6.7.92 OfficialJournaloftheEuropeanCommunities NoC169/41
OpinionontheCommissionproposalsonthepricesforagriculturalproductsandonrelated
measures(1992/1993)
(92/C169/13)
On6April1992theCouncildecidedtoconsulttheEconomicandSocialCommittee,
underArticle198oftheTreatyestablishingtheEuropeanEconomicCommunity ,onthe
abovementioned proposal.
TheEconomicandSocialCommitteedecidedtoappointMrPricoloasRapporteur-General
foritsOpinion.
Atits296thPlenarySession(meetingof30April1992),theEconomicandSocialCommittee
adoptedthefollowingOpinionwithnodissentingvotesand16abstentions .
1.Generalcomments GuaranteeFund(EAGGF),whichhasremainedwell
withinitsguidelineoverthethreeyearperiod1989­
1991,showsclearlythatagriculturalexpenditureis
beingcontained.
1.5.1.Thefactthatspendinghasremainedbelow
thereferenceleveldoesnotmeanthattheappropri­
ationsweretoohigh,butrather—atleastinthecase
ofcerealsandrice,sugar,fatsandoils,fruitandveg­
etables,wineanddairyproducts—istheresultofa
combinationoffactors.Theseinclude:stabilizers;low­
erproductioninsomesectorsbecauseofadverseweath­
er(fruitandvegetables,wine);narrowerfluctuations
oftheUSdollaragainsttheECU;and,possibly,amore
circumspectpolicyonreleasefromstorage.
1.6.WhilsttheCommitteesharestheCommission's
concernwithregardtotheimbalancesincertainagri­
culturalmarkets,itcannotacceptallthepointsinits
analysis.
1.6.1.Forapoliticalandeconomicanalysisofthe
variousanomaliesintheCAPandtheircauses,the
CommitteewouldrefertoitsOwn-initiative Opinion
of27November1991ontheCommission Communi­
cationontheDevelopmentandFutureoftheCAP(1).
1.6.2.Hereitwouldmerelynotethatthedeterio­
rationoftheagriculturalmarketsandtherenewed
build-upofstocksarepartlydue—tomentiononlytwo
ofthemainfactors—toaninadequatequalitypolicy
andinsomecasestotheabsenceofCommunityprefer­
ence.
1.6.3.Theabsenceofdetailed,effectivequalitystan­
dardsforfarmproductsthataresubjecttopriceguaran­
teeshashadparticularlydistortingeffectsinthecereals
sector(akeysectorinthereformoftheCAP).The
surpluseswouldhavebeenconsiderablylowerifthe
price-settingcriteriahaddrawnaclearerdistinction
betweenbread-making cerealsandfoddercereals.1.1.TheCommitteemustfirstnotethatthesituation
ontheCommunityagriculturalmarketshasnowbeen
deterioratingforanumberofyears.
1.1.1.Themodestrecoveryintheworldmarket
pricesofcerealsanddairyproductsin1991hasnot
significantlyalteredthesituation,whichinfactappears
tobegettingworse.
1.2.Thebatteryofstabilizermeasurestakentocon­
tainproductiondoesnotseemtohavesucceededin
restoringthebalancebetweensupplyanddemandfor
farmproductsorstabilizingproducerprices.
1.3.Farmers'incomeshavefallensignificantly,and
therehasbeenadropinthenumberoffarmersand
farmlabourers.Overallfarmincomeshavefallenby
11,5%inrealtermsoverthelasttwoyears,asmeasured
bythemainindicator (netvalueaddedperperson
employedinagriculture).
1.4.Thisfallispartlyduetothefailureofthe
farmpriceproposalstotakeaccountofrealtrendsin
productionfactorcosts.
1.4.1.Inthepast,useofthe'objectivemethod'
playedapositivepartinsupportingfarmincomesby
providingusefuldataonproductioncostswhichwere
takenintoaccountwhenfixingpricelevels.
1.4.2.Anydiscussionoffarmpricesorofthereform
ofthecommonagriculturalpolicy(CAP)mustconsider
costtrendsandhowtosolvethecost/returnsproblem,
interaliatoensurethattheCommunityretainsan
efficientandcompetitiveagriculturesector.
1.5.ThegeneraltrendinspendingoftheGuarantee
sectionoftheEuropeanAgriculturalGuidanceand (i)OJNoC40,17.2.1992,p.56.

NoC169/42 OfficialJournaloftheEuropeanCommunities 6.7.92
1.6.4.Norcanonepassoverthefactthatmassive
importsofcerealsubstitutes,boostedbyinadequate
protectionatborders,havemadetheuseofCommunity
cerealsforfodderlessattractive,thusincreasinginter­
ventionstocks.
1.7.Aproperlyconductedqualitypolicyinthe
cerealssectorwouldalsohavehelpedtoavoidrecourse
tocomplicatedmechanismssuchasMGQsandco­
responsibilityleviesthataredifficulttocontrol,leaving
onlytheinterventionpricetostabilizeproduction .1.11.Whileendorsingtheproposedpricefreeze,the
Committeeconsidersthatmaintenance ofthe1991/
1992guaranteelevelsshouldhoweverbegenuineand
generalized .Itshouldnottriggerdirectorindirect
reductionsinsupportforaparticularproductionsector,
normeanprematurealterationofcertaincommonmar­
ketorganizations ,sincethesecanonlybereviewedas
partoftheCAPreforms.
1.11.1.Inthefinalanalysis,thepricefreezemust
meanastraightforward extensionofthe1991/1992
pricesandrulestothenextfarmyear,withnoinno­
vationsormodifications .
1.11.2.Forthisreason,theCommitteeaskstheCom­
missiontoreconsidercertainproposalswhich,although
motivatedby'technical'concerns,areinfactliableto
reduceguaranteelevelsandaggravatetheincomelosses
offarmerswhohavealreadybeenhitbytheincrease
inproducercosts(up3,5%in1991)andinsomecases
byinflationratesabovetheCommunityaverage.1.7.1.Interventionmustreturntoitsoriginalroleof
providinga'safetynet',ifwearetostopfarmersfrom
producingforinterventionratherthanforthemarket.
1.12.TheadjustmentswhichtheCommitteecon­
sidersnecessaryaresetoutbelow.1.8.TheCommitteeconsidersthattoomuchempha­
sisislaidonsurplusesinsuchsectorsasdurumwheat
andrice,particularlywhenthecausesarenotclearly
pinpointed :
—inthecaseofdurumwheat,theselieinthefailure
tolaydownproperqualitycriteria;thecriteriaused
takeinsufficientaccountofthetangibledifference
inqualitybetweentraditionalproductionareasand
thenewareasinlessclimaticallysuitedregions
whereothercropscouldbegrownjustaswell,
—inthecaseofrice,thecriteriafordetermining
protectionatbordersdonotreflecttherealvalue
ofimportedriceasagainstCommunityrice.2.Commentsonparticularsectors
1.9.Overall,thebasicproblemishowtogivecon­
creteandcoherentexpressiontotheobjectivesrepeat­
edlyvoicedbytheCommission :
—tocreatemoreeffectivemechanismsformarket
balance,
—tosafeguardfarmincomesandtheruraleconomy.2.1.Cereals
2.1.1.UnderthepresentCommissionproposals,it
iscerealproducerswhowillfacethegreatestprice
reductions .
2.1.1.1.Theoverallreductionof11%encompasses
a3%cutintheinterventionpriceandanadditional
levyof3%oftheinterventionprice(thesebothasa
resultoftheovershootingoftheMGQin1991/1992)
plusretentionofthebasiclevyat5%oftheintervention
price(i.e.atthesamelevelasin1991/1992).
2.1.1.2.TheCommitteeopposessuchasharpprice
reductionforthe1992/1993farmyear,whichwould
hitcerealproducers'incomesveryhard.
2.1.1.3.TheCommitteerealizesthatthe3%
reductionintheinterventionpriceisanautomatic
consequenceofthestabilizersystemandthereforecan­
notbechallenged.
2.1.2.However,ithastobesaidthatatpresentthere
isnolegalbasisforapplyingthebasicandadditional
co-responsibility levies.
2.1.2.1.ThisisvbecausetheCouncilhasnotyet
decidedwhethertocontinuetheco-responsibility sys­1.10.TheCommitteeconsidersthatthefreezingof
pricesin1992/1993atthe1991/1992levelistheonly
possiblesolutioninthepresentcircumstances ,even
thoughitwilladverselyhitfarmincomes.
1.10.1.Fromthisangle,1992/1993shouldbetreated
asatransitionalfarmyearpendingthefinaloutcome
ofthediscussiononthereforms.Referringbacktoits
1991Opiniononthedevelopmentandfutureofthe
CAP,theCommitteehopesthatthereformswillbe
adoptedwithoutdelay.

6.7.92 OfficialJournaloftheEuropeanCommunities NoC169/43
temin1992/1993aspartoftheamendmentofthebasic
regulationsonthecerealssectorproposedintheCAP
reformpackage.
2.1.2.2.IftheCouncilweretoadoptsuchameasure,
theCommitteethinksitwouldbereasonabletocushion
theresultant,severeincomelossby(a)limitingthe
basiclevyto2%,and(b)grantingexemptionfromthe
co-responsibility leviestogrowerswhoapplyset-aside.
2.1.2.3.Ithastoberememberedthatanexcessive
dropincerealpricescouldleadfarmerstomoveover
tocropssuchasoilseeds.Thenetresultwouldbeto
neutralizethemeasuresalreadyadoptedtocontain
oilseedproduction .
2.2.Processedtomatoes
2.2.1.Giventhatthe1991/1992provisionsshould
remaininforcein1992/1993,theCommitteecannot
accepttheproposaltoamendthemechanismforpenal­
izingproducerswhoexceedtheguaranteethreshold.
2.2.1.1.Processedtomatoesarecurrentlysubjectto
productionquotaswherebyaidisonlypaidonacertain
quantity.Thesystemwastooperateforfourfarmyears
expiringin1991/1992.
2.2.1.2.IntheCommittee'sview,thesystemshould
continueunalteredin1992/1993.
2.3.Tobacco
2.3.1.Maintenanceofthestatusquoshouldalso
coverthemaximumpenaltiesimposedonproduction
overshoots .2.3.1.1.TheCouncildecidedinMarch1992to
increasefrom15%to23%thereductioninprocessing
aidforpurchasesthatexceedcertainlevels.Thisantici­
pates(albeitpartially)thereformofthesector'scom­
monmarketorganization ,whichshouldproperlyhave
beentackledinthewidercontextofCAPreform.The
Committeemustthereforeopposethismove.
2.4.Beef
2.4.1.Thesucklercowpremiumshouldbesetat
therateappliedfor1991/1992,giventhecontinuing
difficultmarketsituation.
2.5.Milk
2.5.1.TheCommitteeopposestheproposaltoapply
the1%reductioninquotasfrom1992/1993because
thequestionoffurtherquotasandtheirlevelsfalls
withinthewidercontextofCAPreformratherthan
thepricenegotiations .
2.5.1.1.Thebestsolutionwouldbetoextendthe
presentquotasysteminitsentiretyfor1992/1993.
2.5.1.1.1.TheCommitteethereforewelcomesthe
Council'sdecisionofMarch1992toadoptthiscourse.
2.5.1.2.However,itshouldbeclearlyunderstood
thatanyfurtherquotareductionsdecidedunderthe
CAPreformswouldonlyenterintoforceintheyear
followingtheCouncildecision.Retroactiveimplemen­
tationwouldnotbeacceptable .
2.6.Agri-monetary measures
2.6.1.TheCommitteefullyendorsestheproposal
toeliminatetheremainingMCAs.Theircontinued
existenceafter1January1993wouldimpedeintra-EC
tradeandwoulddistortcompetitionwithintheSingle
Market.
DoneatBrussels,30April1992.
TheChairman
oftheEconomicandSocialCommittee
MichaelGEUENICH