WRITTEN QUESTION E-1753/97 by José Valverde López (PPE) to the Commission (27 May 1997)

Subject: Commission suspension of EAGGF payments to Italy, Spain and Greece

The Commission has suspended payment of CAP management to Spain, Italy and Greece as a result of non-payment of fines owing by producers who exceeded milk quotas during the 1995-1996 farming year.

In the case of Spain CAP funds total 3.5 billion pesetas per month.

What is the legtal basis on which the Commission took this decision? Does the Commission think that it is reasonable to penalize farmers who do meet their obligations because of the supposed failure of others to do so?

Answer given by Mr Fischler on behalf of the Commission (18 June 1997)

To curb milk production and prevent rapid erosion of producers' income owing to the fall in prices that would have been the inevitable consequence of imbalance between increasing production and more or less static and only slightly elastic demand, the Council in 1984 adopted rules involving allocation of quotas to producers. The basic provisions were added as Article 5c to Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the market in milk and milk products ((OJ L 148, 28.6.1968. )), as last amended by Regulation (EC) No 1538/95 ((OJ L 148, 30.6.1995. )).

Penalties are an integral part of these rules. An additional levy of 115% of the milk target price is intended to dissuade each producer from exceeding his milk quota for the year (Council Regulation (EEC) No 3950/92 ((OJ L 405, 31.12. 1992. )) establishing an additional levy in the milk and milk products sector, as last amended by Regulation (EEC) No 1552/952.

By not collecting the entire amount of levy due for the 1995/96 milk year certain Member States failed to comply with Article 5(2) of Commission Regulation (EEC) No 536/93 ((OJ L 57, 10.3.1993. )) of 9 March 1993 setting detailed rules of application, last amended by Regulation (EC) No 470/94 ((OJ L 59, 3.3.1994. )). The regulatory date for payment of the amounts inquestion was 31 August 1996 but in view of various administrative difficulties in these Member States the Commission granted an extension to 31 January 1997.

By that date Greece, Spain and Italy had still not credited the total amounts due and the Commission was consequently obliged under Article 4(1) of Commission Regulation (EC) No 296/96 ((OJ L 39, 17.2.1996. ))to reduce by an equivalent amount the monthly advances against booking of expenditure by the Member States to the Guarantee Section of the European Agricultural Guidance and Guarantee Fund.

In order however to avoid a substantial impact on the cash position of Spain and Italy, given the amounts in question, the Commission made the advance reductions in two (Spain) and three (Italy) instalments, so avoiding any penalization of farmers who had met their obligations.

The Member States in question were warned of the reductions and had the opportunity to express their point of view.

The Commission would draw the Honourable Member's attention to the importance of respect for final payment dates by national administrations. These are set both to ensure equality of treatment of interested parties in all Member States and to prevent payment delays from adversely affecting the anticipated economic impact of the

provisions in question. Moreover freedom of payment to suit the administrative convenience of paying agencies would clash with the rules of budgetary discipline set by the Council for agricultural expenditure (Council Decision 94/729/EC of 31 October 1994 on budgetary discipline ((OJ L 293, 12.11. 1994. ))).