WRITTEN QUESTION E-0899/98

by Daniela Raschhofer (NI) to the Commission

(26 March 1998)

Subject: Farm aid: green currencies

With the introduction of the euro, the green exchange rate currently used to pay agricultural aid in Austrian schillings will disappear. This will lead to a loss of aid in real terms for Austrian farmers.

1. Will there be accompanying measures to cover these losses?

2. If so, what form will these accompanying measures take in practice to compensate for the loss of aid?

3. Will the accompanying measures compensate for the losses in full? If not, why not?

4. How are the green exchange rates fixed?

5. What mechanisms are they influenced by?

Answer given by Mr Fischler on behalf of the Commission

(21 April 1998)

In its communication of 5 November 1997, "The impact of the changeover to the euro on Community policies, institutions and legislation"(1), the Commission announced the elimination of the differences between the green rates and the fixed and irrevocable conversion rates, stating, with particular reference to the Member States participating in the single currency, that "Commission proposals should be based on relatively reliable estimates of the aggregate gaps to be eliminated and thus notably take account of the list of participating Member States, as well as of the evolution of markets in the run-up towards monetary union. Specific proposals will be tabled towards the end of the first half of 1998".

In the particular case of Austria, direct aid to farmers is converted on the basis of a green rate "frozen" at ECU 1 = ATS 13 7190, and the green rate applicable to other aid and to farm prices was, in March 1998, ECU 1 = ATS 13 9485. Naturally, the fixed conversion rate of the schilling and the euro has not yet been determined, but, taking the representative market of the ECU against the schilling on 20 March of 13.9312 as a theoretical example, it appears that replacement of the green rates by the representative market rate would increase direct aid by 1.5 % and decrease other aid by only 0.1 %. These figures give no grounds for presuming a fall in incomes. This calculation is intended simply to provide an explanation, but it draws attention to the need mentioned above for relatively reliable estimates of the gaps to be eliminated.

In view of the above, the five points raised by the Honourable Member may be answered as follows:

1. Since the introduction of the euro could result in reductions in aid expressed in national currencies, which can be assessed only for each Member State separately as the parities for each currency change, the Commission will propose appropriate transitional measures towards the end of the first half of 1998.

2. These transitional measures will be defined in the light of market movements during the period preceding monetary union.

3. The question of whether compensation should be total or partial in character depends on the broader problem of how to calculate income lost. This method of calculation must be as close as possible to reality and avoid over-compensation.

4. On 1 January 1999 the national currencies of the participating Member States will become non-decimal subdivisions of the euro, so there will be no scope for specific conversion rates. It will be possible to retain a system of specific rates for the non-participating Member States.

5. From 1 January 1999 there will no longer be mechanisms for varying the green rates for the participating Member States. Mechanisms for the other Member States will be adapted, with the aim of simplification.

(1) COM(97) 560 final.