Proposal for a COUNCIL REGULATION (EC) amending Regulations (EEC) No 2328/91 and (EEC) No 866/90 with a view to speeding up the adjustment of production, processing and marketing structures within the framework of the reform of the common agricultural policy
Date: 1994-04-29
Institutions: European Commission
Subjects: agricultural productivity, agro-industry, investment aid, marketing, policy on agricultural structures, reform of the CAP

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(94) 166  final 

Brussels,  29.04.1994 

94/ 0120CCNS) 

||;,;^3^|j 

Proposal for a 

COUNCIL REGULATION (EC) 

amending Regulations  (EEC) No 2328/91 and (EEC) No 866/90 

with a view to speeding up the adjustment of production, 

processing and marketing structures within the framework 

of the reform of the common agricultural policy 

(presented by the Commission) 

j vial 

EXPLANATORY MEMORANDUM 

1.  Within the framework of the revision of the Regulations of the structural Funds, 
on 22 December  1993 the Council adopted Regulation  (EC) No 3669/93, amending the 
Regulations concerned with Objective 5(a). 

This amendment was a requirement of the new Regulation on FEOGA-Orientation 
(Article 11a of Regulation  (EEC) no. 4256/88 as modified by Regulation  (EEC) no. 
2085/93). This introduced rules on the financing of Objective 5(a) and a few 
adjustments to existing measures, mainly to take account of the accompanying 
measures under the reform of the common agricultural policy. 

2.  When the Regulation was adopted the council made the following declaration : 

"The Council considers that other adjustments to the Regulations relating to 
Objective 5(a) are necessary to take account in particular of current trends  in 
farming conditions and certain particular situations. The Council calls on the 
commission to examine all the requests submitted by delegations  and, on the 
basis of that examination, to submit any necessary proposals as soon as possible 
and no later than 30 April  1994. The Council undertakes to decide on the matter 
no later than 31 July 1994. 

3.  This proposal is the result of the Commission's examination of the requests for 

amendments submitted by the Member States. It includes some of these requests, 
which the Commission believes will simplify and improve the implementation of 
objective 5(a) in the light of the development of the CAP and in view of the 
financial discipline for this Objective. It also takes account of the comments 
of the European Parliament and the Economic and Social Committee in their 
opinions on the most recent amendment proposal, particularly with a view to 
paying special attention to environmental protection and animal welfare and 
measures to assist young farmers. 

It equally takes account of the opinions of the Advisory Committee on Questions 
of Agricultural Structures Policy, in particular to increase the flexibility of 
the conditions  for access to aid. 

4.  The proposed amendments can be summarized as follows : 

I.  Improving production structures  [Regulation  (EEC) No  2328/91] 

Amount of aid: update 

Except for adjustments arising from fluctuations in the conversion rates, the 
amounts provided for in Regulation  (EEC) No 2328/91 have not been amended since 
the entry into force of Regulation  (EEC) No 797/85  [with the sole exception of 
aid for management services, which was updated in December  1993], 

To take account of the increase in costs during the intervening period, the 
Commission proposes to bring the amounts up to date by taking acount of the 
average inflation rate. 

INSEM/94/014 

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Investment aid: optional nature of the scheme 

In view of the current state of agricultural structures, changes in farming 
conditions as a result of the CAP reform and the broader range of means 
available to farmers, the Commission proposes that the investment scheme should 
become optional. 

However, making the scheme optional reinforces the need to ensure that all state 
aid granted in this area complies with the provisions of the Regulation. It must 
therefore comply with the restrictions and prohibitions of Articles 6 and 12. 

Investment aid: conditions 

At present, to qualify  for investment aid co-financed by the Community under 
Objective 5a a farmer's earned income must be lower than the reference income 
(average gross wage of non-agricultural workers in the region) at the start of 
the improvement plan and may not be more than 120% of that income at the end of 
the plan. In addition, the plan must result in an increased  level of income. 

In order to facilitate access to these aids, the Commission proposes to relax 
the conditions by suppressing the ceiling of  120% of the reference income at the 
end of the plan as well as  the condition concerning an increased level of 
income. 

Investment aid: sectoral restrictions 

Investment aid is subject to a number of prohibitions and restrictions in cases 
where the investments concerned may have the effect of increasing the holding's 
production of products for which there are no normal market outlets. 

Without derogating from this principle, the Commission proposes to introduce 
some flexibility  in the case of investments in the area of environmental 
protection, improvement of hygiene conditions on livestock enterprises, and in 
animal welfare which do not result in increases in production capacity. 

Investment aid in group-operated  holdings: conditions 

This proposal makes some technical changes to facilitate the grant of aid to 
group-operated holdings in the case of associations with a legal form similar to 
a cooperative, as well as allowing support to a larger number of holdings per 
association. Moreover, a relaxation of conditions  is foreseen when the majority 
of a group of associated farmers individually meet the conditions necessary to 
qualify for aid. 

Setting-up aid for young farmers 

In order to facilitate the setting-up of young farmers, the Commission proposes 
to widen the approval of these aids to young farmers who, whilst not farming 
full-time, establish a pluriactive regime; taking into account for this purpose 
forestry activities, tourism and craft activities and in addition  there will be 
greater flexibility  in the arrangements  for granting the aid in the form of 
interest-rate subsidies. 

INSEM/94/014 

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Investment aid: the rules governing state aid 

The Commission proposes to adjust the rules governing  state aids in order to 
relax the conditions for granting investment aid in the area of environmental 
protection, improvement of hygiene conditions on livestock enterprises and 
animal welfare on condition that they do not involve any increase in production 
capacity. 

II. Improvement of processing and marketing structures  [Regulation  (EEC) No 866/90] 

The Commission believes it necessary to make certain technical changes to 
simplify and increase the flexibility of Regulation  (EEC) No 866/90 on the 
improvement of processing and marketing structures. 

These changes propose to bring the time limit for payment to beneficiaries into 
line with the general provisions of the structural funds and to enlarge the 
range of criteria to which investments must conform. 

III. 

Producer groups  [Regulation  (EEC) No  1360/78] 

The Commission does not consider it necessary to amend the current rules 
relating to aid to producer groups. The structural deficiencies at the level of 
supply and marketing raised by Ireland and Spain may be handled  appropriately 
within the framework of the operational programmes  for Objectives  1 and 5b) . 

5.  Consolidation 

To take account of these amendments as well as all the other amendments made to 
Regulations  (EEC) Nos 866/90 and 2328/91 since their adoption, the Commission 
intends to propose a consolidated version of these Regulations as soon as the 
Council has decided on this proposal. 

6.  Conclusion 

The proposal for an amendment to the rules governing objective 5(a) of the 
Structural Funds is intended to simplify them in order to give the Member States 
greater room for manoeuvre in the choice of specific conditions for the 
implementation of this objective and greater flexibility regarding aid for 
environmental protection, animal welfare and young farmers. 

It is understood that the possibility of taking into account specific  situations 
in certain regions or sectors can be examined under the heading of programmes 
for Objective  1 and Objective 5b, in duly justified cases and in the framework 
of partnership. 

7.  Financial  implications 

The measures introduced to these regulations form part of the programming of 
Objective  1 or the financial framework of objective 5a). Their modification can 
allow Member States to modify the terms and priorities  for action with Community 
cofinancing, but will not affect the financial envelope of the Structural Funds 
for 1994-1999. 

INSEM/94/014 

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PROPOSAL FOR 

COUNCIL REGULATION  (EC) No 

amending Regulations  (EEC) No 2328/91 and  (EEC) No  866/90 

with a view to expediting the adjustment of production, 

processing and marketing structures within the  framework 

of the reform of the common agricultural policy 

THE COUNCIL OF THE EUROPEAN UNION, 

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

particular Articles  42 and 43 thereof, 

Having regard to the proposal from the Commission^ ), 

Having regard to the opinion of the European Parliament(2), 

Having regard to the opinion of the Economic and Social Committee(3), 

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

efficiency of agricultural structures(4), Council Regulation  (EEC) No  866/90 

of 29 March  1990 on improving the processing and marketing conditions  for 

agricultural products(5) were amended by Regulation  (EC) No  3669/93(6), 

particularly  as concerns the introduction of financing rules in view of the 

ceiling on resources available under objective No.  5(a); 

Whereas, in the context of the implementation of the reform of the common 

agricultural policy and taking account, in particular, of current  developments 

in farming conditions, the measures to improve production, processing and 

marketing  structures  should be adjusted to give the Member states greater 

leeway in choosing the specific conditions for implementing this Objective; 

(1) OJ No 
(2) OJ No 
(3) OJ No 
(4) OJ L 218, 6.8.1991,  p.l. 
(5) OJ No L 91, 6.4.1990, p.l. 
(6) OJ No L 338, 31.12.1993, p. 26. 
INSEM/94/014 

- 5 -

Whereas, keeping within the limits of the resources available for Objective 

No. 5(a), the aid amounts provided for in Regulation  (EEC) No 2328/91 should be 

brought up to date; 

Whereas the investment aid scheme should be made more flexible and optional, 

while maintaining the obligation for all state aid granted in this area to 

comply with the prohibitions and sectoral restrictions as well as with the 

rules on state aid laid down in Regulation  (EEC) No 2328/91; 

Whereas the conditions of access to aid should be relaxed, with  particular 

attention to measures to assist young farmers; 

Whereas it is necessary to ensure that the measures provided for by the present 

Regulation fully respect the current environmental provisions; that in this 

context it is particularly opportune to introduce a certain flexibility to the 

sectoral limitations provided for investment aids in the case of investments in 

thearea of the protection of the environment, hygiene on livestock holdings and 

animal welfare; 

Whereas care should be taken to ensure that the measures envisaged are 

compatible with the reform of the common agricultural policy and that, in 

particular, they do not result in an overall increase in production capacity in 

sectors where there are surpluses, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation  (EEC) No 2328/91 is hereby amended as follows: 

1. The amounts laid down in Regulation  (EEC) No 2328/91 and listed in Annex 1 

to this Regulation are amended as indicated therein. 

2. Article  5 is amended as follows: 

(a)  The first subparagraph of paragraph  1 is replaced by the following: 

"1.  In order to contribute to the improvement of agricultural  incomes 

and of living, working and production conditions on agricultural 

INSEM/94/014 

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holdings, Member States may introduce, pursuant to the common 

measure referred to in Article  1, a system of investment aid to 

agricultural holdings where the farmer :" 

(b)  Paragraph  1(c) is replaced by the following: 

"(c) submits a plan for materially  improving his holding. This plan 

must show that the investments are justified from the point of 

view of the situation of the holding and its economy and that 

implementation of the plan will bring about a lasting  improvement 

of that situation;" 

(c)  Paragraph 2 is replaced by the following: 

"2.  The aid system referred to in paragraph  1 shall be limited to 

agricultural holdings where labour income per man work unit does 

not exceed the reference income referred to in paragraph 3. 

Member States may restrict the aid system referred to in 

paragraph  1 to agricultural holdings which have a family 

character." 

3. Article 6 is amended as follows: 

(a)  The first subparagraph of paragraph  5 is replaced by the following: 

"5.  Aid referred to in paragraph  1 and granted for investments 

relating to the beef sector, other than aid for safeguarding the 

environment, improvement of hygiene conditions on livestock 

enterprises and animal welfare, provided there is no increase in 

capacity, shall be restricted to  livestock enterprises where the 

beef-cattle stocking rate does not, in the final year of the plan, 

exceed the following number of livestock units  (LU) per hectare of 

forage area used for feeding the cattle: 3, 2,5  and 2 LU/ha for 

the plans ending respectively  in 1994, 1995 and 1996 or later. The 

limits of 2,5 and 2 LU/ha shall apply only  to applications 

submitted as from 1 January  1994." 

INSEM/94/014 

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(b) 

Paragraph 6 is replaced by the following: 

"6.  The investment aid referred to in paragraph  1 may not be granted 

in the egg and poultry sector, with the exception of aid for 

safeguarding the environment, improvement of hygiene conditions on 

livestock enterprises and animal welfare, provided there is no 

increase in capacity." 

4. The last paragraph of Article 7 is deleted. 

5. Article 9 is amended as follows: 

(a)  Paragraph 3 is replaced by the following: 

"3.  Member States may grant the aid referred to in Article 7 to group-

operated holdings if at least 3/4 of the members of the group 

holding satisfy the conditions laid down in Article  5(1)." 

(b)  The second subparagraph of paragraph  4 is replaced by the following: 

"However, these ceilings may not exceed: 

-  160 cows, 

-  four times the amount per holding indicated  in the first 

subparagraph of Article 7(2) 

-  per group-operated holding, including any parts of holdings which 

continue to be run by the group members." 

(c)  Paragraph 5 is replaced by the following: 

"5.  In accordance with the procedure  laid down in Article 30, the 

Commission may authorize a Member State to grant the aid referred 

to in Article 7, under the conditions  stipulated  in paragraph 4 

above, to agricultural cooperatives and other similar associations 

whose sole objective  is to manage an agricultural holding. At the 

same time, the Commission shall lay down specific conditions for 

the granting of aid to such cooperatives, as well as the 

conditions under which and the limits within which the volume of 

investment provided  for in paragraph  4 may be exceeded." 

INSEM/94/014 

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6. Article  10 is amended as follows: 

(a)  The second indent of paragraph  1 is replaced by the following: 

"- the young farmer sets up as a farmer practising  farming as his main 

occupation or begins, after having set up as a part-time farmer, to 

practise farming as his main occupation; however, Member States may 

grant this aid to young farmers who set up as part-time  farmers 

deriving at least 50% of their total income from farming, forestry, 

tourism or craft activities or activities for maintaining the 

countryside which qualify for public aid, carried out on the 

holding, provided that the proportion of income deriving directly 

from farming on the holding is not less than 25% of the  farmer's 

total income and that off-farm activities do not account for more 

than half the farmer's total working time," 

(b)  The second subparagraph of paragraph 2(b) is replaced by the following: 

"The duration of the interest subsidy shall not exceed  15 years; the 

capitalized value of the interest subsidy may not exceed the value 

of the single premium fixed at (a)." 

7. Article  12 is modified as follows: 

a)  At paragraph 2 the first indent is replaced by the following text: 

"Where Member states grant aid for investments in holdings which do not 

satisfy the conditions laid down in Article  5, such aid must be at 

least one quarter less than the aid granted pursuant to Article 7, with 

the exception of aid for: 

-  energy saving, 

land improvement, 

-  aid for investment in the protection and improvement of the 

environment, provided that it does not entail an increase in 

production capacity, 

-  measures in respect of investments  for the purpose of improvement of 

hygiene conditions on livestock enterprises or of compliance with 

Community animal welfare standards where these are stricter than 

Community  standards, provided that these investments do not give 

rise to an increase in production capacity, 

which may reach the amount laid down in Article  7(2)." 

INSEM/94/014 

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b)  At paragraph 5 the fifth and sixth indents are replaced by the 

following text: 

aid for to investment in the protection and improvement of the 

environment, providing that it does not entail an increase in 

production capacity, 

-  measures in respect of investments for the purpose of improvement of 

hygiene conditions on livestock enterprises or of compliance with 

Community animal welfare standards where these are stricter than 

Community standards, provided that these investments do not give 

rise to an increase in production capacity, 

c)  A new paragraph is added as follows: 

"6.  The present article applies even if the Member-States do not 

institute a system of investment aids as foreseen under Title IV. 

Article 2 

Regulation (EEC) No 866/90 is hereby amended as follows: 

1. The following points are added at the end of Article 1(2): 

"(f) contributing to the adjustment of sectors facing new situations as a 

result of the reform of the common agricultural policy; 

(g) helping to facilitate the adoption of new technologies relating to 

environmental protection; 

(h) encouraging the improvement and monitoring of quality and of health 

conditions." 

INSEM/94/014 

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2. The first indent of Article 11(1) is replaced by the following: 

"-  rationalizing or developing the preparation, preservation, treatment 

and processing of agricultural products or recycling of by-products or 

manufacturing waste and eliminating or treating waste," 

3. The second subparagraph of Article 17(2) is deleted. 

Article 3 

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 

The President 

INSEM/94/014 

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A N N EX 

Amounts referred to in 
Regulation (EEC) No 2328/91 

Article 7(2) 

Former amounts 

New amounts 

ECU  73 224 per man work unit 
ECU 146 448 per holding 

ECU  90 000 per man work unit 
ECU 180 000 per holding 

Article 8 

ECU  73 224 per man work unit 

ECU  90 000 per man work unit 

ECU 146 448 per holding 

ECU 180 000 per holding 

Article 10(2)(a) 

ECU  12 082 per person 

ECU  15 000 per person 

Article 12(2) 

ECU  73 224 per man work unit 

ECU  90 000 per man work unit 

ECU 146 448 per holding 

ECU 180 000 per holding 

Article 12(3) 

ECU  30 387 per holding 

ECU  38 000 per holding 

Article 13(1) 

ECU  1 197 per holding 

ECU  1 500 per holding 

Article 14 

ECU  18 123 per group 

ECU  22 500 per group 

Article 15(4) 

Article 19(1) 

Article 20(3) 

Article 28(3) 

ECU  14 540 per person 

ECU  18 000 per person 

ECU 123 per livestock unit or per hectare 
ECU 150 per livestock unit or per hectare 
ECU 146.2 per livestock unit or per hectare  ECU 180 per livestock unit or per hectare 
ECU 120 688 per investment 
ECU 
ECU  5 923 per irrigated hectare 

ECU 150 000 per investment 
ECU 
ECU  7 300 per irrigated hectare 

750 per hectare 

603 per hectare 

ECU  8 457 per person 
ECU  3 020 per person 

ECU  10 500 per person 
ECU  4 000 per person 

TABL/94/043-JB/cvo 

"I 

ISSN 0254-1475 

COM(94) 166 final 

DOCUMENTS 

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