WRITTEN QUESTION E-1934/97 by Jan Mulder (ELDR) to the Commission (4 June 1997)

Subject: Export levy on cereals

According to recent press reports, the Commission is thinking of reintroducing a levy on exports of cereals.

1. Is there any truth in those reports? If so, what exactly were the Commission's motives for taking such action at this early stage, given that, at about the same time, it published forecasts of big cereals surpluses for the next few years?

2. What does the Commission think the springing of artificial price hikes on other members of the WTO will do for its reputation as a reliable trading partner within that organization?

3. Is it, in this connection, still planning to maintain a set-aside ratio of 17.5%?

4. How does this decision, to deprive European farmers of higher prices for their cereals, square with its proposal for a reduction in area-based premiums?

Answer given by Mr Fischler on behalf of the Commission (22 July 1997)

1. With effect from 15 May 1997 the Commission by Regulation (EC) No 865/97 ((OJ L 123, 15.5.1997. )) imposed an export tax on common wheat (ECU 15/t), common wheat flour (ECU 20/t), durum wheat (ECU 10/t) and durum wheat meal (ECU 15/t). With effect from 1 June Regulation (EC) No 978/97 ((OJ L 141, 31.5.1997. )) reduced the tax on common wheat to ECU 5/t and on flour to ECU 7/t.

Price trends on the world market and on the internal market for common wheat allowed all taxes to be discontinued from 13 June 1997. They were thus in force for one month only.

Article 16 of Council Regulation (EC) No 1766/92 on the common organization of the market in cereals ((OJ L 181, 1.7.1992. )) provides that if quotations or prices for certain products on the world market reach the level of Community prices and this situation is likely to continue and worsen, thereby disturbing or threatening to disturb the Community market, appropriate action may be taken. Commission Regulation (EC) No 1501/95 on the granting of export refunds on cereals and the measures to be taken in the event of disturbance on the market for cereals ((OJ L 147, 30.6.1995. )) states that when the conditions in question apply an export tax may be imposed.

What in fact happened was that the Commission in exercising its management responsibilities for the cereal market found on examining the situation in the Community and worldwide that at that juncture it called for imposition of an export tax on common and durum wheat and products of their first processing. Since such a tax is intended to reflect market conditions it was first modified and then abolished as these altered.

At the end of April and beginning of May there was cause for concern over the Community cereals position owing to insufficient rain in some of its most productive regions. At the same time unexpectedly cold weather in the United States had affected common wheats in particular. The lack of reliable estimates of the damage then provoked an untimely rise in world market wheat prices. No direct link can be made between temporary introduction of an export tax as a matter of day-to-day management and long-term analytical forecasts based on production and consumption trends. The general trend is in fact one of falling wheat prices on both the world market, particularly in the United States, and the Community market. The Commission will continue to monitor the market trend closely and objectively.

2. Where the WTO is concerned the Community is a reliable export partner. In 1996/97 it issued export licences for some 28 to 29 million tonnes, all cereals together in both grain and processed form. When the 1996/97 marketing year ended with low intervention stocks of some 2.4 million tonnes of cereals, including only 400 000 tonnes of wheat, the further exports would undoubtedly have disturbed the Community market and clashed with the 1992 reform's practical aim of maximising the Community's internal consumption of its own production. The export tax is not a prohibition on exports. It is a price correction mechanism and was applied as part of the Community market organization and in conformity with WTO obligations. The Commission was not responsible for the 'springing of artificial price hikes'. It was forced to react to rising in prices on the American exchanges.

3. and 4. The compulsory set-aside rate of 17.5% is the base rate set in the basic Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops ((OJ L 131, 1.7.1992. )).

The Commission undertook to submit a proposal altering this base rate for the 1998/99 marketing year and the Council has indicated that on its reading of the present situation the rate should be held to 5%.

Generally speaking, market prices for cereals have been higher than anticipated when the common agricultural policy reform decision was taken. Compensatory payments for cereals have not been adjusted in line with that trend. Their level will be on the agenda when the future organization of the arable crop sector is discussed.