Opinion of the Economic and Social Committee on the "Proposal for a Council Regulation amending Regulation (EEC) No 2019/93 introducing specific measures for the smaller Aegean islands concerning certain agricultural products"

(2002/C 80/12)

On 26 November 2001 the Council decided to consult the Economic and Social Committee, under Articles 36 and 37 of the Treaty establishing the European Community, on the above-mentioned proposal.

On 27 November 2001, the Bureau of the Economic and Social Committee asked the Section for Agriculture, Rural Development and the Environment to prepare an opinion on the subject.

Owing to the urgent nature of the opinion, the 387th ESC plenary session of 16 and 17 January 2002 (meeting of 16 January) appointed Mr Papamichaïl as rapporteur-general and adopted his opinion by 68 votes for with three abstentions.

1. Introduction - Background

1.1. When the European Council met in Rhodes on 2 and 3 December 1988, it recognised the difficulties certain of the Community's island regions have in making progress in their economic and social development, owing to their isolation, remoteness, small area, geographical relief, small-scale farming activities, lack of economies of scale, dependence, high production and transport costs and climatic conditions.

1.2. The Commission conducted a global study(1) of the specific problems of small Aegean islands (with a population of under 100000) and produced regulatory proposals for the creation of a framework of agricultural measures to be financed under the EAGGF - guarantee and guidance sections. These proposals defined the overall strategy and practical measures for tackling the problems.

1.3. On 12 February 1993, the Council asked the Economic and Social Committee for an opinion on the Commission's draft regulation. On 26 May 1993, the ESC assembly unanimously adopted the opinion, drafted by Mr Spyroudis(2).

1.3.1. On 19 July 1993, having taken into account the Commission's proposal and the views of the European Parliament and the ESC, the Council published Regulation (EC) No 2019/93(3).

1.3.1.1. In 1996, in accordance with Article 15(1) of Regulation (EC) No 2019/93, the Commission submitted its first progress report(4) to the Council and the European Parliament on the implementation of the specific measures for the smaller Aegean islands.

1.3.1.2. In 1998, in accordance with Article 15(1) of Regulation (EC) No 2019/93, the Commission submitted a second report on the implementation of the programme in 1995 to the Council and the European Parliament(5).

1.3.1.3. In accordance with Article 15(1) of Regulation (EC) No 2019/93, the Commission drafted an annual report on the implementation of the programme in 1996 and 1997.

1.3.1.4. The Commission also appointed external consultants (Speed Ltd.) to draw up an evaluation report on the economic situation in the smaller Aegean islands, which also assesses the impact of the measures implemented under the regulation.

1.3.1.5. In accordance with Article 15(2) of Regulation (EC) No 2019/93, the Commission submitted the above-mentioned annual reports and the general evaluation report to the Council and the European Parliament in the form of document COM(2001) 64 final.

1.4. The Commission drafted the present proposed amendment to Regulation (EC) No 2019/93 on the basis of the above, in accordance with the revision clause in Article 15(2) of the regulation.

2. Brief summary of Regulation (EC) No 2019/93

2.1. Regulation (EC) No 2019/93 was intended to ease the problems facing the island regions in the Aegean Sea (islands with populations of under 100000), with relation to specific agricultural products and means of agricultural production. Specific measures were taken to support supply arrangements and local production, with a view to counter-balancing this disadvantage. Provision for financing these measures was made in special Community budget headings (EAGGF - guarantee section appropriations of the order of EUR 25 million a year). It also included a series of structural derogations. Additional amounts were not entered in the budget for these derogations; the cost of financing them was covered by appropriations from the EAGGF - guidance section under the Community Support Framework (CSF).

2.2. Specific supply arrangements (SSA)

The SSAs are designed to offset the additional cost of the supply of certain products, in order to make them available at prices that are fair in comparison with the mainland. The quantities eligible for the SSAs are determined on the basis of forecast supply balances, which are periodically reviewed in accordance with requirements. For the implementation of the SSAs, the islands were classified in two groups, depending on their distance from ports on the Greek mainland. The Community contribution covers 90 % of the cost of the measures and the remaining 10 % is covered by the Member State.

2.3. Measures to support local products

These measures are designed to support traditional local agricultural activities, in arable and livestock farming, to help them meet market demand and to revive certain production sectors for which the Aegean islands traditionally have a natural flair.

2.4. Structural derogations

To improve the effectiveness of agricultural structures, a derogation to Council Regulation 2328/91(6) of 15 July 1991 set out conditions under which aid would be granted for investment in agricultural activities in the smaller Aegean islands. It also provides for the Community contribution to exceed the specified level (50 %) in the case of investment in certain areas of the processing and marketing of agricultural products, with a view to improving the living conditions of the inhabitants.

3. Main points of the proposed amendment

3.1. The adjustments to the regulation suggested by the Commission (in the light of the conclusions of the general evaluation report), in this proposal for an amendment submitted to the Council for adoption, remain within the framework of the estimated appropriations stated in the financial perspectives (approximately EUR 26 million).

3.2. The list of products covered by the specific supply arrangements (SSA) has been revised.

3.2.1. Processed products will be excluded from the prohibition on re-exporting.

3.2.2. The revised regulation will no longer cover fruit and vegetables, referred to in Article 3(2) of Regulation (EC) No 2019/93. According to that article, this aid was to be reduced progressively over five years from 1993 until 1997, the final year of programme implementation. Moreover, the measure turned out to be of little use, as the companies that transport the small quantities consumed on the islands are small and do not have the infrastructure necessary to benefit from the aid.

3.2.3. Furthermore, the amendment does away with SSA measures for products which had limited results (sugar) or zero effect (yoghurt).

3.2.4. It is proposed to give the Commission responsibility for reviewing the list and to simplify the management of the supply balances.

3.2.5. Following the needs analysis, adjustments are proposed for the measures relating to local agricultural products.

3.2.5.1. Making appropriate adjustments, the proposal maintains the systems applying to cattle farming, areas under vines for the production of quality wines psr, olive groves, the cultivation of potatoes for human consumption and seed potatoes, as well as the production of honey of special quality. The breakdown of the sum of financial aid is expressed in euros rather than the ecus provided for in Regulation (EC) No 2019/93:

- EUR 48,3 per head for bovine animals (as opposed to ECU 40);

- EUR 603 per hectare for potatoes (as opposed to ECU 500);

- EUR 476 per hectare for vines (as opposed to ECU 400);

- EUR 145 per hectare for olive groves (as opposed to ECU 120);

- EUR 12 per hive for honey (as opposed to ECU 10 and 7 for two types of producer as provided under Regulation (EC) No 2019/93).

3.2.6. The following is proposed with regard to the quantities eligible for aid:

3.2.6.1. Fattening aid for male bovine animals is set at a ceiling of 12000 animals a year, without applying the corresponding reduction in the amount of aid provided for under Article 4(4) of Regulation (EC) No 1254/1999(7) for overstepping the national ceiling.

3.2.6.2. The ceiling for the number of hives eligible for aid is set at 75000.

3.2.6.3. Responsibility for drafting annual reports on the implementation of the measures provided for in the regulation is transferred from the Commission to the Member State.

3.2.6.4. The Commission will draw up and review the supply balance in accordance with requirements.

3.2.7. Aid that has not proved very effective (storage of local cheeses and ageing of liqueur wines) will be abolished.

3.2.8. Overly costly and complicated aid for fruit and vegetables and flowers, which was moreover not used, will also be abolished.

3.2.9. Although the structural derogations were abolished by Community Regulation (EC) No 1257/1999(8) on rural development, recital 53 of that regulation provides for flexibility, the possibility for adjustments and derogations.

3.2.9.1. On the basis of the above-mentioned recital, it is stated that the overall value of aid may be increased by a maximum 15 percentage points for investments intended to encourage diversification, restructuring, or a move towards sustainable agriculture.

3.2.9.2. Furthermore, the ceiling for investment in small and medium-sized enterprises engaged in processing and marketing local agricultural products has been raised to 65 %.

3.2.10. It is stated that, at the end of every five-year period of implementing the programme measures, the Commission will submit a general report to the Council and the European Parliament, in which it will suggest any appropriate adjustments. This essentially means that revision is possible after five years.

4. General comments

4.1. It is clear that the Commission was guided in its proposed amendment to the Regulation by the conclusions of the reports which it drafted during the first seven years of programme implementation (1993-1999). In general, the ESC views the amendments in a positive light.

4.2. The ESC would draw attention to the contribution of the development of the smaller Aegean islands to the general development of the country. It is in favour of supporting the agricultural sector, not in a isolated way, but as part of an overall plan for the economic and social development of the islands, in order to further the strategic goal of sustainability (viability). A plan of this kind should include specific measures for all sectors of production, such as:

- supporting and developing traditional industries;

- preserving and promoting local culture;

- encouraging investment initiatives;

- taking measures to address seasonal unemployment, such as the development of rural tourism as an alternative to mass tourism and to supplement agricultural income;

- taking decisive action to protect the environment;

- securing energy supplies by using alternative and environmentally sound forms of energy (wind/solar power) and managing water resources efficiently in order to deal with perennial water shortage problems;

- upgrading health and hospital services;

- improving the educational infrastructure;

- providing vocational training;

- securing high quality communications and transport.

4.3. The ESC would reiterate the points made in its earlier opinion(9) on the need for the viable development of fishing and the exploitation of maritime resources, such as sponge fishing and fish farming.

The Committee would also point out the need to secure the conditions for organised participation of:

- social partners;

- farmers' cooperatives;

- professional associations;

- municipal authorities:

with a view to good management, effective checks and balances and the successful implementation of the programme established by the regulation.

4.4. The ESC wonders why the regulation is (geographically) restrictive, covering only the smaller Aegean islands and not all small Greek islands (e.g. Gavdos), the problems of which are at least similar if not identical.

4.5. Given the border position of the Aegean islands, the ESC would also note the need to support customs, port and coastguard services, in order to deal with smuggling, illegal fishing and illegal immigration, which has recently reached massive proportions owing to the wars in Afghanistan and the Middle East.

4.6. Corresponding attention must be given to the issue of peace and security in the region. The ESC believes that it definitely does not serve the interests of the Community to make a distinction between the Aegean and other regions of the European Union when discussing a Euro army (Eurocorps).

5. Specific comments

5.1. Article 2

5.1.1. The ESC believes that cotton seed must be added to the SSA list in the annex, as it is an extremely useful animal feed supplement that is not produced on the islands and which is made much more expensive owing to transport costs.

5.1.2. The Committee is of the view that corn should be added to the list in the annex, along with the supply of flour, as this product contributes to preserving the traditional flour-producing industry (water-mills/windmills).

5.2. Article 3

5.2.1. In paragraph 1, which states that 90 % of the aid will be financed by the "Commission", it might be more correct to use the term "Community".

5.2.2. The Committee approves of the measure that excludes processed products from the ban on re-exporting, as it will encourage small local processing units.

5.2.3. Paragraph 5 incorrectly refers to the prohibition in paragraph 5, instead of paragraph 4.

5.3. Article 3a

5.3.1. The need to review the way in which the islands are grouped for the purposes of implementing the SSAs is imperative and was mentioned in the annual reports.

5.3.2. The ESC fully endorses the provision made for the Commission to revise the supply balances and the list of products in the annex (paragraph 2).

5.4. Article 12

The ESC believes that the ceiling for the number of hives (75000) for the production of honey of a specific quality eligible for aid should be raised, pointing out that under Regulation (EC) No 2019/93 the ceiling for the number of hives eligible for the first period of implementation was 150000.

5.5. Article 13

The ESC approves of the structural derogations to encourage moves towards sustainable agriculture and investment in small and medium-sized enterprises involved in the processing and marketing of agricultural products and in agricultural holdings.

5.6. Article 15

The island authorities' delay in collecting the data necessary for the Commission to draft the annual reports further demonstrates the problematic nature of the region. It is a very good idea to make the Greek authorities responsible for submitting the annual reports.

5.7. The ESC takes the view that the amendment should include the following among the support measures for local products:

5.7.1. Indirect aid for fresh milk from local dairies, as local production does not meet demand and the minimal remaining milk production potential is ever shrinking.

5.7.2. Aid by hectare to encourage the production and processing of aromatic and medicinal plants; given that the soil and climate conditions are favourable, it would not pose a problem for Community markets, it would put unproductive land to good use and it would provide the local population with an additional source of income.

6. Conclusions

6.1. The ESC concludes from the Commission's previous annual reports and the general evaluation report that the amendment to the Regulation is a move in the right direction and it therefore endorses it. The adjustments reflect the findings of the above reports and bring the Regulation up to date on the basis of the practical results and conclusions of the seven-year period of implementation.

6.2. The Commission has gained more flexibility as regards making corrective adjustments, by adding and removing products eligible for aid in accordance with developments in the islands' requirements. Naturally, every time the Commission seeks to improve the programme's efficiency, the ESC's comments could make its job easier.

6.3. The ESC recognises that the Commission's approach to the problems facing the smaller Aegean islands is on the right track. This approach represents a political position, which in the Committee's view, will lead to research and corresponding measures for all the Community's small islands, whose problems are similar.

Brussels, 16 January 2002.

The President

of the Economic and Social Committee

Göke Frerichs

(1) COM(2001) 64 final of 7.2.2001.

(2) OJ C 201, 26.7.1993, p. 22.

(3) OJ L 184, 27.7.1993, pp. 1-7.

(4) COM(96) 387 final.

(5) COM(98) 292 final.

(6) OJ L 218, 6.8.1991, pp. 1-21.

(7) OJ L 160, 26.6.1999, pp. 21-47.

(8) OJ L 160, 26.6.1999, pp. 80-102.

(9) OJ C 201, 26.7.1993, p. 22.