COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 64 final 
Brussels, 02.03.1994 
94/0066(CNS) 
94/0067(CNS) 
REPORT 
on the situation on the market for milk and milk products 
Proposal for a 
COUNCIL REGULATION (EC) 94/0066(CNS) 
fixing compensation with regard to the reduction in individual 
reference quantities in the milk sector and compensation for 
the definitive discontinuation of milk production 
Proposal for a 
COUNCIL REGULATION (EC) 
amending Regulation (EEC) No 3950/92 establishing an 
additional levy in the milk and milk products sector 94/0067(CNS) 
REPORT TO THE COUNCIL 
on the application of the milk quota system in Italy, 
in Spain and in Greece 
(presented by the Commission) 
Report on the situation on 
the market for milk and 
mi Ik produc ts 
- 1 -
Introduct ion 
In its 1991/92 price proposals presented to the Council in March 1991(1>, 
the Commission drew attention to the worsening situation on the market for 
milk and milk products, where intervention stocks were building up fast 
despite stable or practically stable milk production. 
Given the signs of stabilization in overall Community consumption and the 
lasting reductions in export possibilities on account of the political and 
economic changes in the former USSR and central Europe and the uncertainty 
following the Gulf war on the traditional, important markets in the Middle 
East, the Commission considered that a 5% reduction in the guaranteed total 
quantities was necessary to establish better balance on the market for dairy 
products. Out of a concern to lessen the impact of such a reduction on the 
market for beef and veal, the Commission proposed, and the Council approved, 
an initial reduction not exceeding 2% in quantities not subject to the 
additional levy for 1991/92. 
The Commission Communication to the Council and the European Parliament 
entitled "The Development and Future of the Common Agricultural Policy"^ 
endorsed this analysis of the situation on the market for milk products. On 
that basis the Commission considered a further reduction in the guaranteed 
total quantities necessary and proposed to the Council that the additional 
levy arrangements be extended (and simplified) and a reduction of 3% be made 
in the quantities in steps of 1% over three twelve-month periods starting 
from 1 April 1992 at the same time as the staggered reduction in the 
institutional prices for mi Ik.(3) 
(1) COM (91) 72 final of 1 March 1991 
(2) COM (91) 258 final of 22 July 1991. 
(3) COM (91) 409 final of 31 October 1991 
- 2 -
On 21 May 1992, as part of the reform of the common agricultural policy, the 
Council adopted the Commission proposals on milk and milk products^3) 
subject to a certain number of amendments^4). The Council decided that 
there would be no 1% reduction in quantities for the 1992/93 period, thereby 
confirming the Member States' guaranteed total quantities which it had fixed 
for that period on 31 March 1992, subject to a final decision^5). It 
further decided that before the 1% reduction was applied in the 1993/94 and 
1994/95 periods of the additional levy scheme, the Commission would present 
reports to the Council on the market situation together, where appropriate, 
with proposals in order to permit the Council to review the decisions taken 
for those two periods. This report has been drafted in response to that 
request. 
(4) COUNCIL DOCUMENT No 6953/92 of 2 June 1992. 
(5) Regulation (EEC) No 816/92 published in OJ No L 86, 1.4.1992, p. 83. 
- 3 -
1• Trends in the Community market 
The markets were relatively stable in 1993. The market price for 
butter remained more or less constant during the year despite the 4.3% 
reduction in the intervention price, while the market price for 
skimmed-milk powder, which is more irregular, fell back slightly only 
at the end of the year. Milk collection followed a similar path, 
remaining close to the levels of the previous year despite conflicting 
trends in the Member States: the marked reduction in milk production in 
Spain and Italy was almost exactly compensated for by the increase in 
deliveries in the other Member States. 
This overall stability was mirrored in the trend in intervention stocks 
which remained close to the levels of the previous year. 
Table 1 - Intervention on the Community market (tonnes) 
i 1 1 1 1— 1 
| | 1990 | 1991 | 1992 | 1993 | 
I I I i i 1 
| BUTTER I I I I I 
j Stocks at 1 January j 20 300 j 250 800 j 260 800 j 172.400 j 
j Buying-In | 250 300 j 174 000 j 48 000 j 32.200 j 
j Sales | 19 800 j 163 900 j 136 400 j 44.100 j 
j Stocks at 31 December j 250 800 j 260 800 j 172 400 j 160.500 j 
| j j { i i 
I SKIMyED-MILK POWDER I I I I I 
j Stocks on 1 January j 4 811 j 333 142 j 414 383 j 47.114 j 
| Buying-in j 337 211 j 198 570 j j 10.709 j 
j Sales | 8 880 j 117 330 j 367 269 j 20.873 j 
j Stocks on 31 December j 333 142 j 414 383 j 47 114 j 36.951 j 
While the trend in intervention stocks relects the relative stability 
of the market and of prices in general, their level is largely 
influenced by subsidized consumption, which accounts for a significant 
proportion of Community production: 
- 4 -
Table 2 - Subsidized consumption on the Community market (tonnes) 
1991 
I 
BUTTER (Milk fat in butter equivalent) I Buying-In (sales at reduced | 
prices) j 93 800 
Products on market | 
(subsidized) j 344 300 
TOTAL j 438 100 
Production | 1 800 000 
Subsidized consumption as | 24,3 X 
a percentage of production | 1992 
96 200 
343 900 
440 100 
1 660 000 
26,5 X 1993 
44 000 
430 300 
474 300 
1 680 000 
28,2X Percentage 
change 
1993/1992 
+ 6,4 X 
SKIMMED-MILK POWDER (skimmed milk in skimmed-milk powder equivalent) 
Animal feed 
Casein 
TOTAL (SMP equivalent) 
SMP production 
Casein (SMP equivalent) 
TOTAL (SMP equivalent) | 955 000 
| 350 000 
j 1 305 000 
| 1 505 000 
I 350 000 
j 1 855 000 860 000 
458 000 
1 318 000 
1 162 000 
458 OOP 
1 620 000 697 000 
346 000 
1 043 000 
1 255 000 
346 000 
1 601 000 
Subsidized consumption as 
a percentage of production 70 X 81.4 X 65 X -19 X 
-24 X 
-21 X 
+ 8 X 
-24 X 
-1.2 X 
-20 X 
Subsidized consumption of skimmed milk fell by 300 000 tonnes in 
skimmed-milk powder equivalent in 1993. Despite its scale, this change 
did not cause significant movements in market prices or in the level of 
skimmed-milk powder stocks. At the same time, exports of skimmed-milk 
powder fell back by about 90 000 tonnes. 
Table 3 - Community exports (tonnes) 
Exports 
Butter and butteroil 1991 j 1992 j 1993 • | Variation 
J 1 H 
| 322 000 | 242 000 | 220 000 | -9 X 
* Estimate 
- 5 -
The situation on the Community market is directly affected by the level 
of exports, which in turn depend on both the capacity of the budget to 
finance them and the situation on the world market. 
2- Trends on the world market 
The Community has a commanding position on the world market, both in 
terms of total production and the main products and in terms of market 
share, wich is about 50% as a result of exports amounting in both 1992 
and 1993 to more than 13 million tonnes milk equivalent (see tables in 
Annex II). 
Table 4 - Community share of the world market 
Year 
Mi Ik equivalent 
(mil I Ion tonnes) 
% 1983 
10 
44 1984 
12,8 
48 1985 
12,2 
45 1986 
11,4 
41 1987 
13,8 
48 1988 
16,5 
53 1989 
14,2 
51 1990 
12,4 
47 1991 
12,8 
46 1992 
13,8 
48 1993* 
13,2 
47 
* Preliminary 
The stability in Community exports is a reflection of the stability on 
the world market, where prices changed little in 1993 
Table 5 - International prices (US dollars fob) 
Minimum 
GATT prices 
1990 1st 6 months 
2nd 6 months 
1991 1st 6 months 
2nd 6 months 
1992 1st 6 months 
2nd 6 months 
1993 1st 6 months 
2nd 6 months Butter 
1 350 
1 350 - 1 550 
1 350 - 1 500 
1 350 - 1 400 
1 450 - 1 850 
1 350 - 1 600 
1 350 - 1 500 
1 350 - 1 500 
1 350 - 1 500 ButteroiI 
1 625 
1 600 - 1 900 
1 600 - 1 800 
1 600 - 1 800 
1 675 - 2 250 
1 625 - 1 950 
1 625 - 1 800 
1 625 - 1 800 
1 625 - 1 750 Cheese 
1 500 
1 700 - 2 000 
1 550 - 2 000 
1 600 - 1 900 
1 600 - 2 100 
1 750 - 2 100 
1 750 - 2 100 
1 750 - 2 100 
1 800 - 1 950 Sklmmed-miIk powder 
1 200 
1 200 - 1 700 
1 300 - 1 500 
1 200 - 1 400 
1 450 - 1 800 
1 550 - 1 900 
1 550 - 1 900 
1 550 - 2 000 
1 500 - 1 750 
(2) 
- 6 -
Since the final quarter of last year, however, prices have moved 
downwards and have fallen below minimum GATT prices in the case of 
butter and butteroil. This downward movement is a reflection of the 
drop in international demand which is itself part of the unfavourable 
trend in consumption brought about by the economic recession. 
Adverse economic conditions aside, the world market in milk products 
continues to be dominated by the unfavourable situation in eastern 
Europe and the Middle East: 
eastern Europe : the major market outlet which once existed in the 
former USSR and some central European countries has not only been 
lost but the fall in consumption and the need for strong currencies 
have even resulted in exports from these countries at uncompetitive 
prices. Should these countries permanently reappear on the world 
market after the current economic restructuring, they will most 
likely be exporters, given their agricultural potential; 
the Middle East: leaving aside the political events which can 
always affect these traditional export markets, demand in these 
countries is broadly determined by the price of oil, which remains 
low. 
In addition to these factors influencing the world market in general, 
factors specific to the milk sector are also at play which are equally 
worrying in terms of our exports: 
world consumption of butter is in continuous decline at a rate of 
2% a year. The downward trend in purchasing power in eastern Europe 
is serving to speed up the decline; 
milk production and the supply of milk products from Oceania and 
New Zealand in particular are increasing year by year (see Annex 
II). Even without price-support policies, the relentless move away 
from livestock rearing to milk production and the build-up of milk 
fats in particular as a result of the drop in consumption are a 
threat to the stability of a world market which remains very 
precarious given the prospect of new surpluses in the near future; 
- 7 -
lastly, the effectiveness of the market-penetration programme 
financed by the United States, the DEIP (i.e. Dairy Export 
Incentive Programme) which is specifically targeted at the 
Community's traditional markets, should be highlighted (see 
Annex II). Between 1990 and 1993, American exports in milk 
equivalent increased from 1.2% to 6.7% of the world market. 
To conclude, even if the world market situation appears stable, the 
combined effect of the drop in demand, particularly in eastern Europe, 
the increase in supply from Oceania and the increase in exports from 
the United States seriously threatens the world market which is already 
showing signs of weakness, the most obvious manifestation of which is 
the significant drop in prices, below even minimium GATT prices in the 
case of butter and butteroil. 
In the context of such a fragile world market, the measures that the 
Council must take to control milk production are becoming increasingly 
important. 
3. Control of production and balance on the market 
Despite the difficulties connected with any quota system, the 
production control scheme has given ample proof of its effectiveness. 
The Court of Auditors affirms in the conclusion to its special report 
No 4/93 that "since 1984, milk production has been moving towards the 
desired state of equilibrium between the production and consumption of 
mi Ik products"*6). 
It should be added that establishing a better balance has not been 
achieved at the expense of our exports. Table 4 provides the 
conf irmat ion. 
(6) OJ No C 12, 15. 1. 1994, paragraph 5.2 
Tools 6 - AppI Icot Ion of ths odditlonol Isvy orronqsmsnts 
(tonnss) 
EC 
: 1984/89(1) 
: 1989/86(1) 
: 1966/87(2) 
: 1987/88(2) 
: 1988/89(2) 
: 1989/90(2) 
: 1990/91(2) 
: 1991/92(3) . 
: 1992/93(3) : : Guoronttsd 
totol 
quantity 
a 
99 924 000 
98 078 974 
103 988 974 
102 096 143 
101 099 108 
100 209 222 
100 999 222 
106 697 699 . 
101 672 029 Ouantlty 
•uspsndsd 
b 
3 778 103 
9 3M 489 : 
4 917 603 . 
4 679 486 : 
4 »89 666 : : 
: 
c 
393 000 
393 000 
393 000 
443 000 
443 000 
443 000 
443 000 
443 000 
443 000 K\location from 
Community rsssrvs 
SL0M + 1 X 
d 
0 
0 
0 
0 
0 
902 233 
902 233 
600 000 
600 000 s 
0 
0 
0 
0 
0 
1 039 886 
1 039 886 
1 039 886 
1 039 886 Ouantlty 
ova11ab1 s 
f-o-b+c+d+s 
99 917 000 
98 471 974 
104 381 974 
98 761 040 
96 109 623 
97 676 738 
97 864 899 
103 794 919 
103 794 919 Ouantlty 
dsllvsrsd 
g 
99 293 261 
100 172 744 
103 073 297 
99 173 711 
97 619 776 
97 947 296 
96 781 893 
109 209 994 
n.d. Cross 
dlffsrsncs 
h-g-f 
-623 739 
1 701 170 
691 723 
412 671 
1 914 193 
270 998 
-1 082 962 
1 494 994 
n.d. Corrset Ion 
for mi Ik 
fat 
1 
142 
83 
118 739 
439 882 
408 906 
776 102 
1 372 861 
2 029 708 
2 234 897 Intsrchangs 
dlrsct 
salss 
J 
99 119 
-97 131 
-8 319 
-269 031 
-332 123 
-372 628 
-402 808 
-388 219 
-960 390 Not : 
dlffsrsncs : 
k-h+l+J : 
-968 482 : 
1 644 122 : 
801 939 : 
983 922 : 
1 990 936 : 
674 032 : 
-112 909 : 
3 130 602 : 
n.d. oA 
(a) Art lets 5c(3) of Rsgulotlon (EEC) No 804/68 
(b) Rsgulotlon (EEC) No 779/87 
(c). (d). (s) Artiels 1 of Rsgulotlon (EEC) No 1946/88 
(g) Msmbsr Stotss* dsclorotlons to ths Commission, sttlmatss or provisional dsclarations in ths cass of csrtoln Msmbsr Statss. 
(I) Artiels 12 of Rsgulotlon (EEC) No 1946/88 
(j) Artiels 6o of Rsgulotlon (EEC) No 897/84 
(1) 10 Msmbsr Stotss 
(2) 11 Msmbsr Stotss 
(3) 12 Msmbsr Statss 
n.a. not aval I obis 
- 9 -
While the scheme has definitely enabled deliveries to be kept down in 
most Member States, column (i) in Table 6 also points to the 
ever-rising fat content of the milk delivered and the increasing 
corrections that have to be made to the quantities delivered as a 
result. This constant rise in the fat content of milk delivered 
seriously endangers the balance of the market. 
While the trend in consumption is stable in the Community and generally 
in all developed countries, the trends by product show significant 
variations'7^ : demand for partly-skimmed milk, fresh (reduced-fat) 
milk products and certain cheeses is rising by 1% to 2% a year while 
that for whole milk, hard cheese and particularly butter Is falling 
constantly by 2% to 2.5% a year. The result is an overall decline in 
milk fat consumption that is growing steeper every year and persistent 
difficulties on the market for butter, clearly reflected in the market 
price, which has stayed between 90% and 94% of the intervention price 
for the last three years. 
This downward trend in consumption of butter and milk fat, which is 
almost certainly in part a response to dietary concerns, is also the 
result of competition from butter imitation and replacement products. 
Products competing with butter are now in a dominant position on the 
market for yellow fats'7). 
Faced with a similar situation, Canada has repeatedly reduced its quota 
of milk for processing. The United States, which does not have a 
comparable system, reduced the support price for butter twice in 1992 
and again on 7 July 1993, thus considerably altering the processing 
ratio for milk, which is USD 1 469/tonne or ECU 1 096/tonne for butter 
and USD 2 280/tonne or ECU 1 701/tonne for skimmed-milk powder. 
(7) Cf. Report on development on the market in milk and milk products and 
competing products - Fourth report from the Commission to the Council 
COM (93) 34 final of 5 February 1993. 
- 10 -
Such a reduction in prices for butter, which may help effectively to 
slow down the development of imitation and replacement products, has 
the definite advantage of encouraging consumption. For this reason the 
Commission proposed to the Council an additional reduction of 3% in the 
intervention price for butter as part of the 1994/95 price proposals. 
In this respect, it should be remembered (to emphasize the quantities 
involved) that approximately one third of milk collected in the 
Community is still processed into butter, only 60% of which is disposed 
of at the market price. 
Conversely, it may be feared that the devaluation - in some cases 
substantial - of the green rates of currencies which have recently been 
readjusted within the EMS may result in a marked increase in prices for 
butter and that this may be damaging to consumption in those Member 
States while the strength of some currencies on the other hand may 
cause butter to be placed in intervention because no outlet can be 
found for it on a market saturated by butter from Member States with 
weaker currencies. 
4. CONCLUSIONS 
On 21 May 1992, as part of the CAP reform, the Council decided on a 
reduction of 5% in the intervention price of butter over two years and 
decided in principle on a reduction of 2% in the guaranteed total 
quantities. Even though the market appears to be in better equilibrium 
than was feared, it remains exposed to the same pressures as those 
identified at the time. 
The market stability in 1993 seems to be broadly the result of the 
trend in milk collection, which remained close to the level of the 
previous year, despite the 0.6% increase in the guaranteed total 
quantities decided by the Council in May 1993. The suck 1er cow premium 
scheme and the resulting drop in the dairy herd as well as the impact 
of national programmes to encourage farmers to cease milk production 
all contributed to this unexpected outcome. In this regard, in 
addition to the results achieved by Spain and Italy in reducing their 
milk deliveries to within their guaranteed total quantities, mention 
- 11 -
should also be made of the situation in the new German Lander where 
milk production in 1993 is some 30% lower than the guaranteed total 
quantity fixed by the Council for this region. Given the growth and 
renewal of the dairy herd in the new Lander and the ongoing 
restructuring of farms in general, a better adjustment of deliveries to 
the available quota cannot be excluded in the short term. 
Market stability thus appears very precarious given the worrying 
signals that have begun to appear. A predictable rise in milk 
collection should be felt in the first six months, resulting in an 
increase in the production of skimmed-milk powder and butter. Given 
the drop in international demand, the difficulties on the market in 
caseins and the significant drop in subsidized consumption, it seems 
inevitable that buying-in of skimmed-milk powder will resume at a 
steady rate. 
The persistant drop in butter consumption on both the Community and 
world markets and the unstoppable increase in the fat content of the 
milk collected are combining to cause a growing imbalance which is 
being further aggravated by cheaper competing products. 
To conclude, the Commission believes that the imbalances already 
apparent on the market are likely to worsen in the short term and will 
lead to a significant deterioration in the situation. The butter 
market remains the most worrying, however, its structural imbalance 
continuing to worsen. For this reason the Commission has proposed to 
the Council in the price proposals for 1994/95 that the intervention 
price for butter be reduced by a further 3%. In view of the extra 
reduction in the butter intervention price which has already been 
proposed to rebalance the market, it would now seem possible to tail 
back the 2% cut in total guaranteed quantities agreed in principle as 
part of the CAP reform. The Commission is therefore proposing that the 
total guaranteed quantity for 1994/95 be reduced by 1%, accompanied by 
a compensation scheme and an aid programme to encourage cessation of 
milk production in line with decisions already taken, and It invites 
the Council to re-examine the need for a further 1% reduction for the 
1995/96 marketing year on the basis of the next report on the market 
situât ion. 
- 12 -
ANNEX I 
Supply balance for butter'1) 
Stocks at 1 January 
Pub Iic 
Private 
Production 
Import 
Aval I able 1990 
124 
104 
20 
1796 
88 
2008 1991 
251 
84 
1800 
68 
2203 1992 
302 
261 
41 
1680 
48 
2030 ('000 t) 
1993 
240 
172 
68 
1682 
55 
1977 
Consumot ion 
Normal market price 
Special measures 1455 
1089 
366 1602 
1163 
432 1548 
1153 
437 1566 
1082 
467 
Export 
Stocks per 
Pub Ii c 
Pr ivate 31 December 218 
335 
251 
84 321 
302 
261 
41 242 
240 
172 
68 220 
208 
161 
47 
The trend in internal disposal measures and exports and a comparison with 
butter production is given below : 
1990 1991 1992 (mid year) 
1993. 
1. Internal disposal ('000 t) 366 432 437 467 
of which 
- Pastry & ice cream 292 352 364 392 
- Non-profit making 37 37 36 37 
organizat ions 
- Cooking butter 16 19 19 22 
- Other 21 24 18 16 
2. Exports ('000 
of which 
- Norma I 
- Special price 
- Food aid t) 218 
202 
5 
11 321 
101 
107 
13 242 
205 
40 
5 220 
3. Total 584 754 691 687 
as a percentage of 
product ion 33 43 40 41 
Subsidized butter for the internal market plus total exports exceeded 40 % 
of the butter production both in 1991, 1992 and 1993 while it was only 33 % 
in 1990. 
(1) Including former DDR as from 1991. 
- 13 -
SUPPLY BALANCE FOR SKIMMED-MILK POWDER ('000 t) 
1990(*) 1991 1992 1993 
1. Public stocks at 1 January 5 333 414 47 
2. Quantities avallable 1672 1510 1165 1280 
of which 
- production 1665 1505 1162 1255 
- importation 7 5 3 25 
3. EC consumption 1067 1186 1140 994 
of which 
- at market price 300 330 335 335 
- feed for calves 767 856 805 659 
4. Exports 329 253 390 300 
of which 
- exported on market terms 261 192 291 250 
- food aid 68 61 99(**) 50 
5. Balance - (2)-(3)-(4) 276 89 326 -14 
6. Public stocks at 31 December 333 414 47 37 
7. Skimmed milk used in the 
manufacture of casein 
(SMP equivalent) 334 350 458 346 
(*) excluding the former GDR 
(**) of which 44 000 tonnes covers emergency supplies to eastern Europe 
SUBSIDIZED DISPOSAL OF SKIMMED MILK ('000 t) 
1990 1991 1992 1993 
1. Community market 1166 1288 1317 1043 
of which 
- animal feed 832 939 859 697 
- casein 334 349 458 346 
2. Exports 329 253 390 300 
3. Total 1495 1541 1706 1343 
4. As a percentage of production 75 83 92 84 
(powder + casein) 
(3) 
- 14 -
ANNEX I I 
, 1 1 1 1 1 
j Milk collection | 1990* | 1991 | 1992 | 1993 (p) | 
| (million tonnes) I I I I I 
j EC (without «x-OOR) | 100.7 j 105.4 j 103.5 j 102.9 j 
j CIS + Baltic StatssC) j 108.2 j 101.4 j 90.0 j 82.1 j 
j USA | 66.3 j 66.5 j 67.5 j 67.3 j 
j Now Zealand j 7.4 j 7.4 j 7.9 j 8.1 j 
j Australia j 6.4 j 6.4 j 6.7 j 7.2 j 
J» 
(x) Estimated production • «xcluding the former COR 
(p) Provisional figures 
| Butter production (tonnes) | 1990 | 1991 1992 1993 (p) | 
I EC 
| CIS 
j USA 
| New Zealand 
| Australia | 2 013 000 
j 1 740 000 
j 591 000 
j 255 000 
104 000 | 1 800 000 
j 1 504 000 
j 606 000 
j 228 000 
112 000 1 660 000 
1 438 000 | 
610 000 j 
243 000 | 
135 000 j | 1 680 000 
j 1 362 000 
I 580 000 
248 000 
140 000 
(p) Provisional figures 
| Production of skimmed-milk 
| powder (tonnes) j 1990 j 1991 1992 
I EC 
| USA 
j CIS 
| New Zealand 
| Australia | 1 665 000 
j 399 000 
j 300 000 
j 184 000 
j 135 000 
J | 1 505 000 
j 398 000 
j 274 000 
j 158 000 
143 000 + 1993 (p) 
(P) 
396 000 | 
263 000 j 
155 000 j 
153 000 
(p) Provisional figures 
|Cheese production tonnes) 1990 1991 
I EC 
| USA 
I CIS 
| Australia 
| New Zealand 
I 5 344 000 
2 749 000 
878 000 
175 000 
111 000 5 341 000 
2 730 000 
773 000 
182 600 
125 000 5 508 000 
2 943 000 
592 000 
205 500 
129 700 5 511 000 
3 050 000 
580 000 
205 000 
144 000 
(p) Provisional figures I 
| 1 162 000 | 1 222 000 | 
I 340 000 | 
230 000 j 
131 000 j 
174 000 j 
I 
1 1 
1992 | 1993 (p) | 
I r 1 1 1 1 
| | 1990 | 1991 | 1992 | 1993 (p) | 
| Share of market | j 1 j j ( j j 1 
| in milk equivalent |ml 11 Ion j X jml 11 Ion j % jmillion j X (million ) X j 
I | tonnes | | tonnes | J tonnes | | tonnes | j 
I EC j 12.5 j 49 j 12.8 j 46.2 | 13.8 j 47.6 j 13.2 j 47.1 j 
| New Zealand j 4.3 j 17 j 5.2 j 18.7 j 5.1 j 17.4 j 5.1 j 18.1 j 
j Australia j 1.8 j 7.3 j 2.4 j 8.6 j 2.4 j 8.3 j 2.0 j 7.0 j 
I USA | 0.3 j 1.2 | 0.9 | 3.4 j 1.6 j 5.5 j 1.9 j 6.7 j 
I 1 1 1 I I I I I I 
(p) Provisional figures 
20 -
Proposal for 94/ 0066(CNS) 
COUNCIL REGULATION (EC) No /94 
Of 
fixing compensation with regard to the reduction in individual 
reference quantities in the milk sector and 
compensation for the definitive discontinuation of milk production 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in 
particular Article 43 thereof, 
Having regard to the proposal from the Commission,C) 
Having regard to the opinion of the European Par I lament, <2> 
Whereas developments in the milk market have made necessary a 1% reduction 
in the global quantities fixed in Article 3(2) of Council Regulation (EEC) 
No 3950/92 of 28 December 1992 establishing an additional levy in the milk 
and milk products sector*3*, as last amended by Regulation (EEC) No 
.../..<4>, from 1 April 1994; whereas, to offset the inevitable reduction 
in individual reference quantities which will result, it seems necessary to 
provide for compensation of ECU 5 per 100 kilograms per year for ten 
years, commensurate with the ajustment effort required of producers; 
whereas provision should be made for the possibility of paying such 
compensation in the form of transferable guaranteed bonds negotiable on the 
market ; 
Whereas, however, it is important not to reduce the reference quantities of 
small and medium-sized holdings; whereas to that end, in order to release 
reference quantities for allocation to the said holdings, a Community 
scheme should be introduced to finance the definitive discontinuation of 
milk production which provides for the grant of compensation to all 
(1) 0J No C 
(2) OJ No C 
(3) OJ No L 405, 31.12.1992, p. 1. 
(4) cf p. 'Ç 
- 21 -
producers who so request, subject to certain eligibility conditions, payable 
after they have fully and definitively ceased to produce milk; whereas the 
Member States must take account of the existence of agricultural leases; 
Whereas Member States should also be permitted to decide whether or in which 
region to implement this programme, for reasons relating to the necessity to 
encourage structural trends and changes, or to the requirements of regional 
development, or to the possibility under production conditions in the region 
or regions concerned to free significant reference quantities or to 
overriding administrative needs; 
Whereas the compensation for discontinuing milk production is, in principle, 
granted for the whole of the reference quantity; whereas, however, this 
right should in certain cases be limited since producers who have benefited 
from Article 3c of Regulation (EEC) No 857/84(5) are excluded from the 
compensât ion; 
Whereas, in the light of experience, the maximum compensation for 
discontinuing milk production may be fixed at ECU 17 per 100 kilograms and 
per year, payable for three years; whereas it may be necessary to increase 
the level of compensation; whereas, therefore, Member States should be 
authorized to put up additional financing, the amount of which may be 
adjusted to take account of specific regional features; whereas provision 
should also be made for the compensation to be paid in the form of 
transferable guaranteed bonds negotiable on the market; 
Whereas the reference quantities thus freed must be reallocated to small and 
medium-sized holdings in order to prevent a reduction in their reference 
quantity; whereas the Community contribution to the compensation for 
permanent cessation of milk production must be restricted to these 
reallocation requirements; 
Whereas, over and above this objective, provision should be made for the 
following periods to allow Member States who deem it necessary to continue 
restructuring to maintain a scheme for financing discontinuation of milk 
(5) OJ No L 90, 1.4.1984, p. 13. Regulation repealed by Regulation (EEC) No 
3950/92. 
)L 
- 22 -
production by providing for a Community contribution to the financing of 
such schemes of up to 50% of the amount of compensation fixed by the Member 
State, up to a maximum of ECU 2.5 per 100 kilograms and per year for ten 
years; whereas the compensation may also be paid in the form of transferable 
guaranteed bonds negotiable on the market; whereas, if necessary, the 
reference quantities liberated under this scheme may remain unallocated in 
order to facilitate the decline in deliveries and direct sales implicit in 
the reduction of guaranteed total quantities; 
Whereas the aim of the Community compensation is to restore market balance 
and may, therefore, be considered as intervention within the meaning of 
Article 3 of Council Regulation (EEC) No 792/70 of 21 April 1970 on the 
financing of the common agricultural policy*6*, as last amended by 
Regulation (EEC) No 2048/88*7*, 
HAS ADOPTED THIS REGULATION: 
Art icle 1 
1. Compensation shall be granted to producers whose reference quantity has 
been reduced in order not to exceed the guaranteed total quantity fixed 
in Article 3(2) of Regulation (EEC) No 3950/92 for the period 
concerned. 
2. This compensation shall be: 
(a) fixed at ECU 5 per 100 kilograms per year; 
(b) paid for such part of the individual reference quantity as has 
been and remains actually deducted in relation to the reference 
quantity available on 31 March 1994, where applicable corrected 
by the quantities allocated from the national reserve and 
transfers of reference quantities which have taken place since 
that date. The part so defined may not exceed in relative value 
the reduction applied to the quantities fixed in Article 3(2) of 
Regulation (EEC) No 3950/92 for the Member State and the period 
concerned; 
(6) 0J No L 94, 28.4.1970, p. 13. 
(7) 0J No L 185, 15.7.1988, p. 1. Ol 
- 23 -
(c) paid in ten annual instalments from 1995, between 1 April and 
30 September each year. 
3. The Member State may pay the compensation in the form of transferable 
guaranteed bonds which are negotiable on the market. 
Article 2 
1. At the request of the party concerned and subject to the conditions 
laid down in this Article, the Member States shall grant, to any 
producer who undertakes to discontinue definitively all milk 
production before a date to be determined, compensation payable in 
three annual instalments between 1 April and 30 September each year. 
However, each Member State may, on the basis of one or more of the 
fol lowing cr iter ia: 
- the need to encourage structural trends and changes, 
- the requirements of regional development in order to avoid, in 
particular, the desertification of certain areas, 
- the possibility, under production conditions in the region or 
regions concerned, that such a scheme will not free significant 
reference quantities, 
- overriding administrative needs, 
decide not to implement the scheme referred to in the preceding 
subparagraph in one, several or all of its regions. 
2. (a) Eligible producers are those who have a reference quantity for 
deliveries or direct sales, excluding producers who have 
benefited from quantities pursuant to Article 3c of Regulation 
(EEC) No 857/84. 
However, Member States: 
- may decide not to grant compensation to producers possessing 
less than six dairy cows or whose annual individual reference 
quantity is less than 25 000 kilograms, 
IS 
- 24 -
- shall be authorized to make the necessary provisions to 
ensure that, in the event that the amount of compensation 
corresponding to all eligible compensation applications 
exceeds the amount of Community financing referred to in 
paragraph 3, the reductions in quantities effected under 
this Regulation are, in so far as possible, harmoniously 
apportioned between the regions and collection areas. 
(b) Compensation shall be granted for the reference quantity 
available at the end of the twelve-month period in question. 
(c) In the case of producers who have two reference quantities, one 
for deliveries and one for direct sales, the compensation shall 
be granted for both reference quantities. 
(d) In the case of agricultural leases, the application for 
compensation shall be submitted by the lessee. 
Member States shall determine the conditions under which the 
lessee may submit the application for compensation and the 
conditions under which the compensation is granted, taking 
account of the legitimate interests of the parties concerned. 
3. Community financing of the compensation referred to in paragraph 1 
shall be limited to the reallocation requirements referred to in the 
first paragraph of Article 3. 
Within that limit, Member States shall be authorized to pay maximum 
compensation of ECU 17 per 100 kilograms and per year. 
Member States may: 
(a) pay compensation of less than ECU 17 per 100 kilograms and per 
year and use the balance to free additional quantities; 
(b) contribute to Community financing by increasing the amount of 
compensât ion. 
/) 9 
- 25 -
The level of the increase may be adjusted by each Member State 
within its territory to take account of the differing local 
conditions in respect of: 
- milk production trends, 
- the average level of deliveries per producer, 
- the need to avoid hampering the restructuring of milk 
product ion, 
- the existence of opportunities for converting to other 
productive activities, 
- the siting of milk production in one of the areas as defined in 
Article 3(3), (4) and (5) of Council Directive 75/268/EEC of 
28 April 1975 on mountain and hill farming and farming in 
certain less-favoured areas*8*, as last amended by Regulation 
(EEC) No 797/85*9>. 
4. The Member State may pay the compensation in the form of transferable 
guaranteed bonds which are negotiable on the market. 
Article 3 
The reference quantities freed pursuant to Article 2 shall be reallocated, 
within the limits of the quantity covered by the compensation provided for 
in Article 1, to producers whose reference quantity remains less than 
200 000 kilograms, provided that in cases where the Member State has 
implemented Article 1(3) the amount of compensation still payable 
corresponding to the reallocated quantities is repaid. 
The additional quantities referred to in the second subparagraph of 
Article 2(3)(a) shall be reallocated in the following order of priority: 
first to extensive holdings in areas as defined in Article 3(3), (4) and (5) 
(8) 0J No L 128, 19.5.1975, p. 1. 
(9) 0J No L 93, 30.3.1985, p. 1. 2^ 
- 26 -
of Directive 75/268/75, then to those in other areas and, where applicable, 
to producers determined on the basis of objective criteria laid down in 
agreement with the Commission, and particularly to small producers and 
producers situated in the abovementioned areas. 
"Extensive holdings" means holdings on which the maximum stocking density, 
converted into LU in accordance with Annex I to Council Regulation (EEC) No 
2328/91*10*, does not exceed 1.4 LU per hectare of total forage area on the 
holding calculated in accordance with the second indent of Article 4g(3) of 
Regulation (EEC) No 805/68*11*. 
Article 4 
1. From 1 April 1995 until the end of the additional levy scheme, the 
Member States may, at the request of the party concerned and subject to 
the conditions laid down in Article 2, grant any producer as defined in 
that Article compensation payable in ten annual instalments from 1996, 
between 1 Apr 11 and 30 September each year. 
2. The Member State shall fix the amount of the compensation, which may 
vary on the basis of one or more of the criteria referred to in the 
second subparagraph of Article 2(3). 
Community financing shall be limited to 50% of the compensation 
granted, with a maximum contribution of ECU 2.5 per 100 kilograms and 
per year for ten years. 
3. The reference quantities freed pursuant to this Article shall be 
reallocated in accordance with the second paragraph of Article 3 or, 
where applicable, shall not be reallocated. 
4. The Member State may pay the compensation in the form of transferable 
guaranteed bonds negotiable on the market. 
(10) 0J L 218, 6.8.1991, p.1. 
(11) OJ No L 148, 28.6.1968, p.24. 27 
(4) 
- 27 -
Article 5 
Financing of the Community compensation provided for in Articles 1, 2 and 4 
shall be considered as intervention within the meaning of Article 3 of 
Regulation (EEC) No 729/70. 
Article 6 
Member States shall forward to the Commission, before 1 April each year, all 
the information needed for an assessment to be made of the effectiveness of 
the measures provided for in this Regulation. 
Article 7 
The Commission shall, in accordance with the procedure laid down in 
Article 30 of Regulation (EEC) No 804/68, adopt the measures for applying 
this Regulation. 
Article 8 
This Regulation shall enter into force on the third day following its 
publication in the Official Journal of the European Communities. 
It shall apply from 1 April 1994. 
This Regulation shall be binding in its entirety and directly applicable in 
a 11 Member States. 
Done at Brussels, For the Council 
17-
- 15 -
Proposal for 94/ 0067(CNS) 
COUNCIL REGULATION (EEC) No /93 
Of 
amending Regulation (EEC) No 3950/92 establishing an additional 
levy in ths milk and milk products ssctor 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in 
particular Article 43 thereof, 
Having regard to the proposal from the Commission1, 
Having regard to the opinion of the European Parliament2, 
Whereas, in the context of the reform of the common agricultural policy, the 
Council decided upon the principle of a 2% additional reduction of the 
guaranteed total quantities, spread over 1993/94 and 1994/95, without 
prejudice to a possible review in the light of the general market situation 
and particular situations existing in certain Member States; 
Whereas an analysis of the market in March 1993 led the Council to postpone 
the 1% reduction of the guaranteed total quantities decided in principle for 
1993/94 and it was agreed to review its entry into force at the same time as 
that for 1994/95; whereas an analysis of the market situation shows that 
milk and milk products remain exposed to the same dangers as those 
identified when the Council decided on the 2% reduction of the guaranteed 
total quantities; whereas it is therefore necessary to reduce the guaranteed 
total quantities; whereas, however, in view of the proposed additional 
reduction in the intervention price of butter in order to restore market 
stability, it appears feasible to limit to 1% the reduction for the period 
1994/95 and to specify accordingly in Article 3 of Regulation (EEC) 
No 3950/923, as last amended by Regulation (EEC) No 1560/934, the 
guaranteed total quantities; 
1 
2 
3 OJ No L 405, 31.12.1992, p. 1. 
4 OJ No L 154, 25.6.1993, p. 30. il 
- 16 -
Whereas the particular situations of Italy, Greece and Spain respectively 
have been examined; whereas, in the case of the latter two Member States, 
the conclusions reached permit a carry-over of the increase in the 
guaranteed total quantity, but only for the period 1994/95 in the case of 
Greece; whereas a review will be carried out before the beginning of the 
period 1995/96 to see whether all the conditions to which the definitive 
increase in the guaranteed total quantity for Greece is subject have been 
fui Iy complied with; 
Whereas the situation of Italy, following the examination carried out, 
assumes a new perspective which, currently and for the period 1994/95, 
warrants an increase of no more than 550 000 tonnes in the guaranteed total 
quantity; whereas the amount of this increase and its definitive nature will 
be reviewed before the beginning of the period 1995/96, as in the case of 
Greece, in the light of whether the sum of the individual quantities has 
been absorbed; 
Whereas, as far as required, the components upon which the "deliveries" part 
of the guaranteed total quantity for Greece, Spain and Italy is calculated 
for the period 1994/95 should be specified; whereas, for each of these three 
Member States, to the amounts specified hereafter must be added the 
quantities from the former Community reserve; whereas, in the case of 
Greece, the total quantity fixed for the period 1992/93 is increased by 
100 000 tonnes; whereas, in the case of Spain, the figure of 
4 550 000 tonnes represents the basic total quantity which is increased, on 
the one hand, by 500 000 tonnes and, on the other, by 150 000 tonnes 
following a transfer from direct sales to deliveries; whereas, in the case 
of Italy, the total quantity fixed for the period 1992/93 is increased by 
550 000 tonnes, 
HAS ADOPTED THIS REGULATION 
Article 1 
Article 3(2) of Regulation (EEC) No 3050/92 is hereby replaced by the 
fol lowing: 
?(r 
- 17 -
'2. The following total quantities shall be fixed without prejudice to 
possible review in the light of the general market situation and 
particular conditions existing in certain Member States: 
(a) For the period 1.4.1993 to 31.3.1994 
(tonnes) 
Member State Deliveries Direct sales 
Belgium 2 937 238 373 193 
Denmark 4 454 397 951 
Germany (*) 27 764 778 100 038 
Greece 625 985 4 528 
Spain 5 200 000 366 950 
France 23 502 974 732 824 
Ireland 5 230 554 15 210 
Italy 9 212 190 717 870 
Luxembourg 268 098 951 
Netherlands 10 972 104 102 588 
Portugal 1 804 881 67 580 
United Kingdom 14 197 179 392 868 
(1) Of which 6 244 566 tonnes covers deliveries to purchasers 
established in the territory of the new Lander and 8 801 tonnes 
covers direct sales in the new Lander. 
The increase in the total quantities for Belgium, Denmark, Germany, 
France, Ireland, Luxembourg, the Netherlands and the United Kingdom 
shall be granted in order to permit the allocation of additional 
reference quantities to: 
producers who, by virtue of the second indent of Article 3a(1) of 
Regulation (EEC) No 857/84(*), had been excluded from allocation 
of a special reference quantity, 
producers situated in the mountain areas as defined in 
Article 3(3) of Directive 75/268/EEC(**) or to the producers 
referred to in Article 5 of this Regulation. 
The increase in the total quantity for Portugal shall be granted as a 
matter of priority to contribute towards satisfying the requests for 
additional reference quantities from producers whose production during 
25" 
- 18 -
the 1990 reference year was substantially affected by exceptional 
events which took place during the period 1988 to 1990 or to the 
producers referred to in Article 5. 
The increase in the total quantities for Greece, Spain and Italy shall 
be granted for the period 1993/94. 
(b) For the period 1.4.1994 to 31.3.1995 and subsequent periods 
(tonnes) 
Member State Deliveries Direct sales 
Belgium 2 907 866 369 461 
Denmark 4 409 853 941 
Germanyd) 27 487 130 99 038 
Greece 619 725 4 483 
Spain 5 148 000 363 281 
France 23 267 944 725 496 
Ireland 5 178 248 15 058 
Italy 8 770 068 710 691 
Luxembourg 265 417 941 
Netherlands 10 862 383 101 562 
Portugal 1 786 832 66 904 
United Kingdom 14 055 207 388 939 
(1) Of which 6 182 120 tonnes covers deliveries to purchasers 
established in the territory of the new Lander and 8 713 tonnes 
covers direct sales in the new Lander. 
The increase in the total quantities granted for the period 1993/94 
shall be carried over in the same amount in the case of Greece and 
Spain for the period 1994/95 and in an amount reduced by 350 000 tonnes 
in the case of Italy. Before the period 1995/96, the Commission will 
submit a report to the Council accompanied by proposals on whether the 
increase in the case of Greece and the amount of the increase in the 
case of Italy should be continued in 1995/96 and subsequent years. 
(*) 0J No L 90, 1.4.1984, p. 13. 
(**) 0J No L 128, 19.5.1975, p. 1. 
Z£ 
- 19 -
Article 2 
This Regulation shall enter into force on the third day following its 
publication in the Official Journal of the European Communities. 
It shall apply from 1 April 1994. 
This Regulation shall be binding in its entirety and directly applicable In 
a 11 Member States. 
Done at Brussels, For the Council 
?> 
BUDGETARY ASPECTS 
A. QUOTA REDUCTIONS 
I. Impact on milk 
The quotas for 1994/95 and subsequent periods have been reduced from 
their 1993/94 levels as follows: 
Million tonnes 
(a) EC 12 
Deliveries quota 1.062 
Direct sales quota 0.029 
(b) Deliveries quota for Italy 0.350 
TOTAL 1.441 
The reduction in the direct sales quota should not have an effect on 
the quantity of milk marketed, since the volume of direct sales is 
already appreciably lower than the quota. 
The 1994 budget was based on quota reductions of 2% in 1994/95. The 
1% reduction is thus generating more deliveries than the 1994 budget 
made provision for, with more skimmed-milk powder and butter being 
produced as a result. 
The estimated effect on the production of these products is as 
follows: 
1994 1995 and 
beyond 
Milk deliveries (million tonnes) + 0.425 + 1.062 
SMP production ('000 tonnes) +35 +80 
Butter production ('000 tonnes) +20 +50 
ig 
These increases may conceivably result in corresponding increases in the 
quantities of powder exported and the quantities of butter bought in. 
In view of these quantitative factors, the budgetary impact of the quota 
reduction is estimated as follows: 
1. 1994 Million ECU (B) 
(a) Additional exports of SMP (+ 35 000 tonnes) 
35 000 t x 700(ECU)(A)x 1.207 (DR) = + 29.6 
(b) Additional butter bought in (+ 20 000 tonnes) 
Technical costs + ECU 1.0 million(A) x 1.207 (DR) = + 1.2 
Financial costs + ECU 0.8 million(A) x 1.207 (DR) = + 1.0 
Other costs + ECU 2.2 million(A) x 1.207 (DR) = + 2.7 
Depreciation + ECU 32.2 million(A) x 1.207 (DR) = + 39.0 
Total public storage of butter + 43.9 
(c) Total impact + 73.5 
2. 1995 and subsequent years 
(a) Additional exports of SMP (+ 80 000 tonnes) 
80 000 t x ECU 910(A) x 1.207 (DR) = + 87.9 
(b) Additional butter bought in (+ 50 000 tonnes) 
Technical costs + ECU 2.3 million(A) x 1.207 (DR) = + 2.8 
Financial costs + ECU 2.0 million(A) x 1.207 (DR) * + 2.4 
Other costs + ECU 5.8 million(A) x 1.207 (DR) = + 7.0 
Depreciation + ECU 78.5 million(A) x 1.207 (DR) * + 94.7 
Total public storage of butter + 106.9 
(c) Total impact + 194.8 
11• Impact on beef and veal 
A reduction in the delivery quotas should result in the slaughter 
of a corresponding number of dairy cows and the production of an 
equivalent amount of beef and veal. 
Production in the event of a 1% reduction in delivery quotas is 
estimated as: 
1.06 million t/4 100 kg * 258 000 head x 290 kg • 75 000 t (rounded 
up) 
(4 100 kg = annual average delivery per cow, 290 kg » average weight 
of each) 
As the 1994 budget assumed a 2% reduction in the quotas, there has 
been a saving equivalent to a 75 000 tonne reduction in beef and 
veal production. 
It is thought that the impact on the market in beef and veal - in 
the form of a reduction in the quantity bought in - will not be felt 
until autumn 1994 (and will be limited to 1995): 
The estimated saving is: 
Million ECU (B) 
Technical costs - ECU 14.5 million(A) x 1.207 (DR) « - 17.5 
Financial costs - ECU 1.9 million(A) x 1.207 (DR) * - 2.3 
Other costs + ECU 2.7 million(A) x 1.207 (DR) • + 3.3 
Depreciation - ECU 109.4 million(A) x 1.207 (DR) • - 132.0 
TOTAL - 148.5 
B. COMPENSATION FOR QUOTA REDUCTIONS 
The programme applies to quotas for both deliveries and direct sales. 
The quantity to be compensated is thus 1 090 million tonnes. 
Compensation will be granted: 
as part of a total cessation of production by producers who will 
receive a subsidy of ECU 170/tonne/year, payable for three years; 
- or for a linear reduction in the quotas and a subsidy of 
ECU 50/tonne/year, payable for ten years. 
In estimating the impact on the budget, it is assumed that 50% of the 
total quantity will be compensated at ECU 170/t and 50% at ECU 50/t. 
The first compensation payments will be made in the financial year 
following the quota reductions, i.e. from 1995 on. 
o *£> 
Compared to a reduction in the quotas of 2%, the 1% reduction will reduce 
expenditure by the following amounts: 
1995 1996 1997 1998 
- 0.545m t x ECU 170/t x 1.207 (DR)= - 111.8 - 111.8 - 111.8 
- 0.545m t X ECU 50/t X 1.207 (DR)= - 32.9 - 32.9 - 32.9 - 32.9 (1) 
TOTAL - 144.7 - 144.7 - 144.7 - 32.9 (1) 
(1) Until 2004 
C. Conclusion 
The budgetary impact of the proposal to reduce the quotas by 1% can be 
summarized as follows: 
1994 1995 1996 1997 1998 
A. Quota reductions 
Impact on milk + 73.5 + 194.8 • 194.8 + 194.8 + 194.8 
Impact on beef and veal - - 148.5 -
B. Compensation for the 
quota reductions - - 144.7 - 144.7 - 144.7 - 32.9 
TOTAL + 73.5 - 98.4 + 50.1 + 50.1 + 161.9 
It should be noted that the budgetary impact has been calculated assuming 
a 2% reduction in the quotas from 1 April 1994. 
Had this assumption not been used, the current proposal would represent a 
saving of ECU 73.5 million (B) in 1994, expenditure of 98.4 million (B) 
in 1995, a saving of ECU 50.1 million (B) in 1996 and 1997 and a saving 
of ECU 161.9 million (B) in 1998. 
The proposal does not take account of the prices proposal for 1994/95. 
REPORT TO THE COUNCIL 
on the application of the milk quota system in 
Italy, in Spain and in Greece 
Introduction 
1. In the course of its approval (May 1993) of the Commission's proposal for 
an increase in the global guaranteed quantities for Italy, Spain and 
Greece, the Council of Ministers made the following Declaration: 
"The Council notes that the Commission will closely monitor the 
implementation of the milk scheme in Greece, Spain and Italy in order to 
verify compliance with the detailed undertakings on which the agreement 
on quotas for these three countries was based. The Commission will submit 
a report to the Council in March 1994 accompanied by proposals on whether 
the increased quotas should be continued in 1994/95 and subsequent years." 
This report, and the accompanying proposals, is made in accordance with 
that Declaration. It reflects the situation following the last of a 
series of missions to the Member States which ended on 4th February and 
includes also any significant developments notified to the Commission in 
the meantime. 
Requirements to be met 
2. The increases in milk quotas granted for 1993/94 in the case of Italy 
(0.9mt), Spain (0.5 mt) and Greece (0.1 mt) were subject to effective 
implementation of the quota system. Certain key requirements were 
identified, which, taken together, provide an appropriate framework within 
which to consider progress made in each Member State. These were as 
follows:-
U 
a)adoption of implementing regulations 
b)calculation of individual reference quantities on the basis of 
deliveries to purchasers in 1991/92. together with individual fat 
references 
c)notification of individual reference quantities to each producer, jmd 
to purchasers 
d)establishment and equipping of a central agency to verify the production 
records and collection of levies 
e)adequate records of production 
f)collection of levies from producers 
Besides, certain quantitative undertakings (details at Annex I) were 
specified in the Council agreement in connection with the measures 
necessary to bring production within quota. In the case of Italy and 
Spain, these measures involve voluntary buying-up programmes financially 
supported in part by the Community; the suppression of some quotas 
without compensation was also envisaged in the case of Italy. 
Production in Italy was to be brought within its global guaranteed 
quantity with effect from the 1995/96 milk year; but the quota system was 
to be put in place from the current (1993/94) year. 
Under the compensation procedures (offsetting over-deliveries of milk 
against under-deliveries by individual producers) to be decided in Italy, 
this should mean in practice that (i) while an individual producer may 
have levies retained due to exceeding his quota during the course of any 
marketing year, his final liability should only arise where deliveries or 
direct sales exceed the total of the individual quotas allocated by Italy 
and (ii) the total of the quotas allocated by Italy must correspond to 
the amounts fixed by the Council at the latest from the 1995/96 marketing 
year. 
However, Italy will be accountable financially to the EAGGF for levies due 
in respect of any deliveries or direct sales in excess of the global 
guaranteed quantities. 
Commission Monitoring 
3. Following the Council's agreement in May the Commission services have 
closely monitored the situation in the three Member States. This has 
involved regular discussions in the capitals with officials from the 
Ministries and controlling bodies concerned, as well as field visits to 
the main milk producing regions. The visits involved examination of 
records, and discussions with local controlling authorities, milk 
purchasers and dairies; in the case of Italy producer associations were 
visited also. The regions and purchasers visited account for some 75%, 
70% and 75% of milk production in Italy, Spain and Greece respectively. 
Full cooperation was received in the course of the visits. 
4. The principal test of effective implementation of the system will be 
whether a) quotas have been allocated to individual producers, correctly 
and objectively b) the approved purchasers have accurately recorded 
deliveries from producers in 1993/94 so as to enable them to furnish to 
the competent authorities the relevant statements before 15th May 1994 
and c) levies due have been charged to the producers liable, and paid 
before 1st September, as required by the regulations. The report deals 
with the preparatory measures in terms of legal provisions, administrative 
action and controls taken by the Member States to meet these requirements. 
Verification of payment of levies in Italy, in Spain and in Greece will 
be carried out as part of the normal process of inspection and control by 
the Commission for the purpose of satisfying itself that the financial 
provisions have been respected. 
The information now available provides a clear picture of progress in 
implementing the quota system. It is possible also to draw some 
conclusions in relation to the quantitative targets indicated in 
connection with the Council's agreement. 
?4 
Consistent with the structure of earlier reports from the Commission the 
approach in this report is to measure progress against the requirements 
that were identified in connection with the granting of increased quotas. 
(a)Adoption of implementing regulations 
5. Italy and Spain have now taken the principal legal measures considered 
necessary by them to ensure the smooth operation of the quota system, 
including its control. Certain supplementary measures, covering such 
matters as the national compensation mechanism and the national reserve 
are expected to be adopted by Italy over the coming weeks. Italy intends 
also to adopt appropriate regulations on procedures for reducing its over­
production to within the global guaranteed quantities; the plan will 
include the first phase of reduction of B quota without compensation (see 
par 13). These regulations have not been adopted up to now because of a 
significant delay in completing the procedures associated with the 
adoption of the detailed rules for the quota system and because of other 
procedural requirements. Measures are being taken in Greece to permit 
the designated controlling authority (ELOG) to> become fully operational 
by the beginning of the 1994/95 marketing year. 
6. The Commission has not taken a definitive position on the question of the 
compliance of the individual measures with Community law. Some of the 
national measures pre-date the revised Regulations11' on milk quotas, 
adopted by the Community in December 1992; some measures have been 
adopted only recently; others remain to be adopted. 
7. The Commission is in the course of carrying out an overall review of the 
legislative measures adopted in all Member States, in order to comply with 
the revised Regulations on milk quotas; the measures taken in Italy, in 
Spain and in Greece will form part of that review. 
CD Council Regulation (EEC) No 3950/92, establishing an additional levy 
in the milk sector (OJ L405 of 31 December 1992 p 1). Commission 
Regulation (EEC) No 536/93 of 9 March 1993 laying down detailed rules 
on the application of the additional levy on milk and milk products 
(0J L57 of 10 March 1993 p 12). 
8. While the Commission has not so far identified measures taken at national 
level that would, a priori, prevent the quota system from achieving its 
objective, it does have reservations about the role given to producer 
associations in managing certain aspects of the system in Italy, notably 
in relation to the compensation mechanism. At best the involvement of the 
associations is an added administrative burden and without any 
identifiable advantage to producers; at worst it could be a serious 
impediment to finalising the compensation procedures and determining 
levies payable after the end of the marketing year. 
9. The Commission's concern about the role of producer associations is 
heightened by the provision in the detailed rules which leaves open the 
possibility that the National Union of Milk Producers (UNALAT) might 
assume responsibility for managing the flow of information on milk 
deliveries, and on other aspects of the quota system. This concern has 
led the Commission to ask the Italian authorities to ensure that the quota 
arrangements can if necessary be managed independently of producer 
organisations, and that such associations will not be involved in any of 
the control aspects. 
10. The arrangements being applied to implement the quota system reflect 
existing competences, structures and practices in the Member States, some 
of which cannot easily be adapted and do not always facilitate easy 
management of the system. While Member States need to have some 
flexibility in adopting arrangements best suited to their circumstances, 
including involvement of regional authorities, the Commission emphasises 
the overriding responsibility of the central authorities to exercise the 
controls necessary to ensure that the financial regulations are respected. 
Member States have to be especially vigilant also to avoid the 
introduction of regional dimensions to the system which may be 
successfully challenged on grounds of discrimination. 
11. There is now widespread awareness by producers and milk purchasers in the 
Member States of the implications of introducing the quota system, and an 
acceptance of the inevitability of its application. Mindful of the need 
to proceed rapidly with putting the quota system in place, the Commission, 
<IC 
in the course of its contacts with the Member States, has sought to 
encourage progress and to avoid disrupting the momentum towards the 
application of the system. 
12. The Commission stresses that, while national legislative measures are an 
important preliminary step, they do not in themselves constitute effective 
application of the milk quota system. Real effectiveness can only be 
achieved through observance of the rules, as confirmed by an independent 
and efficient control process. 
bjcalculation of individual reference quantities on the basis of deliveries 
to purchasers in 1991/92. together with individual fat references 
13. Individual reference quantities have been calculated in the case of all 
three Member States: in Italy they are fixed partly on the basis of 
deliveries in 1988/89 (so called A quotas), and partly on deliveries 
between 1988/89 and 1991/92 (so called B quotas which are of a 
transitional nature and are to be phased out by 1995/96). Spain has 
issued quotas on the basis of provisional allocations made in 1987, but 
updated to take account of deliveries and direct sales in 1991/92. 
In November 1993 Greece altered the basis for allocating quotas adopted 
in June 1993; while maintaining a link with 1991/92, producer quotas are 
now determined mainly by deliveries in 1992/93. 
14. There have been delays in finalising the process of allocating quotas to 
producers. 
In Italy the need to carry out a full control on some 165.000 individual 
quotas allocated initially to producers meant that, at the earliest, 
quotas for 1993/94 could not be confirmed until December 1993 in the case 
of some 30% of Italian producers; the process of fixing quotas for 
1993/94 which began in January 1993, has involved three revisions to date 
in the light of successive controls. The remaining controls are expected 
to be finalised in the course of March. This should allow quotas for all 
producers for 1994/95 to be published at the end of the month. The normal 
date limit. (31 January) prescribed in Italy's national law for fixing 
quotas for the following marketing year has been extended by presidential 
decree to 31 March. 
In Spain quotas were allocated in December 1992; about one third 
(43.000) of producers appealed against the quota allocations; almost 
all appeals had been decided by January 1994; the small number (200) of 
outstanding cases are expected to be finalised by the end of March. 
In Greece, the allocation of quotas was not made by the authorities until 
November 1993; the time limit for deciding appeals by producers was fixed 
for the end of February 1994; some 4.000 appeals have been received so 
far. 
15. Individual fat reference quantities have been established and associated 
directly with the quotas issued to producers, in the case of Spain and 
Greece; in Italy this requirement is to be implemented by milk purchasers 
when measuring deliveries against quota for the purpose of preparing 
statements to be sent to the controlling authorities by 15th May. 
16. The approach taken by the Member States as regards the reference year 
chosen as the basis for allocating quotas has been influenced by legal and 
practical considerations. 
In Italy's case the reference years are 1988/89 for A (permanent) quotas 
and 1991/92 for B (temporary quotas). Given the structural changes in 
agriculture, it was to be expected that implementation of quotas in 
1993/94 on the basis of the situation some five years earlier, would give 
rise to adjustments. This goes some way to explain the decision 
actively encouraged by the Commission - to carry out comprehensive 
controls of the quotas allocated to producers. This has been a time 
consuming and laborious process but justified in the circumstances since 
it has revealed important weaknesses in the initial process of issuing 
quotas on the basis of information supplied through UNALAT sources. The 
extent of the adjustments that have already taken place in 1993/94 is 
indicated in par 27. 
*>>$ 
The high level of appeals by producers against the quotas fixed in Spain, 
which has required examination of over 40.000 cases, has absorbed also a 
high level of human and material resources. The appeal process has not 
revealed weaknesses in the allocations made initially; nor has it added 
significantly to the quantity of quota issued. 
The use in Greece of the latest year for which delivery figures are 
available, that is 1992/93, as the main basis for quotas is explained by 
the rapid structural changes taking place in Greece, especially at 
producer level. Having regard to the recent deadline (end February) for 
appeals against the quotas attributed, it is not possible to indicate the 
extent of any adjustments necessary in Greece. 
c)notification of individual reference quantities to each producer, and to 
purchasers 
17. In Italy and in Spain individual notifications have been issued direct to 
producers by post. In Greece the notifications have been made available 
to producers through regional offices of the Ministry of Agriculture. In 
addition, the quotas of individual producers have been published 
officially in Italy, and publicised locally in Greece. 
18. Purchasers of milk are informed also of the reference quantities of their 
suppliers. In Italy the information has been made available through 
official publications setting out the quotas allocated to individual 
producers; there is also ongoing contact with official regional bodies, 
producer associations, and individual producers. In Spain the relevant 
information was communicated in March 1993. In Greece local offices of 
the Ministry of Agriculture have certified the quota of individual 
producers on an index card supplied direct to purchasers. 
19. While the channel of information used in each instance has varied with the 
circumstances of the Member States concerned, it appears to the Commission 
that the relevant information on individual producer quotas is readily 
available to producers and to purchasers. 
In the course of visits to the Member States the Commission found that 
purchasers visited were aware of their suppliers' quotas; many purchasers 
had established systems for keeping individual producers informed 
regularly of how deliveries were progressing compared to quota. Purchasers 
had a sound knowledge of their responsibilities under the milk quota 
regulations, for example, as regards recording deliveries, including fat 
levels, maintaining stock registers, and collecting levies. In Italy 
levies have already been withheld in cases where supplying producers have 
exceeded their quotas, for example four of the dairies visited in February 
had withheld levies to a total amount of 250.000 ECU. 
20. On the other hand, the existence of a large number of milk purchasers 
(about 3000 in Italy and 1000 in Spain), many of which act as 
intermediate buyers of milk on a small scale, does not facilitate control, 
and is likely to pose formidable problems in verifying the declarations 
by purchasers and in determining any levies payable after the end of the 
marketing year. While the process of registration of milk purchasers is 
at an advanced stage in the Member States, there is a risk that small 
scale purchasers may emerge, possibly in the context of trading in milk 
from producers who have exceeded their quotas, and remain undetected for 
a time. Measures to prevent producers switching from one purchaser to 
another during certain sensitive periods of the year would facilitate 
stability and control. 
d)establishment and equipping of a central agency to 
records and collection of levies verify the production 
21. All three Member States have designated central agencies. From the 
operational point of view AIMA in Italy, and SENPA in Spain, have taken 
an active part in the establishment and control of the quota system. The 
situation is different in Greece. While the powers, functions, and 
resources of the controlling body (EL0G) were prescribed in law in June 
1993, ELOG has not been properly staffed and equipped to enable it to 
carry out any worthwhile work in the management and control of the quota 
system. 
ks 
The Greek authorities have been informed of the gravity of this situation 
which is contrary to earlier indications that ELOG would be made fully 
operational at the start of the current marketing year. They have 
explained the delay as being due to bureaucratic procedures with 
unavoidable delays arising from the change of administration. Greece has 
now given firm assurances that the deficiencies will be remedied without 
delay. 
e)adequate records of production 
22. As from 1993/94 the new systems and procedures being put in place to 
control dairies and other milk purchasers should guarantee a 
comprehensive flow of accurate and timely data; this will substitute for 
traditional statistical methods whose limitations have been evident. 
Besides, under existing rules full returns have to be made to the 
Commission by 1 September each year. 
Up to now all three Member States appear to have had difficulties in 
assembling reliable and comprehensive records ,of production at central 
level. This has meant that reliable figures of milk deliveries and 
direct sales in 92/93, based, for example, on returns by purchasers of 
milk and by direct sales producers, are not yet available in all cases. 
Figures for deliveries to dairies in 1992/93 have been supplied only 
recently by Spain and are available also for Greece. As long as 
verifiable figures are outstanding for 1992/93 it is difficult to identify 
the excess of production over quota, notably in Italy, and also to assess 
the impact of recent programmes for the voluntary abandonment of milk 
production. 
23. In Italy there is an important role for regional authorities in verifying 
production records, controlling milk purchasers, and in managing other 
aspects of the system, for example transfers of quota. The major milk 
producing regions seem capable of meeting the requirements. The 
situation tends to be more difficult in regions where milk production is 
not significant and where structures, in terms of number and size of 
producers and of purchasers, are underdeveloped. 
10 
24. There have been particular difficulties in identifying and measuring the 
quantity of milk and milk products sold by direct sellers, especially 
where such operations are on a small scale. This may explain, in the case 
of Spain, that direct sales of only 210.000 tonnes have been the subject 
of applications for direct sales quotas; about half of this quantity has 
been allocated definitively; earlier indications had suggested direct 
sales at a higher level. Up to now the authorities in Italy, in Spain, and 
in Greece (where direct sales of milk are actively discouraged on public 
health grounds) have tended to accord greater priority to systems to 
control deliveries to purchasers, which in all cases comprise by far the 
greater part of milk sales. While this approach is understandable in the 
initial stages, and while structural change is likely to lead to a 
continual reduction in the importance of direct sales, the Commission 
considers that a particular effort should now be undertaken to establish 
and monitor the real level of direct sales. In the meantime the existing 
data on direct sales has to be treated with caution. 
f) Collection of levies frog producers 
In Italy the national legislation provides for the compulsory withholding 
of levy once a producer's quota is exceeded during a marketing year. In 
Spain and in Greece the milk purchaser has discretion to withhold levy, 
but where it fails to do so and levies cannot be recovered from the 
producers concerned, the purchaser is responsible for any levies finally 
due. Levies are currently being collected in Italy (see par 19); the 
amounts retained in Spain and in Greece are negligible. 
Quantitative aspects 
25. While final data on current production in Italy, in Spain and in Greece, 
will only be available when the statements of deliveries and direct sales 
are analysed after the end of the 1993/94 marketing year, it would appear 
that in Italy's case the framework for the removal of surpluses no longer 
corresponds to the situation as envisaged by the Council (Annex I). 
26. As regards the undertakings in relation to the absorption of surpluses, 
in its communication to the Commission (included in COM (93) 109 final of 
9 March 1993) Italy recalled the plan to reduce production by some 1.6 mt 
11 
42 
over a three year period ie 300.000 t in 1992/93, 650.000 t in 1993/94 and 
650.000 t in 1994/95. The plan was to be achieved through voluntary 
abandonment programmes or withdrawal of so called B quotas (see par 13) 
without compensation. 
The recent Community-financed abandonment programme in Italy this year 
should lead to the withdrawal from production of a maximum of 202.000 t; 
its impact will be felt in 1994/95. The earlier restructuring programme 
(Regulation 1637/91) effective from 1992/93, accounted for some 261.000 t 
which has not been redistributed, and which Italy considers should be 
taken into account in measuring performance as regards removal of 
surpluses. A smaller restructuring programme (Reg 3950/92) now being 
finalised should lead to the withdrawal of a maximum of 11.500 t. Italy 
plans to suppress quotas without compensation to an amount of about 
0.5 mt ie 30% of the total B quota, during 1994/95 (see par 13); it 
intends also to introduce a further voluntary abandonment programme in 
1994/95, to remove any remaining surplus; the expectation is that such 
a programme could lead to the withdrawal of 250.000 t. 
The considerable shortfall to date (see Annex II) in meeting the 
undertakings to remove surplus milk, and the substantial 
quantity(650.000 t) that should normally be removed in the course of 
1994/95, must cast serious doubt on whether the plan will be brought to 
fruition; this raises the question as to whether the existing framework 
for the removal of surpluses can still be regarded as realistic and 
whether the constituent elements of the Council agreement remain a valid 
basis for a balanced settlement of the milk quota problem in Italy. It 
appears to the Commission that, even in the most optimistic of hypotheses, 
the quantity likely to be absorbed will fall well short - by about 
350.000 t on the basis of current estimates - of the 1.57 mt specified in 
the Council agreement as the level of surplus requiring to be removed. 
12 
27. The total of the individual quotas (deliveries) allocated initially by 
Italy for the current (1993/94) marketing year was 11.39 mt; following 
successive controls this amount has been reduced to 10.9 mt, (9.3 mt in 
A quotas and 1.6 mt in B quotas) compared to the global guaranteed 
quantity of 9.2 mt. In the case of direct sales, quotas issued initially 
corresponded to the global guaranteed quantity of 0.7 mt; subsequent 
controls have reduced the total to 0.6 mt, (0.55 mt in A quotas and 
0.05 mt in B quotas). 
The Commission has been informed by representatives of Italy that the 
total of quotas to be fixed for the 1994/95 and the 1995/96 marketing 
years will be reduced to within 10.55 mt and 9.9 mt respectively. 
The extent of which the planned reductions in the overall level of quota 
issued to prodcuers can be considered to have made a contribution to the 
reduction of real milk surpluses will depend on the individual elements 
involved. On the one hand, there should be a real contribution from 
voluntary abandonment programmes with compensation, provided of course the 
producers concerned have been actively engaged in milk production, and 
their productive capacity is not transferred to other producers who risk 
to exceed their quotas. A real impact on surpluses can be made also by 
the withdrawal of B quota without compensation, provided there is a 
corresponding withdrawal of productive resources from the system, and 
there is no corresponding reallocation of permanent quota to the producers 
affected, for example from the national reserve. On the other hand 
following the pattern of the reduction in quotas that has taken place in 
1993/94, corrections following verification of the level of quota 
initially issued to producers do not make any contribution to the removal 
of surpluses. It is not possible to accept either that individual 
reference quantities allocated to the national reserve should count 
towards the permanent absorption of surplus where producers have ceased 
production over a specified period; such producers may resume production 
in certain circumstances or the quantities concerned may be reallocated 
to priority categories. It should be noted that Italy's plan to absorb 
surpluses (see par 26) involved voluntary abandonment programmes and 
reduction of B quotas without compensation. 
13 
lA 
28. In the case of Spain the outturn is broadly as expected. 657.000 t of 
milk has been removed under a buy-up programme, including some 140.000 t 
attributed by Spain to the Community financed restructuring programme 
(Regulation 1637/91). The Community financed buy-up programme referred 
to in the Council Agreement is likely to lead to the withdrawal from 
production of some 250.000 t. 
Spain has allocated individual producer quotas totalling 5.165 mt, out of 
its global reference quantity (deliveries) of 5.2 mt. The indications are 
that deliveries to dairies in Spain would normally exceed the 
corresponding quota by about 4% in 1993/94. But since the producer milk 
price in Spain is only about 80% of the levy to be charged, there must be 
a doubt whether such excess deliveries will take place. 
In the case of direct sales 100.000 t has been allocated definitively and 
applications still under consideration cover an additional 100.000 t. The 
total direct sales quota is 366.950 t. 
29. In the case of Greece the quotas allocated amount to 618.000 t, compared 
to a global reference quantity (deliveries) of 625.000. The indications 
are that deliveries are likely to be close to the level of quota fixed. 
In the case of direct sales the amount of the global quota (4.000 t) has 
been divided among the regions for subsequent redistribution among the 
producers concerned. 
30. The final out-turn for milk production and for receipts in levies in 
1993/94 is likely to be influenced by a number of factors, namely the 
margin under quota available to individual producers as the end of the 
marketing year approaches, the efficient application of the compensation 
mechanism, and the producer price for milk. The current indications are 
that levy is likely to be due in Spain, little or no levy will be payable 
in Greece, and, after the compensation process has been completed, levies 
collected from producers in Italy will be reimbursed. 
14 
^ 
The fact that the quota system is now being introduced for the first time 
in a meaningful way, and the related campaigns to inform milk producers 
and dairies of their potential liabilities, should tend to act as a break 
on deliveries by producers; overall production in the Member States 
concerned is likely to stabilise, or may decline slightly, in 1993/94 
compared to 1992/93. 
Conclusions on implementation of the system 
31. Significant progress has been made in the implementation of the system of 
milk quotas even though there have been delays in finalising individual 
producer quotas, and in adopting some legislative measures, especially 
in Italy. 
In Italy solid groundwork is being laid through the comprehensive controls 
carried out on producer quotas, through the development in the major milk 
producing regions of computerised control systems and through the 
preparatory work completed by many dairies. Despite this, the volume and 
difficulty of the work involved in controlling and in managing quotas 
issued to producers especially in situations where producers act to sell 
or lease quota in anticipation of downward adjustments following controls, 
suggests that putting the system finally in place will pose a formidable 
challenge. The need to ensure compliance by numerous purchasers and 
producer associations with the rules and procedures is likely to require 
not only the full attention of the regions, who have specific 
responsibilities in this regard, but also the assistance of the central 
controlling agencies which up to now have played an important role 
throughout Italy in verifying the quotas attributed to producers. 
Full application of the system, based on the quotas fixed for 1993/94, is 
likely to take place in Spain this year, though controlling the large 
number of milk purchasers and managing changes in producer quotas will not 
be easy. 
15 
k£ 
In Greece the late revision of the basis for allocating quotas, together 
with limited administrative resources devoted to managing the quota 
system, may give rise to difficulties; on the other hand the capacity of 
many dairies to fulfil their obligations means that controls at purchaser 
level should not pose insuperable problems. 
The political will to persevere, especially in situations where quotas 
have to be adjusted downwards and levies have to be collected, will be 
crucial. This will require that the authorities maintain a strong 
determination to apply the system effectively and that all necessary 
legislative and administrative support be provided for this task. In this 
regard the situation of the designated body in Greece (ELOG) is 
unsatisfactory. Until such time as ELOG becomes fully operational, 
Greece is unlikely to be able to manage and control the quota system 
adequately. It is essential also that in Italy management and control of 
the system be carried out independently of producer interests and that the 
national legislation should underpin that objective. 
Proposal 
32. Having regard to progress so far, the Commission considers that increased 
quotas for Italy, and for Greece should be granted on a provisional basis 
for 1994/95. 
In the case of Spain it is reasonable to conclude that irreversible 
progress has now been made in putting the system in place and, having 
regard to the satisfactory outcome on the quantitative undertakings, the 
Commission proposes that the increase in the quota given to Spain for 
1993/94 be established on a definitive basis. 
In the case of Italy the Commission considers that sufficient doubt exists 
as to the realisation of the plans for the absorption of surpluses as to 
justify a revision of the increased quota which was agreed for 1993/94 
on the assumption that a higher level of surplus would have been removed 
from the market at this stage. In the Commission's view an increase in 
the deliveries quota of 0.55 mt compared to the 0.9 mt increase agreed for 
16 
o 
1993/94 is appropriate to take account of the new perspective. The 
Commission will review this quantity, which is provisional, in the light 
of the results of the measures envisaged in par 26 in relation to a 
further voluntary abandonment programme and the removal of temporary (B) 
quotas. Account will be taken also of any tangible evidence supplied 
by Italy in relation to levels of surpluses. The Commission considers 
that the continual difficulty in acquiring verifiable data of production 
and the emerging doubts about the level of surplus to be removed, require 
that such information be furnished. In the light of this review the 
Commission will make a further proposal in December on the quotas to be 
fixed for the 1995/96 marketing year, by which stage Italy could 
reasonably have been expected to have taken all the measures necessary to 
absorb the surplus. 
33. In the case of Greece the likely out-turn is broadly in line with 
expectations when the agreement was concluded. Accordingly the level of 
increase granted for 1993/94 should be maintained for 1994/95. The 
proposal is being made in the case of Greece on the basis of the solid 
assurances that have now been received that the controlling body (ELOG) 
will be fully operational from the beginning of the 1994/95 marketing 
year. The report in December will indicate the situation in this regard. 
17 
liT 
SPAIN ANNEX I 
PROPOSALS FOR ABSORBING EXCESS PRODUCTION 
SPAIN 
(tonnes) 
Present quota 
- Deliveries 
- Direct sales 
Present estimated 
production 
Difference between 
quota/production 
National buy-up 
already decided 
SOLUTION 
Revision quota 
Direct sales 
transfer 
Buy-up financed 
by the Community 4 550 000 
527 000 
6 000 000 
1 450 000 
600 000 
500 000 
150 000 
200 000 
GREECE: Quota is increased by 100 000 tonnes 
ITALY 
I Excess to be removed 
II Of which to be removed without compensation 
in accordance with Italian law 
III Net excess 
IV Increase in whole sale quota 
V Amount to be bought up 
VI Amount to be purchased with Community 
contribution (25% of V) Million tonnes 
2.47 
0.84 
1.63 
0.9 
0.73 
0.2 
Iff 
ANNEX II 
A. 
1. Surplus to be removed 2.47 mt* 
2. Increase in quota accorded J 0.9 mt 
3. Net surplus 1.57 mt 
B. Italy's plan for reduction in milk production - recalled in letter of 1 
February 1993 to Commission and included in Commission's report to the 
Council - COM (93) 109 final of 9 March 1993 
1992/93 milk year 300.000 t 
1993/94 milk year 650.000 t 
1994/95 milk year 650.000 t 
C. Measures taken to date 
1992/93 milk year (1637/91) 261.000 t 
1993/94 milk year (EAGGF) 202.000 t (max) 
1993/94 milk year (3950/92) 11.425 t (max) 
D. Undertakings for 1994/95 miIk year 
Voluntary abandonment programme 250.000 t 
with national compensation 
Reduction in B quotas without 
compensation ±500.000 t* 
based on Italy's figures for production in 1991/92 ie 11.5 mt less the 
total of its quotas 9.03 mt 
based on 1.6 mt for total of B quotas 
ISSN 0254-1475 
COM(94) 64 final 
DOCUMENTS 
EN 03 
Catalogue number : CB-CO-94-074-EN-C 
ISBN 92-77-65822-3 
Office for Official Publications of tbe European Communities 
L-2985 Luxembourg