Proposal for a COUNCIL REGULATION (EC) concerning the conversion of land currently under arable crops to extensive livestock farming in Portugal
Date: 1994-04-08
Institutions: European Commission
Subjects: Portugal, agricultural guidance, arable land, redirection of production, sheep, suckler cow

COMMISSION OF THE EUROPEAN  COMMUNITIES 

COM(94) 114 final 
Brussels, 08.04.1994 

94/ 0100CCNS) 

Proposal  for a 

COUNCIL REGULAT I ON  (EC) 

concerning  the conversion of land currently  under 
arable crops to extensive  livestock farming  in Portugal 

(presented  by  the Commission) 

fl,^.,'.,.-^ 

, . ,.fc....,••, 

EXPLANATORY  MEMORANDUM 

When  the  reform  of  the  common  agricultural  policy  was  adopted  (May 
1992), the following declaration was included  in the minutes: 

"The  Commission  will  follow  the  evolution  of  extensive  livestock 
production  in  Portugal  as  a consequence  of  the  redistribution  of  land 
which  was collectivized  and of  adjustments  in the production  of  arable 
crops and will, if necessary, make appropriate proposals." 

No  proposals  were  made  immediately,  because  the  Commission  felt  that 
before major changes could be proposed  in the sectors concerned  (arable 
crops  and  stockfarming),  and  in  order  to  follow  the  adjustments  to 
arable  crop  production,  it was  necessary  to  assess  the  impact  of  the 
CAP reform  in Portugal  and only  then to  submit  any  necessary  proposals 
covering  both  the redistribution  of  land  and the  adjustments  referred 
to in the Council's declaration. 

A  new  declaration  was  made  at  the  Council's  meeting  of  14  to 
17 December 1992: 

"The Council  approves  the  intention  of the Commission  to present  early 
proposals  in  relation  to  the  conversion  to  extensive  livestock 
production  of  up  to  200 000  hectare  of  arable  lands  formally 
collectivized  in  Portugal,  to  be  stocked  at  not  above  0.5  lu  per 
hectare." 

The  annexed  proposal  satisfies  the  commitments  undertaken  by  the 
Commission. 

The  measure  in  question  falls  within  the  exclusive  competence  of  the 
Community.  The  Regulation  is  the  type  of  act  most  suited  to  the 
requirements  of the measure. The proposal  aims  to resolve  a historical 
situation  in  Portugal  which  had  given  rise  to  discrimination  between 
producers. 

d-

Proposal for a 

Council Regulation  (EC) No  ...,/94 

of 

concerning the conversion of land currently  under 
arable crops to extensive  livestock  farming  in Portugal 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in 

particular Article 43 thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament, 

Whereas  more  than  one million  hectares  in  several  regions  of  Portugal  have 

been collectivized  in the context of the  "Reforma  Agraria"; whereas much of 

this  land  has  been or  is being  redistributed  to  the  former  owners  or  their 

successors; whereas part of this  land was dedicated  to  livestock  production 

before  collectivization;  whereas, following  collectivization,  this  land was 

largely  used  for the cultivation  of arable crops; whereas, if the  viability 

of  the  holdings  concerned  is  not  to  be  endangered,  the  conversion  of  the 

said  land  to  traditional  farming  activities,  namely  extensive  farming  of 

cattle  and/or  sheep  and  goats,  as  recommended  by  Portugal  in  the  regions 

concerned,  requires  the  existence  of  a  sufficient  number  of  premium  rights 

as  referred  to  in  Article 4d  of  Council  Regulation  (EEC)  No 805/68  of 

27 June  1968 on the common organization  of the market  in beef  and veal-'- and 

Article 5a  of  Council  Regulation  (EEC) No  3013/89  of  25  September  1989  on 

the  common  organization  of  the  market  in  sheepmeat  and  goatmeat^;  whereas 

Portugal 

should  be  enabled  to  implement  a  programme 

for  the 

1 

2 

0J  No  L  148,  28.6.1968,  p.24.  Regulation  last  amended  by  Commission 
Regulation  (EC) No 3611/93  (OJ No L 328, 29.12.1993, p. 20). 
OJ  No  L  289,  7.10.1989,  p.  1.  Regulation  last  amended  by  Commission 
Regulation  (EC) No 233/94  (OJ No L 30, 3.2.1994, p. 9.). 

L 

conversion  of this  land by providing  it with  a specific  national  reserve of 

premium rights; whereas, so as not to disturb the situation on the market in 

Portugal,  the  maximum  number  of  livestock  units  (LU)  which  may  be  the 

subject of the conversion programme must be restricted; 

Whereas  the  land collectivization  process, because of  its nature  and scale, 

has  affected  all  farming  activity,  and  therefore  all  farms,  in the  regions 

concerned;  whereas  all  the  agricultural  areas  in  the  collectivized  regions 

should therefore be eligible for the conversion programme; 

Whereas access to the conversion programme  should be restricted  to producers 

with all or part of their plots in the regions affected  by collectivization, 

provided  they  fulfil certain conditions  and undertake  to convert  such plots 

to extensive  livestock  farming with a maximum  stocking density per converted 

hectare,  in  accordance  with  a  conversion  plan  approved  by  the  competent 

authorities; 

Whereas male cattle born to new suckler cows  installed  under  the  conversion 

programme  must  also  be  eligible  for  the  special  premium  provided  for  in 

Article  4b  of  Regulation  (EEC)  No  805/68,  without  prejudice  to  current 

producers;  whereas  it  is  therefore  appropriate  that  part  of  the  premium 

rights arising  from the conversion of arable crops to the raising of suckler 

cows should be used to increase the regional ceiling on premiums referred to 

in the above-mentioned Regulation; 

Whereas,  in  order  to  prevent  abuses  of  the  system,  the  transfer  and 

temporary  transfer  of  rights  obtained  as  a  result  of  conversion  should  be 

restricted  and provision  should be made for penalties where producers do not 

fulfil their undertakings; 

Whereas  the  conversion  programme  must  be  completed  within  a  time  limit; 

whereas it should therefore be stipulated that, at the end of the programme, 

the  specific  reserve  created  pursuant  to  this  Regulation  as  well  as  any 

rights not yet allocated should lapse; 

1 

Whereas the arable areas converted to extensive  livestock  farming must cease 

to be eligible  for compensatory  payments  under the  scheme  set up by  Council 

Regulation  (EEC) No  1765/92  of  30  June  1992  establishing  a  support  scheme 

for  producers  of  certain  arable  crops3; whereas  such  land  should  therefore 

be  considered  as  permanent  pasture  as  referred  to  in  Article  9  of  that 

Regulation  and Portugal•s regional base  area  should  therefore be reduced by 

the total area of land converted, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Portugal  shall be  authorized  to carry  out, for  a period  of  eight  years, in 

the  regions  listed  in  the  Annex  to  this  Regulation,  a  programme  for  the 

conversion  of  land  currently  under  arable  crops  to  extensive  livestock 

production, up to a maximum of 200 000 hectares. 

Article 2 

Without prejudice to Article 4f of Regulation  (EEC) No 805/68 and Article 5b 

of  Regulation  (EEC)  No  3013/89,  Portugal  shall  be  allotted  a  specific 

autonomous  national  reserve  (hereinafter  called  "specific  reserve") 

comprising  a  total  number  of  rights  to  the  suckler  cow  premium  within  the 

meaning  of Article 4d  of  Regulation  (EEC) No  805/68  and/or  the  ewe  premium 

within  the meaning  of Article 5 of Regulation  (EEC) No  3013/89  (hereinafter 

called  "premium rights") equivalent to 100 000 livestock units (LU). 

For  the  purposes  of  this  Regulation,  the  conversion  of  LU  into  premium 

rights shall be carried out using the conversion table in Annex  1 to Council 

Regulation  (EEC) No  2328/91  of  15 July  1991 on  improving  the  efficiency  of 

agricultural  structures^.  To  this  end,  account  shall  be  taken  of  suckler 

cows  and  sheep  and/or  goats  covered  by  an  application  for  participation  in 

the conversion programme. 

3 

4 

OJ  No  L  181,  1.7.1992,  p.  12. Regualtion  last  amended  by  Commission 
Regulation  (EC) No 231/94  (OJ No L 30, 3.2.1994, p. 2 ). 
OJ  L  218,  6.8.1991,  p.l.  Regulation  last  amended  by  Commission 
Regulation  (EC) No 3669/93  (OJ No L 338, 31.12.1993, p. 26). 

k 

Article 3 

1.  The  premium  rights  in  the  specific  reserve  shall  be  allocated  to 

farmers having farmland which is entirely or partly used to produce the 

arable  crops  referred  to  in  Annex  1  to  Regulation  (EEC)  No  1765/92. 

Parcels shall be eligible only: 

if they are located in the regions  listed in the Annex, 

if  the  producers  have  received  compensatory  payments  as  provided 

for in Regulation  (EEC) No  1765/92 in respect thereof, and 

if they are the subject of a programme  for conversion to extensive 

livestock production. 

2.  Allocation  of  rights  shall  be  subject  to  the  requirement  that  the 

stocking  density  on  the  declared  area,  calculated  in  accordance  with 

Article  4g(l) to  (3) of Regulation  (EEC) No  805/68, must  be  0.5  LU per 

hectare or less. 

3.  A number of premium rights equivalent  to  0.5  LU  shall be allocated  per 

hectare  converted  to  extensive  livestock  production.  However,  where 

areas  are  converted  to  the  rearing  of  suckler  cows,  the  number  of 

rights to the suckler cow premium  shall be reduced by 2 5%; rights which 

remain unallocated  as a result of  this reduction  shall  be added  to the 

respective  regional  ceiling  referred  to in Article  4b(3) of  Regulation 

(EEC) No 805/68. 

Article 4 

In  order  to  obtain  premium  rights,  producers  must  submit  an  application 

specifying  in particular the type of rights required, accompanied by: 

(a)  a  development  plan  for  extensive  production  of  suckler  cows  and/or 

sheep  and/or  goats, demonstrating  to  the  competent  authority  that  the 

conversion  will  be  completed  within  the  time  limit  laid  down  and  that 

the  maximum  stocking  density  referred  to  in  Article  3(2)  will  be 

complied with; 

J> 

(b)  an  undertaking  to  cease  cultivation  of  arable  crops  on  the  declared 

areas and to convert to extensive livestock production; 

(c)  a  declaration  that  the  producer  is  aware  of  the  conditions  for 

allocating premium rights. 

Article 5 

On the basis of the applications  submitted, the competent  authorities  shall 

decide  on the  number  of  rights  to be  allocated  and  shall  inform  applicants 

thereof  each  year,  not  later  than  two  months  before  the  first  day  of  the 

first  period  for  submission  of  premium  applications  stipulated  by  Portugal 

for suckler cows and/or sheep and/or goats. 

Article 6 

1.  Premium  rights  allocated  in  accordance  with  this  Regulation  shall  be 

added  to  the  rights  already  held  by  the  beneficiary  and  shall  be 

subject  to  the  relevant  provisions  of  Regulation  (EEC)  No  805/68  and 

Regulation  (EEC) No  3013/89 respectively.  However, such  rights may  not 

be transferred  definitively  or temporarily  for five years  or marketing 

years following the date on which they were allocated. 

2.  Where  the areas covered by an application  for allocation of rights are 

not  converted  in  accordance  with  the  development  plan  referred  to  in 

Article 4(a), the  rights  allocated  in respect  of  those  areas  shall  be 

withdrawn and returned to the specific reserve. 

Article 7 

At  the  end  of  the  eighth  year  following  the  entry  into  force  of  this 

Regulation, unallocated  premium  rights  shall  lapse  and  the  specific  reserve 

shall be abolished. 

Article 8 

The Portuguese  authorities  shall take  the necessary  measures  to ensure  that 

this  Regulation  is  complied  with.  Such  measures  shall  include,  in 

particular: 

C 

(a)  verification of the eligibility  of declared areas; 

(b)  checks  to  ascertain  that  arable  crops  are  no  longer  produced  on  the 

declared  areas, which  have  been  duly  converted  to  extensive  livestock 

production within the time limit laid down. 

Article 9 

1.  The  total  area  under  arable  crops  converted  under  this  Regulation  and 

corresponding  to all admissible applications during each marketing  year 

shall be deducted, from the following marketing year, from the regional 

base  area  or, where  applicable,  the  individual  base  area  provided  for 

in Article 2(2) or  (3) of  Regulation  (EEC) No  1765/92. Portugal  shall 

communicate  the  total  area  converted  to  the  Commission  each  year  in 

good time to allow the regional base area to be amended. 

2. 

Converted  areas  formerly  under  arable  crops  shall  be  considered  as 

permanent  pasture  as  referred  to  in  Article 9  of  Regulation  (EEC) No 

1756/92. 

Article 10 

The Commission  shall, if necessary, adopt detailed rules for the  application 

of  this Regulation  in accordance with the procedure  laid down  in Article 27 

of Regulation  (EEC) No 805/68 and Article 30 of Regulation  (EEC) No 3013/89. 

Article 11 

This  Regulation  shall  enter  into  force  on  the  seventh  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 Council 

\ 

ANNEX 

List of regions referred^ to in Article 1 

Castelo Branco, santarém, Lisboa, Setubal, Evora, Beja and Faro, 

*-

m 

t 

FINANCIAL  STATEMENT 

1.  BUDGET  HEADING 

Chapter  10 
Chapter  21 

APPROPRIATIONS 

ECU  13  425  million 
ECU  4  786  million 

2.  TITLE  : 

Draft  Council  Regulation  concerning  the  conversion  of  land  currently  under  arable 
crops  to  extensive  livestock  farming  in  Portugal 

3.  LEGAL  BASIS  :  Article  43  of  the  Treaty 

4.  AIMS  OF  PROJECT  : 

To  allow  Portugal  to  convert  land  under  arable  crops  to  extensive  stockfarming 

PERIOD  OF 
12  MONTHS 

CURRENT 
FINANCIAL  YEAR 
(1994) 

FOLLOWING 
FINANCIAL  YEAR 
(1995) 

-  ECU  24  million 

ECU  6 million 

5.  FINANCIAL  IMPLICATIONS 

5.0  EXPENDITURE 

-  CHARGED  TO THE  EC  BUDGET 

(REFUNDS) 

-  NATIONAL  ADMINISTRATION 
-  OTHER 

5.1  REVENUE 

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

-  NATIONAL 

1996 

1997 

1998 

1999 

-ECU  13  million  -ECU  19  million  -ECU  22  million  -ECU  24 milliç 

5.0.1  ESTIMATED  EXPENDITURE 
5.1.1  ESTIMATED  REVENUE 

5.2  METHOD  OF  CALCULATION 

See  Annex 

6.0  CAN  THE  PROJECT  BE  FINANCED  FROM  APPROPRIATIONS  ENTERED  IN  THE  RELEVANT 

CHAPTER  OF  THE  CURRENT  BUDGET? 

YES 

6.1  CAN  THE  PROJECT  BE  FINANCED  BY  TRANSFER  BETWEEN  CHAPTERS  OF  THE  CURRENT 

BUDGET 

6.2  IS A  SUPPLEMENTARY  BUDGET  NECESSARY? 

6.3  WILL  FUTURE  BUDGET  APPROPRIATIONS  BE  NECESSARY? 

YES 

COMMENTS 

°s 

2 E E J E S 2E 

If the  land  concerned  is currently  used  for  the  production  of  arable crops, 
the  budget  savings  come  from  the  progressive  withdrawal  from  cultivation  of 
200 000 hectares under cereals  (2/3 wheat and  1/3  barley). 

Portuguese  producers  receive  aid  per  hectare  based  on  a  notional  yield  of 
2.9  tonnes/hectare,  85%  of  which  is  aid  for  cereals  (ECU 45/t  as  from 
1995/96)  and  15%  is  aid  for  set-aside.  In  Portugal  Community  aid  for 
set-aside  (ECU 57/tonne) is supplemented by a degressive aid. 

Portuguese  producers  also receive production  aid which  falls each year. This 
aid  is related  to the  yield  actually  observed,  i.e.  1.4 t/ha  for wheat  and 
1.1 t/ha  for barley. 

The table below summarizes the annual savings: 

AID PER  HECTARE 

PRODUCTION  AID 

Cereals  85% 

Set-aside  15% 

Aid 

Wheat  2/3 

Barley  1/3 

Aide 

Area 

ECU  (A) 
mi 11 ion 

savings 

Yield 
t/ha 

Aid 
ECU/t 

Yield 
t/ha 

Aid 
ECU/t 

Aid 
ECU/t 

ECU/ha 

Yield 
t/ha 

Aid 
ECU/t 

Yield 
t/ha 

Aid 
ECU/t 

ECU/ha 

Ha 

1994/95 
1995/96 
1996/97 
1997/98 
1998/99 
1990/00 

2,9 
2,9 
2,9 
2,9 
2,9 
2,9 

35 
45 
45 
45 
45 
45 

2,9 
2,9 
2,9 
2,9 
2,9 
2,9 

57 
57 
57 
57 
57 
57 

22,25 
19,95 
17,62 
15,26 
12,87 
10,45 

121 
144 
143 
142 
141 
140 

1.4 
1.4 
1.4 
1,4 
1.4 
1,4 

88,42 
79,95 
71,32 
62,44 
53,32 
43,89 

1.1 
1,1 
1.1 
1,1 
1,1 
1.1 

58,87 
52,33 
45,78 
39,25 
32,70 
26,17 

104,31 
93,99 
83,52 
72,82 
61,88 
50,67 

40 000 
80 000 
120 000 
150 000 
180 000 
200 000 

-  9,00 
- 19,07 
- 27,23 
- 32,28 
- 36,58 
- 38,19 

The  budget  expenditure  incurred  is  the  result  of  the  conversion  of 
200 000 hectares of cereals  into LU at a rate of 0.5 LU/ha. Additional rights 
to  premiums  per  animal  are  thus  created.  These  LU  may  be  converted  into 
rights  for  suckler  cows,  male  bovine  animals  or  ewes.  A  suckler  cow  is 
equivalent  to  1 LU,  1 male bovine  animal to 0.6  LU  and  1 ewe to 0.15  LU. The 
100 000 LU may  be  broken  down  between  the  three  types  of  animals  in various 
ways. For the purposes of this calculation, the  hypothesis  used  is  75 000 LU 
suckler cows and 25 000 LU male bovine animals. 

This corresponds to 75 000 suckler cows and 41 667 male bovine animals 
animals are to be introduced  gradually over a period of six years. 

These 

Suckler cows in Portugal are eligible for four types of premium: 

the suckler cow premium, 
the compensation  for the single market, 
the supplement to the suckler cow premium, 
the premium  for extensification  (<1.4 LU). 

Male bovine animals are eligible for: 

the special premium, 
the premium for extensification. 

\o 

CALENDAR 
YEAR 

FINANCIAL 
YEAR 

ANIMAL 

NUMBER 

ECU(A)/head 

PREMIUM 

ECU(A) 
mi 11 ion 

ECU(A) 
mi 11 ion 

Applicat ions 

Payments 

Suckler  cows 

94 

95 

Male bov. animals 
Cows +male animals 

Applicat i ons 

Payments 

Suckler  cows 

95 

96 

Male bov. animals 
Cows +male animals 

Appli cat i ons 

Payments 

Suckler  cows 

96 

97 

Male bov. animals 
Cows +male animals 

Applicat i ons 

Payments 

Suckler  cows 

97 

98 

Male bov. animals 
Cows +male animals 

15 000 
15 000 
15 000 
8 333 
23 333 

30 000 
30 000 
30 000 
16 667 
46 667 

45 000 
45 000 
45 000 
25 000 
70 000 

56 250 
56 250 
56 250 
31 250 
87 500 

Applications 

Payments 

Suckler  cows 

98 

99 

Male bov. animals 
Cows +male animals 

Applications 

Payments 

Suckler  cows 

99 

00 

Male bov. animals 
Cows +male animals 

67 500 
67 500 
67 500 
37 500 
105 000 

75 000 
75 000 
41 667 
116 667 

70 
90 
20 
60 
30 

95 
65 
20 
75 
30 

120 
10 
20 
90 
30 

120 
10 
20 
90 
30 

120 
10 
20 
90 
30 

120 
20 
90 
30 

Basic  premium 
Compens. for single market 
Objective 1 
Basic  premium 
Extensi ficat ion 

Basic  premium 
Compens.  for single market 
Objective 1 
Basic  premium 
Extensi ficat ion 

Basic  premium 
Compens. for single market 
Objective 1 
Basic  premium 
Extensi f i cat ion 

Basic  premium 
Compens.  for single market 
Objective 1 
Basic  premium 
Extensi f icat ion 

Basic  premium 
Compens.  for single market 
Objective 1 
Basic  premium 
Extensi fication 

Basic  premium 
Objective 1 
Basic premium 
Extensi f icat ion 

1,1 
1,4 
0,3 
0,5 
0,7 

2,9 
2,0 
0,6 
1,3 
1,4 

5,4 
0,5 
0,9 
2,3 
2,1 

6,8 
0,6 
1,1 
2,8 
2,6 

8,1 
0,7 
1,4 
3,4 
3,2 

9,0 
1,5 
3,8 
3,5 

4,-

8,2 

11,2 

13,9 

16,8 

17,8 

The  increase  in the quota results  in a rise  in production  in Portugal, since 
intervention  is subject in the medium term to a ceiling of 350 000 tonnes and 
as  exports  are  limited  to  the  quantities  granted  under  the  GATT,  it  is  not 
assumed  that  additional  expenditure  will  result  from  this  increase  in 
production. 

This  increase  in  production  should  result  in  a  corresponding  increase  in 
consumption  in  Portugal  or  lower  imports  from  other  Member  states  and 
consequently  lower production elsewhere  in the European Union. 

The net impact  is assessed as follows: 

Savings 

Expenditure 

Net 
ECU  (A) 

Net 
ECU  (B) 

1995 
1996 
1997 
1998 
1999 
2000 

9 
19 
27 
32 
37 
38 

4 
8 
11 
14 
17 
18 

-  5 
- 11 
- 16 
- 18 
- 20 
- 20 

-  6 
- 13 
- 19 
- 22 
- 24 
- 24 

^ 

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COM (94) 114 final 

DOCUMENTS 

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03 

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ISBN 92-77-67036-3 

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\2.