Proposal for a COUNCIL REGULATION derogating from Regulation (EC) No 1251/1999 as regards the set-aside requirement for the 2004/2005 marketing year

(presented by the Commission)

EXPLANATORY MEMORANDUM

In order to qualify for area payments for arable crops under the reform of the common agricultural policy, producers must set aside a percentage of their arable land with a view to achieving a balance between Community production and foreseeable outlets. Small producers are dispensed from the set-aside requirement.

The set-aside rate in the framework of Agenda 2000 is set at 10% and is covered by Council Regulation (EC) No 1251/1999.

The 2003/2004 marketing year for cereals in EU-15 is characterised by a very low production due to a severe drought in main production regions of the Community. In particular the production of soft wheat has fallen from 94 Mio tons in the 2002/2003 marketing year to 84 Mio tons in the 2003/2004 marketing year. In recent weeks estimates of the maize harvest have been steadily revised downwards. Latest estimates are that it will be some 31 Mio tons, viz. 25% lower than in 2002/2003. The total cereals production in the current marketing year has decreased from 209 Mio tons to 183,6 Mio tons. In this situation the ending stocks of the campaign 2003/2004 are estimated to decrease to a very low level.

The harvest in the 10 candidate countries was also very bad due to severe drought. Production has decreased from 53,5 Mio tons in 2002/2003 to 46,4 Mio tons in the 2003/2004 marketing year. Confronting this production with consumption of 50 Mio tons in these candidate countries, there is also a decrease in ending 2003/2004 stocks estimated.

On the world market the consumption of wheat in 2003/2004 is estimated at 585 Mio tons compared with a production of 556 Mio tons. Ending stocks are estimated to decrease from 161 Mio tons in 2002/2003 to 132 Mio tons 2003/2004. For coarse grains the situation is nearly the same. The production in 2003/2004 is estimated at 893 Mio tons, compared with a consumption of 923 Mio tons, despite a record harvest of maize in the USA. Ending stocks are estimated to decrease also from 158 Mio tons in 2002/2003 to 128 Mio tons in 2003/2004.

In these circumstances the Commission has made use of the market management tools available to it, including the sale of stocks from public storage and controls on exports to ensure that Community market obtains supplies.

Regarding the above mentioned situation there is the conclusion that a normal harvest 2004 at a 10% set-aside rate would not be expected to lead to a significant revival of stocks in EU-25 unless exports or internal consumption were to be significantly lower than normal. On the other hand a poor harvest 2004 would expose the internal market to potentially serious risks.

Under these circumstances it is proposed that the set-aside rate for 2004/2005 shall be reduced to 5%.

2003/0271 (CNS)

Proposal for a COUNCIL REGULATION derogating from Regulation (EC) No 1251/1999 as regards the set-aside requirement for the 2004/2005 marketing year

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 36 and 37 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1) The support system for producers of certain arable crops introduced by Council Regulation (EC) No 1251/1999 [1], provides that, in order to qualify for area payments, producers must set aside a certain proportion of their arable land.

[1] OJ L 160, 26.6.1999, p. 1. Regulation last amended by Regulation (EC) No 1782/2003 (OJ L 270, 21.10.2003, p. 1).

(2) The cereals market in the Community during the 2003/2004 marketing year is characterised by a low production due to severe drought in main production regions of the Community. This situation is expected to cause a significant reduction in ending 2003/2004 stocks on the Community market. A normal 2004 harvest would not be expected to lead to a significant increase in stocks. A poor harvest would expose the internal market to potentially serious risks.

(3) For the 2004/2005 marketing year, the rate for set-aside should therefore be fixed at a lower level than that set out in the second subparagraph of Article 6(1) of Regulation (EC) No 1251/1999.

HAS ADOPTED THIS REGULATION:

Article 1

By way of derogation from the second subparagraph of Article 6(1) of Regulation (EC) No 1251/1999, the basic rate of compulsory set-aside is fixed at 5%, for the 2004/2005 marketing year.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

It shall apply to set-aside for the 2004/2005 marketing year.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

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