Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 2072/92 fixing the target price for milk and the intervention prices for butter, skimmed-milk powder and Grana Padano and Parmigiano Reggiano cheeses for two annual periods from 1 July 1993 to 30 June 1995
Date: 1993-03-09
Institutions: European Commission
Subjects: butter, hard cheese, intervention price, milk, skimmed milk powder, target price

COMMISSION  OF  THE  EUROPEAN  COBVMUNITIES 

COM(93)109  final 

Brussels, 9  March  1993 

Report  on  the  s i t u a t i on  on 
the  market  for  milk  and  milk 

products 

(presented  by  the  Coa«1ss1on) 

Amended proposal  for a 

COUNCIL REGULATION  (EEC) 

establishing an additional levy in the aille and nilk products  sector 

(presented  by the Commission pursuant  to Article  149(3) 
of  the EEC-Treaty) 

Proposal  for a 

COUNCIL REGULATION  (EEC) 

amending Regulation  (EEC) No 2072/92 fixing  the  target  price 
for milk  and  the  intervention prices for butter, skimmed-mi Ik powder 
and Grana Padano and Paraigiano Reggiano cheeses for  two annual  periods 
from 1 July 1993 to 30 June 1995 

(presented by the Commission) 

Amended proposal  for a 

COUNCIL REGULATION  (EEC) 
f i x i ng  the  threshold  prices  for  c e r t a in  milk  products 
for  the  1993/94  n i lk  year 

( p r e s e n t ed  by  the  Commission  pursuant 
the  EEC-Treaty) 

of 

to  A r t i c le  149(3) 

REPORT  FROM  THE  COMMISSION  TO  THE  COUNCIL  ON 

THE  PROGRESS  MADE  BY  GREECE.  SPAIN  AND 

ITALY 

IN  THE  EFFECTIVE  APPLICATION  OF 

THE  MILK  QUOTA  SCHEME 

AT  5  MARCH 

1993 

Report on the situation on 
the market for milk and milk 
products 

Introduction 

-  2 -

In its  1991/92 price proposals presented  to the Council in March  1991<1), 
the Commission drew attention to the worsening  situation on the market for 
milk and milk products, where intervention  stocks were building up fast 
despite  stable or practically  stable milk production. 

Given the signs of stabilization in overall community consumption and the 
lasting reductions in export possibilities on account of the political and 
economic changes in the former USSR and central Europe and the uncertainty 
following the Gulf War on the traditional, important markets  in the Middle 
East, the Commission considered that a 5% reduction in the guaranteed total 
quantities was necessary to establish better balance on the market for dairy 
products.  Out of a concern to lessen the impact of such a reduction on the 
market for beef and veal, the Commission proposed, and the Council approved, 
an initial reduction not exceeding  2% in quantities not subject to the 
additional  levy for 1991/92. 

The Commission Communication to the Council and the European  Parliament 
entitled  "The Development and Future of the common Agricultural Policy"(2) 
endorsed this analysis of the situation on the market  for milk products.  On 
that basis the Commission considered  a further reduction in the guaranteed 
total quantities necessary  and proposed to the Council that the  additional 
levy arrangements be extended  (and simplified) and a reduction of 3% be made 
in the quantities in steps of 1% over three twelve-month periods  starting 
from  1 April  1992 at the same time as the staggered reduction in the 
institutional prices for milk<3). 

On 21 May  1992, as part of the reform of the common agricultural policy, the 
Council adopted the Commission proposals on milk and milk products(3) 
subject to a certain number of amendments I *) #  <phe council decided that 
there would be no  1% reduction in quantities  for the  1992/93 period, thereby 
confirming the Member States' guaranteed total quantities which it had fixed 
for that period on 31 March  1992, subject to a final decision in the context 
of the reform of the CAP(^). it further decided that before the beginning 
of the  1993/94 and  1994/95 periods of the additional  levy scheme the 
Commission would present reports to the Council on the market  situation 
together, where appropriate, with proposals in order to permit the Council 
to review decisions taken for those two periods.  This report has been 
drafted  in response to that request. 

(1) 
(2) 
(3) 
(4) 
(5) 

COM  (91) 72 final of  1 March 1991. 
COM  (91) 258 final of 22 July 1991. 
COM  (91) 409 final of 31 October 1991. 
COUNCIL DOCUMENT No 6953/92 of 2 June 1992. 
Regulation  (EEC) No  816/92, published  in OJ No L  86, 1.4.1992, p 
83. 

1.  Trends in the community market 

-  3 -

The 2% reduction in the guaranteed total quantities  for the  1991/92 
twelve-month period, combined with the Community programme  for the 
restructuring of dairy production, the effects of which extended until the 
end of  1992, together with the marked drop in production  in the new Lander, 
had a significant impact on milk collection  in 1992.  Output of  intervention 
products, i.e. butter and skimmed-milk powder, fell as a result by 7% and 
20% respectively  compared with  1991.  Quantities bought into  intervention 
fell accordingly  and the market seemed in better balance in 1992. 

Intervention on the Community market  (tonnes) 

BUTTER 
Stocks at 1 January 
Buying-in 
Sales 
Stocks at 31 December 

SKIMMED-MILK POWDER 
Stocks at 1 January 
Buying-in 
Sales 
Stocks at 31 December 

1990 

1991 

1992 

20 300 
250 300 
19 800 
250 800 

4  811 
337 211 
8 880 
333 142 

250 800 
174 000 
163 900 
260 800 

333 142 
198 570 
117 330 
414 383 

260 800 
48 800 
136 400 
172 700 

414 383 

367 269 
47 114 

However, these figures must be seen in relation to those  for subsidized 
consumption, which accounts for a significant proportion of Community 
production. 

subsidized consumption on the Community market  (tonnes) 

-  4 -

1991 

1992 

Percentage 
change 

BUTTER  (Milk fat in butter  equivalent) 

Buying-in  (sales at 
reduced prices) 
Products on market 

(subsidized) 

TOTAL 

93 800 

96 200 

+ 2,6% 

344 300 
438 100 

343 900 
440 100 

-  0,1% 
+  0,5% 

Production 

1 800 000 

1 660 000 

-  7,8% 

Subsidized consumption as 
a percentage of production 

24,3% 

26.5% 

+ 9,1% 

SKIMMED—MILK POWDER  (skimmed milk in skimmed-milk powder equivalent) 

Animal feed 
Casein 
TOTAL  (SMP equivalent) 

955 000 
350 000 
1 305 000 

860 000 
458 000 
1 318 000 

-  9 % 
+  31 % 
+  1 % 

Production of skimmed-

1 510 000 

1 200 000 

- 20 % 

milk powder 

Casein  (SMP equivalent) 
TOTAL  (SMP equivalent) 

350 000 
1 860 000 

458 000 
1 658 000 

f  31 % 
-  11 % 

Subsidized consumption as 
a percentage of production 

70 % 

79,5 % 

+  13 % 

Under these circumstances, the level of intervention stocks and  accordingly 
the market situation as a whole are to a very large extent determined by 
disposal measures, i.e. the budget funds available to finance them, and by 
exports, which are also subsidized and fluctuate more widely  (see Annex I ). 

Community exports  (tonnes) 

Exports 

1991 

1992 

Percentage 

change 

Butter and butteroil 

321 000a> 

250 000b) 

-  22 % 

Skimmed-milk  powder 

253 000 

389 000 

+  54 % 

a)  incl. special exports to the former USSR, Albania, Romania and Bulgaria: 

107 000 and food aid: 12 600 t 

b)  incl. special exports to former USSR and Albania: 40 000 t and food aid: 

5 500 t 

2.  Trends on the world market 

-  5 -

The Community has a commanding position on the world market, both in terms 
of total production and the main products and in terms of share of the 
market, which is about 50% as a result of exports amounting  in both  1991 and 
1992 to approximately  13 million tonnes milk equivalent  (see also tables in 
Annex II). 

Community  share of the world market 

Year 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992* 

Nilk  equivalent 
(nillion tonnes) 

% 

Preliminary 

10 

12.8 

12.2 

11.4 

13.8 

16.5 

14.2 

12.4 

12.8 

13 

44 

48 

45 

41 

48 

54 

51 

49 

49,5 

50 

The reduction in Community  stocks has not, however, affected the world 
market, where prices have varied little. 

International pricees  (US dollars  fob) 

Minimus 
GATT prices 

1 350 

1 625 

1 500 

1  200 

Butter 

Butteroil 

Cheese 

Skimmed-milk  powder 

1990 1st 6 months 
2nd 6 months 

1 350 - 1 550 
1 350 - 1 500 

1991 1st 6 months 
2nd 6 months 

1 350 - 1 400 
1 450 - 1 850 

1992 1st 6 months 
2nd 6 months 

1 350 - 1 600 
1 350 - 1 500 

1 600 - 1 900 
1 600 - 1 800 

| 
1 

1 600 - 1 800 
1 675 - 2 250 

1 

1 625 - 1 950 
1 625 - 1 800 

1 

1 700 - 2 000 
1 550 - 2 000 

1  200 - 1 700 
1  300 - 1 500 

I 
! 

1 600 - 1 900 
1 600 - 2 100 
1 1 
1 750 - 2 100 
1 750 - 2 100 

1 

1 200 - 1 400 
1 450 - 1 800 

1 
1 

1  550 - 1 900 
1  550 - 1 900 

i 

This stability in prices for products apart from skimmed-milk  powder 
reflects the situation on the world market, which continues to be dominated 
by the consequences of the political changes in eastern Europe and the Gulf 
War. 

The market outlets which once existed in the former USSR and certain central 
European countries may be considered  lost for years to come.  The economic 
changes which have occurred in those countries have drastically  reduced 
their consumption capacity.  After the current restructuring period, those 
countries will probably reappear on the world market but as exporters, given 
their agricultural potential. 

-  6 -

In the Middle East, export outlets cut off by the Gulf War remain uncertain. 
More generally,  currency  fluctuations  and the lack of a lasting  solution to 
the indebtedness  of the developing  countries may  jeopardize  any serious hope 
of consolidation  of the market. 

In addition the upward trend in production, which  is being confirmed  in New 
Zealand,  in spite of the fact that producers there receive  no price  support, 
and in Australia,  as well as in the United States despite the fall in 
support prices, against a background  of static or even falling  consumption 
of milk fat in particular, is threatening the stability  of the world market 
so that it is likely to remain very precarious  given the prospect of new 
surpluses  in the near future. 

Lastly, it would be unwise to ignore the programme  to win new markets 
currently being  financed by the United States  (DEIP - Dairy Export  Incentive 
Programme), which is specifically targeted at the Community's  traditional 
markets. 

3.  Control of production  and balance on the market 

Despite the difficulties connected with any quota system, the production 
control scheme has given ample proof  of its effectiveness.  Since its 
introduction,  it has allowed progressive  savings to be made through the fact 
that  it has not been necessary  to dispose of  1.4 million tonnes of butter 
and 2.8 million tonnes of skimmed-milk  powder at reduced prices. 

Application  of  too  additional  levy  arranaoawnta 

EC 
(tonne*| 

i «uarantaad  i 
i 
t 

Quantity  I 
total  i  aaspondad  i 
i 

quantity  i 

Allocation  from 
Coaaunity  raearvo 
i 

SLOM 

i 

•  1 t 

Quantity  i 

t 
i  available  i  delivered  t diffaranoo  i 
t 
i 

Quantity  i 

i 

i 

for  nilk  t 
fat  i 

Sat 
diroet  i difforaneo 

ealae i 

Sroaa  i Corraotioo  t Xntarobanaai 

t 

at 

b 

i 

o 

i 

d 

i 

• 

i  f-a-b+o+d+ai 

« 

i 

h-«-f 

t 

i 

I 

j 

I 

k-h+i*j 

1984/83(1)  l »»  324  000  l 

1»SS/8«(1)  I »•  070  574  l 

l»8«/87(2)  1103  »88  374  I 

I 

l 

I 

- 

- 

3 1)  l 

3»3  i 

3*3  I 

1987/88(2)  1102  0»<  143  I  3  770  103  I 

443  I 

1988/89(2)  ilOl  03»  100  t  S  3»<  405  I 

443  I 

0  t 

0  t 

0  I 

0  I 

0  t 

0  t »•  »17  000  I »»  2»3  2C1  I 

-«23  73»  I 

142  I 

SS  US  I 

-SCO  402 

0  I »•  471  S74  llOO  172  744  I  1  701  170  I 

03  I 

-37  131  I  1  «44  122 

0  il04  381  374  llOS  073  2»7  I 

f»l  723  t 

lit  733  I 

-•  31»  I 

001 »3» 

0  t »•  741  040  I »»  173  711  t 

412  (71  I 

433  »02  I 

-2<S  031  I 

303  522 

0  I »«  105  «23  I »7  <1»  77<  t  1  514  153  I 

400  S0«  I 

-332  123  I  1  3»0  S3< 

1989/90(2)  1100  209  222  I  4  317  «03  I 

443  t 

302  233  I  1  03»  ••«  t »7  «7«  730  I »7  »47  2»«  I 

270  350  I 

77C  102  I 

-372  «21  t 

«74  032 

1»»0/»1(2)  llOO  35»  222  I  4  «7»  4M  t 

443  I 

302  233  t  1  03»  ••«  I »7  («4  »S5  t »<  701  «93  I -1  082  »«2  I  1 372  ««1  I 

-402  808  t 

-112  909 

1991/92(3)  ll0«  «37  «93  I  4  983  «««  I 

«43  I 

«00  000  I  1  03»  «8«  tl03  734  915  il03  921  500  I 

1««  583  I 

n.a.  I 

n.a.  s 

n.a. 

l 
1992/93(3)  1101 «72  000  t 

I 

l 
i 

- 

t 
443  i 

l 
«00  000  I  1  039  88«  tlOJ  734  915  I 

l 

t 

(p|  l 
n.a.  I 

t 
I 

l 
I 

I 
I 

(a) Artiola  Se(3|  of  Keuulation  (EEC) Bo  804/CS. 

(b) «.««illation  (SEC)  Mo  775/87. 

(e),  (d)  and  (a) Artiola  1 of  «ovulation  (EEC) So  154C/88. 
(«) Meaber  Stataa•  daolarationa  to  tba  Coaaieeion,  aatiaataa  or  provisional  daolarationa  in tha  eaaa  of  eartain  Maabar  Btataa. 

(i) Artiola  12  of  Regulation  (EEC) Bo  1544/88. 
(j|  Artiola  «a  of  Regulation  (EEC) Mo  157/44. 

(1)  10 Maabar  Stataa. 
(2)  11 Maabar  Stataa. 

(3)  12 Maabar  Stataa. 
n.a.  not  available 
(p|  provision»! 

Application  of  additional  levy  arrangeaenta 

Ouaranteed i 
total t 

Quantity 
auapended 

quantity  I 

1991/92 

Allocation 
froa 
Coaaunity 
reserve 

SLOM  (1) 

Total 
quantity 
available 

Deliveries  I Adjustaent. i Interchanges  Differenoe 
after 

for  ailk  i 

(3)  i 

(p|  i 

l 
« 

fat  t 
(J|  t 

t adjuataant 
i 

(•000 t) 

1992/93 

total  t 

Ouaranteed  i Allocation t 
froa i 
quantity  i  Coaaunity  i 
reserve i 

i 

SLOM 
(H 

Total 
quantity 

available 

1 

EUR  12 

S 

DK 

D 

EL 

E 

r 

103  754.» 

101  «72.0 

1  482.» 

«00.0 

103  754.9 

t  10»7+«-<-4 

11 

12 

14-11-12*131 

3  025.5 

144.3 

32.1 

4  589.1 

21».7 

48.8 

28  514.4 

1  340.2 

234.2 

«.« 

9.4 

141.0 

2  919 

2  994 

130.0 

180.0 

25.2 

2  «81.0 

32.1 

4  427 

4  424 

10.2 

0.0 

7.1 

«  349.4 

48.» 

27  549 

2«  171 

n.d. 

n.d. 

27  154.2 

234.2 

544.8 

24.2 

3.4 

S2« 

578 

n.d. 

n.d. 

320.• 

3.4 

4  571.0 

20». 2 

9«.S 

4  458 

5  931 

n.d. 

n.d. 

«  3(1.8 

9C.S 

«.« 

».« 

2  919 

4  427 

1(1.0 

27  549 

52« 

4  458 

24  1»«.0 

1  153.« 

254.3 

«4.0 

23  3<2 

23  389 

293.5 

143.3 

177.0 

23  042.4 

254.3 

«4.0 

23  3(2 

IRL 

«  »«3.2 

237. « 

353.8 

118.0 

5  199 

S  201 

0.0 

«.3 

-4.1 

4  725.« 

355.8 

118.0 

5  199 

X 

L 

5  «20.1 

3»5.» 

249.1 

11.9 

88.0 

27.7 

8  312 

S  8C2 

(•) 

n.d. 

1.7 

2«« 

253 

12.0 

ML  (4) 

11  248.3 

539.1 

119.8 

47.9 

10  87C 

10  534 

381.0 

1  743.4 

14  3»2.S 

1  743 

1  584 

(») 

n.d. 

14  112 

13  995 

171.0 

38 

n.d. 

0.2 

2.4 

n.d. 

«  224.2 

«8.0 

S  312 

-0.4 

237.2 

27.7 

1.7 

2<( 

3C.2 

10  709.2 

119.8 

47.9 

10  87( 

1  743.4 

13  073.0 

1  743 

14  112 

source  i Meaber  State'a  daolarationa 
(1) SLOM  t quantitiaa  allocated  pursuant  to  Article  3a of  Regulation  (EEC) Mo  857/84. 

(2) Adjuataents  pursuant  to  Article  12  of  Regulation  (EEC)  Mo  1S4C/88. 
(1)  Intercbanqe  purauant  to  Article  «a  of  Regulation  (EEC) Bo  857/84. 
(4) 52  weeke. 
(a) Eurostat  - Cronoa.  Tbeae  statistical  data  do  not  neeeaaarily  oorreopond  to dolivoriaa  recorded  under  the  arrangements, 

(p) provisional 
preliainary 
* 

-  9 -

While the scheme has definitely enabled deliveries to be kept down, even 
below the levels set for most Member States, the tables set out earlier also 
point to a growing tendency for those quantities to be exceeded  if the fat 
content of milk delivered is taken into account.  This constant  rise in the 
fat content of milk delivered  seriously endangers the balance of the market. 

While the trend in consumption  is stable in the Community  and generally  in 
all developed countries, the trends by product show significant 
variations(6); demand for partly skimmed milk, fresh  (reduced-fat) milk 
products and certain cheeses is rising by  1% to 2% per year while that for 
whole milk, hard cheese and particularly butter is falling constantly by 2% 
to 2.5% per year.  The result is an overall decline in milk fat  consumption 
that is growing steeper every year and persistent difficulties  on the 
market  for butter, clearly reflected in the market price, which  is 91% of 
the intervention price on average and has stayed between  89% and  94% of the 
intervention price for the last three years  (see Annex). 

This downward trend in consumption of butter and milk fat, which  is almost 
certainly  in part a response to dietary concerns, is also the result of 
competition  from butter imitation and replacement products.  Products 
competing with butter are now in a dominant position on the market  for 
yellow fats<6>. 

In the face of a similar situation, Canada reduced  its quota for 
manufactured milk by 3% for the  1992/93 period.  The United States, which 
does not have a comparable  system, reduced the support price  for butter 
twice in 1992 and plans a further reduction  in 1993, thus  considerably 
altering the solid-non-fat ratio contribution to the value of milk, which 
is USD  1 725/tonne or ECU  1 215/tonne for butter and USD 2 145/tonne or 
ECU  1 511/tonne for skimmed-milk  powder. 

Such a reduction in prices for butter, which may help effectively  to slow 
down the development of imitation and replacement products, has the 
definite advantage of encouraging consumption.  In this respect,  it should 
be remembered  (to emphasize the quantities  involved) that approximately  one 
third of milk collected  is still processed  into butter and only  60% of that 
butter  is disposed of at the market price. 

Conversely,  it may be feared that the - in some cases substantial -
devaluation of the green rates of currencies which have recently  been 
readjusted within the EMS may result in a marked increase in prices for 
butter and that this may be damaging to consumption  in those Member  states. 

(6)  cf. Report on developments on the market  in milk products  and  competing 

products - Fourth report from the Commission  to the Council -
C0M(93) 34 final of 5 February 1993. 

Conclusions 

- 10 -

On 21 May 1992 the Council decided on a reduction over two years of 2% in 
the guaranteed total quantities and 5% in the intervention price for butter. 
Since then the situation on the market, which appears on analysis to be 
still exposed to the same pressures as those identified at the time, does 
seem to be in better equilibrium than might have been feared in March 1992. 

This glimmer of improvement in the market may be put down partly to the 
trend in production in the new Lander, which is now 25% to 30% below the 
reference quantities available for the region.  In the short term, a better 
adjustment hardly seems possible given the restructuring of holdings 
currently under way. 

In this connection, the Council must also take into account the efforts of 
Spain and Italy over the last year to reduce their milk deliveries to within 
the reference quantities available to them.  Given the programme to 
encourage the discontinuation of milk production implemented in 1992/93 by 
Spain, a reduction of approximately 600 000 tonnes is expected  in 
deliveries in 1993/94.  Similarly, the Italian authorities anticipate a fall 
in production of around 300 000 tonnes in 1992/93.  Overall, actual 
quantities of milk collected in the Community in 1993/94 should not exceed 
103 million tonnes, a figure which must be compared with the guaranteed 
total quantity available for 1992/93 (103 755 000 tonnes). 

Seen from the demand side, there is a persisting decline in consumption of 
butter and milk fats and a move towards imitation and replacement products 
assisted by the price edge enjoyed by the latter. 

To sum up, the Commission considers that the situation on the market for 
milk fat gives cause for much greater concern than the situation for milk 
protein.  Accordingly, before deciding on a further reduction in the 
guaranteed quantities, a determined effort should be made to deal directly 
with the imbalance on the market for milk fat.  The Commission therefore 
proposes that the 5% reduction in the intervention price for butter decided 
by the Council in May 1992 should apply in full from this year and not be 
staggered over two years.  At the same time as this reduction, which only 
covers milk processed into butter i.e. less than a third of Community 
deliveries, it has been decided, as part of the CAP reform package, to 
abolish the co-responsibility levy.  The Commission has proposed that this 
take effect on 1 April 1993.  The impact on incomes will therefore be 
slight. 

Consequently, the 1% reduction in guaranteed quantities decided for 1993/94 
could be deferred and its implementation reconsidered at the same time as 
the 1% reduction decided for 1994/95, in the light of a new market analysis 
to be presented before the end of 1993/94. 

-  11 -

ANNEX 1 

Supply  balance  for buter  C)  ('000  t) 

-  Stocks at  1 January 
-  Pub Iic  -
-  Pr ivate -
-  Product ion 
-  Import 

1990 

1991 

1992 

124 
104 
20 
1796 
88 

335 
251 
84 
1800 
68 

302 
261 
41 
1660 
60 

AvaiI able 

2008 

2203 

2022 

Consumpt ion 
normal  market  price -
special  measures 

1455 
1089 
366 

1580 
1148 
432 

1522 
1097 
435 

Export 
Stocks per 
Pub Iic  -
Pr ivate -

31  December 

218 
335 
251 
84 

321 
302 
261 
41 

250 
240 
172 
68 

C)  Including  former  GDR  as from 1991. 
The  trend  in  internal  disposal  measures and exports  and a comparison 
with  butter  production  is given  below: 

Internal  disposal  ('000  t) 
of which 
-  Pastry &  ice-cream 
-  Non-profitmaking organizations 
- Cooking butter 
- Other 

Exports  ('000  t) 
of which 
-  Normal 
-  Special  pr ice 
-  Food aid 

TOTAL 

(mid-year) 
1991 

1992 

1990 

366 

432 

435 

292 
37 
16 
21 

352 
37 
19 
24 

362 
36 
19 
18 

218 

321 

250 

202 
5 
11 

201 
107 
13 

205 
40 
5 

584 

759 

691 

-  as a percentage of  production 

33 

42 

41 

Subsidized  butter  for  the  internal  market  plus  total  exports exceeded 
41% of butter  production  both  in 1991  and  1992 while  it was only  33% in 
1990. 

-  12 -

SUPPLY BALANCE  FOR SKIMMED-MILK  POWDER  ('000  t) 

wmwmmwmmmi*mwÊimmm^mtwmmmtmimmmmmmmmmmmmmmmmmmmmmwmm* 
(1) Public stocks at  1 January 

5 

1990<*> 

(2) Quantities available 

of which: 

-  product ion 
-  imports 

(3) EC consumpt ion 
of which: 

- at  fulI pr ice 
-feed  for  calves 

(4) Exports 

of which  : -

1672 

1665 
7 

1067 

300 
767 

329 

- exported on market  terms  261 
68 
-  food aid 

(5) Balance -  (2) - (3) - (4) 

276 

(6) Public stocks at 31 December  333 

1991 

333 

1528 

1510 
18 

1186 

330 
856 

253 

192 
61 

89 

414 

1992 

414 

1205 

1200 
5 

1140 

335 
805 

389 

295 

94(**> 

-324 

47 

(7) skimmed  milk used  in 
manufacture of casein 
(SMP equivalent) 

334 

350 

458 

(*)  excluding  the former  GDR. 
(**)  of which  44 000 tonnes covers emergency  supplies  to eastern  Europe 

SUBSIDIZED DISPOSAL OF SKIMMED MILK  ('000  t) 

1990 

1991 

1992 

1.  COMMUN ITY MARKET 

1166 

1288 

1317 

Of which 
-  animal  feed 
- casein 

2. 

EXPORTS 

3.  TOTAL 

832 
334 

939 
349 

859 
458 

329 

253 

389 

1495 

1541 

1706 

4.  AS A PERCENTAGE OF PRODUCTION 

75 

83 

92 

(powder  + casein) 

-  13 -

A N N EX 

I I 

Milk collection 
(million tonnes) 

1990 

1991 

1992 

EC 
CIS + Baltic Statesf1) 
USA 
New Zealand 
Australia 

106.0 
108.2 
66.8 
7.3 
6.4 

100.7 
101.2 
67.4 
8.1 
6.6 

100.2 
87.3 
67.8 
8.5 
6.7 

(1)  Estimated  production. 

Butter production  (tonnes) 

1990 

1991 

1992  (p) 

EC 
CIS 
USA 
New Zealand 
Australia 

2 013 000 
1 740 000 
591 000 
276 000 
106 000 

1 800 000 
1 504 000 
606 000 
269 000 
107 000 

1 660 000 
1 420 000 
615 000 
286  000 
111 000 

(p) Provisional  figures. 

Production of  skimmed-milk 
powder  (tonnes) 

1990 

1991 

1992  (p) 

EC 
USA 
CIS 
New Zealand 
Australia 

1 665 000 
399 000 
300 000 
172 000 
127 000 

1 510 000 
398 000 
274 000 
162 000 
135 000 

1 200 000 
390 000 
263 000 
155 000 
146 000 

(p) Provisional figures. 

cheese production  (tonnes) 

1990 

1991 

1992  (p) 

EC 
USA 
CIS 
Australia 
New Zealand 

5 150 000 
2 749 000 
886 000 
175 000 
122 000 

5  170 000 
2 763 000 
780 000 
176 000 
125 000 

5 270 000 
2 920 000 
700 000 
197 000 
139 000 

(p) Provisional figures. 

Share of market 
in milk equivalent 

1990 

1991 

million 
tonnes 

% 

million 
tonnes 

% 

EC 
New Zealand 
Australia 
USA 

12.5 
4.3 
1.8 
0.3 

49 
17 

7.3 
1.2 

13.0 
5.0 
2.3 
0.7 

49.5 
19.3 
8.9 
2.7 

-  14 -

Amended proposal for a 

Council Regulation  (EEC) No 
of 

/93 

establishing  an additional levy in the milk and milk products  sector 

-  15 -

Amended proposal  for a 

COUNCIL REGULATION  (EEC) No 

/93 

Of 

establishing  an additional levy in the milk and milk products  sector 

The sixth recital is deleted and replaced by the following three recitals: 

N  Whereas, under the reform of the common  agricultural policy, the Council 

has decided to reduce the guaranteed total quantities by a further 2% 

over two twelve-month periods without prejudice to any review in the 

light of the market  situation and the special conditions governing the 

implementation of the arrangements  in certain Member States; 

whereas an analysis of the market  shows that the situation regarding milk 

fat gives cause for much greater concern than that for milk protein; 

whereas an attempt  should therefore be made first of all to remedy the 

imbalance  on the market  for milk fat before applying the 1% reduction to 

the guaranteed total quantities decided  in principle  for the  1993/94 

period; whereas that  1% reduction  should  accordingly  be deferred and its 

entry  into force should be reconsidered,  in the light of a new market 

analysis, at the same time as that decided  for 1994/95; 

Whereas, upon examination of the particular  situations  in Spain, Italy 

and Greece, it appears advisable on the basis of the current data to 

increase the guaranteed total quantity  for Spain for 1993/94 at this 

juncture and to defer by at most three months the decisions  regarding 

Italy and Greece; " 

Article 3 is replaced by the  following: 

" Article 3 

1.  The sum of the individual reference  quantities of the same type may 

not exceed the -corresponding guaranteed  total quantities in each 

Member State. 

- 16 -

2.  The guaranteed total quantities shall be as set out below, without 

prejudice to any revision in the light of the overall market 

situation and the particular situation in certain Member States: 

Member State 

Deliveries (tonnes)  Direct Sales (t) 

Belgium 
Denmark 
Germany (1) 
Greece 
Spain 
Prance 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 

2 919 720 
4 427 830 
27 549 481 
525 985 
5 200 000 
23 362 797 
5 199 358 
8 312 190 
266 499 
10 906 664 
1 743 420 
14 112 504 

373 193 
951 
150 038 
4 528 
366 950 
732 824 
15 210 
717 870 
951 
102 307 
118 580 
392 868 

(1)  Of which 6 157 620 tonnes covers deliveries to purchasers 

established in the territory of the new Lander and 58 801 tonnes 
covers direct sales in the new Lander. 

The total quantities given for Spain are hereby fixed for the 

1993/94 period. 

3.  Where the Council decides to adjust the abovementioned total 

quantities to the prevailing market situation, the adjustments shall 

be expressed as a percentage of the total quantities for the 

preceding period. " 

- 1 7-

Proposal  for a 

COUNCIL REGULATION  (EEC) No 

/92 

Of 

amending  Regulation  (EEC) No 2072/92 fixing  the target  price 
for milk and  the  intervention prices for butter, skimmed-milk  powder 
and Grana Padano and Parmigiano Reggiano cheeses for  two annual  periods 
from  1 July  1993 to 30 June 1995 

THE COUNCIL OF THE EUROPEAN  COMMUNITIES, 

Having  regard  to the Treaty establishing  the European  Economic  Community, 

and  in particular  Article 43 thereof, 

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

particular  Article 234(3) thereof, 

Having  regard  to the proposal  from  the  Commission1, 

Having  regard  to the opinion of  the European Parliament2, 

Having  regard  to the opinion of  the Economic and Social  Committee3, 

Whereas, given  the pressing need  to  improve  the balance between  supply and 

demand,  the Council  has decided  to extend  as from  1 April  1993 the 

additional  levy arrangements  introduced  for milk  and milk products and to 

reduce  the guaranteed  total  quantities  fixed under  those arrangements, 

without  prejudice  to a review  in the  light of  the market  situation; 

Whereas an analysis of  the market  shows  that  the situation  regarding milk 

fat gives cause  for much greater  concern  than that  for milk protein; 

whereas, as a consequence, before applying  the 1% reduction  in the 

guaranteed  total  quantities decided  for  the 1993/94 period, an attempt 

should  firstly be made  immediately  to remedy  the  imbalance on  the market  for 

milk  fat and  to bring  forward  to 1 July  1993 the entry  into force of  the 

reduction  in the target  price and  the 5% reduction  in the  intervention price 

for butter  fixed by Council  Regulation  (EEC) No 2072/924, 

1  0J No 
2  OJ No 
3  OJ No 
4  OJ No L 215, 30.7.1992, p. 65. 

HAS ADOPTED  THIS REGULATION : 

- 1 8-

Article 1 

Article  2(1) of Regulation  (EEC) No 2072/92  is hereby  replaced  by the 

fol Iow i ng: 

"  (1)  For  the period  from  1 July  1993 to 30 June 1994 

(ECU/100 kg) 

Community 
except 
Portugal 

Portugal 

(a)  Target  price  for milk 

26,13 

26,13 

(b)  Intervention  price  for : 

-  butter 
-  skimmed-milk  powder 
- Grana Padano cheese: 

-  between  30 and 60 days old 
-  at  least six months old 
-  Parmigiano Reggiano cheese, 

278,14 
172,43 

369,84 
460,18 

at  least  six months old 

509,04 

278,14 
195,48 

Art icle 2 

This Regulation  shall  enter  into force on  the third day  following  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 CounciI 

- 1 9-

Amended  proposal  for a 

COUNCIL REGULATION  (EEC) No 
Of 

/93 

fixing  the threshold prices for certain milk  products 
for  the 1993/94 milk year 

- 2 0-

Amended proposal  for a 

COUNCIL REGULATION (EEC) No 
Of 

/93 

fixing the threshold prices for certain milk products 
for the 1993/94 milk year 

In Article 1(1), the table setting out the pilot products and the 
corresponding prices is replaced by the following: 

Pilot product 
of group of products 

ECU/100 kg 

1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 

56,86 
193,83 
263,32 
98,75 
130,52 
311,95 
372,24 
312,24 
589,52 
336,75 
310,80 
94,26 

/. 

INTRODUCTION 

FINANCIAL  EVALUATION 

The  proposals 

Include 

the  following  measures 

In  quotas  already 

reduction 

decided 
will 
the  same  time 

at 

be 

that  before  1.7.1993, 
1993/94 
fulfilled. 
of  100  000 

Increased  by 
a  decision 
for  Greece 
It 
Is 
tonnes 

this 

It 

It 

for 

Italy. 

1993/94. 

Is  assumed  that 

Is  also  envisaged 

of  the  1% reduction 

for 
that  year; 
for  1993/94  will 

there  will  be  a  deferral 
In  principle 
Instead  be  applied  as  from  the  beginning  of  1994/95, 
as  the  1% reduction  already  decided 
the  quota 
for  Spain 
for  deliveries 
650  000  tonnes. 
will  be  taken  on  an  Increase 
and 
assumed  that 
and  900  000 
the 
for  butter, 
Instead  apply  as  from  1.7.1993. 
from  1.7.1993  of  5%  for 
for 
target 
the 
threshold 

the  target  price 
currently 

for 
being 
respectively 

the 
There  are  also  corresponding 

for  milk  and  of 
to  apply 

This 
Intervention 

to  certain 
be 

In  the  quantities 

there  will 

conditions 

levels  of 

envisaged 

Increases 

Subject 

tonnes; 

prices. 

as 
to 

price. 

leads 

price 

the 

Intervention 
from  1.7.1994, 
total 

reductions, 

price 
will 
as 
and  of  2,5% 
of 

adaptations 

for  butter 

financial 

assessment  of 

the  reform  were  drawn  up  on  the  assumption 

The  1993  budget  and  the 
of  May  1992  concerning 
the  1% quota  reduction  would  be  applied  as  from  1.4.1993,  with  a 
1% reduction  being  applI  cable  as  from  1.4.1994. 
that 
intervention 
1.7.1993  and  by  a  further 
and 
in 
therefore 
reform  decisions, 
assessed  below. 

decisions 
that 
further 
assumed 
from 
this  background 
the 
Is 

the 
the  proposed  measures 

2.5%  as  from  1.7.1994. 
the  évaluât 

price  would  be  reduced  by  2.5%  as 

relation 
the 

It  was  similarly 

the  Council's 

ion  made  at 

the  butter 

Impact  of 

time  of 

financial 

Against 

to 

2.  FINANCIAL  ASSESSMENT 

a)  Deferral 
Increase 

the  1%  decrease 

of 
in  quota  for  Greece  of  100  000  tonnes 

In  quotas 

for 

1993/94 

to  1994/95  and 

(i) 

Impact  on  milk 

production 

to 

the 

This 

level 

relation 

foreseen 

the  delivery 

In 
decisions, 
tonnes. 
deliverles 
milk  powder  of  55  000  tonnes  and  105  000  tonnes  respectively. 
additional 
of  butter  and  skimmed  milk  powder  are 
between  the  1993  and  1994  financial 

reform 
time  of 
Increased  by  1.2  mio 
in  milk 
and  skimmed 
These 
allocated 

and  a  consequent  higher  product  ion  of  butter 

years  as  follows 

a  corresponding 

for  1993/94 

quantities 

Increase 

the 
Is 

should 

quota 

lead 

the 

to 

at 

: 

tonnes 

1993 

1994 

Butter 
Skimmed  milk  powder 

. 

+  20  000 
+  40  000 

+  35  000 
+  65  000 

-  2  -

that 

these 

the  additional 

additional 
cost 

quantities 
the  EAGGF is 

are  exported 
following 

the 

to 

third 

to 
-. 

Assuming 
countries, 

1993 

Butter 
Skimmed  milk  powder 
TOTAL 

1994 

Butter 
Skimmed  milk  powder 
TOTAL 

20  000  t  X  1  690  ECU/t  X  1.205 
645  ECU/t  x  1.205 
40  000  t  x 

(DT) 
(DT) 

35  000  t  x  1  640  ECU/t  X  1.205 
900  ECU/t  x  1.205 
65  000  t  x 

(DT) 
(DT) 

Mlo  ECU  (B) 

40.7 
31.1 
71.8 

+ 

57.4 
70.5 
127.9 

+ 

In  addition, 
for  Greece 
expenditure 
and  subsequent 

the  maintenance 
in 
of  12  Mio  ECU (B) 

1994/95 

years. 

of 

the  100  000 

and  onwards  would 

tonne 
also 

increase 
lead 

In 
to  an 

in  1994  and  of  21  Mlo  ECU  (B) 

quota 
extra 
for  1995 

(Il) 

Compensât  ion 

for 

the  reduction 

of 

quotas 

financial 
account 

The 
took 
respect 
Given 
instead 
transferred 

that 

of 

the 
this 
of  1993/94, 

assessment  made  at 
of  compensation 
1%  reduction 
quota 

reduction 

the 
to  be  paid 
of  quotas 

time  of 

reform 

the 
to  producers 
1993/94 

in 

will 

now  be  applied 

as 

these  compensât  ion  payments  will 

decisions 
in 
in  1994 
(153  Mio  ECU). 
1994/95 
be 

from 
accordingly 

from  1994  to  1995. 

(iil) 

Impact  on  the  beef 

sector 

took  account 

assessment  made  at 
the 

the 
Impact  on 

of 

time  of 
the  beef 
it  was  estimated 

reform 
of 

the 
sector 
that 

product 

of  1% for  1993/94. 
beef 
public 
will 
ion  will 

storage 

ion 

not  now  take  place 
arise 

In 

1994  of 

76  000 

tonnes, 

expenditure 

of 

189  Mio  ECU.  This 

in  1994. 

Instead, 

into 

public 

the  additional 

In  1995.  Assuming 
Intervention 
storage 

public 

that 
and  within 

the  extra 

the 

costs 

for 

that 

this  would 

the 

decisions 
quota 
lead 
involving 
extra 
beef 
les 
ion 
year  would  be 

intervent 

quant  it 

the  extra 

financial 

The 
also 
reduction 
extra 
to 
additional 
expenditure 
product 
are  purchased 
ceiling, 
181  Mio  ECU. 

b) 

increase 

in  quotas 

for  Spain  and 

Italy 

(i) 

Impact  on  milk 

production 

The  envisaged 
cannot  be  dissociated 
reduce  milk 
for 
measures 
product 
corresponding 
1.4.1995. 

by  a 

ion 

increase 

in 
from 

Ion 

product 
the  buying-up 
total 

of 

in 

reduction 

quotas 

for  Spain  and 

the  delivery 
the  measures  which  have  been 
two  Member  States. 
are  designed 
tonnes, 

Italy 
to 
introduced 
For 
Spain, 
reduce  milk 
a 
Italy 
by 
tonnes  should  be  achieved 

these 
of  quotas 
0.8  mio 

whilst 

for 

to 

of  about  1.6  mio 

v 

-  3  -

that  Spain  achieves 

On  the  assumption 
year  but 
that 
the  1993 financial 
(0.3  mlo  tonnes 
years 
three 
over 
tonnes 
0.65  mlo 
1995), 
In 
delIverles 
and the  consequent 
milk  powder  production 

Is  as  follows  ; 

reduction 

Its 
the  reductions 

objective 
Italy 
in  1993, 0.65  mio  tonnes 

within 
are  staged 
In  1994  and 

In 

the 
total 
cumulative 

cumulative 
impact  on  milk 
effect  on  butter  and  skimmed 

Milk  deliveries 
Butter 
Skimmed  milk  powder 
production 

production 

(mlo 
t) 
(1000  t) 

1993 

1994 

7995 

- 7.70 
-  50  000 

- 
1 .75 
-  85  000 

-  2.40 
- 7 75 000 

(1000 

t) 

- 95  000 

-  155 000 

-  210  000 

In 
reductions 
estimated 

terms  of 

their 

disposal 

In  the  product 

cost  on 
Ion  of  butter 

third 

country  markets, 

these 
and  skimmed  milk  powder  are 

to 

lead 

to  the  following 

savings 

: 

1993 

Mlo  ECU (B) 

Butter 
Skimmed  milk  powder:-  95 000 t  x 
TOTAL 

:-  50  000 t  X  1 690 ECU/t  x  1.205 (DT) -
645 ECU/t  x  1.205  (DT) -

-  101.8 
-  73.8 
- 775.6 

7994 

Butter 
Skimmed  milk  powder:-155  000 t  x 
TOTAL 

:-  85  000 t  x  1 640 ECU/t  x  1.205 (DT) 
900 ECU/t  x  1.205  (DT) 

-  768.0 
-  768.7 
-  336.7 

7995  and  onwards 

Butter 
Skimmed  ml Ik  powder:-210  000 t  x 
TOTAL 

.-7 75  000 t  x  1 580 ECU/t  x  1.205 (DT) 
900 ECU/t  x  1.205 (DT) 

-  278.9 
-  227.7 
-  446.6 

(ii) 

Impact  on  the  beef 

sector 

The  reduction 
will 
require 
Assuming 
production 
follows 

: 

in  milk  product  ion  in  the  two  Member  States 

the  corresponding 
the  cows  are  slaughtered, 

and  the  extra 

costs  of  public 

removal  of  cows 

from 

the  consequent 
storage^1) 

concerned 
herd. 
the  dairy 
additional 
meat 
are  assessed  as 

Quantity 
tonnes 

Cost 
Mlo ECU (B) 

1993 
1994 
7995 

+  70  000 
40  000 
+ 
40  000 
+ 

+  184 
+  99 
94 
+ 

TOTAL 

+  150  000 

+  377 

(1)  Assuming 
intervent 

that 

the  extra 

quant  it  ies  can  be 

purchased 

within 

the 

ion  ceilings 

for  the  years 

concerned. 

14) 

-  4 -

(III) 

Effect 

of 

the 

Increases 

in  quotas 

the 

that 

quota 

now  envisaged 
two  Member  States 
the  potential 

Given 
than  current 
levels 
these 
Instead, 
should  be  seen 
the  super  levy. 
for 
the  quota 
as  follows 
calculated 

this 
1993/94, 

In 

In 

: 

level  of  milk  production 

In 

Italy 

and  Spain 

levels 
for 

and  will 
1993/94, 

do  not 
financial 

lower 

not  be 
the  proposed 
to  an 
of 

Impact 

lead 

Increase 

than 
quota 

the  additional 

terms  of 

receipts 

respect, 
is  equivalent 

foregone 
each  100  000 
to 

foregone 

from 

tonnes  of 

super  levy 

the  application 

In  del 

is 

greater 
the  new  quota 
for 
increases 
Iveries. 
quotas 
of 
in 
receipts 

increase 

100  000  t  x  261.40  ECU/t  X  115% X  1.205  (DT)  -  36.2  Mlo  ECU 

(B). 

c)  Additional 
target 

price 

The  effet 
30.6.1994, 

reduction 

In 

the 

for  milk  as  from 

Intervention 
1.7.1993 

the 

of 
proposal 
Inst  I tut  Zonal  prices  will 

Is 

that 

price 

for  butter 

and 

In 

the 

for 

the 

period 

1.7.1993 

to 

now  be  as  follows 

: 

ECU/tonne 

Ion 

Intervent 
purchase 

Butter 
Butter 
Skimmed  milk  powder 
Target 

price 

price 

price 

price 

Proposed 

Previous 

Variât 

Ion 

prices 

(1) 

prices 

(1) 

2  746.60 
2  471.90 
1  702.70 
258.00 

2  818.90 
2  537.00 
1  702.70 
261.40 

- 
72.3 
-  65.7 

3.4 

(1) 

Taking 
coefficient 

Into  account 
of 

1.012674. 

the  applicat 

I on  of 

the  monetary  correct 

ion 

financial 

The 
marketing 

year 

Impact 
these 
of 
Is  assessed  below 

price 

reductions 

for 

the 

1993/94 
-. 

(I) 

Export 

rest  I tut 

Ions 

Mio  ECU  (B) 

Butter 
and  butterol1: 
Skimmed  milk  powder 
Other  products 

230  000  t  x  -65.1  ECU/t  x  1.205 

(DT)  « -  78.0 

: 
:  10.4  mio 

t  x  -3.4  ECU/t  x  1.205 

(DT)  « -  42.6 

(il) 

Private 

storage 

for 

butter 

Normal  aid 
Special 

Increase 

200  000  t  X  -  4.4  ECU/t  X  1.205 
725  000  t  x  65.1  ECU/t  x  1.205 

(DT)  - -  7.7 
(DT)  -  + 
9.8 

(III) 

Public 

storage 

for 

butter 

.  Financial 
.  Other 
. 

Depreciation 

costs 

costs 

- 0.7  Mlo  ECU (A)  X  1.205 
+  6.7  Mlo  ECU (A)  x  1.205 
-  2.3  Mlo  ECU  (A)  X  1.205 

(DT)  - - 0.7 
(DT) 
-  +  8.0 
(DT)  - -  2.8 

TOTAL 

+ 

5.1 

(iv)  Aids 

for  butter: 

445  000  t  x  -65.1  ECU/t  x  1.205 

(DT)  = -  34.9 

(v) 

School  milk 

:  575  000  t  x  -4.25  ECU/t  x  1.205 

(DT)  = -  2.9 

TOTAL 

-84.6 

- 5 

total 

This 
allocated 

saving 
as  follows 

of  85  Mio  ECU  (B) 

for 

the  quota 

year 

1993/94 

between 

the  1993  and  1994  financial 

years 

is 
-. 

1993  : 
1994  : 

-  12  Mlo  ECU  (B) 
-  73  Mlo  ECU  (B) 

3.  CONCLUSION 

financial 

The 
table 

shown  below 

impact  of 
: 

the  measures  proposed 

can  be  summarized 

in 

the 

Mio  ECU  (B) 

1993 

1994 

7995 

1996 
onwards 

a)  Non-reduction 

in  1993/94 
0.1  mio 
t 
reduction 

In  quotas 
increase 

and 

of  1% 
of 
quota 

for  Greece; 
of  2%  from  1994/95 

: 

- 
Increased 
-  compensation 
- 

impact 

on  beef 

payments 
sector 

milk 

production 

+ 

72 

+  140 
-  153 
-  189 

+ 
21 
+  153 
+  181 

+ 

21 

b) 

Increase 
and 
Italy 
buylng-up 

In  quotas 

for 

Spain 

Impact 

and 
measures 

: 

of 

reduced  milk 
impact 

on  beef 

- 
- 
-  super 

levy 

receipts 

production 
sector 

- 776 
+  184 
(1) 

-  336 
99 
+ 

(1) 

-  447 
94 
+ 
(D 

-  447 

(D 

c)  Additional 

price 

from  1.7.1993 
for 
1994 
price 
tion 
price 

instead 

the  butter 
and 

the  milk 

reduction 
of 

1.7. 
interven 

target 

- 

12 

- 

73 

TOTAL 

+ 

68 

- 572 

+ 

2 

-  426 

(1)  Each  100  000 

tonnes 
super  levy  corresponds 

of  milk 
to 

foregone 

removed 
levy 

from 
receipts 

the  appi  Ication 

of 

the 

of  36  Mio  ECU. 

Finally, 
impact 
towards 
Spain  and 
tonnes 
mio 

for 
the  cost  of 

Italy 

in  order 
respectively. 

It  should  be  noted 

that 

this 

assessment 

takes  no  account  of 

the  EAGGF of  any  Community  contribution 

the 
which  may  be  made 
in 
tonnes  and  1.6 

programmes  being  operated 

ion  by  0.8  mio 

the  national 
to 

buying-up 
reduce  product 

COMMISSION 
OF  THE  EUROPEAN 
COMMUNITIES 

REPORT  FROM  THE  COMMISSION  TO  THE  COUNCIL  ON 

THE  PROGRESS  MADE  BY  GREECE.  SPAIN  AND 

ITALY 

IN  THE  EFFECTIVE  APPLICATION  OF 

THE  MILK  QUOTA  SCHEME 

AT  5  MARCH  1993 

Address : 
LOI  120 - 10/39 
200.  rw  de la Loi 
9 - 1049 Brussels 

Tel.: Oirect  line : 293 94 79 
: 299 11 11 
: 296 23 25 

Exchange 
Fox 

Telex 
Telegraphic address 

22037 AGftEC B 
COVEUR Brussels 

C O N T E N TS 

INTRODUCTION 

Situât ion  in 1992 

Request  for additional  quotas 

PROGRESS AT  15 FEBRUARY  1993 

Preliminary  comments 

Greece 

Spain 

Italy 

CONCLUSIONS AND PROPOSAL 

ANNEX 

Reports  transmitted  by Greece, Spain and  Italy 

-  3 

-

INTRODUCTION 

Situation  in 1992 

Three  Member  States  -  Greece,  Spain  and  Italy  -  had  not  fully 
introduced  the milk quota scheme by 1992. 

Greece  was  entitled  to  apply  country-wide  compensations,  which  meant 
that  no  additional  levies  were  due  until  the  national  guaranteed 
quantity  was  exceeded.  This  overrun  in  production  first  occurred  in 
the  1988/89  milk  year.  Additional  levies  were  charged  to  the  milk 
industry  by the Greek authorities  in  late 1992 for excess production  in 
1988/89,  but  have  not  yet  been  collected,  and  levies  for  1990/91  and 
subsequent milk years are still  to be established. 

In Spain, although  individual  reference  quantities  for  deliveries were 
provisionally  allocated  in  1987, no  system  was  established  to  permit 
additional  levies  to  be  collected.  Following  a  re-assessment  of 
production  statistics  in  1991,  it  transpired  that  production  had 
substantially  exceeded  the  national  reference  quantity,  with  excess 
deliveries amounting  to some 1.5 million tonnes  in 1990/91. 

In  Italy  the  national  authorities  had  laid  down  a  legal  framework  for 
the  collection  of  additional  levies,  but  UNALAT,  the  association  of 
producer  groups which  represents practically  the whole  dairy  industry, 
had  failed  to  apply  it,  and  had  in  particular  failed  to  allocate 
individual  reference  quantities  to  its members, amongst  other  reasons 
because  production  already  exceeded  the quota  allocated  to  it.  A  full 
re-assessment  of  production  conducted  in 1991  showed  excess  production 
of some 2.5 million  tonnes  in that year. 

Request  for additional  Quotas 

The  three  Member  States  requested  increases  in  their  national 
guaranteed  quantities  for  deliveries.  Spain  and  Italy  asserted  that, 
as  a  result  of  shortcomings  in  their  national  production  statistics, 
production  in the original  reference  year  had  been underestimated, and 
therefore  higher  national  guaranteed  quantities  should  have  been 
claimed  initially.  All  three  asserted  that  structural  changes,  in 
particular  rapid urbanization, had  led to  increased  demand  for milk  and 
milk  products, thus  increasing  the gap between  demand  and  the national 
production quotas. 

-  4 -

The  Council  of  Ministers  agreed  on  21 May  1992  (Greece  and  Spain)  and  on 
16 December  1992  (Italy)  to  consider  an  Increase  in  the  guaranteed  total 
quantities  with  effect  from  1 April  1993  in  order  to  permit  a  rapid 
transition  to  full  compliance  with  the  quota  arrangements.  Certain 
conditions  were  attached  which  each of  the  three Member  States was  required 
to respect,  in particular: 

(a) an  agency  shall  be  established,  having  the  general  competence  for  the 

implementation and supervision of  the additional  levy  system, 

(b)  individual  reference  quantities, based  on  their  deliveries  in  1991/92, 
shall  be allocated  to each producer, the total  of which  shall  not  exceed 
the guaranteed  total  quantity, 

(c) the  levies  due  shall  be  collected  from  the  producers  who  have 
contributed  to the excess production, after  having  shared out  the excess 
quantities of other  producers. 

The  additional  guaranteed  quantities  envisaged  and  the  arrangements  to 
absorb  the excess production, are summarized  in Annex  1. 

The  three  Memebr  States  were  required  to  send  to  the  Commission  before 
31 December  1992  (Greece,  Spain)  and  31 January  1993  (Italy),  reports 
attesting  to  the  introduction  In  national  regulations  and  the  effective 
Implementation  of  these  provisions,  which  were  to  be  sent  to  the  Council 
accompanied  by appropriate proposals  from  the Commission. 

-  5 

-

PROGRESS AT 15 FEBRUARY  1993 

Preliminary  remarks 

Commission  officials have: 

(a) examined 
submitted 

the  reports  which 
by  the due date, 

each  of  the  three  Member  States 

(b) examined  the  national  regulations,  whether  adopted  or  still 

under 

consideration, which aim at applying  the milk  quota scheme, 

(c) conducted  inspection  visits  lasting  three weeks  to  the  responsible 
control  departments  and  a  selection  of  regional  authorities, 
dairies,  producer  associations  and  producers  in  the  three  Member 
States  in order  to appraise  the progress made  in the  field. 

It  is apparent  that  the time required  to fully  introduce  a quota  system 
covering  all milk producers should not  be underestimated. 

Firstly  the  enabling  legislation  and  the  detailed  implementing  rules 
must  be  proposed  and  adopted  in a  form  which  is workable  in countries 
as highly  federalized  as Spain and  Italy. 

Secondly  procedures  must  be  established  for  recording  deliveries  of 
milk  to each  dairy or  intermediary  buyer, establishing  its fat  content, 
identifying  the producer  and determining when  the producer's  individual 
reference quantity  has been  exceeded. 

The  individual  reference  quantities  have  to  be  established,  and  the 
opportunity  given  for appeals and  reassessment. 

Buy-up  schemes  cannot  usefully  be  implemented  until  the  claimants' 
entitlements to quotas have been established. 

A  structure  for  inspections  and  supervision  must  be  established  to 
verify  production  declarations,  to  ascertain  cessation  in  the  case of 
buy-up,  to ensure  that  all  quantities of milk  traded  by  intermediaries 
are  properly  accounted  for, and  to ensure  that  the  appropriate  amounts 
of  levy are calculated  and  collected. 

The  Commission  has  examined  the  progress  made  by  each  of  the  three 
Member  States.  It  must  be  stressed  that  none  had  completed  the 
implementation  process  by  mid-February  1993.  Each  aims  to  apply  the 
quota  scheme  as  from  1 April  1993,  i.e.  as  from  the  1993/94  marketing 
year,  and  none  plans  to collect  additional  levies  for  the  1992/93 milk 
year.  Only  at  the  end  of  the  1993/94 marketing  year,  therefore, will 
it be possible  to confirm  application of  the system,  as  levies can then 
be  seen  to  be  collected  from  those  individual  producers  who  exceed 
their  reference quantities. 

-  6  -

The  Commission's  main  aim  is  to  ensure  that  the  milk  quota  scheme  is 
effectively  applied.  Until  then  the  Commission  will  continue  through 
the  clearance  of  accounts  procedure  to  recover  from  the  Member  States 
concerned  appropriate  sums  to compensate  for  their  failure  to collect 
additional  levies  on  excess  production.  In  this  context  it  should  be 
borne  in mind  that  the  additional  levy  is not  intended  as a  source of 
revenue  for  the  Community  budget,  but  as  a  means  of  restricting  milk 
production  to  a  certain  maximum  quantity.  This  objective  will  be 
achieved  only  when  the  burden  of  the  levy  is borne  by  the  individual 
producers  rather  than  the Member  States. 

(5) 

-  7 

-

GREECE 

Legal  provisions 

The  Greek  authorities  adopted  a  legal  basis  for  the  implementation  of 
the  milk  quota  scheme  on  28  September  1984,  and,  in  response  to 
Commission  observations,  amended  this  by  adopting  a  replacement  decree 
on  14  July  1986.  Formula  "B"  had  been  applied  whereby  all  the  dairies 
were  considered  as one  purchaser. 

On  10 April  1992,  the  Ministry  of  Agriculture  issued  a  circular  which 
established  the  procedure  for  the  allocation  of  individual  reference 
quantities  to each  producer,  one  quantity  for  deliveries  to  dairies,  or 
intermediaries,  and  one  for  direct  sales.  The  regional  agricultural 
directorates  were  required  to  perform  administrative  checks  on  all 
claims  for  quotas,  and  to  verify  10 X  on  the  spot.  DIDAGEP  was 
required  to  allocate  the  national  guaranteed  quantity  between  the 
individual 
regional 
reference  quantities  to  producers.  This  procedure  was  to  have  been 
completed  by  10  January  1993. 

directorates,  which  would 

in  turn  allocate 

Purchasers  of  milk  are  required  to  keep  a  record  of  the  quantities 
delivered  by  each  producer  and  of  the  fat  content  and  to  collect  the 
additional  levy  due  by  producers  exceeding  their  reference  quantities. 
Direct  sales  are  declared  at  the  end  of  each  year  to  the  competent 
regional  directorate,  which  establishes  the  amount  of  any  additional 
levy  due. 

The  regional  directorates  are  responsible  for  all  the  controls  and 
cross-checks 
and 
intermediar ies. 

producers, 

dairies 

records 

between 

the 

of 

Implementation 

Individual  reference  quantities 

For  the  1992/93  milk  year,  before  the  introduction  of  the  revised 
scheme,  reference  quantities  were  distributed  to  the  dairy  industry, 
but  there  has  been  no  meaningful  distribution  by  the  industry  to  the 
individual  producers. 

The  introduction  of  the  revised  scheme  has  fallen  considerably  behind 
the  schedule  laid  down  in  the  circular  dated  10 April  1992.  It  is  now 
expected  that  DIDAGEP  will  allocate  the  1993/94  reference  quantities  to 
the  regional  directorates  on  10 March  1993,  instead  of  15  November  1992 
as  laid  down  in  the  circular,  and  further  time  will  be  required  for  the 
regional  directorates  to  allocate  individual  reference  quantities  to 
each  producer. 

-  8 

-

The  quant ities aval lab le on  each  producer's  holding  have  been  assessed 
by  the  regional  authorities  in relation  to the number  of  cows  held  and 
to an estimate  of  their  milk  yields.  The Commission  has  proposed  that 
the  Greek  authorities  base  the  individual  reference  quantities  not  on 
this rather  arbitrary  evaluation but on actual  deliveries  to dairies  in 
the  1991/92  milk  year,  as  the  Spanish  and  Italian  authorities  have 
done.  Moreover,  the  provisions  regarding  the  milk  fat  content  do  not 
comply  with  the Community  regulations, as no  individual  average  content 
has been established. 

Competent  agency 

A  condition  for  the  Council's  agreement  was  that  an  agency  is to  have 
general  competence  for  the  implementation  and  supervision  of  the 
additional  levy system, and  in particular  is to have  the power  to: 

check  on  the  spot  the  accuracy  of  producers'  and  purchasers' 
declarations, 
calculate  the  levy due and collect  it. 

None  has  yet  been  appointed  in  Greece,  but  the  authorities  have 
indicated  their  intention  to  establish  a  Milk  Board  before  the 
beginning of  the  1993/94 milk year. 

The  Commission  considers  that  the  principal  obstacle  to  proper 
implementation  of  the  milk  quota  scheme  in  Greece  is  the  lack  of 
central  supervision  and control  which  such a body  should  be exercising. 
The present  reliance on 56 regional  directorates  for all  administration 
and  verification  has  been  the  main  cause  of  delay  in  allocating 
individual  reference  quantities,  leads  to  unequal  treatment  of 
producers, and prevents any effective cross-check  on quantities of milk 
produced  in one  region  but  sold  to an  intermediary  or  dairy  trading  in 
another. 

Unlike  Spain  and  Italy,  there  is as  yet  no  provision  in Greece  for  a 
central  record  of  production  and  deliveries  or  even  any  record  at 
regional  level. 

Conclusions 

The  Commission  has  informed  the  Greek  authorities  that  it  considers 
that  the essential  prerequisites  for  the application of  the milk  quota 
regime  in  Greece  are  the  establishment  of  a  central  agency  with  the 
means  to  record  and  monitor  milk  production  and  deliveries,  and  the 
allocation  of  individual  reference  quantities  based  on  deliveries  to 
dairies  in  the  1991/92  milk  year.  These  requirements  have  yet  to  be 
met. 

On  the  basis  of  the  unreliable  production  figures  submitted  by  the 
regional  directorates, requests for  individual  reference  quantities for 
deliveries cover  a total  of some 775 000 tonnes, considerably  more  than 
the  625 000 tonnes  in  the  national  guaranteed  quantity  which  will 
become  available  after  the  increase  in  the  national  quota.  These 
disquieting  statistics,  which  indicate  that  production  is  increasing 
much  more  rapidly  than  foreseen,  underline  the  necessity  for  the 
implementation  of  systems  for  accurate  and  timely  recording  of 
production  figures. 

-  9  -

SPAIN 

lega' provlslQns 

The  Spanish  authorities  have  adopted  substantial  legal  provisions 
levy 
covering  the  implementation  of  the  Community  additional 
arrangements.  Those 
Spain's 
determination  to  apply  the  arrangements.  The  first  national  texts 
submitted  for  examination  have  been  applicable  from  1 April  1992  but 
will  have  to be  adapted  to  the  regulations  adopted  by  the Council  and 
the Commission governing the extension of  the arrangements  from  1 April 
1993. 

demonstrate 

provisions 

clearly 

(a) Texts adopted  in December  1991 

The  basic  text  for  the  implementation  of  the  arrangements  is  the 
Royal  Decree  of  30  December  1991  providing  for  a  plan  for 
restructuring  the dairy sector. 

(i) It  provides  for  the  allocation  of  individual  reference 
quantities to all producers and producer  groups who declared  and 
provided  supporting  documents  for  quantities  marketed  by  them 
for  1985  (or, where  applicable,  1983  or  1984).  That  quantity 
may  be  affected  by  the  application  of  various  percentages 
provided  for  in the Community  regulations and may  vary or  change 
as provided  for therein. 

The  levy  is payable  where  the  individual  quantity  adjusted  on 
the  basis  of  the  fat  content  of  the  products  is exceeded  and 
after  quantities have been balanced out. 

(ii) A  national  reserve  is  set  up  and  may  be  supplied  from  the 
various  sources  provided  for  in  Community  law,  including 
programmes  for  the  voluntary  discontinuation  of  production. 
Such  programmes, be  they  national  or  Community, can only  permit 
the  definitive  discontinuation  of  production  and  not  temporary 
discontinuation  as  provided  for  in Article  5(2) of  the Decree. 
Quantities  are  allocated  from  the  reserve  in  accordance  with 
Community  law. 

By  a  decree  adopted  on  30  December  1991  too,  plans  for  the 
definitive  discontinuation  of  milk  production  were  implemented. 
That  programme  brings  together  in  a  single  operation  the  various 
possibilities  afforded  by  Community  legislation  in  particular  as 
regards the use of Community funds. 

From  the  legal  viewpoint,  the  programme  presentation  is  in  line 
with  the Community  provisions while  it  is also pointed  out  that a 
resolution  (see below) was adopted  in July  1992 by SENPA to verify, 
by  means  of  supporting  documents  and  on-the-spot  checks,  that  all 
production has actually been definitively discontinued. 

-  70  -

(b) Texts adopted  in 1992 

The  Decree  of  30  December  1991  summarized  in  (a) was  followed  by 
the Order  of  26  June  1992 on  the  updating  of  individual  reference 
quantities  of  milk  producers  affected  by  transfers  before  1 April 
1991. 

To  update  the  reference  quantities,  producers  receiving  transfers 
in whatever  form  before  1 April  1991  must  make  an  application  for 
registration  as  having  an  individual  reference  quantity  on  their 
own  holdings  since  1 April  1991.  In addition  they  must  have  been 
engaged  in  production  uninterruptedly  (except  in  cases  of  force 
majeure)  from  the  date  of  the  transfer  to  that  of  submission  of 
their  appiicat ions. 

That  Order  should  provide  the Spanish  authorities with  a clear  idea 
of  the number  and  identity of persons with  individual  quantities at 
1 April  1993 when Council  Regulation  (EEC) No 3950/92  is affected. 

Following  the  agreement  reached  in  the  Council  on  21  May  1992  to 
make  its decision  to  increase  Spain's  guaranteed  total  quantity  by 
500 000  tonnes  subject  to  a  certain  number  of  conditions,  on  30 
October  1992  the  Spanish  authorities  adopted  a  Royal  Decree 
implementing  those conditions. 

Thus,  the public body designated  to apply  and monitor  the scheme  is 
SENPA.  The  latter  is  authorized  to  caclulate  the  levy  once  the 
figures  have  been  forwarded  and  production  declarations  received 
and  verified.  That  authorization  is  very  precise  and  ensures 
proper  application  of  the scheme  within  the  time  limits  laid down. 
There  is also provision  for  the Ministry  of  Finance  to  take action 
for  recovery  of  sums  and  to  ensure  effective  execution  of 
procedures. 

The  text  states clearly  that  individual  reference quantities are to 
be  allocated  to  producers  and  that  all  changes  relating  to 
quantities are to be  registered. 

7 ; -

The  basis  for  calculating  such  allocations  has  been  altered  as 
compared  with  the Decree of  31 December  1991  since  a programme  for 
the  discontinuation  of  milk  production  has  been  applied  and  the 
Council  has  decided,  subject  to  conditions,  to  increase  Spain's 
guaranteed  total  quantity.  At  all  events  there  is provision  for a 
downward  adjustment  in  individual  quantities  so  that  the  sum 
thereof  does not  exceed  the guaranteed  total  quantity. 

At  the  same  time  as  the  Royal  Decree  was  adopted,  various 
resolutions  were  adopted  by  SENPA.  Two  of  them  relate  to  the 
declarations  to be made by purchasers and by direct  sellers. 

A  third  resolution  lays  down  rules  on  the  verification  and 
monitoring of definitive discontinuation of production. 

By  the  Royal  Decree  of  30 October  1992,  followed  by  the  Order  of 
4 December  1992,  the  Spanish  authorities  supplemented  and  where 
necessary  amended  the  texts  adopted  previously  in order  to  comply 
more  closely  with  the  conditions  which  the  Council  laid  down  for 
the  definitive  decision  to  increase  the  Spanish  guaranteed  total 
quantity.  The Spanish authorities have even  implemented  in advance 
of  the time  limit certain provisions which  the Council  only  adopted 
in  December  1992,  such  as  the  possibility  purchasers  enjoy  of 
withholding  advances  to producers  to ensure collection of  the  levy. 

Appraisal 

The  Spanish  authorities  have  adopted  texts  demonstrating  their  clear 
determination  to comply  as closely as possible with  the conditions* laid 
down  by  the  Council  for  a definitive  increase  in the  guaranteed  total 
quantity.  The  legislation must  be slightly  amended  to adapt  it  to the 
regulations on  the reform  applicable from  1 April  1993. 

The  legislation  is  at  variance  with  Community  requirements,  in 
particular  in so  far  as  it  provides  for  a  reduction  in  the  reference 
quantity  where  utilization  is  less  than  75%  over  two  consecutive 
periods, except  in cases of  force majeure. 

-  12 

-

Implementation of  the scheme 

Allocation of  individual  reference  quantities 

SENPA,  the  body  assigned  general  competence  for  implementation  and 
supervision  of  the  scheme,  has  introduced  the  systems  necessary  to 
record  and  cross-check  declarations  of  milk  deliveries,  has  obtained 
from  the dairies and  the  intermediaries the declarations  concerning  the 
1991/92 marketing  year  and allocated a provisional  individual  reference 
quantity  and  fat  content  to each  producer  by  letter  of  notification  in 
December  1992. 

SENPA  has undertaken  a programme of checks on declarations  submitted by 
milk  purchasers.  Definitive  individual  reference  quantities  for 
deliveries  will  be  allocated  once  these  verifications  have  been 
completed,  once  grounds  for  appeals  against  the provisional  allocation 
of  reference  quantities,  lodged  by  some  2 0%  of  milk  producers,  have 
been  examined  and  after  confirmation  by  the Council  of  the  increase  in 
the  national  guaranteed  quantity.  It  is also  intended  to  inform  milk 
purchasers before  1 April  1993 of  individual  quotas allocated. 

A  programme  for  the  verification  of  declarations  of  direct  sales  must 
also be completed  before  reference quantities can be allocated.  In the 
meantime,  no  accurate  information  is  available  on  the  quantities 
covered  by  direct  sales,  estimated  at  some  10 %  of  total  milk 
product ion. 

National  buy-up scheme 

The  nationally  funded  repurchase  programme  was  implemented  in  April 
1992  and  a  total  of  656 000  tonnes  has  been  bought  up  (568 000  tonnes 
of deliveries quota  and 88 000 tonnes of direct  sales  quota). 

Actual  implementation  is thus close  to  the  target  of  the  repurchase of 
600 000 tonnes of delivery  quota set  in the agreement  with  the Council. 

SENPA  has  carried  out  checks  on  compliance  by  the  claimants,  with 
generally  satisfactory  results.  This  buy-up  scheme  was  based  on  the 
reference  quantities  distributed  in  1987  and  was  implemented  before 
definitive  reference  quantities  were  established.  However,  as  the 
repurchase  programme  took place after  1991/92, any substitution of  the 
bought-up  quantities  by other  producers  will  not  be  reflected  in these 
producers'  quotas  and  will  thus  be  eliminated  in  1993/94.  The 
effectiveness  of  the  repurchase  programme  is  also  supported  by 
slaughter  statistics,  which  show  that  35 %  more  heifers  were 
slaughtered  in 1992  than  in 1991  (205 826 slaughtered  in 1992, 152 493 
In  1991). 

The  repurchase  scheme  to be  financed  by  the Community  has not  yet  been 
launched,  pending  confirmation  of  the  Council's  agreement,  and 
finalization of  individual  reference quantities. 

-  73  -

Conclusion 

Spain 
considerable 
implementation  of  the milk  quota  regime  by  1993/94. 

progress 

made 

has 

towards 

the 

effective 

The  Commission  has  verified  that  SENPA,  both  at  its  head  office  and  in 
its  departments  in  the  regions  in  which  most  of  the  milk  is  produced, 
is  undertaking  the  controls  necessary  to  establish  a  sound  basis  for 
effective  implementation  and  sees  no  reason  why  these  controls  should 
individual 
not  be  completed  before  1 April  1993  and  definitive 
reference  quantities  allocated  for  deliveries. 

Until  verification  of  claims  for  direct  sales  quotas  is  completed  and 
the  quantity  of  direct  sales  established,  the  Commission  cannot  confirm 
that  150  000  tonnes  of  national  guaranteed  quantity  are  available  for 
transfer  from  direct  sales  to  deliveries,  as  proposed  in  the  agreement 
with  the  CounciI. 

-  74  -

ITALY 

iQflal  provisions 

Framework  law 

The  Framework  Law  laying  down  urgent  measures  for  the  dairy  sector  and 
levy 
covering 
arrangements  came  into  force on  19 December  1992. 

implementation  of  the  Community 

additional 

the 

(a) Allocation of  individual  reference  quantities 

To  obtain  an  individual  reference  quantity, one  must  belong  to  a  group 
or  be  registered  individually  in  lists  published  by  the  authorities. 
Member  producers  have  an  A  quota  corresponding  to  quantities  marketed 
in  1988/89  (or  from  1985/86  to  1987/88  in  the  event  of  exceptional 
circumstances)  and  a  B  quota  corresponding  to  the  amount  by  which 
quantities  marketed  in  1991/92  exceed  those  in  1988/89.  Non-member 
producers  only  have  A  quotas  corresponding  to  the  quantities  allocated 
to  them  in  1988  and  which  cannot  exceed  the  quantities  marketed  in 
1990/91  or  1991/92. 

Reference  quantities  are  all  allocated  subject  to  a  decision  by  the 
Council  regarding  the  increase  in  Italy's  guaranteed  total  quantity. 
National  measures  will  be  taken  for  the  difference,  i.e.  the  B  quota, 
to be  absorbed  over  three  years. 

To  that  end,  AIMA  is  authorized  to  introduce  programmes  for  the 
voluntary  discontinuation  of  production  with  the  possibility  of  a 
difference  in the way  A and B quotas  are dealt  with. 

Even  though  the  Community  arrangements  do  not  provide  for  the 
allocation  of  two  quotas  per  producer,  the  practical  solution  proposed 
to absorb  the production surplus may  be  accepted. 

(b)  Calculation  and  payment  of  levy 

In  accordance  with  Article  3  of  the  Law,  producer  groups  may  manage 
their  members' quotas. 

Article  5, 6 and  7  lay down  provisions on payment  of  the  levy. 

Purchasers  must  draw  up  declarations  of  production  by  non-members  and 
forward  them with  those  for members  within  the  time  limits  laid down  in 
the Community  regulations,  in particular  but  not  exclusively  to AIMA. 

-  15  -

For  non-members,  purchasers  withhold  the  levy  where  the  individual 
quota  is  exceeded  and  pay  it  to  the  authorities  within  three  months 
from  31  March,  deliveries  made  outside  quotas  being  charged  in  full. 
For  members,  the  same  amount  is  withheld  but  deliveries  are  balanced 
out  within  four  months  from  31  March  and  payment  takes  place  within  20 
days  of  that  time  limit.  Purchasers  pay  the  levy  to  the  authorities 
and  refund  any  sums  over  to  the  producers. 

(c)  Penalties  and  controls 

The  text  expresses  a  determination  to  ensure  that  the  levy  is  paid  by 
those  liable.  Penalties  apply  at  all  stages  of  the  process. 

Controls  are  conducted  by  the  regions  and  autonomous  provinces  within 
their  areas  of  responsibility  and  without  prejudice  to  checks  falling 
within  that  of  the  judicial  police  and  fraud  prevention  department. 

Implementing  rules 

The  Commission  was  consulted  on  the  draft  implementing  rules, which  are 
to  be  adopted  before  1  April  1993,  and  sees  to  it  that  they  take 
account  of  certain  shortcomings  or  omissions  in  the  Framework  Law,  i.e. 
in  partIcular: 

the  fat  content  of  the  products  delivered  to  be  taken  into  account, 
the  amendments  to  be  made  following  the  reform  of  the  milk  quota 
scheme  in 1993/94, 
no  discrimination  to  be  made  between  members  and  non-members  of 
producer  organizations, 
the  link  between  the  individual  quota  and  the  land, 
the  procedure  for  paying  the  levy  where  the  quota  for  direct  sales 
is  exceeded. 

The  latest  draft,  forwarded  on  22  February  1993,  is  basically  in  line 
with  the  Commission's  comments. 

-  76  -

Appraisal 

The  process  of  national  implementation  of  the  additional  levy 
arrangements  is under way. 

The  national  law  demonstrates  clear  determination  to  apply  the 
Community  additional  levy  arrangements  as  regards  the  allocation  of 
individual  reference quantities, payment of  the  levy and application of 
penalt ies. 

It  seems  probable  that  the  implementing  rules  will  be  published  in 
accordance  with  the  timetable  laid  down  and  that  they  will  supplement 
the  provisions  of  the  Law of  19 December  1992.  A  comprehensive  legal 
framework will  then exist. 

However,  the  Commission  has  drawn  the  attention  of  the  Italian 
authorities  to the following points: 

management  of quotas by producer groups, as provided  for  in Article 
3  of  the  Law,  introduces  a  difference  of  treatment  between  member 
producers  and  non-members,  in particular  as  regards  the amount  and 
payment  of  the  levy  due.  In  addition,  such  management  no  longer 
has  any  legal  basis  since  Article  12(c)  of  Regulation  (EEC) 
No 857/84,  to  which  the  national  Law  refers  and  which  treats 
producer  groups  in the same way  as producers, was not  incorporated 
in Regulation  (EEC) No 3950/92; 

Article  2(3)  and  (7) of  the  national  Law, which  reduce  reference 
quantities  to  bring  them  into  line  with  quantities  actually 
marketed  if  the  latter  are  less  than  the  former,  are  at  variance 
with  the Community rules, which do not  require producers  to produce 
and market  the whole of  the reference quantity  allocated  to them. 

Implementation of  the regime 

Allocation of  Individual  reference quant ities 

The  Individual  reference  quantities  were  provisionally  established  In  a 
bulletin published on  19 January  1993.  These provisional  figures are  being 
verified  and  cross-checked  by  the producer  associations, and  It  Is  Intended 
that  the  definitive  Individual  reference  quantities  will  be  published  on 
15 March  1993.  It  Is  not  at  present  Intended  to  notify  each  Individual 
producer, although  the Commission  considers  this to be an essential  element 
of an effective application of  the quota regime. 

Whilst  those producers which  benetlfed  from  repurchase  programmes  have been 
eliminated  from  the  lists of  individual  quota  holders,  the  status  of  some 
40 000  producers  who  ceased  producing  without  compensation,  and  thus  are 
eligible  to claim quotas, Is at present under  examination. 

Until  January  1993, AIMA had relied entirely on UNALAT  for  the establishment 
of  the quantities  delivered  to each  purchaser.  On  27 January, AIMA  sent  to 
all  regional  authorities  Instructions  to  undertake  checks  on  the  data  on 
which  the quota a Ilocations.were based. 

-  17 -

During  its  missions  to  a  selection  of  regions,  producer  associations  and 
purchasers,  the Commis!son's  departments  found  that  the purchasers have kept 
a sufficient  record  of  deliveries and of  fat  content  since  1988/89, and  that 
it  is  possible  to  verify  the  deliveries  declared  by  the  Producer 
Associations  for  the  1988/89  and  1991/92  years  to  the  purchasers' books  and 
records.  The 
control 
responsibiI ities. 

authorities 

regional 

aware 

their 

are 

of 

There  is  thus  evidence  that  a  sound  basis  exists  for  the  allocation  of 
substantially  all  the  deliveries  quotas,  and  for  a  control  over  deliveries 
and  over  the  collection  of  supplementary  levies.  However,  as  the  controls 
by  the  regional  authorities  have  only  now  begun  to  be  implemented,  a 
verification of  their  effectiveness cannot  yet  be undertaken. 

So  far  as concerns direct  sales, the basis  for  declaration, control  and  levy 
collection  is provided  for  in the draft  Implementing  regulations. 

Competent  agency 

The  conditions  to  the  Council's  agreement  require  the  agency  having  general 
competence  for  the  Implementation  and  the  supervision  of  the  system  to have 
the power  to 

check  on  the  spot  the  accuracy  of  the  declarations  of  producers  and 
purchasers, 
calculate  the  levy due and collect  It. 

In  Italy,  the  responsibility  for  checks  has  been  allocated  not  to  a  single 
body  such  as  AIMA,  but  to  the  regional  authorities.  The  Commission's 
departments  will  continue  their  close monitoring  of  the  Implementation,  and 
verify  in  particular  the  adequacy  of  the  controls  to  be  exercised  by  the 
regional  authorities.  The  Commission  considers  It  more  appropriate  for  a 
central  body  to  undertake  checks  throughout  the  territory,  so  that  full 
assurance  can  be  gained  that  the  quantities  on  which  levies  are  collected 
are  fuily  ver if led. 

Repurchase scheme 

Three  repurchase  schemes had  been undertaken  before  the Council's  agreement, 
a  programme  of  163 592  tonnes  repurchased  under  regulation  1183 90,  a 
nationally  financed  repurchase  programme  of  440 000  tonnes  established  by 
AIMA  on  22 March  1991,  and  a  programme  of  285 853  tonnes  under  regulation 
1637/91. 

Except  for  some  10% of  the  claims  under  the  last-mentioned  programme  which 
are  still  being  processed,  the  Italian  authorities  have  verified  that  no 
beneficiary  has received  a production quota. 

The  repurchase  programme  of  up  to  0,73  million  tonnes  mentioned  In  the 
Council's  agreement  has  not  yet  been  implemented,  pending  a  deflnltvie 
agreement  on  EEC  finance  and  the  establishment  of  the  quantity  of  surplus 
production  to be  absorbed. 

- 18 -

Conclusions on the progress made 

A  system  which  affects  so  many  producers  and  so  large  an  industry  takes  a 
certain  time  to  implement.  The  basic  conditions,  covering  the  essential  of 
all  milk  production,  have  been  established,  in that  the enabling  legislation 
has  been  adopted,  the  individual  production  statistics  established  and 
individual  reference  quantities provisionally  allocated  for  deliveries. 

The  Commission's  departments  are  satisfied  that  the  next  steps  are  in  the 
process  of  being  taken,  which  are  the  adopting  of  the  detailed  Implementing 
rules,  and  the  establishment  and  Implementation  of  control 
systems 
throughout  the  regions. 

It will  take  some  further  months  before  the progress  on  these  next  steps  can 
be  verified,  and  all  controls  over  repurchase  programmes  and  quota 
allocations  completed,  and  indeed  some  years  before  the  full  application  of 
the  quotas  can  be  confirmed,  as  Is  recognized  in  the  Council's  agreement 
which  provides  for  a  time  limit  of  1 April  1995  for  the  full  absorption  of 
excess  production. 

-  79 

CONCLUSIONS AND PROPOSAL 

As  none of  the three Member  States has  applied  the regime, or  is  in a 
position  to collect  supplementary  levies,  in the  1992/93 year,  it will 
not  be  until  the  end  of  the  1993/94  year  that  the  final  proof  of 
compliance,  the  collection  of  levies  from  producers  exceeding  their 
individual  reference  quantities,  will  be  available  for  verification. 
It  is therefore still  too early  for  the Commission  to confirm  that all 
the conditions of  the Council's agreement  have been met. 

The  Commission  considers  that,  provided  it  respects  its  intentions 
mentioned  in this  report,  Spain  has made,  by  15 February  1993 all  the 
progress  which,  given  the  point  of  departure,  can  be  reasonably 
expected  towards fulfilling  the conditions. 
Greece  and  Italy  have made  a substantial  effort  and  progress  to apply 
the  Council  conditions  taking  into  account  particularly  the  difficult 
initial situation and  time available. 

Nevertheless, further  progress  is required. 

For Greece, the following conditions remain  to be fulfilled: 

a)  individual  reference  quantities  have  to  be  calculated  on  the 
basis of deliveries  to purchasers  in 1991/92, and  individual  fat 
reference quantities established, 

b)  individual  reference  quantities  have  to  be  notified  to  each 

producer, and communicated  to the purchasers, 

c) a central  agency  must  be established  and equipped  to verify  the 

production  records and  the collection of  levies due, 

d) an  adequate  record  of  production  must  be  established  both 

locally and centrally. 

Similarly, for  Italy the following conditions remain  to be fulfilled  : 

a) adoption of  the  implementing  regulations, 

b) notification  to  each  producer  of  the  individual  reference 

quantities and communication of  these to the  purchasers, 

c) establishment of a central  agency  for  the effective verification 
of  the quantities declared and of  the quantities on which  levies 
are charged. 

Moreover, the attention  of  the  Italian authorities  is drawn  to the 
need  to  remove  all  discrimination  between  affiliated  and  non 
affiliated producers. 

The Commission, therefore, proposes an  interim solution whereby: 

a) The  guaranteed  quantity  for  deliveries  for  Spain  be  increased 
provisionally,  for  the  1993/94  year  only  by  the  amounts 
mentioned  in Annex  I. 

-  zu 

-

(b) 

(c) 

Greece  and  Italy  are  granted  until  15 May  1993  to  fulfil  the 
conditions  of  the  Council  agreement  so  that,  by  the  end  of 
July  1993  and  on  the  basis  of  a  further  proposal  from  the 
Commission,  an  increase  of  the  guaranteed  quantities  for 
deliveries may  be considered  for  the  1993/94 milk  year. 

It  reports  again  to  the  Council  in  March  1994  on  further 
progress  made  in  the  effective  application  of  the  milk  quota 
scheme  in the  three countries  concerned  and  proposes  further 
measures  to  be  taken  in  the  light  of  such  progress,  and  in 
particular  states  whether  the  increased  quotas  should  be 
continued  in 1994/95. 

-  27  -

PROPOSALS FOR ABSORBING EXCESS PRODUCTION 

SPAIN 

Present  quota 
- Deliveries 
- Direct sales 

Present  estimated 

production 

Difference between 
quota/production 

National  buy-up 
already decided 

SOLUTION 

Revision quota 

Direct  sales 

transfer 

Buy-up  financed 

by the Community 

SPAIN 
(tonnes) 

4 550 000 
527 000 

6 000 000 

1 450 000 

600 000 

500 000 

150 000 

200 000 

GREECE:  Quota  is  increased by 100 000 tonnes 

ITALY 

Mi 11 ion tonnes 

I. 
II. 

Excess to be removed 
Of which  to be removed without  compensation 
in accordance with  I ta Iian  law 

III.  Net excess 
IV. 
V. 
VI. 

Increase  in wholesale quota 
Amount  to be bought up 
Amount  to be purchased with Community 
contribution  (25% of V) 

2.47 

0.84 

1.63 
0.9 
0.73 

0.2 

-  22  -

ANNEX 

REPORTS TRANSMITTED BY GREECE, SPAIN AND  ITALY 

HELLENIC REPUBLIC 
Ministry of  Agriculture 

ATHENS, 30 November  1992 
Ref  : 210365 

I.  Directorate  for Management  of Agricultural  Products 

Animal  Products Section 
Akharnon 241  10446 ATHENS 
Information  : G. Zakharopoulos 
Tel  : 8626415 

II. Directorate  for Animal  Production 

and Exploitation of Animal  Products 
Milk Products Section 
Kapnokopt ir iou 6 
Informat ion  : E. Bol las 
Tel  : 8215894 

SUBJECT  : Mi Ik quotas 

To  : EEC Commission 

VI/DI  - Milk  Products 

Copies  : EAGGF 

Greek  Permanent 
Représentât ive 

Pursuant  to the provisions of  the Council's compromise  document 
No 6953/92/AGRI  53 of  2 June  1992 on  reform of  the CAP, we enclose  the 
report  provided  for  in paragraph 6 of Annex  II of  that document. 

REPORT ON  IMPLEMENTATION OF THE MILK QUOTA SYSTEM  IN GREECE 

1.  Implementation of  the system 

Since  the milk  quota system was first  implemented, and up  to the present 

time  (92/93 milk  year), Greece has been applying  the quota system  in 
accordance with Formula B provided  for  in Council  Regulation  (EEC) No 857/84 
and Commission Regulation  (EEC) No 1546/88. 

In order  to  implement  the provisions of  these Regulations, the 

Ministries of Agriculture  and  the National  Economy  published  joint  Decision 
No 204930 of  1 August  1984, which was supplemented and amended  by their 
joint Decision No 39187 of  14 July 1986. 

2.  Transfer of guaranteed  quantities from direct  sales to deliveries 

to dair ies 

Because of  the structural  changes which  have occurred  in Greece  in 

recent years  in the way  the milk produced  is marketed, and  in particular 

-  2  -

because  of  the  increase  in deliveries  instead  of  direct  sales  (as  the  result 
of  the  steadily  increasing  demand  by  consumer's  for  standardized  fresh  milk 
products  and  the  implementation  of  health  and  veterinary  regulations), 
Community  regulations  were  adopted,  following  a  request  by  Greece,  which 
allowed  the  transfer  of  110  000  tonnes  of  milk  from  direct  sales  to 
deliver ies. 

3.  Taking  into  account  the  provisions  of  Regulations  (EEC)  No  1336/86  and 
No  775/85  which  reduced  the  overall  guaranteed  quantities  of  deliveries  and 
direct  sales,  and  the  continual  structural  changes  which  have  occurred  in 
the  areas  which  collect  milk  from  industries  (Formula  B ), and  in order  to 
meet  the  consumer  requirements  specified  in  the  previous  paragraph,  a  number 
of  decisions  were  taken  amending  the  basic  implementing  Decision 
No  339187/86,  although  these  only  applied  to Annexes  A  and  B  to  that 
Decision.  (These  Decisions  are  enclosed). 

4.  Monitoring  the  system 

Pursuant  to  Decision  339187/86,  responsibility  for  monitoring  the  system 

has  been  assigned  to  the  Regional  Departments  of  the  Ministry  of 
Agriculture,  which  in  turn  keep  industries  and  producers  informed  about 
implementation  of  the  system  in  Greece. 

It  should  be  stressed  that  until  the  87/88  milk  year  there  were  no 
serious  problems,  since  overall  quantities  produced  did  not  exceed  the 
guaranteed  quantities  specified,  after  taking  into  account  the  possibility 
of  making  adjustments  for  any  overruns  at  national  level  (Article  10 of 
Regulation  (EEC)  857/84). 

Beginning  in  the  88/89  milk  year,  production  started  to  exceed  the 

overall  guaranteed  quantities  specified.  However,  the  continual  changes 
occurring  in  the  industrial  collection  areas  and  the  inherent  administrative 
impossibility  of  monitoring  the  system  (because  the  shortage  of  computer 
equipment,  in particular,  and  staff  made  the  task  of  inputting  and 
processing  data  extremely  slow)  resulted  in a  delay  in  the  confirmation  and 
cross-checking  of  the  original  figures  and  consequently  in  the  proportional 
charging  of  additional  levies  to  the  industries  concerned. 

-  3  -

5.  Proportional  charging  of  additional  levies 

9 

Pursuant  to  the  relevant  Community  regulations  and  national  decisions, 
the  Ministry  of  Agriculture  adopted  Decision  No  205197  of  5 October  1992 on 
the  proportional  charging  of  additional  levies  for  the  88/89  milk  year  to 
the  industries  concerned. 

The  reasons  for  the  delay  in charging  were  explained  in paragraph  4. 

The  amount  concerned  -  DR  164 913  628 -  has  already  been  charged  by  the 

EAGGF  departments. 

6.  Overruns  for  the  89/90. 90/91  and  91/92 milk  years 

With  regard  to  the overruns  for  the  89/90, 90/91  and  91/92 milk  years, 
according  to  the  provisional  figures,  it was  agreed  at  bilateral  meetings 
between  the  Greek  Ministry  of  Agriculture  and  the  EAGGF  held  in Brussels  on 
8  October  1992  to  suspend  measures  to charge  these  overruns  by  applying 
retroactively  the overall  guaranteed  quantities  which  are  expected  to  be 
allocated  to Greece  in  the  93/94 milk  year,  increased  by  100 000  tonnes. 

7.  Direct  sales 

With  regard  to  the  level  of  direct  sales  in  the  period  since  the 

introduction  of  the  quota  system,  we  would  remind  you  of  document  No  35092 
of  11  June  1992  that  we  sent  to  the  EAGGF  departments,  which  states  that  the 
figures  on  direct  sales  communicated  to  the  Community's  Statistical 
Department  are  estimates  applying  only  to  the  regional  departments  in each 
area  and  are  designed  to establish  a balance  between  the  production  and 
consumption  of  milk  in Greece.  They  cannot  therefore  be  used  as  a  basis  for 
charging  additional  levies. 

8.  Monitoring  the  quota  system  in  the  1992/93 milk  year 

Because  of  the  regular  overruns  since  the  88/89  milk  year,  the  Ministry 
of  Agriculture  has  held  a  series  of  discussions  at  regional  level  with  the 
authorities  responsible  and  has  contacted  the  sectors  concerned  in order  to 
ensure  full  compliance  with  our  obligations  under  Community  regulations. 

-  4 -

The relevant  quotas have already  been allocated  in turn: 

(a) by  the central  departments of  the Ministry of Agriculture  to the 

regional  departments  in each prefecture; 

(b) by  the regional  departments of  the Ministry of Agriculture  to the 

local  industries; 

(c) by  the  local  industries  to producers. 

It should be emphasized  that all Greek  producers now know  their own 

personal  quotas  (see enclosed model) after  being  informed by  the  local 
industries. 

9.  Appointing  a body  to control  the system 

The enclosed  draft  law proposes a vote  in Parliament on  the appointment 

of a Milk Board  to manage  the quota  system. 

This draft  law should  be voted on before  the end of  the year  and should 

come  into force at  the beginning of  the 93/94 milk year. 

10. Future operation of  the system beginning with  the 1993/94 milk year 

So that Greece can comply  in good  time with  the future proposals of the 
Commission on reform of  the CAP and  the application of  the quota system, the 
Ministry of Agriculture published  the enclosed  circular  No 176124 of 
10 April  1992 setting out new procedures  for applying  the quota  system. 

The procedures  for allocating quotas  to  individual  producers are 

expected  to be completed  by  the end of  this year. 

11. The departments of  the Ministry of Agriculture will  be pleased  to 
provide any  further  details or other  information. 

Director-General 

G. Konstandin id is 

MINISTERIO  DE  AGRICULTURE  PESCA  Y  ALIMENTACION 

REPORT  FROM  THE  MINISTRY  OF  AGRICULTURE,  FISHERIES  AND  FOOD  TO  THE 
COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

Re: 

Council  a g r e e m e nt  of  21.5.92  for  a d a p t i ng  t he  g u a r a n t e ed  overall 
q u a n t i ty  for  Spain:  Allocation  of  individual  q u o t a s. 

The  consolidated 

text  of  t he  commitment 

t he 
milk  a nd  dairy  p r o d u c ts  s e c t or  (Doc.  6953/92  of  2.6.S2)  in  Annexe  II  s e ts  a 
and 
g u a r a n t e ed  overall  q u a n t i ty 
e s t a b l i s h es 
being 
t h at 
fulfilled,  among  which  is  t he  fact  t h at  t he  Member  S t a te  will,  before  31.12.92, 
p r o v i de  t he  Commission  with  a  r e p o rt  t e s t i f y i ng  t h at  t he  established  p r o v i s i o ns 
h a ve  b e en 
t h ey  can  be  applied 
into  national  legislation  so  t h at 
within  t he  specified  p e r i o ds  (Annexe  NQ  1  cf  this  r e p o r t ). 

for  Spain, 
is 

to  c e r t a in  conditions 

this  decision 

to  reforming 

s u b o r d i n a te 

t he  CAP  in 

i n t r o d u c ed 

t a k i ng 

1.4.93 

effect 

from 

National  legislative  p r o v i s i o ns 

(All  t h e se  p r o v i s i o ns  h a ve  b e en  s e nt  to  t he  Commission.) 

1.-  Provisions  p a s s ed  p r i or  to  t he  Council  a g r e e m e nt  of  21.5.92  (Annexe 

N9  2): 

Although  t h e se  p r o v i s i o ns  do  not  form  p a rt  of  t he  commitment,  t h ey  a re 
c o n s i d e r ed  to  be  of  i n t e r e st  for  u n d e r s t a n d i ng  t he  problem  of  a p p l y i ng 
t he 
quota  system  in  Spain  a nd  as  forming  a  b a c k g r o u nd  to  t he  provisions  p a s s ed 
in  compliance  with  t he  said  Council  a g r e e m e n t: 

a)  Royal  Decree  2466/1986  which 

for 
determining  t he  r e f e r e n ce  q u a n t i t i es  p r o v i d ed  for  in  (EEC)  Regulations  804/68 
of  t he  Council  and  857/84  of  t he  Commission. 

t he  p r o c e d u re 

e s t a b l i s h ed 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

to  be 
This  Royal  Decree  has  allowed  other  provisions  of  lesser  rank 
passed  and,  on  the  basis  of  the  obligatory  statements  from  producers  and 
buyers  established  therein,  and  in  spite  of  containing  important  loopholes  and 
mistakes,  it  was  possible  to  make  an  allocation  of  provisional  individual  quotas, 
which  meant  a  major  step  towards  the  implementation  of  a  quota  system  in 
Spain. 

b)  Resolution  of  the  National  Agrarian  Products  Service  (SENPA)  on  the 
to  be  made  by  companies  buying  milk  and/or  dairy  products 

statements 
(12.7.91). 

With 

the  aim  of 

fully  complying  with  Community 

the 
authorities  of  the  Ministry  of  Agriculture,  Fisheries  and  Food  (MAPA-  Miniterio 
de  Agricuitura,  Pesca  y  Aiimentaciôn)  considered  it  necessary  to  produce  a 
more  precise  report  than  the  one  deriving  from  traditional  statistics.  The  data 
provided  by  the  obligatory  statements  from  buyers  indicated  that  the  volume 
of  milk  marketed  in  1990  stood  at  6,000,000  mt,  which  meant  a  surplus  of  some 
1,450,000  mt  above  the  overall  quota. 

regulations, 

With  this  information  it  was  decided  to  prepare  a  plan  of  action  which 
essentially  consisted  in  reducing  the  average  production  by  means  of  a  plan 
of  voluntary  abandonment  and  in  requesting 
to 
collaborate 
effective 
in  order 
application  of  the  quota  system. 

the  Community  authorities 

the  problem  of 

to  be  able 

to  solve 

the 

c)  Royal  Decree  1888/1991 which  established  a  restructuring  plan  for  the 

milk  and  dairy  products  sector. 

This  constitutes  the  second  basic  legislative  piece  in  the  development 
of  the  actions  needed  for  applying  the  supplementary  rate  system.  It  consists 
(EEC) 
of  a  framework  provision 
Regulations  857/84  of  the  Council  and  1546/88  of  the  Commission  along  with  a 
series  of  measures 
improving  production  structures,  especially  with 
regard  to  the  quality  of  the  milk. 

the  points  established 

that  considers 

for 

in 

d)  MAPA  Order  of  30  December  1991 which  formalized  a  plan  of  voluntary 

abandonment  in  milk  production. 

This  provision,  as  with  all  those  that  have  regulated 

the  abandonment 
programmes,  only  affected  producers  who  had  been  allocated  a  provisional 
quota. 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

The  period  in  which  producers  could  resort  to  abandonment  to  withdraw 
from  activity  ended  on  1 May  1992  and  the  quantity  of  quota  bought  came  to 
600,000  mt,  so  the  surplus  had  been  reduced  to  850,000  mt. 

All  this  information  and  the  situation  of  the  milk  producer  sector  prior 
to  Spain's  membership,  as  contained 
in  a  Memorandum  and  complementary 
documentation,  was  made  available  to  the  Commission  in  full  detail  and  served 
as  tha  basis  the  Council  agreement  of  21.5.92. 

2.-  Provisions  passed  as  a  consequence  of 

21.5.92  (Annexe  N9  3). 

the  Council  agreement  of 

a)  Resolution  of  3  June  1992  from  the  SENPA  on  statements  to  be  made 

by  buyers  of  cow's  milk  or  dairy  products  deriving  from  cow's  milk. 

Annexe  II  of  the  Council  agreement  establishes  in  section  b)  that 

the 
individual  reference  quantity  is  equal  to  the  quantity  available  at  31.3.92  or 
in  the  eighth  period  adjusted  by  a  reduction 
otherwise  to  the  production 
coefficient  so  that  the  sum  of  the  individual  reference  quotas  does  not  exceed 
the  guaranteed  overall  quantity. 

The  aim  of  this  provision  was  to  discover  the  quantity  of  milk  or  dairy 
products  bought  by  the  buyers  in  the  eighth  period  as  a  necessary  element 
for  allocating  individual  quotas. 

b)  SENPA  resolution  of  22  June  1992  by  which  rules  are  established  for 

inspection  and  control  of  compensated  abandonments  in  milk  production. 

The  aim  of  this  provision  is  to  guarantee  that  producers  resorting 

to 
abandoning  the  activity  have  actually  complied  with  their  commitment,  and 
concerns  both  producers  and  economic  agents  related  to  the  process  (buyers 
of  milk  and  those  acquiring  the  cows  or  the  farm  that  ceased  production). 

The  Organization  responsible  for 

the  control 

is 

its  provincial  services  and,  up 
conducts 
moment,  has  carried  out  several  inspections  (Annexe  NQ 4). 

inspections  via 

the  SENPA,  which 
the  present 

to 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

c)  MAPA  Order  of  26  June  1992  on  updating  the  individual  reference 

quantities  of  producers  affected  by  acts  of  transference. 

The  aim  of  this  provision  is  to  regularize  the  situation  at  the  eighth 
period  of  all  producers  who,  due  to  inheritance  or  other  reasons,  transferred 
their  quotas  prior  to  1  April  1992,  so  that  the  allocations  of  the  quotas 
provided  for  in  section  b)  of  Annexe  II  of  the  commitment  can  be  made  to  the 
current  producers. 

d)  SENPA  resolution  of  20  July  1992  on  the  statements  to  be  made  by 

the  producers  who  directly  sell  certified  milk  or  pasteurized  milk. 

This  provision  deals  with  obtaining 

for 
allocating  individual  quotas  in  direct  sale,  which  will  be  done  as  soon  as  the 
process  of  allocating  delivery  quotas  to  buyers  has  been  completed. 

the  necessary 

information 

e)  Royal  Decree  1319/1992  of  30  October  which  establishes  specific  rules 
for  applying  the.  supplementary  rate  system  in  the  milk  and  dairy  products 
sector. 

This  provision  complements  Royal  Decrees  2466/1986  and  1888/1991 
closing  the  cycle  of  basic  regulations  for  the  effective  application  of  the  quota 
system 
the  conditions 
in  Spain.  At  the  same  time  it  faithfully  reflects 
established  in  Annexe  II  of  the  Council  agreement  of  21.5.92: 

-  It  establishes  that  the  individual  reference  quantities  will  be  allocated 
by  MAPA through  the  Directorate  General  of  Farming  Productions  and  Markets, 
which  will  inform  the  producers,  the  competent  Organization  and  the  buyers 
of  those  allocations. 

the 
-  The  SENPA  is  appointed  as  the  competent  Organization  with 
participation  of  the  Ministry  of  Economy  and  Finance  and  will  be  responsible 
for  inspecting  and  controlling  statements  from  buyers  and  producers,  as  well 
as  calculating  and  collecting  the  supplementary  rates  that  are  owed. 

A specific  unit  in  the  SENPA  is  created  with  the  rank  of  Subdirectorate 
(Subdirectorate  General  for  Dairy  Quotas)  for  carrying  out  these  undertakings, 
with 
for  Tax 
the  State  Agency 
these 
Administration  on  behalf  of  the  Ministry  of  Economy  and  Finance. 

the  participation 

tasks  of 

in 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

-  The  remaining  articles  contain  the  other  conditions  estabished  in  the 
rate 

the  supplementary 

said  Annexe  II  and  all  the  steps  for 
considered  in  (EEC)  Regulations  857/84  and  1546/88. 

collecting 

Annexe  N9  5  gives  a  graphic  indication  of  the  scheme  for  the  work  of 
the  Organizations  involved  and  the  general  functioning  of  the  supplementary 
rate  system. 

f)  MAPA  Order  of  4  December  1992  regulating  certain  aspects  relating 
to  the  allocation  of  individual  reference  quantities  of  deliveries  to  buyers  for 
applying  the  supplementary  rate  system  in  the  milk and  dairy  products  sector. 

This  provision,  which  develops  Royal  Decree  1319/1992,  establishes  the 
steps  for  allocating  the  individual  reference  quantities  and  sets  the  criteria 
to  be  taken  into  account: 

-  For  producers  who  had  an  allocated  quota  for  the  statement  made  on 

the  year  1985,  they  will  be  allocated  that  quantity  without  any  reduction. 

-  For 

the  above  producers  whose  production  in  the  eighth  period 
exceeded  the  allocated  quota  for  1985,  their  allocation  will  be  reduced  by  10 
percent  of  the  excess. 

-  For  producers  who  did  not  make  a  statement  in  1985,  their  allocation 
will  be  reduced  by  20  percent  of  the  production  marketed  in  the  eighth 
period. 

This  Order  contains  an  Annexe  with  a  standard  communication  form  for 
producers  regarding  the  allocation  of  the  individual  quota  corresponding  to 
them,  the  part  that  may  correspond  to  them  concerning  amplification  of  the 
overall  quota  provided  for  in  the  Council  agreement  for  1.4.93  being  left  as 
a  variable. 

Communications  on  individual  reference  quantities  are  currently  being 
sent  out  and  it  is  hoped  that  this  will  be  completed  in  the  present  month  of 
December.  In  order  to  give  the  process  more  flexibility, 
individual 
communications  signed  by  the  Director  General  ôf  Farming  Productions  and 
Markets  are  being  sent  to  the  provincial  Directors  of  MAPA,  who  in  turn  will 
pass  them  on  to  each  of  the  producers  in  his  province. 

the 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

We understand  that  this  legislative  packet  allows  the  supplementary  rate 
system  to  be  applied  in  Spain  with  regard  to  deliveries  to  buyers  and  that  it 
complies  with  that  specified  in  the  conditions  established  in  Annexe  II  of  the 
Council  agreement. 

Nevertheless,  the  allocation  of  direct  sale  quotas  is  going  to  be  tackled 
immediately  and  a lesser  rank  provision  will  be  passed  for  establishing  certain 
details  on  dealing  with  the  process. 

Information  on 
legislation  passed 

the  current  situation  regarding 

the  application  of 

the 

1.-  Quantity  of  milk  marketed  in  the  eighth  period. 

As  has  already  been  said,  knowledge  of  this  quantity  was  necessary 
before  allocating  the  individual  quotas.  This  quantity  appears  in  Annexe  nS  6 
after  having  deducted 
the  abndonments 
the  quotas  corresponding 
established  in  MAPA  Order  of  30  December  1991. 

to 

2.-  Allocation  of  individual  quotas. 

Taken  as  the  starting  point  were  the  quantities  of  milk  and  dairy 
products  marketed  in  the  eighth  period  and  the  application  of  the  criteria 
the 
established 
amplification  of  thé  overall  quota  provided  for  in  the  Council  agreement.  Thé 
total  figures,  with  the  corresponding  reductions,  also  appear  in  Annexe  N2  6, 
being  subject  to  review  in  line  with  the  result  of  inspections  and  controls 
that  are  being  conducted. 

in  MAPA  Order  of  4  December  1992,  taking 

into  account 

Attached  is  an  example  of  the  individual  communication  that  is  being 

sent  to  producers  (Annexe  7). 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

3.-  The  competent  Organization  is  formally  constituted  and  consists  of 

the  following  staff: 

-  Central  services:  25  officials. 

-  Inspectors  throughout  Spain  not  including  the  collaboration  of 

the 

State  Agency  for  Taxes:  78. 

4.- 

Inspections  and  control. 

As  has  been  stated,  intensive  inspections  are  being  conducted,  both  on 
the  eighth 

abandonments  (Annexe  4)  and  on  the  statements  of  buyers 
period  (Annexe  8). 

in 

5.-  Forecasts. 

a)  In  December,  all  communications  of  individuals  quotas  will  have  been 

made. 

b)  In  January,  the  allocation  of  direct  sale  individual  quotas  is  planned. 

c)  In  January,  the  provision  for  the  abandonment  plan  of  200,000  mt, 

provided  for  in  the  Council  agreement  of  21.5.92,  will  be  passed. 

d)  All  inspections  will  continue  and,  prior 

to  31  March,  it  will  be 

possible  to  have  a  fairly  precise  result  on  the  accuracy  of  the  statements. 

6.-  Cooperation  with  the  Services  of  the  Commission. 

The  Spanish  Government  desires 

to 
facilitate  whatever  information  may  be  necessary  as  well  as  a  joint  analysis  of 
the 
the  problems 
supplementary  rate  system,  due  to  the  characteristics  of  the  dairy  sector  in 
our  country. 

this  cooperation  and  is  willing 

implementation  of 

that  may  arise 

the  effective 

from 

MINISTERIO  DE  AGRICULTURA,  PESCA  Y  ALIMENTACION 

conclusion 

The  points  stated  in 

the 
this  report  confirm 
necessary  provisions  for  complying  with  the  conditions  established  in  Annexe 
II  of  the  Council  agreement  of  21.5.92  and  that  the  said  provisions  are  being 
applied  at  this  moment. 

that  Spain  has  passed 

Maaria,  IA  uecemoer  iyyz 

OFFICE OF THE  ITALIAN PERMANENT  REPRESENTATIVE 

TO THE EUROPEAN  COMMUNITIES 

Ref. 980 

Brussels, 1 February  1993 

Commission of  the European Communities, 

DG V L B. I., 

130 Rue de  la LoI, 

1040 Brussels 

Subject:  Report on application of milk  quota  arrangements 

Please find enclosed  letter No C/336 of  30 January  1993 together  with  the 

abovementioned  report  whereby  the  Italian authorities  comply  with  their 

obligations pursuant  to the decisions of  the Council  (agriculture) meeting 

on  14 to 17 December  1992. 

A copy of  the abovementioned report  has been  forwarded  directly  to the 

Commission  by  the Ministry of Agriculture  and  Forestry  by  fax of 

30 January  1993, a receipt  for which  is appended. 

Deputy  Permanent  Representative 

Rocco Antonio Cangelosi 

Translation of  letter  from  the Ministry of Agriculture  and  Forestry  to the 

Commission. 

Subject:  Report on application of milk quota  arrangements 

In accordance with  the decision of  the Council  meeting on agriculture of  14 

to 17 December  1992, the report on  the application  in  Italy of  Community 

regulations on milk quotas  is enclosed. 

THE  MINISTER 

REPORT ON MILK QUOTAS 

Introduct ion 

The application of  the Community  arrangements on milk  quotas  in  Italy has 
not gone smoothly,  largely owing  to the objective  complexity  of  the  system. 

Prior  to the adoption of Law No 468 of  26 November  1992  laying down urgent 
measures  for  the dairy sector, the  Italian  legal  framework  covering milk 
quotas was based on Decree No 258 of  the Ministry  of Agriculture of 
7  June 1989. 

In accordance with a possibility opened  by  the Community  regulations, the 
abovementioned Decree provided  for  the allocation of an overall  reference 
quantity  to UNALAT  (Unione fra  le associazioni  di produttori  di  latte bovino 
-  association of cow's milk producer  organizations) corresponding  to the 
quantities to which producer members were entitled. 

Producers not members of UNALAT were granted  quotas directly by  the Ministry 
of Agriculture, which published  a  list of successful  applicants with  the 
relevant  reference quantities  in the Official  Gazette. 

In the case of member  producers, UNALAT was  required  to pay  the additional 
levy due. 

In the case of non-member  producers, the purchasers withheld  the additional 
levy  in place of  the tax authorities. 

-  2  -

Overall,  the  system  laid  down  did  not  operate  smoothly,  in particular  as 
regards  member  producers,  especially  since  when  the  arrangements  came  into 
force,  it  became  apparent  that  actual  national  production  was  substantially 
higher  than  that  indicated  by  the  statistics  used  to  calculate  the  national 
quota. 

In February  1992,  by  note  to  the  President  of  the  EC  Commission,  the  Italian 
Prime  Minister  (Présidente  del  Consiglio  dei  Ministri) outlined  the 
difficulties  encountered  in  Italy  in applying  the  milk  quota  arrangements 
and  requested  an  adjustment  to  the  national  quota. 

Subsequently,  at  the  summit  of  heads  of  State  and  Government  held  in  Lisbon 
in June  1992,  the  European  Council  called  on  the  Ministers  of  Agriculture 
meeting  in  the  Council  to  put  forward  a proposal  to  solve  the  problems 
ar ising  in  Italy. 

At  the  Council  meeting  on  agriculture  in Brussels  on  13  and  14  July  1992, 
with  a  view  to  finding  a speedy  solution  to  the  problem  of  quotas,  the 
Italian  Minister  for  Agriculture  out Iined  the  commitments  and  efforts  which 
the  Italian  administration  intended making  to  reduce  milk  production  to 
within  the  limits  laid  down  by  the  Community. 

It was  also  announced  at  that  time  that  a  law was  to  be  adopted  to  define  a 
new  framework  of  rules  on  milk  quotas  with  a  view  to overcoming  all  the 
obstacles  which  had  hitherto  prevented  proper  appi ication of  the 
arrangements. 

A  commitment  to  reduce  national  production  by  1 600  000  tonnes  within  three 
milk  years  was  also  announced.  The  first  stage  was  to  be  completed  in  the 
1992/93  milk  year  and  to  involve  a  reduction  of  300  000  tonnes  of  mi Ik  in 
production. 

-  3 -

This would call  for  the support of  the Council  and  the Commission  since the 
efforts and sacrifices  required of  the  Italian dairy  industry were 
considerable. 

The provisions announced  by the Minister  for Agriculture were approved by 
the  Italian cabinet  at a meeting held on  13 August  1992. 

In September, examination of  the provisions  commenced  in the two houses 
after  the summer  break. 

In November  the provisions were definitively  adopted  by Parliament  and 
published  in Offical  Gazette No 286 of 4 December  1992  (Law No 468 of 
26 November  1992). 

The content  of Law No 468/92 

Law No 468/92, which came  into force on  19 December  1992  (a fortnight 
following publication  in the Official  Gazette  in accordance with  the general 
rule applying), provides for  reference quantities  to be allocated  to all 
Italian producers who produced milk  in the  1988/89 milk year  in the case of 
members of producer  organizations or  in 1983  in the case of  non-members. 

Non-member  producers are to be granted  a quota equal  to the  reference 
quantity  already  allocated  to those producers  in the current  milk  year by 
the Ministry of Agriculture. 

The  list of  this group of producers and  the relevant  reference  quantities, 
broken  down  into deliveries and direct  sales, was published  in the Annex  to 
the Ministerial  Decree of  26 May  1992  (Official  Gazette  No  130 of 
4 June  1992). 

-  4 -

Reference quantities  for member  producers are divided,  in the case of both 
deliveries and direct  sales, into A quotas, equal  to production  in 1988/89, 
and B quotas, equal  to the amount  by which production  in 1991/92 exceeded 
that  in 1988/89. 

In order  to bring  Italian production within  the  limits  laid down by the 
Community  regulations, AIMA  is to  implement  a production discontinuation 
programme with a system of compensation, or alternatively  reductions are to 
be made  in the B quotas without  any corresponding compensation  being paid. 

The quotas are allocated  to  individual  producers, who are directly 
responsible  for any production  in excess and are  liable to any  levy to be 
paid  thereon. 

During  the  initial  application phase, the Law provides  that AIMA  is to 
publish  a first  list of producers allocated  quotas and  the relevant 
reference quantities. 

This first  list of producers  is to cover  all  producers, both members and 
non-members, broken down by province. 

After  the abovementioned  list has been published, producer  organizations may 
submit  applications to AIMA  to manage  their members' quotas. 

Immediately  thereafter, AIMA  is to publish a further  list of all producers, 
broken down by province, showing  individual member  producers under  the 
organization  to which  they belong. 

- 5 -

This second  list will  be updated  and published  by  31  January  each  year  for 
use  in the following milk year. 

The  lists are to be forwarded  to the regional  authorities, which  are to make 
them available  immediately  to operators at  their  premises  in each  provincial 
capital. 

In addition  to providing  various types of services  to their members, under 
the milk quota arrangements producer organizations are responsible  solely 
for balancing out  the surpluses and shortfalls produced  by  their members at 
the end of  the milk year. 

They do not claim  to have any power over  the quotas of members, who remain 
the sole persons entitled  thereto and  the sole parties responsible  for  them. 

The collection of  the  levy  is essentially the responsibility of  the 
purchaser. 

Using  the abovementioned  lists, the  latter must verify  deliveries from each 
supplier  and when the producer  exceeds his reference  quantity, the purchaser 
must  immediately withhold  an amount  per  litre of milk equal  to the 
additional  levy  in force. 

Amounts are withheld  by  the purchaser  from payments  to producers, be they 
members or not, and are paid after  the end of  the milk year. 

When making payments  in respect of member  producers, the purchaser  must  take 
account of balancing out effected by producer  organizations. 

The Law specifies that  the quota belongs  to the producer  as manager  of. an 
agricultural  holding. 

-  6  -

In accordance  with  the  possibilities  afforded  by  Community  regulations  on 
milk  quotas,  recently  approved  by  the  Council  meeting  on  agriculture,  Law 
No  468/92  provides  that  milk  quotas  may  be  leased  or  transferred  without 
this  implying  the  simultaneous  leasing  or  transfer  of  the  holding  where 
production  takes  place. 

The  Law  provides  for  a  series  of  penalties  to  which  the  various  parties 
involved  in  the  quota  arrangements  are  subject  where  they  fail  to  comply 
with  its  provisions. 

Checks  on  the  system  are  largely  the  responsibility  of  the  regions,  which 
receive  all  data  necessary  to  verify  the  correct  application  of  the 
régulât ions  as  regards  purchasers,  producer  organizations  and  producers. 

Checks  may  also  be  conducted  by  AIMA,  the  Judicial  police  authorities  and 
the  Central  Fraud  Prevention  Inspectorate  of  the  Ministry  of  Agriculture. 

As  regards  direct  sales,  the  producer  himself  is  required  to  pay  the  levy 
due  directly,  and  in  the  case  of  member  producers,  payment  is made  through 
the  organization  after  balancing  out  between  the  shortfalls  and  surpluses 
produced. 

Lastly,  Law  No  468/92  provides  that  supplementary  rules  for  its  application 
are  to  be  adopted  within  four  months  of  its entry  into  force. 

Application of  the Law - Lists of  producers 

- 7 -

Article  2(1) of  the Law provides  that within  30 days of  its entry  into 
force,  i.e. by 18 January  1993, AIMA  is to publish  lists of producers and 
forward  them  to the regional  authorities, which  are  to make  them available 
to operators at  their  premises  in each provincial  capital. 

This first  list  is to  include all  producers entitled  to a reference 
quantity, by province, showing  the relevant quotas. 

No distinction  is made between  producers who are members of a producer 
organization and non-members. 

The  list, which has already  been prepared  and  forwarded  to the  regions 
within  the time  limits  laid down by the Law, shows: 

1.  Non-member  producers who produced  in 1983 and who  took part  in the 
survey provided  for  in the Ministerial  Decree of  30 September  1985.  Such 
producers were allocated  reference quantities shown  in the Annex  to the 
Ministerial  Decree of 26 May  1992, published  in the ordinary  supplement  to 
Official  Gazette No 130 of 4 June  1992.  The  list of  non-member  producers 
was updated  subsequently  to take account of  changes occurring  in the period 
elapsing between  the commencement  of  the 1992/93 milk  year  and  the entry 
into force of Law No 468/92 (19 December  1992); 

2.  Producers belonging  to producer  organizations who produced  in the 
1988/89 milk  year.  These were allocated A quotas equal  to production  in the 
1988/89 milk  year and possibly B quotas equal  to the amount  by which 
production  in 1991/92 exceeded  that  in 1988/89. 

-  8  -

Given  the  high  number  of  producers  involved,  the  possibility  cannot  be  ruled 
out  that  the  abovementioned  list  still  contains  certain  errors  or 
inaccuracies  due  to  a  failure  to  record  sales  of  holdings,  successions  and 
the  like. 

A  series  of  checks  is being  carried  out  at  present  to  weed  out  any  possible 
mistakes. 

To  that  end,  last  December  lists of  producers  were  forwarded  to  the 
organizations  concerned  for  the  requisite  corrections. 

At  present  the  lists  are  being  returned  to  the  organizations  with 
correct ions. 

All  producers  who  have  taken  part  in  the  programmes  for  the  discontinuation 
of  milk  production  implemented  in  Italy  to  date  have  naturally  been  deleted 
from  the  lists  even  if  they  were  producing  in  the  1988/89  milk  year. 

Applications  from  organizations  to manage  their  members'  reference 
quantities  must  reach  AIMA  by  17  February  1993. 

To  that  end  an  application  form  has  been  prepared  for  the  purpose.  It  must 
be  accompanied  by  a  list  of  members  with  the  relevant  identifying  data. 

AIMA  will  conduct  all  checks  necessary  on  applications  submitted  by 
organizat ions. 

A  second  list  of  producers  taking  account  of  applications  for  authorization 
of  management  by  organizations  is  thus  scheduled  to  be  published  in  early 
March. 

-  9  -

The  abovementioned  list  will  be  printed  by  AIMA  and  forwarded  to  the  regions 
for  consultation  by  operators  at  their  premises  in each  provincial  capital. 

This  second  list  will  show  member  producers  grouped  by  organization  and  will 
also  take  account  of  all  corrections  forwarded  to  AIMA  in  the  meanwhile. 

The  lists will  thus  be made  available  to  purchasers  and  producers  before  the 
beginning  of  the  1993/94  milk  year. 

As  mentioned  above,  the  first  list  is of  necessity  provisional  in nature  and 
includes  169  000  producers  entitled  to  a  quota  covering  a  total  of 
11.95  million  tonnes  in  reference  quantities  allocated. 

To  sum  up,  the  allocation  of  individual  quotas  is being  undertaken  in 
accordance  with  the  time  limits  and  rules  laid  down  by  the  Law. 

Detailed  rules  for  implementing  Law  No  468/92 

The  Law  as  it  stands  is sufficient  to  start  operations  required  for  the 
commencement  of  the  1993/94  milk  year. 

It  contains  all  the  provisions  necessary  to  allocate  quotas  and  publish  the 
Iists. 

However,  for  certain  procedures  which  need  to  be  carried  out  during  the  milk 
year  and  for  checks  thereon,  it  has  been  necessary  to  prepare  provisions 
containing  implementing  rules. 

-  10  -

These  implementing  rules  are  intended  to  cover  secondary  aspects  of  the  milk 
quota  system  and  accordingly  do  not  prevent  the  Law  from  applying 
immediately. 

The  Regulation,  laying  down  those  rules  to  be  adopted  within  four  months 
from  the  entry  into  force  of  Law  No  468/92,  has  already  been  drafted  and 
consultations  are  under  way  on  the  subject  with  the  bodies  assigned 
responsibility  for  checks  and  with  the  main  parties  subject  to  the 
procedures  laid  down  with  a  view  to  ensuring  that  the  system  is  fully 
effective  and  complies  as  much  as  possible  with  the  practical  requirements 
of  those  part ies. 

In  particular,  the  draft  Regulation  regulates  in  detail  the  requirements  of 
producers,  purchasers  and  organizations,  and  introduces  further  provisions 
in  addition  to  those  laid  down  by  Law  No  468/92,  with  a  view  to  more 
efficient  checks  by  inspection  bodies. 

To  that  end  there  is provision  for  a  computerized,  standardized  system 
enabling  checks,  including  cross-checks,  to  be  conducted  on  data  by  means  of 
specific  data-processing  procedures. 

It  will  accordingly  be  easy  to  detect  any  possible  infringements  punishable 
by  severe  penalties  under  Law  No  468/92. 

Further  detailed  rules  on  the  keeping  of  accounts  have  been  laid  down  to 
ensure  that  purchasers  apply  the  system  in  all  points. 

For  that  purpose  there  is  provision  for  a  special  register,  to  be  endorsed, 
indicating  in  particular  the  fat  content  of  milk  from  each  producer. 

In  addition,  purchasers  are  required  to  take  two  samples  each  month  from 
milk  delivered  by  each  producer  to  calculate  its  fat  content. 

.  -  11  -

With  a  view  to  calculating  any  levy  due,  the  purchaser  must  work  out  the 
average  fat  content  of  milk  delivered  over  the  period  concerned  by  each 
producer. 

Special  attention  has  been  paid  to  the  wording  of  the  provisions  on  direct 
sales. 

There  is  thus  provision  for  careful  checking  of  declarations  which  producers 
must  forward  in accordance  with  Law  No  468/92. 

Checks  involve  verifying  records  held  for  tax  purposes  or  commercial 
documents  to  see  whether  the  figures  tally  with  data  contained  in  the 
abovementioned  declarations  concerning  quantities  of  milk  or  milk  equivalent 
sold  direct I y. 

Checks  relating  to producers  exempt  under  the  provisions  in  force  from  the 
obligation  on  keeping  the  abovementioned  documents  are  aimed  at  ascertaining 
whether  the  number  of  dairy  cattle  on  the  holding  tallies  with  the  quantity 
of  milk  sold  as  given  in  the  declaration. 

Discontinuation  of  milk  production  -  1992 

As mentioned  above,  at  the  Council  meeting  on  agriculture  in Brussels  on  14 
and  15  July  1992,  the  Italian  delegation  outlined  the measures  which  the 
Italian  authorities  intended  introducing  to  bring  milk  production  within  the 
limits  laid  down  by  the  Community. 

At  that  time  it was  pointed  out  that  milk  production  would  have  to  be 
reduced  by  a  total  of  approximately  1 600  000  tonnes  in  Italy  over  three 
milk  years  as  set  out  below: 

1992/93 milk  year 
1993/94 milk  year 
1994/95  mi Ik year 

300  000  tonnes 
650  000  tonnes 
650  000  tonnes 

12  -

In order  to  implement  the  programme  to  reduce'mi Ik production,  Law  No  468/92 
provides  explicitly  for  the Ministry  of  Agriculture  and  Forestry  to  issue a 
decree  setting  out  the  general  criteria  to  be  followed  to  bring  quantities 
allocated  to  individual  Italian  producers  into  line with  Italy's  reference 
quantities  over  three  years  (Article  2(8)). 

The  programme  will  be  implemented  by  AIMA,  which  may  make  use  of  production 
discontinuation  programmes  involving  compensation  or  may  reduce  B  quotas 
without  paying  any  compensation  (Article  2(9)). 

With  regard  to  the  projected  reduction  of  300  000  tonnes  during  the  current 
milk  year,  it  should  be  pointed  out  that  a  production  discontinuation 
programme  in accordance  with  Regulation  (EEC) No  1637/91  has  already  been 
completed  and  compensation  paid  to a  large  extent. 

That  Regulation,  which  was  adopted  to  allow  the Member  States  to  bring 
within  the  limits  reference  quantities, which  were  reduced  by  2%  for  the 
1991/92 milk  year,  specified  that  the  production  discontinuation  programme 
financed  by  the  Community  was  to be  completed  by  31  March  1992. 

The  operation  could  cover  up  to  3% of  the  national  guaranteed  quantity, 
which  in the  case  of  Italy was  around  270 000  tonnes. 

By  the  Decree  of  the  Minister  for  Agriculture  and  Forestry  of 
20 October  1991,  the  Italian  authorities  adopted  measures  for  the 
application  of  Regulation  (EEC) No  1637/91  so  permitting  Italian  producers 
to  benefit  under  the  Community  programme. 

-  13 -

Subsequently, Regulation  (EEC) No 1637/91  was amended  by Regulation  (EEC) 
No 1188/92 to permit  the Member  States  to extend  the programme  for  the 
discontinuation of milk production  to 30 September  1992. 

At  15 November  1991, the closing  date  for  submission of  applications  laid 
down by  the Ministerial  Decree of 29 October  1991, applications from 
producers numbered  approximately  11 500, covering a total  of approximately 
970 000 tonnes mi Ik. 

Of  that number, 6 963 applications were approved  from producers who at 
30 September  1992 had abandoned  production  quotas  totalling  285 860 tonnes 
(equal  to approximately  320 000 tonnes actual  production). 

The objective of  reducing production by around  300 000 tonnes  in the  1992/93 
milk  year was thus clearly  attained. 

The expiry dates for  the subsequent  production discontinuation programmes to 
be  implemented  in the two forthcoming milk  years must  coincide with  the 
termination of  the milk year  to permit  measures  relating  to the additional 
levy to be applied more effectively. 

The next milk production discontinuation programme will  therefore  probably 
expire on 31 March 1994. 

Actual  reductions covered  by the programme may  vary  depending on  the real 
needs, which will  be assessed more accurately  after  the  commencement  of the 
milk year, without  prejudice to the objective, which  consists  in reducing 
the overall  quantities allocated  to producers within  the time  limit  laid 
down by  the Council  Decision of  last December. 

ISSN 0254-1475 

COM (93) 109 final 

DOCUMENTS 

EN 

03 

Catalogue number : CB-CO-93-137-EN-C 

ISBN 92-77-53860-0 

Office for Official Publications of the European Communities 
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