A4-0374/97

Resolution on the Note to the Council of Ministers and the European Parliament on the olive and olive oil sector (including economic, cultural, regional, social and environmental aspects), the current common market organization, the need for a reform and the alternatives envisaged - Options Paper (COM(97)0057 - C4-0096/97)

The European Parliament,

- having regard to the Commission's note to the Council and Parliament, COM(97)0057 - C4-0096/97,

- having regard to its resolution of 25 October 1996 on the reform of the COM in olive oil ((OJ C 347, 18.11.1996, p. 465.)),

- having regard to the report of the Committee on Agriculture and Rural Development and the opinions of the Committee on Social Affairs and Employment, the Committee on Regional Policy and the Committee on Budgetary Control (A4-0374/97),

A. whereas the COM in olive oil has operated efficiently, allowing the olive sector to tackle competition from other vegetable oils and fats which enjoy a high level of support and to develop external markets, and has not given rise to surpluses; whereas in oil-producing regions it has played a dual role as a marketing policy and as a way of stimulating rural development; whereas, however, a thoroughgoing reform of the common organization of the market in olive oil is needed as a matter of the utmost urgency for the fundamental reason that in the previous four marketing years at least there has been a serious crisis affecting the main mechanisms for determining the quantities of olive oil produced by each individual country and that every year there is a serious risk that the Commission may refuse payment of Community aid, leading to a permanent and indiscriminate reduction in the income guarantees for olive growers and the possibility of serious repercussions for all those working in the European olive and olive oil sector,

B. whereas 2 million holdings depend on olive-growing and the sector provides 750 000 full-time jobs; whereas the producing regions are characterized by their peripheral position and the need for economic and social cohesion, they are the EU regions most dependent on agriculture, they have a rate of unemployment twice the Community average and they are sensitive in both environmental and regional planning terms; whereas olives are a key crop in this situation, where there are few alternatives,

C. having regard to the internationally recognized dietary advantages of olive oil as a basic ingredient of a healthy diet and the benefits it offers,

D. whereas the analysis of the sector offered in the options paper presented by the Commission has serious shortcomings: the information is not homogeneous, it contradicts itself, it contains a great deal of data which are either not up-to-date or of dubious origin and reliability and, above all, there are a number of gaps in the information needed to diagnose the problems of the sector,

E. whereas the Commission document only deals partially with one of the two options, aid per tree, and does not deal with any aspect of improving the current system; whereas this imbalance detracts from its usefulness as an options paper,

F. whereas the Commission recognizes the shortage of statistics to be a serious problem, but nevertheless proposes the use of statistics which it itself acknowledges are dubious as a basis for investigating the two options envisaged,

G. whereas the criticisms made of the Commission document as a basis for the drafting of legislative proposals were discussed in detail by the experts who took part in the public hearing held by Parliament's Committee on Agriculture and Rural Development on 15 April 1997,

H. whereas the socio-economic, climatic and environmental conditions of the producing regions are critical; whereas when carrying out a reform, it is necessary to consider all the options and to carry out a rigorous assessment of the social, economic and environmental impact of each of them; whereas the Commission document does not assess this impact,

I. whereas when formulating proposals for a reform the Commission should analyse employment and the use of the factors of production in olive-growing and other possible forms of cultivation, as well as carrying out an historical analysis of the sector by country and region and a full assessment of its role in disadvantaged regions,

J. whereas in considering the future of the market, the Commission uses International Olive Oil Council (IOOC) projections, based on figures from before 1992-93, which do not reflect the developments on external markets; whereas, furthermore, the references to Community demand are based on a year with abnormally high prices, after three years of drought; whereas after a normal marketing year and the consequent fall in prices, internal demand has recovered and, therefore, the Commission's assessments should be revised to include more recent figures,

K. whereas there are market studies and analyses to suggest a great increase in demand and the EU should safeguard its position as the world's leading producer, consumer and exporter,

L. whereas export refunds consume some 3% of expenditure in the COM in olive oil and only 1% of total refunds in all sectors; whereas despite this fact the Commission justifies the need for reform in the possible requirements of the WTO and its justification does not have the necessary relevance,

M. whereas the EU produces more than 80% of the world's olive oil, third countries which produce olive oil have guaranteed adequate access to the Community market under trade agreements and the equivalences scheme; whereas, therefore, there is no conflict to be expected in the WTO and hence the Commission's fears to this effect seem to be groundless,

N. whereas the Commission has not fulfilled the task assigned it by Regulation (EEC) 2261/84 and amendments, which obliged it to submit to the Council, before 1 January 1995, a report on the operation of the production aid system and, if appropriate, a proposal for revising this system; whereas the report is essential for the design of a system to control possible fraud,

O. whereas the cases of fraud detected must be investigated thoroughly, since they involve a very small number of operators, which should make it easy to carry out effective checks; whereas, on the other hand, there are specialized monitoring bodies in this sector, whose main task is to detect fraud,

P. whereas the Commission only makes proposals for the fraud monitoring system for the option of aid per tree,

Q. whereas in 1992 the Commission set up the ¨Lachaux' group of experts for the simplification of the CAP which, in its report, advocated concentrating inspections on authorized oil mills, since they constitute an inevitable stage in oil production; whereas the report referred to the possibility of introducing another specific aid mechanism for small holdings,

R. whereas, despite the repeated adjustments and amendments made to it over the years, long experience of implementing the COM in olive oil has shown that genuine and effective streamlining of the procedures governing Community support is needed as a matter of urgency,

S. whereas in recent years consumption aid has had little influence on olive oil consumption trends; whereas it is not a measure which solely benefits olive oil produced in the EU, since it may also be granted under certain conditions to oils from outside the Community; whereas in any case such aid cannot be maintained and strengthened under the COM in olive oil since it is a measure which could easily be challenged by the WTO on the grounds that it distorts competition,

T. whereas a new integrated control system could be based on the requirement to market oil in any of its forms, including self-regulated consumption, as a condition for releasing aid; whereas an aid and control system based on marketing would be efficient and reliable, since the bottling industries have, in principle, an appropriate administrative and accounting structure; whereas such a system would enable the monitoring bodies to obtain exhaustive information on movements of oils and an accounting system for stocks, making it possible to carry out cross-checks within an integrated system and enabling progress to be made on the harmonization and complementarity of policies,

U. whereas there are 2 million olive growing holdings in the European Union that can be easily monitored with the systems applied in some EU Member States and whereas the different treatment accorded to small and large producers should be ended with regard to controls on production aid; whereas, with this in view, the consumption aid system should be abolished in order to focus controls on production and enhance the efficiency of the bodies carrying out this task,

V. whereas the introduction of aid per tree as the Commission has proposed will, since it will not protect actual production, entail environmental risks, the danger of depopulation of the countryside and the introduction of speculative plantations; whereas any form of flat-rate aid, including aid per tree, not only does not ensure that farmers' incomes are maintained but does not take into account two fundamental objectives, quality and market stability, in view of the great annual fluctuations in production,

W. whereas harvesting olives accounts for 80% of labour costs and 70% of variable costs; whereas in the case of aid per tree as proposed, which would not protect actual production, the right to subsidy would be triggered at a very low level of expenditure and would mean a much weaker link with production costs than in other forms of production which receive direct aid based on production costs, whereas direct aid in the cereals sector is granted when 85% of the costs have been borne, in the case of cattle premiums 98%, but in the olive sector when only 15% of farming costs have been incurred,

X. whereas aid per tree as proposed will, since it will not protect actual production, lead to a considerable reduction in the workforce, by encouraging the reduction of farming expenditure to a minimum, which might lead to farmers not harvesting olives in certain circumstances, in order to maximize the earnings of the recipient of the aid; whereas employment would fall in the regions with highest unemployment, which are most dependent on agriculture and have the lowest GDP in the EU,

Y. whereas one of the objectives laid down in the Amsterdam Treaty is the promotion of a high level of employment through appropriate cooordination of economic policies; whereas the options considered by the Commission are not compatible with the new Treaty, since they entail the risk of large job losses,

Z. whereas the current system of production aid already provides for the introduction and application of olive cultivation registers in producer Member States, but whereas this provision has not been observed by all States concerned; whereas olive cultivation registers are a vital instrument for accurate control to ensure that declared production matches the production potential of the farms and whereas an instrument of this kind is particularly necessary when the aid system is applied uniformly to all producers on the basis of the quantity of olive oil actually obtained,

AA. whereas the Court of Auditors has pointed out several times that a system which does not require evidence of olives being harvested and processed may degenerate into a system of aid based on declarations of ownership which cannot be proven and allow aid to be obtained twice, but whereas this is not possible in countries such as Italy where an olive cultivation register has been introduced,

AB. whereas the determination of aid without regard to the actual production of the olive holdings would sanction the injustice of granting the same amount of aid to inefficient producers and those who have modernized their farms and invested labour, effort and money in obtaining higher quality produce,

AC. whereas a form of aid which does not reward either the harvesting of olives or production of oil from them would promote absenteeism in farming and nullify contracts based on yield or the allocation of land and would only benefit owners of land who are not full-time farmers and have other sources of income, which would undermine the principal objective of any COM, namely maintaining farmers' income,

AD. whereas the alternation of good and bad years in olive-growing makes it necessary to maintain intervention and the intervention price as a minimum reference point on the market, together with buffer stocks in an efficient set-up to cover any Community olive oil deficit; whereas the Commission proposes, in the aid-per-tree option, to abolish intervention and, in order to improve the present system, substantial restrictions, although the financial impact of intervention on olive oil is much less than in other regulated sectors,

AE. whereas the Commission recognizes that the system applicable to small farmers gives rise to statistical problems and whereas their production is not controlled by the maximum guaranteed quantity (MGQ),

AF. whereas since the 1992 CAP reform there has been an imbalance in expenditure on market regulation to the advantage of continental products, which now account for 75% of the draft budget for 1998 as opposed to around 70% in 1992, while Mediterranean products have fallen from 22% to 19%,

AG. whereas Agenda 2000, which discriminates against Mediterranean products, is likely to accentuate the imbalance in financial support between continental and Mediterranean products,

AH. whereas during the 1996/97 marketing year, despite the record level of production of 1 859 400 tonnes, there have hardly been any intervention surpluses and marketing is proceeding in a satisfactory manner for all operators, with market prices appreciably higher than the intervention price throughout the marketing year in all the producer countries, evidence of a situation very different from the supposed conditions on which the Commission claims to have based its options paper; whereas developments during the current marketing year belie the danger of surpluses and demonstrate the absurdity of the level set for the MGQ; whereas the MGQ established in 1987 (1 350 000 tonnes) is less than Community consumption in 1996/97 (1 657 000 tonnes), causing distortions in aid to producers owing to its level and its implementing arrangements; whereas, in order to guarantee that demand is met at reasonable prices, the MGQ should be revised,

AI. whereas there is a need to bring the COM in olive oil into line with the other COMs with regard to the MGQ, adjusting its level up to Community consumption plus average exports and the necessary security margin and, specifically, there is a need to establish national reference quantities (NRQs), based on an objective estimate of production trends, in order to make each producer Member State responsible for the effects of exceeding the MGQ in proportion to the volume of the production obtained,

AJ. whereas certain fundamental parameters of the current COM, such as the determination of yield, are not regulated uniformly in the olive-producing Member States, which causes serious distortions in its operation; whereas their harmonization is one of the main factors which the Commission should take into account before any future reform,

AK. whereas a balance must be achieved in support for the various vegetable oils, taking into account consumption needs, the absorption of factors of production and the impact of direct or indirect public aid on the commercial value of the various oils and on the number of jobs linked to each form of production,

AL. whereas in the main olive-producing Member States the bottling of mixtures of olive oil and seed oil is prohibited but in non-producing countries it is authorized, and hence they can be marketed throughout the EU, to the detriment of the consumer; whereas the Commission must draw up proposals to ban such mixtures,

AM. whereas the sub-sector of table olives does not have support mechanisms to help it withstand international competition and this can cause distortions in the COM in olive oil; whereas the sub-sector plays an important role in the operation of the COM, since when there is a good harvest it may help to regulate the market; whereas a specific aid system supplementing the funds intended for olive oil should be applied to it; whereas this system should be easy to control and should take account of the long period of time needed for the preparation of table olives before they are marketed,

I. GENERAL COMMENTS

1. Points out that experience in the operation of the COM suggests that it has helped to maintain a fair level of income for producers, has encouraged the modernization of cultivation and holdings, improved the quality of the product, helped protect the environment and has ensured that Community olive oil has continued to expand on the markets of third countries, as well as being one of the few sectors without structural surpluses; further points out that the balance between supply and demand can be maintained provided that the EU applies a more vigorous and sustained policy to promote olive oil consumption, both on its own territory and in third countries; considers, however, that the trend in supply and in the markets calls for the adoption of a new COM at an early date, in order to maintain and consolidate the results obtained by the industry in the EU's peripheral regions for employment, earnings and environmental protection;

2. Considers that the Commission must revise and check the figures given in its options paper when it makes legislative proposals, and rectify the damage inflicted on the production sector through the application of the current system, which may cause serious and permanent disruption of an economic and social nature;

3. Stresses the important role played by this sector in maintaining employment in these regions, both directly in production, and indirectly in upstream and downstream sectors, which provides a significant stimulus for regional development; any reform must therefore constantly take into account the need to respect the principle of economic and social cohesion;

4. Considers that the shortcomings of the Commission's options paper as regards describing and diagnosing the situation in the sector, the failure to analyze the consequences of the options considered and the fact that only one of them is considered in detail, make it invalid as an adequate basis for a reform of the COM and recommends to the Commission that it should revise and complete its analyses when it submits legislative proposals, in order to avoid the risk of social, economic and environmental problems;

5. Notes that the Commission has failed to comply with its obligation, under Regulation (EEC) 2261/84, to submit to the Council and Parliament a report on the operation of the aid system for olive oil, which Parliament reminded it of in its abovementioned resolution of 25 October 1996;

6. Rejects aid per tree as a basic option for the reform of the COM as proposed by the Commission, as it will not protect actual production, since it entails a high risk of job losses, environmental damage and a deterioration in the quality of the final product;

II. MAIN ELEMENTS ON WHICH TO BASE THE FUTURE COM

7. Calls on the Commission to submit legislative proposals for a reform of the COM and to base them on:

(a) the granting of a single form of production aid which guarantees a fair income for all producers on the basis of the quantity of oil actually produced, by including small producers in the general system of production aid, in order to facilitate the carrying out of controls; by guaranteeing olive growers fair profits for maintaining the necessary volume of production and marketing of olive oil; by creating an additional system of aid to small farms; and by introducing the environmental and regional planning rules necessary to preserve sensitive areas;

(b) increasing the MGQ to bring it into line with the total of Community consumption, average annual exports and a margin for security; establishing NRQs for the producer Member States;

(c) final abolition of the consumption aid and the introduction of an effective instrument that will make it possible to set up an integrated control system from production to consumption;

(d) maintaining the intervention mechanism and the intervention price, with measures for private storage and buffer stocks as an efficient system to ensure the stability of markets and prices in a sector where production levels vary considerably from year to year;

(e) creating a supplementary system of support for small farmers to promote employment and maintain the rural population;

(f) the uniform regulation in all the olive-producing Member States of the main parameters of the COM, in order to avoid such things as a repetition of the current situation as regards the calculation of yield and the failure to set up a uniform register of olive cultivation;

(g) the implementation and financing, inter alia through resources derived from the abolition of consumption aid, of a global policy for the promotion of consumption and quality, by means of a policy of projecting and promoting the product and looking for new markets, including a ban on the marketing of mixtures of olive oil and other oils, in order to guarantee consumers an authentic product, and introducing effective incentives for quality production;

(h) the operation of an integrated Community control system, based on the marketing of oil as the trigger for aid, to increase cooperation between national and Community control bodies and ensure the transparency of aid, and the rapid introduction in all producer countries of an integrated control system that is simple, reliable and effective and capable of preventing fraud, on pain of suspension of aid;

(i) the introduction of specific and effective measures to support activities relating to concentration of supply, placing products on the market, promotion, crop improvement, technological innovation, environmental protection and quality improvement, through the producers' organizations and their unions, thereby strengthening the importance of their role;

(j) a modification of inward processing traffic in olive oil, making it an exclusive regulating mechanism, revising the equivalences system and authorizing this system only when a deficit in Community olive oil has been established which cannot be remedied using buffer stock;

(k) the creation of a system of production aid for table olives, replacing the rules under budget heading B1-184, which has proved totally ineffective, and providing it with adequate funding;

(l) support for the olive oil sector by improving management and developing and increasing existing resources to project and promote the product and seek new markets;

(m) the overall simplification of the system which is necessary for increased transparency needed for combating fraud in the sector;

III. SPECIFIC REQUESTS TO THE COMMISSION

8. Acknowledges identified problems of controllability and resulting fraud, which are, however, less dramatic than the Commission's note suggests; nevertheless urges the Commission to prove convincingly the necessity, feasibility and budgetary neutrality of any option in order to avoid the risk of unforeseen developments and an increase in unemployment which would affect less favoured and vulnerable regions;

9. Urges the Commission to take account in its legislative proposals of the disparities between agricultural regions, the need to make the necessary changes gradually and the link between agriculture and the economy as a whole;

10. Expresses the wish that the Commission will insist that countries that have not yet done so establish a comprehensive olive cultivation register, which can serve as a basis for the necessary survey to assess the regional impact of the proposed reform and be useful in combating fraud;

11. Considers that the Commission must draw up and submit a study into the implications of the GATT Agreements and the policy of export refunds on olive production and on workers' incomes, and a thorough and comprehensive study of the outlook for the international olive oil market, and the ways and means of maintaining the EU's position as an olive oil exporter;

12. Again urges the Commission, as requested in Parliament's resolution of 10 April 1997 containing the comments which form part of the decision giving discharge to the Commission in respect of the implementation of the general budget of the European Union for the financial year 1995 ((OJ C 132, 28.4.1997, p. 140.)), to apply immediately all the controls made available by the legislation in force, without waiting for the introduction of the future reform;

13. Calls on the Commission to respect the Amsterdam Treaty, in particular its objective of promoting a high level of employment as a key element in the coordination of economic policies, and not to put forward proposals which threaten to destroy employment;

IV. FURTHER COMMENTS

14. Insists, in view of the forecasts of growth in demand for olive oil on international markets and to support the product on the internal market, that the EU must develop a policy for increasing the quality of the product as a natural product and prohibiting its blending with other oils, to improve competitiveness and increase exports and consequently maintain or increase employment and productivity;

15. Repeats that, in order to protect olive growing and combat fraud, and in the interests of the ever increasing number of consumers, the olive growers' representative bodies and associations and their role in control procedures must be strengthened;

16. Considers that, to strengthen this sector, better management and development and an increase in existing resources to present and promote this product are required;

17. Points out, for example, that the income aids provided for sectors such as arable crops, dairy products and beef and veal are essentially compensatory in nature to offset the differences between domestic prices and international prices;

18. Notes also the lack of uniformity in compensatory aid, adjustment aid, aid for environmental and social services, etc., and calls on the Commission to spell out its objectives and clearly define the objectives of the CAP;

19. Considers that the Commission should draw up a general framework for possible variations in aid going beyond the olive oil sector and that this general framework should set out the different production methods and govern the relationship between aid and socio-economic, regional and environmental criteria (cross-compliance);

20. Is concerned lest future budgetary savings at the level of the COM in olive oil result in greater pressure on Structural Fund spending, notably greater expenditure on ongoing CSFs for each Member State;

21. Calls on the Commission to define the concept of ¨budgetary neutrality' and to say whether it is a key element in the reform of the CAP or any of the sectors concerned;

22. Instructs its President to forward this resolution to the Council and Commission.