[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 18.12.2006

COM(2006) 822 final

2006/0269 (CNS)

Proposal for a

COUNCIL REGULATION

establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Context

- Grounds for and objectives of the proposal: A simpler legal framework for the CAP – one horizontal common market organisation instead of 21

The main objective of the proposed regulation is to revise the existing 21 regulations on sector-specific common market organisations (CMOs) and combine them into a comprehensive single regulation, with a view to streamlining and simplifying the legal framework without changing the underlying policies.

Thus, the proposal intends to provide a single set of harmonised rules in the classic areas of market policy such as intervention, private storage, import tariff quotas, export refunds, safeguard measures, state aid and competition rules, and the communication and reporting of data. The existing sector-specific rules on these matters have been rearranged by instrument or policy issue and merged, where possible, into horizontal provisions. As a synthesis of the current CMO provisions at Council level the proposed regulation should apply to all agricultural products that are currently covered by a CMO.

- General context

This proposal is an essential component in the Commission’s plans to streamline and simplify the common agricultural policy (CAP). The key issues of the Commission’s approach have been set out in its 2005 Communication on "Simplification and Better Regulation for the Common Agricultural Policy" (referred to hereinafter as “the Communication”)[1]. In this document the Commission underlined that “Reducing red tape in the farm sector by making rules more transparent, easier to understand and less burdensome will reduce costs for businesses and ensure that European citizens receive value for money".

- Existing provisions in the area of the proposal

An essential part of the current CAP legal framework consists of the 21 CMOs that have been established since the introduction of the CAP (see Annex 1 to this document ). Each of these CMOs is governed by a separate basic Council regulation, often accompanied by a further set of subsidiary Council rules.

Most basic regulations follow the same structure and have numerous provisions in common. This is the case in particular as regards the rules on trade with third countries and general provisions but also to a certain extent for the rules related to the internal market. Moreover, the basic regulations often contain different solutions to identical or similar problems. On this last point, the Communication notes the 2003 reform of the CAP which “simplified the CAP's legislative environment by establishing a horizontal legal framework for all direct payments and amalgamating an array of support systems into a single payment scheme.” In the Communication, the Commission declared its intention to extend the horizontal approach to the 21 CMOs and to examine in this context the extent to which harmonisation is possible and sectoral approaches can be replaced by horizontal ones.

- Consistency with other policies and objectives of the Union

This proposal, in the area of agriculture forms an integral part of the overall Commission approach to Better Regulation and simplification, as it is expressed in its Communication of 25 October 2005 on “ Implementing the Community Lisbon programme – A strategy for the simplification of the regulatory environment” [2] and endorsed in the Interinstitutional Agreement on better law-making of 16 December 2003[3].

2. Consultation of interested parties and impact assessment

- Consultation of interested parties

The Commission’s intention to draw up a proposal for a comprehensive CMO regulation was announced in its Communication of 19 October 2005. Following a discussion, the Council adopted in December 2005 conclusions which did not specifically address this issue. In the course of the preparatory work on the proposal both Member States and stakeholders were given the opportunity to express their views on the project. The consultation of Member States took place in a meeting of the Commission simplification experts group on 27 June 2006, that of the stakeholders in an ad-hoc meeting of the Agricultural Advisory Committee on 30 June 2006, in both cases on the basis of an information note summarising the broad lines of the envisaged proposal.

Member States representatives accepted in general that the approach could lead to simplifying the legislative framework of the CAP. However, they reserved the position of their governments until the presentation of a detailed legislative proposal.

The representatives of stakeholders were equally reluctant to comment on the approach in greater detail. A number of them showed openness to consider a proposal for a comprehensive CMO regulation provided that it would be restricted to a technical exercise without bringing about changes to the existing policies. Some concerns were voiced with regard to the creation of one management committee for all market sectors.

- Collection and use of expertise

There was no need for external expertise.

- Impact assessment

Not applicable. The proposal is not subject to impact assessment requirements as it is not included in the Commission Legislative and Work Programme.

3. Legal elements and main characteristics of the horizontal CMO

- Legal basis

Articles 36 and 37 of the Treaty

- Content of the proposal

Simplification of the regulatory framework without changing the policy

A legislative project of this order of magnitude which consists of combining a significant number of separate legal acts into one comprehensive Regulation goes clearly beyond the level of a mere consolidation of existing legal texts. It inevitably requires re-arranging and re-wording many of the provisions concerned. This should not be seen, however, as an attempt to change the political decisions the Council has taken over the years in CAP matters, and which are reflected in the current CMOs. Although there is no universal and agreed typology of simplification initiatives, the proposed Regulation is essentially an act of “technical simplification”, i.e. it implies, as it is expressed in the Communication, "the revision of the legal framework, administrative procedures and management mechanisms to achieve streamlining and greater cost-effectiveness and attain existing policy objectives more effectively, without changing the underlying policies." Accordingly, it is not proposed to repeal or change existing instruments unless they have become obsolete, redundant or should not by their very nature be dealt with at Council level. This also implies that in the framework of this proposal neither the current scope of the CMOs should be extended nor should new instruments or measures be introduced.

In line with these criteria, the proposed arrangements deviate on a limited number of points from those in current Regulations. This issue is in particular relevant to a number of provisions which currently empower the Council to adopt legal acts without consulting the Parliament (so-called “second generation” acts). In accordance with the institutional balance laid down in the third indent of Article 202 of the Treaty it is proposed to either adopt such acts in accordance with the procedure laid down in Article 37 of the Treaty, i.e. after consulting the Parliament, or to confer the relevant powers on the Commission.

However, since there is currently no need to change or repeal the relevant second generation Regulations in substance the proposal leaves them in place while explicitly setting out a Commission power to amend or repeal such acts by means of the management committee procedure once this becomes necessary. Furthermore, it should be noted that for certain issues which, due to their particularly technical character are not appropriate to be dealt with in a basic Council Regulation, it is proposed to transfer the relevant powers to the Commission.

Scope of the proposal

The scope of the proposed Regulation reflects the step-by-step approach that has already been set out in the Communication. Accordingly, it is proposed for the new basic Regulation to apply from the very beginning to all agricultural products that are currently governed by a CMO. In addition, for the sake of completeness and consistency the new basic Regulation should also include certain other agricultural products such as silkworms, ethyl alcohol of agricultural origin and apiculture products which at present are not subject to a fully-fledged CMO but regulated by a set of specific agricultural rules, without however giving them full CMO-status. It should be noted, however, that due to its particular status as a product that is not covered by Annex I to the Treaty[4], cotton is not included in this proposal.

As regards the sectors which are currently or will soon be subject to policy reviews (fresh and processed fruit and vegetables, wine), it appears appropriate to include only those provisions in the proposal which are or will not be affected by such reviews. This is the case in particular for horizontal or common rules such as the provisions on state aid and competition, comitology procedures, and Member States’ communications to the Commission. Accordingly each review will take place on the basis of a separate proposal. Once a review process is concluded the legal acts adopted in its framework will then in a second step have to be incorporated into the new basic Regulation. To that end the Commission will at due time submit appropriate proposals to the Council. Until such proposals are adopted, the existing regulations governing these rules will remain applicable in addition to the new basic Regulation.

Incorporated legal acts

In addition to the Council acts referred to under 1., it is proposed that the new basic Regulation also take on board further Council rules which do currently not formally form part of CMO Regulations even though they are applicable to the agricultural products covered by current CMOs and other Council acts. This category includes e.g. the rules on milk quotas, specific provisions on private storage and public intervention[5] and the provisions contained in Regulation No 1184/2006[6] with regard to competition and state aid rules for the production of and trade in agricultural products. Annex 2 to this document contains a complete list of such legal acts.

Structure

The structure of the new CMO should mainly follow that used in most of the current basic Regulations. However, due to their importance it seems appropriate to foresee a specific part for competition rules. Accordingly the body of the proposed Regulation is subdivided as follows:

- introductory provisions (e.g. scope, definitions, marketing years),

- provisions concerning the internal market (e.g. public intervention, private storage, special intervention measures, quotas, aid schemes),

- provisions concerning trade with third countries (e.g. licences, import duties, tariff quotas, special safeguard, export refunds, safeguard clause, inward- and outward processing),

- competition rules (antitrust, state aids),

- general provisions (e.g. disturbance clause, communications, management committee),

- transitional and final provisions (e.g. amendments, repeals, transitional clause, entry into force).

In addition the proposed regulation contains a number of annexes which mainly reflect the annexes to current CMO regulations.

Decision making by the Commission

As foreseen in the existing CMOs the proposal requires the Commission in the vast majority of cases to exercise its decision making powers in accordance with the so-called management committee procedure. To avoid repeating in each and every case the necessary reference to the relevant comitology clause the proposal stipulates this requirement at horizontal level.

Entry into force and application

The new Regulation is proposed to enter into force on the seventh day following that of its publication in the Official Journal.

However, the dates for the application of provisions in the proposed Regulation should be fixed so as to ensure a smooth transition to the new legal framework. This implies that the new provisions should not become applicable in the course of marketing years on the one hand, and the Commission should be given the time needed for preparing and adopting the necessary implementing acts. On the assumption of a formal adoption of the proposed regulation by the Council in autumn 2007 its provisions should apply:

- in sectors for which marketing years are provided for, from the beginning of the relevant marketing years in 2008,

- in sectors for which no marketing year is provided for, from 1 January 2008.

In line with the current arrangements the provisions on sugar and milk quotas should apply no longer than the end of the 2014/2015 sugar marketing/milk quota year.

- Subsidiarity principle

The proposal pursues the objective to simplify the legislative framework of the CMOs without changing their underlying political orientations.

- Choice of instrument

Proposed instruments: regulation.

Other means would not be adequate as the proposal is aimed at establishing a horizontal CMO which is directly applicable in all Member States.

4. Budgetary implications

Given that the proposal does not bring about changes to the existing CAP measures it has no budgetary implications.

5. Simplification

The proposal is expected to lead to significant simplification of existing legislation. It will:

- drastically reduce the number of legal acts and provisions governing the CAP,

- harmonise and streamline the instruments and measures of the CAP,

- increase the transparency of the CAP's legal framework and improve its accessibility for farmers, economic operators and national administrations,

- reduce administrative costs.

Ultimately the vast majority of the CAP will be governed by only four Council regulations:

- the Council regulation on the common organisation of the markets,

- Council Regulation (EC) No 1782/2003 on direct payments,

- Council Regulation (EC) No 1698/2005 on rural development and

- Council Regulation (EC) No 1290/2005 on the financing of the CAP.

The proposal is therefore an important contribution to the process of legislative simplification.

However, its contribution to simplifying the CAP should not be judged in an isolated manner but within the global context of the Commission’s efforts in this area. It clearly follows from the Communication that the Commission’s activities with regard to Better Regulation and simplification in the CAP comprise a whole variety of technical and policy related measures and initiatives of which the proposal is only one important component.

Repeal of existing legislation

The adoption of the proposal will lead to the repeal of 35 Council Regulations.

ANNEX 1

COMMON MARKET ORGANISATIONS INCORPORATED IN THE PROPOSED HORIZONTAL CMO

Regulation | Scope |

1. | (EEC) No 234/68 | Live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage |

2. | (EEC) No 827/68 | "Solde" (CMO for many products not covered by other CMOs) |

3. | (EEC) No 2759/75 | Pigmeat |

4. | (EEC) No 2771/75 | Eggs |

5. | (EEC) No 2777/75 | Poultrymeat |

6. | (EEC) No 2075/92 | Raw tobacco |

7. | (EC) No 1254/1999 | Beef and veal |

8. | (EC) No 1255/1999 | Milk and milk products |

9. | (EC) No 1673/2000 | Flax and hemp |

10. | (EC) No 2529/2001 | Sheep and goat meat |

11. | (EC) No 1784/2003 | Cereals |

12. | (EC) No 1785/2003 | Rice |

13. | (EC) No 1786/2003 | Dried fodder |

14. | (EC) No 865/2004 | Olive Oil |

15. | (EC) No 1947/2005 | Seeds |

16. | (EC) No 1952/2005 | Hops |

17. | (EC) No 318/2006 | Sugar |

18. | (EEC) No 404/93 | Bananas |

19. | (EC) No 2200/96 | Fresh fruit & vegetables |

20. | (EC) No 2201/96 | Processed fruit & vegetables |

21. | (EC) No 1493/1999 | Wine |

ANNEX 2

LEGAL ACTS INCORPORATED IN THE PROPOSED HORIZONTAL CMO OTHER THAN BASIC CMO REGULATIONS

NON-CMO products

Regulation | Scope |

(EEC) No 845/72 | Silk Worms |

(EEC) No 707/76 | Silk Worm Producer Groups |

(EC) No 670/2003 | Ethyl alcohol of agricultural origin |

(EC) No 797/2004 | Apiculture products |

Horizontal provisions

Regulation | Scope |

(EC) No 1184/2006 | Council Regulation applying certain rules of competition to the production of, and trade in, agricultural products (= ex Regulation No 26) |

(EEC) No 1055/77 | Council Regulation on the storage and movement of products bought in by an intervention agency |

(EEC) No 2931/79 | Council Regulation on the granting of assistance for the exportation of agricultural products which may benefit from a special import treatment in a third country |

(EEC) No 386/90 | Council Regulation on the monitoring carried out at the time of export of agricultural products receiving refunds or other amounts |

Sugar sector

Decision | Scope |

74/583/EEC | Council Decision of 20 November 1974 on the monitoring of sugar movements |

Fruit and vegetables sector

Regulation | Scope |

(EEC) No 2517/69 | Council Regulation laying down certain measures for reorganising Community fruit production |

Pigmeat sector

Regulation | Scope |

(EEC) No 2763/75 | Council Regulation laying down general rules for granting private storage aid for pigmeat |

Milk sector

Regulation | Scope |

(EEC) No 1898/87 | Council Regulation on the protection of designations used in marketing of milk and milk products |

(EEC) No 2204/90 | Council Regulation laying down additional general rules on the common organisation of the market in milk and milk products as regards cheese (systems of prior authorisation and administrative control) |

(EC) No 2991/94 | Council Regulation laying down standards for spreadable fats |

(EC) No 2597/97 | Council Regulation laying down additional rules on the common organisation of the market in milk and milk products for drinking milk |

(EC) No 2250/1999 | Council Regulation concerning the tariff quota for butter of New Zealand origin |

(EC) No 1788/2003 | Council Regulation establishing a levy in the milk and milk products sector |

Egg sectors

Regulation | Scope |

(EC) No 1028/2006 | Council Regulation on marketing standards for eggs (= ex Regulation No 1907/90) |

Poultry sector

Regulation | Scope |

(EEC) No 1906/90 | Council Regulation on certain marketing standards for poultry meat |

Floriculture sector

Regulation | Scope |

(EEC) No 4088/87 | Council Regulation fixing conditions for the application of preferential customs duties on imports of certain flowers originating in Cyprus, Israel and Jordan |

Tobacco sector

Regulation | Scope |

(EEC) No 2077/92 | Council Regulation concerning inter-branch organisations and agreements in the tobacco sector |

Carcase classification

Regulation | Scope |

(EEC) No 1358/80 | Council Regulation fixing the guide price and the intervention price for adult bovine animals for the 1980/81 marketing year and introducing a Community grading scale for carcases of adult bovine animals |

(EC) No 1183/2006 | Council Regulation concerning the Community scale for the classification of carcases of adult bovine animals (= ex. Regulation No 208/81) |

(EEC) No 3220/84 | Council Regulation determining the Community scale for grading pig carcases |

(EEC) No 1186/90 | Council Regulation extending the scope of the Community scale for the classification of carcases of adult bovine animals |

(EEC) No 2137/92 | Council Regulation concerning the Community scale for the classification of carcases of ovine animals and determining the Community standard quality of fresh or chilled sheep carcases and extending Regulation (EEC) No 338/91 |

2006/0269 (CNS)

Proposal for a

COUNCIL REGULATION

establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products

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,

Having regard to the opinion of the European Parliament[7],

TABLE OF CONTENTS

PART I INTRODUCTORY PROVISIONS 34

PART II INTERNAL MARKET 37

TITLE I MARKET INTERVENTION 37

CHAPTER I PUBLIC INTERVENTION AND PRIVATE STORAGE 37

SECTION I GENERAL PROVISIONS 37

SECTION II PUBLIC INTERVENTION 39

Subsection I General Provisions 39

Subsection II Opening and Suspension of Buying- In 40

Subsection III Intervention Price 41

Subsection IV Disposal from Intervention 43

SECTION III PRIVATE STORAGE 44

Subsection I Mandatory Aid 44

Subsection II Optional Aid 45

SECTION IV COMMON PROVISIONS 48

CHAPTER II SPECIAL INTERVENTION MEASURES 51

SECTION I EXCEPTIONAL MARKET SUPPORT MEASURES 51

SECTION II MEASURES IN THE CEREALS AND RICE SECTORS 52

SECTION III MEASURES IN THE SUGAR SECTOR 52

SECTION IV ADJUSTMENT OF SUPPLY 55

CHAPTER III SYSTEMS OF PRODUCTION LIMITATION 56

SECTION I GENERAL PROVISIONS 56

SECTION II SUGAR 56

Subsection I Quota Allocation and Management 56

Subsection II Quota Overrun 58

SECTION III MILK 60

Subsection I general provisions 60

Subsection II Quota Allocation and Management 61

Subsection III Quota Overrun 67

SECTION IV PROCEDURAL PROVISIONS 70

CHAPTER IV AID SCHEMES 70

SECTION I AID FOR PROCESSING 70

Subsection I Dried Fodder 70

Subsection II Flax and Hemp grown for Fibre 73

SECTION II PRODUCTION REFUND 74

SECTION III AIDS IN THE MILK AND MILK PRODUCTS SECTOR 75

SECTION IV AIDS IN THE OLIVES SECTOR 77

SECTION V COMMUNITY TOBACCO FUND 78

SECTION VI SPECIAL PROVISIONS FOR THE APICULTURE SECTOR 78

SECTION VII AIDS IN THE SILKWORM SECTOR 80

TITLE II RULES CONCERNING MARKETING AND PRODUCTION 80

CHAPTER I MARKETING STANDARDS AND CONDITIONS FOR THE PRODUCTION 80

SECTION I MARKETING STANDARDS 80

SECTION II CONDITIONS FOR PRODUCTION 83

SECTION III PROCEDURAL RULES 83

CHAPTER II PRODUCER ORGANISATIONS, INTERBRANCH ORGANISATIONS, OPERATOR ORGANISATIONS 84

SECTION I GENERAL PRINCIPLES 84

SECTION II RULES CONCERNING INTERBRANCH ORGANISATIONS IN THE TOBACCO SECTOR 85

SECTION III PROCEDURAL RULES 86

PART III TRADE WITH THIRD COUNTRIES 87

CHAPTER I GENERAL PROVISIONS 87

CHAPTER II IMPORTS 87

SECTION I IMPORT LICENCES 87

SECTION II IMPORT DUTIES AND LEVIES 89

SECTION III IMPORT QUOTA MANAGEMENT 91

SECTION IV SPECIAL PROVISIONS FOR CERTAIN PRODUCTS 93

Subsection I Special Provisions for Imports in respect of the Cereals and Rice Sectors 93

Subsection II Preferential Import Arrangements for Sugar 94

Subsection III Special Provisions for Imports of Hemp 95

Subsection IV Special Provisions for Imports of Hops 96

SECTION V SAFEGUARD AND INWARD PROCESSING 96

CHAPTER III EXPORTS 98

SECTION I EXPORT LICENCES 98

SECTION II EXPORT REFUNDS 98

SECTION III EXPORT QUOTA MANAGEMENT IN THE MILK AND MILK PRODUCTS SECTOR 103

SECTION IV SPECIAL IMPORT TREATMENT BY THIRD COUNTRIES 103

SECTION V SPECIAL PROVISIONS FOR LIVE PLANTS 104

SECTION VI OUTWARD PROCESSING 104

PART IV COMPETITION RULES 105

CHAPTER I RULES APPLYING TO UNDERTAKINGS 105

CHAPTER II STATE AID RULES 107

PART V SPECIFIC PROVISIONS FOR INDIVIDUAL SECTORS 109

PART VI General Provisions 112

PART VII IMPLEMENTING, TRANSITIONAL AND FINAL RULES 114

CHAPTER I IMPLEMENTING PROVISIONS 114

CHAPTER II TRANSITIONAL AND FINAL PROVISIONS 115

Whereas:

1. The operation and development of the common market for agricultural products should be accompanied by the establishment of a common agricultural policy (hereinafter referred to as “CAP”) to include, in particular, a common organisation of agricultural markets (hereinafter referred to as “CMO”) which may, according to Article 34 of the Treaty, take various forms depending on the product.

2. Since the introduction of a CAP, the Council has adopted 21 common organisations of the markets for each product or group of products, each governed by a separate Council basic regulation:

3. Council Regulation (EEC) No 234/68 of 27 February 1968 on the establishment of a common organisation of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage[8];

4. Council Regulation (EEC) No 827/68 of 28 June 1968 on the common organisation of the market in certain products listed in Annex II to the Treaty[9];

5. Council Regulation (EEC) No 2759/75 of 29 October 1975 on the common organisation of the market in pigmeat[10];

6. Council Regulation (EEC) No 2771/75 of 29 October 1975 on the common organisation of the market in eggs[11];

7. Council Regulation (EEC) No 2777/75 of 29 October 1975 on the common organisation of the market in poultrymeat[12];

8. Council Regulation (EEC) No 2075/92 of 30 June 1992 on the common organisation of the market in raw tobacco[13];

9. Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organisation of the market in bananas[14];

10. Council Regulation (EC) No 2200/96 of 28 October 1996 on the common organisation of the market in fruit and vegetables[15];

11. Council Regulation (EC) No 2201/96 of 28 October 1996 on the common organisation of the markets in processed fruit and vegetable products[16];

12. Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal[17];

13. Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products[18];

14. Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine[19];

15. Council Regulation (EC) No 1673/2000 of 27 July 2000 on the common organisation of the markets in flax and hemp grown for fibre[20];

16. Council Regulation (EC) No 2529/2001 of 19 December 2001 on the common organisation of the market in sheepmeat and goatmeat[21];

17. Council Regulation (EC) No 1784/2003 of 29 September 2003 on the common organisation of the market in cereals[22];

18. Council Regulation (EC) No 1785/2003 of 29 September 2003 on the common organisation of the market in rice[23];

19. Council Regulation (EC) No 1786/2003 of 29 September 2003 on the common organisation of the market in dried fodder[24];

20. Council Regulation (EC) No 865/2004 of 29 April 2004 on the common organisation of the market in olive oil and table olives and amending Regulation (EEC) No 827/68[25];

21. Council Regulation (EC) No 1947/2005 of 23 November 2005 on the common organisation of the market in seeds and repealing Regulations (EEC) No 2358/71 and (EEC) No 1674/72[26];

22. Council Regulation (EC) No 1952/2005 of 23 November 2005 concerning the common organisation of the market in hops and repealing Regulations (EEC) No 1696/71, (EEC) No 1037/72, (EEC) No 879/73 and (EEC) No 1981/82[27];

23. Council Regulation (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the sugar sector[28].

24. In addition, the Council has adopted three regulations with specific rules for certain products without setting up, however, a common organisation of the markets for these products:

25. Council Regulation (EC) No 670/2003 of 8 April 2003 laying down specific measures concerning the market in ethyl alcohol of agricultural origin[29];

26. Council Regulation (EC) No 797/2004 of 26 April 2004 on measures improving general conditions for the production and marketing of apiculture products[30];

27. Council Regulation (EC) No 1544/2006 of 5 October 2006 laying down special measures to encourage silkworm rearing[31].

28. The above mentioned Regulations (hereinafter “basic regulations”) are often accompanied by a collateral set of further Council regulations. Most of the basic regulations follow the same structure and have numerous provisions in common. This is the case in particular with regard to the rules on trade with third countries and the general provisions but also to a certain extent for the rules related to the internal market. The basic regulations often contain different solutions to identical or similar problems.

29. The Community has, for some time, been pursuing the aim of simplifying the regulatory environment of the CAP. Accordingly, a horizontal legal framework for all direct payments was established amalgamating an array of support systems into a single payment scheme by the adoption of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers[32]. This approach should be extended to the basic regulations. In this context the rules contained therein should be amalgamated into a single legal framework and sectoral approaches be replaced by horizontal ones where this is possible.

30. Simplification should not lead to calling into question the political decisions that have been taken over the years in the CAP. This Regulation should, therefore, essentially be an act of technical simplification. It should not, therefore, repeal or change existing instruments unless they have become obsolete, redundant or should not, by their very nature, be dealt with at Council level nor introduce new instruments or measures.

31. Against this background, this Regulation should not introduce those parts of CMOs which are subject to policy reviews. This is the case with regard to certain parts of the fruit and vegetables, the bananas and the wine sectors. The rules contained in the respective Regulations (EEC) No 404/93, (EC) No 2200/96, (EC) No 2201/96 and (EC) No 1493/1999 should, therefore, only be incorporated into this Regulation to the extent that they are not themselves subject to any policy reforms.

32. In the light of the aforementioned considerations, the basic Regulations should be repealed and replaced by one single Regulation.

33. The CMOs for cereals, rice, sugar, dried fodder, seeds, olives, flax and hemp, bananas, wine, milk and milk products and silk worms provide for marketing years mainly adapted to the biological production cycles of each of these products. In the CMOs for fruit and vegetables and processed fruit and vegetables, the Commission has been empowered to fix the marketing years due to the fact that the production cycles of these products vary to a large extent and that in some cases it is not necessary to fix a marketing year. The marketing years as they have been fixed in the mentioned sectors and the power of the Commission to fix the marketing years for the fruit and vegetables and the processed fruit and vegetables sectors should, therefore, be incorporated into this Regulation.

34. In order to stabilise the markets and to ensure a fair standard of living for the agricultural community, a differentiated system of price support for the different sectors has been developed, in parallel to the introduction of direct support schemes, taking account of the different needs in each of these sectors on the one hand and the interdependences between different sectors on the other. These measures take the form of public intervention or the payment of aid for the private storage of products of the cereals, rice, sugar, olives, beef and veal, milk and milk products, pigmeat and sheepmeat and goatmeat sectors. Given the objectives of the present Regulation, there is, therefore, a need to maintain price support measures where they are foreseen in the instruments as they were developed in the past, without making any substantial changes as compared to the previous legal situation.

35. For the sake of clarity and transparency, the provisions governing these measures should be made subject to a common structure, whilst maintaining the policy pursued in each sector. For that purpose it is appropriate to distinguish between reference prices and intervention prices.

36. The CMOs for cereals, beef and veal and milk and milk products contain provisions according to which the Council, acting in accordance with the procedure laid down in Article 37(2) of the Treaty, may change the price levels. Given the sensitivity of the price systems the indication of that possibility should be maintained. However, as that possibility does not only apply in respect of the aforementioned sectors, it should be extended to all sectors covered by this Regulation.

37. To achieve reliable information on Community market prices for sugar, the price reporting system as it has been contained in the sugar CMO should be incorporated into this Regulation, on the basis of which market price levels for white sugar should be determined.

38. To prevent the system of intervention in respect of cereals, rice, butter and skimmed milk powder from becoming an outlet in itself the possibility to provide for the opening of public intervention during certain periods of the year only, should be maintained. In respect of beef and veal products and butter, the opening and closing of public intervention should be dependent on market price levels during a certain period. As regards the rice and sugar sectors, the limitation of the quantities up to which buying-in under public intervention can be carried out, should be maintained. With regard to butter and skimmed milk powder, the power of the Commission needs to be maintained to suspend the normal buying-in once a certain quantity is reached or to replace it by buying-in under a tender procedure.

39. The price level at which buying-in under public intervention should be carried out ("intervention price") was, in the past, decreased in the CMOs for cereals, rice and beef and veal and fixed along with the introduction of direct support schemes in these sectors. Aid under those schemes on the one hand and intervention prices on the other are, therefore, closely linked. The intervention price for the products of the milk and milk products sector was fixed in view of promoting consumption of the products of that sector and improving their competitiveness. In the rice and sugar sectors, the prices were fixed in order to contribute to stabilising the market in instances where the market price in a given marketing year falls below the reference price fixed for the following marketing year. These policy decisions of the Council still remain valid.

40. So far, the price levels in respect of the rice and sugar sectors have been fixed for products of standard quality as defined by the Council. Given the very technical nature of that notion, it is appropriate to delegate the power to define standard qualities to the Commission. In defining that notion, the Commission should, in particular, be led by the market and trade environments of the products concerned.

41. As in previous CMOs, this Regulation should provide for the possibility of disposal of products bought into public intervention. Such measures should be taken in a way that avoids market disturbances and that ensures equal access to the goods and equal treatment of purchasers.

42. Due to its intervention stocks of various agricultural products, the Community has the potential means to make a significant contribution towards the well-being of its most deprived citizens. It is in the Community interest to exploit this potential on a durable basis until the stocks have been run down to a normal level by introducing appropriate measures. In the light of these considerations, Council Regulation (EEC) No 3730/87 of 10 December 1987 laying down the general rules for the supply of food from intervention stocks to designated organizations for distribution to the most deprived persons in the Community[33] has, so far, provided for the distribution of food by charitable organisations. This important social measure which can be of considerable value to the beneficiaries should be maintained and incorporated into the framework of this Regulation.

43. In order to contribute to balancing the milk market and to stabilising the market prices, the CMO for milk and milk products has provided for the granting of aid for private storage in respect of certain butter products and certain cheese products. Moreover, the Commission has been empowered to decide to grant aid for private storage of certain other cheese products as well as for white sugar, certain kinds of olive oil and of certain beef and veal products, skimmed milk powder, pigmeat and sheep meat and goat meat. Given the purpose of this Regulation, these measures should be maintained and incorporated therein.

44. Under the basic regulations for the beef and veal, the pigmeat and the sheep meat and goat meat sectors Community scales for the classification of carcases have been established. These schemes are essential for the purposes of price recording and the application of the intervention arrangements in the beef and veal and pigmeat sectors. Moreover, they pursue the objective to improve market transparency. Such carcase classification schemes should be maintained. However, due to their mainly technical character it appears appropriate to entrust the Commission with the necessary powers to adopt the relevant rules, acting on the basis of criteria underlying the existing schemes.

45. Restrictions on free circulation resulting from the application of measures intended to combat the spread of animal diseases could cause difficulties on the market of certain products in one or more Member States. Experience shows that serious market disturbances such as a significant drop in consumption or in prices may be attributed to a loss in consumer confidence due to public health, or animal health risks.

46. The exceptional market support measures in order to remedy such situations provided for in the respective CMOs for beef and veal, milk and milk products, pigmeat, eggs and poultry should, therefore, be incorporated into this Regulation under the same conditions as they have applied so far. Such exceptional market support measures should be taken by the Commission and should be directly related to or consequent upon health and veterinary measures adopted in order to combat the spread of diseases. They should be taken at the request of Member States in order to avoid serious disruption on the markets concerned.

47. The possibility for the Commission to adopt special intervention measures where this proves to be necessary in order to react efficiently and effectively against threats of market disturbances in the cereals sector and in order to prevent large-scale application of public intervention in certain regions of the Community in the rice sector or to make up for paddy rice shortages following natural disasters, as they have been provided for in the CMOs for cereals and rice respectively should be upheld in this Regulation.

48. A minimum price should be fixed for quota beet corresponding to a standard quality which should be defined, in order to ensure a fair standard of living for the Community growers of sugar beet and sugar cane. The standard quality of quota beet has, so far, been defined in Annex I to Regulation (EC) No 318/2006. Given the highly technical character of these provisions, it is considered to be more appropriate to deal with these questions at Commission level.

49. Specific instruments are needed to ensure a fair balance of rights and obligations between sugar undertakings and sugar beet growers. Therefore, the standard provisions contained so far in the sugar CMO should be transferred to this Regulation to govern the contractual relations between buyers and sellers of sugar beet. Detailed terms have, so far, been subject to the CMO for sugar as Annex II to Regulation (EC) No 318/2006. Given the highly technical character of these terms, it is considered to be more appropriate to deal with these questions at Commission level.

50. The diversity of natural, economic and technical situations makes it difficult to provide for uniform purchase terms for sugar beet throughout the Community. Agreements within the trade already exist between associations of sugar beet growers and sugar undertakings. Therefore, framework provisions should only define the minimum guarantees required by both sugar beet growers and the sugar industry to ensure a smooth functioning of the sugar market with the possibility to derogate from some rules in the context of an agreement within the trade.

51. A production charge should be applied to contribute to the financing of the expenditure occurring under the CMO in the sugar sector.

52. To maintain the structural balance of the markets in sugar at a price level close to the reference price, it should be possible for the Commission to decide to withdraw sugar from the market for as long as it takes for the market to rebalance.

53. The CMOs for live plants, beef and veal, pigmeat, sheep meat and goat meat, eggs and poultry provide for the possibility for the adoption of certain measures to facilitate the adjustment of supply to market requirements. Such measures may contribute to stabilising the markets and to ensuring a fair standard of living for the agricultural community concerned. Given the objectives of this Regulation, that possibility should be maintained. According to those provisions, the Council may adopt the general rules concerning such measures in accordance with the procedure laid down in Article 37 of the Treaty. The aims to be pursued by such measures are clearly circumscribed, delimiting, at the same time, the nature of the measures that may be adopted. Therefore, the adoption of additional general rules by the Council is not needed and should no more be provided for.

54. In the sugar and milk and milk products sectors the quantitative limitation of production as set out in Regulations (EC) No 318/2006 and Council Regulation (EC) No 1788/2003 of 29 September 2003 establishing a levy in the milk and milk products sector[34] has been an essential market policy instrument for many years. The reasons which in the past led the Community to adopt production quota systems in both sectors still remain valid. Whereas the sugar quota system has directly been embedded in the Regulation (EC) No 318/2006[35], the corresponding system in the dairy sector has so far been regulated in a separate legal act, namely Regulation (EC) No 1788/2003. Given the crucial importance of these schemes and the objectives pursued with the present Regulation, it is, therefore, appropriate to incorporate the relevant provisions in the present Regulation without making any substantial changes to the schemes and their modes of operation as compared to the previous legal situation.

55. The sugar quota scheme under this Regulation should therefore reflect the arrangements set out in Regulation (EC) No 318/2006 and, in particular, maintain the legal status of the quotas in so far as, according to the case-law of the Court of Justice, the system of quotas constitutes a mechanism for regulating the market in the sugar sector which aims to ensure the attainment of public interest objectives.

56. This Regulation should, therefore, also enable the Commission to adjust the quotas to a sustainable level after the termination, in 2010, of the restructuring fund established by Council Regulation (EC) No 320/2006 of 20 February 2006 establishing a temporary scheme for the restructuring of the sugar industry in the Community[36].

57. In the light of the need to allow for a certain national flexibility in relation to the structural adjustment of the processing industry and of beet and cane growing during the period in which the quotas are to be applied, Member States should be allowed to alter the quotas of undertakings within certain limits whilst not restricting the operation of the restructuring fund as an instrument.

58. In order to avoid the surplus sugar distorting the sugar market, the Commission should be enabled according to certain criteria to provide for carrying forward the surplus sugar, isoglucose or inulin syrup to be treated as quota production of the following marketing year. Moreover, if, for certain quantities, the applicable conditions are not met, a levy on the surplus should be imposed in order to avoid the accumulation of these quantities threatening the market situation.

59. In line with the purpose of this Regulation, the structure of the milk quota should be aligned with that of the sugar quota provisions. Accordingly, the point of departure of the dairy rules should no longer be the obligation to pay an additional levy where the national reference quantity is exceeded but the fixation of national quotas which in case they are overrun give rise to collecting a surplus levy.

60. In substance, the milk quota scheme should be shaped according to Regulation (EC) No 1788/2003. In particular, the distinction between deliveries and direct sales should be maintained and the scheme should be applied on the basis of individual representative fat contents and a national reference fat content. Farmers should be authorised under certain conditions to temporarily transfer their individual quota. Although the principle should be maintained that when a farm is sold, leased or transferred by inheritance, the corresponding quota is transferred to the purchaser, tenant or heir together with the relevant land, some exceptions should be made to the principle that reference quantities are tied to farms in order to continue the restructuring of milk production and improve the environment. In line with the various types of transfer of reference quantities and using objective criteria, Member States should be authorised to place part of the transferred quantities in the national reserve.

61. The surplus levy should be set at a dissuasive level and be payable by the Member States as soon as the national reference quantity is exceeded. The Member State should then divide the burden of payment among the producers who have contributed to the overrun. The latter should be liable vis-à-vis the Member State for payment of their contribution to the levy due for the mere fact of having overrun their available quantity. Member States shall pay to the European Agricultural Guarantee Fund (EAGF) the levy corresponding to the overrun of their national reference amount, reduced by a flat-rate amount of 1 % in order to take account of cases of bankruptcy or the definitive inability of certain producers to make their contribution to the payment of the levy due.

62. Article 34(1)(b) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy[37] qualifies the proceeds flowing from the application of the additional levy in the dairy sector as “assigned revenue” which have to be paid to the Community budget and, in the event of reuse, have to be used exclusively to finance expenditure under the EAGF or the European Agricultural Fund for Rural Development (EAFRD). Article 22 of Regulation (EC) No 1788/2003 according to which levy proceeds are considered as intervention to stabilise agricultural markets and are to be applied to financing expenditure in the milk sector, has therefore become obsolete and not been taken over by this Regulation.

63. Various CMOs provide for different kinds of aid schemes.

64. The CMOs for dried fodder and for flax and hemp, introduced processing aids for these sectors as a means to govern the internal market in respect of the sectors concerned.

65. In view of the special market situation for cereals and potato starch the CMO for cereals contained provisions which allowed the granting of a production refund if that proves necessary. The production refund has to be of such a nature that the basic products used by the industry concerned can be made available to it at a lower price than that resulting from the application of the common prices. The CMO for sugar established the possibility of the granting of a production refund in cases where, with regard to the manufacturing of certain industrial, chemical or pharmaceutical products the need arises to take measures aimed at making available certain sugar products.

66. Community finance, consisting of the percentage of direct aid that Member States are allowed to withhold in accordance with Article 110i(4) of Regulation (EC) No 1782/2003, is required to encourage approved operator organisations to draw up work programmes for the purpose of improving the production quality of olive oil and table olives. In that context, the CMO for olive oil and table olives provided for Community support to be allocated in accordance with the priorities given to the activities undertaken within the work programmes in question.

67. To contribute to balancing the milk market and to stabilise the market prices for milk and milk products, measures are needed to increase the possibility of disposing of milk products. The CMO for milk and milk products therefore provided for the grant of aids for the marketing of certain milk products with a view to specific uses and destinations. Moreover, that CMO provided for that, in order to stimulate the consumption of milk by young people, the Community should defray a part of the expenditure occasioned by granting aid for the supply of milk to pupils in schools.

68. A Community tobacco fund financed by certain deductions from aid schemes in that sector was established under Regulation (EEC) No 2075/92 in view of carrying out various measures in respect of that sector. The year 2007 will be the last in which deductions from the aid scheme provided for in Chapter 10c of Title IV of Regulation (EC) No 1782/2003 will be made available to the Community Tobacco Fund. Whilst the financing of the fund will expire prior to the entry into force of this Regulation, the provisions of Article 13 of Regulation (EEC) No 2075/92 should nevertheless be maintained to serve as a legal basis for the multiannual programmes that may be financed by the Community Tobacco Fund.

69. Beekeeping, being a sector of agriculture, is characterised by diversity of production conditions and yields and the dispersion and variety of economic operators, both at the production and marketing stages. Moreover, in view of the spread of varroasis in several Member States in recent years and the problems which that disease causes for honey production, action by the Community continues to be necessary as varroasis cannot be completely eradicated and is to be treated with approved products. Given such circumstances and in order to improve the production and marketing of apiculture products in the Community, national programmes should be drawn up every three years, comprising technical assistance, control of varroasis, rationalisation of transhumance, management of the restocking of hives in the Community, and cooperation on research programmes on beekeeping and apiculture products with a view to improving the general conditions for the production and marketing of apiculture products. Those national programmes should be partly financed by the Community.

70. Regulation (EC) No 1544/2006 replaced all national silkworm aids by a Community aid scheme for silkworm rearing which takes the form of a fixed sum per box of silkworm eggs used.

71. As the policy considerations which led to the introduction of the above mentioned schemes still persist, all these aid schemes should be incorporated in the framework of this Regulation.

72. The application of standards for the marketing of agricultural products can contribute to improving the economic conditions for the production and marketing as well as the quality of such products. The application of such standards is therefore in the interest of producers, traders and consumers. Accordingly, within the CMOs for bananas, olives, live plants, eggs and poultry marketing standards were put in place which, in particular, relate to quality, grading, weight, sizing, packaging, wrapping, storage, transport, presentation and labelling. It is appropriate to maintain that approach under this Regulation.

73. Under the CMOs for olive oil and table olives and bananas the Commission has, so far, been entrusted with the adoption of the provisions on marketing standards. Given their detailed technical character and the need to constantly improve their effectiveness and to adapt them to evolving trade practices, it appears appropriate to extend this approach to the other sectors concerned while specifying the criteria to be taken into account by the Commission in setting out the relevant rules. Moreover, special measures, in particular up-to-date methods of analysis and other measures to determine the characteristics of the standards concerned, may need to be adopted to avoid abuses as regards the quality and authenticity of the products presented to the consumers and the important disturbances on the markets they mayentail.

74. Several legal instruments have been put in place to regulate the marketing and designation of milk, milk products and other fats. They pursue the objective to improve the position of milk and milk products on the market on the one hand and to ensure a fair competition between spreadable fats of milk and non-milk origin on the other, both to the benefit of producers and consumers. The rules contained in Council Regulation (EEC) No 1898/87 of 2 July 1987 on the protection of designations used in marketing milk and milk products[38] are aimed at protecting the consumer and at establishing conditions of competition between milk products and competing products in the field of product designation, labelling and advertising which avoid any distortion. Council Regulation (EC) No 2597/97 of 18 December 1997 laying down additional rules on the common organisation of the market in milk and milk products for drinking milk[39] provides for rules aimed at guaranteeing a high quality of drinking milk and products which fulfil consumers’ needs and wishes, thus stabilising the market concerned and providing the consumer with high quality drinking milk. Council Regulation (EC) No 2991/94 of 5 December 1994 laying down standards for spreadable fats[40] sets out the marketing standards for the milk and non-milk products concerned with a clear and distinct classification accompanied by rules on designation. In line with the objectives of the present Regulation, these rules should be maintained without changes.

75. As it has, so far, been the case under the CMO for hops, a quality policy should be followed throughout the Community by implementing provisions concerning certification together with rules prohibiting, as a general rule, the marketing of products for which a certificate has not been issued, or, in the case of imported products, those which do not comply with equivalent quality characteristics.

76. The descriptions and definitions of olive oil and the denomination are an essential element of the market order by setting quality standards and providing consumers with adequate information on the product.

77. One of the aforementioned aid schemes contributing to balancing the market in milk and milk products and to stabilising the market prices in that sector consists of an aid scheme for the processing of skimmed milk powder into casein and caseinates as it has, so far, been contained in Article 12 of Regulation (EC) No 1255/1999. Council Regulation (EEC) No 2204/90 of 24 July 1990 laying down additional general rules on the common organisation of the market in milk and milk products as regards cheese[41] introduced rules concerning the use of casein and caseinates in the manufacture of cheese in order to counter adverse effects that may result from that aid scheme, taking into account the vulnerability of cheese to substitution operations with casein and caseinates, thereby intending to stabilise the market. These rules need to be incorporated into this Regulation.

78. The processing of certain agricultural raw materials into ethyl alcohol is closely linked with the economy of those raw materials. It can contribute in large measure to enhancing their value and may be of particular economic and social importance for the economy of certain regions of the Community or may be a significant source of income for the producers of the raw materials concerned. It also permits the disposal of products of unsatisfactory quality and short-term surpluses that may cause temporary problems in certain sectors.

79. In the hops, olives, tobacco and silk worm sectors, certain policy instruments are carried out by concentration of efforts on different kinds of organisations, in particular in view of stabilising the markets in, and of improving and guaranteeing the quality of, the products concerned through joint action. The provisions which have regulated that system of organisations so far is based on organisations which are recognised by the Member States or, under certain conditions, by the Commission, in accordance with provisions to be adopted by the Commission. That system should be maintained and the provisions as they have been in place so far should be harmonised.

80. To support certain activities of inter-branch organisations which are of particular interest in the light of the current rules concerning the CMO for tobacco, provision should be made for the rules adopted by an inter-branch organisation for its members to be extended, subject to certain conditions, to all non-member producers and groups in one or more regions. The same should also apply in respect of other activities of the recognised inter-branch organisations which are of general economic or technical interest for the tobacco sector and so be of benefit to all persons active in the branches in question. There should be close cooperation between the Member States and the Commission. The Commission should have permanent monitoring powers, particularly as regards the agreements and concerted practices adopted by such organisations.

81. The creation of a single Community market involves the introduction of a trading system at the external borders of the Community. That trading system should include import duties and export refunds and should, in principle, stabilise the Community market. The trading system should be based on the undertakings accepted under the Uruguay Round of multilateral trade negotiations.

82. Monitoring the volume in trade in agricultural products with third countries in the CMOs for the cereals, rice, sugar, seeds, olives, flax and hemp, beef and veal, milk and milk products, pigmeat, sheepmeat and goatmeat, eggs, poultry meat, live plants and ethyl alcohol sectors, has, so far, both for imports and exports been subject to either compulsory licence systems or to systems where the Commission was empowered to introduce licence requirements.

83. Monitoring trade flows is foremost a matter of management which should be addressed in a flexible way. Against this background and in the light of the experience gained in the CMOs where the management of licences is already conferred on the Commission it appears appropriate to extend this approach to all sectors where import and export licences are being used. The decision on the introduction of licence requirements should be made by the Commission taking account of the need for import licences for the management of the markets concerned and, in particular, for monitoring the imports of the products in question

84. For the most part, the customs duties applicable to agricultural products under the World Trade Organisation (WTO) agreements are laid down in the common customs tariff. However, for some products of the cereals and rice sectors, the introduction of additional mechanisms makes it necessary to provide for the possibility to adopt derogations.

85. In order to prevent or counteract adverse effects on the Community market which could result from imports of certain agricultural products, imports of such products should be subject to payment of an additional duty, if certain conditions are fulfilled.

86. It is appropriate, under certain conditions, to confer on the Commission the power to open and administer tariff quotas resulting from international agreements concluded in accordance with the Treaty or from other acts of the Council.

87. Council Regulation (EEC) No 2729/75 of 29 October 1975 on the import levies on mixtures of cereals, rice and broken rice[42] pursues the aim to ensure the proper working of the duty system in the case of imports of mixtures of cereals, rice and broken rice. These rules should be included in this Regulation.

88. The Community has concluded several preferential market access arrangements with third countries which allow those countries to export cane sugar to the Community under favourable conditions. Therefore, it is necessary to evaluate the refiners' need for sugar for refining and, under certain conditions, to reserve import licences to specialised users of significant quantities of imported raw cane sugar, which are considered to be full-time refiners in the Community.

89. In order to prevent illicit crops from disturbing the CMO in hemp for fibre, provision should be made for checks on imports of hemp and hemp seed to ensure that such products offer certain guarantees with regard to the tetrahydrocannabinol content. In addition, imports of hemp seeds intended for uses other than sowing should be subjected to a control system which makes provision for a system for authorising the importers concerned.

90. A quality policy is being followed throughout the Community as regards products of the hops sector. In the case of imported products, provision needs to be made to ensure that only products complying with equivalent minimum quality characteristics are imported.

91. The customs duty system makes it possible to dispense with all other protective measures at the external frontiers of the Community. The internal market and duty mechanism could, in exceptional circumstances, prove to be inadequate. In such cases, in order not to leave the Community market without defence against disturbances that might ensue, the Community should be able to take all necessary measures without delay. Such measures should comply with the international commitments of the Community.

92. To ensure the proper functioning of the CMOs and, in particular, avoid markets to be disturbed, the CMOs for a number of products traditionally provide for the possibility to prohibit the use of inward and outward processing arrangements. This possibility should be maintained. Moreover, experience shows that in order for this market management instrument to reach its objectives it usually needs to be applied without major delays. In certain sectors the Commission is therefore entrusted with the relevant powers. It is appropriate to extend this approach to the other sectors concerned.

93. Provisions for granting refunds on exports to third countries, based on the difference between prices within the Community and on the world market, and falling within the limits set by the Community's commitments in the WTO, should serve to safeguard the Community’s participation in international trade in certain of the products falling within this Regulation. Subsidised exports should be subject to limits in terms of value and quantity.

94. Compliance with the limits in terms of value should be ensured at the time when the export refunds are fixed through the monitoring of payments under the rules relating to the EAGF. Monitoring can be facilitated by the compulsory advance fixing of export refunds, while allowing the possibility, in the case of differentiated refunds, of changing the specified destination within a geographical area to which a single export refund rate applies. In the case of a change of destination, the export refund applicable to the actual destination should be paid, with a ceiling of the amount applicable to the destination fixed in advance.

95. Compliance with the quantity limits should be ensured by a reliable and effective system of monitoring. To that end, the granting of export refunds should be made subject to an export licence. Export refunds should be granted up to the limits available, depending on the particular situation of each product concerned. Exceptions to that rule should be permitted only for processed products not listed in Annex I to the Treaty, to which volume limits do not apply. Provision should be made for derogating from strict compliance with management rules where exports benefiting from export refunds are not likely to exceed the quantity laid down.

96. In the case of the export of live bovine animals, provision should be made that export refunds are granted and paid only if the provisions established in Community legislation concerning animal welfare, in particular those concerning the protection of animals during transport, are respected.

97. Agricultural products may in certain cases benefit from a special import treatment in third countries if the products comply with certain specifications and/or price conditions. Administrative cooperation between the authorities in the importing third country and the Community is necessary to ensure correct application of such a system. To that end the products should be accompanied by a certificate issued in the Community.

98. Exports of flowering bulbs to third countries are of considerable economic importance to the Community. The continuation and development of such exports may be ensured by stabilising prices in this trade. Provision should therefore be made for minimum export prices for the products in question.

99. In accordance with Article 36 of the Treaty the provisions of the chapter of the Treaty relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 37(2) and (3) and in accordance with the procedure laid down therein. In the various CMOs the provisions on state aid had been largely declared applicable. The application in particular of the Treaty rules applying to undertakings was furthermore defined in Council Regulation (EC) No 1184/2006 of 24 July 2006 applying certain rules on competition to the production of, and trade in, agricultural products[43]. In line with the objective to create one comprehensive set of market policy rules it is appropriate to incorporate the provisions concerned in this Regulation.

100. The rules on competition relating to the agreements, decisions and practices referred to in Article 81 of the Treaty and to the abuse of dominant positions should be applied to the production of, and trade in, agricultural products, in so far as their application does not impede the functioning of national organisations of agricultural markets or jeopardise attainment of the objectives of the CAP.

101. Special attention is warranted in the case of farmers' organisations the particular objective of which is the joint production or marketing of agricultural products or the use of joint facilities, unless such joint action excludes competition or jeopardises attainment of the objectives of Article 33 of the Treaty.

102. In order both to avoid compromising the development of a CAP and to ensure legal certainty and non-discriminatory treatment of the undertakings concerned, the Commission should have sole power, subject to review by the Court of Justice, to determine whether agreements, decisions and practices referred to in Article 81 of the Treaty are compatible with the objectives of the CAP.

103. The proper working of the single market based on common prices would be jeopardised by the granting of national aid. Therefore, the provisions of the Treaty governing State aid should, as a general rule, apply to the products covered by this Regulation. In certain situations exceptions should be allowed. Where such exceptions apply, the Commission should, however, be in a position to draw up a list of existing, new or proposed national aids, to make appropriate observations to the Member States and to propose suitable measures to them.

104. Since accession, Finland and Sweden may, due to the specific economic situation of the production and marketing of reindeer and reindeer products, grant aids in that regard. Moreover, Finland may, subject to authorisation by the Commission, grant aid respectively for certain quantities of seeds and for certain quantities of cereal seed produced solely in Finland, because of its specific climatic conditions. These exceptions need to be maintained.

105. In Member States with a significant reduction of sugar quota, sugar beet growers will face particularly severe adaptation problems. In such cases the transitional Community aid to sugar beet growers [provided for in Chapter 10f of Title IV of Regulation (EC) No 1782/2003] will not suffice to fully address the beet growers' difficulties. Therefore, Member States having reduced their quota by more than 50 % should be authorised to grant State aid to sugar beet growers during the period of application of the transitional Community aid. To avoid Member States granting State aid exceeding the needs of their sugar beet growers, the determination of the total amount of the State aid concerned should be made subject to Commission approval, except in the case of Italy where the maximum need for most productive sugar beet to adapt to the market conditions after the reform can be estimated at EUR 11 per tonne of sugar beet produced. Moreover, due to the particular problems expected to arise in Italy, provision should be made for arrangements allowing sugar beet growers to benefit directly or indirectly from the State aid granted.

106. In Finland sugar beet growing is subject to particular geographical and climatic conditions which will adversely affect the growing beyond the general effects of the sugar reform. For this reason provision should be made for authorising that Member State on a permanent basis to grant its sugar beet growers an adequate amount of State aid.

107. Given the particular situation in Germany, where national support is currently granted to a large number of smaller producers of alcohol under the specific conditions of the German Alcohol Monopoly, it is necessary to permit, during a limited period of time, the continuation of the granting of such support. It is also necessary to provide for the submission of a report on the functioning of that derogation, at the end of that period, accompanied with any appropriate proposals.

108. If a Member State wishes to support, on its territory, measures promoting consumption of milk and milk products in the Community, provision should be made for the possibility of financing such measures by a promotional levy on milk producers at national level.

109. In order to take account of possible evolutions of the dried fodder production, the Commission should, before 30 September 2008, on the basis of an evaluation of the CMO for dried fodder, present a report to the Council on that sector. The report should be accompanied, if needed, by appropriate proposals. Moreover, the Commission should report at regular intervals to the European Parliament and the Council on the aid scheme applied in respect of the apiculture sector.

110. Adequate information is needed about the present state of the market in hops within the Community and the prospects for its development. Provision should therefore be made for the registration of all contracts to supply hops produced within the Community.

111. It is appropriate to provide, under certain conditions and for certain products, for measures to be taken in cases where disturbances are occurring or are likely to occur due to significant changes of the internal market prices or as regards quotations or prices on the world market.

112. It is necessary to establish a framework of specific measures for ethyl alcohol of agricultural origin so that economic data can be collected and statistical information analysed for the purpose of monitoring the market. In so far as the market in ethyl alcohol of agricultural origin is linked to the market in ethyl alcohol in general, information also needs to be made available concerning the market in ethyl alcohol of non-agricultural origin.

113. Expenditure incurred by the Member States as a result of the obligations arising from the application of this Regulation should be financed by the Community in accordance with Regulation (EC) No 1290/2005.

114. The Commission should be authorised to adopt the necessary measures to solve practical specific problems in case of emergency.

115. Since the common markets in agricultural products are continuously evolving, the Member States and the Commission should keep each other informed of relevant developments.

116. In order to avoid abuse of any of the advantages provided for in this Regulation, such advantages should not be granted or, as the case may be, be withdrawn, in cases where it is found that the conditions for obtaining any of those advantages have artificially been created contrary to the objectives of this Regulation.

117. To guarantee compliance with the obligations laid down by this Regulation, there is a need for controls and the application of penalties in case of non-compliance with such obligations. The power should, therefore, be conferred on the Commission to set up the corresponding rules including those concerning the recovery of undue payments and on the reporting obligations of the Member States.

118. The measures necessary for the implementation of this Regulation should, as a general rule, be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission[44]. However, in respect of certain powers under this Regulation which relate to genuine Commission competences, require swift action or are of a purely administrative nature, the Commission should be empowered to act on its own.

119. This Regulation confers powers on the Commission which had, in the past, been conferred on the Council for adoption in accordance with the voting procedure of Article 37 of the Treaty. Such Council acts need to remain in force until the Commission adopts the relevant provisions based on the powers conferred on it by this Regulation. To avoid that in such cases there would be parallel provisions adopted by the Council on the one hand and by the Commission on the other, the Commission should be entitled to repeal such Council acts.

120. Due to the incorporation of various aspects of the CMOs in wine and fresh and processed fruit and vegetables, certain amendments need to be introduced to these CMOs.

121. This Regulation incorporates provisions concerning the applicability of the competition rules under the Treaty. Such provisions have, so far, been dealt with in Regulation (EC) No 1184/2006. That Regulation needs to be amended to spell out that its provisions apply to products listed in Annex I to the Treaty that are not covered by this Regulation.

122. This Regulation incorporates the aspects contained in the Regulations listed in recitals (2) and (3) with the exception of those contained in Regulations (EC) No 2200/96, (EC) No 2201/96 and (EC) No 1493/1999. Moreover, this Regulation incorporates the aspects of the following Regulations:

123. Regulation (EEC) No 2729/75;

124. Council Regulation (EEC) No 707/76 of 25 March 1976 on the recognition of producer groups of silkworm rearers[45];

125. Council Regulation (EEC) No 1055/77 of 17 May 1977 on the storage and movement of products bought in by an intervention agency[46];

126. Council Regulation (EEC) No 2931/79 of 20 December 1979 on the granting of assistance for the exportation of agricultural products which may benefit from a special import treatment in a third country[47];

127. Regulation (EEC) No 1898/87;

128. Regulation (EEC) No 3730/87;

129. Council Regulation (EEC) No 386/90 of 12 February 1990 on the monitoring carried out at the time of export of agricultural products receiving refunds or other amounts[48];

130. Council Regulation (EEC) No 1186/90 of 7 May 1990 extending the scope of the Community scale for the classification of carcases of adult bovine animals[49];

131. Regulation (EEC) No 2204/90;

132. Council Regulation (EEC) No 2077/92 of 30 June 1992 concerning inter-branch organizations and agreements in the tobacco sector[50];

133. Regulation (EC) No 2991/94;

134. Regulation (EC) No 2597/97;

135. Council Regulation (EC) No 2250/1999 of 22 October 1999 concerning the tariff quota for butter of New Zealand origin[51];

136. Regulation (EC) No 1788/2003;

137. Council Regulation (EC) No 1183/2006 of 24 July 2006 concerning the Community scale for the classification of carcasses of adult bovine animals[52].

138. Those Regulations should therefore be repealed. However, it should be foreseen that the change-over from the existing CMOs to this Regulation only applies as of the start of the marketing years for the products concerned. Therefore, the respective Regulations should continue to apply until the end of the corresponding marketing year 2007/2008. Where no marketing years are being laid down, this Regulation should start to apply on 1 January 2008 and the respective Regulations of the existing CMOs should, therefore, continue to apply until that moment. As concerns Regulations (EC) 386/90, 1186/90 and 1183/2006, the competence for the adoption of the substance dealt with by those Regulations is being transferred to the Commission by this Regulation. Some more time should be allowed for the Commission to establish the respective rules. Those Regulations should therefore continue to apply until 31 December 2008.

139. The following Council acts have become redundant and should be repealed:

140. Council Regulation (EEC) No 2517/69 of 9 December 1969 laying down certain measures for reorganising Community fruit production[53];

141. Council Regulation (EEC) No 2728/75 of 29 October 1975 on aids for the production of and trade in potato starch and potatoes for starch manufacture[54];

142. Council Regulation (EEC) No 1358/80 of 5 June 1980 fixing the guide price and the intervention price for adult bovine animals for the 1980/81 marketing year and introducing a Community grading scale for carcases of adult bovine animals[55];

143. Council Regulation (EEC) No 4088/87 of 21 December 1987 fixing conditions for the application of preferential customs duties on imports of certain flowers originating in Cyprus, Israel and Jordan[56];

144. Council Decision 74/583/EEC of 20 November 1974 on the monitoring of sugar movements[57].

145. The change-over from the current arrangements provided for in provisions and Regulations that are being replaced by this Regulation could give rise to difficulties which are not dealt with in this Regulation. In order to deal with such difficulties, the Commission should be enabled to adopt transitional measures.

146. This Regulation should, as a general rule, start to apply on 1 January 2008. However, in order to avoid interferences of the new provisions with marketing years which will be ongoing at that time, certain exceptions should be provided for as regards the date of application of this Regulation in respect of certain products,

HAS ADOPTED THIS REGULATION:

PART I INTRODUCTORY PROVISIONS

Article 1 Scope

1. This Regulation establishes a common organisation of the markets for the products of the following sectors as further set out in Annex I:

(a) cereals, Part I of Annex I (hereinafter referred to as "the cereals sector");

(b) rice, Part II of Annex I (hereinafter referred to as "the rice sector");

(c) sugar, Part III of Annex I (hereinafter referred to as "the sugar sector";

(d) dried fodder, Part IV of Annex I (hereinafter referred to as "the dried fodder sector");

(e) seeds, Part V of Annex I (hereinafter referred to as "the seeds sector");

(f) hops, Part VI of Annex I (hereinafter referred to as "the hops sector");

(g) olive oil and table olives, Part VII of Annex I (hereinafter referred to as "the olives sector");

(h) flax and hemp, Part VIII of Annex I (hereinafter referred to as "the flax and hemp sector");

(i) fruit and vegetables, Part IX of Annex I (hereinafter referred to as "the fruit and vegetables sector");

(j) processed fruit and vegetables, Part X of Annex I (hereinafter referred to as "the processed fruit and vegetables sector");

(k) bananas, Part XI of Annex I (hereinafter referred to as "the bananas sector");

(l) wine, Part XII of Annex I (hereinafter referred to as "the wine sector"); ;

(m) live plants, Part XIII of Annex I (hereinafter referred to as "the live plants sector");

(n) raw tobacco, Part XIV of Annex I (hereinafter referred to as "the raw tobacco sector");

(o) beef and veal, Part XV of Annex I (hereinafter referred to as "the beef and veal sector");

(p) milk and milk products, Part XVI of Annex I (hereinafter referred to as "the milk and milk products sector");

(q) pigmeat, Part XVII of Annex I (hereinafter referred to as "the pigmeat sector");

(r) sheep meat and goat meat, Part XVIII of Annex I (hereinafter referred to as "the sheep meat and goat meat sector");

(s) eggs, Part XIX of Annex I (hereinafter referred to as "the eggs sector");

(t) poultry meat, Part XX of Annex I (hereinafter referred to as "the poultry sector");

(u) other products, Part XXI of Annex I.

2. In respect of the fruit and vegetables, processed fruit and vegetables, and wine sectors, only the following provisions of this Regulation shall apply:

(a) Articles 3 and 4;

(b) Part IV;

(c) Article 183 ;

(d) Article 184;

(e) Article 185;

(f) Article 188 and the first paragraph of Article 189;

(g) point (a) of Article 195.

3. This Regulation establishes specific measures for the following sectors as listed and, as the case may be, further defined in Annex II:

(a) ethyl alcohol of agricultural origin, Part I of Annex II (hereinafter referred to as "the ethyl alcohol sector");

(b) apiculture products, Part II of Annex II (hereinafter referred to as "the apiculture sector");

(c) silkworms, Part III of Annex II (hereinafter referred to as "the silkworm sector");

Article 2 Definitions

1. For the purposes of application of this Regulation, the definitions concerning certain sectors as set out in Annex III shall apply.

2. For the purposes of this Regulation:

(a) 'farmer' shall mean a farmer as defined in Article 2(a) of Regulation (EC) No 1782/2003;

(b) 'paying agency' shall mean the body or the bodies assigned by a Member State in accordance with Regulation (EC) No 1290/2005.

Article 3 Marketing years

1. The following marketing years shall be established:

(a) 1 January to 31 December of a given year for the banana sector;

(b) 1 April to 31 March of the following year for:

(i) the dried fodder sector,

(ii) the silkworm sector;

(c) 1 July to 30 June of the following year for:

(i) the cereals sector,

(ii) the seeds sector,

(iii) the olives sector,

(iv) the flax and hemp sector,

(v) the milk and milk products sector;

(d) 1 August to 31 July of the following year for the wine sector;

(e) 1 September to 31 August of the following year for the rice sector;

(f) 1 October to 30 September of the following year for the sugar sector.

2. For the products of the fruit and vegetables and processed fruit and vegetables sectors, the marketing years shall, if necessary, be fixed by the Commission.

Article 4 Implementing rules

The Commission may adopt the detailed rules for the application of Articles 2 and 3, in particular concerning the fixing of the conversion rates for rice at various stages of processing, the processing costs and the value of by-products.

The Commission may amend the definitions concerning rice set out in Part I of Annex III and the definition of "ACP/Indian sugar" set out in point 12 of Part II of that Annex.

PART II INTERNAL MARKET

TITLE I MARKET INTERVENTION

CHAPTER I PUBLIC INTERVENTION AND PRIVATE STORAGE

SECTION I GENERAL PROVISIONS

ARTICLE 5 Scope

1. This Chapter lays down the rules concerning, where applicable, buying-in under public intervention and the granting of aids for private storage with regard to the following sectors:

(a) cereals,

(b) rice,

(c) sugar,

(d) olives,

(e) beef and veal,

(f) milk and milk products,

(g) pigmeat,

(h) sheep meat and goat meat;

2. For the purposes of this Chapter:

(a) "cereals" shall mean cereals harvested in the Community,

(b) "milk" shall mean cow's milk produced in the Community,

(c) "skimmed milk" shall mean skimmed milk obtained directly and exclusively from cow's milk produced in the Community,

(d) "cream" shall mean cream obtained directly and exclusively from milk.

Article 6 Community origin

Without prejudice to Article 5(2) only products originating in the Community shall be eligible for buying-in under public intervention or for the granting of aid for their private storage.

Article 7 Reference prices

1. For products subject to the intervention measures referred to in Article 5(1) the following reference prices shall be fixed:

(a) as regards the cereals-sector:

EUR 101,31/tonne, monthly increased as follows:

- November: by EUR 0,46/tonne,

- December: by EUR 0,92/tonne,

- January: by EUR 1,38/tonne,

- February: by EUR 1,84/tonne,

- March: by EUR 2,30/tonne,

- April: by EUR 2,76/tonne,

- May: by EUR 3,22/tonne,

- June: by EUR 3,22/tonne.

The price valid for maize and grain sorghum in June shall remain valid in July, August and September of the same year;

(b) as regards paddy rice, EUR 150/tonne for standard quality as defined by the Commission taking into account the market and trade environment and any relevant developments thereof, in particular the marketable quality and yield characteristics and the moisture content;

(c) as regards sugar:

(i) for white sugar:

- EUR 541,5/tonne for the marketing year 2008/2009,

- EUR 404,4/tonne as from the marketing year 2009/2010;

(ii) for raw sugar:

- EUR 448,8/tonne for the marketing year 2008/2009,

- EUR 335,2/tonne as from the marketing year 2009/2010.

The reference prices referred to in points (i) and (ii) shall apply to unpacked sugar, ex factory of standard quality as defined by the Commission taking into account the market and trade environment and any relevant developments thereof, in particular the marketable quality characteristics with regard to white sugar and, with regard to raw sugar, its yield in white sugar;

(d) as regards the beef and veal sector, EUR 2 224/tonne for carcases of male bovine animals of standard quality as defined by the Commission in the Community scale for grading carcases in accordance with point (a) of Article 39(1);

(e) as regards the milk and milk products sector:

(i) EUR 246,39 per 100 kg for butter;

(ii) EUR 174,69 per 100 kg for skimmed milk powder;

(f) As regards the pigmeat sector, EUR 1509,39/tonne for pig carcases of standard quality as defined by the Commission in the Community scale for grading carcases in accordance with point (b) of Article 39(1).

2. The Council, acting in accordance with the procedure laid down in Article 37(2) of the Treaty, may change the reference prices fixed in paragraph 1 of this Article in the light of developments in production and the markets.

Article 8 Price reporting in the sugar market

The Commission shall set up an information system on prices in the sugar market, including a system for the publication of price levels for the sugar market.

The system shall be based on information submitted by undertakings producing white sugar or by other operators involved in the sugar trade. This information shall be treated with confidentiality. The Commission shall ensure that the information published shall not permit to identify the prices of individual undertakings or operators;

SECTION IIPUBLIC INTERVENTION

SUBSECTION IGENERAL PROVISIONS

Article 9 Products eligible for public intervention

Public intervention shall be applicable in respect of the following products subject to the conditions stipulated in this Section and further requirements and conditions to be determined by the Commission in accordance with Article 40:

(a) common wheat, durum wheat, barley, maize and sorghum;

(b) paddy rice;

(c) any white or raw sugar provided that the sugar concerned has been produced under quota and manufactured from beet or cane harvested in the Community;

(d) fresh or chilled meat of the beef and veal sector falling within CN codes 0201 10 00 and 0201 20 20 to 0201 20 50;

(e) butter produced directly and exclusively from pasteurised cream in an approved undertaking of the Community of a minimum butterfat content, by weight, of 82 % and a maximum water content, by weight, of 16 %;

(f) skimmed milk powder of top quality made by the spray process and obtained in an approved undertaking of the Community, directly and exclusively from skimmed milk, with a minimum protein-content of 35,6 % by weight of the non-fatty dry extract.

SUBSECTION IIOPENING AND SUSPENSION OF BUYING- IN

Article 10 Cereals

1. For cereals products public intervention shall be open:

(a) from 1 August to 30 April in the case of Greece, Spain, Italy and Portugal;

(b) from 1 December to 30 June in the case of Sweden;

(c) from 1 November to 31 May in the case of the other Member States.

2. In the event of the intervention period in Sweden leading to the diversion of such cereals products from other Member States into intervention in Sweden, the Commission shall adopt the measures to rectify the position.

Article 11 Rice

For paddy rice public intervention shall be open during the period 1 April to 31 July. However, buying into public intervention shall only be carried out within the limits of 75 000 tonnes per period.

Article 12 Sugar

1. For sugar public intervention shall be open throughout the marketing years 2008/2009 and 2009/2010. However, public intervention shall only be carried out within the limits of 600 000 tonnes, expressed in white sugar, per marketing year.

2. Sugar stored in accordance with the provisions of paragraph 1 during a marketing year may not be subject to any other storage measures in accordance with Articles 29, 49 or 60.

Article 13 Beef and veal

1. The Commission shall open public intervention for beef and veal if, for a period of two consecutive weeks, the average market price in a Member State or in a region of a Member State recorded on the basis of the Community scale adopted in accordance with point (a) of Article 39(1) falls short of EUR 1 560/tonne.

2. The Commission shall close the public intervention when during at least one week the condition referred to in paragraph 1 is no longer met.

Article 14 Butter

1. If, for a period of two consecutive weeks, market prices for butter in one or more Member States, are less than 92 % of the reference price, the Commission shall open public intervention for butter in the Member State or Member States concerned during the period 1 March to 31 August of any year.

2. Once the market prices of butter in the Member State or Member States concerned, over a period of two consecutive weeks, are 92 % or more of the reference price, the Commission shall suspend buying-in by public intervention.

Moreover, where the quantities offered for intervention during the period stipulated in the first subparagraph exceed 30 000 tonnes, the Commission may suspend buying-in by public intervention. In that case, buying-in may be carried out on the basis of a tendering procedure according to specifications to be determined by the Commission.

3. The Commission shall lay down the detailed rules for the establishment of the market prices for butter.

Article 15 Skimmed milk powder

For skimmed milk powder public intervention shall be open during the period 1 March to 31 August.

However, the Commission may suspend public intervention as soon as the quantities offered for intervention in that period exceed 109 000 tonnes. In that case buying-in may be carried out on the basis of a tendering procedure according to specifications to be determined by the Commission.

SUBSECTION IIIINTERVENTION PRICE

Article 16 Cereals

The intervention price for cereals at which buying in shall take place shall be equal to the reference price.

However, if the quality of the products offered to the paying agency differs from the standard quality, the intervention price shall be adjusted by applying price increases or reductions.

Article 17 Rice

The intervention price for rice at which buying in shall take place shall be equal to the reference price.

However, if the quality of the products offered to the paying agency differs from the standard quality, the intervention price shall be adjusted by applying price increases or reductions.

Moreover price increases and reductions may be fixed by the Commission in order to ensure that production is orientated towards certain varieties.

Article 18 Sugar

Sugar shall be bought in at 80 % of the reference price fixed for the marketing year following the marketing year during which the offer is lodged.

However, if the quality of the sugar offered to the paying agency differs from the standard quality referred to in point (c) of Article 7(1) for which the reference price is fixed, the intervention price shall be increased or reduced accordingly.

Article 19 Beef and veal

1. For beef and veal the intervention prices and the quantities accepted for intervention shall be determined by the Commission by means of tendering procedures. In special circumstances, they may be fixed per Member State or per region of a Member State on the basis of recorded average market prices.

2. Only offers equal to or less than the average market price recorded in a Member State or a region of a Member State and increased by an amount to be determined by the Commission on the basis of objective criteria may be accepted.

Article 20 Butter

Without prejudice to the fixing of the intervention price by means of a tendering procedure in the case referred to in the second subparagraph of Article 14(2), butter shall be bought in at 90 % of the reference price.

Article 21 Skimmed milk powder

Without prejudice to the fixing of the intervention price by means of a tendering procedure in the case referred to in the second paragraph of Article 15, the intervention price for skimmed milk powder at which buying in shall take place shall be equal to the reference price.

However, if the actual protein content is less than the minimum protein content of 35,6 % fixed in point (f) of Article 9but not less than 31,4 % of the non-fatty dry extract, the intervention price shall be equal to the reference price less 1,75 % for each percentage point by which the protein content is lower than 35,6 %.

SUBSECTION IVDISPOSAL FROM INTERVENTION

Article 22 General principles

Disposal of products bought into public intervention shall take place in such a way as to avoid any disturbance of the market and to ensure equal access to goods and equal treatment of purchasers.

Article 23 Sugar disposal

As regards sugar bought-in under public intervention, paying agencies may sell sugar only at a price which is higher than the reference price fixed for the marketing year in which the sale takes place.

However, the Commission may decide, whilst respecting the commitments resulting from agreements concluded in accordance with Article 300 of the Treaty, that paying agencies:

(a) may sell sugar at a price equal to or lower than the reference price referred to in the first subparagraph if the sugar is intended:

(i) for use as animal feed, or

(ii) for export, either without further processing or after processing into products listed in Annex I to the Treaty or into goods listed in Part III of Annex XVII to this Regulation.

(b) are to make unprocessed sugar held by them available, for human consumption on the internal market of the Community, to charitable organisations — recognised by the Member State concerned or by the Commission in cases where a Member State has not recognised any such organisation — at a price which is lower than the current reference price or free of charge for the distribution as part of individual emergency aid operations.

Article 24 Distribution to the most deprived persons in the Community

1. Products which are in intervention stocks shall be made available to certain designated organisations to enable food to be distributed to the most deprived persons in the Community in accordance with an annual plan.

The distribution shall be:

(a) free of charge, or

(b) at a price which in no case is greater than that justified by the costs incurred by the designated organisations in implementing the action.

2. A product may be mobilised on the Community market where:

(a) it is temporarily unavailable in Community intervention stocks during implementation of the annual plan referred to in paragraph 1, to the extent necessary to allow implementation of the plan in one or more Member States, or

(b) implementation of the plan would involve the transfer between Member States of small quantities of products in intervention in a Member State other than that or those in which the product is required.

3. Member States concerned shall designate the organisations referred to in paragraph 1 and shall notify the Commission in due time each year if they wish to apply this scheme.

4. Products referred to in paragraphs 1 and 2 shall be released free of charge to the designated organisations. The accounting value of such products shall be the intervention price, adjusted by coefficients where necessary to take account of quality differences.

5. Without prejudice to Article 183, the products made available under the provisions of paragraphs 1 and 2 of this Article shall be financed by appropriations in the relevant budgetary heading within the EAGF of the budget of the European Communities. Provision may also be made for this financing to contribute towards the costs of transport of products from intervention centres and for administrative costs for the designated organisations generated by the implementation of the scheme set out in this Article, excluding any costs which may be borne by the beneficiaries within the framework of the application of paragraphs 1 and 2.

SECTION IIIPRIVATE STORAGE

SUBSECTION IMANDATORY AID

Article 25 Eligible products

Aid for private storage shall be granted for the following products subject to the conditions set-out in this Section and further requirements and conditions to be adopted by the Commission in accordance with Article 40:

(a) in respect of butter:

(i) cream,

(ii) unsalted butter produced from cream or milk in an approved undertaking of the Community of a minimum butterfat content, by weight, of 82 % and a maximum water content, by weight, of 16 %,

(iii) salted butter produced from cream or milk in an approved undertaking of the Community of a minimum butterfat content, by weight, of 80 %, a maximum water content, by weight, of 16 % and a maximum salt content, by weight, of 2 %;

(b) in respect of cheese:

(i) Grana Padano cheese at least nine months old,

(ii) Parmigiano Reggiano cheese at least 15 months old,

(iii) Provolone cheese at least three months old.

Article 26 Conditions and aid-level for butter

The butter shall be classified according to national quality grades to be determined by the Commission and shall be marked accordingly.

The amount of aid shall be fixed by the Commission in the light of storage costs and the likely trend in prices for fresh butter and butter from sto