ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(78)500
Vol.1978/0183

Disclaimer
Conformément aurèglement(CEE,Euratom)n°354/83duConseildu1erfévrier1983
concernantl'ouvertureaupublicdesarchiveshistoriquesdelaCommunauté économique
européenneetdelaCommunautéeuropéennedel'énergieatomique(JOL43du15.2.1983,
p.1),telquemodifiéparlerèglement(CE,Euratom)n°1700/2003du22septembre2003
(JOL243du27.9.2003,p.1),cedossierestouvertaupublic.Lecaséchéant,lesdocuments
classifiésprésentsdanscedossierontétédéclassifiésconformément àl'article5dudit
règlement.
InaccordancewithCouncilRegulation(EEC,Euratom)No354/83of1February1983
concerningtheopeningtothepublicofthehistoricalarchivesoftheEuropeanEconomic
CommunityandtheEuropeanAtomicEnergyCommunity(OJL43,15.2.1983,p.1),as
amendedbyRegulation(EC,Euratom)No1700/2003of22September2003(OJL243,
27.9.2003,p.1),thisfileisopentothepublic.Wherenecessary,classifieddocumentsinthis
filehavebeendeclassified inconformitywithArticle5oftheaforementioned regulation.
InÜbereinstimmung mitderVerordnung(EWG,Euratom)Nr.354/83desRatesvom1.
Februar1983überdieFreigabederhistorischen ArchivederEuropäischen
Wirtschaftsgemeinschaft undderEuropäischen Atomgemeinschaft (ABI.L43vom15.2.1983,
S.1),geändertdurchdieVerordnung(EG,Euratom)Nr.1700/2003vom22.September2003
(ABI.L243vom27.9.2003,S.1),istdieseDateiderÖffentlichkeitzugänglich.Soweit
erforderlich,wurdendieVerschlusssachen indieserDateiinÜbereinstimmung mitArtikel5
dergenanntenVerordnungfreigegeben.

COMMISSION OFTHE EUROPEAN COMMUNITIES
COM(78 )500 final -Part I
Brussels ,20October 1978
THE SITUATION OFTHE AGRICULTURAL MARKETS
1978 REPORT
PART I
(submitted totheCouncil bytheCommission )
COM(78 )500final -Part I

-1-
Prefatory NoteCOM (78)500/1
Thepresent document sets outindetail thesituation onthedifferent
agricultural markets in1978 andtheir outlook for1979 and1980 .
The1978 report ontheAgricultural Situation ,which ispublished bythe
Publications Office oftheEuropean Communities inrelation tothe
"Twelfth General Report ontheActivities oftheEuropean Communities "
contains ,besides other data ,ashortened version ofthepresent document .

CONTENTS
Thesituation ontheagricultural markets
1978 REPORT
Part I
Page Table no
A. General survey
I.Situation ontheprincipal agri­
cultural markets 4
II.Themarket outlook 6
Analysis bysector 10
I.Products subject tocommon market
organization 10
1.Cereals 11 M.l.l . to M.1.19
2.Rice 24 M.2.1 . to M.2.5
3.Sugar 29 M.3.1 to M.3.9
4.Olive oil 36 M.4.1 to M.4.4
5.Oil seeds 42 M.5.a.l to M.5 .C. :
6a .Dried fodder 51
6b.Peas ,broad beans ,andfield
beans for use inanimal feed 54
7.Fibre flax andhemp 55 M.7.1 to M.7.7
8.Seeds 58 M.8.1 to M.8.3
9.Wine 62 M.9.1 to M.9.4
10 .Raw tobacco 67 M.10.1 to M.10.8
11a .Fresh fruit andvegetables 71 M.11.1 to M.11 .Il
lib .Processed fruit andvegetables 81
llc.Live plants 85 M.11 .17
12.llops 87 M.12.1 to M.12.6
13.Milk andmilk products 90 M.13.1 to M.13.2 1
14.Beef and veal 104 M.14.1 to M.14.8
15.Pigmeat 119 M.15.1 to M.15.8
16.Eggs 129 M.16.1 to M.16.7
17.Poultrymeat 133 M.17.1 to M.17.6
18.Silk worms 137 M.18.1
II.Products notsubject tocommon
market organization 138
19a .Agricultural alcohol 139 M.19.a
19b .Potatoes 141 M.19 .b.1to M.19.b
19c .Sheepmeat 145 M.19 .C.1 to M.19 .C
19d .Honey 149 M.19.d
Survey ofcertain groups ofsectors 150
20.Meat 151 M.20.1 to M.20 .4
21 .Oils and fats 157 M.21.1 to M.21 .2
22.Feedingstuffs 163 M.22.1 to M.22 .8

A.GENERALSURVEY

-A.
I.SITUATION IN1978 ONTHEPRINCIPAL AGRICULTURAL MARKETS OFTHECOMMUN ITY
MILK : Thedairy herd remained virtually unchanged ;thepremiums forthe
non-marketing ofmilk andfortheconversion ofdairy herds did
nothave theresults initially expected ,butdidprevent anew
increase inheadage .Thegood weather in1978 andtherelatively
lowprices forcattle feed ledtoasubstantial increase inmilk
production .Consumption ofbutter remained unchanged while
production increased ,cheese production rose more than consump­
tion andsales ofskimmed milk powder expanded .Butter stocks
increased while cheese stocks remained large butstable and
skimmed milk powder stocks declined slightly .
BEEF ANDVEAL :Thecattle herd andmeat production both stabilized ;
consumption increased very slightly .Intervention buying-in was
down onprevious years .Netimports totalled about 200000
tonnes .
SHEEPMEAT :Production picked up,consumption remained stable andprices
increased ,particularly intheUnited Kingdom andIreland .
PIGMEAT :Thebreeding herd continued toincrease ,asdidthetotal herd
andtheproduction ofpigmeat ;production will reach the9.2
million tonne mark in1978 .Percapita consumption ofpigmeat -
unlike that ofbeef andveal andpoultrymeat -isincreasing
steadily innearly allregions oftheCommunity .The fall in
prices from January 1978 meant that intervention measures inthe
form ofprivate storage aidwere required from June onwards .
POULTRYMEAT :Placings increased in1977 and 1978 andtheparent stock was
enlarged in1977 ;exports fell sharply in1977 ,butwere more
satisfactory in1978 .Improved profitability ledtoincreased
production ;prices have been falling since September 1978 .
EGGS : In1978 production increased andprices fell ;thelatter trend
wasaccentuated inmid-summer byseasonal price movements .
Demand wasvery inelastic andmore orless stable .Exports were
low .
CEREALS :Theharvest showed abigincrease over theprevious year .Human
consumption continued todecline slightly ,while animal consump­
tion remained stable because oftheincreased imports of
substitute products ,notably manioc .Market prices for1977 and
thebeginning of1978 were under pressure ;only aslight increase
isforecast for the 1978 harvest .
DRIED FODDER :Production wasbetter than usual in1977 and1978 ;prices
were relatively low .

-5-
OILSEEDS :Exports ofcolza oilwere particularly high in1977/78,
which helped sales from the1977 harvest .Thesunflower seed
crop wasdisposed ofasususal without difficulty .Community
production ofsoya beans ,although rising slightly ,still
accounts foronly asmall part ofCommunity requirements .
Supplies were obtained atlowprices following thevery abundant
harvest intheUnited States .
OLIVE OIL :Production in1977 /78wasdouble that oftheprevious year
(alternate bearing ).Market prices were lower than theinter­
vention price inthecase ofolive residue oil ,equal toitin
thecase oflampante grade olive oilandabove itinthecase of
edible oils .
SUGAR Both Community andworld production were high ;consumption
increased Very slightly .Preferential imports andincreased
production ofisoglucose meant that avery large quantity (3.7
million tonnes )hadtobeexported .
WINE : Production wasvery lowin1977 andstill fairly lowin1978
(25and18%respectively down on1973 and1974 ).Consumption was
stable andprices increased .
AGRICULTURAL ALCOHOL :Production andconsumption were stable ;there
were nomarked variations inprices ,which tended downwards .
FRUIT ANDVEGETABLES :In1977 fruit production declined andvegetable
production wasnormal ;consequently ,relatively high prices were
recorded forfruit andlower prices forvegetables .
TOBACCO :There were structural difficulties for certain varieties
(particularly oriental tobacco andBeneventano ).

II.THEMARKET OUTLOOK
Summary ofCommunity outlook :
Crop production :high (insome cases very high )levels ofproduction ;
prices slightly higher than inthepast year .
Cost ofanimal feed :comparable with that inthepast year ;some
uncertainty regarding theoilcake situation from March /April 1979
onwards .
Livestock production :increase intheproduction ofpigmeat ,
poultrymeat andmilk andmilk products ,nochange foreggs andbeef
andveal ;some pressure onprofitability inthelivestock sector asa
whole .
Specialized crops :nomajor changes areexpected atthis stage as
regards wine ,fruit andvegetables ,hops ,1seeds andother specialized
crops .
TheCommission agrees onthewhole with theconclusions reached bytheOECD
Committee forAgriculture atitsmeeting on16to18October 1978 as
regards theworld outlook forthemarkets incereals ,animal feed and
livestock products for1978 /79.Anabundant supply ofcereals ,particu­
larly coarse grain ,isforecast inalmost allthemajor producing regions ,
together with another large soya harvest intheUnited States .
World wheat production isexpected toexceed 410million tonnes ,thus
almost reaching the 1976 level .Having regard totheexpected increase in
world consumption ,little change inworld stocks istobeexpected ;there
will probably beadecrease intheUnited States and aslight increase
elsewhere .Theworld price will therefore besteadier than inthepast
year ,butwill probably notbemore than half theCommunity price for
wheat .
Asregards feed grain ,theexpected increase insupply will notbe
completely offset byanincrease indemand ,although thelatter will
continue high ,particularly inrespect ofpigandpoultry feed .Stocks in
theUnited States aretherefore likely toexpand andthere will con­
sequently bemore pressure onworld stocks offeed grain than onwheat
stocks .
*
Thesituation asregards protein products foruse inanimal feed ismore
balanced than thesituation inthecereals sector .Record production of
soya intheUnited States ,increased production ofgroundnut ,sunflower and
colza cake ,andstable production offishmeal andcotton seed cake should
beseen inthelight oftherelatively lowstocks atthebeginning ofthe
marketing year ,sustained orincreasing demand ,andabove alltheuncertainty
surrounding soya production inthesouthern hemisphere atthebeginning of
1979 .Equilibrium canbeachieved inthis sector only iftheSouth
American harvest totals about 17million tonnes ,i.e. some 30%more than in
1978 .Relative stability istherefore expected ,butthesituation could be
very sensitive toeven minor fluctuations insupply anddemand .

Against thebackdrop ofamore orless balanced world market incereals ,
certain difficulties aretobeexpected atCommunity level .Total cereal
production will this year probably amount to115million tonnes ,thus
exceeding Community consumption byabout 5million tonnes ,which ,together
with imports ,will mean that theCommunity has asurplus ofaround 20
million tonnes .Large-scale buying-iu ofwheat andbarley andconsiderable
expenditure onexports will probably beunavoidable .Inview ofdemand ,
theprice ofcereals foruseinanimal feed v«ll therefore beonly slightly
higher than inthepast year .
Asregards thesupply andimport ofcereal substitutes ,attention should be
drawn tothegreatly increased useofmanioc infeed ix-pigsan(jais0for
poultry andeven cattle .Themarked increase intheuse i,-manioc inthe
past year ,potential future demand forthis product andthe^"-nation in
thecereals sector will probably lead theCommunity toadopt meat .-esto .
regulate manioc imports .Certain other ingredients ,such ascitrus ^
beet pulps ,areused infeeds ,particularly forcattle ,because ofthen
nutritional value ,anddonotreally replace cereals toanygreat extent .
Thesupply andprice situation forthese products iscomparable with that
inthe cereals sector ..
Tosumup,future supply inthelivestock sector will probably follow the
same pattern asinthepast year .
Therelatively lowprices ofanimal feed during thesecond half of1977 and
theincrease inpigprices ledfarmers toexpand pigmeat production
considerably ,which made prices fall substantially from thebeginning of
1978 .Fortheendofthis year andthemajor part of1979 ,account must be
taken ofincreased production andhence lowprices onthis market .The
still relatively lowprice offeed will probably prevent aserious crisis
inthis sector inthecoming months ,butproducers insome regions must
expect difficulties atthebeginning of1979 .
Some problems canalso beexpected then inthepoultrymeat sector .
Reductions inparent stock atthebeginning of1978 ,satisfactory exports
totheMiddle East andtheprice ofpoultry feed rapidly increased this
sector 'sprofitability during theyear .This ledtoarapid expansion of
production andbySeptember prices were agin falling ;atthesame time
exports became more difficult because ofthesituation oftheAmerican
dollar ,andproduction -because ofthesmall increase inconsumption -
will have toadapt in1979 tomore difficult sales conditions .
Eggprices arecurrently lower than feed prices ,which makes producers
rather reluctant topurchase day-old chicks ;thecrisis inthis sector may
therefore beovercome during thefirst half of1979 ,andmore satisfactory
producer prices canbeexpected inthesecond half oftheyear andthe
beginning of1980 .
I
Beef andveal production will increase only very slightly in1979 ;the
cyclical upturn inbeef andveal production intheCommunity will not
become visible until 1980 .Inview ofthesituation described above for
theother main categories ofmeat ,theeconomic andemployment situation
andthevery lowrate ofpopulation growth ,consumption will increase very
little .Given theoutlook forproduction andconsumption ontheonehand
andtheintervention stocks tobedisposed ofontheother ,thenetimport
balance canbeputatabout 200000tonnes forboth 1978 and1979 .There
is,moreover ,noreason tosuppose that prices will fall inthis sector :
some increase cannot beruled out .From 1980 onwards ,thedecline in
production ofother meat beginning inlate 1979 orearly 1980mayassist in
thedisposal oftheextra beef andveal produced .

8«
Asregards themilk andmilkproducts sector ,thedairy herd isexpected to
remain stable in1979 and1980 .Themilk yield percow ,however ,continues
toincrease andtheexpected level offeed prices will donothing tocurb
theincrease intheuseoffood inthis sector .Consequently ,allowances
must bemade forincreasing production ofmilk andhence ofbutter and
skimmed milk powder inparticular .Ontheother hand ,consumption of
butter islikely tocontinue todecline andcheese consumption will
increase only slowly .Inthenext fewyears ,therefore ,anincrease in
butter stocks canbeexpected andatbest there will benochange inthe
large stocks ofskimmed milk powder .Although some degree ofcontrol over
milk production hasbeen achieved inseveral non-member countries ,noreal
expansion ofCommunity exports isforecast .
Even ifworld sugar prices steady slightly asaresult ofsome reduction of
thelarge stocks andperhaps improved effectiveness oftheInternational
Sugar Agreement ,expenditure inthis sector will continue tobevery high .
Although less than last year ,theCommunity production surplus will total
about 2.75 million tonnes in1978 /79andthecurrent world price isonly
about 40%oftheCommunity price .There isatpresent noprospect of
medium-term equilibrium -either quantitative orfinancial -inthis
sector .
World demand foroils andfats continues tohold steady ;there is,however ,
,some possibility that prices will fall given theforecasts ofavailabili­
ties inthis sector ,which could increase consumption .Asregards olive
oilandbutter ,theconsumption forecasts areless encouraging :the
probable price level forsubstitute products will presumably affect
consumption ofthese twoCommunity products .
From 1979 onwards ,production ofdehydrated fodder mayincrease onthe
basis ofthenew rules recently introduced inthat sector .
Theincrease inareas under colza andrape inthenorthern Member States
andthevery favourable weather conditions inFrance have ledtoan
increase ofabout 25%inCommunity production .Afurther increase inarea
isexpected inthenext fewyears .
Theinformation sofaravailable regarding the 1978 /79harvest indicates
that wine production will exceed last year 'sfigure byabout 10million
hectolitres .Asthis isslightly less than normal foreseeable consumption ,
thehigh level ofexisting stocks could drop slightly ,without anygreat
effect onprices .Inthemedium term ,Community production maybeexpected
toexceed requirements ,which remain more orless stable .
Forfruit andvegetables thesituation isnotexpected tochange much in
themore orless long-term .
Inthefruit sector ,however ,marked fluctuations from oneseason to
another mayoccur asaresult ofweather conditions .
Asregards fibre flax ,market equilibrium isexpected forshort fibres and
agood supply situation isforecast forlong fibres .Supply ofhemp is
expected toremain stable . v

-9-
Forecasts point toacontinuing surplus ofhops over thenext fewyears ,
some difficulties with regard totobacco ,afairly balanced situation as
regards seeds ,andapotato surplus in1978/79andsubsequent years unless
planting isfurther reduced after the7.5% cutin1978 .
/

-10
B.ANALYSIS BYSECTOR
PRODUCTS SUBJECT TOCOMMON MARKET ORGANIZATION

11-
1.CEREALS
1.Introduction
(a)Theeconomic situation :
During thepast year theCommunity cereals market hasremained
remarkably well balanced .The1977 wheat area wasreduced by
poor sowing conditions andthesurplus wasonly just sufficient
tocover ournormal minimum exports .Thebarley crop ,whilst
very large ,metagood export demand .However therelatively
poor demand forbarley ontheinternal market presages consider­
able difficulties inmore normal export market conditions .The .
weather in1978 hasagain favoured thegrowth ofcereals andnew
records areexpected intheproduction ofboth wheat andbarley .
World markets remain depressed byhigh stocks andcontinuing high
levels ofproduction ,particularly asregards feed grains .
(b)Cereals inCommunity agriculture :
Thetotal area ofcereals in1977 was25.8 million ha.or27.8%
oftheutilized agricultural areaj (UAA).Their importance inthe
land-use ofindividual Member States varies considerably ,being
least important inIreland andtheNetherlands (8%and11%ofUAA
respectively )where fodder crops andpermanent grasslands are
more important .They areofgreatest significance inGermany and
Denmark (40%and62%ofUAArespectively )where cereals account
forabout 70%ofthearable land ,they also account for ahigh
proportion ofthearable land inLuxembourg (68%).Inthe
remaining Member States cereals occupy 45to60%ofthearable
land and 20to30% oftheUAA .
Thecereals share inthefinal production ofagriculture isa
less useful measure oftheir economic importance since inmany
cases alarge proportion oftheproduction isused forlivestock
feeding onthefarm where itisproduced .This means that the
final production ofsuch cereals isintheform oflivestock
products .Thus inGermany ,where cereals account for40%ofthe
UAA ,they only represented 6.6% ofthevalue offinal production
in1976 because over 55%ofthetotal quantity produced wasused
foranimal feeding onthefarm where itwasgrown .InFrance ,by
wayofcontrast ,cereals accounted for30% oftheUAA and 14.0%
ofthevalue offinal agricultural production because only 26%of
thecrop wasfedtolivestock onthefarm where itwasgrown .In
theCommunity asawhole ,where about onethird ofthecrop was
fedtolivestock onthefarm where grown ,thedirect contribution
ofcereals tothefinal production ofagriculture was 10.0% in
1976 .
(c)TheCommunity inworld cereals production :
World production ofcereals (excluding rice )in1977 amounted to
1093million tonnes (according toFAOstatistics )ofwhich the
quantity produced intheCommunity was9.5% (8.1% in1976 ).The
proportions produced bytheother major exporters ofcereals were
:United States 24% ;Canada 4%;Australia 2%:Argentina 2%.
(1)Seetables M.I.l toM.I.19 inPart II

-12-
Production
Theoverall production ofcereals intheCommunity recovered in1977 ,
after twosuccessive years ofunfavourable weather .However thearea
sown -tocereals wassmaller than usual because ofpoor autumn sowing
conditions inItaly .For1978 thepreliminary results indicate a4%
increase inthearea sown andover 5%increase intheaverage yield .
Thusproduction will exceed theprevious record (made in1974 )bymore
than 5million tonnes .Thetrend inproduction isnoteasy to
estimate precisely because ofthevariability ofproduction inrecent
years though itseems fairly clear that yields arecontinuing to
increase whilst thetotal area ofcereals remains little changed .
(a)Common wheat :
Sowings ofcommon wheat returned tonormal forthe1978 crop (+
7.6%)after particularly difficult sowing conditions forthe
previous crop inItaly andtheUnited Kingdom .Thegenerally -
cool wetsummer hasledtoyields slightly exceeding those ofthe
record 1974 crop andover 8%higher than in1977 .Total
production isexpected tobebetween 42and43million tonnes (+
16to19%)ofwhich around 20million tonnes inFrance (+15to
17%ascompared with 1977 ).Thequality ofthecrop isexpected
tobeabout average .
(b)Durum wheat :
Thedurum wheat crop inItaly hasalso returned toamore normal
level in1978 with increases of32% inarea and62% inproduction .
InFrance the area remains about the same asin1977 .Total
Community production isforecast at3.5million tonnes (+
54% ).
(c)Rye :
Thearea ofryedecreased byabout 6%in1978 ,duemainly to
reductions of7%inGermany and8%inDenmark .Yields should
reach anewrecord and asaresult production will only decline
by3%toabout 3.4million tonnes .
(d)Barley :
Thetotal area sown tobarley forthe 1978 crop increased
slightly (+1%)to9.5million hectares .Within this total ,the
switch towinter barley continued ,particularly inFrance and
Germany :
Area ofwinter barley in%oftotal barley area
1975 1976 1977 1978 (P)
Germany 39% 46% 49% 52%
France 20% 31% 42% 48%
This change hashadtheeffect ofimproving average yields
because ofthehigher yields ofwinter barley but ithasalso had
andadverse effect onquality since most ofthewinter varieties
areof6-rowbarley which has alower specific weight and
generally lower value foranimal feeding aswell asformalting .

-13-
Yields in1978 areexpected tohave increased by3-4%,
partly because ofthehigher proportion ofwinter barley and
partly because ofthefavourable weather .Despite theswing to
winter barley itseems that there isstill sufficient supply of
barley suitable formalting .Total Community production of
barley isforecast atmore than 39million tonnes ,exceeding the
record 1977 crop byover 4%.
(e)Oats :
Thearea ofoats continues todecline (-7%in1978 and -4.6%
peryear onaverage between "1974"and"1977").Avery good
yield in1978 ,particularly inGermany ,means thatproduction is
expected toincrease by3%toabout 8.2million tonnes .
(f)Maize :
Maize production in1977 was38%higher than intheprevious year
following increases inthearea sown inFrance andinItaly
whilst yields also recovered from thevery lowlevels of1976 .'
Preliminary estimates for1978 suggest greater sowings inFrance
butsome reduction inthearea inItaly .With moderately good
yields ,production maybeexpected torise byaround 5%tosome
16.5 million tonnes .
3.Consumption
In1976 /77thetotal volume ofcereals used intheCommunity amounted
to109.7 million tonnes ,i.e. ,0.4% less than in1975 /76.About 34%
.consisted ofwheat and66%6fcoarse grains ,ofwhich 29%was
accounted forbybarley and26%bymaize .Theutilization ofall
cereals wasmade upasfollows in1976 /77 :
Human consumption andindustrial use ,34.7% (34.1% in1975 /76);animal
feed 61.1% (61.4% in1975 /76);seed andlosses ,4.2% (4.5% in
1975 /76).Theproportions vary substantially from cereal tocereal ,
from oneMember State toanother andfrom year toyear ;thefollowing
table gives thebreakdown bycereals for1976 /77 :
Cereal consumption in1976 /77-breakdown bycereal
Human Animal Industrial Seed and Total
consumption consumption use losses
% % % % %
Wheat (Durum and
common )68.1 26.0 0.5 5.4100.0
Ryeandmeslin 42.1 50.3 1.6 6.0100.0
Barley 0.4 77.1 16.9 5.6100.0
Oats and summer
mixed corn 3.7 91.5 0.0 4.8100.0
Maize 3.2 80.8 15.0 1.0100.0

-14-
(a)Human consumption :
Nethuman consumption declined by0.8% between 1975 /76and
1976 /77.Thedecrease inpercapita consumption (-0.9% )is
somewhat greater than inrecent years (-0.6% onaverage inthe
period "1973/74"to1975/76").fThis isentirely duetothe
erratic figures formaize and isprobably notmeaningful .
Nethuman consumption ofcereals in1976 /77-breakdown bycereal
Net overall
human consumption
(thousand tonnes )Netper capita consumption
Wheat -common
-durum
Rye
Barley
Oats
MaizeKgper capital
16353
2795
1050
68
157
62363.1
10.8
4.1
0.3
0.6
2.4 ,%change
1975 /76to
1976 /77
0.5
■1.3
2.0
■4.3
■4.4
29.1
Amongst thefigures foreach cereal ,itisinteresting tonote
that theper capita consumption ofcommon wheat and ryeincreased
slightly in1976 /77when potato prices were exceptionally high
throughout theCommunity .Consumption ofdurum wheat was
slightly reduced butthis wasentirely due tothereduction which
occurred inItaly whilst intheremainder oftheCommunity there
wasanincrease of17.5% onthenethuman consumption ofthis
product . .
(b)Animal feed use :
Theimportance ofcereals inanimal feeding reached apeak in
1972 /73and1973 /74when they accounted formore than 26%of
total energy requirements (expressed inFodder Units ).This
represented over 62%oftheenergy supplied byconcentrate feeds
(i.e. ,excluding bulky fodder ,root crops andgrazing ,etc.).
This proportion hadfallen to58.8% by1975 /76whilst thepart
taken bymanioc hadincreased from 1.7% to2.3% andthat for
oilcakes from 12.5% to15% .Thetotal quantity ofcereals fedto
livestock hasfallen from apeak of72.2 million tonnes in
1973 /74to67.0 million tonnes in1976 /77.This isprincipally
duetothesubstitution ofcereals byproducts such asmanioc ,
6il-cakes and avariety offood industy by-products which mybe
imported into ,theCommunity with little ornoimport charge .The
most important direct substitute forcereals ismanioc ,the
imports ofwhich have risen from 2.1million tonnes in1974 to
3.8million tonnes in1977 andareexpected tobestill higher in
1978 (perhaps asmuch as5million tonnes ).
Thefollowing table compares theconsumption ofdifferent cereals
onthefarms where they aregrown with theanimal feed useof
cereals which pass through themarket (usually purchased ascompound
feeding-stuffs ).

/
-15-
Animal feed use ofcereals in1976 /77,onthe farm where grown and
through themarket -breakdown bycereal
Cereal Used onfarms Marketed Total
1000 t 1000 t1000 t %
Wheat 5100 4712 9812 14.6
Rye 1217 279 ■ 1496 2.2
Barley 12988 11549 24537 36.6
Oats ,etc . 5570 1440 7010 10.5
Maize 4975 17674 22649 33.8
Other 28 1504 1532 2.3
Total 29878 37158 67036 100.0
44.6% \55 .■4%100.0%.
1976 /77wasnotable forthe fact that less cereals than usual
were used onthefarm where they were grown .This was due tothe
poor crops ,particularly oftheprincipal feed grains (barley ,
maize andoats ),which meant that many farmers were obliged to
supplement their ownsupplies with bought-in cereals orcompound
feeds containing cereals .Normally ,about 50%oftheanimal feed
useofcereals isonthefarm where grown .Theonly other
significant change inthepattern ofanimal feeding was the
decline inuseofsorghum following theincrease inthethreshold
price forimported sorghum .This cereal hadpreviously had a
relatively favourable threshold price when compared tomaize .
(c)Industrial use :
Thestatistics onprocessing andindustrial useofcereals remain
incomplete asregards theUnited Kingdom .Itappears however
that thequantity ofcereals used forthese purposes inthe
Community hasincreased byabout 8%in1976/77ascompared with
1975 /76;this isaresumption oftheupward trend insuch uses
which hadbeen observed inthepast .Theincrease affected both
maize andbarley (which account for97-98%ofprocessing and
industrial useofcereals ).Theuseofbarley inbrewing ,which
accounts for90%oftheindustrial useofbarley ,went upby
5.5% ,this increase being mainly inFrance andtheUnited
Kingdom .Theonly other industrial outlet forbarley ,distilling
(mainly inIreland andtheUnited Kingdom ),reduced itsofftake
by15.9% .Theprocessing andindustrial useofmaize appears to
have increased byabout 15% ,largely because ofttieincrease in
theuseofmaize forstarch which took place inmost ofthe
Member States butwhich wasparticularly notable intheNetherlands .
(d)Self-supply :
Total internal usedeclined inboth 1975/76and1976/77butthe
very poor crops gave levels ofself-supply much lower than would
normally havebeen expected .In1975/76theself-supply wasonly
87.4% andin1976/77itdeclined still further to82%(-6.2%).

Summary ofthecereal balance sheet in1976/77
(millon tonnes )
Wheat
(durum and
common )Rye BarleyOats ,
etc .MaizeOther
oere –
alsTotal
Stock change^"' *•0«2 +0.2 -0.1 -0.1 -0.2
Net external /.v
balance *'-0.9 +0.2+1.9 +0.8 +16.8 +1.2 +19.9
Domestic use ,
leBs produc­
tion
B3Sn¡ SSS3SSS9aa33S
Self supply %-1.1 +0.2
ssaaaas
94.8+2.1 +0.7 +16.7 +1.2
19.9+19.7
82.0 103.0 93.5 90.8 40.4
ill+•»Btockreduction ^–=■Btockincrease 2)+»netimport sj –«netexports
j The -lowopening stocks andpoor orops in1976 resulted invery heavy net
jimports tomeet theCommunity 'snetdeficit which amounted tonearly 20 1
jmillion tonnes .Preliminary estimates for1977/78indicate that thenet
jdeficit ha3fallen toless than 10million tonnes ,equivalent toaself–
I supply ofover 90 Itisprobable however that total imports will
jonlyhavefallen byaround 7million tonnes whilst exports have increased
Ibyover 3million tonnes ,this increase consisting entirely ofbarley .
|Foracomplete picture itwould also benecessary totake into account
j(e)Stockst thetrade innon-cereal feedstuffs .
Theestimation ofstocks inthedifferent Member States isundoubtedly '
ofvery variable accuracy asbetween both Member States andstock posi­
tions .According tothebest available estimates ,thetotal stocks of
|cereals intheCommunity atthebeginning ofthe1977/78marketing year
jamounted to13.7 million tonnes ofwhich 1.3million tonnes were held
'onfarms .Ofthe12.4 million tonnes ofstocks inother positions (in–
|eluding intervention stocks andgovernment reserves insomecases ),
common wheat accounted for6.8million tonnes ,durum wheat for1.2mil–
!liontonnes ,barley for0.9million tonnes andmaize for2.5million
jtonnes .
By1August 1978theoff-farm stocks areexpected tohaverisen slightly ,
toabout 12.5 million tonnes ,including 6.5–7million tonnes ofcommon
wheat (15-18 %ofnormal production ),0.8million tonnes ofdurum wheat
(30%ofnormal production ),1.2million tonnes ofbarley (3%ofnormal
jproduction )andabout 2.9million tonnes ofmaize (l8%ofnormal pro­
|ductionbutonly 10$ofconsumption ).
4.Trade
(a)Between Member Statest
jTrade between Member States oftheCommunity falls intotwodistinct
|categories ,trade incereals ofCommunity origin andtrade inortrant -
ishipment ofcereals ofthird country origin .Briefly ,thelatter con­
jsists ofimport into oneMember State viaanother Member State ,often
»•urdt »n

!forsoundeconomicreasonssuchasvesselsizeandportchargesjbu"t
!sometimesinordertobenefitfromanomaliesarisingfromthemechanis–
jmsofthecommonagriculturalpolicyand.inparticular,itsmonetaryoom-
pensatorysystem.Themajorityofthistradeconsistsofimportsofgrain
ultimatelydestinedforGermanyandtheUnitedKingdomviathelarge
iBeneluxports.Thecerealmostcommonlyinvolvedismaize,theexports
jofwhichfromtheBeneluxcountriestootherMemberStateshavealmost
jdoubledbetween1975/76and1976/77+0reachatotalof4milliontonnes,
jTherehasalsobeenasignificanttradeofthiskindinoommonwheatin
!1975/76(1.6milliontonnes)andinbarleyin1976/77(0.9milliontonnes)
ThemajorCommunitysupplierofcerealstootherMemberStatesisFrance.
|Frenchdeliveriesin1976/77totalled7.5milliontonnes(-19$compa-
'redto1975/76)ofwhich4.3milliontonneswerecommonwheat(+3%)and
I2milliontonneswerebarley(+13%)•Maizedeliveriesweregreatly
jreduced(–73i°)becauseofthepoorcropandFrancebecameanetim­
porterofmaize,taking1.4milliontonnesofmaizefromthirdcountrysuppliers.In1977/78,maizedeliveriesarelikelytohaverecovered
toover2milliontonnes,andwheatdeliveriesarealsoexpectedtohave
risen,toover5milliontonnes.BarleytradefromFrancewassomewhat ■
impededbyretention,whichleadtohighprices,andthequantitymovedin
1977/78wasprobablyonlyalittlehigherthaninthepreviousyear.The
UnitedKingdomhoweverbecameasignificantsupplierofbarleytoother !
MemberStates,sendingwellover1milliontonnes,thoughsomeofthisj
wassubsequently re-exportedtothirdcountries.Theprincipalusersof
FrenchmaizeandwheataretheUnitedKingdom,GermanyandtheBenelux ;
countries.GermanyandBelgiumarethemainreoipientsofFrenchbar-|
ley.In1977/78,Italyhadaverypoorwheatcropandtookanexcep–i
tionallylargequantityofcommonwheatfromFranceaswellasalarge j
amountofbarleyfromFranceandfromtheUnitedKingdomwhereprices
jwererelativelyfavourable.
/,\ .. I(b)Withthirdcountries x
Importsofcerealsfromthirdcountries(reducedbytheestimatedlevel'
oftranshipments )amountedto26.5milliontonnesin1976/77(22.8%
morethanin1975/76)ofwhich17.2milliontonnesweremaize(43%more
thanin1975/76).Theseexceptionalfigureswereentirelyduetothe
|verypoor1976crops*In1977/78thepreliminaryestimatesindicateim–
iportsofabout20milliontonnesofcereals,includingabout13million
tonnesofmaize.In1976/77over90%of"themaizeimportscamefrom
theUnitedStateswiththeremaindercomingmainlyfromArgentina.Im–:
portsofsorghumfellbackin1976/77to1.3milliontonnesandin1977/
78arebelievedtohavefallenstillfurthertoaround0.4milliontonneB.
Heavyimportsofbarleyhavebeenafeatureofboth1975/76and1976/77j
jwhentheyamountedto2.1and3.4milliontonnesrespectively.Itisj
jestimatedthatimportsofbarleyin1977/78amountedtolessthan1mil-j
1liontonnes.Theimportsin1976/77camefromanunsuuallywiderange j
!oforigins,includingotherEuropeancountries,theUnitedStatesand
jtheMiddleEastaswellassuchmoretraditionaloriginsasCanadaand
!Australia.Thesmaller1977/78importshaveoomemainlyfromCanadaand
IAustralia. „

-18-
Importsofcommonwheatfellbetween1975/76and1976/77to3.1
milliontonnesbutareexpectedtohaverisentoover4million
tonnesin1977/78.Ofthistotalitisbelievedthatsome0.3
milliontonnesweretemporaryimportsunderinwardprocessing
arrangements for.subsequentre-exportintheformofflour.
Durumwheatimportshavedeclinedfrom0.9milliontonnesin
1975/76to0.6milliontonnesin1976/77butincreasedtojust
under2milliontonnesin1977/78becauseoftheItaliancrop
shortfall.Around85%ofthe1976/77importscamefromNorth
AmericaandalmostalloftheremainderfromArgentina and
Australia .
Totalexportsofcerealsandcerealproductsin1976/77fellby
almosthalfto6.6milliontonnes.Withinthistotal,common
wheatandflouraccountedforthegreatestpartwithA.3million
tonnes.Theexportsofwheatandwheatflourin1977/78are
estimatedatabout4.7milliontonneswhichwerebrokendownas
follows:3.4milliontonnesofcommercial sales,ofwhich3.0
milliontonnesintheformOfflour,and1.3milliontonnesas
foodaid,ofwhich0.4milliontonnesintheformofflour.The
estimatedtotal3.0milliontonnesofcommercialflourexports
includes0.3milliontonnesexportedunderinwardprocessing
arrangements ,apracticeofconsiderable significance among
millerswhoarefavourablylocated(i.e.inports)becauseofthe
substantial economiesresultingeitherfromthepurchaseofcheap
thirdcountrywheatorfromthesavingofimportlevyonimported
wheatwhentheoperationisdoneonanequivalence basis(i.e.
exportofflourofCommunityoriginsetagainstimportofwheat
ofthirdcountryorigin).Commercial exportsofwheatin1977/78
wereagainsmallandwerelimitedtotheCommunity'smost
traditional marketsinWestAfrica.Flourexportscontinuedtogo
toawidevarietyofdestinations withEgyptandSriLankaamong
themostimportant.Exportsofbarleyandbarleyproducts
(mainlymalt)fellin1976/77toonly1.5milliontonnesofwhich
over1milliontonneswasintheformofproducts.Itis
estimated,however,thatexportsin1977/78amountedtoaround5
milliontonnes,ofwhichsome1.5milliontonnesintheformof
products.Theexportsofbarleyintheformofgrainmainlywent
tootherEuropeancountries,theSovietUnionandtheMediter­
raneanarea.Incontrastwithpastexperience,alargepropor-/
tionoftheseexportscamefromtheUnitedKingdomandDenmark.
5.Prices
(a)Commonprices:
Thecommonpricesfixedforthe1978/79cropyearwereonly
slightlyhigherthenthoseforthepreviousyear.Thereference
priceforcommonwheatofbreadmaking qualityandtheinter­
ventionpriceforryewereincreasedby1%whilstthecommon
intervention priceforcommonwheatandbarleywasincreasedby
1.3%.Atthesametimeanincreaseof3%inthemaizeinterven­
tionpricebroughtthisintolinewithbarleyandcommonwheatat
121.57UA/tonne,socompleting thenewsimplifiedpatternof
cerealssupportprices.Thethresholdpriceforcommonwheatwas
increasedby2.7%.Durumwheatpricesandthethresholdprice
forryewereunchanged.

-19
fK*Tnternal market prices . _Cb)_ – T cereal prices hadbeen relatively
Inthe1976/77m®rke^Tof'the 1977crops prices fellinall
high/butwiththe gndItaly where political and
Member States ex<?ePt;r themainreason forhigher prices .
economic aiSoaffected bytheverypoor 1977wheat
crop .
difference betweenmar^Pt price andIntervention price
- (%)
Common wheat DurumDurum
wheatBarley Maize
Breadmaking
quality (1)Other
1.4
A.99.8
17.5χ
χ1.0
4.9
Κ 13.8 χ
Λ
Ε.4
1.8
11.3
χχ
7.6
12,9
χx
X
X
X6.8
0.2
3.1
0.4χ
X
25.2
χ
X
X
XGermany
France
Italy
Netherlands
Belgium
United Kingdom
Denmark
"(1)Difference between market price andreference price .
ThPharlevmarket wasparticularly oversupplied intheNorthern%nJtheCommunity andprices remained below theintervention
levll forprolonged periods inGermany ,Denmark ,Belgium andthe
United Kingdom .Consideration ofthecommon wheat market isromnLicated bytheexistence oftwosupport price levels ,the
intevention price andthereference price (which onyapplesto£1!^nf"breadmaking quality ").Thecriteria used todefine
"breadmaking quality "andwhich areapplied tothereference
price aresuchthattheprice ofmostkinds ofwheat inthe
•* thncp uhich arenotofbreadmaking quality ,Community eventhose which are=n^^because thedifference
between theintervention price andthereference Pr^eUgrwterthan i«iiustified bythenormal price spread found onthe
market Thismeans that,whilst support buying tends totake
Jtaceior theaverage orbetter quality wheats atthereference
prices ,thelower quality wheats maynotbesufficiently
competitive ontheanimal feedmarket .
(c)World prices . *
The1877/78cropyearopened withworld stocks ofwheat andof
-.coarse grains a?averyhighlevelandprices attheir owest for
several years .During 1977/78aslightly lower level of
production andstrong import demand lifted prices (insomewhat ,particularly asregards wheat theaverage price of
which wasatasimilar level totheprevious yearandwhich
remains fairly firminthefirst months of1978/79because of
lower production inNorth America andsustained import demand .

-20-
Theaveragecifimportpriceofmaizeandbarleyin1977/78were
respectively 19%and24%lowerthaninthepreviouscropyear
and,withtheveryheavy1978crops,havefallenduringthefirst
monthsof1978/79toaroundthelowestlevelsreachedin1977/78.
Highestandlowestmonthlyaveragepricesin1977/78-
CIFAntwerp/Rotterdam ~
Highest LowestType
UA/tonne'month UA/tonne month
Commonwheat:
HardWinterIIOrd. 95.09 June197875.77 August1977
DarkNorthern
Spring11/14% 99.89 February7880.62August1977
Barley:
CanadaFeedI '81.56 November7766.49September77
Maize:'.
YellowCornIII 85.65 "May1978 63.57August1977
Durumwheat: *
USHardAmberDurumIII114.65 January7886.81August1977
<d)Consumerprices:
Breadpricesincreasedbyanaverageofabout13%between1976
and1977,ascomparedwithabout10%inthepreviousyear.The
greatestincreases (17-26%)occurredinItaly,theUnited
KingdomandIreland.Thedegreetowhichthoseincreaseswere
duetowheatpricesisprobablyverysmallthoughitremains
difficulttodeterminesincebreadpricesareprincipally
determined bydistribution andmanufacturing costsandby
governmentpricecontrolsand/orconsumersubsidies.Moreover
theseincreasesareverymuchsmallerorevennegativewhen
expressedinrelationtothegeneralindexofconsumerprices.
Forexample,thebreadandpastryproductsindexexpressedin
thesetermsactuallydecreasedinItalybetween1976and1977
despitea17%increaseinthepriceofthemostrepresentative
typeofbread.
6.Shorttermoutlook
The1978cerealscropintheCommunityisarecordand,combinedwith
astagnantinternaldemandforcereals,putstheCommunityintoa
positionofoverallsurplusforthefirsttime.Thecropforecastin
lateSeptember1978amountedto113.5milliontonnesandtherewere
alreadystrongindicationsthatthefinalresultcouldbeashighas
115milliontonnes,ofwhichperhaps40milliontonnesofbarleyand
43milliontonnesofcommonwheat.Thisistocoveraninternal J
demandwhich,withthedramaticincreaseintheuseofcereal
substitutes,hasfallenfrom115.5milliontonnesin1973/74toaround

-21-
toaround110milliontonnesin1975/76and1976/77.Itistherefore
possiblethatthenetsurplusashighas5milliontonnescombined
withalikelyminimumof15milliontonnesforexportsandstock
increases.Inthecontextofanover-supplied anddepressedworld
marketthisislikelytocauseextremelyhighexpenditure onexport
refundsaswellasdifficulties intheCommunity'srelationswith
thirdcountryexporters.Moreoveritisunlikelythatlargeinter­
ventionbuyingofwheatandbarleycanbeavoided.
Economicaspectsofthemeasurestaken
(a)Leviesandrefunds
(1)Importlevies:
Importlevieshavemovedwithinquiteanarrowrangeduring
1977/78.Forallthreemajorcereals(commonwheat,barley
andmaize)theyhaveremainedbetween70and50UA/tonnefor
mostoftheperiod.Theperiodofvalidityforimport
licencesforcerealshasremainedunchangedat45days.
(2)Exportlevies:
Exportlevieshavenotbeenneededsincetheendof1975.
(3)Exportrefunds:
Noexportrefundswerefixedforcommercial shipmentsof
commonwheatduring1977/78,thoughlicencesforabout
400000tonneswithavalidityperiodofoneyearhadbeen
issuedinJuly1977withadvancefixingofanexportrefund
coveringcertainWest-African countries.Ineffect,these
weretheonlycommercialdeliveriesofwheatasgrainin
thatyearthoughrefundswereavailableforflourexports
throughout theyear.
Refundsforbarleywerefixedinthenormalwayforexports
tonearbycountriesandbytenderforexportstocountries
ofZonesItoVI(i.e.mostoftheworldexcepttheFarEast
andthenearbyWestEuropeancountries).Thetenderwith
itssubsequent amendments wasfortheexportofatotal
2800000tonnesofwhichatotalof2625280tonneswas
accepted.Theperiodofvalidityforthenormalexport
licencesforcerealsremainedatthemonthofissueplusthe
twofollowingmonthsexceptwhenlicenceswereissuedunder
theexportrefundtenderwhereitwasincreasedtofour
monthsafterthemonthofissue.
Refundswerealsofixedthroughout theyearformaltthough
somedifficulties wereagainexperienced asaresultof
brusquemovementsintherefundlevel.Itishopedtoavoid
thiskindofproblemin1978/79bymeansofamoreorless
automaticsystemforcalculating therefundeachweek,with
theaveragebarleyimportlevyasthevariableelementin
thecalculation .Simultaneously themaltexportlicences,
whichhaveavalidityof11monthsafterthemonthofissue,
havehadalimitimposedontheirvalidityinordertostop
thembeingusedinthefollowingmaltmarketingyear
(October/September).Thesemeasureswereallintroducedin
earlyJuly1978.

-22-
(b)International agreements andfood aid
TheInternational Wheat Agreement of1971 remains applicable
pending thenegotiation ofanewagreement toapply from July
1979 .Theonly operational provisions ofthe1971 Agreement were
intheaccompanying Food AidConvention under which theCommunity
iscommitted tothesupply of1287000tonnes ofcereals .In
1977 /78,720500tonnes ofthis total quantity (or56%)wastobe
given asdirect Community aid .Theproportion ofthis direct
Community aidcommittment which hadbeen effected by31July 1978
was70.5% inrespect ofthe1977 /78programme and99.7% in
respect ofprevious programmes .Asregards aidbyMember States
thecorresponding proportions were 49.9% forthe1977 /78
programme and90.9% forprevious programmes .Bywayofcompari -
.son,mobilisation under the1976 /77programme by31July 1977 was
only 27%complete forCommunity aidand31%fornational aid .
(c)Intervention
Stocks ofcommon wheat fell during 1977 /78despite some inter­
vention purchases ofwheat ofbreadmaking qaulity atthe
reference price .This occurred atthebeginning ofthemarketing
year ,mainly inGermany andwasmore than compensated bysales on
the internal markets (mainly ,inItaly andGerman )orforexport
asfood aid .Most oftheremaining stocks are located inGermany
andItaly .Durum wheat stocks fell toanegligeable level
following sales ontheinternal markets inItaly andFrance .
Intervention stocks ofbarley remain quite small even though they
have doubled since August 1977 .Quantities taken into inter­
vention were extremely small butonly because the large export
programme managed tolift prices sufficiently inthesecond half
ofthecrop year .Ryeremains theproblem cereal ,atleast when
considered inrelation totheeconomic importance ofthe crop ,
foralmost 400000 tonnes were taken in (11%ofproduction )
whilst theexport sales out ofintervention were only effected at
thecost ofheavy losses .Most ofthestocks are located in
Germany .
Details ofchanges inintervention stocks during 1977 /78were as
follows :
Intervention stock changes in1977 /78 (provisional estimates )
(1000 tonnes )
Common wheat Durum wheat Rye Barley
Stocks on1.8.1977 846 228 186 53
Purchases 190 2 396 87
Sales 520 211 254 14
Net change -330 -209 +142 +73
Stocks on1.8.1978 516 19 328126

-23-
\
(d)Uniformity ofprices -Accession compensatory amounts
The final transitional price step fortheUnited Kingdom ,Ireland
andDenmark took place on1January 1978 without anyserious
difficulties .There arenolonger ,therefore ,any accession
compensatory amounts .
(e)Uniformity ofprices -Monetary compensatory amounts
Incommon with other sectors ,cereals suffer from considerable
disunity caused bymonetary differences .Theapplication of
monetary compensatory amounts wasextended todurum wheat and its
products ,with effect from 2January 1978 ,thus ending the
distortions which hadexisted intrade inthese products .
(f)Production refunds
Production refunds arepaid tocereal andpotato starch
manufacturers inorder toenable them tocompete with starch
manufactured from other rawmaterials .The refunds fixed for the
1978 /79marketing year were unchanged ascared with theprevious
year ,being 17UA/tonne formaize starch ,24.29 UA/tonne for
wheat ,20.89 UA/tonne forbroken rice and27.37 UA/tonne for
potato starch .Atthesame time production refunds were re­
introduced onmaize groats andbroken rice forbrewing andon
quellmehl .
(g)Durum wheat aid
This direct income aidtocertain producers ofdurum wheat is
aimed atthose areas oftheCommunity where yields arelowyet
where producers aredependent onthis cereal for asignificant
-part oftheir income .Theaid fixed for 1978 /79is63UA/hectare
(60UA/hectare in1977 /78)and covers the same administrative
regions (including theless favoured areas indicated inCouncil
Directive 75/268/EEC)asitdidintheprevious year .
Budgetary expenditure
Theexpenditure oftheEAGGF Section oncereals was609.9 million UA
in1976 ,586.7 million UAin1977 .Itisestimated at1428million
AUA in1978 .The 1428million AUAestimated for1978 breaks down
into 1079million AUAforexport refunds and349million AUAfor
intervention measures ,ofwhich 124million AUAfordurum wheat aid .
/

-24
2.RICE <1)(2)
1.Introduction
Only tworegions intheCommunity aresuitable forrice cultiva­
tion :theRhone delta inFrance ,andthePoplain inItaly .In
1977 thearea under rice represented 0.2% ofUAA intheCommunity
and0.14% oftheworld under rice .
TheCommunity accounted for0.25% ofworld rice production (349
million tofpaddy rice )in1977 .Some 96%ofCommunity
production comes from Italy .
2.Production
In1977 thearea sown with rice intheCommunity was 3.1% greater
than intheprevious year .
In1978 afurther increase (2.9% )brought thetotal to202000
ha.InFrance the area increased to12000 hain1978 after a
decrease from the29000 haannual average for theperiod from
1956 to1960 to9000 hain1976 .InItaly thearea under rice
in1978 totalled 190000 ha,ascompared with anannual average
of133000 habetween 1956 and 1960 .
Despite theincrease inarea ,the1977 harvest was 17.9% down on
that of1976 .Thereason forthis was theparticularly low
yields perhectare in1977 caused byadverse weather conditions
during thegrowing period (30.5 q/haascompared with 38.8 q/ha
in1976 ).
For1978 ,yields perhectare areestimated at43.6 q/ha,which
points toarecord harvest of0.880 million t.
3.Internal consumption
In1976 /771.061 million tofrice were used within theCommunity ,
7.5% less than theprevious year .Adecrease was recorded for
industrial uses (-11.8% ),animal feed (-81.46% )andhuman consumption
(-2.9% ).Thedrop inhuman consumption in1976 /77was,however ,tobe
1expected following thesharp increase in1975 /76during thepotato
shortage .
Asaresult ofthedecrease inproduction and the increase ininternal
consumption in1976 /77theCommunity 'sdegree ofself-supply dropped
to65%,ascompared with 89% in1975 /76and 104% in1974 /75.Self-
supply isexpected toincrease considerably with the record harvest
forecast for 1978 /79.
\
4.Trade
Imports from non-member countries amounted in1976 /77to0.593 million
tcompared with 0.612 million tin1975 /76,adecrease of3.1% .From
"1973 /74"to"1975 /76",however ,imports increased by8.3% peryear .
(1)SeeTables M.2.1 .toM.2.5 .inPart II.
(2)Inthis document theword "rice"means husked rice unless otherwise
specified .

From ,,1973/7«"to1975/76",,exports rose by4%peryear .In1976 /77,
however ,exports were 19.1% down ontheprevious year .
Theexternal balance therefore showed adeficit of0.351 million tin
1976/77.This deficit isgrowing (0.124 million tin1974 /75;0.313
million tin1975 /76).
TheCommunity 'sshare ofworld trade inrice in1976/77was6.2% of
imports and2.5% ofexports .Theprincipal sources ofimports remain
theUnited States ,South America andSurinam forwhole rice andSouth
America ,Burma andThailand forbroken rice .
Most exports ofrice gototheMediterranean countries andItaly 's
immediate neighbours .In1976 /7760900 tofrice wasexported as
food aid,i.e. 25%oftotal exports .
Intra-Community trade increased by6.6% in1976 /77over theprevious
year ,totalling 0.435 million t-only 48.7% ofitproduced inthe
Community -supplied byItaly toother Member States <0.212 million t
In1976 /77;0.223 million tin1975 /76;0.153 million tin1974 /75).
Prices
(a)Common prices
Forthe1978 /79marketing year theintervention prices forpaddy
rice wasincreased by2%andthetarget price forhusked rice by
1.9% ,making them 174.98 UA/tand301.26 UA/trespectively atthe
start ofthemarketing year forstandard quality rice .
/
<b)Market prices
During the1977 /78marketing year prices forpaddy rice inthe
main rice-producing region averaged :
-forround-grain rice 285UA/t(57%above theintervention
price );
-forlong-grain rice 319.8 UA/t(62%above theintervention
price ).
These prices are22% (round-grain )and 13% (long-grain )higher than in
theprevious marketing year .Inthespace oftwomarketing years ,
from September 1976 toAugust 1978 ,prices inlire thus increased by
62and38%respectively .Themain reason for thehigh price level in
Italy istheabsence ofmonetary compensatory amounts ,which means
that rice canonly beimported into Italy atwell above thethreshold
price .
(c)World prices
In1977 /78world prices increased onaverage forthefirst time
since 1973 /74.There was achange intheprice relationship
between round-grain andlong-grain rice in1977 /78asthesupply
ofround-grain rice diminished .In1975 /76theprice oflong-
grain rice asapercentage ofthat ofround-grain rice was100% ,
in1976 /7799% and in1977 /7892% .
Because such asmall proportion ofworld production isexpected
(in1978 :8.5million toutofthe367million tproduced )the
slightest variation inharvest ,supply ordemand canprovoke
sudden andconsiderable price changes .

-26-
(d)Consumerprices
ConsumerpricesarenotavailableforallMemberStates.The
followingwererecordedin1977:
-Italy:LIT866/kg,39%higherthanin1976;
-Germany:DM3.20/kg,1%higherthanin1976;
-France:FF5.48/kg,16%higherthanin1976;
-Netherlands :HFL2.60/kg,1%higher ,thanin1976;
-Belgium:BFR51.75/kg(pricenotavailablefor1976).
From1975to1977.consumerpricesfellby4%inGermanyandrose
by8.5%inFranceandby33.5%inItaly.InthelatterMember
State,thelargestconsumerofrice,consumerpriceshavedoubled
since1973.
Outlook
(a)Short-term
Forthe1978/79marketingyeartheareasownwithricewas1000
ha~greaterinFranceandalmost4000hagreaterinItaly,anda
recordCommunityharvestof0.880milliontisexpected.The
areaunderround-gra\nrice(whichhadalreadydecreasedby15.5%
in1977/78)wasfurtherreducedby18.8%inItaly,althoughthe
soilandclimatearewellsuitedtothiscrop.Thistrendis
regrettable becauseItalianround-grain riceiseasiesttosell
intheotherMemberStates.Someindustries inthenorthofthe
CommunityrelyonItalianround-grain rice,worldsupplybeing
tooirregular.Itispossiblethat,asin1976/77,themain
producercountry,Italy,willhavetoimportround-grain paddy
ricetosupplytheotherMemberStates.
iThereductioninareasunderround-grain ricemeansthatItaly
willproduceevenmorelong-grainricein1978/79.Since,for
reasonsofquality,theItaliansurplusoflong-grainricewill
beabsorbedonlypartiallybydomesticconsumption andsupplies
tootherMemberStates,somewhereintheregionof300000twill
havetobedisposed .ofontheworldmarket,eitherasfoodaidor
commercially .
Thefirstestimatesofconsumption for1977/78pointtoafurther
dropinhumanconsumption .ThisisnotablythecaseinItalyand
intheUnitedKingdom,wheretheconsumerpreferscheaper
alternatives (pastaandpotatoes).
Giventhelargestructuralsurplusesforcastfor1978/79,market
pricesshould,inprinciple,belowerthanin1977/78.
(b)'Medium-term
ThereisscopefordoublingtheareaunderriceinFrance(12000
haatpresent),butitisunlikelythattheareaunderricein
Italyin1978/79willincreasemuchmore,becauseofthespecial
requirements ofthiscrop.However,thehighpricesobtainedby
producersinrecentyearsdeterthemfromreducingtheirarea
underrice.

-27-
Dependingontheweatherconditionsprevailingduringthegrowing
seasonandharvest,riceproductioninfutureyearsisexpected
toamounttobetween0.550milliontand0.900milliont.
BecauseofthehighpriceswithintheCommunity,thereis
uncertainty astohowriceconsumptionintheCommunityand
suppliesofItalianricetootherMemberStateswilldevelop.
Despitethisuncertainty.Communityriceimportsandexportsare
notexpectedtovarymuchinthenextfewyears,fluctuatingonly
accordingtotheabundanceoftheCommunityharvest.
Economicaspectsofthemeasurestaken
(a)Leviesandrefunds
Becauseoftheworldpricerisesleviesdecreasedin1977/78.
Forthelastthreemarketingyearsaveragelevieswereas
follows:
! ,inUA/t
1975/761976/771977/78
71.64 116.78 65.82
92.44 138.25"104.98
109.59 169.50 139.95 .
195.62 255.30 221.66
23.45 60.53 49.63
Duringthe1977/78marketingyear,exportrefundswerefixedfor
exportstoAustria,Liechtenstein andSwitzerland .Refundson
round-grain ricewerefixedatthebeginningofthemarketing
yearat60UA/tforhuskedriceand90UA/tformilledrice.In
November1977theywerereducedto30UA/tand37UA/trespec­
tivelyandwerethenabolishedinMarch1978.Refundsonlong-
grainricewere80UA/t(husked)and100UA/t(milled)atthe
startofthemarketingyearand60UA/tand75UA/trespectively
un,tiltheend.
Forexportstonon-membercountriesotherthanthoseborderingon
Italy,arefundof100UA/twasfixedfortheperiodfrom8July
to23August1978.Smallquantitiesofricewereexportedin
thisway,butthebulkofthericeexportedwasintheformof
foodaid. \
(b)Foodaid
In1977/78130672tofricewassuppliedasfoodaid,114%more
thanin1976/77.Muchofthisaidwassuppliedthroughthe
International CommitteeoftheRedCrossandtheOfficeofthe
UnitedNationsHighCommissioner forRefugees.
(c)Quantitysubmittedforintervention
Since1972/73nointervention measureshavetakenplacein
respectofrice.
(d)Monetarycompensatory amounts1975/761976/77
Round-grain huskedrice 71.64 116.78
Long-grain huskedrice 92.44 138.25
Round-grain miliedrice109.59 169.50
Long-grainmilledrice 195.62 255.30
Brokenrice 23.45 60.53
Sofarnomonetarycompensatory amountshavebeenfixedforrice.
-i

-28-
8.Budgetary expenditure
Expenditure bytheEAGGF Guarantee Section inrespect ofthe rice
sector amounted to13.9 million AUA in1977 and wasestimated at36.6
million AUA for1978 ,or0.2% and0.5% oftheexpenditure ofthe
Guarantee Section .The total of36.6 million AUA breaks down into
35.6 million AUA forrestitutions and 1million AUA for intervention .
Inthat year 13.7 million UAwasspent onexport refunds and0.2
million UAonproduction refunds forbroken rice .

,29-
3.SUGAR
1.Introduction
(a)Economicsituation
Inthesummerof1977themainfactorsaffectingthesituationin
thesugarsectorintheCommunityweretheextremelylow
consumption duringthe1976/77marketingyearjustendedandthe
goodprospectsforthe1977harvest.Itwasthereforeexpected
thataparticularly largequantityofsugarwouldbeavailable
forexportin1978/79.
Atthesametimeworldsugarproduction seemedlikelytobein
considerable surplusagainin1977/78,withanappreciable
increaseinworldstocks.Itbecameclearthatthepressureon
worldpriceswouldcontinueasaresultofthistrend.World­
wideeffortstoconcludeanewinternational sugaragreementto
improvethissituationweresteppedup.Thenegotiations had
beensuspendedinMay1977,butweresubsequently completedin
Octoberofthatyear.TheCommunitydidnottakepartinthe
finalphaseofthenegotiation .
(b)SugarandCommunityagriculture
IntheCommunityasawholetheareaundersugarbeetrepresents
amere2%oftheutilizedagricultural area,butinanumberof
•traditional sugarbeetgrowingregionstheproportionis25to
40%.'Atpresentthereareabout380000farmsproducingsugar
beetintheCommunity.Theaverageareaperfarmgivenoverto.
sugarbeetis4.6hectares.Thereare,however,greatdiffer­
encesfromoneregiontoanother.Atypicalfarminnorthern
France,forinstance,hasabout10to25hectaresundersugar
beet,whereasinsomeoftheGermanproduction regionsthearea
undersugarbeetisonly1to3hectaresperfarm.
In1977/78sugarbeetwasproducedby221refineries ownedby109
undertakings withabasicquota.Thenumberofrefineriesis
continuingtodeclineslowly,without,however,givingriseto
anymajorchangesinthepatternofsugarbeetgrowinginthe
Community.
(c)TheCommunityandtheworldsugareconomy
Astheworld'slargestsugarproducerandexporterofwhitesugar
theCommunityoccupiesaspecialplaceintheworldsugar
economy.Thisisfurtheremphasized bythepreferential imports
towhichtheCommunityhascommitteditself.Duringthe1977/78
marketingyearthemainaimwastomanagesugarexportsinsucha
wayastopreventmajorfluctuations insupplyfromfurther
disturbing themarket.
SeeTablesM.3.1toM.3.9InPartII.

-30-
2,Production
forthe1977/78marketingyearthepriceforsugarbeetwasincreased
by3,5%(see"Prices"),TheCouncildidnotadopttheCommission's
proposalthatthecoefficientfordeterminingthemaximumquotabe
lowered.Indoingsoitdidnotrejectoutofhandtheviewthat
Communityproductionshouldbecurbedbecausetheworldmarketsitua-~
tionhaddeteriorated andthetrendinCommunityconsumption was
disappointing.Thereasonforitsdecisionwasratherthatbythat
time(theendofMarch1977)itwastoolatetoinfluencesowing.
Inastatement,theCouncilundertooktoreducethemaximumquotas
for1978/79iftheworldsituationdidnotimprove.
Therelativelysmallpriceincreaseforbeetandsugarsubjectto
quotasandtheforeseeableproceedsfromthepartofproductiontobe
soldoutsidetheCommunityasCsugarledtoa5,9%reductioninthe
areaundersugarbeetin1977/78comparedwiththepreviousyear,.
TheareadiminishedinmostMemberStates,thelargestcutsbeingin
ItalyandFrance,InDenmark,IrelandandtheUnitedKingdom,onthe
otherhand,theareaundersugarbeetagainexpandedslightly.
Afterthe1976drought,whichhadledinsomeMemberStatestoextremely
lowyieldsperhectare,1977sawareturntonormalweatherconditions
andinthetheautumntheweatherwasexceptionally favourable,
particularly forthedevelopmentofthebeet'ssugarcontent.Particu­
larlygoodyieldswereachievedinFrance,TotalCommunitysugar
productionreachedarecord11,53milliontonnes.
In1977/788,87milliontonneswereproducedunderthebasicquota.
Thiswas266000tonnesshortofthesumofthebasicquotas,i,e,
9,136milliontonnes.ItwasagainmainlyintheFrenchAntillesand
theUnitedKingdomthatthebasicquotaswerenotusedup,butthis
wasalsothecasetosomeextentinItalyandIreland,
Withtheimprovementinproductionconditions,productionintherange
betweenthebasicandmaximumquotasincreasedconsiderably in1977/78,
totalling1,86milliontonnes.Inthepreviousyearthissectionof
productionwhichissubjecttotheproductionlevyamountedtobarely
1,2milliontonnes.
3,Consumption
(a)Food
SalesbythesugarindustrywithintheCommunitypickedupagain
in1977/78,andhumanfconsumptionforthemarketingyearasa
wholetotalled9350000tonnesofwhitesugarequivalent.
Consumption wasthus4,4%uponthepreviousyear.Percapita
consumptionroseto36kg.Thisquitemarkedincreaseinconsump­
tionis,however,ofonlylimitedsignificance inassessingconsumer
trendsbecausethecomparisonismadeonlywiththe1976/77
marketingyear,duringwhichconsumptionhadfallenunusuallylow.
In1976/77humanconsumptiontotalledlessthan9milliontonnes.
Thereasonsgiveninlastyear'sreportforthedropinconsump­tioncanbeconfirmedinretrospect.Therewereanumberof
factors,butthemainoneswerethedropinsalestomanufacturers
ofsoftdrinksandicecreambecauseoftheweatherandthereduced
demandfollowingapoorsoftfruitharvest.

Consumption maybeexpectedtocontinueatthecurrentlevel,
whichisthesameasintheearlyseventies,inthecomingyears,
(b)Animalfeedandthenon-foodsector
In1977/78about12000tonnesofwhitesugarwassoldunderthe
denaturingpremiumsystemforfeedingbees,Afurther80000
tonnesofsugarwassoldasarawmaterialforthechemical
industry.Duringthe1977/78marketingyearthediscussionreopened
astowhethertheproductionrefundonsugarusedinthemanufacture
ofcertainchemicalproductsshouldbereintroduced.TheCouncil
finallyadoptedtherelevantmeasureswitheffectfrom1August
1978,Theamountoftherefundisequaltothatforstarch:
3,4AUAper'100kgofwhitesugarfor1978/79,
<c)Self-supply
Increasingproductionandlowconsumptionofsugarraisedthe
Community'sdegreeofself-supply fromabout90%duringthe,
shortagein1974/75to123%in1977/78,ItshouldbeborneHn
mindwhenassessingthistrendthatthesurplusesconsistpartly
ofso-called Csugarwhichhastobesoldbyproducersonthe
worldmarketwithoutCommunityfinancialresponsibility (0,8
milliontonnesin1977/78>,Thequantityofsugaravailablefor
exportisfurtherincreasedby_about1,3milliontonnesofwhite
sugarequivalentunderthepreferential agreementsconcluded
mainlywiththeACPcountries.
Trade
(a)BetweenMemberStates
Intra-Community tradepatternsfollowedthetraditionallinesin
1977/78,TheUnitedKingdomandItalyregularlypurchases
largequantitiesfromtheotherMemberStatestocovershortfalls.
Byreasonofthelargestocksremainingfromthepreviousmarketing
year,ItalyimportedlesssugarfromMemberStatesin1977/78,
Nonetheless,attimesithadsurplusesofsugarfromtheother
partsoftheCommunity,Thetotalvolumeofintra-Community trade
againdecreasedslightly,
(b)Withnon-membercountries
Preferential sugarimportsfromtheACPcountriesandfromthe
assimilatedcountriesandterritoriesfellslightlytoabout1,33
milliontonnesin1977/78,Mostofthepreferential sugar-
about1,27milliontonnes-wenttotheUnitedKingdom,smaller
quantitiesbeingabsorbedbyFrance,GermanyandIreland,
Sugarexportstonon-membercountriesreachedrecordlevelsin
1977/78,The2,9milliontonnesofsugarexportedwithCommunity
financialresponsibility includedabout275000tonnesofrawsugar.
Sugarexports(inwhitesugarequivalent)canbebrokendownas
follows(roundfigures):

-32-
Invitations totenderforwhitesugar
andrawsugarfromtheopenmarket
Invitationstotenderforintervention stocks
Periodically fixedrefunds
FoodaidforUNRWA
Intheformofprocessedproducts
Csugarwithoutrefund2662000t
3000t
2000t
6000t
257000t
783000t
3713000t
5,Prices
(a)Communityprices
Conparedwithpreviouspricerisesforsugarbeet(8%in1976/77),
the3,5%increasein1977/78wasverylow.Thesugarindustry's
processingmargintakenintoaccountincalculatingtheintervention
priceforwhitesugarwasraisedby2,1%,Inadditiontothe
actualprocessingmargin,anamountwasincludedinthenewprice
forwhitesugarfor1977/78tocompensatefortheabolitionofthe
qualitypremiumforfirst-category whitesugar.Thedefinitionof
theintervention pricehadbeenamendedin1977/78,Theamount
includeduntil1976/77tocoverthestoragelevywasdeducted,
i„e,theintervention priceisno<»anetprice.Sincethestorage
levyqtillhastobepaidbythesugarindustry,however,ithas
tobeinvoicedoverandabovethenetsellingprice.
Theguaranteedpriceforpreferential rawsugarwasfixedfor
1977/78attheleveloftheintervention priceforCommunityraw
beetsugar.Itwas2,1%higherthaninthepreviousyear.
Since,despitethereductionsintheareaundersugarbeetin
recentyears,thetotalareaintheCommunityistillrelativelylarge,
andhavingregardtotherecordharvestof1977/78andtheadverse
worldmarketsituation,theCouncilfixedthepriceincreasesfor
1978/79at2%forsugarbeetandsugar,thuscontinuingthe
cautiouspricepolicyinthesugarsectionalso,
(b)Pricesontheinternalmarket
In1977/78exrefinerymarketprices,netoftax,wereveryclose
totheintervention priceinareaswithasurplus.Inthe
UnitedKingdommarketpriceswerehigher.Consumerprices
increasesvariedfromoneMemberStatetoanotherasaresultof
thevariousadjustments toagriculturalparities.
(c)Pricesontheworldmarket
The1977/78marketingyearagainsawaworld-widesurplussituation,
withproductionexceedingworldconsumption by6milliontonnes.
At1Septemberworldstocksreachedalevelequivalentto36%of
annualconsumption.Ingeneral,balanceisconsideredtohave
beenachievedinworldsupplywhenthefinalstocksat1September
areequivalenttoabout25%ofworldconsumption.Thepresent
surplusesareestimatedonthatbasisatroughly10milliontonnes.

Althoughtheaveragepriceforwhitesugarforimmediatedelivery
was19,85AUA/100kgontheParisstockexchangein1976/77,this
pricefellto13,55AUA(-27%)in1977/78,Actiontakenunderthe
WorldSugarAgreementfailedtohaltthedownwardpricetrend.
Short-termoutlook
Forthenewmarketingyear1978/79,averagetogoodyieldsperhectarecan
beexpectedintheCommunityasawhole.Withanareaof1,76millionha
undersugarbeet,productionisputat10,9to11,1milliontonnesof
whitesugarequivalent.Communitysugarconsumptionhasrecentlypicked
upsomewhatanditisestimatedatabout9,45milliontonnesfor1978/79,
ItshouldbeborneinmindthatCommunityproductionofisoglucoseshould
risetobetween110000and125000tonnes,replacinganequivalent
quantityofsugarwithintheCommunity,
Havingregardinparticulartopreferential sugarimportsandthe
traditionaltradeflowsforsugarintheformofprocessedproducts,
thequantityofunprocessedsugaravailableforexportislikelyto
beabout2,8to2,9milliontonnes.Thiswouldbeconsiderably less
thanthequantityexportedinthepreviousmarketingyear(about3,5
milliontonnes),but,giventhedepressedworldmarketsituation,would
againbeaconsiderablefinancialburdenfortheCommunity,
ThenewInternational SugarAgreemententeredintoforceon1January
1978,AlthoughtheCommunityisnotamember,ithaslinkswiththe
Agreement;inparticular,itattendsthemostimportantmeetingsasan
observer.TheUnitedStatesaccededprovisionally totheAgreement,
buthasnotyetratifiedit,,Theworld'slargestsugarimporterhas
thereforenotyetfullyparticipated intheAgreement,andapplication
ofcertainmeasuressuchastheconstitution ofreservestockshas
beendeferred.TheexportquotasforthepartiestotheAgreementwere
setatthelowestpossiblelevelinlinewithlowworldprices:81,5
or85%ofthebasicexportquotas.Althoughacertaineasingofthe
marketwasexpectedasaresultofthesemeasures,therewasnovisible
priceimprovement ontheworldmarketinthefirstsixmonthsduring
whichtheAgreementwasinforce.
Firstestimatesofworldproductionandconsumptionofsugarfor1978/79
indicatethatforthefirsttimeinfouryearsproductionwillnotfar
outstripconsumption.Itisthusexpectedthatworldstocks(currently
standingataround36%ofannualconsumption )willnotexpandfurther.
TheUnitedStatescanbeexpectedtoratifytheAgreementinthe
firsthalfof1979andthemechanismsoftheAgreementshouldthenbe
moreeffective.Inthelightofthesetwofactors,i,e„animprovement
inthebalancebetweensupplyanddemandontheworldmarketand
increasedeffectiveness oftheAgreement,pricescanbeexpectedto
stabilizeandnotdropfurtherfn1978/79,

-34-
7,Economicaspectsofthemeasurestaken
Leviesandrefunds,intervention andfooda'id'
ThesystemofimportLeviesandexportrefundscontinuedtooperate
satisfactorily in1977/78andtoregulatethesupplysituation.The
considerable sugarsurpluseswereexportedwiththeaidofrefunds,
almostallofwhichwerefixedbytenderingprocedure.Preferential
sugarimportedfreeoflevieswaspurchasedmainlybyUnitedKingdom
refineries,intheformofrawsugar.
In1977/78onlytheBelgianintervention agencybought-inanywhite
sugar(3000tonnes).Thissugarwasexportedtonon-membercountries
inthemiddleofthemarketingyearundertenderingprocedures.
Underfoodaidarrangements forPalestinian refugees,6142tonnesof
whitesugarweredeliveredtotheMiddleEastthroughthegoodoffices
oftheUnitedNations,
„Communityrulesforisoglucoseenteredintoforceon1July1977;they
providedinparticularfor.aLevyof5AUAper100kgofdrymatterin
1977/78,Atthattimeisoglucoseproduction amountedtoabout
80000tonnesofdrymatterperyear.Asmentioned above,production is
expectedtototal110000to125000tonnesofdrymatterin1978/79,
8,Budgetaryexpenditure
Expenditure bytheEAGGFGuaranteeSectioninrespectofthesugarsector
amountedto226,5million UAin1976and536,7millionAUAin1977and
isestimatedat812,5millionAUAfor1978,Theseamountsrepresent
4,1%,8,7%and10,2%respectively oftheGuaranteeSection'stotal
expenditure.Itshouldbepointedout,however,thatalargeproportion
ofthisexpenditure iscoveredbythespecialleviesfromthesugar
Industryprovidedforbythecommonorganization ofthemarketinsugar.
Theabovetotalsandpercentages arenotthereforecomparable withthose
forotheragricultural products.
Inordertoarriveatthenetexpenditure incurredonthecommonorganiza
tionofthemarketinsugar,therevenuefromlevies(i,e,theproduction
levyforsugarandisoglucose andthestoragelevyforCommunity and
preferential sugar)mustbedeductedfromtheall-infigures.
Aproduction levywasnotpaidin1976,In197749millionUAUwasdue
bywayofadvancepaymentforthe1976/77marketingyear.For1978,
however,alevytotalling 147millionAUAisexpected,consistingofan
advancepaymentfor1977/78andthefinalpaymentfor1976/77,
Inthecaseofstoragelevy,itissimplesttorefertotheamount
refundedbytheEAGGFtobeneficiairiesforstoragecosts,giventhe
principleofbalancebetweenrepayments andlevies.Thisamountwas
145millionUAin1976and162millionAUAin1977andisestimatedat
194millionAUAfor1978-

-35-
Allowingforthespecialleviesinthesugarandisoglucosesectors,
netexpenditure bytheEA6GFGuaranteeSectiontotals323,7millionAUA
for1977and465,5millionAUAfor1978,Thesenetfiguresinclude
costsresultingfromthearrangement wherebyforthepreferential imports
ofabout1,3milliontonnesfromtheACPcountriesanequivalentquantity
ofCommunitysugarhastobeexported;thesecostsamountedtoabout
260millionAUAin1977and300millionAUAin1978,

1
4,OLIVEOIL
1,Introduction
OftheCommunity'soliveoilproduction,0,5%comesfromFranceand
99,5%fromItaly,wherethisproductin1977accountedfor5%by
valueofnationalagricultural production and1%byvalueofCommunity
agricultural production.
Upto1975productioncoveredabout70%oftheCommunity'soliveoil
requirements ;accordingtocertainestimatesthetotalnumberofolive
treesintheCommunity,bothcultivated andnot,isabout190million
(185millioninItalyand5millioninFrance),However,thepercentag
ofCommunityrequirements coveredbyinternalproductionofoilhas
beenrisingsteadilyforthreeyears.
Sincetheestablishment ofthecommonorganization ofthemarketin
oilsandfats,thescaleofolivecultivation intheoriginalCommunity
haschangedlittle,Olivegrovesstillcoveraround2,3millionha
(2280000hainItalyand38000inFrance),representing 2,3%ofthe
Community'stotalUAA,andareinthehandsof1200000growers.
InanormalyearCommunityoliveoilproduction represents 30%ofworld
output.However,becauseolivetreesaresubjecttoalternatebearing,
oliveoilproduction mayvaryverysharplyfromoneyeartothenext.
AccordingtotheInternational OliveOilCouncil,thetotalworldarea
devotedtooliveoilcultivation amountsto10millionha;the
Communityareaisthus23%oftheworldtotal.
TrendsontheoliveoilmarketintheoriginalCommunitysince1972
Thedifficulties encountered inestablishing figuresfortheoliveoil
marketingyearsfrom1966/67to1971/72andinanalysingmarkettrends
weresetoutbytheCommissioninareportsenttotheCouncilon26
September 1972,
Asthesedifficulties persist,theCouncilhasdecidedtoestablish a
registerofolivecultivation intheCommunity,
2,Production
Onthebasisofapplications forsubsidies,production in1976/77
amountedto325000(includingoliveresidueoil)inItalyand2200t
inFrance,Theseareamongthelowestproductionfiguresrecordedfor
Italysincethecommonorganization ofthemarketinthisproductcame
intoforcein1966,
1
SeeTablesM4,1toM4,4InPartII,

-37
Onthesamebasis,productioninFrancein1977/78amountedto1400t.
Thenumberof1977/78applicationsforsubsidiesinItalyisnotyet
known,butitcanalreadybesaidthatthefigurewillbemuchhigherthanforthepreviousyear.TheItalianStatisticalOfficeputitat
almost700000t.
Consumption andmarketing
Themainfactorinfluencingconsumption,sometimeswithacertaintime
lag,istherelationshipbetweentheconsumerpricesofoliveoiland
seedoil*
' ' ''-
Itshouldbenotedherethatduringthe1976/77and1977/78marketing
yearsthepriceratioofoliveoiltoseedoilwasabout2,5:1,with
theinevitablerepercussions onoliveoilconsumptionintheCommunity,
Whichdroppedconsiderablyduringthosemarketingyears.Thisdecline-
inconsunptionledtoasubstantialfallinimportsandthesendingof
largequantitiesintointerventionduringthemarketingyearsin
question.
Trade
TheCommunityistheworld'slargestnetoliveoilimporter.From1974/75,
onaccountofthedifficulties describedinparagraph3,importswhich
hadreachedapeakof251000tin1972/73droppedverysubstantially ;
theytotalledonly121758tin1974/75and93357tin1975/76,In
1976/77importsrecoveredatabout147000t,butthisfigureshouldbe
seeninthelightoftheverylowproductionrecordedin1976/77,
Importsin1977/78,onthebasisofimportlicencesissuedupto15
September1978,areabout79000't, .
Intra-Community tradeisverylimitedandbasicallyconcernsthetwo
oliveoilproducer/consumercountries,FrarceandItaly;otherMember
States*tradeisnegligible.
TradebetweenFranceandItalyin1974/75wassome5000t.However,
in1975/76Franceimportedsome10000tofoliveoilfromItaly,The
causeofthisincreaseiscomplex:thehighproductionofoliveoilduring
thatyear,bothwithinandoutsidetheCommunity,broughtabouta
substantialfallintheworldpriceandahighlevywassetaccordingly.
Intheseciccumstances FrancechosetoobtainsuppliesfromtheItalian
market.Thesituationreturnedtonormalin1976/77andinthatyear
Franceimportedsome3800tofoliveoilfromItaly,
Exportstonon-membercountries,whichusuallyformpartofanestab­
lishedtradingpattern,amountedtosome17000tin1975/76,substan­
tiallymorethantheyearlyaveragewhichhasforsomeyearsbeenabout
14000t, x
Thissituationisduetooperators *large-scaleuseoftheEXIM
procedure(thepossibilityofimporting,freeoflevy,aquantityofoil
equivalenttothatexported).In1976/77some9600twereexported.
Thisverylowfigure,whichdoesnotcorrespondtothetraditionalpattern
ofexports,isexplainedbythedifficulties whichoperatorshavein
usingtheEXIMprocedure,theonlywayofexportingintheabsenceof
refunds.

-38-
In1977/78,onthebasisofexportlicencesissuedupto15September
978exportsweresome7400t,mainlyinsmallcontainers,theonlyfnrm'ofpresentationforwhichexportrefundsarefixed.Tothis
Quantitymustbeaddeds„me5500tofexportsinbulkofoliveoilnurchasedfromtheItalianintervention agency.Thevolumeofexportsfor1977/78^totaI1ing12900ton15September1978maythusbecon­
sideredasmarkingareturntonormal.
5.Prices
(a)Commonprices
Forthe1976/77and1977/78marketingyears,oliveoilpriceswere
fixedatthefollowinglevels
UA/1Q0kg
1976/77 1977/78
Productiontargetprice 185 187.78(+1.5%)
Markettargetprice 144.89 141.91(-2.44)
Interventionprice 137.64 134.62(-.
However,onaccountofthedevaluationofthegreenlira
(6.9%),in1977/78thefollowingchangeswererecordedinthe
abovepriceinItaly,themainoliveoilproducingandconsuming
MemberState:
Productiontargetprice: +8.56%
Markettargetprice • +4.75%
Intervention price : +4.61
Undertheneworganization ofthemarketinoliveoilenteringinto
forceforthe1978/79marketingyear,thefollowingpricesand
amountsarefixedbytheCouncil:
UA/100kg%increaseover1977/78
Productiontargetprice 191.54 +2%
Interventionprice 141.14 +4.84A
Production andsubsidy 43.11 ~6.02%
Onaccountofthedevaluationofthe"green"lira(12%),thefollowing
changeswillbemadeinItalytotheabovementionedpricesand
amounts :
Productiontargetprice !+14.28%
Intervention price :+17.47/»
Productionsubsidy i+5.30t*

-39-
Becauseofthechangeinthesystemoforganization ofthemarket
inoliveoilasfromthe1978/79marketingyear,themarkettarget
priceisbeingreplacedbyamarketrepresentative pricetobe
fixedinOctober,thelevelofwhichwilldeterminethelevelofthe
aidforconsumption.Thissetofprovisions 9houldallowabetter
adaptationofthemarketpricesofoliveoiltothepricesof
competingoilsand,asaresult,bringaboutarecoveryin
~consumption ofthatproduct,
(b)Marketprice
During1976/77themarketpricesoflampanteoliveoilandresidueoilfluctuated aroundtheintervention priceallthetime,in
spiteoftheverylowproductionwhichshouldlogicallyhavecaused
pricestorise.Atthesametimethemarketpricesofedible
virginoilsweresubstantially abovethecorresponding intervention
prices, ,
Thissituationevencausedsome10300tofoliveoilofall
qualitiestobedeliveredtotheItalianintervention agency.
Marketpricesin1977/78forlampanteoilfluctuated aroundthe
intervention price,causing5700tofthisoiltobedeliveredto
intervention .
Marketpricesofoliveresidueoilremainedbelowtheintervention
pricethroughoutthemarketingyearand21500tofthisoilwere
deliveredtointervention .
. C -
Finally,marketpricesofediblevirginoilwereabovethecorres­
pondingintervention pricesduringthe1977/78marketingyear,in
spiteofthedeliveryofrelatively largequantities tointerven­
tion(48000t).
6,Outlook *
'Attheendofthe1977/78marketingyear,marketpricesarewellabove
theintervention priceforallqualities,buttheseareonlynominal
pricessincetheCommunity's1976/77productionofoliveoilis
practicallyallsoldandthepricesrecordedpresagethesubstantial
riseexpectedatthebeginningofthe1978/79marketingyear,
7,Economicaspectsofthemeasurestaken
(a)Importlevies
TheCounciladoptedspecialmeasuresforimportsfromJune1976,
duringthesecondhalfofthe1975/76marketingyear,consisting
inallowingthelevy,asanexceptionfromthenormalcriteria,
tobesetbytenderinthelightofboththeworldandtheCommunity
markets.Thismethodwasalsoappliedduringthe1976/77and
1977/78marketingyears.

-40-
Sincethereasonforadoptingsuchasystem-namelythelackof
transparency oftheworldmarketinoliveoil-stillexists,the
possibilityofusingsuchasystemtosetthelevyhasbeen
includedinthenewsystemoforganization ofthemarketinolive
oilwhichwillapplyfromthe1978/79marketingyear.
TheSysteminpractice
Duringthefirstninemonthsofthe1977/78marketingyear,the
leviesfixedforimportsfromnon-membercountriesfluctuated
between48and56UA/100kgforlampanteoliveoil,thequality
mostimported,andbetween50and56UA/100kgforediblevirgin
oils.
However,asregardsimportsfromGreece,theleviessetfor
lampanteoilfluctuatedbetween26and32UA/100kgandforedible
virginoilbetween28and32UA/100kg,
(b)Refunds
H ,*
Duringthe1976/77and1977/78marketingyearscashrefundswere
atsuchlowlevelsastobescarcelyoperational.Nonetheless,
traditionalexportscontinued,sinceoperatorsusedtheEXIM
procedureorwereabletogetoliveoilsuppliesfromtheinter­
ventionagency,
(c)SalesofoliveoilfromItalianintervention stocks
On1November1977,whenthe1977/78marketingyearstarted,the
Italianintervention agencyhadsome38000tofoliveoilofall
qualitiesinstockasaresultofintervention duringthe1975/76
and1976/77marketingyears,Afurther79000tweretakeninto
intervention inItalyin1977/78,
Ofthistotalof117500t,18000thavebeensold.Attheend
ofthe1977/78marketingyeartherearethereforestill99500t
ofoliveoilofallqualitiesinstock,
8,Budgetaryexpenditure
Expenditureintheoliveoilsectorconsistsofintervention buying,
subsidiespaidtooliveoilproducersandexportrefunds.
Expenditure onsubsidiesdependsonthescaleofproductionandon
thedelayinpayment.

-41-
Totalexpenditure bytheGuaranteeSectionoftheEAGGF1sestimated
at236millionEUA,madeupasfollows:
Production subsidies :"214millionEUA
t
Intervention : 16millionEUA
Refunds : 1millionEUA
Other : 5millionEUA
Thedraftbudgetfor1979providesfortotalexpenditure of322
million EUA-
* ».)•
•}
:0
»
\
*
I
..;)
.4
!
ι
1

5,OILSEEDS
5.a.Colza,rapeandsunflowerseeds^1)
1-Introduction
In1977,theshareofoilseedsinthevalueoffinishedagricul­
turalproduction was0,3%andthesecropsagainaccountedfor
slightly *lessthan0,7%oftheCommunity'sUAA,Worldproduction
ofcolzarosefrom7milliontinthepreviousyearto7,4million
tin1977;Communityproductionfellfrom1023milliontin1976
to0954milliontin1977reducingtheCommunityshareofworld
production from14,5%to12,89%,
Worldproductionofsunflowerseedrosefrom10milliontin1976
to12,7milliontin1977,mainlybecauseofthesignificant
expansionintheareadevotedtocultivation ofthisproductionin
theUnitedStates;Communityproductionofsunflowerseedis
0,150milliont,only1,18%ofworldproduction.
TheCommunity'sownoilseedproduction providesonlyaverysmall
partofitsneedsinoilsandoilcakes.Theself-supply ratedoes
notexceed11%foroil,excludingoliveoil,and4to5%inthe
caseofoilcake,
2,Production
In1977theCommunityareaundercolzawasthesameasinthe
previousyear,i,e,nearly500000ha.However,trendsinthe
fourmainproducingcountriesdiffered,sincetherewasanincrease
of15,6%inareaintheUnitedKingdom(from48000to55500ha)
anda10,7%increaseinareainGermany(from94800hato104900
ha),whereastherewasareductionof4,2%inFranceandof3,4%
inDenmark,TheincreaseinareainGermanyandintheUnited
Kingdomisduetothefactthatthesetwocountries hadencouraging
yieldswhereasthereversewastrueinFranceandDenmark,Total
production isabout950000t.
Theareaundersunflower,producedonlyinFranceandItaly,
remainedstablein1977comparedwith1976,atsome84000ha,•
However,highyieldsinFrancemeantanincreaseinproduction
from127000tto149500t.In1976yieldsinthatcountryhad
beenverydisappointing ,i,e,1,28t/ha,whereasin1977theyield
wasabout1,91t/ha.InItaly,howevertheyieldwasdownfrom
2,05t/hain1976to1,59t/hain1977,
^SeeTablesM,5,a,1toM,5,b,4inPartII

Consurrption
Thedemandforcolza,rapeandsunflowerseeddependsonthe
demandforcolzaandsunfloweroilsandoilcakes;thelatterdemand
isinturndeterminedbytheoveralldemandforoilsandoilcake
andbytherelationship betweenthepricesofcolzaandsunfloweroilsandoilcakeandthepricesofalternativetypes.Thisbeing
thecase,twosetsofconsumptiondatawillbegiven,oneforoils
andtheotherforcolzaandsunflowercake,whileseedswillbe
dealtwithseparately.
Oil
Consunptionofcolzaoil,whichreacheditslowestlevelin1975/76
(276000t),hasrecovered.Thefiguresavailableputconsumption
ofthisoilatabout411000tofor1976/77,Communitycolzaoil
productionfellin1977/78(from537000tto432000t)andsince
exportsforthefirsthalfofthemarketingyearhavealreadyreached
thelevelrecordedduringthewholeoftheprecedingyearitis
obviousthatCommunityconsumption hasagaindeclined.
Itshouldbenotedthatduringthesecondhalfof1976colzaoil
priceswereverylowcomparedwiththepricesofcompetingoils,
andinparticularsoyaoil,thisbeingthemainincentiveto
increasedconsumption duringthe1976/77marketingyear;since
then,however,owingmainlytothestrongworldmarketdemandfor
thisoil,priceshaveoftenbeenhigherthanthepricesofcometing
oilsandthismayexplaintheapparentdropinCommunityconsump­
tion, .■.
Consumptionofsunfloweroilwas307000tin1976/77,Importsof
sunflowerseedsamountedto289000tointhefirsthalfofthe
1977/78marketingyear,(comparedwith282000toduringthewhole
of1976/77)andimportsduringthesecondhalfoftheyearwere
probablyofthesameorder.Itisthereforelikelythattotal
sunfloweroilconsumption intheCommunityin1977/78willbesub­
stantiallyhigherthaninthepast.
0iIcakes
Consumptionofcolzacakeshasnotcontinuedtheupwardtrend
recordedinthepasttwoyears.Consumption ofthiscakewas
979000tin1976/77comparedwith700000tintheprevious
marketingyear,butthefiguresavailablefor1977/78indicatethat
adropinconsumptionislikely.Therisein1976/78seemsto
havebeentheresultofincreasedimportsofcolzacake,which
rosefrom121000tin1975/76to216000tin1976/77,
Availabilityofsunflowercakein1976/77werealsouponprevious
years,whenconsumptionhadremainedstableataround390000tper
year,Consunptionroseto490000tin1976/77andthistrend
appearslikelytocontinuein1977/78,

-44-
Seeds
Asmentionedabove,colzaoilexportsin1977/78.wereparticularly -
highandthisfacilitatedthesaleofthe1977colzaseedcrop.
InviewoftheCommunity'slowdegreeofself-supply insunflower
seeds,itscropissoldeachyearwithoutdifficulty.
4-Trade
ImportsofcolzaseedtotheCommunityincreasedfrom150000tin
1975/76to399000tin1976/77,Importsfoethefirsthalfof
the1977/78marketingyearareputat154000t.
Importsofsunflowerseedalsoshowamarkedincrease;theyrose
from213000tin.1975/76to282000tin1976/77andarealready
289000toforthefirsthalfofthe1977/78marketingyear.
Ontheotherhand,exportsofcolzaseedfellfrom60000tin
1975/76to46000tin1976/77andwereonly1000tforthefirst
halfofthe1977/78marketingyear.SincetheCommunityhasabig
deficitinsunflowerseedthisproductisnotexported,Intra-
Communitytradeincolzahasremainedstablefortwoyears,at
180000tin1975/76and193000tin1976/77,
TradeinsunflowerseedismainlyfromFranceandItalyto
Germany,Germanypurchased22000tofCommunitysunflowerin
1975/76and19000tin1976/77,
5,Prices
(a)Commonprices
Forthe1978/79marketingyear,thetargetpriceforcolzaseed
wasfixedat29,67UA/100kgandthatforsunflowerseedat32,32
UA/100kg,upon1977/78pricesby4%and5Xrespectively,
(b)Marketprices
C1)World_market
Atthebeginningofthe1976/77marketingyearpricesofvegetable
oilstookanupwardturnfollowinganincreaseinworlddemand.
Thisriseinpricescontinuedthroughout1976/77andthefollowing
marketingyear,owinginparticulartotheabnormallyhighdemand
fromIndiaalreadymentioned.

-45-
(2)Comrnunjt£_market
The1977/78Communitycolzacropwassoldinfitsandstarts,
dependingmainlyonoilpurchasesontheworldmarket.Generally
producerpriceswerebetweentheinterventionpriceandthetarget
priceandinsomecasesexceededthelatter.
Thesunflowercropissoldeachyearwithoutdifficultyatprices
wellinexcessoftheintervention price.
6,Outlook
TheCommunitycolzaandrapecropforthepresentmarketingyear
isestimatedat1,2milliont,upbyover25%onthepreviousyear
mainlybecauseoffavourableweatherconditionsandtheresulting
higheryieldsinFranceandbecauseofanexpansionintheareas
devotedtothiscropinGermany,theUnitedKingdomandDenmark,
Thereareasyetnoestimatesavailableforsunflowerbutitisto
befearedinthelightofexperiencethat,inspiteofthestrong
Communitydemandforthisproduct,productionwillremainataround
thelevelofpreviousyearsandwillnotexceed120000t.
Consumptionofcolzaoilwilldependonthesellingpricesofthis
oilcomparedtothepricesofcompetingoilsandontheresults
ofmeasuresundertakentopromotetheconsumption ofcolzaoil.
Sunfloweroilconsumption maycontinuetoincrease,particularly if
theexpansioninworldproductionissustained.
Traditional exportsofcolzaseedtonon-membercountriescould
pickupagainonaccountofthegoodcropexpectedinFrance,the
principalsupplieroftheseexports,Intra-Community exportsmay
alsoincreasebecauseItalyhasbeenimportingcolzaagainsince
thebeginningofthemarketingyear,
7,Economicaspectsofthemeasurestaken
(a)Aidandrefunds
Aidforcolzaseedinthe1977/78marketingyearfluctuatedbetween
3,606and11,808UA/100kgwithanaverageof9,330UA/100kg.
Theexportrefundduringthesameperiodvariedbetweenniland
9,500UA/100kg.
Thesunflowerseedcropwassoldwithoutdifficulty.Aidvaried
between10,448and14,315UA/100kg,averagingaround12,000UA/100
kg.Noexportrefundwasfixedforthisproduct.

-46-
(b)Intervention
Duringthe197.7/78marketingyear1092tofcolzaseedwereofferedforintervention inGermanyand963tinDenmark.This
seedwassoldatthebeginningofthe1978/79marketingyear.
Ν
(c)Changeinthestandardquality
For1975/76thestandardqualityofcolzaseedwaschangedtotake
accountoftheloweroilcontentofnewvarietieslowinerucic
acid.Theoilcontentrequirement wasloweredfrom42to40%,•
Witheffectfrom1July1976,intervention wasrestrictedtocolza
seedwithamaximumerucicacidcontentof15%,Witheffectfrom
1July1977,thismaximumwasfurtherreducedto10%,
From1July1979aidwillnolongerbegrantedforcolzaseedwith
anerucicacidcontentexceeding 10%,withtheexceptionofseeds
ofhigherucicacidcontentthe-oilofwhichisintendedfor
industrial uses,
(d)Unityofprices
(1)Accessi_on_comgensator^_amount s
Inthe1976/77marketingyear,accessioncompensatory amountsfor
colzaseedproducedintheUnitedKingdomandDenmarkwerefixed
at2,65and0,61UA/100kgrespectively.Inthe1977/78marketing
year,thiscompensatory .amountremainedinforceintheUnited
Kingdomonlyandwasfixedat1,37UA/100kg.Itwasabolished
from1January1978,
(2)Differential_amounts
Inviewofthepresentmonetarysituation,thesystemof
differential amountsintroducedon20July1972isstillinforce
forcolzaseed,
8,Budgetaryexpenditure
Expenditure inresDectofcolzaandsunflowerseedbytheEAGGF
GuaranteeSectionin1977amountedtoaround80millionEUA,or
1,2%oftheGuaranteeSection'stotalexpenditure.Corresponding
expenditure in1978isestimatedat111,5millionEUA,or1,4%of
total*expenditure,ofwhich105,5millionEUAforintervention,
i,e,,subsidies,5millionEUAforexportrefundsand1million
EUAforstoragecosts.

5,b,Soyabeans
Afteradifficultstartsoyacultivation hasincreasedfrom1200ha
in1977to3900hain1978,almostallofitinFrance,Production
willincreasefromaround2000toaround6000t,Inspiteofthis
initialprogress,productionofthiscropstillaccountsforonly
averysmallproportionofCommunity UAA,ofworldproductionand
ofCommunitysoyacakerequirements,whichin1977totalledaround
14milliont(soyabeanequivalent),Afurtherslightincreasein
Communityareasisexpectedin1978,
Theguidepriceforthe1978/79marketingyearhasbeenfixedat
32,17UA/100kgconparedwith30,64UA/100kgfor1977/78(+5%),
Sinceaverageworldmarketpricewas16,502UA/100kgfor1977/78,
aidforthatmarketingyearamountedto14,138UA/100kg.Thisaid
wasgrantedinrexpectof2000kg/ha,i,e,theminimumyieldto
qualifyforaid.
(1)SeeTableM5,c,1inPartII,

-48-
5,c,Flaxseed^
>......(2)AlthoughCommunityflaxproduction amountsforonlyaninfinitesimal
proportionoftheUAAintheCommunityandofworldareaunderflax
(6,0millionhaand2,9milliontin1977accordingtotheFAO),it
doeshelptocovertheCommunity'.ssubstantialproteinrequirements
(about550000tofflaxcakewereimportedin1977),
In1977theareaunderseedflaxintheCommunitytotalled19600ha
conparedith28000hain1976(-30%),TheareasowninFrancewas
downfrom19500hato7800hawhilethatinItalydecreasedfrom
5300hato9300ha.ThereductioninareainFranceisduetothe
factthatmanyproducersinthesouthdroppedthiscropowingtothe
uncertainty asregardsincome,causedontheonehandbythelate
fixingoftheguidepriceandontheotherbypooryieldsfromthe
1976crop.ThedeclineinareassowninFrancecontinuedin1978
since1977yieldsinthesouthdidnotaffordfarmersafairincome,!
Theguidepricefor1978/79wasfixedat32,43UA/100kgcompared
with31,18UA/100kgfor1977/78(+4%),Sinceaworldmarketprice
of15,77UA/100kgwasdecidedonfor1977/78,aidforthatmarketing
yearwas15,41UA/100kg.Thisamountwasgrantedinrespectof
aquantityofseedfixedonthebasisoftheyieldsrecordedinthe
variousproductionareas.
Expenditure bytheEAGGFGuaranteeSectioninrespectofseedflax
isincludedinthatincurredinrespectoffibreflax(2),
(1)SeeTableM7,4inPartII,
Seealsounder7:Fibreflaxandhemp.

49
5,d,Cottonseed
Cottonrepresentsan"infinitesimal percentageofthevalueoffinal
agricultural productionandoftheUAAintheCommunityandofworld
production (26,6milliontin1977accordingtotheFAO),
ThankstotheCommunityaidsystemthiscropcontinuestobeworthwhile
insomeoftheless-favoured regionsofItaly,Intheseregionsthe
cropareaevenincreasedfrom4000hain1976to5600hain1977/
producingabout1000tofseed.However,itisunlikelythat
Communityproductionwillexpandsubstantially inthenearfuture.
Aidfor1978/79wasfixedat108,70UA/hacomparedwith104,52in
1977/78(+4%),

-51-
6-a,DRIEDFODDER
1-Introduction
Thecommonorganization ofthemarketindriedfoddercoversthe
followingproducts:dehydratedfodder,themainsun-driedlegumes
andproteinconcentratesobtainedfromlucerneandgrassjuice.
Thenewcommonorganization ofthemarket(seebelowunder7)has
beeninforcesince1April1978,Itreplacesandstrengthensthe
commonorganization ofthemarketapplicabletodehydratedfodder
since1May1974,Lastly,theCouncildecidedthatdehydrated
potatoeswouldbecoveredbythenewarrangements onlyuntiltheend
ofthe1978/79marketingyear.
2,Production
Communityproductionofdehydratedfodder(otherthandehydrated
potatoes)in1977was1615606tonnes,representing ariseof31,8%
over1976whentherewasasharpdropowingtothedroughtaffecting
Europethatyear.Hence,in1977productionexceededeventhelevel
recordedbeforethedrought,whichhadbeenabout1,5milliontonnes
inanormalyear.Thelargestincreaseinproduction wasinFrance,
theCommunity'smainproducer,wherethefigurerosefrom585000t
in1976to855000tin1977,
TheCommunityproducesdehydratedpotatoesonamuchsmallerscale
thanconventional dehydratedfodder(particularly lucerneandgrass);
itsproductionofdehydratedpotatoesin1977/78was68270t,arise
of16,9%onthatoftheprevious "year(58424),Germanywithabout
60500t,istheCommunity'slargestproducer,
3,Quantitiesavailable
Suppliesofdehydratedfodderroseconsiderably in1977/78
(1935000tagainst1600000tin1976/77)onaccountoftheupturn
inCommunityproductionmentionedaboveandsubstantialimportsfrom
non-membercountries, •v
4,Trade
Importsoflucernemealfromnon-membercountrieswere334000tin
1977,against389000tin1976,Inspiteofthisdrop,importswerestillappreciablyhigherthanin1974(112000t)andin1975(135000t).
1SeeTablesM6,1toM6,5inPartII,

-52-
In1977theUnitedStatesandHungaryremainedthelargestexportersof
dehydratedfoddertotheCommunity,with187000tand96000trespectively.Forthefirsttimetwoothercountriesalsoexported
considerablequantitiestotheCommunityin1977:CanadaandSpainwith
24000tand16000trespectively.Importsfromnon-membercountries
wentmainlytotheFederalRepublicofGermanyandtheBenelux
countries.TheseMemberStateswerealsothelargestimportersof
dehydratedfodderofCommunityorigin(288000t,mainlyfromFrance
andDenmark),
Communityexportsofdehydratedfoddertonon-membercountriesin1977
were-asinpreviousyears,insignificant (9000t), '
5,Prices
Duringthefirstfewmonthsof1977priceswerehigh(February1977:
146,90AUA/t)inviewoftheworldproteinsituationandfearsthat
demandfortheseproductsmightnotbesatisfied.
Thesefearsintheendprovedgroundless,andanabundantCommunity
harvestofroughageandlow-pricedimportsofdehydratedfodderfrom
non-membercountriescausedpricestodropfromJune1977onwards
(114,70AUA/t),Afterthatsuppliesontheworldmarketofproteins
ingeneralanddehydratedfodderinparticularwereguaranteedandthe
pricesofthelattercontinuedtodrop,reaching88AUA/tinDecember
1977and70AUA/tinJune1978,
6,Outlook .;
Accordingtotheinformationavailable,productionofdehydrated
fodderin1978shouldbeslightlyhigherthaninthepreviousyear,
mainlyasaresultoftheincreaseintheareaundercultivation.
Thebalancebetweensupplyanddemandwilldependonthelevelof
imports.Theentryintoforceon1April1978ofnewarrangements
governingdriedfoddershouldhaveabeneficialeffectonboth
production anddisposalintheCommunity,Oneofthemainchanges
broughtaboutbythenewarrangements concernsthefixingofaguide
pricefordehydratedfodderwhichenablesdehydration concernsto
payaworthwhilepricetofarmersfortheirgreenfodder,irrespective
ofthelevelofpricesforimportsofdehydratedfodder.
Sincethedetailedrulesforapplyingthenewarrangements only
becameeffectiveon1July1978andsincelucerneisapluriannual
crop,theirfulleffectonproductionisunlikelytobefeltuntil
thebeginningof1979,

-53-
7,Economicaspectsofthemeasurestaken
InordertoimprovetheCommunity'sproteinsupplies,theCouncil
adoptednewarrangements fordriedfodderwhichhavebeeninforce
since1April1978,Thesenewarrangements providemainlyforthe
yearlyfixingofaguidepriceatafairlevelforproducers(in1978/79
:103AUA/t)andthegrantingofaidatastandardrate(5AUA/t)to
processingconcernsandofadditionalaidwhentheworldmarketprice
fallsbelowtheguideprice.Whereproductionofdehydratedfodderwas
formerlyaffectedbypricefluctuations ontheworldmarket,thenew
arrangements guaranteeanincometoproducersofgreenfoddercomparable
tothatobtainableforotherproductsalreadycoveredbyacommon
organization ofthemarket,
8,Budgetaryexpenditure
Expenditure bytheGuaranteeSectionoftheEAGGFinrespectof
dehydratedfodderwas3,6millionUAin1974,11,1millionUAin
1975,15,2millionUAin1976and12,9millionAUAin1977,Itis
estimatedat16,2millionAUAin1978,Dehydratedfodderhasaccounted
since1975for0,2%oftheGuaranteeSection'stotalexpenditure.
'■0 ■»

-54-
6,b,PEAS-BROADBEANSANDFIELDBEANSFORUSEINANIMALFEED
ν
Inview,inparticular,oftheCommunity'sLowdegreeofself-supply in
proteinsforuseinanimalfeed,specialmeasureswereadoptedbythe
Councilon22May1978inordertopromotetheproductionofpeas,
broadbeansandfieldbeansforthispurpose.Thesemeasureshavebeen
applicable since1July1978,
Theproductsinquestionareindirectcompetition withoilcakesimported
fromnon-member countriesatzeroduty,Asystemhastherefore been
setupwherebymanufacturers offeedingstuffsusingpeas,broadbeans
andfieldbeansproducedintheCommunityaregrantedaidwhenthe
priceofsoyacakesislowerthantheactivatingpriceforaid,which
hasbeenfixedat28,50AUA/100kgforthe1978/79marketingyear.
Theamountofsuchaidvarieswiththefluctuations ofsoyacakeprices.
Itisgrantedonlyifthemanufacturer offeedingstuffshaspaidaprice
totheproduceratleastequaltotheminimumpricefixedbythe
Council,Forthepresentmarketingyeartheminimumpricehasbeen
fixedat17,50AUA/100kg.Inthisway,producersareguaranteed a
fairprice.
Statistics arerareforthissectorbutithasbeenestimatedthatfor
the1978/79marketingyearabout100000tofpeas,broadbeansand
fieldbeansmayqualifyforspecialaid.

-55-
17,FIBREFLAXANDHEMP
1,Introduction
Althoughtheareaunderflaxandhempislessthan1%ofUAA,these
cropsareofconsiderableimportancefortheregionsin.whichtheyare
concentrated.
Fibreflaxisgrownonabout15000farmsintheNetherlands,Belgium
andnorth-westFrance,Flaxstrawisprocessedthereintofibresin
about250rettingandscutchingconcerns.Theirnumberhasdecreased
sharplyinrecentyearsbuttheyproduceahighandrelativelystable
quantityofrawmaterialswhichtheCommunitylacks:textilefibres,,
oilseedsandpulpwoodparticles.TheCommunityaccountsfor4%ofthe
totalworldareaunderfibreflax(1,5millionha)but14%ofworld
productionofflaxfibre(695000t)asaresultofabove-average
yields.TheUSSRaccountsfor80%ofworldproduction,theEast
Europeancountries,EgyptandChinabeingtheotherproducers.
Paperhemp,althoughsteadilyprogressing,continuestobegrownonly
averysmallareainFrance,Therawmaterialsuppliedby1500
producersisusedinmanufacturing specialtypesofpaper,Italy
producesaverysmallquantityoftextilehemp.
2,Production
/ ... ■
In1977,61500hawereunderfibreflaxintheCommunity,anincrease
ofabout7%onthethreepreviousyears.Theincreaseisduetoa
riseindemandafterthedisastrousharvestof1976,Theorderofthe
threeproducingMemberStateshasnotchanged:75%isproducedin
France,15%inBelgiumand10%intheNetherlands,Strawandfibre
yieldswerenormalandproduction was500000tand96400trespec­
tively.
Theareasunderpaperhempincreasedconsiderably in1977,,demand
havingrisensharplyafterthesmall1976harvest.Cultivatedareas
totalled10000hacomparedwith7800ha(+36%)andtheproduction
ofstalkswas70000t,
3,Consumption andstocksoffibres /
Communityconsumptionofflaxfibresinthe1977/78marketingyearwas
76000t(-8%comparedwith1976/77),Exportstotraditional cus­
tomersamountedto23900tduringthesameperiod.Consequently,
requirements amountedto99900t,metalmostentirelybyCommunity
production (96400t).Imports(17000t)coveredthe'balanceof
/
SeeTablesM7,1toM7,7inPartII­

-56-
requirements (3500t),theremainder(13500t)servingtobuildup
stocks,whichrosefromtheunsatisfactory levelof32300tatthe
beginningofthemarketingyeartothealmostadequatelevelof
45800tattheend.
4-Trade
Sinceitsunitvalueistoosmalltojustifylong-distance transport
toscutchingconcerns,thereisnotradeinflaxstrawwithnon-member
countries.RettingandscutchingconcernsinBelgiumpurchased54600
tofflaxstrawinFranceandtheNetherlands toswelltheBelgiancrop.
Thisquantityishigherthaninthepreviousyear(51700t).
Aftertheabnromallyhighimportsofflaxfibresin1976(39000t),to
makeuptheshortfallintheCommunityharvest,thesuppliesavailable
forexportinnon-membercountriesshrunkconsiderably andimportsin
1977fellto19900t.Itisnotsurprising,therefore,thatexports
decreased :19900tin1977comparedwith25200tin1976,
Importsofhempfibrescontinuedtodeclinein1977whileexportswere,
asusual,onasmallscale,
5,Prices
Inspiteofanexpectedfallcomparedwith197^producerpricesof
flaxstrawreachedafairlysatisfactory levelperkgin1977,The
pricesofflaxfibrehavedroppedsharplysinceApril/May1977without,
however,fallingbelowthelevelrecordedpriortothe1976shortage.
Thecontractpriceforpaperhempstrawagreeduponbyusersand
producersrosefrom64,8AUA/tforthe1975and1976harveststo73,8
AUA/tfor1977,theaimbeingtoencourageproducerstosow10000
ha.Thistargetwasexceeded.
6,Outlook
Asaresultofthelessfavourablesituation onthemarketinflax
fibreattheendof1977andthebeginningof1978,theareasunder
fibreflaxfellin1978to60000ha(-2,5%),Strawandfibre
yieldswerenormalinFranceandBelgiumandveryhighintheNether­
lands,Theharvestwilleasilymeettherequirementforlongfibres
andwillsufficetorebuildstockstoanevenhigherthannormal
workinglevel(57900t).Marketbalancewillaccordingly remainvery
fragile.Asregardsshortfibres,however,productionandexisting
stockswillbetotallyabsorbedattheendofthe1978/79marketing
year.
Theincreaseinthecontractpriceforhempstraw(FF420/tagainst
FF410/tin1977)wastoosmalltoenableareasunderhemptogrow
tomorethantheexisting10500ha.

57-
7,Projectionsforthe1979/80marketingyearandbeyond
Unlessthereisasharpdropinimportstheoutlookforfibreflaxis
notveryencouraging.Sinceconsumptionoflongfibreshasbecome
insufficient toabsorbproduction,itwasonlyasaresultofstocks
needingtoberebuiltthatfibreswerenotsoldatalossduringthe
lasttwomarketingyears#Sincestocksshouldbemorethan
adequatebytheendofthe1978/79marketingyear,itisdifficultto
seehowitwillbepossibletopreventlongfibresfrombeingsold
atalossinfutureunlessoutletsarewidened,
8,Budgetaryexpenditure
Theamountofaidforfibreflaxrosefrom194,76UA/tfor1977/78
to202,55UA/tfor1978/79,anincreaseof4%,Fibre-flaxseed
receivesaidundertheagreementforseed-flaxseed.
Forhemp,aidrosefrom176,88UA/tfor1977/78to183,96UA/tfor
1978/79(+4%),
Expenditure bytheEAGGFGuaranteeSectioninrespectofflaxandhemp
amountedto13,8millionAUAin1977-

-58-
8,SEEDS1
1-Introduction
Thecommonorganization ofthemarketinseedscoversthefollowing
products :
Theproductionoftheseseedsmustbeconsiderednotfromthestand­
pointoftheharvestobtained,butalsoinrespectofthefunctionof
thesespeciesincroprotationandinrespectoftheendusesthey
serve,sincethedifferentvarietiesofasinglespecies'canhave
theirownparticularuse.Leguminousplantsareparticularly important
becausetheyincreasethenitrogencontentofthesoilinwhichtheygrow.
Worldfodderseedproductionin1977totalled3,6millionquintals
(UnitedStates,Canada,NewZealandandEEC);theCommunityproduced
0,95millionquintals,or25%ofthistotal.TheCommunityisanet
importerofsomespeciesbutanetexporterofhybridmaizeforsowing.
(2)Followinganamendment toCouncilRegulation (EEC)No2358/71on
thecommonorganization ofthemarketinseeds,productionaidis
fixedbefore1Augustforthemarketingyearbeginningthefollowing
yearandfortheconsecutive *marketingyearandseed-growing contracts
concludedwithnon-membercountriesmustberegisteredintheCommunity
witheffectfrom1February1979,
2,Production
Denmark,whichproducesnearly28%ofthetotal(and40%ofallgrasses),
isthemainCommunityproducer,FranceandItalyarethemainproducers
oflegumes.
Communityproductionin1977wasabout1485000quintals,anincrease
ofabout260000quintals(32%)over1976,Thisincreaseinproduction
wasduetoanextensionoftheareaplantedandtobetteryields.
Grassesandlegumesweredifferentlyaffected(+213000quintalsand
+134000quintalsrespectively),aswerethevariousspeciese,g.
LoliummultiflorumL,(+158000q),LoliumperenneL,(+51000q),
1SeeTablesM8,1toM8,3inPartII-driedleguminousvegetablesforsowing
-hybridmaizeforsowing
-oilseedsandoleaginousfruitforsowing
-seeds,fruitandspores,ofakindusedforCCT07,05A
CCT10,05A
CCT12,01
sowing CCT12,03
20JNo,L165of22,6,1978

i(+15000a).PisumarvenseU(+49,500q>,
Ue"5»i>I.Trtf»l ««.pr.t.n..U<♦n000„>
Totalproductionfor1978isprovisionallyestimatedat1520000
quintals*
Bycomparisonwith1977,inwhichaidwasgrantedfor.190000hectares
•thedeclaredareaforthe1978harvesthasincreasedconsiderably
(to241000hectares)-.
Themaincauseofthisincreasedproductionisthesatisfactorylevel
ofpricesin1976/77,whichledtoanincreaseinarea.
Hybridmaizeproductiontotalledabout1,3millionquintals.
Communityproductionin1978wasnormalonthewh6le;someCommunity
reqionswereaffectedbydrought,inthespringandlaterbyram.
InSeptember1978,allthegrasseswereharvestedwithslightlylower
thannormalyields.Asregardslegumes,about20%oftheareas
plantedhavestilltobeharvestedand,giventhecurrentweather
conditionsinEurope,itisdifficulttomakeyieldestimatesforthe
timebeing.
Oilseedyieldsareaboveaverageanditisestimatedthattherewill
beasmallsurplus.
Variationsinproductionmainlyaffectedthefollowingspecimens:
1977 1978
ha q■ha* q*
5233 34001 757147800
9055 740541237395100
31348315429 -38574347500
1843 25548 440939300
48937 5940560153 ,100000
10655 237981984147000
estimates.Festucapratensis L,
FestucarubraL,
Loliumperen.neL,
Loliumhybridum L,
MedicagosativaL,
.Trifoliumpratense L,
*provisional Commissi
SUPPLYSITUATION
'Communitysupplieshavebeensatisfactory inrecentyearsandour
dependenceonimportsfromnon-membercountrieshasbeenreduced;
Withseedsuppliesamountingto2,2millionquintalsfor1977/78,
theCommunitywasabletomeetitsownrequirements.Forthecoming

-60-
marketingyearitwillalsobeself-sufficient,asabout2million
quintalswillbeavailablein1978/79anddemandisestimatedat
1540000quintals.Tradewithnon-membercountrieswill,however,
continue,particularly inthecaseofspeciesofwhichthereisstill
ashortfallintheCommunity (Arrhenaterum elatias,Viciasativa,
Phleumpratense,Festucaarundmacea ),
Stocksat1July1977totalled720000quintals,andtheestimate
for1978isabout785000quintals(LoliumperenneL,239000qand
Loliumuiltiflorum L,204000q),Thepersistence ofrelativelylarge
stocksisduetoimportsexceedingrequirements.
Followingthe1978harvestandthecarry-overofstocks,theamountof
seedavailableforthe1978/79marketingyearisestimatedatabout
2,3millionquintals.
Theworldsupplysituationisgenerallygood,butdifficulties may
ariseoutsidetheEECinrespectofMedicagosativaL,
4,PRICES
Communitymarketpricesonthewholefellslightlyin1978,For
certainspeciessuchasLoliummultiflorum L,,Festucapratensis L,
andTrifoliumrepensI,,pricefluctuations arehighlyindicativeof
themarketsituation.International prices,particularly forTrifolium
repensL,,aremarkedlylowerthanCommunityprices.Community
producerpricescangenerallyberegardedassatisfactory.
Λ »..
.PricesontheDanishmarket,themainCommunitymarket,were(UA/100kg)
September1977September1978
LoliumperenneL, 55 49
Loliummultiflorum L, 61 37
Festucapratensis L, 98 126
FestucarubraL, 90 85
Poapratensis L, 133 116
TrifoliumrepensL, 175 149
Thedifferenttypesofhybridmaizewerereclassified whenthe
referencepriceswerefixedforthe,1978/79marketingyear;these
priceshaverisenonaverageby1to2%dependingonthetypeof
hybrid.
t

-61-
5,OUTLOOK
Theareawhichwiltbeharvestedin1979maybeestimatedatabout
220000ha,whichisnotamajorchangefromthepreviousyearin
Whichameasureofpricestabilitywasattainedastherewasa
balancebetweensupplyanddemand.
Pricesmaydropduringthe1978/79marketingyearforsomespecies
becauseoflargestocks(LoliumperenneL,about239000q,Lolium
multiflorumabout204000q)andbecauseofananticipatedincrease
inproduction.ItshouldbenotedthatinthecaseofthesetwospeciesinparticulartheCommunitynormallyimportslargequantitiesunderseed-growingcontractswithnon-membercountries.
Moreover,anestimateofthearesundertrifoliumrepensL,indicates
asignificantfallinproduction,givingrisetoaspecialproblem,asDenmarkandNewZealandaretheonlycountriesintheworld
producingthisspecies.
Medium-termCommunityproductionestimatesareonthewholesatisfactory.
Thesubsequentdevelopmentoftheseedssectorwill,however,also
dependon'theprofitabilityofseedproductioncomparedwithcereals
inparticular.
Accountshouldalsobetakenofcompetingimportsfromnon-member
countries(particularlyEastEuropeancountries)whichbenefitfrom
thesystemofequivalencewithCommunityseedasregardsproduction
andcontrol, ...
Worldproductionoffodderseedisexpectedtoremainstableoverthe
comingyears,
6,BUDGETARY EXPENDITURE
ExpenditurebytheEAGGFGuaranteeSectionisrespectofseedamountedto22,7millionUAin1976and16,1millionUAin1977andisestimated
at26,2millionEUAin1978,i,e,,about0,3%oftheSection'stotal
expenditureintheyearsinquestion.

-62-
(1)9.WINE
1. Introduction
In1977 wine represented about 4.6% byvalue oftheCommunity 'sfinal
agricultural production .Thearea under vines totalled 2699000ha
orabout 3%oftheCommunity UAA .
TheFAOputs world wine production for1977 /78at275million hi.This
iseasily thelowest figure inrecent years ,astheaverage for
1975 /76and1976 /77was316million hiand theaverage for 1973 /74and
1974 /75wasabout 340million hi.Community production in1977 /78was
127million hicompared with 148million hiin1976 /77and 145million
hiin1975 /76,representing 46.1% ,47.3% and45.5% respectively of
world production .Since thearea under vines intheCommunity repre­
sents only about 23.4% oftheworld area under vines ,theaverage
Community yield isconsiderably higher than theworld average .
2.Production
Theharvest wassmall in1977 (127million hi).This follows average
harvests in1976 and1975 (148and 145million hi)andthevery
abundant harvests in1974 and1973 (160and 171million hi).Thevery
lowlevel ofproduction in1977 was innoway the result ofareduc­
tion inwine-growing potential butwascaused bythebadweather
conditions during theyear .
3.Consumption :
In1976 /77,total internal utilization accounted for146million hi
compared with 149million hiin1975 /76.Part ofthis fall was caused
byadrop inthequantities distilled .
(a)Human consumption
In1976 /77,direct human consumption was127million hi,against
130million hiin1975 /76,133million hiin1974 /75and 127
million hiin1973 /74.Itisthus practically back atthe level
of5years ago .Thesubstantial increase expected ontheen­
largement oftheCommunity does notseem tohave come about .
(b)Processing
In1976 /77thequantities processed were practically thesame as
in1975 /76,at18million hi.The level ismuch lower than that
of1974 /75 (35million hi)asaresult ofasharp reduction in
thequantities distilled with Community aid .
(c)Self-supply
TheCommunity self-supply rate in1976 /77was102% (97.5% in
1975 /76)interms ofallinternal utilizations .Ifthequanti­
ties distilled under thevarious intervention measures taken for
normal market management (slightly more than 5million hi)are
deducted from thesupply figure ,therate ofself-supply for
1976 /77is105.9% .
(1)SeeTables M.9.1 toM.9.4 InPart II.

-63-
This figure was99%in1975/76and108% in1974 /75.Thevolume
ofend-of-year stocks ,after thesubstantial drop in1974 /75
(6million hi)brought about bymassive distillations anda
further fall <3million hi)in1975 /76,hasrisen again (by
3million hi)tothe1974 /75level .
Although this l^vel isfairly high ,itisnotacause forgreat
concern inview ofthevolume oftheharvest .
4.Trade
In1976 /77Community imports amounted to5.5million hiagainst
5million in1975 /76,arise of10%.This rise follows adrop of6%
intheprevious year andreflects less abundant internal supplies .
Exports in1976 /77were practically unchanged from theprevious year 's
figure (5.1million hi).
In1976 /77imports were 7.7% higher than exports ,whereas in1975 /76
trade was inbalance .
5.Prices
(a)Common prices
.
Theaverage increase inguide prices foralltypes oftable wine
was2%for1978 /79,compared with anincrease of3.5% inthe
previous year .
(b)Market prices
Alltheaverage prices quoted forthevarious marketing centres
in1977 /78fortable wine oftypes RIand RIIIwere higher than
those recorded theprevious year .Theincrease varied between
5.5% and17.9% forwine oftype RIandwas21.8% forwine of
type RIII .
Average prices forwines oftype RIIalso increased ,except in
one centre where there was afall of6.5% .The increases were
between 4.4% and 9.8% .
Prices forwines oftype AIalso rose (bybetween 4.6% and
50.6% ),except inonecentre where there was afall of0.4% .
Prices forwines oftypes AIIandAIII,ontheother hand ,fell
sharply .Those forwines oftype AIIfell bybetween 13.0% and
53.3% andthose forwines oftypes AIIIby20.6% .
InFrance prices forwines oftype RIwere above theguide price
forthewhole year except thefirst twomonths ,whereas inItaly
there were wider fluctuations ,butprices remained above the
activating price except atthebeginning oftheseason (September
-October ).Theannual weighted average ofprices inFrance

-64-
was4.9%higherthantheaverageinItaly.
PricesfortablewinesofRIIwereabovetheguidepriceforthe
wholeyearinFranceandforsixmonthsinItaly.InItaly,the
pricesatthebeginningandendoftheyearwerebetweenthe
guidepriceandtheactivatingprice.Therewasasharp
difference betweenthetwoproducercountriesinthepricesfor
tablewinesoftypeAI;pricesinFrancewereconsistently
abovetheguidepricewhereasinItalytheywerebarelyhigher
thantheactivatingpricefromDecembertoAprilandwerebelow
thispricefortherestoftheyear,exceptinTrevisowhere
priceswereabovetheguideprice.Thedifference betweenthe
weightedaveragepricesinFranceandinItalywas37%.
PricesforwinesoftypeRIIIwereveryerratic,withmonth-by-
monthdifferences ofmorethan100%.Theannualweightedaverage
was23%abovetheguideprice.PricesforwinesoftypesAII
andAIIIwere,ontheotherhand,substantially lowerthanthe
activatingprice,exceptatthebeginningoftheyear.The
annualweightedaveragewas81%oftheactivatingpriceforAII
and86%forAIII.
Ingeneralthesituation wasfairlysatisfactory whereredwines
wereconcerned,butthepricesforwhitewineshowthatthereis
aratherseriouscrises,exceptinFrance.
(c)Worldprices
AccordingtotheFAO'sinformation,winepricesontheworld
marketwerehigherthaninthepreviousyear.Thedifference
betweenworldpricesandCommunitypricesis,however,still
substantial andinsomecases,particularly ontheSouthAmerican
markets,above40%.
,OntheSpanishmarket,whichisoneofthosewhichconcernsus
mostdirectly,priceshadalreadyrisennoticeablyin1976/77,
androseagainbysome30%in1977/78toreachalevelsome15%
belowtheCommunityguideprices.Withsomefewexceptions,
consignments offeredtotheCommunity wereatpricesabovethe
relevantfree-at-frontierofferprice,thuscomplyingwiththe
corresponding referenceprices.
6.Outlook
(a)Short-term
Preliminary information suggeststhatthe1978/79harvestwill
yieldsome10millionhilesswinethanthepreviousyear.
Accordingtopreliminary estimatesbytheMemberStates,
production shouldamountto136millionhi(against127in
1977/78).Thisquantityisslightlybelownormalforeseeable
utilization and,althoughstocksarequitelarge,marketprices
forredwinesshouldremainatleastattheirpresentleveland
thoseforwhitewinesmayincreaseslightly.There9houldbeno
appreciable changeinimportsandexports.

-65
(b)Medium-term
Therehavebeentwoaverageharvestsandonesmallharvestand,
althoughthenextoneislikelytobeslightlysmallerthan
marketrequirements,increasesinaverageyieldmeanthat
Communitywine-growing potentialtendstobeinexcessofmarket
requirements which,forvariousreasons,arealmostunchanging.
Toestablish abetterbalanceinthemedium-term,theCommission,
atthebeginningofAugust,placedan"actionprogramme1979-
1985"beforetheCouncilsothatthemarketforwinemaybe
progressively broughtbackintoequilibrium,withaseriesof
proposalsforregulationstoachievethisend.
7.Economicaspectsofthemeasurestaken
(a)Leviesandrefunds
1.Importlevies
Theimportleviesinthewinesectorareknownas"counter­
vailingCharges"andplayonlyaveryminorpartsincethey
donotapplytothe18non-Community countrieswhichhave
undertaken toobservethereferencepriceandwhicharethe
Community'sprincipalsuppliers.Thelevelofthecounter­
vailingchargesremainedthesamethroughout the1977/78
marketingyear,exceptforliqueurwinesbecauseofchanges
inthereferencepricesfortheseproducts.
2.Refunds
Theleveloftherefundswasunchanged.Thequantities
qualifyingforrefundswerealreadyfairlylowandhave
droppedfurther(bysome30%);theynowstandat170000hi
(b)Quantitiesinrespectofwhichintervention measuresweretaken
Noexceptionaldistillation measuresweretakenin1976/77or
1977/78.Allthe"normal"intervention measuresprovidedforin
theCommunityruleswereapplied.Thequantities ofwine
distilledwithCommunityaidunderthevariousmeasuresamounted
toabout1millionhi(comparedwith5.3million ,hiin1976/77).
The"guaranteeofperformance"measuresappliedtoholdersof
long-termstoragecontracts (distillation ofpartofthewineand
'prolongation ofthecontractsfortheremainder)extendpoten­
tiallyto1.3millionhibutinviewofharvestestimatesthe
quantitiesinvolvedwillprobablybelowerinpractice.
I
Themonthlyaveragequantities coveredbystoragecontracts
amountedto8.9millionhi(against12.5millionhiin1976/77),
themaximum .reaching13.5millionhi(21.8millionhiin
1976/77).
(c)Stocksituation
Atthebeginningof1977/78stocksheldbyproducers andthe
tradeamountedto82.3millionhi.Attheendofthemarketing
year,stocksof68.7millionhiareexpected.Thisquantitymay
beconsidered normalandcertainlygivesnocauseforconcern
fromamarketmanagementpointofview.

-66-
(d)Unityofprices
Thecompensatory amountswhichwerereintroduced in1976for
ItalyandFrancestillapply.Therepresentative rateforthe
Frenchfrancwaschangedtwiceduringtheyear(on1Februaryand
8March)andthatfortheItalianlireonce(on22May).The
newrepresentative rateswhichwillapplyfrom16December1978
wereanticipated on1September,inrespectofcertaininter­
ventionmeasures.
8.Budgetaryexpenditure
Expenditure bytheGuaranteeSectionoftheEAGGFinthewinesector
amountedto172.9millionU.A.in1976,90.0millionU.A.in1977and
isestimatedat230.7millionEUAin1978,or3%,1.4%and2.5%
respectively oftheGuaranteeSectibn'stotalexpenditure .
Theamountof224.3millionAUAfor1978,maybebrokendownas
follows:2millionAUAforexportrefunds,61.5millionAUAfor
privatestorageaid,2millionAUAforrestorageaid,128millionAUA
fordistillation and20millionAUAfordistillation oftheby­
productsofwinemaking. ^
Thesizeofthe1977/78harvestandthestateofthemarketaresuch
thatintervention hasnotbeenasextensiveasexpectedwhenthe
budgetwasbeingdrawnup.Itnowseemslikelythatactualexpendi­
tureshouldnotexceed100millionU.A.

-67-
10.RAWTOBACCO
1.Introduction
In1977worldtobaccoproductionfellby1.7%comparedwiththe
previousyear.andamountedto5.5milliontonnes.Thissituation
resultsmainlyfromsubstantial dropsinTurkeyandGreece.Virginia
flue-cured makesupabout30%oftotalproduction and50%ofall
trade.Communityproductionin1977(164000tonnes)alsofell,by
4.3%comparedwiththepreviousyear.Baledtobaccoaccountedfor
slightlylessthan1%ofthevalueoftheCommunity'sfinalagricul­
turalproductionin1977.
2.Production andstructure
Overthelastdecadetherehasbeenatworldlevelasteadytendency
fortobaccoproductiontoshifttothedevelopingcountries <+30%)
andthecountrieswithplannedeconomies(+40%);production has
risenbyonly4%intheindustrialized countries,whererapid
inflation andrisingproduction costs(labourinparticular )will
continuetogiveimpetustothistrend.
Overthesameperiod,Communityproduction hasincreasedbyabout30%
asaresultinparticularofamarkedincreaseinyieldperhectare,
especiallyinItalyand,toalesserextent,inFranceandtheFederal
RepublicofGermany.InBelgium,ontheotherhand,thedownward
trendincropareaandproduction continues.Furthermore,thetobacco
sectorhasundergone afar-reaching changeinitsproductionstructure
(thedevelopment ofcooperatives )andmarketingstructure (rationali­
zationandconcentration ofundertakings )sincetheentryintoforce
ofthecommonorganization ofthemarket(1970)inthedirectionof
betteradjustmenttoactualmarketrequirements .
Asregardsthemajortypesoftobacco,worldproductionofdarkair-
curedincreasedbyabout4%in1977ascomparedwiththepreviousyear
andthatofBurleyby0.4%,whereasflue-cured andsun-cureddecreased
by3%and15.6%respectively .
AtCommunitylevel,withdueallowanceforfairlyfavourable weather
in1977,thefollowingchangestookplacecomparedwith1976:
-darkair-curedvarieties:adropof21.1%due,inparticular,toa
dropintheParaguayvariety(28%);
-lightair-curedvarieties:' anincreaseofabout6.6%;
-flue-curedvarieties:anincreaseof36.4%;
-sun-curedvarieties:afallof33%;
-fire-curedvarieties:anincreaseof60.6%.
(1)
SeeTablesM.10.1toM.10.8inpartII

-68-
3.Degreeofself-supply
Consumption
TheCommunity'sself-supplyrateisabout26%.Comparedwith1976,
worldtobaccoconsumption rosebyabout1%in1977.Consumption in
theCommunityofNinehasmoreorlessstabilized,mainlyasaresult
oftheeconomicrecession,theincreaseintaxesandtheanti-smoking
campaigns.Nevertheless,certaindownwardtrendsareevidentin
countriessuchasFrance,GermanyandtheUnitedKingdom.Itshould
bepointedout,moreover,that,althoughatworldleveltheriseis
1%,thisriseexceeds5%onaverageandshowspeaksof10to15%in
thedevelopingcountries.Thesteepriseinconsumption of"light
cigarettes"(lownicotineandtarcontent)continuedin1977and
trademaybeexpectedtomovetothosecountriesexportingneutral-
reactiontobaccoforfilling.Furthermore,theintroduction of
cigarettescontaining tobaccosubstitutes hasmetwithnosuccesson"
theUnitedKingdommarket.
4.Trade
Worldexportsin1977amountedto1.27milliontonnes,whichis4.7%
lessthanin1976.Thus,therehasbeenadropininternational
trade,ascomparedwith1975and1974,byabout2%and10%respec­
tively.
Newmanufacturing techniques,whichreducethetobaccoperunitof
consumption,shouldcombinewithincreasedprices(taxmeasures)and
healthconsiderations tobringaboutadropinconsumption and,con­
sequently,inimportdemand,especiallyintheindustrialized (
countries.Itshouldalsobeemphasizedthatthedeveloping countries
andthecountrieswithplannedeconomiesaretakinganincreasing
shareofworldtrade.
In1977Communityexportswereabout34%lessthanin1976(around
33000tonnes)andimportswere3.8%down.Virginiaflue-cured
tobaccoaccountsforabout61%oftotalimportsandBurleyforonly
7%.Furthermore,aboutonethirdofimportsenterstheCommunityata
zeroorpreferential dutyunderthetermsoftheEECpolicytowards
thedevelopingcountries (generalized preferences,ACP).
Thispolicyontobaccosdirectlyincompetition withthoseproducedin
theCommunity meansthatstrongersupportmeasuresareneededunder
thecommonorganization ofthemarket(premiumsandexportrefunds).

-69-
5.Prices
Prices ontheworld market have been more orless stable compared with
theprevious year :intheUnited States ,themost representative
market onaworld level ,theVirginia flue-cured andBurley reached
fobexport prices ofbetween S4and25perkg,prices forKentucky
were very firm (about 23perkg),about thesame level aslast year ,
andthedemand forthis variety isstill very lively .
ν
Theprices oforiental tobaccos arestill showing theeffects ofover­
production >inTurkey ,Greece ,Bulgaria andYugoslavia andarestill
tending tofall :minimum export prices have been lowered ,export
subsidies andcredit facilities have been granted .InTurkey large
quantities ofinferior-quality tobacco have even been destroyed .This
situation shows nosigns ofchanging during thenext marketing year .
Asfarasthesituation within theCommunity isconcerned ,planters
generally received thenorm price forthe1977 crop but itshould be
pointed outthat ,inItaly ,theprices fororiental varieties ,after
falling considerably in1976 largely onaccount ofthemediocre
quality oftheharvest andin1977 because ofthesituation onthe
world market ,have increased slightly butnot inproportion tothe
better quality oftheharvest .While theaverage increase inthe
level ofthenorm price was3.5% between 1976 and1977 ,the rise
between 1977 and1978 was 1.2% (expressed inunits ofaccount ).
6.Outlook
First indications for1978 are that world production ofrawtobacco
will drop ,although yields inthemain producer countries remain more
orless normal .
Nevertheless ,with particular reference totheCommunity position ,it
should bestressed that thestructural difficulties affecting some
varieties (particularly oriental tobaccoes andBeneventano )will
continue andthat ,inspite ofthedrop inproduction ,theBurley
variety seems tohave reached itsceiling .Intervention buying of
oriental tobaccoes from the1976 harvest have reached 13000tonnes ,
which makes itpossible toinvoke theprocedure inArticle 13ofthe
basic Regulation .TheCommission hasplaced areport before the
Council proposing action inthefield ofagricultural research in
order toimprove quality andthus facilitate marketing .
7.Economic aspects ofthemeasures taken
Todeal with thewell-known difficulties ofmarketing theBeneventano
variety ,aconversion plan extending over 3years wasapproved bythe
Council andapplied forthefirst time tothe1977 crop ,with some
1200ha(about 27%ofthetotal area )being converted ,mainly tothe

-70-
KentuckyandParaguayvarieties.Thetobaccogrownontheconverted
areaswasmarketednormally.
Applications forconversionfor1978relatetosome1500ha.
During1978,oneinvitationtotenderwasissuedfortheexportof
tobaccoheldbytheGermanandItalianintervention agencies(3080
tonnes).Theintervention agenciesaccordinglystillholdinstorage
21905tonnesfromthe1973,1974,1975and1976crops.
Thegrantingofexportrefundswascertainly afactorinenablingthe
Communitytoincreaseitsshareofworldtrade.TheCommunity
varieties,hithertolittleknown,havenowestablished theirplacein
worldtrade.Indeed,althoughexportsin1970onlyreachedabout
4000tonnes,asfrom1973(theyearwhenthesystemofexportrefunds
wasintroduced )exportshavereachedfairlyhighlevelsontheinter­
nationalmarket.However,recenttendencies ininternational trade
havegreatlyrestricted thescopeforexportstotheworldmarket.
Whereasthequantityfromthe1975cropforwhichexportrefundswere
grantedreached21455tonnes,thequantityfromthe1976cropbarely
exceeded 9000tonnes.
8.Budgetaryexpenditure
Expenditure bytheEAGGFGuaranteeSectioninrespectofrawtobacco
was229.8mU.A.in1976and205.3mU.A.in1977,or4.1%and2.8%
respectively oftotalexpenditure .Thisdevelopment maybeexplained
byseasonalchangesinproduction,particularly fluctuations inunit
yields.Expenditure for1978isestimatedat237millionAUA.

-71-
11(a ). FRESH FRUIT AND VEGETABLES
1. Introduction
Fruit andvegetable production in1977,including crops forprocessing ,
represented %byvalue offinal agricultural production ,which is
notvery different from previous years (11%in1976 and11.9% in
1975 ). „
Italy ,with 60%ofCommunity fruit production andnearly 45%of
Community vegetable production ,isbyfarthelargest producer among
theMember States .Second place goes toFrance with 16%offruit and
18%ofthevegetables while thethird most important producer is
Germany inthecase offruit (14%)andtheUnited Kingdom inthecase
ofvegetables (14%).
2. Production
.... ... 2Commercial fruit production intheCommunity in1977 amounted to15.1
million tonnes ,the lowest figure since 1971 and 17%down onthe
figure for1976 .With theexception ofIreland andDenmark ,where the
harvest increased ,afall inproduction wasexperienced tovarying
degrees intheother Member States and isatleast partly duetothe
secondary effects ofthedrought of1976 .
Itistherefore notsurprising that theannual rate ofchange (-2.5% ,
between "1974"and "1976 ")should beunfavourably affected bythis low
production andshould notreflect therelative stability ofCommunity
fruit production inthe long term .
Thefollowing observations maybemade about themain fruit crops :
-inapple production ,which accounted for34%ofCommunity fruit
production ,the1977 harvest was20.8% down on1976 .Thedrop
wasconsiderable inallMember States (between 9.1and47.7% ),
with theexception ofDenmark where theharvest increased by
nearly 30% .
Asisthecase forfruit overall ,the1977 apple crop isthe
poorest since 1971 .
-Thesituation issimilar inthecase ofpears (12.7% ofallfruit ,
production ),i.e. inallMember States except Ireland and
Denmark theharvest fell bybetween 20.7% and41.2% ,leading toa
28%drop inoverall Community production .
This istheworst pear crop since 1965 .
•••/a•■
^SeeTables M.11.1 toM.11.16 ofPart II
This is"biological production "

-72-
-Thepeachharvestwas24.2%downon1976.Since1963,only1969
and1975producedlowerharveststhan1977.
-Citrusfruitproduction,whichaccountsforsome19%oftotal
.fruitproduction,was6%downon1976,asthedropintheorange
crop(12%)wasnotoffsetbyaslightincreaseintheproduction
oflemonsandsmallcitrusfruit.
CommercialvegetableproductioninthewholeCommunityreached
22.7milliont,ariseof10.2%on1976;productionincreasedin
allMemberStatestovaryingdegrees.Itwill,however,be
rememberedthat1976wasayearofseveredroughtinmany
Communityregions,withgreatlyreducedyieldsofmanyproducts.
The1977increasemerelyrestoresvegetableproductiontoamore
normalfigure.
3.Consumption
1In1976/77internalconsumption offruitintheCommunityroseto
24.7milliont,anincreaseof5%onthepreviousyear.
Internalconsumption ofvegetables,at27.1milliont,showsadropof
6.4%on1976/77.
(a)Humanconsumption
Humanconsumption wastheprincipal usemadeoffreshor
processedfruitandaccountedfor89.6%ofallinternalcon­
sumption.
^PercapitaannualconsumptionintheCommunityamountedto
85.6kg(24kgofcitrusfruitand61.6kgofotherfruit),but
therearesubstantial differences betweenMemberStates:11kg
ofcitrusfruitinIrelandand58.6kgintheNetherlands;
27.3kgofotherfruitinIrelandand88.3kginGermany.
Humanconsumption ofvegetables was89.3%ofallconsumption .
Percapitaannualconsumption was93.5kg.Againtherearelarge
differences betweenMemberStates:49.2kginDenmarkand
148.7kginItaly.
*
Theannualrateofchange,calculatedfortheperiod1973/74"to
"1975/76",is-1.0%forfruitotherthancitrusfruit,1.5%for
'citrusfruitand-0.3%forvegetables .Thesearescarcely
perceptible variations which,althoughtheydifferinmagnitude,
moveinthesamedirection asthevariations observedoverthe
sameperiodinthecorresponding usableproduction .
■•■/•■•
Includingpreservesandfruitjuices,butexcludingtropicalfruits
anddryordriedfruits

(b)Animalconsumption andindustrial uses
Thesetwooutlets,whichincludeindustrial usesfornon-food
purposes,tendtobeadventitious andthequantitiesoffruitand
vegetableswhichtheyabsorbaregenerallyverysmall,evenless
significant thanlossesduringmarketing.
<c)Rateofself-supply
TheCommunity'sself-supply rateisparticularly highfor
vegetables,reaching92%in1976/77;thefigurefornon-citrus
fruitis78%andforcitrusfruit44%.
Trade
In1977theCommunity'stotalimportsoffreshfruitamountedto4.3
milliont,adropof3.3%on1976.
Citrusfruits,3.1milliont,werethepredominant import,since
apples,whichoccupiedsecondplace,accountedforonly0.4milliont.
Fruitexportsdidnotgreatlyexceed0.7milliont,ofwhich0.2
milliontwereapples,0.14milliontlemonsand0.12milliont
oranges.
Importsoffreshvegetablestotalled1.2milliont,anincreaseof
13.1%on1976,whileexports,whichfellby8.8%,accountedforonly
0.35milliont.
Intra-Communi'ty tradeinfreshfruitandvegetablesisalsoimportant.
Althoughthequantityoffruittradeddidnotequalimportsfromnon-
membercountries,itnevertheless totalled2.7milliont,makingan
annualincreaseof6.7%since1973.Apples(1.14milliont)werethe
mainproduct,followedbycitrusfruits(0.39milliontandstone
fruit(0.35milliont).
Intra-Community tradeinvegetables,ontheotherhand,totalled2.1
milliont,approximately 1.8timesthequantityimportedfromnon-
membercountries.Althoughthesefiguresareslightlydownon1976(-
1.1%)theynevertheless represent anannualincreaseof3.5%since
1973.
Prices
(a).Commonprices
Thebasicpricesandbuying-inpricesforthe1977/78marketing
yearhavebeenincreasedsothattheresultingaveragewithdrawal
prices,atwhichproducergroupsbuybacktheirmembers'unsold
produce,are2.5%higherthaninthe1976/77marketingyearfor
tablegrapes,3.5%higherforapples,pears,orangesand
mandarinsand4.5%higherforlemons,peaches,cauliflowers and
tomatoes.

74
Theaverageoverallincreasefor1978/79was2%.
Thereferenceprices,whichdeterminetheminimumlevelofentry
pricesforcertainproductsimportedfromnon-membercountries,
increasedby4%between1976/77and1977/78inthecaseof,
cucumbers,tomatoes,tablegrapes,apples,pears,peaches,
cherriesandplums.
Inthecaseoflemons,orangesandmandarins,however/reference
priceshaveremainedatthelevelofthepreviousyear/because
oftherelationship whichexistsbetweenthebasicandbuying-in
prices,thepenetration premiumsandthereferencepricesof
thoseproducts(see7(e)).
Between1977/78and1978/79referencepricesincreasedbyan
averageof2%,withtheexceptionofcitrusfruits,wherethe
fullincreaseinthebasicandbuying-inpriceswasreflectedin
thepenetration premiums.
(b)Marketprices
Fruitandvegetablepricesfluctuateconstantlyandmayvary
considerably fromonetimeoftheyeartotheother,fromone
markettoanotherandevenfromoneconsignmenttoanother.
Ananalysisofthedataavailableleadstothefollowing
conclusions,basedonaveragebasicandbuying-inpricesfor
pilotproducts:«,•...
-Apples(GoldenDelicious,qualityclassI,70mm'orover).
Sincethecropwasparticularly small,pricesroseconsider­
ablybycomparisonwith1976/77:by102.5%inItalyand85%
inFrance,thetwomainproducingcountries,by6.2%in
Denmarkandby115.8%inLuxembourg;increasesintheother
MemberStatesvariedbetween33.4%and74.4%.
Throughoutthemarketingyear,averagemonthlypriceswere
veryhigh,andreacheddoublethebasicpriceonnearlyall
Communitymarkets.
-Pears(various,qualityclassI,60mmor70mmorover,
accordingtoperiod).
Aswithapples,thedropinproductionbroughtaboutarise
inprices,amountingto121.6%inFrance,103%inItalyand
between17.2%and58.4%intheotherMemberStates.Asin
thecaseofapples,averagemonthlypriceswereuptodouble
thebasicprice.

Peaches (various ,quality class I,size 51/61mmor61/67mm
according toperiod ).
In1976 prices hadbeen abnormally low,butprices inthe
1977 marketing year were extremely high onboth theFrench
andItalian markets ,sometimes reaching more than three
times thebasic price .
Theincrease ontheprevious year was intheregion of83.1%
inFrance and91.4% inItaly .
Table grapes (various ,quality class I).
Prices forthis product also showed afavourable develop­
ment ,rising by55.2% inFrance and81.7% inItaly .
However ,Italian prices were still considerably lower than
those inFrance .
Thepeaks registered inrelation tothebasic price ranged
from +33u.a .inAugust to+17u.a .inSeptember in
France ,andfrom +16u.a .to+11u.a .forthesame months
inItaly .
Oranges (various ,quality class I,size 67/80mm).
Theslight drop inproduction had amajor effect onprices ,
which attimes were more than twice those recorded inthe
previous year andremained farabove thebasic price
throughout themarketing year .
Mandarins (quality class I,size 54/64mm).
Although theaverage annual price was65.1% upon1976 /77,
average monthly prices were between 1and 10u.a .uponthe
basic price ,depending onthemarket andthemonth .
\
Lemons (quality class I,size 53/62mm).__
Theaverage annual price forlemons in1977 /78was25%upon
theprevious marketing year andprices remained above the
basic price throughout themarketing year .
Cauliflowers ("with leaves "or"trimmed ",according to
period ,qualify class I).
Ascompared with 1976 ,average annual prices varied from one
Member State toanother :there was aslight increase of10%
inGermany and7%intheNetherlands butprices fell in
Italy (40.3% ),theUnited Kingdom (24%),Denmark (13.9% )and
France (12.8% ).
Theaverage monthly prices fortrimmed cauliflowers remained
above therespective basic prices while ontheFrench and
Italian markets cauliflowers with leaves fetched prices
close tooreven lower than thebasic price .

-76-
-Tomatoes ("round ",quality class I,size 57/67mm).
Theannual average price forthis product also varied from
* oneMember State toanother :increases of29.3% forItaly ,
19%fortheUnited Kingdom ,and2.9% for France and falls of
30.4%forGermany ,30.1% forIreland ,16.1% forBelgium ,
14.4% forDenmark and 11.4% forDenmark and 11.4% for the
Netherlands .
Themonthly .average prices were ,generally speaking ,higher
than thebasic price throughout themarketing year ,except
inAugust ontheSyracuse market and inOctober onthe
Reichenau market ,when prices were lower .
Theoften rapid changes indaily prices andthevarious co­
efficients applied toproducts which differ from thepilot
products explain whyquantities ofsome products fell short of
thewithdrawal price andwere withdrawn from themarket bythe
producer groups ,even when theaverage prices ofthepilot
product were higher than thebasic price .
(c)World prices
Given theperishable nature oftheproducts ,fruit andvegetable
prices arefixed more orless independently ontheprincipal
markets .There is,strictly speaking ,noworld market forsuch
products andconsequently noworld price .
(d)Consumer prices
Inview ofthewide diversity ofproducts -types ,varieties ,
qualitites ,sizes -and thewide variations ofprice for agiven
product atconsumer level ,itisnotpossible todetermine
consumer prices forthemany types offruit andvegetable .
Ifthe retail price indices forfruit andvegetables aretaken as
abasis ,the1977 increase over 1976 wasgreatest intheUnited
Kingdom (30.91% );therates ofincrease inFrance andItaly were
similar (22.14% and23.03% respectively )andthey arefollowed by
Belgium (11.32% ),Germany (9.43% ),Ireland (3.42% )andthe
Netherlands (1.11% ).Theonly reduction inthe index was found
inDenmark ,where itfell by1.71% .
/
6.Outlook
Inthecase ofvegetables ,theannual nature ofmost species ,the
rapid succession ofcrops andtheavailability offixed ormovable
means ofprotection ,areallfactors making forflexibility and
enabling production toadapt itself rapidly todemand .
Inview ofthetrends invegetable production over thelast fewyears
andthestability observed inthis sector ,nomajor changes aretobe
expected forsome time tocome .
•••/•••

Inthecase offruit too,analysis ofproduction trends over a
relatively long period shows acertain stability ,ableit with
considerable fluctuations from oneseason toanother ,aswasobserved
forexample inthe1977 /78harvest .
Economic aspects ofthemeasures taken
(a)Import andexport measures
(i)Countervailing charges onimports
During the1977 /78marketing year ,countervailing charges
were imposed onimports ofthefollowing products :
-cucumbers from Spain ,Bulgaria ,Greece ,Romania and
Cyprus
-tomatoes from Spain ,Romania andBulgaria
-peaches from Greece
-lemons from Argentina
-table grapes from Greece
-certain varieties ofplums from Czechoslovakia
-certain varieties oforanges from Greece andAlgeria
-mandarins from Morocco .
These measures ,some ofwhich were applied foronly ashort
time ,resulted inhigher prices forthe imported products
following adrop oreven acomplete halt inshipments tothe
Community .
(ii)Export refunds
Export refunds were fixed during the1977 /78marketing year '
forfresh sweet oranges ,fresh mandarins ,fresh lemons ,
table grapes ,walnuts inshells ,shelled almonds ,shelled
hazelnuts ,peaches ,dessert apples andtomatoes .
These refunds ,which vary according totheproduct andare
generally low,were fixed only fordestinations which
afforded real export outlets andonly ifthere were export
difficulties tobeovercome .
(iii)Protective measures
InJuly andAugust protective measures were adopted against
peaches from Greece ,suspending their release ontothe
Community market atfirst completely ,andthen inrespect of
certain sizes .
Protective measures were also adopted against onions from
Poland ,therelease ofwhich ontothe Irish market was
suspended from 28December 1977 to14April 1978 inclusive .

78-
(b)International agreements
Since Community apple production wasconsiderably below normal
andtheSouthern Hemisphere countries didnotplan toexport
quantities inexcess oftheabsorption possibilities tothe
Community ,nodiscussions were necessary with theprincipal
supplier countries onpossible voluntary restraint orachange in
thetiming oftheir shipments totheCommunity .
<c)Withdrawals from themarket
Withdrawals offruit andvegetables were generally small .
Thequantity ofapples withdrawn ,forexample ,amounted toonly
2538 t,or0.5% ofproduction .Withdrawals hadbeen lower only
inthe 1972 /73marketing year .
Thequantity ofpears withdrawn from themarket ,almost exclu­
sively inItaly ,wasjust over 41000 t(2.07% ofproduction ),
the lowest figure since 1967 /68.
Thequantity ofpeaches withdrawn -exclusively inItaly -was in
theregion of60000 t,or3.91% ofproduction .This isfar
below thefigures for1976 (347000 t)butnear theaverage for
theother years .
Thequantities ofmandarins withdrawn from themarket were lower
than in1975 /76and 1976 /77butnonetheless represented 7.46% of '
Community production . ~
Withdrawals ofother products were very loworeven insignificant .
Withdrawals ofcauliflowers ,forexample ,amounted to21000 t
(1.47% ofproduction ),about aquarter ofthemarketing losses .
Withdrawals oforanges involved only 1.10% ofproduction and
those oftomatoes only 0.48% ofproduction ;thefigures for
table grapes and lemons were 27and 2tonnes respectively .
(d)Unity ofprices
(i)Accession compensatory amounts
Theaccession compensatory amounts ,which hadbeen intro­
duced forcertain products andcertain periods ,were ,as
agreed ,abolished asfrom 1January 1978 ,theendofthe
transitional period .
(ii)Monetary compensatory amounts
Nomonetary compensatory amount wasfixed forfresh fruit
andvegetables .
■••/mmm

-79-
(c)Measures topromote themarketing ofCommunity citrus fruits
Measures topromote theprocessing oforanges
Measures toassist themarketing ofproducts processed from
lemons
Theso-called penetration premiums (financial compensation to
promote themarketing ofCommunity citrus fruits )were fixed at
thefollowing levels forthe1977 /78marketing year :
8.71 u.a .per100kgnetfororanges oftheMoro ,Tarocco ,Ovale
calabre'se ,Belladonna ,Navel andValencia late
varieties ,
7.48 u.a.per100kgnetfororanges oftheSanguinello variety ,
4.92 u.a.per100kgnetfororanges oftheSanguigno andBiondo
Comune varieties ,
7.48 u.a .per 100 kgnet formandarins ,
4.36 u.a .per100 kgnetforclémentines ,
5.33 u.a .per100 kgnetfor lemons .
Compared with 1976 /77,thefinancial compensation wasincreased
bythetotal percentage fixed fortheincrease inbasic and
buying-in prices ofthesame products ,i.e. 3.5% fororanges ,
mandarins and Clementines and 4.5% for lemons .
Inapplication ofCouncil Regulation (EEC)No2601 /69of
18December 1969 laying down special measures toencourage the
processing ofcertain varieties oforanges ,theminimum price to
bepaid byprocessors toproducers oforanges and thefinancial
compensation payable tothese processors were fixed atthe
following levels forthe1976 /77marketing year :
:Grade ofproduct ::Minimum prtce :Financial compensation :
:per 100kgnet :: per 100 kgnet :
: I :: 8.20 u.a .• a
: 5.50 u.a . :
: II :: 6.74 u.a . : 4.04 u.a . :
: III ormixed :: 5.30 u.a .
t <
:ssssssss3sss:sar :: 2.60 u.a . :
» •
i a
mmim•

-80-
Finally ,themeasures adopted toassist themarketing ofproducts
processed from lemons ,which were applied forthe first time in
the1977 /78marketing year ,fixed theminimum price tobepaid to
growers byprocessors at10.00 u.a. /100 kgandthefinancial
compensation payable totheprocessors at6.00 u.a. /100 kg.
(f)Measures toimprove theefficiency ofCommunity fruit
production
The information obtained from the Member States indicates that
grubbing operations ,inrespect ofwhich apremium system was
introduced inApril /May 1976 ,hadbeen carried out on8844.5 ha
ofapple trees and 3179.9 haofpear trees .
(g)Budgetary expenditure
In1978 ,expenditure bytheEAGGF inthefruit andvegetables
sector will amount to139million a.u.a .

-81-
! ' ■
\
116 .PROCESSED FRUIT AND VEGETABLES
Introduction
From 1976 to1977 production ofprocessed fruit andvegetable products
changed asfollows :
in'000 tonnes
: Products processed from :1976 ;:1977 :
:VEGETABLES :3731 :■
:4263 :
:FRUIT , :
• i
• ■:2829 :
ι ■:2575 :
ι ·
Production ofprocessed vegetables rose by14%from 1976 to1977 .
Theproduction ofjams ,marmalades andjellies in1977 wasabout the
same asin1976 ,namely 550000 tasagainst 557000 t<-2%).
Production offruit preserves in1977 was18%below the1976 level ,
which had,however ,been 25%upon1975 .Production offruit juices
fell by9%from 1976 to1977 .
Community production ofsome sensitive products wasasfollows :
(a)Tomato concentrates :production was172000 tin1977 compared
with 142000 tin1975 ,arise of21%;
(b)Peeled tomatoes :production rose by30%,from 526000 tin1976
to683000 tin1977 ;
(c)Tomato juice :production increased by37%,from 42000 tin1976
to57500tin1977 .(Itshould benoted that the1977 figure
includes theestimated total forFrench production ,which wasnot
available for1976 );
(d)Preserved mushrooms :vproduction increased from 160000 tin1976
to173200 tin1977 ,arise of8.3% ;
(e)Preserved peaches :production was49401tin1976 andfell by
2.4%to48200 tin1977 ;
(f)Theproduction oforange juice inItaly was75000 tin1976 and
rose by2.7% to77000tin1977 .Lemon juice production ,
however ,fell steeply from 38000 tin1976 to28000 tin1977 ,
adrop of26.3% .

-82-
II.Consumption andtrade
Thegeneral state oftrade inthis sector isshown inthefollowing
table :
1976
: Import : Export :
:Tonnes ::'000 EUA ::Tonnes ::'000 EUA :
:TOTAL
:Intra-EEC
:Non-member countries4171 802
1933 081
2226 6992222 220
1024 441
1194 1842390 878
2033644 '
357 2041239 996
1033 340
206 494
1977
: Import : Export :
:Tonnes ::'000 EUA ::Tonnes ::'000 EUA :
TOTAL
Intra-EEC
Non-member countries3992 395
1858 686
2133 7092508 855
1163 358
1345 4972276 330
1814 695
461 6351386 029
1082 710
303 319
Theavailable quantities oftomato concentrates andpeeled ,tomatoes
rose by33%from 1976 to1977 .This wasbasically due toanincrease
inproduction .
Thequantities oftomato concentrates available forconsumption were
224000 tin1976 and 306 462 tin1977 .
Imports rose from 145360 tin1976 to171976 tin1977 .Exports ,on
theother hand ,fell from 63000 tin1976 to37514 tin1977 .
Intra-Community trade fell slightly from 123000 tin1976 to
107000 tin1977 .
Imports ofpeeled tomatoes rose from 44452 tin1976 to48699 tin
1977 .Exports remained more orless stable :64320 tin1976 and
64635 tin1977 .Thequantities available forconsumption rose from
506130 tin1976 to667064 tin1977 .Intra-Community trade fell
from 184000 tin1976 to150000 tin1977 .
Imports oftomato juice rose from 28900 tin1976 to31500 tin
1977 .Exports remained practically unchanged :8000 tin1976 and
8200 tin1977 .
•••/•••

-83-
Importsofpreservedpeachesfellfrom132953tin1976to102822t
in1977.Exportsremainedinsignificant :300tin1976and645tin
1977.
Thischangeinexternaltradeisbehindthesteepfallinthe
quantitiesavailableforconsumption :181860tin1976and150377t
in1977.
TheavailableQuantitiesoforangejuicefellslightlyfrom304406t
in1976to299371tin1977.Importsfellfrom241514tin1976to
239780tin1977,whileexportsrosefrom12108tto17409t.
Intra-Community tradewas126300tin1976and123000tin.1977.
ν - '
Thequantitiesoflemonjuiceavailableforconsumption remainedat
aboutthesamelevel,i.e.37900tin1976and37957tin1977.
Asproductionfellby10000t,importsrose-inproportion,reaching
13808tin1977ascomparedwith65tin1976.Exportsrosefrom.
89tin1976to3851tin1977.Intra-Community tradewasinthe
regionof14900t. -
Thequantitiesofpreservedmushroomsavailableforconsumption
increasedfrom180900tin1976to196500tin1977.Importsrose
slightlyfrom28900tin1976to31500tin1977;exportsremained
atthesamelevel:8000tin1976and8200tin1977.
III.Prices
Afterfallingduring1976,worldpricesforproductsprocessedfrom
tomatoesbecameslightlymorestableintheearlymonthsof1977.
Pricesrecoveredinthefirsthalfof1977andpricesingeneralwere
relativelystable.
Sincepricesforpreservedmushrooms hadrecoveredontheCommunity
marketattheendof1976,theprotective measureswereabolishedwith
effectfrom1January1977.
Importpricesremainedsatisfactory throughout 1977andthequantities
actuallyimportedremainedwithinacceptablelimits.
Communitypricesforotherproductsdidnotgiverisetoany
difficulties,generallyspeaking.
•••/■•

-84-
IV.Outlook
Production oftomato-based products in1978 will beupon1977 .In
May,June andJuly 1978 world prices recovered alittle because ofa
slight shortage ofsupply ,butthere wasnoreal price boom .
Thenewsystem ofproduction aidfortomato concentrates ,peeled
tomatoes ,tomato juice ,peaches insyrup andprunes ,proposed bythe
Commission attheend of1977 during thediscussion oftheproblems of
Mediterranean agriculture andadopted atthebeginning of1978 ,will
stabilize thesituation ofthese products without causing anynotable
rise inproduction .
Protective measures forpreserved mushrooms had tobere-introduced at
theendofMay1978 .Atthat time import licences indicated that
imports were already 30%greater thar>those forthewhole of1977 and
theoffer prices quoted bynon-member countries haddropped farbelow
theproduction costs incurred bytheCommunity industry .
Thegranting ofimport licences wastherefore suspended .Relaxation
orrepealing ofthemeasure will depend onmarket trends ,which still
show prices falling inthepresence ofhuge stocks .
V. Budgetary expenditure
Expenditure bytheEA6GF Guarantee Section inrespect ofprocessed
fruit andvegetables amounted to15.4 million u.a .in1976 and 24.6
million a.u.a .in1977 .
Nowthat asystem ofproduction aid hasbeen introduced forcertain
sensitive products ,expenditure for 1978 isestimated at92.5 million
a.u.a .These figures represent 0.28 ,0.40 and1.20% respectively of
total expenditure bytheGuarantee Section .
Thesumof92.5 million a.u.a .for1978 comprises expenditure of1.5
million u.a .onexport refunds and 91million a.u.a .onintervention ,
i.e. aidforpreserved pineapple ,tomato concentrates ,peeled
tomatoes ,tomato juice ,preserved peaches ,andprunes .

11c .LIVE PLANTS
Introduction
TheLiveplants sector -divided inpractice into bulbs ,nursery products ,
potplants andcutflowers -represents ,with anoverall production inthe
region of3000million EUA.
Production
Thevalue ofproduction inthis sector ,based onestimates ,issubject to
considerable fluctuation .Themost recent estimates indicate thefollowing
position : . '
V
Value ofproduction inthelive plant sector inEUAandrate ofchange
a)million EUA
Year Bulbs Nursery Cut Flowers and Total
Products Potplants
1974 160 363 - •1897 2420
1975 167 395 2091 2653
1976 199 480 2603 3282
1977 225 534 2891 3650
b)%changeΠ
1975 +4 +9 +10 +9
1976 +19 +21 +24 +24
1977 +13 +11 +11 +11
Trade
Both intra-Community trade andtrade with non-member countries have
continued toincrease steadily ;between 1976 and 1977 intra-Community
trade rose by15.2% (theannual average fortheperiod 1973 /77is11.5% ).
Imports from non-member countries rose by20.1% between 1976 and 1977 (the
annual average fortheperiod 1973 /77is24%). Itshould benoted that
imports ofcutflowers ,especially carnations ,rose more steeply .
Exports tonon-member countries rose more slowly ,andwere 9.5% upon1976 .
Theaverage annual increase fortheperiod 1973 /77is13.9% .Exports to
non-member countries ,which were worth 236million u.a .in1977 ,were
nevertheless much greater than imports from non-member countries ,which
represented only 118million u.a .in1977 .
SeeTable M.11.17ofpart IIm•§•m

86-
/ \
Consumption
Totalconsumption isincreasing andimports,particularly ofcutflowers,
arecomingtoplayaconsiderable role.Regionaltrendsvarywidelyon
eithersideoftheCommunityaverage,thepositionofbulbsandnursery
productsbeinggreatlyinfluenced bytheweather,whichaffectsnotonly
theharvestbutalsodemand.
Outlook
Thesectorhashelditsownagainsttheproblemsstemmingfromtheenergy
crisisof1973andtheremovalofimportrestrictions in1976.Rising
productioncostsandincreasedimports,particularly ofcutflowersare,
however,causingproducersconcernforthe.future.

-87-
12.HOPS
1.Introduction
Worldproductionin1977was116000tonnes,9%upon1976,and
forecastsfor1978predictaslightdrop(about112000tonnes).The
worldmarketisneverthelessstillmarkedbyanimbalancebetween
supplyanddemandresultingfromtheexpansionoftheareasunderhops
in1969/74,fromtheincreasing useofhopextractsinthebrewing
industryandfromthehighdemandforvarietiesrichinalphaacid.
Thishasmeanttheuseoffewerhopsperunitofbeer.Inaddition,
newtechniquesforthemanufacture ofhoppowdersandextractsenable
theseproductstobestoredforseveralyears.Merchants' andbrewery
stocksremainhighandexertconstantpressureoninternational market
prices.
Evenafterthe1976droughtinEurope,whichreducedstockstosome
extent,theywerestillabout22%abovenormalatthebeginningof
1977.ForthisreasontheCommunityadoptedstructural measuresto
encouragequalityproduction andreducetheareaplanted.Hop
productionaccountedfor0.1%ofthevalueoffinalagricultural
productionintheCommunity.
2.Structure
In1977theCommission recordedthattherewere7796growersinthe
Community,including 7038membersofrecognized producergroups,the
settingupofwhichisencouraged underRegulation (EEC)No1696/71,
407membersofnon-recognized groupsand351independent growers.
3.Production
EECproduction was47800tonnesin1977(about41%ofworldproduc­
tionofhops),20%upon1976.Theareaunderhopswas27232ha
(downabout600haon1976).In1978theareaisabout25346haand
productionisestimatedat42600tonnes.
Theabovementioned increaseindemandforvarietiesrichinalphaacid
hasledtolarge-scale replantings withthosevarietiesinallMember
States.Thetwomaintypesofvariety,aromaticandbitter,account
for50%and49%oftheEECarearespectively,ascomparedwith73%and
26%in1971.
1
^SeeTablesM.12.1toM.12.66inpartII
Regulation (EEC)No1170/77-0JNoL137of3.6.1977
2253/77-0JNoL261of14.10.1977

-88-
4.Consumption
Thebrewingindustryistheonlyuserofhops.Worlddemandforbeer
isrisingbyabout3%(thehighestincreaseinbeerproductionisin
theThirdWorldandEasternEuropeancountriesbutdemandisstationary
intheEEC.Becauseofthenewmanufacturing techniques,thedemand
forhopsisincreasinglessrapidly,byabout1%intheworld-wide
context,andisevenfallingslightlyintheEEC.
5*Trade
In1977theEECexported48/4ofitsproductiontonon-membercountries.
Itthusremainedthechiefworldexporter,followedbytheUnited
States,Czechoslovakia andYugoslavia.However,exportsfromthe
Communityhavebeenfallingslightlybutcontinuously since1975
becauseoftheworldsurplusandtheinternational monetarysituation
(devaluationoftheU.S.dollaragainstEuropeancurrencies).The
Community'simportsofconesandextractshavealsofallenslightly.
f
6.Prices
Afterthegeneralriseinpricesforthe1976harvest,asaresultof
thedroughtinEurope,pricesforthe1977harvestfellbyabout19%
becauseofincreasedproductionandtheprospectofasurplusonthe
worldmarket.Inaddition,becauseoftheworldsurplusandhigh
inflation,contractsalesaresteadilyfalling.Thequantitysold
undercontractintheCommunityfellfromabout77%ofthe1975
harvesttoabout65%ofthe1977harvest.
7.Medium-term outlook
AsstatedintheCommission'sreportonthe1977harvest,the1978
harvestislikelytoseeareductionofabout1200hainthetotal
worldareaunderhops.TheareaintheEEChasfallenbyabout
1900hawhilethatintherestoftheworldhasincreasedslightly.
Inspiteofthisreduction,thereshouldstillbeaconsiderable area
underhops.Ontheotherhand,forecastsforthe1978harvestpredict
thatyieldwillbelowerandthatdemandwillexceedsupply.This
willhelpreducepartoftheworld'ssurplusstocks.Nevertheless,in
viewofthehighlevelofstocksatthebeginningofthe1978harvest,
priceswillnotreachsatisfactory levelattheproductionstageeven
iftheyriseonthefreemarket.

-89-
Forthe1979harvest,attentionshouldbedrawntotheeffectofthe
growinguseofhoppowdersandextractsandthereducedbitternessof
beers,whichmeansthatfewerhopsareusedperunitofbeer;despite
anincreaseinbeerproductionofabout3%,demandforhopswillrise
onlyslightly(byabout1%).Itmaythusbeconcludedthatthe
restoration ofasatisfactory worldmarketbalanceinthe1980'swill
requiretheareaunderhopstobereducedbyafurther1000to2000
hectares.
8.Budgetaryexpenditure
Theexpenditure oftheEAGGFGuaranteeSectionwas14millionu.a.in
1976,8millionu.a.in1977andisestimatedat8milliona.u.a.in
1978,or0.3,0,and0.1%respectively oftheGuaranteeSection's
totalexpenditure .
9.Economicaspectsofthemeasuresadopted
Productionaidforthe1977harvestwasgreatlyincreased (about7%)
incomparisonwiththepreviousharvesttooffsetthefallin
producers'earnings.InviewoftheworldandCommunitysurpluses,
however,theCommissionappliedArticle12(6)ofthebasicRegulation
tomakenewplantingsineligibleforCommunityaid.
ThenewprovisionsoftheamendedbasicRegulationwereappliedfor
thefirsttimeinordertofixaidaccordingtovarietalgroup.This
willhelpreorganizeCommunityproductioninthelightoftrendson
theEuropeanandworldmarkets.

-90-
■13.MLKAMPtEELKPRODUCTS
Theproductionanduseofmilk
(a)Dairycattlenumberscontinuedtoincreasein1977.Therewasanincreaseof0.8$inthenumberofdairycowsintheCommunity.
Since1977apremiumhasbeenavailableforthenon-marketing of
,milkandtheconversionofdairyherdswiththeaimoftakinga
significantnumberofcowsoutofmilkproduction.Sofarthe
measurehasnothadasgreataneffectasanticipated..Afurther
increaseinthenumberofdairycowshasbeenpreventedbutno
actualdecreasehasyetbeenrecorded.Inviewofthegeneral
economicsituationandbecauseofthelackofalternatives for
milkproducersbothwithinagricultureandoutside,asignificant
declineinthenumberofdairycowsisunlikelyintheforeseeable
future,unlessfar-reaching economicintervention underthe
commonmilkpolicyweretotakeplace.
(b)Thetrendtowardshighermilkproductioncontinuedin1977andis
beingmaintained.InmostregionsoftheCommunitythistrend
ishelpedalongbyanadequatesupplyoffarm-grownfodder,
sunt)lamentedby,purchasesoflessexpensiveconcentrate feed,
mainlysoya-based.TheeconomicbasisforCommunitymilkpro­
ductionisveryattractiveandin1978theweatherhasalsobeen
favourable.Asaresult,afurtherincreaseintheaveragemilk -
yieldpercowisapparent,sothat,evenwithastaticdairyherd,
milkproductionisrising.Ifdairyherdsweretoboreducedonly
slightly,afurtherriseinmilkproductioncouldbeavoided
onlywithamorethanproportionate declineindairycowyield.
Themostimportantfacttonoteisthatmilkproductionin1977
wasup2.7onthatof1976,whilefor1978asimilarincrea.se
on1977isexpected.
(c)Milkdeliveriestodairiesin1977exceededthoseof1976by
3.4$.Thisistheresultofincreasedmilkproductionand,also,
thefactthatthepercentageofproductiondeliveredtodairies
intheCommunityhasrisentoover$0%.Thereisnocorrespond­
ingdemandformilkandnjilkproductswithintheCommunityor
outsideatcurrentpricessothattheadditionalquantities have
increasingly tobestoredandheavilysubsidized.
Production andconsumption ofthemostimportantmilkproducts
(a)Drinkingmilk
1In1977themanufacture andsaleofdrinkingmilkdidnotreach
the1976level.Allthesignssuggestthatin1978afurther
slightfallinthemanufacture andsaleofdrinkingmilkwill
occur.Variationsinthesupplyofdrinkingmilkproductscontinue.
Asteadyslightdeclineintheaveragefatcontentisapparent.
Productswithalowerfatcontentseemtobeincreasingly
preferredbyconsumers.MoreUHTandsterilizedandless
pasteurizeddrinkingmilkproductsarebeingmarketedinthe
Community.Becauseofthemarketingadvantages,bothsuppliers
andthetradeacceptanydisadvantages whicharise,interms
ofthequalityoftheproducts.

-91-
Yoghurtsales,whichrecordedhighgrowthratesintheprevious
years,havenotbeenmakingsuchrapidprogress.Consumptionof
creamhasremainedsteadyataboutthelevelofrecentyears.
(b)Butter
In1977butterproductionroseslightly,by0.5%.Ontheotherhand,
consumptionatmarketpricesisfallingwhiledemandinquantity
termshasbeendeclining,particularly intheUnitedKingdom ,asa
resultoftherelativelysharppriceriseconsequentonpriceharmon­
ization.ThesizeableUnitedKingdomsubsidyforprivateconsumers
hasslowed,butnothalted,thefallintheconsumptionofbutter.
In1978butterproductionisexpectedtobeabout80000tonneshigher
thanin1977.Meanwhile,theimbalanceonthebuttermarketis
increasingonaccountofthepersistentdeclineinconsumption.
Althoughspecialmarketingmeasuresenablebuttertobesoldatgreatly
reducedpriceswithintheCommunityandalthoughcommercialexports
andfoodaidprovideotheroutlets,allthisisnotsufficientto
bringaboutageneralreductioninthestocks.
Itshouldalsobeborneinmindthatthebuttersituationisfurther
aggravatedbyimportsfortradepolicyreasons;theeffectsofthese
importscanbeoffsetonlybytheexpenditureofconsiderable public
funds.
Commercialexportsrosein1977,particularly toState-trading
countries,sothatattheendofI977stocksamountedtobarely
200000tonnes.However,thisfiguredoesnotincludethesizeable
reservestockswhichwereheldbyindustry,tradersandprocessors
atthetimeoftheexpiryofthetransitionperiodintheUnited
Kingdom.Anincreaseinstockstonot-morethan300000tonnesis
expectedfortheendofI978(seeTableM.13.12).
(c)Skimmedmilkpowder
Theamountofskimmedmilkpowdermanufacturedisdependentontheuse
ofmilkforothermilkproductsand,inparticular,onthequantities
ofskimmedmilkusedasfodderinliquidformorprocessedintocheese.
In1976productionagainreached2milliontonnes,butwasalmost
2>lowerthanin1976.InI978ariseofmorethan100000tonnes
isexpected,astheavailablemilkisbeingused-increasinglyfordrying. .
Themanufactureofskimmedmilkpowderfarexceedsdemandatmarket
prices.Onlyabout12%ofthepowdermanufacturedcanbesoldin
theCommunityatthefixedprice.6ofoissoldasfeedwitha45$pricereductionforfatteningcalves,while6°/0isexported ,
commerciallywithsizeablerefundstonon-membercountries.
Furthermore,skimmedmilkpowderissoldbothwithintheCommunityforthefeedingofpigsandoutsideoftheCommunityasfodderor
asfoodaidatpriceswhichdonotcoverthecostsofdryingandpackingofthepowder.

-92-
(d)Cheese
Communityproductionandconsumptionofcheeseagainincreased
slightlyin1977.Thistrend,whichhas"beenapparentnowforsome
years,seemsto"becontinuingin1978.Thecauseofthisisa
steadilyimprovingsupplysituationwithregardtoqualityand
preparation ,combinedwithanactivemarketingpolicyonthe
partofcheesemanufacturers ;thisappliestotheentireCommunity.
(e)Wholemilkpowder
Productionofwholemilkpowderhasriseninrecentyearsmainlyon.
accountofincreasedexports.Consumption withintheCommunity,
however,hasremainedunchanged.Fluctuations inthisareawill
continuetobedeterminedchieflybydemandontheworldmarket.
(f)Condensedmilk
Productionofcondensedmilkhaslikewisebeenincreasedasaresult
ofgreaterworldmarketdemand.Ontheotherhand,consumption
withintheCommunityisstagnant;therehasbeennogrowthindemand
forsomeyears.
(g)Casein
IntheCommunitycaseinandcaseinatearemanufactured thankstothe
expenditureofconsiderable publicfunds;theimportduties
applicabletothemostimportanttariffheadingsareboundunder
GATTataverylowlevel.Apartfromthehighlevelofproduction
in1974,Communitymanufacturers havebeenabletostabilizetheir
shareoftheinternalmarketandoftheworldmarketinrecentyears.

- -
.3.World Market Situation
International trade andproduction development
International trade
In1977 ,theinternational market fordairy products expanded significantly ,
thus continuing theincrease in1976 ,following ontheunusually lowtrade
levels of1975 .Total world exports ofbutter (including butteroil and
food aid)increased by23$andworld exports ofskimmed milk powder
(including food aid)increased bynoless than 52$.These exports reflect
anumber ofspecial factors ofwhich should bementioned notably the
influence ofincreased food aidcommitments (butteroil andskimmed milk
powder )andthespecial GATT-price arrangement forskimmed milk powder
foranimal feed .Furthermore ,anincreased demand inEast Block countries
contributed ,atleast temporarily ,toincreasing world butter exports in
1977 .
World exports ofcheese ,condensed milk andwhole milk powder increased
by10$ ,16$and47$respectively ,in1977 compared with 1976 .Above all ,
theincreased demand forwhole milk powder contributed noticeably toa
diversification ofdairy exports from several dairy producing countries
with increasing orpotential surpluses .Hence toacertain extent ,
increases inworld whole milk powder production could bejustified .In
1977 theaverage unit value ofallmilk powders inworld trade decreased
by12$mainly because oftheincreased exports ofskimmed milk foranimal
feed .Themain outlets fortheincreased Whole milk powder trade were
found inSouth America and certain Asian countries .The increase in
condensed milk quantities in1977 wasaccompanied byaslight rise in
export /import values of2-3$ .Themain regions ofincrease were South
America andAfrica .Therelatively moderate increase incheese exports
in1977 wasaccompanied byaverage price increases of8-9 /o.Themost
important market gains were registered inJapan andcertain South
American countries .
Cheese imports into Iran didnotexpand further ,incontrast tothesub­
stantial increases over theprevious 3years .Neither didUScheese
imports change in1977 andwere still much below thehigh levels of1974
and 1975 . .- "
Milk production
EECisthebiggest milk producing group ofcountries intheworld ,account­
ingin1977 fof96million tons oralmost 24$oftotal world milk output ,
hext inimportance isUSSR with 94million tons or23$ofworld production ,
followed byUSAwith 56million tons or14$ofworld total .Taken
together these three groupings account formore than 60$ofworld production
or246million tonsin1977 »representing anincrease of4$compared with
197t>,reflecting anincrease inUSSR of6,4$ ,inEECof2,7$ andinthe
USof2,2^,Milk production also increased inmost other European
countries andnotably intheEastern ,centrally planned economies .Higher
milk output wasalso recorded incertain South andCentral American
countries (Brazil :+7$,Columbia :4,4$ ,Chile :+2,7$ ,Mexico :+2,3$ )
whereas production decreased inother countries notably inAustralia
andArgentina .

-94-
/
AsintheEEC,thedebateonchangesinthemilkpolicymorderto
copewithsurplusproblemsinthedairysectorhascontinuedin1977
and1978.Somecountrieshavetakenconcretestepstoamendorimprovetheirpolicies.Hence,theCanadianquota/penaltysystemJias
beencontinuedwithsomeadaptations# Australiahasutucenstepsto
pursuethe"StageII"intentionsoflettingmarketpricesinfluence
moredirectlythedairyindustryrevenue,atleastforsomedairy
products.Switzerlandhasreinforcedatemporaryquota/penalty
schemewithsomesuccess.Austriahasveryrecentlyintroducedaquota
systembasedonaguaranteedpricefor121$ofthecountry'smilk
requirements ,withapricepenaltyforfurtherdeliveries.Finlandh~s
adoptedasystemofco-responsibility leviesandNorwayhas,whilecti.l
consideringaquotasystem,givenhigher(premium)pricestoproducers
whoreducetheirmilkdeliveries.
Astorecentdevelopmentsincertainmajorproducing/exportingcountries
outsideoftheEtJC,thefollowingcommentsarerelevant:
IntheUnitedStatesmilkproductionin1977increasedby2,2$compared
withI970.'Msdevelopmentwasduetoa2,9$increaseinmilkyield
percowanda0,7$decreaseindairycownumbers.However,sinceMarch
1978theUSmilkproductionhasbeendecreasingasacombinedresult
ofstagnatingyielddevelopment andslightlyaccentuateddecreasein
cownumbers.Highercullcowpricesandimprovedoff-farmemployment
werethemaincontributing elementsinreducingdairycownumbers.On
theotherhand,themilk-feedpriceratiostayedquitefavourableduring
thefirsthalfof1978.Thus,thestagnatingyielddevelopmentisprobably
atemporaryphenomenon,duemainlytoslowpasturegrowth.Butpressures
forincreasedherdcullingwillmostlikelycontinueandtheoverall
resultcouldbestableorslightlyreducedUSmilkproductionintheshort
andmediumterm.Furthersurpluseswillprobablybeavoidedinthe
shortterm,alsobecauserecentdevelopmentindomesticdemandfordairy
productshasbeenquitestrong,notablyforcheese.Themajorfactors
influencingthedemandinthispositivedirectionareimproved .consumer
purchasingpowerandrelativelyslowerrisesinretailprices .fordairy
productsthanforotherproducts. v
TheFoodandAgriculture Actof1977requiresthemilksupportprice
beadjustedsemi-annually toreflecttheestimatedchangeintheparity
index(indexofpricespaidbyfarmersforcommoditiesandservices,
interest,taxesandwagerates).FromApril1978,themilksupportprice,
reflectedintheintervention pricesforbutter,skimmedmilkpowder
andcheesewasincreasedby4,8$to$9,43per100lbs.Toavoidlarge
surplusesinthenextfewyearsitisconsiderednecessarytomaintain
supportpricesrelativelyclosetothepresentlevels.■
Bymid-year1978theuncommitted USintervention stocksamountedto
112.000tonsofbutter,25.000tonsofcheeseand27I.OOOtonsof
skimmedmilkpowder.Comparedwithsametimelastyearbutterstocks
hadincreasedby39.000tonsandpowderby33.000tonswhereascheese
stocksremainedstable.

-y?-
InCanada"thequota/penaltyschemeintroducedin1976reducedmilkdeliveries,
incomparaisonto1975»by5»5$whereasmilkproductiononlydecreasedby
0,8$.In1977milkproductionincreasedagaintoits1975levelandtotaldeliveriesincreasedby2,2$.Thus,thesubstantialrevisionofthe
Canadianmilkoutputwhichwasexpectedlastyearhasnottakenplace.
Throughthefirsthalfof1978theCanadianmilkproductioncontinuedto
increaseatarateof1to2percentabovethecorresponding 1977level.Effectivelythemarketsharingquotafor1978/79(industrialmilk)has
beenfixed5$aboveestimatedmarketrequirements ,or3,2$abovefirst
quotasetfor1976/77.Further,for1978/79*"thetargetpricewas
increased(+4,7/5comparedwithApril1977),directsubsidyremained-
unchanged,butterandskimmedmilkpowclersupportpricesincreasedby
7,6$and5,7$respectively ,whereasinquota-levy wasreducedfrom
ft1.20/l00lbstof>l.OO/lOOlbsandoverquotalevyincreasedslightlyfrom
7.00/100lbsto$7.50/l00lbs.Thus,producers'netreturnsincreased.
Finally,thecheeseimportquotawasreducedfrom50millionto
45millionlbs(20.412metrictons).Becauseofthecontinuingdownward
trendinbutterconsumption ,butterproductionisexpectedtodecline
in1978andmoreindustrialmilkwillbedivertedtocheeseplants.
InAustraliadomesticconsumptionofdairyproductsisdeclining-notably
forbutter-despiterelativelylowerretailprices.Exportreturns
remaindepressedandthereisacontinuingupwardtrendinproduction
costs.Intheshorttermdroughtconditionshavehadadepressingeffect
onoutputinsomedairyingareas.Thecombination ofthesefactorsand
uncertainty onfuturepolicieshasaccellerated therateofdeclinein
dairycownumbers(downbymorethan4$in1978),asubstantialfallin
thenumberofdairyholdingsandacontractioninthedairyprocessing
sector.Thus,afteraslightdecreasein1977comparedwith1976,
Australianmilkproductionisexpectedtodecreasefurtherby2-3$in1978.
ForthisreasonitseemslessprobablethatAustraliawillintroducemilk
quotas,butratherpursuetheaimsoftheso-called"StageII"policy
(lettingmarket"signals"influenceproduction)throughmoredifferentiation
inthepriceguaranteesforindividualproducts.Hence,itisexpectedinthecurrent1978/79milkyearthatbutterproductionwilldecreaseby
15/o,beingfollowedbyaconsequential sharpdropinskimmedmilkpowder
production.However,asubstantialincreaseisexpectedintheoutputof
wholemilkpowderand.tosomedegreealsoforcheese.
InNewZealanddairycownumbersarefairlystableandareexpectedtostayattheirpresentlevelthroughoutI978withoutreflectingnoticeablythe
droughtinthefirsthalfof1978.Milkdeliveries,.however,beingalmoststablein1977comparedwith1976decreasedby23$duringthefirsthalfof19fo.Thus,evenifproductionconditionsinthesecondhalfofI978improve
considerably ,totalmilkoutputforI978wouldprobablystillbe10$ormore
belowtheI977level.Areturntomorenormalconditionsisexpectedfor1979.1n
1977NewZealandproductionofbutterdecreasedby20.000tonsor7$,
whereasskimmedmilkpowderproductiononlydecreasedby1$.Cheese
prouctiondecreasedby9$andcaseinproductionby3$.Ontheotherhand,productionofwholemilkpowderincreasedbynolessthan35$toanewi8V?i°f72,00°tons*Thelowermilkdeliveriesin1978have
?£+!!■v,alITpr0ductsandarereflectedinlowerproductionlevels.thisbackground,stockshavebeensignificantlyreduced,notablyforskimmedmilkpowder.

-96-
Communityexports
TotalCommunity "butterexportsin1977increased "by152.000^tonsor129;',reflectinganincreaseoflbO^incommercialexportsand50>$infoodaid.
TheCommunity'sshareoftotalworldtradein"butterincreasedtoL\f\\ofrom
24'^in197".Asexplainedelsewhereinthisreport,theincreasein1977
inCommunity "butterexportshasbeenexceptional andwillnot"berepeatedin
1978.Inquantityterms,cheeseexportsincreased "by3,5%.However,total
worldtradeincreasedmoreandreducedtheEECworldmarketsharefrom37/«
in1976to35/oin1977.AdecreaseisforeseeninEECcheeseexportsin
1978.ForskimmedmilkpowdertotalCommunityexportsin1977increased'"by
250.000tonsor152^,reflectingsubstantialincreasedincommercialexports,
foodaiddeliveriesand,notably,specialsalesmeasuresforanimalfeed.
Itisnotexpectedthatthisexportcanbemaintainedatthesamelevelin
1978.
FollowingtheexpansionoftheworldmarketforwholemilkpowderCommunity
exportsincreasedin1977by39^«However,suppliesfromot'herexporting
countriesincreasedfasterandthe.Communityshareofworldtradeofwhole
;milkpowderdecreasedfrom6<$,in1976to65foin1977.Afurtherexpansion
inCommunityexportsisforeseenfor1978.
Communityexportsofcondensedmilkincreasedby19^in1977andis
stagnatingin1978.EECworldtradesharein1977was8Cffo(revisedseries)
comparedwith79/»in1976.
Communityimports
Communityimportstatisticsforbuttershowimportsof120.000tonsin1977
comparedwith132.000tonsin1977.UnderProtocol18oftheActof
Accession138.000tonsofNewZealandbutterhavetechnically beenimported
in1977intotheUnitedKingdom(includingreleasesfrombondedstores).
CheeseimportsfromNewZealandunderthesameProtocolamountedto15.000
tons,whereastotalCommunitycheeseimportsin1977amountedto89.000tons
comparedwith104.000tonsin1976.Thus,in1977EECcheeseimports
representedalmost15$ofworldcheesetrade.

-97-
Prices
(a)Producer milk prices
Thetarget price formilk wasfixed forthe1978/79milk marketing
year ,witheffect from22May1978 ,at17.70 ua/lOOkg.This
represents anincrease of2%ontheprevious year .Intervention
prices forbutter ,skimmed milk powder andcertain Italian cheeses
have teen adjusted accordingly ,inorder tofollow theaims ofthe
target price asdefined inArticle 3ofRegulation No804/68.
In1977 actual milk producer prices again showed differences which
areattributable chiefly tothemonetary measures and theattendant
fixing ofrepresentative rates forthevarious national currencies
inrelation totheunit ofaccount .Moreover ,thedairies inthe
various regions oftheCommunity differ intheir useofmilk ,their
specific cost situation andtheir particular market position .
(b)Wholesale andconsumer prices .
Thegeneral economic climate andthecompetition onthemilk market
have recently made itincreasingly difficult forsuppliers topass
onthehigher prices totheconsumers .Themarket situation hasin
many cases prevented such price alterations from being putinto
immediate effect ,with theresult that profits from milk have not
risen asmuch asmight have been expected .
Asaresult ofeconomic andmonetary differences among theMember
States andcertain national measures concerning consumer prices ,the
trends inthese prices ,expressed innational currency were again
very varied in1977 ascompared with 1976 .
.TheCommunity 'scautious price policy fortheI978/79milk marketing
year should enable thesituation tosettle down somewhat inthelong
term . *

-98-
5,Marketoutlook
ThenumberofdiarycowsregisteredfortheCommunityasawholeat
theendof1976and1977,whicharerepresentative for1977and1978
respectively/haveshownaremarkabledegreeofstability.However,
thisstabilityreflectsaseriesofdifferentfactorssuchas
a)increasednumberofcowsinbiggerherdsandadecreasednumberof
smallerherds,b)expectations astothebeefmarketandc)the
generalimpactofCommunitypolicy(prudentpricepolicy,
corresponsibilitylevy,non-delivery andconversionschemes).Hence
theapparentstabilitymightdisguisetheunderlyingpotential
instability,:However,intheshortrun-1979and1980-itis
probablethatcownumberswi11remainrelativelystable.
Ontheotherhand,themilkyieldpercowisincreasingintheshort
runbymorethan2%ayear.Therefore,itisestimatedthattotal
EECmilkproductionin1978wiltincreaseby2,5-3%andmilk
deliveries byapproximately 4%,Thisincreaseisoccuringalongside
withacertainstagnationinCommunitybutterconsumption andonly
slowincreasesexpectedintheconsumption ofcheese.Thus,itis
likelythattheproductionofbutterandskimmedmilkpowderwill
showsignificantincreases.Someincreaseswillalsooccurintotal
homemarketutilization ofbutterandskimmedmilkpowder.Nonetheless,
skimmedmilkpowderstockswhiledecreasing,willremainhighthrough­
out1979andbutterstockswillagainincrease,+-
if-! -
Asmentionedina:foregoingchapterworldtradeformostdairy
productshasshownsignsofstagnationduringthefirsthalfof1978,
Recentinternational forecastspointtoapersistentdisequilibrium
betweensupplyanddemandfordairyproductsintheshortandmedium
term.Tocopewiththegrowinginternational imbalancetheworld
marketformostdairyproductsshoulddoublein6-7years.This
seemstobefartoooptimistic agoaltosetforcommercial consump­
tion,'i

-99-
6.Economiceffectsofthemeasurestaken
(a)Imports
UnderArticle14ofRegulation(EEC)NO804/68,theimportlevy
corresponds "basicallytothedifference "betweenthethresholdprice
andtheCommunity'sfree-at-frontierprice.Underthepricearrange­
mentsforthe1978/79milkmarketingyear,thethresholdpriceshave
beenadjustedconsistanttothechangeinthetargetprice.The
fixingoftheleviesdidnotleadtoanydisturbancesofthemarket
byimportsoCmilkandmilkproducts.
UndertheexistingtradeagreementsbetweentheCommunityandvarious
non–membercountries,theminimumpricesforthetariffheadingsand
quantitiesconcernedwerealteredsothatitwaspossibletorespect
theimportconditionsagreedforbutter,variouscheesesandbaby-
food.
1
(b)Export3
Exportsofmostmilkproductsdevelopedfavourablyasaresultof
increaseddemandontheworldmarketin1977..Refundswereagain
necessarytomaketheseexportspossible;inthecaseofmostmilk
productstheserefundsremainedunchangedforlengthyperiodsoftime.
Thisfavourabledevelopment hasnotcontinuedin1978.Withthe
exceptionofwholemilkpowderexportsofallimportantmilkproducts
axedecreasing,andnotablyforbutterandcheese*
(c)Aidforskimmedmilk,skimmedmilkpowderandcasein
Inrecentyearstheaidshavebeenfixedasfollows:
ua/lOOkg
Liquidskimmedmilkforfodderpurposes
from3.3.1975 3.39
from1.5.1976 4.00
from22.5.1978 4.40
Skimmedmilkpowderforfodderpurposes
from3.3.1975 36.50
from1.4.1976 38.00
from1.5.1977 .39.00
from22.5.1978 43.00
Skimmedmilk,usedforcasein
fromI.II.I975 4,80
from1.4.1976 5.3O
.from1.5.1977 5.55
Moreover,duringtheperiod24.8.1976to31.5.1977specialaidfor
skimmedmilkforfodderpurposeswasgranted,amountingto5»50ua/lOOkgintheareasaffectedbythedrought.Thesearrangements weresuperseded
byageneralmeasurerelatingtospecialaid,underwhichaidamount­
ingto6.20ua/100kgisgranted,witheffectfromI.IO.I977.

-100 -
Inthecase ofskimmed milk powder ,special aidwasalso introduced
with effect from September 1977 where thepowder wasbeing fedto
animals other than young calves ..Theamount ofthe ,aidisfixed
monthly under tendering procedure .
In1977 thequantities inrespect ofwhich aidwasgranted increased
further inallsectors .Inparticular ,thequantity ofskimmed milk
powder used forfodder purposes wasstabilized intheCommunity .
This wasattributable basically toaminimum content of60$£skimmed
milk powder inmixed fodder being made acondition forthegranting
ofaid inthis area .
In1977 ,191000tonnes ofbutter were bought inbytheintervention
agencies ,188500tonnes ofbutter were sold inthe same period
under special measures ;afurther 59500tonnes were made available
from public storage forfood aid .This resulted inpublic stocks
ofbutter amounting to117000tonnes atthe endof1977 .
During 1977 private storage aidwasgranted inrespect of2J2 000
tonnes ofbutter .Atthe endof1977 ,79000tonnes ofthis was
still instorage .In1978 about 280000tonnes areexpected to
betaken into private storage .
Skimmed milk powder
In1977 ,464000tonnes ofskimmed milk powder were bought inbythe
intervention agencies ,while 636000tonnes were removed from storage ,
489000tonnes being disposed ofunder special measures including
theobligation topurchase within theCommunity ,91000tonnes being
sold forexport andafurther 5O000tonnes forfood aid .
Italian cheeses .Long keeping cheeses
Intervention measures forGrana andParmigiano were again un­
necessary in1977# Ontheother hand ,aidwasfixed in1977 and1978
fortheprivate storage ofcertain Long keeping cheeses .This aidhas
been used regularly since 1974 *
Since 1970 theCommunity hasbeen giving food aidinlarge quantities
intheform ofbutteroil andskimmed milk powder .
Thequantities made available are asfollows :(d)Storage
Butter
(e)Pood aid
Butteroil Skimmed milk powder
1976
1977
197845000tonnes
45000 tonnes
45000 tonnes150000 tonnes
105000 tonnes
150000 tonnes
Thedeliveries aremade under theprescribed administrative procedures
assoon astherecipients have indicated that they areready toreceive
them . ■

-101-
7.Uniformityofprices
Accessioncompensatory ^amounts
Withtheendofthetransitionperiodon31.12.1977,theaccessioncom­
pensatoryamountslapsedentirely.Theapplicationoftheaccession
compensatory amountsandpricealignmentinthenewMemberStateshave
notledtoanymajordifficultiesinthemilksector.Becauseof
substantialpricechangesforbutterintheUK,however,itproved
necessarytolaydowntransitionalprovisionstopreventdistortionsin
thepatternoftrade;thelastsuchmeasureexpiredon30.6.1978.
Monetarycompensatory amounts
Themonetarycompensatory amountsarealsofixedinthemilksectoron
thebasisofgeneralagri-monetary provisions.Forsometime,howevor,
theCommissionhasnoticedshiftsinintra-Community tradeinmilk
productsandthisledtheCommissiontoadjustpartially'thecalculation
procedurewitheffectfrom5»9*1977.*nessence,themonetarycompensatory
amountsarecalculatedforallagricultural sectorsonthebasisofthe
basicagricultural (farm)products,butthisisnotthecaseinthemilk
sector.Inthissector,butterandskimmedmilkpowder,andnotmilk,
formthebasis.Thechangesdecidedonshouldmakeforgreater
equilibrium here. ~
8,Budgetaryexpenditure
TheexpenditureoftheGuaranteeSectionoftheEAGGFinrespectofmilk
productsamountedin1975"to1149*8millionua,in1976to2051.5
millionuaandin1977"to2566.8millionua.Thetotalexpenditure
of2566.8millionu.a.breaksdowninto1237.0millionu.a.for
refunds,996.8millionu.a.forinterventioninthecaseofskimmed
milk,311.9millionu.a.forintervention inthecaseofbutterand
21.1millionu.a.inrespectofothermeasures*
Thecoresponsibility levy,introducedinthemilksectorfrom
16September19771amountedto21.8millionu.a.in1977*

-104 -
14 .BEEF AND VEAL
1.Introduction
Beef andveal production (adult cattle andcalves )accounted for15.5% of
thevalue offinal agricultural production ,in1977 .
Thenumber offarms engaged inbeef andveal production isabout 2.7
million ,ornearly twothirds ofallfarms intheCommunity .The area
under fodder represents about 60%oftheCommunity 'sUAAand ,since
cattle rearing isessentially dependent ontheland ,itisnotsurprising
that most beef andveal isproduced incountries with large areas of
pasturage .
TheCommunity ,with about 14%ofworld production ,isinsecond place ,
along with theUSSR ,among world producers ofbeef andveal ,butfar
behind the USA .
SeeTables M.14.1 toM.14.8 inPart II.

-105 -
PRODUCTION
(a)Cattle numbers
Thenumber ofcattle hasfallen steadily since December 1974 ,
when itstood atarecord level of79.5 million head .The
reason forthefall isacertain loss ofconfidence among beef
andveal producers .
Thesurvey ofcattle numbers inDecember 1977 revealed 77.2
million head ofcattle and30.9 million head ofcows ,i.e. 0.1%
upand0.4% down respectively ontheprevious year ,which
represents acertain stabilization inthecattle numbers but 2
to3%below the1973 /1974 figure .
However ,itshould benoted that inDecember 1977 thenumber of
calves (cattle less than oneyear old)was0.4% down onD
ecember 1976 and ,inparticular ,that thenumber ofbeef cows
hasfallen once again bymore than 2%over theyear .
Theaverage increase incattle numbers hasbeen a"bout 1%per
year ,while thenumber ofcows hasnotchanged .
This relative stability incattle numbers seems tosuggest that
theperiod ofrunning down theproduction potential hasended ,
despite thedownward trend inthenumbers offemales ofbeef
breeds .
(b)Production ofbeef andveal
Asin1976 ,thecyclical fall inbeef andveal production
continued in1977 .
) -
In1977 thetotal number ofcattle slaughtered exceeded the
1976 figure only inthetwoCommunity countries least affected
bytheexceptional drought ofthesummer of1976 ,namely
Ireland andItaly .
In1977 slaughterings_of_adult _cattle amounted toabout 20.4
million head ,i.e. some 4.4% less'than in1976 ;inthefirst
half of1978 thenumber ofadult cattle slaughtered wasabout
1.4% lower than thefigure forthecorresponding period in
1977 .
Onthebasis ofthetrend inCommunity cattle numbers itis
estimated that ,despite slaughterings ofcows under there­
organization programme inthemilk sector ,thenumber ofadult
cattle marketed in1978will becomparable tothe1977 figure .
Itisexpected that more young cattle (young bulls )andfewer
adult cattle (beef animals )will beslaughtered ,while slaugh -
terings ofheifers will bemarkedly up.
Slaughterings ofadult cattle have shown adifferent trend from
slaughterings ofcalves inrecent years :there hasbeen an
increase ofabout 2%peryear intheformer andafall ofabout
3%peryear inthelatter . -

-106 -
In1977 slaughterings _of_calves amounting to7million head ,
showed an~Increase "of~277%"on"the 1976 figure ;during the
first half of1978 thenumber ofcalves slaughtered fell by
around 3.1% compared with thevery high level attained inthe
first half of1977 .
Slaughtering _coefficient (i.e. therelationship between slaugh -
terings andcattle numbers )
Although down on1974 ,1975 and1976 ,theslaughtering co­
efficient in1977 was still atahigh level .
Average slaugh ter_weight
Ï
In1977 average slaughter weights ,277.5 kgforadult cattle
and103.1 kgforcalves ,were more than 1%heavier than those
recorded in1976 .
After falling in1974 and1975 ,when market prices were low
compared with production costs andprompted breeders tosend
stock tomarket early ,theaverage slaughter weight ,ofadult
cattle continued torise in1977 ,when natural grazing con­
ditions andfodder supply returned tonormal .
Theaverage weight ofcalves ,which hadfallen fairly markedly
in1975 ,continued torise in1977 .
Product ion_of_beef_and_veal
Even more markedly than in1976 ,thecyclical fall inbeef and
veal production continued in1977 .Netproduction ofbeef and
veal ,6382million tonnes in1977 ,was2.5% down onthe1976
figure .In1977 beef production fell by3.3% intheCommunity .
Inthefirst half of1978 avery slight fall inproduction was
recorded .
Production ofveal increased by4.1% in1977 onaccount ofthe
high number ofslaughterings andanincrease intheaverage
slaughter weight .Inthefirst half of1978 ,production of
veal increased only very slightly onthefigure forthefirst
half of1977 .

-107 -
However ,thetrend ofbeef andveal production over thelast 15
years hasbeenmarked byanaverage increase ofclose on2%per
year .
Inrecent years stock-rearing structures have greatly changed :
-thenumber ofstock farmers hasbeen falling attherate
of4.6% ayear ,mainly owing tothedisappearance ofsmall
farms ,and .
-thenumber ofanimals perfarm hasbeen increasing .
thus ,inDecember 1977 ,theaverage size ofcattle herd per 1
farm wasover 28head fortheCommunity ,about 12inItaly and
72intheUnited Kingdom . '
Beef andveal products fall into three main categories ,corres­
ponding tothethree categories ofanimals reared ,namely :
-culled cows andyoung calves (milk production ),
-grass-reared adult cattle (beef animals ),
-young male cattle fattened oncereal-based feedingstuf fs
(maize silage )inspecial production units .
Asaresult ofthegreat expansion intheorganized production
ofyoung bulls upto1974 ,young male animals nowaccount for
about onethird ofalladult cattle slaughtered .
CONSUMPTION • .
(a)Consumption ofbeef andveal
Asin1974 ,1975 and1976 ,beef andveal consumption wascurbed
in1977 bycontinuing economic difficulties such asthefall in
thegrowth rate asaresult oftheenergy crisis andthesigni­
ficant increase inunemployment . >
However ,in1977 ,onaccount ofplentiful supplies ,consumption
ofbeef andveal increased byabout 1%to6.6million tonnes .
Theconsumption trend forthecoming years isexpected tobe
less favourable than during theperiod 1960-73 when great
economic expansion took place intheCommunity ;another factor
which makes the outlook unfavourable isthat there seems tobe
little income /demand elasticity intheCommunity atthemoment .
Bearing inmind thegeneral economic problems andtheunemploy­
ment situation intheCommunity and ,more particularly ,the
economic difficulties inthemain importing countries ,namely
Italy andtheUnited Kingdom ,there isunlikely tobeasubstan -
v tial increase inbeef andveal consumption in1978 .

-108-
Thetrend ofbeef aridveal consumption isaffected bythe
following factors :
-population growth ,which inrecent years hasslowed down
considerably ,
-expansion oftheeconomy ,andthepattern ofprivate
expenditure inparticular ,
-theavailability ofmeat onthemarket andtheshort-term
fluctuations initsprice ,
-lastly ,thesize ofthetrading margin between producer
andconsumer prices .
(a)Annual percapita consumption ofbeef andveal increased
steadily between 1964 and1971 ;in1972 and1973 ,how­
ever ,itstabilized intheCommunity ataround 24.5 kg,
/-jibout 1kgless than themaximum attained in1971 .After
marked growth again in1974 ,percapita consumption level
ledout in1975 and 1976 at25.2 kgintheCommunity ,
except inItaly (18%VATonconsumption )and'theUnited
Kingdom ,where ithasfallen considerably inrecent years
/
^ In1977 percapita consumption rose again to25.4 kg,
i.e. 22.7 kgforberf and2.7kgforveal .
Although percapita consumption hasincreased byanaver­
ageofabout 1%peryear over thepast decade ,which has
been atime ofcon ;.derable economic expansion ,theannua
increase nowappeas tobewell below 1%,asaresult of
thepresent economic difficulties .
Over themedium ter.m ,per capita consumption ofbeef has -
increased byabout 1kgwhile per capita consumption of
veal hasdropped ~nabout 0.5kg.
(b)Thanks tosubstaicial population growth ,overall
consumption
ofbeef andvea increased considerably between 1963 and
1971 (bymore t.n 1.5% );butin1972 and1973 itfell
from the1971 1rel ,nodoubt onaccount ofthecyclical
fall inproduct ,>n.
Although consur j.tion ofbeef andveal increased consider­
ably in1974 ,vian production rose sharply ,itremained
static atarour j6.5million tonnes in1975 and1976 ,and
in1977 itrose)nly slightly toaround 6.6million
tonnes .
Theannual ris 4intotal beef andveal consumption will
probably beIftjinfuture than inthedecade preceding
1973because >{;thedrop inthebirth rate andinthe
level ofeconi lieactivity .

-109 -
(b)Self-supply rate
TheCommunity 'sself-supply rate inbeef andveal fell to
around 96%in1977 while in1974 ,1975 and 1976 ,theCommunity
hadachieved self-sufficiency .
Sizeable imports ofbeef andveal in1973 andbuying-in bythe
intervention agencies between 1974 and1977 left aconsiderable
quantity ofmeat ihstock .Thequantities ofintervention beef
andveal (including meat qualifying forprivate storage aid)
still instorage inautumn 1978 amounted tosome 0.33
million t,expressed interms ofbone-in meat .Itislikely ,
therefore ,that there Will still beaconsiderable quantity in
storage attheendof1978 .
TRADE '. '
Intra-Community trade inbeef andveal amounted in1973 and1974 to
less than 1million tonnes ,butin1975 itreached some 1.3million
tonnes ,in1976 more than 1.1million tonnes andaround 1.3million
tonnes again in1977 ,which represents anaverage annual increase of
around 10%since 1973 .
Since 1974 imports ofbeef andveal from non-member countries have
been asfollows :
455000tonnes in1974 ,
289000 ,-tonnes in1975 ,
415000tonnes in1976 ,
379 000 tonnes in1977 .
r
This shows that total beef andveal imports arestabilizing at
around 350to400000tonnes peryear .
This confirms theexceptional nature ofthemassive imports which
occurred in1973 ,amajor part ofwhich wasduetotheactivities of
speculators encouraged bytheprice explosion ontheworld market in
1972-73 .

-110-
TheCommunity sexternal trade
('000 tonnes )
: Period :
:Trade :1973 1974 • 1975 1976 ; 1977
:Imports from non-member
:countries :
:Beef and Veal ::990 ::445 ::289 ::415 ::379 :
:ofwhich :live animals :;168 ::102 :: 35 ::54 :46 :
:('000 head )!(846) :I(517) ::(183) :(265) :(257) :
:Fresh orchilled meat :235 ::83 : 29 : 47 !48 :
:Frozen meat :548 :171 : 77 :154 :141 :
:Preserves : 39 : 99 :148:160 :144 :
:Exports n :86:200 :237 :209 :152 :
:ofwhich preservesII1:22:20 : 38 : 41
Net trade balance '904 '255 52 *206 227
Source :DGVI:Data converted into carcase weight terms bymeans of
single coefficients .
EHR 6only
Whereas in1974 ,1975 and1976 exports ofbeef andveal tonon-
member countries rose toaround 200000tonnes ,in1977 they fell
to150000tonnes .Thebeef andveal deficit intheCommunity 's
external trade reached amaximum level ofsome 900 000 tonnes in
1973 ;this deficit wasdueprincipally toItaly (around 40%of
total imports ).Although relatively small in1975 ,thebeef and
veal deficit wasslightly inexcess of200000tonnes inboth 1976
and 1977 .
Themain suppliers ofbeef andveal totheCommunity in1977 were :
-Argentina andUruguay ,supplying around 45%oftotal imports
and60%offrozen meat imports ,
-theEastern European countries ,supplying about one-fifth of
total imports andtwothirds ofimports oflive animals ,in
particular from Hungary andPoland (33%),
-Australia andNewZealand ,supplying around 10%oftotal
imports .

-111 -
-Yugoslavia ,supplying almost aquarter ofimports offresh and
chilled meat ,
-Austria ,supplying around onefifth oflive animal imports ,
--Lastly ,theACPcountries (Botswana ,Swaziland ,Kenya ,
Madagascar ),supplying more than 10%oftotal imports ,in
particular intheform offrozen meat .
Ourmain customers in1977 were :
theEastern European countries ,taking more than
onethird ofourtotal exports ,
-theMediterranean European countries (Spain ,Portugal ,Greece ,
Turkey ),taking around onefifth ofourtotal exports ,
-theArab andMiddle East countries ,particularly Egypt and
Iran ,taking more than onequarter ofourtotal exports and
more than 50%ofourexpots ofpreserves .

-112-
5.PRICES
(a)Common prices
Theguide price foradult cattle forthe1978 /79marketing year
hasbeen fixed at125.97 u.a. /lOOkglive weight forthewhole
Community .
Theguide price ,which isapplicable toallcategories ofadult
cattle sold onrepresentative markets intheCommunity ,isthe
price which itissought toachieve inanormal marketing year
bymeans ofCommunity rules .
TheCouncil hasalso fixed theintervention price at113.37
u.a./100kglive weight ,or90%oftheguide price ,thereby
derogating from Regulation (EEC)No805/68forthis marketing
year . .
(b)Market prices
In1973 there was areversal inthe trend inbeef and veal
prices intheCommunity ;this trend hadbeen upward since the
1968 /1969 marketing year ,but adownward trend inmarket prices
began in1973 /74.
In1977 theaverage Community market price foradult cattle
rose byonly 4.8% ,which waslower than theinflation rate (1).
Theaverage prices foradult cattle settled ataround 87%of
theguide price ,i.e. atalevel well below theCommunity
intervention price .
Inmid-September 1978 Community market prices forallqualities
ofadult cattle still stood ataround 87%oftheguide price .
/
\
^Innational currencies ,however ,thisriseaveraged about 9.4% .

Trend inprices foradult cattle
inu.a. /100kglive weight
Period
Price1972 /73 1973 /74 1974 /75 1975 /76 :1976 /77 1977 /78 1978 /79Change
78/79
77/78
:Guide price 75.00
78.0086.20 96.50 / :
101.33 :109.94 118.74 -122.90 125.97 +2.5%
:Intervention price ::69.75
: 72.54 :80.166 :89.745 / :
94.237 :99.42 106.87 :110.61 :113.37 ::+2.5% :
Market price
-inmoney terms
-aspercentage
:ofguide price92.11
118.1%89.24
103.5%86.36
85.2%96.81
88.1%102.91
86.7% .107.40
87.4%109.48 * +1.9 :
• «
:Import price :
• •70.63 ::77.50 : 58.80 :56.32 ::61.85 ::62.75 ::63.50 * ::+1.6%
April toSeptember 1978 "^ -

-114 -
Import prices
In1973 and1974 theimport price recorded forlive animals and
fresh orchilled meat followed adownward trend similar tp
that ofmarket prices intheCommunity ,though much more marked .
In1975 theimport price remained relatively stable a'talevel
some 25%below the1973 figure .In1976 and1977 this price
(expressed inunits ofaccount )rose again ,although itslevel
isstill below the 1973 level .
Similarly ,world market prices forfrozen meat slumped in1974
and 1975 andsettled atavery lowlevel in1976 .However,' in
1977 there was aslight improvement inworld prices forbeef
and veal .
Consumer prices
Consumer prices forbeef andveal have risen fairly sharply
over theyears ;similarly ,in1977 they have risen again by
some 10%onaverage .
Cost ofanimal feed
Since spring 1977 ,thefall intheprices offeed grains onthe
world market and ,since thebeginning of1978 ,thedepreciation
ofthedollar ,have entailed first ofall astabilization of
theprice ofcattle feed andthen afall intheprices ofthe
protein-rich products used inanimal feed .
/

-115 -
6.OUTLOOK
(a)After thesuccessive falls incattle numbers recorded inrecent
years ,there waslittle change incattle numbers intheCommunity
asawhole between December 1976 andDecember 1977 ,albeit 2to
3%down onthe1973 /74figure .Although thenumbers ofbree­
ding animals ofbeef breeds have dropped beef andveal pro­
duction isexpected tostabilize atalevel some 4%down on
that reached in1974 /75.
In1978 Community production ofbeef andveal isexpected tobe
around the1977 figure ,i.e. some 6.3million tonnes .
Itisestimated that 1979 will see aslight increase inCommunity
production ofbeef andveal andthat ,asfrom 1980 ,anupturn
intheCommunity production cycle will take place .
Consumption ofbeef andveal rose byabout 1%in1977 .
Since consumption ofbeef andveal depends notonly onthe
general economic andemployment situations andontherate of
population growth butalso onthesupply ofbeef andveal as
compared with other redmeats ,consumption ofbeef andveal is
expected toincrease only slightly between nowand1980 .
Given theprobable production andconsumption trends andthe
stocks ofintervention meat tobesold inthecoming months ,
netimports maybeassessed atabout 200000tonnes forboth
1978 and 1979 . ......
Theself-supply rate ,which wasaround 100in1974 ,1975 and
1976 ,will drop in1978 and1979 .(1)
* /
With supplies ofbeef andveal atalowlevel andwith demand
becoming more stable ,anupward movement ofmarket prices for
adult cattle maybeexpected in1979 ,asoccurred inthecase
ofcalf prices in1978 . ,
(1)However ,therelationship between total quantities available (inc­
luding stocks )andconsumption should remain ataround 100% .

-116-
(b)From 1978 onwards ,beef andveal production isexpected to
fall notonly inthemajor non-member countries using
intensive rearing methods ,particularly theUSA ,butalso
incountries using extensive methods where natural con­
ditions have notbeen very conducive tostock-rearing
(drought inAustralia ).
Bytheendofthedecade ,the traditional importing
non-member countries such asthe USA will have increased
import requirements and ,nowthat newmarkets have opened
up(Middle East ,including Egypt )world prices ofbeef and
veal canbeexpected torise substantially from their
present fairly lowlevel in1979 .
ECONOMIC ASPECTS OFTHE MEASURES TAKEN UNDER THE COMMON ORGANIZATION
OFTHE MARKET INBEEF AND VEAL ,
(a)Market support measures
Inorder tosupport thebeef andveal market theCommunity has
continued toapply anumber ofmeasures :

-117 -
\
-market clearance measures :
granting ofexport refunds with thepossibility ofadvance
fixing ofthese amounts ,
direct buying-in bypublic intervention agencies ;
23000tonnes in1973 (from July 1973 )
465000tonnes in1974
414 000 tonnes in1975
362000tonnes in1976
260 000 tonnes in1977
116000tonnes upto1September 1978 ,
granting ofprivate storage aidforcarcases andfore­
quarters ofadult cattle (with provision forboning );
measures tostimulate consumption (reduced-price sales to
social welfare organizations );sale of400()0tonnes of
intervention meat ontheItalian market through theItalian
intervention agency ;implementation oftheprovisions of
thebasic Regulation whereby theimportation offrozen
meats forprocessing ,within annual limits ,canbemade
conditional onthepurchase offrozen meat held bythe
intervention agencies .
possibility ofgranting variable premiums fortheslaughter
ofcertain adult beef cattle (clean cattle );only the
United Kingdom hasavailed itself ofthis possibility ;
lastly ,thecontinued grant ofacalving premium inItaly .
(b)International agreements
Under GATT theCommunity hasagreed tothefollowing annual
import quotas : 1
38500tonnes (interms ofboned meat )offrozen beef and
veal ,attherate of20%
20000*heifers andcows ofcertain mountain breeds atthe
rate of6%and5000head ofcertain Alpine breeds atthe
rate of4%,other than animals intended forslaughter .
Under theACP/EECLome Convention special arrangements were
introduced fortheimport of27532tonnes (interms ofboned
meat )ofbeef andveal from Botswana ,Kenya ,Madagascar and
Swaziland .Inaddition toexemption from customs duties ,the
agreement also provides forthereduction ofother import
charges .
Quantity increased autonomously by18000head .

-118 -
Under anagreement reached with Austria ,Sweden andSwitzerland ,
specific levies maybefixed onimports oflive cattle ,fresh and
chilled beef and veal from those countries .
Similarly ,reduced levies have been applied tocertain imports from
Yugoslavia (baby beef ).
Given thelength oftime required forseatransport ,theCommunity
hasalso agreed totheadvance fixing ofthelevy forchilled meat
imported from Argentina ,Uruguay andother distant non-member
countries .
8.BUDGETARY EXPENDITURE
Expenditure bytheGuarantee Section oftheEAGGF onbeef andveal
was320.8 million u.a .in1974 ,980.0 million u.a .in1975 ,643.2
million u.a .in1976 ,410.8 million a.u.a .in1977 and isreckoned
at460.8 million a.u.a .in1978 ,i.e. 10.5% ,20.7% ,11.5% ,6.7%
and5.8% respectively ofthetotal expenditure oftheGuarantee
Section .Thesumof460.8 million a.u.a .maybebroken down into
92.0 million a.u.a .forexport refund expenditure and368.8 million
a.u.a .forintervention expenditure ,including 251.3 million a.u.a .
forprivate andpublic storage and117.5 million a.u.a .forpremiums .

-119-
15.PIGMEAT
1.Introduction
InDecember 1977 there were inthe Community altogether 72.1 million
pigs forbreeding andfattening onabout 2.5million farms .
Farms with more than 200animals numbered in -1977 about 75000 ,or
3%ofthetotal (2.7% in1975 ).
There arestill considerable structural differences inpig produc­
tion from country tocountry :198pigs perfarm intheUnited
Kingdom ,8pigs perfarm inItaly ,while theCommunity average is
about 29perfarm .Thesize ofthefarms continues toincrease in
theCommunity Member States butthedifference between theextremes
isgrowing wider (in1975 171pigs perfarm intheUnited Kingdom
and 7inItaly ,Community average 26).
Specialization inpigfarming iscontinuing :between 1975 and1977
thenumber offarms with over 200pigs increased by6%while farms
with less than 50pigs arebecoming fewer inallCommunity countries
(2.2million in1977 compared with 2.4million in1975 )butstill
represent almost 90%ofallfarms .
Thesmallest farms (1-2pigs )aredisappearing less rapidly than
average-sized farms with aslightly larger number ofpigs (3to50
animals ),especially inFrance andItaly .Given theuncertain
economic situation inrecent years ,many families still fatten pigs
toprovide themselves with aconsiderable quantity ofcheap meat .
Thesize offarms with 10sows andover isstill increasing .The
number offarms with more than 9sows decreased by5.4% between 1975
and1977 butthenumber ofsows perfarm increased .
Thenumber ofsmall pigfarms (1to9sows )decreased by12.2%
between 1975 and1977 andthenumber ofsows kept onthem dropped by
12.5% over thesame period .
Thegeographical distribution ofpigproduction hasnotchanged
much :itremains concentrated intheareas bordering theNorth Sea
andtheEnglish Channel andinNorthern Italy .
In1977 ,pigmeat accounted foralmost 13.2% byvalue ofthegross
final agricultural production andalmost 44%byvalue ofthemeat
production intheCommunity .
TheCommunity isthesecond largest pigproducer intheworld after
China .
SeeTables M.15.1 toM.15.8 ofPart II.

-120 -
2.Production
Ofthe72.1 million pigs intheentire Community on1December 1977 ,
8.5million were sows .
Compared with December 1976 thetotal number ofpigs hasrisen' by
2.9% andthenumber ofsows by3.5% .
Despite therather lowprices in1977 ,thebreeding stock isonthe
increase forthethird consecutive year .Afurther increase in
supply canthus beexpected in1978 .Theresults ofthesurveys on
pignumbers asof1April 1978 confirm theincrease inpotential
supplies ;compared with April 1977 ,thetotal number ofpigs is
4.6% greater andthat ofsows 4.2% greater .
In1977 theEECproduced 8.9million tonnes ofpigmeat ,4.4% upon
1976 .
During thefirst four months of1978 ,thepigmeat produced byslaughte
houses intheCommunity wasabout 1.7% uponthesame period in
1977 .Inthesecond half of1978 theincrease over 1977 ismore
marked .
Thesharp increase inproduction in1978 caused afurther reduction
inproducer prices forpigcarcases .
3.Consumption
In1977 ,pigmeat consumption increased intheCommunity asawhole
byabout 3.2% compared with 1976 (8.54 million tin1976 and8.81
million tin1977 ).Percapita consumption increased from 33to34
kg.
Internal consumption
1000 tkg/inhabitantDegree of :
self-supply
°L ■h
:EUR 9 :: 8813 :: 34 :100.1 :
:BLEU :: 376 :: 36.9 :: 175.3 :
:Denmark :: 212 :: 41.7 :: 353.8 :
:Germany :: 3228 : 52.6 :: 87.9 :
:France : 11892 :: 35.6 :: 84.6 :
:Ireland : 89 : 27.9 :: 150.4 :
:Italy : 1133 :20.1 : 75.6 :
:Netherlands :: 489 : 35.3 : 221.5 :
:United Kingdom : 1394 : 24.8 : 64.8 :

-121 -
In1977 ,Germany again increased itsconsumption ofpigmeat and ,
with apercapita consumption ofalmost 53kg,remains byfarthe
largest consumer (internal consumption inGermany represents 36.6%
oftheCommunity total ).
There wasanother large increase inpigmeat consumption inItaly :
20.1 kgpercapita compared with 18.8 kgin1976 ;nevertheless ,
Italy isstill inthelast place .
In1977 ,forthefirst time since 1974 ,thebalance between gross
home production andconsumption slightly exceeds theself-supply
rate (100.1% ).
Denmark still hasthehighest self-supply rate intheCommunity
(353.8% )butthis rate hasbeen falling steadily since 1974 (427%).
Germany (87.9% )andtheUnited Kingdom (64.8% )aremaintaining their
self-supply rate .This rate hasdropped slightly inFrance (84.6% )
buthasincreased intheNetherlands (221.5% ),Ireland (150.4% ),
Italy (75.6% )andintheBLEU (175.3% ).
4.Trade
Theexport-import balance inthevarious Member States isasfollows :
(allintra-Community andextra-Community trade )
i t Percentage change :
:Netimports ::Netexports i 1977 /76 :
(t (t)
Net
importsNet :
exports :
• i
:BLEU ί285 600» »
» %
:+7.9 :
:Denmark 523 000 :+5.1 :
:Germany !307 300 : :-5.4 :
:France :268600
i i
i i:+9.1 :
:Ireland : 46200 :-26 :
:Italy :227 300 :-16.1;
:Netherlands :606 900 :+12.3 :
:united Kingdom :700 700
• / <
■:+7.9 :
» <
» 1
Thepositive trends inintra-Community trade ,which hassteadily
increased over theyears ,show that theintegration oftheCommunity
pigmeat market iscontinuing satisfactorily .

-122-
In1977 thequantity ofpigmeat products traded between themember
countries amounted to1.77 million t,anincrease of6.6^over 1976
(1.66million t).Intra-Community trade hadincreased by4.3% be­
tween 1975 and 1976 .
Intrade with non-member countries in1977 ,278000tonnes ofpro­
ducts were imported and214000tonnes ofproducts were exported
(1).
Compared with 1976 ,imports fromnon-member countries fellby10.6 /,
while exports tothese countries increased by6.8% .
TheCommunity trade deficit went down compared with 1976 (netim­
ports fell from 110450tin1976 to63700tin1977).This defi­
citiseven lower than in1974 (81450 t).
Nevertheless ,this deficit isbigger than would have been expected
from thestatistics forthefirst half of1977 ,which showed a
positive balance forthefirst time .However ,Community imports
increased considerably during thesecond half oftheyear (170000 t
from July toDecember 1977 ,compared with 109000 tfrom January to
June 1977 )while exports fell (110000 tinthefirst half ,compared
with 103000 tduring thesecond half ).
Thebreakdown bytype ofproduct imported orexported in1977 is
given inthefollowing table :
Imports from Exports to
non-member countries non-member countries
-live pigs ' . 4% 0.15%
-fresh andsalted meat 35.5% 24.9 %
-lard 33.7% 7.7%
-offal 18.6% 8.2%
-prepared andpreserved
meat 8.2% 59 %
Total 100 % 100 %
TheCommunity isstill anetexporter ofprocessed pigmeat products .
Compared with previous years ,thebreakdown ofexports remains
practically unchanged .However ,thesituation asregards imports
haschanged because offewer imports oflive pigs andgreater im­
ports oflard .
Exports ofpreserved meats totheUSAalso fell .
(1)Source :DGVI,including lard andoffal

-123 -
In1977 theCommunity 'sexternal trade waswith itstraditional
trading partners among thenon-member countires .
However ,asinthepast ,certain Eastern European countries (the
German Democratic Republic ,Hungary ,Poland andRumania )were the
main suppliers oflive pigs andfresh meat .
Theother main supplier countries were :
United States ofAmerica (mainly offal ,lard )
China (boned meat )
Sweden (mainly carcases ,fresh meat )
Canada (offal ,pigfat)
Spain (lard )
Brazil (boned meat )
TheEECcontinued toexport to:
United States (preserves )
Japan (meat andpreserves )
Sweden (cuts andoffal )
Angola (prepared andpreserved meat )
In1977 Poland also bought meat andlard intheCommunity .
Prices
(a)Common prices
Basic price
Management oftheCommunity pigmeat market depends onthe
basic price which isfixed annual forthemarketing year from 1
November to31October andwhich applies toClass IIcarcases
ontheCommunity scale .
Thebasic price represents anequilibrium atwhich pigmeat
production candevelop andprovide afair return toproducers
while thebalance between supply anddemand ismaintained .
Theintervention measures provided forintheCommunity rules
canbetaken when prices ontherepresentative markets fall
below 103% ofthebasic price .
Thelevel ofthebasic price ,which hadbeen 114.48 u.a. /lOOkg
from 15March 1976 to31October 1977 ,wasincreased to120.20
u.a. /lOOkgfortheperiod from 1November 1977 to31October
1978 .
Given thefavourable trend inallproduction costs ,thenew
basic price applicable from 1November 1978 to31October 1979
wasfixed at122.604 u.a. /lOOkgofpigcarcases (+2%).

-124 -
Thesluice-gate prices ,which arefixed every quarter ,are
considered tobethenormal world market offer prices atthe
Community frontier ,atwhich products from non-member countries
mayenter andcomply with theprices aimed atthrough the
organization ofthemarket .These prices vary with theprice
offeed grain ontheworld market .In1977 /78thesluice-gate
prices fell dramatically tolevels unknown inrecent years .
(b)Market prices
Theupward cycle which began in1975 reached apeak inthe
first half of1976 .In1977 prices began tofall ,thereby
necessitating intervention measures intheform ofprivate
storage aid .These measures were suspended attheendof
September 1977 when market prices rose above thelevel of103%
ofthebasic price .
1978 must beconsidered asanexception inthat thenormal
cyclical recovery didnotcontinue .Prices rose during the
last quarter of1977 ,reaching apeak inDecember ,butthis
increase wasnotmaintained in1978 .Thesituation asregards
market prices ofanimal feed had apositive effect onproduc­
tion ,which expanded enormously .Superabundant supplies brought
down prices andshortened theupward phase ofthecycle .
Prices $tarted tofall inJanuary 1978 andintervention mea­
sures intheform ofprivate storage aidwere necessary by
'mid-June ,i.e. much earlier than inanormal cycle .
Pigcarcase prices
i u.a. /lOOkgpigcarcase
1Nov.73 7Oct.74 1Aug:75 15Mar.76 1Nov.77 1Nov.78
6Oct.74 31Jul.75 14Mar.76 31Oct.77 31Oct.78 31Oct.79
Basic price
Percentage
change 100.00 -113.50 123.30 133.10 139.80 142.60
Market price
Percentage "V
change 100.00 102.70 121.6 118.90 114.40
Asapercentage
ofbasic
price 114.20 103.20 112.50 101.90 93.30
Sluice-gate
price
Percentage
change 100.0 114.70 101.90 101.60 81.92

-125 -
(c)World prices
Ofthenon-member countries with amarket economy theUSA is
themost important producer .
v Thetrends inpigprices intheUSAhave been similar tothose
intheCommunity although thefluctuations have been much
greater .Prices were very lowduring thesecond half of1976
and1977 butimproved considerably during thefirst half of
1978 .
Theother countries producing pigmeat onalarge scale arethe
Eastern European countries with State-run economies .
(d)Consumer prices
Theconsumption offresh pigmeat isonly about half ofall
uses ,andthecuts and presentations vary from onecountry to
another .Comparison ofprices andqualities atEuropean level
istherefore very difficult .
Asharp rise inprices attheproduction stage always leads to
anincrease inretail prices .However ,areduction inprices
attheproduction stage does notnecessarily bring about a
reduction inretail prices .
In1977 thelowprices paid attheproduction stage kept producer
prices atastand-still incountries with strong currencies and
ledtoaslight increase ,.intheother Member States .Inall
Community countries theretail price ofpigmeat rose ata
slower rate than consumer prices asawhole between 1973 and
1977 .Ineach Member State there is nevertheless aclose
correlation between theoverall trend inconsumer prices and
thetrend intheprice ofpigmeat .
Production costs
Feedingstuffs
Prices offeed grain ontheworld market were fairly stable
throughout 1977 .Inthefirst half of1978 theprice ofthese
cereals increased somewhat .OntheCommunity market these
prices rose slightly ,inline with agricultural prices .
Thecorrelation between feed barley prices andpigcarcase
prices wasnotvery high during thefirst half of1977 but
improved considerably during thesecond half oftheyear .In
1978 this correlation again fell toavery lowlevel ,sinking
lower inMayandJune ofthecurrent year than intheworst
periods of1974 .

-126 -
However ,the feedingstufffs 'market hasremained attractive
from theproducer 'spoint ofview .
Thecosts offeedingstuf fsforpigs have remained fairly stable
since theend of1976 .
This situation should notchange greatly inthenear future ,
nowthat substitute products arebeing used increasingly to
replace cereals infeedingstuf fsforpigs .
Theprices oftheprotein ingredients offeed (inparticular
soya andfishmeal )followed cereal prices downwards onthe
world market from spring 1977 onwards ,after having risen
considerably in1976 .Inthefirst half of1978 these prices
recovered somewhat .
Other_costs
Although newtechniques have resulted inmore efficient and
profitable pigmeat production ,higher labour andenergy costs
have combined with inflationary trends ingeneral topush up
pigmeat production costs ,other than feedingstuf fcosts upto
1977 .Itisprobable that these costs ,which make up25to35%
oftotal production costs ,will follow thegeneral trend of
agricultural andnon-agricultural production costs inthe
various countries .For some months there has been amarked
deceleration intheupward movement ofproduction costs .
Outlook
1977 sawthebottom ofthecycle with production upandprices down .
After aparticularly critical period from April toSeptember ,Community
supplies ofpigmeat fell offandprices rose .Thus anewcycle
should have been initiated with adrop inproduction andanincrease
inprices .
However ,prices began tosagagain inJanuary 1978 .They decreased
steadily until June when theCommission decided tointervene onthe
market byintroducing private storage aid .Themore favourable
production conditions created bylowfeedingstuff prices andnew
feeding techniques (substitutes forcereals )have resulted inanew
increase inproduction instead oftheanticipated reduction insupp­
lies .Asthese favourable production conditions continued into
1978 ,there should beaplentiful supply ofpigs ontheCommunity
market during thefirst half of1979 atleast .

-127 -
Economic aspects ofthemeasures taken under thecommon organization
ofthemarket inpigmeat .
(a)Levies andrefunds
Trade arrangements with non-member countries provide forthe
fixing oflevies andadditional amounts onimports and ,if
necessary ,export refunds mayalso begranted .
Thelevies fixed depend onthetrend ofworld andCommunity
feed grain prices .
Additional amounts were reintroduced attheendofJanuary 1977
after aninterval of14months .They helped tomaintain the
prices ofimported products atafair level ,inline with
Community internal prices .They were suspended on1November
1977 but had tobereintroduced inJune 1978 .
Export refunds were maintained forprocessed products butat
low levels soasnot todisturb established trade flows .
Refunds were once again introduced forfresh meat inFebruary
1977 andthen abolished attheendofOctober .InApril 1978
export refunds onlive pigs andfresh meat were re-introduced
andtherefunds onprocessed products were increased .In
September 1978 itwasdecided tomake aslight increase inthe
refunds forfresh products andlive pigs .
(b)Intervention
After prices forpigcarcases dropped ontherepresentative
markets inthefirst half of1978 ,theCommission adopted
support measures intheform ofaidfortheprivate storage of
certain types offrozen pigmeat asfrom June 1978 .
Theeffect onmarket prices forpigcarcases seems tohave been
positive .Thesteady drop from January toJune 1978 .waschecked
buttheprices ofpigcarcases ontherepresentative markets
arestill farbelow thelevel ofthebasic price .
Neither theaidmeasures applied northeamounts ofaidgranted
northeeligible products selected arelikely to-create struc­
tural surpluses .AttheendofSeptember 1978 private storage
aidhadbeen granted inrespect ofsome 35000 t..

-128 -
(c)Spécial intervention
There wasanoutbreak ofswine fever inSardinia inthe spring
of1978 .Toprevent disturbances onthis market asystem of
private storage aidwasintroduced inMay 1978 .However ,the
measure was notused bytheoperators asthehealth measures
adopted were adequate .
9.Budgetary expenditure
Expenditure bytheEAGGF Guarantee Section in1977 was31.9 million
AUAofwhich 24.9 million AUAwas forexport refunds and 7.0million
forpayments under intervention measures forthe 1976 /77marketing
year .
For 1978 budget appropriations are101.4 million EUA ofwhich 66.5
EUAare forexport refunds and21.1 million EUA forintervention .
Itisprobable that this amount will notbefully used .

-129 -
16.EGGS
1.Introduction
Therelative value ofeggproduction intheCommunity maybegauged
from recent estimates .
1976 1977
Eggs /animal products 6.6% 6.1h
Eggs /total agricultural production 3.9% 3.8%
Production continues tobeconcentrated inanever smaller number of
enterprises . ,
Atthesectoral level there have been many contacts intheCommunity
between representative groups andassociations .Nosingle co­
ordinating body hasyetbeen established ,however .
2.Production
Statistics relating tothenumber oflaying hens indicate that
production in1977 was1%down ascompared with 1976 intheCommunity
asawhole butinindividual Member States thechange varied from -13%
to+7%.
Figures onthenumber ofchicks hatched indicate anoverall increase
of3.7% in1977 compared with 1976 although some Member countries
show much greater increases (upto14%intheNetherlands ).
These twofactors ,thepresent andfuture number oflaying hens ,and
theslight increase inyield perlaying hendetermine thecyclical
pattern ofproduction ,which wasroughly thesame in1977 asin1976
butwill behigher again in1978 ,asitwasin1975 .
Overall production in1977 ,at3824000t,represents about 21%of
world production .
3.Consumption
Despite thefluctuations inprices between 1975 and1977 ,percapita
consumption remained practically thesame (13.8 kgpercapita ),
which confirms therelative inelasticity ofthedemand foreggs .
SeeTable M.16.1 toM.16.7 ofPart II.
/

130-
Supplies andTrade
TheCommunity self-supply rate isapproximately 100 /&.
In1977 intra-Community trade amounted to335000t(less than 7%of
production )ofwhich Germany imported about 200000t,mainly from
theNetherlands andBelgium .France became anetimporter ,the
United Kingdom anetexporter .
Trade with non-member countries amounted to94000 t,ofwhich
51000twere imports and43000texports (1.4% and1.1% ofproduc­
tion respectively ).
6500 twere imported from certain European countries which had
undertaken toobserve thesluice-gate price (Article 8ofRegulation
(EEC)No2771 /75).Most imports were effected under theinward
processing arrangements ,i.e. theimported eggs were processed and
re-exported aseggproducts orfoodstuffs containing ej>gs .
TheCommunity exported only small quantities ofeggs (1%ofthe
production ),mainly totheMiddle East ,Switzerland andAustria and
assupplies forarmies andshipping .
Prices
\
Theprice ofeggs followed theopposite trend tothat ofproduction
between 1975 and1977 .Thus ,prices were lowin1975 butincreased
considerably in1976 andinthefirst half of1977 ,account being
taken ofthemonetary values used inthecomparison .
Attheendof1977 prices began todrop rapidly andcontinued todo
soin1978 ,with theresult that production costs arenolonger
covered bymarket prices .
Consumer prices arenot ,however ,inline with producer prices .
Generally speaking ,profits aretending toincrease ,which means
that theproducers arebearing thebrunt ofthemarket fluctuations .
Outlook
Theproduction ofeggs inshell seems tofollow along-term cycle ,
which reached itslowest point towards theendof1976 .Thenumber
oflaying chicks incubated in1977 was3%higher than in1976 .
Production thus increased butbecause exports were higher andcon­
sumption increased slightly ,producer prices were relatively high in
1977 .This increase ,which wasmade allthemore significant bya
reduction incompound feed prices ,stimulated production ;during
thelast half of1977 ,thenumber oflaying chicks incubated was
over 6%higher than thenumber forthesame period in1976 (+6%).

-131 -
Asaresult ,prices fell in1978 .Inmid-summer seasonal movements
aggravated thesituation .Given theexisting laying stock ,supplies
should beplentiful throughout 1978 andatthebeginning of1979 .
Theincrease inexport refunds in1978 could encourage exports ,
which were lowatthebeginning of1978 ,andthereby ease thesitua­
tion ontheeggmarket .
Measures taken under thecommon organization ofthemarket
(a)Inaccordance with theCouncil Regulation applicable on1
February 1978 ,thetariff headings 04.05 AI(a)(hatching
eggs )and01.05 A(day-old chicks )were sub-divided into tur­
keys andgeese ,ontheonehand ,andother poultry species ,on
the other hand .
(b)In1977 thedrop intheworld price offeed grain wasparal­
leled byareduction inthesluice-gate prices foreggpro­
ducts ,which continued until May 1978 .Prices rose subse­
quently .
Levies followed theopposite trend .
(c)Therefunds oneggs inshell were changed several times .At
thebeginning of1977 therefund was 13u.a. /lOOkg;on15
April this amount wasreduced to10u.a. /lOOkgandthis
refund wasapplied until 31January 1978 .On1February 1978
itwasincreased to12u.a./lOOkgandon15May 1978 to18
u.a. /lOOkg.
Asfrom that date theCommission granted export refunds on
hatching eggs for athree month period only .
Therefunds oneggproducts have notbeen changed since they
were introduced on1May 1976 .
\
Thefixing oftherefund three months inadvance isauthorized
only foreggs inshell .
(d)Theaccession compensatory amounts which still applied tosome
products were abolished on31December 1977 .
(e)Thefixing ofmonetary amounts raises noparticular problems in
this sector .
/
Budgetary expenditure
Budget expenditure forthecombined eggandpoultrymeat sector
amounted to13.1 million u.a .in1976 ,22.3 million a.u.a .in1977
andisestimated at30.0 million EUAfor1978 ,i.e. 0.3% ,0.4% and
0.4% respectively ofthetotal expenditure oftheEAGGF Guarantee
Section .

-132 -
Although theexport refund granted foreggs inshell (inu.a./
100kg)wasnotverydifferent in1977fromwhat ithadbeenxn1976 theincrease inthevolume ofexports andtheextension of
refunds toeggproducts hadadirect impact ontheexpenditure
committed .

-133 -
17.POULTRYMEAT
1.Introduction
In1977 therelative value ofpoultrymeat production wasstill
substantial andfairly similar tothat ofeggs ,that is,together
about 12.6% ofannual production and7.9% oftotal agricultural
production .Thefigures relating topoultrymeat alone are :
1976 1977
Poultrymeat /animal products 6.7% 6.5%
Poultrymeats /total agricultural
production 4.0% 4.1%
Poultrymeat production isstill characterized byconcentration and
byhorizontal andvertical integration .Thedegree ofconcentration
isgreater inthepoultrymeat sector than intheeggsector ,with a
large proportion ofsome Member States' production being inthe
hands ofafewindustrial-scale producers .
Theattempts tobring together thevarious groups andassociations
concerned with theproduction andmarketing ofpoultrymeat inorder
toimprove market stabilizatio have notyetsucceeded .
2.Production
Thefigures forpoultrymeat production show anincrease of3.5% in
1977 compared with 1976 ,butincubations ofday-old chicks formeat
production increased byonly 2.5% (Table M.17.1 ).This apparent
discrepancy canbeexplained bythefact that theincubation figures
arefor "chickens "only andthat the17%reduction inexports of
chicks tonon-member countries hasmade more day-old chicks avail­
able within theCommunity .Incubations ofday-old chicks ofall
other meat-producing species increased in1977 .
In1977 total Community production wasestimated at3419000 t,the
degree ofchange (ascompared with 1976 )varying considerably from
oneMember State toanother ,although there hasbeen anincrease in
production inallMember States .
According totheestimates available ,Community production ofpoultry
meat represents about 21%ofworld production .
3.Consumption
Poultrymeat isprobably thecheapest form ofmeat available to
consumers andevidence from numerous countries suggests that there
isscope foranincrease inconsumption levels intheEEC .
SeeTables M.17.1 toM.17.6 ofPart II.

-134 -
Whereas consumption hadbeen atastandstill in1974 and1975 ,an
upward trend started in1976 andcontinued in1977 (+2%).The
marked difference between theprice ofpoultrymeat andthat ofother
meats isresponsible forthis trend .
4.Supplies andtrade
For several years theCommunity hadbeer \between 101and103 /,
self-supplying ,butin1977 therate wasover 105% .Imports from
non-member countries represent about 2%(60000 t)ofCommunity
production andexports about 6%(225000t).
Imports from non-member countries fell by9000t(-13%)butthis
reduction hardly changes theeffect hadbyimports ontheCommunity
market .Most imports from Eastern Europe benefited from thearrange
ments pursuant toArticle 8ofRegulation (EEC)No2777 /75whereby
additional amounts arenot imposed ifsluice-gate prices are res­
pected .Such imports totalled 7600tonnes ofducks and 8600
tonnes ofgeese in1977 .Imports ofturkeys andturkey parts from
theUSA reached 10000 tin1976 and 1977 butthere isagrowing
tendency todeclare these products under Tariff Heading 16.02 B.
Since therate oftheduty inrespect ofthis heading hasbeen
consoidated under GATT ,additional amounts arenotapplied tothese
imports ,although justified bysome offer prices .
Exports tonon-member countries in1977 were 22%upontheprevious
year .This increase of40000t.was mainly made upofchickens .
In1977 intra-Community trade amounted to270000 t,3%higher than
in1976 ;thequantities traded included 170000tonnes ofchickens ,
6000tonnes ofduck ,12000tonnes ofturkey and50000tonnes of
poultry cuts and20000tonnes ofmeat preserves .
Theprincipal trade flows arefrom other Member States towards West
Germany ,which continues toimport 45%ofitsconsumption .By
contrast ,theNetherlands exports 70%ofitsproduction .
Health ,veterinary orzootechnical problems continue toinhibit free
trading ofproduce among theMember States .
5. Prices
Chicken prices reached apeak inthemonths ofJuly ,August and
September 1976 andsince then prices have fallen butremain reason­
able .Theexceptions tothis generalization areshown inTable IIB
17.4 (market prices ofchickens )because inFrance ,Italy theUnited
Kingdom andIreland prices improved considerably in1977 compared
with 1976 ,even iftheeffects ofinflation aretaken into account .
>

-135 -
Consumer prices were allhigher in1977 than in1976 despite the
fact that producer prices fell insome Member States .IntheUnited
Kingdom ,andespecially inFrance ,consumer prices increased bya
much larger percentage than producer prices .InItaly ,however ,
producers benefitted from amajor price surge .There isnosimple
explanation forthese divergent movements inavery competitive
market . .
Outlook
Itisdifficult toforecast poultrymeat production accurately onthe
basis ofparent stock .Theproblem isthat only avery short produc­
tion period isnecessary toincrease parent stock -amatter ofsix
to12months -andthat thenumber ofchicks used canvary greatly
inrelation tothepotential available .
Poultrymeat production isvariable anddepends onmany factors
including recent prices ,feedingstuff costs ,export possibilities
andthegeneral trend indemand .
/, . .
Since themiddle of1976 prices have fallen gradually butproduction
hascontinued toincrease .Compared with 1976 ,incubations within
theCommunity increased by2.8% in1977 ;exports ofchicks dropped
byabout 20% ;theparental stock increased by6%in1977 andcon­
tinues toincrease in1978 ,thefigures forthefirst four months
being 8%higher than those forthesame period in1977 .Exports in
thefirst half of1978 were 20%down onthose forthesame period in
1977 because theUSSR didnotrenew itspurchases .Itisstill too
soon toassess theeffect oftherefund of22u.a. /lOOkggranted in
May .Anextremely difficult market situation could thus rise to­
wards theendof1978 .Itistobehoped that traders will handle
thesituation carefully .
Measures taken under thecommon organization ofthemarket
(a)Inaccordance with theCouncil Regulation applicable on
1February 1978 ,tariff headings 04.05 AI(a)(hatching eggs )
and01.05 A(day-old chicks )were subdivided into turkeys and
geese ,ontheonehand ,andother poultry species ,ontheother
hand .
This distinction clarified themarket andthetrading situation
andimproved competition incertain areas ofCommunity trade .
(b)Thebases adopted in1974 forcalculating sluice-gate prices
andlevies were changed inrespect ofducks andgeese bya
Council Regulation applicable on1February 1978 .Inthecase
ofducks ,therate forconverting cereals into meat was re­
duced and the flat-rate amounts increased .Inthe case of
geese ,only theflat-rate amounts were increased .These adjust
ments gave raise toslight changes inthelevel ofprotection
given toderived products .

1JU
(c)Thegradual fall infeed grain prices ontheworld market
between summer 1976 andsummer 1977 hadrepercussions onthe
sluice-gate prices forpoultry ,which also decreased .The
recovery ontheworld market atthebeginning of1978 increased
sluice-gate prices slightly on1August 1978 butasaresult of
theplentiful cereals harvest in1978 thesluice-gate prices
aretobereduced again on1November 1978 .
Levies followed theopposite trend tothat ofsluice-gate
prices since theformer arebased onthedifferences between
thecereals price ontheworld market andtheCommunity prices .
(d)Refunds granted inthis sector in1977 were limited tochicken
meat exported tocertain non-member countries ,particularly ,in
Europe andtheMiddle East .Theamount ofthis refund was8.5 v
u.a./100kgatthebeginning of1977 andwasraised to12 I
u.a. /lOOkgon1April 1977 .Therefund remained atthis level
until 1February 1978 when itwasincreased to15u.a. /lOOkg.
On15May1978 theamount wasincreased to22u.a. /lOOkg.At
thesame time arefund wasgranted forday-old chicks ,butonly
foraperiod ofthree months .Refunds forchickens maybe
fixed inadvance (three months ).
(e)Theaccession compensatory amounts still applicable tocertain
products were abolished on31December 1977 .
(f)Water content offrozen chickens :
Thedate ofapplication oftheRegulation limiting thewater
content offrozen chickens wastwice postponed bytheCouncil
ontechnical grounds concerning thechemical analysis methods .
Meanwhile theCommission had further research carried out in
order toclarify theconditions forapplying themethods des­
cribed inAnnexes IIIand IVtotheRegulation .
Budgetary expenditure
Budget expenditure forthecombined eggs andpoultrymeat sector
amounted to13.1 million u.a .in1976 ,22.3 million a.u.a .in1977
and isestimated at30.0 million EUAfor1978 ,i.e. 0.3% ,0.4% and
0.4% respectively ofthetotal expenditure oftheEAGGF Guarantee
Section .
Inthepoultrymeat sector ,thesole refunds granted in1977 were for
chicken exports ,butboth theamount ofthis refund andtheexports
were greater than in1976 .Exports increased byabout 40000 t
(22% ).
In1978 ,despite still higher refunds ,exports arefacing stiffer
competition and itisprobable that thequantities exported will be
sirialler than in1977 .

-137 -
18.SILKWORMS
Silkworm rearing ,which ispracticed inItaly andonasmall scale in
France ,represents only atiny fraction ofCommunity agricultural activity
andofworld sericulture ,which produces about 52000 tofrawsilk from
iabout 425 000 tofcocoons .
Relatively high prices forrawsilk ontheworld market attheendof
1976 andbeginning of1977 hadtheresult that thenumber ofboxes cul­
tivated increased from 7265in1976 to8797in1977 ,producing 197and
202 tofcocoons respectively .Asprices have remained high ,12000
boxes were prepared in1978 butonly 8644boxes were cultivated ,the
remainder perishing forlack ofmulberry leaves following exceptionally
cold weather .Itisexpected that 12000boxes will becultivated in
1979 .
For1978 /79theamount oftheaidhasbeen fixed at55u.a.,_which is
about thesame asthetotal amount (normal aid+supplementary aid)
granted in1977 /78.
Expenditure bytheEAGGF Guarantee Section inthesilkworm sector amoun­
ted to0.4million u.a .in1977 .
SeeTable M.18.1 ofPart II

-138-
PRODUCTS NOT SUBJECT TOCOMMON MARKET ORGANIZATION

-ijy
19a .AGRICULTURAL ALCOHOL
1.Introduction
Intheabsence ofacommon oorganization ofthemarket ,thesitu
ation continues todeteriorate inthis sector .
2.Production
During 1977 agricultural alcohol production wasrelatively stable .
There wasaslight drop intheproduction ofbeet alcohol (-10.1% )
andmolasses alcohol (-3%),butthis wasoffset byaconsiderable
increase intheproduction ofvinous alcohol (+101%).There were
nosignificant changes intheother production sectors.-
France isstill byfartheCommunity 'smain producer ofagricultural
alcohol .Production increased substantially there (+20.2% )and
also inBelgium (+9.8%),while itfell inItaly (-7.9%),the
Netherlands (-11.6% ),Denmark (-11.0% ),Ireland (-10.0% )and ,to
alesser degree ,theUnited Kingdom (-3.7% ).
3.Consumption
Consumption (human consumption in..particular )isatastand-still
despite large taxincreases (Germany ,France ,etc.).
4.Prices
Ontheworld market thecheapness ofmolasses andtheexistence of
surpluses have had adepressing effect ontheprice ofalcohol .In
theCommunity prices have varied little .Aslight drop hasbeen
recorded where prices arenotmanipulated .
5.Trade
French exports account foraconsiderable share ofextra-Community
trade (more than 500000hiinthenatural state ).Intra-Community
trade wasdominated bythefact that theGerman market received
212000hiofalcohol ,ofwhich 195000hicame from Italy and
17000hifrom Belgium .
SeeTable M.19a .ofPart II

-140-
Outlook
Thepressure created byCommunity measures andtheprecedents setby
recent Court judgements should result inthefurther dismantling of
monopolies andother forms ofnational market organizations ,al­
though this mayunfortunately disturb thesector even more .

-141 -
19b .POTATOES (1)
1.Introduction
Nocommon market organization yetexists forpotatoes .Aproposal
waspresented bytheCommission totheCouncil on23January 1976
concerning thewhole range offresh andprocessed products .-
Theproposal provides for :
-marketing standards ;
-measures promoting theformation ofproducer groups ;
support measures aimed atmarket stability ;
-asystem oftrade with non-member countries including arefer­
ence price system fornewpotatoes .
Products such aspotato starch (2),dehydrated potatoes (3)and
products processed from potatoes (4)arealready subject toacommon
market organization .Themarketing ofseed potatoes issubject toa
Council Directive (5).
2.Production -
According toFAOstatistics ,theworld harvest in1977 was
292938000tonnes .TheCommunity ,with aproduction of38826000 ,
grew about 13%oftheworld total .Theaverage yield perhectare ia
theEEC isalmost double theworld yield perhectare .
Thevalue ofpotato production represented about 7%ofthevalue of
crop production and2.9% ofthevalue oftotal agricultural produc­
tion intheCommunity .Thelatest statistics show that thenumber
ofholdings which grow potatoes isabout 2.4million (intheen­
larged Community ).Atnational level theproduction structure is
very variable ,theaverage crop area perfarm being 5.3hainthe
United Kingdom andabout 0.4hainFrance andItaly .
(1)See Tables M.19b .1toM.19.b.3ofPart II
(2)Regulation (EEC)120/67of13.6.1967 ,OJL117of19.6.1967 ,
p.2209 .
(3)Council Regulation (EEC)1420/75of26.5.1975 ,OJL141 ,3.6.1975 .
(4)Council Regulation (EEC)516/77of14.3.1977 ,OJL73,21.3.1977 .
(5)Consolidated version ofCouncil Directive of14.6.1966 ,OJ66,
8.6.1966 ,p.35.

-142 -
Since theperiod from 1951 to1955 ,thetotal area under potatoes in
theEEChasdropped byabout 60% :3512000hain1951 /55compared
with 1418000hain1977 .Because oftheincrease inyield per ha,
however ,production hasfallen byonly onethird approximately
(61957000 tin1951-55 ;38826000tin1977 ).
TheCommunity isbasically self-sufficient .However ,there have
been supply problems following very dryyears (in1975 about 33
million tandin1976 about 29million t).
Both thearea under newpotatoes (about 125000ha)andtheproduc­
tion ofnewpotatoes (about 2million t)have remained almost the
same over thepast 10years .There isashortage o'fhome-grown
products inthis sector ,however ,because theCommunity imports
about 400000 tperyear .
In1976 thearea under seed potatoes intheEECwasabout 103000 ha .
About 3million tofseed potatoes were produced ,mainly inthe
Netherlands ,theUnited Kingdom ,France andGermany .
Processed products (crisps ,puree ,French fried potatoes ,etc.)are
also important inthepotato sector .About 3million tonnes of
fresh potatoes areprocessed annually intheEEC .Some varieties
areparticularly suited toprocessing andthey aremainly grown
under contracts concluded between thefarmers andtheprocessing
industry .Thesector hasdeveloped very rapidly butproduction
seems tohave stabilized forthetime being .Thebasis exists,'
however ,forfurther expansion inthis sector inthevery near
future .
Consumption
Unprocessed potatoes areused mainly asfoodstuffs .They areem­
ployed toalesser extent inanimal feed .Thequantities turned by
theprocessing industry into products forhuman consumption re­
present about 14%oftotal human consumption .
(a)Human consumption
Percapita consumption ofpotatoes inthenatural state has
tended todiminish over thelast fewyears .Ithasgone from
109kgin1956 to69.1 kgin1976 /77.
(b)Animal feed
Theamount used inanimal feed depends onthevolume ofthe
harvest .In1975 /76itwas 5240000 tintheEEC .In1977 it
was4731000t,including 2991000tinGermany ,319000tin
France ,380000 tinItaly ,and490000tinIreland .

-143 -
(c)Products processed forhuman consumption
Theconsumption ofproducts processed from potatoes continues
toincrease .In1977 about 2.8million tonnes were processed .
Consumption ofcertain products such asfrozen pre-cooked
products should increase further .
4.Trade
Intra-Community trade inpotatoes represents only about 4%oftotal
production while trade inseed potatoes andnewpotatoes stands at .
between 12and15% .Themain netexporting countries arethe
Netherlands ,France andIreland .TheUnited Kingdom exports seed
potatoes andimports newpotatoes .Italy exports newpotatoes and
imports seed potatoes andware potatoes .Denmark andtheBLEU also
have aconsiderable import-export trade .
Thestructure ofCommunity trade inprocessed products issimilar to
that inunprocessed products .Themain exporting countries arethe
Netherlands andFrance while theother countries areimporters .
Trade with non-EEC countires ismainly inseed potatoes andnew
potatoes .TheEECexports seed potatoes toSouth America ,Africa
andAsia andimports newpotatoes from thecountries inthe
Mediterranean bassin .
5. Prices
Prices arevery unstable ,varying from year toyear .Thereasons
aretheinelasticity ofthedemand curve andthenegative effect of
plentiful harvests ontheprice levels .In1977/78,following a
good harvest intheCommunity after twoyears ofdrought ,potato
prices fell tovery lowlevels ,inparticular ontheRotterdam and
Arras markets .OntheRotterdam market theprice was2.68 u.a .per
100kgon13.9.1977 ;4.92 u.a .per100kgon7.6.1978 .Onthe
Arras market theprice was2.83 u.a .per100kgon13.9.1977 and
1.44 u.a .per100kgon7.6.1978 .During thesame marketing year
(1977/78)theprices ontheAmerican markets inNewYork andChicago
were about 6u.a .and9u.a .per100kgrespectively .Theprice of
newpotatoes ismuch higher than theprice ofware potatoes .The
same comment canbemade with regard totheprice ofseed potatoes
which isatleast five times higher than that ofware potatoes .

-144 -
6.Outlook
The 1977 /78marketing year wasoneofvery lowprices .Because of
thelarge harvest inFrance thelevel ofpices wasvery lowandnew
potatoes also had avery difficult marketing year .
According toprovisional data from theSOEC ,thearea under potatoes
in1978 wasmuch smaller than in1977 (1418000hain1977 ,
1318000hain1978 (-7.5% ).Ontheother hand ,since rainfall
wasadequate inthesummer of1978 ,theharvest should bealmost the
same asinthe previous marketing year (about 38million t).Asa
result ofthenormal harvest and thepressure onthenewpotato
supply markets ,the1978 /79marketing year opened with lowprices
(about 4u.a .per 100kginRotterdam on5September :Bintje
+50mm).
Prices will probably remain very lowonthevarious European markets .
until Christmas .
Other factors mayaffect thelong-term market .Itappears that
blight hascaused damage insome regions oftheCommunity .This
could give rise tostorage problems inthefuture andconsequent
price increases .However ,more precise information onthequality
ofthe stocks must beawaited .
7.Economic aspects
Intheabsence ofCommunity jparket .regulations inthesector ,steps
have been taken bysome Member States toremove thedifficulties
affecting markets insome regions oftheCommunity where supplies
have faroutstripped demand .

-145 -
19c .SHEEPMEAT (1)
1.Sheep numbers
In1977 thenumber ofsheep intheCommunity continued toincrease
slowly aS"ithadbeen doing almost uninterruptedly since 1970 (1977/
70+10%).Sheep numbers increased inalltheMember States except
Denmark andIreland .
2.Production
In1977 Community production continued onthedownward trend which
hadbegun in1976 .This downward movement must beconsidered as
temporary because themedium-term upward movement should beresumed
from 1978 onwards (seepoint 6).
Production fell most sharply intheUnited Kingdom because ewe-lambs
were kept forbreeding ;this reduction must therefore beconsidered
astheresult ofanincrease innumbers .
The situation isthe same inFrance .
Production wasstatic intheother Member States except Germany and
Italy . -
3.Consumption
.Asin1976 ,consumption ofsheepmeat intheCommunity dropped con­
siderably in1977 .Although consumption hasincreased inallthe
continental Member States ,there hasbeen alarge reduction (-10%)
inconsumption intheUnited Kingdom ,duemainly totheincrease in
market prices .
4.Market prices
In1977 theCorrpunity weighted average market price increased by10%
from 221u.a .per100kgin1976 (2)to244u.a .per 100kg.However
this result conceals divergent trends .There was aslight increase
inFrench prices (9.1% )and aconsiderable increase inUKprices
(+21.1% ),these prices being expressed innational currency .
Thus ,thetrend which hadbegun inprevious years wascontinued ,
i.e. thedifference between theFrench andUKmarket prices has
diminished further .Therelationship between these twoprices went
from 46%in1975 to49%in1976 and55%in1977 (3).
(1)SeeTables M.19 .C.1toM.19 .C.7ofpart II.
(2)Average market prices intheMember States converted into u.a .at
,thegreen rate andweighted inaccordance with thesize offlocks .
(3)Based ontheconversion ofmarket prices atthecommercial rate .

-146
Trade
(a)Trade with non-member countries
In1977total Community imports ofliveanimals andsheepmeat
wereslightly lower thanin1976 .Although imports fromNew
Zealand remained stable andimports fromArgentina andPoland
'wereup,there wasasharp reduction inimports fromAustralia
andBulgaria (which found newoutlets incertain countries ,
mainly intheMiddle East )andUruguay .
Imports byproduct categories were asfollows (indecreasing
order ):
-Liveanimals : Hungary ,Poland ,theGerman Democratic
Republic ,Bulgaria ,Romania (1).
-Fresh meat :- Yugoslavia ,Czechoslovakia (1),Spain (1),
Bulgaria (1). ,
-Frozen meat :. NewZealand ,Argentina ,Australia ,Uruguay ,
Brazil ,
I
TheUnited Kingdom ,with 216470t(1976 :225000t),isstill
byfartheleading importer intheCommunity .
With theexception ofItaly ,which imported less (18760t
compared with 19860tin1976 ),thecontinental Member States
imported almost thesamequantities in1977 asintheprevious
year :
Germany imported 20410t,including 13600tfromArgentina ,
France :5870t,BLEU 4320tandtheNetherlands 1180t.
In1977 theCommunity exported 5000tofsheepmeat ,
1600tgoing toSwitzerland and 1200ttoAlgeria .Of
this total ,3700twere exported bytheUnited Kingdom
and900 tbyIreland . .
(b)Intra-Community trade
In1977 thevolume oftrade increased further to92830t
(compared with 78090tin1976).Itcontinued tobedominated
byaflow ofsome 50000t(43000tin1976 )towards France
from theUnited Kingdom (20000t),theNetherlands (16500t),
theFederal Republic ofGermany (10000t)andIreland (2000t)
Only UKexports increased in1977 . .
TheUnited Kingdom also exported 13000totheBLEU and16000
toGermany .
Irish exports (7000t)remained stable onthewhole .
(1)Quantities notexceeding 1000t/year carcase weight .

-147 -
6.Provisional estimate for1978 andoutlook for1979
-,In1978 production increased appreciably inalltheMember
States .This movement wasparticularly evident intheUnited
Kingdom andshould continue in1979 .
With regard toconsumption in1978 and1979 itisestimated
that :
-onthecontinent (except inDenmark )thesteady upward
movement will continue ;
-intheUnited Kingdom thedownward movement will bechecked
because less redmeat ofother kinds will beavailable ;
-there will beasharp reduction inIreland asaresult of
theFrench market being opened togood quality Irish meat .
These divergent movements should result inanoverall increase
inCommunity consumption in1979 .
There was aconsiderable increase inmarket prices inIreland
andintheUnited Kingdom in1978 .
In1979 thesame trends areexpected tocontinue .Thus thediffer­
ence between UKprices andFrench prices (seepoint 4)should
continue todiminish .
In1978 total imports from non-member countries should fall by
10-15% ;incontrast ,intra-Community trade should continue to
expand .There should bpasharp increase inexports from
Ireland toFrance .These areexpected toexceed 10000 t
(compared with 2000tin1977 ).
Thedrop inexports from theUnited Kingdom toFrance will beoffset
byanincrease intrade with theBenelux countries ,Germany and
Ireland (live animals from Northern Ireland ).
7.Self-supply rate
TheCommunity self-supply rate istending toincrease slightly over
thelong term ,ascanbeseen from thefollowing :
1973 59.3%
1974 66.4%
1975 63.1%
1976 64.0%
1977 63.8%
1978 66.9% (provisional )
1979 68.3% (estimates )
(1)Where theincrease inquality exports hasreached 80% .

-148 -
Situation innon-member countries -
In1977 sheep numbers increased considerably inNewZealand and in
theEuropean countries with State-run economies .Asregards Western
Europe ,itwill benoted that inSpain numbers have continued on
their long-term downward trend .
NewZealand with 400000 tcarcase weight isstill theleading world
exporter ofsheepmeat .Theother main world suppliers areAustralia
(242000 t)andArgentina (45000 t).Ofthenon-member countries ,
themain importers ofsheepmeat areJapan with 290000t(carcase
weight ),theMiddle East with 240000 tandtheUSSR with 130000 t.
There isastrong demand from Middle Eastern markets ,mainly for
live animals and mutton .
In1978 NewZealand should export more (420000 t),thanks toin­
creased purchases byMiddle Eastern countries (also Greece toa
lesser extent ),while exports from other supplier countries should
remain atastandstill .
This being thecase ,theprice level should remain stable orin­
crease slightly ontheinternational market .

-149 -
λ
19d .HONEY
1.Introduction
Honey isnotsubject toacommon market organization .Theonly
general charge onimports isa27%customs duty ,which isreduced to
25%inthecase ofcertain developing countries .
2.Production ,consumption andtrade
In1976 /77theEECproduced 55000 tofhoney andimported 77000
tonnes .Germany alone produced 40%ofCommunity supplies in1976 /77
andFrance contributed 27%ofthetotal product .
TheFederal Republic ofGermany isalso thebiggest importer (60%)
intheEEC ,followed bytheUnited Kingdom (17%).TheEECproduces
only 42%ofitsrequirements buttheamounts produced bytheMember
States differ widely .Basically theEECmaybedivided into those
countries with ahigh degree ofself-supply (France ,Italy and
Denmark )andthose dependent onimports formost oftheir require­
ments .France increases itsdegree ofself-supply byapplying
quantitative restrictions tohoney imports from certain countries
-andbyapplying Article 115oftheTreaty ofRome ^(protective clause )
toothers .
Thedivergent trade policies oftheMember States make itdifficult
tosetupacommon market' organization .
3.Common measures toassist beekeeping
Between 1968 and1973 theCommunity granted indirect aidtobee­
keepers intheform ofapremium fordenatured sugar intended as
food forbees .This aidwasabolished in1974 because ofthesugar
shortage .In1976 theEECgranted direct aidamounting to2.5
million u.a .toassociations ofbeekeepers ;this ,aidcame from
special funds voted bytheEuropean Parliament andnotfrom the
EAGGF budget .
Inview ofthesugar supplies currently available ,theEECagain
granted apremium fordenatured sugar tobeused asfood aidfor
bees ,asin1978 .
Foreach ofthese twoyears theappropriations forthis premium
amounted to2.5million u.a .
_SeeTable M.19.d .ofpart II.

-150-
SURVEY OFCERTAIN SECTORAL GROUPS

-151 -
20 .MEAT
1.Gross meat production within theCommunity
Community gross production ofallmeat in1977 reflects thechanges
that have come about inthethree largest sectors :beef andveal ,
pigmeat andpoultrymeat .Itincreased from 20.6million tonnes in
1976 to20.9 million tonnes in1977 (+1.8% ).
Thebreakdown 6fthis figure isasfollows :
pigmeat 42.2 /4
beef andveal 30.3a
poultrymeat 16.3A
sheepmeat andgoat meat 2.3a
horse meat 0.3%
other meat (rabbit andgame )2.4%
offal 6.2%
100.0%
Comparison ofthese data with those forprevious years brings out
thefollowing general points :
-pigmeat continues toadvance ,largely asaresult ofthesteady
improvement inproduction structures ;
-beef andveal production isdeclining ;
-themarket share ofalltheother types ofmeat remains un­
changed .
Meat production
(a)Pigmeat production in1977 ,at8.9million tonnes ,wasabout
4.4% upon1976 (8.6million tonnes ).
In1978 ,although thepigmeat production cycle wasduetoenter
thedownward phase ,there wasanincrease which wasparticu­
larly marked during thesecond half oftheyear .
This phenomenon canbeattributed tothevery favourable situ­
ation onthemarket infeedingstuf fsandtheprominence acquired
recently bysubstitutes forfodder cereals inthecomposition
offeed rations .These favourable production conditions will
entail afurther increase inslaughterings ,atleast during the
first half of1979 .
SeeTables M.20.1 toM.20.4ofPart II.

-152 -
(b)Beef andveal >
In1977 gross Community production ofbeef andveal together
totalled 1.9% less than in1976 .This decrease inproduction
follows thedownward cycle which began in1976 (2.4% down on
1975 ),butmainly ,reflects adrop inbeef production (-3.3% ),
forveal production hasincreased .
Themain reason forrising veal production istheincrease in
theaverage slaughter weight .
During thefirst half of1978 beef production was slightly
lower than in1977 ,while veal production wasslightly higher .
Total Community production ofbeef andveal isestimated at
about 6.3million tonnes for1978 ,i.e. comparable with the
1977 total .
Forecasts atpresent suggest a-cyclical upturn inbeef andveal
production beginning in1980 .\
(c)Poultrymeat
In1977 poultrymeat production totalled 3.'pillion tonnes ,
3.5% mope than in1976 .Price levels contii..-od toberelatively
attractive for producers in1977 ,which encoutv^od production .
There wasa6%increase in1977 inparent stock io/'ikeprod­
uction oftable chickens .This upward trend continut v\n1978 .
v
(d)Sheepmeat andgoat meat
Production ofsheepmeat continued todecline in1977 (484000
tonnes ascompared with 499000in1976 ,adecrease of3%).In
1978 ,however ,production haspicked upandseems likely to
continue toexpand inthecoming years .
In1977 thedecline wasmarked intheUnited Kingdom ;inthe
other Member States production remained stable andinItaly and
the Netherlands it increased .
(e)Horse meat
Production continued toincrease in1977 (68000tonnes as
compared with 61000 tin1976 ,i.e. +11.6% ).Itisdifficult
topredict thefuture trend ;itisinteresting ,however ,to
note that production hasincreased significantly fortwo suc­
cessive years (+24.7% in1976 over 1975 )after along period
ofdecline .OV

-153
(f)Other meat
Production ofgame andrabbit increased slightly in1977
(+0.8% ).Production seems likely tostabilize inthelong
term ataround 0.5million tonnes .
However ,thepresent situation asregards feed prices could
encourage thedevelopment ofrabbit production ,which isnow
arousing some interest among Community operators .
(g)Edible offals
Production isdependent onthenumber ofslaughterings of
cattle ,pigs andsheep .In1977 ,1.3million tonnes were
produced ,2.1% more than in1976 (1.272 million tonnes ).
Meat consumption intheCommunity •(
In1977 percapita consumption ofmeat (83.9 kg)increased more than
inprevious years (+1.8% compared with 1976 ).
Theincrease wasmainly intheconsumption ofpigmeat (+3%)and
poultrymeat (+2%).Broadly speaking ,thepercentages forthecon­
sumption ofeach type ofmeat were thesame asintheprevious year ;
aslight drop canbeseen ,however ,inbeef andveal consumption and
aslight increase inpigmeat consumption .
Consumption ofthevarious meats .(asapercentage of'total)'
Pigmeat
Beef and veal
Poultrymeat
Sheepmeat andgoat meat
Horse meat
Other meat (rabbit andgame )
Offal
Total meat40.5%
30.3%
14.0%
3.5%
1.2%
2.6%
7.0%
100.0%
(a)Pigmeat
In1977 pigmeat wasinabundant supply atmoderate prices ,
which ledtoafurther increase inconsumption (34kgperhead ,
ascompared with 33kgin1976 ).

-154 -
Germany ,with almost 53kgpercapita ,remains theCommunity s
largest consumer ;Italy ,although itsconsumption again inc­
reased substantially (20.1 kgpercapita in1977 ,asagainst
18.8 kgpercapita in1976),still consumes theleast pigmeat
*.intheCommunity .
Theproportion ofpigmeat intotal meat consumption inthe
Community wasslightly higher (40.5% in1977 ,ascompared with
40.2% in1976 ).
Asforthefuture ,pigmeat islikely toconsolidate itsposition
vis-a-vis the other meats .
(b)Beef andveal
Although still curbed bythe persistent economic difficulties ,
total consumption ofbeef andveal increased byabout 1%in
1977 ,mainly because ofthelarge stocks available .After
remaining steady from 1974 to1976 ,percapita consumption rose
to25.4 kg,i.e. the1970 level .
Nonetheless theproportion ofbeef andveal intheCommunity 's
total meat consumption again dropped slightly ,to30.3% as
compared with 30.5% in1976 .
Since 1976 ,France hasbeen thelargest consumer (31.6 kgper
capita in1977 ).Denmark remains thesmallest consumer ofbeef
andveal :16.8 kgpercapita in1976 ,falling to15.1 kg ,in
1977 .
Inthemedium term avery slight increase inbeef andveal
consumption canbeexpected ,since account must betaken of
widespread unemployment ,theslow rate ofpopulation growth ,
thehigh level ofproduction ofother types ofmeat andthe
high price ofbeef andveal .
(c)Poultrymeat
In1977 consumption ofpoultrymeat continued toincrease (12.5 kg
percapita ascompared with 12.3 kgin1976 ).
Since 1973 ,theadvance hasbeen slow butsteady (11.8 kgin
1973 ).Asapercentage oftotal meat consumed ,poultrymeat
remains atabout 15% .
(d)Sheepmeat andgoat meat
Thetrends which hademerged inrecent years andmore particu­
larly in1976 were confirmed in1977 .Community consumption of
sheepmeat aga.in declined in1977 ,theincrease intheconti­
nental Member States failing tooffset thesubstantial drop
(-10%)intheUnited Kingdom .

-155 -
In1978 and1979 thesteady upward trend isexpected tocon­
tinue onthecontinent .InIreland ,however ,consumption is
expected todecline considerably asaresult oftheopening of
theFrench market togood quality Irish meat .
Thedownward trend intheUnited Kingdom islikely tobechecked
assheepmeat production picks up;animprovement canbeseen
inthat Member State inparticular .
(e)Horse meat
Consumption remained atabout 1kgpercapita in1977 .Asa
percentage oftotal meat consumption itremained around 1%.
Thedifferences from onecountry toanother continue tobemuch
thesame asbefore ;thelargest horse-meat consumer isthe
BLEU :3.9kgpercapita .
Virtually nohorse meat iseaten intheFederal Republic of
Germany ,theUnited Kingdom orIreland .
(f)Other meats
Consumption ofrabbit andgame intheCommunity hasremained
almost unchanged since 1971 ,at2.2kgpercapita .
France remains byfarthelargest consumer (5.8kgpercapita ),
although since 1975 consumption hassteadily declined .
Consumption ofrabbit andgame isnegligible intheNetherlands ,
theUnited Kingdom andIreland .
Asapercentage oftotal meat consumed ,rabbit andgame have
decreased slightly :2.6% in1977 ,ascompared with 2.7% in
1976 .
(g)Edible offals
At5.9kgpercapita ,consumption ofedible offals isincreasing
.(5.7kgin1976 ),asisitspercentage oftotal meat con­
sumption (7%in1977 and6.9% in1976 ).
Ireland eats themost offals (15.7 kgpercapita );atthe
other endofthescale isItaly with apercapita consumption
ofonly 3.3kg.
Self-supply inmeat "
Community meat production meets some 96%ofoverall Community
requirements .This rate ofself-supply hasbeen stable for a
number ofyears .There arequite large differences from one
category ofmeat toanother ,however :there hasbeen aninc­
rease formost categories but amarked decrease intheself-
supply rate forbeef andveal .
*
Thelowest rate ofself-supply isstill inhorse meat (27.1% )
andthehighest isinpoultrymeat (105.4% ).

-156 -
TheCommunity remains amajor netimporter ofmeat ,with a
deficit ofabout 680000tonnes .This figure remains relat­
ively stable since it isdetermined bytheself-supply situ­
ation .
Expenditure onthemanagement ofthemeat markets
Only beef andveal ,pigmeat andpoultrymeat aresubject tocommon
market organization andtherefore financed bytheEAGGF Guarantee
Section .
These represent nearly 89%ofallmeat andedible offals produced
within theCommunity :pigmeat 42.2% ,beef andveal 30.3% andpoultry -
meat 16.3% .Expenditure onthemanagement ofthethree markets
totalled 465million u.a .in1977 ,broken down asfollows :
pigmeat
beef and veal
poultrymeat31.9 million u.a .(6.9% )
410.8 million u.a .(88.3% )
22.3 million u.a .(4.8% )

-157 -
21.OILS AND FATS
1.Introduction
The oils and fats sector comprises :
oils andfats ofvegetable origin ,which must besubdivided ,in
view ofthestructural market differences ,into olive oil ,on
theonehand andallother vegetable oils ontheother ;
oils andfats ofanimal origin ,which again must besubdivided
between butter ,ontheonehand ,andlard andtallow onthe
other ; \
oils and fats ofmarine animals .
Theabove arethebasic rawmaterials ,butthey maybeconsumed as
they are ,orintheform ofprepared oils andfats ,such asmarga­
rine ;they maybeused foranimal orhuman consumption ,orin
industry orthey maybeincorporated into other products .Further ,
depending onend-use ,the various basic products arelargely inter­
changeable .Theform ofend-use varies considerably within the
Community .Forexample ,intheNorthern countries ,consumption of
oils andfats islargely intheform ofbutter andmargarine ,whereas
inFrance andItaly ,oils andfats consumption ispreponderantly in
theform offluid vegetable oils .
Theimportance ofthedifferent .categories intotal human con­
sumption varies only slightly from year toyear .Thefollowing
table shows thequantities ofthevarious categories ofoils and
fats consumed in1975 and1976 andthepercentages oftotal con­
sumption which they account for .
TABLE I
Human consumption ofeach category ofoils andfats inabsolute
terms andasapercentage oftotal human consumption .
'000 t
1.Vegetable oils andfats
2.Oils and fats ofland animals
3.Oils and fats ofmarine animals
4.ButterQuant
1975
3250
1234
361
1402:ity
1976
3452
1329
342
1370Percer
1975
51.3
20.9
5.7
22.1itage
1976
53.2
20.4
5.3
21.1
TOTAL '6337 *6493 ':ioo% ;:ioo% :
SeeTables M.21.1 andM.21.2 ofpart II.

-158 -
Different policies are a
products .Inthevegeta
Community free ofduty .
10%to15% ,butlower or
from associated countries
oilimported assuch .olicies areapplied intheCommunity foreachcategory of
Inthevegetable oilsector ,alloilseeds enter the
reeofduty .Oils aresubject toduties ranging from
butlower orzerotariffs areapplied tooil^mPor^rnnntries -andthese imports represent upto70/ooi
Hence vegetable oilprices intheCommunity ,apart fromolive oil ,
tendtobeatworld market level .Similarly ,oilsandfatsof
marine andlandanimal origin aresubject torelatively lowimport
duties .Forbothbutter andolive oil ,however ,there aresuppo
prices fixed within theCommunity ,andimports ares"bJectt0a
levy .Thisdiversity ofpolicy regarding products which arenatur
allyinterchangeable hasaninevitable effect onconsumption .
Factors external tothesector mayalsoaffect therelationship
between thevarious oils andfatsavailable andhence their con­
sumption figures .Forinstance ,thedrought which hittheCommunityin1976ledtoanincrease intheuseofoilcake .Theveryhigh
demand resulted inan11%increase within ayear inthequantitiessumption figures .Forinstance ,tnearougut wuu .^in1976ledtoanincrease intheuseofoilcake .Theveryhigh
demand resulted inan11%increase within ayear inthequantities
ofseedcrushed inCommunity oilmills ;thismeant thatavailabil
ities ofvegetable oilsalsoexpanded ,hence thegreater consumptioi greater consumption
ofthese oils .
Production
Thefactors 'determining Community production ofoils andfatsvary
according tothecategory concerned .
Ofthetotal quantity ofoilseeds crushed intheCommunity ,soya
represents between 70and75%..Soya ismainly processed forits
oilmeal content ,which represents 80%ofitsvolume .Itsoilisa
secondary product which nonetheless ,amounting toover 1.5million
tonnes annually ,equals onethird ofCommunity vegetable oilrequire­
ments .Between 25and30%ofourvegetable oilproduction derives
from other oilseeds crushed within theCommunity ,andtheremainder
isimported intheform ofoil .Ofthetotal quantity ofseed
crushed (12.5million tonnes in1976 )about 10%isofCommunity
According toofficial figures ,production ofvegetable oils inthe
Community ,excluding olive oil ,totalled 3526000tonnes in1976 .
Production ofolive oilusually ranges from 400000to600000
tonnes annually intheCommunity .Since olive trees areperennial
plants ,output depends notondemand ,butmainly onclimatic con-
Output ofoils andfatsderived from landanimals -mainly lard and
tallow -amounts tonearly 2million tonnes annually .Inthis
category again ,insofar asthese fatsrepresent aby-product ofthe
slaughtering industry ,itislargely thesize ofthelivestock
population ,andthedemand formeat ,which determines theoutput of
these fats .Thequantity produced in1976 totalled 1946000origin .
ditions .
tonnes .

-159 -
Theproduction ofoils andfatsderived frommarine animals is
mainly concentrated inDenmark ,although ,theUnited Kingdom and
Germany also contribute toCommunity output .In1976production
totalled 125000tonnes ascompared with 131000tonnes in1975 .
Thefactors which determine butter production intheCommunity are
thenumber ofcows ,themilk yield anddemand formilk andcheese .
TheCommunity ismore than self-sufficient inbutter ,forwhich
demand isstagnant ordeclining .Sohere again demand isnotthe
sole factor determining output .In1976 butter production totalled
1745000tonnes ,ascompared with 1719000tonnes in1975 .
Consumption ,
Thelevel ofconsumption ofoils andfats intheCommunity is
determined ,aselsewhere ,bythefollowing factors :
absolute level andrate ofgrowth ofpopulation
absolute level anddevelopment ofincomes
price andavailability oftheproduct
level ofconsumption already attained .
Within theCommunity thepopulation isgrowing only slowly .The
level ofeconomic development ,while high compared tomuch ofthe
world ,hasbeen relatively stagnant over thepast fewyears .Per
capita consumption ofoils andfats (excluding butter ),fell between
1974 and1975 from 19.5 kgperhead to19.1 kgperhead ,largely
because ofthedramatic increase intheprice ofoils andfats
between thetwoyears inquestion ,androse again to19.8 kgper
head in1976 .
Apparent human consumption ofoils andfats ofland mammals has
remained relatively stable since 1975 ,atabout 1.2million tonnes ,,
or5.1 kg/head .Consumption ofoils andfats ofmarine animals
amounted to342000tonnes or1.3kg/head in1976 ,asagainst 368000
tonnes in1975 .
According toofficial statistics ,apparent consumption ofallvege­
table oils andfats ,except olive oil ,amounted to3452000tonnes
in1976 ,about thesame asin1975 .
Trade estimates putitmuch higher ,however :4.3million tonnes .
In1974 consumption ofolive oildeclined intheCommunity ,since
itsincrease inprice waseven higher than theincrease forcom­
peting vegetable oils .When theprice forother oils fell in1975 ,
that ofolive oil ,being fixed ,could notfollow thetrend ,and
consumption continued todecrease .
As .regards butter ,percapita consumption hasbeen declining since
1974 andstood at5.3kgin1976 ,oneofthereasons being theprice
trends forthecompeting products mentioned above .

-160 -
Th„,,c*ofbatter within theCommunity declined from 1798000Theuseofbutter vitni 7J3w ,nm1 Thls
^Ughtd^wouSd havebeengreater ifspecial measures hadnotbeen
taken topromote consumption ofthisproduct .
Trade
Asmentioned above ,theCommunity imports themajor partofits
vegetable oilrequirements ,(apart fromolive oil)ineither
oroilform .Imports aretherefore anexact reflection ofdemand -
butdemand forprotein-rich oilcake aswell asdemand foroil .In
1974thetotal quantity ofoilseeds imported andcrushed inthe
Community rose -butthemajor partoftheincrease wasaccounted
forbysoyabeans which ,asalready stated ,tendtobePr°ce^edfor
their protein content .In1975thedropindemand foroii ,asa
result ofthehighprices thereof during 1974 ,caused irnPQ^ofoilseeds tofallslightly ,butthistrend wasreversed in1976 .As
regards vegetable oilimported assuch ,thetotal rosefrom 1652000
tonnes in1975to1782000tonnes in1976 .Community ex?°'t®°fQ00vegetable oilsrepresent 12to14%oftotal supply averaging 600000
to700 000 tonnes per year .
I •
Trade inoilsandfatsoflandmammals isrelatively insignificant
since theCommunity 'sdegree ofself-supply inthis sector is /<>.
Exports arenegligible .
Thesituation inrespect offats andoils derived from
animals isquite different .Imports represent between 70and80/„of
total consumption ,butinfact ,si.nce Community production hasbeen
increasing ,imports havefluctuated inresponse todemand oraccor­
dingtoavailability world-wide .Imports dropped from405000
tonnes in1975 to393000in1976 .
Although theCommunity ismorethan100%self-sufficient inbutter ,
itnonetheless imports between 120000and160000tonnes .The
major part ofthese imports result frominternational commitments
taken onbytheCommunity vis-a-visNewZealand in1973 .Exports
arepartly intheformoffoodaidandpartly soldatworld market
prices with theaidofexport refunds .
Theprésent situation
Official statistics arenotavailable for1977 ontheoils andfats
sector ,butfromtheinformation available somedeductions maybe
made .
Thequantity ofoilseeds crushed intheCommunity rose substan­
tially ,asaresult oftheincreased demand foroilcake andabundant
supply ofsoyabeans .Apparent consumption ofoilshould bewell
above thelow1974 and1975 levels .Consumption ofolive oilagain
declined .

-161 -
Output anddemand foranimal andmarine oilsandfatsappear tohave
remained rather static in1977while consumption ofbutter fell .It
would thus appear that theincrease indemand consequent upon fal­
ling prices andaslightly improved economic situation wassatis­
fiedbyvegetable oils andfats ,consumption ofwhich rose .
/
Prices
Asindicated earlier ,prices intheoils andfats sector tend tobe
atworld market level forallofthe products concerned except
olive oilandbutter ,forwhich prices arefixed within theCommunity .
Thefollowing table sets outprices quoted atRotterdam forsoya
oil ,theeffective price leader forvegetable oils ,lard ,tallow and
marine oils .
TABLE II
Prices ofselected oils quoted atRotterdam ($/t)
:1973
-•:1974 :
• «:1975 ::1976 :
\:1977 i:1978 :
:(Aug .):
:Soya oil (Dutch ) :436 :832 ::563 ::438 ::523 ::575 :
:Lard :373 :602 ;:479 ::480 ::618 ::611:
:Tallow (US) :,356 ;448 ::340 ::377 ::421 :509 :
:Fish oil (anyorigin ) :342 :559 ::344 ::373 ::472 :430 :
• «
• «
During thesame period ,theprices fixed forbutter andolive oil
were asfollows :
TABLE III
u.a. /100kg
Olive oilmarket target price
1972 /73 1973 /74 1974 /75 1975 /76 1976 /77 1977 /78
79.60 95.00 101.86 * 149.96 144.89 141.91
Butter -intervention price • j. " .
186.00 176.00 183.58 209.58 * 223.80 * 230.95
\
Where twoprices were fixed during themarketing year ,thehighest
price isshown .

-162 -
Outlook for 1978 /79
World prices foroils andfats were higher in1977 and 1978 than in
1976 because of strong demand ,particularly from India .The indi­
cation atpresent isthat demand will remain stable ,but inview of
theforecasts ofavailabilities in1978 /79afall inprices cannot
beruled out ,andthis could lead toanincrease inconsumption .
Forolive oilandforbutter ,however ,theprospects areless encourag­
ing ,asconsumption ofthese products will presumably beadversely
affected bytheprices expected forcompeting products .

-163 -
22 .FEEDINGSTUFFS
1.Supply andconsumption in1977
Conditions ofsupply were particularly good in1977 forboth energy-giving
rawmaterials andproteins .
Soya wasgenerally inplentiful supply following therecord harvests in
.theUnited States and theadoption ofanactive export policy byBrazil .
This didnotprevent soya oilcake prices from varying considerably ,
some ofthereasons being monetary fluctuations ofthedollar ,a"strike
intheUnited States ,therate ofcover factories ,theavailability of
transport ,etc .
Themarket incereals wasparticularly buoyant ;theraising ofprices
bytheCouncil toalevel regarded asaverage andthesimplification of
themarket organization helped toestablish this security ofsupply .
Industrial consumption ofcereals remained steady . .
Thevolume ofoilcake used foranimal feed wasslightly greater than
in1976 ,when itshowed asudden andvery large increase over theprevious
year .Thelargest percentage increase was intheconsumption ofoilcakes
made from colza (rape )andsunflower .
Consumption ofskimmed milk powder increased byabout 5%,while thehigh
prices offishmeal reduced consumption thereof .
2.Production ofcompound feedingstuffs
From 1970 to1977 production ofindustrial feedingstuffs more than
doubled ,rising from 33million ttoover 67million t.There were
however ,large differences from onetype ordestination toanother .
Forinstance ,production offeed forpoultry increased byonly 69% ,
ascompared with a92%increase infeed forpigs ,161% forcattle and
sucking calves and159% forother animals .
In1976 production increased considerably compared with 1975 :ata
rate of12,8% .Economic circles agreed that thereason forthepheno­
menon wasthedrought ,especially after thetwoprevious years of
stable production .
«t•/«•»
1Seetables M.22.1 toM.22.8 ofPart II.

164 ~
that thelevel ofproduction achieved
-II Nation *however ,total production ofindustrialContrary toallexpectation , increased bv3.5°/0.This percen -
feedingstuffs wasmaintaine an ti toanother .Theincrease for
tagevaried fromonetyP=0«^42%£or„ttle£eed3.9%andforpoultry feedwas1.3 /4,f°5 will bereflected in1978other feed13.8% .These increases moutput will bereiiect
byanincrease inanimal 1production .
3.Feed requirements oflivestock
In1977livestock feedrequirements were0.7%morethanin1916Calculated inFU).Although there wasasligh dropinthecattle
sector (-0.1%),there wasasubstantial increase inthe .other sectors
(pigs +2.8% ;poultry +1.6%).
Thepercentage ofthere requirements covered byindustrial feedings -
stuffs increases eachyear . ( 0•
Inthecattle sector ,themarket share ofindustrial feeds was10•*%in
1975and13.7% in1977 .Inthepigsector ,thepercentage rose from
66'37to71.2% overthesameperiod ,andinthepoultry sector from
614%to638%.There areofcourse still great -differences fromoneMember State toanother asregards thefeeds used which aredetermined
tosomeextent bythestructure oftheir livestock herds .
Outlook
There islikely tobeadecrease inthetotal Community livestock herd
in1978 ,which would leadtoanoverall dropinfeedrequirements .
Evenassuming a2.5%increase inmilkproduction ,feedrequirements for
thecattle sector willbelower than in1977 .Theforecasts alsopoint
toanoverall decline indemand forpigandpoultry feeds .
TheDirectorate -General forAgriculture estimates thatindustrial produc­
tionofcompound feedingstuf fswillincrease byabout 700000tonnes ,
thisforecast being based onthemarket share ofindustrial feed as
compared withfarm-produced fodder andthecutback inanimal production .

-165 -
Asregards»:hr^«»^; t^t^rrric:sihSr s£r1:y£
of^the^price dropwillnotbefeltbyproducers ,however ,since theother
overheads which makeupthefinal costareexpected .