Proposal for a COUNCIL REGULATION (EC) determining measures and compensation relating to appreciable revaluations that affect farm incomes
Date: 1997-02-19
Institutions: European Commission
Subjects: agri-monetary policy, agricultural product, aid to agriculture, monetary compensatory amount, representative rate

'Jll»Htt|iPWi|ll 

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  19.02.1997 
COM(97)  59 final 

Proposal  for a 

COUNCIL REGULATION  (EC) 

determining  measures and compensation relating to appreciable revaluations that  affect 

farm incomes 

(presented by the  Commission) 

EXPLANATORY  MEMORANDUM 

Council  Regulation  (EEC)  No  3813/92  provides  for  compensation  measures  when, 
following  a  revaluation,  the  agricultural  conversion  rate  falls  below  certain  thresholds 
established as a function  of past currency developments. In order to enable  compensation 
to  be paid,  the  Member  States may  request the  application  of  the  following  provisions: 

Article  7  of  the  Regulation,  for  an  increase  in  the  amount  of  most  direct  aid  to 
producers  as  expressed  in  ecus,  to  prevent  a  reduction  in  terms  of  revalued 
national  currency; 

Article  8  of  the  Regulation,  for  digressive  compensatory  aid  over  a  three-year 
period, with the European Union contributing 50% or 75% of the cost, as the case 
may  be. 

The cost of applying Article 7 is about ECU  250 million a year for each percentage  point 
of revaluation.  The maximum  amount of compensatory  aid under Article  8 is  established 
by  the  Council,  at  least  12 months  after  the  revaluation,  on  the  basis  of  an  estimate  of 
actual  income  loss. 

However,  under  Article  9  of  Regulation  (EEC)  No  3813/92,  the  Council  must  take  all 
necessary measures in the event of an appreciable revaluation, which, primarily to comply 
with  obligations  under  the  GATT  Agreement  and  budgetary  discipline,  may  involve 
derogations from  the provisions of the said Regulation concerning aid and the amount by 
which  the  monetary  gaps  are  dismantled,  without,  however,  resulting  in  the  five-point 
threshold  being  extended. 

To  avoid  the  financial  and  international  consequences  of  applying  Articles  7  and  8  of 
Regulation  (EEC)  No  3813/92,  the  Council  adopted  Regulations  (EC)  No  1527/95  and 
(EC)  No  2990/95;  for  appreciable  reductions  in  agricultural  conversion  rates  before  31 
December  1996, those  Regulations  replace  the  measures  of  Articles  7 and  8 by: 

a  freeze  on  the  agricultural  conversion  rate  applicable  to the  amounts  referred  to 
in  Article  7,  for  the  Member  State  concerned,  until  1 January  1999,  the  date  of 
the  planned  introduction  of  the euro; 

the  possibility  of  digressive  compensatory  aid  over  three  years,  of  a  maximum 
amount determined  on the basis of a flat-rate  forward  estimate of future  losses of 
annual  incomes. 

The  currencies  of  eight  Member  States  have  been  concerned  by  the  provisions  referred 
to.  However,  no  compensatory  aid  was  granted  for  the  2%  reduction  in  the  agricultural 
conversion rate of the Irish pound  on 8 November  1996, since, despite the  fact  that 0.3% 

of this reduction was regarded as "appreciable", the Council did not establish a maximum 
amount  of  aid  in  this  case. 

The impact of all these measures was analysed in the Annual Report on the agri-monetary 
system  for  1995/96.l  The  approximate  cost  of  freezing  agricultural  conversion  rates  is 
ECU  185  million  a  year,  and  that  of  compensatory  aid  ECU  200  million  in  1996,  one 
third less the following  year, and two thirds less the year after  that. For the future,  despite 
the  various  problems  arising,  the  report  concludes  that  care  should  be  taken  to  ensure 
similar treatment  when appreciable revaluations occur, although the measures should not 
aggravate  the  risk  of problems that  could  interfere  with the  changeover  to the  euro on 1 
January  1999. 

At  present,  any  further  decline  in  an  agricultural  conversion  rate,  except  for  that  of  the 
Greek  drachma,  would  be  regarded  as  "appreciable"  under  Article  1(e)  of  Regulation 
(EEC) No 3813/92. The declines in the rates of the Irish pound and of sterling in January 
1997  are  "appreciable"  reductions  comparable  to  those that  occurred  in  1995  and  1996. 
In view  of the agri-monetary  situation, the United  Kingdom  would  thus be in a position 
to request the  application  of  Article  7 for  an 8.5%  increase  in ecus for  certain  direct  aid 
payments from  July  1997, and  Ireland that of Article  8 from  April  1997. The criteria  set 
out  in  Article  1(e)  do  not,  in  fact,  correspond  exactly  to  those  for  triggering  Articles  7 
and  8.  The  level  of  the  Italian  lira  in  January  1997,  for  example,  if  maintained,  would 
enable  Italy  to  request  the  application  of Article  8 in  March  and  Article  7 in  July. 

It would  thus  appear  necessary  to take measures at  Community  level  to  avoid problems, 
and  especially  financial  problems,  in  implementing  the  common  agricultural  policy.  In 
accordance  with  the conclusions of the Annual  Report on the agri-monetary  system, it is 
proposed  to  follow  the  approach  determined  by  Regulations  (EC) No  1527/95  and  (EC) 
No  2990/95, taking  due  account  of  experience. 

More specifically,  it is proposed to extend the scope of the compensatory  measures to all 
cases that  lead  to  the  application  of  Articles  7 and  8 of  Regulation  (EEC)  No  3813/92. 
When the appreciable  revaluation does not correspond  to an appreciable  reduction  in the 
agricultural  conversion  rate  within  the  meaning  of  Article  1 (e)  of  the  Regulation,  the 
conditions  for  applying  Articles  7 and  8 would  be  fulfilled,  for  example,  following  one 
or more  reductions  in  the  rate  over  the  previous  twelve  months  that  were  not  offset  by 
devaluations  occurring  in the  same period. For  such cases, a date must be  determined  to 
be deemed  to  be  that  of  the  appreciable  revaluation.  It  is proposed  to  take  the  first  date 
on which  the  conditions  for  applying  either  Article  7 or  Article  8 are  fulfilled,  with  the 
exception  of  the  request  by  the  Member  State  concerned. 

Experience  has  shown  that  the principle  of  freezing  agricultural  conversion  rates  for  the 
amounts referred  to  in Article  7 may  lead to very  wide  monetary  gaps. These  gaps  have 
very little short-term impact on the markets; and although they could over the longer term 

Report  from  the  Commission  to  the  Council  and  the  European  Parliament  on  the  agri-monetary 
system  for  the  single  market;  1 July  1995 to  30  June  1996. COM(96)  636  final. 

create  difficulties  of  a structural  nature  between  Member  States  or  between  production 
sectors in the  same Member  State the freeze  is limited  to  1 January  1999. On the  other 
hand, large monetary  gaps may  lead to major  problems when they  have to  be closed  up 
in order to substitute the euro for national currency.  Consequently, it is proposed to limit 
the size of these monetary  gaps. The gap between the frozen  agricultural  conversion  rate 
and the agricultural conversion rate which it replaces should never exceed  7%. The choice 
of  a threshold  value  of  7%  takes  account  of  the  fact  that  in July  1996,  for  the  Swedish 
krona,  the  gaps  were  14.7% for  per  hectare  aid  for  arable  crops  and  6.9%  for  beef  and 
veal premiums, ewe premiums  and  structural  aid. If necessary, the loss of income due to 
a decline in the agricultural conversion rate for the amounts referred  to in Article 7 could 
be  taken  in to  account  when  granting  compensatory  aid. 

Compensatory aid,  like the aid granted under Regulations (EC) No  1527/95 and (EC) No 
2990/95, would  not  be linked  to current production,  would  be digressive  in three  annual 
tranches,  could  be  extended  for  a  limited  period,  and  would  be  eligible  for  Community 
financing  to  cover  50%  of  the  maximum  amount.  The  amounts  of  the  second  and  third 
tranches  would  be  reconsidered  in  the  case  of  a  devaluation  affecting  incomes,  but 
experience  has  also  shown  that  the  maximum  amount  of  the  first  tranche  can  and  must 
be  revised  if  there  is a  devaluation  in the  first  six months of  the  first  year,  since  in  that 
case  the  full  amount  of  aid  would  no  longer  be  justified.  At  all  events,  the  first  aid 
payments  are  made  only  after  the  national  arrangements  for  granting  the  aid  have  been 
drafted,  notified  and  approved,  a  process  that  takes  at  least  six  months.  When  the 
"appreciable"  fraction  of  the  revaluation  is  small,  the  amount  of  compensatory  aid  per 
holding  does  not  correspond  to  a  notable  and  significant  loss  of  income.  It  is  proposed 
to  introduce  a  minimum  of  ECU  150  per  existing  holding,  below  which  aid  is  not 
granted. In the past, the smallest amounts paid in aid corresponded to a maximum  amount 
possible  of  about  ECU  200  per  holding. 

In fact,  the method  of  calculating  the amount  of aid  was approved  by the  Council  under 
Regulations  (EC)  No  1527/95  and  (EC)  No  2990/95.  It  is  proposed  to  formalize  this 
method  so  that  the  Commission  may  apply  it,  through  the  management  committee 
procedure,  whenever  necessary,  and  as  a  function  of  the  latest  available  economic  and 
financial  data.  This  method  is  based  on  determining  the  extent  to  which  a  given 
revaluation  is  appreciable  in  terms  of  a  percentage  (the  "appreciable  part"),  and 
determining  the  expected  flat-rate  income  loss for  each percentage  point  of  appreciable 
revaluation. 

The  appreciable  part  of  a  revaluation  corresponding  to  an  appreciable  reduction  in  the 
agricultural  conversion  rate  as  defined  in Article  1(e) of  Regulation  (EEC) No  3813/92 
derives  directly  from  that  définition.  In  other  cases  of  appreciable  revaluation,  the 
problem  is more  complex,  since  the  difference  between  the  level  of  the  conversion  rate 
obtaining on average and the level  beyond which a revaluation  is regarded  as appreciable 
varies  both  upwards  and  downwards  over  time.  In  such  cases,  the  proposal  takes  the 
average over twelve months of the reductions that would have made it possible to request 
the  application  of  Article  8 of  Regulation  (EEC) No  3813/92. 

The  assessment  of  income  loss  by  percentage  point  of  appreciable  revaluation  is  based 
on the economic  accounts  for  agriculture and on documents relating to the budget of the 
European  Union.  It  is  assumed,  on  a  flat-rate  basis, that  the  effects  of  the  reduction  in 
agricultural  conversion  rates are passed on  in full  in: 

, 

(i) 

(ii) 

the  value  of  products  where  an  intervention  price  usually  effectively  influences 
market prices: cereals and rice, sugar beet, milk and milk products, beef and veal; 

products  subject  to  a minimum  price, aid  or premiums  paid  direct  to  farmers,  to 
the  extent  that  the  said  reduction  in  the  agricultural  conversion  rate  is  actually 
applied. 

However,  for  the  amounts  referred  to  in  point  (ii),  losses  affecting,  in  the  sector 
concerned,  less  than  0.01% of  the  value  of  total  agricultural  production  by  percentage 
point  of  appreciable  revaluation  are regarded  as not being  significant,  and  no  account  is 
taken  of  them. 

It is also assumed, on a flat-rate  basis, that the income loss will be reduced by the impact 
of  the  agricultural  conversion  rate  on  the  value  of  feedingstuffs  and  on  tax  payments, 
since they may be expected to decline as a function  of cereal prices, on the one hand, and 
gross  value  added  on  the  other.  Finally,  in  accordance  with  the  agreement  established 
under  Regulations  (EC)  No  1527/95  and  (EC)  No  2990/95,  a  deduction  is  applied  for 
budgetary  reasons,  in  particular  to  contribute  to  financing  the  freeze  on  agricultural 
conversion  rates  for  the  amounts  referred  to  in  Article  7  of  Regulation  (EEC)  No 
3813/92. 

The  provisions  of  this  Regulation  will  help  to  prevent  the  main  adverse  effects  of 
currency revaluations on farm incomes, while limiting the risk of possible problems when 
national  currencies  are  phased  out.  It  will  provide  optimum  protection  for  the  financial 
interests  of  the  Community,  without  leading  to  discrimination  between  Member  States. 
It should be regarded  as a transitional stage pending reform  and simplification  of the agri-
monetary  arrangements  that  will  be  possible  after  the  introduction  of  the  euro  on  1 
January  1999. 

COUNCIL REGULATION (EC) No  ..../97 

of 

determining  measures  and  compensation  relating  to  appreciable  revaluations  that  affect 

farm  incomes 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing the European  Community, 

Having  regard  to  the  proposal  from  the  Commission, 

Having  regard  to  Council  Regulation  (EEC) No  3813/92  of  28  December  1992  on  the 

unit  of  account  and  the  conversion  rates to  be  applied  for  the  purposes  of  the  common 
agricultural  policy,2  and  in particular  Article  9 thereof, 

Whereas  appreciable  revaluations  have  occurred  for  the  Irish pound,  the  pound  sterling 

and  the  Italian  lira;  whereas  it  is necessary  to take  steps at Community  level  to  prevent 

distortions  in  the  implementation  of  the  common  agricultural  policy  due  to  monetary 

causes; 

Whereas  Article  9 of  Regulation  (EEC) No  3813/92 provides  for  the  Council to take all 

necessary measures in the event of an appreciable revaluation, which, primarily to comply 

with  obligations  under  the  GATT  Agreement  and  budgetary  discipline,  may  involve 

derogations from  the provisions of the said Regulation concerning aid and the amount by 

which  the  monetary  gaps  are  dismantled,  without,  however,  resulting  in  the  threshold 

being  extended;  whereas  the  measures  provided  for  in  Articles  7  and  8  of  the  said 

Regulation  cannot  be  applied  as they  stand; 

OJL387, 31.12.1992, p. 1; last amended by Regulation (EC) No 150/95 (OJL 22, 31.1.1995, p. 1). 

6 

Whereas  compensation  for  appreciable  reductions  in  the  agricultural  conversion  rates 
before  1 January 1997 was regulated by Council Regulations (EC) No 1527/953 and (EC) 
No 2990/954; whereas equality of treatment requires that new cases should be dealt with 

in  the  same  way,  while  taking  account  of  experience;  whereas  on  the  basis  of  the 

information  available it is impossible to know what the situation will be for  more than 

twelve, months ahead; 

Whereas  problems  could  arise,  in  particular  upon  the  introduction  of  the  euro,  if  the 

conversion rates applicable to the amounts referred  to in Article 7 of Regulation (EEC) 

No  3813/92  were  maintained  until  1  January  1999,  the  planned  date  for  the 

implementation  of  the  third  stage  of  Economic  and  Monetary  Union;  whereas  the 

monetary  gap for  the agricultural  conversion rate applicable to the amounts in question 

should consequently be limited; 

Whereas  the  rules  for  granting  compensatory  aid  should  be  amplified  on the  basis of 

experience;  whereas  the  amplification  should  involve  iaking  account  of  currency 

developments in the months following appreciable revaluation, and introducing an amount 

per holding below which the grant of aid makes little economic sense; 

Whereas the amount of compensatory aid should be established in each case as a function 

of  the  latest  known  economic  and  financial  data;  whereas  this  amount  should  be 

determined  by the Commission by the management committee procedure, as a  function 

of  the  methods  devised  and  applied  under  Council Regulations  (EC) No  1527/95 and 

(EC) No 2990/95; whereas these methods lead to  calculation,  on a flat-rate  basis, of a 

forward  estimate  of  annual  income  loss related  to  the  appreciable  revaluation,  with  a 

deduction for  budgetary purposes; 

3 
4 

OJL  148, 30.6.1995, p.l. 
OJ L 312, 23.12.1995, p.l; amended by Regulation (EC) No 1451/96 (CJ L 187, 26.7.1996, p.l). 

Whereas the appreciable revaluation of the Irish pound on 8 November  1996 did not lead 

to  the  granting  of  compensatory  aid; whereas  aid  should  be  authorized  in  this  case  in 

accordance with the conditions  of this Regulation, 

HAS  ADOPTED  THIS  REGULATION: 

Article 1 

1. 

This  Regulation  shall  apply  in  the  event  of  appreciable  revaluations  occurring 

from  1  January  1997  until  the  end  of  the  twelfth  month  following  that  of  its 

publication. 

2. 

For  the  purposes  of  this  Regulation,  an  appreciable  revaluation  shall  mean  a 

reduction in the agricultural conversion rate leading to the application of Articles 

7  and 8 of  Regulation (EEC) No  3813/92, and any other reduction  as defined  in 

Article  1(e)  of that Regulation. 

3. 

The  appreciable  revaluation  shall be deemed to have occurred: 

where  applicable,  on  the  date  of  the  appreciable  reduction  in  the 

agricultural conversion rate, as defined in Article 1(e) of Regulation (EEC) 

No  3813/92, or 

in other cases, on the earliest date on which all the conditions for applying 

Articles 7 or 8 of Regulation (EEC) No 3813/92, with the exception of the 

request from the Member State concerned,  are  fulfilled. 

Article 2 

Articles  7  and  8  of  Regulation  (EEC) No  3813/92  shall  not  be  applicable  in  cases  of 

revaluation  as referred  to  in Article  1. 

Article  3 

1. 

The  agricultural  conversion  rate  applied  to  one  of  the  amounts  referred  to  in 

Article  7  of  Regulation  (EEC) No  3813/92,  on the  day  preceding  that  on  which 

the  conditions  for  applying  that Article  are  fulfilled,  except  for  the request  from 

the  Member  State  concerned,  shall  remain  unchanged  until  1 January  1999. 

However,  without  prejudice  to  Article  3  of  Regulation  (EC)  No  1527/95-or  to 

Article  3  of  Regulation  (EC)  No  2990/95,  in  cases  where  the  agricultural 

conversion rate referred  to in the first subparagraph exceeds by more than 7% the 

agricultural  conversion rate it replaces, the rate applied until  1 January  1999 shall 

be the  rate  replaced  increased  by  7%. 

2. 

The  agricultural  conversion  rate  referred  to  in  paragraph  1  shall  apply  to  the 

amount  in  question  and  to  any  additions  or  changes  to  the  value  of  that  amount 

decided  before  2 January  1999. 

Article  4 

1. 

The Member  State affected  may make compensatory payments to farmers  in three 

successive tranches lasting twelve months each, starting with the month  following 

the  appreciable  revaluation. 

These compensatory payments shall not take the form  of aid linked to production, 

other  than  production  during  a  stipulated  period  prior  to  introduction  of  the 

compensation  scheme; they  shall not  favour  any  particular  type  of production  or 

be  dependent  on  production  subsequent to  the  period  stipulated. 

2. 

The  maximum  amount  of  the  first  tranche  of  compensatory  aid  shall  be 

established,  for  the  Member  State  concerned  as  a whole,  by  multiplying: 

the  appreciable  part  of  the  revaluation,  as  a  percentage,  determined  in 

accordance  with  Article  5 

by 

the  flat-rate 

income  loss  for  each  percentage  point  of  appreciable 

revaluation,  determined  in accordance  with Article  6. 

To  the  sum  resulting  from  these  calculations  shall  be  added  the  part  of  the  aid 

referred to in Article 7 of Regulation (EEC) No 3813/92 for which the agricultural 

conversion  rate  has been  reduced  in accordance  with  Article  3. 

3. 

The maximum  amount referred  to in paragraph 2 shall be reduced  or cancelled  if 

necessary as a function  of the effect  on income of the development of  agricultural 

conversion rates until the end of the sixth month following  that of the  appreciable 

revaluation. 

However,  no aid  shall be granted when the amount calculated  in accordance  with 

paragraph 2 and the first subparagraph of this paragraph corresponds to an average 

of  less than  ECU  15.0 per  agricultural  holding  in the  Member  State  concerned. 

4. 

The amounts paid  out under the second and third tranches  shall each be  reduced, 

vis-à-vis  the  previous  tranche,  by  at  least  a  third  of  the  amount  paid  out  in  the 

first  tranche. 

The  amounts  paid  out  under  the  second  and  third  tranches  of  compensatory  aid 

shall  be  reduced  or  cancelled  as  a  function  of  the  effect  on  incomes  of  the 

development  of  agricultural  conversion  rates  until  the  beginning  of  the  month 

preceding  the  first  month  of  the relevant  tranche. 

5. 

The  Community  contribution  to financing  these compensatory  payments  shall  be 

50  %  of  the  amounts  that  may  be paid  out. 

10 

For  the  purposes  of  the  financing  of  the  common  agricultural  policy,  this 

contribution  shall  be  considered  to  form  part  of  the  assistance  designed  to 

regularize  agricultural  markets. The  Member State may  withdraw  from  national 

participation  in financing the aid. 

Article 5 

1. 

The appreciable part of the revaluation,  expressed as a percentage, referred to in 

the first indent of Article  4(2)  shall: 

(a) 

in cases of appreciable reduction of the agricultural conversion rate within 

the meaning of Article  1(e) of Regulation (EEC) No  3813/92, be equal to 

the  difference  between,  on  the  one  hand,  the  threshold  beyond  which  a 

reduction  becomes  appreciable  and,  on  the  other,  the  new  agricultural 

conversion rate, expressed as a percentage  of that threshold; 

(b) 

in other cases, be equal to the average, over the twelve months  following 

that of the appreciable reduction, of the reductions in average agricultural 

conversion  rates  below  the  thresholds triggering  the  possible  application 

of  Article  8  of  Regulation  (EEC) No  3813/92;  such reductions  shall  be 

established on the first day of each month, and expressed as a percentage 

of  the  said thresholds. 

2. 

Where  several  successive  appreciable  revaluations  occur,  the  reductions  in  the 

agricultural  conversion  rates  taken  into  account  for  determining  the  appreciable 

part leading  to the  grant of  aid may not be taken into account more than once. 

Article  6 

1. 

The flat-rate  income  loss referred to in the second indent of Article 4(2)  shall be 

equal to: 

11 

(a) 

the  sum of 1%: 

of final agricultural production of cereals including rice, sugar beet, 

milk and milk products and beef and veal, 

and 

and 

of the value of the quantities of products supplied under a contract 

imposing, in accordance with Community rules, a minimum price 

to the producer, for products not referred to in the first indent, 

of  aid  or premiums paid to  farmers,  with  the  exception  of  those 

referred  to in Article  7 of Regulation (EEC) No  3813/92; 

(b) 

after  subtraction  of: 

0.5%  of  the  value  of  intermediate  consumption  in  the  form  of 

animal  feed, 

and 

and 

the  impact on tax of the reduction in gross value  added at market 

prices  resulting  from  the  operations  concerning  point  (a)  and the 

first indent of point (b), 

a deduction corresponding to  1% of forecast EAGGF  expenditure 

on the  following  items: 

12 

the full  amount  of  flat-rate  per  hectare  aid, 

half  the  amount  of  structural  or  environmental  aid,  and 

130% of  ewe premiums. 

2. 

The  amounts  referred  to  in  the  second  and  third  indents  of  paragraph  1(a)  shall 

not  be  taken  into  account  when  their  sum  is  less  than  0.01%  of  the  final 

agricultural  production  of  the  relevant  Member  State  in  the  product  sector 

concerned. 

For  the purposes  of this Regulation, the product  sectors  shall be those  set out  in 

the  Annex. 

3. 

The flat-rate  income loss shall be determined on the basis of information  relating 

to: 

(a) 

economic  accounts  for  agriculture  available  from  Eurostat  for  the  last 

calendar year ending before the date of the appreciable revaluation, for the 

first indent of paragraph  1(a) and the first and second indents of paragraph 

1(b); 

(b) 

the  budget  outturn,  or,  failing  that,  the  budgets  or  draft  budgets  or 

preliminary  draft  budgets  relating  to: 

income  for  the  year  referred  to  in  (a),  for  the  second  and  third 

indents  of paragraph  1(a), 

the budget year beginning during the marketing year  for  cereals in 

which the appreciable revaluation  occurred,  for  the third  indent  of 

paragraph  1(b). 

13 

For the purposes  of applying paragraph  2 in marginal  cases, consideration of  the 

information  referred to in point (a) above shall take account of the relevant  figures 

for  the  preceding  two  years  also. 

The  increase  referred  to  in  the  second  indent  of  Article  4(2)  shall  be  calculated 

as  a  function  of  the  data  referred  to  in the  first  indent  of  point  (b)  above. 

Article  7 

The  Commission  shall,  in  accordance  with  the  procedure  laid  down  in  Article  12  of 

Regulation  (EEC) No  3813/92,  adopt  detailed  rules for  applying  this Regulation,  and  in 

particular  the  amounts  of  the  aid  tranches  referred  to  in  Article  4  and  the  factors  for 

calculating  them  referred  to  in  Articles  5 and  6. 

Article  8 

Before  the  end  of  the  third  period  during  which  the  compensatory  aid  is  granted,  the 

Commission  shall  examine  the  effects  on  agricultural  income  of  the  appreciable 

revaluation  concerned. 

Where  it  is  found  that  income  losses  are  likely  to  continue,  the  Commission  may,  in 

accordance with the procedure laid down in Article  12 of Regulation (EEC) No  3813/92, 

extend  the  possibility  of  granting  compensatory  aid  as  provided  for  in  Article  4  by  a 

maximum  of two  additional  12-month tranches, the maximum  amount per tranche  being 

equal  to  that  granted  in the  third  tranche. 

Article  9 

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

Official  Journal  of  the  European  Communities. 

14 

Articles 4 to 8 shall apply to the reduction in the agricultural conversion rate of the Irish 

pound that occurred on 8 November  1996. 

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

< 

States. 

Done  at Brussels, 

For the  Council 

15 

The production sectors correspond to the statistical aggregates identified in the economic 

accounts  for  agriculture,  drawn  up  by  Eurostat,  or  to  groups  of  aggregates,  as  listed 

ANNEX 

below: 

1. 

Cereals and rice 

2. 

Sugar beet 

3. 

Milk and milk  products 

4. 

Beef and veal 

5. 

Oilseeds  and olive  oil 

6. 

Fresh  fruit 

7. 

Fresh  vegetables 

8. 

Potatoes 

9. 

Wines  and  musts 

10. 

Flowers  and  nursery  plants 

11. 

Pigmeat 

12. 

Sheepmeat  and  goatmeat 

13. 

Eggs  and  poultry 

14. 

Other 

16 

FINANCIAL  STATEMENT 

BUDGET  HEADING:390 

APPROPRIATIONS:ECU  140.9 m 

2. 

TITLE: Council  Regulation  determining  measures  and  compensation  relating  to  appreciable  revaluations  that  affect  farm 

incomes 

LEGAL  BASIS:  Article  9  of Regulation  3813/92 

4. 

AIMS  OF  PROJECT:To  define  measures  and  degressive  aid  financed  from  the  Community  Budget  to  offset  loss  of 

farm  income  following  a decline  in the  agricultural  conversion  rate 

FINANCIAL  IMPLICATIONS 

PERIOD  OF  12 
MONTHS 

CURRENT 
FINANCIAL 
YEAR 

FOLLOWING 
FINANCIAL 
YEAR 

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. 

ESTIMATED  EXPENDITURE 

5.1.1. 

ESTIMATED  REVENUE 

(97) 

263 

(98) 

369 

1999 

306 

2000 

2001 

2002 

5.2. 

6.0. 

6.1. 

6.2. 

6.3. 

METHOD  OF  CALCULATION: 

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

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

IS A  SUPPLEMENTARY  BUDGET  NECESSARY? 

WILL  FUTURE  BUDGET  APPROPRIATIONS  BE  NECESSARY? 

Y-ES/NO 

YES/NO* 

YES/NO 

YES/NO 

OBSERVATIONS: 

The  lack  of  appropriations  is  due to  the abatement  of  ECU  1 000  million  in  the  draft  Budget  for  1997. If 
sufficient  global  appropriations  are available  under heading  1, the  Commission  will  transfer  funds  to  the 
relevant  headings  in this  chapter. 

If  global  appropriations  are  insufficient,  the  Commission  will  propose  a  SAB  to  provide  the  necessary 
funds,  as  agreed  in the joint  declaration  of the  Council  and  the  Commission  of  21  July  1996. 

17 

ANNEX 

Measures have  become  necessary  as a  consequence  of  recent  revaluations  of  the  Irish pound,  the  pound  sterling 

and the  Italian  lira. 

The  proposed  measure  avoids  the  application  of  Articles  7  and  8  of  Regulation  3813/92,  which  could  have  a 

financial  impact  on the  budget  in  1998 and  subsequent  years  of  the  order  of  ECU  1 800  million. 

The  cost  of  the  measure  is based  on the  monetary  situation  on 21.1.1997. 

The  maximum  amounts  of  compensatory  aid  were  established  on the  basis of the  latest  forecasts  available  at the 

time. 

Cost  of  the  measure  (ECU  million) 

1997 

-  Compensatory  aid 

1998 

-  Compensatory  aid 

-  freeze  on  green  rate 

TOTAL 

1999 

-  Compensatory  aid 

-  freeze  on  green  rate 

TOTAL 

IRL 

UK 

IT 

TOTAL 

62 

41 

41 

21 

21 

104 

97 

263 

69 

143 

212 

35 

167 

202 

65 

51 

116 

32 

51. 

83 

175 

194 

369 

88 

218 

306 

ISSN 0254-1475 

COM(97) 59 final 

DOCUMENTS 

EN 

03  oi 

Catalogue  number  :  CB-CO-97-049-EN-C 

ISBN  92-78-15664-7 

Office  for  Official  Publications  of the European  Communities 

L-2985  Luxembourg