Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) No 805/68 on the common organization of the market in beef and veal
Date: 1996-07-30
Institutions: European Commission
Subjects: agricultural guidance, agricultural production policy, aid system, animal disease, beef, intervention buying

COMMISSION OF THE EUROPEAN COMMUNITIES 

m 

Brussels,  30.07.1996 
COM(96) 422  final 

%/02H  (CNS) 
96/0212 (CNS) 
96/0213  (CNS) 

Proposal  for  a 

COUNCIL  REGULATION  (EC) 

amending Regulation (EEC) No 805/68 on the common  organization  of the market in 

beef and veal 

Proposal  for  a 

COUNCIL REGULATION (EC) 

amending Regulation (EEC) No  1765/92 establishing a support  system  for 

producers of certain  arable crops and repealing Regulation  (EEC) No  1872/94 

Proposal  for  a 

ÇQUNÇIL REGULATION  (EC) 

amending Regulation (EEC) No 2328/91 on improving the  efficiency 

of  agricultural  structures 

(presented  by the  Commission) 

M • 

EXPLANATORY MEMORANDUM 

1. 

The  BSE  crisis  has  brought  about  a  persistent  and  rapid  deterioration  in  the 
market for  beef.  This  has found  expression  in  a  dramatic  fall  in  consumption 
(which is down by 20-30% in some Member States), a collapse in producer prices 
and massive intervention buying. 

2. 

Unfortunately, there is little sign that the situation will improve in the near future. 

BSE has severely  shaken  consumer  confidence  and consumption  cannot 
reasonably be expected to recover significantly  in the short term. 

When cattle  are taken off  pasture in the autumn there will  be no outlets 
for the increased production. 

The ceiling on beef intervention (fixed  by the Council  at 400 000 tonnes 
for  1996 and 350 000 tonnes for  1997) will  probably be reached by the 
end of October 1996. 

3. 

In these circumstances a long-term action plan is urgently required. The aim must 
be  to  produce  a  durable  reduction  in  production  as  quickly  as  possible.  This 
means: 

that  the  calf  slaughter  programme  already  decided  as  part  of  the  1992 
reform  must  be  made  compulsory  in  all  Member  States  (optional  for 
participating farmers); 

that there should be provision for young animals to be slaughtered and for 
their carcases to be taken into intervention. This will solve the problem of 
outlets in the autumn and reduce production in 1997 without disturbing the 
markets concerned; 

that the maximum number of  adult male bovine premiums must be cut, 
thus reducing the incentive to produce. 

Nevertheless, it will be impossible in 1996 and 1997 to adhere to the intervention ceiling 
laid down in the basic Regulation. Bearing in mind the special nature of the current crisis 
it is preferable to avoid using the safety  net (even though the price reduction should, at 
least theoretically,  favour  consumption).  The ceiling  for  1996 and  1997  must therefore 
be raised. 

Encouragement  should also be given to extensive forms of cattle production, thus taking 
better account of consumer wishes, by differentiating  the extensification premiums. 

Structural  measures  should  also be  adjusted  in  line  with the  above changes  in market 
measures. This will involve in particular investment aid, setting-up aid for young farmers 
and compensatory payments. As regards early retirement, the Commission will itself lay 
down the conditions for the transfer of farms so as to prevent any intensification. 

All  this will  cost  money.  The  measures  will  have  to be  financed  entirely  in  1996  and 
1997  by  savings  made  in  the  EAGGF  Guarantee  Section  and  farmers  must  show 
solidarity, for the savings will have to be made in the arable sector (cereals and oilseeds), 
where the market situation  is very good. For  1997 a budget margin could be created by 
delaying by a few  months payment of the advance for  oilseeds and for  set-aside. 

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

of 

1996 

9 € | o *^  CCMS 

\ 

amending Regulation (EEC) No  805/68  on the common organization of the market in 

beef and veal 

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 the market in beef and veal has been seriously  disturbed, mainly as a result of 

consumer  fears  concerning  bovine  spongiform  encephalopathy  (BSE);  whereas  this 

situation has led to a sudden, continuing deterioration on the market, entailing a sharp fall 

in consumption, a collapse in prices paid to producers and public intervention buying-in; 

whereas forecasts show that, despite the battery of measures adopted by the Community 

in  this  area,  consumption  is  unlikely  to  return  to  previous  levels  in  the  near  future; 

whereas  measures  should  therefore  be  taken  to  restore  balance  on  the  market  while 

safeguarding  the  operational  praticability  of  the  support  arrangements  for  the  beef 

industry; whereas, to that end, production  must be brought more closely  into line with 

consumption; 

Whereas the special premium for male bovine animals may currently be granted twice, 

by age bracket, in the life of each animal; whereas the granting of a second premium for 

bulls  over 22  months old is  an incentive to  the  rearing  of  particularly  heavy  animals; 

whereas, in order to remedy that situation, the second payment should be discontinued; 

whereas this measure must be accompanied by an increase in the premium paid once only 

to avoid penalizing producers economically; 

Whereas the total number of  animals qualifying  for the special  premium each calendar 

year depends on the regional ceilings fixed in Article 4b(3) and (3a) of Regulation (EEC) 

No  805/68; whereas,  in  line  with  past  experience,  the number  of  animals  covered by 

premium applications in certain Member States is substantially below those ceilings while 

in others it is significantly  above them; whereas, in order to adjust the ceilings to actual 

production, they should be  redefined  on the basis of actual  applications; whereas, with 

a view  to  reducing the total  quantity  produced,  the  adjusted  ceiling  should  be  further 

reduced by  5% and any increase which  might result from this financial  year in certain 

Member States should be reduced by a half; 

Whereas,  in  order to  encourage  extensive  production,  Article  4h  of Regulation  (EEC) 

No 805/68  provides  for  the  granting  of  an  additional  amount  on  top  of  the  special 

premium  and  the  suckler  cow  premium  where  the  stocking  density  observed  on  the 

holding is less than 1.4 LU per hectare of forage area; whereas, in order to enhance the 

effectiveness  of this measure from the viewpoint of both extensification  and production 

control, that stocking density  should be reduced to  1.2 LU for payment of the standard 

amount and provision should be made for a higher amount to be paid where the stocking 

density  observed is below  1 LU per hectare; 

Whereas the impact on production of the processing premium provided for in Article 4i 

of Regulation (EEC) No  805/68 must be stepped up; whereas it should accordingly apply 

compulsorily in all Member States, its scope should be extended to cover all male calves 

and the Member States should be authorized to extend it to animals withdrawn before 

they are 20 days old on condition they introduce the controls necessary to eliminate from 

the human food chain the animals thus withdrawn; whereas also, given the existence of 

certain  special  types  of  production  in  some  Member  States,  beef-breed  animals 

slaughtered before  or at the age of  six  weeks should  also be eligible for the premium; 

whereas,  in  order to  ensure  that  the  premium  or premiums,  as  the  case  may  be,  are 

adjusted to the requirements of the arrangements, the Commission should also be given 

the task of setting the amount; 

Whereas there is likely to be an overrun in the ceilings fixed in Article 6(1) of Regulation 

(EEC) No  805/68 as a result of the quantities which have had to be bought in since the 

onset of the BSE crisis; whereas, in order to prevent the application of the ceilings from 

triggering the "safety net" arrangements provided for in Article 6(4) of that Regulation, 

the  ceilings  for  1996  and  1997  should  be  raised  to  levels  corresponding  to  the 

requirements of the market; whereas the measures to restore balance  on the market can 

nevertheless be expected to allow a return to previous levels from  1998 on; 

Whereas  the  temporary  buying-in  of  light  animals  can  also  help  to  restore  sound 

conditions  on the market for  beef  and veal; whereas,  to that  end,  special  intervention 

arrangements covering male  animals from  7 to 9  months old  and of  a live weight not 

exceeding 300 kilograms should be introduced; 

Whereas, in order to deal with the special  situation stemming from German unification, 

Article  4k  of Regulation  (EEC)  No  805/68  provides  for  a system  of  special  regional 

ceilings  for  the  new  German  Lander  by  way  of  derogation  from  the  provisions  on 

regional and individual ceilings for the special and suckler cow premiums; whereas in the 

meantime there has been sufficient  progress in the structuring of the beef industry in the 

new Lander for special measures no longer to be indispensable; whereas, however, certain 

adjustments should be made; 

Whereas transitional measures ensuring a smooth switchover from the old arrangements 

to those provided for in this Regulation may prove necessary even before the entry into 

force thereof, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EEC) No  805/68  is hereby amended as follows: 

1. 

In Article 4b: 

(a) 

paragraph 2 is replaced by the following: 

"2. 

The premium shall be granted no more than: 

(a) 

once  in  the  life  of  each  uncastrated  male  bovine  animal 

from  10 to 21  months old, or 

(b) 

twice in the life  of each castrated male bovine animal: 

- 

- 

the first time at the age of  10 months, 

the second time after  it has reached the  age of  22 

months. 

To qualify for the premium, any animal covered by an application 

must be held for fattening for a period to be determined."; 

(b) 

paragraph 3(b) and paragraph 3a are replaced by the following: 

"(b) 

'regional ceiling': the number of animals qualifying for the special 

premium within a region and in respect of a calendar year; the total 

numbers  of  animals  falling  within  the  regional  ceilings  of  the 

Member States shall  not exceed: 

Belgium 

Denmark 

Germany 

Greece 

Spain 

France 

Ireland 

* 

Italy 

Luxembourg 

Netherlands 

Austria 

235  149 

277  110 

1 782 700 

150 388 

603 674 

1 754 732 

1 002 458 

598 746 

18 962 

157 932 

426 547 

Portugal 

Finland 

Sweden 

169 809 

241 553 

226 328 

United Kingdom 

1 441 302."; 

(c) 

the first subparagraph of paragraph 6 is replaced by the following: 

"6. 

The premium per eligible animal  shall be: 

- 

- 

ECU  108.7 per castrated male animal, 

ECU  123.9 per uncastrated male animal." 

Article 4h(l)  is replaced by the following: 

"1. 

Producers receiving the special premium and/or the suckler cow premium 

may qualify  for an additional: 

- 

ECU 36.23 per premium granted provided that the stocking density 

on their holdings during the calendar year is less than  1.2 LU per 

hectare, or 

- 

ECU 54 per premium granted provided that the stocking density on 

their  holdings  during  the  calendar  year  is  less  than  1 LU  per 

hectare." 

Article 4i is replaced by the following: 

n Article 4i 

1. 

Operators may qualify for a processing premium in respect of young male 

calves originating in the Community: 

which are withdrawn from production before they are over 10 days 

old. However, the Member States may decide to grant the premium 

for such animals which are withdrawn from production before they 

are  20  days  old  provided  they  take  the  necessary  measures  to 

ensure that  such  animals  are excluded  from  entering the human 

food  chain, or 

which belong to a beef breed and are slaughtered before they are 

more than six weeks old. 

2. 

Save in duly justified  exceptional  cases, the processing premium must be 

paid within four months of the date of submission of the application. 

3. 

In  accordance  with  the  procedure  laid  down  in  Article 27,  the 

Commission: 

- 

shall  adopt detailed rules for the application of this Article; 

shall  set  the  premium  at  a  level  or,  where  appropriate,  levels 

enabling  a  sufficient  number  of  calves  to  be  withdrawn  from 

production in line with market requirements; 

may suspend the granting of the premium." 

4. 

Article 4k is replaced by the following: 

"Article 4k 

In the new German Lander: 

1. 

The arrangements on premiums applicable to the rest of the Community 

shall apply subject to the provisions of this Article. 

2. 

Germany shall determine individual  ceilings for rights to the suckler cow 

premium as provided  for in Article 4d(2)  on the basis of  the number of 

animals  for  which  the  producer  received  the  suckler  cow  premium  in 

respect of  1996 and shall inform  each producer thereof. 

Where  natural  circumstances  result  in  non-payment  of  the  premium  in 

respect  of  1996  or  in  a  reduction  in  the  amount  paid,  the  number 

corresponding to payments during  1995 may be used. 

Where the premium is not paid in respect of  1996 or the amount paid is 

reduced as a result of the application of penalties laid  down to that end, 

the  number  ascertained  during  the  inspection  which  resulted  in  the 

penalties shall be used. 

3. 

Following  the introduction  of  individual  ceilings,  where the  sum  of the 

rights allocated  to  producers  whose  holdings  are  located  in  the  new 

German Lander is  less  than  the  regional  ceiling  set  previously  for  that 

territory, the balance of the rights shall  be cancelled,  with the exception 

of a number of rights from  among the surplus which  shall  be  added by 

Germany  to  the  national  reserve  provided  for  in  Article  4f(l)  not 

exceeding  3% of the sum of the ceilings allocated to those producers. 

The new reserve thus established  shall  apply  to the whole  of  Germany. 

The sum of the rights allocated to producers located  in the new German 

Lander,  plus  the  3%  intended  for  the  reserve,  shall  not  under  any 

circumstances exceed the regional ceiling allocated to that territory at that 

time. 

4. 

As and when the need arises, the Commission  shall  adopt detailed rules 

for the  application  of this Article in accordance with the procedure laid 

down in Article 27." 

The second subparagraph of Article 6(1) is replaced by the following: 

"Such buying-in may not cover more than the following  quantities, per year and 

for the Community as a whole: 

720 000 tonnes for 1996, 

500 000 tonnes for  1997, 

350 000 tonnes as from 1998." 

6. 

Article 6a is replaced by the following: 

"Article  6a 

1. 

Notwithstanding  Article  5(2),  where  market  forecasts  demand,  certain 

kinds of fresh or chilled meat of lean male bovine animals from  seven to 

nine  months  old  of  a  live  weight  not  exceeding  300  kilograms  and 

originating in the Community may be bought in by intervention agencies 

in one or more Member States or in a region thereof under invitations to 

tender. 

2. 

The quantities  of meat bought in pursuant to paragraph  1 shall be taken 

into  account  for  the  purposes  of  applying  the  ceilings  on  buying-in 

provided for in Article 6(1). 

3. 

The  Commission  shall  adopt  detailed  rules  for  the  application  of  this 

Article in accordance with the procedure laid down in Article 27." 

Article 2 

As and when the need arises, the Commission  shall  adopt measures to ensure a smooth 

switchover from the previous  arrangements to those provided for in this Regulation  in 

accordance with the procedure laid down in Article 27. 

10 

Article 3 

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

Official Journal of the European Communities. 

Article  1(1), (2) and (4) shall apply from  1 January 1997. 

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

Member States. 

Done at..., 

For the Council 

The President 

11 

FINANCIAL  STATEMENT 

TTTLE  OF  OPERATION 

Draft Council Regulation amending Regulation (EEC) No 805/68 on the common 

organization of the market in beef and veal. 

BUDGET  HEADING  INVOLVED 

Bl-21 

3 

LEGAL  BASIS 

Article 43 of the Treaty 

4 

DESCRIPTION  OF  OPERATION 

4.1  General  objective 

To control production of beef/veal  in the wake of imbalance on the market 

as a result in particular of the BSE crisis. 

4.2 

Period covered  and arrangements  for renewal  or extension 

Amendment of existing measures relating to premiums for livestock and 

intervention on the market in beef applicable from the entry into force of 

the Regulation;  some  of  the measures  are definitive  while  the  scope  of 

12 

others  (like  the  processing  premium  for  calves  and  buying-in)  will  be 

confined to restoring balance on the market. 

CLASSIFICATION  OF  EXPENDITURE  OR  REVENUE 

Compulsory  expenditure 

Non-differentiated  appropriations 

TYPE  OF EXPENDITURE  OR  REVENUE 

-  100% subsidy of market measures adopted  at Community  level. 

FINANCIAL  IMPACT 

7.1  Method  of calculating total  cost of operation  (definition  of unit  costs) 

1. 

Discontinuation of second tranche of premium for uncastrated male 

bovine  animals and increase in first tranche of premium. 

The impact on the budget of this measure is neutral as the increase 

in  the  premium  (14%)  corresponds  to  the  percentage  of  bovine 

animals qualifying  for the second tranche of the premium. 

2. 

Reduction in ceilings for male bovine animals. 

This  measure will  have financial  consequences  as  from  the  1988 

financial  year.  In  1997  the  number  of  first-tranche  premiums  is 

estimated  at  9.4  million.  At  present,  assuming  no  Regulation  is 

adopted, the number of animals on which the premium is paid will 

increase by  100 000 head each year. 

13 

The measure thus precludes payment in respect of 400 000 head in 

1998, 500 000 head in  1999, and so on. 

The average  premium  used in the calculations  is ECU  120.6 per 

head, corresponding to a weighted average premium for castrated 

and uncastrated male animals. 

Calculation for  1998: 

400 000 head  x ECU  120.6/head x  1.030  (DR) = 

- ECU 50 million (B) 

3. 

Extensification premium 

It is assumed that this measure will encourage extensification to the 

extent that 60% of the animals on which the premium is currently 

paid will  qualify  for the higher premium of ECU 54 (less than 1 

LU/ha). It is also estimated that 20% will no longer qualify  (over 

1.2 LU/ha). 

Calculation: 

7.8 million head * ECU (54 - 36.23)/head  *  1.030 (DR)  -

+ ECU  143 million (B) 

T 2.6 million head * ECU 36.23/head x  1.030  (DR) = 

- ECU 97 million (B) 

+ ECU 46 million (B) 

14 

Calf processing premium 

It is assumed that 1 million calves will be slaughtered in  1996/97 

(1997 financial  year) and in  1997/98 (1998 financial  year), which 

would otherwise have led to the production of 320 000 tonnes of 

meat in  1998 and 1999. 

It is also assumed that these quantities will  not be bought in. 

Calculations: 

1997: 

-  1 million calves * ECU  175/head x  1.030  (DR) = 

+ ECU  180 million (B) 

1998: 

-  1 million calves x ECU  175/head  x  1.030  (DR) = 

+ ECU  180 million (B) 

- 

savings  on buying-in  of  320  000  t  x  0.6  (marketing year 

coefficient)  =  192  000  t  at  current  buying-in  price  of 

ECU 2 520/t = 

- ECU 433  million (B) 

1999: 

- 

savings on buying-in of 320 0001 at current buying-in price 

of  ECU 2 520/t.  Added  to  this  is  the  cost  of  storage  of 

meat bought in during the previous year = 

- ECU 769 million (B) 

15 

2000: 

savings  on buying-in  of  320  000 t  x  0.4  (marketing year 

coefficient)  =128  000 t at current buying-in price. Added 

to  this  is  the  cost  of  storage  of  meat  bought  in  during 

previous years = 

- ECU 411 million (B) 

2001  and subsequent years: 

- 

savings on buying-in: 

Cost of buying-in during previous years = 

- ECU  150 million (B) 

Measures for new German Lander 

The  measure  has  no  financial  impact  as  the  total  number  of 

premiums remains unchanged as a result of this measure. 

Increase in ceilings for intervention buying-in 

It  is  assumed  that  were  the  proposal  not  adopted,  the  same 

quantities  (with  the  exception  of  measures  covering  weanlings) 

would  be  bought  in  but  at  the  safety-net  price  for  quantities 

overrunning the present ceilings. 

Calculations: 

1997: 

250*000 t (overrun in the  1996 ceiling) 

at current buying-in price = 

ECU 564 million (B) 

250 000 t at safety-net  price = 

ECU 452 million (B) 

Difference 

+ ECU  112 million (B) 

16 

1998: 

10 000 t (overrun in the  1997 ceiling) 

at current buying-in price = 

ECU 23 million (B) 

10 000 t at safety net price = 

ECU  18 million (B) 

Difference 

+ ECU 5 million (B) 

7. 

Effect  as regards weanlings 

It is  assumed  that  1 million  weanlings will  be bought  in during 

1996/97 (1997 financial  year) and  1997/98  (1998  financial  year), 

corresponding to  140 000 t of meat per financial year. 

The assumed buying-in price is ECU 3 600/t. 

This would otherwise have resulted in production of 320 000 t in 

1997 and  1998. It is  assumed these  quantities will  not be bought 

in. 

Calculations: 

1997: 

Buying-in of  140 000 t of meat of weanlings at buying-in 

price of ECU 3 600/t = 

ECU 471 million (B) 

Savings on buying-in  of  320  000 t  x  0.6  (marketing year 

coefficient)  =192  000 t at safety-net price = 

- ECU 347 million (B) 

17 

1998: 

Buying-in of  140 000 t of meat of weanlings  at buying-in 

price of ECU 3 600/t.  Added to this is the cost of storage 

of quantities bought in during  1997 = 

+ ECU 507 million (B) 

Savings  on  buying-in  of  320  000  t,  of  which  8 000  t at 

current buying-in  price  and 312 000  t  at safety-net  price. 

Added to this is the cost of storage of quantities bought in 

during  1997  = 

- ECU 628 million (B) 

1999: 

2000: 

2001: 

As regards meat of weanlings, it is assumed that 140 000 t 

is sold at price at which the product is depreciated. 

Cost of storage and sale = 

+ ECU 50 million (B) 

Savings on buying-in  of  320  000 t  *  0.4  (marketing year 

coefficient)  =  128 000 t,  of  which  30 000  t  at  current 

buying-in price and 98 000 t at safety-net  price. Added to 

this  is  the  cost  of  storage  of  quantities  bought  in  during 

1997 and 1998 = 

- ECU 366 million (B) 

As regards meat of weanlings, it is assumed that 140 000 t 

will  be sold at price at which the product is depreciated = 

+ ECU  17 million  (B) 

Savings on buying-in: cost of storage of  quantities bought 

in during  1997,  1998 and 1999 =  - ECU  150 million  (B) 

Savings on buying-in: cost of storage of quantities bought 

in during  1997,  1998 and 1999 =  - ECU  150 million (B) 

18 

7.2 

Table demonstrating  the difference  in cost between  a situation where 

no measure  is adopted  and  a situation  where the proposed  measures 

are adopted 

Financial  impact 

19% 

1997 

1998 

1999 

2000 

2001 

TOTAL 

1. Single premium  for uncastrated  male 

bovine  animals 

2. Reduction  in  ceilings  for  premiums 

for  male  bovine  animals 

3.  Extensification  premium 

4.  Calf  slaughter  premium 

Premiums  (1 million  head/year) 

Savings  on buying-in  of  meat  (adult 

animals) 

5. Measures  for  new German  Lander 

6.  Increase  in buying-in  ceilings  (non-

weanlings) 

(Difference  between  normal  buying-in 

price  and  safety-net  price) 

7. Buying-in  of weanlings  (1  million 

head/year) 

Savings on buying-in  (adult  animals) 

Total 

and 

subs, 

yrs 

-

-

-

-

-

-

-

0 

-50 

-62 

-75 

-87 

-274 

46 

46 

46 

46 

184 

180 

180 

360 

-433 

-769 

-411 

-150 

-1  763 

-

112 

-

5 

-

-

-

0 

117 

471 

507 

50 

17 

1  045 

-347 

-628 

-366 

-150 

-150 

-1  641 

416 

-373 

-1  101 

-573 

-341 

-1  972 

-

-

-

-

-

-

-

19 

Planned  additional  cost  to  the  beef  and  veal  sector  compared  to  the  assumptions  made  in  the  1997 

preliminary  draft budget taking account of the proposed  measures  (in ECU  million) 

1. 

Intervention without  measures being taken 

adult animals 

"weanlings" become adults 

Total buying-in 

Proposed  measures 

Single premium for uncastrated  male bovines 

Reduction in ceilings for  male bovine premiums 

Extensification  premium 

Slaughtering of calves 

Premiums  (1 million head per year) 

Resulting  saving on buying-in of beef  (adult  animals) 

Measures for the new German Lander 

n. 

1. 

2. 

3. 

4. 

5. 

6. 

1997 

1998 

667 

347 

843 

628 

1014 

1471 

- 

- 

180 

- 

-50 

46 

180 

-433 

Increase  in buying-in ceilings (non-weanlings) 

112 

5 

(Difference  between normal buying-in and  safety  net prices) 

7. 

Buying-in of weanlings (1 million head per year) 

Resulting saving on buying-in of beef  (adult  animals) 

Total 

471 

-347 

507 

-628 

416 

-373 

j 

' — " • " - ' • • '• 

I 

I 

I 

M 

m. 

Measures already  budgeted for  in the  1997 preliminary  draft  budget 

| ™" 

"~ 

" 

" 

' 

Slaughtering of calves 
; 

_ 
TOTAL  ADDITIONAL  COST 

,  __ 

1 

: 

' 

: 

I 

I 

I 
-49 

1381 

I 

0 

1098 

I 

Those  measures, along with those  proposed  for  arable  crops, leave  the  total  agricultural  expenditure  in 

the  guideline. 

20 

FRAUD  PREVENTION  MEASURES;  RESULTS  OF MEASURES TAKEN 

The measures entail the application of controls already in force  and which were 

drawn  up  taking  account  of  experience  in  fraud  prevention.  These  entail  in 

particular the Integrated  Administration  and Control  System  (Regulation  (EEC) 

No 3508/92) as regards premiums and Regulation (EEC) No 2456/93  as regards 

intervention. 

ELEMENTS  OF COST-EFFECTIVENESS  ANALYSIS 

The objective of the measures is to control  or restore balance on the market for 

beef and veal in the wake in particular of the BSE crisis, which has brought about 

a sharp fall in consumption, a fall in prices paid to producers and very substantial 

buying-in. 

The slaughter of calves and intervention buying-in of light animals, together with 

the  payment  of  a  single  premium  for  uncastrated  male  bovine  animals  and  a 

reduction  in  the  ceiling  applicable  to  premiums  for  male  bovine  animals  are 

intended  to  reduce  production  as  from  1997  and  in  particular  in  1998  and 

subsequent years, with a view to restoring balance on the market (including the 

disposal  of intervention  stocks) around the year 2000. 

For the time being,  intervention buying-in  should shore up market prices. 

In order to foster the development of extensive beef cattle raising, which is more 

in line with consumer wishes, it is proposed to vary the extensification premium. 

These  measures  should  help  to  prevent  massive  buying-in  under the  safety-net 

arrangements (Article 6(4) of Regulation (EEC) No 805/68) at prices 10% below 

those obtaining in July  1996 (which already stood  15% below March  1996) and 

to restore balance on the Community beef market. 

21 

10 

A D M I N I S T R A T I VE  E X P E N D I T U RE 

( P A RT  OF  S E C T I ON  ni  OF  T HE  B U D G E T) 

An attempt will be made to cope with the extra work stemming from the adoption 

of this Regulation with the current staffing  levels of the divisions concerned. 

22 

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

of 

3€>|o2>U  CCMS^ 
y 

amending Regulation  (EEC) No  1765/92 establishing a support system for 

producers of certain arable crops and repealing Regulation (EEC) No  1872/94 

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 established by 
Regulation (EEC) No  1765/923 provides for compensatory payments and special 

aids to be granted to producers of cereals, oilseeds or protein plants and linseed 

in  return  for  a  cut  in  institutional  prices  and  on  condition  that  the  producers 

participating in the general  scheme set aside a certain percentage of their arable 

land; 

Whereas  the  beef  sector  is  experiencing  a  serious  and  long-lasting  crisis  on 

account of the impact of bovine spongiform encephalopathy (BSE), which makes 

it necessary to take a series of measures relating to the common organization  of 

the market in beef and veal, financing  of which cannot be guaranteed to comply 

with  budgetary  discipline  within  the  meaning  of  the  Council  Decision  of 

I  2> 

31 October  19944; whereas  observance  of  budgetary  discipline  can  be  ensured 

only by making savings on other market organizations financed  by the EAGGF 

Guarantee Section; 

Whereas arable crops account  for by  far the largest part of EAGGF  Guarantee 

Section  expenditure;  whereas  that  sector  is  also  experiencing  a  better  market 

situation  than  expected  when  the  system  provided  for  in  Regulation  (EEC) 

No  1765/92 was introduced; whereas,  therefore, the requisite  savings should be 

made by adjusting the compensatory  payments in that sector; 

Whereas, however, the protein plants sector has not developed  in the same way 

as the other arable crops in question; whereas, to safeguard the balance between 

the various arable crops, compensatory payments for protein plants should be kept 

at their current level; 

Whereas  compensatory  payments for  arable  crops from  the  1997  harvest  other 

than the advance for  oilseeds  are chargeable to the  1998 budget; whereas  1997 

budget funds need to be released and a system of payment should be established 

in  future  which  can  be  administered  more  effectively;  whereas,  to  that  end, 

advances for oilseeds  should be postponed  by  setting the date from  which they 

may be paid at 16 October; 

Whereas producers are currently receiving higher compensation for set-aside than 

for  land under cereals; whereas that difference  is  no longer justified  given  the 

economic situation of cereals and having regard to the various adjustments made 

to the set-aside scheme since it was introduced to make it more flexible; whereas, 

on  the  other hand,  the  current  level  of  compensation  for  set-aside  is  likely  to 

persuade producers" to practice voluntary  set-aside and this would cancel  out the 

objective  sought  by  reducing  the  rate  of  compulsory  set-aside;  whereas 

OJ No L 293,  12.11.1993, p. 14. 

compensation  for  set-aside  should  therefore  be  aligned  on  that  for  cereals  as 

initially  provided  for  in Regulation  (EEC) No  1765/92, 

HAS ADOPTED THIS REGULATION: 

Article 1 

I. 

Regulation  (EEC) No  1765/92 is hereby  amended  as  follows: 

1. In  the third  indent  of  Article  4(2)  "ECU  54.34"  is  replaced  by  "ECU 

50.37". 

2.  In  the  last  subparagraph  of  Article  4(3)  "ECU 358.6"  is  replaced  by 

"ECU 332.42". 

3.  In Article 4(5)  "ECU  138.9" is replaced  by  "ECU  128.76". 

4. In Article  5(l)(b)  "ECU 433.5" is replaced  by  "ECU 415.24". 

5. In Article 7(5)  "ECU 68.83" is replaced  by  "ECU 50.37". 

6. In Article 7(6) "ECU 48.30" is replaced  by  "ECU 35.35". 

7. In Article  11(2) the last  sentence is replaced  by  the  following: 

"The advance must be paid on or after  16 October following  the harvest." 

8. In Article 6a, paragraphs 2 and  3 are replaced  by the  following: 

"2.  For  the  1997/98  and  subsequent  marketing  years,  the  amount  of  the 

compensatory  payment per hectare for linseed  referred  to in Article 6a(3) 

'  2. j 

shall be ECU 97.43 multiplied by the regional yield for cereals,  excluding 

maize yields in those regions where a separate yield is applied for maize." 

9. In Article 6a, paragraph 4 becomes paragraph 3. 

H. 

Council Regulation (EEC) No  1872/94 is hereby  repealed. 

Article I 

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

Journal of the European Communities. 

It shall apply from  the  1997/98 marketing year. 

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

Member  States. 

Done at Brussels, 

For the Council 

Z.G 

FINANCIAL STATEMENT 

1 

TITLE  OF  OPERATION 

Draft Council Regulation amending Regulation (EEC) No  1765/92 establishing a 

support  system  for  producers  of  certain  arable  crops  and  repealing  Regulation 

(EEC) No  1872/94 

2 

BUDGET HEADING INVOLVED 

Bl-104, Bl-105  and Bl-106 

3 

LEGAL BASIS 

Articles 42 and 43 of the Treaty 

DESCRIPTION  OF  OPERATION 

4.1  General  objective 

To  make  savings  within  the  EAGGF  Guarantee  Section  by  adjusting 

compensatory  payments for arable crops in order to tackle the problems 

in the beef sector 

4.2 

Period covered: indefinite 

5 

CLASSIFICATION OF EXPENDITURE 

Compulsory expenditure 

^ 

6 

TYPE  OF EXPENDITURE 

100% subsidy 

7 

FINANCIAL  IMPACT 

7.1  Method  of  calculating  total  cost  of  operation  (see  Annex  for  detailed 

calculation) 

7.2 

Itemised breakdown  of cost 

FINANCIAL  IMPACT 

• 

' 

-

1996 

1997 

1998 

1999 

2000 

Change in oilseed aid payment date 

-

-1338 

0 

0 

0 

1. 

2. 

Cut in aids per hectare: 

cereals and silage crops 

set-aside 

oilseeds 

linseed 

-

additional aid for durum wheat 

-

-830 

-301 

-113 

-6 

-83 

-750 

-710 

-103 

-6 

-83 

-750 

-710 

-103 

-6 

-83 

-1333 

-1652 

-1652 

-1338 

-1333 

-1652 

1  -1652 

Total aid per hectare 

TOTAL 

FRAUD PREVENTION MEASURES 

Special  control  measures  envisaged:  integrated  control  (Reg  3508/92) 

which  has  existed  since the  entry  into force  of  the  reform  of  the  arable 

crops sector. 

2S 

9 

ELEMENTS OF COST-EFFECTIVENESS  ANALYSIS 

9.1 

The compensatory payments to producers of arable crops were introduced 

as part of the CAP reform, in order to align internal prices for cereals on 

those on the world market. 

The  purpose  of  the  proposed  measure  is  to  release  funds  within  the 

EAGGF  guideline to  cover costs  in the beef  sector  arising in particular 

from the BSE crisis. 

10 

ADMINISTRATIVE  EXPENDITURE  (PART  OF  SECTION  m  OF  THE  GENERAL 

BUDGET) 

No  additional  administrative expenditure. 

2-3 

FINANCIAL  IMPACT  OF THE  CHANGES  TO AIDS FOR ARABLE  CROPS 
(first  marketing year of application) 

area 
(million 
ha) 

previous 
aid per 
tonne 
aid per ha 
ECU/t 

new aid 
per 
tonne 
aid per 
ha 
ECU/t 

yield (2) 
t/ha 

coefficient 
% 

DR 

amount 
ECU 
million 
(A) 

impact 
1997 ECU 
million (B) 

impact 
1998 
ECU 
million 
(B) 

1. change  of date of payment of 
oilseeds aid 

1997/98 marketing  year 

1998/99 marketing year 

Total for oilseeds 

2. reduction in aid in 1997/98 

cereals and silage  crops 

set-aside (1) 

oilseeds 

non-fibre  flax 

additional  aid for durum wheat 
(traditional) 

additional  aid for durum wheat 
(non-traditional) 

Total  for cut in aid 

TOTAL  IMPACT 

0 

4.94 

4.94 

521.2 

521.2 

50% 

50% 

1287 

1287 

1.040 

1.040 

-1338 

1338 

0 

-1338 

41.54 

3.24 

4.94 

0.14 

3.00 

54.34 

68.83 

433.5 

105.1 

358.6 

50.37 

50.37 

415.24 

97.43 

332.42 

4.84 

4.84 

5.53 

5.40 

-798.2 

-289.5 

-108.4 

-5.8 

-78.5 

1.040 

1.040 

1.040 

1.040 

1.040 

0.055 

138.9 

128.76 

0.6 

1.040 

-1338 

0 

0 

0 

0 

0 

0 

0 

0 

-830 

-301 

-113 

-6 

-82 

-1 

-1333 

-1338 

-1333 

(1) For  1997/98 compulsory  set-aside is set at 5% and the area for voluntary  set-aside is estimated at  1.4 million ha. 
(2) Historic yields, particularly for oilseeds, are expressed as cereals equivalents. 

Council  Regulation  (EC) No 

/96 

of 

1996 

9 6fo2-l3Cc/JS  ^ 

amending Regulation  (EEC) No  2328/91  on improving  the  efficiency 

of  agricultural  structures 

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  the  beef  market  has  been  seriously  disturbed  as  a  result  of  consumer 

concerns  over bovine  spongiform  encephalopathy  (BSE);  whereas  this  situation 

has  resulted  in  a  rapid  and  continuous  deterioration  of  the  market;  whereas 

forecasts indicate that, despite the many measures taken by the Community in this 

regard,  consumption  is  unlikely  to  return  rapidly  to  its  former  level;  whereas 

measures  must therefore  be taken to restore  market equilibrium;  whereas  to this 

end it is necessary to bring production  more closely  into line with  consumption; 

Whereas  the  measures  to  restore  market  equilibrium  should  therefore  be 

accompanied by corresponding  action regarding the structural  measures provided 
for  in Regulation  (EEC)  No  2328/911,  as  last  amended  by  Regulation  (EC)  No 
2387/952; whereas the  sectoral  limits for  investment  aid  in  the beef  sector  must 

be redefined,  the same limits must be applied to setting-up aid for young farmers 

1O J N o L 2 1 8,  6.  8.1991,  p.  1. 

2O J N o L 2 4 4,  12.10.1995,  p.  1. 

"Î1 

and  the  maximum  density  at  which  compensatory  allowances  can  be  granted 

should be reduced to  1.2 LU/ha  so that they go only  to extensive holdings, 

HAS  ADOPTED  THIS REGULATION: 

Article 1 

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

(a) 

The first  subparagraph  of Article  6(5)  is replaced by the  following: 

"5.  The aid granted for investments in the beef sector, with the exception 

of investments  aimed  at protecting the environment,  hygiene  on holdings 

or animal welfare where there is no increase in capacity, shall be restricted 

to livestock holdings run by young farmers within the meaning of Article 

10(1)  of  this  Regulation,  where  the  beef-cattle  stocking  rate  does  not 

exceed  3, 2  and 2.5  livestock  units (LU)  per hectare of forage  area used 

for feeding  the cattle  in the final  year  of the plans ending in  1994,  1995 

and  1996  or  later,  respectively.  The  limits  of  2.5  and  2  LU  shall  apply 

only to applications  lodged  on or after  1 January  1994." 

(b) 

The following  paragraph is  added to Article  10: 

"4. The conditions laid down in Article 6(5) must be complied with in the 

case  of young farmers who  are setting up in beef production." 

(c) 

The following  paragraph is  added to Article  11: 

"Where  the  beef-cattle  stocking  density  does  not  exceed  1.2  LU  per 

hectare  of  forage  in  the  last  year  of  the  material  improvement  plan,  the 

percentage referred  to in the above  paragraph may be increased to 30%." 

•%  2 

(d) 

The third subparagraph of Article  19(l)(a) is replaced by the following: 

"Grant of  the  compensatory  allowance  shall  be  limited  to  1.2  LU  per 

hectare of total forage on the holding." 

Article 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  be  binding  in  its  entirety  and  directly  applicable  in  all 

Member States. 

Done at Brussels, 

For the Council, 

The President 

^>s 

FINANCIAL  STATEMENT 

TITLE  OF OPERATION 

Proposal  for  a Council  Regulation  amending Regulation  (EEC) No  2328/91  on 

improving the effectiveness  of agricultural structures. 

BUDGET HEADING  INVOLVED  (1996  NOMENCLATURE) 

Article 

B2-100 

Structural  measures,  EAGGF  Guidance  Section, 

Items 

B2-1000 

Objective 1 

Community  support frameworks 

B2-1001 

Objective 5(a) (outside Objectives  1 and 5(b)) 

B2-1002 

Objective 5(a) (within Objective 5(b)) 

Legal  basis 

Article 43 of the EC Treaty 

DESCRIPTION  OF THE OPERATION 

Objectives 

The proposal amends the eligibility conditions for the grant of investment aid and 

aid for the installation  of young  farmers in the beef  sector and for the grant of 

compensatory allowances for the less-favoured areas as referred to in Article 3(3), 

(4) and (5) respectively  of Directive 75/268/EEC. 

^ 

Period  covered 

Given the seriousness of the situation on the beef and veal  market as a result of 

consumer  concerns  over  BSE  and  the  unlikelihood  of  consumption  returning 

quickly  to  its  former  levels,  the  proposed  amendment  of  Regulation  (EEC) 

No 2328/91will  not be short-term. 

CLASSIFICATION  OF EXPENDITURE 

Non-compulsory  expenditure 

Differentiated  appropriations 

TYPE  OF EXPENDITURE 

Subsidy through the part-funding of eligible public expenditure in accordance with 

Article 13 of Regulation (EEC) No 2052/88 on differentiating  rates of assistance. 

The Commission is responsible for setting the rate. 

FINANCIAL IMPACT 

In a context of fixed  financial  appropriations,  as is the case with the Structural 

Funds, the proposed measures will have no impact on the budget. The Structural 

Funds  budget  is  fixed  and  the  proposed  measures  will  simply  result  in  a 

redistribution of allocations between its various activities. 

The  amounts charged  to the  Community  budget  for  the  aid referred  to  in this 

proposal  are  subject  to  the  general  provisions  on  financial  implementation 

governing the Structural Funds and laid down in particular in Articles 29 to 36 of 

3S-

Regulation (EEC) No 2328/91, as last amended by Regulations Nos 3669/93 and 

2843/94. 

Indicative timetable of commitment  and payment  appropriations 

Years 

1996-99 

Items B2-1000. B2-1001  and  1002 

p.m. 

For  the  subsequent  programming  period,  expenditure  eligible  for  Community 

funding  will  be  considered  in  forthcoming  budgets  allocating  resources  by 

Objective to the Member States. 

FRAUD PREVENTION MEASURES 

The  aid  schemes  for  investments,  the  setting  up  of  young  farmers  and 

compensatory allowances introduced by Regulation (EEC) No 2328/91 are subject 

to Articles 23 (financial  control) and 24 (reduction, suspension and withdrawal of 

aid)  of the Regulation  coordinating the  Structural  Funds  (Regulation  (EEC) No 

4253/88). 

In  addition,  as  structural  aid  is  involved,  Commission  Regulation  (EC)  No 

1681/94 concerning irregularities and the recovery of sums wrongly paid and the 

information  system in this field  also applies. 

Furthermore,  the  compensatory  allowances  scheme  under  Articles  17  to  19  of 

Regulation  (EEC) No  2328/91  is also  covered  by  the  integrated  control  system 

established by Regulation  (EEC) No 3508/92. 

2>C 

ELEMENTS  OF  COST-EFFECTIVENESS  ANALYSIS 

Aims 

The  new  conditions  proposed  aim to  limit the  Community  aid  to  cases  where 

increased  extensification  of  beef  production  has  occurred,  and  to  make  the 

holdings in less-favoured  areas even more extensive. 

Grounds 

The beef  market has been  seriously  disturbed as a result of  consumer concerns 

over bovine  spongiform  encephalopathy  (BSE).  This situation has resulted  in a 

rapid  and  continuous  deterioration  of  the  market  and  forecasts  indicate  that, 

despite the many measures taken by the Community in this regard, consumption 

is unlikely to return rapidly to its former level. It is therefore necessary to bring 

production more closely into line with the level  of consumption. 

The measures to restore market equilibrium should therefore be accompanied by 

corresponding action regarding the structural measures provided for in Regulation 

(EEC) No 2328/91. In particular, the sectoral restrictions on investment aid in the 

beef sector must be redefined, the same conditions should be applied to setting-up 

aid  for  young  farmers  and  the  maximum  density  at  which  compensatory 

allowances can be granted should be reduced to  1.2 LU/ha so that they go only 

to extensive holdings; 

Monitoring and  evaluation 

As this is a structural measure, Articles 25 (monitoring) and 26 (assessment and 

evaluation) of coordinating Regulation (EEC) No 4253/88 apply. 

3  ) 

Consistency with financial  programming 

Funding will  be  provided  in  the  1994-99  period  from  within  the  budgets  for 

measures under Objectives 5(a), 5(a) in 5(b) areas and agricultural measures under 

Objective  1 as fixed by Commission decision. 

3* 

ISSN 0254-1475 

COM(96) 422 final 

DOCUMENTS 

EN 

03  10 

Catalogue number  :  CB-CO-96-423-EN-C 

ISBN  92-78-07953-7 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

33