Proposal for a COUNCIL REGULATION ( EEC ) fixing the premiums for leaf tobacco by group of tobacco varieties and the processing quotas allocated by group of varieties and by Member State
Date: 1991-10-24
Institutions: European Commission
Subjects: guarantee threshold, tobacco

CŒvlvlISSION  OF  THE  EUROPEAN  COMvïUNITIES 

C0M(91) 339 final 

Brussels, 24 October 1991 

Proposal  for a 

COUNCIL  REGULATION (EEC) 

on the common  organization of the market 

in raw tobacco 

Proposal  for a 

COUNCIL  REGULATION (EEC) 

fixing the premiums  for leaf  tobacco by group of  tobacco 

varieties and the processing  quotas  allocated  by group 

of  varieties and by Member  State 

(presented  by the Commission) 

- 2 -

EXPLANATORY MEMORANDUM 

REFORM OF THE TOBACCO MARKET  ORGANISATION 

Some 200,000 holdings with  an average production  area of  1 hectare each  are 

producing  annually  around  400,000  tonnes of  leaf  tobacco  in the Community. 

Production  takes  place mainly  in  Italy  (49%),  Greece  (31%) and  to a  lesser 

extent  in Spain  (10%),  France  (7%),  Germany, Portugal  and Belgium (3%). 

Overall  consumption  in  the  Community  stands  at  600,000  tonnes  of  baled 

tobacco, of  which  72%  is  imported.  Out  of  an  annual  350,000  tonnes  baled 

tobacco  production,  165,000  tonnes  are  consumed  in  the  Community  and 

185,000 tonnes 53% or  are exported. 

Support  for  the  tobacco  sector  is  not  in  conflict  with  the  Commission's 

policy,  which  aims  to  combat  smoking  for  public  health  reasons.  Ending 

tobacco  production  would  not  necessarily  bring  about  a  reduction  in 

cigarette  consumption.  In  that  event,  the  manufacturers  would  simply 

obtain supplies  from non-member  countries. 

As  long  as  demand  for  tobacco  exists  it  is  reasonable  that  the  product 

should  be supplied  and supported  at producer  level  in the Community.  Apart 

from  the  market  aspect,  the  socio-economic  position  of  tobacco  producers 

who  are  located  in  the  least  developed  parts  of  the  Community  and  often 

have  few economic  alternatives,  requires  that  worthwhile  support  continues 

to be available.  On  the other  hand  the emphasis  in the support  system must 

be on  encouraging  varieties  usually of  low yield, that  can  find  a place  in 

the market. 

In  the  proposals  for  prices  and  related  measures  (1991/92)  (C0M(91)  72 

final),  the  Commission  announced  a  change  in  the  basic  tobacco  market 

mechanism  to permit  its  implementation  for  the  1992 harvest. The Commission 

is  presenting  this  proposal  in  advance  to  allow  economic  operators  to 

adjust  to the new  rules of  the market organisation. 

-  3 -

The  tobacco  sector  presents  great  technical  complexity.  To  take  this 

situation  into  account,  the  Commission  staff  asked  a  group  of  external 

experts  to  prepare  a  report  analysing  the  functioning  of  the  market 

organization  and  presenting  possible  improvements.  This  report  has  been 

very  valuable  to  the  Commission  staff  in  preparing  this  reform.  In 

addition  the  background  of  a general  reform  of  the CAP  and  of multilateral 

négociations has been  taken  into consideration. 

The  cost  of  the  market  organization  for  tobacco  rose  by  27%  from  1988  to 

1990,  despite  the  introduction  of  a  stabiliser.  This  increase  is  largely 

due  to  an  expansion  in  the  production  of  low-value  varieties  for  which 

there  is no  outlet  on  the  Community  market  and  which  are  exported  to  the 

world  market  at  prices  which  are  below  the  premiums  and  refunds  paid  on 

them  -  in effect  at  negative  prices.  The  present  system  does  not  permit 

these  problems  to  be  avoided  mainly  because  it  is  based  on  a  series  of 

maximum  guaranteed  quantities, each  being  subject  to a butoir  of  15% and of 

premiums  linked  to  34 varieties, many  of  which  are  indistinguishable  after 

the  tobacco  has been  processed.  This allows producers  to claim  the  highest 

available  premium  and  to minimise  the  effectiveness  of  the  MGQ.  (For  one 

variety,  production  exceeded  the  MGQ  by  as  much  as  1000% but  the  maximum 

reduction  in  the  price  and  premium  under  the  stabiliser  system  is only 

15%.) 

To solve  these problems  the attached  proposals  comprise: 

a regrouping  of varieties-, 

a  temporary  system of quotas; 

measures  to  strengthen  the  role  of  producers  and  to  convert 

production  to varieties which  are easier  to market. 

SUMMARY  OF THE  PROPOSALS 

The  proposals  for  the  tobacco  market  organisation  fall  under  three  main 

headings, namely  premium,  production  control  and production  conversion. 

1. 

Premium 

- 4 -

A  premium  Is to be  paid  to  the producer  by  the  first  processor  when 

the  tobacco  is purchased.  The  EAGGF  will  immediately  reimburse  this 

amount  to  the  processor.  A  system  of  guaranteed  advance  payments 

based  on  quantities  under  contract  may  be  established.  The  level  of 

the premium  is to be  fixed  for  five groups of  varieties according  to 

the type of curing,  i.e. flue-cured,  light-air  cured, dark-air  cured, 

sun-cured  and  fire-cured  and  for  three  aromatic  oriental  varieties, 

i.e. Basma, Katerini  and Kaba Koulak classic. 

These  premium  arrangements  cover  the  period  from  the  1992  harvest 

to the 1996 harvest. 

2. 

Production control 

A  cultivation  contract  between  the  producer  and  the  processor  is 

compulsory  for  the payment of  the production aid. 

A  maximum  threshold  of  340,000  tonnes  divided  between  the  different 

groups  is  introduced.  The  level  of  the  threshold  corresponds  to  the 

1987 Commission proposal  when  the stabilizers were  introduced. 

To  ensure  that  this  threshold  is  complied  with  a  quota  system  is 

established  for  the  1992  to  1996  harvests.  Initially  the  quotas  are 

distributed  among  the  processors  on  the  basis  of  the  average 

quantities  processed  over  the  past  three  years.  However,  the 

particular  situation of certain speculative productions  is taken  into 

account  during  this  distribution.  This  transitional  period  when  the 

quotas  are  distributed  to  the  processors  will  serve  to  prepare  the 

measures  required  for  the  subsequent  distribution  of  quotas  to 

producers under  satisfactory conditions. 

3. 

Production  conversion 

A  specific  aid  of  10%  is  paid  to  the  producers'  group  if  the 

cultivation  contract  is signed  between  a  processor  and  a producers' 

group. 

- 5 -

An extensive  research  programme  permits  the  identification of  low-tar 

varieties of  tobacco  (less harmful). The budget  for  this programme  is 

obtained  from  an advance  deduction  from  the production  aid. 

There  is  provision  for  specific  programmes  for  the  conversion  of 

Tsebelia  and  Mavra  production  to a higher-quality  tobacco  or  to some 

other  agricultural  product.  The  cost  of  this  programme  is calculated 

taking  into account  the amount  paid  previously  as a premium  for  those 

var iet ies. 

To  ensure  the  uniform  implementation  of  Community  rules  in  the 

tobacco sector, specific national  agencies are created  with  Community 

financial  support  up  to a maximum  level  of  50 %. 

If  measures  are  necessary  to  facilitate  the  transition  from  the 

previous  system  to the new one, appropriate measure  are  to be decided 

by  the Commission  by  the management  committee  procedure. 

As  regards  the  system  of  premiums  and  production  control,  the 

appended  Regulation  simply  lays down  the  temporary  framework  applying 

until  the  1996  harvest. 

Before  1  April  1995,  the  Commission  will  present  to  the  Council 

proposals  concerning  the premium  and production  control  to apply  from 

the 1997 harvest. 

As soon  as  possible  the Commission  will  also  submit  a proposal  for a 

Regulation on  inter-trade organizations and  agreements  in the  tobacco 

industry. 

This  reform will  have no  impact  on SMEs. 

- 6 -

Proposal for a 

COUNCIL REGULATION (EEC) 

on the common organization of the market 

in raw tobacco 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community, and in particular Articles 42 and 43 thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament, 

Having regard to the opinion of the Economic and Social Committee, 

Whereas  the  operation  and  development  of  the  common  market  for 

agricultural  products  must  be  accompanied  by  the  establishment  of  a 

common  agricultural  policy,  to  include  in  particular  a  common 

organization of markets, which may take various forms depending on the 

product; 

Whereas it is the purpose of the common agricultural policy to achieve 

the objectives of Article 39 of the Treaty, and, in particular  in the 

raw tobacco sector, the stabilization of markets and a fair standard of 

living  for  the  agricultural  population  concerned;  whereas  these 

objectives may  be  achieved  by  adapting  resources to  requirements, in 

particular by means of a quality policy; 

- 7 -

Whereas the present  situation on the tobacco market, on which  supply 

does not correspond to demand, calls for a substantial overhaul of the 

Community  arrangements which have governed the market hitherto, while 

ensuring  the  continuation  of  tobacco  growing  by  the  traditional 

producers;  whereas  such  an  overhaul  requires  simplification  of  the 

market management mechanisms, limitation of production in line with the 

requirements of the market and the demands of the budget, and stronger 

means of control to ensure that the management mechanisms fully achieve 

the objectives of the common market organization; 

Whereas  tobacco  varieties  can  be  classified  in  groups  according  to 

cultivation  technique  and  production  costs,  taking  account  of  the 

descriptions used in international trade; 

Whereas  competition  on  the  tobacco  market  calls  for  some  support  of 

tobacco production;  whereas such support should be based on a premium 

system allowing the disposal of tobacco in the Community; 

Whereas  the  premium  system  can  be  managed  efficiently  by  means  of 

cultivation  contracts  between  growers  and  first  processors  which 

guarantee  stable  outlets  to  the  growers  and  regular  supplies  to  the 

processor;  whereas payment of a sum equivalent to the premium by the 

processor  to  the  producer  at  the  time  of  delivery  of  the  tobacco 

covered  by  the  contract,  subject  to  compliance  with  the  quality 

requirements,  provides  support  for  the  growers  while  facilitating 

management of the premium system; 

Whereas,  in  order  to  limit  Community  tobacco  production  and  to 

discourage the production of varieties which are not readily disposed 

of, a maximum  global guarantee threshold  should  be laid down  for the 

Community  and divided  annually  into specific guarantee thresholds for 

each group of varieties; 

- 8 -

Whereas,  to  ensure  that  the  guarantee  thresholds  are  observed,  a 

processing  quota  system  must  be  instituted  for  a  limited  period; 

whereas,  for  a  transitional  period,  the  Member  States  must  allocate, 

within  the  guarantee  thresholds,  processing  quotas  to  the  firms 

concerned,  applying  the  Community  rules  laid  down  for  the  purpose  to 

ensure  fair  allocation on the basis of the quantities processed  in the 

past,  but  disregarding  any  abnormal  production  levels;  whereas  the 

necessary measures will be taken to permit  subsequent  allocation of the 

quotas to the producers, under  satisfactory  conditions; 

Whereas  it  is  indispensable  that  first  processors  do  not  conclude 

cultivation  contracts  for  quantities  exceeding  the  processing  quotas 

allocated  to  them;  whereas  reimbursement  of  the  premium  must  be 

limited  to  an  amount  corresponding  to  no  more  than  the  processing 

quota; 

Whereas  provision  should  be  made  initially  for  the  premium  and 

production  limitation  systems  to  run  until  1996  so  that  they  can  be 

reviewed  in  the  light  of  experience  and  possibly  adapted  for  the 

subsequent  period; 

Whereas  measures  to  orientate  production  can  help  to  stabilize  the 

tobacco market and  improve the quality of production;  whereas  specific 

aid  will  enable  producer  groups  to  contribute  towards  the  improvement 

of  the  organization  and  orientation  of  production;  whereas  a  research 

programme  financed  with  the  proceeds  of  a  deduction  from  the  premium 

will  enable  tobacco  growing  to  be brought  more  closely  into  line  with 

Community  requirements  as  regards  public  health;  whereas,  lastly,  a 

conversion  programme  for  growers  of  Mavra  and  Tsebelia  tobacco  is 

necessary  because  of  the  importance  of these  varieties  for the  economy 

of certain Community regions; 

Whereas  the  establishment  of  a  single  market  requires  a  single  system 

of trade at the external frontiers; 

- 9 

Whereas quantitative restrictions at the Community's external  frontiers 

can  be  dispensed  with;  whereas,  however,  should 

exceptional 

circumstances  arise, in order not to leave the Community market without 

protection  against  any  disturbance,  the  Community  should  be  able  to 

take all the necessary measures without delay; 

Whereas unforeseen market circumstances may necessitate the adoption by 

the Commission of exceptional market  support measures; 

Whereas  the  achievement  of  a single market would  be  jeopardized  by  the 

grant  of  certain  aid;  whereas  the  Treaty  provisions  governing  the 

appraisal  of  aid  granted  by  Member  States  and  the  prohibition  of  aid 

incompatible  with  the  common  market  should  be  applied  to  the  tobacco 

sector; 

Whereas,  in  accordance  with  Council  Regulation  (EEC)  No 729/70  of 

21 April  1970  on  the  financing  of  the  common  agricultural  policy(^), 

as  last  amended  by  Regulation  (EEC)  No  2048/88(2),  the  Community 

should bear  financial  responsibility  for expenditure  incurred by Member 

States pursuant  to this Regulation; 

Whereas  experience  shows  that  more  stringent  controls  in  the  tobacco 

sector are essential;  whereas  in appropriate  cases certain  supervisory 

powers  could  be  assigned  to  an independent  supervisory  agency  in order 

to deal with the specific requirements of the tobacco market; 

(1)  OJ No L 94, 28.4.1970, p. 13. 

(2)  OJ No L 185, 15.7.1988, p. 1. 

-  10 -

Whereas  the  common  organization  of  the  tobacco  market  must  take 

account,  simultaneously  and  appropriately,  of the objectives  laid  down 

in Articles 39 and  110 of the Treaty; 

Whereas  the  transition  from  the  arrangements  instituted  by  Council 

Regulation  (EEC) No  727/70 of  21 April  1970 on the  common  organization 

of  the  market  in  raw  tobacco(3),  as  last  amended  by  Regulation  (EEC) 

No  1737/91(4)  to  the  arrangements  provided  for  herein  must  take  place 

in  the  best  possible  conditions;  whereas  transitional  measures  may 

prove  necessary  to  ensure  this;  whereas  the  new  arrangements  should 

not become  fully applicable until after the 1992 harvest, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  common  organization  of  the  market  in  raw  tobacco  shall  comprise 

rules on: 

- a premium  system; 

- measures to orientate and  limit production; 

-  arrangements  for trade with third countries. 

The  common  organization  shall  cover  raw  or  unmanufactured  tobacco  and 

tobacco  refuse  falling  within  heading  2401  of  the  Combined 

Nomenclature. 

(3) OJ No L 94, 28.4.1970, p. 1. 

(4) OJ No L 163, 26.6.1991, p. 11. 

-  11 -

Article 2 

Raw tobacco varieties  shall be classified  in the following groups: 

(a)  flue-cured: 

tobacco  dried  in  ovens  with  controlled  air  circulation, 

temperature and humidity; 

(b) 

light  air-cured 

tobacco dried  in the air under cover, not  left to ferment; 

(c)  dark  air-cured 

tobacco  dried  in  the  air  under  cover,  left  to  ferment 

naturally before being marketed; 

(d) 

sun-cured 

tobacco dried  in the sun; 

(e)  fire-cured 

tobacco dried by fire; 

(f)  Basma  (sun-cured); 

(g)  Katerini  (sun-cured); 

(h)  Kaba-Koulak  (classic)  (sun-cured). 

The varieties  in each group are listed in the Annex. 

TITLE I 

PREMIUM SYSTEM 

Article 3 

From the  1992 harvest  until the  1996 harvest  a premium  system  shall  be 

applied.  The  amount  of  the  premium  shall be  the  same  for the  tobacco 

varieties  in each of the various groups. 

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-  12 -

The  purpose  of  the  premium  shall  be  to  supplement  the  incomes  of 

producers  whose  products  correspond  to  market  requirements  and  to 

facilitate the disposal of tobacco produced  in the Community. 

Article 4 

1. 

In  accordance  with  the  procedure  laid  down  in  Article  43(2)  of 

the  Treaty,  the  Council  shall  fix  the  amount  of  the premium  for 

each  tobacco  harvest,  taking  particular  account  of  past  and 

foreseeable  possibilities  for  the  disposal  of  the  various  types 

of  tobacco,  under  normal  conditions  of  competition,  on  the 

Community  and world markets. 

2. 

The amount of the premium  shall be fixed: 

(a)  per  kilogram  of  leaf  tobacco  not  having  undergone  first 

processing  and market preparation; 

(b) 

for each raw tobacco group. 

Article 5 

Granting of the premium  shall be subject to the following conditions: 

(a)  the  tobacco  must  come  from  a  production  area  specified  for  the 

variety  concerned; 

(b)  quality  requirements must be  fulfilled; 

(c)  the  leaf  tobacco  must  be  delivered  by  the  producer  to  the 

premises of the first processor under a cultivation contract; 

(d)  any other  requirements to be laid down must be  fulfilled. 

-  13 -

Article 6 

1. 

Cultivation  contracts shall comprise: 

an  undertaking  by  the  first  processor  to  pay  to  the  grower,  in 

addition to the purchase price, a sum equal to the premium  at the 

time  of  delivery  for  the  quantity  under  contract  and  actually 

delivered; 

an  undertaking  by  the  grower  to  deliver  to  the  premises  of  the 

first  processor  raw  tobacco  corresponding  to  the  quality 

requirements. 

2. 

The  competent  body  shall  reimburse  the  amount  of  the  premium  to 

the  first processor  against presentation of proof that the grower 

has  delivered  the  tobacco  and  that  the  amount  referred  to  in 

paragraph  1 has been paid. 

Article 7 

Detailed  rules  for  the  application  of  this  Title  shall  be  adopted  in 

accordance with the procedure  laid down in Article 23. 

They  shall comprise: 

delimitation of the production areas for each variety; 

quality  requirements  for delivered tobacco; 

additional  points  to be  included  in the  cultivation  contract  and 

the final date for its conclusion; 

the  obligation  for  the  first  processor  to  provide  a  security  if 

he  requests  an  advance,  and  the  conditions  governing  the 

provision  and release of the said  security; 

specific  conditions  for  the  grant  of  the  premium  in  cases  where 

the cultivation contract  is concluded with a group of producers; 

- 

measures  to  be  taken  in  the  event  of  failure  of  the  grower  or 

first processor to fulfil his statutory obligations. 

-  14 -

TITLE II 

SYSTEM OF PRODUCTION  LIMITATION 

Article 8 

A  maximum  global  guarantee threshold  for the Community  is hereby  fixed 

at 340 000 tonnes of raw leaf tobacco per harvest. 

Every  year,  within  this  limit,  the  Council  shall  fix,  in  accordance 

with the procedure  laid down  in Article 43(2) of the Treaty, a specific 

guarantee  threshold  for  each  group  of  varieties,  taking  particular 

account  of  market  conditions  and  socio-economic  and  agronomic 

conditions  in the production areas concerned. 

Article 9 

1. 

To  ensure  observance  of  the  guarantee  thresholds  a  system  of 

processing  quotas  is  hereby  instituted  for  the  harvests  of  1992 

to 1996. 

2. 

Each  harvest,  in  accordance  with  the  procedure  laid  down  in 

Article 43(2) of the Treaty, the Council  shall allocate among the 

producer Member States the quantities available  for each group of 

varieties. 

3. 

On  the basis  of the quantities  allocated  pursuant  to paragraph  2 

and  without  prejudice  to  the  application  of  paragraph  4,  Member 

States  shall distribute processing quotas on a transitional  basis 

for  the  1992  and  1993  harvests  among  the  first  processors  in 

proportion  to  the  average  quantities  delivered  for  processing 

during the three years preceding the year of harvest, broken down 

by  group  of  varieties.  The  procedure  for  allocating  processing 

quotas  for the  subsequent  harvests  shall  not  be affected  by this 

allocation. 

First  processors  who  start  business  after  the  beginning  of  the 

reference  period  shall  obtain  a  quantity  proportional  to  the 

average  quantity  delivered  for processing  during  their  period  of 

business. 

- 15 -

Where  appropriate, production  shall  be taken  into  account  only 

within  the  limit  of  the  processing  quota  allocated  during  the 

years taken into consideration. 

For first processors which begin business in the year of harvest, 

Member States shall reserve 2% of the total quantities available 

to them by group of varieties.  Within this percentage, the said 

first  processors  shall  obtain  a quantity  not  exceeding  70% of 

their  processing  capacity,  provided  that  they  offer  adequate 

guarantees as to the efficiency and long-term viability of their 

business. 

4. 

When  the  processing  quotas  are  allocated  as  provided  for  in 

paragraph  3,  no  account  shall  be  taken  in  particular,  when 

calculating  the  reference  production, of  any  quantities  of  raw 

tobacco produced  in excess of the maximum guaranteed  quantities 

applicable under Regulation (EEC) No 727/70. 

Article 10 

A  first  processor  may  not  conclude  cultivation  contracts  or  be 

reimbursed  the  amount  of  the  premium  for  quantities  exceeding  the 

processing quota allocated to him. 

Article 11 

Detailed  rules  for the application of this Title shall be adopted  in 

accordance  with  the  procedure  laid  down  in  Article  23.  They  shall 

include the adjustments, as provided for in Article 9(4), in the method 

of distribution  of the quotas  and the preconditions  for  applying the 

quotas  at  the  level  of  the  producers,  in particular  in  relation  to 

their previous situations. 

- 16 -

TITLE III 

MEASURES TO ORIENTATE PRODUCTION 

Article 12 

1. 

In order to  concentrate  supply  and adapt  it to the qualitative 

requirements of the market, specific aid equivalent to 10% of the 

premium  shall  be  granted  where  cultivation  contracts  are 

concluded  between  a  first  processor  and  a  recognized  group of 

producers  and  where  the  deliveries  covered  by  such  contracts 

account for the entire output of the members of the group. 

2. 

Specific  aid  shall  be  paid  to  the  producers'  group  for  the 

purpose  of  improving  the  organization  and  orientation  of 

production. 

3. 

Detailed  rules  for  the  application  of  this  Article  shall  be 

adopted by the Commission  in accordance with the procedure laid 

down in Article 23.  They shall include: 

the  definition  of  producers'  groups  eligible  for  specific 

aid; 

-  the conditions for recognizing producers' groups; 

the use to which specific aid may be put. 

Article 13 

1. 

A  Community  Fund  for tobacco  research  and  information  shall be 

set up.  It shall be  financed  from the proceeds of  a deduction 

not exceeding 1% from the premium at the time of payment. 

2. 

The Fund shall finance and coordinate programmes of research and 

information to promote greater knowledge of the harmful effects 

of tobacco  and the appropriate preventive  and curative measures 

relevant  to  such  effects  and  to  orientate  Community  tobacco 

production towards the least harmful varieties and qualities. 

3. 

Detailed  rules  for  the  application  of  this  Article  shall  be 

adopted in accordance with the procedure laid down in Article 23. 

-  17 -

Article 14 

A  three-year  programme  for  the  conversion  of  plantations  of  Mavra  and 

Tsebelia  tobacco  to varieties more  in  line with market  requirements  or 

to  other  agricultural  crops  shall  be  adopted  by  the  Commission  in 

accordance  with  the  procedure  laid  down  in Article  23.  The  programme 

shall  be  launched  immediately  after the  1992  harvest.  It may  comprise 

specific  measures  to  compensate  growers  for  any  loss of  income  due  to 

the conversion. 

TITLE IV 

TRADE WITH THIRD  COUNTRIES 

Article 15 

Except where this Regulation provides otherwise or where the Commission 

adopts  a  derogation  in  accordance  with  the  procedure  laid  down  in 

Article  23,  the  following  shall  be  prohibited  in  trade  with  third 

countries: 

(a)  the  collection  of  any  charge  with  an  effect  equivalent  to  a 

customs duty; 

(b)  the  application  of  any  quantitative  restriction  or  measure  with 

equivalent effect. 

Article 16 

1. 

If, by reason of imports or exports,  the Community market  in one 

or  more  of  the  products  referred  to  in Article  1  suffers  or  is 

liable  to  suffer  serious  disturbance  which  may  jeopardize  the 

objectives  of  Article  39 of the Treaty,  appropriate measures  may 

be  taken  in  respect  of  trade  with  third  countries  until  the 

disturbance or threat of disturbance has ceased. 

- 18 -

2. 

If  the  situation  referred  to  in  paragraph  1  arises,  the 

Commission  shall, at the request  of  a Member  State or on  its own 

initiative,  decide  on  the  necessary  measures,  which  shall  be 

notified  to  the Member  States and  be  immediately  applicable.  If 

the  Commission  receives  a  request  from  a  Member  State  it  shall 

take  a  decision  thereon  within  24  hours  after  receipt  of  the 

request. 

3. 

The  measures  taken  by  the  Commission  may  be  referred  to  the 

Council by any Member State within three working days of the date 

of  notification.  The  Council  shall  meet  without  delay.  It  may 

amend or repeal the measure in question by a qualified  majority. 

TITLE V 

GENERAL AND TRANSITIONAL  PROVISIONS 

Article 17 

In  order  to  deal  with  unforeseen  market  circumstances,  exceptional 

support  measures  may  be  taken  in  accordance  with  the  procedure  laid 

down  in  Article  23.  The  scope  and  duration  of  such  measures  may  not 

exceed  that which  is strictly necessary to support the market. 

Article  18 

Except where this Regulation provides otherwise, Articles 92, 93 and 94 

of  the  Treaty  shall  apply  to  production  of  and  trade  in  the  products 

referred  to in Article 1. 

Article 19 

Expenditure  incurred  pursuant  to  Title  III  shall  be  regarded  as 

expenditure  within  the meaning  of  Article  1(2) of  Regulation  (EEC) No 

729/70. 

- 19 -

Article 20 

1. 

Member  States  shall  take  all the  necessary  measures  to  ensure 

compliance with the Community provisions concerning raw tobacco. 

To  this  end  they  shall  notify  to  the  Commission,  within  six 

months  after  the  adoption  of this Regulation, the  arrangements 

they  intend  to  make  for  the  purposes  of  management  and 

supervision.  Within  three  months  after  such  notification  the 

Commission shall approve the arrangements or ask for adjustments. 

Where adjustments are required the Member State shall make them 

at  the  earliest  opportunity.  Any  modification  of  national 

arrangements shall be notified without delay by the Member States 

to the Commission and examined by it in accordance with the same 

procedure. 

2. 

Each producer Member State shall set up, in accordance with its 

legal  system,  a specific  agency to carry out certain  checks in 

connection with the Community arrangements for tobacco. 

3. 

The agency  shall be given complete  administrative  autonomy.  It 

shall be given full powers by the Member State concerned to carry 

out the tasks assigned to it. 

Its staff shall be sufficient in number and level of training to 

accomplish the tasks specified. 

4. 

Before  the  beginning  of  each marketing  year, the  Member  State 

concerned  shall, acting  on a proposal  from the agency, draw up 

and send to the Commission a budget estimate and work schedule to 

ensure correct application of the premium system.  The Commission 

may  ask  the  Member  State,  without  prejudice  to  the 

responsibilities of the latter, to make any change in the budget 

estimate  or  work  schedule  that  it  deems  appropriate. 

-  20 -

Persons  designated  by the Commission  may  at  any time monitor  any 

of the work carried out by the agency. 

The  agency  shall  submit  to  the  Member  State  and  the  Commission 

regular  reports  on  the  work  which  it  has  carried  out.  Such 

reports  must  mention  any  problems  encountered  and,  where 

appropriate,  suggestions  as  to  how  to  improve  the  checking 

arrangements. 

5. 

50%  of  actual  expenditure  by  the  agency  shall  be  chargeable  to 

the  general  budget  of  the  European  Communities,  the  remainder 

being covered by the Member State concerned. 

6. 

The annual amount representing the actual expenditure referred  to 

in  paragraph  5  shall  be  decided  upon  by  the  Commission  on  the 

basis of the particulars provided by the Member States  concerned. 

The amount  shall be granted when the Commission  is satisfied  that 

the agency has been set up and is performing the work assigned to 

it.  In  order  to  facilitate  the  setting  up  and  operation  of  the 

agency, the amount  in question may be paid  in advance in the form 

of  instalments  during  the  year  in  question,  in  accordance  with 

the  agency's  annual  budget,  the  latter  being  drawn  up  with  the 

agreement  of  the  Member  State  and  the  Commission  before  the  end 

of October  of each following year. 

7. 

Member  States  shall  take  the  necessary  measures  to  ensure  that 

the inspection officers designated  pursuant to paragraphs  2 to 4: 

have  access  to  the  production,  processing  and  marketing 

premises, 

- 

can  examine  accounting  data  and  other  documents  relevant  to 

the checking procedure, and make copies or take extracts  from 

them, 

- 

can ask for any relevant  information. 

8. 

Detailed  rules  for  the  application  of  this  Article  shall  be 

adopted  by  the  Commission  in  accordance  with  the  procedure  laid 

down  in Article 23. 

- 21 -

Article 21 

Member  States  and  the Commission  shall  send  each other  any  information 

necessary  for  the  application  of  this  Regulation.  Detailed  rules  for 

the  sending  and  dissemination  of  such  information  shall  be  adopted  in 

accordance with the procedure  laid down in Article 23. 

Article 22 

A Management Committee  for Tobacco  (hereinafter called  "the Committee") 

shall  be  established,  consisting  of  representatives  of  the  Member 

States and presided over by a representative of the Commission. 

Article 23 

1. 

The  representative  of  the  Commission  shall  submit  to  the 

Committee  a  draft  of  the  measures  to  be  taken.  The  Committee 

shall  deliver  its opinion on the draft within  a time  limit  which 

the chairman may  lay down according to the urgency of the matter. 

The  opinion  shall  be  delivered  by  the  majority  laid  down  in 

Article  148(2) of  the  Treaty  in the  case  of  decisions  which  the 

Council  is  required  to  adopt  on  a proposal  from  the  Commission. 

The votes of the  representatives  of the Member  States within  the 

committee  shall  be  weighted  in  the  manner  set  out  in  that 

Article. 

The chairman  shall not vote. 

2. 

The  Commission  shall  adopt  measures  which  shall  apply 

immediately.  However,  if  these  measures  are  not  in  accordance 

with  the opinion  of the  committee, they  shall be  communicated  by 

the  Commission  to the Council.  In that  event  the  Commission  may 

defer  application  of  the  measures  which  it  has  decided  for  a 

period  of  not  more  than  one  month  from  the  date  of  such 

communication. 

3. 

The Council, acting by a qualified majority, may take a different 

decision  within  the  time  limit  referred  to  in  paragraph  2. 

- 22 -

Article 24 

The  Committee  may  consider  any  other  matter  raised  by  its  chairman, 

either  on  his  initiative  or  at  the  request  of  the  representative  of  a 

Member State. 

Article 25 

This  Regulation  must  be  applied  in  such  a  way  that  account  is  taken, 

simultaneously  and  appropriately,  of  the  objectives  laid  down  in 

Articles  39 and  110 of the Treaty. 

Article 26 

Before  1  April  1995  the  Commission  shall  submit  a  proposal  to  the 

Council  concerning the arrangements provided  for in Titles  I and  II for 

application  after  the  1997  harvest.  The  Council  shall  act  on  this 

proposal  in accordance with the procedure  laid down  in Article 43(2) of 

the Treaty. 

Article 27 

Where  transitional  measures  prove  necessary  to  facilitate  the 

transition  from  the  arrangements  set  up  by  Regulation  (EEC) No  727/70 

to  those  laid  down  in  this  Regulation,  such  measures  shall  be  adopted 

in accordance with the procedure  laid down in Article 23. 

Article 28 

Regulation  (EEC) No 727/70 is hereby repealed with effect  from the  1992 

harvest. 

Article 29 

This Regulation  shall enter  into force on 1 January 1992. 

It shall apply  from the 1992 harvest. 

-  23 -

This  Regulation  shall  be  binding  in  its  entirety  and  directly 

applicable  in all Member States. 

Done at Brussels, 

For the Council 

The President 

24 -

ANNEX 

Classification of tobacco varieties 

I. 

Flue-cured 

Virginia 

Virgin D and hybrids thereof 

Bright 

II. 

Light  air-cured 

Burley 

Badischer  Burley  and hybrids thereof 

Maryland 

III.  Dark  air-cured 

Paraguay  and hybrids thereof 

Dragon Vert and hybrids thereof 

Philippin 

Petit Grammont  (Flobecq) 

Semois 

Appelterre 

Nijkerk 

Misionero  and hybrids thereof 

Rio Grande and hybrids thereof 

Forchheimer Havanna lie 

Nostrano del  Brenta 

Resistente  142 

Goyano 

Badischer Geudertheimer  and its hybrids, Pereg, Korso 

Beneventano 

Brasile Selvaggio and similar varieties 

Fermented  Burley 

Havana 

-  25 -

IV. 

Fire-cured 

Kentucky  and  hybrids 

Moro di Cori 

Salento 

V. 

Sun-cured 

Xanthi-Yaka 

Perustitza 

Samsun 

Erzegovina and similar varieties 

Myrodata, Smyrna, Trapezous and Phi 1 

Kaba Koulak  (non-classic) 

Z ichnomyrodata 

Tsebelia 

Mavra 

VI. 

Basmas 

VII.  Katerini and  similar varieties 

VIII. Kaba Koulak  (classic) 

Elassona 

-  26  -

F I N A N C I AL  S T A T E M E NT 

DATE: 

1. BUDGET HEADING:  17 

APPROPRIATIONS:  ECU 1 341 million 

2. TITLE: 

Oounci I Regulation on the cannon organization of the market in raw tobacco 

3. LEGAL BASIS: 

Articles 42 and 43 of the Treaty 

4. AIMS OF PROJECT: 

To reform the market organization in raw tobacco 

5.  FINANCIAL  IMPLICATIONS 

5.0 EXPENDITURE 

- CHARGED TO THE EC BUDGET 
- (REFUNDS/ INTERVENT ION) 
- NATIONAL ADMINISTRATION 
- OTHER 

5.1 REVENUE 

-  Om  RESOURCES OF THE EC 
(LEVIES/CUSTOMS DUTIES) 

- NATIONAL 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 

5.2 METHOD OF CALCULATION: 
See detaiIs in Annex 

Period of 12 months 
ECU mi 11 ion 

Current Financial Year 
(1991)  ECU mi 11 ion 

Following Financial Year 
(1992)  ECU mi 11 ion 

1993 

1994 

1995 

1996 

930,9 

930,9 

930,9 

902,9 

6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6 .1  CAN THE  PROJECT  BE  FINANCED  BY  TRANSFER  BETWEEN  CHAPTERS  OF  THE  CURRENT  BUDGET? 

6.2 IS A SUPPLEMENTARY BUDGET NECESSARY? 

6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

YES 

YES 

ND 

YES 

OBSERVATIONS: 
The budgets for 1993 to 1996 must also take account of the residual expenditure arising frcm the operation 
of the present market organization in line with point V of the Annex. 

-  27 -

ANNEX 

COST PER MARKETING  YEAR  OF THE MARKET ORGANIZATION  IN RAW  TOBACCO 

I.  COST OF  PREMIUMS 

Flue-
cured 

Light 
a i r-
cured 

Dark 
a i r-
cured 

F i r e-
cured 

Sun-
cured 

Basmas 

Katerini 

K.  Koulak 

Total 

2  500 

2  000 

2  000 

2  200 

2  000 

3  300 

2  800 

2  000 

91  800 

72  500 

53  900 

9  900 

39  500 

25  800 

21  800 

24  800 

340  000 

Premiums  (1) 
ECU  ( A ) /t 

Quota 
(tonnes) 

DR 

1,153 

1,143 

1,155 

1,143 

1,129 

1,119 

1,119 

1,119 

Cost 
ECU m (B) 

264,5 

165,7 

124,5 

24,9 

89,2 

95,3 

68,3 

55,5 

887,9 

(1) Including the 10X Increase. 

It should  be noted  that  an amount  equal  to no more  than  1% of  the cost 
of  the premiums,  i.e. ECU 9 million, will  be withheld  to finance a 
Community  fund  for  research  and  information on  the  tobacco  sector. 

I I.  COST OF CONVERSION  OF MAVRA  AND TSEBELIA 

Production  of  these  two varieties will  switch  from  an MGQ of 
26 500 tonnes  (1991) to a quota of  14 000 tonnes.  Compensation  at  the 
level  of  the proposed  premiums,  i.e. ECU 2 OOO/t  for  the  12 500 
tonnes, will  be granted  for  the first  three years: 
12 500 t x ECU  2 000  (A)/t  x 1,119  (DR) - ECU 28,0 million. 

M l.  COST OF CONTROL  AGENCY 

Article  20(5) and  (6) states  that  50% of expenditure  for  the agency  is 
to come  from  the general  budget  of  the Community.  Expenditure  is 
fixed  annually on  the basis of  information provided  by  the Member 
States  concerned. 

In the  light of experience with  the olive oil  control  agency, an 
indicative amount  of  ECU 30 million, 50% of which  is to be defrayed  by 
the Community,  has been decided. 

IV.  TOTAL  EXPENDITURE 

1993 

1994 

1995 

1996 

1997 

(ECU mi I I ion  (B)) 

Premiums 
C o n v e r s i on 
C o n t r ol  a g e n cy 

8 8 7 ,9 
2 8 .0 
1 5 ,0 

8 8 7 ,9 
2 8 ,0 
1 5 ,0 

8 8 7 ,9 
2 8 ,0 
1 5 ,0 

8 8 7 ,9 
0 
1 5 ,0 

8 8 7 ,9 
0 
1 5 ,0 

TOTAL 

9 3 0 ,9 

9 3 0 ,9 

9 3 0 ,9 

9 0 2 ,9 

9 0 2 ,9 

- 28 -

V.  REMARKS 

In view of the time necessary  for the payment of the premiums, refunds 
and  intervention costs under  the present  market  organization, the 
budgets for 1993 to 1996 should  take account of the remaining 
expenditure  arising  from the operation of the present  market 
organization as follows: 

1993 

1994 

1995 

1996 

1997 

(ECU million (B)) 

Premiums 
Refunds 
Intervent ion 

TOTAL 

120 
40 
130 

290 

60 
10 
70 

20 
p.m. 
30 

p.m. 
0 
p.m. 

140 

50 

p.m. 

0 
0 
0 

0 

-  29 -

EXPLANATORY  MEMORANDUM 

Fixing of  premiums  and processing  quotas  for  leaf  tobacco 
from  the 1992 harvest 

In accordance with  its undertaking,  the Commission  has submitted  a new basic 
Regulation  on  the common  organization of  the market  in tobacco  for  the  1992 
harvest.  The Regulation  provides  for a system of  premiums  and measures  to 
control  and  convert  production. 

It provides  that  the Council  is to fix each year  the premiums on  leaf  tobacco 
and  the annual  allocation of  the processing  quota. 

The premiums proposed  for  the  1992 harvest  were established  taking  account  in 
part icular of: 

the premiums granted  in the past; 

the grouping  of  varieties  into groups of  varieties  according  to the drying 
system; 

the differences  in production  costs according  to the group of varieties; 

the converting  of  production  to groups of varieties most  sought  after  on the 
market. 

The allocation of  the processing  quotas among groups of  varieties  and  among  the 
Member  States was established  taking  account  in particular  of: 

the production  of each group of varieties  in the various producer  countries 
as observed  in the past, not  including quantities  in excess of  the maximum 
guaranteed  quantities; 

the requirements of  European  industry, 

the trend  in consumption  in Europe-, 

the  trend  in demand  on  the world market  for certain  aromatic  varieties. 

The  fixing  by  the Council  of  the premiums and processing  quotas at a 
sufficiently  early  stage enables operators  to determine  their  economic  strategy 
in full  knowledge of  the circumstances. 

- 30 -

Proposal for a 

COUNCIL REGULATION (EEC) 

fixing the premiums for leaf tobacco by group of tobacco 

varieties and the processing quotas allocated by group 

of varieties and by Member State 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community, 

Having  regard  to  Council  Regulation  (EEC) No 

of 

on the 

common  organization  of  the  market  in  raw  tobacco,  and  in particular 

Articles 4(1) and 9(2) thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament, 

Having regard to the opinion of the Economic and Social Committee, 

Whereas, when the premiums for raw tobacco are fixed, account should be 

taken of the objectives of the common agricultural policy; whereas the 

common  agricultural  policy  aims  in  particular  to  guarantee  a  fair 

standard of living for the farming community and to ensure supplies at 

reasonable prices to consumers; whereas the premiums must take account 

in particular of past and foreseeable possibilities of disposal of the 

various tobacco varieties under normal conditions of competition; 

-  31 -

Whereas  Article  9(2)  of  Regulation  (EEC)  No 

provides  for  the 

annual  allocation  of  processing  quotas  for  each  group  of  varieties 

among  the producer  Member  States; whereas those quotas  should  be  fixed 

for  the  1992  harvest  taking  account  in particular  of market  conditions 

and the socio-economic  and agricultural  circumstances of the production 

areas  concerned, 

HAS ADOPTED THIS  REGULATION: 

Article 1 

For  the  1992  harvest,  the  premium  referred  to  in  Article  4  of 

Regulation  (EEC)  No 

for  each  group  of  raw  tobacco  varieties 

shall be as set out  in Annex  I hereto. 

Article 2 

For the  1992 harvest, the processing quotas referred  to  in Article 9 of 

Regulation  (EEC)  No 

by  group  of  varieties  and  by  Member  State 

shall be as set out  in Annex  II hereto. 

Article 3 

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

the Official  Journal of the European  Communities. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly 

applicable  in all Member States. 

Done at Brussels, 

For the Council 

The President 

-  32  -

ANNEX I 

Premiums for  leaf tobacco from the  1992 harvest 

Premium 
(ECU) 

Flue-
cured 

Light 
air-cured 

Dark 
air-cured 

Fire-
cured 

Sun-
cured 

Basmas 

Katerini 

Kaba 
Koulak 

ECU/kg 

2,273 

1,818 

1,818 

2,000 

1,818 

3,000 

2,545 

1,818 

- 33 -

ANNEX  I I 

ALLOCATION OF PROCESSING QUOTAS BY MEMBER  STATE AND BY 

GROUP OF  TOBACCO VARIETIES  IN TONNES OF LEAF  TOBACCO 

Flue-
cured 

Light 
air-cured 

Dark 
air-cured 

Fire-
cured 

Sun-
cured 

Basmas 

Other 
Katerini 

K. Koulak 

Total 
(tonnes) 

ITALY 
GREECE 
SPAIN 
PORTUGAL 
FRANCE 
GERMANY 
BELGIUM 

43600 
12900 
22800 
4000 
6000 
2500 

43600 
12900 
4000 
2000 
4000 
6000 

17800 

9900 

14900 
24600 

25800 

21800 

24800 

13800 

17000 
3500 
1800 

129800 
122800 
40600 
6000 
27000 
12000 
1800 

91800 

72500 

53900 

9900 

39500 

25800 

21800 

24800 

340000 

- 34 -

F I N A N C I AL  STÂTEME 

1. BUDGET HEADING: 171 

2. TITLE: 

DATE: 

APPROPRIATIONS: ECU 1 107 mi 11 ion 

(1992 PDB) 

Council Regulation fixing the premiums for leaf tobacco by group of tobacco varieties and the processing 
quotas a I located by group of varieties and by Member State. 

3. LEGAL BASIS: 

Counci I Regulation on the cannon organization of the market in raw tobacco. 

4. AIMS OF PROJECT: 

To fix the premiums and allocate the 

quotas. 

5.  FINANCIAL 

IMPLICATIONS 

Period of 12 months 

Current Financial Year 
1991 

Following Financial Year 
1992 

ECU mi 11 ion 

ECU mi 11 ion 

ECU mi 11 ion 

5 .0  EXPENDITURE 

-  CHARGED  TO  THE  EC  BUDGET 

887,9 

(REFUNDS/INTERVENT ION) 
- 
-  NATIONAL  ADMINISTRATION 
-  OTHER 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 

5.2 METHOO OF CALCULATION: 

1993 

887,9 

1994 

p.m. 

1995 

1996 

See calculation in financial sheet acoonpanying the Council Regulation on the cannon organization of the 
market in raw tobacco. 

£.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED  IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6 .1  CAN  THE  PROJECT  BE  FINANCED  BY  TRANSFER  BETWEEN CHAPTERS  OF  THE  CURRENT  BUDGET? 

6.2  IS A SUPPLEMENTARY BUDGET NECESSARY? 

6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

OBSERVATIONS: 

YES 

YES 

ND 

YES 

ISSN 0254-1475 

COM (91) 339 final 

DOCUMENTS 

EN 

03 

Catalogue number : CB-CO-91-449-EN-C 

ISBN 92-77-76617-4 

Office for Offîdal Publications of the European Coznmimitîes 
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