No C 101/10 Official  Journal  of the European  Communities 26. 4. 78 
years  have  created  a situation  where  some  of the 
main  reasons  for  the  introduction  of production 
refunds  no longer  apply  to the same  extent'  and  the 
conclusion  that  'the  long-term  preservation  of the 
system  in its present  form  is no longer  economically 
justified'. 
12. The  Commission  is asked  to take  a closer  look 
at EAGGF  spending,  in order  to try and  justify  its 
statements,  which  do not seem  to be quite  accurate. 
Similarly,  the  facts  and  figures  given  on the  starch 
industry  and  its ancillaries  are  not  comprehensive 
enough  to provide  a proper  picture  of the situation. 13. In  conclusion,  the  Committee  rejects  the 
Commission's  view  that  starch  used  for  food  and 
animal  feed  should  no longer  qualify  for Community 
refunds.  A number  of recent  judgments  of the Court 
of Justice  on similar  questions  would  seem  to confirm 
the Committee's  point  of view. 
14. Finally,  special  attention  should  be given  to 
striking  the  • requisite  balance  between  the  different 
branches  and  raw  materials  (wheat,  maize,  potatoes) 
of the  starch  sector.  Recalculation  is urgently 
necessary. 
Done  at Brussels,  1 March  1978. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
Opinion  on the  Commission  proposals  fixing  prices  for certain  agricultural  products 
and on certain  related  measures 
The text  referred  to the  Committee  has  been  published  in Official  Journal  of the 
European  Communities  No  C 50 of 28 February  1977,  page  1. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 12 December  1977,  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Articles  47 and  198  of the Treaty 
establishing  the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
156th  plenary  session,  held  in Brussels  on 1 and 2 March  1978. 
The full  text  of the opinion  is as follows: 
26. 4. 78 Official  Journal  of the European  Communities No C 101/11 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Articles  47 and 198  thereof, 
Having  regard  to the request  made  by the Council  of 
the European  Communities  on 12 December  1977  for 
an opinion, 
Having  regard  to the decision  taken  by its Bureau  on 
13 December  1977  instructing  the  Section  for 
Agriculture  to draw  up an opinion  on the matter, 
Having  regard  to Article  46 of the Rules  of Procedure 
(urgency  procedure), 
Having  regard  to the  earlier  opinions  of the 
Committee  on this subject, 
Having  regard  to the opinion  issued  by the Section 
for Agriculture  at its meeting  on 24 February  1978, 
Having  regard  to the oral  report  submitted  by the 
rapporteur,  Mr Schnieders, 
Having  regard  to the discussions  at its 156th  plenary 
session  held  on 1 and  2 March  1978  (meeting  of 
1 March  1978), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 48 votes  to 42 with  six abstentions: 
1. The  Commission's  farm  price  proposals  find  the 
Community  still  in a difficult  economic  and  social 
situation. 
Although  a certain  reduction  in inflation  is to be 
observed,  inflation  is still a serious  problem  in all the 
Member  States  and  there  remains  considerable 
variation  between  the rates  of inflation  in different 
Member  States. 
The targets  for economic  growth  are not being  met. 
There  has  been  no radical  improvement  in the 
employment  situation  in any Member  State. 
Unemployment  in trade  and industry  remains  high. 
And no solution  has been  found  to the problems  in 
the monetary  sector. The balance-of-payments  position  of the  various 
countries  differs  widely  and re-establishment  of fixed 
parities  in the Community  is not a serious  prospect  in 
the short  term. 
2. In  view  of this  situation,  the Committee  would 
underline  the importance  of a common  agricultural 
policy  which  is a major  factor  in the integration  of 
the Community. 
The analyses  of the agricultural  policy  given  in the 
Committee's  stocktaking  of the CAP  are still  largely 
true. 
3. The  Committee  would  call  to mind  the most 
important  objectives  of the CAP  (Article  39): 
(a) To increase  agricultural  productivity  by 
promoting  technical  progress  and by ensuring  the 
rational  development  of agricultural  production 
and the  optimum  utilization  of the  factors  of 
production,  in particular  labour. 
(b) Thus  to ensure  a fgir  standard  of living  for the 
agricultural  community,  in  particular  by 
increasing  the  individual  earnings  of persons 
engaged  in agriculture. 
(c) To  stabilize  markets. 
(d) To assure  the availability  of supplies. 
(e) To  ensure  that  supplies  reach  consumers  at 
reasonable  prices. 
The Committee  would  also  draw  attention  to the 
objectives  stated  in Article  117,  namely,  that 
'Member  States  agree  upon  the  need  to promote 
improved  working  conditions  and  an  improved 
standard  of living  for workers,  so as to make  possible 
their  harmonization  while  the improvement  is being 
maintained'. 
4. The  annual  farm  price  package  and  related 
market  organization  measures  have  a major  bearing 
on achievement  of the objectives  of Article  39. 
5. Since  the  1972/73  marketing  year,  the 
Commission  has been  using  the 'objective  method'  as 
a basis  for determining  the necessary  price  increases. 
The Economic  and  Social  Committee  has  discussed 
the principle  and  the  mechanics  of the  objective 
method  on several  occasions,  one of the most  notable 
being  when  it was  drawing  up its opinion  on the 
No C 101/12 Official  Journal  of the European  Communities 26. 4. 78 
1975/76  price  proposals.  As a result,  the Committee 
has on a number  of occasions  come  out  clearly  in 
favour  of use of this  method. 
6. Despite  its shortcomings,  the  Committee  still 
thinks  that  the  objective  method  is a useful 
instrument  for determining  the necessary  adjustments 
in farm  prices. 
7. The  price  changes  the Commission  is proposing 
this year  however  differ  very  substantially  from  those 
indicated  by the objective  method. 
It is proposing  an average  increase  in target  prices  of 
only 2 %, whereas  the  figure  calculated  by  the 
objective  method  in the form  in which  the  method 
has been  applied  in previous  years,  based  on seven 
countries  (the  original  six,  plus  Denmark)  would  be 
4 7%. 
Even  with  the changes  the Commission  has made,  the 
result  of the calculations  still  points  to an increase  in 
target  and  intervention  prices  of 4-2  % as being 
required. 10. Agromonetary  measures 
The Committee  concedes  that,  as a result  of the 
agromonetary  measures,  when  price  increases  are 
translated  into  national  currencies  they  differ  from 
those  yielded  by  the  objective  method.  The 
Committee  would  however  point  out  that  even 
allowing  for  the  changes  proposed  by  the 
Commission  in the  'green  currencies'  the  proposed 
price  increases  do  not  cover  the  increase  in 
production  costs  in either  the weak-currency  countries 
or the strong-currency  countries. 
11. Furthermore,  in the  result  arrived  at by the 
objective  method  it is assumed  that  those  countries 
whose  currencies  have  depreciated  have  brought  their 
green  rates  into  line  with  their  real  rates  of exchange. 
In reality  however  these  countries  have  made  no 
adjustment  at all,  or a completely  inadequate  one. 
Unless  a full  correction  is made,  family  farms  in 
particular  will  be hard  hit by the increases  that  have 
occurred  in input  prices.  In the  strong-currency 
countries  an adjustment  of green  currencies  to real 
exchange  rates  causes  a drop  in farm  prices  and  farm 
incomes. 
The increases  in intervention  prices  that  are proposed 
average  even  less  than  2 %. This  amounts  to a 
further  reduction  in incomes  support. 
8. The  reasons  why  the Commission  thinks  it does 
not need  to follow  the results  of the objective  method 
are stated  as follows: 
(a) The  method  relates  only  to the prices  in units  of 
account,  and not to those  in national  currencies. 
(b) It provides  quantitative  guidelines  only  with 
respect  to the  development  — not  the  absolute 
level  — of common  agricultural  prices. 
(c) It considers  only  the average  increase  of common 
agricultural  prices,  and  not  that  of individual 
commodities. 
(d) It is an approximation  of the  needs  of the 
farming  community  and  it takes  into  account 
neither  the  market  situation  of  different 
commodities,  the general  economic  background 
nor the interests  of consumers. 
(e) It does  not  reflect  the  actual  development  of 
agricultural  incomes. 
9. Besides  these  technical  arguments,  the 
Commission  says  in its conclusions  that  the present 
economic  circumstances  were  another  factor  which 
made  it go for a moderate  increase  in farm  prices. 12. Significance  of surpluses  and  production  targets 
The Committee  considers  that  not  all the  current 
stocks  of dairy  produce,  sugar,  wine  and  beef  are 
structural  surpluses.  Some  of them  must  be regarded 
as normal  trading  stocks. 
In the particular  cases  of sugar,  butter  and  wine,  the 
imbalance  of internal  supply  and  demand  has  been 
considerably  worsened  by the  import  commitments 
entered  into  by the  Community  for  foreign  policy 
considerations  (New  Zealand,  Lome,  the 
Mediterranean  Agreements).  Therefore  the Commu-
nity's  farming  industry  cannot  be blamed  for  these 
imbalances. 
13. Another  factor  to be taken  into  consideration 
in deciding  the price  increases  is whether  they  will 
lead to market  imbalance. 
14. The  Commission  states  in its explanatory 
memorandum  that  there  has hardly  been  any  increase 
in the acreage  of common  wheat,  for example.  The 
same  is true  of dairy  cattle  numbers  which  have  not 
changed  since  1960  despite  price  rises. 
The sugar  beet  acreage  furthermore  is on  the 
decrease.  And  it should  be remembered  that  the 
26. 4. 78 Official  Journal  of the European  Communities No C 101/13 
increase  in the  years  1975  and  1976  was  at the 
express  wish  of the Council  of Ministers. 
15. The  Committee  points  out  that  there  is no 
consensus  on production  targets  for  the  European 
Community.  Some  governments  favour  an expansion 
of agricultural  production  out  of an understandable 
desire  to improve  their  balance  of payments.  Without 
a Community  monetary  policy  these  governments 
will have  no chance  of changing  their  attitude.  Other 
governments  see  exploitation  of their  agricultural 
production  capacity  as an  important  means  of 
improving  the employment  situation  and  the  growth 
performance  of their  national  economies.  Meanwhile, 
prominent  politicians  and  organizations  are 
proclaiming  the Community's  obligation  in terms  of 
providing  food  for  the  world's  growing  population. 
There  are  already  500  million  people  in the  world 
today  who  do not  get enough  to eat,  particularly  of 
protein,  and  population  growth  is expected  in the 
future  to outstrip  the expansion  of food  production. 
Even  accepting  that  the  bulk  of the  necessary 
expansion  of food  production  will  have  to take  place 
in the  developing  countries  themselves,  the 
Community  too  will  have  to contribute,  at least  on a 
modest  scale,  towards  solving  the  world's  food 
problems.  For  all these  reasons  the  Committee  calls 
upon  the  Council  to  reach  agreement  on  the 
long-term  food  production  strategy  of  the 
Community. industries  which  produce  goods  needed  by 
agriculture  and  process  and  distribute  farm  output. 
The Committee  wonders  whether  it would  not  be 
better,  economically  and  socially,  for the Community 
to accept  certain  agricultural  surpluses  in order  to 
avoid  the  increases  in unemployment  which  would 
result  from  too  tight  a squeeze  on farm  prices.  For 
this reason  it is questionable  whether  the  1-5  % 
productivity  improvement  assumed  under  the 
objective  method  and  deducted  from  the  estimated 
price  increase  to be recommended  is still  justified.  In 
some  cases  productivity  increases  are only  achieved  at 
high  cost  in terms  of increased  expenditure. 
18. There  are still  gaps  between  farm  incomes  and 
the incomes  of other  groups.  The  size  of the  gap 
varies  from  area  to area  and  product  to product  and 
according  to farm  size.  The  income  disparity  exists 
both  within  agriculture  and  between  agriculture  and 
other  industries,  i.e.  between  farmers  and  their 
families  and  other  self-employed  businessmen,  and 
between  farmworkers  and  workers  in comparable 
occupations  in other  industries. 
Views  differ  widely  as to the size  of these  differences. 
However,  if one  merely  takes  the averages,  almost  all 
national  statistics  are  found  to show  agricultural 
earnings  lagging  far behind  those  in other  industries. 
16. The  recession  and  the  employment  and  income 
situation  in agriculture 
The Committee  thinks  that  agriculture  is not  as 
effectively  insulated  from  the effects  of the  recession 
as the Commission  proposals  would  have  us believe. 
Past increases  in farm  incomes  were  largely  possible 
because  the  number  of people  working  in the 
industry  declined  and  the remaining  income  could  be 
distributed  among  a smaller  number  of people.  Since 
the beginning  of  the  recession,  however,  this 
possibility  has  all but  disappeared,  and  there  has 
been,  and  continues  to be, a considerable  increase  in 
underemployment  in agriculture,  especially  on family 
farms  in the less-advanced  areas. 19. The  importance  of price  support  for agriculture 
For a number  of products  (sugar,  cereals,  butter  and 
skimmed-milk  powder),  the  intervention  arrange-
ments  guarantee  farmers  a price  about  6 to 7 % 
below  the  target  prices,  which  are  the  prices 
considered  necessary  for  a fair  income.  These 
products  account  for  about  33 to 35 % of sales  of 
farm  products. 
20. In  the beef  and  veal  sector  the average  market 
price  in the Community  has  for over  two  years  failed 
to reach  even  the  intervention  level,  which  in this 
period  has been  only  about  90 % of the guide  price. 
There  are  no  official  intervention  support 
arrangements  for pigmeat,  eggs  or poultry. 
17. The  Committee  concludes  that  it is aggravating 
the problem  of the  economy  generally  to adopt 
agricultural  measures  which  endanger  the  jobs  of 
those  working  on  the  land  and  in the  ancillary 21. In  the  case  of a few  types  of fruit  and 
vegetables  unsaleable  surpluses  are  bought  in at 
special  intervention  prices.  The  gap  between  these 
intervention  prices  and  the  actual  market  prices  is, 
however,  almost  40 %, so that  intervention  has  no 
No C 101/14 Official  Journal  of the European  Communities 26. 4. 78 
impact  in practice  on the  earnings  of fruit  and 
vegetable  growers. 
22. The  support  arrangements  for  flowers, 
ornamental  plants  and  wine  have  only  a small  effect. 
23. Ensuring  reasonable  prices  for consumers 
There  needs  to be greater  effort  to ensure  that  food 
products  reach  the consumer  at reasonable  prices.  A 
special  study  is needed  of  what  causes  the 
considerable  variations  in the prices  of food  products 
made  from  foodstuffs  covered  by a common  price 
scheme.  These  variations  are at any  rate  much  greater 
than the  variations  in the  prices  paid  to farmers, 
although  the Commission  stresses  the impact  of the 
latter  on consumers. 
Prices  cannot  be kept  down  by controlling  only  one 
of their  components,  because  the  price  restraint 
secured  at this  stage  may  be completely  nullified  by 
what  happens  to the  prices  of the  products  at the 
later  stages  in the  production  chain.  It would 
therefore  be wrong  to disregard  the objective  method 
and ask  farmers  to make  an extra  effort  unless  steps 
are taken  at the same  time  to see that  their  sacrifice  is 
reflected  in retail  prices. 
74. Conclusion 
The Committee  does  not  think  the  Commission  is 
justified  in proposing  prices  differing  so widely  from 
those  which  the objective  method  indicates  to be fair. 
After  careful  consideration,  the Committee  proposes 
that this  year's  price  adjustments  be based  on the 
results  obtained  by the objective  method. 
SPECIFIC  COMMENTS  OF  THE  INDIVIDUAL 
PRODUCTS 
If the  Council  does  decide  on a level  of price 
increases  above  that  proposed  by the Commission,  in 
general  the  Committee  wishes  there  to  be 
commensurate  price  rises  for all individual  products, 
except  where  otherwise  stated  in the comments  which 
follow. 
For Mediterranean  products  such  as olive  oil,  fruit 
and vegetables,  etc.,  the  Commission  has  proposed 
changes  in the present  market  organizations. 
The Committee  is at present  working  on an opinion 
on this. The Committee  understands  that  the  Commission 
also intends  very  shortly  to  make  additional 
proposals  for beef  and  veal  and  milk. 
The Committee  may,  of course,  decide  to comment 
on the proposals  when  they  appear,  and  they  could 
lead it to revise  the judgement  on these  two  sectors 
given  in the present  opinion. 
The Committee  assumes  that  the new  arrangements 
will not  be adopted  by the Council  in time  for the 
marketing  year  1978/79. 
Its recommendations  are,  therefore,  based  on the 
existing  market  regimes. 
1. Cereals 
(a) Common  wheat 
It is the Committee's  opinion  that  the introduction  of 
additional  chemical  and  biochemical  criteria  for 
determining  the  average  bread-making  quality  of 
common  wheat  will  unfairly  favour  particular 
sections  of the market.  The  procedures  used  to date 
are suitable  for  encouraging  the  production  of 
high-quality  grain  and  the  existing  differential 
between  the reference  price  for bread-making  wheat 
of minimum  quality  and  the  intervention  price  for 
non-bread-making  wheat  should  therefore  be 
continued,  together  with  the  present  arrangements 
for defining  bread-making  quality  until  experimental 
work  on  Part  II of the  baking  test  has  been 
satisfactorily  completed.  The  Committee  considers, 
however,  that  effective  measures  need  to be taken  to 
support  the reference  price  of bread-making  wheat. 
The Committee  regrets  that  the Commission  has  not 
proposed  any  rise  in the monthly  price  increments  in 
the light  of the  general  increase  in costs  which  has 
occurred. 
It is in the Community's  interest  that  not  all of the 
grain  should  come  into  the market  immediately  after 
harvesting,  but some  of it should  go into  storage. 
(b) Durum  wheat 
The Committee  rejects  the  Commission's  proposal 
for a reduction  in the target  and  intervention  price  of 
durum  wheat.  Durum  wheat  is not  in surplus.  The 
proposed  price  reductions  would  lead  to an unfair 
drop  in producers'  incomes  — especially  in the 
Mediterranean  areas,  where  there  is little  scope  for 
increasing  yields. 
The increase  in the per hectare  aids  for durum  wheat 
does  not offset  the price  reductions. 
26. 4. 78 Official  Journal  of the European  Communities No C 101/15 
The Committee  is against  a redrawing  of  the 
boundaries  of the areas  eligible  for aids,  especially  in 
Italy  and  the south  of France. 
(c) Rice 
The Committee  fears  that  the  inadequate  price 
increase  will  lead  to a further  decline  in rice 
production.  It also  considers  that  better  sales 
promotion  is needed,  particularly  publicity  for  the 
varieties  of rice  produced  in the Community. 
Since  rice  production  costs  have  already  risen 
considerably  the  Committee  would  stress  that  rice 
too must  get a price  increase. 
Finally,  there  is a need  for a more  effective  policy  of 
export  refunds. 
(d) Cereal  substitutes 
To ensure  that  the  market  organization  for  cereals 
can continue  to operate  effectively,  cereal  substitutes 
must  be brought  under  this  market  system. 
Rising  imports  of cereal  substitutes  make  this  an 
urgent  matter. 
The Committee  appreciates  that  account  must  also  be 
taken  of the impact  on feeders  and  processors. 
2. Sugar 
For two  reasons  the  Committee  is less  pessimistic 
than  the  Commission  about  the  trend  of the  sugar 
market.  Firstly,  the acreage  under  sugar  beet  can  be 
expected  to contract,  as it did last  year.  Secondly,  the 
cost of disposing  of surpluses  is partly  covered  by 
revenue  from  the special  levy. 
The Committee  considers  that  the  sugar  market  is 
mainly  weighed  down  by the import  obligations.  The 
Committee  also  rejects  the reduction  of the  B quota 
for this  reason,  and  also  because  it considers  that 
such  a step  will  jeopardize  processing  capacity  and 
jobs. 
The Committee  welcomes  the  retention  of  the 
production  levy  on isoglucose.  However,  the  pro-
duction  levies  on sugar  and  isoglucose  should  be 
brought  into  line  with  each  other  — the  1978/79 
production  levy  on sugar  is to be almost  twice  as 
large  as that  on isoglucose. 3. Milk 
If the  problems  of this  sector  are  to be solved  a 
longer-term  policy  for  milk  will  have  to  be 
established.  In particular,  the  Committee  advocates 
the following  steps: 
(i) The  system  of premiums  for the non-marketing 
of milk  and  the  conversion  of dairy  herds 
should  be retained  up to 1980. 
(ii) Greater  encouragement  should  be given  to the 
use of skimmed  milk  in animal  feed: 
— by applying  simpler  rules  for  reducing  the 
price  of liquid  skimmed  milk,  and 
— by raising  the skimmed-milk  powder  subsidy 
by at  least  the  same  amount  as  the 
intervention  price  is changed. 
(iii) A premium  for  suckler  cows  should  be 
introduced  in order  to further  reduce  milk 
capacity. 
(iv) Community  rules  should  be introduced  for  the 
use of milk  and  milk  constituents  in products 
for human  and  animal  consumption. 
(v) The  special  schemes  for  promoting  sales  of 
butter  should  be unified  and  put  on a long-term 
basis.  In  addition,  the  existing  consumer 
subsidies  for  butter  should  be  retained  and 
extended  to consumers  in all the Member  States. 
(vi) The  producer  levy  should  be  applied  more 
equitably  and  the  proceeds  should  be used  in 
full for  new  measures  or for  supplementing 
existing  measures  aimed  at restoring  balance  in 
the milk  market.  Above  all,  the subsidization  of 
school  milk  should  be continued  on a long-term 
basis. 
The outlets  for  milk  products  in non-member 
countries  should  also  be  exploited  more 
extensively. 
(vii) The  Committee  thinks  that  there  is  no 
justification  for  curtailing  the  existing 
investment  incentives  in the  milk  sector.  It is 
vital  that  continued  encouragement  be given  to 
the development  of efficient  production  units. 
No C 101/16 Official  Journal  of the European  Communities 26.4.78 
4. Beef  and  veal 
The Committee  has  already  commented  on  the 
problems  in this  sector  and  on the  Commission's 
intention  to change  the market  organization,  and  has 
said it will  return  to the  matter  when  it has  the 
Commission's  concrete  proposals  before  it.  It 
assumes,  however,  that  the Council  of Ministers  will 
not be able  to decide  on specific  changes  in the 
market  organization  before  the  price  proposals  are 
adopted.  It therefore  proposes  that  the  intervention 
price  be raised  to the old level  of 93 % of the guide 
price. 
When  the  intervention  arrangements  are  being 
decided  consideration  should  be given  to the question 
of whether  some  of the  produce  could  not  be 
prepared  and  treated  in the  light  of processors' 
requirements,  immediately  after  delivery  to  an 
intervention  agency. 
For the rest,  the existing  market  organization  for beef 
and veal  should  be continued  until  the  Council 
reaches  agreement  on a new  system. 
5. Pigmeat 
The Commission's  proposed  3 % increase  in the 
basic  price  is disproportionate  to the  proposed 
change  in the prices  for feed  grain,  the principal  input 
for pigmeat  production.  The  Committee  therefore 
considers  that  in order  to maintain  market  balance, 
the percentage  change  in the basic  price  should  be the 
same  as that  for  the  target  prices  for  barley  and 
maize.  The  Committee  would  also  point  out  that  an 
increase  in the  basic  price,  because  of its effect  on 
MCAs,  could  aggravate  the present  serious  difficulties 
of pigmeat  producers  and  processors  in  some 
countries. 
6. Olive  oil 
The Committee  notes  that  the  price  proposals  for 
olive  oil are based  on new  arrangements  for the olive 
oil market  proposed  in  connection  with 
Mediterranean  policy. 
The Committee  will  be delivering  a detailed  opinion 
on this  subject,  but  it points  out  that  the  proposed 
changes  in the  organization  of the  market  are  too 
significant  for  a decision  to be reached  within  the 
time  set aside  for consideration  of the  present  price 
proposals. 
The Committee  therefore  asks  the  Commission  to 
work  out  new  proposals  for raising  the price  of olive 
oil on the basis  of the present  market  regime. 7. Fruit  and  vegetables 
The Committee  agrees  with  the Commission  that  the 
basic  price  and  the  buying-in  price  should  be 
uncoupled  from  the reference  price.  The  Committee 
therefore  advocates  basing  the  increase  in the 
reference  price  on the  cost  trend  in the Community, 
and considers  that  the  reference  price  system  should 
be extended  to a wider  range  of fruit  and  vegetables, 
and that  the  support  given  to fruit  and  vegetables 
could  be varied  according  to variety. 
8. Tobacco 
The Committee  finds  it hard  to understand  why  the 
Commission  is not proposing  any  price  increases  for 
a number  of varieties  despite  the  rise  in production 
costs  and  although  it says  it wishes  to make  full 
allowance  for the rise  in processing  costs. 
9. Wine 
The production  of quality  wines  should  continue  to 
be encouraged.  Export  refunds  should  take  greater 
account  of the reference  price.  In the case  of imports, 
the safeguard  clause  should  be applied  in good  time. 
The Committee  would  also  reiterate  that  the 
obstacles  to an increase  in consumption  must  be 
eliminated  by aligning  wine  taxes  throughout  the 
Community. 
10. Flax,  hemp  and  silkworms 
The proposed  increase  in the aids  for flax,  hemp  and 
silkworms  is not  enough  to maintain  the  necessary 
level  of production. 
11. Dried  fodder 
The Committee  welcomes  the  change-over  to a 
variable  aid system,  but  thinks  that  the  dehydration 
of potatoes  should  continue  to be covered,  so as to 
allow  appropriate  market  support. 
12. Potatoes  and  sheepmeat 
The Committee  reiterates  its view  that  the  common 
market  organizations  for  potatoes  and  sheepmeat 
26. 4. 78 Official  Journal  of the European  Communities No C 101/17 
should  be set  up as soon  as possible,  so that  the 
producers  of these  commodities  too  have  a single 
market  with  identical  rules  of competition. 13. Alcohol 
The Committee  would  refer  to its opinion  on this 
subject. 
Done  at Brussels,  1 March  1978. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  amendments  were  rejected  by the Committee: 
Paragraph  23 
Delete  the last  sentence. 
Voting 
For: 43, against:  46, abstentions:  3. 
Paragraph  24 
Substitute  the following: 
'The  Committee  recognizes  that  there  can  be no simple  or quick  solution  to agriculture's 
problems  and  that  the  Commission  is making  a real  attempt  to improve  the  common 
agricultural  policy.  Therefore,  taking  all the circumstances  into  account,  the Committee  is 
prepared  to accept  the Commission's  price  proposals  for the 1978/79  year.  However,  the 
Committee  does  want  to see much  more  progress  made  on reform  of the common  agricul-
tural  policy  and  considers  that  price  policy  must  be complemented  by much  stronger 
structural,  social  and  regional  policies.' 
Voting 
For: 43, against:  46, abstentions:  3. 
Paragraph  24 
'The  situation  of agriculture,  not  least  that  of farmers,  continues  to cause  concern.  The 
economic  recession,  the  impact  of inflation  upstream  and  downstream  of the  sector, 
played  a part  in the erosion  of farm  incomes. 
No C 101/18 Official  Journal  of the  European  Communities 26. 4. 78 
Floating  currencies,  and  international  monetary  disorder  are  adversely  affecting  Com-
munity  efforts  to devise  a prices  policy. 
The continued  use  of a system  which  is increasingly  incapable  of guaranteeing  farm 
incomes  is both  contentious  and  futile. 
The ESC  therefore  feels  that  the  time  has  come  to review  one  of the  cornerstones  of the 
common  agricultural  policy,  namely  prices  policy. 
The ESC  will  in the near  future  express  its views  on this  problem  in an initiative  opinion 
addressed  to the Community  decision-making  bodies.' 
Reasons 
It is obvious  that  the situation  is serious.  Anyone  who  refers  to points  1, 3, 7, 9 and  14 of the 
opinion  will  see  that  the  recession  in general,  and  that  of agriculture  in particular,  is under-
mining  the  social  situation  of producers.  Such  a situation  is incompatible  with  the  objectives 
set out in Articles  39 and  117  of the Treaty  of Rome. 
Voting 
For: 2, against:  47, abstentions:  39. 
The following  passage  in the  Section  for  Agriculture's  opinion  was  amended  to the  wording 
now appearing  in the Committee's  opinion  on the  basis  of an amendment  which  the  meeting 
carried: 
Paragraph  2 
In view  of this  situation  the  Committee  would  underline  the  importance  of the  common 
agricultural  policy  which  is a major  factor  in the integration  of the Community. 
Voting 
For: 33, against:  23, abstentions:  4. 
Opinion  on  the  proposal  for  a Council  Regulation  amending  Regulations  (EEC) 
No 2727/75  and  (EEC)  No  1418/76  as regards  the  export  refunds  for  cereals  and  rice 
exported  in the  form  of goods  not  covered  by Annex  II to the  Treaty 
The text  referred  to the  Committee  has  been  published  in Official  Journal  of  the 
European  Communities  No  C 10 of 12 January  1978,  page  3. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 4 January  1978,  the  Council  referred  the  abovementioned  proposal  to the  Economic 
and Social  Committee  in accordance  with  Article  43 of the  Treaty  establishing  the 
European  Economic  Community.