Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) No 1696/71 on the common organization of the market in hops
Date: 1997-03-07
Institutions: European Commission
Subjects: aid per hectare, aid system, common organisation of markets, hops, production aid

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  07.03.1997 
COM(97)98  final 

97/0066  (CNS) 

Proposal  for a 

COUNCIL REGULATION (EC) 

amending  Regulation  (EEC) No  1696/71 
on  the common  organization  of the market  in hops 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

It is proposed that the Council adopt the appended proposal for a Regulation amending Regulation 
(EEC) No  1696/71  of  26 July  1971 on the  common  organization  of the market  in hops. 

From the point  of  view  of timing, these  amendments come  at a juncture  when  a decision needs 
to be taken regarding the system in the future,  31 December  1996 marking the end of the varietal 
conversion programme  (to aromatic  or  super-alpha varieties, which are better  adapted to market 
requirements)  and  of the transitional  period  during which  aid to producers could be paid  in  full, 
under  certain  conditions,  where  the  members  of  the  producer  group  did  not  market  all  their 
produce  through  the  latter.  The  need  to  adapt  Community  legislation  to  market  realities  has 
resulted  in  the  proposed  amendments  set  out  below.  The  opportunity  has  been  grasped  of 
simplifying  that  legislation  and  granting  producer  groups  greater  scope and  flexibility. 

The justification  for maintaining the aid to producers lies in the fact that their income is very low 
compared  with  their  high production  costs and that  it is therefore  vital  to grant aid to  producers 
(even of  a small  amount,  as  is the case at present) to allow the  sector to  survive by  maintaining 
production  of  hops,  a  tradition  going  back  several  centuries,  and  making  it  competitive  with 
American  production  and  to  ensure that  Community  hops  is present  on export  markets. 

The  decision to  maintain  the  same rate  of  aid  for  a period  of five  years is explained  by the  fact 
that  it  is  essential,  under  present  production  and  marketing  conditions,  to  give  guarantees  of 
stability  to  producers  while  bearing  in  mind  that,  on  the  basis  of  the  report  drawn  up  by  the 
Commission for  the Council each year and pursuant to Article  12(6) of the basic Regulation, the 
situation  may  be  reviewed  periodically  with  the  result,  where  the  need  arises, of  an  adjustment 
to  the  rate  of  aid. 

The impact of the proposed amendments on the present situation can be summed up in four  major 
points,  the  main  aim  being  to  facilitate  the  sector's  adjustment  to  market  requirements  by 
strengthening  the  role  of  the  producer  groups: 

- 

- 

the  granting  of  flat-rate  annual  aid  per  hectare  based  on  historical  averages,  with  no 
distinction  between  the  various  groups  of  varieties  and  payment  being  made  as  soon  as 
possible  after  the  harvest.  The  aid  comprises  two  amounts  existing  under  the  previous 
scheme,  i.e.  aid to producers  and aid  for  varietal  conversion.  It amounts to ECU  450/ha. 
The  producer  group  can  decide  whether  to  pay  all  the  aid,  after  deducting  5%,  to  be 
withheld  compulsorily  for  varietal  conversion,  to  its members  in proportion  to the  area 
cultivated  or only  a percentage  of between  80% and 95% thereof,  depending  on whether 
there  are  still  applications  pending  in  respect  of  varietal  conversion  or  possibly  other 
measures to be  implemented  (see point  4 below), 

the  possibility  for  members  of  recognized  producer  groups to  market  all  or  part  of  their 
produce themselves, without any reduction in the aid resulting by way of a penalty, where 
they  are so authorized  by the group. The  latter has the right  to monitor  prices  negotiated 
between  producers  and  traders  and  can  grant  or  refuse  approval  for  the  conclusion  of 
contracts.  In  the  event  of  disagreement  on  prices  proposed,  the  producer  group  is  under 
an  obligation  to  take  over  the hops at a higher  price  and find another  purchaser, 

m 

the  possibility  of  varietal  conversion  on  a permanent  basis, i.e.  with  no  limit  in  area  or 
time, payment  being covered by the flat-rate  aid per hectare mentioned  above. The  funds 
allocated  to that end  will be decided by the producer  group  in  line with  its  requirements 
and  subject  to  certain  limits  (see point  4 below), 

the possibility  of  withholding  up to  20% (100%  under  the  present  system) of  the  aid  to 
producers  to  implement  special  measures.  The  latter  involve  measures  relating  to  the 
rationalization  and  mechanization  of cultivation  and harvesting, the adoption  of  common 
rules on production  (cultivation techniques, fertilizers, varieties, etc.), varietal  conversion, 
promotion,  measures  to  determine  and  improve  quality,  research  and  intervention.  The 
objective  of  the  measure  is to ensure the producer  group  has some  latitude  in  managing 
the  aid,  with  the  option  of  using  the  full  20%  of  the  aid  for  the  purposes  of  varietal 
conversion. 

Should  producer  groups  not  market  their  members'  whole  production,  this  possibility 
become  an obligation,  the percentage  in that  case continuing  to  stand  at 20%. 

During  the  fifth  year  following  the  entry  into  force  of  the  Regulation, there  is provision  for  an 
assessment to be made of the measures applied  and of their impact on the economic  situation of 
the  sector. 

This proposal  has no  impact  on the  budget. 

Proposal  for  a 

COUNCIL  REGULATION  (EC) 

of 

amending  Regulation  (EEC) No  1696/71 
on the  common  organization  of the market  in hops 

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  Commission, 

Having  regard  to the  opinion  of the European  Parliament, 

Having  regard  to the  opinion  of the Economic  and  Social  Committee, 

Whereas aid  to producers  should be used principally  to ensure higher  and more  stable incomes; 

whereas any  amount withheld  with a view to attaining the aims of producer groups as laid down 

in  Article  7(1 )(a)  to  (d)  of  Council  Regulation  (EEC)  No  1696/71  of  26  July  1971 '  must 

accordingly be subject to a fair ceiling; whereas Article  7(la) of that Regulation must be amended 

accordingly; 

Whereas  increasing  aid  for  other  varieties  is  likely  to  result  in  a  considerable  rise  in  the  areas 

under those varieties to the detriment of the quality produced; whereas, given overplentiful  supply 

and weak  demand,  prices  for  such varieties could plummet,  forcing  producer  groups to exercise 

their right  of veto and to buy back the hops; whereas  such hops may  not find purchasers  on the 

market  and  major  stocks  of  varieties  of  poorer  quality  are  liable  to  build  up  within  producer 

groups;  whereas  this  could  destabilize  the  market;  whereas,  to  prevent  such  a  situation  from 

arising, producer  groups should  decide what varieties can be grown by their  members; whereas, 

to  that  end,  Article  7(1 )(d)  and  the  first  subparagraph  of  Article  7(3)(b)  of  Regulation  (EEC) 

No  1696/71  should  be  amended; 

OJ  No  L  175,  4.8.1971,  p.  1.  Last  amended  by  Regulation  (FX)  No  3290/94  (OJ  No  L 349, 
31.12.1994, p.  105). 

V 

Whereas Article  7(3)(b) of Regulation (EEC) No  1696/71 provides for  an obligation in principle 

on producers who are members of groups and on recognized producer groups which are members 

of  unions  to  sell  all  their  produce  through  the  group  or  union;  whereas  the  application  of  that 

principle  has  proved  highly  problematic  for  Community  producers,  a  majority  of  whom  are 

members  of  one  and  the  same  group;  whereas  the  transitional  period  laid  down  in  the  last 

subparagraph of the abovementioned  provision, during which the members of a recognized  group 

may,  on  condition  they  are  so  authorized  by  the  latter,  market  all  or  part  of  their  produce 

themselves in accordance with the rules laid down and under the group's supervision, expires on 

31 December  1996; whereas, as a consequence,  a decision  should  be taken  on the  arrangements 

to  apply  from  1 January  1997  and  abovementioned  Article  7(3)(b)  should  be  amended 

accordingly; 

Whereas it would be detrimental to withdraw recognition from producer groups, which, moreover, 

diligently  perform  all  their  other  tasks,  such  as  the  administration  of  aid  to  producers  and  the 

attainment  of  their  aims as referred  to  above; whereas  members  of  recognized  producer  groups 

should  accordingly  be  granted  the  option  of  marketing  all  or  part  of  their  produce  themselves, 

without  suffering  any  reduction  in the aid by  way  of a penalty, where they  are  so authorized by 

the  group  and  on condition  that  the  latter  enjoys  the right  to monitor  prices  negotiated  between 

producers  and traders and  can veto them; whereas in the same connection  producers  so desiring 

should be allowed to sell part of their produce through another producer group designated by their 

own group where products with special characteristics not necessarily covered by the commercial 

activities  of  the  latter  are  concerned; 

Whereas  each  producer  group  has  its  own  specific  characteristics  as  regards  conditions  of 

production  and marketing; whereas it is accordingly  in the best position to take a decision at any 

time  on  behalf  of  its  members  as to  what  steps  should  be  taken  quickly  to  adapt  production  to 

market  requirements;  whereas  this  latitude  presupposes  the  introduction  of  some  flexibility  as 

regards  budget  funds  and  management; 

Whereas,  to  that  end,  the  aid  must  be  paid  at  the  time  of the  harvest  concerned,  no  distinction 

being  made  between  groups  of  varieties;  whereas  this  implies  abandoning  the  method  of 

calculation  laid  down  in  Article  12(5)(a)  and  (b)  of  that  Regulation,  which  is  based  on 

declarations  by  the  Member  States;  whereas  it  should  be  replaced  by  flat-rate  aid  per  hectare 

calculated on the basis of historical averages; whereas, in the event of market disturbance, the aid 

6 

can be paid in respect of only part of the areas under hops; whereas it should also be possible in 

such cases to vary the aid; whereas the abovementioned paragraph and paragraph  6 of that Article 

should be  amended  and paragraph  7 deleted; 

Whereas producer  groups  should  be able to decide  whether  to pay the flat-rate aid  in  full,  after 

deducting 5%, to be withheld compulsorily for varietal conversion, to their members in proportion 

to area cultivated or only a percentage of between 80% and 95% thereof; whereas Article  7(1 )(e) 

of that Regulation relating to the administration of the aid scheme should accordingly be adapted; 

Whereas  producer  groups  should  be  able  to  withhold  up  to  20% of  the  aid  with  a  view  to  the 

aims  set  out  in  Article  7(1 )(a)  to  (d)  of that  Regulation,  mainly  or  exclusively  for  purposes  of 

varietal  conversion, where  there  is still  a need; 

Whereas,  where  producer  groups  do  not  market  all  the  produce  of  their  members,  the 

abovementioned option becomes an obligation; whereas it should be incorporated  in Article  12(5) 

of that  Regulation; 

Whereas, with a view to rationalization  and simplification,  payments should henceforth  be made 

once a year only and should cover both aid to producers and aid for  varietal conversion; whereas 

such payments should be made soon after  the harvest and in any case by 31 December of the year 

concerned;  whereas,  however,  that  date  has  already  passed  as  regards  the  1996  harvest  and  a 

suitable  solution  should  therefore  be  found;  whereas  Article  17  of  that  Regulation  should  be 

amended  to that  end; 

Whereas  provision  should  be  made  to  assess the  measures  introduced  and  their  impact  on  the 

economic  situation of the sector; whereas that obligation  should be incorporated  in Article  18 of 

that  Regulation, 

HAS  ADOPTED  THIS  REGULATION: 

Article 1 

Regulation  (EEC) No  1696/71  is hereby  amended  as  follows: 

Co 

1. 

In Article 7: 

(a) 

paragraph  1(d) is replaced by the  following: 

"(d)  deciding what varieties of hops may be grown by its members and adopting 

common rules on production;"; 

(b) 

paragraph  1(e) is replaced by the  following: 

"(e)  managing the aid system provided for in Article  11 by allocating the share 

of  the  aid to  each member of  the  group  in proportion  to  area cultivated, 

subject to the application of paragraph 5 of that Article."; 

(c) 

paragraph  la  is replaced by the  following: 

"la.  Producer groups may  use up to 20% of  the  aid for  measures  designed to 

attain the aims referred to in paragraph  1(a) to (d)."; 

(d) 

paragraph 3(b)  is replaced by the  following: 

"(b) 

include  an obligation  in their  statutes on producers who  are members  of 

groups and on recognized  producer groups which are members of unions 

to: 

- 

- 

comply with the common rules on production and decisions on the 

varieties to be grown, 

market all their produce through the group or the union. 

That  obligation  shall  not  apply,  however,  to  products  covered  by  sales 

contracts  concluded  by  producers  before  they joined  the  group,  provided 

that the  latter is informed  of and has approved  such contracts. 

However, where the producer group so authorizes and under the conditions 

it lays down, member producers may: 

f 

- 

replace the obligation  to have all their  production  marketed by the 

producer  group  with  marketing  in  accordance  with  common  rules 

incorporated  in  the  statutes to  ensure  that  the  producer  group  has 

the right to monitor selling prices, which it must approve, failure  to 

do  so requiring  the  group to take  over  the hops at a higher  price; 

- 

market, through the offices of another producer group designated by 

their  own  group,  products  which  by  virtue  of  their  characteristics 

are  not  necessarily  covered  by  the  commercial  activities  of  the 

latter." 

2. 

Article  9 is  repealed. 

3. 

Article  10 becomes  Article  9 and  so on. 

4. 

Article  10 is replaced  by the  following: 

"Article 9 

1. 

The Council, acting  in accordance  with the voting procedure laid down in Article 

43(2) of the Treaty  on a proposal  from  the Commission, shall adopt general  rules 

for  the  application  of  Article  8. 

2. 

Detailed rules for the application of Article 8 shall be adopted  in accordance with 

the procedure  provided  for  in Article 20." 

5. 

In Article  12: 

(a) 

paragraph  5 is replaced  by  the  following: 

"5. 

(a) 

The aid per hectare shall be the same for all groups of varieties. For 

five years from  the  1996 harvest,  it shall  amount  to  ECU 450/ha. 

(b)  Where  the  aid  is  granted  to  a  recognized  producer  group  in 

accordance  with  the  first  subparagraph  of  paragraph  3,  the  group 

t 

shall be able to decide whether to pay the full  aid, after deducting 

5%,  to  be  withheld  compulsorily  for  varietal  conversion,  to  its 

members  in  proportion  to  the  area  they  cultivate  or  only  a 

percentage of between 80% and 95% thereof, depending on whether 

there  are  still  applications  pending  for  varietal  conversion  or 

possibly other aims to be attained in accordance with Article  7(1 )(a) 

to (d). 

(c)  Where the aid is granted to a recognized producer group and where 

that body  does not market all  the produce of  its members,  it shall 

withhold 20% of the aid to producers to attain the aims referred to 

in point (b) above."; 

(b) 

paragraph 6 is replaced by the  following: 

"(6)  Where  the  report  referred  to  in  Article  1  shows  that  there  is  a  risk  of 

creating  structural  surpluses or disturbance  in  the  supply  structure  of the 

Community  hop market: 

(a) 

the aid may be granted solely  in respect of part of the area under 

hops  registered  for  the  year  in  question;  the  aid  may  also  be 

adjusted where the need arises; 

(b) 

those  areas under hops  which are in their first and/or second year 

of production may be declared ineligible  for aid."; 

(c) 

paragraph 7 is deleted. 

6. 

Article  12a is repealed. 

7. 

Article  16 is replaced by the following: 

"Article 15 

Except  where  otherwise  provided  for  in this  Regulation,  Articles  92,  93  and  94  of  the 

Treaty shall apply  to production of and trade in the products referred to in Article  1(1)." 

5 

8. 

Article  17 is replaced by the  following: 

"Article 16 

1. 

The Regulations on the financing of the common agricultural policy shall apply to 

the  market  in  the  products  referred  to  in  Article  1(1)  from  the  date  of 

implementation of the arrangements laid down herein. 

2. 

The  aid  granted  by  the  Member  States  pursuant  to  Article  8  shall  constitute  a 

common  measure  within  the  meaning  of  Article 2(1)  of  Regulation  (EEC) 
No  4256/882. It shall be covered by the annual expenditure forecasts referred to in 
Article  31(1)  of  Regulation (EEC) No 2328/913. 

Article  1(3) of Regulation (EEC) No 2328/91  shall apply to the aid covered by this 

paragraph. 

The  aid  shall  be  paid  in  accordance  with  Article  21  of  Regulation  (EEC) 
No 4253/884. 

3. 

The Member States shall pay the aid to the producers as soon as possible after the 

harvest and by no later than  15 October  1997 in respect of the  1996 harvest and, 

as  from  the  1997  harvest  on,  between  16 October  and  31  December  of  the 

marketing year in respect of which the aid is applied for. 

4 

The Commission shall adopt detailed rules for the application of this Article." 

Council  Regulation  (EEC)  No  4256/88  of  19  December  1988  laying  down  provisions  for 
implementing  Regulation  (EEC)  No  2052/88  as  regards  the  EAGGF  Guidance  Section 
(OJ No  L 374,  31.12.1988, p. 25).  Amended  by  Regulation  (EEC)  No  2085/93  (OJ  No  L 193, 
31.7.1993,  p. 44). 
Council Regulation (EEC) No 2328/91 of 15 July  1991 on improving the efficiency  of agricultural 
structures  (OJ  No  L  218,  6.8.1991,  p.  1).  Last  amended  by  Commission  Regulation  (EC) 
No  2387/95  (OJ  No  L 24,  12.10.1995, p. 50). 
Council  Regulation  (EEC)  No  4253/88  of  19  December  1988  laying  down  provisions  for 
implementing  Regulation  (EEC)  No  2052/88  as  regards  coordination  of  the  activities  of  the 
different  Structural  Funds between themselves and with the operations of the European Investment 
Bank and the other existing financial  instruments (OJ No L 374 ,31.12.1988, p.  1 ). Last amended 
by  Regulation  (EC) No  3193/94 (OJ  No  L 337, 24.12.1994, p.  11). 

.4© 

9. 

Article  18 is replaced  by the  following: 

"Article  17 

The  Member  States  and  the  Commission  shall  send  each  other  such  information  as  is 

necessary  for  the  implementation  of  this  Regulation.  The  procedure  for  forwarding, 

assessing  and  disseminating  such  information  shall  be  adopted  in  accordance  with  the 

procedure  laid  down  in Article 20. 

The  Commission shall  undertake to draw up an assessment of the sector  for  the Council 

on the basis of  that  information  before  1 September  2000." 

Article 2 

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

Journal of the European Communities. 

It  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 

M 

FINANCIAL  STATEMENT 

BUDGET HEADING: 181 

2. 

TITLE: 

Date: 20 December 1996 
APPROPRIATIONS: 
ECU  14.6 million 

Proposal for a Council Regulation amending Regulation (EEC) No  1696/71 on the common organization of the market in 
hops 

3. 

LEGAL BASIS: 

Articles 42 and 43 of the Treaty 

AIMS: 

To adapt the COM in hops, introducing a single flat-rate aid per hectare 

FINANCIAL  IMPLICATIONS 

5.0 

EXPENDITURE 
-  CHARGED TO THE EC BUDGET 
(REFUNDS/INTERVENTION) 

-  NATIONAL  AUTHORITIES 
-  OTHER 

5.1. 

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

-  NATIONAL 

5.0.1 
5.1.1 
5.2 

ESTIMATED EXPENDITURE 
ESTIMATED REVENUE 
METHOD OF CALCULATION: 

27 200 ha x ECU 450/ha = ECU  12.5 million 

PERIOD OF 
12MONTHS 

(ECU million) 

CURRENT 
FINANCIAL 
YEAR  (97) 
(ECU million) 

FOLLOWING 
FINANCIAL 
YEAR  (98) 
(ECU million) 

12.5 

12.5 

12.5 

1999 
12.5 

2000 
12.5 

2001 
12.5 

2002 
12.5 

6.0 

6.1 

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? 
WILL A SUPPLEMENTARY  BUDGET BE NECESSARY? 
WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

6.2 
6.3 
OBSERVATIONS: 

YES/NO 

YES/NO 

YES/NQ 
YES/NO 

41 

ISSN 0254-1475 

COM(97) 98 final 

DOCUMENTS 

EN 

03  02  01 

Catalogue  number  :  CB-CO-97-083-EN-C 

ISBN 92-78-16594-8 

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