Proposal for Council Regulation (EC) amending Regulation No 136/66/EEC on the establishment of a common organisation of the market in oils and fats
Date: 1998-03-18
Institutions: European Commission
Subjects: common organisation of markets, market stabilisation, olive oil, production aid, sales promotion, target price

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  18.03.1998 
COM(1998) 171 final 

98/0098 (CNS) 

Proposal  for 

Council Regulation (EC) Nc 

amending Regulation  No  136/66/EEC on the establishment  of a  common 
organisation  of the market  in oils and  fats 

Proposal  for 

Council Regulation (EC) N£ 

amending Regulation (EEC) N° 2261/84 laying down general rules on the granting 
of aid for the production of olive oil and of aid to olive oil producer  organisations 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

I. 

THE REFORM OF THE OLIVE OIL SECTOR 

Over the  last  few  years,  many  problems  in the  workings  of  the  market  organisation  for 
olive  oil have  drawn the  attention  of the  Commission  and  the  Council  to  the  need  for  a 
reform  of  the  latter.  Parliament  and  Court  of  Auditors  have  frequently  called  for 
measures to combat fraud and irregularities in the sector. 

Many, at times far-reaching,  changes have been made. The instruments  for  controls have 
been strengthened, but the problems remain. 

1. 
The  options  were  spelled  out  to  the  Council  and  the  European  Parliament  in 
February  1997  in  a  Commission  Note  on  the  olive  and  olive  oil  sector,  the  current 
common market organisation, the need for  a reform  and the alternatives  envisaged1.  The 
Note outlined  the sector's  economic, cultural, regional,  social  and  environmental  aspects 
and  concluded  on  the  need  for  a  reform  of  the  present  market  organisation  along  two 
possible avenues. 

The first option is to improve the existing system and would essentially  comprise: 

-  abolishing the aid scheme for  small producers and granting aid across the board on the 

basis of actual production; 

-  possibly,  breaking  down  the  maximum  guaranteed  quantities  (MGQs)  between  the 

Member States; 

-  abolishing consumption aid; 

- 

reviewing the possibilities of intervention  buying-in. 

The second (more radicaD option would be based principally on: 

-  aid per olive tree, calculated  on the basis of historical  yields and  granted  to  producers 

in place of the present production aid system; 

- 

introducing a quality control system and abolishing consumption  aid; 

-  a system of private storage in place of public intervention. 

The Note on the options put forward  by the Commission was the subject  of lively  debate 
in  Parliament,  the  Council,  the  Economic  and  Social  Committee,  the  Committee  of  the 
Regions  and  many  professional  organisations.  Thanks  to  this  fruitful  and  wide-ranging 
exchange  of  views,  the  existing  problems  and  the  objectives  and  constraints  of  any 
reform  were analysed in greater depth. 

COM(97)57  final. 

1 -

2. 
The  positions  expressed  by  those  taking  part  in  the  dehate  acknowledge  the 
need for  a reform  of the present market organisation  introduced  in  1966. The system  has 
become increasingly  complex, with a growing number of support mechanisms  which are 
increasingly  ineffective  overall  and  difficult  to  monitor.  The  existence  of  a  two-tier 
system of aid to producers  is a source of fraud almost universally  deplored. The value of 
consumption  aid, which has been reduced  sharply  in amount to prevent  the  irregularities 
it fostered,  is now seriously in question. 

Agreement  is  growing  on  the  social,  regional  and  environmental  importance  of  olive 
cultivation and on the need to emphasise quality and the promotion of olive oil. 

The consensus regarding the desirability  of a reform  entailing  a simpler  system  which  is 
easier  to  monitor  and  therefore  more  effective  in  distributing  the  necessary  aid  to 
producers breaks down when it comes to deciding on the form  such aid should take. 

Those in favour  of the first option, in particular Parliament and certain producer  Member 
States, stress the advantages  of  a system  of aid that  is proportional  to  actual  production. 
Such  an  aid  scheme  rewards  producers  for  their  output.  It  is  based  on  long-standing 
experience  with  the  present  mechanisms,  which  have  been  adapted  gradually  to 
encourage production while  avoiding market distortion. Nevertheless, with this  option  it 
is  difficult  to  check  applications  for  aid.  Those  in  favour  of  production  aid  advocate 
much  stricter  checks  at the time  of release  for  consumption.  Such  a  system  could  entail 
compulsory  channels  for  the  manufacture  and  marketing  of  olive oil  and  could  perhaps 
involve  a system  of certificates  establishing  links  between the  olive  oil  checked  and  the 
producers. 

Those in favour  of aid per tree point out the effect  such a system could have in stabilising 
the  incomes  of  olive  growers,  who  have  always  been  faced  with  uncertain  weather 
conditions  and  natural  variations  in  yields.  From  the  environmental  viewpoint,  such  a 
system seems beneficial  in so far as it implies no incentive for intensive cropping. A flat-
rate  aid  scheme  would  also  allow  for  more  effective  control  of  increases  in  average 
production,  which  tends  to  rise  ahead  of  consumption  under  the  present  system  of 
incentives.  Lastly,  this  option  would  make  the  aid  scheme  very  much  simpler  and 
significantly  more  reliable. Nevertheless,  there  is  little  experience  with  flat-rate  aid  per 
olive  tree  under  the  wide  range  of  regional  conditions,  despite  the  fact  that  it  already 
applies to small producers. Some believe that it could result in olives not being  harvested 
and accordingly  lead to job  losses. Those in favour  of this option  agree that there  should 
be  some  regional  variation  in  the  aid  granted,  certain  obligations  regarding  harvesting 
and  measures  to  combat  the  abandonment  of  the  countryside  and  environmental 
deterioration. 

Analyses  of  the  way  the  olive  oil  market  operates  focus  on  the  mechanisms  covering 
intervention,  storage  and  trade  with  non-member  countries.  Parliament  has  come  out  in 
favour  of maintaining the present  system and reviewing the conditions  governing  inward 
processing  traffic. 

Other,  at  times  more  specific,  topics  were  raised  during  the  discussions,  such  as  the 
national  guaranteed  quantity  and  its  apportionment  among the  producer  Member  States, 

and  support  for  table  olives.  Approaches  to  such  matters  generally, reflect  the  basic 
options followed  regarding aid granted to producers. 

The  Commission  has  carefully  examined  and  analysed  the  remarks  made,  the 
3. 
views expressed and the resolutions adopted by Parliament. All this work has thrown new 
light on the question  and enabled the Commission  to identify  more precisely the aims to 
be  pursued.  It  has  also  clearly  revealed  the  need  for  closer  examination  of  the  data 
underlying its policy approach. 

The  Commission  takes  the  view  that  the  reform  of  the  olive  oil  sector  should  take 
account of four broad aims: 

-  safeguarding  and improving the quality of the products concerned; 

-  stabilising olive growers' incomes; 

-  achieving dynamic equilibrium on the olive oil market; 

-  organising and monitoring the sector in question. 

Quality is a key factor  in fostering  consumer loyalty and increasing consumption of olive 
oil  in  the  European  Union  and  non-member  countries  and  its  role  is  essential  in 
production  and  income  and  on  the  market.  The  concept  of  quality  depends  on  many 
factors  relating  to  olive  production,  oil  manufacture  and  marketing.  What  has  already 
been  done  must  therefore  be  continued  and  stepped  up,  and  an  integrated,  more  highly 
coordinated  strategy focusing  on quality in the broad sense must be developed. 

Olive growers'  incomes  depend  mainly  on annual  olive production  and on the  system  of 
aid  which  is now the  subject  of  discussion  between  the  two  options  put  forward  by  the 
Commission.  They  also  depend  on  market  balance,  which  can  be  upset  by  a  rise  in 
production  exceeding  the  possibilities  of  disposal.  In  order  to  choose  between 
maintaining  production  aid  and 
to  producers,  more 
introducing 
comprehensive  and  more  reliable  information  must  be  available  on  the  quantities 
concerned and on producers' incomes. 

flat-rate  aid 

Equilibrium on the market for olive oil is seen in dynamic terms, particularly  if the policy 
followed  regarding  quality  and  its  promotion  leads  to  an  increase  in  consumption  at 
prices that  are related  to quality.  Given the  existing  limits  on exports  attracting  refunds, 
the market price for olive oil should resume its full  role in mediating between supply  and 
demand.  Consumption  aid, which  is fairly  ineffective  in the fight against  fraud  and  may 
even  encourage  it,  should  be  abolished.  The  intervention  arrangements  should  also  be 
reviewed.  By means  of mechanisms  based  on  storage,  intervention  could  be  made  more 
flexible  and brought more closely into line with the market. As for imports, the European 
Union's  efforts  to  control  production  should  be  reflected  in  agreements  with  the  non-
member  countries  concerned,  with  harmonisation  of  conditions  governing  inward 
processing  traffic. 

Olive oil  sector organisation  and controls should be thoroughly  recast  in the wake of the 
other  changes  under  the  reform.  The  functions  and  roles  of  the  various  existing  bodies 
need redefining  in line with the new requirements  for  administering  aid to producers and 

in particular the integrated  quality policy.  With regard to the latter, many measures  need 
to be laid down, coordinated  and implemented  with a view order to improving,  verifying, 
certifying  and  increasing  awareness  of  quality.  In  addition  to their  role  in  concentrating 
supply, producer groups definitely  have a role to play. 

4. 
To  determine  and  implement  the  reform  along  the  lines  set  out  above,  better 
estimates  of actual production  are needed.  One factor  is also lacking, namely  quantified, 
reliable figures  on the number of trees and hectares granting producers entitlement to flat-
rate  aid.  This  is  one  of  the  consequences  of  the  present  production  aid  scheme,  which 
casts  much  doubt  on  the  statistics  available.  In  spring  1997 the  Commission  ordered  a 
precise  statistical  estimate, based  on aerial photography,  of the number  of olive trees per 
Member  State.  However,  the  surveys,  studies  and  checks  necessary  mean  the  requisite 
data  cannot  be  analysed  for  some  months.  The  latter  must  be  carried  through  and 
supplemented, in particular as regards areas and yields. 

The Commission considers that no proposal  for a Council Regulation reforming  the olive 
oil sector can thus only be put forward  in 2000, for application in respect of 2000/01. 

The  prospect  of  flat-rate  aid  to  producers  announced  several  years  before  it  becomes 
payable  is  likely  to  trigger  frenzied  planting  of  olive  trees  and  seriously jeopardise  the 
future  balance  of  a  market  already  in  surplus.  Where  production  aid  is  subject  to  a 
maximum  guaranteed  quantity,  any  national  breakdown  of  that  quantity  or  any 
adjustment  in  that  breakdown  carries  the  same  risk.  Budget  resources  not  being 
unlimited, each region of production would thus seek to increase its share. In the past, the 
risk  of  such  a  development  was  prevented  by  disqualifying  new  plantings  from 
entitlement to aid. These measures, which were applied  from  1977 on with a view to the 
accession  of  Greece,  were  abandoned  in  1985  when  the  budget  stabilisers  were 
introduced.  For  some  years  now,  despite  the  introduction  of  a  maximum  guaranteed 
quantity,  new  olive  groves  have  increasingly  been  planted  without  any  concern  for  the 
future  balance of the market. This is unacceptable in the Commission's view and pending 
a more thoroughgoing  reform  of the common  organisation  of the market, measures  must 
be taken as of now for the  1998/99,  1999/2000 and 2000/01 marketing years. 

II. 

THE 1998/99,1999/2000  AND 2000/01  MARKETING  YEARS 

The  present  situation  cannot  continue  unchanged  during  the  three  marketing  years 
1998/99,  1999/2000  and 2000/01  since  it implies risks  of major  difficulties  for  operators 
and  in  particular  for  producers,  as  well  as  to  the  Community  budget.  The  Commission 
therefore  proposes amending the arrangements  as from  1  November  1998 to eliminate  or 
reduce those risks. The changes involve: 

1.  restricting the aid to oil produced from  groves existing at  1  May  1998; 

2.  information  regarding production; 

3.  the definition  of categories of virgin olive oil; 

4.  the intervention  arrangements; 

5.  consumption  aid; 

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6.  aid for small producers; 

7.  national breakdown of the MGQ. 

The changes would apply in the  1998/99, 1999/2000 and 2000/01 marketing years only, 
i.e. up to 31 October 2001. To put that expiry date beyond discussion, the Commission 
proposes to repeal the provisions on aid and the market regulation mechanism provided 
for  in  Council  Regulation  No 136/66/EEC  on  the  establishment  of  a  common 
organisation of the market in oils and fats2 with effect from  1 November 2001. 

To  curb  the  rise  in  the  number  of  olive  trees  planted,  the  Commission 
1. 
proposes  deciding  as  of  now  that  production  aid  will  no  longer  be  granted  after 
31 October 2001 in respect of new areas under olive trees or, where applicable, additional 
olive  trees  planted  after  1  May  19983.  Exceptions  would  be  allowed  for  planting  or 
modernisation under programmes approved by the Commission. 

The  measure  will  be  monitored  through  the  cultivation  declarations  which  producers 
must  submit  to  qualify  for  the  aid  under  the  current  arrangements.  These  declarations 
state the area and the number of olive trees producing olive oil. In accordance with the 
arrangements to be introduced  under the reform,  as from  1 November  2001  only  those 
olive groves existing  at 1 May  1998 and declared  in the few  months thereafter  will be 
eligible for production aid. 

Information  regarding production, i.e. the areas, the numbers of trees and the 

2. 
yields concerned, provides a response to two different needs. 

On the  one hand,  it  is necessary  to  obtain  reliable  national  estimates  for  decisions  on 
options  and  to  determine  the  content  of  the  reform  for  1 November  2001.  In  this 
connection, the Commission will supplement the information provided by the analysis in 
progress  of  aerial  photographs  of  oil-producing  regions.  It  will  also  undertake  a 
harmonised survey of average national yields in 1998/99, 1999/2000 and 2000/01. 

On the other hand, this information regarding production must be available at a level that 
is  close  to  the  recipient  agricultural  holdings.  This  is  necessary  in  order  to  check  the 
verisimilitude  of  production  aid  and  to  administer  the  granting  of  aid  per  tree  or  per 
hectare. The methods for estimating yields in small regions call for a critical analysis of 
experience gained and require harmonisation. 

Detailed  information  on  each  olive  grove  should  be  available  in  the  register  of  olive 
cultivation. Experience shows all the difficulties  there are in establishing and keeping up 
to date  a register  of all existing  olive trees with no latitude  for  disparities between the 
data recorded and those declared by the farmers each year. The register should give way 

2  OJ  172, 30.9.1966, p. 3025. Last  amended  by Regulation  (EC) No  1581/96  (OJ  L 206,  16.8.1996, 

P-11). 

3 

1 May  1998 is the first day  of the month  following  the publication  of a Commission  notice  in the 
Official  Journal of the European Communities informing operators of these proposed measures. 

- 5-

to a geographical information system (GIS) along the lines of that used in other sectors of 
agriculture. Data recorded in a GIS are practically the same as those in a register, but they 
qnly relate to the olive groves covered by aid applications. Olive growers'  declarations 
are  admissible  within  a  margin  of  tolerance  defined  in  advance  with  respect  to 
observations using aerial photographs. 

This  approach  should  enable  a  GIS  to  be  developed  in  each  producer  Member  State 
before  1 November 2001, based on a common system of controls and penalties covering 
the aid. It could be financed using production  aid withheld  in accordance with Council 
Regulation (EEC) No 2159/924. The GIS option the Commission proposes would allow 
olive growers to receive 2.4% production aid more as from the  1998/99 marketing year, 
paid from the 2000 budget. 

3. 
The names and characteristics of the various categories of olive oil and olive-
residue  oil  are set out  in the Annex to  Council  Regulation No  136/66/EEC. As far  as 
virgin  olive  oil  is  concerned,  that  Regulation  specifies  the  values  distinguishing  the 
various categories in terms of acidity and organoleptic properties. 

Acidity is determined by an objective physico-chemical  analysis using a method whose 
reproducibility  and  repeatability  have  been  thoroughly  verified.  The  organoleptic 
properties  are  assessed  by  a  panel  of  tasting  experts  trained  to  ascertain  the  sensory 
characteristics of virgin olive oil. The results are inevitably subjective to some extent and 
can provoke much argument. 

The International  Olive  Oil  Council  recently  drew up and tested  a new, more  reliable 
testing method, which focuses on determining clear defects without seeking to describe 
all  flavours.  It  does  not  eliminate  subjectivity  entirely  but,  being  more rigorous and 
simple, does reduce the  risk. 

The Commission proposes adapting the Annex to Regulation No  136/66/EEC to refer to 
the new sensory analysis method where it is absolutely necessary to check organoleptic 
quality, in particular to distinguish extra virgin olive oil from other oil. 

4. 
Public  buying-in  at  the  intervention  price  in  bumper  crop  years  generates 
stocks  that  can  dampen  price  hikes  in  years  of  poor  harvests.  In  addition,  these 
arrangements guarantee producers a minimum return on quantities produced. In the past, 
the effect  of variations in production and the annual increases in the institutional prices 
provided for in the Act of Accession of Spain and Portugal enabled the cost of buying-in 
to be kept down. The quantities of olive oil bought in were sold at higher prices where 
there had been no deterioration in quality. 

Over three years, with the shift  of a large percentage of consumption aid to production 
aid, the  latter  rose  by  66%. At  present,  on  its  own  the  aid  granted  to  producers  thus 
ensures a significant minimum return on quantities produced. The guarantee provided by 
the intervention price is accordingly less important but it does constitute an incentive to 

OJL 217, 31.7.1992, p. 8. 

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produce without any concern for market balance and irrespective of the ratio of supply to 
demand. 

The management instruments available in the olive oil sector are not as powerful  as those 
existing, for  example, for  the cereals  and dairy  sectors. The  annual  variation  in  olive-oil 
production  is particularly  wide, and even where it is broken  down nationally, the  impact 
of the  maximum  guaranteed  quantity  is moderate  in  the  short  and  medium  term.  Under 
these circumstances, as for pigmeat  and beef/veal,  the market price must be managed  by 
more flexible  means than public buying-in. 

Furthermore,  since exports  attracting refunds  are limited  under the  GATT agreements  to 
around  120 000  tonnes  per  marketing  year  for  1998/99,  1999/2000  and  2000/01,  if 
Community  production  is  to  be  disposed  of  on  an  expanding  consumer  market  in  non-
member countries, prices within the European Union must allow some oil to be  exported 
without export subsidies. 

The  Commission  therefore  proposes  replacing  the  intervention  buying-in  arrangements. 
This  would  allow  expansion  to  be  curbed,  irrespective  of  the  laws  of  the  market  that 
affect  output,  and  would  permit  consumption  of  quality  production  to  be  promoted  at 
accessible prices within the European Union and in non-member countries. The supply of 
olive  oil  would  be  regulated  more  flexibly  and  easily  by  means  of  private  storage 
contracts.  Where  prices  fell  sharply  owing  to  production  surpluses  on  the  market,  aid 
would  be  granted  to producer  groups  which  undertook  to  maintain  a certain  quantity  of 
olive  oil  in  storage  for  a  given  period.  By  extending  that  period,  stocks  could  be 
maintained until the market situation  improved. 

5. 
Consumption  aid  for  olive  oil  was  designed  to  encourage  consumption  of  the 
product  within  the  European  Union.  It  is  granted  to  bottling  enterprises  and  aims  to 
reduce  price  differences  between  olive  oil  and  other  vegetable  oils.  It  has  nevertheless 
proved very difficult  to monitor and has been a source of fraud, which means it has been 
reduced  progressively  by  more  than  80%.  Such  reductions  in  favour  of  aid  granted  to 
producers have not shown consumption aid to have any particular effect.  Consumption  is 
influenced  to  a  much  greater  extent  by  the  size  of  the  harvest,  which  is  still  the  main 
factor  influencing  prices, together  with other,  sometimes  fairly  subjective,  factors.  At  its 
current  low  level  (required  to  combat  fraud),  consumption  aid  now  has  practically  no 
impact  on  prices.  Many  enterprises  no  longer  apply  for  the  aid  in  order  to  avoid  the 
administrative costs and checks it entails. 

The  granting  of  consumption  aid  often  provides  an  opportunity  to  check  the  purity  and 
the category  on the label of oil released for  consumption. This is the responsibility  of the 
national  authorities  in  connection  with  the  controls  on  consumer  information  and 
protection  pursuant  to  Council  Directive  79/112/EEC5.  Nonetheless,  this  responsibility 
and the controls concerned  do not depend  on the existence  of consumption  aid. They  are 
in  fact  less  useful  in  enterprises  which  accept  the  constraints  of  transparency  connected 
with the aid than in others. 

OJ L 33, 8.2.1979,  p.  1. Last amended by Directive 97/4/EC (OJ L 43, 14.2.1997, p. 21). 

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The  Commission  proposes  discontinuing  consumption  aid, which has practically  lost  all 
its  impact,  and  to  concentrate  checks  on  the  utilisation  of  Community  funds  on 
production aid. 

In  order  to  encourage  further  the  consumption  of  olive  oil  and  table  olives,  thought 
should  be  given  to  whether,  and  how,  promotion  could  be 
intensified.  Such 
considerations should be based on the outcome of the current evaluation. 

6. 
Aid for small  producers  is intended for  growers whose average production  does 
not  exceed  500 kg. The number  of trees on the holding  concerned  and the  average  yield 
over four years in the production area are used to ascertain that there is no overrun of that 
quantity. Recipients are not penalised by an overrun of the maximum guaranteed  quantity 
and receive  a higher amount per tonne produced  than large producers. The latter  receive 
aid on the basis of the quantity of olive oil actually produced. The aid for small producers 
was  introduced  on  a  flat-rate  basis  to  ensure  better  organisation  of  checks  at  large 
producers, who, despite their limited number, produce around 75% of the olive oil on the 
market. Nevertheless,  in spite of the measures taken,  controls  covering  small  producers' 
production  have  proved  ineffective.  Their  output  is  frequently  transferred  to  large 
producers, who include it with their own production giving entitlement to aid. 

The  two-tier  aid  scheme  for  small  and  large  producers  is  a  source  of  fraud  on  a  scale 
which probably  exceeds that resulting previously from the insufficient  checks  conducted 
at  a  very  large  number  of  producers.  As  a  consequence,  the  Commission  proposes 
abolishing  the  aid  for  small  producers.  The  relevant  benefits  will  be  transferred  by 
increasing the maximum guaranteed quantity by  120 000 tonnes. 

Checks  of  actual  production  qualifying  for  aid  will  be  stepped  up  under  a  single  aid 
scheme.  They  will  replace  checks  of  transfers  between  small  and  large  producers  and 
those covering consumption aid. 

7. 
The  maximum  guaranteed  quantity  for  olive  oil  was  set  at  1 350 000  tonnes. 
Any  overrun  currently  results  in  a  proportional  reduction  in  the  aid  for  olive  growers 
producing  over  500 kg of olive oil. The intervention price is also reduced  proportionally 
by up to  3% per marketing  year. The MGQ penalises  all EU producers  across the  board, 
whether their harvest was good or bad and irrespective of any contribution they may have 
made  to  the  uncontrolled  rise  in  Community  production.  Where  production  varies 
considerably from one Member  State to another, production in those Member States with 
a  real  responsibility  for  the  overrun  is  offset  by  lower  production  in  the  others.  The 
producers  responsible  for  the  overrun  pay  a  smaller  penalty  while  the  others  suffer  a 
reduction  in the  aid  on top  of the effects  of  a poor  harvest.  This penalty  would  be  even 
more  difficult  to  bear  were  there  a  single  aid  scheme  making  no  distinction  between 
small and large producers. 

The Commission proposes  apportioning  the MGQ among the Member  States in order to 
make  producers  more  responsible.  The  difficulties  of  monitoring  movements  of  the  oil 
rule  out  allocating  MGQs  to  individuals  or production  areas  within  Member  States.  To 
continue  ensuring  solidarity  among  EU  producers,  overruns  of  national  guaranteed 
quantities  (NGQs)  would,  where  applicable,  be  offset  by  the  quantities  available  in  the 
other  Member  States. There  would  accordingly  be no  penalty  in  a Member  State  where 

production is below the NGQ, but the penalty in another Member State exceeding its own 
NGQ  could  be reduced,  so as to reflect  the  overrun  of the  overall  maximum  guaranteed 
quantity only. 

With  a  view  to  a  national  breakdown  of  the  MGQ,  as  in  other  sectors  where  this  has 
already been done, the criterion should be average national output over a reference  period 
as  a  percentage  of  Community  production.  In  principle,  the  average  should  relate  to  a 
large  number  of  years  to  take  account  of  the  cyclic  nature  of  production  and  the  wide 
variation  in  olive  harvests.  However,  the  situation  in  the  individual  Member  States  has 
evolved  considerably  in recent years and the reference  period  must  be kept within  limits 
if it is to remain representative. 

The Commission proposes apportioning  the  1 350 000 tonnes proportionately  among  the 
Member  States  on  the  basis  of  their  average  national  production  in  three  of  the  five 
marketing  years  1992/93  to  1996/97, discarding  the  best  and  the  poorest  year  for  each 
producer  Member  State.  The  production  figures  taken  into  account  are  those  used  for 
determining  entitlement  to the  aid,  based  on  applications  from  large  producers  and  flat-
rate  yields  of  small  producers.  These  data  are  disputed  in  various  quarters,  but  are  the 
most  reliable  at  present.  Furthermore,  considering  production  in  terms  of  percentages 
eliminates the effects  of overevaluations common to all Member States. 

In  addition,  the  Commission  proposes  increasing  the  maximum  guaranteed  quantity  to 
approximately  the average level of output during the reference  period,  augmented  by the 
special potential of Spanish and Portuguese olive groves. 

The first step would be to convert average spending in each Member  State on aid to. small 
producers over the reference  period into an additional  national  quantity, involving  a total 
of  121 700  tonnes.  Next,  extra  quantities  would  be  allocated  to  take  account  of  the 
sector's  special  features  in  Spain  and  Portugal.  In  Spain,  new  plantings  which  are  still 
relatively  unproductive  are expected  by  Spain to produce  an estimated  50 000 tonnes  in 
the medium  term.  In Portugal, where  farmers  lost  interest  in  growing  olives,  production 
fell  by  half  after  the  1960s.  This  trend  has  recently  been  reversed,  however,  and  the 
number of olive-growers applying for the aid increased  fivefold  in the  1990s. As a result, 
average production  in receipt of the aid in past years is about  10 000 tonnes  less than the 
output  that  would  have  qualified  had  Portuguese  olive-growers  been  involved  from  the 
outset. 

The  quantity  equivalent  to  expenditure  on  consumption  aid  over  the  reference  period, 
minus  the  60 000  tonnes  allocated  to  Spain  and  Portugal,  is  shared  out  between  the 
producer  Member  States  in accordance  with their  share  in total  production  over the  said 
period. 

This gives  a new maximum  guaranteed  quantity  of  1 562 400 tonnes. Irrespective  of the 
factors  to  be  used  for  the  reform  of  the  olive  oil  sector  from  1  November  2001,  the 
Commission  proposes  the  following  NGQs  for  the  1998/99,  1999/2000  and  2000/01 
marketing years: 

-  Spain: 

40.0160% 

.e. 625 210 

tonnes 

-  France: 

0.1962% 

.e. 

3 065 

tonnes 

-  Greece: 

24.9000% 

.e. 389 038 

tonnes 

- 

Italy: 

32.0770% 

.e. 501  172 

tonnes 

-  Portugal:  2.8107% 

i.e.  43 915 

tonnes 

III. 

CONCLUSIONS  AND  IMPACT 

The  proposed  measures  seek  to  achieve  the  general  objective  of  uniform  application  of 
the  common  agricultural  policy.  They  fall  within  the  exclusive  competence  of  the 
Community. Most of them entail amendments to an existing Council Regulation  and thus 
call for a new regulation to be adopted by the Council. 

The  contemplated  simplification  of  olive  oil  categories  is  beneficial  to  small  and 
medium-sized  enterprises.  The  abolition  of  consumption  aid  is  financially  neutral  for 
such enterprises  in principle as the aid in question should apply to the selling price of the 
oil. Administration of the aid and the associated red tape will be eliminated. 

To  sum  up, the measures  proposed  by  the  Commission  for  the  1998/99,  1999/2000  and 
2000/01  marketing  years  will  involve  a  2.4%  increase  in  the  aid  actually  received  by 
producers and a rise of 15.7% in the maximum guaranteed  quantity. 

To  control  production  more  effectively,  that  maximum  guaranteed  quantity  will  be 
apportioned  among the Member  States  and  output  from  plantings  after  1 May  1998  will 
no  longer  qualify  for  the  aid.  To  improve  monitoring  of  entitlement  to  aid,  the  small-
producer  scheme  will  be  discontinued  and  cultivation  declarations  will  be  crosschecked 
with data from a GIS, with penalties being applied, where appropriate, to the aid. 

As  for  the  market,  the  categories  of  olive  oil  will  be  defined  more  closely  and 
consumption  aid  abolished. Prices  will  be managed  via private  storage  contracts  and  not 
through public buying-in. 

In addition, in order to pave the way for the reform  to come into force on  1  November 
2001, the Commission intends improving the reliability of information  on olive 
production, in particular of table olives, in the producer Member States; it also intends to 
give further  consideration to a quality strategy and possible changes in trade with non-
member countries. With respect to table olives the Commission will examine the 
possibilities  for improving the competitive position of the sector in order to ensure the 
overall balance of the olive sector as a whole. 

-7o-

Proposal for a 

Council Regulation (EC) No 
of 
amending Regulation No 136/66/EEC on the establishment of a common 
organisation of the market in oils and fats 

98/0098 (CNS) 

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  , 

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

Whereas  in  February  1997  the  Commission  presented  a  Note  to  the  Council  of 

Ministers and to the European Parliament on the olive and olive oil sector, concluding 

on the need for a reform of the current common organisation of the market in oils and 

fats; whereas that Note and the options for reform set out therein have been discussed 

within the Community institutions; whereas opinions concord on the need for reform; 

whereas,  however,  with  a  view  to  determining  the  best  approach,  more  reliable 

information  must  be  obtained,  in  particular  on  the  number  of  olive  trees  in  the 

Community, the areas planted and yields; whereas, given the time required to gather 

and  analyse  such  data,  the  Commission  has  undertaken .to present  a proposal  for  a 

reform in the course of 2000 for application from the 2001/02 marketing year; 

P 

Whereas  experience  has  shown  that  some  adjustments  need  to  be  made  in  the  near 

future  to  the  current  common  organisation  of the market  to reduce  the  difficulties  of 

operators  in  the  sector,  improve  checks  conducted  by  the  national  authorities  and 

protect  the  Community  budget  better;  whereas  provision  should  be  made  for  the 

necessary  adjustments  to the  present  market  organisation  and  the relevant  prices  and 

amounts should be fixed for the marketing years from 1998/99 to 2000/01; 

Whereas  Article  5 of Regulation  No  136/66/EEC 4  provides  for  production  aid  fixed 

on  a flat-rate  basis  for  producers  whose  average  production  does not  exceed  500 kg; 

whereas  the  measure  was  intended  in  particular  to  reduce  the  administrative  cost  of 

checks  of  entitlement  to  the  aid;  whereas,  however,  changes  to  the  production  aid 

scheme, and in particular the rise in the proportion of expenditure on aid paid to small 

producers  and  the increase  in the  aid, have  transformed  the two-tier  system  of  aid  to 

producers into a source of fraud; whereas the provisions relating specifically  to aid  for 

small producers should accordingly be deleted; 

Whereas the stabiliser mechanism for production aid is currently based on a maximum 

guaranteed quantity for the Community as a whole; whereas the maximum  guaranteed 

quantity should be increased to take account of production trends; 

Whereas,  to  encourage  a responsible  level  of production  in  each  Member  State,  that 

maximum  guaranteed  quantity  should  be  apportioned  among  the  producer  Member 

States; whereas  the  apportionment  should  essentially  be  based  on  production  over  a 

representative  period,  taking  no  account  of  extreme  production  years;  whereas, 

however,  account  should  be taken of the specific  allocation of  aid previously  granted 

to  small  producers  and  of  the  production  potential  of  olive  groves  in  Spain  and 

Portugal; 

Whereas,  in  order  to  ensure  some  solidarity  between  producers  in  the  European 

Union,  overruns  of national  guaranteed  quantities  should be  offset,  where  applicable, 

4  OJ  L  172,  30.9.1966,  p.  3025.  Last  amended  by  Regulation  (EC)  No  1581/96  (OJ  L  206, 

16.8.1996, p. 11). 

it 

by  the  quantities  available  within  the  maximum  guaranteed  quantity  in  the  other 

Member States; 

Whereas the production  aid is payable to the olive growers; whereas the latter must 

receive  the  aid  in  full,  irrespective  of  the  various  reductions  provided  for  in  the 

Community rules; 

Whereas  consumption  aid  cannot  be  increased  without  a  risk  of  fraud  and  it  is 

ineffective  at  its present  level; whereas  in  the past  it  was  reduced  sharply  without 

adverse effect  on the consumption of olive oil in the Community; whereas abolishing 

it would enable checks of the production aid scheme to be stepped up, in particular by 
the  inspection  agencies  provided  for  in  Council  Regulation  (EEC)  No 2262/845; 

whereas  Council Regulation  (EEC) No 3089/78  of  19 December  1978 laying down 
general rules  in respect  of  aid  for  the  consumption  of olive  oil 6  must  therefore  be 

repealed; 

Whereas the provisions  for  promoting  the  consumption  of olive  oil  in the Member 

States and third countries  should be maintained,  clarified  and strengthened; whereas 

such  measures  are  intended  to  establish  better  balance  on  the  market  and  as  a 

consequence  the  relevant  expenditure  should  be  deemed  intervention  within  the 

meaning of Article 3 of Council Regulation (EEC) No 729/70 of 21 April 1970 on the 
financing  of the common agricultural policy7; whereas those provisions call for certain 
technical  adaptations  to  Council  Regulation  (EEC)  No  1970/808;  whereas  that 

5  OJ L 208, 3.8.1984, p.  11. Last amended by Regulation  (EC) No  2599/97  (OJ L 351, 23.12.1997, 

p.  17) 

6  OJ L 369, 29.12.1978, p.  12. Last amended by Regulation (EC) No  1582/96 (OJ L 206,  16.8.1996, 

P- 13) 

7  OJ L 94, 28.4.1970, p.  13. Last amended by Regulation  (EC) No  1287/95  (OJ L  125, 8.6.1995, p. 

1). 

8  OJ  L  192, 26.7.1980,  p.  5. Amended  by  Regulation  (EEC)  No  1651/86  (OJ  L  145, 30.5.1986, p. 

10). 

• 3- 

IZ 

Regulation  should  be  repealed  and  its  provisions  incorporated,  with  the  requisite 

amendments, in Regulation No 136/66/EEC; 

Whereas the system  of public buying-in constitutes  a production  incentive which is 

liable to destabilise the market; whereas, if the supply of olive oil is to be regulated, 

buying-in must be discontinued and a system of private storage contracts by groups or 
associations within the meaning of Council Regulation  (EC) No 952/9 79; should be 

applied; whereas the references  to the intervention price must accordingly be deleted 

or replaced; 

Whereas  the  definitions  of  the  categories  of  virgin  olive  oil  in  the  Annex  to 

Regulation No 136/66/EEC refer to an organoleptic  assessment based on a particular 

method; whereas methods of sensory analysis have improved recently, although they 

retain an inherent risk of some subjectivity; whereas the definitions in question should 

be amended to refer, where necessary, to more effective  analysis methods; 

Whereas, in order to improve knowledge of and checks on the production of olive oil 

at the level of the individual producer, special attention should be paid to work on the 

olive cultivation register during the  1998/99 to 2000/01 marketing years; whereas, to 

take account of experienced gained, the method used for other crops in the context of 

the Integrated Administration and Control System should also be applied for the olive 

cultivation register; whereas the Commission must therefore  determine the measures 

to  be  taken  and  the  arrangements  and  criteria  to  be  complied  with  to  achieve  the 

creation of a Geographical  Information  System; whereas it is therefore  necessary, to 
derogate from Regulation (EEC) No 154/7510 and Regulation (EEC) No 2261/8411; 

9  OJL  142, 2.6.1997, p. 30. 

10  OJ L  19, 24.1.1975, p.  1. Last amended by Regulation  (EEC) No  3788/85 (OJ L 367, 31.12.1985, 

p.l). 

11  OJ L 208, 3.08.1984, p. 1. Last amended by Regulation (EC) No 636/95 (OJ L 67, 25.3.1995, p.l). 

M 

Whereas the options for the reform may encourage producers to plant new olive trees; 

whereas  such  new  plantings  would  seriously jeopardise  the  future  balance  of  the 

market, which is currently already in surplus; whereas, in order to forestall  that risk, 

provision should be made at this stage to exclude new plantings from eligibility under 

any  future  aid  scheme,  unless  they  are  part  of  a  programme  approved  by  the 

Commission;  whereas,  owing  to  the  time  elapsing  between  the  presentation  of  the 

Commission's proposal and its adoption, plantings from the month following the date 

when operators are notified  of the Commission's intention in this respect should also 

be ineligible; 

Whereas  the  need  for  a  reform  of  the  olive  oil  sector  stems  from  the  ultimate 

impossibility  of  maintaining  certain  measures  provided 

for 

in  Regulation 

No 136/66/EEC; whereas, despite the transitional adjustments provided for herein, the 

measures in question should be repealed with effect from 1  November 2001, 

HAS ADOPTED THIS REGULATION: 

-5 

ti 

Regulation No  136/66/EEC is amended as follows: 

Article 1 

1. 

In Article 2a(2), the words 'intervention price' are replaced by the  following: 

"production  target  price,  less  production  aid  and  an  amount  taking  account  of  market 

variations  and the costs  of transporting  the olive  oil  from  the  areas  of production  to  the 

areas of consumption,". 

2. 

Article 4 is replaced by the  following: 

"Article 4 

1)  A production target price shall be fixed for the Community 

That  price  shall  be  fixed  at  the  wholesale  marketing  stage  for  ordinary 

virgin  olive  oil  with  a  free  fatty  acid  content  expressed  as  oleic  acid  of 

3.3g/100g. 

2) 

For  the  1998/99  to  2000/01  marketing  years,  the  production  target  price 

provided for in paragraph  1 shall be ECU 383.77/100 kg. 

3) 

Save as otherwise decided by the Council acting by a qualified  majority  on 

a  proposal  from  the  Commission,  the  olive  oil  marketing  year  shall  run 

from 1 November to 31 October of the following  year." 

3. 

Article 5 is replaced by the  following: 

"Article 5 

1) 

Production  aid shall be granted  for olive oil. Such aid shall be intended  to 

contribute towards establishing a fair income for producers. 

The  aid  shall  be  granted  to  olive  growers  on  the  basis  of  the  quantity  of 

olive oil they actually produce. 

/6 

Without  prejudice 

to  the  different  reductions  provided  for 

in  the 

Community rules, the aid shall be paid in full to the olive growers. 

2) 

For  the  1998/99  to  2000/01  marketing  years,  the  unit  amount  of  the 

production aid provided for in paragraph  1 shall be ECU  142.20/100 kg. 

3) 

The  maximum  quantity  of  olive  oil  to  which  the  aid  provided  for  in 

paragraph  1 shall apply shall be  1 562 400 tonnes per marketing year. That 

maximum  guaranteed  quantity  shall  be  apportioned  among  the  Member 

States as follows  (national guaranteed quantities): 

Spain 

France 

Greece 

Italy 

625 210 

tonnes 

3 065 

tonnes 

389 038 

tonnes 

501 172 

tonnes 

Portugal 

43 915 

tonnes 

4)  Where  actual production  in  any marketing  year  in  certain Member  States 

is less than their national guaranteed quantities, the sum of the shortfalls  in 

question shall be distributed among the other Member States in proportion 

to their national guaranteed quantities. 

The  aid  fixed  in  paragraph 2  shall  be  granted  in  those  Member  States 

whose actual production recognised  as eligible for the aid is lower than or 

equal  to  their  national  guaranteed  quantities,  plus  any  increase  in 

accordance with the first subparagraph. 

In  the  other  Member  States,  the  unit  aid  granted  shall  be  equal  to  the 

amount  fixed  in paragraph 2, multiplied  by  a coefficient.  That  coefficient 

shall  be  arrived  at  by  dividing  the  national  guaranteed  quantity  of  the 

Member  State  concerned,  plus  any  increase  in  accordance  with  the  first 

subparagraph, by the actual production recognised as eligible for the aid. 

7-

1} 

5)  With a view to checks of the quantity of olive oil eligible for the aid, olive 

and  olive  oil  yields  shall  be  fixed  for  each  marketing  year  per 

homogeneous production area. 

6)  Recognised  producer  organisations  and  associations  thereof  may  be 

associated  in the  work  of  determining  actual  production  as  referred  to  in 

paragraph 4 and of establishing yields as referred  to in paragraph 5. 

7)  A percentage of the production aid allocated to all or some producers  shall 

be  used  to  finance  regional  measures  to  improve  the  quality  of  oil 

production and its environmental impact in each producer Member State. 

For the  1998/99 to 2000/01 marketing  years, the percentage referred  to  in 

the first subparagraph shall amount to  1,4%  of the production aid allocated 

to olive oil producers. 

8)  Acting  by  a  qualified  majority  on  a proposal  from  the  Commission,  the 

Council shall lay down general rules for applying this Article. 

9) 

The  yields  referred  to  in  paragraph 5  and  the  detailed  rules  for  applying 

this Article  shall be laid down  in accordance with the procedure  provided 

for  in  Article 38  of  this  Regulation  and,  where  applicable,  with  that 

provided for in Article  13 of Council Regulation (EEC) No 729/70." 

Articles 5 a, 7 and 8 are deleted. 

Article  11 is replaced by the  following: 

"Article 11 

1) 

The  Community  may  undertake  measures  directly  or  indirectly  in  the 

Member States or third countries to provide information  or to promote the 

consumption of olive oil produced in the Community. 

The  measures  referred  to  in  the  first  subparagraph  may  entail  the 

following: 

/? 

a) 

dissemination  of  existing  knowledge,  in  particular  regarding  the 

nutritional qualities of olive oil; 

b)  market studies to expand the market for olive oil; 

c) 

publicity,  public  relations  and  promotional  campaigns  to  encourage 

the consumption of olive oil, in particular with a view to stressing its 

quality, and of products prepared with olive oil; 

d) 

research  work,  in  particular  covering  scientific  study  of  the 

nutritional aspects of olive oil; 

e) 

study to assess the results of promotional campaigns. 

2) 

The  Commission  shall  send  the  Council  a  programme  of  measures  it 

contemplates  undertaking  during  the  following  marketing  year(s).  With  a 

view  to  drawing  up  the  programme,  the  Commission  may  in  particular 

consult bodies  specialising  in market  studies  and publicity  campaigns  and 

research institutes. 

3) 

The  Commission  shall  decide  on  the measures  listed  in paragraph  1  after 

consulting  the  Management  Committee  for  Oils  and  Fats  in  accordance 

with the procedure laid down in Article 39. 

4) 

Expenditure  incurred  on  measures  as  referred  to  in  paragraph  1 may  be 

financed  at  a  rate  of  100%  by  the  Community  and  shall  be  deemed 

intervention  within  the  meaning  of  Article 3  of  Regulation  (EEC) 

No 729/70. 

5)  Detailed rules for applying this Article shall be adopted in accordance with 

the procedure laid down in Article 38." 

6. 

The first paragraph of Article  1 la is replaced by the  following: 

"The  individual  Member  States  shall  take  the  necessary  steps  to  penalise 

infringements  of the aid  scheme provided  for  in Article 5. Where infringements  are 

- 9-

h 

reported  by the  inspection  agencies  provided  for  in Regulation  (EEC) No 2262/84, 

they shall decide on action to be taken within  12 months of the report." 

7. 

8. 

Article  12 is deleted. 

Article  12a is replaced by the following: 

"Article 12a 

In  the  event  of  serious  disturbance  of  the  market  in  certain  regions  of  the 

Community, a decision may be taken in accordance with the procedure laid down in 

Article 38  to  authorise  producer  groups  and  associations  thereof  recognised  in 

accordance with Regulation (EC) No 952/97 to conclude contracts for the storage of 

olive oil that they market." 

9. 

Article 20(2) is deleted. 

10. 

The last subparagraph of Article 20a(2) and Article 20a(4) are deleted. 

11. 

Article 20d(l) is replaced by the  following: 

"1. 

A percentage of the production aid shall be withheld from the amount paid 

to  recognised  producer  groups  and  associations  thereof  under  this  Regulation.  The 

resulting  amount  shall  go towards the financing of activities under Article 5(6)  and 

Article 20c. 

For  the  1998/99  to  2000/01  marketing  years,  the  percentage  of  the  production  aid 

referred  to in the first subparagraph  shall be 0,8%." 

1. 

Article 20d(3) is deleted. 

13. 

Point  1  of the Annex is replaced by the  following: 

"1 Virgin olive oils: 

Oils obtained from the fruit of the olive tree solely by mechanical  or other  physical 

means  under  conditions,  particularly  thermal  conditions,  that  do  not  lead  to 

alterations  in  the  oil,  and  which  has  not  undergone  any  treatment  other  than 

10 

Zo 

washing, décantation, centrifugation  and filtration, to the exclusion  of oils  obtained 

using  solvents  or  re-esterification  processes  and  any  mixture  with  oils  of  other 

kinds. 

Virgin olive oils are classified  and described as follows: 

a) Extra virgin olive oil: 

Virgin  olive  oil  having  a maximum  free  acidity,  in  terms  of  oleic  acid,  of  1 g  per 

100 g,  the  other  characteristics  of  which  comply  with  those  laid  down  for  this 

category. 

b) Virgin olive  oil  (the  expression  "fine  virgin  oil" may  be  used  at  the  production 

and wholesale stage) 

Virgin  olive  oil  having  a maximum  free  acidity,  in  terms  of  oleic  acid,  of  2 g  per 

100 g,  the  other  characteristics  of  which  comply  with  those  laid  down  for  this 

category. 

c) Ordinary virgin olive oil: 

Virgin  olive oil having  a maximum  free  acidity, in terms  of oleic  acid, of 3,3 g per 

100 g,  the  other  characteristics  of  which  comply  with  those  laid  down  for  this 

category. 

d) Lampante virgin olive oil: 

Virgin  olive oil having  a free acidity, in terms of oleic acid, of more than  3,3 g per 

100 g and/or the other characteristics of which comply with those laid down  for  this 

category." 

Article 2 

1.  Notwithstanding  Regulation  (EEC)  No  154/75,  work  on  the  olive  cultivation 

register  during  the  1998/99 to  2000/01  marketing  years  shall  focus  on the  creation, 

updating and utilisation of a geographic information  system (GIS). 

11-

The  GIS  shall  be  created  using  the  data  from  the  olive  cultivation  register. 

Additional  data  shall  be  supplied  from  the  crop  declarations  attached  to  the  aid 

applications. The information  in the GIS shall be located using computerised aerial 

photographs. 

2.  The  Member  States  shall  verify  that  the  information  in  the  crop  declarations 

corresponds to the information  in the GIS. If this information  does not correspond, 

the Member State shall carry out verifications and on-the-spot checks. 

The  Commission  shall  determine  the  detailed  rules  and  criteria  for  ensuring 

correspondence as referred  to in the first subparagraph and the acceptable olerance. 

It shall also lay down the detailed rules  and intensity  for  the verifications  and on-

the-spot  checks  to  be  carried  out  during  each  of  the  three  marketing  years from 

1998/99 to 2000/01. 

3. 

If,  during the verifications  and checks referred to in paragraph 2, the information in 

the crop declaration is found  to be incorrect, particularly  as regards the number of 

olive  trees, the  Member  Sate  shall  apply,  for  one  or  more  marketing  years,  and 

depending on the size of the discrepancies observed: 

-  a reduction in the quantity of olive oil eligible for aid, or 

-  exclusion of the olive trees concerned from eligibility for the aid, 

in accordance with rules and criteria to be laid down by the Commission. 

4.  The Commission shall adopt the measures to be taken and the detailed rules, criteria 

and intensity of checks to be laid down under this Article for the 1998/99 to 2000/01 

marketing  years,  in  accordance  with  the  procedure  laid  down  in  Article  38  of 

Regulation No 136/66/EEC. 

5.  The measures provided  for  in this Article  shall  apply by way  of  derogation from 

those laid down in Regulation  (EEC) No 2261/84 as regards crop declarations and 

their links with the aid. 

-  1 2-

<tt 

Article 3 

1. 

In  accordance  with  the  procedure  laid  down  in  Article 38  of  Regulation 

No  136/66/EEC, the Commission may adopt the measures required  for a smooth 

changeover  from  the  arrangements  in  force  for  the  1997/98  marketing  year  to 

those resulting from the measures introduced by this Regulation.. 

2. 

On  a proposal from the  Commission  to be presented  in 2000, the Council  shall 

decide  on  measures  to  replace  the  common  organisation  of  the  market  in  oils 

and fats established by Regulation No  136/66/EEC as from 1  November 2001. 

Article 4 

No  aid  under  the  common  organisation  of  the  market  in  oils  and  fats  in  force  from 

1 November 2001 may be paid to olive growers in respect of additional  olive trees or the 

relevant  areas  planted  after  1  May  1998  and  those  not  covered  by  a  cultivation 

declaration at a date to be determined. 

However: 

-  additional olive trees in connection with the conversion of an old olive plantation, or 

-  new plantings 

on  areas  covered  by  a  programme  approved  by  the  Commission  may  be  taken  into 

account within certain limits still to be determined. 

Detailed rules for applying this Article shall be adopted in accordance with the procedure 

laid down in Article 38 of Regulation No  136/66/EEC. 

Article 5 

Articles  5,  11a,  12a,  13 and  20a  of Regulation  No  136/66/EEC  are  repealed  with  effect 

from  1  November 2001. 

Regulations (EEC) No 3089/78 and No  1970/80 are repealed. 

-13 

^ 

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

Article 6 

Official Journal of the European  Communities. 

It shall apply from 1  November 1998. 

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

States. 

Done at 

For the Council 

14-

FINANCIAL STATEMENT 

BUDGET HEADING:B1 12 

w—mmmmmm 

DATE: 15.1.98 

APPROPRIATIONS:ECU 2 256m 

TITLE:Proposal for a Council Regulation amending Regulation No 136/66/EEC on the establishment of a common 
organisation of the market in oils and fats 

LEGAL BASIS: Art. 39 of the Treaty establishing the European Community 

AIMS OF PROJECT:To introduce transitional arrangements for  1998/99,  1999/2000 and 2000/01 before the 
reform of the olive oil sector enters into force,  and to reduce the risks for operators, producers and the Community 
budget which the current system entails 

1. 

2. 

3. 

4. 

5. 

FINANCIAL IMPLICATIONS 

PERIOD OF 
12 MONTHS 

Mio ECU 

+  1 

CURRENT 
FINANCIAL 
YEAR 
(98) 
Mio ECU 

FOLLOWING 
FINANCIAL 
YEAR 
(99) 
Mio ECU 

0 

-90 

2000 

+  1 

2001 

+  1 

2002 

+  1 

EXPENDITURE 
- CHARGED TO THE EC BUDGET 

(REFUNDS/INTERVENTION) 
- NATIONAL ADMINISTRATION 
- OTHER 

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

- NATIONAL 

ESTIMATED EXPENDITURE 
ESTIMATED REVENUE 

METHOD OF CALCULATION:See Annex 

5.0. 

5.1. 

5.0.1. 
5.1.1. 

5.2. 

6.0. 

6.1. 

6.2. 

6.3. 

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

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

IS A SUPPLEMENTARY BUDGET NECESSARY? 

WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

YES/NO 

YES/NQ 

YES/NO 

YES/NO 

$ 

Annex 

Financial implications of the proposed transitional  arrangements 
for the three marketing years 1998/99,1999/2000 and 2000/01 

Hypotheses for each marketing year (1) 

Production = 

18 

million  t 

small 
large 

Quantities eligible for consumption  aid = 

0,350 million t 
1,450 million t 

1,065  million t 

(of which 0.040 million  tonnes as refunds  for preserves) 

(1) Average of marketing years  1995/96 to  1997/98 

I. Current  arrangements 

Production  aid 

MGQ= 

1,350  million t 

Small 
Large 

0,350 
1,450 

million t 
million t 

1550,5 
1422 

ECU/t 
ECU/t 

x 

75,00% 

(2) 

546 
1551 
2098 

(B) ECU mil 
(B)ECUmil. 
(B) ECU mil. 

1997/98 marketing  year 
1998/99, 1999/2000 and 2000/01  marketing years 

Consumption  aid 

1,065 

million t 

120,7 

ECU/t 

129 

(B) ECU mil. 

in (B) ECU million 
2000, 2001 and 2002 

1999 

budget 

annual  budget 

Total 
(2) reduction coefficient  = MGQ /  Production 

II. Transitional  arrangements for marketing years 1998/99,1999/2000 and 2000/01 

1999 

2000, 2001 and 2002 

budget 

annual  budget 

Production  aid 

SumoftheNGQs  = 

1,5624  million t 

1.8 

million t 

x 

1422 

ECU/t 

x 

86,80% 

(2) 

= 

2228 

(B) ECU mil 

1997/98 marketing year  (under current arrangements) 
1998/99,  1999/2000 and 2000/01  marketing years 

.-. 

Consumption  aid 

Payment of balance  for  1997/98 (30%) 
Abolition 

2098 

39 

2228 

0 

Total 
(2) Reduction  coefficient  = MGQ / Production  (Hypothesis of overrun  of the NGQ in each producer Member State) 

2137 

2228 

III. Difference 

I  Budget  12000, 2001  and 2002 

1999 

annual  budget 

-90 

1 

Abolition of the public  intervention arrangements may give rise to additional  savings if production is higher 
than average. These savings could be offset  by expenditure on private storage. 

Export refunds  remain unchanged  under the transitional  arrangements. 

"b 
o-

Explanatory memorandum 

The  proposal  for  amendment  of  Regulation  N°  136/66/EEC  deletes  the  special 
production  aid  provisions  for  small  growers  and  allocates  the  maximum  guaranteed 
quantity between the Member States. 

To  bring  the  Council  Regulations  on  rules  of  application  for  the  olive  oil  market 
organisation into line with these changes it is necessary to amend Regulation (EEC) N° 
2261/84. 

l  -

M 

Proposal for 

Council Regulation (EC) Nc 

amending Regulation (EEC) N° 2261/84 laying down general rules on the granting 
of aid for the production of olive oil and of aid to olive oil producer organisations 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  N°  136/66/EEC  of  22  September  1966  on  the 
establishment of a common organisation of the market in oils and fats1, as last amended 
by Regulation (EC) N° ..../982, and in particular Articles 5(8), 

Having regard to the proposal from the Commission, 

Whereas Regulation (EC) N° ..../98 deletesin Article 5 of Regulation N° 136/66/EEC the 

special production aid provisions for producers of less than 500 kg of olive oil; whereas it 
is  therefore  necessary  to  amend  Regulation  (EEC)  N°  2261/843,  as  last  amended  by 
Regulation (EC) N° 636/954; 

Whereas Regulation (EC) N° ..../98 introduces in Article 5 of Regulation N° 136/66/EEC 

an allocation of the maximum guaranteed quantity between Member States and  specifies 

the implications  of an overrun of any of these national  quantities  for  production  aid in 

that Member State; whereas  it is necessary to specify,  on the basis of experience, what 

data must be determined or notified for the operation of these provisions, 

HAS ADOPTED THIS REGULATION: 

1  OJ  172, 30.9.1966, p. 3025/66. 

2  OJL.... 

1  OJL  208, 3.8.1984, p. 3. 

4  OJL  67, 25.3.1995, p. 1. 

OS 

Article J 

Regulation (EEC) N° 2261/84 is amended as follows: 

1) Article 2(4) and (5) is replaced by the  following: 

"4.  The  aid  shall  be  granted,  in  accordance  with  Article  5(1)  of  Regulation  N° 

136/66/EEC, on the quantity of oil actually produced at an approved mill." 

2)  The second indent of Article 8(1) is replaced by the  following: 

"- that  the  figures  supplied  by  each  grower  for  quantities  of olives  pressed  and  of  oil 

obtained  correspond  to  the  quantities  of  olives  and  oil  stated  in  the  evidence  of 

pressing." 

3) Article  12(1) is replaced by the  following: 

"1.  Each  olive  oil  grower  may  receive  an  advance  on  the  amount  of  the  aid  applied 

for." 

4)  The following  is added to Article  13(1): 

"(e)  submit  to  the  competent  authority  before  dates  to  be  determined,  monthly  stock 

record summaries". 

5)  In Article 14: 

- 

in paragraph  3a the words preceding the first indent  are replaced by "For the  purposes 

of paying aid to olive growers Member States shall check"; 

-  paragraph 4 is deleted; 

- 

the second subparagraph of paragraph 5 is replaced by the  following: 

"These files shall be used to guide the checking required under paragraphs  1  to 3." 

6)  In  Article  15(3)  the  words  "whose  average production  is  at  least  500  kg  of  oil  per 

marketing year  and"  are deleted. 

7)  Article  17a ià replaced by the  following: 

21 

"ARTICLE  17a 

1. 

In  accordance  with  the  procedure  laid  down  in  Article  38  of  Regulation  N° 

136/66/EEC the Commission  shall  determine  before  1 October,  for  each  Member  State 

for the current marketing year: 

-  estimated production qualifying  for the aid; 

-  a  single  rate  for  advances  on  the  production  aid;  this  must  be  such  that  given  the 

production forecast  any risk of undue payment to growers is avoided. 

2.  No  later than eight months after  the end of the marketing year the Commission  shall, 

in accordance with the procedure referred  to in paragraph  1, determine  for  each  Member 

State for that marketing year: 

-  actual production for which entitlement to aid is recognised; 

-  a  single  production  aid  rate,  possibly  weighted  by  a  coefficient  as  provided  for  in 

Article 5(4) of Regulation N°  136/66/EEC. 

3.  Member States shall notify  to the Commission, by 5 September of the marketing year, 

their  production  estimates  for  that  marketing  year.  The  Commission  may  make  use  of 

other  sources  of  information  and  if  appropriate  have  studies  or  surveys  of  olive  oil 

production carried out." 

Article  2 

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

Official  Journal of the European Communities. 

It shall apply from 1  November 1998. 

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

Done at Brussels, 

t-

For the Council 

3d 

FINANCIAL  STATEMENT 

BUDGET HEADING: Bl  12 

DATE:  15.1.98 

APPROPRIATIONS: 
ECU 2.256 m 

TITLE:  Proposal  for  a  Council  Regulation  amending  Regulation  (EEC)  N°  2261/84  laying  down  general 
rules on the granting of aid for the production of olive oil and of aid to olive oil producer organisations.. 

LEGAL BASIS: 

Article 39 of the Treaty establishing the European  Communit 

AIMS OF PROJECT: 

Temporary  arrangements  for  the  1998/99  and  1999/2000  marketing  years  (prior  to  entry  into  force  of  the 
sector  reform)  to  reduce  the  risks  of  the  present  arrangements  to  growers  and  other  operators  and  to  the 
Community budget. 

5. 

FINANCIAL  IMPLICATIONS 

5.0. 

EXPENDITURE 

- CHARGED TO THE EC BUDGET 

(REFUNDS/INTERVENTION) 

- NATIONAL  ADMINISTRATION 

-  OTHER 

5.1. 

REVENUE 

- OWN RESOURCES OF THE EC 

(LEVIES/CUSTOMS  DUTIES) 

-NATIONAL 

5.0.1. 

ESTIMATED  EXPENDITURE 

5.1.1. 

ESTIMATED  REVENUE 

PERIOD OF 12 
MONTHS 

ECU million 

CURRENT 
FINANCIAL 
YEAR 
(98) 
ECU million 

OLLOWING 
FINANCIAL 
YEAR 
(99) 
ECU million 

2000 

2001 

2002 

2003 

5.2. 

6.0. 

6.1. 

6.2. 

6.3. 

METHOD OF CALCULATION: 

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

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

IS A SUPPLEMENTARY  BUDGET NECESSARY? 

WILL FUTURE BUDGET APPROPRIATIONS  BE  NECESSARY? 

OBSERVATIONS: 

The  financial  implications  of  the  temporary  arrangements  for  1988/99  and  1999/2000  are  set 
out in the financial  statement annexed to the Regulation amending Regulation N°  136/66/EEC. 

-1 

2/ 

ISSN 0254-1475 

COM(98) 171  final 

DOCUMENTS 

EN 

03  10  15 

Catalogue  number  :  CB-CO-98-189-EN-C 

ISBN  92-78-32466-3 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

3^