Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) No 2262/84 laying down special measures in respect of olive oil
Date: 1996-11-12
Institutions: European Commission
Subjects: EU aid, EU financing, co-financing, financial control, olive oil

COMMISSION OF THE  EUROPEAN COMMUNITIES 

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Brussels,  12.11.1996 
COM(96)  571 final 

96/0275  (CNS ) 

Proposal  for a 

COUNCIL  REGULATION  ŒO 

amending  Regulation  (EEC)  No 2262/84  laying  down  special 
measures  in respect  of olive oil 

(presented  by the Commission) 

EXPLANATORY  MEMORANDUM 

1. 

The proper  application  of the Community  regulations on olive oil required  the  setting-up 
of inspection  agencies responsible for  overseeing compliance with regulatory  obligations 
in  the  Member  States  producing  olive  oil. 

Council  Regulation  (EEC)  No  2262/84,  as  amended  by  Regulation  (EEC)  No  593/92, 
provides  that  50%  of  the  actual  expenditure  of  the  agencies  is  to  be  covered  by  the 
general  budget  of  the  Communities  for  a  period  of  five  years  from  1 November  1992 
and  that  before  1 January  1997 the Council,  acting  by a qualified  majority  on  a  proposal 
from  the  Commission,  is to decide on a method  for  financing  the expenditure  in  question 
from  the  1997/98  marketing  year. 

3. 

The  proposed  method  involves  maintaining  the  Community  contribution  to  agencies' 
expenditure  for  one  year  at  the  50  %  rate. 

The financial  impact  on the Community  budget  is estimated  at ECU  12.1  million in total 
over  the  1997  and  1998  financial  years. 

In  view  of  the  fact  that  a  draft  reform  of  the  MO  for  olive  oil  is  currently  under 
examination,  before  1 October  1997 the Commission  will  consider  the need  to  continue 
part-financing  the  agencies  after  the  1997/98  marketing  year. 

Z 

Proposal  for  a 

COUNCIL  REGULATION  (EC) No 

amending  Regulation  (EEC) No  2262/84  laying  down  special 
measures  in respect  of  olive oil 

THE  COUNCIL  OF THE  EUROPEAN  UNION, 

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

Article  43 thereof, 

I laving  regard  to  the  proposal  from  the  Commission, 

Having  regard  to the opinion  of the  European  Parliament, 

Whereas,  in  accordance  with  Article  1(5)  of  Council  Regulation  (EEC)  No  2262/84  of 
17 July  19841,  as  last  amended  by  Regulation  (EEC)  No  593/922, the  Council,  acting  by  a 

qualified  majority  on a proposal  from  the Commission,  is to adopt before  1  January  1997 the 

method  for  financing  actual  expenditure  of  agencies as from  the  1997/98 marketing  year; 

Whereas  work customarily entrusted  to the agencies must be carried  out during the  1997/98 

marketing  year;  whereas,  as  a  consequence,  provision  should  be  made  for  a  Community 

contribution  to the agencies'  expenditure  for  that  period  in order  to ensure they  can  operate 

effectively  and  in  accordance  with  the  rules  within  the  framework  of  the  administrative 

autonomy  provided  for  in Regulation  (EEC) No 2262/84, 

HAS ADOPTED  THIS  REGULATION: 

1 
2 

OJNo  L 208, 3.8.1984,  p.  12. 
O J N oL  64,  10.3.1992, p.  1. 

3 

Article  1 

The  last  two  subparagraphs  of  Article  1(5)  of  Regulation  (EEC)  No  2262/84  are  hereby 

replaced  by  the  following: 

"50%  of  the  agency's  actual  expenditure  for  the  1997/98  marketing  year  shall  be  covered  by 

the  general  budget  of  the  European  Communities. 

Before  1 October  1997, the  Commission  shall  consider  the  need  to  maintain  the  Community 

contribution  to  the  agency's  expenditure  and,  where  appropriate,  shall  present  a  proposal  to 

the  Council.  In  accordance  with  the procedure  provided  for  in  Article  43(2)  of the Treaty,  the 

Council  shall  decide  before  1 January  1998  on  any  financing  of  the  expenditure  in  question." 

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 

V 

FINANCIAL  STATEMENT 

Item  B2  -  511 - Inspection  in  agriculture 

1.  TITLE  OF  OPERATION 

Council Regulation  (EC) amending Regulation (EEC) No 2262/84 laying down  special 
measures  in  respect  olive  of  oil  (extension  of  Community  part-financing  of  olive  oil 
agencies  for  one year). 

2.  BUDGET  HEADING(S)  INVOLVED 

B 2-  511 

3. 

LEGAL  BASIS 

Article 43  of the  Treaty  establishing  the EC. 
Council  Regulation  (EEC)  No  2262/84,  as  last  amended  by  Regulation  (EEC) 

No  593/92. 

4.  DESCRIPTION  OF  OPERATION 

4.1.  General  objective 

To extend for  one year the duration of the financial  contribution  from  the general 
budget  of  the  European  Union  to  actual  expenditure  of  the  four  inspection 
agencies  in  order  to  ensure  they  operate  normally  and  to  enhance  their 
administrative  autonomy. 

4.2.  Period  covered:  one year 

In view  of the fact  that a draft  reform  of the MO  for  olive  oil is currently  under 
examination,  the  continuation  of  Community  part-financing  of  the  agencies 
is  introduced.  Before  1  October  1997  the 
depends  on  when  the  reform 
Commission will consider the need to continue the Community  contribution to the 
agencies'  expenditure. 

5.  CLASSIFICATION  OF EXPENDITURE  OR REVENUE 

5.1.  NCE 

5.2.  DA 

S 

6 

TYPE  OF EXPENDITURE  OR REVENUE 

Subsidy  for joint financing  (50%) with  other  sources in the public and/or  private 
sector; the Community contribution is provided on the basis of a work programme 
and a forecast budget which the agencies submit to the Commission each year (see 
point  9.1 for  description  of type  of  expenditure). 

7. 

FINANCIAL  IMPACT 

7.1.  Method  of  calculating  total  cost  of  operation  (ECU  million):  drawn  up  on  the 
basis of  previous utilization.  Italy  6.5,  Spain  2.4,  Greece 2.3, Portugal  0.9. 

7.2.  Itemized  breakdown  of  cost 

CA (ECU million  at  current  prices) 

n+  1 

n + 2 

n +3 

n + 4 

Breakdown 

Part-financing of expenditure 
incurred  by  agencies 

Total 

Budget 
year  n 
(1997) 

12.1 

12.1 

7.3.  Indicative  schedule  of  commitment/payment  appropriations 

n +  5 and 
subsequent 
years 

Total 

12.1 

12.1 

CA (ECU  million) 

Budget 
year  n 
(1997) 

n+  1 

n + 2 

n + 3 

n + 4 

n +  5 and 
subsequent 
years 

Commitment  appropriations 

12.1 

Payment  appropriations 

Year n  (1997) 
n +  1 (1998 
n + 2 
N + 3 
N + 4 
N +  5 and  subsequent  years 

Total 

3.1 
9.0 

12.1 

€ 

Total 

12.1 

3.1 
9.0 

12.1 

8.  FRAUD PREVENTION MEASURES 

The  agencies  regularly  submit  work  programmes.  In  addition,  financial  statements  give 
rise  to  regular  monitoring  by  the  Commission;  the  financial  situation  at  the  end  of  the 
year 
is  considered  by  the  Commission,  which  takes  a  decision  on  the  amount 
representing  actual  expenditure  of  the  agencies  to  be  granted  to  the  Member  States 
concerned. 

9. 

ELEMENTS  OF  COST-EFFECTIVENESS  ANALYSIS 

9.1.  Specific  and  quantifiable  objectives;  target  population 

-  Specific  objectives:  links  with  general  objective 

The  types  of  expenditure  covered  by  the  operation  are  as  follows: 

Staff  costs: Expenditure  on  staff  recruited  for  work  directly  connected  with  the 
introduction  of  the  system  of  controls  covering  olive  oil;  staff  costs,  which 
account  for  the  most  important  item  of  expenditure,  comprise  both  wages  and 
salaries  and  social  welfare  contributions  payable  by  the  employer  as  well  as 
expenditure  on  training. 

Control  structure:  Printing  of  registers  and  forms  and  preparation  of the  latter; 
equipment  for  taking  samples  of  olive  oil  stored;  costs  of  disseminating 
information  to  farmers. 

Operating  expenditure:  travelling  and  subsistence  expenses,  rental  of  premises 
and  upkeep,  insurance,  miscellaneous  office  expenses  (data  processing). 

-  Target  population 

The  recipients  of  the  Community  financial  contribution  are  the  four  agencies 
in  the  Member  States  concerned  (I,  E,  GR  and  P)  with  responsibility  for 
monitoring  aid  to  olive  oil. 

The  expenditure  is  paid  directly  to  the  agency;  payments  take  place  at  the 
beginning  of  each  quarter  and  take  account  of  the  liquidity  position. 

9.2.  Grounds  for  the  operation 

Need  for  Community  budget  contribution  having  regard  in  particular  to  the 
principle  of  subsidiarity. 

Financing  of  the  agencies  is  justified  by  the  need  to  protect  the  Community's 
financial 
interests  and  also  to  meet  the  requirements  of  the  Member  States 
concerned  for  whom  the  introduction  of  a system  of  specific  controls  constitutes 
a  high,  additional  budget  burden. 

-  Choices  of  ways  and  means 

Advantages  over  possible  alternatives  (comparative  advantages) 
The  Community  financial  assistance  provides  support  for  the  agencies  and 
also gives them  some independence vis-à-vis the various national  inspection 
authorities. 

Explanatory  reference  to  similar  Community  or  national  operations 
The  system  of  agencies  co-financed  by  the  Commission  and  the  Member 
State  is  peculiar  to  the  olive  oil  industry;  the  operation  involves  the 
application  of  a  system  of  controls  which  is  totally  new.  No  comparison 
with  other  operations  administered  nationally  can  be  made. 

Spin-of  and  multiplier  effects  expected 
The  Community  financial  contribution  represents substantially  less than  1% 
of  the  aid  paid  to  the  olive  oil  industry  but  allows  an  effective  system  of 
controls to function  with its indisputable deterrent effect.  The  part-financing 
of  the  agencies  is  therefore  fully  worthwhile,  in  view  of  the  fact  in 
particular  that  the  administrative  structures  of  the  producer  Member  States 
are  not  sufficiently  adapted  to carrying  out the  controls provided  for  by  the 
Community  regulations. 

In  addition,  the  controls  conducted  by  the  agencies  have  pointed  to  many 
irregularities  and  at  times  even  to  fraud. 

Main  factors  of  uncertainty  which  could  affect  the  specific  results  of  the 
operation. 

The  main  factors  of  uncertainty  are  related  to  the  technical  difficulties 
which the  Member  States may  encounter  in complying  with  the  regulations. 

9.3  Monitoring  and  evaluation  of  the  operation 

Performance  indicators  selected 

With  the  view  to  ensuring  the  proper  application  in  particular  of  Community  aid 
for  olive oil, the  agencies conduct  checks entrusted to them  in accordance  with  the 
Community  regulations,  record  irregularities  observed  following  such  checks  and 
inform  the  Commission  staff  and  the  competent  authorities  of  the  Member  State 
concerned  thereof. 

§ 

On  the  basis  of  results  obtained  in  recent  years  and  of  checks  conducted  by 
Commission  agents,  positive  conclusions  may  be  drawn  regarding  the  way  the 
agencies  operate. 

While  it  is  indisputable  that  in  the  first  few  years,  the  agencies  have  encountered 
difficulties  of  all  sorts,  their  work  has  gradually  had  an  effect  on  national 
authorities. Nowadays  it is possible to claim that the four  agencies have  competent 
staff  experienced  in  monitoring  the  various  measures  connected  with  olive  oil. 

Nevertheless,  the results  of the agencies' work  cannot be  evaluated  solely  in  terms 
of  figures  (checks  conducted,  proposed  penalties,  aid  recovered,  fines  collected, 
etc.).  It  is  reasonable  to think  that  by  virtue  of  the very  existence  of the  agencies, 
the  temptation  or  the  possibility  of  conducting  fraudulent  operations  is  reduced, 
a  dissuasive  effect  which  is  very  difficult  to  gauge. 

Details  and  frequency  of  planned  evaluations 

The  agencies'  activities  have  been  monitored  very  closely  by  the  Commission 
staff,  the  latter  regularly  assess  the  performance  of  the  agencies  and  include  the 
results  of their work  in the EAGGF  report  each year.  The present  measure  extends 
the  part-financing  of  the  agencies  for  the  1997/98  marketing  year.  An  assessment 
of  the  situation  will  be  made  during  1997  and  will  take  account  in  particular  of 
progress  in  the reform  of  the MO  for  olive  oil  to  decide  on  any  further  extension. 

Assessment  of  the  results  obtained 

In  view  of  the  difficulties  peculiar  to  the  sector,  the  agencies  appear  to  play  an 
indispensable  part  in  controls.  Controls  carried  out  are  used  both  by  the 
Commission  and  by  the various  national  authorities. For these reasons  the  method 
of  financing  them  should  be  extended  for  the  1997/98  marketing  year. 

3 

ISSN 0254-1475 

COM(96) 571 final 

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Catalogue  number  :  CB-CO-96-571-EN-C 

ISBN 92-78-11446-4 

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