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Brussels, 19.07.1995 
COM(95) 405 final 
Proposal for a 
COUNCIL REGULATION (EC) 
determining the standard quality of rice 
(presented by the Commission) 

Explanatory Memorandum 
1. Introduction 
The Community market in rice is structured around two main types of rice, japonica and 
indica, corresponding to two separate consumption traditions. 
The outlook for the development of rice-growing depended to a large extent on this dual 
structure. 
Present market equilibria are satisfactory on the whole. The moderate increase in area in 
certain Member States has been offset by a decline in output due to increasingly frequent 
drought. 
The structural surplus in japonica rice either finds outlets in the traditional neighbouring 
markets around the Mediterranean, or is used to meet the Community's food aid 
commitments. Community production of indica rice has enabled the processing industry 
to take advantage of having different supply sources for raw materials. 
The obligations resulting from the GATT Agreement imply, first of all, changing from 
a system of floor prices based on the threshold price to a system of ceiling prices 
superimposed on the system of customs duties resulting from tarification of the former 
system of variable levies. Moreover, these duties will be gradually cut by 36% from 1995 
to 2000. 
The GATT Agreement raises a new challenge for European rice-growing, brought directly 
face to face with competition and the uncertainties of the world market, both at the level 
of agricultural production and at that of the industrial processing of paddy rice into milled 
rice. 
The Commission believes that, in view of the further need to avoid any distortion of 
competition as a result of the new system for cereals introduced in 1992, the response to 
this new situation should be sought mainly through a substantial drop in producer prices, 
which should be accompanied by measures to restore competitiveness, in terms of quality, 
in relation to the imported product. Moreover, the Community market will have to face 
wider cyclical variations in price; consequently, the intervention mechanism, in its present 
form, is no longer compatible with the probable new scenarios. It should be reformed to 
provide more flexible management tools and ensure increased market fluidity. 
2. Fall in producer prices 
The outlook for new market equilibria, in terms of prices, gives rise to a multitude of 
possible scenarios, which make it impossible to evaluate the extent of the price reduction 
needed to meet competition from the imported product as duties are cut pursuant to the 
GATT Agreement. The Commission estimates that prices will have to fall by between 
15% (ECU 53/t) and 34% (ECU 119/t). At this stage, it is pointless and unnecessary to 
determine a priori the level of the eventual price cut. Consequently, the best approach 
is to choose to keep to a minimum target of 15%, subject to market developments and 
trends, especially in terms of prices and sales into intervention if any. 
I 
3. Compensatory aid 
The reduction in producer prices will alter the profitability of the crop. Arrangements 
should therefore be introduced for compensatory production aid with a view to 
maintaining present income levels. The amount of aid is fixed on the basis of agricultural 
yields observed in the various Member States and the size of the price reduction. 
For the establishment of basic yields, it is proposed that reference should be made to the 
three-year period 1992-94, except in the cases of Spain and Portugal for which the more 
representative period of the last three years preceding the drought (1989-91 for Portugal 
and 1990-92 for Spain) should be used. 
Average yields in tonnes/ha: 
Italy 
5.82 Portugal 
4.74 Spain 
6.35 Greece 
7.48 France 
5.29 French 
Guiana 
7.41 
4. Maximum guaranteed area 
In view of the introduction of this area-linked compensatory aid scheme, a maximum 
guaranteed area should be fixed to maintain production targets compatible with the needs 
of the market and to comply with the commitments undertaken in the framework of the 
GATT Agreement regarding trade exports. 
It is proposed to set the maximum area on the basis of the three-year period 1992-94, 
except in the cases of Spain and Portugal for which the more representative period of the 
last three years preceding the drought (1989-91 for Portugal and 1990-92 for Spain) 
should be used. 
Average area in ha: 
EU 
396 607 Italy 
228 034 Portugal 
32 884 Spain 
89 711 Greece 
18 731 France 
23 500 French 
Guiana 
3 747 
Compliance with the maximum area should be ensured by reducing the aid sharply 
enough to obtain a disincentive effect upon producers. If the Community maximum 
guaranteed area (CMGA) is exceeded by up to 5% in a given crop year, the amount of 
compensatory aid for the current crop year will be cut by 6 points for each percentage 
point of overshooting. 
3 
If the area given over to rice exceeds 105% of the CMGA, aid will be cut further in 
the Member States responsible for exceeding their national maximum guaranteed area 
(NMGA) by more than 5%. 
5. Quality policy 
The market mechanisms devised when the common organization of the market in rice was 
set up have not been substantially modified since their adoption. 
Innovations in the arrangements for trade with third countries introduced pursuant to the 
GATT Agreement have led the Commission to give serious consideration to the 
compatibility of certain market management measures, in particular intervention, with 
trade arrangements that are no longer based on a system of levies, but on a fixed customs 
duty, which by its nature cannot absorb changes in world prices or fluctuations in 
currency exchange rates as the levy could. 
Account must also be taken of the need to reform the common organization of the 
market on the basis of stricter quality criteria. In other words, the Commission takes the 
view that Community rice growing must adopt a strategy for a gradual improvement in 
the quality of output. As demand is moving towards products with a very high level of 
quality and an advanced technology content, and as imported products compete primarily 
at the top of the range, the competitiveness of the Community product needs to be 
restored. The entire rice production sector, from the farmer to the processor, is concerned 
by this challenge. 
From this point of view, the Commission feels that it is necessary to make proposals that 
can result in production of paddy rice of a quality matching the supply needs of a 
processing industry which now has direct access to third country products. 
The parameters for defining the standard intervention quality should be reinforced to align 
them on the production standards of the third countries that export to the Community 
market. 
Premiums and penalties applied to the intervention price when the product is taken over 
should play a greater role in market regulation, reflecting and even accentuating the price 
differentials for different qualities and varieties of rice. 
Demand for rice on the Community market is structured by variety. However, mainly 
because there is no differentiated support for different varieties, Community production 
has concentrated on the most productive varieties rather than the varieties for which 
market demand is strongest. The Commission believes that certain varieties should be 
encouraged; to this end, it proposes correction factors based on the yield of the various 
varieties compared with the most productive variety. 
The Commission also feels that the compensatory aid scheme should be used as an 
incentive to the production of certain varieties, in a manner consistent with a quality 
strategy more closely tailored to market demand. 
V 
6. Precautionary intervention 
Since the common organization of the market was introduced, intervention has been used 
only in exceptional cases and for small quantities, in 1990, 1991 and 1992. Intervention 
should remain an exceptional event, what has been called a "safety net." In the rice 
sector, it is very expensive to take over intervention stocks and, as the product is liable 
to rapid deterioration, storage may be difficult. 
As already pointed out, the market will be exposed to the uncertainties of the world 
market; it is to be expected that massive intervention will be needed, in view of the 
volatility not only of the world market, but also, and especially, of the Community 
market. 
The Commission does not think that the intervention mechanism as at present designed 
is compatible with the new arrangements for trade with third countries: short-term 
developments on the world market could have repercussions on the internal market that 
would lead to the buying in of a considerable volume of rice. 
To avoid having to take large quantities into intervention in this type of situation, the 
Commission proposes the introduction of a precautionary intervention scheme, under 
which the producer stores the product for four months, at his own expense, subject to an 
advance payment equal to 60% of the price. During this period the producer may seek 
a more advantageous outlet on the market, and sell the product after informing the 
intervention agency. During the same period, the Commission may, for its part, offer the 
product in precautionary intervention for sale, according to the rules already laid down 
for sale under an intervention scheme. Actual removal to the warehouses of the 
intervention agency, taking over and, obviously, payment of the balance, would be 
possible only where the rice had already been in precautionary intervention. 
This scheme would make for compatibility between the intervention arrangements and the 
cyclical and short-term development of the world market. 
7. Changes to intervention arrangements 
The Commission reserves the right to propose other measures, pursuant to the so-called 
management committee procedure, with a view to restoring intervention as a safety net 
and an exceptional occurrence. These measures intended as disincentives to intervention 
would also aim at improving the fluidity of the market. 
It would be proposed: 
that where products were brought under precautionary intervention arrangements 
or removed to the warehouses of the intervention agency a period of four months 
should be allowed for payment; 
that the intervention period should be limited to four months (May to August). 
r 
When reforming the common organization of the market in rice, it is appropriate 
to adjust the Community rules and remove certain obsolete arrangements that in 
some cases have never been applied. 
ê 
(//& proposal for a 
COUNCIL REGULATION (1ÏC) 
determining the standard quality of rice 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EEC) No 1418/76 of 21 June 1976 on the common 
organization of the market in rice, and in particular Article 3(1) thereof, 
I laving regard to the proposal from the Commission, 
Whereas the intervention price for paddy rice should correspond to a specific standard quality; 
whereas that quality is determined by Council Regulation (EEC) No 1423/76 of 21 June 1976 
determining standard qualities for rice and broken rice ; 
Whereas, with regard to quality, trends in demand for rice on the Community market as well 
as the guidelines followed in the reform of the common organization of the market make it 
appropriate to re-determine the standard quality taking account of both the quality 
characteristics of Community production and the most representative qualities of imported 
rice; whereas it follows from those factors as well as other factors in the reform of the 
common organization of the market that requirements should be made more stringent and the 
system provided for by the above-mentioned Regulation should be replaced; 
HAS ADOPTED THIS REGULATION: 
OJNoL 166, 25.6.1976, p. 20. 
Article 1 
The standard quality of paddy rice for which the intervention price is fixed shall be defined 
as follows: 
(a) rice of a sound and fair marketable quality, free of odour; 
(b) moisture content: 15%; 
(c) yield of wholly milled rice: 
72% by weight of the total yield; 
63% by weight in whole grains (with a tolerance of 3% of clipped grains) of which 
a percentage by weight of wholly milled rice grains which are not of unimpaired 
quality: 
- chalky grains: 1.5% 
- grains striated with red: 3% 
- spotted grains: 0.5% 
- stained grains: 0.25% 
- yellow grains: 0.02% 
- amber grains: 0.05%. 
Article 2 
For the purposes of this Regulation, the definition of grains which are not of unimpaired 
quality shall be as shown in the Annex. 
J Article 3 
Regulation (EEC) No 1423/76 is hereby repealed. References to Regulation (EEC) No 
1423/76 should be taken as references to this Regulation. 
Article 4 
This Regulation shall enter into force on 1 September 1996. 
This Regulation shall be binding in its entirety and directly applicable in all Member States. 
°) 
ANNEX 
Definition of nrain. and broken grains which are not of unimpaired quality 
A. Whole grains: 
Grains from which only part of the end has been removed, irrespective of characteristics 
. produced at each stage of milting. 
B. Clipped grains ':' 
Grains from which the entire end has been removed. 
C proken grains or broken rice: 
' Grains from which a part of the volume greater than the end has been removed ; broken grains 
include: 
— large broken grains (pieces of grain of a length not less than half chat of a grain, but not 
constituting a complete grain); '. 
— medium broken grains (pieces of grain of a length not less than a quarter of theiength 
of a grain but which are smaller than the minimum she of large broken grains*); 
— fine broken grains (pieces of grain less dun a quarter of the size of a grain but too large 
to pass through a sieve with a mesh of 1*4 mm); 
— fragments (small pieces or panicles of grain which can pass through a sieve with a mesh 
of 1*4 mm); split grains (pieces produced by « longitudinal splk in the grain) come under 
this definition. 
O. Green grains: 
Grains which are not fully ripened. 
' E. Grains showing natural malformation: 
Natural malformation means malformation, whether or not of hereditary origin, as compxrrd 
with the morphological characteristics typical of the variety. 
F. Chalky grains: 
Grains at least three-quarters of thé surface of which looks opaque and chalky. 
G. Grains striated with red:' 
Grain* showing longitudinal red srriarions of differing intensity-and shades, due to residues 
from the pericarp. 
H. Spotted grains: 
Grains showing a well-defined small circle of dark colour of more or less regular shape: 
spotted grains also mdude those which show slight bled: «mations on the surface only; 
the ttriatiofu and spot* must not show * yellow or dark aureole. 
'X Stained grains: 
Grains which have undergone, on a small area of their surface, an obvious casings ira'thar 
natural colour; the stains may he of different colours (blackish; seddish» brown); deep black 
. striations m also to bs regarded as stains. If the* colour of the stains -is_ Wnoemiy marked/ 
(black, pin's, geddish-orown) f$ be immediately visible and if they cover an area $m I©» thm 
half that of the orsin, the grains must he ccoskWd to be yellow grains 
J„. Yellow grains: 
Ydlow grains are those which have undergone, totally or partially,, otherwise than by ftying 
a change in their natural colour and havetaken on a lemon or change-yellow tone. 
K. Amber grains: 
Amber gr«ns are those which have ot«Jergo«e, otn«rwse dun by Aying, a dick US^-^CT 
chans£ m colour over the whole surface; this chatige sJcen rfe cokra of the grains to a 1^ 
' amber^yeuow. 
10 
ISSN 0254-1475 
COM(95) 405 final 
DOCUMENTS 
EN 03 
Catalogue number : CB-CO-95-444-EN-C 
ISBN 92-77-92837-9 
Office for Official Publications of the European Communities 
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