Opinion of the Economic and Social Committee on the 'Commission Proposals on the prices for agricultural products and related measures (1998-1999) - Vols. I, II and III'
Date: 1998-04-29
Institutions: European Economic and Social Committee
Subjects: EU act, agricultural product, fixing of prices, intervention price, marketing year

10.7.98

EN

Official Journal of the European Communities

C 214/67

Opinion of the Economic and Social Committee on the ‘Commission Proposals on the prices
for agricultural products and related measures (1998-1999) — Vols. I, II and III’ ()

(98/C 214/17)

On 19 February 1998 the Council decided to consult the Economic and Social Committee,
under Articles 43 and 198 of the Treaty establishing the European Community, on the
above-mentioned proposals.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the subject, adopted its opinion on 2 April 1998. The rapporteur was Mr Barato
Triguero.

At its 354th plenary session of 29 and 30 April 1998 (sitting of 29 April), the Economic and
Social Committee adopted its opinion by 106 votes to two, with 14 abstentions.

1. Presentation by the Commission

1.1. Agricultural production and situation in 1997

1.1.1.
The Commission proposal summarizes the
general situation of production and the agricultural
economy for 1997 as follows:

— The economic situation of agriculture was much

more balanced in 1997 than in 1996.

— Despite the serious swine fever outbreaks in the
pigmeat sector, the market situation was generally
favourable for most EU producers.

— The agricultural year was quite positive for oilseeds,

sugar beet and poultry.

— Climatic conditions were less advantageous than in
the previous year, but less disastrous than expected.

— Milk production is expected to have reached 1996
levels (121 million tonnes). As a result, prices
remained stable.

— Beef and veal production was stable (7,9750 million

tonnes). Prices recovered due to exports.

— Following the swine fever outbreaks in the Nether-
lands and Spain pigmeat experienced a series of ups
and downs, as did prices.

— Poultry production rose by 3,4 % compared with

1996.

— Lastly, sheep and goat meat production fell slightly.

1.1.2.
Production prices fell by 3,4 % in real terms,
particularly in vegetable crops (5,3 %), principally due
to price falls for olive oil (36 %) and cereals (8,9 %).
Animal production fell by an average of 3,1 %.

— With the exception of Ireland and the United
currencies underwent major
Kingdom (whose
revaluations in the course of 1997), agricultural
conversion rates rose moderately in 1997.

1.1.3.
According to Commission figures, farm income
fell by 3,1 % in 1997. It should be pointed out that this
fall in farm income across the EU as a whole masks
highly diverse situations between countries and sectors.

— Cereal production is estimated at 202 million tonnes,
less than 1996, although the area sown increased by
2 % due, basically, to the lower percentage of
compulsory set-aside (down from 10 % to 5 %).

— Oilseed production achieved a record level of 14,7

million tonnes.

— Production of protein crops rose by 20 %.

— Sugar production also reached a record level, of

17 million tonnes.

— Olive oil rose to 1 859 400 tonnes, a record figure

which led to a sustained fall in prices.

— Wine production fell by 5 %, due in particular to
falls in Italy and France. The quality, however, is
considered to be outstanding.

(1) OJ C 87, 23.3.1998.

1.2. Budgetary context

1.2.1.
1998 budget appropriations for the EAGGF-
Guarantee Section have been set at ECU 40 596 million,
lower than those for 1997 (ECU 40 805 million). The
financial guideline for 1998 is ECU 43 263 million,
leaving a margin of ECU 2 667 million.

1.3. The Commission proposal

1.3.1.
The Commission proposal is based on that
for the previous agricultural year, with the following
modifications:

— Arable crops: in the context of regionalized base
areas, the Commission is allowing the Member
States to set the deadline for informing producers by
15 September instead of 15 May.

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— Rice: in accordance with the provisions adopted
under the CMO reform for the sector, the Com-
mission proposes to set the price for paddy rice in
the 1998/1999 marketing year at ECU 315,5 per
tonne, 5,3 % lower than the price for the previous
year. However, the monthly increases are kept are
ECU 2/tonne/month.

— Sugar: the latest statistics indicate that Italy is not a
deficit area and consequently no derived intervention
price for white sugar is proposed.

— Flax: in anticipation of a Council decision on an
amendment to the CMO, the Commission proposes
the same level of aid per hectare.

— Hemp: reduction in aid per hectare, on account of

the increased area sown.

— Olive oil: the Commission is currently preparing a
reform, quite separate from the present package,
which includes price setting for the 1998-1999 and
1999-2000 marketing years. No prices are therefore
proposed in the present package.

— Wine:

it is
in anticipation of a new proposal,
necessary to avoid legal gaps and for this reason an
extension by one year of the ban on new plantings
and of the regime for permanent abandonment is
proposed.

— Tobacco: in anticipation of the adoption of the
Commission proposal to reform the CMO, the
current provisions for the sector are extended.

— Beef: increased ceilings for Spain and Portugal so
that applications do not exceed them by more than
10 %. It is also proposed to extend by one year the
reduction of ceilings which was decided in 1996 for
the years 1997 and 1998.

— Sheepmeat and goatmeat: the Commission proposes
to freeze the basic price and keep the stabilizer at
7 %.

2.1.3.
Regrettably, the Commission makes no pro-
posals concerning the non-food outlets for agricultural
production, such as, for example, renewable and sus-
tainable sources of energy. The Commission should
adopt a courageous policy in favour of such new,
non-food outlets, providing stable, direct supplementary
aid for the raw materials in question, together with a
series of tax measures and others giving priority to the
use of such materials to produce fuel.

2.1.4.
It is difficult to understand why the Com-
mission also fails, in its explanatory memorandum, to
mention Mediterranean agriculture and, more specifi-
cally, the recently reformed fruit and vegetable sector.
The Commission must carry out a serious, objective
analysis of the effects of applying the new reform of the
sector on the farmers and areas affected: such an analysis
should cover the impact of preferential imports from
third countries.

2.2. Specific comments

2.2.1. A r a b l e c r o p s

2.2.1.1.
In view of crop prospects, the Committee
urges the Commission to set the percentage of compul-
sory set-aside well in advance and at a level significantly
lower than in the basic Regulation 1765/92.

Similarly, the Committee considers that the
2.2.1.2.
date of compensatory payments should be brought
forward to 31 October (instead of 31 December) for
cereals and protein crops.

2.2.1.3.
The Committee believes that the base areas
of the new German Länder should now be definitively
established.

2. Comments on the proposal

2.1. Preliminary comments

2.2.2. C e r e a l s

2.1.1.
The Commission proposal fails to take account
of the repercussions of price setting measures on farmers’
income as well as the impact on EU consumers. The
Committee therefore urges the Commission to carry out
an in-depth study of the impact of its farm prices policy
on EU consumers.

2.1.2.
For most products, the Commission proposal
means freezing the prices and related measures in
comparison with the previous year. However,
the
Commission fails to take account of the documented
3,1 % loss of income in the sector during 1997. This is
all the more serious given that committed expenditure
is more than ECU 2 500 million below the financial
guideline.

2.2.2.1.
In fixing the monthly increases, the Com-
mission should take account of aspects, other than
interest rates, which are connected with the real cost of
cereal storage.

2.2.2.2.
The Commission should allow for the fact
that, in certain parts of the EU, harvesting takes place
several months before the opening date for intervention.

2.2.2.3.
The Commission should display a degree
of flexibility in establishing its quality criteria for
intervention eligibility, particularly when justified on
the grounds of exceptional climatic conditions.

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2.2.2.4.
Similarly, weather conditions should be taken
into account when deciding on penalties for exceeding
base areas. Such conditions may compel farmers to
adjust their crop plans.

2.2.3. R i c e

2.2.3.1.
The Committee is concerned at the crisis in
the European rice sector, which is experiencing severe
problems in providing its producers with income, due
to the continued fall in market prices within the EU.
This has been triggered principally by large-scale imports
of milled rice from third countries. This situation cannot
be resolved simply by maintaining the level of monthly
increases, as the Commission claims: because the fall in
prices was greater than expected by the Commission,
the necessary increase in aid per hectare did not occur.

2.2.4. P r o t e i n c r o p s

2.2.4.1.
The reduction in areas sown more than
justifies an increase in the reference aid for these crops.
A series of crops, such as kidney beans, should be
included under grain legumes, with the corresponding
increase in the Maximum Guaranteed Area in order to
ensure their viability.

2.2.5. O i l s e e d s

In view of the size of the compensatory
2.2.5.1.
payments and yield and world price trends in this sector,
it would seem appropriate to ask for the advance on the
premium to be 80 % rather than the proposed 50 %.

2.2.5.2.
The recorded reference price should accu-
rately reflect the real prices received by producers in
each region as practised on the market each month.

2.2.6. H e m p

2.2.6.1.
The measure reducing production aid for
hemp by 25 % is not the best way of stabilizing areas
used for this crop, putting as it does the viability of
production zones at risk. The reduction is not justified
given that this is an ecological crop, and since demand
is expanding rapidly there is no surplus; producers and
processors have invested heavily in it. On the contrary,
in view of the potential for use and consumption of the
crop, the Committee considers that the Commission
should encourage production.

and pending

Consequently,

2.2.6.2.
the Com-
mission’s presentation of proposals for hemp production
controls in the forthcoming months, the Committee
believes that the amounts of aid for hemp production
should remain unaltered.

2.2.7. S u g a r

The Committee recalls the loss of income
2.2.7.1.
experienced by beet growers from sale of sliced beet, as
a result of the fall in cereal prices.

Secondly, the Committee would point to the
2.2.7.2.
Council’s call for the Commission to carry out research
on inter-occupational relations.

2.2.8. F r u i t a n d v e g e t a b l e s

2.2.8.1.
The Committee regrets the Commission pro-
posal’s lack of attention to this sector. There is no
analysis of the impact of the first year of reform
implementation. The Committee would point to the
situation of the processed citrus fruit sector, which is
heavily penalized because the reform takes no account
of its production capacity when setting thresholds.

2.2.8.2.
The Committee also stresses the need to
establish, at Community level, clear and objective criteria
for the definition, identification and classification of
juices, as the best safeguard for consumer information
on product quality and origin.

2.2.9. L i v e s t o c k

In general

2.2.9.1.
the Committee would
terms,
emphasize the need to guarantee the competitiveness of
EU livestock production in the world context. It would
therefore warn of the need for compensation in the event
of animal welfare or environmental protection measures
which are stricter than those demanded of imported
products.

2.2.9.2.
The EU should also aim to maximize all its
export opportunities, ensuring our produce is present
on international markets, taking into account third
world agriculture.

2.2.10. B e e f a n d v e a l

2.2.10.1.
The Commission’s proposal to increase the
ceiling on the number of male bovines eligible for the
premium in Spain and Portugal does not match the
Commission’s own figures. It is therefore necessary to
clarify the real increase in the number of male bovines
which will qualify. It should be borne in mind that in
the EU as a whole, 85 % of male bovines are entitled to
aid, while only 60 % of animals qualify in Spain and
Portugal. A more balanced distribution of premiums
should be achieved.

2.2.10.2.
The Committee also regrets that in its
proposals the Commission does not refer to extension
of the special measures applicable in the new German

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Länder with regard to the ceilings for beef premiums on
farms with 90 animals.

full use. This should not be hampered by administrative
measures concerning the fixing of export support.

2.2.11. S h e e p m e a t a n d g o a t m e a t

2.2.11.1.
Freezing the basic price for the fifth consecu-
tive year means there can be no increase in the premium
for sheepmeat and goatmeat.

2.2.11.2.
The establishment of individual references
for premium eligibility means that maintaining the
stabilizer is pointless. The Committee therefore calls for
it to be abolished.

2.2.12. M i l k

2.2.12.1.
The Committee accepts the Commission’s
proposal to maintain prices for the 1998-99 marketing
year, but believes that in the context of WTO commit-
ments, the export support mechanism should be put to

2.2.13. O l i v e o i l

2.2.13.1.
The Committee highlights the need to put
forward a farm prices proposal for the sector, bearing
in mind that there is no guarantee that the Council
debate on the reform of the CMO in olive oil will end
before the new marketing year begins.

2.2.14. C o t t o n

The Committee recalls the need to adjust
2.2.14.1.
the MGQ and, consequently, the national reference
quantities, for the sector at EU level, bringing it into line
with real production in the main EU producer countries.

Furthermore, the Committee considers that
2.2.14.2.
the calculation of advances on aid must be better
managed, so that the 15 % currently taken into account
by the Commission in increasing estimated production
can be reduced without delaying payment dates.

Brussels, 29 April 1998.

The President

of the Economic and Social Committee

Tom JENKINS