Proposal for a COUNCIL REGULATION (EC) derogating from Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops as regards the set-aside requirement for the 1995/96 marketing year
Date: 1994-10-05
Institutions: European Commission
Subjects: agricultural production, arable land, cereals, domestic consumption, fallow, set-aside

COMMISSION  OF  THE  EUROPEAN  COMVIUNITIES 

C0M(94) 417  final 

Brussels, 05.10.1994 

94/ 0223(CNS) 

Proposal  for a 

COUNCIL REGULATION  (EC) 

derogating  from Regulation (EEC) No 1765/92 

establishing a support system for producers of 

certain arable crops as regards the set-aside requirement 

for the 1995/96 marketing year 

(presented  by the Commission) 

LAPLAWAtUKY WbHUKANUUM 

To be eligible for the compensatory payments  introduced as part of the reform 
of the common agricultural  policy for arable  crops, producers  participating 
in the general  scheme must set aside a percentage of their arable  land with 
a  view  to  achieving  a  better  balance  between  Community  production  and 
potential demand. In contrast, small producers can opt for a simplified scheme 
exempt from the set-aside obligation. The set-aside rate was originally fixed 
at 15% for rotational  set-aside and 18% and 20% for the other forms of set-
aside. 

Set-aside was devised as an instrument of market management. Under Regulation 
(EEC) No 1765/92, the set-aside percentage can be revised upwards or downwards 
depending on the evolution of the market. 

The  results  of the reform  are currently  very  encouraging.  In the case of 
cereals,  the 1993/94  marketing  year  - the first  in which  the reform has 
a 
applied - has seen a decline in production as a result of set-aside and 
major  expansion  of outlets  on the internal  market.  This  greatly  improved 
performance on the Community market has been helped during thje marketing year 
by the first  round of internal  price  cuts and by an increase  in prices of 
substitute  products for use as animal  feed, due to abnormally  low soya and 
maize  harvests  in the United  States of America. The combination of reduced 
supply and greater demand has allowed a considerable draw-down of intervention 
stocks of cereals. These  have  fallen  from  over  33 million  tonnes  when the 
reform came  into effect on 1 July 1993 to 17.9 million  tonnes by the end of 
the 1993/94 marketing year. 

Looking to the 1994/95 marketing year, it appears that cereals production will 
be  lower  than  forecast  at  the time  of  the  reform.  This  extra  fall  in 
production is largely the result of bad weather in 1994. Three months into the 
marketing  year,  intervention  stocks  have  declined  further.  At the end of 
September  they  stood  at  14.5 million  tonnes  and  will  probably  end the 
marketing  year at around  10 million  tonnes.  This  spectacular  drop  is also 
being reflected in internal prices for cereals, which are still high compared 
with  intervention  prices. This high price-level on the internal market could 
of course put a brake on the Community's  uptake of domestic  cereals, to the 
advantage of imported  substitutes. 

If  these  trends  continue  during  1995/96,  it could  lead  to extremely low 
intervention  stocks even if actual  production  in 1995 is higher. This might 
well  put up internal  prices  for cereals  and frustrate  some  of the effort 
deployed  to regain  internal  market-share,  bringing  a  halt  to the desired 
convergence of internal and world-market  prices for both cereals and derived 
products. 

On the basis of this analysis, the Commission  proposes  that rotational set-
aside be cut to 13% for the 1995/96 marketing year. Changes to the percentages 
for  other  forms  of  set-aside  follow  automatically.  This  reduction  only 
applies, of course, to 1995/96. For the 1996/97 marketing year, the percentage 
will automatically revert to 15%. 

*£ 

COUNCIL REGULATION  (EC) No  .../.. 
of 

derogating  from Regulation  (EEC) No 1765/92 
establishing a support system  for producers of 
certain arable crops as regards the set-aside requirement 
for the 1995/96 marketing year 

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*1), 

Having regard to the opinion of the European Par Iiament*2), 

Having regard  to the opinion of  the Economic and Social Committee^) t 

Whereas the support  system  for producers of certain arable crops  introduced 
by Regulation (EEC) No l765/94(4), as  last amended by Regulation  (EC) No 
/94^5), provides that  in order  to qualify  for compensatory  payments under 
the general  scheme producers must set aside a predetermined  percentage of 
their arable  land; whereas this percentage should  be re-examined  to take 
account of production and market developments; 

Whereas since the  introduction of the system the cereals market  has 
achieved a better balance as a result of a reduction  in production and an 
increase  in Community  consumption; whereas this situation, together with 
the favourable world market situation, has resulted  in a significant 
reduction  in intervention cereal  stocks; whereas  it has also  led to a rise 
in the prices for cereals on the Community market; 

Whereas the present market  situation  for cereals  is threatening to 
undermine,  in the short  term, some of the results achieved since the reform 
of  the arable sector,  in particular  the continuing rise  in the consumption 
of cereals  in animal  feed; whereas the rate for set-aside beginning not 
later than 15 January  1995 should be set temporarily therefore for the 
1995/96 marketing year at a  level  lower than that resulting from the 
provisions  in  force; 

Whereas the views that  led to the setting of the set-aside rates now in 
force remain valid, however, with a view to maintaining a set-aside rate 
which  is in line with the average trend of the market  in cereals, 

MAS ADOPTED THIS REGULATION: 

O) 
(2) 
C3) 
<4) 
iS) 

O J N oC 
0J No C 
0J NO C 
0J No I 161, 1.7.1902. p. 12. 
0J NO L 

Art icle 1 

Notwithstanding  the second subparagraph of Article 7(1) of Regulation  (EEC) 

No 1765/92, the set-aside requirement  based on rotation  is hereby  fixed for 

the 1995/96 marketing  year at 13%. 

Art icle 2 

This Regulation shall enter  into force on the seventh day following  its 

publication  in the Official  Journal of the European Communities. 

This Regulation shall  apply to set-aside for the 1995/96 marketing year 

only. 

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

all Member States. 

Done at  ... , 

For the Council 

The President 

F i

n

a

n

c

i

al 

S t a t e m e nt 

(FF/94/017) 

Date  :  29  September  1994 

1.  BUDGET  HEADING  :  (1995  DRAFT  BUDGET)  B1-10 

APPROPRIATIONS  :  ECU  14.558m 

2. TITLE : 

Council Regulation derogating  from Régulât ion (EEC) No 1765/92 establishing a support system for 
producers of certain arable crops as regards the set-aside requirement  for 1995/95 

| 3. LEGAL BASIS : Articles 42 and 43 of the Treaty 

4. AIMS 

To  lower by 2 percentage points, for the 1995/96 marketing year, the compulsory set—aside rate set by 
Regulation (EEC) No 1765/92 

5. FINANCIAL  IMPLICATIONS 

5.0 EXPENDITURE 

- CHARGED TO THE EC BUDGET 

(INTERVENTIONS) 

5.1 REVENUE 

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

- NATIONAL 

PERIOD OF 12 MONTHS 
(ECUm) 

CURRENT FINANCIAL YEAR 

<  ECUm  ) 

FOLLOWING FINANCIAL YEAR 
ECUm 

) 

( 

p.m. 

p.m. 

1997 

1998 

1999 

2000 

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 ? 

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

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY ? 

6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY ? 

COMMENTS 

YES 

YES 

NO 

YES 

ANNEX TO THE FINANCIAL STATEMENT 

A. 

Per hectare aid 

It  is assumed  that  the  land released will be sown exclusively  to 

cereaIs. 

The drop to 13% compulsory set-aside will  release around 

0.7 million ha out of a total of approximately 5.5 million ha 

envisaged as compulsory set-aside. 

Average yield  is 5.1  t/ha. 

Cost of per hectare aid 

Saving  (reduction  in set-aside) 

- 0.7m  ha x 5.1  t/ha  x ECU/t  x 1.207  (DR) 

- - ECU 246m 

Expenditure  (increase  in cereals) 

+ 0.7m  ha x 5.1  t/ha  x ECU 45/t  x 1.207  (DR) - + ECU 194m 

Total : 

- ECU  52m 

B. 

Refunds 

The additional  0.7 million ha sown to cereals will produce 3.6m  t of 

cereals. 

It  is assumed  that half of this additional  quantity will be disposed 

of on the Community market  and half will be exported. The resulting 

extra cost  due to export  refunds can be calculated  as follows: 

1.8m  t x ECU 24/t  x 1.207  (DR) - ECU 52m  (B) 

C. 

Cost  to the 1996 budget 

Per hectare aid 

Refunds 

- ECU 52m 

+ ECU 52m 

KSN 0254-1475 

COM(94) 417 final 

DOCUMENTS 

EN 

03 

Catalogue number : GB-CO-94-444-EN-C 

ISBN 92-77-80911-6 

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