REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Application of the provision of article 5.1 under g) of Regulation (CEE) nr 1765/92
Date: 1996-12-12
Institutions: European Commission
Subjects: aid per hectare, oleaginous plant, production aid, utilised agricultural area

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  12.12.1996 
COM(%) 664 final 

REPORT FROM THE COMMISSION  TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 

Application of the  provision of article  5.1 under g) 
of Regulation  (CEE) nr 1765/92 

INTRODUCTION 

Regulation  (EC)  No 232/94  (OJ  L nr 30  dated  February  3,  1994,  p.7)  amends 
Regulation (EEC)  No 1765/92 in order to bring it into line with the Memorandum 
of  Understanding  on  oilseeds  approved  by  Council  Decision 93/355/EEC  of  8 
June  1993.  This  report  is drafted  in application  of  Article 5(1 )(g)  of  Regulation 
(EEC) No 1765/92 which lays down that the Commission must submit a report to 
the  European  Parliament  and to the Council by 31  December  1996. 

BACKGROUND 

The  Memorandum  of  Understanding  on  oilseeds  of  3  December  1992  and  the 
approval of that Agreement by the Council on 8 June 1993 (Decision 93/355/EEC) 
permitted a resolution of the dispute between the United States and the European 
Community  on the aid arrangements for oilseeds. 

It  should  be  recalled  that  this  Agreement  lost  its  bilateral  character  with  the 
conclusion of the Agreements  in Marrakesh on  15 April  1994 under the  Uruguay 
Round  multilateral  negotiations. 

The Commission proposal for transposing the Memorandum of Understanding on 
oilseeds  into  Community  law  is  contained  in  document  COM(93)  389  final 
(28/07/1993).  The  proposal  was  the  result  of  the  undertaking  made  by  the 
Commission  when  the  Council  adopted  the  Memorandum  to  propose  to  the 
Council a mechanism to ensure the equitable administration of the oilseeds base 
area  in accordance with  Regulation  (EEC)  No 1765/92. 

The  proposal  provided  for  the  amendments  to  Regulation  (EEC)  No  1765/92 
necessary  to  implement  the  Memorandum  of  Understanding  on  oilseeds,  i.e. 
(point  10 of the explanatory  memorandum)  : 

to exclude from the benefits of the regime the cultivation of  "confectionery 
sunflower seed", with effect from sowing for harvest in 1994 (the technical 
implementation  to  be  managed  by the  Commission  via the  Management 
Committee  procedure); 

to  introduce  a separate  base-area  system, to  be known  as the  maximum 
guaranteed  area, for  producers  benefiting from the crop-specific  oilseeds 
payments system, respecting the principles set out in the Memorandum of 
Understanding on oilseeds (the Commission to manage the system by the 
Management  Committee  procedure). 

The  Commission  had  previously  estimated  that,  in  the  medium  term,  the  area 
sown  with  oilseeds  would  be  no  more  than  the  total  figure  for  the  Community 
referred to in the Memorandum of Understanding with the United States, but that 
areas  in the  Member  States would  not  all develop  in the  same way. This  led to 
the conclusion that a sub-division of the Community's Maximum Guaranteed Area 

> 

by  Member  State  would  not  only  go  beyond  what  was  required  by  the 
Memorandum  of Understanding  but would also be unnecessarily  restrictive. 

The Commission therefore proposed that, should  it become  necessary to  adjust 
compensatory  payments  for  oilseeds  for  1994/95,  1995/96  and  1996/97  due  to 
implementation  of  the  Memorandum  of  Understanding,  if  the  overrun  was  not 
greater than 5% measures would be applied Community-wide. In other words, up 
to an overrun of 5%, the final reference amounts would be reduced by the  same 
amount  in all Member  States. Above that percentage, measures would focus on 
producers  in those  Member  States in which areas  under oilseeds  had  increased 
most.  Additional  reductions  would  be  applied  in  those  Member  States  which 
exceeded the average area sown for harvest in 1989, 1990 and 1991 reduced by 
the rate of rotational set-aside for the marketing year concerned or by 10% where 
that rate was lower than  10%. The proposal was made on the assumption that the 
mechanism  would  only  be  required for  a transitional period. 

The Commission proposal was a compromise between two opposing views. One 
view  was  that  all  measures  should  be  applied  on  a  Community-wide  basis, 
committing the solidarity  of all Community  oilseed producers and maximizing the 
area sown with oilseeds up to the level of the MGA. The other was that measures 
should  be  applied  on  a  Member-State  basis,  placing  responsibility  on  the 
prcducers  in  each  Member  State,  thus  protecting  them  against  any  risk  of 
penalties  arising  from  an  increase  in  the  area  sown  with  oilseeds  in  another 
Member State. The former view is reflected in the proposed 5% threshold and the 
latter  in the  placing of responsibility  on producers  in those Member  States which 
have most  increased their  area sown with oilseeds. 

The  compromise  reached  in  the  Council  in  December  1993,  formalized  by 
Regulation  (EC)  No 232/94, maintains  the  principal features  of the  Commission 
proposal  (threshold  and  responsibility  of  the  Member  States).  The  three-
marketing-year transitional period was abandoned but the compromise  maintains 
the  idea  of  Community  solidarity,  although  to  a  lesser  extent,  and  the 
responsibility  of Member  States and their  producers, to an increased  extent. 

APPLICATION  OF THE  MEASURE 

1994/1995  marketing  year 

Application of the threshold (Article 5(1 )(g)) was limited to the 1994/95 marketing 
year,  which was  also the first  marketing  year  in which the  new  mechanism  was 
applicable.  The  areas  for  which  specific  compensatory  payments  for  oilseeds 
were  applied  for  exceeded  by  9%  the  maximum  guaranteed  area  of  the 
Community of Twelve, excluding sunflower production in Spain and Portugal. The 
measure did not apply to Spanish or Portuguese sunflowers, for which there was 
a separate  maximum  guaranteed  area. 

The  method  of  applying  the  threshold  is  set  out  in  Annex  I  to  Commission 
Regulation  (EC)  No  307/95  establishing  corrected  final  regional  reference 

amounts for producers of soya beans, rape seed, colza seed and sunflower seed 
for the  1994/95  marketing year (OJ  No L No 36,  16.2.1995,  p.2).  The  left-hand 
side of the two tables given in Annex  I to this report gives the basic figures for the 
1994/95  marketing year and the penalties to be applied. The  right-hand  side  of 
the tables shows the results of applying the  Commission's  original proposal. 
A study of the tables leads to the following  conclusions: 

a  threshold  of  0% still  permits  equal  treatment  of  Member  States  which 
have  exceeded  the  reference  national  guaranteed  area  and those  which 
have  not; compensatory  payments  can thus  be optimized; 

application of penalties by Member State does not permit compliance with 
the  international commitments  made, which provide for  a  1% reduction  in 
compensatory  payments  for  each  percentage  point  overrun  of  the 
maximum  guaranteed  area;  this  is  shown  by  the  figures  for  Spain,  as 
Spanish  rape  and  soya  producers  would  have  received  a  negative 
compensatory  payment; 

a  higher  threshold,  for  example  5%,  would  have  permitted  a  further 
reduction  in  the  penalties  imposed  on  producers  in  Member  States 
exceeding  their  reference  national  guaranteed  area;  it  must  also  be 
recognized  that  such  a  mechanism  would  have  led  to  a  5%  reduction  in 
compensatory  payments  for  producers  in  Member  States  which  had  not 
exceeded their  reference  national guaranteed area. 

1995/96 and  1996/97  marketing  years 

The  MGA  was  respected  in  1995/96  and  it  is  highly  unlikely  that  it  will  be 
exceeded  in  1996/97.  Compliance  with  the  MGA  over  the  last  two  marketing 
years is a result of the national measures that a number of Member  States have 
applied  in  order  to  reduce  the  risk  of  an  overrun  of  their  national  maximum 
guaranteed  areas,  a move to  cereals  caused  by the  level  of  market  prices,  the 
dissuasive effect of penalties applied in 1994/95 and the risk that penalties would 
be  maintained  for  the  following  marketing  year  if  the  MGA  were  again  to  be 
exceeded. 

Nevertheless, in the  1995/96 and  1996/97 marketing years, oilseed producers in 
certain Member  States will have profited from the fact that the reference  national 
guaranteed  area for  oilseeds was  not  used  up  in other  Member  States. 

The  straightforward  division  of the  MGA  into  15  reference  national  guaranteed 
areas,  i.e. with  no Community  solidarity  and therefore  no thres+iold, would  have 
resulted in an overrun of the reference national guaranteed area and therefore the 
imposition  of  a  penalty  for  the  1995/96  marketing  year  in  Spain,  France,  the 
United Kingdom and Finland, to which would have been added the penalty carried 
over from the previous marketing year. Furthermore, the penalties imposed would 
have  had to  have been maintained  in  1996/97 for  Spain, France  and the  United 
Kingdom, since the reference national guaranteed areas for those Member States 

have again been exceeded  in 1996/97.  Penalties would also  have  had to  have 
been  imposed  on  oilseed  producers  in  Portugal  and  Italy.  Figures  for  the  two 
marketing years are given in Annex II. 

Conclusion 

The mechanism adopted allows Community solidarity, in that a Member State and 
its producers who have exceeded their reference national guaranteed area profit 
from under-utilization in other Member States. It avoids penalties disproportionate 
to  production  in  certain  Member  States.  Penalties  are  borne  by  those  Member 
States  and  their  producers  who  have  not  respected  the  reference  national 
guaranteed area. It permits compliance with the international commitments made 
by  the  European  Union  and  is  in  accord  with  the  wishes  of  the  Council  as 
specified  in Regulation  (EEC)  No 1765/92. 

The  European  Commission  does  not  for  the  moment,  therefore,  propose  to 
amend the provisions concerned. 

Area for which Crop Specific  Oilseed Payment to be made 

MGA:  EC-12 other than Spanish and Portuguese  Sunflowers 

Crop 
Specific 
Support 

National 
MGA 

MGA 
- 1 5% 

Overshoot 
in ha 

Overshoot 
in% 

Reduction 
necessary 

Reduction 
necessary 
(ha equ.) 

Reduction 
5% 
(ha equ.) 

Crop 
Specific 
Support 

remain. 
Overshoot 
? 

remain. 
Overshoot 

Overshoot! 
in% 

Total 
Reduction 

Basic data wtth a 5% franchisa and no distribution of the  reserve 

Belgium 

3.893 

195 

Total 
Reduction 
("«equ.) 

195 

Germany 

17,11% 

Spain 

rape/soya 

26,06% 

-11,24% 

TP\ 

4,12% 

Ireland 

Italy 

Luxembourg 

Netherlands 

Portugal 

rape/soya 

5,00% 

T O T AL 

3.696.956 

3.966.000 

3.371.100 

Yes 

325.866 

9% 

9% 

3 3 2 . 7 26 

1 8 4 . 8 48 

3.512.108 

Y es 

332.726 

N e c e s s a ry  r e d u c t i on  in  ha  -  e q u i v a l e n t s: 

9,666% 

332.726 

Area for which Crop Specific Oilseed Payment to be made 

MGA:  EC-12 other than Spanish and Portuguese  Sunflowers 

Basic Data with distribution of the reserve to have the same réduction for all crops in Spain, 
no change for the  U.K.  and the same reduction for Ireland as  U.K. 

Basic D au  with 5% franchise and distribution of the reserve to have the same reduction for a» crepe in Spain, 
no change for the U.K. and the same reduction for Ireland as  U.K. 

Crop 
Specific 
Support 

National 
MGA 

Increase 
MGA 

total 
MGA 
- 1 5% 

Overshoot 
in ha 

Overshoot) 
in% 

Reduction 
necessary 
% 

Reduction 
necessary 
(ha equ) 

Reduction 
5% 
(ha equ.) 

Crop 
Specific 
Support 

National 
MGA 

Increase 
MGA 

total 
MGA 
- 1 5% 

Overshoe 
? 

Overshoot 
in ha 

Reducten 
in% 

Total 
R#ducbon 
% 

Reduction 
necessary 
("*»») 

Belgium 

3893 

5.00% 

Germany 

17,87% 

4^ 

Spain 

rape/soya 

Ireland 

Italy 

Luxembourg 

Netherlands 

Portugal 

rape/soya 

5,48% 

TOTAL 

325.856 

9% 

184.848 

3.512.108 

Yes 

147.87» 

Necessary  reduction in ha - equivalents: 

9,666% 

332.726 

ANNEX II 

Area for which crop specific 
payment is made in 1995/1996 

Member state  National MGA 

'MGA-12% 

crop spec 

overshoot  +/- in % 

Belgium 

Denmark 

6.000 

5.280 

3.898 

236.000 

207.680 

119.515 

Germany 

929.000 

817.520 

688.758 

Greece 

Spain 

France 

Ireland 

Italy 

Luxembourg 

Netherlands 

Portugal 

UK 

EC-12 

Austria 

Finland 

Sweden 

EC-15 

26.000 

22.880 

18.809 

1.168.000 

1.027.840 

1.053.875 

1.730.000 

1.522.400 

1.531.706 

5.000 

4.400 

2.572 

542.000 

476.960 

396.247 

2.000 

7.000 

93.000 

1.760 

6.160 

1.422 

1.110 

81.840 

78.733 

385.000 

338.800 

354.709 

5.128.000 

4.512.640 

4.251.354 

147.000 

129.360 

102.411 

70.000 

61.600 

79.725 

137.000 

120.560 

94.192 

5.482.000 

4.824.160 

4.527.682 

N 

N 

N 

N 

Y 

Y 

N 

N 

N 

N 

N 

Y 

N 

N 

Y 

N 

N 

-26,17 

-42,45 

-15,75 

-17,79 

2,53 

0,61 

-41,55 

-16,92 

-19,20 

-81,98 

-3,80 

4,70 

-5,79 

-20,83 

29,42 

-21,87 

-6,15 

? 

Area for which 
in 1996/1997 

crop specific payments are to be made 
(art.8.2 du règlement (CE) n° 658/96) 

Member state  National MGA 

'MGA-10% 

crop spec. 

overshoot  +/- in  % 

Belgium 

6.000 

5.400 

Denmark 

236.000 

212.400 

3.903 

81.174 

Germany 

929.000 

836.100 

670.745 

Greece 

26.000 

23.400 

9.994 

Spain 

1.168.000 

1.051.200 

1.128.086 

France 

1.730.000 

1.557.000 

1.603.951 

Ireland 

5.000 

4.500 

2.511 

Italy 

542.000 

487.800 

540.441 

Luxembourg 

2.000 

Netherlands 

7.000 

1.800 

6.300 

Austria 

147.000 

132.300 

Portugal 

93.000 

Finland 

70.000 

83.700 

63.000 

Sweden 

137.000 

123.300 

1.614 

592 

79.826 

92.785 

58.150 

60.320 

UK 

385.000 

346.500 

357.712 

EC-15 

5.482.000 

4.933.800 

4.691.803 

N 

N 

N 

N 

Y 

Y 

N 

Y 

N 

N 

N 

Y 

N 

N 

Y 

N 

-27,73 

-61,78 

-19,78 

-57,29 

7,31 

3,02 

-44,20 

10,79 

-10,33 

-90,60 

-39,66 

10,85 

-7,70 

-51,08 

3,24 

-4,90 

9 

ISSN 0254-1475 

COM(96) 664 final 

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