COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.04.1997 
COM (97) 165 final 
REPORT FROM THE COMMISSION TO THE COUNCIL 
ON THE APPLICATION OF THE EARLY MARKETING AND THE CALF 
PROCESSING PREMIUM SCHEMES 
IN THE BEEF SECTOR 

I. INTRODUCTION 
Council Regulation (EEC) No 805/68 states in Article 4i, inter alia, that Member 
States must apply at least one of the following two premium schemes during the 
period 1 December 1996 to 30 November 1998: 
- Early marketing premium for calves, 
- Processing premium for young male calves. 
Furthermore, the same Article provides that after six months i.e. after 1 June 1997 
the Commission shaii verify whether the two schemes have achieved satisfactory 
results- At the March meeting of the Agricultural Council it was agreed, however, 
that the Commission should present its report on this subject in April 1997. This 
report fulfils that obligation. 
II. EARLY MARKETING PREMIUM 
A. Aim 
The early marketing premium was and is intended to reduce red meat production 
in 1998 and 1999 by encouraging veal producers to increase the number of calves 
used for veal production in 1997 and 1998. 
B. Legislation 
The premium was agreed by the Council through Regulation (EC) No 2222/96 of 
18 November 1996. 
Due to the very short time scale available to prepare the implementing rules, the 
Commission Regulation on this subject was not published until 3rd December 
1996 (Reg. (EC) No 2311/96), although the scheme was already applicable from 
1st December. For various reasons a number of modifications have subsequently 
been adopted (Regulation (EC) No 18/97, (EC) No 200/97, (EC) No 280/97 and 
(EC) No 616/97). 
The accelerated implementation and subsequent modifications together with 
delayed decisions from Member States as to which premium to apply and the 
related introduction of their national administration systems resulted in various 
degrees of application in the first two months (Dec-Jan). This may have led veal 
producers to adopt a wait-and-see approach especially in the context of a 
generally weak veal market across the Community. 
Eventually, the early marketing scheme was implemented in all Member States 
except Ireland, the United Kingdom and Portugal. 
C. Weight limits 
In accordance with the Council Regulation the maximum weights were fixed per 
Member State on the basis of EUROSTAT-statistics for 1995 or any other official 
and published figures accepted by the Commission. Germany, Denmark and 
Luxembourg had their reference weight adjusted as a result of applying such 
alternative statistics (see Annex I). 
Nevertheless, both Denmark and Italy have repeatedly argued that the reference 
weight is too low to reflect actual veal production in these two countries. 
Although, alternative official statistics to prove their claims have not so far been 
provided. 
Furthermore, some Member States, in particular France, have complained that the 
application of a national weight limit leads to a distorted market situation. They 
argue that their producers, who before 1997 used to slaughter calves for a 
traditional veal market with carcase weights of 125-140 kgs, are now being forced 
to decide between two options; either to continue production of such carcases 
without the premium (in possible competition with imported veal which has 
benefited from the premium) or to produce 15 % lighter carcases with the 
premium but for which there is not an immediate market K For slaughterings 
from 20 January onwards an increased amount of premium was made available in 
order to alleviate the special and transitional problems related to the light weight 
carcases. 
D. Statistical information 
Under the implementing rules Member States are required to notify the 
Commission on a weekly basis of the number of animals in the preceding week 
which were subject to an application for premium. In addition, such information 
should be broken-down according to weight groups in order to calculate the 
number of calves which are slaughtered well below the maximum weight , 
thereby enabling an estimate to be made of the number of animals which receive 
the premium "freely". 
Unfortunately, only a couple of Member States have been correctly notifying 
such weekly information. Some countries are still (end of March) in the process 
of revising figures from December and January and others have responded with a 
delay of up to 6 weeks. Annex II, which shows the total number of premium 
applications recieved so far should therefore be looked upon against this 
background of incomplete information. A total of 300,000 applications for 
premium have been received from the beginning of December 1996 to the end of 
March 1997 of which 6 Member States account for 94 % of the Community total : 
the Netherlands 35 %, France 21 %, Italy 12 %, Austria 11 %, Germany 8 % 
and Belgium 8 %. By comparing these applications with the total number of veal 
calves slaughtered in the same period (based on actual statistics where available 
1 A French memorandum on this subject was distributed to the Council in March. 
3 
or 1996 EUROSTAT statistics for the corresponding months) it appears that in 
the Netherlands premium applications cover 26 % of the total number of veal 
calves slaughtered while the percentage in France is 11 %, in Austria 63 %, in 
Italy 8 %, in Germany 19 % and in Belgium 28 %. For the sake of 
comparison, the latter set of percentages refer to applications and production in 
the period December - February (3 months). 
Information received on the actual weight of slaughter for the premium calves 
confirm a fairly wide statistical spread (see Annex III). Furthermore, an 
extrapolation of the weight distribution from the lower weight groups to the 
weight group just below the maximum weight gives an indication of the number 
of animals which would have been slaughtered in that group in any case, with or 
without the introduction of the premium. For the sake of simplification of 
calculation it is assumed 
(1) that 50 % of the calves in the 10 kilogrammes interval just below the 
maximum weight would in any case have been slaughtered at that weight and 
that 
(2) calves lighter than that weight interval all would have been slaughtered at 
that low weight irrespective of the premium. It can reasonably be argued 
that active early slaughter so far only refer to 20 % of all premium 
applications in the Netherlands, 34 % in France, 25 % in Austria and 24 % 
in Germany. No or incomplete statistics have been received from Belgium 
and Italy. Consequently, in the 4 Member States referred to above more than 
75 % of the premia have been applied for in respect of animals which in any 
case would have been slaughtered at a lower weight. 
Evaluation 
On the basis of the participation in the scheme as indicated by Member States for 
the first 4 months it is estimated that the premium may be granted in respect of 1 
million calves in 1997. However, on the background of the findings above, the 
premium paid on 750.000 head would not necessarily give rise to an active 
restructuring of production but may simply constitute a production subsidy. With 
regard to the 250.000 calves which it is estimated will be deliberately slaughtered 
early, savings are only obtained if the producers turn to calf replacements in 
order to increase their throughput in terms of numbers. Assuming a full 15 % 
replacement rate the saving can be estimated at 26 mio ECU compared with the 
total cost of the premium of+/- 65 mio ECU for 1997. An estimate based on the 
assumption that all calves above the one million mark will fall under the "active" 
premium definition actually leads to the conclusion that in order for the early 
marketing premium to be cost effective slightly more than 2 mio calves must be 
covered by the premium (Annex IV). If there is less than a 15 % replacement 
rate of calves the break-even number will be correspondingly higher. 
An increase in the current average number of applications cannot be excluded in 
particular because veal producers obviously need some time to adapt to the new 
situation. The scheme is still fairly young and has already gone through a number 
of modifications in particular with regard to the level of the premium. On the 
other hand, a doubling of the present rate of applications seems rather optimistic 
and the decision to go for supplementary replacements is very much a function of 
the prevailing and foreseeable market conditions. Those factors are still very 
much influenced by the BSE scare of last year although the prices admittedly 
have recovered somewhat during the month of March (see Annex V). 
In its Memorandum, France has to a large extent blamed so-called premium 
subsidised imports for being responsible for the low veal prices at the beginning 
of 1997. The Commission, however, has no statistical evidence to support that 
assumption and notes, furthermore, that the prices for veal from particularly the 
Netherlands have historically always been lower than the French veal prices. 
Concluding remarks 
On the basis of the existing incomplete statistics from Member States it may be 
somewhat premature to draw firm conclusions on the cost effectiveness of the 
premium scheme over its full two years of application. It seems, nevertheless, 
beyond reasonable doubt that the bulk of premium payments granted so far have 
only to a small extent complied with the intentions behind the scheme. If this 
tendency is not quickly reversed a logical. conclusion, based solely on the 
cost/effectiveness of the early marketing premium, would be a suspension of the 
arrangements in order to safeguard the Community finances. However, Article 4i, 
following Council's conclusions, consists of a balanced package of two measures 
which have to be assessed together. Therefore, any final conclusion can only be 
drawn after having analysed the global result produced by the two schemes. 
III. CALF PROCESSING SCHEME 
A. Aim 
The concept of the calf processing premium was first introduced in the basic beef 
regulation following the 1992 reform. With a view to reducing the use of male 
calves of dairy origin for beef production, Member States either had to apply a 
light weight intervention system or provide for a system which enabled calf 
producers to sell the abovementioned type of animals for processing subject to a 
maximum age of 10 days. Although the light weight intervention ceased to apply 
in 1995 the calf processing premium remained as a market instrument although 
only on a voluntary basis for Member States. 
In the context of the Council's renewed intention to bring down future beef 
production, as set out in Regulation (EC) No 2222/96, the calf processing scheme 
was made obligatory for those Member States which did not opt for the 
application of the early marketing scheme, in particular with a view to provide as 
far as possible equal distribution of efforts to adjust production. The declared aim 
was to process one million calves per year. 
B. Legislation 
The basic rules for the calf processing premium are laid down in Article 4i of 
Council Regulation (EEC) No 805/68 as amended in particular by regulation (EC) 
No 2222/96. The implementing rules are provided through Commission 
Regulation (EEC) No 3886/92, as amended by Regulation (EC) No 2311/96, and 
in particular at Chapter V, Section I. 
The amount of premium before 1 December 1996 was fixed at a uniform level of 
120 ECU per male animal. After that date non-dairy male calves also became 
eligible for the premium, which was set at 150 ECU, whilst the premium for 
dairy calves remained unchanged at 120 ECU. 
Statistical information f Annex VD 
Statistical information on the premium is obtained on a weekly basis and Member 
States applying the processing premium generally respect the statistical 
requirements. 
Under the pre-December system only the United Kingdom (since the end of April 
1996), Portugal (since the end of May 1996) and France (since the middle of 
October 1996) applied the premium. A total number of 445.000 calves were 
slaughtered for processing before December 1996 with the United Kingdom 
accounting for more than 80 %. 
After 1 December 1996 Uniied Kingdom has opted to continue the application of 
the premium along with Portugal and France. Since February 1997 Ireland has 
joined the other 3 countries in their choice. 
Up to the end of March 1997 some 330.000 calves have been slaughtered under 
the new arrangements with UK accounting for slightly more than 50 %. Taking 
into account that Ireland has only been operating the scheme for 2 months and 
assuming the same monthly average for the rest of the year the Commission 
anticipates that the target quantity of 1 million calves will be reached in 1997. 
D. Evaluation 
The total cost of granting this premium in respect of one million calves is 
estimated at 125 mio ECU. However, the savings in terms of lower future 
production and lower intervention in-take amount to an estimated 690 mio ECU 
(see Annex VII). 
It goes without saying that the processing scheme is the most effective measure 
for reducing production, not only in terms of direct cost efficiency but also in 
terms of providing a greater balance between consumption and production in the 
future. 
A number of Member States have not opted for this premium expressing concerns 
over possible negative reactions among consumers. In this respect it is interesting 
to note that according to information from the 4 Member States applying the 
scheme no such negative attitudes have been expressed and the consumption of 
beef and veal is continuing its slow but steady recovery in all of those countries. 
The processing premium on male calves may admittedly in certain circumstances 
constitute a floor price for calves intended for veal production as the bulk of such 
calves in fact are male animals. On the other hand, of the four Member States 
applying the premium only France has substantial veal production. It is reported 
that calves from other Member States are also being processed in France thereby 
influencing the prices of very young animals in those countries, but no factual 
information can be obtained as to such movements. 
Furthermore, if there is indeed a floor price, that price would be somewhat lower 
than the premium of 120 ECU due to the cost of transport, slaughter and 
processing of the calf. Finally, it has to be noted that prices for young calves are 
still below the level of one year ago, which means that the processing premium (at 
least until now) does not seem to have been causing an unfair price increase in 
the raw material for veal and beef production. 
Concluding remarks 
Given the background of the continuing inbalance in the beef market, effective 
measures to adjust red meat production should be encouraged. The Commission 
finds that the calf processing scheme is by far the most efficient of such measures 
and once again urges Member States to make use of this option. 
IV. CONCLUSION 
A. This report has been prepared in accordance with Article 4i(6) of Regulation (EC) 
No 805/68 under which the Commission is obliged to verify whether the two calf 
schemes have produced satisfactory results as measured against their intended 
targets. The report was initially due 6 months after the application of the two 
schemes but was subsequently advanced at the request of the Council. 
Unfortunately, as a direct consequence, the experience gained as well as the 
statistical information required is far from complete and the conclusions which 
have been drawn should be considered in that light. 
Another unfortunate factor at least vis-à-vis the early marketing premium was the 
timing of the start of the scheme which coincided with a very depressed market 
situation created by the BSE scare earlier in 1996. Decisions by veal producers 
with regard to calf replacements have definitely been negatively influenced by the 
weak market in the sector. 
B. Having said that, the Commission can only conclude that the arrangements for the 
early marketing premium have not yet produced the desired results. In order for 
the premium to become cost effective at least a doubling of the current rate of 
applications coupled with increased calf replacements would be necessary. The 
present rate and nature of applications tends to suggest that 3 out of 4 calves 
simply obtain a production subsidy decoupled from the production effort with 
which it was intended to go hand in hand. 
The calf processing premium, on the contrary, appears to be very effective in 
terms of actual reduction of future production and in terms of cost-effectiveness. 
Although the Commission appreciates some Member States' concern about 
negative consumer reactions in the context of this premium it is still disappointed 
* that only 4 Member States have decided to apply the premium on their territory. 
Since the Council introduced the two premia as part of an integrated solution 
which was intended to result in a balanced effort to reduce production, it is 
appropriate to evaluate the two premia together. In terms of total cost 
effectiveness, the application so far is positive, although only because of the 
application of the processing premium. This unfortunately means that the 
measures in reality have not provided equal burdens in terms of the reduction of 
the production potential. Furthermore, if one of the two premia were to be 
suspended (e.g. the early marketing premium) the inbalance would be even 
greater. 
The Commission, therefore, proposes that the Council should judge the early 
marketing premium on a period longer than the past 4 months, taking into 
account the necessary time for technical adaptation of the veal production 
structures. Furthermore, account should be taken of the fact that the latest increase 
of the supplement paid to low weight carcases only entered into force on 
14 April 1997 and has therefore not yet had any effect on the implementation of 
the premium. Finally, the beginnings of a recovery in veal prices in March may 
equally encourage producers to turn to more positive decision-making in respect 
of increased calf replacements. The Commission will continue to closely monitor 
the level and distribution of applications and, depending on their future 
development, as measured against both cost effectiveness and balanced efforts in 
Member States, it reserves its right to take steps in accordance with Article 4i (5) 
and/or (6) of Regulation (EEC) No 805/68. 
ANNEX I 
Maximum carcase weight for the early marketing premium 
Member State of slaughter Maximum 
carcase weight 
Belgium 136 
Denmark 110 
Germany 112 
Greece 127 
Spain .124 
France 108 
Ireland 
Italy 117 
Luxembourg 120 
The Netherlands 138 
Austria .82 
Portugal 110: 
Finland 84 
Sweden . 88 
United Kingdom 32 
10 
EARLY MARKETING PREMIUM FOR VEAL CALVES: 
APPLICATIONS RECEIVED 
Regulation (EEC) No. 3886/92 ANNEX II 
Week 
96wk49 December 
96wk50 "" 
96wk51 
96wk52 
1996 TOTAL 
97wk01 January 
97wk02 
97wk03 
97wk04 ' 
97wk05 
97wk06 February 
97wk07 
97wk08 
97wk09 
97wkl0 March 
97wkll 
97wkl2 
97wkl3 
TOTAL 
% of EU TOTAL Be 
1000 
1047 
1604 
1615 
5266 
462 
1406 
2118 
1820 
2088 
1705 
1722 
1874 
1874 
1758 
675 
5 
22773 
7.57 Da 
0 
0 
0 
0 
0 
132 
12 
45 
76 
129 
104 
125 
101 
73 
79 
105 
74 
• 
1055 
0.35 De 
275 
394 
1024 
480 
2173 
1019 
1480 
4982 
1629 
2064 
1969 
1530 
1641 
1654 
1909 
1492 
1323 
24865 
8.26 El 
n 
n 
19 
7 
3 
8 
9 
2 
2 
5 
66 
0,02 Es 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 Fr 
2466 
3442 
4377 
3515 
13800 
3631 
5935 
5287 
5020 
4842 
4297 
4098 
4974 
6401 
3593 
1287 It 
• 
1365 
5482 
-
3497 
4565 
2190 
2509 
2824 
2463 
3625 
3044 Lu 
0 
0 
0 
0 
0 
0 
10 
10 
7 
9 
11 
7 
12 
6 
8 
9 
8 
0 63165 • 36287 97 
0*00 20.99 12*06 "1 0,03 NI 
0 
783 
7422 
1422 
9627 
5181 
10403 
4417 
9414 
5936 
7266 
10352 
4331 
13790 
8943 
4737 
11495 
105892 
35o20 Ôs 
0 
50 
1028 
1339 
2417 
2798 
3689 
4195 
2042 
2561 
2347 
1956 
2491 
2166 
2169 
2062 
2420 
33313 
11,07 Pt 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0.00 
NJ6* Shaded figure denote actual totals provided by Member States but which cannot be broken dowtt by weéfcdr Weight category* Fi 
0 
13 
55 
50 
118 
57 
122 
177 
205 
325 
361 
360 
326 
258 
177 
174 
92 
10 
2762 
0,92 Sv 
536 
771 
538 
60 
1905 
69 
625 
958 
926 
722 
904 
874 
907 
830 
857 
644 
373 
10594 
3.52 EU 
4277 
6500 
16059 
9846 
40799 
13349 
23682 
22189 
21139 
22192 
23536 
23217 
19174 
29885 
21958 
14812 
18839 
300869 
ANNEXE III 
APPLICATIONS FOR EARLY MARKETING PREMIUM 
(ACCORDING TO WEIGHT) 
AUSTRIA* 
Groups of 10 kg 1 TOTAL CALVES (I) | TOTAL "FREE" CALVES (II) 
0-42kg 121 121 
42 - 52 kg 2082 2082 
52 - 62 kg 5186 5186 ' 
62 - 72 kg 9424 9424 
72 - 82 kg 16500 8250 
TOTALS 1 33313 | 25063(75%) 
* : From December 96 to 97 week 12 
FRANCE* 
Groups of 10 kg I TOTAL CALVES (I) | TOTAL "FREE" CALVES (II) 
0 - 38 kg 13 (+ 7) 13 (+7) 
38-48 kg 35 (+ 21) 35 (+21) 
48 -58 kg 98 (+ 59) 98 (+ 59) 
58 - 68 kg 307 (+ 185) 307 (+ 185) 
68 - 78 kg 906 (+ 546) 906 (+ 546) 
78 - 88 kg 2686 (+ 1615) 2686 (+ 1615) 
88 - 98 kg 8907 (+ 5366) 8907 (+ 5366) 
98 - 108 kg 26469 (+ 15942) 13235(4-7971) 
TOTALS 1 39421+23744** =63165 | 26186 (+15773) « 41959 (66 %) 
* : From December 96 to 97 week 8 
** : No. calves for which a premium application has been received but which cannot be broken down by weight 
( ) : Etimated distribution by weight of the 23744 calves 
GERMANY* 
Groups of 10 kg I TOTAL CALVES (I) I TOTAL "FREE" CALVES (II) 
0- 72 kg 3031 3031 
72- 82 kg 2475 2475 
82- 92 kg 3729 3729 
92- 102 kg 6281 6281 
102-112 kg 9349 4675 
TOTALS 1 24865 | 18941(76%) 
* : From December 96 to 97 week 12 
THE NETHERLANDS* 
Groups of 10 kg I TOTAL CALVES (I) I TOTAL "FREE" CALVES (II) 
0 - 28 kg 2 2 
28 - 38 kg 32 32 
38-48 kg 79 79 
48 - 58 kg 143 143 
58-68 kg 399 399 
68 - 78 kg ; 841 841 . 
78 - 88 kg 1706 1706 
88 - 98 kg 3490 3490 
98 - 108 kg 7425 7425 
108-118 kg 16629 16629 
118-128 kg 32291 32291 
128 - 138 kg 42855 21428 
TOTALS I 105892 I 84464(80%) 
* : From December 96 to 97 week 12 
M 
ANNEXIV 
Earlv marketing premium / Cost effectiveness 1997 
Number of 
calves receiving 
premium 
(head) 
(1) 
1,000,000 
1,200,000 
1,400,000 
1,600,000 
1,800,000 
2,000,000 Estimated costs 
(mio ECU) 
(2) 
64 
77 
90 
103 
115 
128 Calves with 
actual reduction 
of weight 
(head) 
(3) 
250,000 
450,000 
650,000 
850,000 
1,050,000 
1,250,000 Increase of calf 
replacements l 
(head) 
(4) 
37,500' 
67,500 
97,500 
127,500 
157,500 
187,500 Savings on 
., intervention2 
(mio ECU) 
(5) 
25.9 
46.6 
67.3 
88.0 
108.7 
129.4 
1 15% of (3). 
2 (4) x 0,3 tonne x 2300 ECU. 
13 
-F VEAL 
Community Average Price 
550 
525 
425 
400 
375 • • ' i ' • • • * * • • -j—i—i—•—i—i i—•—i i i i___i i i_ 
10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 
Week 
ANNEX VI 
Applications for the calf processing premium 
United 
Kingdom 
Portugal 
France l 
Ireland 1 
TOTAL Applications 
received before 
1.12.96 
Dairy calves 
370 339 
12 406 
62 269 
0 
445 014 Applications received after 
1.12.96 
Dairy calves 
140 291 
17 904 
94 005 
8 346 
260 546 non-dairy 
calves 
23 535 
89 
20 832 
175 
44 631 Total 
applications 
received up to 
21.3.97 
534 165 
30 399 
177 106 
8 521 
750 191 
Applications up to 15.3.1997. 
15 
ANNEX VTT 
Calf processing premium / Cost effectiveness 1997 
Number of 
dairy calves 
receiving 
premium 
(head) 
0) 
850,000 Cost of dairy 
calves 
(mio ECU) 
(2) 
102.0 » Number of 
non-dairy 
calves 
receiving 
premium 
(head) 
(3) 
150,000 Cost of 
non-dairy 
calves 
(mio ECU) 
(4) 
22.5 2 Total cost 
(2) + (4) 
(mio ECU) 
(5) 
124.5 Savings on 
intervention 
(mio ECU) 
(6) 
6903 
1 850,000 head x 120 ECU. 
2 150,000 head x 150 ECU. 
3 1,000,000 head x 0,3 t x 2,300 ECU. 
16 


ISSN 0254-1475 
COM(97) 165 final 
DOCUMENTS 
EN 03 10 
Catalogue number : CB-CO-97-153-EN-C 
ISBN 92-78-18660-0 
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