Proposal for a COUNCIL REGULATION amending Regulation (EC) No 1251/1999 establishing a support system for producers of certain arable crops

(presented by the Commission)

EXPLANATORY MEMORANDUM

These proposals for Regulations seek to amend Council Regulations (EC) No 1251/1999 and (EC) No 1254/1999.

In the "Agenda 2000" reform, it was decided to reduce by 20% the intervention price in the beef sector in order to improve the competitiveness of beef in the EU as well on the world market. An increase in existing premia and the introduction of new premia aimed at partial compensation of producer income loss. Furthermore, in order to promote extensive production methods, the extensification premium was nearly tripled and more strict criteria were imposed in view of increasing its efficiency.

As this reform came into effect only in 2000, and the price reduction applicable until now is limited to 6,7%. However, two further steps of a 6,7% price drop each are scheduled for 2001 and 2002, while private storage and a safety net intervention is foreseen after 2002. All these measures led independent impact studies on the 2000 reform to expect a positive impact on the EU surplus from the combined effect of lower production and higher consumption. Unfortunately the overall aim of the reform to regain internal consumption and to perform exports without refunds is disturbed by the recent events on the beef market.

The market for beef and veal has been seriously disrupted because consumers, concerned at the appearance of new cases of bovine spongiform encephalopathy (BSE), have lost confidence in and turned away from the sector's products. Demand has tumbled as a result of a sharp fall in consumption and exports and owing to a rise in the number of livestock held back on holdings.

The continuing fall in prices calls for measures contributing to support the market price at an acceptable level as well as to rebalance this market in medium term perspective. The proposed measures are focusing in particular on limiting the potential for production increases in the future. This is essential in order to allow producers income to recover to levels that contribute to their economic sustainability. In addition, these measures correspond to the increasing demands for measures of production that are also environmentally and socially sustainable.

1. The special premium for male bovine animals is one of the main support instruments for beef and veal production. It is currently subject to a regional ceiling, corresponding in fact to each Member State. If the number of animals that can qualify for the special premium is smaller, there will be less incentive to produce. In addition, the introduction of a system of individual premium rights, based on payments in respect of 1997, 1998, 1999 and 2000, plus a certain percentage to create a reserve, should make management more precise than by using a regional ceiling.

2. Since beef/veal production depends largely on the number of cows, future meat production can be reduced by cutting down the number of suckler cows. To do this, the effect -- in terms of reducing production -- achieved by including heifers among the animals eligible for the premium should be reinforced by setting a minimum threshold number of heifers. In addition, the possibility of reallocating premium rights returned to the national reserve should be suspended for three years.

3. The number of animals eligible for the special premium and the suckler-cow premium is currently limited by the application of a stocking density of two livestock units (LU) per hectare. In order to reduce the number of animals on intensive holdings that are eligible for such premiums and so encourage extensification, the stocking density is to be brought down to 1.8 LU.

4. The quantities that need to be bought in to deal with current production generated by the fall in consumption are likely to lead to an overrun in the yearly ceiling of 350 000 t set in Council Regulation (EC) No 1254/1999. That ceiling should not apply for 2001 and 2002 in order to prevent triggering the use of the "safety net" system provided for in Article 47(5) of that Regulation (which starts if market prices are for two consecutive weeks below 78% at EU level and below 60% at Member State level).

5. The BSE crisis demonstrates the need for a return to farming methods that are more in tune with the environment and interests of consumers. In this connection, encouraging organic production through the use of set-aside to produce fodder legumes such as clover grown by organic methods may provide one suitable approach. To that end, the uses that can be made of land set aside under the support system for producers of certain arable crops provided for in Regulation (EC) No 1251/1999 should be widened.

The measures provided for in these Regulations are intended to address the situation currently applying on the market. Further measures could be required in the future depending on the way the situation develops.

From the moment testing of all animals above 30 months becomes obligatory, the purchase for destruction scheme which has been operative since 1 January 2001 under Regulation (EC) No 2777/2000 will cease to apply and be replaced by a special purchase scheme on the basis of Article 38 of Regulation (EC) No 1254/1999 and using the same financial provisions. The special purchase scheme is intended to withdraw from the market beef from animals above 30 months which are not currently eligible for intervention. Products under this new scheme may subsequently at the choice of the Member State be either destroyed or kept in store (at Member State's expense) until such time where they can be placed back in the market in an orderly manner (after approval by the Commission).

Depending on developments on the market, the Commission reserves the right to review the situation in connection with the preliminary draft budget for 2002 and to consider any legislative measures to deal with the potential risk to the budget that may arise as from the 2002 financial year.

2001/0043 (CNS)

Proposal for a COUNCIL REGULATION amending Regulation (EC) No 1251/1999 establishing a support system for producers of certain arable crops

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 36 and 37 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C, , p. .

Having regard to the opinion of the European Parliament [2],

[2] OJ C, , p. .

Having regard to the opinion of the Economic and Social Committee [3],

[3] OJ C, , p. .

Whereas:

(1) Council Regulation (EC) No 1251/1999 [4] provides that producers must set aside a predetermined percentage of their land to qualify for area payments and the areas set aside may also be used for non-food purposes.

[4] OJ L 160, 26.6.1999, p. 1. Last amended by Regulation (EC) No 1672/2000 (OJ L 193, 29.7.2000, p. 13).

(2) Council Regulation (EEC) No 2092/91 of 24 June 1991 on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs [5] lays down special rules for the development of organic farming and in particular the limited use of fertilisers.

[5] OJ L 198, 22.7.1991, p. 1. Last amended by Commission Regulation (EC) No 2020/2000 (OJ L 241, 26.9.2000, p. 39).

(3) Growing fodder legumes is an agronomic practice that restores the soil's fertility in a natural way; the extension of such crops is therefore important for developing organic production of agricultural products.

(4) To encourage the development of organic production methods, the use of land set aside under the support scheme for arable crops in order to grow fodder legumes on agricultural holdings taking part for the totality of the production in the scheme provided for in Regulation (EEC) No 2092/91 should be authorised.

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1251/1999 is hereby amended as follows:

1. The first subparagraph of Article 6(3) is replaced by the following:

"3. The land set aside may be used for:

- producing materials for the manufacture within the Community of products not directly intended for human or animal consumption, provided that effective controls are applied,

- growing legume crops on a agricultural holding, for the totality of its production, in compliance with the obligations laid down in Regulation (EEC) No 2092/91."

2. The ninth indent of the first paragraph of Article 9 is replaced by the following:

" - those relating to set-aside, and in particular those relating to Article 6(3); these conditions shall define the fodder legumes that may be grown on land set aside and, with regard to the first indent of the first subparagraph of that paragraph, may include the growing of crops without compensation,".

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities.

It shall apply from the 2001/02 marketing year.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

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