Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) N 1765/92 establishing a support system for producers of certain arable crops
Date: 1996-06-25
Institutions: European Commission
Subjects: aid per hectare, aid system, area of holding, regional aid, set-aside

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  25.06.1996 
COM(96)  175  final 

96/  0167  (CNS) 

Proposal  for  a 

COUNCIL  REGULATION  (EC) 

amending Regulation (EEC) N* 1765/92 establishing a support 

system for producers of certain arable crops 

(presented  by the  Commission) 

(PCER\EN\0142.wpd) 

EXPLANATORY MEMORANDUM 

This draft Council Regulation  is in response to a request by the Agriculture Council  in 
November  1995 that the Commission submit a proposal, within two months, for making 
the system of penalties applied when the base area is exceeded more flexible. 

This draft Regulation contains two proposals: 

Under  the  first  proposal,  the  Commission  could  help  producers  in  areas  which  had 
suffered  climatic  disaster by granting partial  or total  exemption  in the year in question 
from the rule under which, when regional  base areas are exceeded, the area per farmer 
eligible for the arable compensatory  aid is reduced. 

Under the second proposal, Member States which opt to treat the whole of their territory 
as a single base area could subdivide that area into sub-base areas and concentrate all or 
part of the penalties which arise when base areas are exceeded  on sub-base areas where 
expansion has taken place. 

The first  of  these  measures  complements  the measure  already  adopted  by  the  Council 
under which the Commission can give partial or total exemption from supplementary set-
aside when a base area has been  overshot for exceptional  climatic  reasons  (Regulation 
(EC) No 2989/95). If one of the two penalties which arise from base areas being overshot 
may,  exceptionally,  be relaxed  in cases where the overshoot  is  due to climatic  disaster 
such  as  that  recently  experienced  in  Spain,  then  it  is  only  reasonable  to  provide  the 
possibility  for the other to be relaxed also. 

It  has  to  be  stressed,  however,  that  this  possibility  can  never  constitute  a right. The 
general principle remains that base area overshoots lead to reductions in the area eligible 
for aid even when climatic conditions have contributed to the overshoot.  The possibility 
of  providing  derogations  is  meant  to  be  used  under  very  exceptional  circumstances. 
Furthermore the possibility which will be introduced by this measure to relax the rule on 
the reduction of eligible areas will have budgetary  consequences.  It can, therefore, only 
be applied in years when the necessary budgetary  resources are available. 

The  second  measure  arises  from  an  undertaking  given  by  the  Commission  on 
28  September  1995 to examine the possibility  of giving Member  States which  apply a 
single national base area the power to concentrate penalties arising from that area being 
exceeded,  in  whole  or in  part,  on  the  sub-base  areas which  were  responsible  for  that 
excess.  This examination  has taken account of  a number of key  considerations  referred 
to in that undertaking: equality of treatment of producers, the effective  application of the 
base  area system  and the possible  consequence  in terms  of the Union's  budget  and its 
international  obligations. 

A  tt 

(PCER\EN\0142.wpd) 

As regards the budget, the proposal does not introduce any risk of additional expenditure 
going beyond what could arise at present as it does not allow a Member  State to apply 
lower penalties than would arise in the case of a national base area. All it does is to allow 
for the distribution of these penalties to be modulated. There are potential budgetary  risks 
inherent in allowing Member States to have base areas whose boundaries do not coincide 
with  their  yield  regions,  but  these  consequences  already  exist  and  the  means  of 
controlling them is provided by the yield stabiliser (Article 3(6) of Regulation (EEC) No 
1765/92). 

As  regards  the  Union's  international  obligations,  the  measure  in  question  does  not 
derogate from the principle that the aids provided under CAP reform are limited to a set 
area.  Nor  does  it  imply  an  additional  production  by  comparison  with  the  existing 
provision permitting a national base area, provided that it does not lead to situations in 
which the base area system could not be applied  effectively. 

As regards the effective application of the base area system, there are two dangers which 
must be avoided. 

The first is that the risk of penalties may be less clearly perceived by producers 
and  that  the  way  in  which  the  penalties  were  divided  could  be  controversial, 
particularly  in the case of federal  states.  Such controversies could lead to delays 
in the announcement of the penalties, which would make it difficult to respect the 
dates laid down by the Council Regulation for the payment of the arable aids and 
the starting date for supplementary  set-aside. 

The second is that within a regional  sub-base area producers might expand their 
area planted  with  eligible  arable  crops  over  several  years without  any warning 
signals being  applied in terms of  eligible  area reductions  or supplementary  set-
aside,  because  of  offsetting  reductions  in  sub-base  areas  in  other  parts  of that 
Member  State.  Then,  as a result  of  an expansion  in the  area  elsewhere  in that 
Member State, they could find themselves confronted with penalties which were 
either  too  high  to  be  borne  economically  or  which  led  to  such  a  large 
supplementary set-aside requirement that participation in the general scheme could 
become uneconomic for most producers. In such circumstances producers could 
opt to reduce their claims to the limit for  access to the small  producer scheme, 
thereby escaping both supplementary  set-aside and obligatory  set-aside. 

These potential problems would be overcome by two important provisions of the current 
proposal. 

First,  it  is  proposed  that  Member  States  which  wish  to  use  this  option  must 
announce publicly, and communicate to the Commission, the rules which will be 
applied to distribute penalties arising from base area overshoots before 31 March, 
the deadline for the submission of claims. 

Second, it is proposed that the size of sub-base areas be limited. 

(PCER\EN\0142.wpd) 

As reg£  ds equality of treatment between producers, big differences already exist between 
the  size  of  the  regional  base  areas  in  different  Member  States.  The  existing  Council 
Regulation,  in  the  spirit  of  subsidiarity,  gives  individual  Member  States  the right to 
choose to have a series of regional base areas or a national base area, depending on their 
judgement as to the size of the area within which producers have a sufficient  degree of 
mutual solidarity to be prepared to share in the risk of being subject to penalties arising 
from expansion of others, in return for the possibility  of being able to benefit from area 
reductions  by  others.  Given  that,  at  the  level  of  the  individual  producers,  there  is  a 
balance between the < dvantages and disadvantages of being situated in a large base area, 
the  difference  in  the  size  of  the  regional  base  areas  does  not  create  a  feeling  of 
unfairness.  The current proposal  would not change this, given that all producers within 
national base areas could, at least in principle, be asked to share to some degree in the 
adverse  consequences  of  an  expansion  by  others, just  as  they  could  benefit  from  the 
consequences of a contraction by others. 

These are the major principles of this proposal. 

One subsidiary  point has also to be mentioned. 

In the new Lander of the Federal  Republic  of  Germany the base  area was temporarily 
adjusted  to  take  account  of  the  special  problems  arising  from  the  application  of  the 
common agricultural  policy  in this new part of the Union.  The supplementary  hectares 
provided for this purpose should, of course, be reserved for the new Lander, even if the 
Federal Republic of Germany as a whole were to opt for a single base area. 

(PCER\EN\0142.wpd) 

Proposal for a 

Council Regulation (EC) N\... 

amending Regulation (EEC) N* 1765/92 establishing  a support 

system for producers of certain arable crops 

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 Commission1, 

Having regard to the opinion of the European Parliament2, 

Whereas  the  support  system  for  producers  of  certain  arable  crops  introduced  by 
Regulation (EEC) No  1765/923 provides that in the case where the sum of the individual 

areas  for  which  aid  is  claimed  is  in  excess  of  the  regional  base  area  two  types  of 

measures are to be applied,  one in the form of  a reduction in eligible area, the other in 

the form of extraordinary set-aside; whereas that Regulation also provides that in the case 

where exceptional climatic conditions have caused a reduction in yields and an overshoot 

of the regional  base area the producers concerned may be exempted from extraordinary 

set-aside; whereas severe climatic conditions have adverse financial  consequences for the 

producers in the affected  regions; whereas it is thus justified to broaden the scope of the 

exemption possible to include the reduction in eligible area provided that the budgetary 

situation allows it; whereas severe climatic conditions have been noted in certain regions 

of  the Union  in  1995; whereas  the exemption  from  one  or both  measures  under such 

conditions should already apply from  1995 onwards; 

OJNoC 
OJNoC 

OJ No  L  181,  1.7.1992,  p.  12.  Regulation  last  amended  by  Regulation  (EC) 
No 2989/95  (OJNo L 312, 23.12.1995,  p. 5). 

ti 

(PCER\EN\0142.wpd) 

Whereas Member  States may  apply  one or more national  base  areas; whereas in  such a 

case the measures to be applied  in the case of a possible overshoot  of the base area  are 

currently  applied  on  a  national  basis;  whereas  it  is  considered  appropriate  that  the 

Member  States which choose this option should be able to divide each national base area 

into  sub-base  areas;  whereas  the  minimum  size  of  such  sub-base  areas  should  be  laid 

down; whereas when a national base area has been exceeded the Member State concerned 

should  be allowed  to  concentrate the application  of the measures totally  or  partially  on 

those areas for  which the overshoot  has been noted; whereas the Member  States  should 

be required to notify  the Commission  and producers, in due time, of the exercise of this 

option  and how they  intend to apply the measures; 

Whereas Regulation  (EEC) N*  1765/92  should therefore  be  amended, 

HAS ADOPTED  THIS REGULATION: 

Article 1 

Regulation (EEC) N"  1765/92 is hereby  amended  as follows: 

1. 

Article 2(6) is replaced  by the  following: 

"6. 

In the case of a regional base area, when the sum  of the individual  areas 

for which aid is claimed under the arable producers' scheme, including the 

set-aside provided  for  under that  scheme,  and land  counted  as being  set-

aside  pursuant  to  Article  7(2)  and  to  Council  Regulation  (EEC) 

N" 2328/91  of  15 July  1991  on  improving  the  efficiency  of  agricultural 
structures4, is in excess of the regional  base area,  the following  measures 

will  be applied  in the region in  question: 

OJ  No  L  218,  6.8.1991,  p.  1.  Regulation  last  amended  by  Regulation  (EC) 
No  2387/95  (OJ No L  244,  12.10.1995, p. 50). 

S 

(PCER\EN\0142.wpd) 

during  the  same  marketing  year,  the  eligible  area  per  farmer  will  be 

reduced proportionately  for all the aids granted under this Title, 

in the following  marketing year, producers in the general  scheme will be 

required to make, without compensation,  an extraordinary  set-aside. The 

percentage rate for extraordinary set-aside shall be equal to the percentage 

by  which  the  regional  base  area  has  been  exceeded,  established  by 

deducting  85%  of  the  area  set  aside  under  voluntary  set-aside  in 

accordance  with  Article  7(6).  This  shall  be  additional  to  the  set-aside 

requirement given in Article 7. However, if the excess in the regional base 

area  leads  to  a  level  of  extraordinary  set-aside  of  less  than  1% being 

applied in respect of the 1996 harvest, the extraordinary set-aside shall not 

be applied. 

Areas which  are the  subject  of  extraordinary  set-aside  in  accordance  with  the 

second  indent of the preceding  subparagraph  shall  not be taken into account in 

applying this paragraph. 

In the  event  that  exceptional  climatic  conditions  have  affected  production  in a 

marketing year in which it is found that the regional base area has been exceeded, 

and those conditions have had the effect of lowering yields to a level considerably 

below the normal  and of  causing the excess in  question, the  Commission  may, 

pursuant  to  the  procedure  laid  down  in  Article  23  of  Regulation  (EEC) 
No  1766/92  on  the  common  organisation  of  the  market  in  cereals5,  totally  or 

partially  exempt  producers  in  the  regions  affected  from  one  or both  measures 

applicable under this paragraph." 

OJ No  L  181,  1.7.1992,  p.  21.  Regulation  last  amended  by  Regulation  (EC) 
No  1863/95  (OJNo L  179, 29.7.1995, p. 1). 

c 

2. 

The following  is added after Article 2(6): 

(PCER\EN\0142.wpd) 

"7. Without prejudice to Article 3, where a Member State has chosen to establish 

one  or more national  base areas,  it may  subdivide  each national  base  area into 

sub-base areas established in accordance with paragraph 2. A sub-base area shall 

not be  smaller than level  2  of  the Nomenclature  of  Territorial  Statistical  Units 

(NUTS). 

In the case of an overshoot of a national base area, the Member State concerned 

may,  in  accordance with  objective  criteria,  concentrate the measures applicable 

under  paragraph  6  totally  or  partially  on  the  sub-base  areas  for  which  the 

overshoot has been noted. 

The Member State which has decided to apply the possibility  provided for in the 

first and  second  subparagraphs  shall  notify  producers  and the  Commission  by 

31 March of its choices and the rules and procedures for their application. 

Where the option provided for in this paragraph is applied, the consequences must 

be  the  same  as  those  that  would  result  from  application  of  the  measures  at 

national  level. 

If the option provided  for in this paragraph is applied,  the  expression  "regional 

base area" shall, for the purposes of Article 5(l)(f), be understood to mean a sub-

base area." 

3. 

In Article  12 the following  is added at the end of the first indent: 

"and  (7),  including  the  special  conditions  to  be  applied  in  the  case  of 

Germany,". 

7-

(PCER\EN\0142.wpd) 

Article 2 

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

Official Journal of the European  Communities. 

However,  Article  1(1) shall  apply from  1995/96 onwards. 

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

States. 

Done at Brussels, 

1996 

For the Council 

FINANCIAL  STATEMENT 

BUDGET  HEADING:  1040 to  1055 

TITLE: 

(PCER\EN\0143.wpd) 

DATE: 1 8.  V!  m 

APPROPRIATIONS:  ECU  15 
545 million 

Council  Regulation  amending  Regulation  (EEC) No  1765/92  establishing  a support  system  for  producers  of 
certain  arable  crops 

LEGAL  BASIS: 

Articles  42  and 43 

AIMS  OF PROJECT: 

To  alter the  application  of penalties  in the case  of overshoot  of base  areas, to  introduce  the  possibility  of 
creating  sub-base  areas within  a national  base  area. 

5. 

FINANCIAL  IMPLICATIONS 

5.0. 

5.1. 

EXPENDITURE 
-  CHARGED  TO THE  EC  BUDGET 

(REFUNDS/INTERVENTION) 
- NATIONAL  ADMINISTRATION 
-  OTHER 

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

- NATIONAL 

5.0.1. 
5.1.1. 

ESTIMATED  EXPENDITURE 
ESTIMATED  REVENUE 

5.2. 

METHOD OF  CALCULATION: 

SEE ANNEX  TO FINANCIAL  STATEMENT 

PERIOD OF 12 
MONTHS 

million  ecu 

CURRENT 
FINANCIAL 
YEAR 
(96) 
million  ecu 

+  143,6 

FOLLOWING 
FINANCIAL 
YEAR 
(97) 
million  ecu 

1998 

1999 

2000 

2001 

6.0. 

6.1. 

6.2. 

6.3. 

CAN  THE  PROJECT  BE  FINANCED  FROM  APPROPRIATIONS  ENTERED  IN THE 
HI II  VAN I  (MAPI!  R OI<  II It-: CIIRRINT  milKilT? 

YFS/NO 

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

IS A SUPPLEMENTARY  BUDGET  NECESSARY? 

WILL  FUTURE  BUDGET  APPROPRIATIONS  BE NECESSARY? 

¥BS/NO 

YES/NQ 

OBSERVATIONS: 

The  additional  expenditure  for  1996  is offset  by  savings, in particular  through  lower  cereals 
exports and  more  profitable  use of cereal  slocks  resold  within  the  Community. 

*r 

ANNEX TO FINANCIAL  STATEMENT 

Firstly,  the proposal  is  intended  to  exempt  Member  States  from financial penalties  arising 
from overshoots that  are the consequence of exceptional  weather  conditions. 

The  measure  will  apply  from  the  1995  harvest  and  concerns  overshoots  noted  in  Spain. 
Detailed  figures  for  the cost of this measure for  1996 (ECU  143.6 million) are shown in the 
attached  table. 

Figures cannot be calculated for the measure as such for the following budget years. However, 
one may  consider  that  any  expenditure  will  be offset  by  savings on  refunds  and  production 
aid  in the cereals sector or other  sectors such as rice, cotton or tobacco. 

Secondly, the proposal authorizes Member States that opt to create one or more national base 
areas,  possibly  subdivided  into  sub-base  areas,  to  concentrate  any  penalties  partially  or 
entirely on one or more of those sub-base areas provided that such redistribution does not lead 
to an overall  reduction  in the national  penalty. 

In the context of current regionalization  plans, the budget  impact of this measure is neutral. 

sC? 

ANNEX FINANCIAL  TABLE 

Supplementary  expenditure  in Spain  in  1996 arising from Article  1(1) 
Impact of drought  for  1995 marketing year 

WITHOUT  REDUCTIONS 

WITH  REDUCTIONS 

CROPS 

AREA1 
(1000 ha) 

AID 
(ECU/ha) 

COST2 
(ECU  million) 

AREA' 
(1000 ha) 

AID 
(ECU/ha) 

COST2 
(ECU  million) 

DIFFERENCE 

(ECU  million) 

Simplified  system 
-  maize  base 
-  other  crops 

General  system 
-  maize  base 
-  other  crops 

-  oil seeds 
-  protein  crops 
-  non-textile  flax 
-  set-aside 

TOTAL 

142.37 
142.37 

432.00 
132.59 

360.94 
259.02 
392.9 
182.39 

84 
1770 

153 
4401 

1069 
91 
5 
1426 

8999 

12.0 
252.0 

66.1 
583.5 

385.8 
23.6 
2.0 
260.1 

1585.0 

141.28 
141.28 

432.00 
130.42 

343.03 
230.76 
380.26 
176.20 

84 
1676 

153 
4165 

977 
83 
4 
1339 

8481 

11.9 
236.8 

66.1 
543.2 

335.1 
19.2 
1.5 
235.9 

1449.7 

0.09 
15.21 

0.00 
40.33 

50.70 
4.42 
0.44 
24.16 

135.4 

Impact of double rate:  ECU  135.4 million 

x 

1.061  (double rate)  = ECU  143.6 million 

A 
\ 

Excluding  five-year  set-aside  and  forage  area 

Excluding  supplementary  expenditure  on durum  wheat 

23 

ISSN 0254-1475 

COM(96) 175  final 

DOCUMENTS 

EN 

03 

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ISBN 92-78-05908-0 

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