Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) No 1883/78 laying down general rules for the financing of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section
Date: 1996-01-12
Institutions: European Commission
Subjects: EAGGF Guarantee Section, EU financing, agricultural product, interest, intervention buying

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  12.01.1996 
COM(95)  557  final 

Proposal  for  a 

COUNCIL  REGULATION  (EC) 

amending  Regulation (EEC) No 1883/78 laying down general rules for the financing of 

interventions by the European Agricultural Guidance and Guarantee  Fund, Guarantee 

Section 

(presented  by the  Commission) 

EXPLANATORY  M l ' M O R A N Dl )M 

Community  rules  on  the  common  agricultural  policy  impose  an obligation  on  Member  States 
to buy agricultural  products covered by an intervention mechanism when the producers  present 
such  products  to them. This  involves  expenditure  by the  Member  States  which  is  reimbursed 
by  the  Commission  two  months  later. 

Since  most  Member  States  must  borrow  the  funds  necessary  for  intervention  purchases, 
Community  rules  provide  for the  reimbursement  of financing  costs  on  the  basis  of  a  uniform 
rate  for  the whole  Community. 

In 1993,  the Council  adopted  rules for Member  States  paying  interest  rates  much  higher  than 
the uniform rate (Council Regulation  (EEC) No  1571/93 of 14 June  1993 amending  Regulation 
(EEC) No  1883/78  laying down general  rules for the financing  of interventions  by the  European 
Agricultural  Guidance  and  Guarantee  Fund,  Guarantee  Section,  OJ  No  L  154,  25.6.1993, 
p.46.) 

Under  these  rules, the  EAGGF will reimburse  any  Member  State  paying  an  interest  rate  more 
than double  the uniform  rate the interest  paid above  that threshold.  Interest  paid  between  the 
uniform  rate  and  double  that  rate  remains  the  responsibility  of the  Member  State  concerned. 

This  provision  was  to  apply  for  three  years.  It  is  proposed  that  the  Council  extend  it  for  a 
second  one-year  period  to  cover  the  1996  EAGGF  financial  year. 

The measure  is based on Article  3(2) of Council  Regulation  (EEC)  No  729/70  of 21  April  1970 
on the financing  of the common agricultural  policy  (OJ No L 94, 28.4.1970,  p.  13.) which  gives 
the  Council  sole  responsibility  for  adopting  rules  for  financing  measures  implemented  under 
the  CAP  and  the  principle  of  subsidiarity  referred  to  in Article  3b  of  the  EC  Treaty  does  not 
therefore  apply. 

The continuance  of the scheme for Member States bearing high financial charges,  established 
by  Council  Regulation  (EEC)  No  1571/93,  requires  the  adoption  of  this  Regulation. 

Proposal  for  a 

COUNCIL  REGIJLLATïQN (EC) 

amending  Regulation  (EEC)  No  1883/78  laying  down  general  rules  for the  financing  of 

interventions  by the  European  Agricultural  Guidance  and  Guarantee  Fund,  Guarantee 

Section 

THE  COUNCIL  OF  THE  EUROPEAN  UNION, 

Having  regard  to the  Treaty  establishing  the  European  Community, 

Having regard to Council  Regulation  (EEC) No  729/70  of 21  April 1970 on the financing of the 

common  agricultural  policy(1),  and  in particular  Article  3(2)  thereof, 

Having  regard  to the  proposal  from the  Commission(2), 

After  consulting  the  Fund  Committee, 

Whereas,  for  intervention  operations  for  which  a  unit  amount  has  not  been  set  by  market 

organization  rules,  basic  Community  financing  rules  have  been  set  by  Regulation  (EEC) 

No  1883/78(3),  in particular  as to the  method  of establishing  the  amounts  to be financed,  the 

financing  of expenditure  resulting  from the  mobilization  of the  funds  needed  for  intervention 

buying,  the valuation  of stocks to be carried  over from one year to another  and  the financing 

of expenditure  resulting  from the  physical  operations  of storage; 

(1)  OJ  No  L 94,  28.4.1970,  p.  13.  Regulation  last amended  by  Regulation  (EC)  No  1287/95 

(OJ  No  L  125,  8.6.1995,  p.  1). 

(2)  OJ  No  C 
(3)  OJ No  L 216, 5.8.1978,  p.1. Regulation last amended by Regulation (EEC) No  1571/93  (OJ 

No  L  154,  25.6.1993,  p.  46). 

Whereas Article  5 of Regulation  (EEC) No  1883/78  provides that the interest charges  incurred 

by  Member  States  in  mobilizing  the  funds  used  for  public  intervention  buying  are  to  be 

financed  by the  Community  at  a  uniform  interest  rate; 

Whereas  it is possible that in a Member State the buying into public intervention  of agricultural 

products can be financed  only at interest rates which are substantially  higher than the uniform 

interest  rate; 

Whereas, in such cases, provision should be made for a correcting mechanism to compensate 

for a part of the difference between the particularly  high interest rate paid by the Member  State 

and  the  uniform  interest  rate,  while  leaving  responsibility  for  a  part  of  the  difference  to  the 

Member  State  in order  to encourage  it to seek  the  least  costly  financing  method; 

Whereas  the mechanism  introduced  to that  end in Article  5 of Regulation  (EEC)  No  1883/78 

by  Regulation  (EEC)  No  1571/93(4)  for  a  period  of  three  years  is  functioning  satisfactorily; 

whereas  that  provision  expires  at the  end  of the  1995  financial  year; 

Whereas  the substantial  differences  between  the costs of financing  noted  in 1993 and which 

were  the  reason  for  the  introduction  of  that  mechanism  continue  to  exist;  whereas  it would 

therefore  be  useful  to extend  the  period  of application  of the  provision  concerned; 

HAS ADOPTED  THIS  REGULATION: 

(4)  OJ  No  L  154,  25.6.1993,  p  46 

Article  1 

The third subparagraph  of Article  5 of Regulation  (EEC) No  1883/78  is hereby  replaced  by the 

following: 

"The first paragraph  notwithstanding,  if the interest rate borne by a Member State is more than 

twice the uniform  interest  rate, the Commission  may, for the financial  year  1996,  in financing 

the  interest  costs  incurred  by that  Member  State,  apply  the  uniform  rate  of  interest  plus the 

difference  between  double  that  rate  and  the  actual  rate  borne  by the  Member  State." 

Article  2 

This Regulation  shall enter  into force on the day following its publication  in the Official Journal 

of the  European  Communities. 

It shall  apply  to expenditure  incurred  from  1 October  1995. 

INANCIAL  STATEMENT 

BUDGET HEADING:B1-1012 

Bl-1231 

APPROPRIATIONS: 
ECU 84 and ECU 8 million 

TITLE: 
Council Regulation amending Regulation (EEC) No  1883/78  laying down general  rules for the financing  of 
interventions by the European Agricultural  Guidance and Guarantee Fund, Guarantee  Section 

LEGAL BASIS: 
Regulation (EEC) No 729/70 of 21 April  1970 

2. 

3. 

AIMS: 
To extend by one year the derogation from the application of the uniform rate introduced by Regulation (EEC) No 
1571/93 

FINANCIAL IMPLICATIONS: 

PERIOD OF  12 
MONTHS 

(ECU million) 

CURRENT 
FINANCIAL 
YEAR 
(95) 
(ECU million) 

FOLLOWING 
FINANCIAL 
YEAR 
(96) 
(ECU million) 

5.0. 

EXPENDITURE 
- CHARGED TO THE EC BUDGET 

(REFUNDS/INTERVENTION) 

- NATIONAL  AUTHORITIES 
-OTHER 

5.1. 

REVENUE 
- OWN RESOURCES  OF THE EC 
(LEVEES/CUSTOMS DUTIES) 

- NATIONAL 

1997 
(ECU million) 

1998 
(ECU million) 

1999 
(ECU million) 

2000 
(ECU million) 

ESTIMATED  EXPENDITURE 
ESTIMATED  REVENUE 

METHOD OF CALCULATION: 
The cost of applying an identical Regulation (No  1571/93) was around ECU  13.5 million for the  1993  and 1994 
EAGGF financial years. 
The  reduction in annual appropriations is a result of the reduction in public  stocks and the gradual disappearance of 
existing intervention stocks of tobacco. 

CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS  ENTERED  IN THE RELEVANT 
CHAPTER OF THE CURRENT BUDGET? 

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

WILL  A SUPPLEMENTARY  BUDGET  BE  NECESSARY? 

WILL FUTURE BUDGET  APPROPRIATIONS  BE NECESSARY? 

YES 

NO 

NO 

YES 

5.0.1. 
5.1.1. 

5.2. 

60. 

6  1. 

6 2. 

6 3. 

I  OBSERVATIONS  This Regulation  is identical  to  Council Regulation  (EEC)  No  1571/93  of  14 June  1993 (OJ No L  154, 

25.6.1993, p. 46). To  date, these  provisions  have been  applied  to  Greece. 

H-

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COM(95) 557  final 

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