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DOCUMENTS "COM"
COM(77)220
Vol.1977/0083

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)220 final .
I
Brussels ,5October 1977
Amendment ofthe common organisation
ofthe market in "beef andveal
(Communication from theCommission totheCouncil )
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COM(77 )220final

Sumnary
Atits386th meeting on2to6March 1976theCouncil took note ofthe
Commission' cintsntion tosubmit toitareport on i/herespective meiio >-.
oftheintervention system andthesystem ofslaughter premiums andonthe
implementation ofcalving premiums ,together with anyproposals .Atits45^s'"
meeting on25and26April 1977 theCouncil decided that theproposals for
amendments tothesystem ofintervention prices orpremiums ,following the
examination oftheCommission 'sreport ,would beapplicable with effect from
the "beginning ofthe1978/79marketing year .
TheCommission examined thedevelopment ofthemarket in "beef andveal and
thefunctioning ofthecommon organization ofthemarket since theestablishment
ofasingle market inthis sector on29July 1968.
Theperiod ofrelative stability from 1968 to1971 wasfollowed byaperiod
ofscarcity (1972-1973 )a^dthen byaperiod ofsurplus which 1edtheCommunity
todiversify theinstruments used tinder thecommon organization ofthemarket
(permanent intervention ;orderly marketing premium ;premium fortheslaughter
ofclean cattle ;premium fortheretention ofcows andcalving premium ).
Theexperience gained inrecent marketing years now shows more clearly the
respective merits ofthese different instruments ,having inmind theforesee­
able trend ofthemarket inbeef andveal over thenext fewyears .The
Commission isconsequently proposing totheCouncil ,forthereasons setout
inthis Communication ,that itamend thecommon organization ofthemarket
inbeef andveal .TheCommission also recalls thelonger-term policies which
itproposed forbeef andveal inits "Stocktaking oftheCommon Agricultural
Policy "of27February 1975 *
Formal proposals will betransmitted tothe Council and theEuropean Parliament
intime forthem toenter into force atthebeginning ofthe1978/79marketing
year .

I.THESITUATION OHTHE MARKET IffBEEF AND VEAL
1.The "beef andveal sector represents about 16%offinal
agricultural production andinvolves nearly two-thirds offanes in
theCommunity .Beef andveal production isclosely linked with milk
production ,since 80$ofthemeat comes from dairy cows anddual-
purpose cows .TheCommunity isthesecond largest world producer of
"beef andveal (15•Of)after theUnited States (25$).
Thequantity of "beef andveal produced comes from theslaughter of
cows (29$)tbeef cattle (61$)andcalves (10%)»Thepercentage of
calves issteadily deolining .Theheadage ofbeef breeds remains
limited because offarm structures ,andindustrial fattening is
little developed except inNorthern Italy .Beef andveal production
1isthus mainly concentrated inthesame places asdairy production •
Beef andveal consumption represents about 3$offinal household
consumption intheCommunity ;itisindirect competition with
other meat (inparticular pigmeat andpoultrymeat ).
2.Beef andveal producers have alower level ofguarantee andless
regular receipts than milk producers .Their production isseasonal
and italso follows acyclical pattern over several years .Itis
influenced notonly bypricing andmarket policy (combined effect
oftheprices ofmilk andbeef/veal ,external protection ,thevarious
premiums )butalso bythetrend ofcosts ,technical progress and
changes inmarketing andprocessing structures .
Asregards demand ,several factors come into play independently of
thetrend ofprices andtheprice relationships between thedifferent
types ofmeat :inparticular ,general economio developments and
changes inconsumer attitudes .
Seethegraph onpage 8ofSupplement 10/76totheBulletin ofthe
European Communities :"Restoring balance onthemilk market ;Action
Programme 1977-80 M.

4!(CATTLENUMBERS/COWS
millionhead
30
28
ΛPRODUCTION POTENTIAL ANDACTUALPRODUCTION OFBEEFANDVEALINTHE•
COMMUNITY OFNINE i
CATTLENUMBERSTRENDS88 -/
86J- –PRODUCTION––
84 /-A­/> ■'
82 f\-A
,.1-1– IIIIi-\"i111111111111r
ÏS 1 n"Nn TRENDS/\/V–mo–H-Hhbr-
»H J/\/CATTLENUMBERS M,K\/ A­\-/fJ 120 yK4xy ■A\LWt
: .../'CATTLENos
■« 110/X-–*1IIII
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■Hjfcfc*? ~7ÎÎÎÎÎÎTÎ
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vU–I 1–I–I–I–III–I–I–IIIII–IIlIIIIPRODUCTION j
milliontonnes
140
130
120
110
100
70 76901
J---4
'MCOWS>«,6,8
6,6
6,4
6,2
6,0
5,8
5,6
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Graph1. •Φ"

C0M(77)220-E
Production
3.Inthelong term ,Community "beef andveal production isincreasing
byabout 2.7$ ayear (1963-76 ). This istheresult oftherise in
cattle numbers andtheincrease inaverage slaughter weight (see
Graph 1)«
4.Beef andveal production follows acyclical pattern ;inthe
Community thecyoles ineach Member State ,originally differing ,are
tending tobecome synchronized *Thecyclical movement hasthus
deepened ,andatthesame time itsduration isdiminishing (four to
sixyears ).Since i960 three cycles canbedistinguished (seeGraph 2)
Moreover ,there seems tobesome interaction between thecattle cycle
andtheshorter pig cyole .
5.Several factors determine the cyole :theproduction period –
themarket prices ofbeef andveal –theprioe ofmilk –theprice
relationship between feed (maize )andbeef/veal .Exceptional factors
mayaccentuate ormoderate thecycle :,slaughter premiums ,drought .
Cyclical movements inmarket prices lead tocorresponding cyclical
movements intheproduction ofbeef andveal twoorthree years later
(seeGraph 2).Ontheother hand ,theeffect ofprice fluctuations
isinstantaneous ,giving rise either totheretention ofcattle (rise
inprices )ortoslaughterings (fall inprices ).
6.Meat marketing structures areundergoing far-reaching changes .
Themodernization ofslaughterhouses –between 1964 and 1975 the
Guidance Section ofthe EA.GGF financed 553projects representing a
total investment ofabout 600Mu.a.–goes hand–inr-hand with an
increased tendency forslaughterhouses tomove outinto theproduction
areas .Thecreation ofproducer groups ,especially inFrance and
Germany ,theextension ofslaughtering andstorage capacities andthe
spread oftechnical progress inslaughtering andtransport arehelping
toimprove meat marketing andprocessing struct tires .Curing therecent
crisis storage ,andinparticular freezing ,capaoity could notmeet
theneeds oftheoommon organization ofthemarket .

w^■
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ιΝi',vfhtANNUALVARIATIONS ifilPRICE,CATTLENUMBERSANDBEEFANDVEAL
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CATTLEHEADAGE
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60 70 75 80%
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è-4- C0M(77)220-E
7.Theenlargement of"theCommunity andagreaterincreasein
production thaninconsumption raisedtherateofself-supply from
85$(1968-1973 )toalmost100$1974-1976.
AverageannualimportsintotheCommunity whichwereabout600000t.
(1968-1972 )changed "between1973and1976toabout400000t.
8.Theincomeoffour–fifths ofcattleproducers dependsonthethe .milk-beef
combinedresultof/twospecializations' (milk,slaughter ofcows,
saleorfattening ofcalves).Theirincomeissaidtoamountto
onlytwo-thirds oftheincomeoflarge–scalearablefarms;regional
disparities anddisparities betweenlargeandsmallfarmsremain
great•
Specialized farmershavealowerandlessstableincomethanmixed
farmers;buttheyhavegreaterguarantees thanpigandpoultry
producers •
Consumption
9.Theconsumption ofbeefandvealisincreasing byabout1.5$a-
year(1960-76)buthasbeentendingtoleveloutoverthelastfew
years.Itisincreasing lessrapidlythanthatofpigmeat(3.6$)and
poultrymeat (7.8$),sothatbeefandvealwhichwas35$ofallmeat
consumedini960isonly31$today.Theconsumereatsanannual
averageofabout81kgofmeat,including 32kgofpigmeat,25kgof
beefandveal,12kgofpoultryand12kgofothermeatandoffal
(seeGraph3)*
10.ConsumerhabitsvarygreatlyfromoneMemberStatetoanother,
bothasregardsthetotalconsumption ofmeat(from63kgperyear
inItalyto88kginFrance)andasregardsthedifferent kindsof
meateaten.WhereasbeefandvealheadthelistonlyinItaly,
pigmeatisthemostpopular meatinalltheotherMemberStates.Per
capitaconsumption ofpigmeatvariesfrom17kginItalyto$0kgin
Germanyandofbeefandvealfrom15kginDenmarkto30kginthe
BLEU.

MEATCONSUMPTION ANDBEEFANDVEALPRODUCTION
EUR"9"
(Semi-logscale)
Miot l l I l I I I I i I IMiot
_O
20 20
ALLMEAT
15^ 1" 15
10 10•
--–'°d■-–■■■■ " jj;^ 9
, ~~
PIGMEAT/*
»I I IIII I I | | I o,7 1–T^r^EEF ANDVEAL | i _-7
:rjK^mairŒ =:
DOMESTIC PRODUCTION OFBEEFANDVEAL DOMESTIC PRODUCTION OFBEEFANDVEAL
4I 14
3 -zA^\ 1III3/25llIIIIIIIIII!IIIilI25
A 20 IU-L-H*T^-N20POULTRYMEATy JMfflTffiffl .
^ ""M'M'z=-JjJ-LUj102 – _l2
^""Bant*Vcons.5
,r 3 ^x*'–POULTRY-3./ meat_/ •2trttr 2
* .TRENDS
I I III II1o 10o in1
to <o r-s f-
11–J11–J 1L–J 11111–JIII■''■■■'■■■'-I
£ 15 P m o ir>tû <o r* co coS O) O) O) O) O)t" r- . r- • r-
1CCE-rGVI-G/2-77n6.?9"
Graph3

11*Different consumer habitsdirectly influence thetrendinthe
consumption ofmeatcomparedwithotherfoods(bread,pasta,fish,
milkproducts);inthelongtermtheyalsoinfluence thetrendin
theconsumption ofbeefandvealcomparedwithothermeat(in
particular pigmeatandpoultry);intheshorttermthecompetitive
position of"beefandvealisdetermined mainly "byitsprice.Beef
andvealisnotonlydearerthancompeting meathutitspriceis
risingmorerapidlythanthatofpigmeatandpoultry(wherethe
increasesinproductivity aregreater).Inthelongtermtheprices
ofpigmeatandpoultryinrealtermshavefallenintheCommunity
whereasthepriceofbeefandvealhasrisen(seeGraph5)*
12.However,thereaction ofoonsumers topricevariations depends
largelyonthetransparency andefficiency ofthedistribution system.
Ariseinproducer priceshasafullerandquickereffectthan,afall
inprices.
Moreover ,consumption ofbeefandvealrisesinlinewiththegrowth
ofincomes,providedthisisnotoffsetbyariseinprices.
13.Inthelongterm,theincreaseintotalconsumption ofbeefand
vealisattributable bothtotheincreaseinpopulation andtothe
slightincreaseinpercapitaconsumption (from21kgini960to
25kgtoday).Theriseinconsumption relatesexclusively toredmeat,
sincetheconsumption ofwhitemeatisdeclining .
Thecrisis
14-Since1972therehasbeenincreased instability onthemarket
inbeefandveal,whichisreflected inprices,cattlenumbersand
production .Theoriginofthisinstability seemstobealackof
confidence onthepartofproducers following afallinpricesin
realtermsovertheperiod1968–'71.Thereduction inherdscaused
adropinslaughterings in1972,leadingtoashortageofbeefand
vealintheCommunity atatimeofshortage ontheworldmarket.
15.Theshortagecausedmarketpricestorisesubstantially (upby
22$in1972)*Theresultwasageneraloptimism,reinforced bythe

-6- C0M(77 )220-E
measures -taken under thecommon organization ofthemarket (relatively
large increase intheguide price ;introduction ofpermanent
intervention ,premiums forthechangeover frommilk tomeat ).The
subsequent reconstitution ofherds ledtoavery sharp increase in
production intheautumn of1973 (up "by21$in1974)*
16.Since consumption remained relatively stable ,theincrease in
production caused prices tocollapse ,leading towidespread slaughterings
which were further stimulated "byavery sharp rise inproduction costs .
Inview ofthe serious nature ofthe crisis the Community wasobliged ,from
'thespring of1974 ,totake protective measures which atfirst gradually
limited imports and'which later were gradually relaxed (Exim ;"jumela 1je"
–i.e. linked sales ).
Permanent intervention *applied since August 1973 »hasledover four'
marketing years tothebuying inofabout 1.3million tofbeef of
production ).Intervention hastaken place tovarying degrees inthe
different Member States ,reflecting differences notonly inlevels of
production butalso insupport systems andmonetary effects .In
addition ,apremium system wasimplemented toreduce theeffects ofthe
crisis (phasing ofslaughterings ;supplementary income )*
17.Theinstability ofthemarket inbeef andveal andtherange of
specific measures introduced entailed considerable expenditure for
theGuarantee Section oftheEAGGF (Annex 1),amounting toover
2000Mu.a.fortheperiod 1974–76 (against only 100Mu.a.for
theperiod 1968–73).
18.Thecrisis onthemarket inbeef andveal ispartly explained
bythe convergence ofeconomic phenomena both onaworld –wide basis
andwithin theCommunity (gradual synchronization ofcycles ).Ithas
highlighted thedifficulties encountered under thecommon organization
ofthemarket incontrolling andregulating thesupply ofbeef and
veal .Lastly ,ithasshown theneed toforesee thetrend ofproduction
andconsumption ofbeef andveal sufficiently farinadvance andwith
sufficient precision topermit aneffective count er-cyolical management
ofmarkets .

-7- COM(77 )220-E
Outlook
19.TheCommission forecasts show aslight increase inthe
consumption of "beef andveal "between nowand1985 (from 25kgto
27kgperhead );thebeef andveal percentage oftotal meat
consumption will continue -tofall (Graph 3)•
Beef andveal production will "bethe subject oftwo cyclical
movements .Thefirst ,"beginning atthe 1975 peak ,will reach its
lowest point in1978/79andrise again toapeak in1980/81(see
Graph 1);however ,this movement may "beinfluenced "bytheconsequences
ofthemilk action programme .TheCommunity 'sdegree ofself-supply
will "bearound 100$ atthepeak ofthecyole andfall toabout
95$in "thetrough .
20.These forecasts show that arecurrence ofthe recent crisis
cannot "beruled 'out .They suggest that the Community ,without
neglecting thepossible effect ofmeasures relating toconsumption ,
must give priority todeveloping abattery ofmeasures capable of
flattening outtheproduction cycle andthus stabilizing thebeef
and veal market .
Ψ-
Meat consumption (EUR "9")inkfrperhead ofpopulation
Meat 1960Î1970
II1975
ι1980 1985
Beef and veal 21.0I
I.25.5 25.2 26.6 27.3
IPigmeat 24.4 29.6 32.4 34.5 35.9
IPoultrymeat 5.5 10.3 12.1 13-0 14.0
All categories 60.9 76.6 81.886.4 J
i89.8

•■0. '
COMMONORGANIZATION OFTHEMARKETINBEEFANDVEAL
u.a/100kg u.a/100kg
tliveweight liveweight
Adultbovineanimals! _–___–. . , . , ,Adultbovineanimals
Suspension -
i Optionalinterventionat ofcustoms
; 98%oftheguideprice,I• (duties GuidepriceI
VVY/ZY/Acompulsoryat93%j –––
– Permanentinterventionat! –
t' 93%oftheguidepriceI Marketpriceused
Permanentintervention at __
90%oftheguideprice! ^/*
I75 > ^ Protectiveclause -75
: IntTrvëntiôrTpnce _
j ^Importprice
Premiumfor• IMilk/meatconversionpremiumI.Premiumforslaughteringcleancattletheslaughter ! * 1'
ofdairycows I
IIIIL 1 II I^1
|I25 \––I––___ ––premiumforretent. 25| _ ofcows.France|
'| Premiumforthenon- j
I!Il Imarketingofmilk • ' I ; jit •1 –' I I |IICalvingpremium,Italy
! I■- :IOrdefymarketinq
i : i
!I°A1SOWDL 1F'M'A'M*J'J'AVG^'D|J1FM1A'M'J1J'A'S^WD!J1F'M'AWJ1J'A'S^ND!J'F'M'AWJ1J1A'S'O'N1L>!J1F'M'A!M'J'J'A'S'OND!J1F'M'A'M'J'J'A'S'OWO!J'F'M'A'M'J'JA'S^WD!J1F'M'A'M'J1J'A'S'OWOJ0
1968'1969k1970'1971'1972 1973 1974 1975 1976
Irrf-T,vi-Vr.77nb.2tr
. 1 ! 1
/
Graph4
\

-8- C0M(7?)220-E
II.THEMEASURES ADOPTED
21.Theeffectiveness ofCommunity andnational measures adopted
inthe"beefandvealsectorsince1968andtherelative meritsofan
intervention systemandapremiumsystemmustbejudgedagainstthe
aimspursued.
Thefunctioning ofthecommonorganization ofthemarketestablished
witheffectfrom29July1968isillustrated inGraph4.
Alreadybeforethe1972crisis "butmainlysince1973,theCommunity
introduced anumberofspecific measures designed eithertoreduce
themilksurplusortoadjustitspolicyinthebeefandvealsector.
Thesemeasures aresetoutinGraph4»Inaddition ,there'arethe
nationalmeasures (premiums ;producergroups,etc.)implemented by
theMemberStatesandthenational expenditure approved inthebeef
andvealsector.
Theaimspursued
22.Amongtheaimspursued,thatofmarketstabilization callsfor
specialattention .Inthedownward swingoftheproduction cycle
(shortage )theCommunityfacilitated importsfromnon-member
countries (zerolevy;partialsuspension ofcustomsduties)and
introduced non-delivery premiums andconversion premiums anda
pricingpolicyfavourable tobeefaaidveal.Thesemeasures were
generally introduced toolatetorestrain thedownward swingoftheproduction
I
cycle;theythusonthecontrary helpedtoaggravate thecrisis.At
thetimeoftheproduction increase in1974theCommunity ,witha
viewtoexternalprotection ,firstresortedtofullapplication ofthe
levyandthentotheprotective clause,subsequently relaxed.The
tergiversations accompanying thesedecisions letinspeculative imports,
thescaleofwhichtemporarily aggravated thecrisisonthecommon
marketinbeefandveal.Internally ,permanent intervention was
generally effective ,althoughlessthanitmighthavebeenbecause
ofthecomplexity ofdistribution networks andtheinadequacy of
storageandfreezingcapacity.Similarly ,theorderlymarketing
premiums andthepremiumsfortheslaughter ofcleancattleenabled
someslaughterings tobephased,butwithoutdoingmuchtocounteract
thecycle.

-9- C0M(7Î)220-E
Onthewhole |"themeasures implemented did .no~tsucceed ,inrestraining
thecycle .However ,this relative failure isduenotsomuch tothe
intrinsic ineffectiveness of "theinstruments used astothemanner in
which they were implemented andinparticular their timing .
23.Thesupport ofstockf armors' incomes depends -inthefirst instance
oftheeffectiveness oftheinstruments used tostabilize themarket in
beef andveal .The65$rise inguide prices between 1971/72and1976/77,
theintroduction ofpermanent intervention atahigh level ofguarantee
andtheuseoftheprotective clause greatly helped toconsolidate the
level ofstockf armers' income .Although ,generally speaking ,premiums
support theincome ofrecipients ,some ofthem (slaughter ,conversion )
mayhave anegative effect ontheincomes ofnon-recipient producers .Overall ,
themeasures adopted proved insufficient toguarantee specialized cattle
producers income support comparable tothat ofmixed producers (milk/meat )
orlarge scale arable producers .
24.Themeasures adopted canscarcely besaid tohave encouraged producers
toabandon milk production andtoconcentrate more onmeat production .
Since 1968 thepercentage ofbeef derived from dairy herds hashardly
varied .This isdoubtless duetostructural rigidity ,butprobably also
tothe fact that most ofthemeasures adopted areneutral with regard to
thespecialization objective andthat the conversion premiums were granted
attimes when thebeef andveal market wasnotvery attractive .Itistoo
early tojudge theeffect oftheconversion measures taken pursuant to
Directive 72/159 and the milk action programme .
25.Thecommon organization ofthemarket must provide consumers not
only with security ofsupply butalso with reasonable and stable prices .
Itmust beacknowledged that atthetime ofthe shortage in1972 and1973
and inthe absence ofadequate supply possibilities ontheworld market
the Community wasunable toprevent both anupsurge inprices anda
substantial fall intheconsumption ofbeef andveal .

-10- C0M(77)220-E
Foritspart,thepricingpolicyseemstohavecomeofftherails
fromthemomenttheCommunity "believed ,itcouldsteermilkproduction
towardsmeatproduction bysubstantially raisingtheguidepricefor
adultbovineanimals.Thus,evenatthetimeofover-production ,when
theprotective clauseandthepermanent intervention wereworkingto
thefull,thepricesofbeefandvealinrelationtothepricesofother
meatwerenotparticularly advantageous toconsumers .Onlyspecific
measures (salesatareducedpriceontheinternalmarkettocertain
consumers andwelfareinstitutions )and,tosomeextent,thegranting
ofpremiumstoproducers ofbeefandvealdidtheconsumer anygood.
•Thecomma*organization ofthemarkethasasitsobjective toenabletheCommunity
/
tocontribute tothesupportofpricesandproduction within "theCommunity andtothe
harmonious development oftradeinbeefandvealbothinsideandoutsidetheCommunS }
Evenwhenthecommonmarketinbeefandvealwasbadlytroubled withtemporary
surpluses andtheprotective clausewasbeingapplied ,theCommunity maintained the
importsitwascommitted tounderGAITandopenedthedoorwidertoimportsfromthe
ACPcountries .Moreover ,theConama*ity'sintervention policyhelpedtoprevent
worldmarketpricesforbeefandvealfromfallingfurther.
27.Implementation ofthemeasures adoptedunderthecommonorganization
ofthemarketgaverise,especially from1974onwards,toheavypublic
expenditure .ThatbornebytheGuarantee SectionoftheEAGGPissetout
andanalysed inAnnex1;in1975itreachednearlyonemilliardu.a.,
or8.4$oftheaveragemarketpriceofbeefandveal;duringthecrisis
period(1974to1976)itwassharedbetweenintervention (51$),
premiums (30$),refunds(17$)andothermeasures (2$).Therelative
economic andfinancial effectiveness ofintervention measures and
premiumsisanalysed below.

-11- COM(.77)220–Ej
S
Relative meritsofintervention andpremiums
*
28.Attherequestofthecouncil,theCommission hasprepared areport
ontherelative meritsoftheintervention systemandthepremiumsystem.
Thisreportisannexedtothiscommunication' (C0M(77)221)•j
Itsmainfindings aresummarized "below. '
Theobjectives oftheTreatymayheattainedeitherbyanintervention
systemtostabilize pricesandincomesorbyasystemofvariable premiums
whichallowsthefreeplayofmarketforcesbutguarantees producers a
stableincome.
29*Bothintervention andthepremiumsystemaredesigned toreducethe
swingsoftheproduction cycleandhencetostabilize markets. ;
Permanent intervention ,whichhasbeenimplemented since 1973»prevented
agreaterrun-down ofherdsin1974–75andthereturntoashortage
situation ;moreover ,becauseofthegreatersecurityitofferstomeat
producers,intervention preventsthemfromchangingover|omilkproduction.
Inthemediumtermthegranting ofavariable premium,whichprovides
producers withguaranteed receipts ,helpstostabilize theproduction Cycle.
Intheshorttermithelpstoattenuate thdseasonal fluctuations inproduction
30.Onlyintervention measures canstabilize marketprices.Intheevent
ofseasonal orcyclical increases inproduction orwhenthereare
exceptional circumstances (drought)intervention stopspricescollapsing .
However,theeffectiveness ofintervention depends onitsbeingpermanent and
generalthroughout theCommunity andontheavailability "ofadequatestorage
capacity.Inashortage ,intervention provides aneffective meansof;
supplying themarket,fromthestockofmeatinintervention ;iethen'
helpstocounteract theriseinprices.
Thestabilization ofmarketpricesisonlyimperfectivelyachievedby\
premiumsystems.Thesedonotpreventgreatvariations inprices;th^y
mayevenaddtothemiftheyaregrantedselectively and'atanuntime^r
moment* I I

-12- C0M(77)220-E
31.Whileintervention hasabsolutely noeffectonspecialization ,some
premiums canhelptosteerproducers towardsmeatproduction andaway
frommilkproduction *Conversion andnon-marketing premiums andother
premiums ofaselective naturecanheeffective inthisrespect.
32.Intervention andpremiums systemsaffectconsumption differently .Inaperiod
ofover-supply ,intervention restrains consumption whilevariable premiums
stimulate it;inashortage ,ontheotherhand,intervention ismore
favourable toconsumers .However,thereactions ofconsumers toprice
variations varyaccording totheMemberState.
Thevariable premiumsystemhasapositive effectonconsumption inthe
UnitedUnitedKingdomintheshorttermbutdoesnotnecessarily havea
longtermeffect.IntheotherMemberStates,intheabsenceofintervention /
consumption absorbsonlypartofthesurpluses .Butinthelongterm
intervention makesformorestablepricesandsupplies totheconsumer .
Thefavourable effectonconsumption ofafallinpricesdepends onthe
transparency andeffectiveness ofthedistribution system,consumerhabits,
priceelasticity andthepricerelationship fortheconsumer betweenthe
varioustypesofmeat.
Bythetimeitleavesintervention meathasusuallylostthequalities of
freshness ,etc.,required bytheconsumer.Naturally thereareappreciable
'differences astomarketability ,andconsequently astoprice,betweenfreshmeat
andfrozenmeat.
33.Non-uniform application ofpremium andintervention measures isliable
tocauseirregularities inintra-Community tradeandintheintervention
operations financed bytheEAGGP.Itshouldbenoted,however,thatin
1975 "thegranting ofavariable premiumintheUnitedKingdomdoesnot
seemtohavecausedsuchseriousdisturbances .
Moreover ,thelackofuniformintervention conditions intheMember
States(differentqualities andbuying–inprices)andtheeffectof
monetary compensatory amountscanalsocausedistortions .

-13- CQM(77)220-E
34.Underagivensystemofexternalprotection ,intervention andpremiums
seemtohavenoeffect011tradewithnon-nembercountries ,"butthereisariskof
changesinthequalityofthemeatwhichisthesubjectoftrade.
35*Foragivenlevelofincomesupportforproducers ,apremiumsystemalwaysplaces
agreaterburdenonthebudgetthanintervention ,althoughintervention inthebeef
andvealsectorismorecostlyrelatively speakingthaninofchersectors (cereals,
sugar).Althouthapremiumsystemisadvantageous forconsumers andconsequently
fortheeconomyingeneral ,andwhereasthisadvantage mightmorethanoffsetthe
budgetcost,itisdoubtfulifitwouldaccrueentirely totheconsumer inview
ofthenatureofthedistributive networks inthissector.
Itisevendoubtful whetherapremiumsystemappliedoveranentireproduction cycle
canoffset,totheconsumers' advantage ,thebudgetary expenditure incurredtoassist
Droducers (lesseconomically effective).
Theimplementation ofamixedsystemofvariable premiums andintervention ,
whichismorecostlytothebudgetthanapureintervention system,is
probably moreadvantageous toconsumers thanthelatter.Thiseffectwould
beevenmorepronounced iftheleveloftheguidepricetookmoreaccount
oftherelative pricesofcompeting meat.
36.Concluding itsanalysis oftherespective meritsofintervention and
premiums ,theCommission considers
(a)thatintervention isaneffective systemforachieving market
stabilization andsecurity ofsupply.However,itsapplication mustbe
limitedandselective soastoavoidencouraging production inthelong
termandinordertofacilitate thedesiredspecialization ofproduction ;
itmustbeflexible andoperateatleastcost;
(b)thatthepremiumsystemisanadditional toolforincreasing the
flexibility oftheintervention systemandproviding betterguidelines
forbeefandvealproduction .Generally speaking ,premiums arealso
advantageous toconsumers .

-14- CCM(77)220-E
III.THEAMENIJMENTS FROPOSED
37.Inviewofpastandforeseeable developments onthemarketin
beefandvealandtheexperience gainedsince1968,theCommission
proposes totheCouncilthatcertain amendments bemadetothecommon
organization ofthemarketinbeefandveal.
TheCommission considers thatthismarketorganization shouldpursue,
inthelightoftheobjectives ofArticle 39oftheTreaty,the
following specific aims:
(a)tocounteract theproduction cyclebylimitingitsswingsand
extending itsduration ;
(b)toallowsufficient flexibility intheinterplay ofsupplyand
demandonthemarketinbeefandveal;
(o)tocontribute totheCommunity^effortstorestorebalanceon
themilkmarket,byencouraging producers tospecialize morein
meatproduction .
38.Inordertoavoiddistortions ofcompetition ,thesystemadopted
mustapplythroughout theCommunity .Itmustbesufficiently flexible
toenablethemarkettobemanagedconsistently andeffectively .
Lastly,themarketmanagement policyimplemented mustbeasefficient
aspossibleinitsuseoffinancial andeconomio resources .
39•Totakeaccountoftheparticular features ofthemarketinbeef
andveal,thesystemchosenmustincludemeasures todealwithall
phasesoftheproduction cycle(fallinproduction ;shortage ;rise
inproduction ;surplus).Similarly ,thesystemmustbesufficiently
flexibletocopewiththerelatively highelasticity ofdemandfor
beefandveal.
Themeasures proposed,combinedwiththeexternalprotective arrangements
andtheinstruments ofsocio–structural policy(hillfarming,
modernization offarms)mustmakeitpossibletomanagethemarketin
suchawaythatproducers andconsumers benefitequally.

-H ■'.'î+'
MOVEMENT OFTHEINDICES OFPRODUCER PRICES IN 'i
REALTERMSFORADULTBOVINEANIMALS ,PIGSAND t '
POULTRY >
"... ■· ·?''.·
1801~ΊΤ*ΐΓΊ IIΓΠΤ IIIίIIΓ~1180
17ON EUR*6"Hlf4"EUR"9"––117?1 1970-100 'II-IN i ■
i6o :&-–110rr~]–––––I–riw–ièo: •1 'BEEFI,
1100-^'TZL '-U-100I• m I^îr-U.1POULTRYMEAT f –I-|Tftaii-f
■ •h '8.H THvj«°
:r* III !»->.r ■ 1 T"N°S I ■
V I140I– i –mI–80'IIi111 I180–1140
& Il g >•g
^ 1"'2 *''
j?.130V ■m 130
ÎL* --1il *
j?,.' POULTRYMEAT g
'.'120 I 120i \/\\J\ÊI V'\\\P1GMEAT*»| VO>0J1y-^A
<2 XYX"V"-P /\l'j 110 -r'Vif\– /\] 110
il' /\\"fl/1/\y''î.■/_\\/\\Ai v/beef" ^\/;,r r1îIf–7^>–F!:■:1f- h\v/.–;
$-■ I\\>\b-..90 :–i\–*L– 90
!80 j ■80
70U Il-l IIIIIM1.1 I1111Mro
S *2 o ia.
•J2 «o ■p* r*.. 2 o> <r> ai
ICCE-DGVl-G/Z-77C5.?2
'–[–T"\jS'.'l.-r~'.v~~^z-l.Çraph5....:-•••■■■•'■ ...I
1
Η

-15- C0M(77)220-E
Cautious pricing policy
40,Theprice of "beef andveal compared with theprice ofpigmeat and
poultry isatpresent such astodiscourage theconsumption ofbeef
andveal andtoencourage theconsumption ofcompeting meat (seeGraph 5)
andsynthetic meat .Moreover ,high prices for "beef andveal arelikely
toencourage milk production .For this reason theCommission
considers itnecessary topursue acautious pricing policy for "beef
and veal inthe future .
Stabilization ofthe market
41.Inorder toavoid excessive variations inmarket prices fthe
Commission proposes toemploy thefollowing measures :
(a)private storage
(b)variable premium (forcategories tobedefined ).
(c)public buying-in
(d)slaughter premium (dairy cows )
These measures andthose relating toexternal protection would be '
implemented depending onthemovement ofmarket prices inrelation to
theguide price :
MeasuresLevel ofmarket prxce
(asioofguide price )
I
ι
(a)Market price low
Stepped –uplevy^
Private storage g
Variable premium
Public buying-in<98
<93
<90
percentage tobefixed below
90,inrelation tothe
decision oilthe level ofthe
guide price .
98-100
>100
100-106
>106(b)Market price high
Whole levy
Slaughter premium
Reduced levy
Zero levy „(
Reduced CCT )
1SeeOJNoL61of5March 1977 ,p.1.
Non–automatic measure .
3Level ofintervention price ;buying-in would bepermanently available
unless there issuspension .

-16- COM(77)220-E
42.TheCommission believes thatpermanent intervention represents
anadequate meansofpreventing anexcessive fallinthepricesof
"beefandvealandthusproviding permanent protection forfarmers'
incomes ;sinceproducers' incomeswouldalso "beguaranteed bya
premiumsystemtheintervention pricecouldhefixedbelow90$of
theguidepriceatalevelwhichwouldrelatetothe decision
ontheguideprice.Thesystematpresentinforceallowsthesuspension
ofbuying-in whenthemarketpricereaches95$oftheguideprice;
theCommission proposes "thatthisthreshold "be-changedtoalevelwhich
willdependonthepercentage adaptedforfixingtheintervention price.
43.Theapplication ofpermanent intervention asageneralrule
doesnothoweverexcluderecourse toprivatestorage.Thishasthe
advantage ofpermitting moresophisticated intervention measures ,in
respectofquantities andqualities whicharemoreinlinewithmarket
requirements .Italsoprovides forgreaterflexibility inthe
interplay ofsupplyanddemandonthemarketinbeefandveal.
TheCommission proposes tomaJeeincreased useofthisinstrument from
themomentwhenmarketpricesfall "below93%oftheguideprice.
44«TheCommission isproposing totheCouncilthatpremiums ("both
variable andslaughter premiums )beretainedasapermanent instrument
ofthecommonorganization ofthemarket.Thegranting ofpremiums
makesitpossibletoguarantee anadequatereturntoproducers ,to
encourage themtospecialize insteadofcombining milkproduction with
meatproduction andtoreducetheswingsofthebeefandveal
production cycleandtheseasonalvariations inproduction .

-17- COM (77)220-E
Thevariable premium could bepaid onthe slaughter ofeligible cattle
when theCommunity market price falls below 90%oftheguide price .
Thepayment ofthepremium would besuspended throughout Community
when theCommunity market price reached 90%oftheguide price ,,
Inagiven Member State thepremium could besuspended ormaintained
under certain circumstances ,ifthemarket price there deviates con­
siderably from theaverage market price inthe Community .
The amount ofthevariable premium should cover the difference
between 90%oftheguide price andtheCommunity market price for
adult bovine animals jhowever the amount ofthe premium would be
limited to10%oftheguide price tocontribute toacertain
stability inthemarket price .
Incase ofintervention ,the part ofthepremium which exceeds the
difference between 90%oftheguide price andtheintervention price
would bededucted from thebuying-in price formeat coming from
animals eligible forpremium .
Indeed ,theapplication ofasystem combining thepermanent intervention
with thegranting ofavariable premium canonly bejustified ifa
relative fall oftheintervention bying price with regard totheguide
price isachieved .
With this system s
-duetothegranting ofthepremium a .certain advantage issecured tothe
consumers ononehand ,taking into account the fact that themarket
price canfall below theintervention price ,and
–ontheother hand due tothegranting ofthepremium combined with the
benefits derived from thepermanent intervention oneisinposition
toallow theCommunity producers onaverage areturn atleast equal
to90$oftheguide price .
TheCost ofthevariable premium would beborne entirely bytheEAGGP .

-18- C0M(77)22O-E
46*Intheeventofanincreaseinproduction ,theintroduction of
thevariable premiumwouldmakeitpossible tospread ,outsupplyon
aseasonalbasisinawaythatismoreinlinewithdemand.Onthe
otherhand,inashortageithasnoeffect*Forthisreasonthe
Commission proposes theintroduction ofslaughter premiumsfordairy -
cowsand/orheifersfromthemomentwhenthemovementoftheproduction
cycleindicates ashortage ,withmarketpricesabovetheguideprice
andontheinorease *
47•TheCommission isexamining thedesirability ofintroducing
supplementary measures toencourage greaterspecialization in
meatproduction ,aftertheendofthesystemofpremiums forthe
non-marketing ofmilkintroduced underthemilkactionprogramme *
Accompanying measures
48*Theimplementation oftheabovesystemcallsforanumberof
accompanying measures :
(a)itisessentialtohaveshort–,medium–andlong-term forecasts
whichareconstantly updatedifthereistobeefficient management
ofalltheinstruments proposed andinparticular iftheyareto
beimplemented attherightmoment;.
(b)thechangeover ftomthepresentsystemofrecording marketprices
(liveanimals)toasystemofrecording marketpricesbasedona
Community classification ofcarcasesisalsoessentialifthe
transparency andmanagement ofthemarketaretobeimproved *
TheCommission alsoconsidersitnecessary toexaminemeasuresto
improvethemarketing system(slaughterhouses ,producergroups)so
astomakethefunotioning ofthemarketinbeefandvealmore
effective *

ANNEX I
EEC-Community support measures in "thebeef andveal sector
.1968 1969 1970 1971 1972 1973 1974 19751976 I1977
estimât .-I
A.Expenditure
(i)EAGGF Guarantee Sectionwithout 1
double I
rate I
–refunde
-intervention
-slaughter' orderly marketing /
retention ofcows and1A 12,2
6,3
••25,1
5,717,5
1,67,4
Μ3,3
13,755,5
246,Γ
16,3144,2
438,2
359,5135.7
350.8
-.15^5110*
231,3
153,7
'dalf premiums'
J.–othermeasures ^ I **i
I 2,3 38,1 0,2-
(ii)EAGGF Guidance Section I ** 24,8 1,9 4,3 11,7 27,7 17,"12,0
(iii)National financing of
Community measures *a» ■» . » 18,7 .288,8 77,5 12,0
Total (a)million u.a .
(b)u.a./lOOkgliveweight14
0,1418,5
0,1830,8
0,2943,7
0,409,3
0,0921,3
0,22351,2
2,921.296,5
10,64737,7
•6,20519>é
•4,55
B*Gross domestic production
inthousands oftonnes 5.542 5.517 5.782 5.834 5.263 5.359 6.487 •
I6.582 6.430 6.150
C*Average market price
(u.a./lOOkgliveweight ) 63,97 67,84 68,81 71,55 87,58 91,68 85,29 ) 94,68 101,67 115
D.Total expenditure asa
percentage ofmarket
prioe A("b)/c 0,22% 0,26% 0,42% 0,56% 0,01% 0,02% 3,4% 11,2% 6,1% 4,0%
E.Ofwhich :premiums chargeable
totheEAGGF asapercentage
ofmarket price■t-
mm 0,5% 5,8% 2,1% 1,3%
P.Average market price -plus
premiums ^u.a./lOOkgliveweight ) 63,97 67,84 68,81 71,55 87,58
I91,68 85,68 100,19 103,78 116,55
t.
-Welfare sales -publicity campaigns .Premiums chargeable ttothe EAGGF inu.a./100kg0,39 5,51 2,11 1/5l
^Premiums fortheslaughter ofcowsandthenon-marketing ofmilk (Regulation (EEC)No1975/69)•
Premiums forthechangeover frommilk tomeat (Regulation (EEC)No1353/73).
-Premiums referred toin2,plus slaughter andorderly marketing premiums .
:Eurostat :meat balance *