COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC89) 328 final 
Brussels, 12 July 1989 
Proposal for a 
£2J2!£ik_Bi5yk£II2!L£§Kl 
modifying Council Regulation (EEC) No 1316/86 of 22 April 1986 
adopting the application in Portugal of Regulation (EEC) No 797/85 on 
improving the efficiency of agricultural structures 
(presented by the Commission) 
&^uK y 
EXPLANATORY NOTE 
1. Background 
At the time of entry into the Community of Portugal in 1986 a number of 
specific agreements were made and special regulations were adopted 
concerning the agricultural structure. The reason for this was the poor 
situation of agricultural structures in Portugal which meant that it was 
not possible to apply fully all the existing EC measures in the field of 
agricultural structures. One of the most important of these measures was 
Regulation (EEC) No 797/85 on improving the efficiency of agricultural 
structures. 
On 22 April 1986 the Council therefore adopted Regulation (EEC) No 1316/86 
concerning certain specific conditions for the application in Portugal of 
Regulation (EEC) No 797/85. Regulation (EEC) No 1316/86 had a term of 
three years, which ends on 1 September 1989. 
Now the question arises as to what extent there is still a need for the 
derogations set out in the Regulation. On 16 March 1989 the Portuguese 
government made a request to the Commission to extend Regulation (EEC) 
No 1316/86 up to and including 31 December 1991. Article 6 of Regulation 
(EEC) No 1316/86 foresees a decision by the Council on a proposal of the 
Commission and based on a report on the evolution of the economic and 
structural situation in Portugal. 
2. Summary of the measures in Regulation (EEC) No 1316/86 
In this Regulation provision is made for four different measures. 
(a) The reference income 
In fixing the reference income as laid down in Article 2, paragraph 3 
of Regulation (EEC) No 797/85, Portugal may apply a corrective factor 
not exceeding a maximum of 1.7 to the average gross wage of 
non-agricultural workers in Portugal as a whole. No such corrective 
factors are allowed for other Member States. 
(b) Group operated holdings 
Where an improvement plan relates to group operated holdings 
(Article 6, paragraphs 1 to 4 of Regulation (EEC) No 797/85), Portugal 
may grant aids provided at least two-thirds of the members of the group 
practise farming as their main occupation. In other Member States all 
the members of a group have to meet the main occupation requirements. 
(c) Pig farming in Madeira 
Portugal may grant aid for investment in pig farming in Madeira if the 
condition relating to fodder production (Article 3, paragraph 4 of 
Regulation (EEC) No 797/85) is not met. That is to say, that on 
completion of the farm improvement plan at least 35% of the quantity of 
feed consumed by the pigs can be produced on the holding. 
(d) Minimum hectarage for compensatory allowances 
In mainland Portugal, compensatory allowances may be granted to farmers 
with at least one hectare of usable agricultural land. In the Azores 
and Madeira the minimum is half a hectare. 
z 
- 2 -
In the rest of the Community the minimum amount of usable agricultural 
area for holding is at least three hectares. However, in the 
Messogiorno, including the islands, in the French overseas departments 
and in the Greek regions, the minimum usable agricultural area per 
holding is two hectares. 
3. Results of the application of Regulation (EEC) No 1316/86 in Portugal 
Information was requested from the Portuguese government on 29 March 1989 
about the results of the application of the Regulation. This information 
was supplied on 4 April 1989 and may be summarized as follows : 
(a) The reference income 
The reference income for 1988 in Portugal was 6608 ECU's; for other 
Member States the figures ranged between 10.270 ECU's for Spain to 
21.702 ECU*s for Denmark. Without the coefficient of 1.7 the reference 
income in Portugal should have been reduced to 3887 ECU. 
In 1988 2447 farm improvement plans (regiem Al) were approved and 
1914 plans for young farmers (regiem A2). In the first semester of 
1989 the equivalent figures were 477 and 392. By leaving out the 
factor of 1.7, a great number of farmers would not have been able to 
fulfill the conditions for investment aid any more. The percentage of 
applications that could not be met differs from 5% in Beira Litoral to 
40% in the Algarve, Madeira, the Azores and Tras os Montes (see 
Table I). 
Under the influence of investments in agriculture a positive 
development can be observed in both gross production, gross value 
added, net value added and the ratio between the set value added and 
the man work unit. It appears from the statistical data that on farms 
where investments are carried out both the absolute values and the rise 
of the index of these four indicators is higher than on farms where 
this is not the case (see Table II). 
(b) Group-operated holdings 
In 1988, 14 projects were approved concerning farm improvement plans 
under Article 6, paragraphs 1 to 5 of Regulation (EEC) No 797/85. In 
all of these cases use was made of the specific conditions foreseen for 
this kind of project in Article 2 of Regulation (EEC) No 1316/86. 
(c) Pig farming in Madeira 
In 1988 and the first semester of 1989 in total 18 farm improvement 
plans in the category Al and A2 were approved in Madeira. Of these 
18 plans none were in the pig sector. This means that no use has been 
made of the exemption for the pig sector concerning the 35% fodder 
clause as laid down in Article 3 of Regulation (EEC) No 1316/86. 
(d) Minimum hectarage for compensatory allowances 
For the years 1987 and 1988 figures are available on the distribution 
of exemptions concerning the minimum hectarage of farms. These can 
benefit from compensatory allowances under Articles 13 up to and 
including Article 17 of Regulation (EEC) No 797/85. 
^ 
- 3 -
: Region 
: Year 
: 1987 No. 
Amount 
:(1000 ESC) 
: 1988 No. 
Amount 
:(1000 ESC) Mainland 
Between 1 & 2 ha 
39.325 
1.010.000 
55.000 
770.000 % 
41 
15 
42 
. 14 Azores 
0.5 - 2 ha 
119 
1970 
116 
2750 % 
3 
0.4 
2.1 
0.4 Madeira 
0.5 - 2 ha 
28 
292 
398 
6066 % : 
72 : 
25 : 
86 : 
65 : 
This table shows that both on the mainland and on Madeira the exemption 
concerning the minimum hectarage is used on a large scale. The number 
of beneficiaries has even risen in 1988. It is evident that cancelling 
these exemptions will have important consequences. For the mainland 
this would mean that 55.000 farmers or 42% of the number of 
beneficiaries could not apply for a compensatory allowance. The 
regions who would be hurt most are Entre Duoro e Minho (67%) and Beira 
Litoral (50%). Concerning the isles, it is evident that Madeira would 
be severely affected. 
4. Evaluation 
The evaluation of the results of Regulation (EEC) No 1316/86 must be 
considered in the context of two developments. 
Firstly there are the changes in the common agricultural policy, as started 
a few years ago. Secondly there is the declaration of the Heads of 
governments at the Brussels Summit concerning the situation of agriculture 
in Portugal and the acknowledgment that it is necessary to adopt specific 
measures. 
Concerning the factor 1.7 in relation to the calculating of the reference 
income it is clear that leaving out this factor would have lead to an 
income for 1988 of 3887 ECU'S which is very low in relation to the rest of 
the Member States and hardly defensible. As concerns the incomes in the 
non-agricultural sector it appears that the relationship in the development 
between Portugal and the other Member States has stayed at nearly the same 
level as in 1986. In other words, the existing gap between Portugal and 
the other Member States has not been reduced. Lowering the factor 1.7 
would mean that the position of Portuguese agriculture would be influenced 
in a negative way. 
The exemption for group-operated holdings has been used for all such 
projects and therefore might be considered as successful. 
- 4 -
The exemption concerning the 35% fodder clause for Madeira seems to be 
superfluous, at first sight, because no farm improvement plans in the pig 
sector have been approved. However, despite the few plans that have been 
approved for Madeira, the possibility of introducing plans in the pig 
sector remains possible. In the light of the structural situation of 
Madeira, and that in the pig sector, an extension of this measure has to be 
considered. 
The figures resulting from the exemptions concerning the minimum hectarage 
of the farms, which can benefit from compensatory allowances show that the 
structural situation has not improved in the less-favoured areas, with the 
slight exception of the Azores. Not continuing with the exemptions would 
therefore lead to considerable negative effects for the area's concerned. 
5. Conclusion 
Portugal has only recently joined the Community and therefore was only 
recently able to start applying Regulation (EEC) No 797/85 in any real 
way. At the time of entry into the Comunity the relative position of 
Portuguese agriculture was not favourable. It has been proven that 
structural improvement takes a certain period of time. In the present case 
it appears that the desired relative improvement of agricultural structures 
of Portugal has not been achieved during the period foreseen in Regulation 
(EEC) No 1316/86. A continuation of this Regulation for a limited period 
of time therefore seems reasonable. 
This period of time should however be shorter than the one provided for in 
the existing regulation in order to indicate clearly the temporary nature 
of the measure. An extension of the existing Regulation (EEC) No 1316/86 
up to and including 31 December 1991 fulfills this condition and is also in 
line with the wishes of the Portuguese government. 
5 
- 5 -
ANNEX 
Table I : Reference income Article 1 of Regulation 1316/86 
Region :Percentage of rejected projects (regiems Al & A2) : 
: : Reference income without factor 1.7 : 
: Ent. Dour. MINHO: : 22.5 : 
: Tras os Mont. 40.0 
: Beira Litoral 5.0 : 
: Beira Interior : 33.3 : 
: Ribatejo Oeste : 30.0 
: Alentejo : 30.0 
: Algarve 40.0 
: Madeira 40.0 
: Azores : 40.0 
G 
- 6 -
Table II : Results of the enterprises to the period 1985-1987 
(Average value per enterprise) 
: Enterprises without investments : 
: Gross Production 
index 
: Gross Value Added 
: index 
: Net Value Added 
: index 
: Net Value Added / MWU 
: index 
: Enterprises with investments : 
: Gross Production 
index 
: Gross Value Added 
: index 
: Net Value Added 
: index 
: Net Value Added / MWU 
index 1985 
2516 
(100) 
1325 
(100) 
1197 
(100) 
532 
(100) 
4099 
(100) 
2685 
(100) 
2364 
(100) 
651 
(100) 1986 
2567 
(102) 
1374 
(103) 
1230 
(103) 
566 
(106) 
4785 
(117) 
3024 
(113) 
2670 
(113) 
738 
(113) 1987 
3034 
(121) 
1712 
(129) 
1568 
(131) 
709 
(133) : 
5505 
(134) 
3592 : 
(134) : 
3112 
(132) : 
889 
(137) : 
1-
Council Regulation (EEC) No /89 
of 1989 
modifying Council Regulation (EEC) No 1316/86 of 22 April 1986 
adapting the application in Portugal of Regulation (EEC) No 797/85 on 
improving the efficiency of agricultural structures 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
Having regard to the Act of Accession of Spain and Portugal, 
Having regard to Regulation (EEC) No 1316/86 (1) and in particular to 
Article 6, second sub-paragraph, 
Having regard to the proposal of the Commission, 
Whereas the specific conditions of agriculture in Portugal are 
characterised by a particularly poor structure and some of the 
conditions laid down in Regulation (EEC) No 797/85 (2) as amended 
by Regulation (EEC) No 591/89 (3) on improving the efficiency of 
agricultural structures are therefore not in keeping with this specific 
condition and the specific requirements of Portuguese agriculture; 
(1) OJ No L 115, 03.05.1986, p.17 
(2) OJ No L 93, 30.03.1985, p. 1 
(3) OJ No L 65, 09.03.1989, p. 1 
I 
Whereas, Regulation (EEC) No 1316/86 made provision for a number of 
adjustments to, or derogations from, Regulation (EEC) No 797/85 for a period 
of three years to enable it to be implemented in these specific conditions of 
Portuguese agriculture, in particular as regards eligibility under the various 
schemes and the improvements to be achieved by Portuguese agricultural 
holdings; 
Whereas these adjustments or derogations from the Regulation are due to expire 
on 1 September 1989; 
Whereas, the relative position of Portuguese agricultural structures has not 
changed sufficiently during the time of application of Regulation (EEC) 
No 797/85; 
Whereas an estension of the adjustments and derogation of Regulation (EEC) 
No 1316/86 in order to improve the relative position of Portuguese 
agricultural structures therefore seems justifiable, 
HAS ADOPTED THIS REGULATION : 
Article 1 
In Article 6 of Regulation (EEC) No 1316/86 of 22 April 1986 adapting the 
application in Portugal of Regulation (EEC) No 797/85 on improving the 
efficiency of agricultural structures the words **three years** are replaced by 
"six years**. v 
Article 2 
This Regulation shall enter into force on the day of its publication in the 
Official Journal of the European Communities. 
FICHE FINANCIERE concernant : une proposition de modification 
du règlement du Conseil (CEE) n* 1316/86 arrêtant certaines conditions spécifiques 
pour l'application du règlement (CEE) n- 797/85 au Portugal. 
1. ligne budgétaire : IIIB poste : 301 intitulé : Politiques structurelles. 
2. Base juridique : Acte d'adhésion de l'Espagne et du Portugal. 
3. Classification : IHfHMIfUiJOépense non obligatoire 
K. Objectifs de la «esure et description de l'action : Prorogation de trois ans du R. 1316/86. 
Ce règlement, qui expire le 1er septembre 1989, déroge à certaines dispositions du 
R. 797/85 concernant l'éligibilité aux régimes d'aide aux investissements et 
d'octroi des indemnités compensatoires, pour tenir compte des conditions spéci­
fiques de l'agriculture portugaise. 
5. Mode de calcul 
5.1 Nature de la dépense : remboursement d'une partie des dépenses nationales effectuées 
au cours de l'exercice précédent. 
5.2 Part du finançaient cceminautaire : Hypothèse retenue : 50 X. 
5.3 Calcul : Depuis 1986, le R. 797/85 a été appliqué au Portugal sur base des dispo­
sitions spécifiques du R. 1316/86. Comme la situation de l'agriculture portu­
gaise n'évolue que lentement, l'hypothèse a été faite, pour l'établissement des 
perspectives financières, que le R. 1316/86 continuerait de s'appliquer. Le 
coût total pour le FEOGA de l'application du R. 797/85, avec les dispositions 
spécifiques du R. 1316/86, figurent à la colonne (3) ci-dessous. Ces montants 
ont été décomposés afin de distinguer : (*) 
6. Incidence financière sur les crédits opérationnels 
6.1 Echéancier des crédits d'engagement.,^ dfcpaleaent (Mlo ECU) 
Exercice R.797/85 Defenses supple-
sans adaptation mentaires resultant 
du R. 1316/86 • 
(1) (2) 
36,5 15,0 
41.4 20,0 
46,2 23,0 
50.5 26,0 Total 
(3)-(1)+(2) 
1990 36,5 15,0 51,5 
1991 41,4 20,0 61,4 
1992 46,2 23,0 69,2 
1993 50,5 26,0 76,5 
Total 174,6 84,0 258,6 
Total '91-93 138,1 69,0 207,1 
6.2 Financée en t pendant l'exercice en cours : sans incidence. 
Dans I'APB 1990, le montant de 51,5 mio d'écus a été retenu. 
7. Obstr.-'. .. :. 
(*) - Les montants résultant de l'application du R. 797/85 sans adaptation aux con­
ditions spécifiques portugaises par le R. 1316/86 (colonne 1) 
- les montants résultant du R. 1316/86 qui assure une plus large application du 
R. 797/85 (colonne 2). 
ÂO 

Commission of the European Communities 
COM(89) 328 final 
Proposal for a 
COUNCIL REGULATION (EEC) 
modifying Council Regulation (EEC) No 1316/86 of 22 April 1986 adopting 
the application in Portugal of Regulation (EEC) No 797/85 on improving 
the efficiency of agricultural structures 
(submitted to the Council by the Commission) 
12.7.1989 
Office for Official Publications of the European Communities 
L - 2985 Luxembourg 
Series: DOCUMENTS 
1989 - 10 pp. — Format: 21.0 x 29.7 cm 
EN 
ISSN 0254-1475 
ISBN 92-77-51973-8 
Catalogue number: CB-CO-89-307-EN-C 
ISSN 0254-1475 
COM(89) 328 final 
DOCUMENTS 
Proposal for a 
COUNCIL REGULATION (EEC) 
modifying Council Regulation (EEC) No 1316/86 
of 22 April 1986 adopting the application in 
Portugal of Regulation (EEC) No 797/85 on 
improving the efficiency of agricultural 
structures 
(submitted to the Council by the Commission) 
03 
Catalogue number: CB-CO-89-307-EN-C 
ISBN 92-77-51973-8 12.7.1989 
€ 
COMMISSION OF THE EUROPEAN COMMUNITIES