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•à A COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 05.12 1995 
COM(«)5X>37 filial 
Proposal for a 
COUNCIL REGULATION (EC) 
regulating compensation for appreciable reductions in the 
agricultural conversion rates before 1 July 1996 
(presented by the Commission) 

EXPLANATORY MEMORANDUM 
Regulation (EC) No 1527/95 lays down, for certain currencies and until 1 January 1996, 
the measures to be adopted in the event of appreciable revaluations, in particular to 
prevent the application of Article 7 of Regulation (EEC) No 3813//92 running counter to 
compliance with the obligations deriving from the GATT agreement and budgetary 
discipline. The fundamental reasons behind the adoption of Regulation (EC) No 1527/95 
remain valid and probably will do so for several months to come. 
Because of their rise in value, the Finnish markka and the Swedish krona have recently 
been at risk of an appreciable revaluation which could occur after 1 January 1996. In 
accordance with Article 1(e) of Regulation (EEC) No 3813/92, any fall in the agricultural 
conversion rate for these currencies resulting from the halving of a monetary gap of more 
than 5 points should be regarded as appreciable because it would be greater than the 
effects of previous devaluations. 
In order to afford the Finnish markka and the Swedish krona the same treatment as the 
other currencies which found themselves in similar situations in 1995, it is necessary to 
take measures similar to those in Regulation (EC) No 1527/95. The overall amount of 
compensation which Finland or Sweden can grant will be determined according to the 
same criteria as those previously used. 
The measures to be taken will of necessity be at Community level, because this is an area 
in which the Community has exclusive competence. They pursue the general objective of 
uniform application of the common agricultural policy and adapt provisions already laid 
down by the Council to take account of the particular situation arising. 
PROPOSAL FOR 
COUNCIL REGULATION (EC) No ..../95 
of 
regulating compensation for appreciable reductions in the agricultural 
conversion rates before 1 July 1996 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to the proposal from the Commission, 
Having regard to Council Regulation (EEC) No 3813/92 of 28 December 1992 on the 
unit of account and the conversion rates to be applied for the purposes of the common 
agricultural policy1, as last amended by Regulation (EC) No 150/952, and in particular 
Article 9 thereof, 
Whereas Council Regulation (EC) No 1527/95 of 29 June 1995 regulating 
compensation for reductions in the agricultural conversion rates of certain national 
currencies3 lays down special rules applicable between 23 June 1995 and 1 January 
1996 to currencies which experience during that period an appreciable reduction in 
ihcJL ^Lullmal 'wOnversion rate; whci'eas the risk of an apprceiahl: redaction in the 
agrlwu'lLua! ecveisioii rates has arisen in the case of the Hiiiiish n;:.:hh:: :^.t the 
Swedish krona since monetary gaps of more than 5% have occurred for those 
currencies; whereas this situation could lead to an appreciable reduction in the 
agricultural conversion rates after the period referred to in Regulation (EC) No 
1527/95; 
Whereas Articled of Regulation (EEC) No 3813/92 provides for the Council to take 
all necessary measures in the event of an appreciable revaluation, which, primarily to 
1 OJNoL387, 31.12.1992, p. 1. 
2 OJNoL22,31. 1.1995, p. 1 
3 OJNoL 148,30. 6.1995, p. 1. 
comply with obligations under the GATT agreement and budgetary discipline, may 
involve derogations from the provisions of the said Regulation concerning aid and the 
amount by which the monetary gaps are dismantled, without, however, resulting in the 
threshold being extended; whereas the measures provided for in Articles 7 and 8 of the 
said Regulation cannot be applied as they stand; whereas it is necessary to take steps 
at Community level to prevent distortions of monetary origin affecting the 
implementation of the common agricultural policy; 
Whereas on the basis of the information available it is impossible to know what the 
situation will be after 30 June 1996; whereas application of the rules laid down in 
Regulation (EC) No 1527/95 would be justified in similar cases up to that time; 
whereas the amounts of the aid provided for in Regulation (EC) No 1527/95 must be 
determined using the criteria employed when that Regulation was adopted, and in 
particular by reference to the most recent data available; whereas in order to reflect the 
most recent data available the amount of the aid must be fixed for those Member 
States, such as Finland and Sweden at present, for which there is a risk of an 
appreciable reduction in the agricultural conversion rate, 
HAS ADOPTED THIS REGULATION: 
Article I 
This Regulation shall apply in the event of significant reductions in agricultural 
conversion rates in accordance with Article 4 of Regulation (EEC) No 3813/92 before 
30 June 1996. 
i Article 2 
1. Provided an amount is fixed for the purpose in paragraph 2, in the event of a 
reduction in an agricultural conversion rate as referred to in Article 1, the 
Member State affected may make compensatory payments to farmers in three 
successive tranches lasting twelve months each, starting with the month 
following the relevant reduction in the agricultural conversion rate. These 
compensatory payments shall not take the form of aid linked to production, 
other than production during a stipulated period prior to introduction of the 
compensation scheme; they shall not favour any particular type of production 
or be dependent on production subsequent to the period stipulated. 
2. In the case of Sweden the overall amount of compensation allocated for the 
first 12-month tranche may not exceed ECU 10,8 million multiplied by the fall 
in the agricultural conversion rate referred to in Article 1 expressed as a 
percentage and reduced, in the case of the first appreciable reduction, by 1,564 
points if the reduction occurs before 13 January 1996 or by 1,043 points if it 
occurs thereafter. 
In the case of Finland the overall amount of compensation allocated for the 
first 12-month tranche may not exceed ECU 14,6 million multiplied by the fall 
in the agricultural conversion rate referred to in Article 1 expressed as a 
percentage and reduced, in the case of the first appreciable reduction, by 1,119 
points if the reduction occurs before 21 January 1996 or by 0,746 points if it 
occurs thereafter. 
The amounts paid out under the second and third tranches shall not exceed the 
amount paid out in the previous tranche in each case, less at least a third of the 
amount paid out in the first tranche. 
3. The Community contribution to financing these compensatory payments shall 
be 50 % of the amounts that may be paid out. 
For the purposes of the financing of the common agricultural policy, this 
contribution shall be considered to form part of the assistance designed to 
regularize agricultural markets. The Member State may withdraw from national 
participation in financing the aid. 
4. The Commission shall, in accordance with the procedure laid down in Article 
12 of Regulation (EEC) No 3813/92, adopt detailed rules for applying this 
Article and in particular, in cases where the Member State does not participate 
in financing the aid, lay down the conditions for paying that aid. 
Article 3 
1. In cases as referred to in Article 1, the agricultural conversion rates applicable, 
on the date of the appreciable reduction, to the amounts referred to in Article 7 
of Regulation (EEC) No 3813/92 shall remain unchanged until 1 January 1999. 
2. Articles 7 and 8 of Regulation (EEC) No 3813/92 shall not apply to the 
reductions in agricultural conversion rates referred to in Article 1 of this 
Regulation. 
Article 4 
Before the end of the third period during which the compensation is granted, the 
Commission shall examine the effects on agricultural income of the reductions in 
agricultural conversion rates as referred to in Article 1. 
Where it is established that income losses are likely to continue, the Commission may, 
in accordance with the procedure laid down in Article 12 of Regulation (EEC) No 
3813/92, extend the possibility of granting compensation as provided for in Article 2 
by a maximum of two additional 12-month tranches, the maximum amount per tranche 
being equal to that granted in the third tranche. 
Article 5 
This Regulation shall enter into force on the day of its publication in the Official 
Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 
Done at Brussels, For the Council 
BUDGET HEADING: 390 and practically all EAGGF Guarantee items APPROPRIATIONS: ECU 194m 
(Item 390) 
2. TITLE: Proposal for a Council Regulation regulating compensation for appreciable reductions in the agricultural 
conversion rates before 1 July 1996 
3. LEGAL BASIS: Regulation 3813/92 - Article 9 
4. AIMS OF PROJECT: 
Fixing degressive aid financed by the Community budget to compensate farmers for loss of income as a result of 
reductions in agricultural conversion rates 
FINANCIAL IMPLICATIONS PERIOD OF 12 
MONTHS CURRENT 
FINANCIAL 
YEAR (96) FOLLOWING 
FINANCIAL 
YEAR (97) 
m EXPENDITURE 
- CHARGED TO THE EC BUDGET 
INTERVENTION 
- NATIONAL ADMINISTRATION + 19,- Mio ECU 
p.m. + 8,- Mio ECU 
p.m. 
5.2. METHOD OF CALCULATION: 
6.0. CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT 
CHAPTER OF THE CURRENT BUDGET? NO 
6.1. CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT 
BUDGET? NO 
6.2. IS A SUPPLEMENTARY BUDGET NECESSARY? 
6.3. WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? YES 
OBSERVATIONS: 
At present it is necessary to make assumptions in order to estimate the proposal's financial impact. The calculations are based on 
monetary gaps at 20.11.1995 of 6 points for the SKR and 5 points for the FMK and appreciable revaluations up to 11.1.1996 for 
the SKR and up to 21.1.1996 for the FMK. 
The measure proposed avoids the possible application of Articles 7 and 8 of Regulation 3813/92 which could have a financial 
impact in 1997 of around ECU 750m for EUR 15. 
Updating the DR for the 96 budget gives expenditure of ECU 79m for Sweden and ECU 18m for Finland compared with the 
assumptions in the 96 draft budget. 
The DR effects are based on that updating. 
Cost of the measure : 1996 1997 
- Cost for compensatory aid 
- Sweden 9 Mio ECU 6 Mio ECU 
. Finland 14 Mio ECU 9 Mio ECU 
Total compensatory aid 23 Mio ECU 15 Mio ECU 
- DR savings : 
- Sweden - 2 Mio ECU - 3 Mio ECU 
- Finland - 2 Mio ECU - 4 Mio ECU 
Total DR - 4 Mio ECU - 7 Mio ECU 
GENERAL TOTAL 19 Mio ECU 8 Mio ECU 
The Commission will make proposals for mobilizing any budget resources necessary for this proposal in compliance with the 
decision on budget discipline of 31 October 1994 and the Financial Regulation. 
£ 
ISSN 0254-1475 
COM(95) 637 final 
DOCUMENTS 
EN 03 
Catalogue number : CB-CO-95-677-EN-C 
ISBN 92-77-97369-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
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