Proposal for a COUNCIL REGULATION (EEC) establishing a special system of assistance to traditional ACP suppliers of bananas
Date: 1992-11-11
Institutions: European Commission
Subjects: ACP countries, financial aid, production aid, supplier, technical cooperation, tropical fruit

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(92) 465  final 

Brussels, 11 November  1992 

Proposal  for a 

COUNCIL REGULATION  (EEC) 

establishing  a special  system of  assistance 

to traditional ACP suppliers of bananas 

(presented by the Commission) 

- 2 -

EXPLANATORY  MEMORANDUM 

I. 

The  fourth  ACP/EEC  Convention  provides  the  framework  for  cooperation 

between  the  Community  and  the  69  African,  Caribbean  and  Pacific  countries 

(ACP).  Protocol  5 of  the Convention  provides  that  in respect  of  its  banana 

exports to the Community  markets, no ACP  State  shall be placed,  as  regards 

access to  its traditional markets and its advantages on those markets,  in a 

less favourable  situation than  in the past or at  present. 

To  date,  national  market  organizations  have  granted  traditional  ACP 

suppliers  of  bananas  an  outlet  for  their  production  on  their  traditional 

markets and enabled  them to obtain  from these markets  an adequate  income. 

The  Commission's  proposal  on  the  common  organization  of  the  market  in 

bananas^1)  sets  the  framework  for  continuing  on  the  Community  market  the 

advantages  enjoyed  by  traditional  ACP  suppliers,  in  accordance  with  the 

Community's commitment  set out above. 

There  is nevertheless  a risk that the  introduction  of  the  new  organization 

and  the  adaptation  to  it  could  jeopardize  the  continuing  viability  of  ACP 

producers. 

The  majority  of  ACP  banana  exporters  share  the  disadvantages  associated 

with  the  producing  regions  of  the  Community  such  as  insularity,  size  of 

exploitation,  distance  from  market,  etc.  They  are  also  in  relative  terms 

more dependent on bananas as a foreign exchange earner  and  as a  significant 

sector of the economy  - some of them almost  entirely. 

A  reduced  presence  on  the  Community  market  or  a  reduced  income  from  this 

market  could  have an immediate negative  impact on the development  prospects 

of  these  countries.  It  is not  to be excluded  that  for  certain  traditional 

suppliers  a  decline  in  returns  from  the  banana  trade  could  result  in 

serious economic  and political  instability. 

(1)  COM(92) 359  final 

-  3 -

It is essential that the Community  has at hand the necessary  instruments to 

avoid the consequences  if such a situation  should  develop. 

II.  Assistance  to  improve  structures  and  marketing  (technical  and 

financial  assistance) 

The  common  organization  of  the  market,  as  proposed  by  the  Commission, 

provides traditional ACP suppliers with a guaranteed  space  in the  Community 

market  in  a  similar  way  to  that  provided  presently  in  their  traditional 

markets. However, the structure and nature of  the market  and the marketing 

effort  needed  to  exploit  that  space  are  different  and  constitute  new 

elements  some of which neither the ACP suppliers nor the operators  handling 

their  produce  could  reasonably  foresee  as  an  outcome  of  the  common 

organization  of the market. For example, there will be a new requirement  to 

meet  certain  quality  standards  and  there  will  be  incentives  for  operators 

handling  Community  bananas to organize and market  in a more integrated way. 

The; ACP  producers  will  be  in  a  similar position  to  Community  producers  as 

regards  their  ability  to  meet  the  additional  expenditure  from  market 

returns alone.  It  is therefore  necessary  to make provision  for  traditional 

ACP suppliers to be assisted  to adapt  to the new circumstances. 

The-  advent  of  the  single  market  in  bananas  is  not  in  itself  an 

unforeseeable  phenomenon  and ACP  States have been  aware  for  some time  that 

their  market  situation  would  change.  Several  of  them  have  taken  measures 

within  normal development programmes  to meet the challenges which will  face 

them. 

It is proposed that  financial assistance  additional to that provided  for in 

the Lomé Convention  is made  available  to  ACP  States  who  submit  programmes 

designed  to  assist  producers  to  adapt  to  new  market  circumstances. 

Particular  attention  will  be  given  to  programmes  designed  to  improve 

quality,  to  improve  marketing  and  to  improve  competitiveness.  Programmes 

already  begun  will  not  be  eligible  for  retroactive  funding  but  in  cases 

where  a programme  may  have been eligible  for  funding  if submitted  after  the 

adoption  of  the  Regulation  it  will  be  eligible  for  additional  fundB  to 

accelerate  its  completion. 

- 4 -

III.  Income support 

The common organization of the market  as proposed  by the Commission  is also 

designed  to  ensure  that  traditional  ACP  suppliers  continue  to  find  an 

economic  return  on the Community  market  comparable  to what  they  can  expect 

at  present.  However,  the  risk  to  traditional  ACP  suppliers  that 

adjustments  in  the  marketing  arrangements  of  operators  will  result  in  a 

sudden  loss of revenue with  immediate  impact  on the capacity  of  small-scale 

producers  to  survive  or  of  the  economy  of  the  ACP  States  to  adjust  to  new 

challenges, exists. 

The  effect  of  such market  disturbances  on ACP  supplies  and  marketing  could 

be  permanent  if  nothing  is done.  However,  the  common  organization  of  the 

market  as  proposed  by  the  Commission  should  allow  reaction  to  such 

developments  and therefore market  disturbances of the kind mentioned  should 

only be temporary. 

In  order  to  prevent  lasting  effects  from  any  disturbance  of  the  marketing 

of  ACP  bananas,  income  support  should  be  granted  to  ACP  producers  to  make 

up for any shortfall  in income directly  related to conditions prevailing  on 

the  Community  market  subsequent  to  the  establishment  of  the  common 

organization  of  the  market.  Any  such  intervention  will  be  temporary  and 

will  last  only  until  market  mechanisms  can  reestablish  stability  in  the 

market. 

The  calculation  of  the  lost  income  can be made  in the  same way  as  for  the 

calculation proposed  for Community producers. 

Some ACP  States may  be eligible  for Stabex  transfers  as  a result  of  a  drop 

in  export  earnings.  Stabex  transfers  may  be  triggered  by  the  same  set  of 

circumstances  which  give  rise  to  payment  of  income  support,  but  are 

normally based on a broader assessment.  Nevertheless,  it is not  considered 

appropriate  to  compensate  ACP  States  cumulatively  for  foreign  exchange 

losses under  the  Stabex  system  and  for  losses  in producers  income  under  an 

income  support  system  in  so  far  as  both  arise  from  the  same  set  of 

circumstances.  It  is  therefore  proposed  that  income  support  be 

complementary  to  Stabex  transfers  and  that  income  support  shall  only  be 

paid  in  so  far  as  Stabex  transfers  do  not  entirely  offset  the  effects  of 

price decreases on the producers'  income as provided  for  in this proposal. 

- 5 -

Proposal for a 

COUNCIL REGULATION (EEC) 

establishing a special system of assistance 

to traditional AGP suppliers of bananas 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing, the European Economic Community-, 

and in. particular; Article 113 thereof;* 

Having regard to the proposal from the Commission t3^** 

Having, regard to the opinion of the European Parliament^), 

Whereas  Protocol  5 on  bananas to  the  fourth ACP/EEC Convention- provides 

that,. in respect of its banana exports to the Community markets,  no ACP 

State shall be placed, as regards access to itST traditional markets and? its 

advantages on those markets, in a  less favourable situation  than  in the 

past., or at present; 

Whereas national market organizations have hitherto granted traditional ACP 

suppliers of bananas an outlet for their production on their traditional 

markets and enabled them to obtain from these markets ana adequate income; 

Whereas  the  common  organization  of  the  market  established  by  Council. 
Regulation  (EEC)  No  ....(3)  sets  the  framework, for  continuing,,  on  the 

Community market.,, the advantages enjoyed by traditional ACP suppliers, in 

accordance with the Community's commitment set out above; 

Whereas  risks  exist  nevertheless  that  the  introduction  of  a  new  market 

organization and the need to adapt to  it could  jeopardize the continuing 

viability of ACP supplies;. 

(1) 
(2) 
(3)  OJ No L 

t>  -

Whereas  particular  efforts  will  be  needed  to  adapt  to  the  new  market 

conditions  in order to take advantage of the opportunities  offered; 

Whereas  the  structure  and  the  nature  of  the  new  market  and  the  marketing 

efforts  necessary  to  maintain  a  presence  on  this  market  represent  new 

elements  some  of  which  neither  the  traditional  ACP  suppliers  nor  the 

operators handling  this produce could  reasonably  foresee; 

Whereas technical  and  financial assistance, additional to that provided  for 

in the  fourth ACP/EEC  Convention  should  therefore  be  provided  to  carry  out 

programmes  designed  to  assist  producers  to  adapt  to  new  market  conditions 

and  in  particular  to  improve  quality,  to  improve  marketing  and  to  improve 

coropetit iveness ; 

Whereas the new conditions prevailing  on the market may result  in  temporary 

market  disturbances,  particularly  in  the  sectors  of  the  Community  Market 

traditionally  supplied  by the ACP States; 

Whereas  such  disturbances  could  seriously  affect  the  returns  to  the  ACP 

from the market  and therefore the continued  viability  of this  production; 

Whereas  financial  assistance  should  therefore be provided  to permit  the ACP 

to  remain  on  the  market,  until  such  time  as  the  market  stabilizes  and  an 

economic  return  from the market  can be  received; 

Whereas  income  support  should  be  complementary  to  Stabex  transfers 

triggered  by the same set of  circumstances; 

Whereas  it  is therefore  appropriate  to  align  calculation  of  income  support 

with the calculation of Stabex transfers, 

HAS ADOPTED THIS  REGULATION: 

Article 1 

A  special  system  of  assistance  to traditional  ACP  suppliers  of  bananas  is 

hereby established.  This assistance may  consist  of technical  and  financial 

assistance  and/or of  income  support. 

Article 2 

For the purposes of this Regulation, 

- 

"traditional ACP  suppliers" means the ACP States  listed  in the Annex. 

- 

"bananas" means  fresh  or  dried  bananas  covered  by  the  code  CN 0803, 

excepting plaintains. 

TITLE I - TECHNICAL AND FINANCIAL  ASSISTANCE 

Article 3 

1. 

Technical  and  financial  assistance  shall  be  provided  to  traditional 

ACP  suppliers with  a view  to  helping  such  suppliers  adapt  to the  new 

market  conditions  following  the  establishment 

of  a  common 

organization  of the market  in bananas. 

2. 

Technical  and  financial  assistance  shall be provided to contribute to 

the carrying-out  of programmes  in the banana sector to achieve one or 

more of the  following  objectives: 

- 

to  improve  quality; 

-  to  adapt  production,  distribution  or  marketing  requirements  to 

meet  the  quality  standards  provided  for  in  Article 

2  of 

Regulation  (EEC) Mo  ...; 

- to establish  producers' organizations  which  have  as an  objective 

the  improvement  of  the  marketing  and  competitiveness  of  their 

products; 

- te  develop  a  production  and/or  marketing  strategy  te  meet  the 

requirements  of  the  market  in  the  Community  in  the  light  of  the 

coflwm organisation of the market  1A  bananas; 

- to assist with training, market  intelligence, the development of 

environmentally  sound  production  methods,  improving  the 

distribution  infrastructure,  improving  trade  and  financial 

services to banana producers and/or improving competitivity. 

3. 

Assistance may be given to programmes having similar objectives which 

are  currently  financed  under  the  Lomé  Convention  or  by  the  public 

authorities  of  the  Member  States  parties  to  the  fourth  ACP/EEC 

Convention  where  such  assistance  would  result  in  a  more  rapid 

completion of the programme. 

Article 4 

The  Commission  shall  decide  on  the  eligibility  of  the  programme  and  the 

level  of  assistance  after  consultation  with  the traditional  ACP  supplier 

concerned.  It shall also take into account the coherence of the envisaged 

programme  with  the  general  development  objectives  of  the  ACP  State 

concerned  and  its  impact  on  regional  cooperation  with  other  banana 

producers, in particular the Community producers. 

Title II  -  INCOME SUPPORT 

Article 5 

1. 

Within  the  limits  indicated  in point  1 of Article  15 of  Regulation 

(EEC) No  ..., traditional ACP suppliers shall be eligible for income 

support. 

2. 

Income support shall be paid where the reduction in income drawn from 

exportation  to  the  Community  of  bananas  complying  with  the  common 

standards is directly related to conditions prevailing on the market 

subsequent  to  the  establishment  of  the  common  organization  of  the 

market in bananas. 

Article 6 

1. 

Income  support  shall be  individually  calculated  for  each  traditional 

ACP supplier on the basis of the quantities exported to the Community 

during  the  year  of  application  and  the  difference  between  the 

reference price and the actual price. 

2. 

The  reference  price  shall  be  the  average  price  per  tonne  of  bananas 

produced  in  the  ACP  State  concerned  and  exported  to  the  Community 

during  the  six calendar years preceding  the entry  into  force  of  this 

Regulation,  less  the  two  years  with  the  highest  and  the  lowest 

figures. 

The  actual  price  shall  be  the  average  price  per  tonne  of  bananas 

produced  in  the  ACP  State  concerned  and  exported  to  the  Community 

during the year of application. 

3. 

The statistics needed  for the calculation of  income support are those 

calculated  and  published  on  Community  imports  by  the  Statistical 

Office of the European Communities. 

4. 

Before 1 July of each year, the Commission  shall determine the  income 

support  for  the  previous  year  after  consultation  with  the  ACP  State 

concerned. 

5. 

Exceptionally, and  in particular during the first year of  application 

of this Regulation, advances may be paid where there  is a  signicifant 

reduction  in the  production  income  compared  to  that  of  the  previous 

year or within any given year. 

The  need  for  and  the  level  of  such  advances  shall  be  determined  by 

the Commission after consultation with the ACP State  concerned. 

- 10 -

Title  III - GENERAL  PROVISIONS 

Article 7 

1. 

Financial  commitments  made under  Title  I shall  be  in addition  to  any 

funds  available  for  ACP  States  under  the  provisions  of  the  fourth 

ACP/EEC  Convention. 

2. 

Financial  commitments  made  under  Title  II  shall  be  complementary  to 

funds  available  under  the  system  guaranteeing  the  stabilization  of 

export  earnings  provided  for  in  Articles  186  to  212  of  the  fourth 

ACP/EEC  Convention.  Title  II  therefore  permits  payment  of  income 

support  only  in so  far  as transfers made  for  identical  quantities  in 

accordance  with Articles  186 to  212 of  the  fourth  ACP/EEC  Convention 

do not entirely  offset  the effects of price decreases  in the  revenues 

of traditional ACP  suppliers. 

3. 

Payments  of  income  support  shall  be  used,  in  accordance  with  a 

framework  of mutual  obligations  to be agreed  between  the  traditional 

ACP  supplier  concerned  and  the  Commission  in  each  case,  for  the 

benefit  of  economic  operators  adversely  affected  by  the  loss  of 

income. 

Article 8 

1. 

Granting  of  assistance  as  defined  in  Article  1  shall  be  subject  to 

the  designation  by  the  ACP  State  concerned  of  a  representative 

organization  entitled  to  act  and  to  receive  payments  on  its  behalf 

within the  framework of this Regulation. 

2. 

The  representative  organizations  shall  present  the  following 

characteristics : 

- 

be  composed  entirely  or mainly  of producers  of  bananas  in one  or 

more traditional ACP suppliers; 

- 11 -

pursue at least two of the following objectives: 

improvement of the quality of the produce; 

improvement of the quality of distribution and marketing; 

improvement of the returns to producers; 

improvement  of the role of producers  in the organization of 

the banana market. 

3. 

The  representative  organization  designed  in  accordance  with 

paragraph 2 must be notified to the Commission. 

Article 9 

As far as necessary, detailed rules for the application of this Regulation 

shall be determined by the Commission in accordance with the procedure laid 

down in Article 10. 

Article 10 

The  Commission  shall  be  assisted  by  a  committee  of  an  advisory  nature 

composed  of  the  representatives  of  the Member  States  and  chaired  by  the 

representative of the Commission. 

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, if necessary by taking a vote. 

The  opinion  shall  be  recorded  in  the  minutes;  in  addition,  each  Member 

State  shall  have  the  right  to  ask  to  have  its  position  recorded  in  the 

minutes. 

The Commission  shall  take the utmost  account  of the opinion  delivered  by 

the committee.  It  shall  inform  the committee  of the manner  in which  its 

opinion has been taken into account. 

- 12 -

Article 11 

This Regulation shall enter into force on 1 January 1993. 

It shall apply until 28 February 1996. 

This Regulation shall be binding in its entirety and directly applicable in 

all Member States. 

Done at Brussels, 

For the Council 
The President 

- 13 -

ANNEX 

LIST PROVIDED FOR IN THE FIRST INDENT OF ARTICLE 2 

Traditional ACP suppliers of bananas; 

Belize 

Cameroon 

Cape Verde 

Dominican  Republic 

Grenada 

Ivory Coast 

Jamaica 

Saint Lucia 

Saint Vincent  and the Grenadines 

Somalia 

Suriname 

-  14  -

Financial  Statement 

Oate : 

1. BUDGET  HEADING 

B7-5G23 - Compensation for ACP banana 
products 

APPROPRIATIONS  :  ECU 2 00  mi  11  i on 

2.  TITLE  :  Draft Proposal for a Council Regulation establishing a special system of assistance to 

traditional ACP suppliers of bananas 

. 

3. LEGAL  BASIS : 

Article 113 EEC 

4. AIMS  :  Assistance to traditional ACP banana suppliers to adapt to conditions created by 

the completion of the Single Market 

S. FINANCIAL  IMPLICATIONS 

PERIOD OF 12 MONTHS 

CURRENT  FINANCIAL  YEAR 
(1992) 

FOLLOWING  FINANCIAL  YEAR 

(1993) 

5.0 EXPENDITURE 

- CHARGED TO THE EC BUOGET 

(INTERVENTIONS) 

5.1  REVENUE 

5.0.1  ESTIMATED  EXPENDITURE 
5.1.1  ESTIMATED  REVENUE 

5.2 METHOD OF CALCULATION 

See annex 

• ECU  60 Billion 

ECU  35 mill ii 

1994 

1995 

1996 

•  ECU 60 million 

•  ECU 60 million 

•  ECU 4 5 million 

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 WILL A SUPPLEMENTARY  BUDGET BE NECESSARY ? 

6.3 UILL  FUTURE BUDGET APPROPRIATIONS BE NECESSARY ? 

COMHENTS : 

The 1993 preliminary draft  budget  contains no appropriations for this measure. 

NO 

NO 

YES 

YES 

-  15 -

Annex to the. Financial  Statement 

1.  Technical  and  financial  assistance  (Article  3) 

The objective of  this aid .Is to assist  traditional  ACP  suppliers  to 
adapt  to the new market  conditions and not  to replace normal 
development aid. 

The amount of  finance depends on  factors such  as specific  conditions 
which  have yet  to be determined  and  the priority  they  receive. 

Nevertheless  the costs of previous expenditure on programmes  In the 
banana  sector  can serve as a useful  guide of  the  level  of expenditure 
likely to be required.  On this basis, an annual  cost  of ECU 10 million  is 
estimated. 

income support  (Article 5) 

The reference price of  traditional ACP bananas calculated  In accordance 
with article 6(2)  is ECU 642 per  tonne (a). 

The average price of bananas  in the Community  after  introduction of  the 
market  organisation may be estimated  from  the CIF price of dollar  zone 
bananas  In Belgium, the Netherlands,  Ireland and  Denmark,  the Member 
States with  no special  arrangements.  This recently  stood  at  ECU  414 
per  tonne (b). 

Once customs duties of 20X have been added,  the price on  the  Community 
market  is therefore 414 x 1.2 -  ECU 497 per  tonne. 

The  income support  Is the difference between  (a) and (b): 
642 - 497 - £CU  145 per  tonne. 

Traditional  ACP production  referred  to  in Art  5  (1)  Is 622,000 tonnes. 

The maximum  cost will  be 622,000 tonnes x ECU  145 per  tonne - E CU  90.2 
mi 11 Ion 

income  losses set off by  Stabex  transfers  to be deducted  In accordance 
with Article 7  (2) are estimated  tentatively  at  ECU 40 million. 

The maximum  cost  for  Income support  will  be  ECU 90.2 million - ECU  40 
mi 11 ion - 50.2 mi 11 Ion. 

It  is assumed  that  the advance  provided  for  in Article 6  (5)  is oaid at 
the rate of 50%. 

-  16 -

3.  Summary  of  expenditure 

ECU million  (budgetary) 

1993 

1994 

1995 

1996 

Technical/financial assistance (Art 3) 

10 

10 

10 

10 

income support  (Article 5) 
1993 
1994 
1995 
1996 

TOTAL 

25 

25 
25 

25 
25 

25 
10 

35 

60 

60 

45 

17  -

ISSN 0254-1475 

COM(92) 465 final 

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