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The simplified method requires the identification of activities among those listed in Articles 169, 170 and 171 of the CMO Regulation and the assessment of significance of volumes and costs covered by these activities. The following four boxes present for each of the three sectors situations where such activities represent significant volumes of product concerned and significant costs of the production and placing of the product on the market so that the PO can benefit from the Derogation. This can be achieved through one activity or through the combination of several activities where none of the activities listed in the Derogation, on its own, is likely to generate significant efficiencies. Each situation requires a case-by-case analysis to make sure that the costs generated and volumes covered by these activities are sufficient to generate significant efficiencies. The following examples do not aim to exhaustively list all situations where the simplified method applies. OLIVE OIL SECTOR Application of the Significant Efficiency Test Examples of situations where joint activities listed in Article 169 of the CMO Regulation are likely to generate significant efficiencies in the context of the simplified method. i. Joint processing 1. Joint processing is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO processes more than half of the volume of olives harvested by its members to produce olive oil in an olive oil mill. The establishment of an olive oil mill requires a significant investment. Processing olives into olive oil normally involves several stages such as: cleaning the olives, pressing the olives and filtering of the olive oil and other processes. In such a situation, where the joint processing activities of a PO produce more than half of the olive oil commercialised by the PO, the PO is likely to generate significant efficiencies compared to the situation where members would individually seek to process their olives and therefore would fulfil the conditions of the simplified method. ii. Joint packaging, labelling or promotion 2. Joint packaging/bottling and labelling of olive oil is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out these activities with respect to more than half of the olive oil commercialised in an olive oil mill. Joint packaging/bottling and labelling normally requires a significant investment for the acquisition of the necessary technology/machinery. In such a situation, where the activities of joint packaging/bottling and labelling of a PO cover more than half of the olive oil commercialised by the PO, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. 3. Joint promotion is likely to generate significant efficiencies in certain situations. For example, this can be the case if a PO develops and commercialises a value-added product. A product ‘adds value’ for instance if it is distinctive from other products based on a specific set of characteristics to meet particular demands of customers. The PO can differentiate its product based on the production methods adopted (e.g. to produce organic olive oil) or other factors. In this context, the joint promotion is the marketing part of an integrated strategy to sell such a value-added product and the joint promotion will cover all volumes commercialised by the PO. The PO sets out and ensures the compliance with the set of specifications of the product: this involves e.g. developing the adequate set of specifications, production process planning and quality control in respect of such specifications, procuring inputs needed to respect the specifications, etc. The costs of such an integrated approach both for the PO and for its members to comply with the specifications are significant. In such a situation, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. Sectorial joint promotion activities, such as general promotion of olive oil consumption, are not relevant for the purpose of the Derogation because they are not an activity carried out by a single PO but an activity coordinated between producers and/or POs in the same sector which aims to benefit the whole sector and not solely one PO. iii. Joint organising of quality control 4. Joint organising of quality control is likely to generate significant efficiencies in certain situations. For example, this can be the case when a PO ensures consistent quality of the products produced by its members either because this is required by regulation or by an established standard (e.g. if the PO and its members aim to meet the requirements of buyers). The PO helps achieving quality firstly, through advice and support on production processes. In doing so, the PO provides the producers field services like advice on improved methods of applying phyto-sanitary agents, other chemicals and fertilisers, on the application of better production techniques, on the assistance with on-farm production problems and on regulatory and inspection issues which help the producer to achieve a quality product. Secondly, the PO also carries out testing (own or outsourced) to verify the quality of the olive oil (laboratory testing of acidity and presence of pesticides, testing of organoleptic qualities, etc.) produced by its members and that the PO will commercialise. Such testing is done either to demonstrate to independent certifiers/controllers that products meet the regulatory or standard requirements and/or to prove to the buyer(s) that the products meet its/their requirements. The costs of all these activities are significant if these activities cover more than half of the olive oil commercialised by the PO. In such a situation, the PO is likely to generate significant efficiencies because it would be significantly more costly for an individual member to achieve the same result on his/her own. As a result, in such a situation the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. iv. Joint distribution Joint distribution can cover the following activities: joint transportation, setting up a distribution centre or a selling infrastructure and/or organising a selling platform. 5. Joint transportation is likely to generate significant efficiencies in certain situations. For example, this can be the case if the PO organises transport services from olive groves to the processing site (olive mill) for more than half of the olive oil commercialised by the PO or if the PO organises transport services from several olive mills to a packaging/bottling and labelling site for more than half of the olive oil commercialised by the PO. Transport costs represent a significant part of the cost of producing and placing the product on the market. In this context, the PO can operate the transportation business more efficiently compared to what would be done by members on an individual basis. For example, the PO can achieve economies of scale by transporting larger volumes, consolidating the number of shipments or reducing unloading and handling costs. Therefore, in such a situation, the PO is likely to achieve significant cost reductions and generate significant efficiencies compared to what would be done by members on an individual basis and, as a result, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. 6. Setting up a distribution centre or a selling infrastructure and/or organising a selling platform. The Commission is not aware of a situation where a distribution centre, a selling infrastructure and/or an online selling platform on their own would generate sufficient significant efficiencies to comply with the Significant Efficiency Test in the olive oil sector. However, if combined with other activities such as transport or quality control, where the cost of these activities together are significant, then it could generate significant efficiencies if the volumes covered are more than half of the products commercialised by the PO. As a result, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. For example, the PO could organise jointly a distribution centre, the transport of the production and an online selling platform. If the volumes covered by these activities are more than half of the volumes commercialised by the PO the costs of setting up and organising these activities are significant and these activities together are likely to generate significant efficiencies and, as a result, the PO would fulfil the conditions of the simplified method. v. Joint use of equipment or storage facilities 7. Joint use of equipment is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in significant agricultural machinery (e.g. harvesting machines, applicators for phyto-sanitary agents, fertilisers, pesticides) and ensures proper use and maintenance of it. In such a case, the PO initially bears investment costs by purchasing the equipment (new or used) to produce the olive oil. The PO afterwards bears other costs concerning the maintenance and ensuring proper use of the equipment (e.g. training). The initial investment and other costs in equipment entail significant costs if they concern significant volumes. In this context, the costs of using the equipment are significant if significant parts of the volumes commercialised by the PO are produced with the help of the jointly owned equipment. Therefore, in case the equipment is used to produce more than half of the volume of olive oil commercialised by the PO, the PO is likely to generate significant efficiencies. New equipment/machinery is often necessary to increase productivity as well as to ensure that the product meets market demands. However, some producers cannot afford new equipment due to the high investments needed, therefore the joint use of equipment can save costs for the members and increase their productivity. In such a situation, the PO would fulfil the conditions of the simplified method. 8. Joint use of storage is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in the storage facilities and ensures proper use and maintenance of it. The PO bears initial investment costs in storage by purchasing or planning and building the facilities. The PO bears other investment costs in storage by upgrading the facilities. Investments in storage entail significant costs if they concern significant volumes. The costs of using the storage are also significant if significant parts of the volumes of olive oil of the PO are stored through these facilities. In case the storage activities cover more than half of the olive oil commercialised by the PO and are thus significant in terms of volumes, the PO is likely to generate significant efficiencies. The provision of storage facilities by the PO can lead to lower costs compared to the situation where members have to invest individually in storage. The possibility to store the product without immediately delivering it to a third party, possibly for a longer period and possibly in larger quantities, enables the members of the PO to sell their products when the price is more favourable and not necessarily at the time of the harvest when the supply is the highest. It could also address the imbalances in supply created by the changing volumes of olives harvested over different years. In such a situation, the PO would fulfil the conditions of the simplified method. vi. Joint management of waste directly related to the production of olive oil To the Commission's knowledge, it appears that joint management of waste directly related to the production of olive oil usually takes place together with joint processing, which on its own, if it covers more than half of the olive oil commercialised by the PO, is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method (see above point (i) for joint processing). vii. Joint procurement of inputs 9. Joint procurement of inputs is likely to generate significant efficiencies in certain situations. For example, this can be the case if the procurement is done for significant volumes as then the PO can obtain significant discounts, better delivery terms and/or credit terms compared to what an individual producer would obtain. Besides, purchasing these inputs on its account, the PO may ensure proper storage and/or delivery of these products. When a PO procures for its members fertilisers, phyto-sanitary agents, pesticides or energy (fuel, electricity), these inputs represent significant costs (50). If a PO carries out procurement of these inputs for a volume corresponding to what is needed to produce more than half of the olive oil jointly commercialised, the PO is likely to generate significant efficiencies. In such a situation, the PO would fulfil the conditions of the simplified method. Procurement of other types of input, such as IT support, economic or technical advice, phyto-sanitary services, on its own, does not normally represent significant costs for the PO. As a consequence it is not likely that the PO will generate significant efficiencies as required in order to benefit from the Derogation. viii. Combinations of activities 10. The combination of activities in the situation where none of the activities covers more than half of the olive oil commercialised by a PO is likely to generate significant efficiencies in certain situations. See below the box for Combinations of activities for more details. BEEF AND VEAL SECTOR Application of the Significant Efficiency Test Examples of situations where joint activities listed in Article 170 of the CMO Regulation are likely to generate significant efficiencies in the context of the simplified method. i. Joint distribution Joint distribution can cover the following activities: joint transportation, setting up a distribution centre or a selling infrastructure and/or organising a selling platform. 1. Joint transportation is likely to generate significant efficiencies in certain situations. For example, this can be the case if the PO organises transport services from producing points to the buyer or to the processing site for more than half of the livestock commercialised by the PO. In this context, the PO can operate the transportation business more efficiently compared to what would be done by members on an individual basis. For example, the PO can achieve economies of scale by transporting larger volumes, consolidating the number of shipments and reducing unloading and handling costs. Therefore, in such a situation, the PO is likely to achieve significant cost reductions and generate significant efficiencies compared to what would be done by members on an individual basis and the PO would fulfil the conditions of the simplified method. 2. Organising a selling platform is likely to generate significant efficiencies in certain situations. For example, this can be the case if the PO develops a physical market or auction platform for selling livestock. In such a situation, the PO invests in facilities to present livestock and allow trade of the livestock. This requires significant investment costs and entails significant operating costs. In order to comply with the simplified method, the activity would have to cover large volumes and regular trades. This would be achieved if the selling platform represents the main sales channel for its members, i.e. the PO sells more than half of the livestock of its members (in volume). This is likely to ensure economies of scale for the sales of the livestock by allowing producers to reach a larger number of buyers and more quickly than if they were doing it individually. It can also reduce transaction costs for the sellers and buyers. Therefore, in such a situation, the PO is likely to generate significant efficiencies compared to what would be done by members on an individual basis and the PO would fulfil the conditions of the simplified method. 3. Setting up a distribution centre is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in a distribution facility like a calf collection centre to regroup the calf according to certain specifications and ensures proper use and maintenance of the centre. The PO bears initial investment costs in the distribution centre by purchasing or planning and building the facility. The PO bears other investments by upgrading the facility. Initial and other investments entail significant costs if they concern significant volumes. The costs of running the facility are also significant when significant parts of the volumes of the PO are distributed through this facility. In case the distribution activities cover more than half of the livestock commercialised by the PO and are thus significant in terms of volumes, the PO is likely to generate significant efficiencies. This ensures economies of scale for the sales of the livestock by allowing producers to reach a larger number of buyers and more quickly than if they were distributing the livestock by themselves. It can also reduce transaction costs for the sellers and buyers. Therefore, in such a situation, the PO is likely to generate significant efficiencies compared to what would be done by members on an individual basis and the PO would fulfil the conditions of the simplified method. ii. Joint promotion 4. Joint promotion is likely to generate significant efficiencies in certain situations. For example, this can be the case if a PO develops and commercialises a value-added product. A product ‘adds value’ for instance if it is distinctive from other products based on a specific set of characteristics to meet particular demands of customers. The PO can differentiate its product based on the breed, feed, production system or the place of origin or other factors. In this context, the joint promotion is the marketing part of an integrated strategy to sell such a value-added product and the joint promotion activity is one of several activities carried out to implement this strategy. The PO sets out and ensures compliance with the set of specifications of the product: this involves e.g. developing the adequate set of specifications, production process planning and quality control in respect of such specifications, procuring inputs needed to respect the specifications, etc. The costs of such an integrated approach both for the PO and for its members to comply with the specifications are significant when it covers more than half of the volumes commercialised by the PO. In such a situation, the PO would fulfil the conditions of the simplified method. Sectorial joint promotion activities, such as general promotion of beef consumption, are not relevant for the purpose of the Derogation because it is not an activity carried out by a single PO but an activity coordinated between POs in the same sector which aim to benefit the whole sector and not solely one PO. iii. Joint organising of quality control 5. Joint organising of quality control is likely to generate significant efficiencies in certain situations. For example, this can be the case when a PO ensures consistent quality of the livestock by its members either because this is required by regulation or by an established standard required by buyers. The PO helps achieving quality first, through advice and support on production processes. In doing so, the PO provides services like advice on breed, improved feed, the application of better techniques to bring up the livestock and the assistance with on-farm production problems and regulatory and inspection issues for the producer to achieve a quality product. Secondly, the PO provides veterinary services (own or outsourced) to ensure the health and safety of the product (vaccination and other prophylactic actions, disease surveillance, reproduction activities, etc.) that is produced by its members and that the PO will commercialise. In addition, the PO carries out testing, either to demonstrate to independent certifiers/controllers that the products meet the regulatory safety requirements or quality standard requirements and/or to prove to the buyer(s) that the products meet its/their additional requirements. The costs of all these activities are significant if these activities cover more than half of the livestock commercialised by the PO. In such a situation, the PO is likely to generate significant efficiencies because it would be significantly more costly for an individual member to achieve the same result on his/her own and, as a result, the PO would fulfil the conditions of the simplified method. iv. Joint use of equipment or storage facilities 6. Joint use of equipment is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in the significant equipment (e.g. machinery for producing feed like harvester, grinder) and ensures proper use and maintenance of it. In such a case, the PO initially bears investment costs by purchasing the equipment (new or used) to produce the livestock. The PO afterwards bears other costs concerning the maintenance and ensuring proper use of the equipment (e.g. training). The initial investment and other costs in equipment entail significant costs if they concern significant volumes. In this context, the costs of using the equipment are significant when significant parts of the volumes commercialised by the PO are produced with the help of the jointly owned equipment. Therefore, in case the equipment is used to produce more than half of the volume of livestock commercialised by the PO, the PO is likely to generate significant efficiencies. New equipment/machinery is often necessary to increase productivity as well as to ensure that the product meets market demands. However, some producers cannot afford new equipment due to the high investments needed, therefore the joint use of equipment can save costs for the members and increase their productivity. In such a situation, the PO would fulfil the conditions of the simplified method. 7. Joint use of storage is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in the storage facilities (e.g. for feed) and ensures proper use and maintenance of it. The PO bears initial investment costs in storage by purchasing or planning and building the facilities. The PO bears other investments in storage by upgrading the facilities. Initial and other investments in storage entail significant costs if they concern significant volumes. The costs of using the storage are also significant when significant parts of the volumes of the PO are stored through these facilities. In case the storage activities cover more than half of the livestock commercialised by the PO and are thus significant in terms of volumes, the PO is likely to generate significant efficiencies. The provision of storage facilities by the PO can lead to lower costs compared to the situation where members have to invest individually in storage. The possibility to store the feed without immediately delivering it to the members of the PO, possibly for a longer period and possibly in larger quantities, enables the members of the PO to have feed when necessary, without delays. Furthermore, the PO can buy bigger amounts of feed when the price is interesting and store it until it is used by the members. In such a situation, the PO would fulfil the conditions of the simplified method. v. Joint management of waste directly related to the production of live cattle 8. Joint management of waste is likely to generate significant efficiencies in certain situations. For example, this can be the case if the PO ensures the removal, storage and reuse of the waste in a sustainable way (for energy and for biogas production, for fertilisers, etc.) for the waste produced by more than half of the livestock commercialised by the PO. In this context, the PO can operate the waste management more efficiently compared to what would be done by members on an individual basis. For example, the PO can achieve economies of scale by transporting larger volumes of waste, consolidating the number of shipments and reducing unloading and handling costs. Therefore, in such a situation, the PO is likely to achieve significant cost reductions and generate significant efficiencies compared to what would be done by members on an individual basis and, therefore, the PO would fulfil the conditions of the simplified method. vi. Joint procurement of inputs 9. Joint procurement of inputs is likely to generate significant efficiencies in certain situations. For example, this can be the case if the procurement is done for significant volumes as then the PO can obtain significant discounts, better delivery terms and/or credit terms compared to what an individual producer would obtain. Besides purchasing these inputs on its account, the PO may ensure proper storage and/or delivery of these products to the members. When a PO procures for its members feed, purchased animals or other inputs like fuel and electricity, these inputs represent significant costs (51). If a PO carries out procurement of these inputs for a volume corresponding to what is needed to produce more than half of the livestock jointly commercialised, the PO is likely to generate significant efficiencies. In such a situation the PO would fulfil the conditions of the simplified method. Procurement of other types of input, such as IT support, genetic advice, veterinary services or insemination services, on its own usually does not represent significant costs for the PO in order to comply with the simplified method and thus it is not likely that the PO will generate significant efficiencies to benefit from the Derogation. vii. Combinations of activities 10. Combinations of activities in the situation where none of the activities covers more than half of the livestock commercialised by a PO is likely to generate significant efficiencies in certain situations. See below the box for Combinations of activities for more details. ARABLE CROPS SECTOR Application of the Significant Efficiency Test Examples of situations where joint activities listed in Article 171 of the CMO Regulation are likely to generate significant efficiencies in the context of the simplified method. i. Joint distribution Joint distribution can cover the following activities: joint transportation, setting up a distribution centre or a selling infrastructure and/or organising a selling platform. 1. Joint transportation is likely to generate significant efficiencies in certain situations. For example, this can be the case if the PO organises transport services (road or rail transportation or maritime shipping) from harvesting points to the buyer's storage or processing site for more than half of the volumes of crops commercialised by the PO. In this context, the PO can operate the transportation business more efficiently compared to what would be done by members on an individual basis. For example, the PO can achieve economies of scale by transporting larger volumes, consolidating the number of shipments and reducing unloading and handling costs. Therefore in such a situation, the PO is likely to achieve significant cost reductions and generate significant efficiencies compared to what would be done by members on an individual basis and, therefore, the PO would fulfil the conditions of the simplified method. 2. Setting up a distribution centre or a selling infrastructure and/or organising a selling platform. The Commission is not aware of a situation where a distribution centre, a selling infrastructure and/or an online selling platform on their own would generate sufficient significant efficiencies to comply with the Significant Efficiency Test in the arable crops sector. However, if combined with other activities such as transport or quality control, the cost of these activities together are significant and then it could generate significant efficiencies if the volumes covered are more than half of the volumes commercialised by the PO. As a result, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. For example, the PO could organise jointly a distribution centre, the transport of the production and an online selling platform. If the volumes covered are more than half of the volumes commercialised by the PO, the costs of setting up and organising these activities are significant and these activities together are likely to generate significant efficiencies and, as a result, the PO would fulfil the conditions of the simplified method. ii. Joint promotion 3. Joint promotion is likely to generate significant efficiencies in certain situations. For example, this can be the case if a PO develops and commercialises a value-added product. A product ‘adds value’ for instance if it is distinctive from other products based on a specific set of characteristics to meet particular demands of customers. The PO can differentiate its product based on the protein content, the seeds used, the use of fertilisers, the crops' moisture content and size on delivery or the place of origin or other factors. For example, in the oilseed sector, the promotion could include technical information for feeding rations. In this context, the joint promotion is the marketing part of an integrated strategy to sell such a value-added product and the joint promotion activity is one of several activities carried out to implement this strategy. The PO sets out and ensures the compliance with the set of specifications of the product. This involves e.g. developing the adequate set of specifications, production process planning and quality control in respect of such specifications, procuring inputs needed to respect the specifications, etc. The costs of such an integrated approach both for the PO and for its members to comply with the specifications are significant when it covers at least more than half of the volumes commercialised by the PO. In such a situation, the PO would fulfil the conditions of the simplified method. Sectorial joint promotion activities, such as general promotion of arable crops consumption, are not relevant for the purpose of the Derogation because it is not an activity carried out by a single PO but an activity coordinated between POs in the same sector which aim to benefit the whole sector and not solely one PO. iii. Joint organising of quality control 4. Joint organising of quality control is likely to generate significant efficiencies in certain situations. For example, this can be the case when a PO ensures consistent quality of the products produced by its members either because this is required by regulation or by an established standard required by buyers. This can be the case of joint drying and mixing of crops to achieve the quality standard asked by a buyer. The PO helps achieving quality first, through advice and support on production processes. In doing so, the PO provides field services like advice on improved methods of applying chemicals and fertilisers, the application of better techniques e.g. ridging, fertilising, transplanting, pest control, etc., and/or assisting with on-farm production problems and regulatory and inspection issues for the producer to achieve a quality product. Secondly, the PO also carries out laboratory testing (own or outsourced) to verify the quality of the crop (protein, moisture, seed size, impurities, etc.) that is produced by its members and that the PO will commercialise. Such testing is done either to demonstrate to independent certifiers/controllers that the products meet the regulatory or standard requirements and/or to prove to the buyer(s) that the products meet its/their requirements. The costs of all these activities are significant if these activities cover more than half of the volume of crops commercialised by the PO. In such a situation, the PO is likely to generate significant efficiencies because it would be significantly more costly for an individual member to achieve the same result on his/her own. Therefore, the PO would fulfil the conditions of the simplified method. iv. Joint use of equipment or storage facilities 5. Joint use of equipment is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in significant agricultural machinery (such as a harvester or a dryer) and ensures proper use and maintenance of it. In such a case, the PO initially bears investment costs by purchasing the equipment (new or used) to produce the arable crops and/or manage the harvested crop. The PO afterwards bears other costs concerning the maintenance and ensuring proper use of the equipment (e.g. training). The initial investment and other costs in equipment entail significant costs if they concern significant volumes. In this context, the costs of using the equipment are significant if significant parts of the volumes commercialised by the PO are produced with the help of the jointly owned equipment. Therefore, in case the equipment is used to produce more than half of the volume of crops commercialised by the PO, the PO is likely to generate significant efficiencies. New equipment/machinery is often necessary to increase productivity as well as to ensure that the product meets market demands. However, some producers cannot afford new equipment due to the high investments needed, therefore the joint use of equipment can save costs for the members and increase their productivity. In such a situation, the PO would fulfil the conditions of the simplified method. 6. Joint use of storage is likely to generate significant efficiencies in certain situations. For example, this can be the case where the PO carries out the necessary investment in the storage facilities in order to meet health and industry requirements and ensures proper use and maintenance of it. The PO bears initial investment costs in storage by purchasing or planning and building the facilities. The PO bears other investment costs in storage by upgrading the facilities. Investments in storage entail significant costs if they concern significant volumes. The costs of using the storage are also significant if significant parts of the volumes of the PO are stored through these facilities. In case the storage activities cover more than half of the crops commercialised by the PO and are thus significant in terms of volumes, the PO is likely to generate significant efficiencies. The provision of storage facilities by the PO can lead to lower costs compared to the situation where members have to invest individually in storage. The possibility to store the product without immediately delivering it to a third party, possibly for a longer period and possibly in larger quantities, enables the members of the PO to sell their products when the price is more favourable and not necessarily at the time of the harvest when the supply is the highest. In such a situation, the PO would fulfil the conditions of the simplified method. v. Joint procurement of inputs 7. Joint procurement of inputs is likely to generate significant efficiencies in certain situations. For example, this can be the case if the procurement is done for significant volumes as then the PO can obtain significant discounts, better delivery terms and/or credit terms compared to what an individual producer would obtain. In addition to purchasing these inputs on its account, the PO may ensure proper storage and/or delivery of these products. When a PO procures for its members fertilisers, pesticides or energy (fuel, electricity), these inputs represent significant costs (52). If a PO carries out procurement of these inputs for a volume corresponding to what is needed to produce more than half of crops jointly commercialised, the PO is likely to generate significant efficiencies. In such a situation, the PO would fulfil the conditions of the simplified method. Procurement of other types of input, such as IT support, financial services, economic and technical advice, testing and harvesting planning, on its own does not normally represent significant costs for the PO. As a consequence it is not likely that the PO will generate significant efficiencies as required in order to benefit from the Derogation. vi. Combinations of activities 8. The combination of activities in the situation where none of the activities covers more than half of the arable crops commercialised by a PO is likely to generate significant efficiencies in certain situations. See below the box for Combination of activities for more details. Combinations of activities Examples of situations where combined activities listed in Articles 169, 170 and 171 of the CMO Regulation are likely to generate significant efficiencies in the context of the simplified method. The efficiency-enhancing activities described above are in many cases found to be creating significant efficiencies where they cover more than half of the volumes commercialised by the PO. Where a PO carries out two or more efficiency-enhancing activities each covering volumes which are smaller than half of the volumes commercialised by the PO, the sum and/or combination of the efficiencies created by the different activities may together be significant enough for the PO to fulfil the Significant Efficiency Test. It can be that different efficiency-enhancing activities cover the same volumes (i.e. activities overlap) or that they cover separate volumes. If an efficiency-enhancing activity covers a very low proportion (e.g. 10 % or 15 %) of the volumes commercialised by the PO, it is unlikely that it will contribute to creating significant efficiencies because on its own it creates limited efficiencies and it is unlikely that its combination with another activity will significantly increase the efficiencies of the activities of the PO. A PO is thus unlikely to create significant efficiencies by carrying out one additional efficiency-enhancing activity that covers a very low proportion of the volumes commercialised. In other words a PO is unlikely to fulfil the Significant Efficiency Test by carrying out one additional efficiency-enhancing activity that covers a very low proportion of the volumes commercialised. Also given that economies of scale are not linear, the efficiencies achieved through an activity with a given volume are larger than twice the efficiencies achieved with two activities covering half the volume. And in turn the efficiencies achieved with two activities covering half the volume are also larger than three times the efficiencies achieved with three activities covering one third of the volume. As a consequence a PO can fulfil the Significant Efficiency Test by combining efficiency-enhancing activities if the total volume covered by such a combination of activities (the sum of the volumes covered by the different activities) is higher than the volume for one activity alone and when this total volume increases each time an activity is added. As regards two efficiency-enhancing activities it is likely that the combination of the two activities will generate significant efficiencies if the sum of volumes covered by the two activities is higher than 70 % of the volumes commercialised by the PO. In such a case no activity covers a volume lower than 20 % (otherwise the PO fulfils the Significant Efficiency Test with the other activity assessed individually, i.e. without the necessity of a combination with another activity). If at least one activity covers a volume as large as 35 % then the sum and/or combination of the efficiencies created by the two activities is likely to be significant enough for the PO to fulfil the Significant Efficiency Test. As regards three efficiency-enhancing activities it is likely that the combination of the three activities will generate significant efficiencies if the sum of volumes covered by the three activities is higher than 100 % of the volumes commercialised by the PO. In such a case no activity covers a volume lower than 20 % (otherwise the PO fulfils the Significant Efficiency Test with one of the two other activities or with the two other activities together). There can be a number of combinations of three activities (for example two covering a volume of around 40 % each with a third activity covering a volume of around 20 % or three activities covering a volume of around 33 % each). The combination of the efficiencies created by the three activities is likely to be significant enough for the PO to fulfil the Significant Efficiency Test. Any activity that is on its own not sufficient to generate significant efficiencies (e.g. procurement of IT services, general promotion) is very unlikely to generate significant efficiencies when combined and it is thus very unlikely that it can contribute to creating significant efficiencies when combining activities. i. Combination of two activities with overlap of volumes For example this can be the case when the PO uses equipment for mixing cereals of different characteristics according to the requirements of customers and stores the cereals for that purpose. These two integrated activities allow the PO to satisfy the demands of customers requiring mixtures of specific characteristics (such as, for example, bakeries), which the individual farmers would not be either able to satisfy at all or they would not be able to satisfy them in required quality/volume/time/price. If these two activities of the PO, when considered together, cover more than 70 % of the volume of arable crops commercialised by the PO, they have the potential to lead to significant cost savings compared to the situation, in which the individual producers try to satisfy the demand for specific cereal mixtures and may even create the possibility for the PO to offer such mixes where members could not do it on their own. In such a situation, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. ii. Combination of two activities without overlap of volumes For example this can be the case where the PO procures from the market part of the animal feed needed for cattle raising by the members and the members of the PO use jointly acquired equipment for the production of another part of the animal feed needed for cattle raising by the members. If these two activities of the PO, when considered together, cover the feed required for more than 70 % of the volume of livestock commercialised by the PO, they have the potential to lead to significant cost savings compared to the situation in which the animal feed is procured individually from the market by livestock producers or produced on the machinery which they acquired individually. In such a situation, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method. iii. Combination of three activities with overlap of volumes The combination of activities in the situation where none of the activities covers more than half of the olive oil commercialised by a PO is likely to generate significant efficiencies in certain situations. For example this can be the case where the PO combines activities linked to the sale of bottled olive oil. If a PO carries out joint storage of olive oil, joint bottling and labelling and operates a joint distribution network, these three activities of the PO represent an integrated system for the production of bottled olive oil which entails significant investment costs. If the volume of olive oil going through this integrated system covers at least one third of the volume of the olive oil commercialised by the PO, these activities, when considered together, have the potential to lead to significant cost savings compared to the situation in which these activities are carried out by individual olive oil producers. In such a situation, the PO is likely to generate significant efficiencies and therefore would fulfil the conditions of the simplified method.