COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(89) 464 final 
Brussels, 4 October 1989 
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulation (EEC) No 2601/69 laying down special measures 
to encourage the processing of mandarins, satsumas, clémentines 
and oranges 
(presented by the Commission) 
to-kthf 
EXPLANATORY MEMORANDUM 
Subject; Proposal for an amendment to Regulation (EEC) No 2601/69 laying 
down special measures to encourage the processing of certain 
varieties of oranges 
In the chapter on citrus fruit In the 1989/90 price proposals, the 
Commission pointed out that the world market price for orange juice 
sometimes fluctuated strongly and that In order to encourage processors 
to purchase the available products provision should be made for the aid 
granted to processors who pay producers the minimum price to enable 
them to remain competitive even when trends In the world price 
situation are unfavourable. Therefore, at the time when the Council 
adopted the Commission's proposals for measures In that sector, the 
Commission also undertook to present to the Council as soon as possible 
a proposal to the effect that the system of aid for processing citrus 
fruit into juice should comprise an element enabling fluctuations in 
the prices of these products on the world market to be taken into 
account. 
2. The present rules provide for aid for processing into Juice to be 
calculated in a different way for lemons and oranges. In the case of 
lemons, Regulation (EEC) No 1035/77 provides that the financial 
compensation granted to processors for lemons purchased from producers 
at the minimum price "may not exceed the difference between the minimum 
purchase price and the price charged for the raw material In non-member 
producer countries". 
Thus the rules provide for fluctuations in the prices of the raw 
materials in non-Community countries to be taken into account at the 
annual fixing of the amount of the financial compensation. 
Processing costs are not taken into consideration, since the Industry 
is protected by the customs duty imposed on imports. 
This has created a situation In which: 
- aid is granted on the basis of the difference in the price of the raw 
material, without taking account of the competitiveness of the 
processing Industries, in accordance with the general policy on aid 
for the processing of agricultural products; 
- aid can take account of price fluctuations In competing countries. 
P2 
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In thA case of oranges, on the other hand, Regulation (EEC) No 2601/69 
provides for financial compensation to be fixed In such a way that the 
cost borne by the processing industry cannot decrease from one year to 
the next. However, If the minimum price increases, the cost borne by 
the industry may Increase by at least 50% of the price Increase. Thus, 
the rate of financial compensation Is not linked to the price of the 
raw material on the world market. 
These rules can lead to situations in which the cost borne by the 
Industry, that Is, the cost to the Community processing Industry of the 
raw material (equal to the difference between the minimum prlce(1) 
and the financial compensation), Is higher than the cost of the raw 
material In the producer countries. 
This could compromise the effort to encourage processing and reduce 
withdrawals, since the processing Industry may prove reluctant to enter 
Into contracts when prices are not sufficiently competitive to 
guarantee that they will be able to dispose of the finished product, 
even if Community products account for only a small percentage of the 
products consumed on the European market. 
4. It Is therefore proposed that the system for calculating financial 
compensation for the processing of oranges Into Juice be brought in 
line with the system used In the case of lemons and to provide for 
financial compensation to reflect the difference between the price of 
the raw material In the Community and the price In non-Community 
producer countries. 
Calculations based on past figures show that, on average, the new 
calculation method, if used over a period of several years, would not 
result in an amount much higher than the amount fixed to date, but the 
amounts would differ from year to year (see Annex). The same holds 
good for the future when the hypotheses regarding costs are made on the 
basis of the FAO price estimates which were recently distributed to the 
citrus group, even those which predict an Important development of 
production In South American countries and In the United States. The 
system Is not more protectionist than the previous one. 
(1) The minimum price Is fixed by the Commission at the level of the 
withdrawal price, which Is derived mathematically for the basic and 
buying-in prices fixed annually by the Council. 
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5. The attached proposal therefore aims at introducing the same system for 
the calculation of financial compensation for oranges as the one in use 
for lemons processed into juice, without changing any other elements in 
the system provided for in the relevant decisions for 1989/90. 
The financial compensation for the processing of satsumas, Clementines 
and mandarins into Juice will be similarly changed but without amending 
legislation as it is provided that aid In respect of those products be 
proportional to aid for oranges. 
There is no link between the price of orange and satsuma Juice and the 
price of satsumas in syrup ; the philosophy used is that the price to 
the industry for the raw materials for the two different products 
should be the same. Therefore, no amendment has been contemplated. 
6. In conclusion, it is proposed that the Council adopt the attached draft 
Regulation: 
- amending Regulation (EEC) No 2601/69 providing for the financial 
compensation for the processing of oranges into juice to be 
calculated by reference to the difference between the minimum 
purchase price and the price for the raw material in non-member 
producer count rI es ; 
- which provides for the possibility of adjusting the amount fixed for 
the 1989/90 marketing year In line with this new rule, so that the 
effects of the new system are felt In the Industry as soon as 
possible. 
Proposal for a 
O0TJNCIL REGULATION (EEC) 
amending Regulation (EEC) No 2601/69 laying down special measures 
to encourage the processing of mandarins, satsumas, 
Clementines and oranges 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Ctammunity, 
and in particular Article 43 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Parliament, 
Whereas Council Regulation (EEC) No 2601 /691, as last amended by Regulation (EEC) 
No 1123/892, provides for a system of financial compensation Intended to 
encourage the processing of mandarins, satsumas, Clementines and oranges, 
in the context of contracts ensuring regular supplies to the processing industries 
at a minimum purchase price to the producer; 
Whereas the prices of the raw material produced in the Community are wghw 
than the prices in non-member countries; ràaereas the competitiveness of the 
Ctommunity-produoed raw material should be ensured Irrespective of price 
movements for the raw material in the non-member country; 
Whereas the current market situation requires that the competitiveness of 
the Community product he improved as soon as possible; whereas, therefore, 
provision should he made for the amount of the financial compensation fixed 
for the 1989/90 marketing year to he adjusted during the year; 
1 OJ NO L 324, 27.12.1969, p. 21. 
2 QJ NO L 118, 29.4.1989, p. 25. 
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HAS ADOPTED THIS REGCIAIICN: 
Article 1 
The second subparagraph of Article 3(1) of Regulation (EEC) No 2601/69 is 
replaced by the following: 
"For oranges, the financial : compensation may not exceed the 
difference between the minimum price referred to in Article 2 (2) and 
the prices obtaining for the raw material in non-member producer 
countries." 
Artilolft a 
For the 1989/90 marketing year, the amount of the financial compensation 
fixed prior to the beginning of the marketing year may be adjusted HH-MT^ 
the marketing year to take account of the second subparagraph of Article 3(1) of Regu­
lation (EEC) No 2601/69, provided that such adjustment does not lead to a reduction in the 
financial compensation. 
• - "• --- - .. . x. 
Detailed rules for the application of this Article shall be adopted in accordance with the pro­
cedure laid down in Article 33 of Council Regulation (EEC) No KB5/7Z\ 
Acfciûle_2. 
This Regulation shall enter into force on the day of its publication in the 
Official Journal of the European Communities. 
It shall apply from the beginning of the 1989/90 marketing year. 
This Regulation shall be binding In its entirety and directly applicable in 
all Member States. 
Done at Brussels, 
For the Council 
30J No L 118, 20.5.1972, p.1. £ 
i__. 
FINANCIAL STATEMENT 
Date: 19.7.1989 
1. Budget heading: 1503 Appropriations: ECU 101 million 
2. Title: Amendment to Regulation (EEC) No 2601/69 laying down special measures 
to encourage the processing of certain varieties of oranges (mandarins, 
satsumas, clémentines and oranges). 
3. Legal basis: Article 43 of the Treaty and Regulation (EEC) No 2601/69 
4. Aims of project: Financial compensation for oranges should not exceed the 
difference between the minimum price and the prices of the 
raw material in non-EEC producer countries 
5. Financial implications 
5.0 Expenditure 
- charged to the EC budget 
(refunds/intervention) 
- national administration 
- other 
5.0.1 Estimated expenditure 
5.1.1 Estimated receipts 
5.2 Method of calculation: 
EEC-10 
Spain 
Portugal period of 
12 months 
ECU 99.5 m current 
financial year 
(1989) following 
financial year 
(1990) 
ECU 99.5 m 
Quantity Aid (1) Cost 
770 000 t x 110.2 ECU/t = ECU 84.85 million 
47 600 t x 99.6 ECU/t * ECU 4.74 million 
12 000 t x 81.1 ECU/t = ECU 0.97 million 
TOTAL ECU 90.56 million 
Impact of dual rate : 1 099 
ECU 90.56 m x 1.099 (DR) : ECU 99.5 m 
6.0 Can the project be financed from appropriations entered in the relevant chapter 
of the current budget ? yes 
6.1 Can the project be financed by transfer between chapters of the current budget ? 
yes 
6.2 Is a supplementary budget necessary ? 
6.3 Will future budget appropriations be necessary ? no 
yes 
Observations: 
(1) The aid has been calculated on the basis of last year's price for the raw 
material in the non-EEC producer countries. 
Given the various assumptions, it is likely that the measure will cost some 
ECU 5.1 million more than the amount provided for in the 1990 PDB. 
•#-
PI CHE P'IMPACT SUR LA COMPETITIVITE ET L'EMPLOI 
I. Quelle est la Justification principale de la mesure ? 
Augmenter la compétitivité du transformateur européen d'agrumes 
II. Caractéristiques des entreprises concernées 
En parti cul 1er : 
- Y a-t-l1 un grand nombre de P.M.E. ? Oui 
- Note t'on des concentrations dans des réglons : Oui 
- éliglbles aux aides régionales des E.M. ? 
- éliglbles au Feder ? 
III. Quelles sont les obligations Imposées directement aux entreprises ? 
Néant 
IV. Quelles sont les obligations susceptible» d'être Imposées 
Indirectement aux entreprises via les autorités locales ? 
Néant 
V. Y a-t-lI des mesures spéciales pour les PME ? Aucune 
- lesquelles ? 
VI. Quel est l'effet prévisible ? 
- sur la compétitivité des entreprises ? Positive 
- sur I'emploi ? 
VII. Les partenaires sociaux ont-Ils été consultés ? Non 
- avis des partenaires sociaux î 
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EN ISSN 0254-1475 
COM(89) 464 final 
DOCUMENTS 
Catalogue number : CB-CO-89-451-EN-C 
ISBN 92-77-53571-7 
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