Proposal for a Commission Regulation (EC) on the financing of the common agricultural policy
Date: 1998-03-18
Institutions: European Commission
Subjects: EAGGF, agricultural market, common agricultural policy, reform of the CAP, support policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  18.03.1998 
COM(1998)  158 final 

98/0107 (CNS) 
98/0108 (CNS) 
98/0109 (CNS) 
98/0110 (CNS) 
98/0111 (CNS) 
98/0102 (CNS) 
98/01 12 (CNS) 
98/0113 (CNS) 

Proposals  for 
COUNCIL REGULATIONS  (EC) 

concerning the reform  of the common agricultural policy 

(presented by the Commission) 

EXPLANATORY MEMORANDUM 
THE  FUTURE FOR EUROPEAN AGRICULTURE 

Since  its  inception,  the  common  agricultural  policy  has been  able to  adapt  and  grow  by 
mastering the challenges with which it has been faced  over the years: in the early days it 
concentrated  on  attaining  the  goals  set  out  in  Article 39  of  the  Treaty,  then  it  had  to 
control the surpluses which appeared in some sectors, mainly by introducing  quantitative 
restrictions,  and  finally  it  embarked  on  a  new  approach  based  on  a  combination  of 
lowering  institutional  prices  and  making  compensatory  payments.  This  was  the  1992 
reform  reviewed  in the document Agenda 2000. 

In Agenda 2000, the Commission explained why it believes that the moment has come to 
give a new impetus to the CAP by tackling a further  stage. 

The Commission  is now transmitting a set of proposals for  legislation to the Council and 
Parliament which translate the main lines contained in Agenda 2000 into legal texts. 

Before  analysing  the various parts  of the proposed  reforms,  the  Commission  would  like 
to explain the overall thinking which has guided these proposals. 

1. 

THE NEED  FOR REFORMING THE COMMON AGRICULTURAL POLICY 

The challenges facing  the CAP are first and foremost  internal  in nature. There are at 
least three of these. 

-  Agenda 2000  highlights  a  number  of  developments  on  our  main  agricultural 
markets which, in the long term, pose a major threat to Community agriculture. 

The  vast  majority  of  analyses  which  attempt  to  gauge  the  prospects  for  world 
markets  agree  in predicting  strong growth  in demand  and prices  offering  a good 
rate of return. 

It is also clear that the current level of prices in the Union is still too high for it to 
be  able  to  take  advantage  of  this  expansion  of  world  markets  given  the 
international  commitments  it has made. If this is not corrected, the  consequences 
are  easy  to  predict:  surpluses  will  appear  again  and  stocks  will  start  to  build  up 
and  create intolerable budget costs. The Union will  gradually  lose its position on 
both the world and internal market, not only in agricultural  commodities but also 
in  processed  products.  This  would  have  detrimental  effects  on  employment  as 
well. 

- 2-

This  analysis  has been presented  at the  Council  of agriculture  ministers  and  was 
scarcely  contested. 

The  CAP  has  had  a  number  of  negative  effects  which  have  only  been  very 
partially  corrected  by  the  1992  reform.  The  support  it  provides  is  distributed 
somewhat  unequally  and  is  concentrated  on  regions  and  producers  who  are  not 
among  the  most  disadvantaged.  This  is  having  negative  effects  on  regional 
development  planning  and  the  rural  community,  which  has  suffered  badly  from 
the  decline  in  agricultural  activity  in  many  regions.  At  the  same  time,  other 
regions  have  seen  the  development  of  excessively  intensive  farming  practices 
which  are having  often  a serious  impact  in terms of the environment  and  animal 
diseases. 

All  these  factors  combine  to  create  a bad  image  of the  CAP  in the  minds  of  the 
public.  An  agriculture  which  pollutes,  which  contributes  inadequately  to  spatial 
development  and  protection  of  the  environment,  and  which,  because  of  its 
undesirable practices, must take its share of responsibility  in the spread of animal 
diseases,  has  no  chance  of  long-term  survival  and  cannot  justify  what  it  is 
costing. 

Making  the CAP more acceptable  to the citizen  in the street, to the consumer,  is 
one of our primary tasks in the years ahead. 

Agriculture  in  the  fifteen  countries  of  the  Union  is highly  diverse  in  its  natural 
resources, its farming  methods, its competitiveness and income levels, and also in 
its  traditions.  This  diversity  is  one  of  the  strengths  of  European  agriculture, 
contributing  to  its  specific  character  and  quality.  But  to  make  best  use  of  this 
diversity, we have to relate it to how agricultural  policy  is devised  and  managed; 
the  current  way  the  CAP  operates  and  is  managed  was  designed  for  the 
Community  of six and has hardly been modified  since. It is not suited to a Union 
of fifteen which  is on the point of welcoming  in further  members. It gives rise to 
complexity,  bureaucracy  and, in the end, a lack of understanding  among  farmers 
about how it works. 

A  new,  more  decentralised  model  has therefore  to be  developed  which  gives  the 
Member  States the means of settling a number of issues for themselves by taking 
better  account  of  the  characteristics  of  a  given  sector  or  a  given  set  of  local 
conditions. 

But  such  a development  in this direction  needs to be carefully  controlled  so as to 
avoid any risk of distorting competition or renationalising the CAP. 

This  also  means  that  the  greater  freedom  granted  to  the  Member  States  must  be 
exercised  within  a framework  of  shared,  clear  and  precise  ground  rules,  using  a 
Community  financing  system and based on rigorous controls. 

Defining  and  safeguarding  this  new  balance  between  common  management  and 
increased  decentralisation  is  without  doubt  one  of  the  major  issues  facing  us  in 
the years to come. 

These  challenges  on  the  internal  scene,  which  are  easily  enough  on  their  own  to 
justify  reforming  the CAP, are reinforced  by two external  factors. 

-  The first is the future  expansion  of the Union, already  analysed  in Agenda 2000. 
Here  it  is  enough  to  add  that  enlargement  makes  the  measures  of  market 
management  and  simplification  which  have  to  be  taken  anyway  within  the 
present Union even more necessary 

-  The  second  factor  is the  international  trade negotiations  which  are  in the  offing, 
both  the  new round  of  agricultural  talks  under  the  WTO  and  the  negotiatipn  of 
various bilateral trade agreements. 

We  cannot  expect  that  these  negotiations  will  result  in  a  reversal  of  the  trend 
towards  greater  liberalisation  of  trade,  with  all  the  implications  this  has  for  the 
Community market. 

The  Union  has  to  prepare  its  agriculture  sector  for  these  negotiations.  This  has 
two vital  consequences: 

-  First, with this reform  the Union has to lay down the agricultural  policy that it 
intends carrying out in the years ahead in a way that satisfies  its own interests and 
takes  a realistic  view of developments  in the  international  context.  This  needs  to 
be  done  before  the  opening  of  the  WTO  negotiations  so  that  the  Union  can 
negotiate on a solid basis and knows where it wants to go. 

-  Secondly,  it must be made quite clear to all that the reform  to be adopted  will 
outline  the  limits  of  what  the  Union  is  able  to  agree  to  in  the  forthcoming 
international  negotiations. 

These  are  the reasons  why  the  CAP must  be reformed.  They  have  been  the  subject 
of  wide-ranging  debate  within  the  Council,  Parliament,  the  Economic  and  Social 
Committee  and  the  Committee  of the  Regions.  These  discussions  have  shown  that 
the arguments are largely understood and shared. 

The  European  Council  in  Luxembourg  confirmed  the  point  by  concluding,  in 
December  1997,  that  "The  process  of  reform  begun  in  1992  should  be  continued, 
deepened, adapted  and  completed". 

4-

2.  T HE MAIN LINES OF THE PROPOSED REFORMS 

Based  on  the  preceding  analysis,  the  Commission  has  defined  a  number  of 
guidelines on which the proposals for reforming the CAP are founded. 

Before  detailing  its proposals  in the second  part  of this Explanatory  Memorandum, 
the Commission would like first to explain these guidelines. 

2.1.  Continued  competitiveness  must  be  ensured  by  sufficiently  large  price  cuts 
that will guarantee growth of home-market outlets and increased  participation 
by Community agriculture in the world market. 

These price reductions should  be offset  by an increase in direct aid payments 
in order to safeguard  producers' incomes. 

2.2.  The  principle  that  there  should  be  a  new  division  of  functions  between 
Brussels and the Member States means developing a new approach on several 
very  important points. 

-  Compensation  in  the  form  of  direct  payments  to  producers  has  to  be 
in  a  different  way  compared  with  1992.  Some  of  the 
organised 
compensation  will  take  the  form  of  national  envelopes,  financed  entirely 
from  the  EAGGF  Guarantee  Section  and  distributed  according  to  the  size 
of  national  production.  Each  Member  State  will  be  able  to  allocate  this 
money  as  it  chooses,  provided  it  complies  with  a  number  of  Community 
criteria designed to prevent distortions of competition. Each Member  State 
will  be able to  strike the balance  it wants between  intensive and  extensive 
production. 

-  The new Regulation on rural development recasts all the rural development 
schemes  within  a  single  framework,  providing  Member  States  with  an 
opportunity  of  defining  their  priorities  themselves  and  making  their  own 
choices  among  the  schemes  contained  in  the  Regulation.  These  choices 
will be incorporated into an overall programming  frame. 

2.3.  This new decentralisation needs logically to be accompanied by a major  effort 
at simplifying  the rules. An example is the new rural development Regulation, 
which  does  away  with  a  large  number  of  complicated  regulations  which  are 
often  mutually not very consistent. 

The same approach  has been taken to the market-management  regulations, in 
particular the one on arable crops. 

2.4.  The Commission's  determination to give agricultural  policy a number of new 
tasks so that it can meet the expectations  of society  better  leads to a series of 
further  guidelines: 

-  Action  on the environment  is to be substantially  reinforced.  The  resources 
devoted  to agri-environmental  measures  are increased  and the aid  for  less-
favoured  areas is to be made  into an instrument  for  consolidating,  or  even 
expanding, cultivation methods requiring  low intermediate inputs. A  major 
effort  will be made to encourage truly extensive beef production  by  almost 
tripling  the  premium  for  this  type  of  livestock  farming.  Finally,  Member 
States will have to take detailed steps to ensure that environmental rules are 
complied with, including reducing or discontinuing direct payments. 

-  The  new  rural  development  Regulation,  for  the  first  time,  lays  the 
foundations  for  a comprehensive  and  consistent  rural  development  policy 
whose  task  will  be  to  supplement  market  management  by  ensuring  that 
agricultural  expenditure  is  devoted  more  than  in  the  past  to  spatial 
development and nature conservancy. 

-  Rural  development  will  thus  become  the  second  pillar  of  the  CAP.  This 
major  new  departure  is  to  be  backed  by  Community  funding  for  rural 
development  schemes  across  all  rural  areas  and  transferring  the  financing 
of  most  of the  expenditure  on this  from  the  EAGGF  Guidance  Section  to 
the Guarantee Section. 

2.5.  The Commission  is proposing an increase in milk quotas of 2%, with the idea 
of  signalling  two  clear  political  messages:  half  the  increase  will  go  to 
mountain  regions  and  half  to  new  entrants  to  farming,  who  need  to  be 
supported. 

2.6.  The  Commission  has also wanted to underscore  the  importance  it attaches  to 
Mediterranean  products  by  proposing  a reform  of the  market  organisation  in 
olive  oil  to  complement  the  proposal  already  presented  on  tobacco.  A 
proposal  for the wine sector will be. transmitted  to the Council and  Parliament 
by June 1998. 

2.7.  Lastly, it is vital  to deal with various  inequalities  and abuses which  seriously 

harm the image of the CAP. 

-  A ceiling is therefore  proposed, to operative degressively, on the amount of 
direct aid that a farm  can receive under the various support schemes linked 
to the market organisations. The Commission wants to avoid the reform  of 
the  CAP  becoming  a further  reason  for  handing  out  over-generous  public 
subsidies to agricultural holdings. 

-6 

Member  States will be given  a legal basis for  awarding direct  aids only  to 
farms  that  are  genuinely  engaged  in  farming.  This  should  end  the  abuses 
detected  since  1992  by  which  individuals  making  clever  use  of  legal 
loopholes  have  been  able  to  apply  for  CAP  aids  although  they  are  not 
farmers. 

The  Member  States  will  be  able  to  vary,  i.e.  downwards,  the  direct  aids 
awarded  to  holdings  in  line  with  criteria  to  be  defined  by  each  Member 
State relating to the amount of labour employed on a farm.  Money released 
in  this  way  is to  be  allocated  by  the  Member  State  to  agri-environmental 
schemes. 

3.  THE EUROPEAN MODEL OF AGRICULTURE. 

All  these  proposals  together  have  the  aim  of  giving  concrete  form  to  a  European 
model for agriculture in the years ahead. 
It is worth listing here what the main lines of this model should be: 

-  a competitive  agriculture  sector which can gradually  face  up to the world  market 
without  being  over-subsidised,  since  this  is  becoming  less  and  less  acceptable 
internationally; 

-  production  methods  which  are  sound  and  environmentally  friendly,  able  to 

supply quality products of the kind the public wants; 

-  diverse  forms  of agriculture,  rich  in tradition,  which  are not just  output-oriented 
but seek to maintain the visual amenity of our countrysides as well as vibrant and 
active rural communities, generating and maintaining  employment; 

-  a  simpler,  more  understandable  agricultural  policy  which  establishes  a  clear 
dividing  line between the decisions that have to be taken jointly  and those which 
should stay in the hands of the Member States; 

-  an  agricultural  policy  which  makes  clear  that  the  expenditure  it  involves  is 

justified  by the services which society at large expects farmers to provide. 

This  is not the  same model  as pursued  by our  major  competitors  elsewhere.  There 
are many differences  between ours and theirs. Seeking to be competitive  should  not 
be confused  with  blindly  following  the dictates  of a market  that  is far  from  perfect. 
The  European  model  is  designed  to  safeguard  the  earnings  of  farmers,  above  all 
keeping  them  stable,  using  the  machinery  of  the  market  organisations  and 
compensatory payments. 

For  centuries  Europe's  agriculture  has  performed  many  functions  in  the  economy 
and the environment and has played many roles in society and in caring for the land. 
That is why it is vital, as the Luxembourg European Council concluded in December 
1997,  that  multifunctional  agriculture  must  develop  throughout  Europe,  including 
those  regions  facing  particular  difficulties.  In connection  with  Agenda  2000  and  its 
implementation,  care  will  accordingly  need  to  be  taken  to  provide  proper 
compensation  for natural constraints and disadvantages. 

The  fundamental  difference  between  the  European  model  and  that  of  our  major 
competitors  lies in the multifunctional  nature of Europe's  agriculture  and the part  it 
plays  in  the  economy  and  the  environment,  in  society  and  in  preserving  the 
landscape, whence the need to maintain farming throughout Europe and to  safeguard 
farmers'  incomes. 

In any  case, it is wrong  to claim that there is another model  available.  Those who 
claim  it  is  possible  to  reconcile  the  two  models  outlined  above  are  prey  to  an 
illusion.  They  would  like  to  believe  that  there  is  a  future 
in  high  prices, 
protectionism  and  bureaucratic  steering  of  production.  But  that  way  lies  a  loss  of 
international  markets,  falling  home  consumption  and,  as  a  result,  declining 
production  in  Europe.  This  model,  if  it  can  be  called  that,  may  offer  short-term 
comfort  but means inevitable decline in the longer run. 

This is not in the interests of farmers  who want to have a future  and need to bank on 
future  growth.  Nor  is  it  what  consumers,  the  private  sector  or  the  taxpayer  want, 
since they are less and less inclined to pay for rising surpluses. 

EXPLANATORY  MEMORANDUM 

(TECHNICAL  PART) 

4. 

ARABLE  CROPS 

4.1.  The  Regulation  on  arable  crops  and  the  modification  of  the  cereal  CMO 
transpose  the  orientations  concerning  cereals,  oilseeds  and  protein  crops 
contained  in  Agenda  2000.  In  view  of  these  proposals  and  of  previous 
modifications  of  Regulation  (EEC)  No  1765/92,  it  appears  appropriate,  for 
reason of clarity, to replace the current Regulation on arable crops. 

4.2.  As  the role  of  intervention  will  no  longer  be to  guarantee  price  stability  at  a 
high  level, but rather to act as a safety  net for  farm  incomes, the  intervention 
price for cereals will be reduced by 20 % in one single step. 

4.3.  With 

the  diminishing  role  of 

intervention,  a  seasonal  correction  of 
intervention  prices will no longer be justified.  The monthly  increment  system 
will  therefore  be  abrogated,  without  changing  the  intervention  period.  The 
provisions  for  maize  and  sorghum,  export refunds  - in particular  for  "malt"  -
will  be adapted.  The minimum  price  for  starch  potatoes  will  be reduced  by 
20% and compensation  payments to starch potato producers will be  increased 
in  line  with  the  increase  of  area  payments  for  arable  crops  thus  maintaining 
the  calculation  base  in  the  1992  Reform.  Furthermore,  the  notion  of  quality 
type  will  become  obsolete,  as  the  intervention  price  will  refer  to  a  certain 
minimum  quality,  with  no  further  differentiation.  However,  stabilisation  of 
markets  will  continue  to  be  a  major  objective  of  the  Common  Market 
Organisation. Therefore, the instrument of export levies would be retained but 
under normal circumstances would not be required. 

4.4.  The  Regulation  on arable crops  increases the direct payment  for  cereals  from 
54  ECU/t  to  66  ECU/t  and  puts  direct  payments  for  oilseeds  and  non-textile 
linseed  at  the  same  level.  For  oilseeds, this  non-specific  payment  eliminates 
the  basic  condition  for  production  area  constraints  imposed  by  the  Blair 
House  agreement  and  enables  the  EU  to  abrogate  all  specific  oilseeds 
provisions. 

4.5.  To  ensure  the  relative  profitability  of  protein  crops  compared  to  the  other 
arable  crops,  they  will  receive  an  additional  direct  payment  of  6,5  ECU/t. 
Compared  to  the  current  situation  this  will  mean  a  reduction  in  the  direct 
payment  from  78,49  ECU/t  to  72,5  ECU/t.  The  specific  scheme  for  durum 
wheat, which was modified  in  1997, will be continued. 

4.6.  Compulsory  set-aside will  be retained  as an  instrument,  while  its normal  rate 
will  be fixed at zero, under expected  conditions. Voluntary  set-aside will  still 
be  allowed,  but  its  effectiveness  and  positive  impact  on  the  environment 
should  be further  improved. Thus it should be available at a minimum  level of 
10% of the arable area across the Community.  At or above this level  Member 
States may fix their own maximum percentage. Compensation per hectare will 
be at the same level as for cereals. This amount can be guaranteed  for a period 
up to 5 years in order to enhance the environmental impact of set-aside. 

4.7.  The payment  per hectare and the rate of set-aside may be modified  according 

to market developments. 

4.8.  The  draft  Regulation  on  arable  crops  does  not  exclude  silage  cereals  from 
direct  payments.  This  departure  from  Agenda  2000  will  mean  expensive 
control  mechanisms  are avoided  and  producer  flexibility  is maintained,  since 
the final use of maize (grain versus silage) may depend  on weather  conditions 
which  cannot  be  foreseen  when  applying  for  the  arable  crop  payment.  The 
retention  of  aid  for  silage  cereals  will  result  in  important  cost  savings 
compared  to  the  earlier  Agenda  2000  proposal,  for  many  producers  in  other 
sectors, notably the dairy and beef sectors. 

4.9.  Although  the essential  elements  of the  existing  regime,  in particular  the  base 
areas,  the régionalisation  scheme, the  link  to historic  yields  and the  set-aside 
provisions, are retained, major  simplifications  have been achieved. 

-  As no  Member  State  has  chosen  this  option,  the  application  of  individual 
base  areas will no longer be possible. If base areas are exceeded,  financial 
sanctions  will  still  apply,  while  extraordinary  set-aside  is  abolished.  The 
system  of  concentrating  sanctions  on  responsible  sub-areas  has  turned  out 
to be extremely complex and is discontinued. 

-  Under  the  régionalisation  scheme,  the  possibility  of  determining  specific 
base  areas for  maize  will  no  longer  apply. A specific  yield  may,  however, 
be  fixed  for  irrigated  crops.  Only  historic  areas  may  benefit  from  such 
specific  aid,  which  implies  the  determination  of  base  areas  for  irrigated 
land. Reference  yields for oilseeds will no longer be necessary, since direct 
payments will be based on cereals base areas. 

-  All provisions concerning the use of set-aside for environmental or  forestry 
purposes  have  become  obsolete.  Small  producers  will  continue  to  be 
exempt  from  obligatory  set-aside should the set-aside rate at some stage be 
other than zero. 

10 

4.10.  Practical  experience  with  the  implementation  of  the  1992  reform  has  led  to 

certain technical changes being proposed: 

-  postponement of the sowing date from  15 May to 31 May; 

-  postponement of the payment period from  autumn to spring (1 January - 31 

March); 

- 

reduction  of the number  of management  committees  to a single  committee 
competent for all arable crops covered by this Regulation. 

4.11.  The provisions  on trade with third  countries have not been altered,  except  for 
some  minor  adaptations  and a new proposal  to establish  general  Commission 
competence for the implementation of tariff quotas. 

5. 

BEEF  REGIME 

5.1.  The  proposal  for  a  new  Common  Market  Organisation  for  beef  and  veal 
intends replacing the intervention system by a private storage system, inspired 
by  that  applied  in the  pig  meat  sector.  The  scope  of  direct  payments  will  be 
extended  and  made  more  flexible  in  application.  For  reason  of  clarity,  it 
appears appropriate to replace Regulations (EEC) No 805/68 and No  1892/87. 

5.2.  Under the reform  proposal, the effective  market  support  level of 2 780 ECU/t 
will be reduced by 30 %. The current intervention price will be reduced in two 
annual  steps  of  10  %  and  on  1 July  2002  be  replaced  by  a  basic  price  for 
private storage, which will  introduce the third  10 % decrease  in support  level. 
The  basic  price  for  private  storage  will  be  set  at  1  950  ECU/t  which  is  the 
level  for  effective  market  support  foreseen  in  the  Agenda  2000  proposal. 
Private  storage  aid  may  be  granted  when  -  as  in  the  pig  meat  sector  -  the 
average  Community  market  price  is  less  than  103 % of the  basic  price.  This 
price  can  only  be  changed  by  the  Council  in  consultation  with  the  European 
Parliament (Art. 43 (2) of the Treaty). The legal provisions on the intervention 
scheme,  including  the  existing  private  storage provisions,  will  be  maintained 
for a transitional period, to allow for phasing-in. 

5.3.  To ensure a fair  standard  of living  for the farmers  concerned,  direct  payments 
will be increased for  male bovine animal  and suckler cows. Heifers  will  - to a 
certain  percentage  -  be  eligible  for  the  suckler  cow  premium.  A  new  direct 
payment  for dairy cows would be introduced. Flexibility and targeting will be 
increased  by  entitling  Member  States  to  allocate  part  of  the  direct  payment 
(national envelope) according to specific  priorities. 

11  -

5.4.  The  amount  of  direct  support  follows  the  Agenda  2000  proposal  but  will  be 
sub-divided into a Community-wide basic payment and an additional payment 
according  to national  provisions. However, the premium  for  bulls has to  take 
into account the benefits  of retaining the arable crop payment for silage maize. 
Direct  payments  for  bovine  animals  will  only  be  granted  for  those  animals, 
which are identified  and registered in accordance with EU legislation. 

5.5.  The  basic  special  premium  for  male  animals  will  be  increased  in  three  steps 
from  135 ECU up to 220 ECU for bulls and from  108.7 ECU up to  170 ECU 
for steers in the year 2002 and will be continued at this level in the subsequent 
calendar  years. Payments  will  be one-off  for  bulls and  twice  in  a lifetime  for 
steers. 

Regional  ceilings  for  the number  of premium  rights  for  male animals  will  be 
fixed. 

The  deseasonalisation  premium  for  steers  would  continue  as  at  present. 
However, to apply  this scheme  effectively,  it appears appropriate  to require a 
certain  level  of  relative  importance  of  steer  production  in  a  Member  State 
(60%). 

5.6.  The annual stickler cow premium will be increased from  144.9 ECU up to  180 
ECU  in  2002  and  will  continue  to  be  based  on  individual  ceilings.  A 
maximum 20 % of the suckler cow premium rights can be claimed for  heifers. 
This will help reduce the total  number of suckler cows, while maintaining  the 
current individual ceilings. 

In addition,  it is appropriate to introduce national  ceilings to cover all  suckler 
cow  premium  rights.  The  overall  number  of  premium  rights  would  therefore 
be  reduced  to the  level  of actual  use  in a certain  reference  period  (best  out  of 

1995  and  1996,  plus  3%).  Where  the  national  ceiling  would  require  a 
reduction of individual premium rights, Member States would have to comply 
with  certain  objective  criteria.  The  provisions  for  a  national  reserve  of 
premium rights have been  simplified. 

5.7.  The  beef  premium  granted  to  dairy  cows  will  be  determined  on  the  basis  of 
the dairy premium  units. Thus an excessive administrative  and control  burden 
will  be  avoided.  According  to  the  milk  yield,  a  certain  number  of  dairy 
premium  units could  be achieved  with  different  numbers  of cows.  Therefore, 
the  beef  premium  for  dairy  cows  has  been  adjusted  to  these  differences  at  a 
national  level.  The  beef  portion  will  in  consequence  be  higher  in  Member 
States with low milk yields (more cows per premium unit) and vice versa. The 
amounts to be paid per premium unit are fixed on an annual base in the annex. 

-12 

5.8.  The  total  number  of  animals  qualifying  for  the  special  premium  and  the 
suckler  cow  premium  will  be  limited  to  2  livestock  units  (LU)  per  hectare 
forage  area.  Producers  with  a  stocking  density  less  than  1.4 LU  per  hectare 
and  currently  practising  extensive  production  methods  (animal  grazing  on 
pasture land) may qualify  for an additional payment of  100 ECU per premium 
granted. 

5.9. 

In  addition  to  this  premia,  Member  States  will  allocate  additional  payments 
within  the  limits  of  fixed  global  amounts,  financed  by  the  EAGGF.  While 
permitted  extensive  flexibility,  Member  States  will  be  responsible  for  a non 
discriminatory  implementation.  Payments  should  be  allowed  per  animal 
and/or per hectare of permanent pasture. For pastureland, a maximum  amount 
per  hectare  should  be  approximately  equal  to  the  average  area  payment  for 
arable  crops. A set of specific  Community  criteria,  including  specific  density 
requirements,  are  considered  necessary  to  ensure  a  reasonable  level  of 
to  ensure 
production  control, 
compatibility  with  multilateral  commitments.  An  evaluation  of 
the 
distribution of Community funds  is envisaged after 4 years. 

to  avoid  discriminatory  effects,  and 

5.10.  The  amount  of  direct  payments  may  be adapted  in the  light  of  developments 

in production, productivity and the markets. 

5.11.  The  provisions  on  trade  with  third  countries  would  be  carried  over  from 
existing  legislation,  except  for  some  minor  amendments  concerning  in 
particular  an extension of Commission  competence  for the implementation  of 
tariff quotas. 

5.12.  The Regulation establishes a new legal basis for price reporting. 

6. 

DAIRY  REGIME 

6.1.  The  Regulation  establishes  a  new  Common  Market  Organisation  for  dairy 
products.  The  internal  market  provisions  would  continue  to  be  based  on 
intervention and public storage of butter and skimmed  milk powder as well as 
certain  aid  schemes  for  private  storage  and  particular  marketing  measures. 
The  proposed  Regulation  repeals  Regulations  (EEC)  No  804/68  (old  basic 
Regulation),  No  987/68,  No  1723/81,  No  2990/82,  and  No  1842/83  and 
777/87.  All  the essentials  of these  Regulations  have been  incorporated  in  the 
new CMO and will therefore  be commonly  based on articles 42 and 43 of the 
Treaty.  It  appears  appropriate,  for  reason  of  clarity,  to  replace  the  current 
Regulations. 

13 

6.2. 

In  the  dairy  sector,  competitiveness  should  be  increased  by  a  reduction  of 
internal prices. This will improve marketing possibilities on both  internal  and 
external  markets.  To  make  best  use  of  these  possibilities  the  Commission 
proposes  gradually  decreasing  in 4  equal  steps  intervention  prices  for  butter 
and skimmed milk powder by  15%. This proposed price decrease goes beyond 
the  Agenda  2000  proposal.  It  is justified  not  only  by  the  added  benefit  in 
terms  of  competitiveness  but  also,  in  comparison  to  the  Agenda  2000 
proposal, by the  fact  that  available  milk  quotas will be increased  and  also by 
the  fact  that  dairy  farmers  will  partially  benefit  from  the  retention  of  a  crop 
premium  for  silage cereals. Moreover,  most farmers  can be expected to  adapt 
to their new situation through cost saving measures. 

Intervention  prices  in the  dairy  sector,  as  in the  arable  and  beef  sectors,  will 
no  longer  be  subject  to  annual  price  fixing  but  will  be  fixed  for  the  whole 
period covered by Agenda 2000. It can be expected for the dairy sector as well 
as  for  the  other  sectors  that  internal  market  prices  will  stay  above  the 
intervention level. 

6.3.  The  conditions  for  intervention  remain  largely  unchanged,  except  for  butter 
where  intervention  will  be  explicitly  restricted  to  produce  originating  in  the 
Community. 

6.4.  Provisions  concerning  private  storage  aids and marketing  measures would  be 
adapted  to  existing  general  rules.  For  school  milk,  a  Community  aid  level 
(95% of the target price) and a maximum quantity per pupil (0.25 litre of milk 
equivalent)  have  been  fixed.  Provisions  for  butter  purchases  have  been 
specified. 

6.5.  The  amount  of  direct  support  per  producer  will  be  based  on  the  number  of 
premium  units.  This  number  will  be  determined  by  dividing  the  individual 
reference  quantity  by  the  average  milk  yield  in  the  Community.  In  order  to 
target support to producers rather than quota holders, temporarily  leased quota 
will be accounted to the producer who has leased it. 

6.6.  The  amount  of  direct  payment  per  premium  unit  follows  the  Agenda  2000 
proposal but will be sub-divided  into a basic payment common to all premium 
units  and an additional  payment  according  to national  provisions. The  global 
amounts available per Member State are fixed in an annex. 

The  basic  cow  premium  will  be  phased  in  gradually  by  four  equal  steps  in 
parallel  with  the  reduction  in  intervention  prices,  reaching  100  ECU  in  the 
calendar year 2003 and the subsequent years. 

The  additional  payments  follow  similar  common  rules  as  introduced  for  the 
beef  sector  (per  head  maximum,  area  payments,  maximum  per  hectare,  s. 
paragraph  5.9). 

- 1 4-

6.7.  The  provisions  on  trade  with  third  countries  will  be  carried  over  from 
previous  regulations,  except  for  some  minor  amendments  concerning  in 
particular  an  extension  of  Commission  competence  for  implementation  of 
tariff  quotas,  and  for  the  granting  of  export  refunds  on  imported  milk 
products. 

6.8.  Some  general  provisions  concerning  internal  trade  and  the  Milk  Marketing 
Board  have  become  obsolete  and  have  been  deleted.  Furthermore,  the 
Commission  should  be  empowered  to  facilitate  the  transition  and  to  resolve 
specific  practical problems. 

7. 

NEW  MILK  QUOTA REGULATION 

7.1.  Council  Regulation  (EEC) No 3950/92 of 28 December  1992, establishing  an 
additional  levy  in  the  milk  and  milk  products  sector  remains  necessary  in  a 
mid-term  perspective  in  order  to  maintain  a  reasonable  market  balance. 
However,  farmers  should  not  given  the  impression  that  the  present  schemes, 
with  its  intrinsic  rigidities,  can  last  forever.  It  is  therefore  only  proposed  to 
continue to apply the scheme for six further  consecutive years. 

7.2.  The effects  of the price support reduction  on internal consumption  and  export 
of milk and milk products justify  a 2% increase in the total reference  quantity 
for  milk  in the  Community  in  four  steps  following  the  respective  price  cuts. 
The  additional  reference  quantities  should  be  distributed  in  such  a way  as  to 
improve  the  situation  of  certain  categories  of  farmers  who  need  particular 
support.  It  is  therefore  appropriate  to  provide  that  Member  States  allocate 
these quantities  with priority to young  farmers  who intend to start  or  develop 
milk  production  and  to  producers  in  mountain  areas.  Precautions  should 
however  be  taken  to  prevent  the  said  distribution  criteria  from  being 
circumvented.  In  the  case  of  producers  in  mountain  areas,  these  measures 
should  be designed  in the  form  of ring-fencing  clauses  in order to nullify  the 
effects  of moving additional reference  quantities out of mountain areas during 
the first two twelve months periods following  their allocation. 

7.3.  The experience with the additional  levy scheme has shown that the transfer  of 
reference  quantities  through  legal  constructions  such  as  leases  which  do  not 
necessarily 
lead  to  a  permanent  allocation  of  the  reference  quantities 
concerned  to  the  transferee,  can  be  an  additional  cost  factor  for  milk 
production  hampering  the  improvement  of  production  structures.  In  order  to 
strengthen  the  reference  quantities'  character  as  a  means  of  regulating  the 
market  of milk  and milk products, it is appropriate  to provide that  in cases of 
non-permanent  transfers  a certain  part  of  the  relevant  reference  quantities  be 
returned  to  the  national  reserve  for  re-distribution  to  active  producers. 
Member  States should however have the possibility  to exempt certain  specific 
categories  of  persons  or  cases  from  the  application  of  this  syphoning-off 
measure,  in  the  light  of  an  evaluation  of  the  interests  involved  and  the 
objectives  pursued  by  the  said  clause.  The  percentages  applied  should  be 

- 1 5-

determined  by  Member  States  in  the  light  of  their  specific  situation. 
Moreover, where reference quantities fall back to persons who did not actively 
produce  milk  or  milk  products  during  a  given  reference  period,  Member 
States  should  have  the  possibility  to  provide  that  the  relevant  reference 
quantities  should  revert  to  the  national  reserve  unless  they  are  permanently 
transferred  to  an  active  producer  within  a  certain  period.  However,  persons 
who  resume  milk  production  within  a  certain  period  should  have  the 
possibility  to  apply  for  a  re-allocation  of  reference  quantities,  similarly  to 
Article 5 second subparagraph of Regulation (EEC) No 3950/92. 

8. 

RURAL  DEVELOPMENT 

8.1. 

In transposing  the orientations  set out  in the Agenda 2000 document  on  rural 
policy,  agri-environmental  policy  and  on  economic  and  social  cohesion,  the 
new  Regulation  on  Community  Support  for  Rural  Development  by  the 
EAGGF  establishes  an  effective  instrument  to  accompany  and  complement 
the  proposed  reforms  in  market  and  price  policy.  The  new  Regulation  will 
replace 
the  EAGGF  Structural  Funds  Regulation,  four  Objective  5a 
regulations,  the  three  accompanying  measures  regulations  and  the  regulation 
on structural  forestry  support. Their fusion  under a single legal framework  for 
rural  development  support  will  constitute  a  significant  contribution  to  the 
simplification  of Community legislation. The scope of the new regulation may 
be  extended  to  a  new  Community  Initiative  on  rural  development  by  the 
Commission. 

8.2.  Rural  development  measures  concern  in  particular  support  for  structural 
adjustment  of  the  farming  sector  (investment  in  agricultural  holdings, 
establishment  of  young  farmers,  training,  early  retirement),  support  for 
farming  in less favoured  areas, remuneration  for agri-environmental  activities, 
support for investments in processing and marketing facilities, for forestry  and 
for  measures  promoting  the  adaptation  of  rural  areas  insofar  as  these  are 
related to farming activities and to their conversion. 

Following a request of the European Parliament concerning a European Forest 
Strategy,  forestry  measures  have  been  extended  in  the  rural  development 
framework.  Furthermore,  measures  in  favour  of  producer  organisations  have 
been reassigned from rural development to market policy. 

8.3.  Eligibility  criteria  for  the  different  measures  are  inspired  by  current 

legislation. There are, however, some important new elements: 

-  Only certain basic eligibility  criteria will be laid down, for  most measures, 
in  the  Council  framework  Regulation.  This  radical  simplification  will 
allow  for  greater  flexibility  and  subsidiarity.  Details  will  be  decided  at 
programming level, rather than by overloading the Council Regulation. If a 
particular  need  arises  for  further  Community  legislation,  this  can  be 
enacted at Commission implementing level. 

- 1 6-

-  Current  eligibility  criteria  for  support  in  Less  Favoured  Areas  will  be 
modified  in  order  better  to  integrate  environmental  goals  into  rural 
development policy; the LFA scheme will gradually be transformed  into an 
instalment  to  maintain  and  promote  low-input  farming  systems.  In 
addition,  targeted  agri-environmental  measures  will  be  aimed  more 
specifically  at  achieving  the  objectives  of protecting  the  environment  and 
maintaining the countryside. 

-  Coherence  between  rural  development  measures  and  other  instruments  of 
the  Common  Agricultural  Policy  or  other  Community  policies  will  be 
ensured  by  specific  rules,  which  will  ensure  that  overlapping  between 
instruments  is  avoided.  On  this  line,  training  measures  financed  by 
EAGGF  under  this  regulation  should  have  a  sufficient 
link  to  rural 
development  in  order  to  exclude  financing  of  activities  supported  by  the 
Social Fund. Maximum amounts for some measures will prevent any abuse 
of  rural  development  support,  such  as  unjustified  additional  market 
support. 

8.4.  Administrative  and financial provisions of the Rural Development  Regulation 
reflect  the  Agenda  2000  proposals  that  Community  support  for  rural 
development  measures 

- 

- 

is programmed  under  the  Structural  Funds  in those  regions  qualifying  for 
Objective  1  and Objective 2 support, 

is financed  from  the "Guidance" or the "Guarantee" section of the EAGGF 
according to the measure and the region. 

8.5.  Two groups of rural development measures have therefore been  distinguished: 

- 

the  1992  accompanying  measures  (agri-environment,  afforestation,  early 
retirement) complemented by the Less Favoured Areas Scheme, 

-  measures  concerning  modernisation  and  diversification  (investment  in 
agricultural  holdings, establishment  of young farmers, training, support  for 
investments  in  processing  and  marketing  facilities,  additional  support  for 
forestry  and  measures  promoting  the  adaptation  and  reconversion  of 
agriculture in the context of rural development). 

8.6.  The  1992 accompanying  measures  including the LFA scheme will be applied 
horizontally  in  all  regions  of  the  Community.  The  EU  will  co-finance  these 
measures through the EAGGF Guarantee Section. 

8.7.  Measures  concerning  modernisation  and  diversification  follow  a  different 
approach  according  to their  regional  context.  In  Objective  1 and  Objective  2 
regions, they will be included in the regional programmes and so contribute to 
specific targets set under the Economic and Social Cohesion Policy. For these 
purposes,  the  Rural  Development  Regulation  is  equally  part  of  the  overall 

17-

legal  framework  for  Structural  Funds,  referring  in  particular  to  the  General 
Structural Funds Regulation (Com. proposal...). 

In  Objective  1  regions,  the  measures  concerning  modernisation  and 
diversification  will  be  financed  under  the  EAGGF  "Guidance"  section  while 
in  Objective  2  regions  and  in  all  other  regions  they  would  fall  under  the 
EAGGF "Guarantee" section. 

For Objective  2 regions the General  Structural  Funds Regulation  will  provide 
the  legal framework.  However,  financing  by the EAGGF "Guarantee" section 
would  inevitably  require  some  limited  derogations  from  the  Structural  Funds 
Regulation.  Such  derogations  are  in  most  cases  justified  by  the  fact  that 
similar  rules  already  exist  for  the  "Guarantee"  section  or  may  be  adopted 
under  Commission  powers.  None  of  these  derogations  calls  Objective  2 
programming into question. 

8.8.  Outside  Objective  1  and  Objective  2  areas,  rural  development  measures 
concerning  modernisation  and  diversification  will  be  applied  horizontally 
the  same  administrative  and  financial  provisions  as  the  1992 
under 
accompanying  measures  and  the  LFA  scheme.  All  these  measures  will  be 
implemented  in a decentralised way at the appropriate level, at the initiative of 
the  Member  States.  The  draft  Regulation  establishes  rules  for  multiannual 
Rural  Development  Programming,  including  monitoring  and  evaluation. 
These  rules  are as close  as possible to those  for  the  Structural  Funds  or  even 
refer to them in some cases. 

8.9.  State  aid  rules  (Art.  42  of  the  Treaty)  clarify  conditions  and  procedures  for 

state aids in the field of rural development  support. 

18 

9. 

FÏNANCING  RÉGULATION 

9.1.  Taking  into  account  the  reorganisation  of  rural  development  policy  a  new 
financing  Regulation  on  the  EAAGF  will  replace  Regulation  (EEC)  No 
729/70  on  the  financing  of  the  Common  Agricultural  Policy  rather  than 
pursuing  the  codification  procedure.  The  new  Regulation  will  consolidate 
former  legislation and thus contribute to  simplification. 

9.2.  Rural  development  measures  would  in  future  be  financed  by  either  the 
Guarantee  Section  or  the  Guidance  Section  of  EAGGF  according  to  the 
regional  context.  Rural  development  measures  covered  by  Objective  1 
programmes and the rural development Community Initiative will be financed 
by  the  Guidance  Section  of  EAGGF.  Other  rural  development  measures  will 
fall  under the Guarantee  Section of EAGGF. These will be the  accompanying 
measures  and  the  LFA  scheme  in  all  rural  areas  as  well  as  measures 
concerning  modernisation  and  diversification  covered  by  Objective  2 
programmes  and  by  rural  development  programmes  outside  Objective  1 or 2 
regions. In this concept  some  specific  financial  rules would  be  introduced,  in 
particular,  the  possibility  of  advanced  payment  for  rural  development 
programmes. 

9.3.  Moreover,  it will  be  clarified  that the EAGGF  Guarantee  Section  would  also 
finance  specific  veterinary  and  plant  health  measures  as  well  as  information 
on the Common Agricultural Policy. 

10.  HORIZONTAL REGULATION AND OTHER HORIZONTAL  QUESTIONS 

10.1.  The Commission proposes to deal with certain issues concerning  all  Common 
Market  Organisations  providing  direct  payments  in  a  horizontal  Regulation 
which will contain the following rules: 

10.2.  Cross compliance:  With respect to integrating  better the environment  into the 
CAP,  Member  States  should  apply  appropriate  environmental  measures 
concerning  the  particular  market  support  schemes. They  will  also  be  enabled 
to  decide  on  appropriate  and  proportional  penalties  for  environmental 
infringements  and be authorised to reduce or to annul direct payments. 

10.3.  Modulation:  The  distribution  of direct  payments  among  farmers  might  cause 
specific  problems  within  certain  Member  States  which  call  for  a  subsidiarity 
approach.  However,  agricultural  income  including  direct  payments  has 
important employment  impacts in rural areas. Member  States would  therefore 
be  authorised  to  modulate  direct  payment  per  farm  within  certain  limits  and 
relative to employment on the farm. 

- 19 

10.4.  Funds  made  available  from  aid  reducing  -  either  under  cross-compliance  or 
under modulation - would remain available for the respective Member State as 
an additional Community  support for agri-environmental  measures. 

10.5.  Ceilings:  To  avoid  excessive  transfers  of  public  funds  to  individual  farmers, 
the  Commission  proposes  to  introduce  a  degressive  overall  ceiling  to  direct 
in 
payments.  A  degressive  formula  takes  into  account  the  differences 
adaptation opportunities according to production capacities. 

10.6.  The  changes  in the  different  market  organisations  will  require  an adaption  of 
the  Integrated  Management  and  Control  System  (Regulation  (EEC)  No 
3508/92. In due course, the Commission will make a proposal. 

10.7.  The  various  changes  which  are  proposed  for  the  support  scheme  for  arable 
crops,  the  common  market  organisations  for  beef  and  veal  and  for  milk  and 
milk products as well as for the system of CAP financing  would require  major 
and complex amendments to the relevant  Council  Regulations. For reasons of 
transparency  and  legislative  clarity  it  is  appropriate  to  repeal  these  said  acts 
and to replace them by new consolidated  Regulations. 

As  regards  Regulations  (EEC)  No  804/68  (milk  and  milk  products),  No 
805/68  (beef  and  veal)  and  No  1765/92  (arable  crops),  the  Commission  has 
started  the  special  consolidation  procedure.  So  far,  two  consolidation 
proposals have already been presented to the Council: 

-  COM(94) 467 final of 3.11.1995 for the CMO for beef and veal and 

-  COM (95) 598 final of 6.12.1995  for the CMO for milk and milk products. 

As  a consequence  of  the  respective  proposals  presented  under  Agenda  2000, 
both proposals will become obsolete. They will be formally  withdrawn. 

11.  PRE-ACCESSION  REGULATION 

11.1.  The  Luxembourg  Council  agreed  on  a  substantial  increase  in  pre-accession 
aid  to  complement  the  PHARE  programme,  Structural  Funds  support  and 
support  for  agriculture  and  rural  development  in  the  applicant  countries  of 
Central and Eastern Europe. 

-20 

11.2.  In accordance with the orientations of Agenda 20001 and with the conclusions 
of  the  European  Council  in  Luxembourg,  financial  aid  provided  for  by  the 
structural and agricultural pre-accession  instruments will be granted to Central 
and  Eastern  European  applicant  countries.  This is reflected  in article  1 of the 
present regulation, which lists the ten countries concerned. 

11.3.  Cyprus,  as  set  out  in  the  Luxembourg  conclusions  (§  22),  benefits  from  a 
specific  pre-accession  strategy  which  corresponds  with  its  present  economic 
situation. 

11.4.  In  the  light  of  future  progress  towards  a  political  solution  to  the  Cyprus 
problem  currently  being pursued under the aegis of the United Nations and in 
order to take account  of the economic  situation  then  prevailing  on the  island, 
it may  become  appropriate,  as accession  negotiations  proceed  on the basis  of 
the  Luxembourg  conclusions  (§ 28),  to  also  include  Cyprus  in  the  list  of 
beneficiary  countries. 

11.5.  In many  of the  applicant  countries, agriculture  still  represents  a major  source 
of  employment.  In  general,  the  institutional  process  of  privatisation  and 
transformation  in  the  agricultural  sector  still  has  to  be  completed  and  farm 
to  evolve.  Community  pre-accession  aid  for 
structures  will  continue 
agriculture  and  rural  development  has to be decided  in view  of the  particular 
need for adaptation to a rather complex Community "acquis" in this sector. 

11.6.  The  framework  for  Community  pre-accession  aid  is provided  by a  horizontal 
co-ordination  Regulation.  The  Regulation  concerning  pre-accession  measures 
for  agriculture and rural development  has been drafted  in accordance with the 
horizontal  framework.  Article 235 of the Treaty  is the relevant  legal  basis  for 
these indispensable Community measures. 

11.7.  Concentrating  on  priority  needs  for  agriculture  and  rural  development,  pre-
accession measures concern  in particular  support for  improving  the  efficiency 
of  farms  (including  producer  groups), processing  and  distribution,  promotion 
of  quality  products,  veterinary  and  phytosanitary  control,  improving  land 
its  reparcelling  and  registration,  water  resource  management, 
quality, 
vocational  training,  diversification  of  economic  activities  in rural  areas, agri-
environmental  and forestry  measures, improvement  of rural  infrastructure  and 
rural  villages, including the maintenance  of rural heritage as well  as technical 
assistance. The list can be extended if additional priority needs should emerge. 

see  part  II (the Challenge  of  Enlargement), section  III (a strategy  for  enlargement)  part 2  (reinforcing 
the pre-acceession  strategy) and section  IV (Cyprus) 

21 

11.8.  Community  support  will  be  implemented  in  the  form  of  multiannual 
programmes,  following  the  guidelines  and  principles  for  operational 
programmes under the EU Structural Policy. These comprise in particular the 
principles  of  complementarity,  partnership,  additionality,  the  programming 
procedure,  monitoring  and  evaluation.  Compatibility  with  the  accession 
partnership and the national programme for the adoption of the "aquis" must 
be ensured. 

11.9.  According to the Agenda 2000 proposal, the annual resources available to the 
EAGGF "Guarantee" section are equal to 500 MECU at constant  1997 prices. 
This money will be allocated to the applicant countries according to objective 
criteria.  Upon  accession  to the  EU,  a country  will  lose  its  entitlement  under 
this Regulation. 

-22 

Proposal for a 

.o 

1^ 

/ w nm 

98/0107  (CNS) 

Council Regulation (EC) No 

of... 

amending Regulation (EEC) No 1766/92 on the common organisation of the 
market of cereals and repealing Regulation (EEC) No 2731/75 fixing standard 
qualities for common wheat, rye, barley, maize and durum wheat 

THE COUNCIL OF THE EUROPEAN UNION 

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

Article 43 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

Whereas  after  the  1992  reform  of  the  common  agricultural  policy,  there  has  been  a 

particular improvement in market balances; 

Whereas  set-aside  under  the  support  system  for  producers  of  certain  arable  crops 

introduced in 1992 in addition to a lowering of the intervention price, has helped to keep 

production under control, while increased price competitiveness has allowed  significant 

additional cereals quantities to be used on the domestic market, mainly for animal  feed; 

1  OJ C... 
2  OJC... 
3  OJC... 

23 

Whereas, subject to increases of area payments under the arable crops support system as 
laid down in Council Regulation (EC) No ...4, to reinforce the effect  of the 1992 reform, 

price competitiveness  should be strengthened by a  further  cut in the intervention price, 

bringing it down at one step to a safety-net level; 

Whereas intervention should no longer be a major factor on the internal market; whereas 

in the light of this new role of intervention, the system of monthly increments should be 

discontinued; 

Whereas the provisions  of standard  quality have no longer any practical  relevance and 

should, therefore, be withdrawn; 

Whereas since the non cereal starch price and compensation  arrangements have always 

been governed by the common organisation of the market in cereals, the adjustment  of 

those arrangements should follow the measures taken for cereals; that the minimum price 

for potatoes intended for the manufacture of potato starch and the payments for producers 

of such potatoes should, therefore, be adapted in line with the price reduction for cereals; 

Whereas  tariff  quotas  resulting  from  agreements  concluded  in  accordance  with 

Article 228  of the  Treaty  or  from  any  other  act  of the  Council  should  be opened  and 

administered by the Commission on the basis of detailed rules; 

Whereas,  taking  into  account  the  influence  of  the  world  market  price  on  the  internal 

price, the conditions for  application, by the Commission, of the necessary  measures to 

stabilise the internal market should be clarified, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EEC) No 1766/92 is hereby amended as follows 

1.  Article 1 paragraph 2 shall be replaced by the following text: 

OJL... 

24 

"2.  This  Regulation  shall  apply  notwithstanding  the  measures  provided  for  by 

Regulation (EC) No ... on support for arable farmers." 

2.  Article 3 shall be replaced by the following: 

"Article 3 

1.  An  intervention  price  for  cereals  subject  to  intervention  shall  be  fixed  at 

ECLL2125 per tonne. 

2. The intervention price shall refer to the wholesale stage for goods delivered to the 

warehouse,  before  unloading.  It  shall  be  valid  for  all  Community  intervention 

centres designated for each cereal. 

3.  The prices fixed  in this Regulation may be changed in the light of developments 

in  production  and  the  markets  in  accordance  with  the  procedure  laid  down  in 

Article 43 (2) of the Treaty." 

3.  Article 8 shall be replaced by the following: 

"Article 8 

1. A minimum price for potatoes intended for the manufacture of potato starch shall 

be set at ECU 167.82. 

This  price  applies  to  the  quantity  of  potatoes,  delivered  to  the  factory,  which  is 

needed for making one tonne of starch. 

2.  A  system  of payments  is  established  for producers  of potatoes  intended  for the 

manufacture of potato starch. The amount of the payment applies to the quantity of 

potatoes needed for making one tonne of starch. It shall be set at ECU 105.60. 

25 

The payment shall be paid only  in respect of the quantity of potatoes covered by a 

cultivation contract between the potato producer and the starch manufacturer within 

the limit of the quota allocated to such undertaking, as referred to in Article 2 (2) of 

Council Regulation (EC) No  1868/945 

3.  The  minimum  price  and the  payment  shall  be  adjusted  according  to  the  starch 

content of the potatoes. 

4.  If the situation on the potato starch market makes it necessary, the Council  shall 

adopt  the  appropriate  measures  in  accordance  with  the  procedure  laid  down  in 

Article 43 (2) of the Treaty. 

5. The Commission shall adopt the detailed rules for applying this Article  following 

the procedure laid down in Article 23." 

4.  Article  12 paragraph 1 shall be replaced by the following text: 

"1.  Tariff  quotas  for  the  products  listed  in  Article  1  resulting  from  agreements 

concluded in accordance with Article 228 of the Treaty or from any other act of the 

Council pursuant to the Treaty shall be opened and administered in accordance with 

detailed rules adopted under the procedure laid down in Article 23." 

5.  Article  13 paragraph 8 shall be replaced by the following text: 

"8. A corrective amount may be fixed in accordance with the procedure laid down in 

Article  23.  However,  the  Commission  may,  where  necessary,  alter  corrective 

amounts. 

The  first  subparagraph  may  be  applied,  in  whole  or  in part,  to  products  listed  in 

Article  1(1 )(c) and (d) and to products listed in Article  1  and exported in the form of 

goods listed in Annex B." 

6.  Article  16 shall be replaced by the following: 

5  Council Regulation of 27 July  1994 establishing a quota system in relation to the production of potato 
starch,  OJ  L  197  of  30.7.1994,  p.  4,  as  last  amended  by  Council  Regulation  (EC)  No  1863/95, 
OJ L 179 of 29.7.1995, p. 1, corrected by OJ L 83 of 2.4.1995, p. 20 and OJ L 39 of 8.2.1997, p. 23.. 

26 

"Article 16 

1.  Where  the  quotations  or  prices  on  the  world  market  for  one  or  more  of  the 

products listed in Article  1 reach a level which disrupts or threatens to disrupt the 

availability of supply on the Community market, and where that situation is likely to 

continue and to deteriorate, appropriate measures may be taken. 

2. Detailed rules for the application  of this Article shall be adopted  in accordance 

with the procedure laid down in Article 23." 

Article 2 

Council Regulation (EEC) No 2731/75 of 29 October  1975 fixing standard qualities for 
common wheat, rye, barley, maize and durum wheat6 shall hereby be repealed. 

Article 3 

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

Official  Journal of the European Communities. 

This Regulation shall apply from the 2000/2001 marketing year onwards. 

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

States. 

Done at 

For the Council 

6  OJ L 281 of 1.11.1975, p. 22, as last amended by Council Regulation (EC) No 2594/97, OJ L 352 of 

23.12.1997, p. 10. 

27 

Proposal for a 

Council Regulation (EC) No 

98/0108 (CNS) 

of... 

establishing a support system for producers of certain arable crops 

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 Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

Whereas  the  common  agricultural  policy  aims  to  attain  the  objectives  referred  to  in 

Article 39 of the Treaty, taking account of the market situation; 

Whereas,  in  order  to  ensure  better  market  balance,  a  new  scheme  of  support  was 

introduced  by  Council  Regulation  (EEC) No  1765/92  of  30  June  1992  establishing  a 
support system for producers of certain arable crops4; 

Whereas,  after  the  1992  reform  of  the  common  agricultural  policy,  there  has  been  a 

particular improvement of market balances; 

Whereas  set-aside  under  the  support  system  for  producers  of  certain  arable  crops, 

introduced in 1992 in addition to a lowering of the intervention price, has helped to keep 

production under control, while increased price competitiveness has allowed  significant 

additional cereals quantities to be used on the domestic market, mainly for animal feed; 

1  OJC... 
2  OJ C... 
3  OJC... 
4  OJ  L  181  of  1.7.1992,  p.  12,  as  last  amended  by  Regulation  (EC)  No  2309/97,  OJ  L  321  of 

22.11.1997, p. 3. 

28 

Whereas the support on the basis of the scheme introduced in 1992 should be continued, 

taking into account, however, market developments and experience acquired in applying 

the current scheme; 

Whereas  the  reform  of  the  support  scheme  has  to  take  into  account  the  international 

obligations of the Community; 

Whereas the best way to achieve market balance is to approximate the Community prices 

of  cereals  to  the  prices  on the  world  market  and to  provide  for  non-crop  specific  area 

payments; 

Whereas  area  payments  should  be  revised  if  the  market  conditions  differ  from  those 

currently foreseen; 

Whereas the area eligible should be restricted to the area down to arable crops or publicly 

funded set aside in the past; 

Whereas, when the sum of the areas for which payment is claimed under the scheme is in 

excess of the base area, a reduction of the eligible area per farm should be provided for in 

order to ensure market balance; 

Whereas area payments should reflect the specific  structural characteristics that influence 

yield; whereas the drawing up of a régionalisation plan based on objective criteria should 

be  left  to the Member  States; whereas uniform  average yields  should  be established  by 

the  régionalisation  plans;  whereas  these  plans  should  be  consistent  with  the  average 

yields  of  each  region  achieved  in  a  given  period,  taking  into  account  any  structural 

differences between production regions; whereas a specific procedure should be provided 

in order to examine these plans at Community level; 

Whereas differentiation  of yields may be permitted for irrigated and non-irrigated areas 

provided  that  a  separate  base  area  for  irrigated  crops  is  established  and  there  is  no 

extension of the total base area; 

Whereas,  in  order to  calculate  the  area payment,  a basic  amount  per  tonne  should  be 

multiplied by the average cereals yield determined for the region concerned; 

29 

Whereas  a  single  area  payment  should  be  fixed  for  arable  crops;  whereas  the  basic 

amounts  per tonne  should  be increased taking  into  account the reduction  in the  cereals 

intervention  price;  whereas  crop  specific  payments  for  oilseeds  and  linseed  should  be 

abolished;  whereas  a  specific  aid  should  be  established  for  protein  crops  in  order  to 

preserve their competitiveness with cereals; 

Whereas  a  special  scheme  for  durum  wheat  should  be  established  to  ensure  a  durum 

wheat  production  level  which  is  sufficient  to  supply  user  industries  while  keeping 

budgetary  expenditure  in  check;  whereas  that  objective  should  be  achieved  by 

introducing a supplement limited, for each Member State concerned, to a maximum area 

of durum wheat; whereas any overshoot of those areas should lead to an adjustment to the 

applications submitted; 

Whereas,  moreover,  in  some  Member  States,  the  production  of  durum  wheat  is  well 

established  in  regions  outside  traditional  zones;  whereas  it  is  desirable  to  safeguard  a 

certain level of production in those regions by the grant of special aid; 

Whereas,  in  order  to  benefit  from  the  area  payments,  producers  should  set  aside  a 

predetermined percentage of their arable area; whereas the land set aside should be cared 

for so as to meet certain minimum environmental  standards; whereas the areas set aside 

should also be eligible for use for non-food purposes, provided effective  control  systems 

can be applied; 

Whereas in the current market situation, the set-aside requirement should be fixed at 0%; 

whereas this percentage should be re-examined to take account of production and market 

developments; 

Whereas  the  set-aside  obligation  should  be  subject  to  due  compensation;  whereas  the 

compensation  should  be  equivalent  to  the  area  payments  for  arable  crops  other  than 

protein crops; 

Whereas  no  set-aside  requirement  should  be  imposed  for  small  producers  whose  claim 

for area payments is below a certain level; whereas this level should be  fixed; 

Whereas for voluntary set-aside, basic conditions should be fixed at Community level; 

30 

Whereas  area payments  should be paid once  a year for a given area; whereas areas not 

cultivated  immediately  before  the  entry  into  force  of  the  scheme  established  by 

Regulation  (EEC)  No  1765/92  should  not  be  eligible  for  payment;  whereas  to  take 

account  of  certain  specific  situations  where  this  provision  is  unduly  restrictive  certain 

derogations should be permitted, to be managed by the Member States; 

Whereas  it  is necessary  to  determine  certain conditions  for  applying  for  area payments 

and to specify when producers should be paid; 

Whereas payment dates should be fixed in order to ensure an even distribution of arable 

crops sales during the marketing year; 

Whereas sowing dates should be adapted to natural conditions in the different production 

areas; 

Whereas expenditure incurred by the Member States as a result of the obligations arising 

out  of  the  application  of  this  Regulation  should  be  financed  by  the  Community  in 

accordance with Articles  1 and 2 of Council  Regulation (EC) No  ... on the financing of 

the common agricultural policy5; 

Whereas  it  is  necessary  to  provide  for  transitional  measures  and  to  enable  the 

Commission to adopt, if necessary, additional transitional measures; 

Whereas the adaptations to the arable crops support system should be introduced as  from 

the marketing year 2000/2001 ; 

Whereas, in view of the present adaptations to the current support scheme and to previous 

modifications,  it  is  appropriate,  for  reasons  of  clarity  ,  to  replace  Regulation  (EEC) 

No  1765/92 by a new Regulation, 

HAS ADOPTED THIS REGULATION: 

OJ  L... 

31 

Article 1 

1.  This  Regulation  hereby  establishes  a  system  of  area  payments  for  producers  of 

arable crops. 

2.  For the purposes of this Regulation: 

- 

the marketing year shall run from 1 July to 30 June, 

- 

'arable crops' are taken to mean those listed in Annex I. 

CHAPTER I 

Area payment 

Article 2 

1.  Community  producers  of  arable  crops  may  apply  for  an  area  payment  under  the 

conditions set out in this Chapter. 

2.  The area payment shall be fixed on a per hectare basis and regionally  differentiated. 

The area payment  shall  be granted  for  the area which  is down to  arable  crops or 

subject  to  set-aside  in  accordance  with  Article  6  and  which  does  not  exceed  a 

regional base area. This is established  as the average number of hectares within a 

region  down  to  arable  crops  or  where  appropriate  fallowed  in  conformity  with  a 

publicly funded  scheme during 1989, 1990 and 1991. A region in this sense shall be 

understood  to mean a Member  State  or a region  within the  Member  State, at the 

option of the Member State concerned. 

3.  Producers applying for the area payment shall be subject to an obligation to set aside 

part of the land of their holding from production and shall receive compensation for 

this obligation. 

4.  When  the  sum  of  the  areas  for  which  payment  is  claimed  under  the  arable 

producers'  scheme,  including  the  set-aside  provided  for  under  that  scheme,  is  in 

excess of the base area, the eligible area per farmer shall be reduced proportionately 

for all the payments granted under this Chapter in the region in question during the 

same marketing year. 

32 

Areas which are not the subject of an application for payment under this Regulation 

but are used to support an application for  aid under Regulation  (EC) No [...]  shall 

also be taken into account for the calculation of areas for which payment is claimed. 

Article 3 

1.  For  the  purpose  of  setting  average  yields  to  be  used  for  calculation  of  the  area 

payment,  each Member  State  shall  establish  a régionalisation plan  setting  out the 

relevant  objective  criteria  for  determination  of the  separate production  regions  in 

order to arrive at distinct homogeneous areas. 

With this in mind, Member  States shall take due account  of specific  situations in 

drawing up their régionalisation plans. They may in particular adjust  average yields 

in line with any structural differences between production regions. 

Member  States may  in their régionalisation plans  set different  yields  for  irrigated 

and non-irrigated  land. In that case, Member  States shall establish  a separate base 

area for areas bearing irrigated crops. 

The  irrigated  base  area  shall  be  equal to the  average  area  irrigated  from  1989 to 

1991 with a view to harvesting arable crops including the increases made pursuant 

to  Article  3  paragraph  1 fourth  subparagraph  last  sentence  of  Regulation  (EEC) 

No 1765/92.  The  establishment  of  the  irrigated  base  area  must  not  lead  to  any 

increase in the total base area of the Member State concerned. Should this base area 

be exceeded, Article 2(4) shall apply. 

The  régionalisation  plan  shall  in  all  cases  ensure  that  the  average  yield  of  the 

Member  State  concerned  established  for  the  period  and  in  accordance  with  the 

criteria referred to in paragraph 2 is respected. 

2.  For  each production  region, the  Member  State  shall  give  details  of the  areas and 

yields of arable crops produced in that region during the five year period  1986/87 to 

1990/91. Average  cereals yields  shall be  separately  calculated  for  each region by 

excluding the year with the highest and the year with the lowest yield during that 

period. 

33 

However,  this  obligation  may  be  fulfilled  in  the  case  of  Portuguese  cereals  by 

providing  data  having  been  supplied  pursuant  to  Council  Regulation  (EEC) 

No 3653/90 of  11  December 1990 introducing  transitional  measures  governing the 
common organisation of the market in cereals and rice in Portugal6 and in the case 

of the five new German Lander by providing the average crop yield applicable in the 

other German Lander. 

If a Member State decides to treat irrigated land separately from non-irrigated land, 

the corresponding average yield, which shall not be altered,  shall be broken down 

between the two types. 

3.  Member  States  shall  submit  their  régionalisation  plan  to  the  Commission  by 

1 August 1999 together with all necessary supporting information.  In order to  fulfil 

this  obligation,  they  may  refer  to  their  régionalisation  plan  submitted  to  the 

Commission in accordance with Regulation (EEC) No 1765/92. 

4.  The Commission shall examine the régionalisation plans submitted by the Member 

States and shall ensure that each plan is based on appropriate, objective criteria and 

is consistent  with available historical  information.  The Commission may object to 

plans  which  are  not  compatible  with  the  aforementioned  relevant  criteria  in 

particular with the average yield of the Member State. In this case the plans shall be 

subject  to  adjustment  by the  Member  State  concerned  after  consultation  with the 

Commission. 

5.  The  régionalisation  plan  may  be  revised  by  the  Member  State  concerned  at  the 

request of the Commission or at the initiative of that Member  State in accordance 

with the same procedure as outlined in paragraphs 1 to 4. 

6  OJ No L 362 of 27.12.1990, p. 28 

34 

6.  Should a  Member  State, pursuant  to  paragraph  1, choose  to  establish  production 

regions the demarcation of which does not correspond to that of regional base areas, 

it shall send the Commission a summary statement of payment applications and the 

yields  pertaining  to  these. If  it  emerges from this  information  that,  in  a Member 

State, the average yield resulting from the régionalisation plan applied in 1993 or, in 

the case of the new Member States, the average yield resulting from the plan applied 

in  1995,  is  exceeded,  all  payments  to  be  made  in  that  Member  State  for  the 

following  marketing year shall be reduced  in proportion to the overrun which has 

been recorded. However, this provision shall not apply where the quantity for which 

applications  were  made,  expressed  in  tonnes  of  cereals,  does  not  exceed  that 

resulting  from  the  product  of  the  total  base  areas  of  the  Member  State  by  the 

aforementioned average yield. 

Member States may decide to ascertain whether there has been any exceeding of the 

average yield for each base area. In such cases, the provisions of this paragraph shall 

be applied to the payments to be paid in each base area concerned. 

Article 4 

1.  The area payment  is calculated  by multiplying  the basic amount per tonne by the 

average yield determined in the régionalisation plan for the region concerned. 

2.  The basic amount per tonne is fixed at: 

-  ECU 72.5 for protein crops and 

-  ECU 66 for other arable crops. 

Article 5 

A supplement to the area payment of ECU 344.5 per hectare  shall be paid for the area 

down to durum wheat in the traditional production zones listed in Annex II, subject to the 

limits fixed in Annex III. 

Should the total of the areas for which a supplement to the area payment is claimed be 

greater than the limit referred to above during the course of a marketing year, the area per 

producer for which the supplement may be paid shall be reduced proportionately. 

35 

However, subject to the limits per Member State laid down in Annex III, Member States 

may distribute the areas indicated in that Annex among the production zones as defined 

in Annex II, or, if necessary, the production regions referred to in Article 3, according to 

the extent of the production of durum wheat during the period  1993 to  1997. Where this 

is done, should the total of the areas within a region for which a supplement to the area 

payment is requested be greater than the corresponding regional limit during the course 

of  a  marketing  year,  the  area  per  producer  in  that  production  region  for  which  the 

supplement may be paid shall be reduced proportionately.  The reduction shall be made 

when, within a Member State, the areas in regions which have not reached their regional 

limits have been distributed to regions in which those limits have been exceeded. 

In regions  where the production  of  durum  wheat  is  well  established,  other  than  those 

referred to in Annex II, special aid amounting to ECU 138.9 per hectare shall be granted 

up to a limit of the number of hectares laid down in Annex IV. 

Article 6 

1.  The set-aside obligation for each producer applying for area payments shall be  fixed 

as a proportion of his area down to arable crops and for which a claim is made, and 

left in set-aside pursuant to this Regulation. 

The set-aside obligation shall at present be 0%. 

2.  Member States shall apply appropriate environmental measures which correspond to 

the specific situation of the land set aside. 

3.  The land set aside may be used for the provision of materials for the  manufacture 

within  the  Community  of  products  not  primarily  intended  for  human  or  animal 

consumption, provided that effective control systems are applied. 

Member  States  are  authorised  to  grant  national  aid  to  producers  to  help  them  to 

cover the costs of planting multiannual crops for biomass production. The aid may 

not,  however,  be  more  than  the  equivalent  of  the  interest  to  be  paid  on  a  loan, 

repayable in five equal annual instalments, taken out for  an amount not exceeding 

five  years of area payments for the land in question. 

36 

4.  The  payment  for  set-aside  obligation  shall  be  calculated  as  the  area  payment 

according to Article 4 paragraphs 1  and 2, second indent. Where different  yields are 

set  for  irrigated  and  non-irrigated  land, those  for  non-irrigated  land  apply.  In the 

case of  Portugal, payment  shall  take account  of the aid  granted  under  Regulation 

(EEC) No 3653/90. 

5.  Producers may be granted the set-aside payment on land set aside in excess of their 

obligation. In such cases, the area set aside may not exceed an area to be defined by 

Member States at rates taking into account specific situations and ensuring  sufficient 

occupation of farmland. The area set aside should at least be 10% of the area down 

to arable crops and for which a payment application  is made, and left  in set-aside 

pursuant to this Regulation. The set-aside payment may be granted on a multiannual 

basis for a period up to five years. 

6.  Producers  who  make  a  payment  application  for  an  area  no  bigger  than  the  area 

which would be needed to produce 92 tonnes of cereals, on the basis of the yield 

determined for their region, are not bound by the set-aside obligation. 

Article 7 

Applications  for  payment Is  may not  be made in respect  of land that  on  31 December 

1991  was  under  permanent  pasture,  permanent  crops  or  trees  or  was  used  for  non-

agricultural purposes. 

Member  States  may,  on  terms  to  be  determined,  depart  from  these  provisions  under 

certain specific circumstances, in particular for areas subject to restructuring programmes 

or for  areas subject  to standard rotations of multi-annual  arable crops with those crops 

listed in Annex I. In such cases, they shall take action to prevent any significant  increase 

in the total eligible agricultural area. This may in particular involve deeming previously 

eligible areas ineligible as an offsetting measure. 

37 

Member  States  may  also  depart  from  the  provisions  of  the  first  subparagraph  under 

certain specific  circumstances relating to one or other form of public intervention where 

such  intervention  results  in  a  farmer  growing  crops  on  land  previously  regarded  as 

ineligible in order to continue his normal agricultural  activity and if the intervention in 

question means that land originally eligible ceases to be so with the result that the total 

amount of eligible land is not increased significantly. 

Moreover,  Member  States  may,  in  certain  cases  not  covered  by  the  previous  two 

subparagraphs,  depart  from  the  first  subparagraph  if  they  provide  proof  in  a  plan 

submitted to the Commission that the total amount of eligible land remains unchanged 

Article 8 

1.  Payments shall be made between 1  January to 31 March following the harvest. 

2. 

In order to qualify  for the area payment, a producer shall by 31 May preceding the 

relevant harvest have sown the seed and by 15 May have lodged an application. 

3.  Member States shall take the necessary measures to remind applicants of the need to 

respect environmental legislation. 

Article 9 

Detailed rules for the application of this Chapter shall be adopted in accordance with the 
procedure  laid  down  in  Article  23  of  Council  Regulation  (EEC)  No  1766/927  and  in 

particular: 

- 

those relating to the establishment and management of base areas, 

- 

those relating to the establishment of production régionalisation plans, 

- 

those relating to the granting of the area payment, 

7 OJ No L 181 of 1.7.1992, p. 21, as last amended by Regulation (EC) No 923/96 of 24.5.1996, p. 37 

38 

-  those  relating  to  the  minimum  area  eligible  for  payment;  such  rules  shall  take 

particular account of the monitoring  requirements and of the desired effectiveness  of 

the scheme in question, 

-  those  determining,  for  durum  wheat,  the  eligibility  for  the  supplement  to  the  area 

payment  referred  to  in  Article  5  and the  eligibility  requirements  for  the  special  aid 

referred to  in that Article,  and in particular determination  of the regions to  be taken 

into consideration, 

-  those relating to set-aside, in particular those relating to Article 6 (3); these conditions 

may include the growing of products without compensation, 

-  those relating to the conditions  for applying Article  7; these  conditions  shall  specify 

under  what  circumstances  the  provisions  of  Article  7  may  be  waived  and  Member 

States' obligation to refer envisaged action to the Commission for approval. 

According to the same procedure, the Commission may: 

-  either  make  the  granting  of  payments  subject  to  the  use  of  specific  seeds,  certified 

seeds  in  the  case  of  durum wheat,  certain  varieties  in  the  cases  of  oilseeds,  durum 

wheat  and  linseeds  or  provide  for  the  possibility  for  Member  States  to  make  the 

granting of payments subject to such conditions; 

-  allow the dates in Article 8(2) to be varied in certain zones where exceptional climatic 

conditions render the normal dates inapplicable; 

-  allow, subject to the budgetary situation, to authorise, in derogation from Article 8(1), 

payments prior to 1  January in certain regions, of up to 50 % of the area payments and 

of the payment for set-aside in years in which exceptional climatic conditions have so 

reduced yields that producers face severe financial difficulties. 

Article 10 

The  measures  defined  in  this  Chapter  shall  be  deemed  to  be  intervention  intended  to 

stabilise  agricultural  markets  within  the  meaning  of  Article  [..]  of  Regulation  (EC) 

No [...]. 

39 

Chapter II 

General and transitional provisions 

Article 11 

The amounts of the area payments and the payment for set-aside as well as the percentage 

area to be set aside fixed in this Regulation may be changed in the light of developments 

in production,  productivity  and  the  markets,  according  to  the  procedure  laid  down  in 

Article 43(2) of the Treaty. 

Article 12 

Should specific measures be necessary to facilitate the transition from the system in force 

to that established by this Regulation, such measures shall be adopted in accordance with 

the procedure laid down in Article 23 of Regulation (EEC) No 1766/92. 

Article 13 

Regulation (EEC) No 1765/92 is hereby repealed. 

Article 14 

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

the Official  Journal of the European Communities. 

2.  This Regulation shall apply from the 2000/ 2001 marketing year onwards. 

3.  Regulation  (EEC)  No  1765/92  shall  continue  to  be  applied  in  relation  to  the 

1999/2000 marketing year. 

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

States. 

Done at 

For the Council 

40 

Annex I 

Definition of products 

CN Code 

Description 

I.  CEREALS 
100110 00 
1001 90 
1002 00 00 
1003 00 
1004 00 00 
1005 
1007 00 
1008 
0709 90 60 

II.  OILSEEDS 
120100 
ex  1205 00 
ex  1206 00 10 

Durum wheat 
Other wheat and meslin other than durum wheat 
Rye 
Barley 
Oats 
Maize 
Grain sorghum 
Buckwheat, millet and canary seed; other cereals 
Sweet corn 

Soyabeans 
Rape seed 
Sunflower seed 

III.  PROTEIN CROPS 

0713  10 
0713 50 
1209 29 50 

Peas 
Field beans 
Sweet lupins 

IV.  FLAX 

other than fibre flax 

ex  1204 00 

Linseed 
(Linum usitatissimum L.) 

41 

Annex II 

Traditional production zones for durum wheat 

GREECE 
Nomoi (prefectures) of the following regions 

AUSTRIA 

Pannonia 

Central Greece 
Péloponnèse 
Ionian Islands 
Thessaly 
Macedonia 
Aegean Islands 
Thrace 

SPAIN 

Provinces 

Almeria 
Badajoz 
Burgos 
Cadiz 
Cordoba 
Granada 
Huelva 
Jaén 
Malaga 
Navarra 
Salamanca 
Seville 
Toledo 
Zamora 
Zaragoza 
ITALY 

Regions 

Abruzzo 
Basilicata 
Calabria 
Campania 
Latium 
Marches 
Molise 
Umbria 
Apulia 
Sardinia 
Sicily 
Tuscany 

FRANCE 

Regions 

Midi-Pyrénées 
Provence-Alpes-Côte d'Azur 
Languedoc-Roussillon 

Departments* 

Ardèche 
Drôme 

PORTUGAL 

Districts 

Santarém 
Lisbon 
Setùbal 
Portalegre 
Évora 
Beja 
Faro 

Each of these departments may be linked to one of the above mentioned regions. 

42 

Annex III 

Maximum guaranteed areas in receipt of the supplement to the area payment for 

durum wheat 

Greece 
Spain 
France 
Italy 
Austria 
Portugal 

(hectares) 

617 000 
594 000 
208 000 
1  646 000 
7 000 
59 000 

Annex IV 

Maximum guaranteed areas in receipt of the special aid for durum wheat 

Germany 
Spain 
France 
Italy 
United Kingdom 

(hectares) 

10 000 
4 000 
50 000 
4 000 
5 000 

43 

Proposal for a 

COUNCIL REGULATION (EC) NO ...../98 

98/0109 (CNS) 

of 

199. 

on the common organisation of the market in beef and veal 

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 Commission1; 

Having regard to the opinion of the European Parliament2; 

(1)  Whereas the operation and development of the common market in agricultural products should be 
accompanied  by  the  establishment  of  a  common  agricultural  policy  to  include  in  particular  a 
Common  organisation  of  agricultural  markets  which  may  take  various  forms  depending  on  the 
product; 

(2)  Whereas the aim of the common agricultural policy is to attain the objectives set out in Article 39 of 
the Treaty; whereas, in the beef and veal sector,  in order to stabilise markets and to ensure a fair 
standard  of  living  for  the  agricultural  community,  provision  should  be made  for  internal  market 
measures  comprising,  in  particular,  direct  payments  to  beef  producers-and  a private  storage  aid 
scheme; 

(3)  Whereas, in order to rebalance meat consumption in the Community to the benefit of beef sector and 
to  improve  the  competitivity  of these  products  on the  international  markets, the  level  of  market 
support should be gradually reduced; whereas, given the consequences  for producers, the  level of 
income aid provided  for under the common market organisation  should be adapted  and reshaped; 
whereas, to that end, it is appropriate to establish a comprehensive scheme of direct payments  for 
producers;  whereas  the  amounts  of  these  payments  should  develop  in  parallel  with  the  gradual 
reduction of market support; 

(4)  Whereas, given  the variety  of stockfarming  enterprises, direct payments  should  include  a special 
premium for producers of bulls and steers, a premium for maintaining suckler cow herds and a dairy 
cow  premium;  whereas  the  granting  of the  premiums  should  not  be  reflected  by  an  increase  in 
overall  production;  whereas, to  that  end,  the  number  of  male  bovine  animals  and  suckler  cows 
eligible for  premiums  should be  limited by applying respectively  regional  and individual  ceilings 
and, in the case of the special premium, a headage limit per holding; whereas, as regards the dairy 
cow premium, an equivalent limitation follows the individual reference  quantities of the producers 
concerned which serve as the basic reference for calculating the level of support; whereas as regards 
the regional ceiling for the special premium, the existing level should be maintained; 

(5)  Whereas the conditions of steer production usually differ from those of bull production; whereas it 
is therefore justified  to set the special premium  for  steers at a different  level per animal than  for 
bulls;  whereas,  however,  the  special  premium  for  steers  should  be  split  into  two  payments  for 
specific age brackets; 

(6)  Whereas slaughtering too great a number of steers during the slaughtering season in Member States 
where this type of production is particularly important, could disturb the stability of the market and, 
in particular, lead to a fall in market prices; whereas to encourage the slaughter of steers outside the 
annual "off grass" period, an additional premium should be granted, subject to certain conditions, in 

l 

2 

; 

44 

addition to the special premium for animals slaughtered out of season during the first twenty three 
weeks of the year; 

(7)  Whereas, in order to give more flexibility to producers, eligibility for suckler cow premium should 
be extended to heifers meeting the same breeding requirements as suckler cows; whereas, however, 
the  number  of  eligible  heifers  in  suckler  cow  herds  should  be  limited  to  the  normal  ratio  of 
replacement; 

(8)  Whereas the suckler cow premium should primarily be restricted to producers who do not supply 
milk  to dairies  under  the additional  levy  scheme provided  for  by  Council  Regulation  (EEC) No 
3950/92 of 28 December 1992, establishing an additional levy in the milk and milk products sector3; 
whereas, however, income support is also needed in the case of small and medium-sized holdings 
with a dairy herd and a suckler cow herd; whereas suckler cow premium should therefore  also be 
granted for those mixed holdings with a total individual milk reference  quantity of not more than 
120 000 kilograms; 

(9)  Whereas, as regards the suckler cow premium, it is appropriate to maintain individual ceilings for 
producers; whereas some of the premium rights conferred by the individual ceilings have not been 
used in the past; whereas these unused rights would be likely to encourage production and increase 
expenditure,  in  particular,  as  a  consequence  of  heifers  becoming  fully  eligible  for  suckler  cow 
premium; whereas to avoid such an effect, the total number of suckler cow premium rights of each 
Member  State should be fixed  on the basis of the premium payments actually made in respect of 
historical  reference  years,  increased  by  a  certain  margin  for  maintaining  the  national  reserve; 
whereas Member States should take the necessary measures to ensure the respect of their national 
ceilings; whereas, if necessary, they should adjust the individual ceilings of their producers without 
compensation  according  to  certain  objective  criteria;  whereas  these  criteria  should  ensure,  in 
particular, equal treatment of the producers concerned and the protection of legitimate expectations; 

(10)  Whereas  a  producer's  level  of  production  may  vary  because  of  changes  in  stock  or  production 
capacity; whereas it is therefore  advisable to provide for the possibility of transferring  suckler cow 
premium  rights  acquired  in  respect  of  individual  ceilings  to  other  producers,  under  certain 
conditions, either together with the holding or without retaining the link between premium  rights 
and land farmed; 

(11)  Whereas new producers and existing producers  whose  individual  ceilings  do not  correspond,  for 
various reasons, to changed circumstances of their suckler cow herds should not be excluded  from 
rights to premium; whereas provision  should therefore  be made to operate national reserves to be 
stocked and administered in accordance with Community criteria; whereas, for the same reason, it is 
appropriate to subject the transfer of rights to premium without the transfer of the associated holding 
to rules whereby part of the rights transferred  shall be withdrawn without  compensatory payment 
and allocated to that national reserve; 

OJ No L 405, 31.12.1992, p. 1. Regulation as last amended by Commission Regulation (EC) No 

614/97 of 8.4.1997 OJNo L 94 , 9.4.1997, p. 4.; 

45 

(12)  Whereas  it  is  opportune  to  allow  Member  States  to  establish  a  link  between  sensitive  zones  or 
localities and the production of suckler cows so as to ensure the maintainance of such production 
especially in areas where there is no other alternative; 

(13)  Whereas,  given  the  trend  towards  intensification  of  beef  and  veal  production,  premiums  for 
stockfarming  should be limited with regard to the forage capacity of each holding in relation to the 
numbers and species of animals held; whereas, to avoid excessively intensive types of production, 
the grant of such premiums should be subject to compliance with a maximum stocking density on 
the holding; whereas, however, the situation of small producers should be taken into consideration; 

(14)  Whereas,  to  strengthen  incentives  to  extensify  production  with  a  view  to  improving  their 
effectiveness  in relation  to  environmental  objectives,  an  additional  amount  should  be  granted  to 
producers who comply with severe and genuine stocking density requirements; whereas, to avoid a 
major change in the global level of support and ensure reasonable control of expenditure, provision 
should be made for adjusting the additional amount, if necessary; 

(15)  Whereas, as a consequence of reduced market support in the beef and veal sector, there should also 
be income support for  milk producers  in the form  of a dairy cow premium; whereas this support 
should be granted on the basis of the individual reference quantities of the producers concerned and 
the national average milk yield in the Member State where their holdings are located; whereas, for 
reasons of simplification, the dairy cow premium should be managed and granted together with the 
corresponding income support for dairy cows under the common market organisation for milk and 
milk  products; whereas  this  support  takes  account  of the  average  milk  yield  in the  Community; 
whereas, to that end, the amounts of dairy cow premium per Member State need to be calculated 
taking into account the difference  between the average milk yield in the Community and that in the 
Member State concerned; 

(16)  Whereas  the  conditions  for  beef  production  and  the  income  situation  of  producers  significantly 
varies  in different  production  areas  of the Community; whereas a Community-wide  scheme with 
uniform  payments to all producers would be too rigid to respond adequately to the structural and 
natural disparities and the diverse needs resulting therefrom; whereas, therefore, it is appropriate to 
provide for a flexible framework of additional Community payments to be determined and made by 
Member  States  within  fixed  global  amounts  and  in  accordance  with  certain  common  criteria; 
whereas the global amounts should be allocated to the Member States on the basis of their share in 
Community  beef  production;  whereas  the  common  criteria  are  intended,  inter  alia,  to  prevent 
additional payments from producing discriminatory effects  and to take full  account of the relevant 
multilateral  commitments  of  the  Community;  whereas,  in  particular,  it  is  essential  that  Member 
States be obliged to use their discretionary powers exclusively on the basis of objective  criteria, to 
pay full  regard to the concept of equal treatment and to avoid market and competition distortions; 
whereas it is appropriate to provide for the forms that additional payments may take; whereas these 
forms should be headage payments for certain categories of bovine animals  and area payments; 

(17)  Whereas, as regards additional headage payments, certain quantitative limits are required to ensure a 
reasonable  level  of production  control; whereas  it  is  also  necessary  to  limit  the  total  amount  of 
support which may be granted per animal and, where applicable, per year; whereas, moreover, the 
concept of applying stocking density requirements should be followed by Member States; 

(18)  Whereas  additional  area payments  should  only be granted  for  permanent  pasture  which  does not 
benefit from other Community market support measures; whereas area payments should be applied 
within  the  limits  of  regional  base  areas  of  permanent  pasture  which  should  be  established  by 
Member  States  according  to  historical  reference  data;  whereas  the  maximum  amount  of  area 
payments which may be granted per hectare, including additional area payments under the common 
market  organisation  for  milk  and  milk  products,  should  be  comparable  the  average  support  per 
hectare under the support system for producers of certain arable crops; 

46 

(19)  Whereas direct payments should be subject to compliance by the keepers of the animals concerned 
with the relevant Community rules on identification  and registration of bovine animals; whereas, in 
order to achieve the desired economic impact, direct payments must be granted within certain time 
limits; 

(20)  Whereas  me  use  of  certain  substances  in  beef  production  is  prohibited  under  Community  law; 

whereas appropriate penalties should apply where the relevant provisions are not respected; 

(21)  Whereas under the price and income support arrangements provided for  in this Regulation, public 
intervention  in  the  form  of  buying-in  by  intervention  agencies  and  public  storage  is  no  longer 
indispensible to balance the market but would cause considerable  expenditure; whereas it should, 
therefore, be phased out gradually; whereas, however, in order to contribute to stabilising the market 
prices  around  the  basic  price  which  represents  the  desired  market  support  level,  aid  for  private 
storage should be provided for; whereas, to that end, the Commission should be authorised to decide 
the grant of private storage aid when the market price falls below  103% of the basic price; whereas 
provision should be made for the private storage aid scheme to be implemented on the basis of the 
grading scale laid down in Council Regulation (EEC) No 1208/81 of 28 April 1981 determining the 
Community scale for the classification of carcases of adult bovine animals4; 

(22)  Whereas the creation of a single Community market for beef and veal involves the introduction of a 
single trading system at the external frontiers of the Community; whereas a trading system including 
import duties and export refunds,  in addition to the internal market measures, should, in principle, 
stabilise the Community market; whereas the trading system should be based on the undertakings 
accepted under the Uruguay Round of multilateral trade negotiations; 

(23)  Whereas, in order to monitor the volume of trade in beef with third countries, provision should be 
made for a system of import and export licences for certain products, which includes the lodging of 
a security to guarantee that the transactions for which such licences are granted are effected; 

(24)  Whereas in order to prevent or counteract adverse effects  on the Community market which could 
result from imports of certain agricultural products, imports of one or more such products should be 
subject to payment of an additional import duty, if certain conditions are  fulfilled; 

(25)  Whereas it is appropriate, under certain conditions, to confer on the Commission the power to open 
and administer tariff  quotas resulting from international agreements concluded  in accordance with 
the Treaty or from other acts of the Council; 

(26)  Whereas provisions  for  granting  a refund  on  exports  to  third  countries,  based  on  the  difference 
between  prices  within  the  Community  and  on  the  world  market,  and  falling  within  the  WTO 
Agreement  on  Agriculture5,  should  serve  to  safeguard  Community  participation  in  international 
trade in beef and veal; whereas these refunds  should be subject to limits in terms of quantity and 
value; 

(27)  Whereas compliance with the limits in terms of value should be ensured at the time when  refunds 
are fixed through the monitoring of payments under the rules relating to the European Agricultural 
Guidance and Guarantee Fund; whereas monitoring can be facilitated  by the compulsory  advance 
fixing  of refunds, while allowing the possibility, in the case of differentiated  refunds,  of changing 
the specified  destination within a geographical area to which a single refund  rate applies; whereas, 
in the case of a change of destination, the refund  applicable to the actual destination should be paid, 
with a ceiling of the amount applicable to the destination fixed in advance; 

(28)  Whereas ensuring compliance with the quantity  limits calls  for  the  introduction  of  a reliable and 
effective  system of monitoring; whereas, to that end, the granting of refunds should be made subject 
to an export licence; whereas refunds  should be granted up to the limits available, depending on the 
particular  situation  of  each  product  concerned;  whereas  exceptions  to  that  rule  should  only  be 

OJ No L 123, 7.5.1981, p. 3. Regulation as last amended by Council Regulation  No 1026/91 (OJ 

No L 106, 26.4.1991, p. 2). 
5 

O J N o L 3 3 6,  23.12.1994,  p. 22. 

47 

permitted in the case of food-aid  operations, which are exempt from any limit; whereas monitoring 
of  the  quantities  exported  with  refunds  during  the  marketing  years  as  referred  to  in  the  WTO 
Agreement  on  Agriculture  should  be  carried  out  on the basis  of  export  licences  issued  for  each 
marketing year 

(29)  Whereas,  in  addition  to  the  system  described  above,  and  to  the  extent  necessary  for  its  proper 
working, provision should be made for regulating or, when the situation on the market so requires, 
prohibiting the use of inward processing arrangements; 

(30)  Whereas the customs duty system makes it possible to dispense with all other protective measures at 
the external frontiers of the Community; whereas, however, the internal market and duty mechanism 
could, in exceptional circumstances, prove defective; whereas, in such cases, so as not to leave the 
Community  market  without  defence  against  disturbances  which  may  arise  therefrom,  the 
Community  should be able to take all necessary measures without delay; whereas those measures 
should be in accordance with the obligations derived from the relevant WTO agreements; 

(31)  Whereas, in order to ensure proper application  of the instruments provided  for  in this Regulation, 
the Commission should be fully  informed  about the development of prices on the common market 
for beef and veal; whereas, therefore, provision should be made for a system for recording the prices 
of adult bovine animals and meat of such animals; 

(32)  Whereas it is appropriate to provide for measures to be taken when a substantial rise or fall in prices 

disturbs or threatens to disturb the Community market; 

(33)  Whereas  restrictions  on  free  movement  resulting  from  the  application  of  measures  intended  to 
prevent the spread of animal diseases could cause difficulties  on the  market of one or more Member 
States;  whereas  provision  should  be  made  for  the  introduction  of  exceptional  market  support 
measures in order to remedy such situations; 

(34)  Whereas the establishment of a single market would be jeopardized by the granting of certain aids; 
whereas,  therefore,  the  provisions  of  the  Treaty  which  allow  the  assessment  of  aids  granted  by 
Member States and the prohibition of those which are incompatible with the common market should 
apply in the common market organisation for beef and veal; 

(35)  Whereas it is necessary that, as the common market in beef and veal develops, the Member States 
and the Commission  should keep each other supplied with the information  necessary  for  applying 
this Regulation; 

(36)  Whereas,  in  order  to  facilitate  implementation  of the proposed  measures,  a procedure  should  be 
provided for establishing close co-operation between Member States and the Commission within a 
Management Committee; 

(37)  Whereas expenditure incurred by the Member States as a result of the obligations arising out of the 
application  of this Regulation  should  be financed  by the Community  in accordance with Council 
Regulation (EC) No 

6 on the financing of the common agricultural policy; 

of 

/ 

(38)  Whereas the common organisation of the market in beef and veal should take appropriate account, at 

the same time, of the objectives set out in Articles 39 and 110 of the Treaty; 

OJNoL 

48 

(39)  Whereas the common organization of the market in beef and veal laid down in Council Regulation 
(EEC)  No  805/68  has  been  amended  several  times; whereas,  by  reason  of  their  number,  their 
complexity and their dispersal among several Official  Journals, these texts are difficult  to use and 
thus  lack the clarity  which should be an essential  feature  of all  legislation; whereas, under these 
circumstances, they should be consolidated in a new regulation and the aforementioned  Regulation 
(EEC) No  805/68  should  be repealed;  whereas  Council  Regulation  (EEC) No  1892/87 of 2 July 
1987 on the recording of market prices in the beef and veal sector8, whose legal base was Regulation 
(EEC)  No  805/68,  is  replaced  by  a  new  provision  in  this  regulation  and  should  therefore  be 
repealed; 

(40)  Whereas  the  change  from  the  arrangements  in  Regulation  (EEC)  No  805/68  to  those  in  this 
Regulation  could give rise to difficulties  which are not dealt with  in this Regulation; whereas, in 
order  to  deal  with  that  eventuality,  provision  should  be  made  for  the  Commission  to  adopt  the 
necessary  transitional  measures; whereas the the Commission  should  also be  authorized  to  solve 
specific practical problems; 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. The common organization of the market in beef and veal shall comprise an internal market and trade 

with third countries system and cover the following products: 

CNCode 

Description of goods 

(a) 

0102 90 05 to 
0102 90 79 
0201 
0202 
0206 10 95 
0206 29 91 
0210 20 
0210 90 41 
0210 90 90 
1602 50 10 

1602 90 61 

Live animals of the domestic bovine species, other than pure-bred breeding 
animals 
Meat of bovine animals, fresh or chilled 
Meat of bovine animals,  frozen 
Thick skirt and thin skirt, fresh or chilled 
Thick skirt and thin skirt,  frozen 
Meat of bovine animals, salted, in brine, dried or smoked 
Thick skirt and thin skirt, salted, in brine, dried or smoked 
Edible flours and meals of meat or meat offal 
Other prepared or preserved meat or meat offal of bovine animals,  un cooked; 
mixtures of cooked meat or offal and uncooked meat or offal 
Other prepared or preserved meat containing bovine meat or offal,  un cooked; 
mixtures of cooked meat or offal and uncooked meat or offal 

(b) 

010210 
0206 10 91 

Live bovine pure-bred animals 
Edible offal of bovine animals excluding thick skirt and thin skirt, fresh or 
chilled, 

OJ No L 148,28.6.1968, p. 24. Regulation as last amended by Regulation (EC) No 2634/97 (OJ 

NoL  356, 31.12.1997, p. 13). 
8 

OJ No LI 82, 3.7.1987, p. 29. 

49 

0206 10 99 
0206 21 00 

0206 22 90 
0206 29 99 
0210 90 49 

other than for the manufacture of pharmaceutical products 
Edible offal of bovine animals excluding thick skirt and thin skirt, frozen, 
other 
than for the manufacture of pharmaceutical products 

Edible meat offal of bovine animals, salted, in brine, dried or  smoked, other 
than thick skirt and thin skirt 

ex 1502 00 90  Fats of bovine animals, raw or rendered, whether or not pressed or  solvent-

extracted 

1602 50 31 to  Other prepared or preserved meat or meat offal, of bovine animals, other than 
1602 50 80 

uncooked meat or meat offal and mixtures of cooked meat or offal and un 
cooked meat or offal 
Other prepared or preserved meat containing bovine meat or offal other than 
uncooked, and mixtures of cooked meat or offal and uncooked meat or offal 

1602 90 69 

2. For the purposes of this Regulation: 

(a)  "bovine  animals"  shall  mean  live  animals  of  the  domestic  bovine  species  other  than  pure-bred 
breeding  animals  falling  within  subheadings  0102  90  05  to  0102  90  79  of  the  combined 
nomenclature; 

(b)  " adult  bovine  animals"  shall  mean  bovine  animals  the  live  weight  of  which  is  more  than  300 

kilograms. 

CHAPTER I 

Internal Market 

Article 2 

In order to encourage action by trade and joint trade organisations to facilitate the adjustment  of supply to 
market requirements, the following Community measures may be taken in respect of the products listed in 
Article 1 : 

(a) measures to improve stock breeding; 

(b) measures to promote better organisation of production, processing and marketing; 

(c) measures to improve quality; 

(d) measures to permit the establishment of short- and long-term forecasts on the basis of the means of pro 

duction used; 

(e) measures to facilitate the recording of market price trends. 

General rules concerning these measures shall be adopted by the Council in accordance with the procedure 
laid down in Article 43 (2) of the Treaty. 

50 

Title 1 - Direct payments 

Article 3 

For the purposes of this title: 

(a) "producer" shall mean an individual farmer, whether a natural or a legal person or group of natural or 
legal persons, irrespective of the legal status conferred by national law on such a group or its members, 
whose holding is located in Community territory and who is engaged in rearing bovine animals, 

(b) "holding" shall mean all the production units managed by the producer and located in the territory of a 

single Member State; 

(c) "region" shall mean a Member State or a region within a Member State, at the option of the Member 

State concerned; 

(d) "bull" shall mean an uncastrated male bovine animal; 

(e) "steer" shall mean a castrated male bovine animal; 

(f)  "suckler cow" shall mean a cow belonging to a meat breed or born of a cross with a meat breed, and 

belonging to a herd intended for rearing calves for meat production; 

(g) "heifer" shall mean a female bovine animal of more than 8 months which has not yet calved, belonging 
to a meat breed or born of a cross with a meat breed, and belonging to a herd intended for rearing calves 
for meat production ; 

(h) "permanent pasture" shall mean non-rotational  land used for grass production  (sown or natural) on a 

permanent basis (five years or longer). 

Section 1 - Premiums 

Sub-section 1 - Special premium 

Article 4 

1. A producer  holding  male  bovine  animals  on  his  holding  may  qualify,  on  application,  for  a  special 
premium. It shall be granted in the form of an annual premium per calendar year and per holding within 
the limits of regional ceilings for not more than 90 animals for each of the age brackets referred  to in 
paragraph 2. 

2. The special premium shall be granted no more than: 

(a) once in the life of each bull from the age of 10 months; or 

(b) twice in the life of each steer: 

- the first time at the age of 10 months, 

- the second time after it has reached the age of 22 months. 

51 

3. To qualify for the special premium: 

(a) any animal covered by an application shall be held by the producer for fattening  for a period to be 

determined, 

(b)  each  animal  shall  be  covered  until  slaughter  by  an  animal  passport  referred  to  in  Article  6 of 
Regulation  (EC) No  820/97  containing  all  relevant  information  on  its premium  status  or,  if not 
available, an equivalent administrative document 

4. When  in a given region the total number of bulls from the age of  10 months and of steers from 10 
months to 22 months of age, for which an application has been made and which satisfy  the conditions 
for granting the special premium exceeds the regional ceiling referred  to in Annex I, the number of all 
eligible animals under paragraph 2 (a) and (b) per producer  for the year  in question  shall be reduced 
proportionately. 

Within  the  meaning of this  Article,  "regional  ceiling"  shall  mean  the  number  of  animals  entitled  to 
benefit, in a region and per calendar year, from the special premium. 

5. Member States may decide to grant the special premium at the time of slaughter. In this case, for bulls 
the  age  criterion  referred  to  in  paragraph  2  (a)  shall  be  replaced  by  a  minimum  weight  of  200 
kilogrammes. 

The premium shall be paid or passed back to the producers. 

The United Kingdom shall be authorized to apply in Northern Ireland a system for granting the special 
premium which differs from that applied in the remainder of its territory. 

6. The amount of the premium shall be: 

(a) per eligible bull: 

- ECU 165 for the calendar year 2000, 

- ECU 195 for the calendar year 2001, 

- ECU 220 for the calendar year 2002 and the subsequent calendar years; 

(b) per eligible steer and age bracket: 

- ECU 130 for the calendar year 2000, 

- ECU 150 for the calendar year 2001, 

- ECU 170 for the calendar year 2002 and the subsequent calendar years. 

7. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

52 

Sub-section 2- Deseasonalisation premium 

Article 5 

1. Where, in a Member State the number of steers: 

(a) slaughtered in a given year exceeds 60% of total annual slaughterings of male bovine arimals, and 

(b) slaughtered  during the period  1 September to 30 November  in a given year exceeds 35% of total 

annual slaughterings of steers, 

producers  may  qualify,  on  application,  for  an  additional  premium  to  the  special  premium 
(deseasonalization premium). However, if both triggering rates referred to above are reached in Ireland 
or in Northern Ireland, the premium shall apply in Ireland and in Northern Ireland. 

For the purpose of applying this Article in the United Kingdom, Northern Ireland shall be regarded as a 
separate entity. 

2. The amount of this premium shall be set at: 

- ECU 72.45 per animal slaughtered during the first 15 weeks in a given year, 

- ECU 54.34 per animal slaughtered during the 16th and 17th weeks in a given year, 

- ECU 36.23 per animal slaughtered during the 18th to the 21st week in a given year, and 

- ECU 18.11 per animal slaughtered during the 22nd and 23rd weeks in a given year. 

3.  Where the rate referred  to  in paragraph  1 (b)  is not achieved, Member States whose producers have 
previously received the deseasonalization premium may decide to grant this premium at the rate of 60 % 
of the amounts set in paragraph 2. 

In such case, the Member State concerned shall ensure the measure is financially  neutral  in respect of 
the same budget year by accordingly reducing: 

-  the  amount  of the  second  age  bracket  of  the  special  premium  applicable  to  steers  granted  in that 

Member State, and/or 

- the additional payments to be made under section 2, 

and shall inform the Commission of the reduction measure applied. 

For the purpose of applying this measure, Ireland and Northern Ireland shall be regarded as one entity 
for the calculation of the rate referred  to in paragraph  1 (b) and consequently  for qualification  for the 
premium. 

4. In order to establish  whether the percentages referred  to  in this Article have been  exceeded,  account 
shall be taken of slaughterings  carried out during the second year preceding that  in which the animal 
qualifying for the premium was slaughtered. 

5. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

53 

Sub-section 3 - Suckler cow premium 

Article 6 

1.  A  producer  keeping  suckler  cows  on  his  holding  may  qualify,  on  application,  for  a  premium  for 
maintaining suckler cows (suckler cow premium). It shall be granted in the form of an annual premium 
per calender year and per holding within the limits of individual ceilings. 

2. The suckler cow premium shall be granted to any producer: 

(a) not supplying milk or milk products from his farm  for twelve months from the day on which the 

application is lodged.. 

The supply of milk or milk products directly from the holding to the consumer shall not, however, 
prevent grant of the premium. 

(b) supplying milk or milk products whose total individual reference quantity as referred to in Article 4 

of Regulation (EEC) No 3950/92 does not exceed 120 000 kilograms. 

provided that he keeps, for  at  least six consecutive months from the day on which the  application  is 
lodged  a number  of  suckler  cows at  least  equal to  80% and of heifers  at most  equal  to 20% of the 
number for which the premium was requested. 

For the purposes  of determining  the number  of eligible  animals under  points  (a)  and  (b)  of the first 
subparagraph, whether cows belong to a suckler herd or to a dairy herd shall be established on the basis 
of the beneficiary's individual reference quantity as defined in Article 15 (3) of Council Regulation (EC) 
9 [milk] and the average milk yield in the Member State where the holding is located. 
No 

3. The producers' entitlement to the premium shall be limited by the application of an individual ceiling as 

defined in Article 7. 

4. Per eligible animal, the amount of the premium shall be: 

- ECU 155 for the calendar year 2000, 

- ECU 170 for the calendar year 2001, 

- ECU 180 for the calendar year 2002 and the subsequent calendar years. 

5. Detailed rules for the application of this Article and, in particular, those relating to the definition  of the 
concept of suckler cow referred to in Article 3, shall be adopted by the Commission in accordance with 
the procedure laid down in Article 39. 

OJNo 

54 

Article 7 

1. On 1  January 2000, the individual ceiling of each producer shall be equal to the number of suckler cow 
premium  rights  (premium  rights)  which  he  held  on  31  December  1999  according  to  the  relevant 
Community rules and, where appropriate, adjusted according to paragraph 3. 

2. Member States shall take the neceesary steps to ensure that, from \  January 2000, the sum of premium 
rights on their territory does not exceed the national ceilings set out in Annex II and that the national 
reserves referred to in Article 9 may be set up. 

3.  Where the  adjustment  referred  to  in paragraph  2 requires  a reduction  of  individual  ceilings  held by 
producers, it shall be carried out without compensatory payment and decided on the basis of objective 
criteria, including, in particular: 

- the rate at which producers have used their individual ceilings during the three reference years prior to 

the year 2000, 

- the implementation of an investment or extensification programme in the beef and veal sector, 

-  particular  natural  circumstances  or  the  application  of  penalties,  resulting  in  a  non-payment  or  a 

reduced payment of the premium for at least one reference year, 

-  additional  exceptional  circumstances  having  the  effect  that  the  payments  made  for  at  least  one 

reference year do not correspond to the actual situation as established during the previous years. 

4. Premium rights which have been withdrawn pursuant to the measure provided for in paragraph 2 shall 

be abolished. 

5. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

Article 8 

1. Where a producer sells or otherwise transfers his holding, he may transfer all his suckler cow premium 
rights to the person taking over his holding. He may also transfer,  in full  or in part, his rights to other 
producers without transferring his holding. 

In the case of transfer of premium rights without transfer of the holding a part of the transferred rights, 
which shall not exceed 15 %, shall be returned without compensatory payment to the national reserve of 
the Member State where the holding is situated for redistribution free of charge. 

2. The Member States: 

(a) shall take the necessary measures to prevent premium rights being transferred  outside sensitive areas 

or regions where beef and veal production is particularly important for the local economy; 

(b) may provide either that the transfer  of rights without transfer  of the holding is carried out directly 

between producers or that it is carried out through the intermediary of the national reserve. 

3.  Member  States  may  authorize,  before  a  date  to  be  determined,  temporary  transfers  of  part  of  the 

premium rights which are not intended to be used by the producer who holds them. 

4. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

55 

These detailed rules may concern in particular: 

- provisions  enabling the Member  States to resolve problems relating to the transfer  of premium  rights 

by producers who are not the owners of the land occupied by their holdings, and, 

- specific  rules relating to the minimum number which may form the subject of a partial  transfer. 

Article 9 

1. Each Member State shall maintain a national reserve of suckler cow premium rights. 

2. Any premium  rights withdrawn pursuant to Article  8 (I)  or other Community provisions  shall be added 

to the national reserve, without prejudice to Article 7 (4). 

3.  The  Member  States  shall  use their  national  reserves  for  allocating,  within  the  limits  of those  reserves, 

premium rights in particular to newcomers, young farmers and other priority producers. 

4. Detailed rules for the application  of this Article shall be adopted by the Commission  in accordance with 

the procedure laid down in Article 39. These rules shall concern, in particular: 

- the measures applicable where, in a Member State, the national reserve is not used, 

- the measures relating to unused premium rights which have been returned to the national reserve. 

Sub-section 4 - Stocking density 

Article 10 

1. The total number  of animals  qualifying  for  the  special premium  and the  suckler  cow premium  shall  be 
limited  by the  application  of a  stocking  density  on the  holding  of 2  LU  per  hectare  and  calendar  year. 
This  stocking  density  shall  be  expressed  in  livestock  units  (LU)  per  unit  of  forage  area  of the  holding 
used  for  the  animals  carried  on  it.  However,  a  producer  shall  be  exempt  from  the  application  of  the 
stocking  density  if  the  number  of  animals  held  on  his  holding  and  to  be  taken  into  account  for 
determining the stocking density is not more than  15 LU. 

2. For determining the stocking density on the holding, account shall be taken  of: 

(a)  the  male  bovine  animals,  suckler  cows  and  heifers,  sheep  and/or  goats  for  which  premium 
applications  have  been  submitted,  as well  as the  dairy  cows  needed  to produce  the  total  reference 
quantity  of  milk  allocated  to  the  producer.  The  number  of  animals  shall  be  converted  to  LU  by 
reference to the conversion table in Annex III. 

(b) the  forage  area, meaning the  area of the holding  available throughout  the  calendar  year  for  rearing 

bovine animals and sheep and/or goats. The forage area shall not include: 

- buildings, woods, ponds, paths, 

-  areas  used  for  other  crops  eligible  for  Community  aid  or  for  permanent  crops  or  horticultural 
crops,  except  permanent  pasture  for  which  area  payments  are  granted  pursuant  to  Article  15 of 
this Regulation and Art.  18 of Regulation (EC) No 

[milk] 

-  areas qualifying  for the  support  system  laid down for the producers  of certain  arable  crops, used 

for the aid scheme for dried fodder or subject to a national or Community set-aside scheme. 

56 

Forage area shall include areas in shared use and areas which are subject to mixed cultivation. 

3. The Commission  shall  adopt detailed  rules for  the application  of this Article  in accordance  with the 

procedure laid down in Article 39. These rules shall, in particular, concern those: 

- relating to areas in shared use and to areas which are subject to mixed cultivation, 

- enabling improper application of the stocking density to be pcvented. 

Sub-section 5 - Extensiflcation payment 

Article 11 

1. Producers receiving the special premium and/or the suckler cow premium may qualify  for an additional 

payment of ECU 100 per premium granted provided that during the calendar year concerned: 

- the stocking density on their holdings is less than 1,4 LU per hectare, 

- their animals are actually grazed on pasture land during the growing season. 

2. For the purposes of this Article: 

- by derogation from Article  10 (2) (a), the stocking density of the holding shall be determined taking 
account of the male bovine animals, suckler cows, dairy cows and heifers present thereon during the 
calendar year concerned, as well as of the sheep and/or goats for which premium applications have 
been  submitted  for  the  same  calendar  year.  The number  of  animals  shall  be  converted  to  LU by 
reference to the conversion table in Annex III. 

-  by  derogation from Article  10 (2)  (b),  only  the  temporary  and  permanent  pasture  of  the  holding 
available  throughout  the calendar year  for  rearing bovine  animals  and  sheep  and/or goats  shall be 
taken as "forage area". 

3. In accordance with the procedure laid down in Article 39 the Commission shall: 

- adopt detailed rules for the application of this Article, 

- if necessary, adjust the amount set out in paragraph  1  taking account, in particular, of the number of 

animals qualifying for the payment for the preceding calendar year, 

Sub-section 6 - Dairy cow premium 

Article 12 

1. The amount per dairy cow premium unit set out in Article  15 (2) of Regulation (EC) No 

[dairy] 

shall be supplemented by the amounts per premium unit set out in Annex IV 

2. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

57 

Section 2 - Additional  payments 

Article 13 

1. Member  States  shall  make  additional  payments  to  producers  in  their  territory  within  the  limits  of  the 
global  amounts  set  out  in Annex  V  and  on  a yearly  basis.  Such  payments  shall  be  made  according  to 
objective criteria including, in particular, the relevant production structures and conditions, arid in such a 
way  as to  ensure  equal  treatment  between  producers  and  to  avoid  market  and  competition  distortions. 
Moreover, such payments shall not be linked to fluctuations  of market prices. 

2. Additional payments may be made  in the  form  of headage payments (Article  14) and/or area  payments 

(Article  15). 

Article 14 

1. Headage payments may be granted  for: 

(a) male bovine animals, 

(b) suckler cows, 

(c) dairy cows, 

(d) heifers. 

2. The grant of headage payments shall be subject: 

(a) to the special conditions set out in Annex VI, 

(b) to specific  stocking density requirements to be established by Member States. 

3. The specific  stocking density requirements shall be established: 

- on the basis of the forage  area referred to in Article  10 (2) (b), 

-  taking  account  of,  in  particular,  the  environmental  impact  of  the  type  of  production  concerned,  the 
environmental  sensitivity  of  the  land  used  for  rearing  cattle  and  the  measures  which  have  been 
implemented with a view to stabilise or improve the environmental situation of this land. 

Article 15 

1. Area payments shall be granted per hectare of permanent pasture: 

(a) which is available to a producer during the calendar year concerned, 

(b) which  is not used to comply with the specific  stocking  density requirements  referred  to  in Article  14 

(3), and 

(c)  in respect  of which no payments  under the  support  system  laid  down  for  producers  of certain  arable 
crops, under the aid system for dried fodder  and under Community aid schemes for other permanent or 
horticultural crops are claimed for the same year. 

2. The area of permanent pasture in a region  for which  area payments may be granted  shall not exceed the 

relevant regional base area. 

58 

Regional  base  areas  shall  be  established  by  Member  States  as  the  average  number  of  hectares  of 
permanent pasture available for rearing bovine animals during the years 1995,1996 and 1997. 

3. The maximum area payment per hectare which may be granted,  including  area payments pursuant to 

Article 18 of Regulation (EC) No 

[milk], shall not exceed: 

- ECU 210 for the calendar year 2000, 

- ECU 280 for the calendar year 2001, 

- ECU 350 for the calendar year 2002 and the subsequant calendar 

Article 16 

Before  1 January 2000, Member States shall provide the Commission with detailed  information  on their 
national arrangements concerning the granting of additional payments. Any changes of these arrangements 
shall be communicated to the Commission not later than one month after their adoption. 

Article 17 

Before  1  April  2004,  Member  States  shall  submit  to  the  Commission  detailed  reports  on  the 
implementation of this section. 

Before  1  January 2005, the Commission shall evaluate the implementation of this section and examine the 
distribution of Community funds between Member States as provided for in Annex V, taking account  of, 
in particular, the development of the Member States' shares in Community beef production. If necessary, 
the Commission shall make appropriate proposals to the Council. 

Detailed rules of application  of this section shall be adopted by the Commission  in accordance with the 
procedure laid down in Article 39. 

Article 18 

Section 3 - Common provisions 

Article 19 

To qualify  for direct payments under this title, except area payments referred  to in Article  15, an animal 
shall be identified and registered in accordance with Council Regulation (EC) No 820/9710. 

Article 20 

1. Direct payments under this title, except the deseasonalisation  premium,  shall be paid  as soon  as the 
inspections are carried out but not earlier than  16 October of the calendar year in respect of which they 
are applied for. 

2. Save in duly justified  exceptional cases, direct payments under this title shall be made not later than 30 

June of the year following the calendar year in respect of which the payment is applied for. 

10 

OJNoL  117, 7.5.1997, p. 1. 

59 

However, the deseasonalisation  premium  shall be paid as soon as the inspections  are carried out and  no 
later than  15 October of the calendar year in respect of which it is applied  for. 

Article 21 

1. Where residues of substances prohibited  under  Council  Directive  96/22/EC11, or residues of  substances 
authorized  under  the  aforementioned  act  but  used  illegally,  are  detected  pursuant  to  the  relevant 
provisions  of Directive  96/23/EC, in an animal belonging  to the bovine herd  of a producer,  or where  a 
non-authorized  substance  or  product,  or  a  substance  or  product  authorized  under  Council  Directive 
96/22/EC12  but  held  illegally  is  found  on  the  producer's  holding  in  any  form,  the  producer  shall  be 
excluded,  for  the  calendar  year  of  that  discovery,  from  receiving  the  amounts  provided  for  under  this 
section. 

In  the  event  of  a  repeated  infringement,  the  length  of  the  exclusion  period  may,  according  to  the 
seriousness of the offence,  be extended to five years as from the year in which the repeated  infringement 
was discovered. 

2. In the event of obstruction  on the part of the owner or holder of the animals when  inspections are being 
carried  out  and  when  the  samples  are  being  taken  which  are  necessary  for  the  application  of  national 
residue-monitoring  plans  or  when  the  investigations  and  checks  provided  for  under  the  Directive 
96/23/EC are being carried out, the penalties provided for in paragraph  1  shall apply. 

3. Detailed rules for the application of this Article shall be adopted by the Commission  in accordance  with 

the procedure laid down in Article 39. 

, Article 22 

The  amounts  of  the  direct  payments  set  out  in  sections  1  and  2  may  be  changed  in  the  light  of 
developments  in production, productivity  and the markets, according to the procedure  laid down in Article 
43 (2) of the Treaty. 

The  expenditure  incurred  in granting  the  direct  payments provided  for  in this title  shall  be  considered  as 
intervention measures within the meaning of Article 2 (2) of Regulation (EC) No 

[CAP financing] 

Article 23 

1 ' 
Council Directive 96/22/EC of 29 April  1996 concerning the prohibition on the use in 
stockfarming  of certain substances having a hormonal or thyrostatic action and of 6-agonists, and repealing 
Directives 81/602/EEC, 88/146/EEC and 88/299/EEC, OJ No L  125, 23.5.1996, p. 3. 
12 
residues thereof in live animals and animal products and repealing Directives 85/358/EEC and  86/469/EEC 
and Decisions 89/187/EEC and 91/664/EEC, OJ No L  125, 23.5.1996, p. 10. 

Council Directive 96/23/EC of 29 April  1996 on measures to monitor certain substances and 

60 

Title 2 - Private Storage 

Article 24 

1.  From  1  July  2002,  the  granting  of  aids  for  private  storage  may  be  decided,  when  the  average 
Community  market  price  recorded,  on  the  basis  of  the  Community  grading  scale  provided  for  in 
Regulation (EEC) No  1208/81, for the carcases of adult bovine animals, is, and is likely to remain, at 
less than 103% of the basic price. 

2. The basic price shall be set at ECU 1,950 per ton. 

3. Private storage aid may be granted for fresh or chilled meat of adult bovine animals presented  in the 
form  of  carcases,  half-carcases,  compensated  quarters,  forequarters  or  hindquarters,  classified  in 
accordance with the Community grading scale provided for in Regulation (EEC) No 1208/81. 

4. The Council, acting in accordance with the procedure laid down in Article 43 (2) of the Treaty, may: 

-  change the  basic price  taking  account,  in particular,  of the need  to fix this price  at  a  level which 
contributes towards stabilizing market prices without, however, leading to the formation  of structural 
surpluses in the Community, 

- amend the list of products in paragraph 3 which may be the subject of private storage aid. 

5. Detailed rules for the application  of this Article shall be adopted and the granting of aids for private 
storage shall be decided by the Commission in accordance with the procedure laid down in Article 39. 

CHAPTER II 

Trade with third countries 

Article 25 

1.  Imports  into  the  Community  of  any  of  the  products  listed  in  Article  1 (1)  (a)  shall  be  subject  to 

presentation of an import licence. 

Imports  into the  Community  of any of the products  listed  in Article  1 (1) (b)  and  exports from the 
Community of products listed in Article 1  (1) (a) and (b) may be subject to presentation of an import or 
export licence. 

Licences  shall  be  issued  by  the  Member  States  to  any  applicant,  irrespective  of  his  place  of 
establishment in the Community and without prejudice to measures taken for the application of Articles 
28 and 29. 

Import  and  export  licences  shall  be  valid  throughout  the  Community.  Such  licences  shall  be  issued 
subject to the lodging of a security guaranteeing that the products are imported or exported during the 
term of validity of the licence; except in cases of force majeure, the security shall be forfeited  in whole 
or in part if import or export is not carried out, or is carried out only partially, within that period. 

2. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. These rules may concern, in particular, 

(a) the term of validity of licences, 

(b) the list of products for which import or export licences are requested under paragraph  1  second sub 

paragraph. 

Article 26 

Unless this Regulation provides otherwise, the rates of duty in the Common Customs Tariff shall apply to 
the products listed in Article 1. 

61 

Article 27 

1. In order to prevent or counteract adverse effects on the market in the Community which may result  from 
imports of certain products listed in Article 1, imports of one or more of such products at the rate of duty 
laid down in Article 26 shall be subject to payment of an additional import duty if the conditions set out 
in Article 5 of the Agreement on Agriculture concluded in accordance with Article 228 of the Treaty in 
the framework of the Uruguay Round of multilateral trade negotiations have been  fulfilled  unless the 
imports are unlikely to disturb the Community market, or where the effects would be disproportionate to 
the intended objective. 

2.  The  trigger  prices  below  on  which  an  additional  duty  may  be  imposed  shall  be  those  which  are 

forwarded by the Community to the World Trade Organization. 

The  trigger  volumes  to  be  exceeded  in  order  to  have  the  additional  import  duty  imposed  shall  be 
determined particularly on the basis of imports into the Community in the three years preceding the year 
in which the adverse effects referred to in paragraph 1  arise or are likely to arise. 

3.  The  import  prices  to  be  taken  into  consideration  for  imposing  an  additional  import  duty  shall  be 

determined on the basis of the cif import prices of the consignment under consideration. 

Cif import prices shall be checked to that end against the representative prices for the product  on the 
world market or on the Community import market for that product. 

4.  The Commission  shall  adopt  detailed  rules  for  the application  of this Article  in accordance  with the 

procedure laid down in Article 39. Such detailed rules shall specify in particular: 

(a) the products to which additional import duties may be applied under the terms of Article 5 of the 

Agreement on Agriculture; 

(b) the other criteria necessary to ensure application of paragraph  1  in accordance with Article 5 of the 

Agreement on Agriculture. 

Article 28 

1. Tariff quotas for the products listed in Article 1 resulting from agreements concluded in accordance with 
Article 228 of the Treaty or from any other act of the Council shall be opened and administered by the 
Commission in accordance with detailed rules adopted under the procedure laid down in Article 39. 

With regard to the import quota of 50 000 tonnes of frozen meat coming under CN codes 0202 20 30, 
0202  30  and  0206  29  91  and  intended  for  processing,  the  Council,  acting  on  a  proposal from the 
Commission by a qualified  majority,  may lay down that all or part of the quota shall cover equivalent 
quantities of quality meat, applying a conversion rate of 4,375. 

2. Quotas shall be administered by applying one of the following methods or a combination of them: 

-  method  based  on  chronological  order  of  the  lodgement  of  applications  ('first  come, first served' 

principle), 

- method  of distribution  in proportion  to the quantities requested when the applications  were lodged 

(using the 'simultaneous examination' method), 

-  method based on taking traditional trade patterns  into account (using the 'traditional  importers/new 

arrivais' method). 

62 

Other appropriate methods may be adopted. 

They shall avoid any discrimination between the operators concerned. 

3.  The  method  of  administration  adopted  shall,  where  appropriate,  give  due  weight  to  the  supply 
requirements of the Community market and the need to safeguard the equilibrium of that market, whilst 
at  the  same  time  possibly  drawing  on  methods  which  may  have  been  applied  in the  past  to  quotas 
corresponding  to  those  referred  to  in  paragraph  1,  without  prejudice  to  the  rights  resulting from 
agreements concluded as part of the Uruguay Round trade negotiations. 

4.  The  detailed  rules  referred  to  in  paragraph  1 shall  provide  for  annual  quotas,  if  necessary,  suitably 
phased over the year, and shall determine the administrative method to be used and, where appropriate, 
shall include: 

(a) guarantees covering the nature, provenance and origin of the product, and 

(b) recognition of the document used for verifying the guarantees referred to in (a); and 

(c) the conditions under which import licences are issued and their term of validity. 

Article 29 

1.  To  the  extent  necessary  to  enable  the  products  listed  in  Article  1 to  be  exported  on  the  basis  of 
quotations  or  prices  for  those  products  on  the  world  market  and  within  the  limits  resulting from 
agreements  concluded  in  accordance  with  Article  228  of  the  Treaty,  the  difference  between  those 
quotations or prices and prices in the Community may be covered by export refunds. 

2. The method to be adopted for the allocation of the quantities which may be exported with a refund shall 

be the method which: 

(a) is most suited to the nature of the product and the situation on the market in question, allowing the 
most  efficient  possible  use  of the  resources  available,  account  being taken  of the  efficiency  and 
structure of Community exports without, however, creating discrimination between large and small 
operators; 

(b)  is  least  cumbersome  administratively  for  operators,  account  being  taken  of  administration 

requirements; 

(c) prevents any discrimination between the operators concerned. 

3. Refunds shall be the same for the whole Community. 

They may vary according to destination, where the world market situation or the specific  requirements 
of certain markets make this necessary. 

Refunds  shall be fixed by the Commission  in accordance with the procedure  laid down  in Article 39. 
Refunds may be  fixed: 

(a) at regular intervals; 

(b) in addition and for limited quantities, by invitation to tender for products for which that procedure 

seems appropriate. 

63 

Except where fixed by tender, the list of products on which an export refund  is granted and the amount 
of such refund  shall be fixed at least once every three months. The amount of the refund  may, however, 
remain  at  the  same  level  for  more than  three  months  and  may, where  necessary,  be  adjusted  in the 
intervening period by the Commission at the request of a Member State or on its own initiative. 

4. The following shall be taken into account when refunds are being  fixed: 

(a) the existing situation and the future trend with regard to: 

- prices and availabilities of beef and veal sector products on the Community market; 

- prices for beef and veal sector products on the world market; 

(b)  the  aims  of  the  common  organization  of  the  market  in  beef  and  veal,  which  are  to  ensure 

equilibrium and the natural development of prices and trade on this market; 

(c) the limits resulting from agreements concluded in accordance with Article 228 of the Treaty; 

(d) the need to avoid disturbances on the Community market; 

(e) the economic aspect of.the proposed exports. 

Account  shall  also  be  taken  in  particular  of  the  need  to  establish  a  balance  between  the  use  of 
Community basic products in the manufacture  of processed goods exported to third countries and the 
use of products from these countries admitted to inward processing arrangements. 

5. When prices within the Community  listed in paragraph  1 are being determined the following  shall be 

taken into account: 

- prices ruling on the representative Community markets, 

- prices ruling at export. 

When prices in international trade listed in paragraph  1 are being determined account shall be taken of: 

- prices ruling on third-country markets, 

- the most favourable prices in third countries of destination for third-country imports, 

-  producer  prices  recorded  in  exporting  third  countries,  account  being  taken,  where  appropriate,  of 

subsidies granted by those countries, 

- free-at-Community-frontier offer prices. 

6. Refunds shall be granted only on application and on presentation of the relevant export licence. 

7. The refund  applicable to exports of products listed in Article  1 shall be that applicable on the day of 
application for the licence and, in the case of a differentiated  refund, that applicable on the same day: 

(a) for the destination indicated on the licence; or 

(b) for the actual destination if it differs from the destination indicated on the licence. In that case, the 
amount  applicable  may  not  exceed  the  amount  applicable  for  the  destination  indicated  on  the 
licence. 

Appropriate measures may be taken to prevent abuse of the flexibility provided for in this paragraph. 

64 

8. Paragraphs 6 and 7 may be waived  in the case of products  listed in Article  1 on which refunds  are paid 

under food-aid  operations, in accordance with the procedure laid down in Article 39. 

9. The refund  shall be paid upon proof that: 

- the products are of Community origin, 

- the products have been exported from the Community, and 

- in the case of a differentiated  refund  the products have reached the destination indicated on the licence 
or  another  destination  for  which  the  refund  was  fixed,  without  prejudice  to  paragraph  3  (b). 
Exceptions  may  be  made  to  this  rule  in  accordance  with  the  procedure  laid  down  in  Article  39, 
provided conditions are laid down which offer  equivalent guarantees. 

Moreover, the payment of the refund  for exports of live animals shall be subject to compliance with the 
provisions  established  in  Community  legislation  concerning  animal  welfare  and,  in  particular,  the 
protection of animals during transport. 

10. Without prejudice to paragraph 9 first indent, in the absence of a derogation granted in accordance with 
the procedure laid down in Article 39, no export refund  shall be granted on products which are  imported 
from third countries and re-exported to third countries. 

11.  Observance  of the  volume  limits resulting from the  agreements  concluded  in accordance  with  Article 
228  of  the  Treaty  shall  be  ensured  on  the  basis  of the  export  licences  issued  for  the  reference  periods 
provided  for  therein  which  apply  to  the  products  concerned.  With  regard  to  compliance  with  the 
obligations arising in the framework of the Uruguay Round multilateral trade negotiations, the ending of 
a reference period shall not affect  the validity of export licences. 

12.  Detailed  rules  for  the  application  of  this  Article,  including  provisions  on  the  redistribution  of 
exportable  quantities which have not been  allocated  or utilized,  shall be adopted  by the  Commission  in 
accordance with the procedure laid down in Article 39. 

With  regard  to  paragraph  9,  last  subparagraph,  the  detailed  rules  for  the  application  may  also  include 
conditions concerning, in particular, imports into third countries. 

Article 30 

1. To the  extent  necessary  for  the  proper  working  of the common  organization  of the  market  in beef  and 
veal, the  Council,  acting  by  a qualified  majority,  on  a proposal  from  the  Commission,  may,  in  special 
cases,  prohibit  in whole  or  in part the  use  of  inward  or  outward  processing  arrangements  in respect  of 
products listed in Article 1. 

2. However, by way of derogation from paragraph  1, if the situation referred  to  in paragraph  1 arises with 
exceptional urgency and the Community market is disturbed or is liable to be disturbed by the  inward or 
outward processing arrangements, the Commission shall, at the request of a Member State or on its own 
initiative, decide upon  the necessary  measures; the  Council  and the Member  States  shall  be notified  of 
such measures, which shall be valid for no more than six months and shall be immediately  applicable. If 
the Commission  receives  a request from a Member  State, it shall take  a decision thereon  within  a week 
following  receipt of the request. 

3. Measures decided on by the Commission may be referred  to the Council by any Member  State within  a 
week of the day on which they were notified.  The Council, acting by a qualified  majority,  may  confirm, 
amend  or  repeal  the  Commission  decision.  If  the  Council  has  not  acted  within  three  months,  the 
Commission decision shall be deemed to have been repealed. 

65 

Article 31 

1.  The  general  rules  for  the  interpretation  of  the  combined  nomenclature  and  the  detailed  rules  for  its 
application  shall  apply  to  the  tariff  classification  of  products  covered  by  this  Regulation;  the  tariff 
nomenclature  resulting  from  the  application  of this  Regulation  shall  be  incorporated  into  the  Common 
Customs tariff. 

2.  Save  as  otherwise  provided  for  in  this  Regulation  or  in  provisions  adopted  pursuant  thereto,  the 

following  shall be prohibited in trade with third countries: 

- the levying of any charge having equivalent effect  to a customs duty, 

- the application of any quantitative restriction or measure having equivalent  effect. 

Article 32 

1.  If,  by  reason  of  imports  or  exports,  the  Community  market  in  one  or  more  of  the  products  listed  in 
Article  1  is affected  by, or is threatened with, serious disturbance  likely to jeopardize the achievement  of 
the objectives  set out in Article 39 of the Treaty, appropriate measures may be applied in trade with third 
countries until such disturbance or threat of disturbance has ceased. 

The  Council,  acting  by  a  qualified  majority,  on  a  proposal  from  the  Commission,  shall  adopt  general 
rules  for  the  application  of  this  paragraph  and  shall  define  the  circumstances  and  limits  within  which 
Member States may adopt protective measures. 

2. If the situation referred  to in paragraph  1 arises, the Commission  shall, at the request of a Member  State 
or on its own initiative, decide upon the necessary measures: the Member  States shall be notified  of such 
measures, which  shall be immediately  applicable. If the Commission  receives a request  from  a Member 
State, it shall take a decision thereon within three working days following  receipt of the request. 

3. Measures decided upon by the Commission may be referred  to the Council by any Member  State within 
three  working  days  of  the  day  on  which  they  were  notified.  The  Council  shall  meet  without  delay.  It 
may,  acting  by  a  qualified  majority,  amend  or  repeal  the  measure  in  question  within  one  month 
following the day on which it was referred to the Council. 

4.  This  Article  shall  be  applied  having  regard  to  the  obligations  arising  from  agreements  concluded  in 

accordance with Article 228 (2) of the Treaty. 

CHAPTER III 

General  provisions 

Article 33 

Member States shall record prices of adult bovine animals and of meat of adult bovine animals on the basis 
of rules to be established by the Commission  in accordance with the procedure  laid down in Article 39 

Article 34 

1. When a substantial rise or fall  in prices is recorded on the Community market and this situation  is likely 
to  continue,  thereby  disturbing  or  threatening  to  disturb  the  market,  the  necessary  measures  may  be 
taken. 

66 

2. Detailed rules for the application of this Article shall be adopted by the Commission in accordance with 

the procedure laid down in Article 39. 

Article 35 

In order to take account  of the restrictions  on free circulation  which may result from the application  of 
measures for combating the spread of diseases in animals, exceptional measures of support for the market 
affected  by  those  restrictions  may  be taken  in  accordance  with  the procedure  laid  down  in Article 39. 
Those measures may only be taken in so far as, and for as long as, is strictly necessary for the support of 
that market. 

Save as otherwise provided  in this  Regulation,  Articles  92, 93 and  94 of the  Treaty  shall  apply  to the 
production of and trade in the products listed in Article 1. 

Article 36 

Article 37 

Member  States  and  the  Commission  shall  communicate  to  each  other  the  information  necessary  for 
implementing  this  Regulation.  The  information  to be  communicated  shall be  determined  in  accordance 
with  the  procedure  laid  down  in  Article  39.  Rules  for  the  coriimunication  and  distribution  of  such 
information shall be adopted in accordance with the same procedure. 

A Management  Committee for  Beef and Veal (hereinafter  called  "the Committee")  shall be  established, 
composed of representatives of Member States and chaired by a representative of the Commission. 

Article 38 

Article 39 

1. Where the procedure laid down in this Article is to be followed, the chairman shall refer the matter to 

the Committee either on his own initiative or at the request of the representative of a Member State. 

2. The representative of the Commission shall submit to the Committee a draft of the measures to be taken. 
The Committee shall deliver  its opinion  on the draft  within  a time limit which the chairman may lay 
down according to the urgency of the matter. The opinion shall be delivered by the majority  laid down 
in Article  148 (2) of the Treaty  in the case of decisions which the Council  is required  to adopt  on a 
proposal  from  the  Commission.  The  votes  of  the  representatives  of  the  Member  States  within  the 
Committee shall be weighted in the manner set out in that Article. The Chairman shall not vote. 

3. The Commission shall adopt measures which shall apply immediately. However, if these measures are 
not in accordance with the opinion of the Committee, they shall be communicated by the Commission to 
the Council forthwith. In that event the Commission may defer application of the measures which it has 
decided for a period of not more than one month from the date of such communication. 

The Council, acting by a qualified majority, may take a different  decision within one month. 

67 

The Committee may consider any other question  referred  to it by its chairman  either  on his own  initiative 
or at the request of the representative of a Member State. 

Article 40 

Regulation  (EC)  No 
apply to the products listed in Article 1. 

[CAP  financing]and  the  provisions  adopted  in  implementation  thereof  shall 

Article 41 

This Regulation shall be so applied that appropriate account  is taken, at the same time, of the objectives  set 
out in Articles 39 and  110 of the Treaty. 

Article 42 

CHAPTER IV 

Transitional and final  provisions 

Article 43 

1. Until  30  June  2002,  products  as  referred  to  in  paragraph  2  in  connection  with  Article  24  (1),  may  be 
bought-in  by  intervention  agencies  in  accordance  with  the  provisions  laid  down  in  this  Article,  to 
prevent or mitigate a substantial fall  in prices. 

2.  Where  the  conditions  laid  down  in  paragraph  3  are  met,  buying-in  by  intervention  agencies  in  one  or 
more  Member  States  or  in  a  region  of  a  Member  State  of  one  or  more  categories,  qualities  or  quality 
groups, to be determined, of fresh or chilled meat falling within CN codes 0201  10 00 and 0201 20 20 to 
0201  20  50  originating  in the  Community  may  be  organized  under  tender  procedures  arranged  with  a 
view to  ensuring  reasonable  support  of the market,  having  regard  to  seasonal  developments  as  regards 
slaughterings. 

Such buying in may not cover more than 350 000 tonnes per year and for the Community as a whole. 

The  Council  may  amend  this  quantity,  acting  by  a  qualified  majority  on  a  proposal  from  the 
Commission. 

3.  For  each  quality  or  quality  group  that  may  be  bought  in,  the  tender  procedures  may  be  opened  as 
provided  in paragraph  8 whenever,  in a Member  State  or  in a region  of a Member  State, the  following 
two conditions are both met for a period of two consecutive weeks: 

-  the  average  Community  market  price  recorded  on  the  basis  of the  Community  grading  scale  for  the 

carcases of adult bovine animals is less than 84 % of the intervention price, 

-  the  average  market  price  recorded  on  the  basis  of  the  said  scale  in  the  Member  State  or  States  or 

regions of a Member State is less than 80 % of the intervention price. 

The intervention price shall be set at: 

- ECU 3,475 per ton for the period from  1  January until 30 June 2000, 

- ECU 3,127.5 per ton for the period from  1  July 2000 until 30 June 2001, 

- ECU 2,780 per ton for the period from  1  July 2001 until 30 June 2002, 

68 

4. Tender arrangements for one or more qualities or quality groups shall be suspended  in any one of the 

following two situations: 

- where, for two consecutive weeks, the two conditions referred  to in paragraph  3 are no longer both 

met, 

- where buying-in is no longer appropriate in view of the criteria set out in paragraph 2. 

5. Intervention  shall also be opened  if,  for  a period  of two consecutive  weeks, the average Community 
market  price  of  young  uncastrated  male  animals  less  than  two  years  old  or  castrated  male animals, 
recorded on the basis of the Community grading scale for carcases of adult bovine animals, falls short of 
78 % of the  intervention  price, and  if  in a Member  State or regions  of a Member  State, the average 
market  price  of  young  uncastrated  male  animals  less than  two  years  old  or  castrated  male  animals, 
recorded on the basis of the Community grading scale for carcases of adult bovine animals, falls short of 
60 % of the intervention price; in this case, buying-in shall take place for the categories concerned in the 
Member States or regions of a Member State where the price level is below that limit. 

For this buying-in, and without prejudice to paragraph 6, all offers  shall be accepted. 

The quantities bought in pursuant to this paragraph shall not be taken  into account for the purposes of 
applying the buying-in ceiling referred to in paragraph 2. 

6. Only offers  equal to or less than the average market price recorded in a Member State or a region of a 
Member  State and increased by an amount to be determined  on the basis of objective  criteria may be 
accepted under the buying-in systems referred to in paragraphs 2 and 5. 

7.  For  each  quality  or  quality  group  eligible  for  intervention,  the  buying-in  prices  and  the  quantities 
accepted  for  intervention  shall  be  determined  under  tender  procedures  and  may,  in  special 
circumstances, be fixed per  Member  State or per region  of a Member  State on the basis  of recorded 
average market prices. The tender procedures must ensure equality of access for all persons concerned. 
They shall be opened on the basis of specifications  to be determined taking commercial structures into 
account, where necessary. 

8. Under the procedure provided for in Article 39: 

- the categories, qualities or quality groups of products eligible for intervention shall be determined, 

- the opening or reopening of tender procedures and their suspension in the case referred  to in the last 

indent of paragraph 4 shall be decided, 

- the buying-in prices and the quantities accepted for intervention shall be fixed, 

- the amount of the increase referred to in paragraph 6 shall be determined, 

- the procedures  implementing this Article, and  in particular those designed  to prevent market prices 

spiralling downward, shall be adopted, 

- any transitional provisions necessary for the implementation of these arrangements shall be adopted. 

The Commission shall decide on: 

- opening intervention as referred to in paragraph 5 and suspending it where one or more conditions laid 

down in that paragraph no longer apply, 

- suspending buying-in as referred to in the first indent of paragraph 4. 

69 

Article 44 

1. Disposal  of  the  products  bought  in  by  the  intervention  agencies  in  accordance  with  the  provisions  of 
Article 43 of this Regulation  and of Articles 5 and 6 of Regulation  (EEC) No 805/68 shall take place in 
such  a  way  as  to  avoid  any  disturbance  of  the  market  and  to  ensure  equal  access  to  goods  and  equal 
treatment of purchasers. 

2.  The  Council,  acting  by  a  qualified  majority,  on  a proposal  from  the  Commission,  shall  adopt  general 

rules for implementing this Article. 

3.  Detailed  rules  for  the  application  of  this  Article,  in particular  as  regards  selling  prices,  conditions  for 
release  from  storage  and,  where  appropriate,  the  processing  of  products  bought  in  by  the  intervention 
agencies, shall be adopted by the Commission in accordance with the procedure laid down in Article 39. 

Article 45 

1. Until  30 June 2002, the granting of aids for  private  storage  for  products as referred  to  in Article  24  (3) 

may be decided. 

2. Detailed rules of application with regard to private storage aid shall be adopted and the granting of aids 
for  private  storage  shall  be decided  by the  Commission  in accordance  with the procedure  laid  down  in 
Article 39. 

1. Regulations (EEC) No 805/68 and No  1892/87 are hereby repealed. 

Article 46 

2.  References  to  Regulation  (EEC)  No  805/68  shall  be  construed  as  references  to  this  Regulation  and 

should be read in accordance with the correlation table in Annex VII. 

Article 47 

The Commission shall adopt, in accordance with the procedure laid down in Article 39: 

- the measures required to facilitate  the transition from the arrangements provided  in Regulation  (EEC) No 

805/68  to those established by this Regulation, 

-  the  measures  required  to  resolve  specific  practical  problems.  Such  measures  -  if  duly justified  -  may 

derogate from certain parts of this Regulation. 

70 

Article 48 

This Regulation shall enter into force on the day of its publication in the Official Journal of the European 
Communities. 

It shall apply as from 1  January 2000, except Article 16 which shall apply from the entry into force of this 
Regulation.. 

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

Done at 

* For the Council 
The President 

71 

ANNEX I 

Special premium 
Regional ceilings of the Member States referred  to in 
Art. 4 (4) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 

235  149 
277  110 
1 782 700 
140130 
649 896 

1 754 732  (1) 
1  002 458 
598 746 
18 962 
157 932 
423 400 
166 483  (2) 
241 553 
226 328 
1419 811 

(1)  Without  prejudice  to  the  specific  rules  laid  down  in 
Council Regulation (EEC) No 3763/913. 

(2) Excluding the extensification  programme set out in 
Regulation (EC) No  1017/9414. 

13 
No L 267, 9.11.1995, p. 1). 
14 
L  144,28.6.1995, p. 4). 

OJ No L 356 , 24.12.1991  p.  1. Regulation  as last amended  by Regulation  (EC) No 2598/95  (OJ 

OJ No L  112 , 3.5.1994, p. 2. Regulation as last amended by Regulation (EC) No  1461/95 (OJ No 

72 

ANNEX  n 

Suckler cow premium 

National ceilings referred to in Article 7 (2) applicable as 
from  1.1. 2000 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France  (1) 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal  (2) 
Finland 
Sweden 
United  Kingdom 

391,034 
111,044 
547,690 
131,856 
1,347,486 
3,739,106 
1,020,606 
578,418 
13,978 
61,366 
283,010 
269,765 
28,332 
132,510 
1,629,268 

(1) Excluding the specific ceiling as provided for in 
Article 5 (3) of Regulation (EEC) No 3763/91. 

(2) Excluding the specific reserve provided for in Article 
2 of Regulation (EC) No  1017/94. 

73 

ANNEX III 

Livestock Unit conversion table referred to in Article 10 

Male bovine animals and 
heifers older than 24 
months, suckler cows, 
dairy cows 

1.0 LU 

Male bovine animals and 
heifers from 6 months to 
24 months 

0.6 LU 

Sheep 

Goats 

0.15 LU 

0.15 LU 

74 

ANNEX TV 

Dairy cow premium 

Supplementary amounts referred to in Article  12 (expressed in ECU) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 

2000 

2001 

2002 and 
subsequent 
years 

12.9 
9.8 
11.9 
15.4 
14.4 
12.1 
15.4 
13.4 
11.0 
10.0 
13.5 
14.3 
10.4 
9.5 
11.2 

24.8 
18,9 
22.7 
29.5 
27.5 
23.1 
29.5 
25.7 
21.0 
19.1 
26.0 
27.4 
20.0 
18.1 
21.5 

37.7 
28.7 
34.6 
45.4 
41.9 
35.2 
44.9 
39.2 
31.9 
29.0 
39.5 
41.7 
30.5 
27.6 
32.3 

75 

ANNEX V 

Additional payments 

Global amounts referred to in Article  13 (expressed in Mio. ECU) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 

2000 

2001 

2002 and 
subsequent 
years 

26.8 
16.3 
122.1 
5.3 
45.7 
129.1 
43.5 
90.6 
0.6 
35.0 
16.6 
8.6 
8.6 
12.7 
88.1 

52.5 
31.9 
239.2 
10.3 
89.6 
252.9 
85.2 
177.5 
1.3 
68.5 
32.5 
16.8 
16.8 
24.9 
172.7 

80.9 
49.2 
368.8 
15.9 
138.2 
390.0 
131.3 
273.7 
1.9 
105.7 
50.2 
25.9 
25.9 
38.4 
266.3 

76 

ANNEX VI 

Special conditions for the granting of headage payments referred to in Article 14 

I.  Male bovine animals 

1. Headage payments may be granted per calendar year for no more than: 

(a) a number of animals per holding to be determined by the Member State on a national or regional 

basis, using historical reference data, and, 

(b) a number of animals in a Member State: 

- equal to the regional ceiling of the Member State concerned set out in Annex I or 

- equal to the average number of slaughterings of male bovine animals during the years  1997, 1998 
and 1999 deriving from Eurostat statistics for these years or any other published official  statistical 
information for these years accepted by the Commission. 

Only male bovine animals of more than 8 months shall be eligible. 

2. The total amount of headage payment and special premium which may be granted during the lifetime of 

an animal shall not exceed: 

(a) per eligible bull: 

- ECU 210 for the calendar year 2000, 

- ECU 280 for the calendar year 2001, 

- ECU 355 for the calendar year 2002 and the subsequent calendar years; 

(b) per eligible steer: 

- ECU 320 for the calendar year 2000, 

- ECU 420 for the calendar year 2001, 

- ECU 530 for the 2002 calendar year and the subsequent calendar years. 

II. Stickler cows 

1. Headage payments may only be granted as a supplementary amount per suckler cow premium unit set 

out in Article 6 (4). 

2. The total  amount of headage payment and suckler  cow premium  which may be granted per eligible 

animal and calendar year shall not exceed: 

- ECU 175 for the calendar year 2000, 

- ECU 205 for the calendar year 2001, 

- ECU 235 for the calendar year 2002 and the subsequent calendar years. 

77 

III. Dairy cows 

1. Headage payments may only be granted as a supplementary amount per dairy cow premium unit set out 

in Annex IV. 

2. The total amount of dairy cow premium and headage payment, including any other dairy cow payment 
under Regulation (EC) No .... [milk], which may be granted per premium unit and calendar year shall 
not exceed the amounts set out in Article 17 (2) of the said Regulation. 

3. Article 14 (2) (b) shall not apply. 

IV. Heifers 

1. Headage payments may be granted per Member State and calendar year for no more than a number of 
heifers  equal to the average number of slaughterings of heifers  during the years  1997, 1998 and  1999 
deriving from Eurostat statistics for these years or any other published official  statistical information  for 
these years accepted by the Commission. 

2. The total amount of headage payment which may be granted during the lifetime of an animal shall not 

exceed: 

- ECU 100 for the calendar year 2000, 

- ECU 150 for the calendar year 2001, 

- ECU 225 for the calendar year 2002 and the subsequent calendar years. 

78 

ANNEX VII 

Correlation table 

| 

Regulation 805/68 

This Regulation 

| 

Article 1 

Article 2 

Article 4 

Article  1 

Article 2 

Article 4a first and second indent 

Article 3 first and second indent 

Article 4b (1) 

Article 4b (2) first subparagraph 

Article 4(1) 

Article 4 (2) 

Article 4b (2) second subparagraph 

Article 4 (3) (a) 

Article 4b (3) point (a) of the third subparagraph  Article 3 third indent 

' 

Article 4b (3a) 

Article 4b (4) 

Article 4b (5) 

Article 4b (7a) 

Article 4b (8) 

Article 4c (1) second subparagraph 

Article 4 (5) 

Article 4 (7) 

Article 5 (4) 

Article 4c  (1) third subparagraph 

Article 5 (1) second subparagraph 

Article 4c (2) second subparagraph 

^.Article 4c (2) third subparagraph 

Article 5 (2) 

Article 5 (4) 

Article 4c (3) third subparagraph 

Article 5 (3) third subparagraph 

Article 4c (4) 

Article 5 (5) 

Article 4d (1) first sentence 

Article 6(1) first sentence 

Article 4d (la) 

Article 4d (2) first sentence 

Article 6 (3) 

Article 4d (3a) 

Article 4d (5) 

Article 4d (6) first subparagraph 

Article 4d (6) second to fourth subparagraph 

Article 6 (2) (a) 

Article 6 (2) (b) 

79 

Article 4d (6) fifth subparagraph 

Article 6 (2) second subparagraph 

Article 4d (8) second indent 

Article 6 (5) 

Article 4e (1) first sentence  of the first 

Article 8(1) first subparagraph 

subparagraph 

Article 4e (1) second sentence of the first 

Article 8 (4) second indent of the second 

subparagraph 

subparagraph 

Article 4e (1) second subparagraph 

Article 8 (1) second subparagraph 

Article 4e (2) 

Article 4e (3) 

Article 4e (4) 

Article 4e (5) 

Article 8 (2) 

Article 8 (3) 

Article 8 (4) first subparagraph and first indent of 

the second subparagraph 

Article 4f (4) first and second indents of the 

Article 9 (4) first and second subparagraphs 

second subparagraph 

Article 4g (3) 

Article 4g (4a) 

Article 4g (5) 

Article 4h (2) 

Article 4i 

Article 4j (1) to (3) 

Article 4k 

Article 41 

Article 5 

Article 6 (1) 

Article 6 (2) 

Article 6 (3) 

Article 6 (4) 

Article 6 (5) 

Article 6 (6) 

Article 6 (7) 

Article 6a 

Article 10 (2) 

Article 10 (3) 

Article 11  (3) first indent 

Article 21(1) to (3) 

Article 23 

Article 43 (2) 

Article 43 (3) 

Article 43 (4) 

Article 43 (5) 

Article 43 (6) 

Article 43 (7) 

Article 43 (8) 

80 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 44 

Article 45 

Article 25 

Article 26 

Article 27 

Article 12 (1) second subparagraph 

Article 28 (1) second subparagraph 

Article 12 (2) to (4) 

Article 13(1) to (3) 

Article 28 (2) to (4) 

Article 29(1) to (3) 

Article 13 (4) first and second subparagraph 

Article 29 (4) first and second subparagraph 

Article 13 (5) to (12) 

Article 29 (5) to (12) 

Article 14 

Article 15 

Article 16 

Article 22 

Article 22a (1) 

Article 22a (2) 

Article 22a (3) 

Article 23 

Article 24 

Article 25 

Article 26 (1) 

Article 26 (2) 

Article 27 

Article 28 

Article 29 

Article 30 

Article 30a 

Article 31 

Article 32 

Article 30 

Article 31 

Article 32 

Article 34 (1) 

Article 34 (2) 

Article 35 

Article 36 

Article 37 

Article 38 

Article 39 

Article 40 

Article 41 

Article 42 

81 

Article 33 

Article 34 first subparagraph 

Article 48 first subparagraph 

Annex 

Annex II 

82 

Proposal for a 

98/0110  (CNS) 

COUNCIL REGULATION ( EC ) NO 

/98 

of 

on the common organisation of the market in milk and milk products 

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 Commission1; 

Having regard to the opinion of the European Parliament ; 

(1)  Whereas the operation and development of the common market in agricultural products should be 
accompanied  by  the  establishment  of  a common  agricultural  policy  to  include  in  particular  a 
common  organisation  of  agricultural  markets which  may take various  forms  depending  on the 
product; 

(2)  Whereas the aim of the common agricultural policy is to attain the objectives set out in Article 39 
of  the  Treaty;  whereas,  in  the  milk  sector,  in  order  to  stabilise  markets  and  to  ensure  a  fair 
standard of living for the agricultural  community,  it is necessary that the intervention agencies, 
based  on  a  single  price  system,  may  take  intervention  measures  on  the  market  including  the 
buying-in  of butter  and  skimmed  milk  powder  and  the  grant  of  private  storage  aids  for  these 
products; whereas, however, such measures should be standardised  so as not to impede the free 
movement of goods in question within the Community; 

(3)  Whereas by  Council  Regulation  (EEC) No  3950/92  of 28  December  19923 an  additional  levy 
scheme for the market of milk and milk products was introduced for the purpose of reducing the 
imbalance  between  supply  and  demand  on  the  milk  and  milk-product  market  and  resulting 
structural  surpluses; whereas this  scheme will apply  for  six new consecutive  periods  of twelve 
months commencing on 1 April 2000; 

(4)  Whereas, in order to encourage the consumption of milk and milk products in the Community and 
to improve the competitivity  of these products on the international markets, the level of market 
support  should  be  reduced,  in  particular,  through  a gradual  reduction  of  the  target  prices  and 
intervention prices for butter and skimmed milk powder; 

(5)  Whereas the implementation of an intervention system for butter should maintain the competitive 
position of butter on the market and provide for the most efficient  possible storage; whereas the 
quality  requirements  to  be  observed  in  respect  of  butter  constitute  a  determining  factor  for 
attaining  these  objectives;  whereas  buying  into  intervention  should  take  place  insofar  as  it  is 
necessary to maintain the stability of the market by reference to the market price of butter in the 
Member States, and should be carried out under a tendering procedure; 

OJ  L 405, 31.12.1992, p. 1. Regulation as last amended by Commission Regulation (EC) No 

614/97 of 8.4.1997, establishing an additional levy in the milk and milk products sector OJ  L 94 , 
9.4.1997, p. 4. 

83 

(6)  Whereas, in the case of private storage aid for butter, it is appropriate to subject its grant to butter 
produced from cream  and  milk  of  Community  origin  and  to  maintain  a  reference  to  national 
quality grades as a condition of eligibility; 

(7)  Whereas  in  addition  to  intervention  in  respect  of  butter  and  fresh  cream,  other  Community 
intervention measures are required to enable the best return to be obtained from milk proteins and 
to support the prices of products which have special  importance in determining producer prices 
for milk; whereas these measures should take the form of buying-in of skimmed milk powder and 
of  granting  private  storage  aid  for  this  product;  whereas,  however,  the  normal  buying  into 
intervention of skimmed milk powder may be suspended when a certain quantity is reached and 
may be replaced by buying-in under a tender procedure; 

(8)  Whereas to avoid distortion between operators selling into public intervention and in the interest 
of the proper administration  of Community funds, a minimum requirement should be set for the 
protein content of skimmed-milk-powder bought into intervention; whereas the content should be 
fixed taking  account  of  current  commercial  standards  and  in  such  way  that  it  cannot  act  as a 
criterion for exclusion from intervention; 

(9)  Whereas, to contribute to balancing the milk market and to stabilise the market prices for milk and 
milk products, provision should be made for complementary measures  increasing the possibility 
of disposing of milk products; whereas these measures should include the grant of private storage 
aid for certain types of cheeses, on the one hand, and the grant of aids for the marketing of certain 
milk products with a view to specific uses and destinations; 

(10)  Whereas,  in order to stimulate the consumption  of milk  by young people, provision  should  be 
made for the Community to defray  a part of the expenditure occasioned by granting  aid for the 
supply of milk to pupils in schools; 

(11)  Whereas,  as  a  consequence  of  reduced  market  support  in  the  milk  sector,  income  support 
measures for milk producers should be introduced; whereas these measures should take the form 
of a dairy cow premium the level of which should develop in parallel with the gradual reduction 
of market support; whereas the  level of  individual  income support  should be calculated  on the 
basis of the individual reference quantities of the producers concerned and the average milk yield 
in the Community; whereas, to ensure the proper application of the scheme, to take account of the 
multilateral commitments of the Community and for reasons of budget control, provision should 
be made for keeping the overall income support at the level of the Member States' total reference 
quantities as applicable at the entry into force of the premium scheme; 

(12)  Whereas, for reasons of simplification,  the dairy cow premium  should be managed  and granted 
together  with  the  corresponding  income  support  for  dairy  cows  under  the  common  market 
organisation for beef and veal; 

(13)  Whereas the conditions  for  milk production  and the income situation  of producers  significantly 
vary  in different  production  areas of the Community; whereas a Community-wide  scheme with 
uniform  dairy  cow  payments  to  all  producers  would  be  too  rigid  to  respond  adequately  to 
structural and natural disparities and the diverse needs resulting therefrom; whereas, therefore, it is 
appropriate  to  provide  for  a  flexible  framework  of  additional  Community  payments  to  be 
determined  and  made  by  Member  States  within  fixed  global  amounts  and  in  accordance  with 
certain common criteria; whereas the global amounts should be allocated to the Member States on 
the basis of their total reference quantity for milk; whereas the common criteria are intended, inter 
alia, to prevent additional payments from producing discriminatory effects and to take full account 
of the relevant multilateral commitments of the Community; whereas, in particular, it is essential 
that  Member  States  be  obliged  to  use  their  discretionary  powers  exclusively  on  the  basis  of 
objective  criteria, to pay full  regard to the concept of equal treatment  and to avoid market and 
competition distortions; whereas it is appropriate to provide for the forms that additional payments 
may take; whereas these forms should be premium supplements and area payments; 

84 

(14)  Whereas premium  supplements  should be granted  in addition to the  dairy  cow  premium units; 
whereas  it  is  also  necessary  to  limit  the  total  amount  of  support  which  may  be  granted  per 
premium unit per year; 

(15)  Whereas additional area payments should only be granted for permanent pasture which does not 
benefit  from  other  Community  market  support  measures;  whereas  area  payments  should  be 
applied within the limits of regional base areas of permanent pasture which should be established 
by Member States according to historical reference  data; whereas the maximum amount of area 
payment  which  may  be  granted  per  hectare,  including  additional  area  payments  under  the 
common market organisation  for beef and veal, should be comparable with the average support 
per hectare under the support system for producers of certain arable crops; 

(16)  Whereas, in order to achieve the desired economic impact, direct payments must be granted within 

certain time limits; 

(17)  Whereas,  should  the  administration  of  bovine  somatrophin  to  dairy  cows  be  prohibited  under 
Community  law, the Commission  should  establish  penalties  analogous to those  foreseen  in the 
common market organsiation for beef and veal in the case of use of certain prohibited substances 
in beef production; 

(18)  Whereas the  creation  of  a  single  Community  market  for  milk  and  milk  products  involves the 
introduction  of  a single trading  system  at the  external frontiers of  the  Community;  whereas  a 
trading  system  including  import  duties  and  export  refunds,  in  addition  to  the  intervention 
measures,  should,  in  principle,  stabilise  the  Community  market;  whereas  the  trading  system 
should  be  based  on  the  undertakings  accepted  under  the  Uruguay  Round  of  multilateral  trade 
negotiations; 

(19)  Whereas, in order to monitor the volume of trade in milk and milk products with third countries, 
provision should be made for a system of import and export licences for certain products, which 
includes the lodging of a security to guarantee that the transactions  for which  such  licences are 
granted are effected; 

(20)  Whereas in order to prevent or counteract adverse effects  on the Community market which could 
result from imports of certain agricultural products, imports of one or more such products should 
be subject to payment of an additional import duty, if certain conditions are  fulfilled; 

(21)  Whereas  it is appropriate, under certain  conditions, to confer  on the Commission  the power to 
open and administer tariff quotas resulting from international agreements concluded in accordance 
with the Treaty  or from other  acts  of the Council; whereas, moreover, the Commission  should 
have analogous powers concerning certain tariff quotas opened by third countries; 

(22)  Whereas provisions  for  granting a refund  on exports to third countries, based on the  difference 
between  prices  within  the  Community  and  on  the  world  market,  and  falling  within  the  WTO 
Agreement on Agriculture , should  serve to safeguard  Community participation  in  international 
trade  in milk  and milk products; whereas these refunds  should  be subject  to  limits  in terms of 
quantity and value; 

(23)  Whereas compliance with the limits in terms of value should be ensured at the time when refunds 
are fixed through the monitoring of payments under the rules relating to the European Agricultural 
Guidance and Guarantee Fund; whereas monitoring can be facilitated  by the compulsory advance 
fixing of refunds, while allowing the possibility, in the case of differentiated  refunds, of changing 
the specified destination within a geographical area to which a single refund rate applies; whereas, 
in the case of a change of destination, the refund  applicable to the actual destination  should be 
paid, with a ceiling of the amount applicable to the destination fixed in advance; 

OJ  L 336, 23.12.1994, p. 22. 

85 

(24)  Whereas ensuring compliance with the quantity limits calls for the introduction of a reliable and 
effective  system  of monitoring;  whereas, to that  end,  the  granting  of  refunds  should  be made 
subject  to  an  export  licence;  whereas  refunds  should  be  granted  up  to  the  limits  available, 
depending on the particular situation of each product concerned; whereas exceptions to that rule 
should only be permitted in the case of processed products not listed in Annex II to the Treaty, to 
which volume limits do not apply, and in the case of food-aid operations, which are exempt  from 
any limit; whereas monitoring of the quantities exported with refunds  during the marketing years 
-•  as referred to in the WTO Agreement on Agriculture should be carried out on the basis of export 

licences issued for each marketing year; 

(25)  Whereas, in addition  to the  system  described  above, and to the extent  necessary  for  its proper 
working, provision should be made for regulating or, when the situation on the market so requires, 
prohibiting the use of inward processing arrangements; 

(26)  Whereas  it is appropriate to provide for measures to be taken when a substantial  rise or fall  in 

prices disturbs or threatens to disturb the Community market; 

(27)  Whereas the customs duty system makes it possible to dispense with all other protective measures 
at  the  external frontiers of  the  Community;  whereas,  however,  the  internal  market  and  duty 
mechanism could, in exceptional circumstances, prove defective; whereas, in such cases, so as not 
to leave the Community market without defence against disturbances which may arise  therefrom, 
the  Community  should  be  able  to  take  all  necessary  measures  without  delay;  whereas  those 
measures  should  be  in  accordance  with  the  obligations  derived  from  the  relevant  WTO 
agreements; 

(28)  Whereas restrictions  on free movement  resulting from the  application  of  measures  intended to 
prevent  the  spread  of  animal  diseases  could  cause  difficulties  on  the  market  of  one  or  more 
Member  States; whereas  provision  should  be  made  for  the  introduction  of  exceptional  market 
support measures in order to remedy such situations; 

(29)  Whereas the establishment  of a single market would  be jeopardized  by the granting  of certain 
aids; whereas, therefore, the provisions of the Treaty which allow the assessment of aids granted 
by Member States and the prohibition of those which are incompatible with the common market 
should apply in the common market organisation for milk and milk products; 

(30)  Whereas  it  is necessary  that,  as the  common  market  in  milk  and milk  products  develops, the 
Member  States  and  the  Commission  should  keep  each  other  supplied  with  the  information 
necessary for applying this Regulation; 

(31)  Whereas, in order to facilitate  implementation  of the proposed measures, a procedure  should be 
provided for establishing close co-operation between Member States and the Commission within a 
Management Committee; 

(32)  Whereas expenditure incurred by the Member States as a result of the obligations arising out of 
the  application  of  this  Regulation  should  be financed by  the  Community  in  accordance  with 
on the financing of the common agricultural policy5; 
Council Regulation (EC) No 

of 

/ 

(33)  Whereas  the  common  organisation  of  the  market  in  milk  and  milk  products  should  take 
appropriate  account,  at the  same time,  of the  objectives  set  out  in  Articles  39 and  110 of the 
Treaty; 

(34)  Whereas the common organization of the market in milk and milk products laid down in Council 
Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the market in milk 
and milk  products6 has been  amended  several times; whereas, by reason  of their  number, their 

OJ  L 
OJ  L 148, 27.6.1968, p. 13. Regulation as last amended by Regulation (EC) No  1587/96 (OJ 

6 
L 206, 16.8.1996, p. 21). 

86 

complexity and their dispersal among several Official  Journals, these texts are difficult  to use and 
thus lack the clarity which should be an essential feature of all legislation; whereas, under these 
circumstances,  they  should  be  consolidated  in  a  new  regulation  and  the  aforementioned 
Regulation  (EEC)  No  804/68  should  be  repealed;  whereas  the  essential  rules  of  Council 
Regulations  (EEC)  No  986/687,  No  987/688,  No  508/719,  No  1723/8110,  No  2990/8211,  No 
1842/83n and No 777/8713 have been incorporated  into this Regulation, and should therefore be 
repealed; 

(35)  Whereas  the  change from the  arrangements  in  Regulation  (EEC) No  804/68  to  those  in  this 
Regulation could give rise to difficulties  which are not dealt with in this Regulation; whereas, in 
order to deal with that eventuality, provision  should be made for  the Commission  to adopt the 
necessary transitional measures; whereas the the Commission should, also be authorized to solve 
specific practical problems; 

OJ L 169, 18.7.1968, p. 4. Regulation as last amended by Regulation (EC) No 1802/95 (OJ  L 

OJ  L 169,18.7.1968, p. 6. Regulation as last amended by Regulation (EEC) No 1435/90 (OJ  L 

OJ  L58,  11.3. 1971, p.l. 
OJ  L 172, 30.6.1981, p. 14. Regulation as last amended by Regulation (EEC) No 863/84 (OJ  L 

OJ  L 314,10.11.1982, p. 26. Regulation as last amended by Regulation (EC) No 2442/96 (OJ 

OJ  L 183, 7.7.1983, p. 1. Regulation as last amended by Regulation (EC) No 1958/97 (OJ  L 

7 
174,26.7.1995, p. 31). 
8 
138, 31.5.1990, p. 8). 
9 
10 
90, 1.4.1984, p. 23). 
11 
L 333,21.12.1996, p.l). 
12 
277, 10.10.1997, p. 1). 
13 
150, 15.6.1991, p. 26). 

OJ  L 78,20.3.1987, p. 10. Regulation as last amended by Regulation (EEC) No 1634/91 (OJ  L 

87 

HAS ADOPTED THIS REGULATION: 

Article 1 

The common organization of the market in milk and milk products shall cover the following 
products: 

CN code 

Description of goods 

(a) 
0401 

(b) 
0402 

Milk  and  cream,  not  concentrated  nor  containing  added  sugar  or  other 
sweetening matter 

Milk  and  cream,  concentrated  or  containing  added  sugar  or  other 
sweetening matter 

(c) 
0403 10 11 to 39 
0403 90 11 to 69 

Buttermilk, curdled milk and cream, yoghurt, képhir and other fermented 
or acidified  milk  and cream,  whether  or not  concentrated  or  containing 
added  sugar  or  other  sweetening  matter  not  flavoured  nor  containing 
added fruit, nuts or cocoa 

Whey, whether or not concentrated  or containing added sugar or other 
sweetening  matter;  products  consisting  of  natural  milk  constituents, 
whether or not containing added sugar or other sweetening matter, not 
elsewhere specified or included 

Butter and other fats and oils derived from milk; dairy spreads of a fat 
content of more than 75% but less than 80%; 

Cheese and curd 

Lactose and lactose syrup not containing added flavouring  or colouring 
matter,  containing  by  weight  less  than  99%  lactose,  expressed  as 
anhydrous lactose, calculated on the dry matter 

Flavoured or coloured lactose syrup 

(d) 
0404 

(e) 
ex 0405 

(0 
0406 

(g) 
1702 19 00 

(h) 
2106 90 51 

88 

G) 
ex 2309 

Preparations of a kind used in animal feeding: 

Preparations  and  feedingstuffs  containing  products  to  which 
this  Regulation  applies,  directly  or  by  virtue  of  Council 
Regulation  (EEC)  No  2730/7514,  except  preparations  and 
feedingstuffs  to which Council Regulation (EEC) No 1766/9215 
applies 

14 
307, 20.12.1995, p. 10). 
15 
126, 24.5.1996, p. 37). 

OJ L 281, 1.11.1975, p. 20. Regulation as last amended by Regulation (EC) No 2931/95 (OJ  L 

OJ  L 181, 1.7.1992, p. 21. Regulation as last amended by Regulation (EC) No 923/96 (OJ  L 

89 

CHAPTER I 

Internal market 

TITLE I 

Prices 

Article 2 

The  milk  year  for  all  products  listed  in  Article  1 shall  begin  on  1 July  and  end  on  30  June  of  the 
following year. 

1. The target price in the Community for milk containing 3.7 % fat, delivered to dairies and expressed in 

ECU per 100 kg, shall be set at: 

Article 3 

- 29.66 for the period from 1 July 2000 until 30 June 2001, 

- 28,35 for the period from 1  July 2001 until 30 June 2002, 

- 27.04 for the period from 1  July 2002 until 30 June 2003, 

- 25.72 as from from 1 July 2003. 

The target  price  shall be deemed to be that price which  it is aimed to obtain  for  the aggregate of 
producers' milk sales on the Community market and on external markets. 

2. The Council, acting in accordance with the procedure laid down in Article 43 (2) of the Treaty, may 

change the target price. 

1. The intervention prices in the Community, expressed in ECU per 100 kg, shall be set: 

Article 4 

(a) for butter at: 

- 315.89 for the period from 1  July 2000 until 30 June 2001, 

- 303.59 for the period from 1  July 2001 until 30 June 2002, 

- 291.28 for the period from 1  July 2002 until 30 June 2003, 

- 278.97 as from from 1 July 2003; 

(b) for skimmed milk powder at: 

- 197.81 for the period from  1  July 2000 until 30 June 2001, 

-190.11 for the period from 1  July 2001 until 30 June 2002, 

-  182.40 for the period from  1  July 2002 until 30 June 2003, 

90 

-  174.69 as from from 1  July 2003 

2. The Council, acting in accordance with the procedure laid down in Article 43 (2) of the Treaty, may 

change the intervention prices. 

The price system is established without prejudice to the implementation of the additional levy scheme. 

Article 5 

TITLE n 

INTERVENTION SYSTEM 

Article 6 

1. Where the market prices of butter are, in one or more Member States, at a level lower than 92 % of the 
intervention price for a representative period, buying-in by the intervention agencies shall be carried 
out in the Member State(s) concerned under an open invitation to tender on the basis of specifications 
to be determined. 

The buying-in price fixed by the Commission shall not be less than 90 % of the intervention price. 

Where market prices in the Member State(s) concerned are at a level equal to, or higher than, 92 % of 
the  intervention  price  for  a representative  period,  buying-in  under  a tendering  procedure  shall  be 
suspended. 

2.  Under  paragraph  1,  the  intervention  agencies  may  only  buy  in  butter  produced  directly  and 

exclusively from pasteurized cream in an approved undertaking in the Community, and 

(a) meeting the following requirements: 

- a minimum butterfat  content, by weight, of 82 % and a maximum water content, by weight, of 

16%, 

- an age at the time of buying in not exceeding a maximum to be  fixed, 

- conditions to be determined as regards the minimum quantity and packaging; 

(b) meeting certain requirements to be determined regarding in particular: 

-  preservation; additional requirements may be laid down by the intervention agencies, 

- free fatty acid content, 

-  peroxide content, 

-  microbiological standard, 

-  sensory characteristics (appearance, texture, taste and smell). 

National  quality  grades to be  determined  may  be  shown  on the  packaging  of  butter  which  meets 
national quality requirements. 

Flat rate transport costs shall be borne, under conditions to be fixed, by the intervention agency if the 
butter is delivered to a cold store situated at a distance greater than a distance to be determined  from 
the place where the butter was in store. 

91 

3. Aid for private storage shall be granted for: 

- cream, 

- unsalted butter produced from cream  or milk in an approved undertaking of the Community of a 
minimum butterfat content, by weight, of 82 % and a maximum water content, by weight, of 16 %, 

-  salted  butter  produced from cream  or milk  in  an  approved  undertaking  of the Community  of a 
minimum butterfat content, by weight, of 80 %, a maximum water content, by weight, of 16 % and 
a maximum salt content, by weight, of 2 %. 

The  butter  shall  be  classified  according  to  national  quality  grades  to  be  determined  and  shall  be 
marked accordingly. 

The aid shall be fixed in the light of storage costs and the likely trend in prices for fresh butter and 
butter from stocks. Where, at the time of removal from storage, an adverse change unforeseeable  at 
the time of entry into storage has occurred on the market, the aid may be increased. 

Private storage aid shall be subject to the drawing-up of a storage contract concluded, in accordance 
with provisions to be laid down, by the intervention agency of the Member State on whose territory 
the cream or butter qualifying for the aid is stored. 

Where the market situation so requires, the Commission may decide to remarket some or all of the 
cream or butter covered by private storage contracts. 

4.  Butter  bought  in by the  intervention  agencies  shall be  disposed  of at a" minimum  price  and under 
conditions  to  be  determined  so  as  to  avoid  disturbing  the  balance  on  the  market  and  to  ensure 
purchasers  equal treatment  and access to the butter to be sold.  Where the butter  put up  for  sale is 
intended  for  export, special conditions may be laid down to ensure that the product  is not diverted 
from  its destination and to take account of requirements specific to such sales. 

For  butter  kept  in  public  storage  which  cannot  be  disposed  of  during  a  milk  year  under  normal 
conditions,  special  measures  may  be taken.  Where warranted  by  such  measures,  special  measures 
shall  also  be  taken  with  a  view  to  maintaining  possibilities  of  disposing  of  products  which  were 
subject to aid as referred to in paragraph 3. 

5. The intervention arrangements shall be applied so as to: 

maintain the competitive position of butter on the market, 

safeguard the original quality of the butter as far as possible, 

ensure storage as rationally as possible. 

92 

6. For the purposes of this Article: 

- "milk" shall mean cow's milk produced in the Community, 

- "cream" shall mean cream obtained directly and exclusively from milk. 

Article 7 

1.  The  intervention  agency  designated  by  each  of  the  Member  States  shall,  under  conditions  to  be 
determined,  buy  in at the  intervention  price top quality  skimmed  milk  powder  made by the spray 
process and obtained  in an approved undertaking  in the Community, directly  and exclusively  from 
skimmed milk, which is offered to it during the period 1  March to 31 August and which: 

meets a minimum protein content of 35,6 % by weight of the non-fatty dry extract, 

meets preservation requirements to be laid down, 

meets conditions to be determined as regards the minimum quantity and packaging. 

However, intervention agencies shall also buy in skimmed milk powder whose protein content is at 
least 31,4 % and less than 35,6 %, of the non-fatty dry extract, provided that the other provisions laid 
down in the first subparagraph above are met. In that case, the buying-in price shall be equal to the 
intervention price less  1,75  % for each percentage point by which the protein content  is lower than ' 
35,6 %. 

The intervention price shall be that in force on the day of manufacture  of the skimmed milk powder 
and shall apply to skimmed milk powder delivered to the store designated by the intervention agency. 
Flat-rate transport costs shall be borne, under conditions to be fixed, by the intervention agency if the 
skimmed  milk  powder  is  delivered  to  a  store  situated  at  a  distance  greater  than  a  distance  to be 
determined from the place where the skimmed milk powder was in store. 

The skimmed milk powder may only be stored in stores meeting conditions to be  fixed. 

2. The Commission may suspend the buying in of skimmed-milk powder provided for in paragraph  1  as 
soon as the quantities offered  for  intervention  in the period  from  1 March to 31 August each year 
exceed 109 000 tonnes. 

In  that  case  buying-in  by  the  intervention  agencies  may  be  carried  out  under  an  open  standing 
invitation to tender on the basis of specifications to be determined. 

3.  Aid  for  the  private  storage  of  skimmed  milk  powder  of  top  quality,  obtained  in  an  approved 
undertaking  in  the  Community  directly  and  exclusively  from  skimmed  milk  may  be  granted,  in 
particular,  if trends in prices and stocks of the products indicate a serious imbalance in the market 
which could be avoided or reduced by means of seasonal storage. In order to be eligible for aid, the 
skimmed milk powder must meet conditions to be  fixed. 

The aid shall be fixed in the light of storage costs and the likely trend  in prices for  skimmed milk 
powder. 

Private storage aid shall be subject to the drawing-up of a storage contract concluded, in accordance 
with provisions to be laid down, by the intervention agency of the Member State on whose territory 
the skimmed milk powder qualifying for the aid is stored. Where the market situation so requires, the 
Commission  may decide to remarket  some or all of the skimmed milk powder  covered  by private 
storage contracts. 

93 

4. Skimmed milk powder bought in by the intervention agency shall be disposed of,  at a minimum price 
and under  conditions to be determined  so as to avoid disturbing  the balance  on the market  and to 
ensure purchasers equal treatment and access to the skimmed milk powder to be sold. 

Where the skimmed milk powder put up for sale is intended for export, special conditions may be laid 
down  to  ensure  that  the  product  is  not  diverted  from  its  destination  and  to  take  account  of 
requirements specific to such sales. 

For  skimmed milk powder kept  in public  storage which cannot be disposed  of during  a milk year 
under normal conditions, special measures may be taken. 

5. Within the meaning of this Article, "skimmed milk" shall mean skimmed milk obtained directly and 

exclusively from cow's milk produced in the Community. 

1. Under conditions to be determined, aid shall be granted for the private storage of: 

Article 8 

(a)  Grana Padano cheese at least nine months old; 

(b)  Parmigiano Reggiano cheese at least 15 months old; 

(c)  Provolone cheese at least three months old; 

if these cheeses reach certain standards. 

2. The amount of private storage aid shall be fixed taking account of storage costs and the likely trend of 

market prices. 

3. The intervention agency designated by the Member State in which the said cheeses are produced and 
qualify to bear the designation of origin shall implement the measures taken pursuant to paragraph 1. 

The granting of private storage aid shall be subject  to the conclusion  of a storage contract with the 
intervention agency. The contract shall be drawn up under conditions to be determined. 

Where the market situation so requires, the Commission may decide that the intervention agency will 
remarket some or all of the cheese stored. 

Article 9 

1. Private storage aid may be granted for longkeeping cheeses and for cheeses which are manufactured 
from  sheep and/or goat's milk and require at least six months for maturing, if for those cheeses price 
developments  and  the  stock  situation  indicate  a  serious  imbalance  of  the  market  which  may  be 
eliminated or reduced by seasonal storage. 

2. The amount of aid shall be fixed with reference  to storage costs and the balance to be maintained 

between cheeses for which aid is granted and other cheeses coming on the market. 

3.  Should the situation  of the Community market so require, the Commission may decide to remarket 

some or all of the cheeses covered by private storage contracts. 

4. If, at the time the storage contract expires, the level of market prices for cheeses in store is higher than 
that prevailing when the contract was signed, a decision may be taken to adjust  the amount  of aid 
accordingly. 

94 

Article 10 

There shall be adopted in accordance with the procedure laid down in Article 41 : 

(a) the detailed rules for the application of this Title and, in particular, those for establishing the market 

prices for butter, 

(b) the amounts of aid for private storage referred to in this Title, 

(c) the other decisions and measures which may be taken by the Commission under this Title. 

TITLE III 

Marketing measures 

Article 11 

1. Aid shall be granted for skimmed milk and skimmed-milk powder intended for use as feedingstuffs,  if 

these products reach certain standards. 

For the purposes of this Article, buttermilk and buttermilk powder shall be regarded as skimmed milk 
and skimmed-milk powder. 

2. Aid amounts shall be fixed taking into account the following factors: 

- the intervention price for skimmed-milk powder, 

-  development  of  the  supply  situation  as  regards  skimmed-milk  and  skimmed-milk  powder,  and 

developments in the use thereof as feed, 

-trends in calf prices, 

-  trends  in  the  market  prices  for  competing  proteins  as  compared  with  those  for  skimmed-milk 

powder. 

3. Detailed rules for the application of this Article, and in particular the conditions under which such aid 
may be granted  and the amount of the aids, shall be determined  by the Commission  in accordance 
with the procedure laid down in Article41. 

Article 12 

1. Under  the  conditions  determined  in  accordance  with  paragraphs  2  and  3, aid  shall  be  granted  for 
Community-produced skimmed milk processed into casein and caseinates, if such milk and the casein 
or caseinates produced from it reach certain standards. 

2. The aid may vary, according to whether the skimmed milk is processed into casein or caseinates and 

according to the quality of those products. 

95 

Aid shall be fixed taking into account the follwing factors: 

- the intervention price for skimmed-milk powder, or the market price for first-quality spray-process 

skimmed milk powder, if that price exceeds the intervention price, 

- the market prices for casein and caseinates on the Community and world markets. 

3. Detailed rules for the application of this Article, and in particular the conditions under which such aid 
may be granted and the amount of the aid, shall be adopted by the Commission in accordance with the 
procedure laid down in Article 41. 

1. When surpluses of milk products build up, or are likely to occur, the Commission may decide that aid 

shall be granted to enable butter and concentrated butter to be purchased at reduced prices by: 

Article 13 

(a) non-profit making institutions and organisations; 

(b) military forces and units of comparable status in the Member States; 

(c) manufacturers of pastry products and icecream; 

(d) manufacturers of other foodstuffs  to be determined 

2. The measures provided  for  in this Article and detailed rules for  its application  which shall cover in 
particular the amount of the aid and the determination  of the products  in paragraph  1 (d), shall be 
adopted by the Commission in accordance with the procedure laid down in Article 41. 

Article 14 

1. Subject to the conditions laid down in paragraphs 3, 4 and according to paragraph 5, Community aid 
shall be granted for supplying to pupils in educational establishments certain processed milk products 
falling under CN codes 0401, 0403, 0404 90 and 0406 or CN code 2202 90. 

2. In addition to the Community aid, Member States may grant national aid for supplying the products 

specified in paragraph  1 to pupils in educational establishments. 

3. In the case of whole milk, the Community aid shall be equal to 95% of the target price for milk. In the 
case  of  other  milk  products, the  amounts  of  aid  shall  be  determined  taking  into  account  the milk 
content of the products concerned. 

4.  The  aid  referred  to  in paragraph  1 shall  be granted  on  a maximum  quantity  of  0.25  litre  of milk 

equivalent per pupil and per day. 

5. The detailed rules for the implementation of this Article and the amount of aid shall be adopted by the 

Commission in accordance with the procedure laid down in Article 41. 

96 

TITLE IV 

Direct payments 

Article 15 

1. Producers shall qualify for a dairy cow premium. It shall be granted per calendar year and per holding. 

2. The amount per premium unit shall be set at: 

- ECU 25 for the calendar year 2000, 

- ECU 50 for the calendar year 2001, 

- ECU 75 for the calendar year 2002 

- ECU 100 for the calendar year 2003 and the subsequent calendar years. 

It shall be supplemented by the amounts per premium unit set out in Annex IV of Regulation (EC) 
No 

16 [beef] for the Member State and the calendar year concerned. 

3. The number of premium units to which a producer shall be entitled, shall be determined by dividing 
the individual reference quantity for milk, expressed in tonnes, available on the holding on 31 March 
of  the  calendar  year  concerned  by  the  figure  5.8  representing  the  average  milk  yield  in  the 
Community. 

For  the  purpose  of  the  preceding  subparagraph,  individual  reference  quantities  which  have  been 
subject of temporary transfers  in accordance with Article 6 of Regulation (EEC) No 3950/92 on 31 
March of the calendar year concerned shall be deemed to be available on the holding of the transferee 
for that calendar year. 

Where, on 31 March of a calendar year, the sum of all individual reference  quantities in a Member 
State exceeds the sum of the corresponding total quantities of that Member State fixed  for the twelve 
months period  1999/2000, the Member State concerned shall, on the basis of objective  criteria, take 
the neccessary steps to reduce proportionately the total number of premium units on its territory  for 
the calendar year concerned. 

4. For the purposes of this title, the definitions  of "producer" and "holding" laid down in Article 9 of 

Regulation (EEC) No 3950/92 shall apply. 

Article 16 

1. Member States shall make additional payments to producers in their territory within the limits of the 
global amounts set out in Annex I and on a yearly basis. Such payments shall be made according to 
objective  criteria  including,  in particular,  the  relevant  production  structures  and  conditions,  and in 
such  a way as to  ensure  equal  treatment  between  producers  and to  avoid  market  and  competition 
distortions. Moreover, such payments shall not be linked to fluctuations of market prices. 

2.  Additional  payments  may  be made  in the  form  of  premium  supplements  (Article  17) and/or  area 

payments (Article 18). 

16 

OJ  L 

97 

Article 17 

1. Premium  supplements  may  only  be granted  as a supplementary  amount  per  dairy  cow  premium  unit 

referred  to in Article  15 (2). 

2.  The  total  amount  of  dairy  cow  premium  and  premium  supplement,  including  any  other  dairy  cow 
(beef),  which  may  be  granted  per  premium  unit  and 

payments  under  Regulation  (EC)  No 
calendar year shall not exceed: 

- ECU 90 for the calendar year 2000, 

- ECU  180 for the calendar year 2001, 

- ECU 270 for the calendar year 2002, 

- ECU 330 for the calendar year 2003 and the subsequent calendar years. 

Article 18 

1. Area payments shall be granted per hectare of permanent pasture: 

(a) which is available to a producer during the calendar year concerned, 

(b) which  is not used to comply with the specific  stocking  density requirements referred  to  in Article 

14 (3) of Regulation (EC) No 

[beef], and 

(c)  in  respect  of  which  no  payments  under  the  support  system  laid  down  for  producers  of  certain 
arable  crops, under the aid  system  for  dried  fodder  and  under  Community  aid  schemes  for  other 
permanent or horticultural crops are claimed for the same year. 

The  area of permanent  pasture  in a region  for  which  area payments may be granted  shall  not  exceed 
the relevant regional base area. 

2.  The  regional  base  areas  shall  be  established  by  Member  States  in  accordance  with  Article  15  of 

Regulation (EC) No 

[beef]. 

3. The maximum  area payment  per hectare which  may be granted,  including  area payments  pursuant  to 

Article  15 of Regulation (EC) No 

[beef], shall not exceed: 

- ECU 210 for the calendar year 2000, 

- ECU 280 for the calendar year 2001, 

- ECU 350 for the calendar year 2002 and the subsequent calendar years. 

4.  For  the  purposes  of  this  Article,  "permanent  pasture"  shall  mean  non-rotational  land  used  for  grass 

production (sown or natural) on a permanent basis (five years or longer). 

Article 19 

1. Before  1 January  2000,  Member  States  shall  provide  the  Commission  with  detailed  information  on 
their  national  arrangements  concerning  the  granting  of  additional  payments.  Any  changes  of  these 
arrangements shall be communicated to the Commission not later than one month following  adoption. 

2.  Before  1  April  2004,  Member  States  shall  submit  to  the  Commission  detailed  reports  on  the 

implementation of Articles  16, 17 and  18. 

98 

Before  1 January  2005, the  Commission  shall  evaluate  the  implementation  of  Articles  16 to  18 and 
examine  the distribution  of Community  funds  between  Member  States as provided  for  in Annex  I. If 
necessary, the Commission  shall make appropriate proposals to the Council. 

Article 20 

Direct payments under this title shall be made from 16 October of the calendar year concerned as soon as 
the legally required  inspections are carried out and, save in duly justified  exceptional  cases, no later than 
30 June of the following  year. 

Article 21 

The amounts  of the  direct payments  set out  in this title may  be changed  in the  light of developments  in 
production,  productivity  and the markets, according  to the procedure  laid  down  in Article  43  (2)  of the 
Treaty. 

Article 22 

Where, by or on the basis of Community  law, the administration  of bovine  somatrophin  to dairy cows is 
not  authorized  or  where  the  availability  of  that  substance  on  farms  is  regulated  otherwise,  the 
Commission  shall, in accordance with the procedure laid down in Article 41, adopt measures which shall 
be analogous to those provided for  in Article 21 of Regulation (EC) No 

[beef]. 

Detailed rules for the application  of this title shall be adopted by the Commission  in accordance with the 
procedure  laid down in Article  41. 

Article 23 

Article 24 

The expenditure  incurred  in granting the direct payments provided  for  in this title shall be considered  as 
relating  to  intervention  measures  within  the  meaning  of  Article  2  (2)  of  Regulation  (EC)  No 
[EAGGF]. 

CHAPTER II 

Trade with third countries 

Article 25 

1.  Imports  into  the  Community  of  any  of  the  products  listed  in  Article  1  shall  be  subject  to  the 
presentation  of  an  import  licence.  Exports  from  the  Community  of  any  such  products  may  be  made 
subject to presentation  of an export licence. 

2. Licences shall be issued by Member  States to any applicant,  irrespective  of his place of  establishment 
in the  Community  and without  prejudice  to the measures taken  for  the  application  of  Articles  28, 29 
and 30. 

Import  and  export  licences  shall  be  valid  throughout  the  Community.  Such  licences  shall  be  issued 
subject to the lodging of a security guaranteeing that the products are imported  or exported  during the 
term  of  validity  of  the  licence;  except  in  cases  of  force  majeure,  the  security  shall  be  forfeited  in 

99 

whole  or  in  part  if  import  or  export  is  not  carried  out,  or  is  carried  out  only  partially,  within  that 
period. 

3.  The  following  shall  be  adopted  by  the  Commission  in  accordance  with  the  procedure  laid  down  in 

Article 41: 

(a) the list of products in respect of which export licences are required; 

(b) the term of validity of the licences; and 

(c) the other detailed rules for the application of this Article. 

Unless this Regulation  provides  otherwise, the rates of duty  in the Common  Customs  Tariff  shall  apply 
to the products listed in Article  1. 

Article 26 

Article 27 

1. In  order  to  prevent  or  counteract  adverse  effects  on the  market  in the  Community  which  may  result 
from  imports  of  certain  products  listed  in  Article  1, imports  of  one  or more  of  such  products  at  the 
rate  of  duty  referred  to  in Article  26  shall  be  subject  to payment  of  an  additional  import  duty  if the 
conditions  set out in Article  5 of the Agreement  on Agriculture  concluded  in accordance with  Article 
228 of the Treaty in the framework of the Uruguay Round of multilateral trade negotiations have been 
fulfilled  unless the imports are unlikely to disturb the Community market, or where the effects  would 
be disproportionate to the intended  objective. 

2. The trigger prices below which an additional duty may be imposed shall be those which are  forwarded 

by the Community to the World Trade Organization. 

The  trigger  volumes  to  be  exceeded  in  order  to  have  the  additional  import  duty  imposed  shall  be 
determined  particularly  on the  basis of  imports  into the  Community  in the  three  years  preceding  the 
year in which the adverse effects  referred to in paragraph  1  arise or are likely to arise. 

3.  The  import  prices  to  be  taken  into  consideration  for  imposing  an  additional  import  duty  shall  be 

determined on the basis of the cif import prices of the consignment under  consideration. 

Cif import prices  shall be checked  to that end against the representative  prices for  the product  on  the 
world market or on the Community  import market for that product. 

4.  The  Commission  shall  adopt  detailed  rules  for  the  application  of this  Article  in  accordance  with  the 

procedure  laid down in Article 41.  Such detailed rules shall specify  in particular: 

(a)  the products to which additional  import duties shall be applied under the terms of Article 5 of the 

Agreement on Agriculture; 

(b)  the  other  criteria necessary  to ensure  application  of paragraph  1 in accordance  with  Article  5 of 

the Agreement on Agriculture. 

Article 28 

1. Tariff  quotas  for  the  products  listed  in Article  1 resulting  from  agreements  concluded  in  accordance 
with Article 228 of the Treaty or from  any other act of the Council  shall be opened  and  administered 
in accordance with detailed rules adopted under the procedure  laid down in Article  41. 

100 

2. Quotas may be administered by applying one of the following methods or a combination of them: 

-  method based on the chronological order of the lodging of applications (using the 'first come,  first 

served' principle), 

- method of distribution  in proportion to the quantities requested when the applications were lodged 

(using the 'simultaneous examination' method), 

-  method based on taking traditional trade patterns into account (using the 'traditional  importers/new 

arrivals' method). 

Other appropriate methods may be adopted. 

They shall avoid any discrimination between the operators concerned. 

3.  The  method  of  administration  adopted  shall,  where  appropriate,  give  due  weight  to  the  supply 
requirements  on the Community  market  and the need to  safeguard  the equilibrium  of that market, 
whilst  at the  same time possibly  drawing on methods which may have been  applied  in the past to 
quotas corresponding to those referred to in paragraph 1, without prejudice to the rights resulting  from 
agreements concluded in the framework of the Uruguay Round trade negotiations. 

4. The detailed rules referred to in paragraph  1  shall provide for annual quotas, suitably phased over the 
year,  if  necessary,  to  be  opened,  determine  the  administrative  method  to  be  applied  and,  where 
appropriate, include provisions regarding: 

(a)  guarantees covering the nature, provenance and origin of the product; 

(b)  recognition of the document used for verifying the guarantees referred to in (a); and 

(c)  the conditions under which import licences are issued and their term of validity. 

Article 29 

1. Where an agreement concluded in accordance with Article 228 of the Treaty provides for the total or 
partial management of a tariff quota opened by a third country for the products referred  to in Article 
1, the management method to be applied and detailed rules relating to that method shall be adopted in 
accordance with the procedure provided for in Article 41. 

2. Quotas may be managed using one of the following methods or a combination thereof: 

-  order in which applications are submitted ('first come, first served' basis), 

-  allocation  in  proportion  to  quantities  requested  when  applications  are  submitted  ('simultaneous 

examination' method), 

- traditional trade flows ('traditional importers/new arrivals' method). 

Other  appropriate  measures may be adopted,  in particular  ones which guarantee the full  use of the 
possibilities available under the quota concerned. 

They shall avoid any discrimination between the operators concerned. 

Article 30 

1. To the  extent  necessary  to  enable  the  products  listed  in  Article  1 to  be  exported  without  further 

processing or in the form  of goods listed in Annex II if they are products listed in Article  1  (a), (b), 

101 

(c), (d), (e) and (g), on the basis of prices for those products on the world market and within the limits 
resulting  from  agreements  concluded  in  accordance  with  Article  228  of  the  Treaty,  the  difference 
between those prices and prices in the Community may be covered by export  refunds. 

Export refunds  on the products  listed  in Article  1 in the form  of goods  listed  in the Annex  II may not 
be higher than those applicable to such products exported without further  processing. 

2.  The  method  to  be  adopted  for  the  allocation  of the  quantities  which  may  be  exported  with  a  refund 

shall be the method which: 

(a)  is most  suited to the nature  of the product  and the  situation  on the market  in question,  allowing 
the  most  efficient  possible  use of the  resources  available,  account  being taken  of the  efficiency 
and  structure  of  Community  exports  without,  however,  creating  discrimination  between  large 
and small operators; 

(b)  is  least  cumbersome  administratively  for  operators,  account  being  taken  of  administration 

requirements; 

(c)  prevents any discrimination between the operators concerned. 

3. Refunds  shall be the same for the whole Community. 

They  may  vary  according  to  destination,  where  the  world  market  situation  or  the  specific 
requirements of certain markets make this necessary. 

Refunds  shall be fixed  by the Commission  in accordance with the procedure  laid down  in Article 41. 
Refunds  may be fixed: 

(a)  at regular intervals; 

(b)  by invitation to tender for products for which that procedure was provided for in the past. 

Except  where  fixed  by  tender,  the  list  of  products  on  which  an  export  refund  is  granted  and  the 
amount  of such refund  shall be fixed at  least once every  four  weeks. The amount  of the refund  may, 
however, remain at the same level for more than four weeks and may, where necessary, be adjusted  in 
the  intervening  period  by the Commission  at the  request  of  a Member  State  or  on  its own  initiative. 
However, for products listed in Article  1 and exported  in the form  of goods listed  in the Annex II, the 
refund  may  be  fixed  according  to  another  timetable  determined  in  accordance  with  the  procedure 
referred  to in Article  16 of Council Regulation (EC) No 3448/93l7. 

4.  The  following  shall  be  taken  into  account  when  refunds  are  being  fixed  for  the  products  listed  in 

Article  1  and exported without further  processing: 

(a) the existing situation and future trends with regard to: 

- prices and availabilities for milk and milk products on the Community  market; 

- prices of milk and milk products on the world market; 

(b)  the most favourable  marketing costs and transport costs from Community markets to Community 
ports  or  other  places  of  export  together  with  forwarding  costs  to  the  countries  of  destination; 
demand on the Community market; 

(c)  the  objectives  of the  common  organization  of the markets  in milk  and  milk  products,  which  are 
to  ensure  a  balanced  situation  and  natural  development  regarding  prices  and  trade  on  these 
markets; 

OJ  L 318, 20.12.1993, p.  31. 

102 

(d)  limits resulting from agreements concluded in accordance with Article 228 of the Treaty; 

(e)  the importance of avoiding disturbances on the Community market; 

(f)  the economic aspect of the proposed exports. 

Account  shall  also  be taken  in  particular  of  the  need  to  establish  a  balance  between  the  use  of 
Community basic agricultural products for export as processed goods to third countries, and the use of 
products from those countries admitted for inward processing. 

5. For the products referred to in Article 1  and exported as such: 

(a)  the prices in the Community referred to in paragraph  1  shall be determined taking account of the 

prices prevailing which prove to be the most favourable as regards export; 

(b)  the prices on the world market referred to in paragraph  1 shall be determined taking account in 

particular of: 

- the prices on third-country markets; 

- the most favourable prices in third countries of destination for third-country imports; 

- producer prices recorded in exporting third countries, account being taken, where appropriate, 

of subsidies granted by those countries; 

- free-at-frontier  offer prices. 

6. Refunds  shall be granted  for the products referred  to in paragraph  1 and exported  as such  only on 

application and on presentation of the relevant export licence. 

7. The refund  applicable to exports of products  listed  in Article  1 and exported  as  such  shall be that 
applicable on the day of application  for the  licence and,  in the case of a differentiated  refund,  that 
applicable on the same day for: 

(a)  the destination indicated on the licence, or where appropriate 

(b)  the actual destination if it differs from the destination indicated on the licence. In that case, the 
amount  applicable  may not  exceed the  amount  applicable  for  the  destination  indicated  on the 
licence. 

Appropriate measures may be taken to prevent abuse of the flexibility provided for in this paragraph. 

8. Paragraphs 6 and 7 may be made to apply to products listed in Article  1  and exported in the form of 
goods listed in Annex II in accordance with the procedure laid down in Article  16 of Regulation (EC) 
No 3448/93. 

9. Paragraphs 6 and 7 may be waived in the case of products listed in Article 1  on which refunds are paid 

under food-aid operations, in accordance with the procedure laid down in Article 41. 

10. The refund shall be paid upon proof that: 

-  the products are of Community origin, 

- the products have been exported from the Community, and 

-  in the case of a differentiated  refund,  the products  have reached the destination  indicated  on the 
licence or another destination  for which a refund  was fixed, without prejudice  to paragraph  7 (b). 

103 

Exceptions  may  be  made  to  this  rule  in  accordance  with  the  procedure  laid  down  in  Article 41, 
provided conditions are laid down which offer  equivalent guarantees. 

11.  Without prejudice  to paragraph  10 first indent,  in the absence of a derogation  granted  in  accordance 
with the procedure  laid down  in Article  41,  no export  refund  shall be granted  on products  which  are 
imported from third countries and re-exported to third countries. 

1?. As regards the products referred  to in Article  1  and exported  in the form  of the goods listed  in Annex 

II, paragraphs  10 and  11 shall apply only to goods falling within the following  CN codes: 

- 0405 20 30 (dairy spreads with a fat content between 60 and 75%), 

-  1806 90 60 to  1806 90 90 (certain products containing cocoa), 

-  1901 (certain food preparations of flour, etc.), 

-  2106 90 98 (certain food preparations not elsewhere  specified), 

having a high milk-product  content. 

13.  Compliance  with  the  limits  on  volumes  arising  from  agreements  concluded  in  accordance  with 
Article  228  of  the  Treaty  shall  be  ensured  on  the  basis  of  the  export  certificates  issued  for  the 
reference  periods  provided  for  therein  and  applicable  to  the  products  concerned.  With  regard  to 
compliance  with  the  obligations  arising  under  the  Agreement  on  Agriculture,  the  ending  of  a 
reference  period shall not affect  the validity of export licences. 

14.  Detailed  rules  for  the  application  of  this  Article,  including  the  arrangements  for  redistributing 
unallocated  or unused  exportable  quantities,  shall be adopted  by the  Commission  in accordance  with 
the procedure laid down  in Article 41.  However, the detailed rules on the application  of paragraphs 8, 
10,  11 and  12 for products referred  to in Article  1 and exported  in the form  of goods  listed  in Annex 
II shall be adopted  in accordance  with the procedure  laid  down  in Article  16 of Regulation  (EC) No 
3448/93. 

Article 31 

1. To the extent necessary  for the proper working of the common organization of the market in milk  and 
milk products, the Council, acting by a qualified  majority,  on a proposal from the Commission,  may, 
in special  cases, prohibit  in whole  or  in part the use of inward  processing  arrangements  in respect  of 
products listed in Article  1  which are intended for the manufacture  of products listed  in that Article or 
of goods listed in Annex II. 

2.  By  way  of  derogation  from  paragraph  1,  if  the  situation  referred  to  in  paragraph  1  arises  with 
exceptional urgency  and the Community market is disturbed  or is liable to be disturbed  by the  inward 
processing  arrangements,  the  Commission  shall,  at  the  request  of  a  Member  State  or  on  its  own 
initiative, decide upon the necessary measures; the Council and the Member States shall be notified  of 
such measures, which shall be valid for no more than six months and shall be immediately  applicable. 
If the  Commission  receives  a request  from  a Member  State,  it shall  take  a decision  thereon  within  a 
week following  receipt of the request. 

3. Measures decided on by the Commission may be referred  to the Council by any Member  State within 
a  week  of  the  day  on  which  they  were  notified.  The  Council,  acting  by  a  qualified  majority,  may 
confirm,  amend or repeal the Commission  decision. 

If the  Council  has not  acted within  three  months, the  Commission  decision  shall  be  deemed  to  have 
been repealed. 

104 

Article 32 

1. The general rules  for the  interpretation  of the combined  nomenclature  and the  special rules  for  its 
application  shall apply to the tariff  classification  of products  covered  by this Regulation; the  tariff 
nomenclature resulting from the application of this Regulation shall be incorporated in the Common 
Customs Tariff. 

2.  Save  as  otherwise  provided  for  in  this  Regulation  or  in  provisions  adopted  pursuant  thereto, the 

following shall be prohibited in trade with third countries: 

-  the levying of any charge having equivalent effect to a customs duty, 

-  the application of any quantitative restriction or measure having equivalent effect. 

Article 33 

1. Where,  for  one  or more  of  the  products  listed  in  Article  1, the free-at-frontier price  significantly 
exceeds  the  level  of  Community  prices  and  where  that  situation  is  likely  to  continue,  thereby 
disturbing or threatening to disturb the Community market, the measures provided for in paragraph 5 
may be taken. 

2. A significant  excess  within  the meaning  of paragraph  1 shall  exist  when  the free-at-frontier price 
exceeds the  intervention  price  fixed  for the product  in question,  increased  by  15 %, or,  as regards 
products for which there is no intervention price, a price derived from the intervention price, to be 
determined in accordance with the procedure laid down in Article 41, taking account of the nature and 
composition of the product in question. 

3. The situation  in which the free-at-frontier price significantly  exceeds the level of prices is likely to 
continue  when  an  imbalance  exists  between  supply  and  demand  and  that  imbalance  is  likely  to 
continue, in view of foreseeable trends in production and market prices. 

4. The Community market is disturbed or under threat of disturbance by the situation referred  to in this 

Article when the high level of prices in international trade: 

-  hinders imports of milk products into the Community, or 

-  causes milk products to leave the Community, 

so that security of supply is no longer ensured or threatens to be no longer ensured in the Community. 

5.  Where the conditions listed  in paragraphs  1 to 4 are met, total  or partial  suspension  of the import 
duties and/or collection of export charges may be decided on in accordance with the procedure laid 
down in Article 41. Detailed rules for the application of this Article shall, if necessary, be adopted by 
the Commission in accordance with the same procedure. 

Article 34 

1. If,  by reason of imports or exports, the Community market in one or more of the products listed in 
Article  1  is affected  by, or is threatened with, serious disturbance likely to jeopardize the achievement 
of the objectives set out in Article 39 of the Treaty, appropriate measures may be applied in trade with 
third countries until such disturbance or threat of disturbance has ceased. 

The Council, acting by a qualified  majority, on a proposal from the Commission, shall adopt general 
rules for the application  of this paragraph  and shall define  the cases in which and the limits within 
which Member States may take protective measures. 

105 

2. If the situation referred  to in paragraph  1 arises, the Commission  shall, at the request of a Member 
State or on its own initiative, decide upon the necessary measures; the Member States shall be notified 
of such measures, which shall be immediately applicable. If the Commission receives a request from a 
Member  State,  it  shall take  a decision  thereon  within  three  working  days  following  receipt  of the 
request. 

3.  Measures  decided  upon by the Commission  may be referred  to the  Council  by  any  Member  State 
within three working days of the day on which they were notified.  The Council shall meet without 
delay.  It may, acting by a qualified  majority,  amend  or repeal  the measure  in question  within  one 
month following the day on which it was referred to the Council. 

4. This Article shall be applied having regard to the obligations arising from agreements concluded in 

accordance with Article 228 (2) of the Treaty. 

CHAPTER III 

GENERAL PROVISIONS 

Article 35 

In order to take account of the restrictions on free circulation which may result from the application of 
measures  for  combating  the  spread  of  diseases  in  animals,  exceptional  measures  of  support  for  the 
market affected  by those restrictions may be taken in accordance with the procedure laid down in Article 
41.  Those  measures  may only  be taken  in  so far  as, and  for  as  long  as,  is  strictly  necessary  for  the 
support of that market. 

Save  as  otherwise  provided  in  this  Regulation,  Articles  92  to  94  of  the  Treaty  shall  apply  to  the 
production of and trade in the products listed in Article 1. 

Article 36 

106 

Article 37 

1. Subject  to the  provisions  of Article  92  ( 2  )  of the  Treaty,  aids  the  amount  of  which  is  fixed  on  the 

basis of the price or quantity of products listed in Article  1  shall be prohibited. 

2. National measures permitting  equalisation  between the prices of products  listed  in Article  1 shall  also 

be prohibited. 

Article 38 

Without  prejudice  to the  application  of Articles  92 to  94  of the  Treaty,  a Member  State  may  impose  a 
promotional  levy  on  its milk  producers  in respect  of  marketed  quantities  of  milk  or  milk  equivalent  in 
order to finance  the measures  on promoting  consumption  in the Community,  expanding  the markets  for 
milk and milk products and improving quality. 

Article 39 

Member  States  and  the  Commission  shall  communicate  to  each  other  the  information  necessary  for 
implementing this Regulation. Rules for the communication  and distribution  of such information  shall be 
adopted by the Commission  in accordance with the procedure laid down in Article 41. 

Article 40 

A  Management  Committee  for  Milk  and  Milk  Products  (hereinafter  called  the  "Committee")  shall  be 
established,  composed  of  representatives  of  Member  States  and  chaired  by  a  representative  of  the 
Commission. 

Article 41 

1. Where the procedure  laid down  in this Article is to be followed,  the chairman  shall refer  the matter to 
the Committee either on his own initiative or at the request of the representative of a Member State. 

2.  The  representative  of  the  Commission  shall  submit  to  the  Committee  a  draft  of  the  measures  to  be 
taken.  The  Committee  shall  deliver  its  opinion  on  the  draft  within  a time  limit  which  the  Chairman 
may  lay down according to the urgency  of the matter. The opinion  shall be delivered  by the  majority 
laid  down  in Article  148 (2)  of the  Treaty  in the  case  of  decisions  which  the  Council  is required  to 
adopt  on  a  proposal  from  the  Commission.  The  votes  of  the  representatives  of  the  Member  States 
within the Committee  shall be weighted  in the manner set out  in that Article. The Chairman  shall not 
vote. 

3. The Commission  shall adopt measures which shall apply immediately. However, if these measures are 
not in accordance with the opinion of the Committee, they shall be communicated  by the  Commission 
to the Council forthwith.  In that event the Commission may defer application  of the measures which it 
has decided for not more than one month from the date of such  communication. 

The Council, acting by a qualified  majority,  may take a different  decision within one month. 

The Committee may consider any other question referred  to it by its chairman either on his own  initiative 
or at the request of the representative of a Member State. 

Article 42 

107 

This Regulation  shall be so applied that appropriate account  is taken, at the same time, of the  objectives 
set out in Articles 39 and  110 of the Treaty. 

Article 43 

Regulation (EC) No 
apply to the products listed in Article  1. 

[CAP financing]  and the provisions adopted  in implementation thereof shall 

Article 44 

CHAPTER IV 

Transitional and final  provisions 

Article 45 

1.  Regulations  (EEC)  No  804/68,  No  986/68,  No  987/68,  No  508/71,  No  1723/81,  No  2990/82,  No 

1842/83 and No 777/87 are hereby repealed. 

2. References  to the Regulation (EEC) No 804/68 shall be construed  as references  to this Regulation  and 

should be read in accordance with the correlation table in Annex III. 

Article 46 

The Commission shall adopt, in accordance with the procedure laid down in Article 41 : 

- the measures  required  to facilitate  the transition  from  the  arrangements  provided  in Regulation  (EEC) 

No 804/68 to those established by this Regulation, 

-  the  measures  required  to  resolve  specific  practical  problems.  Such  measures  -  if duly justified  -  may 

derogate from certain parts of this Regulation. 

Article 47 

This Regulation shall enter into force on the day of its publication  in the Official  Journal of the  European 
Communities. 

It shall  apply  as  from  1 January 2000, except  Article  19 (1) which  shall  apply  from  the entry  into  force 
of this Regulation. 

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

Done at... 

For the Council 
The President 

108 

ANNEX I 

Additional payments: global amounts referred to in Article 16 (expressed in Mio. ECU) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 

2000 

2001 

2002 

2003 
and subsequent 
calendar years 

6.4 
8.7 
54.2 
1.2 
10.8 
47.2 
10.2 
19.3 
0.5 
21.6 
5.4 
3.6 
4.7 
6.4 
28.4 

12.8 
17.3 
108.0 
2.4 
21.6 
93.9 
20.3 
38.5 
1.0 
42.9 
10.7 
7.3 
9.3 
12.8 
56.5 

19.3 
25.9 
162.2 
3.7 
32.4 
141.1 
30.5 
57.8 
1.6 
64.5 
16.0 
10.9 
13.9 
19.2 
84.9 

25.7 
34.5 
216.0 
4.9 
43.1 
187.9 
40.7 
77.0 
2.1 
85.8 
21.3 
14.5 
18.6 
25.6 
113.1 

109^ 

ANNEX II 

(previously ANNEX) 

' 

CNcode 

Description of goods 

0403  10 51 to 99 

and 
0403 90 71 to 99 

Buttermilk,  curdled  milk  and  cream,  yoghurt,  képhir  and  other  fermented  or  acidified  milk  and  cream,  whether  or  not  concentrated  or 
containing added sugar or other sweetening matter, flavoured  or containing added fruit or cocoa 

ex 0405 

Butter and other fats and oils derived from milk; dairy spreads: 

0405 20 
0405 20  10 
0405 20 30 

- 
- 
- 

Dairy spreads 
- 
- 

of a fat content, by weight, of 39% or more but less than 60% 
of a fat content, by weight, of 60% or more but not exceeding 75% 

ex  1517 

1517 10 
1517 10 10 

1517 90 
1517 90  10 

ex  1702 
1702  11 00 

Margarine;  edible  mixtures  or  preparations  of  animal  or  vegetable  fats  or  oils  or  fractions  of  different  fats  or  oils  of  this  chapter,  other 
than edible fats or oils or their fractions of CN code No  1516: 
- 
- 

Margarine, excluding liquid margarine: 
- 

containing more than  10% but not more than  15% by weight of milk  fats 

- 
- 

Other: 
- 

Containing more than  10% but not more than  15% by weight of milk  fats 

Lactose and lactose syrup: 
- 

- 

containing by weight 99% or more lactose, expressed as anhydrous lactose, calculated on the dry matter 

ex 1704 

Sugar confectionery  (including white chocolate), not containing  cocoa: 

ex 1704 90 

- 

Other, excluding liquorice extract containing more than  10% by weight of sucrose but not containing other added  substances 

110 

ex  1806 

Chocolate and other food preparations containing cocoa, excluding cocoa powder sweetened  solely by the addition of sucrose of CN code 

1806 10 

ex  1901 

Malt extract; food preparations of flour, meal, starch or malt extract, not containing cocoa or containing  less than 40% by weight of cocoa 

calculated  on  a totally  defatted  basis,  not  elsewhere  specified  or  included;  food  preparations  of  goods  of  CN  codes  0401  to  0404,  not 
containing cocoa or containing  less than 5% by weight of cocoa calculated on a totally defatted  basis, not elsewhere specified  or  included: 

1901  10 00 

1901 20 00 

1901 90 

- 

- 

- 

Preparations for  infant  use, put up for retail sale 

Mixes and doughs for the preparation  of bakers'wares of CN code  1905 

Other: 

Other: 

1901 90 91 

- 

- 

- Containing  no  milk  fats,  sucrose,  isoglucose, glucose  or  starch  or containing  less than  1.5%  milk  fat,  5%  sucrose 
(including  invert sugar) or isoglucose, 5% glucose or starch, excluding food preparations in powder form  of goods of 
CN codes 0401 to 0404 

190190 99 

- 

- 

-Other 

ex  1902 

Pasta,  whether  or  not  cooked  or  stuffed  (with  meat  or  other  substances)  or  otherwise  prepared,  such  as  spaghetti,  macaroni,  noodles, 
lasagne, gnocchi, ravioli, cannelloni; couscous, whether or not prepared: 

1902  19 
1902 20 

1902 20 91 

- 
- 

- 

Uncooked pasta not stuffed  or otherwise prepared: 

Other 

- 
Stuffed  pasta, whether or not cooked or otherwise  prepared: 

Other: 
- 

Cooked 

- 

111 

1902 20 99 
1902 30 
1902 40 
1902 40 90 

- 
- 
- 
- 

- 

- 
Other pasta 
Couscous: 
- 

Other 

Other 

1904 

1905 

1905 10 00 
1905 20 
1905 30 
1905 40 
1905 90 

1905 90 40 
1905 90 45 
1905 90 55 
1905 90 60 
1905 90 90 

ex 2004 

2004 10 

Prepared  food  obtained by the swelling  or roasting  of cereals or cereal products (for  example, com flakes); cereals (other than maize 
(com)) in grain form  or in the form  of flakes or other worked grains (except flour and meal),_pre-cooked  or otherwise prepared, not 
elsewhere specified or included 

Bread, pastry, cakes, biscuits and other bakers'  wares, whether or not containing  cocoa; communion  wafers,  empty  cachets  of a kind 
suitable for pharmaceutical use, sealing wafers, rice paper and similar products: 

Crispbread 
Gingerbread and the like 
Sweet biscuits; waffles and wafers 
Rusks, toasted bread and similar toasted products 
Other: 

Other: 

Waffles and wafers with a water content exceeding  10% by weight 
Biscuits 
Extruded or expanded products, savoury or salted 
With added sweetening matter 
Other 

- 

- 

- 

- 

Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen, other than products oh heading No 2006: 

Potatoes: 

Other: 

2004 10 91 

In the form of flour, meal or  flakes 

112 

ex 2005 
2005 20 
2005 20 10 

ex 2008 

Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading No 2006: 
- 
- 

In the form of flour, meal or  flakes 

Potatoes: 
- 

Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening 
matter or spirit not elsewhere specified or included: 

200811 
2008 1110 

- 
- 

Nuts, ground-nuts and other seeds, whether or not mixed together: 
- 
- 

Ground-nuts: 
- 

Peanut butter 

2105 00 

Ice cream and other edible ice, whether or not containing cocoa 

ex 2106 

ex 2202 

2202 90 

Food preparations not elsewhere specified  or included, excluding compound alcoholic preparations falling within CN code 2106 90 20 
and flavoured or coloured sugar syrups falling within CN codes 2! 06 90 30,2106 90 51, 2106 90 55 and 2106 90 59 

Waters, including mineral waters and aerated waters, containing  added  sugar or other  sweetening matter or flavoured, and other non 
alcoholic beverages, not including fruit and vegetable juices of CN code No 2009: 
- 

Other: 

2202 90 91 
2202 90 95 
2202 90 99 

- 
- 
- 

- 
- 
- 

Other, containing by weight of fat obtained from the products of CN codes 0401 to 0404: 
- 
- 
- 

Less than 0,2% 
0,2% or more but less than 2% 
2% or more 

ex 2208 
2208 70 
2208 90 

Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol; spirits, liqueurs and other spirituous beverages: 
- 
- 

Liqueurs and cordials 
Other: 

other spirits and spirituous beverages, in containers holding: 

113 

2208 90 69 

2208 90 78 

- 

- 

- 

- 

- 

- 

2 litres or less: 
other: 
- 
- 
more than 2 litres: 
- 

other spirituous beverages 

other spirituous beverages 

ex 3302 

3302 10 

Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind 
used as raw materials in industry; other preparations based on odoriferous substances, of a kind used for the manufacture of beverages: 
- 

3302 10 29 

- 

of a kind used in the food or drink industries: 
of a kind used in the drink industries: 
- 
- 

other 

- 

- 

3501 

Casein, caseinates and other casein derivatives; casein glues 

ex 3502 
3502 20 

Albumins, albuminates and other albumin derivatives: 
- 

milk albumin, including concentrates of two or more whey proteins: 

3502 20 91 
3502 20 99 

.
- 

.. 

- 

dried (for example in sheets, scales, flakes, powder) 

- 

other 

other: 

114 

ANNEX III 

Correlation  table 

Regulation 804/68 

I 

This Regulation 

Article  1 
Article 2 
Article 3 (1) and 2 
Article 3 (3) 
Article 3 (4) 
Article 4 
Article 5 
Article 5a 
Article 5c 
Article 6 (2) 
Article 6 (3) 
Article 6 (4) 
Article 6 (6) 
Article 7(1) 
Article 7 (2) 
Article 7 (3) first subparagraph 
Article 7 (3) fourth  subparagraph 
Article 7 (4) 
Article 7 (5) 
Article 7a 
Article 8 (1) to (3) 
Article 8 (4) 
Article 9 (3) 
Article  10(1) 
Article  10 (2) 
Article  10 (3) 
Article  11(1) 
Article  11 (2) 
Article  11 (3) 
Article  12 (3) 
Article  13 
Article  14 
Article  15 
Article  16 
Article  16a 
Article  17 
Article  18 
Article  19 
Article 20 
Article 21 
Article 22 
Article 22a 
Article 23 
Article 24 
Article 24a 
Article 25 
Article 26 (1) and (2) 

Article 1 
Article 2 
Article  3(1) 

Article 3 (2) 

Article  4(1) 

Article 5 
Article 6 (3) 
Article 6 (4) 
Article 6 (5) 
Article 10 
Article  7(1) 
Article 7 (3) 
Article 7 (4) first subparagraph 
Article 7 (4) second  subparagraph 
Article 7 (5) 
Article 10 

Article 8 (1) to (3) 
Article  10 
Article  10 
Article  11(1) 

Article  11 (3) 
Article  12(1) 

Article  12 (3) 
Article  13 (2) 
Article 25 
Article 26 
Article 27 
Article 28 
Article 29 
Article 30 
Article 31 
Article 32 
Article 33 
Article 34 

Article 35 
Article 36 
Article 37 
Article 38 

Article  14 (1) and (2) 

115 

Article 26 (4) 
Article 26 (5) 
Article 28 
Article 29(1) 
Article 29 (2) 
Article 30 
Article 31 
Article 32 
Article 33 
Article 34 
Article 35 
Article 36 
Article 37 (1) 
Annex 

Article 14 (5) 

Article 39 
Article 40 

Article 41 
Article 42 

Article 43 
Article 44 

Article 47 
Annex II 

116 

Proposal for a 

COUNCIL REGULATION (EC) No 

/... 

9 g / Q 1},  ( C N S) 

of 

199. 

amending Regulation (EEC) No 3950/92 establishing an additional levy in the milk 

and milk products sector 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Article 43 thereof, 

Having regard to the proposal from the Commission , 

Having regard to the opinion of the European Parliament, 

2 

Whereas, pursuant to Council Regulation  (EEC) No 3950/92 of 28 December  1992, 
establishing  an additional  levy in the milk and milk products  sector3,  the  additional 

levy scheme, which had been originally been introduced from 2 April  1984 in the said 

sector, was extended by another seven twelve months periods; whereas the purpose of 

this scheme was to reduce the imbalance between supply and demand on the milk and 

milk-products  market  and  the  resulting  structural  surpluses;  whereas  the  scheme 

remains necessary in the future  in order to achieve a better market balance; whereas it 

should  therefore  continue  to  be  applied  for  six  further  consecutive  twelve  month 

periods starting on 1  April 2000; 

OJNoC 
OJNoC 
OJ No L 405, 31.12.1992, p.  1. Regulation as last amended by Commission  Regulation (EC) No 

2 
3 
614/97 of 8.4.1997 (OJNo L 94 , 9.4.1997, p. 4). 

117 

Whereas the level of price support in the dairy sector will be gradually reduced by 15% 

in  total  over  four  marketing  years  from  1  July  2000;  whereas  the  effects  of  this 

measure on internal  consumption  and export of milk  and milk  products justify  a 2% 

increase  in  the  total  reference  quantity  for  milk  in  the  Community  in  four  steps 

following the respective price cuts; 

Whereas the individual reference quantity  should be defined as the quantity available, 

irrespective  of  any  quantities  which  may  have  been  transferred  temporarily,  on  31 

March 2000,  the  expiry  date  of  the  seven  periods  of  application  of  the  levy  scheme 

following its prolongation decided in 1992; 

Whereas the additional reference  quantities  should be distributed in such a way as to 

improve  the  situation  of  certain  categories  of  farmers  who  need  particular  support; 

whereas it is therefore appropriate to oblige Member States to allocate these quantities 

with priority to young farmers who intend to start or develop milk production and to 

producers in mountain areas; whereas precautions  should be taken to prevent the said 

distribution  criteria from being  circumvented;  whereas,  in  the  case  of  producers  in 

mountain  areas,  these  measures  should  be  designed  in  such  a way  as  to  nullify  the 

effects  of moving additional reference quantities out of mountain areas during the first 

two twelve months periods following their allocation; 

118 

Whereas the experience with the additional levy scheme has shown that the transfer of 

reference quantities through legal constructions such as leases which do not necessarily 

lead to a permanent allocation of the reference  quantities concerned to the transferee, 

can be an additional  cost  factor  for  milk production  hampering the improvement  of 

production  structures;  whereas,  in  order  to  strengthen  the  reference  quantities' 

character  as  a  means  of  regulating  the  market  of  milk  and  milk  products,  it  is 

appropriate to provide that  in cases of non-permanent  transfers  a certain part  of the 

relevant reference  quantities be returned to the national reserve for re-distribution  to 

active producers; whereas Member States should have the possibility to exempt certain 

specific categories of persons or cases from the application of the said measure, in the 

light of an evaluation of the interests involved and the objectives pursued; whereas the 

percentages  applied  should  be  determined  by  Member  States  in  the  light  of  their 

specific  situation; whereas, moreover, where reference  quantities fall  back to persons 

who did not actively produce milk or milk products during a given reference  period, 

Member  States  should  have  the  possibility  to  provide  that  the  relevant  reference 

quantities should revert to the national reserve unless they are permanently transferred 

to an active producer within a certain period; whereas, however, persons who resume 

milk production within a certain period should have the possibility to apply for  a re 

allocation of reference quantities; 

Whereas  a  certain  number  of  provisions  in  Regulation  (EEC)  No  3950/92  have 

become obsolete and should therefore be deleted; 

HAS ADOPTED THIS REGULATION: 

119 

Regulation (EEC) No 3950/92 is hereby amended as follows: 

Article 1 

1.  Article 1 first subparagraph is replaced by the following: 

"For six new consecutive periods of twelve months commencing on  1 April 2000, an 

additional  levy shall be payable by producers  of cow's milk  on quantities  of milk or 

milk equivalent delivered to a purchaser or sold directly for consumption during the 12-

month period in question in excess of a quantity to be determined." 

2. Article 3 (2) is replaced by the following: 

"(2)  The  total  quantities  set  out  in  Annex  I  and  Annex  II  including  the  additional 

reference  quantities  referred  to  in  Article  4  (3)  and  (4),  shall  be  fixed  without 

prejudice  to  possible  review  in  the  light  of  the  general  market  situation  and 

particular conditions existing in certain Member States. 

The  overall  quantity  for  the  Austrian  deliveries  quota  may  be  increased  to 

compensate Austrian 'SLOM' producers, up to a maximum of 180 000 tonnes, to be 

allocated  in  accordance  with  Community  legislation.  This  reserve  must  be  non 

transferable  and  used  exclusively  on  behalf  of  producers  whose right to  take  up 

production again will be affected  as a result of accession. 

The  overall  quantity  for  the  Finnish  deliveries  quota  may  be  increased  to 

compensate Finnish 'SLOM' producers, up to a maximum of 200 000 tonnes, to be 

allocated  in  accordance  with  Community  legislation.  This  reserve  must  be  non 

transferable  and  used  exclusively  on behalf  of  producers  whose right to  take  up 

production again will be affected  as a result of accession. 

The  increase  in  overall  quantities, and  the  conditions  under  which the  individual 

reference  quantities  provided  for  in  the  two  preceding  subparagraphs  shall  be 

granted,  shall  be  decided  upon  in  accordance  with  the  procedure  referred  to  in 

Article 11." 

3. Article 3 (3) is hereby deleted. 

120 

4. Article 4 is replaced by the following: 

"Article 4 

(1)  The  individual  reference  quantity  available  on  the  holding  shall  be  equal  to  the 

quantity available on 31 March 2000. It shall be: 

- increased, where appropriate, in accordance with Article 4 (3) and (4), and 

- adjusted, where appropriate, for each of the periods concerned, so that the sum of 

the  individual  reference  quantities  of  the  same  type  does  not  exceed  the 

corresponding  global  quantities  referred  to  in  Article  3,  taking  account  of  any 

reductions made for allocation to the national reserve provided for in Article 5. 

(2) Individual reference quantities shall be increased or established at the duly justified 

request  of  producers  to  take  account  of  changes  affecting  their  deliveries  and/or 

direct  sales.  The  increase  or  establishment  of  such  a  reference  quantity  shall  be 

subject to a-corresponding reduction or cancellation of the other reference  quantity 

the producer owns. Such adjustments may not lead to an increase in the sum of the 

deliveries and direct sales referred to in Article 3 for the Member State concerned. 

Where the individual reference quantities undergo a definitive change, the quantities 

referred to in Article 3 shall be adjusted in accordance with the procedure laid down 

in Article  11. 

(3) Member States shall: 

(a) allocate the additional  reference  quantities set out in column (c) of the tables in 

Annex  II with  priority  to  young  farmers  who  intend  to  start  or  develop  milk 

production; 

(b)  take  the  necessary  measures  to  ensure  that  the  allocation  of  these  additional 

reference  quantities achieves the intended purpose and, in particular, to provide 

121 

for cases where reference quantities allocated have not been used in accordance 

with that purpose. 

(4)  Member  States shall  allocate the additional  reference  quantities set out in column 

(d) of the tables in Annex II to producers the whole of whose holdings are situated 

in mountain areas within the meaning of Article  17 of Regulation (EC) No ...  [rural 

development]. 

For  two  twelve  month  periods  following  the  allocation  referred  to  in  the  first 

subparagraph: 

(a)  Member  States  shall  not  authorise  the  producers  who  have  received  such 

allocations to make temporary transfers as defined  in Article 6 (1) to producers 

other than those referred to in the first subparagraph; 

(b)  where  all  or  part  of  the  holding  of  a  producer  who  has  received  such  an 

allocation is sold or leased, to producers other than those referred to in the first 

sub-paragraph,  the  additional  reference  quantity  shall  revert  to  the  national 

reserve in proportion to the area sold or leased. 

(c) where producers who have received such allocations transfer reference quantities 

under an authorisation granted pursuant to Article 8 (d) or (e) to producers other 

than those referred to in the first sub-paragraph, a part of the additional reference 

quantity  allocated  which  shall  be  equal  to  the  quantity  subject  to  the  transfer, 

shall be transferred to the national reserve. 

122 

(d) where producers who have received such allocations participate in any measure 

regarding  the  definitive  abandonment  of  reference  quantities,  the  additional 

reference  quantity  allocated  shall  revert  to  the  national  reserve,  and 

compensation  shall  be paid for the quantity transferred  less  the  said  additional 

quantity. 

The  additional  reference  quantities  transferred  to  the  national  reserve  under 

points (b), (c) and (d) shall be re-allocated to other producers referred to in the 

first  sub-paragraph. 

(5)  Member  States  shall  allocate  the  additional  reference  quantities  referred  to  in 

paragraphs  3  and  4,  taking  due  account  of  the  requirements  resulting  from 

Community legislation in the field of environment." 

5. The second sentence of Article 6 (1) first subparagraph is hereby deleted. 

6. Article 7 (1) second subparagraph is replaced by the following: 

"However, where land is transferred to public authorities and/or for use in the public 

interest, or where the transfer is carried out for non-agricultural  purposes, Member 

States shall provide that the measures necessary to protect the legitimate interests of 

the  parties  are  implemented,  and  in  particular  that  the  departing  producer  is  in  a 

position to continue milk production, if such is his intention." 

7. Article 8 shall be replaced by the following: 

"Article 8 

With  a  view  to  completing  restructuring  of  milk  production  or  to  environmental 

improvement,  Member  States  may  take  one  or  more  of  the  following  actions  in 

accordance  with  detailed  rules  which  they  shall  lay  down  taking  account  of  the 

legitimate interests of the parties: 

123 

(a) grant compensation  in one or more annual instalments to producers who undertake 

to abandon definitively  all or part of their milk production and place the reference 

quantities thus released in the national reserve, 

(b)  determine  on the  basis  of  objective  criteria the  conditions  under which producers 

may  obtain,  in  return  for  payment,  at  the  beginning  of  a  12-month  period,  the 

reallocation by the competent authority or by the body designated by that authority, 

of  reference  quantities  released  definitively  at  the  end  of  the  preceding  twelve 

month period by other producers in return for compensation in one or more annual 

instalments equal to the abovementioned payment, 

(c) provide, in the case of land transferred with a view to improving the environment, 

for the allocation of the reference quantity available on the holding concerned to the 

departing producer if he intends continuing milk production, 

(d) determine,  on the basis of  objective  criteria, the regions  or collection  areas within 

which  the  transfer  of  reference  quantities  between  certain  producer  categories 

without transfer of the corresponding land is authorized, with the aim of improving 

the structure of milk production, 

(e) authorize, upon application by the producer to the competent authority or the body 

designated by that authority, the transfer of reference  quantities without transfer of 

the  corresponding  land,  or vice  versa,  with the  aim of  improving  the  structure  of 

milk  production  at  the  level  of  the  holding  or  to  allow  for  extensification  of 

production." 

124 

8. The following is added after Article 8: 

"Article 8a 

(1) Where reference quantities are transferred with or without the corresponding land by 

means of rural leases or by other means involving comparable legal effects, a part of 

the  transferred  reference  quantities  to  be  determined  by the  Member  State  on the 

basis  of  objective  criteria,  shall  revert to  the national  reserve  for  redistribution  to 

producers. 

The first subparagraph shall not apply to cases where where due to the expiration of 

rural leases or in situations involving comparable legal effects, reference quantities, 

which had been transferred with or without the corresponding  land, are transferred 

back. 

Member States may decide, on the basis of objective criteria, not to apply the first 

subparagraph  to  certain  specific  categories  of  persons  or  cases,  where,  taking 

account  of  the  interests  involved,  such  non-application  does  not  put  at  risk  the 

achievement of the objectives pursued in the first subparagraph. 

(2) Member  States may provide that, where due to the expiration of rural leases  or in 

situations  involving  comparable  legal  effects,  reference  quantities, which had been 

transferred with or without thé corresponding land, are transferred back to a person 

who  has  not  marketed  milk  or  milk  products  during  the  twelve  months  period 

preceding  that during  which  the  transfer  took  place  as  well  as  during  the  current 

twelve months period up to the transfer, the relevant reference quantities shall revert 

to  the  national  reserve  for redistribution  to  producers  in  accordance  with  detailed 

rules to be determined by them, unless the person concerned permanently transfers 

these  reference  quantities  with  or  without  the  corresponding  land  to  another 

producer. 

Where, in the case of the application of the first subparagraph, the person concerned 

resumes production of milk or other milk products within a period to be determined 

125 

by the Member  State he shall  be granted  a reference  quantity  in accordance with 

Article 4 (1) no later than  1 April following  the date of his application.  Reference 

quantities  re-allocated  under  this  subparagraph  shall  not  be  transferred  with  or 

without  the  corresponding  land  by  means  of  rural  leases  or  by  other  means 

involving  comparable  legal  effects  during  the  two  consecutive  twelve  months 

periods following their re-allocation." 

(3)  Paragraph  1  and  paragraph  2  first  subparagraph  shall  not  apply  to  temporary 

transfers under Article 6." 

9. The Annexes set out in the Annex hereto are hereby added to Regulation (EEC) No 

3950/92. 

Article 2 

Where  transitional  measures  are  necessary  to  facilitate  the  implementation  of  the 

amendments  provided  for  in Article  1, they  shall  be adopted  in accordance  with the 

procedure referred to in Article 11  of Regulation (EEC) No 3950/92 

Article 3 

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

Official  Journal of the European Communities. 

It shall apply from 1 April 2000. 

126 

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

States. 

Done at Brussels, 

For the Council 

The President 

127 

ANNEX 

"ANNEXI 

Total reference quantities referred to in Article 3 (1) as applicable from 1 April 
2000 to 31 March 2001 
(expressed in tonnes) 

Member States  Deliveries 

Direct supply 

total reference 
quantities 

total reference 
quantities 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United 
Kingdom 

3 109 639 
4 454 639 
27 764 778 
629 817 
5 438 118 
23 749 650 
5 235 723 
9 698 399 
268 098 
10 988 039 
2 382 377 
1835 461 
2 384 327 
3 300 000 
14 338 375 
I 

200 792 
709 
100 038 
696 
128 832 
486 148 
10 041 
231661 
951 
86 653 
367 000 
37 000 
10 000 
3 000 
251672 

128 

ANNEX II 

Total reference quantities referred to in Article 3 (1) including the additional 
reference quantities referred to in Article 4 (3) and (4) 
(expressed in tonnes) 

(a) applicable from 1  April 2001 to 31 March 2002 

Member States 

total reference 
quantities 

(a) 

(b) 

Deliveries 

additional 
reference 
quantities 
"young 
farmers"* 
(c) 

additional 
reference 
quantities for 
mountain 
areas* 
(d) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United 
Kingdom 

3 117915 
4 465 777 
27 855 754 
634 435 
5 493 458 
23 886 636 
5 248 837 
9 770 989 
268 771 
11015 726 
2 429 221 
1 848 882 
2 434 316 
3 319 336 
14 374 850 

8276 
11138 
69662 
1576 
13917 
60589 
13114 
24825 
673 
27687 
6873 
4681 
5986 
8258 
36475 

* Included in total reference quantities for deliveries 

21314 
3042 
41423 
76397 

47765 

39970 
8740 
44003 
11078 

Direct supply 

total reference 
quantities 

(e) 

200 792 
709 
100 038 
696 
128 832 
486 148 
10 041 
231 661 
951 
86 653 
367 000 
37 000 
10 000 
3 000 
251 672 

129 

(b) applicable from 1 April 2002 to 31 March 2003 

Member States 

total reference 
quantities 

(a) 

(b) 

Deliveries 

additional 
reference 
quantities 
"young 
farmers"* 
(c) 

additional 
reference 
quantities for 
mountain 
areas* 
(d) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United 
Kingdom 

3  126 191 
4 476 915 
27 946 730 
639 053 
5 548 798 
24 023 622 
5 261951 
9 843 579 
269 444 
11043 413 
2 476 065 
1 862 303 
2 484 305 
3 338 672 
14 411325 

8276 
11138 
69662 
1576 
13917 
60589 
13114 
24825 
673 
27687 
6873 
4681 
5986 
8258 
36475 

21314 
3042 
41423 
76397 
' 
47765 

39970 
8740 
44003 
11078 

* Included in total reference quantities for deliveries 

Direct supply 

total reference 
quantities 

(e) 

200 792 
709 
100 038 
696 
128 832 
486 148 
10 041 
231661 
951 
86 653 
367 000 
37 000 
10 000 
3 000 
251 672 

130 

(c) applicable from 1  April 2003 to 31 March 2004 

Member States 

total reference 
quantities 

(a) 

(b) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United 
Kingdom 

| 

3  134 467 
4 488 053 
28 037 706 
643 671 
5604 138 
24  160 608 
5 275 065 
9 916  169 
270 117 
11071 100 
2 522 909 
1 875 724 
2 534 294 
3 358 008 
14 447 800 

Deliveries 

additional 
reference 
quantities 
"young 
farmers"* 
(c) 

additional 
reference 
quantities for 
mountain 
areas* 
(d) 

8276 
11138 
69662 
1576 
13917 
60589 
13114 
24825 
673 
27687 
6873 
4681 
5986 
8258 
36475 

21314 
3042 
41423 
76397 

47765 

39970 
8740 
44003 
11078 

Direct supply 

total reference 
quantities 

(e) 

200 792 
709 
100 038 
696 
128 832 
486 148 
10 041 
231 661 
951 
86 653 
367 000 
37 000 
10 000 
3 000 
251 672 

Included in total reference quantities for deliveries 

131 

(d) applicable as from 1  April 2004 

Member States 

total reference 
quantities 

(a) 

(b) 

Deliveries 

additional 
reference 
quantities 
"young 
farmers"* 
(c) 

additional 
reference 
quantities for 
mountain 
areas* 
(d) 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United 
Kingdom 

3  142 743 
4 499 191 
28  128 682 
648 289 
5 659 478 
24 297 594 
5 288 179 
9 988 759 
270 790 
11098 787 
2 569 753 
1 889 145 
2 584 283 
3 377 344 
14 484 275 

8276 
11138 
69662 
1576 
13917 
60589 
13114 
24825 
673 
27687 
6873 
4681 
5986 
8258 
36475 

21314 
3042 
41423 
76397 

47765 

39970 
8740 
44003 
11078 

Included in total reference quantities for deliveries' 

Direct supply 

total reference 
quantities 

(e) 

200 792 
709 
100 038 
696 
128 832 
486  148 
10 041 
231661 
951 
86 653 
367 000 
37 000 
10 000 
3 000 
251 672 

132 

Proposal for 

Council Regulation (EC) No.,. 

<;8/0« °2  (C N S) 

of... 

on support for Rural Development from the European Agricultural Guidance and 
Guarantee Fund (EAGGF) 

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 Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

Having regard to the opinion of the Committee of the Regions4, 

Whereas  a  common  rural  development  policy  should  accompany  and  complement  other 
instruments  of  the  common  agricultural  policy  and  thus  contribute  to  the  achievement  of the 
objectives of this policy laid down in Article 39(1) of the Treaty; 

Whereas, according to Article  39(2)(a) of the Treaty, in working  out the common  agricultural 
policy and the special methods for its application, account shall be taken of the particular nature 
of agricultural activities which result from the social structure of agriculture and from structural 
and natural disparities between the various agricultural regions; 

Whereas, according to Article  130b of the Treaty, the implementation  of the common policies 
shall take into account the objectives set out in Articles 130a and 130c for the common policy of 
economic  and  social  cohesion  and  shall  contribute  to  their  achievement;  whereas  rural 
development measures should, therefore, contribute to this policy in regions whose development 
is lagging behind (Objective  1) and regions facing structural difficulties  (Objective 2) as defined 
in Council regulation (EC) No ... (General Structural Funds Regulation)5; 

133 

Whereas  measures  designed  to  support  the  improvement  of  agricultural  structures  have  been 
introduced  into  the  common  agricultural  policy  as early  as  1972; whereas  during  almost  two 
decades,  attempts  have  been  made  to  integrate  agricultural  structural  policy  into  the  wider 
economic  and  social  context  of  rural  areas;  whereas  the  1992  policy  reform  stressed  the 
environmental dimension of agriculture as the largest land user; 

Whereas rural policy is currently carried out through a range of complex instruments which lack 
overall coherence; 

Whereas  over  the  coming  years,  agriculture  will  have  to  adapt  to  new  realities  and  further 
changes  in  terms  of  market  evolution,  market  policy  and  trade  rules,  consumer  demand  and 
preferences  and  the  Community's  next  enlargement;  that  these  changes  will  not  only  affect 
agricultural  markets  but  also  local  economics  in  rural  areas  in  general;  whereas  a  rural 
development  policy  should  aim  at  restoring  and  enhancing  the  competitiveness  of  rural  areas 
and, therefore, contribute to the maintenance and creation of employment in these areas; 

Whereas  these  developments  should  be  encouraged  and  supported  by  a  reorganisation  and 
simplification of the existing rural development instruments; 

Whereas such reorganisation should take into account the experience gained in applying existing 
instruments and thus to be based on these instruments, which are those implemented under the 
current priority  objectives  which promote rural  development  by speeding up the adjustment  of 
agricultural  structures  in the framework of the  reform  of the  common  agricultural  policy  and 
which facilitate the development and structural adjustment  of rural areas (Objectives 5a and 5b), 
as  laid  down  in  Council  Regulation  (EEC) No  2052/88  of  24 June  1988  on  the  tasks  of the 
General  Structural  Funds  Regulation  and  their  effectiveness  and  on  coordination  of  their 
activities between themselves and with the operations of the European Investment Bank and the 
other existing financial  instruments6 and Council Regulation (EEC) No 4256/88 of 19 December 
1988 laying  down provisions  for  implementing  Regulation  (EEC) No  2052/88  as  regards the 
European  Agricultural  Guidance  and  Guarantee  Fund  (EAGGF)  Guidance  Section7,  and those 
introduced  as  accompanying  measures  of  the  1992  common  agricultural  policy  reform  by 
Council  Regulation  (EEC)  No  2078/92  of  30  June  1992  on  agricultural  production  methods 
compatible with the requirements of the protection of the environment  and the maintenance of 
the  countryside8,  Council  Regulation  (EEC)  No  2079/92  of  30  June  1992  instituting  a 
Community  aid  scheme  for  early  retirement from farming9and  Council  Regulation  (EEC) No 
2080/92  of  30  June  1992  instituting  a  Community  aid  scheme  for  forestry  measures  in 
agriculture10; 

6  OJ L  185 of  15.7.1988, p. 9, as last amended by Regulation (EC) No 3193/94, OJ L 337 of 24.12.1994, p.  11. 

7  OJ L 374 of 31.12.1988, as amended by Regulation (EEC) No 2085/93, OJ L  193 of 31.7.1993, p. 44. 

8  OJ  L  215  of  30.7.1992,  p.  85,  as  last  amended  by  Commission  Regulation  (EC)  No  2272/95,  OJ  L  288  of 
1.12.1995,  p. 35. Regulation  rectified  by  Commission  Regulation  (EC) No  1962/96, OJ  L 259  of  12.10.1996, 
p. 7. 

9  OJ  L  215  of  30.7.1992,  p.  91,  as  amended  by  Commission  Regulation  (EC)  No  2773/95,  OJ  L  288  of 

1.12.1995, p. 37. 

10  OJ  L  215  of  30.7.1992,  p.  96,  as  last  amended  by  Commission  Regulation  (EC)  No  231/96,  OJ  L  30  of 

8.2.1996, p. 33. 

134 

Whereas the framework of a reformed  rural development policy  should cover all rural areas in 
the Community; 

Whereas  the  three  existing  accompanying  measures  introduced  by  the  1992  reform  of  the 
common  agricultural  policy  (agri-environment,  early  retirement  and  afforestation)  should  be 
supplemented by the Less-Favoured areas Scheme (LFA); 

Whereas other rural development measures should form part of integrated development programs 
for Objective 1 regions and for Objective 2 regions; 

Whereas  in the  rural  areas  outside  Objective  1 and  Objective  2,  rural  development  measures 
should accompany and complement market policies; 

Whereas  support  from  EAGGF  for  rural  development  should  be  based  on  a  single  legal 
framework  establishing measures eligible for support, their objectives and criteria for eligibility; 

Whereas, given the diversity of the Union's rural areas, rural development policy should  follow 
the principle  of  subsidiarity;  whereas  it  should, therefore,  be  as decentralised  as possible  and 
emphasis must be on participation  and a "bottom up" approach; whereas, therefore,  eligibility 
criteria  for  rural  development  support  should  not  go beyond  what  is necessary  to  achieve the 
objectives of rural development policy; 

Whereas  coherence  with  other  instruments  of  the  common  agricultural  policy  and  with  other 
common policies  requires, however,  basic  support  criteria to  be laid  down  at the  Community 
level;  whereas,  in  particular,  unjustified  distortions  of  competition  resulting  from  rural 
development measures should be avoided; 

Whereas, in order to ensure flexibility  and to  simplify  legislation, the  Council  shall  confer  all 
necessary implementing powers to the Commission in accordance with Article 155 of the Treaty; 

Whereas the  structure  of  agriculture  in the  Community  is typified  by the  existence  of  a large 
number of holdings which lack the structural conditions which would ensure a fair  income and 
living conditions for farmers and their families; 

Whereas  the  aim  of  Community  investment  aid  is  to  modernise  agricultural  holdings  and  to 
improve their viability; 

Whereas Community conditions concerning eligibility  for  investment  aids should be  simplified 
as compared to the existing conditions as laid down in Council Regulation (EC) No 950/97 of 20 
May 1997 on improving the efficiency  of agricultural structures11; 

Whereas  the  grant  of  specific  benefits  to  young  farmers  may  facilitate  not  only  their 
establishment but also the structural adjustment of their holdings after their initial establishment; 

11  OJ L  142 of 2.6.1997, p. 1. 

135 

Whereas  the  evolution  and  the  specialisation  of  agriculture  require  an  appropriate  level  of 
general,  technical  and  economic  training  for  the  active  farm  population,  especially  as  regards 
new approaches to management, to production or to marketing; 

Whereas  a  particular  effort  is  needed  to  educate,  and  inform  farmers  of,  agricultural  methods 
compatible with  the environment; 

Whereas early retirement from  farming  should be encouraged  in order to improve the viability of 
agricultural  holdings  taking  into  account  the  experience  acquired  in  the  implementation  of 
Regulation (EEC) No 2079/92; 

Whereas  support  to  less  favoured  areas  should  contribute  to  continued  agricultural  land  use, 
preservation  of  the  countryside,  maintenance  and  promotion  of  farming  systems  and  to  the 
fulfilment  of environmental requirements; 

Whereas  the  support  scheme  for  less  favoured  areas  should  constitute  a  basic  instrument  to 
maintain and promote low-input farming  systems; 

Whereas  less  favoured  areas  should  be  classified  on  the  basis  of  common  criteria;  whereas 
existing  criteria  should  be  modified  to  allow  classification  of new  areas  and  in particular  areas 
affected  by specific environmental handicaps; 

Whereas there  is no need  for  any  further  classification  of  less  favoured  areas to  be  drawn  up at 
Community  level; 

Whereas  conditions  concerning  eligibility  for  compensatory  allowances  should  be  laid  down  in 
order  to  ensure  the  efficiency  of  this  support  scheme  and  to  ensure  that  its  objectives  are 
achieved; 

Whereas,  in  the  coming  years,  a  prominent  role  should  be  given  to  agri-environmental 
instruments  to  support  the  sustainable  development  of  rural  areas  and  to  respond  to  society's 
increasing demand for environmental services; 

Whereas the existing agri-environmental  support under Regulation  (EEC) No 2078/92  should be 
continued  for  targeted  environmental  measures  taking  into  account  experience  gained  in  the 
implementation  of  this  scheme,  as  described  in  detail  in  the  Commission's  report  presented 
pursuant to Article  10(2) of Regulation (EEC) No 2078/92; 

Whereas  the  agri-environmental  aid  scheme  should  continue  to  encourage  farmers  to  serve 
society as a whole by introducing or continuing the use of farming  practices compatible with the 
increasing  need  to protect the  environment  and natural  resources  and  to maintain  the  landscape 
and the countryside; 

Whereas  improvements  in  the  processing  and  marketing  of  agricultural  products  should  be 
encouraged by support for investments in that field; 

136 

Whereas  such  support  can  largely  be  based  on  existing  conditions  as  currently  laid  down  in 
Council Regulation (EC) No 951/97 of 20 May 1997 on improving the processing and marketing 
conditions for agricultural products12; 

Whereas it should be ensured that such investments are viable and that farmers have a share in 
the economic benefits of the action taken; 

Whereas forestry is an integral part of rural development and forestry measures should, therefore, 
be included into the rural development support scheme; 

Whereas forestry measures should be adopted in the light of undertakings of the Community and 
the Member States made at an international level and should be based on Member States forest 
plans; whereas  such measures  should  also take  into  account the  specific  problems  of climatic 
change; 

Whereas forestry  measures should be pursued on the lines of the existing schemes laid down in 
Regulation  (EEC)  No  1610/89  of  29  May  1989  laying  down  provisions  for  implementing 
Regulation (EEC) No 4256/88 as regards the scheme to develop and optimally utilise woodlands 
in rural areas in the Community13 and in Council Regulation (EEC) No 867/90 of 29 March 1990 
on improving the processing and marketing conditions for forestry products14; 

Whereas the afforestation  of agricultural land is especially  important from  the point of view of 
soil  use  and  the  environment  and  as  a  contribution  to  increase  supplies  in  certain  forestry 
products;  whereas  the  existing  support  for  afforestation  under  Regulation  (EEC) No  2080/92 
should, therefore,  be pursued, taking  into  account  experience  gained  in the  implementation of 
that  scheme as described  in detail  in the Commission's  report presented  pursuant  to Article 8 
paragraph 3 of Regulation (EEC) No 2080/92; 

Whereas  compensatory  allowances  should  be  granted  for  the  maintenance  of  sustainable 
sylviculture in areas with major natural handicaps; 

Whereas  support  should  be  granted  for  other  measures  related  to  farming  activities  and their 
conversion; whereas the list of measures should be defined on the basis of experience and having 
regard  to the need  for  rural  development  to be based  partly  on non-agricultural  activities and 
services so as  to reverse the trend towards the economic and social decline and depopulation of 
the countryside;whereas measures to remove inequalities and to promote equal opportunities for 
men and women should be supported; 

Whereas  rural  development  measures  eligible  for  Community  support  should  comply  with 
Community  law  and  be  coherent  with  other  Community  policies  as  well  as  with  other 
instruments of the common agricultural policy; 

12  OJL142of2.6.1997,p.22. 

13  OJL165of  15.6.1989, p. 3. 

14  OJL  91 of 6.4.1990, p. 7. 

137 

Whereas  support  should  be  excluded  for  certain  measures  eligible  under  other  common 
agricultural  policy  instruments  and  in  particular  those  falling  within  the  scope  of  support 
schemes under common organisations of the market; 

Whereas, in view of existing aids to producer groups and their associations in several common 
organisations  of  the  market,  specific  support  to  producer  groups  in  the framework of  rural 
development  does  not  appear  to  be  necessary  any  more;  whereas,  therefore,  the  aid  scheme 
existing  under  Council  Regulation  (EC) No  952/97  of  20 May 1997  on  producer  groups  and 
associations thereof15should not be continued; 

Whereas the financing  of Community support for the accompanying measures and to other rural 
development  measures  in  areas  outside  objective  No  1 should  be  made from the  Guarantee 
Section of EAGGF; whereas the basic financial rules laid down in Council Regulation (EC) No 
...[General Structural Funds Regulation]16 have been adapted accordingly; 

Whereas the financing of Community support for rural development measures, in areas covered 
by objective No 1, should continue to be made from the Guidance Section of EAGGF except for 
the three existing accompanying measures and for less favoured areas support; 

Whereas, with regard to the support for rural development measures covered by Objective  1  and 
Objective 2 programming, Regulation (EC) No ... [General Structural Funds Regulation] should 
apply,  in particular  as to  integrated  programming  of these  measures; whereas,  however,  rules 
concerning financing should take into account the Guarantee financing of measures in Objective 
2 regions; 

Whereas rural development measures not covered by Objective  1 or Objective  2 programming 
should be subject to rural development programming pursuant to specific rules; whereas rates of 
assistance  for  such measures  should  be  differentiated  according  to  the  general  principles  laid 
down in Article 28(1) of Regulation  (EC) No  ...  [General  Structural  Funds Regulation] taking 
sufficiently  into account the requirement of social and economic cohesion, and as a consequence 
those assistance rates should, in principle, be differentiated  between areas covered by Objective 
and  Objective  2  and  other  areas;  whereas  rates  laid  down  in  this  Regulation  are  maxima  of 
Community assistance; 

Whereas,  in  addition  to  Rural  Development  Programmes, the  Commission  should  be  able  to 
make provisions for studies on rural development on its own initiative notwithstanding the rural 
development  initiative  provided  for  in Articles  18 and  19 of  Regulation  (EC) No...  [General 
Structural Funds Regulation]; 

Whereas  appropriate  rules  should  be  established  for  monitoring  and  evaluation  of  rural 
development  support, using as a reference  well defined  indicators to be agreed and established 
prior to programme implementation; 

15  OJL  142 of 2.6.1997, p. 30 

16  O J L . .. 

138 

Whereas rural development measures should be eligible for Member State support without any 
Community cofinancing; whereas in view of the considerable economic impact of such aids and 
in order to  ensure  coherence  with measures  eligible  for  Community  support,  and to  simplify 
procedures specific state aid rules should be established; 

Whereas it should be possible to adopt transitional rules to facilitate the transition from  existing 
support schemes to the new rural development support scheme, 

HAS ADOPTED THIS REGULATION: 

Title I 

Scope and objective? 

Article 1 

1.  This  Regulation  establishes  the  framework  for  Community  support  for  sustainable  rural 

development. 

2.  Rural  development  measures  shall  accompany  and  complement  other  instruments  of  the 
common agricultural  policy  and thus contribute to the achievement  of the objectives  laid 
down in Article 39 of the Treaty. 

3.  Rural development measures shall 

-  be integrated into the measures promoting the development and structural adjustment of 

regions whose development is lagging behind (Objective  1) and 

-  accompany the measures supporting the economic and social conversion of areas facing 

structural difficulties  (Objective 2), 

in  the  regions  concerned,  taking  into  account  the  specific  targets  of  Community  support 
under  these  objectives  as  laid  down  in  Articles  130a  and  130c  of  the  Treaty  and  in 
Regulation  (EC)  No  ...  [General  Structural  Funds  Regulation]  and  according  to  the 
conditions laid down in this Regulation. 

Article 2 

Support for rural development, related to farming activities and their conversion, may concern: 

- 

- 

the improvement of structures in agricultural holdings and for the processing and marketing of 
agricultural products; 

the conversion and reorientation of agricultural production potential, the introduction of new 
technologies and the improvement of product quality; 

139 

-  sustainable forest  development; 

- 

the diversification  of activities with the aim of complementary or alternative activities; 

- 

the maintenance and reinforcement  of viable social fabric in rural areas; 

- 

the development of economic activities and the maintenance and creation of employment with 
the aim of ensuring a better exploitation of existing inherent potential; 

- 

the improvement of working and living conditions; 

- 

the maintenance and promotion of low-input farming  systems in less favoured  areas; 

- 

- 

the preservation and promotion of a high nature value and a sustainable agriculture  respecting 
environmental requirements; 

the removal  of inequalities  and the promotion  of equal  opportunities  for  men and  women,  in 
particular by supporting projects initiated and implemented by women. 

Article 3 

Support  shall  be  granted  for  the  rural  development  measures  defined,  and  under  the  conditions 
laid down, in Title II. 

Title II 

Rural development measures 

Chapter I 

Investments in agricultural holdings 

Article 4 

Support  for  investments  in  agricultural  holdings  shall  contribute  to  the  improvement  of 
agricultural incomes and of living, working and production conditions. 

They shall pursue one or more of the following  objectives: 

- 

reduce production costs; 

- 

improve and redeploy production; 

- 

increase quality; 

-  preserve  and  improve  the  natural  environment,  hygiene  conditions  and  animal  welfare 

standards; 

-  promote the diversification  of farm activities. 

140 

Article 5 

Support for investments shall be granted to agricultural holdings: 

-  whose economic viability can be demonstrated; 

-  which  comply  with  minimum  standards  regarding  the  environment,  hygiene  and  animal 

welfare, and 

-  where the farmer possesses adequate occupational skill and competence. 

Article 6 

Support  shall  not  be  granted  for  investments  which  have  as  their  objective  an  increase  in 
production for which no normal market outlets can be found. 

Member States shall set maximum amounts for support for investments. 

Article 7 

Chapter II 

Setting-up of young farmers 

Article 8 

1.  Setting-up aids to young farmers shall be granted under the following conditions: 

- 

the farmer is under 40 years of  age; 

- 

the farmer possesses adequate occupational skill and competence; 

- 

the farmer sets up for the first time on an agricultural holding; 

-  for this holding 

economic viability can be demonstrated; and 

minimum standards regarding the environment, hygiene and animal 

welfare are complied with; 

(i) 

(ii) 

and 

- 

the farmer is established as head of the holding. 

Specific conditions may be applied to the situation where a young farmer is not established 
as  sole head  of the holding. These conditions  must be equivalent  to those  required  for  a 
young farmer setting up as a sole head of a holding. 

141 

2.  The setting-up aid may comprise: 

-  a single premium up to the maximum eligible amount specified in the Annex; 

-  an  interest  subsidy  on  loans  taken  on with  a view to  covering  the  costs  arising from 
setting up; the capitalised value of the  interest subsidy may not exceed the value of the 
premium. 

Chapter III 

Training 

Article 9 

Support for vocational training shall contribute to the improvement of the occupational skill and 
competence  of  farmers  and  other  persons  involved  in  agricultural 
activities,  and  their 
conversion. 

Training  shall  in  particular  be  intended  to  prepare  farmers  for  qualitative  reorientation  of 
production,  the  application  of  production  practices  compatible  with  the  maintenance  of  the 
landscape,  the  protection  of  the  environment,  hygiene  standards  and  animal  welfare  and 
acquisition of the skills needed to enable them to manage an economically viable farm. 

Chapter IV 

Early retirement 

Article 10 

1.  Support for early retirement from farming shall contribute to the following objectives: 

-  providing an income for elderly farmers who decide to stop farming; 

-  encouraging  the  replacement  of  such  elderly  farmers  by  farmers  able  to  improve  the 

economic viability of the remaining agricultural holdings; 

-  reassigning  agricultural  land to non-agricultural  uses where it  cannot  be  farmed  under 

satisfactory conditions of viability. 

2.  Early retirement support may include measures to provide an income for farm workers. 

1.  A transferor  shall : 

Article 11 

-  stop  all  commercial  farming  activity  definitively;  he  may,  however,  continue  non 
commercial farming  and retain the use of the buildings in which he continues to live; 

-  be not less than 55 years old but not yet of normal retirement age at the time of  transfer, 

and 

-  have practised farming  for the ten years preceding  transfer. 

2.  A farming  transferee  shall: 

-  succeed  the transferor  as the  head  of the  agricultural  holding  or take  over  all  or part  of 
the  land  released.  The  economic  viability  of  the  holding  of  the  transferee  must  be 
improved within a period and in compliance with conditions to be defined,  in terms of,  in 
particular,  the  occupational  skill  and  competence  of  the  transferee,  surface  area  and 
volume of work or income, according to the region and type of production; 

-  possess adequate occupational skill and competence, and 

-  undertake  to  practise  farming  on  the  agricultural  holding  for  not  less  than  5  years  in 
accordance  with  minimum  standards  regarding  the  environment,  hygiene  and  animal 
welfare. 

3.  A worker shall: 

-  stop all farm work  definitively; 

-  be not less than 55 years old but not yet of normal retirement age; 

-  have devoted at least half of his/her working time as a family  helper or a farm  worker to 

farm work during the preceding five years; 

-  have  worked  on  the  transferor's  agricultural  holding  for  at  least  the  equivalent  of  two 
years  full-time  during  the  four-year  period  preceding  the  early  retirement  of  the 
transferor  and 

-  belong to a social security scheme. 

\.  A non-farming  transferee  may be any other person or body who takes over released  land to 
use  it  for  non-agricultural  purposes,  forestry  or  the  creation  of  ecological  reserves  in  a 
manner compatible with protection or improvement of the quality of the environment and of 
the countryside. 

143 

5.  The conditions laid down in this Article shall be applied throughout the period during which 

the transferor receives early retirement support. 

Article 12 

1.  Early  retirement  support  granted  to transferors  may not exceed the total  amount per year 

fixed  in the Annex. 

2.  The duration of early retirement  support shall not exceed ten years and shall not continue 
after the normal retirement age of the transferor  or the worker's normal retirement age and 
in no case beyond his seventieth birthday.  Where a normal retirement pension is paid by the 
Member State early retirement support shall be granted as a supplement taking into account 
the amount of the national retirement pension. 

Chapter V 

Less-favoured areas 

Article 13 

Support for less-favoured areas shall contribute to the following objectives: 

-  ensuring  continued  agricultural  land  use  and  thereby  contributing  to  the  maintenance  of a 

viable rural community, 

-  preserving the countryside, 

-  maintaining and promoting sustainable farming systems, 

-  assuring environmental requirements. 

Article 14 

1.  Farmers in less-favoured areas may be supported by compensatory allowances. 

2.  Compensatory allowances shall be granted on a per hectare basis to farmers who: 

-  farm a minimum area of land to be defined; 

-  undertake to pursue their farming  activity in a less-favoured  area for at least five years 

from  the first payment of a compensatory allowance; and 

144 

-  use practices compatible  with the need to  safeguard  the environment  and preserve the 
countryside,  in particular  by  sustainable  farming,  such practices  to  be  defined  for  the 
different areas. 

3.  Where residues of substances prohibited under Council Directive 96/22fEC11 or residues of 
substances authorised under the aforementioned act but used illegally, are detected pursuant 
to  the  relevant  provisions  of  Council  Directive  96/23/EC18  on  monitoring,  in  an  animal 
belonging to the bovine herd of a producer, or where an authorised substance or product, or 
a substance or product authorised under the Directive 96/22/EC but held illegally is found 
on the producer's holding in any form, then the producer shall be excluded, for the calendar 
year of that discovery, from receiving compensatory allowances. 

In the event of a repeated infringement, the length of the exclusion period may, according to 
the seriousness of the offence, be extended to five years from the year in which the repeated 
infringement  was discovered. 

In  the  event  of  obstruction  on  the  part  of  the  owner  or  holder  of  the  animals,  when 
inspections are being carried out and when the samples are being taken which are necessary 
for  the  application  of  national  residue-monitoring  plans,  or  when  the  investigations  and 
checks provided for under the Directive 96/23/EC referred  to in the first subparagraph are 
being carried out, the penalties provided for in the first subparagraph shall apply. 

1.  Compensatory allowances shall be fixed at a level which: 

Article 15 

- 

is sufficient  to contribute effectively  to a compensation for existing handicaps and 

-  avoids overcompensation. 

The compensation may, if necessary, take into account the costs to and income foregone by 
farmers resulting from their obligations under environmental legislation. 

17  Council  Directive  concerning  the  prohibition  on  the  use  in  stockfarming  of  certain  substances  having  a 
hormonal  or  thyrostatic  action  and  of  6-agonists,  and  repealing  Directives  81/602/EEC,  88/146/EEC  and 
88/299/EEC, OJ L 125 of 23.5.1996, p. 3. 

18  Council Directive on measures to monitor certain substances and residues thereof  in live animals and animal 
products and repealing Directives 85/358/EEC and 86/469/EEC and Decisions 89/187/EEC and 91/664/EEC, 
OJL  125 of 23.5.1996, p. 10. 

145 

2.  Compensatory allowances shall be duly differentiated  taking into account: 

- 

the situation and development objectives particular to a region, 

- 

the severity of any permanent natural handicap affecting  farming activities, 

- 

the particular environmental problems to be solved, 

- 

the  type  of  production  and  economic  situation  of  the holding  and  the  income  of the 
farmer. 

3.  Compensatory allowances shall be fixed between the minimum and maximum amounts set 
out  in the  Annex.  Compensatory  allowances  higher  than the maximum  amounts  may be 
granted  provided  that the average  amount  of  all  compensatory  allowances  granted  in the 
programming region concerned respects this maximum. 

Less-favoured areas shall include: 

-  mountain areas, 

-  other less-favoured areas and 

-  areas affected  by specific handicaps. 

Article 16 

Article 17 

1.  Mountain areas shall be those characterised by a considerable limitation of the possibilities 

for using the land and an appreciable increase in the cost of working it, due: 

- 

to the existence, because of altitude, of very difficult  climatic conditions, the effect  of 
which is substantially to shorten the growing season; 

-  at a lower altitude, to the presence, over the greater part of the area in question, of slopes 
too  steep  for  the  use  of  machinery  or  requiring  the  use  of  very  expensive  special 
equipment or 

- 

to  a  combination  of  these  two  factors,  where  the  handicap  resulting  from  each  taken 
separately  is  less  acute,  provided  that  this  combination  gives  rise  to  an  equivalent 
handicap. 

2.  Areas north of the 62nd parallel and certain adjacent  areas shall be treated in the same way 

as mountain areas. 

146 

Article 18 

Less-favoured  areas in danger of abandonment  of land uses and where the conservation  of the 
countryside  is necessary,  shall  be made up of  farming  areas  which  are homogenous from the 
point of view of natural production conditions and exhibit all of the following characteristics: 

- 

the presence  of  land  of poor productivity,  difficult  cultivation  and  with  a  limited  potential 
which cannot be increased except at excessive cost, and which is mainly suitable for extensive 
livestock farming; 

-  production  which  results  from  low  productivity  of  the  natural  environment  which  is 
appreciably lower than the average, with regard to the main indices of economic performance 
in agriculture; 

-  a  low  or  dwindling  population  predominantly  dependent  on  agricultural  activity,  the 
accelerated  decline  of  which  would jeopardise  the  viability  of  the  area  concerned  and  its 
continued habitation. 

Article 19 

Less-favoured  areas  may  include  other  areas  affected  by  specific  handicaps,  in  particular  by 
specific  environmental constraints, and in which farming  should be continued, where necessary 
and subject to certain conditions, in order to conserve or improve the environment, maintain the 
countryside and preserve the tourist potential of the area or in order to protect the coastline. 

The total extent of such areas may not in any Member State exceed  10% of the area of the State 
concerned. 

Chapter VI 

Agri-environment 

Article 20 

Support for agricultural production methods designed to protect the environment and to maintain 
the  countryside  (agri-environment)  shall  contribute  to  achieving  the  Community's  policy 
objectives regarding agriculture and the environment. 

Such support shall promote: 

-  ways of using agricultural land which are compatible with the protection and improvement of 
the  environment,  the  landscape  and  its  features,  natural  resources,  the  soil  and  genetic 
diversity, 

-  an environmentally  favourable  extensification  of farming  and management  of  low intensity 

pasture systems, 

147 

- 

the conservation of high nature value farmed environments which are under threat, 

- 

the upkeep of the landscape and historical features on  farmland, 

- 

the use of environmental planning in farming practice. 

Article 21 

1.  Support shall be granted to farmers  in return for agri-environmental  undertakings of at least 
five  years.  Where  necessary,  a  longer  period  shall  be  determined  for  particular  types  of 
undertakings in view of the environmental effects  of such undertakings. 

2.  Agri-environmental  undertakings  shall  go  beyond  the  application  of  usual  good  farming 

practice. 

They  shall provide for  services which are not provided  for  by other support measures, such 
as market support or compensatory allowances. 

1.  Support  for  agri-environmtal  undertakings  shall  be  granted  annually  and  be  calculated  on 

Article 22 

the basis  of: 

- 

income  forgone, 

-  additional costs resulting from the undertaking, and 

- 

the need to provide an incentive. 

The  cost  of  any  non  remunerative  capital  works  necessary  for  the  fulfilment  of  the 
undertakings may also be taken into account in calculating the level of annual  support. 

2.  Maximum  amounts  per  year  eligible  for  Community  support  are  laid  down  in  the  Annex. 
These  amounts  shall  be  based  on  the  area  of  the  holding  to  which  agri-environmental 
undertakings apply. 

Chapter VII 

Improving processing and marketing of agricultural products 

Article 23 

1.  Support  for  investments  shall  facilitate  the  improvement  and  rationalisation  of  processing 
the 

thereby  contribute 

and  marketing  of  agricultural  products  and 
competitiveness and the added value of agricultural products. 

increasing 

to 

2.  Such support shall contribute to one or more of the following  objectives: 

-  guiding  production  in  keeping  with  foreseeable  market  trends  or  encouraging  the 

development of new outlets for agricultural products, 

- 

improving or rationalising marketing channels or processing procedures, 

148 

- 

improving  the presentation  and preparation  of products  or encouraging  a better  use or 
elimination of by-products, 

-  applying new technologies, 

-  favouring innovative investments, 

- 

improving and monitoring quality and health conditions, 

-  protecting the environment. 

Article 24 

1.  Support  shall  be  granted  to  those  persons  ultimately  responsible  for  financing  the 

investments in enterprises 

-  for which economic viability can be demonstrated and 

-  which comply with minimum standards regarding the environment, hygiene and animal 

welfare. 

2. 

Investments must contribute to improving the situation of the basic agricultural production 
sector in question. They must guarantee the producers of such basic products an adequate 
share in the resulting economic benefits. 

3.  Sufficient  evidence  must be given that  normal  market  outlets  for  the products  concerned 

exist. 

Article 25 

1.  The investments shall concern the processing and marketing of products covered by Annex 

II to the Treaty except fishery products. 

2. 

Investments shall meet selection criteria setting priorities and indicating which investments 
are not eligible for support. 

Article 26 

The following investments shall be excluded from support: 

- 

investments at the retail level, 

- 

investments in the processing or marketing of products from third countries. 

149 

Chapter VÏÏI 

Forestry 

Article 27 

1.  Support  for  forestry  shall  contribute  to  the  development  of  the  economic,  ecological  and 

social functions  of forestry  in rural areas. 

2.  Such support shall promote in particular one or more of the following  objectives: 

-  sustainable management and development of  forestry, 

-  conservation of forest resources, 

-  extension of woodland areas. 

3.  Such support shall contribute to the fulfilment  of undertakings made by the Community and 
the  Member  States  on  international  level.  It  shall  be  based  on  national  forest  plans  as 
adopted  in the Intergovernmental  Panel on Forests.  In relation to areas classified  as high or 
medium  forest-fire  risk,  forest  fire  protection  plans  according  to  Regulation  (EEC) 
No 2158/9219 of 23 July  1992 on protection of the Community's forests  against fire shall be 
provided  for. 

1.  Support for forestry  shall concern one or more of the following  measures: 

Article 28 

-  planting  and  restocking  of  non-farm  land  provided  that  the  planting  is  adapted  to  local 

conditions compatible with the environment, 

- 

- 

investments  in  forest  holdings  owned  by  private  forest  owners,. associations  thereof  or 
municipalities, aimed at a significant  improvement of their economic or ecological value, 

investments  to  improve  and  rationalise  the  processing  and  marketing  of  forestry 
products; investments related to the use of wood as a raw material  shall be limited to all 
working operations prior to industrial use, 

-  promoting new outlets for the use and marketing of wood and forestry  products, 

-  setting  up  of  associations  of  forest  holders,  that  are  established  to  help  members  to 

improve sustainable and efficient  management of their holdings, 

- 

restoring  forestry  production  potential  damaged  by  natural  disasters  and  fire  and 
introducing appropriate prevention instruments. 

2.  The  rules  laid  down  in  Chapters  I,  III  and  VII  shall  apply  correspondingly  to  forestry 

measures. 

19  OJ L 217 of 31.7.1992, p. 3, as last amended by Regulation (EC) No 308/97, OJ L 51 of 21.2.1997, p. 11. 

150 

Article 29 

1.  Support shall be granted for the  afforestation  of agricultural land. 

Such support may include in addition to planting costs: 

-  an annual premium per hectare afforested  to cover maintenance cost for a period of up to 

five  years, 

-  an annual premium per hectare to cover losses of income resulting from afforestation  for 
a  maximum  period  of 20 years for  farmers  or their  associations  who worked  the land 
before its afforestation  or for any other private law person. 

2.  Support for the afforestation  of farmland shall not be granted: 

- 

to farmers benefiting from early retirement support, 

- 

in relation to the planting of Christmas trees. 

In the case of fast-growing  species cultivated  in the short term, aid for  afforestation  costs 
shall only be granted provided that the planting is adapted to local conditions  compatible 
with the environment. 

3.  Maximum amounts per year of the annual premium to cover losses of income eligible for 

Community support are laid down in the Annex. 

1.  With a view to: 

Article 30 

-  preserving and improving the ecological stability of forests or restoring damaged forests 
in areas with serious natural handicaps, where the protective and ecological role of these 
forests are in the general interest and where this role cannot be solely assured by income 
from  sylviculture; or 

-  maintaining fire-breaks through agricultural practices, 

support shall be granted as a compensatory  payment to individual persons or associations 
thereof  in  order  to  safeguard  the  public  interest  in  maintaining  the  forests  concerned 
provided that sustainable management of these forests is ensured. 

2.  Compensatory payments shall be fixed between the minimum and maximum  amounts set 
out  in  the  Annex.  Compensatory  payments  higher  than  the  maximum  amounts  may  be 
granted  provided  that  the  average  amount  of  all  compensatory  payments  granted  in  the 
programming region concerned respects this maximum. 

151 

Chapter IX 

Promoting the adaptation and the development of rural areas 

Article 31 

Support  shall  be  granted  for  measures,  related  to  farming  activities  and  their  conversion  and 
related to rural activities, which do not fall within the scope of any other measure referred to in 
this Title. 

These measures shall concern: 

- 

land improvement, reparcelling, 

-  setting up of farm relief and farm management services, 

-  marketing of quality products, 

- 

improvement of living conditions, 

-  renovation and development of villages and protection and conservation of rural heritage, 

-  diversification of activities, to provide multiple activities or alternative incomes, 

-  agricultural water resources management, 

-  development and improvement of rural infrastructure, 

-  encouragement for tourist and craft activities, 

-  preservation of the environment and management of rural areas, 

-  restoring  agricultural  production  potential  damaged  by  natural  disasters  and  introducing 

appropriate prevention instruments, 

-  financial  engineering. 

Chapter X 

Implementing rules 

Article 32 

Detailed  rules  for  the  implementation  of  this  Title  shall  be  adopted  in  accordance  with  the 
procedure  laid  down  in  Article  49  of  Regulation  (EC)  No  ...[General  Structural  Funds 
Regulation]. 

These rules may in particular define: 

-  conditions for support for investments in agricultural holdings (Articles 4 to 7); 

- 

the  period  and  the  conditions  for  the  improvement  of  economic  viability  of  a  farm  and 
conditions of use of land released in the case of early retirement (Article 11(2)); 

-  conditions for granting and calculation of compensatory allowances (Articles 14 and 15); 

152 

-  conditions governing agri-environmental undertakings (Articles 21 and 22); 

-  selection criteria for investments improving processing and marketing of agricultural  products 

(Article 25(2)), 

-  conditions governing forestry  measures (Articles 27 to 30). 

According  to the  same procedure, the Commission  may derogate from Article 26  second  indent 
in ultraperipheral regions subject to the condition that the processed products are destined for the 
market of the region in question. 

Title m 

General principles.  Administrative and financial  provisions 

Chapter I 

General principles 

Subchapter I 

Support from EAGGF 

Article 33 

1.  Community  support for early retirement (Articles  10 to  12), less-favoured  areas (Articles 13 
to  19), agri-environment  (Articles 20 to 22) and afforestation  (Article 29) shall be  financed 
by the EAGGF Guarantee Section throughout the Community. 

2.  Community support for other rural development measures shall be financed by the EAGGF 

-  Guidance Section in areas covered by Objective  1, 

-  Guarantee Section in areas outside Objective  1. 

3.  Support  for the measures referred  to in the third,  sixth and eight indents of Article 31 shall 
be  financed  by  EAGGF  in  areas  classified  under  Objectives  1  and  2  in  so  far  as  their 
financing is not ensured by the ERDF. 

Article 34 

1.  With regard to support for rural development measures referred to in Article 33(2) 

- 

- 

in  areas  covered  by  Objective  1,  Regulation  (EC)  No  ...  [General  Structural  Funds 
Regulation] shall apply as supplemented by specific rules contained in this Regulation; 

in  areas  covered  by  Objective  2,  Regulation  (EC)  No  ...  [General  Structural  Funds 
Regulation]  shall  apply  as  supplemented  by  specific  rules  contained  in  this  Regulation 
and save as otherwise provided for under this Regulation. 

153 

2.  With regard to support  for rural development  measures financed by the EAGGF  Guarantee 
Section, the specific rules of Regulation (EC) No  ... [Agricultural Financial Regulation] and 
the provisions adopted in implementation thereof shall apply save as otherwise provided  for 
under this Regulation. 

Subchapter II 

Compatibility and Coherence 

Article 35 

1.  Support  for  rural  development  shall  only  be  granted  for  measures  which  comply  with 

Community law. 

2.  Such measures shall be coherent with other Community policies and measures  implemented 

thereunder. 

In  particular,  any  measure  which  falls  within  the  scope  of  this  Regulation  shall  only  be 
eligible  for  support under  other  Community  support  schemes provided  that this measure  is 
not incompatible with any specific condition laid down in this Regulation. 

3.  Coherence shall also be ensured with measures implemented  under other instruments  of the 
common  agricultural  policy.  In  particular,  coherence  shall  be  ensured  between  rural 
development  support  measures  on  the  one  hand  and  measures  implemented  under  the 
common  market  organisations  and  agricultural  quality  and  health  measures  on  the  other 
hand, as well as between the different  rural development support measures. 

For this purpose, no support under this Regulation may be granted  for: 

-  measures  falling  within  the  scope  of  support  schemes  under  common  market 

organisations, 

-  measures  to  support  research  projects,  to  promote  agricultural  products  or  to  eradicate 

animal diseases. 

4.  Member States may lay down further  or more restrictive conditions for granting  Community 
support for rural development provided that such conditions are coherent with the  objectives 
and requirements laid down in this Regulation. 

Article 36 

1.  Payments may not be made  in respect  of the same measure under  both this Regulation  and 

another Community  support scheme. 

2.  Support  for  several  measures  under  this  Regulation  may  only  be  combined  provided  that 
they are coherent and compatible between each other. If necessary, the level of support shall 
be adapted. 

154 

Article 37 

1.  Member States shall take all necessary steps to ensure compatibility and coherence of rural 

development support measures pursuant to the provisions laid down in this Chapter. 

2. 

In relation to all rural development measures, the plans submitted by Member  States shall 
include an appraisal of the compatibility and the coherence of the rural development support 
measures envisaged and an indication of the measures taken in order to ensure compatibility 
and coherence. 

3.  Where necessary to ensure compatibility and coherence, support measures shall be revised 

subsequently. 

Chapter U 

Programming 

Article 38 

1.  Rural development measures financed by the EAGGF Guidance Section shall form part of 
the  programming  for  Objective  1 regions  according  to  Regulation  (EC)  No  ...[General 
Structural Funds Regulation]. 

2.  Rural development measures other than those referred to in Article 33 (1) shall form part of 
the programming for Objective 2 regions in accordance with Regulation (EC) No ...[General 
Structural Funds Regulation]. 

3.  Other rural development measures shall be subject to Rural Development Programming in 

accordance with Articles 39 to 42. 

Article 39 

1.  Rural development plans shall be drawn up at the geographical level deemed to be the most 
appropriate. They shall be prepared by the competent authorities designated by the Member 
State and shall be submitted by the Member State to the Commission after  consultation of 
competent authorities and organisations at the appropriate territorial level. 

2.  Rural development support measures to be applied in one area shall be integrated, whenever 
possible,  into  a  single  plan.  Wherever  several  plans  need  to  be  established,  the  relation 
between  measures  foreseen  in  these  plans  shall  be  indicated  and  their  compatibility  and 
coherence shall be ensured. 

Rural development plans shall cover a period of seven years from 1 January 2000. 

Article 40 

155 

1.  Rural development plans shall include: 

Article 41 

-  a quantified  description of the current  situation  showing disparities, gaps and potential 
for  development,  the financial resources  deployed  and  the  main  results  of  operations 
undertaken  in  the  previous  programming  period  with  regard  to  the  evaluation  results 
available, 

-  a description  of the strategy proposed,  its quantified  objectives,  and rural  development 

priorities selected, and the geographic area covered, 

-  a  prior  appraisal  showing  the  expected  economic,  environmental  and  social  impact, 

including employment effects, 

-  an indicative overall financial table summarising the national and Community  financial 
resources provided for and corresponding to each rural development priority adopted in 
the context of the plan, 

-  a description of the measures contemplated for implementing the plans, and in particular 

aid schemes, including the points necessary for assessing the rules of competition, 

-  where  appropriate,  information  on  the  needs  for  any  studies,  demonstration  projects, 
training or technical assistance operations relating to the preparation, implementation or 
adaptation of the measures concerned, 

- 

the designation of competent authorities and bodies responsible, 

-  provisions to ensure an effective  and correct implementation, including monitoring and 
evaluation  with the definition  of quantified  indicators  for  evaluation,  arrangements  for 
controls and sanctions and adequate publicity, 

- 

the results of consultations and steps taken to associate competent authorities and bodies 
as well as the economic and social partners at the appropriate levels. 

I. 

In their plans, Member States shall 

-  provide  for  agri-environment  measures  throughout  their  territories,  and  in  accordance 

with their specific needs, 

-  ensure the necessary equilibrium between the different  measures to be supported. 

Article 42 

I.  Rural  development plans shall be submitted not later than six months after  the entry into 

force of this Regulation. 

I.  The Commission shall appraise the proposed plans to determine whether they are consistent 
with  this  Regulation.  On  the  basis  of  the  plans,  it  shall  approve  Rural  Development 
Programming  Documents  in  accordance  with  the  procedure  referred  to  in  Article  49  of 
Regulation  (EC) No  ...[General  Structural  Funds  Regulation]  within  six months  after  the 
submission of the plans. 

156 

Chapter III 

Additional measures and Community initiative 

Article 43 

1.  Pursuant to Article 20(2) of Regulation (EC) No ... [General  Structural Funds Regulation] 
the Commission, following  the procedure laid down in Article 51 of that Regulation, may 
extend the scope of assistance from the EAGGF Guidance Section beyond that provided for 
in  Article  33(2)  of  this  Regulation  for  the  implementation  of  the  rural  development 
Community initiative. 

2.  The EAGGF Guarantee  Section may finance, on the initiative of the Commission, studies 

related to Rural Development Programming. 

Chapter IV 

Financial provisions 

Article 44 

1.  Community  support  for  rural  development from the  EAGGF  Guarantee  Section  shall  be 
subject to financial planning and accounting on an annual basis. The financial planning shall 
form part of Rural Development Programming (Article 38(3)) and of programming related 
to Objective 2. 

2.  The Commission shall make initial allocations to Member States and per year on the basis 
of  objective  criteria taking  into  account particular  situations  and  needs, and  efforts  to be 
undertaken especially for the environment, job  creation and the maintenance of landscape. 

3. 

Initial allocations shall be adapted in view of real expenditures and on the basis of revised 
expenditure forecasts submitted by the Member States taking into account the objectives of 
programmes and subject to funds available and, as a rule, in coherence with the aid intensity 
for rural areas covered by Objective 2. 

Article 45 

1.  The financial provisions laid down in Articles 30, 31 (except for the fifth subparagraph of 
paragraph  1 thereof),  33, 37 and  38 of Regulation  (EC) No  ...  [General  Structural  Funds 
Regulation]  shall  not  apply  to  support  for  rural  development  measures  in  relation  to 
Objective 2. 

The  Commission  shall  take  the  necessary  action  to  ensure  efficient  and  coherent 
implementation of these measures which shall at least attain the same standards as those laid 
down  in the provisions  referred  to  in the first subparagraph,  including  the principle  of a 
single management authority. 

157 

2.  For measures covered by Rural Development Programming (Article 38(3)), the Community 
shall contribute to financing pursuant to the principles laid down in Articles 28 and 29 of 
Regulation  (EC)  No.  ...  [General  Structural  Funds  Regulation].  The  Community 
contribution shall not exceed 50% of the total eligible cost and, as a general rule, shall be 
equal to at least 25% of eligible public expenditure in areas not covered by Objective  1  and 
Objective 2. In those areas, the rates laid down in Article 28(4)(a)(ii) and (iii) and (b)(ii) and 
(iii) of Regulation (EC) No ... [General Structural Funds Regulation] shall apply. 

In the programming  for the implementation  of Articles 20, 21 and 22 of this Regulation, 
provision may be made, in exceptional cases, for a rate of part-financing  up to  10% higher 
than the maximum rates laid down in the first subparagraph for specific measures of special 
merit from the environmental viewpoint. 

The fifth subparagraph of Article 31(1) of Regulation (EC) No ... [General Structural Funds 
Regulation] shall apply to such payments. 

3.  Payments of financial  assistance from the EAGGF Guarantee Section may take the form of 
advances  for  programme  implementation  and  of  payments  in  respect  of  expenditure 
incurred. 

Chapter V 

Monitoring and evaluation 

Article 46 

1.  The  Commission  and  the  Member  States  shall  ensure  effective  monitoring  of 

implementation of Rural Development Programming (Article 38(3)). 

2.  Such monitoring shall be carried out by way of jointly agreed procedures. 

Monitoring  shall  be carried  out by reference  to  specific  physical  and  financial  indicators 
agreed and established beforehand. 

Member States shall submit annual progress reports to the Commission. 

3.  Where appropriate, monitoring committees shall be established. 

Article 47 

Evaluation  of measures  covered  by  Rural  Development  Programming  (Article  38(3))  shall be 
carried out on the basis of the principles laid down in Articles 39 to 42 of Regulation (EC) No ... 
[General Structural Funds Regulation]. 

Chapter VI 

Implementing rules 

Article 48 

Detailed rules for the application of this Title shall be adopted in accordance with the procedure 
laid down in Article 49 of Regulation (EC) No ...[General Structural Funds Regulation]. 

These rules may in particular define the details of 

158 

- 

the presentation of rural development plans (Articles 39 to 42), 

- 

the revision of Rural Development Programming Documents, 

-  financial  planning,  in particular  to  ensure  budgetary  discipline  (Article  44), the  participation 

in financing (Article 45(2)), 

- 

the monitoring and evaluation (Articles 46 and 47). 

Title IV 

State aids 

Article 49 

1.  Save as otherwise provided  in this Title, Articles  92 to 94 of the Treaty  shall  apply to  aids 

granted by Member States for measures to support rural  development. 

However, Articles 92 to 94 of the Treaty  shall not apply to financial contribution  provided 
by Member  States for  measures  subject  to  Community  support  within the  scope  of  Article 
42 of the Treaty in accordance with the provisions of this Regulation. 

State aids to support farmers  in less-favoured  areas which fail  to  satisfy  the conditions  laid 
down  in  Articles  13  to  19  or  which  exceed  the  amounts  determined  in  accordance  with 
Article  15 shall be prohibited. 

State  aids  to  support  farmers  in  return  for  agri-environmental  undertakings  which  fail  to 
satisfy  the  conditions  laid  down  in  Articles  20  to  22  are  prohibited.  However,  additional 
aids  exceeding  maximum  amounts  fixed  according  to  Article  22(2)  may  be  granted  if 
justified  under paragraph  1 of that Article. 

2. 

3. 

Article 50 

Within the  scope  of Article 42 of the Treaty  State aids intended to provide  additional  financing 
for  rural  development  measures  for  which  Community  support  is  granted  shall  be  notified  by 
Member  States  and  approved  by  the  Commission  in  accordance  with  the  provisions  of  this 
Regulation as part of programming referred to in Article 38. The first sentence of Article 93(3) of 
the Treaty shall not apply to aids thus  notified. 

Title V 

Transitional and final rules 

Article 51 

1.  Should specific  measures be necessary to facilitate the transition from the system in force to 
the one established  by this Regulation,  such measures  shall be adopted  by the  Commission 
in  accordance  with  the  procedures  laid  down  in  Article  49  of  Regulation  (EC) 
No ...[General Structural Funds Regulation]. 

2. 

Such  measures  shall  in  particular  be  adopted  for  the  integration  of  existing  Community 
support  actions,  approved  by  the  Commission  for  a period  ending  after  1  January 2000  or 
without any time limit into the rural development support provided for by this Regulation. 

159 

Article 52 

1.  Article  17 of  Council  Regulation  (EEC)  No  1696/71  on  the  common  organisation  of  the 

market in hops20 shall be replaced by the  following: 

"Article 17 

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 referred to in Article 8 shall be subject to part financing  by the Community. 

3.  The  Member  States  shall  pay  the  aid  referred  to  in Article  12 to the producers  between 
16 October  and  31 December  of  the marketing  year  in respect  of which the  aid  is  applied 
for. 

4.  The  Commission  shall, following  the procedure  laid  down  in Article  20, adopt  rules  for 
the application of this Article." 

2.  Article  6  of  Council  Regulation  (EEC)  No  404/93  on  the  common  organisation  of  the 

market in bananas21 shall be replaced by the following  text: 

"Article 6 

1.  For  the  five  years  following  the  date  of  recognition,  the  Member  States  shall  grant 
recognised  producer  organisations  assistance  to  encourage  their  establishment  and  assist 
their administrative  operation. 

2. Such aid: 

-  shall be, for the first, second, third, fourth  and fifth years respectively,  5%, 5%, 4%, 3% 
and  2%  of  the  value  of  production  marketed  under  the  auspices  of  the  producer 
organisation, 

-  shall  not  exceed  the  actual  cost  of  formation  and  administrative  operation  of  the 

organisation  concerned, 

-  shall  be paid  in annual  instalments  for  a maximum  of seven  years  following  the date of 

recognition. 

The value of each year's production shall be calculated on the basis  of: 

- 

the annual volume actually marketed, 

- 

the average producer prices obtained. 

3.  Producer  organisations  deriving  from  organisations  which  already  comply  to  a  large 
extent  with the conditions  of this Regulation  shall qualify  for  aid under this Article  only  if 

20  OJ L  175 of 4.8.1971, p.  1, as last amended by Regulation  (EC) No  1554/97, OJ L 208 of 2.8.1997, p. 1 

21 

OJ L 47 of 25.2.1993, p.  1, as last amended by Regulation (EC) No 3290/94, OJ L 349 of 31.12.1994, p. 105. 

160 

they are formed  as the result of a merger enabling the objectives referred  to in Article 5 to 
be  achieved  more  effectively.  However,  in  such  a  case, the  aid  shall  be  granted  only  in 
respect of the cost of formation of the organisation (expenditure incurred in connection with 
the preparatory work and the drawing up of the memorandum and articles of association). 

4. The aid referred to in this Article shall be notified to the Commission in a report from the 
Member States at the close of each financial year." 

3.  Council Regulation (EC) No 2200/96 on the common organisation of the market in fruit and 

vegetables22 shall be amended as follows: 

-  Article 15(6) shall be replaced by the following: 

"6. In regions of the Community where the degree of organisation of producers is 
particularly low, Member States may be authorised, upon duly substantiated request, 
to pay producer organisations national financial assistance equal to half the financial 
contributions  of  producers.  This  assistance  shall  be  additional  to  the  operational 
fund. 

For  Member  States  less  than  15% of  whose  fruit  and  vegetable  production  is 
marketed  by  producer  organisations  and  whose  fruit  and  vegetable  production 
represents at least  15% of their total agricultural output, the assistance referred to in 
the first subparagraph may be partly reimbursed by the Community at the request of 
the Member State concerned". 

-  Article 52 shall be replaced by the following: 

"Article 52 

1. Expenditure relating to the payment of the Community withdrawal compensation 
and to Community financing of the operational fund, the specific measures referred 
to in Article  17 and Articles  53, 54 and  55 and checks by experts of the Member 
States  made  available  to the  Commission  in  application  of  Article  40(1)  shall  be 
deemed  to  be  intervention  to  stabilise  agricultural  markets  within  the meaning of 
Article l(2)(b) of Regulation (EC) No [Agricultural Financial Regulation]. 

2. Expenditure relating to the aid granted by the Member States in accordance with 
Article  14  and  the  second  subparagraph  of  Article  15(6)  shall  be  deemed  to  be 
intervention to stabilise agricultural markets within the meaning of Article l(2)(b) of 
Regulation (EC) No [Agricultural Financial Regulation]. It shall be eligible for part 
financing  by the Community. 

22  OJ  L  296  of  21.11.1996,  p.  46,  as  amended  by  Commission  Regulation  (EC)  No  2520/97,  OJ  L  346  of 

17.12.1997, p. 41. 

161 

3.  The Commission  shall, following  the procedure  laid  down  in Article  46, adopt 
rules for the application of paragraph 2 of this Article. 

4.  The provisions  of  Title  VI  shall  apply  without  prejudice  to  the  application  of 
Council Regulation (EEC) No 4045/8923". 

Article 53 

1.  The following Regulations are hereby repealed: 

-  Regulation (EEC) No 4256/88, 

-  Regulations (EC) Nos 950/97, 951/97, 952/97, 867/90, 

-  Regulations (EEC) Nos 2078/92, 2079/92, 2080/92, 

-  Regulation (EEC) No 1610/89. 

2.  The following provisions are hereby deleted: 

-  Article 21 of Regulation (EEC) No 3763/9124, 

-  Article 32 of Regulation (EEC) No 1600/9225, 

-  Article 27 of Regulation (EEC) No 1601/9226, 

-  Article 13 of Regulation (EEC) No 2019/9327. 

23  Council  Regulation  of  21  December  1989  on  scrutiny  by  Member  States  of  transactions  forming  part  of  the 
system  of financing  by the Guarantee  Section  of the European  Agricultural  Guidance  and Guarantee  Fund  and 
repealing  Directive  77/435/EEC, OJ L 388 of  30.12.1989, p.  17, as  last amended  by  Council  Regulation  (EC) 
No 3235/94, OJ L 338 of 28.12.1994, p. 16. 

24  Council  Regulation  of  16  December  1991  introducing  specific  measures  in  respect  of  certain  agricultural 
products  for  the benefit  of the French  overseas departments, OJ L 356 of 24.12.1991, p.  1, as last amended  by 
Council Regulation (EC) No 2598/95, OJ L 267 of 9.11.1995, p. 1. 

25  Council  Regulation  of  15  June  1992  concerning  specific  measures  for  the  Azores  and  Madeira  relating  to 
certain  agricultural  products,  OJ  L  173  of  27.6.1992,  p.  1,  as  last  amended  by  Council  Regulation  (EC) 
No 2348/96, OJ L 320 of  11.12.1996, p. 1. 

26  Council  Regulation  of  15  June  1992  concerning  measures  for  the  Canary  Islands  with  regard  to  certain 
agricultural  products, OJ L  173 of 27.6.1992, p.  13, as  last amended  by Council  Regulation  (EC) No 2348/96; 
OJL  320 of  11.12.1996, p. 1. 

27  Council  Regulation  of  19 July  1993  introducing  specific  measures  for  the  smaller  Aegean  islands  concerning 
certain  agricultural  products,  OJ  L  184  of  27.7.1993,  p.l,  as  last  amended  by  Commission  Regulation  (EC) 
No 2417/95, OJ L 248 of  14.10.1995, p. 39. 

162 

3.  The Regulations and provisions repealed under paragraphs  1 and 2 shall remain applicable 
to actions approved by the Commission under those Regulations before  1  January 2000. 

4.  Council and Commission Directives adopting lists of less favoured  areas or amending such 
lists in accordance with Article 21(2) and (3) of Regulation (EC) No 950/97 shall remain in 
force unless further amended in the framework of programmes. 

Article 54 

This Regulation shall enter into force on the seventh day following its publication in the  Official 
Journal of the European Communities. 

It shall apply in relation to Community support as from  1  January 2000. 

Done at 

For the Council 

163 

Annex 

Table of amounts 

Article 

Subject 

8(2) 

setting up aid 

ECU 

25 000 

12(1) 

early retirement 

15 000 

per  transferor 

15(3) 

minimum  compensatory 
allowance 

maximum  compensatory 
allowance 

22(2) 

annual crops 

29(3) 

specialised perennial crops 

other land uses 

premium to cover 
losses  from  afforestation 
- for farmers or associations 
thereof 

- for any other private law 
person 

3 500 

per worker 

40 

per hectare 

200 

600 

900 

450 

per hectare 

per hectare 

per hectare 

per hectare 

600 

per hectare 

150 

per hectare 

30(2) 

minimum  compensatory 
payment 

40 

per hectare 

maximum  compensatory 
payment 

120 

per hectare 

164 

Proposal for a 

Commission Regulation (EO No .J... 

9 8 /0 ] ] 2  ( C N S) 

of 

on the financing of the common agricultural policy 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Article 43 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Court of Auditors3, 

Having regard to the opinion of the Economic and Social Committee4, 

Whereas  by  means  of Regulation  No  25  on  the  financing  of  the  common  agricultural 
policy5, the Council established the European Agricultural Guidance and Guarantee Fund 

(EAGGF), hereinafter  referred  to as "the Fund", which forms part of the general budget 

of the European Union; whereas that Regulation laid down the principles which should 

apply for the financing of the common agricultural policy; 

1  OJC... 

2  OJC... 

3  OJC... 

4  OJC... 

5  OJ 30, 20.4.1962. Regulation as last amended by Regulation (EEC) No 728/70 (OJ L 94, 28.4.1970, 

p. 9) 

165 

Whereas at the single market stage, in view of the fact that price systems are standardised 

and  the  agricultural  policy  is  a  Community  policy,  the financial consequences  devolve 

upon the Community; whereas, in accordance with that principle as laid  down in Article 

2(2)  of Regulation No  25,  refunds  on exports to  third  countries,  intervention  aimed  at 

stabilising agricultural markets, rural development measures, specific veterinary measures 

as laid down in Council Decision No 90/424/EEC of 26 June  1990 on expenditure in the 
veterinary  field6  and  measures  intended  to  provide  information  on  the  common 

agricultural policy are financed by the Fund in order to  achieve the objectives  set out in 

Article 39(l)(a) of the Treaty; 

Whereas the "Guarantee" section of the Fund should in particular finance expenditure of 

the common organisation  of the agricultural markets, those rural  development  measures 

which  accompany  market  support,  certain  fishery  expenditure,  certain  veterinary 

expenditure  as  well  as  measures  intended  to  provide  information  on  the  common 

agricultural policy; 

Whereas the "Guidance" section of the Fund should finance expenditure for  certain rural 

development measures in regions whose development is lagging behind as well as for the 

rural development Community initiative; 

Whereas the  Commission is responsible for  the administration  of the Fund  and whereas 

close cooperation between Member  States and the Commission is provided  for  within a 

Committee for the European Agricultural Guidance and Guarantee Fund; 

6  OJL  224,  18.8.1990, p.  19 

166 

Whereas the responsibility for checking the Fund's Guarantee Section expenditure lies, in 

the  first  place,  with  the  Member  States,  which  designate  the  authorities  and  bodies 

empowered  to  effect  expenditure; whereas the Member  States must  carry  out  this task 

fully  and  effectively;  whereas  the  Commission,  being  responsible  for  implementing  the 

Community  budget,  must verify  the  conditions under which  payments  and  checks have 

been made; whereas the Commission can only finance expenditure where those conditions 

offer  all necessary guarantees regarding compliance with Community rules; whereas, in a 

decentralised  system  of management  of  Community  expenditure* it  is  essential  that  the 

Commission, as the institution responsible for funding, is entitled and enabled to carry out 

all checks on the management of expenditure it considers necessary and that there should 

be full  and effective  transparency  and mutual assistance between the Member  States and 

the Commission; 

Whereas, during the clearance of accounts, the Commission is able to determine within a 

reasonable time the total expenditure to be entered  against the Guarantee  Section in the 

general  account  only  if  its  has  satisfactory  assurance  that  the  national  controls  are 

adequate and transparent and that the paying agencies verify the legality and regularity of 

the payment requests which they  execute; whereas provisions  should therefore  be made 

for  the  accreditation  of  paying  agencies  by  Member  States,  the  Commission  provides 

guidance on the criteria to be applied; whereas, for  that purpose, it should be stipulated 

that only expenditure effected  by paying agencies accredited by the Member States should 

be financed; whereas, moreover, in order to ensure the transparency of national controls, 

in particular as regards authorisation, validation and payment procedures, the number of 

authorities  and  bodies  to  which  these  responsibilities  are  delegated  should,  where 

appropriate,  be  restricted  taking  account  of  the  constitutional  arrangements  of  each 

Member State; 

167 

Whereas decentralised management of Community funds,  in particular following  reform  of 

the  common  agricultural  policy,  leads  to  the  designation  of  several  paying  agencies; 

whereas, therefore, where a Member State accredits more than one paying agency, it must 

designate a single contact body to  ensure  consistency  in the management  of the funds,  to 

provide  liaison between  the  Commission  and  the various  accredited  paying  agencies  and 

to ensure that the information  requested  by the Commission  concerning the operations  of 

several paying agencies is made rapidly available; 

Whereas financial resources  must be mobilised  by the Member  States in  accordance  with 

the  needs  of  their  disbursing  agencies,  while  the  Commission  makes  advance  payments 

against the booking of the expenditure  effected  by the disbursing  agencies; whereas in the 

framework  of  rural  development  measures,  genuine  advance  payments  for  programme 

implementation  should  be  provided  for;  whereas  it  is  appropriate  to  treat  these  advance 

payments according to the financial mechanisms established for  advances on the provision 

for  expenditure effected  in a reference  period; 

Whereas two types of decisions should be established,  one concerning the clearance of the 

Guarantee  Section  of  the  Fund,  the  other  determining  the  consequences,  including 

financial corrections,  to  be  drawn  from  the  results  of  the  checks  on  conformity,  with 

Community rules, of the expenditures; 

Whereas  the  checks  on  conformity  and the  ensuing  clearance  decisions will therefore  no 

longer be linked to the implementation of the budget in a particular financial year; whereas 

the  maximum  period  to  which  the  consequences  to  be  drawn  from  the  checks  on 

conformity  may  be  applied  must  be  determined;  whereas,  however,  the  pluriannual 

character of rural development measures does not allow to apply such a maximum period; 

Whereas  measures  must  be  taken  to  prevent  and  deal  with  any  irregularities  and  to 

recover  the  amounts  lost  as  a  result  of  such  irregularities  or  negligence;  whereas  the 

financial responsibility for  such irregularities or negligence must be determined; 

168 

Whereas Community expenditure must be made subject to close supervision; whereas, in 

addition  to  supervision  carried  out  by  Member  States  on  their  own  initiative,  which 

remains  essential,  provisions  should  be  made  for  verification  by  officials  of  the 

Commission and for it to have the right to enlist the help of Member States; 

Whereas information  technology needs to be used  as fully  as possible for  producing the 

information  to  be  sent  to  the  Commission;  whereas,  when  carrying  out  checks,  the 

Commission must have full  and immediate access to  information  on expenditure held in 

both documents and electronic  files: 

Whereas  the  extent  of  Community financing makes  it  necessary  for  the  European 

Parliament and the Council to be kept regularly informed by means of financial reports; 

Whereas Council Regulation (EEC) No 729/70 of 21 April  1970 on the financing of the 
common  agricultural  policy7  has  been  substantially  amended  on  several  occasions; 

whereas, in the event of new amendments being made to the said Regulation, in order to 

clarify and rationalise matters, all provisions in question should be recast, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  The  European  Agricultural  Guidance  and  Guarantee  Fund  (hereinafter  called  the 

"Fund") shall form part of the general budget of the European Union. 

It shall comprise two sections: 

- 

the Guarantee Section; 

- 

the Guidance Section. 

2.  The Guarantee Section shall finance: 

(a) 

refunds on exports to third countries; 

(b) 

intervention intended to stabilise the agricultural market; 

7  OJ L 94, 28.4.1970, p.  13, as last amended by Regulation  (EC) No  1287/96 (OJ  L  125, 8.6.1995, 

P  1) 

169 

(c) 

rural  development  measures  outside  objective  No  1  programmes 

except the rural development Community initiative; 

(d)  measures accompanying the restructuring  of the fishing fleets  outside 

objective  No  1 regions  and  all  structural  measures  for  the  fishing 

sector outside objective No  1 and objective No 2 regions, according 

to the relevant legislation in the fisheries sector; 

(e) 

the  Community's  financial  contribution  towards  specific  veterinary 

measures, inspection measures in the veterinary field and programmes 

for  the  eradication  and  monitoring  of  animal  diseases  (veterinary 

measures) as well as towards plant health measures; 

(f) 

measures intended to provide information  on the common agricultural 

policy. 

3.  The  Guidance  Section  shall finance rural  development  measures  which  are  not 

covered by paragraph 2 point (c). 

4.  Expenditure relating to administrative costs and personnel borne by Member  States 

and by recipients of aid from the Fund shall not be taken over by the Fund. 

Article 2 

1.  Refunds  on  export  to  third  countries,  granted  in  accordance  with  the  Community 

rules within the framework of the common organisation of agricultural markets, shall 

be financed under Article l(2)(a). 

2. 

Intervention intended to stabilise the agricultural markets, undertaken in accordance 

with  Community  rules  within  the  framework  of  the  common  organisation  of 

agricultural markets, shall be financed under Article l(2)(b). 

3.  The  Council,  acting  by  a  qualified  majority  on  a  proposal  from  the  Commission, 

shall, as far as is necessary, adopt the procedure for financing the measures referred 

to in paragraphs 1  and 2. 

170 

Article 3 

1.  Rural  development  measures  outside  objective  No  1 undertaken  in accordance  wi\h 

Community rules shall be financed under Article  l(2)(c). 

2.  Fishery  measures undertaken  in accordance  with  Community  rules  shall be financed 

under Article  l(2)(d). 

3.  Veterinary  and  plant  health  measures  undertaken  in  accordance  with  Community 

rules shall be financed under Article  l(2)(e). 

4. 

Information  measures  undertaken  in  accordance  with  Community  rules  shall  be 

financed under Article  l(2)(f). 

5.  Detailed  rules for  the application  of this Article  shall be adopted  in accordance  with 

the procedure laid down in Article  13. 

1.  Each Member State shall communicate to the Commission: 

Article 4 

(a) 

details of the authorities and bodies it accredits to pay the expenditure 

referred  to  in  Articles  2  and  3,  hereinafter  referred  to  as  "paying 

agencies"; 

(b) 

where  more  than  one  paying  agency  is  accredited,  details  of  the 

authority  or  body  it  charges,  first,  with  bringing  together  the 

information to be supplied to the Commission and  sending it the same, 

and,  second,  with  promoting 

the  harmonised  application  of 

Community rules, hereinafter  referred  to as the "coordinating body". 

2.  Paying  agencies  shall  be  authorities  and  bodies  of  the  Member  States,  which,  as 

regards  payments  in  the  areas  for  which  they  are  responsible,  offer  sufficient 

guarantees that: 

(a) 

the  admissibility  of claims  and  compliance  with  Community  rules  are 

checked before payment is authorised; 

171 

(b) 

the payments effected  are correctly and fully recorded in the accounts, 

and 

(c) 

the necessary documents are submitted within the time and in the form 

laid down in Community rules. 

3.  The  paying  agencies  must  hold  documents  justifying  the  payments  effected  and 

documents concerning the carrying out of the prescribed administrative and physical 

controls.  Where  the  relevant  documents  are  kept  by  the  bodies  responsible  for 

authorising the expenditure, those bodies must transmit reports to the paying agency 

on the number of checks carried out, their content and the measures taken in the light 

of the results. 

4.  Only  expenditure  effected  by  accredited  paying  agencies  may  be  the  subject  of 

Community  financing. 

5.  Each  Member  State  shall,  taking  into  account  its  constitutional  and  institutional 

structures, limit the number of accredited paying agencies to the minimum necessary 

in order to  effect  the expenditure referred  to in Articles 2 and  3 under  satisfactory 

administrative and accounting conditions. 

6.  Each Member State shall communicate to the Commission the following  particulars 

concerning those paying agencies: 

(a) 

their name and their statues; 

(b) 

the  administrative,  accounting  and  internal  control  conditions  under 

which  payments  are  made  relating  to  the  implementation  of 

Community  rules  within  the  framework  of  the  common  agricultural 

policy, 

(c) 

the act of accreditation. 

The Commission shall be informed forthwith of any change in those particulars. 

172 

7.  Where  one  or  more  of the  conditions  for  accreditation  are not,  or  are no  longer, 

fulfilled  by an accredited paying agency, accreditation  shall be withdrawn unless the 

paying  agency  makes the  necessary  adjustments  within  a time limit  to  be fixed in 

relation to the seriousness of the problem. The Member State concerned shall inform 

the Commission. 

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

the procedure laid down in Article 13. 

Article 5 

1.  The financial resources  required  to  cover the  expenditure  referred  to  in Articles 2 

and 3 shall be made available to the Member States by the Commission by means of 

advances on the provision for expenditure effected  in a reference period. 

Advance  payments  for  programme  implementation  in  the  framework  of  rural 

development measures referred to in Article 3(1) may be granted by the Commission 

on the approval of the programmes concerned and shall be deemed to be expenditure 

effected  on the first day of the month following the granting decision. 

2.  Until the advances on the provision for  expenditure effected  are paid, the resources 

necessary  to  meet  that  expenditure  shall  be  mobilised  by  the  Member  States  in 

accordance with the needs of their accredited paying agencies. 

3.  Detailed rules for the application of this Article shall be adopted in accordance with 

the procedure laid down in Article 13. 

173 

Article 6 

1.  Member  States shall, at regular intervals, transmit to the Commission the following 

information  concerning the accredited paying agencies and coordinating bodies and 

relating to the transactions financed by the Guarantee Section of the Fund: 

(a) 

statements of expenditure and estimates of financial needs; 

(b) 

annual  accounts,  accompanied  by  the  information  required  for 

clearance and  an attestation  regarding the integrality,  exactitude and 

veracity of the accounts transmitted; 

2.  Detailed rules for the application of this Article and, in particular, those covering the 

attestation  of  the  accounts  referred  to  in  paragraph  1(b)  shall  be  adopted  in 

accordance with the procedure laid down in Article 13. 

Article 7 

1.  The Commission, after  consulting the Fund Committee shall adopt the decisions set 

out in paragraphs 2, 3 and 4. 

2.  The Commission shall decide on monthly advances on the provision for  expenditure 

effected  by the accredited paying agencies. 

Expenditure  for  October  shall be  attributed  to  October  if it  is  effected  from  1 to 

15 October and to November if it is effected from 16 to 31 October. Advances shall 

be paid  to  the  Member  State  not  later  than  the  third  working  day  of  the  second 

month following that in which the expenditure is effected. 

Additional advances may be made, the Fund Committee being informed  at the next 

consultation. 

3.  The  Commission  shall,  before  30  April  of  the  year  following  the financial year 

concerned,  on the basis of the information  referred  to  in point  (b)  of Article 6(1), 

clear the accounts of the paying agencies. 

174 

The clearance of accounts decision shall cover the integrality,  exactitude and veracity 

of  the  accounts  submitted.  The  decision  shall  not  prejudice  the  adoption  of  a 

subsequent  decision pursuant to paragraph 4. 

4.  The Commission shall decide on the expenditure to be excluded from the Community 

financing  referred  to in Articles 2 and 3 where it finds that  expenditure  has not  been 

effected  in compliance with Community rules. 

Before  a decision to refuse  financing is taken, the results of the Commission's  checks 

and  the  replies  of  the  Member  State  concerned  shall  be  notified  in  writing,  after 

which the two parties shall endeavour to reach agreement on the action to be taken. 

If no agreement is reached, the Member  State may ask for  a procedure to be initiated 

with  a view  to  mediating  between  the  respective  positions  within  a  period  of  four 

months, the results of which shall be set out in a report  sent to  and  examined  by the 

Commission, before  a decision to refuse financing is taken. 

The  Commission  shall  evaluate  the  amounts  to  be  excluded  having  regard  in 

particular  to  the  degree  of  non-compliance  found.  The  Commission  shall  take  into 

account  the nature  and gravity  of the infringement  and the financial  loss  suffered  by 

the Community. 

A  refusal  to  finance  may  not  involve  expenditure  referred  to  in  Article  2  effected 

prior  to  twenty-four  months  preceding  the  Commission's  written  communication  of 

the results of those checks to the Member  State concerned. 

However, the fifth subparagraph shall not apply to the financial consequences: 

(a) 

of irregularities as referred  to in Article 8(2); 

(b) 

concerning  national  aids,  or  infringements,  for  which  the  procedures 

referred  to in Articles 93 and  169 of the Treaty have been initiated. 

175 

5.  Detailed rules for the application of this Article shall be adopted in accordance with 

the  procedure  laid  down  in  Article  13.  Those  rules  shall  cover  in  particular  the 

treatment of advance payments referred to in Article 5(1) second subparagraph under 

paragraphs 2, 3 and 4 and the procedures relating to the decisions referred  to in the 

said paragraphs. 

Article 8 

1.  The Member  States shall, in accordance with national provisions laid down by law, 

regulation or administrative action, take the measures necessary to: 

(a) 

satisfy  themselves that transactions financed by the Fund are actually 

carried out and executed correctly; 

(b) 

prevent and deal with irregularities; 

(c) 

recover sums lost as a result of irregularities or negligence. 

The Member  States  shall inform  the  Commission  of  the measures  taken  for  those 

purposes and in particular of the state of the administrative and judicial procedures. 

2. 

In  the  absence  of  total  recovery,  the financial consequences  of  irregularities  or 

negligence shall be borne by the Community, with the exception of the consequences 

of  irregularities  or  negligence  attributable  to  administrative  authorities  or  other 

bodies of the Member States. 

The sums recovered shall be paid to the accredited paying agencies and deducted by 

them from the expenditure financed by the Fund. The interest on sums recovered or 

paid late shall be paid into the Fund. 

3.  The Council, acting by a qualified majority on a proposal from the Commission, shall 

lay down general rules for the application of this Article. 

176 

Article 9 

1.  Member  States shall make available to the Commission all information  required  for 

the proper working of the Fund and shall take all suitable measures to facilitate the 

supervision which the Commission may consider it necessary to undertake within the 

framework  of the management of Community financing, including inspections on the 

spot. 

Member States shall communicate to the Commission provisions laid down by law, 

regulation  or  administrative  action which they have adopted  for  the  application  of 

legal acts  of the Community  relating to  the common  agricultural  policy  insofar  as 

those acts have financial consequences for the Fund. 

2.  Without prejudice  to the  supervision  effected  by the Member  States in accordance 

with national provisions  laid  down by law, regulation  or  administrative  action and 

without prejudice to Article 188c of the Treaty, or to any inspection organised on the 

basis of point (c) of Article 209 of the Treaty, authorised representatives appointed 

by the  Commission  to  carry  out  inspections  on the  spot  shall have  access  to  the 

books and all other documents, including information  created or stored in electronic 

form, relating to expenditure financed by the Fund. 

They may, in particular, check 

(a)  whether  administrative  practices  are in  accordance  with  Community 

rules; 

(b)  whether  the requisite  supporting  documents  exist  and  tally with the 

transaction financed by the Fund; 

(c) 

the  condition  under  which  transactions financed by  the  Fund  are 

carried out and checked. 

The  Commission  shall give  due  notice  before  the  inspection  is  carried  out  to  the 

Member  State  concerned  or to  the Member  State on whose territory  it  is to  take 

place. Officials of the Member State concerned may take part in the inspection. 

177 

At  the  request  of  the  Commission  and  with  the  agreement  of  the  Member  State, 

inspections  or  inquiries  concerning  the  transactions  referred  to  in  this  Regulation 

shall be carried  out by the competent authorities of that Member  State. Officials  of 

the Commission may also participate. 

To make verification more effective,  the Commission may, with the agreement of the 

Member  States concerned,  arrange for  administrative  authorities  of those  States to 

participate in certain inspections or inquiries. 

3.  The  Council,  acting  by  a  qualified  majority  on  a  proposal  from  the  Commission, 

shall, as far as is necessary, lay down general rules for the application of this Article. 

Article 10 

Before  1  July of each year, the Commission shall submit to the European Parliament and 

to the Council a financial report  on the administration  of the fund  during the preceding 

financial  year  and,  in  particular,  on  the  state  of  its  resources  and  the  nature  of  its 

expenditure and the conditions for achieving Community financing. 

Article 11 

The Committee for the European Agricultural Guidance and Guarantee Fund  (hereinafter 

called the "Fund  Committee")  shall assist the Commission in administering the Fund,  as 

laid down in Articles 12 to 15. 

Article 12 

The Fund  Committee  shall  consist  of representatives  of the Member  States  and  of the 

Commission.  Each  Member  State  shall  be  represented  on  the  Fund  Committee  by not 

more than five officials. 

The Fund Committee shall have a representative of the Commission as Chairman. 

178 

Article 13 

1.  Where the procedure laid down in this Article is to be followed,  the matter shall be 

referred  to the Fund Committee by the Chairman,  either on his own initiative or at 

the request of the representative of a Member State. 

2.  The representative of the Commission shall submit to the Committee a draft  of the 

measures to be taken. The Committee shall deliver its opinion on the draft  within a 

time which the Chairman may lay down according to the urgency of the matter. The 

opinion shall be delivered by the majority laid down in Article 148(2) of the Treaty in 

the case of decisions which the Council is required to adopt on a proposal from the 

Commission.  The  votes  of  the  representatives  of  the  Member  States  within  the 

Committee  shall be weighted  in the manner  set  out  in that  Article.  The  Chairman 

shall not vote. 

The  Commission  shall  adopt  measures  which  shall  be  immediately  applicable. 

However, if such measures are not in accordance with the Opinion delivered by the 

Fund  Committee,  they  shall  at  once  be  communicated  by the  Commission  to  the 

Council. In that case, the Commission may defer for not more than one month  from 

the date of such communication, application of the measures which it has adopted. 

The Council, acting by a qualified majority, may adopt a different  decision within one 

month. 

1.  The Fund Committee shall be consulted: 

Article 14 

(a) 

in cases where provision is made for it to be consulted; 

(b) 

for  the  assessment  of  the  Fund's  credits  to  be  entered  in  the 

Commission's estimate for the coming financial year and, if necessary, 

in additional estimates; 

(c) 

on draft reports on the Fund to be submitted to the Council. 

2.  The Fund Committee may examine any other question referred  to it by its Chairman 

either on his own initiative or at the request of a representative of a Member State. 

179 

It shall be informed regularly of the activities of the Fund. 

The Chairman shall convene the Fund Committee. 

Article 15 

Secretarial services shall be provided for the Fund Committee by the Commission. 

The Fund Committee shall lay down its own rules of procedure. 

Regulation (EEC) No 729/70 is hereby repealed. 

Article 16 

References to the repealed Regulation shall be construed as references to this Regulation 

and should be read in accordance with the correlation table set out in the Annex. 

Article 17 

Article  15 third subparagraph and Article 40 of Council Decision 90/424/EEC are hereby 

deleted. 

Article 18 

The  measures  required  to  facilitate  the  transition  from  the  arrangements  provided  in 

Regulation (EEC) No 729/70 to those established by this Regulation shall be adopted in 

accordance with the procedure laid down in Article 13. 

Article 19 

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

Official Journal of the European Communities. 

It shall apply to expenditure effected  as from 1  January 2000. 

180 

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

States. 

Done at Brussels, 

For the Council 

The President 

181 

Regulation 729/70 

This Regulation 

Article 1  (I) 
Article 1  (2) (a) and (b) 
Article 1  (4) 
Article 2(1) 
Article 2 (2) 
Article 3(1) 
Article 3 (2) 
Article 3 (3) 
Article 4 (1) (a) first subparagraph 
Article 4 (1) (a) second subparagraph 
Article 4 (1) (a) third subparagraph 
Article 4 (1) (b) first subparagraph 
Article 4 (1) (b) second subparagraph 
Article 4 (2) 
Article 4 (3) 
Article 4 (4) 
Article 4 (5) first sentence 
Article 4 (5) second sentence 
Article 4 (6) 
Article 5 (1) 
Article 5 (2) (a) 
Article 5 (2) (b) 
Article 5 (2) (c) 
Article 5a 
Article 6 
Article 6a 
Article 6b 
Article 6c 
Article 7 
Article 8 
Article 9 
Article 10 
Article 11 
Article 12(1) 
Article 12 (2) 
Article 13 
Article 14 
Article 15 
Article 16 

Article 1  (1) 
Article 1  (2) (a) and (b) 
Article 1 (4) 
Article2(l) 
Article 2 (3) 
Article 2 (3) 
Article 2 (3) 

Article 4 (1) (a) 
Article 4 (2) 
Article 4 (3) 
Article 4(1) (b) 
Article 4 (4) 
Article 4 (5) 
Article 4 (6) 
Article 4 (7) 
Article 5 (1) first  subparagraph 
Article 5 (2) 
Article 4 (8) and Article 5 (3) 
Article 6 (1) 
Article 7 (2) 
Article 7 (3) 
Article 7 (4) 

Article 8 
Article 9 
Article 10 
Article 11 
Article 12 

Article 13 
Article 14 
Article 15 

Proposal for a 

Council Regulation ŒO  No 

/... 

98/0113 (CNSÏ 

of 

199. 

establishing common rules for direct support schemes under the common agricultural policy 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 43 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

Whereas for  direct  payments under  the various income  support  schemes in the  common  agricultural 

policy some common conditions should be established; 

Whereas  payments  foreseen  under  Community  support  schemes  should  be  made  by  the  competent 

national authorities in full to beneficiaries without any prejudice of reductions explicitly foreseen in the 

present Regulation; 

Whereas,  with  respect  of better  integrating  the  environment  into  the  common market  organisations, 

Member  States  should  apply appropriate  environmental  measures in relation  to  agricultural  land and 

agricultural  production;  whereas  Member  States  should  decide  the  consequences  in  case  of  not 

observing mandatory  environmental requirements  and that  they  should  be enabled  to  reduce  or even 

cancel  benefits  accruing  from  support  schemes  where  such  environmental  requirements  are  not 

respected; whereas such measures should be taken by Member States notwithstanding the possibility of 

granting aids for facultative agri-environmental undertakings; 

1  OJC 

2  OJC... 

3  OJC... 

183 

Whereas,  in  order to  stabilise  the  employment  situation  in agriculture  and thus  contributing  to  a fair 

standard of living for the agricultural community, including all persons engaged in agriculture, Member 

States should be authorised to reduce direct payments to farmers in cases where the labour force used 

on their  holding  falls  short  of  limits  to  be  determined;  whereas  in  order  to  in  particular  maintain in 

particular  agricultural  productivity,  such  reductions  should,  however,  not  exceed  20  % of  the  total 

amount of payments; 

Whereas modalities for reductions of payments for environmental reasons or for reasons of  insufficient 

labour force should be determined by Member States on the basis of objective criteria; whereas Member 

States  should be enabled to use  amounts made available from payment reductions for  additional agri-

environmental measures in the framework of rural development  support provided for under Regulation 

(EC) No...4; 

Whereas direct payments should be subject to an overall limit in order to take account of economics of 

scale  and to  avoid  excessively  high payments to  single  beneficiaries;  whereas  the  application  of  such 

ceilings should not put into question the objective laid down in Article 39 paragraph  1 of the Treaty to 

ensure a fair standard of living for the agricultural community and to  stabilise markets; whereas overall 

ceilings for direct payments should be applied in a degressive way; 

Whereas  common  support  schemes  have  to  be  adapted  to  market  developments,  if  necessary  within 

short delays; whereas beneficiaries  can, therefore,  not rely on support conditions remaining unchanged 

and should be prepared to possible review of schemes in the light of market developments; 

Whereas the support schemes under the common agricultural policy provide for direct income support 

in particular with a view to  ensuring  a fair  standard of living for the  agricultural  community; whereas 

this  objective  is  closely  related  to  the  maintainance  of  rural  areas  by  enabling  farmers  to  exercise 

genuine  and  serious  agricultural  activities;  whereas,  in  order  to  avoid  misallocations  of  Community 

funds,  Member  States  should  restrict,  in  an  appropriate  manner,  the  benefit  of  support  payments  to 

farmers who can demonstrate on the basis of objective and verifiable  elements that the main purpose of 

their support-related activités is of such a genuine and serious nature and thus is not primarily pursued 

to obtain support payments; 

OJL 

184 

Whereas, in view of the  significant  budgetary implications of direct payment  support  and in order to 

better appraise their impact, Community schemes should be subject to a proper evaluation, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Scope 

This  Regulation  shall  apply  to  payments  granted  directly  to  farmers  under  support  schemes  in  the 

framework  of the common agricultural policy which are financed in full  or in part by the "Guarantee" 

section of the EAGGF, except those provided for under Regulation (EC) No  ...  [Rural Development] 

(support schemes). 

Article 2 

Full payment 

Payments under support schemes shall be made in full to the beneficiaries. 

Article 3 

Cross compliance 

1.  Member  States shall take the environmental measures they consider to be appropriate in view of 

the specific  situation of the agricultural land used and the production concerned.  These measures 

may  include  support  in  return  for  agri-environmental  undertakings,  general  mandatory 

environmental requirements  and  specific  environmental requirements  constituting  a condition  for 

direct payments. 

2.  Member  States  shall  decide  the  sanctions  which  are  appropriate  and  proportionate  to  the 

seriousness  of  the  ecological  consequences  of  not  observing  the  mandatory  environmental 

requirements. They may provide for a reduction or, where appropriate, cancellation of the benefits 

accruing from the support schemes concerned if such specific environmental requirements are not 

respected. 

185 

Article 4 

Modulation 

1.  Member States may decide to reduce the amounts which would, but for this paragraph and before 

applying Article  6, be granted  to farmers  in respect  of a given calendar year in cases where the 

labour force used on their holdings during that calendar year, expressed in annual work units, falls 

short of limits to be determined by the Member States. 

"Annual work unit" shall mean the national or regional average annual working time of adult full 

time farm workers employed throughout a calendar year. 

2.  The  reduction  of  support  to  a  farmer  in  respect  of  a  given  calendar  year,  resulting  from  the 

application of the measures referred to in paragraph 1, shall not exceed 20% of the total amount of 

payments which would,  but for  paragraph  1, be granted  to the farmer  in respect  of the calendar 

year concerned. 

Article 5 

Common provision 

1.  Member States shall apply the measures referred  to in Articles 3 and 4 in such a way as to ensure 

equal treatment between farmers and to avoid market and competition distortions. 

2.  The difference between the amounts which would, but for Articles 3 and 4, be paid to farmers in a 

Member  State in respect of a calendar year and the amounts calculated  after  application of those 

Articles, shall be available to the Member State concerned within time limits to be fixed under the 

procedure  referred  to  in  Article 11  as  additional  Community  support  for  agri-environment  in 

accordance with Articles 20 to 22 of Regulation (EC) No 

[rural development]. 

186 

Article 6 

Ceiling 

Where the total amount of payments which would, but for this Article, be granted to a farmer under the 

support  schemes  in  respect  of  a  given  calendar  year  exceeds  ECU 100 000,  that  amount  shall  be 

reduced by: 

-  20% of the part of that amount which exceeds ECU 100 000 but is not more than ECU 200 000, and 

-  25% of the part of that amount which exceeds ECU 200 000. 

Article 7 

Review 

Support  schemes shall be applied without prejudice  to possible review at any moment  in the light of 

market developments. 

Article 8 

Restriction of payments 

Member States shall take the measures they consider to be necessary, taking account of the objectives 

of the support schemes to restrict the benefit of payments to farmers who, in the case of doubt, are able 

to demonstrate on the basis of the objective elements of all their income-related activités, with reference 

in particular  to  the legal,  economic,  social and  agronomic  aspects thereof,  that  they  do not  exercise 

support relevant activities predominantly for the purpose of obtaining the benefit of support payments. 

Article 9 

Evaluation 

In order to  gauge their  effectiveness,  payments under  support  schemes shall be subject  to  evaluation 

designed  to  appraise their impact with respect  of their  objectives  and to  analyse their  effects  on the 

relevant markets. 

187 

Article 10 

Information of the Commission 

Member States shall inform the Commission in detail on the measures taken to apply this Regulation. 

Article 11 

Definitions 

For the purposes of this Regulation: 

(a)  "farmer"  shall mean an individual  agricultural  producer,  whether  a natural  or  legal  person  or a 

group of natural or legal persons, whatever legal status is granted the group  and its members by 

national law, whose holding is within Community territory, 

(b)  "holding"  shall  mean  all  the  production  units  managed  by  a  farmer  situated  within  the  same 

Member State's territory, 

(c)  payments  to  be  granted  in respect  of  a  calendar  year  shall  include  payments  to  be  granted  in 

respect of other periods starting in that calendar year. 

Article 12 

Detailed Rules 

Detailed rules for the application of this Regulation including, in particular: 

- 

the list of support schemes referred to in Article 1, 

- 

the measures necessary to avoid Articles 3, 4 and 6 to be circumvented, 

shall be adopted by the Commission according to the procedure referred  to in Article .... of Regulation 

(EC) No 

[arable crops], the procedure  laid  down in Article  39 of Regulation  (EC) No 

[beef]  or,  as  appropriate,  the  corresponding  Articles  in  the  other  Regulations  on  the  common 

organisation of agricultural markets. 

188 

Article 13 

Entry into force 

This  Regulation  shall  enter  into  force  on  the  day  of  its  publication  in  the  Official  Journal  of  the 

European Communities. 

It shall apply as from 1 January 2000. 

Done at 

For the Council 

189 

EUROPEAN COMMISSION 

it 

£ 

Brussels, 

1998 

EVALUATION OF THE FINANCIAL IMPACT OF THE 
COMMISSION PROPOSALS CONCERNING THE REFORM OF THE 
COMMON AGRICULTURAL POLICY 

AGENDA 2000 

2000 - 2006 

(Estimations based on preliminary estimations of the 1999 expenditure for non-reformed sectors) 

A$o 

INTRODUCTION 

In the three parts of this document an assessment has been made of global expenditure  for 
the EAGGF Guarantee over the period 2000-2006. 

Part A includes global expenditure after the reform as proposed by the Commission. 

Part B includes global expenditure with the maintenance of status quo. 

Part  C  includes  the financial impact  of  the  proposed  reform  expressed  as  the  difference 
between the cost under part A and under part B. 

f.i 

•' 

THE  ASSESSMENT  OF  THE  GLOBAL  EXPENDITURE  UNDER  RUBRIC  1  AS 
PROPOSED  BY THE COMMISSION  IN AGENDA  2000 IS CONTAINED  IN  PART 
A. 

The agricultural guideline 

The  latest  revision  of  the  economic  forecasts  and  a revision  for  previous  years  leads  to  an 
increase  in the  1999 guideline to 45 205 Mio. ECU, compared  to a forecast  in July  1997 of 
45 000 Mio. ECU. By maintaining the estimated annual growth rate at 2,5% and the  deflator 
at 2% the agricultural guideline will increase to 

2000  2001  2002  2003  2004  2005  2006 

Mio. ECU (EU-15) 

46940  48750  50630  52600  54650  56790  59020 

The  forecasted  guideline  after  enlargement  takes  the  sugar  levies  to  be  paid  by  the  new 
Member  States into account.  Furthermore, total  growth is estimated  to increase at an annual 
rate of 2,6%  due to the impact of the 6 new Member States (5% growth with a GDP share of 
4%). 

Mio.ECU(EU-21) 

50940  52990  55120  57350  59680 

"Existing" rubric  1 measures 

For  the  measures  included  in  EAGGF  Guarantee  as  outlined  before  the  reform  a  detailed 
assessment  of  the  total  cost  after  the  reform  has  been  made  for  the  sectors  for  which  a 
specific  proposal  has been put  forward.  These  sectors are: arable  crops, dairy  products,  and 
beef and veal. 

The quantitative  impact  is based  on the forecasts  made in the DG VI  CAP  2000  documents 
of April  1997 or on updated  forecasts. 

A ratio between the $ and the ECU of 0,87 has been used. 

An  analysis  has  also  been  made  of  the  indirect  financial  impact  for  other  sectors,  as  for 
example pigs and poultry, non Annex II products, and certain aid schemes. 

The point  of departure  for  the calculation  of the  financial  cost  for  the non  reformed  sectors 
has  been  the  preliminary  estimation  of  expenditure  for  the  1999  budgetary  exercise.  This 
expenditure has been kept stable to the extent that there are no specific  factors  which  should 
lead to a change in the level of expenditure. 

For fruit  and vegetables the financial  assessment made after the  1996 reform  has been used. 

For tobacco the financial  sheet accompanying the latest proposal has been used. 

For  sheep  and  goat  meat  a  market  price  of  3  300  ECU/tonne  has  been  used  for  the 
calculation of the financial  cost. 

The forecast  of expenditure for fish is based on the assumption of a slight deterioration of the 
market  in  the  year  2000  and  integrates,  as  from  the  financial  year  2001,  the  budgetary 
consequences  of  introducing  the  new  measures  envisaged  by  the  Commission  in  its 
communication  on  the  future  of  the  market  in  fisheries  products  in  the  European  Union 
(COM(97)719 final of  16.12.1997). 

No account is taken of the clearance of accounts which normally leads to a net receipt for the 
EAGGF Guarantee. 

For  the  accompanying  measures  the  cost  is  increased  from  the  present  level  of  2  620  Mio. 
ECU  to  2  800  Mio.  ECU  as  foreseen  in  the  AGENDA  2000  document  of  15  July  1997. 
(DOC/97/6). The increase reflects  the desire that the agri-environmental  measures  should  be 
reinforced  and encouraged. 

The  introduction  of  financial  ceilings  on the  amount  to  be paid  to  an  individual  holding  is 
estimated  to  gradually  lead  to  an  annual  saving  of  the  order  of  400  Mio.  ECU,  the  main 
impact falling  on arable and mixed  farms. 

The calculations have been made in ECU (B). 

Global  expenditure  for  "existing" rubric  1 measures is estimated  to be 46 460 Mio. ECU  in 
2006. 

"New" measures to be included under rubric 1 

The inclusion of expenditure for veterinary measures, currently financed  under Chapter B2-
510. is expected to increase expenditure by  100 Mio. ECU per year. 

For  the  new  structural  measures  and  the  cost  arising  from  enlargement  the  financial 
assessment  corresponds  to the figures  included  in the AGENDA  2000 document  of  15 July 
1997 (DOC/97/6). However, an additional  amount of 45 Mio. ECU has been added to cover 
measures for the restructuring  of the fishing  fleets  in Objective 2 areas. The initial amount of 
1  945  Mio.  ECU  in  2000  has  been  increased  by  2% annually  to  reach  2  190 Mio.  ECU  in 
2006.  The  breakdown  between  the  various  measures  is  only  indicative,  based  on  average 
historical  spending.  In  future  Member  States will have more  flexibility  in  establishing  their 
policy  mix,  and  the  relative  weight  of  the  different  measures  will  possibly  change. 
Community  support  for  rural  development  will  be  subject  to  a  financial  planning  on  an 
annual  basis. In practice, this will prevent  an overshoot  of the budget  for  rural  development 
measures. 

The  pre-accession  aid  for  candidate  countries  is  set  at  500  Mio.  ECU  in  1997  prices  as 
foreseen  in  the  AGENDA  2000  document  of  15 July  1997  (DOC/97/6),  equivalent  to  530 
Mio.  ECU  in the  year  2000  and  rising  to  600  Mio.  ECU  for  the  year  2006  with  an  annual 
inflation rate of 2%. 

The  expected  cost  of  enlargement  (excluding  pre-accession  aid)  has  been  maintained  as 
outlined  in  the  AGENDA  2000  document  of  15  July  1997  (DOC/97/6),  i.e.  +1  700  Mio. 
ECU in 2002 increasing to +3 900 Mio. ECU in 2006. 

/IS 

Total  expenditure 

Total  expenditure  for  measures  under  rubric  1 as  defined  after  the  reform  is  estimated  to 
become 49 350 Mio. ECU  for EU-15 in 2006, leaving  a margin  of 9 670 Mio. ECU  under 
the agricultural  guideline(EU-15). Total  expenditure  for  EU-21  is estimated  at 53 250 Mio. 
ECU, leaving a margin under the EU-21 guideline of 6 430 Mio. ECU. 

IN PART B AN ASSESSMENT OF GLOBAL EXPENDITURE WITH THE 
MAINTENANCE OF STATUS QUO HAS BEEN MADE. 

As  under  A,  the  expenditure  for  non-reformed  products  has  mainly  been  based  on  the 
preliminary  estimation  of expenditure  for the  1999 budgetary exercise. This expenditure  has 
been kept stable to the extent that there are no specific  factors which should lead to a change 
in the level of expenditure. 

For  arable  crops,  dairy  products,  and  beef  and  veal  the  expenditure  has  been  evaluated  by 
applying  the  present  price  levels  to  the  quantitative  and  price  forecasts  in  DOC/97/6  or 
updated  forecasts. 

On the assumption of maintaining the status quo, global expenditure would be of the order of 
43 315 Mio. ECU, leaving a margin under the guideline of 15 705 Mio. ECU in 2006. 

IN  PART  C  THE  FINANCIAL  IMPACT  OF  THE  PROPOSED  REFORM  IS 
OUTLINED. 

The  estimated  financial  impact  of  the  proposed  reform  is  an  additional  cost  of  3  145 Mio. 
ECU  in  2006  for  the  sectors  currently  covered  by  rubric  1.  The  inclusion  of  certain 
veterinary  measures  increases  the  cost  by  100 Mio.  ECU.  The  structural  measures  outside 
objective  1 add  another  2  190  Mio.  ECU.  With  the  inclusion  of  pre-accession  aid  of  600 
Mio. ECU total expenditure under rubric  1 for EU-15 is estimated to increase by 6 035 Mio. 
ECU  in  2006.  The  estimated  financial  impact  of  enlargement  of  3  900  Mio.  ECU  in  2006 
would lead to a total increase of expenditure for rubric  1  of 9 935 Mio. ECU in 2006 for EU-
21. 

INDIVIDUAL  SECTORS 

ARABLE  CROPS 

Proposals 

Intervention price 

It  is  proposed  to  reduce  the  intervention  price  of  cereals  by  20%  in  a  single  step,  as  from 
marketing  year  2000/2001, bringing  it  down  from  119,19 ECU/t  to  95,35  ECU/t  on  1 July 
2000.  It  is  also  proposed  to  abolish  monthly  increments  which  are  currently  fixed  at  1,0 
LCU/t. 

Area payments 

The proposed changes are the  following: 

-  A  single  basic  amount  per  tonne  of  66  ECU  for  cereals; oilseeds,  non-textile  linseed  and 
set-aside  (current  amounts  are  54,34  ECU/t  for  cereals,  68,38  ECU/t  for  set-aside,  105,1 
ECU/t for  linseed and the average world  market price related  aid for  oilseeds for  1997/98 is 
450 ECU/ha) 

- The proposed basic amount is 72,5 ECU for protein crops (current amount is 78,49 ECU/t). 

Area payments will be calculated  by multiplying  the basic amount per tonne by the  average 
cereals yield. 

Set-aside rate 

It is proposed to fix the basic set-aside rate at 0%. 

Payment period 

Payments shall be paid between the period  1  January and 31 March following  the harvest. 

Main assumptions for the status quo situation 

In  a  status  quo  situation,  the  current  intervention  price  of  119,19 ECU/t  as  well  as  current 
monthly increments are considered to remain unchanged. 

The basic amounts of the area payments are kept at their current  level throughout the 6 year 
period and the average historical yields on which these payments are based are those paid  for 
marketing year 1997/98. 

The  17,5  %  set-aside  rate  which  is  fixed  in  Council  Regulation  (EEC)  N°  1765/92  is 
maintained for all six years. 

It  is  assumed  that  all  the  base  area  available  under  the  arable  crops  regime  (53,5  Mio.  ha) 
will  be  farmed  and  that  a  little  less  than  a  million  hectares  of  it  will  be  claimed  as  fodder 
area. 

, / { ? :" 

The cultivated  areas are distributed  between the various arable crops following  the  forecasts 
for  the  year  1999.  The  total  area  as  well  as  its  distribution  remain  stable  throughout  the 
period  1999-2005. 

Cereals yields increase from 5,40 t/ha in  1999 to 5,89 t/ha in 2005. 

Total  gross production  of cereals  reaches  214 million  tonnes  in 2005  (coming  up  from  195 
Mio. t. in 1999). 

An average estimated  world market price is used throughout the period. For wheat,  it is  145 
$/t, for coarse grains, 113 $/t and for oilseeds, 260 $/t. 

Exports are kept at the level of the GATT quantitative ceilings. 

Intervention stocks accumulate over the 6 year period to reach a final theoretical high of 72,5 
million tonnes in 2005. 

Impact of the  reform 

On areas and on the cereals balance sheet 

The reduction  of the basic set-aside rate from  17,5% to 0% will put 4  103 000 ha back  into 
production while an estimated 3 000 000 ha area would remain as voluntary  set-aside. 

The  impact  on  cereals  production  of  the  area  put  back  into  cultivation  (3  337  500  ha  of 
which 70 000 ha of silage) will be an annual increase of around  18 million tonnes. This extra 
production  is distributed  between  wheat  and coarse  grains with  about  10 million  tonnes  for 
wheat and 8 million tonnes for coarse grain. 

It is assumed  that the proposed  reduction  in the intervention  price will  enable the  European 
Union  to  export  wheat  without  the need  for  an export  refund.  (There  are no  quantitative  or 
financial  limits  to  refund  free  exports.)  The  calculations  based  on  world  market  price 
forecasts  confirm  this.  The  additional  production  of  wheat  will  find  an  outlet  on  export 
markets.  This  is  the  reason  why  export  quantities  of  wheat  after  the  reform  have  been 
increased beyond GATT limits to around 30 Mio. tonnes per year. 

For  coarse  grains, the  exportable  quantities  remain  within  the  GATT  ceilings  because  it  is 
assumed that the world market price situation will still require an export  refund. 

Taking  these  elements  into  consideration,  the  reform  would  have  as  a  result,  estimated 
intervention stocks of cereals in the year 2005 of just under 25 million tonnes. 

On prices and area payments 

The  reduction  in  the  intervention  price  has  a  direct  impact  on  the  amount  of  the  export 
refunds.  It  reduces  wheat  export  refunds  to  0  from  an  assumed  7,5  ECU/t  in  a  status  quo 
situation. 

With the proposed  reform,  area payments  would  be radically  simplified.  All  arable  crops 
(except protein crops) as well as set-aside will be getting a single basic amount of 66 ECU/t 
to  be multiplied  by the cereals yield.  In our calculations, we have taken the average paid 
yield  for  the European  Union  for  marketing  year  97/98 of 4,86 t/ha.  This  brings us to an 
average area payment of 321 ECU/ha (352 ECU/ha for protein crops). 

Budgetary impact 

The cost of area payments would be increased from 16 870 Mio. ECU to  18 500 Mio. ECU 
after the reform. 

The  reform  would  bring  about  a  considerable  saving  on  intervention  costs  and  export 
refunds.  In a status quo situation, the estimate for these costs amounts to 2  100 Mio. ECU 
whereas they are budgeted at 550 Mio. ECU in the final year of the reform. 

The impact  of the reform  on the cost of production  refunds  for  starch would  represent 95 
Mio. ECU because production refunds  would decrease due to the change in the relationship 
between world market prices and European Union prices. 

By  2006  the total  cost  of the arable crops chapter  is estimated  at  19 250  Mio. ECU,  the 
reform is estimated to lead to a saving in the order of 30 Mio. ECU in 2006. 

Impact on other chapters 

The reduction in cereals prices is expected to lead to the elimination  of export refunds  for 
pigmeat, eggs and poultry meat, and cereals in non-Annex II products. An indicative cost of 
40  Mio. ECU  has been  maintained  for  pigmeat  in order to  cover  possible  costs  linked to 
private storage and exceptional  support measures (swine fever). The impact on chapters 18 
(POSEI), 30 and(non Annex II products), and 31 (food programmes) is estimated at -10, -53 
and -13 Mio. ECU respectively. 

W 

MILK AND DAIRY PRODUCTS 

Proposals 

It is proposed to reduce the intervention prices by  15% over four  years as  from  1 July 2000, 
leading to a reduction of the intervention price for butter from  3282 ECU/t to 2789,7  ECU/t 
in  2006,  and  of  the  intervention  price  for  skimmed  milk  powder  from  2055,2  to  1746,9 
ECU/t  in  2006.  The  indicative  price  for  milk  will  be  reduced  from  309,8  ECU/t  to  257,2 
ECU/t.  The price reduction  will  be accompanied  by the gradual  introduction  of a dairy  cow 
premium of 215  ECU per cow (EU average), the beef part of this premium  (70 ECU) will be 
financed  under  the  beef  chapter,  leaving  an  average  amount  of  145  ECU/cow  for  the  dairy 
budget  chapter.  Part  of the direct  aid  (100  ECU) will  be paid  according  to  common  criteria 
and part (average 45 ECU) will be paid according to national  criteria, this does however not 
affect  the  global  expenditure.  The  global  number  of  premium  units  will  correspond  to  the 
present level of the milk quota divided by the estimated EU yield of 5,8 tons/cow in 2000. 

The measures mentioned above will be accompanied  by a gradual increase of the milk  quota 
by  2%  over  four  years  as  from  1 April  2001. The  increased  quota  will  be  distributed  in 
mountain and Nordic areas (1 %) as well as to young farmers (1%). 

Quantitative impact 

The  price  reduction  is  assumed  to  lead  to  an  increased  export  of  cheese  without  refund 
(+100  000  tonnes  by  the  end  of  the  period),  to  higher  consumption  of  butter  (+48  000 
tonnes) and cheese (+300 000 tonnes), and to lower production  of butter  and  skimmed  milk 
powder (SMP). 

It is also assumed  to lead to a very substantial  reduction of the refund  for  SMP. This  impact 
should make room for a increase in the milk quota by 2 % corresponding to 2,3. Mio. tonnes. 
The  increase  in  milk  production  would  lead  to  an  annual  increase  in  butter  and  SMP 
production of the order of  116 000 and 214 000 tonnes respectively by the end of the period. 

It  is  assumed  that  intervention  butter  and  SMP  intervention  stocks  will  be  eliminated  by 
2001 and 2005 respectively. In a non-reform  scenario the intervention  stocks of  SMP would 
have been expected to reach 200 000 tonnes by 2006. 

Priées and direct aids 

The  reduction  in  the  support  level  will  lead  to  correspondingly  lower  prices  for  export 
refunds  and  internal  aids.  The  substantial  reduction  of  the  difference  between  the  internal 
price and the external price for protein will  lead to increased  exports of cheese and  possibly 
also SMP without export  refunds. 

For  the  calculations  a  world  market  price  of  1600$ =1390  ECU/t  has  been  forecasted  for 
butter,  and  of  1950$  =  1700  ECU/t  for  SMP.  To  the  extent  that  the  development  in  SMP 
prices  is more favourable  which allows for the export refund  for  SMP to be eliminated,  the 
reduction in SMP intervention stocks may be accelerated. 

It  is  assumed  that  the  aid  for  internal  disposal  measures  of  butter  and  SMP  etc.  will  be 
reduced by amounts corresponding to the price reduction. 

AM 

Budgetary impact 

The  introduction  of  direct  aids  for  dairy  cows  leads  to  higher  budget  costs.  By  2006,  total 
cost of the milk chapter is estimated at 4 550 Mio. ECU. 

The reform  of the dairy  sector  is estimated  to have a total budgetary  impact  of +1 900 Mio. 
in 2006. 

Impact on other chapters 

The reduction  in the dairy prices will have a financial  impact on chapter 25 (POSEI) -8 Mio. 
ECU  in  2006,  chapter  30  (export  refunds  for  non-Annex  II  products)  -69  Mio.  ECU,  and 
chapter 31 (food programmes) -37 Mio. ECU. 

The  reduction  in  expenditure  for  chapter  30  should  make  it  possible  to  overcome  the 
difficulties  in respecting the WTO financial  ceiling for incorporated products. 

Ai  ' 

BEEF AND VEAL 

Proposals 

It  is  proposed  to  reduce  institutional  prices  by  30%  over  three  years  as  from  July  2000, 
accompanied  by  a gradual  increase  in the premiums  for  suckler  cows, bulls, and  steers  and 
the gradual  introduction  of a "meat" premium  for  dairy  cows within  redefined  individual  or 
regional  ceilings. The theoretical  global premiums  are 310 ECU/head  for  bulls paid  once in 
their  lifetime,  232  ECU  for  steers  paid  twice  in  their  lifetime,  215  ECU/head  for  suckler 
cows per year and 70 ECU/head per year for dairy cows. 

The basic premiums will be (2002 level)  180 ECU for  suckler cows, 220 ECU for bulls, 170 
ECU for steers, and 35 ECU for dairy cows. 

These basic  amounts correspond  to the pre-reform  level  of the aid plus  50% of the  increase 
in  the  total  premium.  The  remaining  50%  of  the  increase  is  distributed  to  Member  States 
according  to  their  share  in  production,  in  order  for  Member  States  to  distribute  these 
amounts within certain limits and according to common rules. 

It is proposed  to fix the  sum  of the  individual  quotas  for  suckler  cows  for  2000  onwards  at 
the level of  1995 or  1996 payments + 3%, leading to an estimated total of  10,285 Mio. head 
(exc.  the  special  ceilings  for  the  French  Overseas  Departments  and  the  Portuguese 
extensification  programme). 

For  male  animals  it  is proposed  to  maintain  the  1997  -  1998  ceilings  increased  by  57  000 
heads for  Spain and Portugal  (from  1997), leading to a total  of 9,095  Mio. heads from  2000 
(exc.  the  special  ceilings  for  the  French  Overseas  Departments  and  the  Portuguese 
extensification  programme). 

The additional  premiums  for  suckler  cows which are at present  co-financed  by the  EAGGF 
in  certain  regions  (Objective  1 and  Belgium)  will  be  abolished  (-90  Mio.  ECU)/year).  The 
calf processing scheme will also be eliminated. 

The  criteria  for  receiving  the extensification  premium  will  be  strengthened,  followed  by  an 
increase  in  the  premium  for  extensive  animals  to  100 ECU/head.  The proposed  increase  is 
expected to be budgetarily neutral as fewer animals will qualify  for the premium. 

It  is  also  proposed  to  abolish  public  intervention  as  from  1 July  2002,  and  to  replace  it  by 
private storage. 

Quantitative  impact 

The price  reduction  is assumed  gradually  to  lead  to  an  increase  in  consumption  of  200  000 
tonnes  annually,  as  well  as  to  exports  to  new  markets  without  refunds  of  a  quantity 
progressively  rising to 200  000 tonnes per year.  Intervention  stocks  are thereby  expected  to 
be eliminated  by 2006, compared to the building of stocks reaching  1,6  Mio. tonnes  in 2006 
if the status quo were to be maintained. 

£0Q 

Prices 

Aid  levels for  export refunds  are assumed to be reduced  by an amount  corresponding  to the 
price  reduction.  For  the  calculation  of  export  refunds  a  theoretical  world  market  price  of 
1800 ECU/t has been used. 

The intervention  price will be abolished  from  2002 when intervention  is replaced  by  private 
storage. 

Budgetary  impact 

The global beef budget  is expected to rise to 7 930 Mio. ECU, corresponding  to an  increase 
of+1  990 Mio. ECU compared to a continuation of the present regime. 

The increase  is due to the payment  of direct aids rather than export refunds  and  intervention 
storage. 

Impact on other chapters 

The reduction  in beef prices will have a financial  impact on chapter 25 (POSEI) of-19  Mio. 
ECU and on chapter 31 (food  aid programmes) of -27 Mio. ECU. 

RURAL DEVELOPMENT 

Rural development measures concern: 

-  Support  for  structural  adjustment  of  the  farming  sector  (investment  in  agricultural; 

holdings, establishment of young farmers, training, early retirement); 

-  Support for farming in less favoured areas (compensatory allowances); 

-  Payments for agri-environmental activities; 

-  Support for investment in processing and marketing facilities; 

-  Support for forestry; 

-  Measures for promoting diversification and adaptation of rural areas. 

These  different  measures  incorporate  most  of the  current  legislation  with  some  important 
elements of simplification: 

Only basic eligibility criteria are laid down in the Council regulation. This will allow for 
greater flexibility  and subsidiarity. Details will be inserted in the programmes approved 
by the Commission; 

Support  in Less Favoured  Areas  is modified  in order to  integrate  environmental  goals 
and to promote low-input farming systems: it will be fixed on a per hectare basis. 

The Guarantee Section of EAGGF will finance: 

-  The 1992 accompanying measures (agri-environment, afforestation,  early retirement) and 

the Less Favoured Areas support scheme throughout the Union; 

-  The remaining rural development measures in all areas outside Objective 1. 

lo I 

Moreover the Guarantee Section of EAGGF will also  finance: 

"the  accompanying  measures  for  the restructuration  of the fishing  fleets"  in the  Objective  2 
areas  which  are  not  part  of  the  programming  of  the  Objective  2,  and  all  structural  fishery 
measures outside Objective  1  and 2 areas. 

Maximum  amounts  have  been  increased  for  the  single  premium  for  the  establishment  of 
young  farmers  (25  000 ECU), for  early  retirement  support  for  transferors  (15 000  ECU  per 
year). The minimum aid for compensatory  allowances in less favoured  areas has been raised 
to 40 ECU per hectare in order to avoid ineffective  payments. Moreover the average  amount 
granted  cannot  exceed  a maximum  of  200 ECU  per hectare.  Maximum  annual  amounts  for 
agri-environmental  measures  have been  simplified  by keeping  only three  categories:  annual 
crops (600 ECU/ha), perennial crops (900 ECU/ha) and other land uses (300 ECU/ha). 

Modification  of  maximum  amounts  are  not  expected  to  lead  directly  to  any  increase  of 
expenditure,  on the  one hand  because  most  Member  States  do not reach  these  ceilings,  and 
on the other because the overall  budget  allocations to Member  States  for  rural  development 
measures  will  be  determined  by the  Commission.  Rural  development  Programmes  and  any 
modifications  to them will also be approved by the Commission. 

The  ceiling  for  fishery  structural  measures  in  Objective  2  is  45  Mio  ECU  per  year  and  80 
Mio ECU per year outside Objective  1  and 2. 

The  1992  accompanying  measures  (agri-environment,  afforestation,  early  retirement)  are 
already financed  by the Guarantee Section of the EAGGF, and a yearly amount of 2 800 Mio 
ECU has been foreseen  for the period 2000-2006. 

The estimates  for  the other rural  development  measures have been made  on the basis of the 
amounts  made  available  during  the programming  period  1994-99 outside  Objective  1 areas 
and for the LFA scheme in Objective  1  areas. 

For the new rural development measures the financial  assessment corresponds to the 
figures  included in AGENDA 2000. The initial amount will be 1 900 Mio ECU in 2000 
to which it should be added 45 mio ECU for fishery  measures in Objective 2 areas not 
foreseen  by AGENDA 2000. 

&>5 

PART A: SYNTHESIS ON THE FINANCIAL COST AFTER 
THE REFORM 

ia*/ 

ESTIMATE OF GLOBAL EXPENDITURE EAGGF 

2000-2006 (AFTER REFORM) 

EAGGF expenditure  Mio. ECU 

B1-10 arable crops 
B1-11 sugar 
B1-12 olive oil 
B1-13 dried fodder 
B1-14 textiles 
B1-15 fruit and vegetables 
B1-16 wine 
B1-17 tobacco 
B1-18 other vegetable sectors 
B1-20 milk and dairy  products 
B1-21 beef and veal 
B1 -22 sheep and goatmeat 
B1-23 pigmeat 
B1-24 eggs and poultry 
B1-25 other actions for animal products 
B1-26 fishery products 
B1-30 restitutions  non- annex  II 
B1-31 food  programmes 
B1-36 control actions 
B1-37 clearance of accounts 
B1-38 promotion 
total 
B1-50 accompanying  measures 
total 

. 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

16.850 
1.760 
2.340 
390 
850 
1.940 
800 
1.020 
430 
2.780 
4.700 
1.940 
190 
100 
130 
50 
475 
380 
50 

19.120 
1.760 
2.340 
390 
850 
1.930 
800 
1.020 
420 
3.180 
5.730 
1.940 
40 
0 
120 
70 
340 
350 
50 

19.170 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
420 
3.630 
7.120 
1.940 
40 
0 
110 
70 
330 
330 
50 

19.220 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
420 
4.060 
8.230 
1.940 
40 
0 
,110 
70 
310 
310 
50 

19.250 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
420 
4.500 
7.960 
1.940 
40 
0 
100 
70 
290 
300 
50 

19.260 
1.760 
2.340 
390 
850 
1.890 
800 
1.020 
420 
4.520 
7.900 
1.940 
40 
0 
100 
70 
290 
300 
50 

100 
37.275 
2.800 
40.075 

100 
40.550 
2.800 
43.350 

100 
42.380 
2.800 
45.180 

100 
43.930 
2.800 
46.730 

100 
44.090 
2.800 
46.890 

100 
44.040 
2.800 
46.840 

19.250 
1.760 
2.340 
390 
850 
1.890 
800 
1.020 
420 
4.550 
7.930 
1.940 
40 
0 
100 
40 
290 
300 
50 

100 
44.060 
2.800 
46.860 

impact of ceiling on individual payments 

-250 

-325 

-400 

-400 

-400 

-400 

total "existing" CAP 

40.075 

43.100 

44.855 

46.330 

46.490 

46.440 

46.460 

New measures to be financed under EAGGF Guarantee 

Veterinary  measures  B2-510 

100 

100 

100 

100 

100 

100 

100 

Structural  measures 
compensatory  payments, less favoured areas 
measures "type 5a" outside objective 1 

of which fisheries 

measures "type 5b" outside objective 1 

total 

Enlargement 
pre-accession  aid 

750 
645 
125 
550 

770 
660 
130 
560 

790 
670 
130 
570 

810 
680 
130 
580 

830 
690 
140 
590 

850 
700 
140 
600 

870 
710 
140 
610 

1.945 

1.990 

2.030 

2.070 

2.110 

2.150 

2.190 

530 

540 

550 

560 

570 

590 

600 

GENERAL TOTAL EU-15 

42.650 

45.730 

47.535 

49.060 

49.270 

49.280 

49.350 

UPDATED GUIDELINE EU-15 

46.940 

48.750 

50.630 

52.600 

54.650 

56.790 

59.020 

MARGIN EU-15 

4.290 

3.020 

3.095 

3.540 

5.380 

7.510 

9.670 

Enlargement 
CAP market  measures 
rural and accompanying  measures 
total EU-6 

GENERAL TOTAL EU-21 

UPDATED GUIDELINE  EU-21 

MARGIN EU-21 

1.100 
600 
1.700 

1.200 
1.000 
2.200 

1.200 
1.500 
2.700 

1.300 
2.000 
3.300 

1.400 
2.500 
3.900 

49.235 

51.260 

51.970 

52.580 

53.250 

50.940 

52.990 

55.120 

57.350 

59.680 

1.705 

1.730 

3.150 

4.770 

6.430 

PART B: SYNTHESIS ON THE FINANCIAL COST 
WITHOUT THE REFORM 

ESTIMATE OF GLOBAL EXPENDITURE EAGGF 

2000-2006 (STATUS QUO) 

B1-10 arable crops 
B1-11 sugar 
B1-12 olive oil 
B1-13 dried fodder 
B1-14 textiles 
B1-15 fruit and vegetables 
B1-16wine 
B1-17 tobacco 
B1-18 other vegetable  sectors 
B1-20 milk and dairy  products 
B1-21 beef and veal 
B1-22 sheep and goatmeat 
B1-23pigmeat 
B1-24 eggs and poultry 
B1-25 other actions for animal products 
B1-26 fishery  products 
B1-30 restitutions  non- annex  II 
B1-31 food  programmes 
B1-36 control actions 
B1-37 clearance of accounts 
B1-38 promotion 
total 
B1-50 accompanying  measures 
total 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

17.940 
1.760 
2.340 
390 
850 
1.940 
800 
1.020 
430 
2.780 
4.700 
1.940 
190 
100 
130 
50 
475 
380 
50 

18.070 
1.760 
2.340 
390 
850 
1.930 
800 
1.020 
430 
2.770 
4.930 
1.940 
190 
100-
130 
70 
415 
380 
50 

18.240 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
430 
2.770 
5.780 
1.940 
190 
100 
130 
70 
415 
380 
50 

18.450 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
430 
2.740 
6.480 
1.940 
190 
100 
130 
70 
415 
380 
50 

18.690 
1.760 
2.340 
390 
850 
1.910 
800 
1.020 
430 
2.710 
6.130 
1.940 
190 
100 
130 
70 
415 
380 
50 

18.960 
1.760 
2.340 
390 
850 
1.890 
800 
1.020 
430 
2.680 
5.940 
1.940 
190 
100 
130 
70 
415 
380 
50 

19.280 
1.760 
2.340 
390 
850 
1.890 
800 
1.020 
430 
2.650 
5.940 
1.940 
190 
100 
130 
40 
415 
380 
50 

100 
38.365 
2.620 
40.985 

100 
38.665 
2.620 
41.285 

100 
39.665 
2.620 
42.285 

100 
40.545 
2.620 
43.165 

100 
40.405 
2.620 
43.025 

100 
40.435 
2.620 
43.055 

100 
40.695 
2.620 
43.315 

total "existing" CAP 

40.985 

41.285 

42.285 

43.165 

43.025 

43.055 

43.315 

UPDATED GUIDELINE  EU-15 

46.940 

48.750 

50.630 

52.600 

54.650 

56.790 

59.020 

MARGIN 

5.955 

7.465 

8.345 

9.435 

11.625 

13.735 

15.705 

M 

PART C: SYNTHESIS ON THE FINANCIAL IMPACT OF 
THE REFORM 

FINANCIAL IMPACT OF THE REFORM 

2000-2006 

B1-10 arable crops 
B1-11 sugar 
B1-12 olive oil 
B1-13 dried fodder 
B1 -14 textiles 
B1-15 fruit and vegetables 
B1 -16 wine 
B1-17 tobacco 
B1-18 other vegetable  sectors 
B1-20 milk and dairy  products 
B1-21 beef and veal 
B1-22 sheep and goatmeat 
B1-23pigmeat 
B1-24 eggs and poultry 
B1-25 other actions for animal products 
B1-26 fishery  products 
B1-30 restitutions non- annex  II 
B1-31 food  programmes 
B1-36 control actions 
B1-37 clearance of accounts 
B1-38 promotion 
total 
B1-50 accompanying  measures 
total 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

1.090 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.090 
180 
-910 

1.050 
0 
0 
0 
0 
0 
0 
0 
-10 
410 
800 
0 
-150 
-100 
-10 
0 
-75 
-30 
0 
0 
0 
1.885 
180 
2.065 

930 
0 
0 
0 
0 
0 
0 
0 
-10 
860 
1.340 
0 
-150 
-100 
-20 
0 
-85 
-50 
0 
0 
0 
2.715 
180 
2.895 

770 
0 
0 
0 
0 
0 
0 
0 
-10 
1.320 
1.750 
0 
-150 
-100 
-20 
0 
-105 
-70 
0 
0 
0 
3.385 
180 
3.565 

560 
0 
0 
0 
0 
0 
0 
0 
-10 
1.790 
1.830 
0 
-150 
-100 
-30 
0 
-125 
-80 
0 
0 
0 
3.685 
180 
3.865 

300 
0 
0 
0 
0 
0 
0 
0 
-10 
1.840 
1.960 
0 
-150 
-100 
-30 
0 
-125 
-80 
0 
0 
0 
3.605 
180 
3.785 

-30 
0 
0 
0 
0 
0 
0 
0 
-10 
1.900 
1.990 
0 
-150 
-100 
-30 
0 
-125 
-80 
0 
0 
0 
3.365 
180 
3.545 

impact of ceiling on individual payments 

-250 

-325 

-400 

-400 

-400 

-400 

total "existing" CAP 

-910 

1.815 

2.570 

3.165 

3.465 

3.385 

3.145 

New measures to be financed under EAGGF Guarantee 

Veterinary  measures  B2-510 

100 

100 

100 

100 

100 

100 

100 

Structural  measure 
compensatory  payments, less favoured areas 
measures "type 5a" outside objective 1 

of which fisheries 

measures "type 5b" outside objective 1 

total 

Enlargement 

pre-accession aid 

750 
645 
125 
550 

770 
660 
130 
560 

790 
670 
130 
570 

810 
680 
130 
580 

830 
690 
140 
590 

850 
700 
140 
600 

870 
710 
140 
610 

1.945 

1.990 

2.030 

2.070 

2.110 

2.150 

2.190 

530 

540 

550 

560 

570 

590 

600 

GENERAL TOTAL EU-15 

1.665 

4.445 

5.250 

5.895 

6.245 

6.225 

6.035 

Enlargement 

CAP market  measures 

rural and accompanying  measures 

total 

GENERAL TOTAL EU-21 

1.100 
600 

' 1.200 
1.000 

1.200 
1.500 

1.300 
2.000 

1.400 
2.500 

1.700 

2.200 

2.700 

3.300 

3.900 

6.950 

8.095 

8.945 

9.525 

9.935 

2o9 

ISSN 0254-1475 

COM(98) 158  final 

DOCUMENTS 

EN 

03  01  06  10 

Catalogue  number  :  CB-CO-98-181-EN-C 

ISBN 92-78-32378-0 

Office  for  Official  Publications of the European  Communities 

L-2985 Luxembourg