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Vol. 1985/0 255 
  
 
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COMMISSION OF THE EUROPEAN COMMUNITIES
COM(85) 750 final  
Brussels, 18th December 1985
A future for Community agriculture  
Commission guidelines following the consultations
C0MC85) 750 final
·$

A FUTURE FOR COMMUN T  TY AGR ICUI/I'URE
Commission guidelines following the consultations 
in connection with the Green Paper
On 13 July 1983, the Commission adopted a Communication (COM(83) 333 final) on 
the perspectives for the common agricultural policy ("Green Paper") which was 
intended to serve as a basis for consultations with the Community institutions 
and other interested parties. Part I of the Green Paper is a descriptive 
section in which the Commission discusses extensively the main features of 
European tarming, its contrilmtion to the economic and agricultural 
development of the member countries and the role it has played in the 
integration process in the Community. The Commission then considers the 
problems now arising in connection with the common agricultural policy and 
recalled the constraints which, in coming years, will have to be complied 
with, i.e. the general economic contexL, wiLh low growtfi rates, limited 
budgetary resources and a world market which is tending to grow narrower and 
on which competition is steadily growing. As for possible solutions, the 
Green Paper suggests subjects for study and a range of possible options.
This document contains tentative guidelines which the Commission has worked 
out on the basis of the opinions expressed in the course of the consultations 
and study of the matter over the last few months.
In some cases more analysis and study is required before formal proposals can 
be drawn up, while in others the situation calls for urgent action.
Therefore, in order to ensure that the various measures taken at different 
times are consistent with one another and that those involved understand their 
interrelationship and significance, at this stage the overall framework and 
the objectives to be attained must be indicated clearly.
Defining this overall framework was indeed one of the main reasons for the 
Green Paper and the ensuing consultations. The Commission is aware that a 
realistic appraisal of the perspectives for the common agricultural policy in 
the years ahead is a necessity for farmers who took up farming when the market 
situation was fundamentally different from what it is at present and who now 
have to make a great effort to adjust to the changed circumstances. Such an 
appraisal is also vital for young people who are wondering about their future 
and the possibilities which agriculture still lias to offer.

As regards certain particularly important aspects, this Communication is 
supplemented by the proposal for a Regulation fixing compensation for the 
definitive discontinuation of milk production (C0M(8S) 38.3 final), the 
Memorandum on the adjustment of the market organization for cereals 
(COM(85) 700 final). The Commission is also finalizing a memorandum on 
beef/veal, and it has put in hand a detailed study on policy concerning food 
supplies for developing countries, with a view to proposals in the near future.
As regards forestry policy, the Commi ss ion is preparing a consultative paper 
on certain questions relating to agriculture; and forestry. It plans to 
conduct a consultation which will be as comprehensive as possible on the 
questions raised in this document and on the ideas put forward.
I.  The consultations
Very intensive consultations have been held in the last few months; they 
have enabled the Community's institutions and the other parties involved to 
express their views on the analysis of the problems and the various options 
set out in the Green Paper, to express desiderata and underline points of 
concern,
While the views expressed sometimes diverge, in piirticular on the practical 
aspects of action to be taken, they do reveal a broad consensus on certain 
fundamental questions which are proving crucial for the definition of the 
main lines of an overall strategy.
In the first place, there is very broad agreemment with regard to the 
analysis of the situation. All the parties concerned agree in this 
connection with the Commission; they are therefore aware of the 
seriousness of the problems and of the urgent need for resolute, sustained 
and effective action. Their receptiveness may therefore be counted on for 
action on these lines.
Secondly, all parties agreed that farming in Europe has a special 
character, the key features being the central importance of family farms 
and the very wide range of structures and production conditions. As the 
Commission noted in the Green Paper, the special nature of European farming 
is such that approaches such as those adopted in the United States of 
America, where farms are very large and farmers few in number, is neither 
feasible nor desirable.

-  '5 -
Thirdly, there is a growing awareness of the fact that agriculture, beyond 
its economic function, also lias an increasingly important role in regional 
development, contributing to the maintenance of the socio-economic fabric 
or to the safeguard of the environment and the countryside. These 
services to society as a whole are of key importance in regions which, 
because they are so far from urban centres and because of difficult 
natural conditions, face the danger of progressive desertification and 
impoverishment in both economic and cultural terms.
LastLy, the consultations have shown that both the farmers and the other 
parties involved reject any unduly static approach to farming. Farmers in 
particular are fearful of being forced out of the mainstream of society, 
and they are anxious to take part in current developments in the 
technical, economic and social fields; they are ready to make their 
contributions to this process, and, while emphasizing certain specific 
aspects peculiar to tanning, look forward to growing integration into the 
rest of the economy.
The Commission has examined carefully all the points of view expressed 
during the consultations and has taken them into account in its own study 
work and when defining the guidelines set out in this Communication. It 
has constantly borne in mind the three main principles underlying the 
common agricultural policy: a single market financial solidarity and 
Community preference.
II. Nature of the probLem
The imbalance between the supply of and the demand for certain 
agricultural products is the crucial problem now hampering the proper 
conduct of the common agricultural policy.
In the Green Paper the Commission pointed out that current trends in many 
sectors of agriculture are leading inevitably to a growth of surpluses 
which are becoming increasingly difficult and costly to dispose of both 
within the Community and on the world market. This results in a waste of 
resources which is difficult to justify, particularly in the present 
economic situation and at a time when the Community should be 
concentrating its efforts on a strategy for the future. It also produces 
a climate of uncertainty inhibiting Community farmers in their work and 
decisions. Lastly, it leads to growing tension in our relations with 
countries outside the Community.
This situation arose mainly as a result of the open-ended guarantees which 
have gradually isolated farmers from market forces. It is also the result 
of institutional prices being set at very high levels to deal with the 
income problems of structurally weak holdings. These holdings make a very 
small contribution in terms of production but in terms of numbers they 
predominate in the Community. The causes of the problem have been known

- 4 -
for a long time: in 1968, in the first of a long series of memoranda 
dealing with the problems affecting Community agriculture, the Commission 
pointed to the dangers of a trend which was already discernible. The 
fact is that it is not easy to remedy the situation without at the same 
time creating income problems which are socially and therefore 
politically unacceptable for a very large number of farmers who are 
marginal in terms of production but whose function, at least in certain 
cases, is essential for preserving the social balance, for land use 
planning and for the preservation of the environment. The task is made 
more difficult by the fact that enlargement from a Community of Ten to a 
Community of Twelve will have the effect of increasing the structural 
diversity of Community agriculture.
III. Ob jec t ives to be atta ined
The production processes in agriculture are linked to biological cycles 
which in most cases extend over one or more years and in the case of 
"permanent” crops (vines, olives, fruit trees, etc.) may even cover 
several decades. In addition, in agriculture we often have to deal with 
cyclical movements of the market and the unforeseeable and sometimes 
drastic consequences of climatic factors. It would therefore be illusory 
to seek to give farmers a more responsible attitude to production and the 
market by means of radical or abrupt measures or to expect spectacular 
results immediately or in the very short term.
Radical and abrupt measures would, moreover, be unfair. As the 
Commission has already pointed out in its memorandum on the adjustment of 
the market organization for cereals (COMfSb) 700 final of 14 November 
198S), in choosing the solution to be adopted it must be borne in mind 
that the present situation on the agricultural markets, while it is 
partly the result of the free choices made by farmers in the running of 
their holdings, is also the result of the agricultural policy guidelines 
laid down by the Community institutions over more than 20 years of the 
CAP and the measures - some fully consistent with the CAP, some less so - 
adopted under the national agricultural policies. This shared 
responsibility must be recognized and accepted by both sides.
The Commission considers that in order to achieve the desired aim there 
is a need for measures extending over several years and that consistency 
and continuity are aL least as important as the scale of the measures 
adopted in any given year. In order to avoid disappointment it is also 
necessary to be aware that results will only be achieved gradually.

- 5  -
It is therefore essential· to state the objectives very clearly at the 
outset. There must be as broad a consensus as possible on these 
objectives. The means to achieve them can be adjusted along the way to 
the extent that they prove insufficiently effective.
In the light of the analyses performed and the opinions expressed by the 
various bodies in the course of the consultations, the Commission, in the 
framework of and with due regard for Article 39 of the Treaty of Rome, has 
identified the following priorities:
gradually to reduce production in the sectors which are in surplus and 
to alleviate the resulting burden on the taxpayer;
to increase the diversity and improve the quality of production by 
reference to the internaL and external markets and the desires of 
consumers;
to deal more effectively and systematically with the income problems of 
small family farms;
to support agriculture in areas where it is essential for land use 
planning, maintenance of the social balance and protection of the 
environment and the landscape;
to make farmers more aware of environmental issues;
to contribute to the development in the Community of industries which 
process agricultural produce, and thus involve agriculture in the 
profound technological changes which are taking place.
IV. Methods
The seriousness of the problems calls for urgent and sustained action; the 
various instruments of the CAP must therefore be used to contribute to the 
search for solutions whereby the objectives can be achieved.
The pol icy on prices .and markets and the policy on structures constitute 
an inter-related whole having the same objectives, i.e. those of 
Article 39 of the Treaty; it is therefore important that they should act 
along co-ordinated and convergent lines. It would be abnormal that two 
instruments of a single policy should have the effect of offsetting each 
other.

- 6  -
This applies also in respect ot' action taken under agricultural policy 
schemes organized in the member countries themselves, which, especially 
for schemes relating to structures, account for the bulk of funds spent. 
The data mustered in a study published by the Commission early in the year 
on public, expenditure' on agriculture show that total national expenditure 
broadly matches total Community expenditure on guidance and market 
guarantee.
El torts made under Llie policy on prices to control the expansion of 
production and instil in farmers a greater awareness of the market should 
not be hampered by measures the direct or indirect effect of which is the 
opposite, e.g. 01 1-farm investments that may lead to the expansion of 
production of products already in surplus by more intensive use of land.
The Commission will be particularly watchful with regard to this danger, 
especially in its approach to State aids. It takes the view that improved 
consistency in this field is indispensable, were it only to ensure that 
the rigour which is required and is being imposed at Community level is 
not allowed to become an excuse for increased flexibility in action taken 
at national level, and therefore the occasion for the beginning of a 
gradual process of "tenaLiona1izaLion" of agricultural policy.
The nature of the problems and especially their links with changes in 
production and in the markets also require increased flexibility in the 
use ot the various instruments made available under Community 
Regulations. TL must be possible to wield these instruments in harmony 
with current circumstances and in compliance with the role originally 
assigned to them, under the market organizations to which they relate.
This objective, which is a matter ot efficiency, can be achieved by 
further extension of the delegation of powers granted to the Commission as 
the body responsible for management, in particular by a strengthening of 
its responsibility for all decisions relating to the disposal of products.
A.  Price and markets policy
In the Green Paper the Commission set out two extreme basic options for
achieving a better balance between supply and demand:
- a rigorous prices policy accompanied where necessary by direct aids 
to overcome the income problems which such a policy conic! entail for 
the structurally weaker holdings;
- the introduction of production quotas.

- 7 -
The first solution gives the farmer an entrepreneurial role; he is f 
to make his own choices but also more responsible as regards their 
consequences at market level. It is also designed to ensure that a 
clearer distinction is made between economic and social consideratio 
when price decisions are taken in the framework of the CAP.
The second solution foreshadows a trend towards an increasingly 
"managed" agriculture.
In the course of the consultations, farmers declared their opposition 
to quotas and increased bureaucratic control of agriculture; they also 
expressed their distrust of a generalized system of direct aids to 
incomes. They believe that in agriculture, as in all other sectors, it 
is the market, and therefore prices, which should provide the yardstick 
of the profitability of the farm, and they cannot accept an arrangement 
which would leave many of them "on welfare". Some Community drillers, 
however, were prepared to share financial responsibility for disposing 
of surpluses but on condition that the funds were used to develop new 
outlets and farmers were associated in managing them.
The Commission has taken note of these views. They deserve the 
greatest attention when it comes to defining a strategy which, in order 
to achieve its objectives, will require a whole-hearted commitment on 
the part of farmers, particularly those who have chosen to engage in 
farming in the full knowledge of what was involved, who intend to 
continue farming and for whom farming is the principal source of income.
The Commission, however, wishes to stress that it would be illogical to 
refuse the status of a welfare recipient and at the same time reject 
the idea of shared responsibility. Co-responsibility is a justified 
and fair solution in view of the increasing burden on the Community 
budget, and lienee on the taxpayer, which results from disposing of 
production which lias expanded and keeps expanding while shielded, at 
least in part, from the realities of the market-place and which, in 
addition, greatly exceeds the requirements of the internal market.
1. Prices
Price policy is the main instrument for guiding the development of 
agriculture in the medium and long term while taking account of 
demand within the Community and outlets on the world market. In the 
present market situation, and in view of the outlook for the next 
few years, the Commission takes the view that a restrictive price 
policy is necessary. It is aware, however, that this policy will 
have to work within certain limits.

- 8 -
Even a drastic reduction in institutional prices would affect the 
level of production only gradually and would probably have only 
limited effects on consumption because of the relative inelasticity 
of demand for agricultural products.
A rigorous policy, with across-the-board price cuts, would also have 
a very uneven impact on incomes, because farming structures vary so 
widely within the Community, a factor that will be further 
accentuated when Portugal and Spain join. The options listed in the 
Green Paper to overcome this disadvantage include direct aids, e.g. 
aids to supplement the incomes of farm households, or aids having a 
more structural character for farms which have a fair prospect of 
viability in the long term. But serious difficulties stand in the 
way of generalized deployment of aid schemes of this kind, given the 
very diversified economic and structural situations in the Community 
at the present time, for administrative and budgetary reasons; on 
the other hand, direct aids of a more specific character could well 
form a valuable adjunct to market management or could help to temper 
certain structural problems.
Consequently,  the Commission believes that the policy on prices must 
be supplemented by other machinery enhancing the effectiveness and 
sharpening the selectivity of the action taken. An important 
consideration is this connection is the need to allow more fully for 
the special income problem arising for small farms and, by this 
approach, also to allow for the problems of the regions in which 
there are heavy concentrations of farms handicapped by weak 
structures.
2. Production quotas
Provided they can be administered properly and effectively, 
production quoLas have the obvious advantage ol exerting a rapid and 
direct influence on the quantity produced. In the Green Paper, the 
Commission ,has already pointed out the many disadvantages of this 
approach,  which represents the culmination and institutionalization 
of a systematic separation of the production process from the 
realities of the market-place. It finds comfort in the fact that 
farmers share its reservations and prefer responsibility to 
constraint. The Commission remains convinced that the dangers of 
increasing bureaucratization of agriculture, factor immobility and 
an increasingly marked isolation of agriculture from the general 
economy must be avoided at all costs.
Although ,'iL I  i  is L sight it gives the illusion of security, such a 
course would be Iundamental1  y opposed to farmers interests, 
especially young farmers and those who regard farming as a genuine 
ent repreneur i  a L ac L i  v i ty.

- 9 -
This unambiguous attitude adopted by the Commission may seem 
inconsistent with the fact that Lt has in the past proposed the 
introduction of quotas for milk. It should, however, be remembered 
that it accepted this solution only when it ascertained that, 
because of special features of the dairy sector, the scale of the 
problem, the time available to solve it and the failure of the 
machinery then available, it had no choice to use this last resort, 
on a temporary basis.
It should also he remembered that should there be a new application 
ot quotas, it would be difficult if not impossible, if the aim was 
to avoid shifting problems from one sector to another, to confine 
their scope to any given product. But the management of a quota 
system covering £ i  large part of Community agriculture would riiise 
virtually insoluble administrative problems, particularly if it came 
to attempting to control the development of crops harvested on an 
annual basis.
3. Producer _co- re spoils ibili ty
The principle of co-responsibility, implemented in a wide vtiriety of 
forms adapted to the various market organizations, has been applied 
for a number of years under the common agricultural policy. Its 
purpose is to ensure that farmers pay part or all of the costs of 
disposing of production exceeding a given quantity, this quantity 
being normally referred to as the "guarantee threshold".
In 1984, the Council stressed the need to apply "guarantee 
thresholds" to all products for which there are surpluses or for 
which budgetary expenditure may rise very sharpLy.
Co-responsibility can Lake different practical forms. It may 
involve reductions in the common prices or the intervention prices, 
or a reduction in aids, or curtailment of aids related to maximum 
quantities, or again the payment of a levy designed to cover certain 
budget costs for disposal, or again quota restriction of guaranteed 
production; it is now applied in respect of most products, 
including sugar, milk, cereals, rape, sunflower, cotton, tobacco, 
tomato-based processed products, and wine.
In budgetary terms and as means of controlling production, the 
various forms of co-responsibility have been found to be all the 
more effective if they are managed in association, and co-ordinated, 
with the“  policy on prices and it there is a direct 1  i  nk. .  between the 
level of co-responsibility and changes in production (as is, for 
example, the case for cotton) or the expenditure occasioned by 
disposal (as is the case for sugar).

-  10 -
The Commission takes the view that co-responsibility must remain an 
essential adjunct to the policy on prices, and must be applied on 
the basis of proper procedures allowing for the economic, budgetary 
and social situations arising in respect of the products concerned; 
for example, for cereals, the Commission lias just indicated its 
intention to adjust the market organization by means of several 
instruments, including a co-responsibility levy which can be 
modulated Lo allow for production structures.
h.  r  ntervention
(a) Making management more flexible
Intervention is one of the basic elements in most of the market 
organizations. It was introduced in order to flatten out the 
excessive short-term price fluctuations and the accompanying 
production trends harmful to both producer and the consumer. It 
sometimes also helps Lo increase the farmer's bargaining power 
vis-à-vis dealers and the various users of agricultural products.
As far as the first aspect is concerned, the original function 
of intervention as a "safety net" has been gradually lost as the 
Community has passed from deficit to surplus in the various 
sec tors.
As a result of the gradual decline of prices, intervention has 
become an outlet in itself, particularly attractive in that it 
avoids the efforts and risks of marketing. Under these 
circumstances, instead of reorientating production in line with 
demand it becomes an instrument stimulating an artificial supply 
for which there is no real possibility of disposal.
In a market generating a structural surplus, the regulatory role 
falls rather to exports, which also have their limitations. A 
gradual adjustment of the balance between intervention and 
exports is necessary therefore in order to secure a more 
rational orientation of production.
Tin.· role ol intervention in increasing the bargaining strength 
of farmers is undoubtedly losing its importance its the 
agricultural world organises itself and creates machinery, 
cooperatives for example, that eliminate the disadvantages of 
wide dispersal of supply confronted with fairly highly

- LI -
concentrated demand. The Commission considers that the trend 
towards better organization of the agricultural· world is highly 
desirable and it intends to help resolve the problem by 
encouraging this trend and not by consolidating a distorted 
intervention system.
Given the above considerations, adjustments should be made in 
the system to eliminate certain rigidities and ensure that 
intervention is restored to its original function. The 
continuity and the stcibility of the progress made can be ensured 
by safeguarding this original function, through adiiptations 
necessitated by changes in market conditions, avoiding 
consolidation of machinery as established at a given moment in 
time on the basis of circumstances which since have undergone 
far-reaching change.
(h) Quality standards
The policy on quality is directed towards two objectives which 
are both necessary at the present time. Firstly, there is an 
effort to matcli production more accurately to the requirements 
expressed on by the market and by users, and, secondly, there is 
an attempt to limit quantitative increases in production since 
very often quality can be achieved only at the expense of 
reduced yields.
It must be stressed that in certain cases where a surplus exists 
it is a surplus of certain qualities or varieties only within 
the sector and is not in fact an overall surplus.
The Commission intends to pursue its efforts in this area by iill 
available means and in particular by differentiating the 
intervention price in line with the differentials recorded on 
the market for different qualities, such differentiation being 
indispensable when, as is the ease at the moment for many 
sectors, the intervention price is close to the market price and 
is a very strong pole of attraction and orientation for the 
producer.
Moreover, the increasingly important role of exports as an 
outlet for and stabilizer of the market makes it more and more 
necessary to stress quality in the policies followed.

- 12 -
(c) Disposal of stocks left over from the past
A large volume of intervention stocks is not only a considerable 
strain on the budget but reduces bargaining power vis-a-vis 
possible purchasers and thus helps depress the market and create 
a climate of instability.
Developments in the last few years have led to a build—up of 
intervention stocks creating, particularly for butter and beef, 
problems that are all the more acute in that these are 
perishable products.
The stocks of butter were largely accumulated before the 
introduction of milk quotas and those of beef are at the moment 
being indirectly affected by the Introduction of these quotas, 
which has led to heavy culling. In both cases a large 
proportion of the stock has been in the warehouses for more than 
a year.
The Commission is aware of the gravity of the problem and ot the 
resulting consequences; it lias therefore taken initiatives with 
regard to reducing stocks which should help to ensure that the 
situation is gradually restored to normal. It has also proposed 
the allocation of funds to reduce the price of perishable 
intervention products, when taken into storage, which would help 
to improve budget ''transparency" and facilitate disposal of 
products in store.
5. Consumers
In the Green Paper, the Commission recalled the advantages that have 
accrued to consumers from the common agricultural policy, in 
particular stabilization of the markets and secure supplies. It 
also pointed out that during the last few years official prices have 
generally lagged behind inflation.
Consumers are now becoming more and more sensitive about the 
"naturalness" or otherwise of the products they buy and about their 
dietary qualities. Genetic manipulation, hormones, pesticides, 
additives and preservatives are all disturbing concepts often 
featured in the media. The Community has already made great efforts 
in response to these worries by prohibiting the use of harmful 
substances, encouraging production of healthy varieties, fighting 
against contagious disease, standardizing qualities, harmonizing 
legislation etc. This work must be pursued and the consumer must be

- 13 -
informed about it and, above all, given the necessary assuriinces.  
Re-establishment of a climate of confidence will undoubtedly 
encourage consumption and efforts in this direction are in the 
interest of both producers and consumers.
The same attitude must be adopted to the aspirations of the steadily 
growing number of consumers who wish to be able to purchase 
organically grown products even if they have to pay more for them. 
This is a demand that Community farmers would find it in their 
interests to satisfy before farmers outside the Community do so.
The Commission intends to take action to promote such production by 
introducing a legislative framework that will ensure free movement 
and give satisfastory guarantees. The rules on labelling may in 
this case as in others be a means of responding to the requirements 
of both consumers and producers.
Consumers in our society are bombarded with publicity material 
promoting foodstuffs many of which compete with traditional 
agricultural products. If agricultural products are to compete on 
equal terms with these products, action should be taken, without 
interfering with competition, to organize Community or national 
information campaigns providing fuller knowledge for the consumers 
to guide their decisions in the shops. Funds, usually accruing from 
the various producer co-responsibility schemes, have been earmarked 
for this purpose, and some action along these lines has already been 
taken. The experience already gained in the organization of these 
campaigns should be turned to good account with a view to their 
improvement and intensification.
6. Diversification of production
The diversification of production still has a contribution to make 
to improving the Community’s agricultural potential whilst avoiding 
the creation or increase of surpluses.
As already pointed out in the Creon Paper, the products offering the 
best prospects in this connection are oil and protein plants, of 
which the Community consumes far more tluui it grows, products such 
as certain types of fruit which are now quite uncommon but which 
could well prosper in the future, and timber products.
For oleaginous and protein products, past and prospective 
development is being hampered by cost problems connected with the 
nature of the present Community support arrangements. The present 
schemes are a heavy burden on the budget because, in the absence of

- I n ­
adequate protection From non-member countries, the Commission has 
been forced to make deficiency payments without which farmers would 
simply not grow them.
Tn the chapter on external relations in the Green Paper, the 
Commission suggested that Lhis difficulty could be resolved by a 
more balanced form of external protection. This would, however, 
require difficult negotiations with our trading partners, and it 
would be unrealistic to think that a solution could be found in the 
short term.
In the meantime, provided that the cost to the budget arises from 
the nature of the system set up and not from the development of 
surpluses, this sector should not be treated in the same way as 
those adequately protected in respect to external competition.
In addition to these two groups of products, there are a number of 
other types ol production not widespread at the moment (berries, 
medicinal plants, herbs and spices, almonds, minor forms of 
stockfarming etc.) which could under appropriate circumstances be 
developed to a certain extent without it being necessary to 
introduce burdensome and costly support mechanisms. The very marked 
polarization of production that is now characteristic of certain 
types of farming has come about at least in part from the existence 
of the absolute guarantees afforded by rigid intervention 
mechanisms. The gradual introduction of more flexible intervention 
mechanisms should bring about an increase in sensitivity to market 
demand on the part of farmers and encourage some diversification and 
reorientation of production.
The Commission intends to take the initiative on measures relating 
to research, experimental work and the provision of advisory 
services, since these are the best means of supporting this trend.
Forestry may also have a role to play, not only as a source of 
supplementary income, but also in the use of land withdrawn from 
agriculture. It could well offer certain advantages in terms of 
alternative production, since it is a major activity in the regions 
of the Community and since, in many respects, it is a valuable 
source of employment. It is an activity which could also be turned 
to good account in different ways so as to adapt to the specific 
features of the farms and the characteristics of the regions 
concerned, and it an activity which is already supported, to some 
extent, by the structures side of Lhe C.A.P.
The Commission is now drafting a document on forestry with a view to 
discussion of certain questions concerning agriculture and 
forestry. The matters on which the Commission would like to prompt 
comprehensive discussion include the following questions: "What are
the best ways and means of organizing an increase in the areas under

- Ie )  -
timber in the Community? What are the conditions which must be met 
to enable forestry to play a role as an alternative to surplus 
agricultural production? How could schemes operated under taxation 
arrangements or through aid systems be combined to provide effective 
incentives or enhancement of the value of the Community woodlands ?
7. Technical progress and new uses
Technical progress goes far to account for the expansion of 
production in recent years. The contribution it has been making, 
notably through bio-technology, may be expected to increase, not 
only on the supply side, but also in respect of demand: the 
development of bio-technology will definitely lead to wider outlets 
for certain agricultural products traditionally grown in the 
Community (e.g. sugar and cereals) and for those the production of 
which could be developed (e.g. certain oil-bearing plants).
Nonetheless, the actual quantities of agricultural produce that can 
be accounted for through these new outlets are, at any rate in the 
short and medium terms, relatively small.
The major obstacle standing in the way of the development of these 
new channels is the high cost of the agricultural raw materials. In 
this connection, the Commission has proposed, with a view to 
involving Community agriculture in these new developments and 
ensuring that price levels do not induce investors to locate their 
operations outside the Community, systems designed to enable the 
industrialists concerned to obtain supplies at world prices. The 
products covered by these systems are, at the present time, cereals 
and sugar.
As time goes on, productivity gains should make it possible to 
organize production specifically designed for industrial uses and 
competitive enough to obviate costly subsidies. Agricultural 
research must be promoted and guided on the basis of this policy 
goal, with the consistent principle that any further expansion of 
production must henceforth be justified by a real - and unsubsidized 
- expansion in outlets.
The Commission has also studied the problem of the use of certain 
Community products for the manufacture of bio-ethanol. Its 
preliminary conclusions are contained in its Memorandum on the 
adjustment of the market organization of cereals (C0M(8S) 700 
final). This problem is particularly complex in view of its 
strategic and budgetary implications. At this stage the Commission 
plans, on the one hand, to study the question in greater depth to 
obtain an objective view of the various factors involved and, on the 
other hand, to continue to promote research programmes on this 
subject for the time being.

- 16 -
B. Policy on structures
As already pointed out in the Green Paper, agriculture has been 
involved in the last twenty years in the far-reaching process of 
adaptation which lias affected, and still affects, all the industries, 
notably because of technical progress and the development of the 
conditions under which firms and operators compete.
However, declining growth rates, the lack of alternative jobs, and the 
build up of surpluses on the agricultural markets are all factors 
combining to make the old strategy of development hinging on sustained 
mobility of manpower and capital goods and on production growth an 
unrealistic one.
Thus the Council of Ministers adopted on 12 March 1985 an updating of 
the entire legislation in force on agricultural structures (Council 
Regulation (EEC) No 797/85) with a view to improving the effectiveness 
of the relevant instruments.
This updating allowed to some extent for the changes of context in 
which it is to work, in particular by refocussing investment aids on 
targets such as conversion of production, improvement of quality, 
improvement of living and working conditions, protection of the 
environment, and, in general, an effort to enhance productivity by 
cutting costs rather than by increasing production.
In the Green Paper, the Commission thus assumes that, following recent 
adjustments, the Community has the essential instruments for stepping 
up its action in this sphere; it foresaw, however, that further 
ddit ions or alterations might prove necessary.
The Commission also stresses the importance of action to encourage the 
creation of income sources alternative to, or supplementing, 
agricultural income, and consequently the need for a sharp increase in 
the intensified action of the structural funds in rural areas, by means 
of additional financial resources. It was against this background that 
the Community decided, for example, to implement the Integrated 
Mediterranean Programmes (IMPs).
As for action peculiar to the socio-structural policy under the overall 
strategy on removing market imbalances, it could be usefully 
implemented in four main areas.

- 17 -
L·  Assisting the proccss of change
Tn the first place this means helping farmers to adjust to the new 
realities of the market:
- by rationalization of the means ol production, with the emphasis 
on better organization rather than on ill-considered increases 
in production;
- by the diversification or qualitative improvement of production;
- by actively seeking new outlets and by taking more systematic 
account of medium-term and long-term trends on the market.
In this context the services which provide the farmer with the 
technical and economic support necessary for the proper management 
of his business have always been a decisive factor in the 
development of farming, particularly where family holdings are 
concerned. The remarkable achievements recorded in certain 
countries of the Community are doubtless largely attributable to the 
efficiency of the support services in question. The need for such 
support is particularly clear when, as is now the case, the task is 
to guide production along new lines and to reorganize holdings in 
the light of far-reaching changes in the economic context and the 
market situation or to bring about a gradual change in the attitude 
of producers who have so far been rather passive in their approach 
to tlu: market.
The provision of such support, which is very largely dependent on 
the government and the structures established by farmers' 
organizations, has varied greatly from one country to another. It 
is difficult, after all, to provide uniform and centralized 
encouragement lor initiatives which have to be cidapted to local 
circumstances. Experience so far has been rather disappointing in 
this respect. It is important, however, that further endeavours 
should be made to remedy certain shortcomings, in particular in the 
regions suffering from natural or structural handicaps.
The Commission intends to step up iLs commitment to the promotion 
and coordination of research and experimentation. Policy on 
agricultural research is to bo strengthened. Technology transfer 
must be organized effectively, especially for the less developed

regions, so that the gap between them and the rest can be narrowed. 
The Commission is also ready to study, together with the national 
administrations and the farmers' organizations, the most effective 
means of encouraging the development of advisory and management 
services and of services which can provide farmers with information 
on the state of the market.
facilitating the disposal of products
Secondly, increased support should be given to those structures 
which can facilitate the disposal of production by better 
organization of marketing and the development of processing.
Marketing structures which ensure the necessary transparency and a 
competitive processing industry are the farmer's best allies. In 
many cases the cause of failure or disappointment is more likely to 
occur at this level than at the production stage. For example, the 
scope for developing certain alternative lines of production depend 
heavily on the provision of appropriate industrial and commercial 
infrastructures.
The recent adjustments to Regulaton No 3.SS/77 have further enhanced 
the usefulness of the instrument which held already proved itself 
extremely effective. The Commission intends to pursue its efforts 
for improvements in this area and, should the funds available prove 
insufficient, it is ready to take the necessary steps to have these 
funds increased.
Helping Lo reduce production potential and encouraging the 
instil yL at_ion_o_f j young_ farmers
Thirdly, measures should be adopted which will help to bring about 
better equilibrium in the area of production whilst helping certain 
types of farmers who merit special attention in connection with the 
present adjustments.
Technical progress will certainly enhance unit yields and therefore 
the supply of products to be disposed of on the market, although 
demand is marking time or, at any rate, increasing only slowly. 
Hence the need to convert some land to non—agricultural use, to 
forestry or to unintensive forms of farming.

- 19 -
Also, young people entering tanning in present conditions are 
handicapped not only by the saturation of the markets but also by 
the very low degree of production factor mobility, especially of 
land, and have serious difficulties to contend with in their efforts 
to establish farms that are large enough to be really viable.
The position of elderly farmers, who started farming when the market 
situation was completely different from what it is now, is equally 
unenviable. Because of their age, training and futbits acquired over 
many years of work, it will probably be difficult for many of them, 
especially those who have no successors, to make the necessary 
effort to revise substantially the organization of their work. for 
the same reasons, it is not easy to see how they could retrain for 
other work, particularly at a time when jobs are so hard to find.
In view of these various probLems, the Commission is contemplating a 
scheme consisting in offering farmers aged between 55 and 65 an 
annual "pre-pension" supplemented by a lump-sum payment per hectare 
where the farmer stops farming and his land is either withdrawn from
cultivation and is left fallow for a specified number of years, or
is assigned to non-agricultural uses such as afforestation, sport or 
recreation. Thought should be given at the same time to ways in 
which meitsures taken under the social security systems for the 
benefit of farm workers could be fitted into this plan.
Where farmers aged between 55 and 65 stop work and hand over
responsibility for the farm to a young farmer, they may also qualify
for an annual "pre-pension" allowance provided that the successor 
commits himself to conversion of the farm, for example to 
alternative products, to quality production, or to a production 
system allowing for environmental constraints.
In order to allow for the particular circumstances in given regions 
and countries, and thus enhance the effectiveness of the scheme, the 
allowances and the Community reimbursement rates could be modulated.
The Commission is also further studying the possibility of 
organizing other schemes which would facilitate conversion of part 
of the land to other non-agricultural activities: an active and
extensive policy designed to cut back production potential· would be 
of obvious value given the present production and market situation, 
but related financing and audit and control problems would be by no 
means negligible. In this connection, what is needed in particular 
is a thorough review of the experience already gained in this field 
in a number of non-member countries.

- 20 -
h. He L  ping to maintain agricultural activities
FonrthLy,  there should be ; i  Further strengthening oF the measures 
designed to. take account oF the irreplaceable role played by Farming 
in certain areas oF the Community and to provide a Fair return for 
the services which farmers render to society in general in terms oF 
land improvements and the safeguarding of the social and 
environmental equilibrium.
The Commission Urns plans to propose that the scope of the measures 
on behalf of mountain and hill farming and farming in certain 
less-favoured areas (Title III of Regulation (EEC) No 797/83) should 
be broadened and their effectiveness improved. This will be done 
without encouraging increased or more intensive production, the sole 
objective being to ensure satisfactory incomes and thus help 
maintain, in these areas, the level of farming equilibrium.
The Commission also intends, in connection with the implementation 
of Article 18 of Regulation (EEC) No 797/81, to propose schemes 
which will be integrated with those financed by the Community's 
other structural funds and loan instruments, with a view to 
improving the economic viability of certain rural areas of the 
Community and, in particular, encouraging the creation of 
alternative opportunities tor employment.
C. Protection of the environment and maintenance of the countryside
Consultations have confirmed that there is a growing interest in all 
matters relating to the environment and the protection thereof. As 
public opinion becomes more aware of the problem, a great variety of 
initiatives are being taken to introduce appropriate legislation. In 
planning the development of any form of productive activity, therefore, 
implications can now no longer be ignored.
Agriculture is thus increasingly affected, partly because of the 
measures to control the misuse of pesticides and fertilizers or to 
regulate certain forms of stock-tanning. In this context the adoption 
by certain Member States of legislation on intensive stock-farming 
(particularly pig-farming) is now conferring some urgency on the 
question of common action, not only with a view to protecting the 
environment but also to ensure fair conditions of competition. 
Similarly, .indefinite exemption from the principle that the "polluter 
pays" can hardly be given to agricultural holdings, least of all to 
those which, in terms of the way they are structured and operate, are 
to all intents and purposes industrial undertakings.

-li­
lt should be remembered, however, that the introduction of certain 
constraints obliges the farmer to alter his habitual production 
techniques. Consequently, it is important that farmers in this 
situation should have available the necessary technical assistance and 
thus be able to make the change in the proper manner. The Commission 
intends to look into this matter and to take the necessary steps, in 
particular to promote research and experimentation on the production 
techniques best suited to achieve the desired objective along 
economically satisfactory lines. Appropriate planning procedures 
should also be introduced, including a comprehensive assessment of the 
impact on the environment for the main projects relating to land 
utilization, and the possibility should be studied of curtailing, or 
even, in certain cases, prohibiting, the use of public assistance to 
promote drainage.
Unlike other activities, however, agriculture can claim to make a 
positive contribution to safeguarding the environment, provided that it 
observes certain rules. The usefulness of a common aid scheme for 
farmers making such a contribution has been recognized in the new 
Regulation on agricultural structures (Article 18 of Regulation No 
797/8S). The Commission has undertaken to propose a common framework 
for encouraging the conservation of the rural environment and the 
protection of specific sites and will shortly forward the relevant 
proposals to the Council. Income support would be provided for farmers 
who maintain (or introduce) agricultural production methods which are 
compatible with the protection of the natural habitat and the measures 
taken under the CAP would be integrated with overall environmental 
policy. A Community financial contribution towards such income support 
arrangements could be envisaged.
On the whole, therefore, the concern for the environment is a positive 
factor where the agricultural sector is concerned. It may mean 
additional income for the farmer under specific aid schemes and it may 
help to remove certain market imbalances attributable to over-intensive 
farming of the land.

External relations
The gradual transition from a situation of deficit to one of surplus 
means that the design and management of the common agricultural policy 
must take increasing account of the external dimension.
As regards the products in surplus, which tiow constitute the majority 
of agricultural products in the Community, outlets in non-member 
countries are both an essential requirement for the balance of the 
market and a fundamental parameter in the quantitative and qualitative 
guidance of production. It was for this reason that the Commission 
included a chapter on international trade in the Green Paper. It 
emerged in the consultations that farming circles attach special 
importance to this .aspect and view certain adjustments to the rules 
governing imports as a matter of priority in any adaptations made to 
the mechanisms of the common agricultural policy.
In the case of products bound under GATT, the Community can only alter 
the rules on imports after negotiations with its trading partners. To 
subordinate any other adaptation of the mechanics of the CAP to a 
modification of these trade regimes, as some farmers would seem to 
demand, would be tantamount to recognizing the inability of the 
Community to settle its own internal problems for itself. This is 
clearly an approach which the Commisssion cannot entertain. The 
Commission feels, however, that the effort demanded community producers 
to adapt to present market situations and to contain surpluses must be 
matched by similar sacrifices from the Community's trading partners.
Pending possible negotiations, account can moreover be taken of certain 
imbalances in the field of external protection, and the Community 
preference can be ensured by other means. For example, in the recent 
memorandum on the adaptation of the cereals market organization, the 
Commission envisaged including substitute products, which are imported 
into the Community at a very low or zero rate of duty, in the internal 
consumption of cereals, entailing an equivalent reduction in that 
portion of production with regard to which coresponsibility would be 
calculated. It is also in this connection that, in the absence of 
adequate protection, the Community has set up, for example for oilseeds 
and vegetable oils, a system of processing aids accompanied by minimum 
prices which takes account of growers' interests.

-  2 3 -
It should he emphasized that, as pointed out in the Green Paper, 
stronger external protection for some products should go hand in hand 
with an attenuation of protection in others. More precisely, it would 
be inconceivable to negotiate consolidation and even the improvement of 
our expo-t trade flows while at the same time sealing off our frontiers 
to imports. Autarchy is not a suitable model for a Community whose 
economy depends very much on trade and which has to import most of the 
raw materials it needs.
In this chapter, the Commission can, at this stage, only confirm the 
value of the ideas set out in the Green Paper relating to the rules 
governing imports and exports, which it is now considering in greater 
depth. The preparatory work for the next multilateral negotiations is 
now under way and at this state the greatest caution is to be observed.
There is no doubt, however, that the credibility of the Community and 
its bargaining power at the forthcoming international agricultural 
negotiations will depend greatly on the ability which it will have 
shown to solve its internal problems, particularly in the matter of 
agricultural· surpluses.
If the Community has demonstrated the necessary determination, we may 
perhaps be able to convince our partners of the need for a better 
organization of the world market. This is a long-standing Community 
aim. It is admittedly one which is in its own interest but also, the 
Commission is profoundly convinced, in that of its partners as well, 
whether they are industrialized or developing countries. There is 
therefore reason to hope that more systematic co—operation and more 
refined rules for international trade will take the place of 
confrontation on the markets and in international organizations and 
that the unjustified costs of cut-throat competition can be avoided.
It is also vital that the adjustments made to the CAP allow properly 
for the relations the Community maintains with developing countries and 
for the need to ensure Lhat the Community's policy on exports is in 
line with their supply needs: the Community is at the same time a 
major supplier and the leading customer for agricultural products. It 
has also established fairly extensive co-operation links with many of 
them and has introduced a generalized preferences system which covers a 
wide range of agricultural products.
As already indicated at the beginning of the Communication, the 
Commission has begun a thorough reassessment of its policy of supplies 
for the developing countries which need more in the way of agricultural 
products than they can produce, and it will make appropriate proposals 
in due course. However, it wishes to stress once again that this

-  Ih -
policy cannot and must not in any circumstances be seen solely as a way 
of disposing of agricultural surpluses «and that the Community must 
continue to assist these countries with the development of their own 
agricultures.
The Commission intends to confirm what it stated in the Green Paper 
also as regards the need to pursue an active export policy and, in that 
context, ensure that the instruments of the external regime of the CAP 
are effective. The continuing importance of the world market as an 
outlet for a part of the Community's production implies a twofold 
requirement in this connection:
firstly, it is important that the efforts to rationalize the 
existing instruments be continued and that their operation be made 
more transparent. This could help to restore a climate of 
confidence with our trading partners and prevent pointless disputes 
which are not in the interest of Community agriculture;
secondly, it is important that these instruments be diversified so 
that Community operators can be present, on an equal footing, on a 
market where competition is constantly increasing.
V.  Budgetary cons iderations
The guidelines adopted allow for budgetary constraints, in particular 
those deriving from the budgetary discipline required in connection with 
EAGGF guarantee spending. This discipline, involving a growth rate for 
agricultural expenditure lower than the rate of growth of the Community's 
own resources, will necessitate difficult decisions, especially because of 
recent developments on agricultural markets both within the Community and 
outside it.
Given, however, the time needed to implement the measures contemplated, 
the value, indeed the necessity, of intensifying certain types of 
intervention, and the time required before measures intended to curtail 
the developim.MiL of production have any appreciable impact on the volume of 
Community expenditure:, the question does arise as to whether the 
objectives set can be achieved within the time limits fixed whilst 
remaining within the "normal" framework of the present financial rules and 
of the appropriations which these rules place at the disposal of the two 
EAGGF sections.
Although it is not possible at the present time to answer this question on 
the basis of precise figures, it is, however, clear that certain measures 
contemplated, or that could be contemplated, in respect of the policy on 
markets and/or the policy on structures will have the effect of slowing 
down the growth of agricultural expenditure in the medium and long term, 
but could well, in the immediate future, tend to boost EAGGF costs.

- 25 -
This is an effect which the Commission has already had to contend with 
when preparing the proposal for the buying in of milk quotas, and it will 
again arise for a number of specific schemes contemplated with a view to 
eliminating the supply/demand gap which lies at the heart of the present 
difficulties besetting the CAP.
In this field, for example, the restoration of a reasonable supply 
equilibrium requires not only market and structural policy measures to 
control production and thus curb the build-up of surpluses, but also 
action in respect ot the present situation by the disposal of current 
stocks which, owing to their size, represent a major item of expenditure 
for the budget and also affect market prices.
In this connection, it is obvious that a special operation - which the 
present situation calls for - to dispose of surpluses, and action in the 
near future with regard to the volume of production, could not be financed 
from the ordinary funds available to the EAGGF Guarantee Section under the 
current budgetary rules.
Likewise, it should be noted that the EAGGF Guidance Section's five-year 
allocation lor 198A-89, does not cover approprierions for Lhe measure 
aimed at encouraging farmers to leave Lhe Land, since it is a new measure, 
nor does it provide sufficient appropriations to cover intensification of 
measures already in force.
The conclusion must be that, allowing for budgetary requirements, it will 
nonetheless be necessary, if the objectives set are to be achieved, to 
finance beyond the normal appropriations, specific schemes of the type 
outlined above for the EAGGF Guarantee Section and to increase the EAGGF 
Guidance Section's five-year allocation.
VI. Conclusions
Throughout the Community, the production system is now being adjusted in 
order to focus effort and streamline the use of resources within a 
strategy designed to prepare Europe for the challenges of the next decade 
and thus provide alL its citizens with real prospects for the future.
This is a process which is bound to affect agriculture as well.
That farming is a special branch of industry is, ot course, a fact that 
cannot be ignored. Agricultural activity remains greatly dependent on 
biologicaL cycles which impose constraints and particular rhythms Largely 
escaping human control. It retains a strategic role as a supplier of

- 26 -
basic food products; over and above its strictly economic functions, it 
pLays what is, in some cases at least, an irreplaceable role in land 
development and the safeguarding of certain social, environmental and 
natural equilibria.
The consultations have also confirmed a broad consensus as to the 
importance of safeguarding the particular character of farming in Europe. 
The European system, which is based mainly on family farms, is 
characterized by structures resulting from the high density of the 
population and frequently very intensive interpenetration between urban 
and rural areas. The maintenance of certain equilibria serves the 
interest of society as a whole.
These characteristics and specific features demand a stable framework of 
rules designed to temper the impact on prices and incomes of excessive 
fluctuations in production and ensure some degree of protection from the 
erratic swings of prices on a world market which is usually narrow, often 
residual and sometimes actually manipulated. Neither exclusively 
budgetary - and, therefore, narrow-ranging - considerations, nor 
self-interested pressure by certain non-member countries can compel the 
Community to review the basic principles of the common agricultural 
policy. Its aims as set out in the Treaty of Rome remain valid.
However, agriculture, Like any other sector of the economy, must meet the 
Laws of the market-place and relate to socio-economic developments in the 
surrounding world if it is to remain dynamic and efficient. In the eyes 
of the taxpayer, particular character is no reason for permanent, 
conspicuous wastage, least of all at a time when the economic situation is 
difficult and demands sacrifices from everybody.
As pointed out at the beginning of this Communication, the imbalance 
between supply and demand lies at the root of the present problems of the 
CAP. The return to a sound situation will therefore have to be achieved 
mainly through the policy on prices and markets.
Many instruments are available, and they all have something to 
contribute. They will have to be used in a coherent and coordinated 
manner so as to help the farmer to regain an awareness of the market and 
to act in consequence.
In this context, prices play a crucial role: trends in prices and in
price relationships determine the long-term development of production and 
structural adjustments. furthermore, prices constitute a reference factor 
in relation to which the other management instruments available may be 
deployed. On a saturated market, prices tend to ease down; if the present 
market conditions continue, the policy on prices can but be restrictive in 
the years to come.

- 27 -
Pending a medium- and long-term adjustment of production, the 
co-responsibility of the farmer is proving to be an essential complement 
to price policy. Insofar as it is intended to provide each farmer with an 
effective indicator of market dynamics, it must develop in line with the 
growth or fall of production or the costs sustained in disposing of the 
latter. The contribution made by farmers must, moreover, be distributed 
fairly and, therefore, be modulated to allow for certain social problems 
which are particularly acute in the case of small farms, but also for the 
relative advantages which each category of fcirmer derives from CAP support 
and the system of guaranteed prices, depending on how big their farms are 
and the type of farming.
i
Intervention must gradually revert to its original role as a safety net 
designed to contain short-term price fluctuations within certain limits.
It cannot take the place of a structurally congested market. The 
rigidities which prevent this management instrument from being used 
effectively must therefore be gradually attenuated.
Attenuating of the structural rigidity of intervention and pursuing a more 
realistic price policy will automatically stimulate the diversification of 
production and the new uses of products. Research and dissemination of 
information will assist this process.
Lastly, a policy which puts the emphasis on quality as opposed to 
quantity, more careful and systematic consideration for the concerns of 
the consumer and measures to contain the harm done by a type of 
agriculture which, being intensive, can be prejudicial to the environment, 
all these are factors which constitute very useful adjuncts to the effort 
to achieve market balance. They contribute to containing unrestrained 
growth of production and help to create the conditions facilitating its 
disposal.
The policy on structures can and must, by means of measures which are 
coordinated and consistent with the price policy, also help to reach the 
objectives mentioned. The measures envisaged in this field will both help 
farmers to adapt to the new market reality and contribute to a better 
balance between supply and demand.
The Commission itself will deploy all the instruments and resources 
available to ensure that the action it takes is as fair and as effective 
as possible, relying, for this, on more open consultation with all those 
working in the agricultural sector.
The guidelines set out in this Communication result from the search for a 
balanced path among the numerous constraints. Their aim is gradually to 
encourage the farmer to return to his role as entrepreneur. This 
admittedly entails what for some farmers may be a difficult process of 
adaptation. However, it should be realized that if these adaptations are 
not accepted and undertaken on the initiative or with the support of the 
parties concerned, they will inexorably be imposed upon them by 
circumstances. The Commission believes that its duty is to offer the 
farming community prospects rather than illusions and it believes that it 
is proposing a way ahead which is both realistic and fair.