Council Regulation (EC) No 1636/98 of 20 July 1998 amending Regulation (EEC) No 2075/92 on the common organisation of the market in raw tobacco
Date: 1998-07-20
Institutions: Council of the European Union
Subjects: EU control, agricultural guidance, common organisation of markets, tobacco

28. 7. 98

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Official Journal of the European Communities

L 210/23

COUNCIL REGULATION (EC) No 1636/98

of 20 July 1998

amending Regulation (EEC) No 2075/92 on the common organisation of the
market in raw tobacco

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 42 and 43 thereof,

changes made, a transitional period should be set;
whereas this system should be established within the
producer groups, while permitting a comparison to
be made of the market prices obtained by individual
producers;

Having regard to the proposal from the Commission (1),

Having regard to the opinion of
liament (2),

the European Par-

(5) Whereas it is essential to reinforce control proced-
ures in the tobacco sector; whereas the definitions of
‘producer’,
‘first processor’ and ‘first processing’
should be made more precise and control agencies
should be allowed access to all information relevant
to their task;

(1) Whereas

of

26

Article

(EEC)
No 2075/92 (3), requires the Commission to submit
proposals on the premium and quota arrangements
governing the organisation of
in raw
tobacco;

the market

Regulation

(2) Whereas the present market situation is one of
mismatch of supply and demand, largely due to the
poor quality of Community production; whereas that
situation calls for fundamental reform of the sector
to improve its economic position; whereas such
reform must entail a variation of Community aid in
line with product quality, greater
flexibility and
simplicity in the setting of quotas, stricter control
and improved observance of public
procedures
health and environmental protection requirements;

(3) Whereas the premium for flue-cured, light air-cured
and dark air-cured tobaccos grown in Belgium,
Germany, France and Austria should be increased;
whereas the Council will reduce, in accordance with
the procedure set out in Article 43(2) of the Treaty,
the guarantee thresholds of these Member States in
order to ensure the maintenance of budgetary neut-
rality;

(6) Whereas an auction system for cultivation contracts
should be established so that contract prices for
tobacco truly reflect market conditions; whereas this
system should be optional for the Member States, to
take account of their different structures;

(7) Whereas by participating in determination of the
purchase price of the tobacco delivered the processor
plays a central role in determination of the premium
to be paid to the individual producer; whereas first
processors benefit indirectly from Community aid by
acquiring a subsidised product; whereas national
authorities should be allowed to take appropriate
action against any first processors not complying
with Community rules; whereas to that end only
approved first processors should be able to sign cul-
tivation contracts, approval being withdrawn for
non-compliance;

(8) Whereas

to simplify management of

the sector,
producer groups should be made responsible for
paying the variable part of the premium to producers
and for
to their
allocating production quotas
members;

(4) Whereas, in order to encourage improvement of the
quality and value of Community production, and at
the same time to provide income support to produ-
cers, the payment of part of the premium should be
linked to the value of the tobacco produced; whereas
the extent of this differentiation may vary by variety
and tobacco-growing Member State; whereas, if it is
to be effective, differentiation should operate within
a certain range; whereas, given the magnitude of the

(1) OJ C 108, 7. 4. 1998, p. 87.
(2) OJ C 210, 6. 7. 1998.
(3) OJ L 215, 30. 7. 1992, p. 70. Regulation as last amended by
Regulation (EC) No 2595/97 (OJ L 351, 23. 12. 1997, p. 11).

(9) Whereas

transfer of production quotas between
producers should be permitted to improve produc-
tion structures; whereas quota buy-back arrangements
should be introduced to help producers who wish to
find no purchasers for their
leave the sector but
quotas;

(10) Whereas due account should be taken of the require-
ments of public health and respect for the environ-
ment; whereas to that end the premium deduction
financing the Community fund for tobacco research
and information should be doubled and the specific

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Official Journal of the European Communities

28. 7. 98

aid used not only to help producer groups discharge
their new management functions but also to finance
action aimed at increasing respect for the environ-
ment,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EEC) No 2075/92 is amended as follows:

1. Article 3(1) and (2) shall be replaced by the following:

From the 1999 harvest onwards, a premium
‘1.
scheme shall apply to tobacco, its amount being set
for all the tobacco varieties shown in each of the
different groups.

A supplementary amount

shall, however, be
2.
granted on flue-cured, light air-cured and dark air-
cured tobaccos grown in Austria, Belgium, France and
Germany. That amount shall be equal to 65 % of the
difference between the premium granted for those
tobaccos in accordance with paragraph 1 and the
premium applicable to the 1992 harvest.’;

2. the following Article shall be inserted:

‘Article 4a

The premium shall comprise a fixed part, a vari-

1.
able part and a specific aid.

2.
The variable part of the premium shall account
for 30 % to 45 % of the total premium. It shall be
introduced in stages up to the 2001 harvest. It may be
adjusted within that specified range, according to
variety group and Member State.

3.
The fixed part of the premium shall be paid
either to producer groups for distribution to the
members of the group or to individual producers who
are not members of a group.

4.
The variable part shall be paid to producer
groups for distribution to each member in proportion
to the purchase price paid by the first processor for
his crop.

5.
Specific aid, not exceeding 2 % of
premium, shall be paid to producer groups.’;

the total

groups or individual producers who are not members
of a group.

2.

For the purposes of this Regulation:

— the term “producer” shall mean individual produ-
cers who are not members of a group, individual
producers who are members of a group, or
producer groups, all of whom deliver their crop of
raw tobacco to a first processor under a cultivation
contract,

— a “first processor” shall mean any approved natural
or legal person who carries out first processing of
raw tobacco by operation, in his own name and
on his own account, of one or more first tobacco-
processing establishments suitably equipped for
that purpose,

— “first processing” shall mean the processing of raw
tobacco delivered by a producer into a stable,
storable product put up in uniform bales of a
quality meeting final user (manufacturer) require-
ments.

3.

The cultivation contract shall include:

— a commitment by the first processor to pay the
producer the purchase price according to quality
grade,

— a commitment by the producer to deliver to the
first processor the raw tobacco meeting the quality
requirements specified in the contract.

4.
The Member State’s competent body shall, on
submission of proof of delivery of the tobacco and of
payment of the price as referred to in the first indent
of paragraph 3, pay:

— the fixed part of the premium to the producer
group or to the individual producer not a member
of a group,

— the variable part of the premium and the specific

aid to the producer group.

However, on a transitional basis and for a period not
exceeding two harvests, the premium may be paid
through the intermediary of the first processor.

5.
The Member State may, if its structures make it
appropriate, apply a cultivation contract auction
scheme covering all contracts referred to in paragraph
1 that were concluded before the date on which deliv-
ery of the tobacco commences.

3. Articles 6 and 7 shall be replaced by the following:

Article 7

‘Article 6

Cultivation

1.
contracts
between first processors of

be

shall
concluded
tobacco and producer

Rules for the application of this Title shall be adopted
in accordance with the procedure laid down in
Article 23.

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Their scope shall include:

— delimitation of production zones for each variety,

— quality requirements for tobacco delivered,

— other details of the cultivation contract and the

closing date for its conclusion,

— any requirement of a security to be lodged by
producers applying for an advance, and the terms
of its provision and release,

— determination of

the

variable part of

the

premium,

— specific premium terms for cultivation contracts

concluded with producer groups,

— action to be taken if

the producer or

first

processor fails to meet his obligations,

— the cultivation-contract auction scheme, including
the option for the first purchaser to match any
offers.’;

tions to other variety groups, in accordance with para-
graph 3.

Subject to the third subparagraph, a one-tonne reduc-
tion in the allocation for one variety group shall give
rise to an increase of at most one tonne in the alloca-
tion for the other variety group.

No transfer of parts of guarantee threshold allocations
from one variety group to another may give rise to
additional costs to the EAGGF.

The quantities authorised for transfer shall be deter-
mined in accordance with the procedure laid down in
Article 23.

5. National quota reserves shall be set up, the rules
of operation of which shall be adopted in accordance
with the procedure laid down in Article 23.

Article 10

4. Articles 8 to 14 shall be replaced by the following:

1. No premium may be granted on any quantity in
excess of a producer’s quota.

‘Article 8

A maximum overall guarantee threshold of 350 600
tonnes of raw leaf tobacco per harvest shall be set for
the Community.

Within that quantity the Council shall set individual
guarantee thresholds for each variety group for three
consecutive harvests, in accordance with the proced-
ure laid down in Article 43(2) of the Treaty.

Article 9

To

observance
1.
thresholds, production quotas shall be imposed.

ensure

the

of

guarantee

2.
The Council, acting in accordance with the
procedure laid down in Article 43(2) of the Treaty,
shall allocate the quantity available for each variety
group between producer Member States for three
consecutive harvests.

3. On the basis of the quantities set pursuant to
paragraph 2 and without prejudice to paragraphs 4
and 5, Member States shall assign production quotas
to individual producers who are not members of a
producer group and to producer groups, in proportion
to the average quantity of tobacco of the particular
variety group delivered for processing by each indi-
vidual producer over the three years preceding that of
the most recent harvest.

4.
Before the final date for the conclusion of cul-
tivation contracts, Member States may be authorised
to transfer parts of their guarantee threshold alloca-

2. Notwithstanding paragraph 1, a producer may
deliver excess production of up to 10 % of his quota
for each variety group, this surplus being eligible for
the premium granted on the following harvest,
provided that he reduces his production for that
harvest accordingly so that the combined quota for
the two harvests is observed.

3. Member States shall keep accurate data on the
production of all individual producers so that, where
appropriate, production quotas can be assigned to
them.

Production quotas may be transferred between

4.
individual producers in the same Member State.

Article 11

Rules for the application of this Title shall be adopted
in accordance with the procedure laid down in Article
23.

TITLE III

Measures to convert production

Article 12

The specific aid referred to in Article 4a shall be paid
to producer groups for the purposes of improving
for
respect
the environment, boosting production
quality,
strengthening management and ensuring
compliance with Community rules within the group.

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Article 13

1.
A Community Tobacco Fund financed by a
deduction of 2 % of the premium shall be set up.

The Fund shall finance action in the following

2.
areas:

(a) combating tobacco-smoking, in particular inform-
tobacco

the dangers of

ing the public of
consumption,

(b) — research to create or develop new varieties and
cultivation methods that result in less harm to
human health and are better geared to market
conditions and more environment-friendly,

— the creation or development of alternative uses

for raw tobacco,

(c) studies of the possibilities for producers of raw
tobacco of switching to other crops or activities,

(d) the dissemination of the results obtained in the
above areas to national authorities and to the
sectors concerned.

Article 14

1.
In order to facilitate the voluntary departure
from the sector by individual producers, a quota buy-
back programme with corresponding reduction of the
guarantee thresholds referred to in Article 8 shall be
set up.

Rural development programmes for the conver-
2.
sion of tobacco-growing regions in difficulty to other
activities may be implemented under Community
structural policies.’;

5. the following Article shall be inserted:

‘Article 14a

Rules for the application of this Title shall be adopted
in accordance with the procedure laid down in Article
23. Those rules shall cover:

— fixing of the specific aid amount,

— the definition of producer groups eligible for

specific aid,

— terms for the recognition of groups,

— use of the specific aid, and in particular its alloca-
tion between the purposes specified in Article
12(1),

— setting the level of

the quota buy-back price,
which should not be such as to encourage any
excessive exodus of producers from the sector,

— definition, on the basis of a proposal from the
Member State, of sensitive production areas and/or
groups of high-quality varieties to be exempted
from the quota buy-back system, which may not
affect more than 25 % of each Member State’s
guarantee threshold,

— definition of a period of not more than four
months between the individual producer’s inten-
tion to sell his quota and the actual buy-back;
during that period the Member State shall make
public the intention to sell so that other producers
may buy the quota before it is actually bought
back.’;

6. the heading of Title V shall be replaced by the fol-

lowing:

‘TITLE V

Control measures’;

7. Article 17 shall be replaced by the following:

‘Article 17

1. Member States shall take all necessary action to
ensure and verify compliance with Community provi-
sions concerning raw tobacco.

for
2. Member States
granting entitlement to first processors to sign cul-
tivation contracts.

shall make arrangements

Entitlement shall be withdrawn by the Member
3.
State if the processor deliberately or through serious
negligence fails
to comply with the Community
provisions concerning raw tobacco.

4. Member States shall take the action necessary
for their control bodies to be able to verify compli-
ance with Community provisions, and in particular:

— to have access to production and processing facil-

ities,

— to be able to acquaint

themselves with first
processors’ accounting and stock records and with
other
relevant documents and take copies or
extracts,

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— to be able to obtain all relevant information, par-
ticularly in order to check that tobacco delivered
has actually been processed,

with the procedure laid down in Article 23. Their
scope and duration shall be strictly limited to what is
necessary to support the market.’;

— to obtain exact

the volume and
purchase price of the production of all individual
producers,

figures

for

— to check the quality of the tobacco and payment
by the processor of a purchase price to the indi-
vidual producer,

— to check each year the areas planted by individual

producers.

Rules for the application of this Title shall be
5.
adopted in accordance with the procedure laid down
in Article 23.’;

8. the following heading shall be inserted after Article

17:

‘TITLE VI

General and transitional provisions’;

9. Article 20 shall be replaced by the following:

‘Article 20

To deal with unforeseen circumstances, exceptional
market support measures may be taken in accordance

10. Article 26 shall be replaced by the following:

‘Article 26

Before 1 April 2002, the Commission shall submit a
report to the European Parliament and to the Council
on the functioning of the common organisation of
the market in raw tobacco.’;

11. the following paragraph shall be added to Article 27:

‘Where transitional measures prove necessary to facil-
itate the application of the amendments to this Regu-
lation introduced by Regulation (EC) No 1636/98 (*),
such measures shall be adopted in accordance with
the procedure laid down in Article 23.

(*) OJ L 210, 28.7.1998, p. 23.’

Article 2

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

It shall apply from the 1999 harvest.

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

Done at Brussels, 20 July 1998.

For the Council

The President

W. MOLTERER