26. 4. 78 Official  Journal  of the European  Communities No C101/7 
6. Under  the basic  Regulations  there  are two  ways 
in which  the  Commission  can  intervene  when  there 
are structural  surpluses: 
(a) it can  grant  aid  to only  a part  of the  cultivated 
area listed  for a given  year;  or 
(b) it can  withhold  aid from  areas  which  are in their 
first and/or  second  year  of production. 
The Commission  has chosen  the second  alternative. 
7. Under  Article  12  of  the  amended  basic 
Regulation,  aid may,  under  certain  circumstances,  be 
paid  upon  application  by producers'  groups. 
But, as the amended  Regulation  only  came  into  force 
on 1 July  1977,  it was  not  possible  for  the 
Commission  to apply  it to the 1977  harvest. 
8. Bearing  in mind  the  above  comments,  the 
Committee  approves  the Commission's  proposal. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
Opinion  on the report  on starch  products  in the Community  and  the starch  production 
refund 
The opinion  of the Committee  does  not relate  to any  published  text. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 152nd  plenary  session  held  on 25 and  26 October  1977  the  Committee,  acting 
on a proposal  from  its Bureau,  decided  to deliver  an opinion  on the  abovementioned 
subject  on its own  initiative. No 1696/71  (i) as amended  by Regulation  (EEC)  No 
1170/77  (:). 
3. According  to the  Commission's  report,  hop 
producers'  earnings  in 1977  were,  on average,  down 
1 % from  1976.  This  was  because  although  the  unit 
price  was  lower,  the harvest  was  bigger. 
4. To  counteract  this  drop  the  Commission  plans 
to increase  aid by an average  of 7 % over  its 1976 
level,  but  the  three  groups  of hop  varieties  will  be 
treated  differently.  Aid  to the  bitter  group  of hop 
varieties  will  go up 5 % and  the aromatic  group  will 
get 10 % more  aid,  but  other  varieties  will  get 10 % 
less. 
5. The  Commission  justifies  this  variation  by 
saying  that  it has  to ensure  that  planters  get  a fair 
income  and  that  the structural  surpluses  noted  in its 
report  to the Council  are corrected. 
(*) OJ No L 175,  4. 8. 1971. 
(2) OJ  No L 137,  3. 6. 1977. 
Done  at Brussels,  i March  1978. 
No C 101/8 Official  Journal  of the European  Communities 26.4.  78 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the  above  matter  at its 
156th  plenary  session  held  in Brussels  on 1 and  2 March  1978. 
The opinion  is published  below: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the fourth  paragraph  of Article  20 
of the Rules  of Procedure, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Articles  47 and  198  thereof, 
Having  regard  to the decision  taken  by its Bureau  on 
25 October  1977  instructing  the  Section  for 
Agriculture  to draw  up an opinion  and  a report  on 
the matter, 
Having  regard  to the  opinion  issued  by the  Section 
for Agriculture  at its meeting  on 9 February  1978, 
Having  regard  to the  report  submitted  by  the 
rapporteur,  Mr Masprone, 
Having  regard  to the discussions  at its 156th  plenary 
session  of 1 and  2 March  1978  (meeting  of 1 March 
1978), events  ensure  that  the  production  of starch  using 
Community  raw  materials  is  maintained  and 
expanded.  The  Community  must  avoid  the 
temptation  of adjusting  the current  market  situation 
solely  to the  effects  of competition.  In other  words 
the Community  must  contribute  to the development, 
not just  the survival,  of the starch  industry. 
3. The  supply  prices  of the  starch  industry  were 
absolutely  stable  from  1967  to 1974.  Since  1974, 
however,  major  changes  have  occurred  because  of a 
reduction  in  the  production  refund  and 
discontinuation  of the  practice  of taking  monthly 
price  rises  into  account. 
3.1. Constant  prices  had  formed  the  basis  of the 
starch  industry's  investment  and  research 
programmes,  some  of which  extended  beyond  1974. 
3.2. The  sudden  change  after  1974  was  due  to the 
EEC's  delicate  financial  position,  caused  not  least  by 
the trend  in world  cereal  prices. 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
with  no votes  against  and  six abstentions: 
The Economic  and  Social  Committee  has  the 
following  comments  to make  on the  Commission's 
report: 
1. The  Committee  applauds  the  Commission's 
initiative  in submitting  a report  on starch  products  in 
the Community  (cereal  starch  and  potato  starch). 
The Commission  sees  the  report  as a basis  for 
concrete  proposals  to amend  the  Regulations  on 
starch  products.  The  report  should  at all events  make 
it possible  to review  the  current  situation  and  draw 
conclusions  as to the need  tc revise  and/or  adapt  the 
Regulations  in question. 
2. If  there  is to be a revision  or adaptation  of the 
Regulations  then  the  new  provisions  should  at all 3.3. In  the  crop  years  1975/76,  1976/77  and 
1977/78,  levy  receipts  rose  gradually  to a level 
considerably  in excess  of expenditure. 
4. The  Community's  maize  deficit  poses  problems 
from  the  point  of view  of the  common  agricultural 
policy,  and  makes  it difficult  to find  a financial 
solution. 
4.1. The  problem  is that  a significant  proportion 
of the maize  used  in the Community  is imported  and 
Community  aid  may  well  seem  difficult  to justify. 
Nevertheless,  it must  be remembered  that  maize  on 
which  a levy  has been  paid  must  be considered  to be 
Community  maize. 
4.2. It  must  not,  however,  be forgotten  that  there 
are about  20 000  potato  growers  and  over  20 000 
producers  growing  domestic  maize  used  for  starch 
manufacture  (1 100  000  tonnes  or 10 to 11 % of the 
26. 4. 78 Official  Journal  of the European  Communities No C 101/9 
Community  maize  marketed).  It should  also  be noted 
that the maize  deficit  may  well  decrease  rapidly  (1980 
to 1982). 
5. At  world  level  there  are two  regions,  the EEC 
and the  USA,  where  the  starch  industry  (wheat 
starch,  maize  starch,  potato  starch)  is important. 
Competition  between  them  is keen. 
The American  starch  industry  has  significantly 
cheaper  raw  materials  and  bigger  outlets  in the 
confectionery  sector  (the  US has a deficit  in sucrose, 
whereas  Community  production  and  consumption  of 
sucrose  are in balance).  The  American  industry  can, 
therefore,  expect  to achieve  greater  productivity  gains 
than the Community,  and  to have  significantly  bigger 
technological  research  capabilities  and  development 
prospects. 
In these  circumstances,  it is no exaggeration  to say 
that the Community  starch  industry  is in danger  of 
disappearing,  or at best  of becoming  a marginal, 
underdeveloped  industry.  This  prospect  obviously 
has serious  implications  for Community  farmers,  and 
in particular  growers  of starch  potatoes  (growers 
who have  no other  markets). 
6. The  raw  materials  (maize,  wheat,  potatoes)  of 
the starch  industry,  and  some  of its products,  are 
covered  by CAP.  But,  though  the  starch  industry  is 
consequently  affected  by CAP,  it is nevertheless  a 
processing  industry  and  subject  to the relevant  Treaty 
principles  —  smooth  development  of economic 
activities,  continuing  balanced  growth,  greater 
stability,  rapid  improvement  in standard  of living.  It 
is, therefore,  necessary  to ensure  that  the  starch 
industry  can  preserve  and  even  expand  its labour 
force,  both  on the agricultural  and  industrial  fronts. 
Abrupt  changes  have,  however,  jeopardized 
employment  in the starch  industry. 
7. Treaty  objectives  are furthered  by a fair  price 
policy  for starch  raw  material. 
Such  a  fair  policy  also  furthers  the 
counter-inflationary  strategy  which  the  Community 
rightly  champions,  and  which  benefits  not only  the 
agricultural  and  industrial  sectors  of the Community's 
economy,  but also  workers  and  consumers. 
8. The  by-products  of maize  and  potato  starch 
receive  virtually  no  tariff  protection  in  the 
Community. The competitive  position  of the  Community  starch 
industry  is undermined  by the free  import  of starch 
by-products  and  commodities  such  as soya. 
As against  this,  the  by-products  of the  Community 
starch  industry  make  a major  contribution  (around 
180 million  units  of account  per  annum)  to its 
balance  of payments. 
Annual  Community  production  of starch  residues, 
maize  oil  cake  and  maize  proteins  reduces 
Community  imports  by the  equivalent  of 600  000 
tonnes  of soya  oil cakes. 
9. Agricultural  starch  products  have  to  face 
competition  from  substitutes  and  synthetics  (alginate, 
carboxymethylcellulose,  petrochemical  products) 
whose  production  costs  are  immune  to  the 
Community's  policy  on farm  prices. 
Special  attention  must  be paid  to manioc  root.  This 
has a starch  content  of 60 %, almost  the  same  as 
maize,  but it is freely  imported  into  the Community, 
and carries  a customs  duty  of only  6 % bound  in 
GATT. 
The supply  price  of starch  raw  materials  must  take 
account  of these  rival  products. 
10. The  Committee  has noted  that  the Commission 
is in favour  of selective  support,  i.e.  keeping 
production  refunds  for industrial  starch  and  phasing 
out those  on starch  used  in food  and  animal  feed. 
Industry  is a more  important  outlet  for potato  starch 
than for cereal  starch.  A switch  to selective  support 
on the  above  lines  would  thus  probably  hit  the 
former  harder  than  the  latter,  though  it has  to be 
remembered  that  the  two  products  are 
interchangeable  to a fairly  large  extent. 
Furthermore,  the Committee  considers  that  in practicc 
it would  be difficult  if not impossible  to operate  such 
selective  support.  On  this  point,  the  Committee 
disagrees  with  the Commission. 
11. The  descriptive  section  of the  Commission's 
report  seems  to indicate  that  the  starch  industry 
should  have  a special  supply  price  but  the 
Commission  comes  to very  different  conclusions. 
In addition,  there  is a contradiction  in paragraph  39 
between  the statement  that  'developments  over  recent 
No C 101/10 Official  Journal  of the European  Communities 26. 4. 78 
years  have  created  a situation  where  some  of the 
main  reasons  for  the  introduction  of production 
refunds  no longer  apply  to the same  extent'  and  the 
conclusion  that  'the  long-term  preservation  of the 
system  in its present  form  is no longer  economically 
justified'. 
12. The  Commission  is asked  to take  a closer  look 
at EAGGF  spending,  in order  to try and  justify  its 
statements,  which  do not seem  to be quite  accurate. 
Similarly,  the  facts  and  figures  given  on the  starch 
industry  and  its ancillaries  are  not  comprehensive 
enough  to provide  a proper  picture  of the situation. 13. In  conclusion,  the  Committee  rejects  the 
Commission's  view  that  starch  used  for  food  and 
animal  feed  should  no longer  qualify  for Community 
refunds.  A number  of recent  judgments  of the Court 
of Justice  on similar  questions  would  seem  to confirm 
the Committee's  point  of view. 
14. Finally,  special  attention  should  be given  to 
striking  the  • requisite  balance  between  the  different 
branches  and  raw  materials  (wheat,  maize,  potatoes) 
of the  starch  sector.  Recalculation  is urgently 
necessary. 
Done  at Brussels,  1 March  1978. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
Opinion  on the  Commission  proposals  fixing  prices  for certain  agricultural  products 
and on certain  related  measures 
The text  referred  to the  Committee  has  been  published  in Official  Journal  of the 
European  Communities  No  C 50 of 28 February  1977,  page  1. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 12 December  1977,  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Articles  47 and  198  of the Treaty 
establishing  the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
156th  plenary  session,  held  in Brussels  on 1 and 2 March  1978. 
The full  text  of the opinion  is as follows: