PROPOSAL FOR A COUNCIL REGULATION ( EEC ) MODIFYING COUNCIL REGULATION ( EEC ) NO 1316/86 OF 22 APRIL 1986 ADOPTING THE APPLICATION IN PORTUGAL OF REGULATION ( EEC ) NO 797/85 ON IMPROVING THE EFFICIENCY OF AGRICULTURAL STRUCTURES
Date: 1989-07-12
Institutions: European Commission
Subjects: Portugal, investment aid, policy on agricultural structures

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0MC89)  328 final 

Brussels,  12  July 1989 

Proposal  for a 

£2J2!£ik_Bi5yk£II2!L£§Kl 

modifying  Council Regulation  (EEC) No 1316/86 of 22 April 1986 

adopting  the application  in Portugal of Regulation  (EEC) No 797/85 on 

improving  the efficiency of agricultural  structures 

(presented by the Commission) 

EXPLANATORY  NOTE 

1. Background 

&^uK y 

At the time of entry into the Community of Portugal in 1986 a number of 
specific agreements were made and special regulations were adopted 
concerning the agricultural structure.  The reason for this was the poor 
situation of agricultural structures in Portugal which meant that it was 
not possible to apply fully all the existing EC measures in the field of 
agricultural structures.  One of the most important of these measures was 
Regulation  (EEC) No 797/85 on improving the efficiency of agricultural 
structures. 

On 22 April 1986 the Council therefore adopted Regulation (EEC) No 1316/86 
concerning certain specific conditions for the application in Portugal of 
Regulation (EEC) No 797/85.  Regulation (EEC) No 1316/86 had a term of 
three years, which ends on 1 September 1989. 

Now the question arises as to what extent there is still a need for the 
derogations set out in the Regulation.  On 16 March 1989 the Portuguese 
government made a request to the Commission to extend Regulation (EEC) 
No 1316/86 up to and including 31 December 1991.  Article 6 of Regulation 
(EEC) No 1316/86 foresees a decision by the Council on a proposal of the 
Commission and based on a report on the evolution of the economic and 
structural situation in Portugal. 

2. Summary of the measures in Regulation (EEC) No 1316/86 

In this Regulation provision is made for four different measures. 

(a) The reference income 

In fixing the reference income as laid down in Article 2, paragraph 3 
of Regulation (EEC) No 797/85, Portugal may apply a corrective factor 
not exceeding a maximum of 1.7 to the average gross wage of 
non-agricultural workers in Portugal as a whole.  No such corrective 
factors are allowed for other Member States. 

(b) Group operated holdings 

Where an improvement plan relates to group operated holdings 
(Article 6, paragraphs 1 to 4 of Regulation (EEC) No 797/85), Portugal 
may grant aids provided at least two-thirds of the members of the group 
practise farming as their main occupation.  In other Member States all 
the members of a group have to meet the main occupation requirements. 

(c) Pig farming in Madeira 

Portugal may grant aid for investment in pig farming in Madeira if the 
condition relating to fodder production (Article 3, paragraph 4 of 
Regulation (EEC) No 797/85) is not met.  That is to say, that on 
completion of the farm improvement plan at least 35% of the quantity of 
feed consumed by the pigs can be produced on the holding. 

(d) Minimum hectarage for compensatory allowances 

In mainland Portugal, compensatory allowances may be granted to farmers 
with at least one hectare of usable agricultural land.  In the Azores 
and Madeira the minimum is half a hectare. 

z 

- 2 -

In the rest of the Community  the minimum amount of usable agricultural 
area for holding is at least three hectares.  However, in the 
Messogiorno, including the islands, in the French overseas departments 
and in the Greek regions, the minimum usable agricultural area per 
holding is two hectares. 

3. Results of the application of Regulation  (EEC) No 1316/86 in Portugal 

Information was requested from the Portuguese government on 29 March 1989 
about the results of the application of the Regulation.  This information 
was supplied on 4 April 1989 and may be summarized  as follows : 

(a) The reference income 

The reference income for 1988 in Portugal was 6608 ECU's; for other 
Member States the figures ranged between 10.270 ECU's for Spain to 
21.702 ECU*s for Denmark.  Without the coefficient of 1.7 the reference 
income in Portugal should have been reduced to 3887 ECU. 
In 1988 2447 farm improvement plans (regiem Al) were approved and 
1914 plans for young farmers (regiem A2).  In the first semester of 
1989 the equivalent figures were 477 and 392.  By leaving out the 
factor of 1.7, a great number of farmers would not have been able to 
fulfill the conditions for investment aid any more.  The percentage of 
applications that could not be met differs from 5% in Beira Litoral to 
40% in the Algarve, Madeira, the Azores and Tras os Montes (see 
Table I). 

Under the influence of investments in agriculture a positive 
development can be observed in both gross production, gross value 
added, net value added and the ratio between the set value added and 
the man work unit.  It appears from the statistical data that on farms 
where investments are carried out both the absolute values and the rise 
of the index of these four indicators is higher than on farms where 
this is not the case (see Table II). 

(b) Group-operated holdings 

In 1988, 14 projects were approved concerning farm improvement plans 
under Article 6, paragraphs 1 to 5 of Regulation  (EEC) No 797/85.  In 
all of these cases use was made of the specific conditions foreseen for 
this kind of project in Article 2 of Regulation  (EEC) No 1316/86. 

(c) Pig farming in Madeira 

In 1988 and the first semester of 1989 in total 18 farm improvement 
plans in the category Al and A2 were approved in Madeira.  Of these 
18 plans none were in the pig sector.  This means that no use has been 
made of the exemption for the pig sector concerning the 35% fodder 
clause as laid down in Article 3 of Regulation (EEC) No 1316/86. 

(d) Minimum hectarage for compensatory allowances 

For the years 1987 and 1988 figures are available on the distribution 
of exemptions concerning the minimum hectarage of farms.  These can 
benefit from compensatory allowances under Articles 13 up to and 
including Article 17 of Regulation  (EEC) No 797/85. 

^ 

- 3 -

: Region 

Mainland 

Azores 

Madeira 

: Year 

Between 1 & 2 ha 

% 

0.5 - 2 ha 

% 

0.5 - 2 ha 

%  : 

: 1987 No. 

39.325 

Amount 
:(1000 ESC) 

1.010.000 

41 

15 

119 

3 

1970 

0.4 

28 

292 

: 1988 No. 

55.000 

42 

116 

2.1 

398 

Amount 
:(1000 ESC) 

770.000 

. 14 

2750 

0.4 

6066 

72 : 

25 : 

86 : 

65 : 

This table shows that both on the mainland and on Madeira the exemption 
concerning the minimum hectarage is used on a large scale.  The number 
of beneficiaries has even risen in 1988.  It is evident that cancelling 
these exemptions will have important consequences.  For the mainland 
this would mean that 55.000 farmers or 42% of the number of 
beneficiaries could not apply for a compensatory allowance.  The 
regions who would be hurt most are Entre Duoro e Minho (67%) and Beira 
Litoral  (50%).  Concerning the isles, it is evident that Madeira would 
be severely affected. 

4. Evaluation 

The evaluation of the results of Regulation (EEC) No 1316/86 must be 
considered in the context of two developments. 

Firstly there are the changes in the common agricultural policy, as started 
a few years ago.  Secondly there is the declaration of the Heads of 
governments at the Brussels Summit concerning the situation of agriculture 
in Portugal and the acknowledgment that it is necessary to adopt specific 
measures. 

Concerning the factor 1.7 in relation to the calculating of the reference 
income it is clear that leaving out this factor would have lead to an 
income for 1988 of 3887 ECU'S which is very low in relation to the rest of 
the Member States and hardly defensible.  As concerns the incomes in the 
non-agricultural sector it appears that the relationship in the development 
between Portugal and the other Member States has stayed at nearly the same 
level as in 1986.  In other words, the existing gap between Portugal and 
the other Member States has not been reduced.  Lowering the factor 1.7 
would mean that the position of Portuguese agriculture would be influenced 
in a negative way. 

The exemption for group-operated holdings has been used for all such 
projects and therefore might be considered as successful. 

-  4 -

The exemption  concerning  the 35% fodder clause  for Madeira  seems  to be 
superfluous, at first  sight, because no farm improvement  plans  in the pig 
sector have been approved.  However, despite  the few plans  that have been 
approved  for Madeira, the possibility  of  introducing  plans  in the pig 
sector remains possible.  In the light of the structural  situation of 
Madeira, and that  in the pig  sector, an extension of this measure  has to be 
considered. 

The figures resulting  from the exemptions  concerning  the minimum  hectarage 
of the farms, which can benefit  from compensatory  allowances  show that the 
structural  situation has not  improved  in the less-favoured  areas, with the 
slight exception of the Azores.  Not continuing with the exemptions  would 
therefore  lead  to considerable  negative  effects  for the area's  concerned. 

5. Conclusion 

Portugal has only recently  joined  the Community  and therefore was only 
recently  able to start  applying Regulation  (EEC) No  797/85  in any real 
way.  At the time of entry  into the Comunity the relative position of 
Portuguese  agriculture was not  favourable.  It has been proven that 
structural  improvement  takes a certain period  of time.  In the present  case 
it appears  that the desired  relative  improvement  of agricultural  structures 
of Portugal has not been achieved during  the period  foreseen  in Regulation 
(EEC) No 1316/86.  A continuation of this Regulation  for a limited  period 
of time therefore seems  reasonable. 

This  period  of time should  however be shorter  than the one provided  for in 
the existing  regulation  in order  to  indicate  clearly  the temporary  nature 
of the measure.  An extension of the existing Regulation  (EEC) No 1316/86 
up to and  including 31 December  1991 fulfills  this condition  and  is also in 
line with the wishes  of the Portuguese  government. 

5 

- 5 -

ANNEX 

Table I : Reference income Article 1 of Regulation 1316/86 

Region 

:Percentage of rejected projects (regiems Al & A2) : 

: 

: Reference income without factor 1.7 

: Ent. Dour. MINHO: 

: 

: Tras os Mont. 

: Beira Litoral 

: Beira Interior 

: Ribatejo Oeste 

: Alentejo 

: Algarve 

: Madeira 

: Azores 

: 

: 

: 

: 

22.5 

40.0 

5.0 

33.3 

30.0 

30.0 

40.0 

40.0 

40.0 

: 

: 

: 

: 

G 

- 6 -

Table II : Results of the enterprises to the period 1985-1987 
(Average value per enterprise) 

: Enterprises without investments : 
: Gross Production 

index 

index 
: Gross Value Added 
: 
: Net Value Added 
: 
: Net Value Added / MWU 
: 

index 

index 

: Enterprises with investments : 
: Gross Production 

index 
: Gross Value Added 
: 
: Net Value Added 
: 
: Net Value Added / MWU 

index 

index 

index 

1985 

1986 

1987 

2516 
(100) 
1325 
(100) 
1197 
(100) 
532 
(100) 

4099 
(100) 
2685 
(100) 
2364 
(100) 
651 
(100) 

2567 
(102) 
1374 
(103) 
1230 
(103) 
566 
(106) 

4785 
(117) 
3024 
(113) 
2670 
(113) 
738 
(113) 

3034 
(121) 
1712 
(129) 
1568 
(131) 
709 
(133)  : 

5505 
(134) 
: 
3592 
(134)  : 
3112 
(132)  : 
889 
(137)  : 

1-

Council  Regulation  (EEC) No 

/89 

of 

1989 

modifying  Council  Regulation  (EEC) No 1316/86 of 22 April  1986 

adapting  the application  in Portugal  of Regulation  (EEC) No 797/85 on 

improving  the efficiency  of agricultural  structures 

THE COUNCIL  OF  THE EUROPEAN  COMMUNITIES, 

Having  regard  to the Treaty establishing  the European  Economic  Community, 

Having  regard  to the Act of Accession of Spain and Portugal, 

Having  regard  to Regulation  (EEC) No 1316/86  (1) and  in particular  to 

Article 6, second  sub-paragraph, 

Having  regard  to the proposal of the  Commission, 

Whereas the specific  conditions of agriculture  in Portugal  are 

characterised  by a particularly  poor  structure and  some of the 

conditions  laid down  in Regulation  (EEC) No 797/85  (2) as amended 

by Regulation  (EEC) No 591/89  (3) on  improving  the efficiency  of 

agricultural  structures are therefore not  in keeping with this  specific 

condition  and the specific  requirements of Portuguese  agriculture; 

(1) OJ No L 115, 03.05.1986, p.17 

(2) OJ No L  93, 30.03.1985, p. 1 

(3) OJ No L  65, 09.03.1989, p. 1 

I 

Whereas, Regulation (EEC) No 1316/86 made provision for a number of 

adjustments to, or derogations from, Regulation (EEC) No 797/85 for a period 

of three years to enable it to be implemented  in these specific conditions of 

Portuguese agriculture, in particular as regards eligibility under the various 

schemes and the improvements to be achieved by Portuguese agricultural 

holdings; 

Whereas these adjustments or derogations from the Regulation are due to expire 

on 1 September 1989; 

Whereas, the relative position of Portuguese agricultural structures has not 

changed sufficiently during the time of application of Regulation (EEC) 

No 797/85; 

Whereas an estension of the adjustments and derogation of Regulation (EEC) 

No 1316/86 in order to improve the relative position of Portuguese 

agricultural structures therefore seems justifiable, 

HAS ADOPTED THIS REGULATION : 

Article 1 

In Article 6 of Regulation (EEC) No 1316/86 of 22 April 1986 adapting the 

application in Portugal of Regulation (EEC) No 797/85 on improving the 

efficiency of agricultural structures the words **three years** are replaced by 

"six years**. 

v 

Article 2 

This Regulation shall enter into force on the day of its publication in the 

Official Journal of the European Communities. 

FICHE FINANCIERE  concernant  :  une  proposition  de  m o d i f i c a t i on 

du  règlement  du  Conseil  (CEE)  n*  1316/86  a r r ê t a nt  certaines  conditions  spécifiques 
pour 

(CEE)  n-  797/85  au  P o r t u g a l. 

l ' a p p l i c a t i on  du  règlement 

1.  ligne  budgétaire  :  I I IB 

poste  :  301 

intitulé  :  P o l i t i q u es  s t r u c t u r e l l e s. 

2.  Base  juridique  :  Acte  d'adhésion  de  l'Espagne  et  du  P o r t u g a l. 

3.  Classification  : 

I H f H M I f U i J O é p e n se  non obligatoire 

K.  Objectifs  de la  «esure  et  description  de l'action  :  Prorogation  de  t r o is  ans  du  R.  1316/86. 

Ce  règlement,  qui  expire 
R.  797/85  concernant 
d ' o c t r oi  des  indemnités  compensatoires,  pour  t e n ir  compte  des  conditions  s p é c i 
fiques  de  l ' a g r i c u l t u re  p o r t u g a i s e. 

l ' é l i g i b i l i té  aux  régimes  d ' a i de  aux  investissements  et 

le  1er  septembre  1989,  déroge  à  certaines  d i s p o s i t i o ns  du 

5.  Mode de calcul 
5.1  Nature  de la  dépense  :  remboursement  d'une  p a r t ie  des  dépenses  nationales  effectuées 

au  cours  de  l ' e x e r c i ce  précédent. 

5.2  Part  du finançaient  cceminautaire  :  Hypothèse  retenue  :  50  X. 

5.3  Calcul  :  Depuis  1986, 

le  R.  797/85  a  été  appliqué  au  Portugal  sur  base  des  dispo 

s i t i o ns  spécifiques  du  R.  1 3 1 6 / 8 6.  Comme  la  s i t u a t i on  de  l ' a g r i c u l t u re  p o r t u 
gaise  n'évolue  que  lentement, 
perspectives  f i n a n c i è r e s,  que  le  R.  1316/86  c o n t i n u e r a it  de  s ' a p p l i q u e r. 
coût  t o t al  pour 
spécifiques  du  R.  1316/86,  f i g u r e nt  à  la  colonne  ( 3)  ci-dessous.  Ces  montants 
: 
ont  été  décomposés  a f in  de  d i s t i n g u er 

le  FEOGA  de  l ' a p p l i c a t i on  du  R.  7 9 7 / 8 5,  avec 

Le 
les  d i s p o s i t i o ns 

l'hypothèse  a  été  f a i t e,  pour 

l ' é t a b l i s s e m e nt  des 

( *) 

Incidence  financière  sur  les  crédits  opérationnels 

6. 
6.1  Echéancier  des crédits  d'engagement.,^ dfcpaleaent  (Mlo ECU) 

Exercice 

1990 
1991 
1992 
1993 

Total 
T o t al 

R.797/85 
sans  adaptation 

Defenses  supple-
mentaires  resultant 
du  R.  1316/86 

• 

( 1) 
36,5 
36,5 
41.4 
41,4 
4 6 ,2 
4 6 ,2 
50.5 
50,5 

174,6 
138,1 

(2) 

1 5 ,0 
1 5 ,0 
20,0 
20,0 
23,0 
23,0 
2 6 ,0 
2 6 ,0 

8 4 ,0 
6 9 ,0 

incidence. 

Total 

( 3 ) - ( 1 ) + ( 2) 

51,5 
61,4 
69,2 
76,5 

258,6 
207,1 

'91-93 
6.2  Financée en t  pendant  l'exercice  en cours  :  sans 

Dans  I'APB  1990, 

le  montant  de  51,5  mio  d'écus  a  été  r e t e n u. 

7.  Obstr.-'. ..  :. 

(*) - Les montants  résultant  de l'application  du R. 797/85  sans adaptation aux con 

ditions  spécifiques  portugaises par le R. 1316/86  (colonne 1) 

-  les montants  résultant  du R. 1316/86 qui assure une plus  large  application du 

R. 797/85  (colonne 2 ). 

ÂO 

Commission of the  European Communities 

COM(89)  328  final 

Proposal for a 

COUNCIL  REGULATION (EEC) 

modifying Council Regulation (EEC) No  1316/86 of 22 April  1986 adopting 
the  application  in  Portugal  of  Regulation  (EEC) No 797/85  on  improving 
the efficiency  of  agricultural  structures 

(submitted to the Council by the  Commission) 

12.7.1989 

Office for  Official  Publications of the  European Communities 
L - 2985  Luxembourg 

Series:  DOCUMENTS 

1989 -  10 pp. — Format:  21.0 x 29.7 cm 

EN 

ISSN  0254-1475 

ISBN  92-77-51973-8 

Catalogue number:  CB-CO-89-307-EN-C 

COM(89)  328  final 

ISSN 0254-1475 

DOCUMENTS 

Proposal for  a 

COUNCIL  REGULATION  (EEC) 

modifying  Council  Regulation  (EEC) No  1316/86 
of  22 April  1986 adopting the  application  in 
Portugal  of  Regulation  (EEC) No 797/85  on 
improving the  efficiency  of  agricultural 
structures 

(submitted to the  Council  by the  Commission) 

03 

Catalogue number:  CB-CO-89-307-EN-C 

ISBN  92-77-51973-8 

€ 

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

12.7.1989