereof  (1) and its opinion  of 11 
and 12 May  1970  on the Commission's  proposals  for 
agricultural  reform  (2), 
Having  regard  to the opinion  issued  by the Section  for 
Agriculture  at its meeting  on 10 November  1977, 
Having  regard  to the report  submitted  by the rappor-
teur,  Mr Caprio, 
Having  regard  to its discussions  at its 153rd  plenary 
session  held  on 23 and  24 November  1977  (meeting  of 
23 November), 
(*) OJ No C 1, 12. 1. 1968,  p. 11. 
(2) OJ No C 60, 14. 6. 1971,  p. 14. HAS  ADOPTED  THE  FOLLOWING  OPINION 
with five  votes  against  and  two  abstentions: 
I. GENERAL  COMMENTS 
0.1. The  Committee  deplores  the extreme  dilatoriness 
of the Council  in proceeding  with  the work  on producer 
groups  and  associations.  More  than  10 years  have 
elapsed  between  the  first  Commission  proposal  (21 
February  1967)  and  the present  one  without  the Coun-
cil's having  taken  any  action;  this  despite  the fact  that 
the importance  and  the urgency  of Community  inter-
vention  in this  field  has increased. 
In particular,  the Committee  is disappointed  that  no 
action  has  been  taken  on the Council's  promise  of 15 
February  1977  that  it would  decide  on a new  Commis-
sion proposal  on producer  groups  by 30 June  1977. 
0.2. The  Committee  unequivocally  endorses  the  ap-
proval  and  support  which  the Committee  has repeatedly 
expressed  in its previous  opinions  on proposed  instru-
ments  on producer  groups.  However,  the present  pro-
posal  is substantially  different  from  its predecessors  and 
generally  introduces  significant  innovations  with  regard 
to the thinking  behind  Community  intervention  on the 
organization  of agricultural  markets.  What  is innovat-
No C 59/26 Official  Journal  of the European  Communities 8. 3. 78 
ory about  the present  proposal  for tackling  structural 
regional  problems  is the fact  that  it only  covers  pro-
ducer  groups  located  in a specific  part  of the Communi-
ty, and  does  not make  Community-wide  improvements 
to the market  machinery  for the various  products. 
0.3. The  Committee  considers  that  the  Commission 
document  fails  to make  a clear  distinction  between  de 
facto  producer  groups  (and  associations  thereof)  and 
'recognized'  producer  groups  (and  associations);  such  a 
distinction  is needed  to avoid  confusion  and ambiguity. 
The Committee  suggests  that  each  time  the Regulation 
refers  to producer  groups  (and  associations)  it should  be 
made  clear  whether  the groups  and associations  referred 
to are de facto  or recognized,  in order  to take  account 
of the implications  of this  important  distinction,  espe-
cially  as regards  producer  groups  taking  part  in the 
organization  of the markets  for the various  products. 
0.4. The  Committee  considers  that  the measures  should 
apply  to all the Community  regions,  and  therefore  has 
reservations  about  the territorial  scope  of the Regula-
tion as laid  down  in Article  1. 
1.1. The  Committee  has reservations  about  the Regula-
tion's  restricted  scope. 
In its opinion  on the preceding  Commission  proposal 
relating  to producer  groups,  the Committee  agreed,  and 
indeed  stressed,  that  Community  aid should  be directed 
to those  regions  of the Community  where  the structural 
deficiencies  in regard  to product  marketing  were  the 
most  severe. 
The following  statement  is taken  from  that  opinion: 
'In order  to give  more  substance  to the idea  of put-
ting a regional  differentiation  into  the measures,  the 
Committee  considers  that  the amount  of aid and  the 
portion  to be paid  by the Community  should  be 
geared  to regional  structure.  However,  this  regional 
differentiation  as regards  implementation  should 
not conflict  with  the principle  of encouraging  pro-
ducer  groups  throughout  the Community.' 
1.2. The  Committee  therefore  considers  that  it ought  to 
be possible  to apply  the Regulation  to all the Communi-
ty's regions,  albeit  with  a marked  bias  towards  those 
regions  with  the most  serious  structural  deficiencies. 
The Committee  assumes  that  existing  national  rules 
regarding  the formation  of producer  groups  which  are 
in accordance  with  Articles  92 to 94 of the Treaty  may 
continue  in being  in those  regions  unaffected  by the 
Regulation. 1.3. The  Committee  questions  whether  the territorial 
scope  of the  Regulation  complies  with  appropriate 
criteria.  Moreover,  the criteria  used  in the Regulation 
are defined  only  by implication  and  by reference  to the 
situation  in a single  Member  State. 
1.4. The  Committee  advocates  laying  down  the general 
criteria  governing  the territorial  scope  of the Regulation 
in Article  1 of the Regulation  itself,  given  that  in the 
recitals  of the amended  proposal,  the Commission  al-
ready  refers  to a number  of specific  criteria  (based  on 
the situation  in Italy)  which,  in its view,  justify  setting 
limits  to the territorial  scope  of the Regulation. 
II. SPECIFIC  COMMENTS 
2. Field  of application  — Territorial  field  of applica-
tion — (Article  1 of the amended  proposal) 
2.1. In view  of the foregoing,  the Committee  considers 
that the Regulation  should  apply  to those  regions  of the 
Community  which  have  serious  structural  deficiencies. 
The criteria  for assessing  whether  serious  structural  dif-
ficulties  are present  should  include: 
(a) average  farm  size  substantially  below  Community 
median  for farms  specializing  in comparable  pro-
ducts; 
(b) collective  supply  of agricultural  produce  to have 
reached  a very  low  level  of development; 
(c) only  a small  proportion  and  a small  number  of 
farms  to be members  of collective  organizations 
established  to market  products  of the soil  and  live-
stock  products; 
(d) situation  in individual  sectors  of production. 
2.2. To this  end,  the Member  States  should  provide  the 
Commission  with  a list of regions  that  fall  into  this 
category,  together  with  the data  which  are needed  to 
assess  their  conformity  with  the  above  criteria.  The 
Council  should  decide  thereon,  by a qualified  majority, 
in the light  of proposals  from  the Commission. 
2.3. Nevertheless,  the Committee  considers  it vital  that 
the Regulation  should  apply  directly  and immediately  to 
the whole  of Italy  as the Commission  already  provides. 
The reason  for this  is the serious  structural  deficiencies 
that exist  in Italy  from  the point  of view  of the market-
ing of agricultural  produce.  These  deficiencies  have  been 
highlighted  by the Commission  itself  in terms  of the 
above  criteria. 
8. 3. 78 Official  Journal  of the European  Communities No-C  59/27 
3. Scope  in relation  to products  (Articles  2 and 3 of the 
amended  Commission  proposal) 
3.1. The  Committee  agrees  with  the Commission  that 
the regional  application  of the Regulation  necessitates 
the exclusion  of products  for which  producer  groups 
have  been  provided  within  the  framework  of the 
common  organization  of the markets. 
However,  the Committee  considers  that  potatoes  should 
fall within  the Regulation  (Article  2) until  such  time  as 
the instrument  on the  common  organization  of the 
market  in potatoes  has come  into  effect. 
3.2. The  Committee  suggests  that  the terms  'products 
of the soil'  and  'livestock  products'  in Article  2 should 
be made  more  explicit,  at least  in the  English  and 
German  versions,  possibly  by adding  the  adjective 
'primary'. 
3.3. The  Committee  is concerned  at the possibility  that 
too broad  an interpretation  of the range  of processed 
products  will  distort  competition  of the market.  This 
point  is supported  by the fact  that,  where  processed 
products  are concerned,  it is more  difficult  to ensure 
that the Community  aids  are used  for the purposes  in-
tended  by the Regulation,  viz. formation  and  operation 
of producer  groups  (Article  10),  since  in such  cases  it is 
difficult  to distinguish  productive  investment  from  set-
ting-up  and  operating  expenses  proper  which  already 
come  under  Regulation  (EEC)  No 355/77. 
3.4. On  the other  hand,  although  the Committee  is in 
favour  of associating  farms  with  processing  activities,  it 
considers  that  where  the object  of the producer  group 
(or association  of producer  groups)  is processing  of 
products  of the soil  or livestock  products,  the products 
in question  must  have  come  from  the farms  of pro-
ducers  who  are members  of that  group  (or association 
of groups). 
4. Recognition  of producer  groups  and  associations 
(Articles  4 to 9 of the amended  Commission  pro-
posal) 
4.1. The  Committee  has  scrutinized  Article  5's provi-
sion whereby  persons  other  than  producers  'whose  ac-
tivity  is calculated  to facilitate  the attainment  of the 
object  of the group'  may  belong  to producer  groups. The Committee  considers  that  it should  be made  clear 
that this  provision  is optional  and  depends  on compati-
bility  with  the existing  provisions  of national  law. 
4.2. In order  to emphasize  that  both  individual  pro-
ducers  and groups  of producers  (set up for the purposes 
of production)  may  form  themselves  into  recognized 
producer  groups,  the  Committee  suggests  adding  to 
Article  5 (1) (a) the words  'individual  and/or  groups  of 
before  the word  'producers'. 
The Committee  further  considers  that  the term  'pro-
ducer'  should  not be defined  by recourse  to the Standing 
Committee  on Agricultural  Structures  but in the Regula-
tion itself  by the Council.  The  terms  adopted  should 
make  it clear  that  'producer'  means  the person  running 
the farm. 
4.3. The  Committee  considers  that  Article  5 (1) must 
be amended  so as to guarantee  individual  producers  and 
producer  groups  which  qualify  under  the  Regulation 
full freedom  and an absolute  entitlement  to join  recog-
nized  groups.  Accordingly  the  statutes  of recognized 
groups  must  confer  on such  groups  the status  of volun-
tary and  open  associations. 
4.4. The  Committee  suggests  that  the word  'apply'  in 
Article  6 (1) (b) be replaced  by the fuller  formula  'de-
termine  and  apply'. 
4.5. The  Committee  considers  that  the-common  rules 
to be determined  and  applied  must  govern  both  quan-
titative  and  qualitative  aspects. 
4.6. What  is meant  by 'adequate  economic  activity'  in 
Article  6 (1) (e) should  be made  clear  in relation  to 
general  criteria,  preferably  in the present  Regulation.  In 
any event,  the criteria  listed  in Article  6 (3) should  in-
clude  adequate  representativity  (in terms  of volume 
produced)  or the total  output  of the region  concerned. 
4.7. In the German  version  the term  'Engrosangebot  an 
die Kaufer'  ('supply  to bulk  buyers'  in the English  ver-
sion)  used  in Article  6 (2) is unclear  and  should  be re-
placed  by 'Erstellung  eines  grofihandelsfahigen  Ange-
botes'. 
4.8. In any  case,  as regards  the determination  of im-
plementing  provision,  which  Article  6 (3) refers  to the 
Standing  Committee  on Agricultural  Structures  in ac-
cordance  with  the procedure  detailed  in Article  17, the 
Committee  recommends  that  the relevant  criteria  be as 
flexible  as possible.  The  criteria  should  be differentiated 
in order  to make  allowance  for region-to-region  varia-
tion and  type  of product. 
No C 59/28 Official  Journal  of the European  Communities 8. 3. 78 
4.9. The  Committee  regrets  that  no provision  is made 
in Article  8 for  withdrawal  of recognition  should 
Community  aids  be misappropriated.  Despite  the fact 
that provision  is made  in Article  6 (1) (h) for checks  on 
the use to which  aid has been  put,  and  notwithstanding 
the provision  enabling  aid to be recovered,  the Commit-
tee regrets  that  the Commission's  proposal  lacks  a sup-
plementary  sanction:  in the event  of a serious,  deliberate 
misappropriation  of Community  funds  it should  be 
possible  for recognition  to be withdrawn  from  a pro-
ducer  group.  It, therefore,  suggests  that  an appro-
priately  worded  paragraph  (e) be added  to Article  8 to 
cover  this.  In view  of the fact  that  withdrawal  of recog-
nition  is a very  harsh  measure,  it must  be made  sure 
that recognition  is withdrawn  on the ground  of a mis-
appropriation  of funds  only  after  a scrupulous  inquiry 
procedure  which  allows  the producer  group  affected  the 
possibility  to lodge  objections. 
The Committee  considers  that  'operating  expenses'  (on 
which  the amount  of aid is made  to depend  by Article 
10) should  be interpreted  with  sufficient  flexibility  to 
cover  such  things  as expenditure  on technical  and  pro-
fessional  assistance  to producer  group  members  which 
is made  on the initiative  of the producer  group  and  in 
connection  with  its activities. 
5. Aids  to recognized  producer  groups  and  associa-
tions  thereof  (Articles  10 and  11 of the  amended 
proposal) 
5.1. The  Committee  has  misgivings  as to whether  the 
aids should  be on a descending  scale  from  year  one  to 
year three.  Once  the initial  stimulus  has  disappeared  it 
often  happens  that  difficulties  arise  with  the operation 
of associations,  as a result  of which  there  is a need  for a 
minimum  amount  of continuing  financial  assistance. 
5.2. The  Committee  suggests  that  the  phrase  'in any 
event'  be added  after  'may  not'  in Article  10 (1) (b) in 
order  to avoid  possible  conflict  between  the two  criteria 
for determining  the quantitative  limits  to the amount  of 
aid (paragraphs  (a) and  (b) of Article  10 (1)). 
5.3. The  Committee  wonders  whether  where  the pro-
ducer  group  is set  up to process  the  appropriate 
categories  of products,  the  starting-up  aid  might  not 
usefully  be determined  as laid  down  in Article  10 but by 
reference  to the value  of the basic  product. 
6. Financial  and  general  provisions  (Articles  12 to 21 
of the amended  proposal) 6.1. The  Committee  considers  that  Article  13  (1) 
should  be brought  into  line  with  the indications  given  in 
the financial  statement  which  is attached  to the  pro-
posal.  This  would  make  it clear  that  producer  groups 
which  are granted  recognition  in the fifth  and last  year 
of the scheme  may  continue  to receive  aid for the fol-
lowing  three  years  too. 
6.2. The  Committee  considers  the  25 % ceiling  for 
expenditure  chargeable  by the  Member  States  to the 
Guidance  Section  of the EAGGF  to be completely  un-
satisfactory.  Moreover,  the  Committee  asks  that  the 
ceiling  be increased  to 65%  in view  of the fact  that  the 
Regulation  will  concern  regions  which  have  serious 
structural  deficiencies  — in most  cases  co-extensive 
with  those  covered  by Directive  268/75/EEC.  Failing 
this, it suggests  that  a ceiling  of 65%  be implemented  in 
those  regions  which  are  covered  by  Directive 
268/75/EEC.  Similarly,  it asks  that  such  regions  be 
granted  the maximum  amounts  of aid which  are  pro-
vided  for in Articles  10 and  11. 
6.3. The  Member  States'  communications  to  the 
Commission  stipulated  in Article  20 should  be for-
warded  to the  Economic  and  Social  Committee;  by 
'communications'  the Committee  means  both  the laws, 
regulations  and  administrative  provisions  enacted  to 
implement  the scheme,  and  the annual  reports  on the 
application  of the scheme. 
6.4. The  Committee  finds  that  there  is a certain  conflict 
between  the objectives  of the Regulation  as cited  in the 
financial  statement  ('to  encourage  the  initiation  of 
producer  groups  in regions  of poor  agricultural  market-
ing structures,  so that  the advantages  of group  market-
ing can be obtained  for these  regions')  and  the purposes 
for which  aid may  be granted  as laid  down  in Article 
10. Article  10 in fact  talks  of aid  to encourage  the 
formulation  and  facilitate  the  operation  of producer 
groups. 
6.5. The  Committee  considers  that  if it is agreed  that 
the Regulation  is to be of general  application,  viz. that  it 
should  cover  the Community  as a whole,  the amount  of 
funds  earmarked  for financing  it are absolutely  inade-
quate. 
The Committee  considers  that  the  funds  should  be 
brought  into  line  with  the objectives  which  the proposal 
sets itself. 
Done  at Brussels,  23 November  1977. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
8. 3. 78 Official  Journal  of the European  Communities No C 59/29 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  amendments  were  rejected  during  the debate: 
Paragraph  4.1 
Replace  by: 
'4.1.  The  Committee  considers  that  the provision  in Article  5, whereby  persons  other  than  agricul-
tural  producers  may  belong  to recognized  producer  groups  is anomalous  and  in absolute  conflict 
with  the specific  aims  of producer  groups,  which  consist  in expanding  the amount  of production 
carried  out under  contract,  and  bringing  about  a better  organization  of the markets. 
In addition,  the presence  of non-producers  would  hamper  the setting  up of groups  comprising  pro-
ducers  of more  than  one  nationality  (especially  in frontier  areas),  the development  of possible  inter-
trade  bodies  and,  above  all, real  alignment  between  associations  at Community  level.' 
Reasons 
The reasons  for the amendment  should  be clear  from  the amendment  itself.  Bringing  outsiders  into 
agricultural  producer  groups  would  be incompatible  with  the  nature  and  aims  of producer  groups 
and would  be liable  to create  serious  distortions  when  it came  to the actual  operation  of producer 
groups. 
Moreover,  in 1971  the Commission  itself  submitted  much  better  constructed  and  more  well-reasoned 
proposals  which  (a) made  a clear  distinction  between  tasks  and  functions  which  regard  to an economic 
system  based  on contract,  market  transparency  and  the possible  inter-trade  groups,  and  (b) above  all, 
aimed  at achieving  true  alignment  of the characteristics  and  activities  of producer  groups. 
Voting 
For: 20, against:  21, abstentions:  25. 
Paragraph  4.1 (second  subparagraph) 
Delete  'and  depends  on compatibility...  national  law'. 
Reasons 
The proposal  is for a Regulation,  and  will  therefore  be legally  binding  in all the Member  States.  The 
only  condition  that  has  to be met  under  Article  5 (1) (b) before  'other  persons  whose  activity  is calcu-
lated  to facilitate  the attainment  of the object  of the group'  may  belong  to producer  groups  covered  by 
the proposal  is that  the producer  groups  must  be set up 'under  a legal  form  provided  by national  law  for 
the specific  purpose  of ensuring  that  producers,  whether  individual  or associated,  retain  control  of the 
groups  and  their  decisions'. 
The wording  which  this  amendment  seeks  to delete  is against  the spirit,  not only  of the proposal  for a 
Regulation,  but also  of the Treaty,  and  stands  in the way  of there  being  a worthwhile  collaboration  of 
all the sectors  concerned  with  a view  to effectively  improving  the situation. 
Voting 
For: 6, against:  42, abstentions:  13. 
Paragraph  4.5 (a) 
Insert  the following  new  paragraph  numbered  4.5 (a): 
No C 59/30 Official  Journal  of the European  Communities 8. 3. 78 
The Committee  considers  that  the reference  among  the conditions  of recognition  to "common  rules 
.. .which  .. . can also  relate  to the fixing  of prices"  is excessive,  too rigid,  and hard  to reconcile  with 
the rules  on free  competition  in the Treaty  of Rome.  The  Committee  suggests  replacing  the words 
"the fixing  of prices"  by a more  flexible  phrase,  namely,  "criteria  for the fixing  of prices".' 
Reasons 
The above  wording  was  in the Section's  draft  opinion  but was  not accepted  by the Section. 
Article  6 (1) (b), second  indent,  includes  among  the general  conditions  the fixing  of prices  for placing 
goods  on the market. 
Producer  groups  are bound  to seek  to bring  about  the conditions  which  are necessary  in order  to ensure 
that their  members'  products  sell on the best  possible  terms,  bearing  in mind  the market  situation. 
The wording  of the Article  seems  too bold  in that  it could  be construed  as permitting  a given  producer 
group  to dictate  to the market  by determining  its selling  prices.  In reality  the fixing  of market  prices  is 
determined  by a whole  set of factors  which  go beyond  the mere  local  market  and,  a fortiori,  the policy 
of any given  producer  group. 
What  is more,  the present  wording  is at odds  with  a non-dirigist  concept  of prices,  and would  be against 
the interests  of consumers. 
The wording  proposed  (which  was  originally  in the Section's  draft  opinion)  is much  nearer  economic 
reality. 
Voting 
For: 7, against:  40, abstentions:  18.