EN Official Journal of the European Union CE 78/188

(2004/C 78 E/0195)

WRITTEN QUESTION E-2921/03

by Glyn Ford (PSE) to the Commission

(2 October 2003)

Subject: Cotton subsidies

Could the Commission detail subsidies paid to cotton producers by country within the EU each year for the past five years and give the comparison between EU subsidies paid per tonne and those paid in the US?

Answer given by Mr Fischler on behalf of the Commission

(5 November 2003)

In line with a commitment made at Luxembourg on 26 June this year, the Commission on 23 September adopted a Communication on reform of the common market organisations for olive oil, tobacco and cotton. This is geared to the same purposes and adopts the same approach as this year's earlier common agricultural policy (CAP) reform package.

In support of this Communication a working document entitled ‘The cotton sector’ (available at europa.eu.int/comm/agriculture/markets/cotton) was drawn up by the Agriculture Directorate-General to provide a documentary basis for the proposal.

It gives the reader a picture of the Community cotton sector's place in the world market during the last few years. It also describes how the Community aid scheme has operated since it was set up when Greece joined the Community. Statistical information (areas, production, budget) is given for the scheme.

It should be remembered that the Community cotton sector aid is paid to the processor on the basis of the quantity of unginned cotton delivered by the grower, who must have received a minimum price per tonne of unginned cotton. There are no export support measures such as refunds.

The aid per tonne of unginned cotton paid to the processor is the difference between a guide price set by the Council and the world market price determined by the Commission from quotations on the international fibre market. If production exceeds reference levels a stabilising mechanism reduces the guide price and the minimum price by the same amount and so lowers the aid rate.

For the last five marketing years the aid per tonne of unginned cotton has been:

(EUR/tonne) Campaign Greece Spain 1998/1999 561 664 1999/2000 474 523 2000/2001 427 633 2001/2002 461 696 2002/2003 562 670

According to the International Cotton Advisory Committee American aid per pound of ginned cotton was:

(US cents/lb) Campaign United States Internal support 1998/1999 22 1999/2000 25 2000/2001 12 2001/2002 24

Under the new Farm Bill from 2002/03 an additional aid, the ‘counter-cyclical payment’, is to be granted when the grower's overall income (market price + normal subsidies) is less than a guide price of US 72,4 cents/lb.

Other forms of American export aid for cotton should also be mentioned, notably the subsidised export credit programmes. There is no comparable Community support.

Other facts to be borne in mind are that there is free access to the European market (no customs duty or import quotas), that the Union is the leading world importer of ginned cotton and that European production at (about 2,5 % of the world total) is of marginal importance compared with American production (about 20 %). This situation is reflected in the overall budgets:

Campaign European Union (EUR million) United States (1) (USD million) 1998/1999 903 1 132 1999/2000 855 1 882 2000/2001 733 3 809 2001/2002 804 1 868 2002/2003 871 3 307

(1) USDA (United States Department of Agriculture).