Proposal for a Council Regulation (EC) amending Regulation (EEC) No 2262/84 laying down special measures in respect of olive oil
Date: 1997-10-17
Institutions: European Commission
Subjects: EU aid, EU financing, co-financing, financial control, olive oil

COMMISSION OF THE EUROPEAN COMMUNITIES 

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Brussels,  17.10.1997 
COM(97)  515  final 

97/0267  (CNS  ) 

Proposal for a 

COUNCIL REGULATION (EC) 

Amending Regulation (EEC) n° 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. 

2.  Council Regulation (EEC) No 2262/84, as last amended by Regulation (EC) No 533/97, 
provides  that  50%  of  the  actual  expenditure  of  the  agencies  is  to  be  covered  by  the 
general budget  of the  Communities up to the marketing year  1997/98 and that  before  1 
January  1998 the  Council,  in  accordance  with  Article  43(2)  of  the  Treaty  acting  on  a 
proposal from the Commission, is to decide on a method for financing  the expenditure in 
question from the  1998/99 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  1998 and  1999 financial years. 

In  view  of  the  fact  that  a  draft  reform  of  the  MO  for  olive  oil  is  currently  under 
examination,  before  1  October  1998 the  Commission will consider  the need  to  continue 
part-financing  the agencies after the  1998/99 marketing year. 

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(2) thereof, 

Having 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  , as  last 
amended  by  Regulation  (EC)  No 533/97  ,  the  Council,  acting  on  a  proposal  from  the 
Commission,  is to adopt before  1 January  1998 the method  for  financing  actual  expenditure 
of agencies as from the  1998/99 marketing year; 

Whereas  work customarily  entrusted to the agencies must be carried  out during the  1998/99 
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 

OJ  No  L  2 0 8,  3 . 8 . 1 9 8 4,  p.  12 
OJ  No  L  8 3,  2 5 . 3 . 1 9 9 7,  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 agencies  actual  expenditure for the  1998/99  marketing year shall be covered by 
the general budget of the European Communities. 

Before  1 October  1998,  the Commission  shall  consider  the  need  to  maintain the Community 
contribution to  the  agencies  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 1999 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 

H 

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 

B2-511 

3. 

LEGAL BASIS 

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

No 533/97. 

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  depends  on  the  type  of  the  reform  and  the  time  it  is  to  be 
introduced.  Before  1 October  1998 the  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 

r 

TYPE OF EXPENDITURE OR REVENUE 

Subsidy  for joint  financing  (50%) with other sources in the public 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). 

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 

Breakdown 

Budget year 
n(1998) 

n +  1 

n + 2 

n + 3 

n + 4 

n + 5 and 
subsequent 
years 

CA (ECU million at current prices) 

Part-financing  of  expenditure 
incurred by agencies 

Total 

12.1 

12.1 

7.3. 

Indicative schedule of commitment/pavment appropriations 

Budget year 
n(1998) 

n+ 1 

n + 2 

n + 3 

n + 4 

n + 5 and 
subsequent 
years 

CA (ECU million) 

Commitment appropriations 

12.1 

Payment appropriations 

Yearn (1998) 
n + 1  (1999) 
n + 2 
N + 3 
N + 4 
N + 5 and subsequent years 

3.1 

9.0 

Total 

3.1 

9.0 

Total 

12.1 

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  justilled  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  1998/99 marketing  year.  An 
assessment  of the  situation  will  be  made  during  1998 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 olive oil 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 1998/99 marketing year. 

ISSN 0254-1475 

COM(97) 515 final 

DOCUMENTS 

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02  03  13  17 

Catalogue  number  :  CB-C0-97-527-EN-C 

ISBN 92-78-25831-8 

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