WRITTEN QUESTION E-1845/97 by Daniela Raschhofer (NI) to the Commission (30 May 1997)

Subject: Commission's economy measures

Have the Member States' contributions been reduced as a result of the Commission's economy measures?

Will the slight increase in the agricultural budget mean further losses of income for farmers in Austria? Are there any forecasts or studies on this? If so, what are their conclusions?

What areas of domestic policies will have to manage with reduced funding in 1998?

1. What were the criteria used to decide which areas would have reduced funding?

2. Why were the PHARE, MEDA, Fisheries and Humanitarian Aid projects given priority over other External Actions?

3. What does the financial compensation in the cereals sector, as confirmed by Commissioner Fischler, consist of?

4. What is the justification for cutting the cereals premiums?

Joint answer to Written Questions E-1845/97 and E-1933/97 given by Mr Fischler on behalf of the Commission (15 July 1997)

The budgetary authority had decided in 1996 to maintain the 1997 appropriations for the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section, at their 1996 level, thus committing itself to adopting, during performance of the budget, a supplementary and amending budget if the budget provision proved likely to be exceeded during the course of the year.

It should be noted that the EAGGF Guarantee Section appropriations are estimated appropriations based on economic forecasts made up to 18 months before performance of the corresponding expenditure. The monitoring of agricultural expenditure for the 1997 financial year (the early warning system) indicates that from June on there will be an under-utilisation of about ECU 1.3 billion in relation to the 1997 budget appropriations, thus showing that there is no risk of exceeding the initial appropriations. This under-utilisation is particularly due to the good performance of certain markets (cereals, sugar, sheepmeat), a slowing-down in expenditure in the beef and veal sector and the imposition of the additional milk levy on producers who exceeded their allotted quota.

Agricultural producers did not therefore suffer any loss of income owing to the ECU 1 billion reduction in appropriations by the budgetary authority.

On the contrary, that reduction made it possible to reduce the need to use own resources by an equivalent amount and thus helped to meet the objective of limiting the budget deficit to 3% in Member States in 1997, since they did not have to mobilise unnecessarily one billion ecu that year.

For the 1998 financial year, the Commission has presented to the budgetary authority a preliminary draft budget which, with regard to the Guarantee Section, respects the objective of 0.50% growth in relation to the 1997 budget appropriations, while covering, as in the past, the entire budgetary requirements of the agricultural sector.

The Commission, in its proposal for agricultural product prices for the 1997/1998 marketing year, presented to the Council a proposal to reduce the compensatory payments in the arable crops sector from the 1997/98 marketing year on by ECU 1 353 million overall, representing an average drop of 6%.

This proposal, which the preliminary draft budget had already taken into account and which had already been forwarded to the Council and to Parliament in July 1996 before being included in the prices package, was brought forward in order to finance additional expenditure in the beef and veal sector following the BSE crisis, within the difficult budgetary framework anticipated for 1998.

However, the proposal also fits into the general economic context of the sector. The Commission notes that the compensatory payments had been adopted in 1992, as compensation for a drop in cereal prices on the assumption that they would mirror the planned decrease in institutional prices. In fact, the decrease was only partial, because the cereal sector had been experiencing high prices, on both the world and internal markets, for several years. As a result, the compensation to producers was for only a partial decrease in prices.

The Commission notes its intention, as described in its 1997 programme, to present, after the conclusions of the intergovernmental conference, a communication on the financial framework of the Community from the year 2000, accompanied by a very thorough reflection on the future of Community policies, more particularly the common agricultural policy and structural policies.

It is for this purpose that the Commission published on 22 April 1997 a working paper on the long-term prospects for the cereal, milk and beef and veal markets.

It should be stressed that the proposed reduction in no way foreshadows a possible reform of the arable crops sector - its aim is to correct the obvious over-compensation in the sector. With regard to the Phare and Meda programmes, the budgetary authority has respected the commitments entered into with regard to the countries concerned at the Cannes European Council in June 1995.