Opinion of the Economic and Social Committee on: the 'Proposal for a Council Regulation adjusting, for the sixth time, the system of aid for cotton introduced by Protocol 4 annexed to the Act of Accession of Greece', and the 'Proposal for a Council Regulation on production aid for cotton'
Date: 2000-03-29
Institutions: European Economic and Social Committee
Subjects: European Union, cotton, production aid

18.5.2000

EN

Official Journal of the European Communities

C 140/33

Opinion of the Economic and Social Committee on:

— the ‘Proposal for a Council Regulation adjusting, for the sixth time, the system of aid for

cotton introduced by Protocol 4 annexed to the Act of Accession of Greece’, and

— the ‘Proposal for a Council Regulation on production aid for cotton’

(2000/C 140/09)

On 24 January 2000 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, Rural Development and the Environment, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on the 14 March 2000. The
rapporteur was Mr Fakas.

At its 371st plenary session (meeting of 29 March 2000), the Economic and Social Committee adopted
the following opinion by 21 votes to five with two abstentions.

1. General comments

aimed at improving quality further by means of specific
additional incentives.

1.1.
The ESC applauds the Commission’s intention to
simplify the current scheme, bringing together in a single
Council Regulation the general principles of Protocol 4
annexed to the Act of Accession of Greece and provisions in
support of cotton production. All the rules of the market will
be encapsulated in the same regulation so that, in legal terms,
cotton will be treated in the same way as other CAP
commodities, having its own Common Market Organization.
This simplification must not, however, entail the removal of
important provisions aimed at achieving the objectives of
Protocol 4.

1.2.
The Committee welcomes the Commission’s intention
to maintain the current system of aid for cotton production,
which plays a major role in the agricultural sector in some
regions of the EU (Greece and Spain).

In the ESC’s view, any move away from a system of
1.2.1.
aid based on deficiency payments (the difference between the
guide price and the world price) would — in view of haphazard
fluctuations in world prices — be disastrous for cotton
production in the EU and for the incomes of cotton producers,
and would lead to a decline in the quality of cotton.

Cotton is the most important textile fibre of plant
1.3.
origin, which should progressively gain ground over synthetic
fibres. The cotton produced is of good quality, although
there is room for further improvement, as European textile
manufacturers require cotton of the highest quality to be
able to compete internationally. The ESC would like to see
proposals from the European Commission as soon as possible

1.3.1.
The ESC feels that a positive contribution towards
improving quality would be for the Commission to introduce
a legal provision under these regulations imposing the use of
a table to determine variations in the prices of teased cotton
according to the quality. Something of this kind is needed both
to improve quality and to make sure that the minimum price
is paid to the producer.

1.4.
The ESC believes that the supplementary environmen-
tal programmes which may be implemented by Member
States in addition to compulsory horizontal provisions on
environmental protection with the aim of limiting eligibility
for aid in certain sensitive areas will be of benefit in the effort
to monitor production as well as helping to protect the
environment. When designating the surface areas eligible
for aid, account should be taken of
the socio-economic
characteristics of producers in addition to the other criteria.

1.5.
Cotton is grown on irrigated land, and has in recent
years replaced other similar irrigated crops, such as maize,
sugar beet, tobacco and industrially-produced tomatoes, of
which there is a surplus in the EU, thereby reducing production
of these. Cotton cultivation methods, using fertilizers and
plant health products, generate fewer environmental problems
than other comparable intensive crops. Moreover, the increas-
ing use of new and advanced irrigation technology has cut
water consumption. Indeed, cotton offers an environmental
benefit,
in that it is the main textile fibre of plant origin
competing with synthetic fibres.

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Official Journal of the European Communities

18.5.2000

1.5.1.
However, in order to minimise the environmental
problems of cotton cultivation, the ESC considers that biologi-
cal production should be encouraged and supported, even
though this is more labour intensive than traditional methods.
The EU should provide further incentives through special
financial support to those producers who switch to biological
production.

2. Specific comments

Under Protocols 4 and 14 on cotton, annexed to the
2.1.
Acts of Accession of Greece and Spain respectively, a system
was established with the aim of:

— supporting the production of cotton in areas where it is an

important element in the agricultural economy;

— ensuring a fair income for producers;

— stabilising the market by improving supply and disposal

structures for the product.

1 550 000 tonnes of unginned cotton, distributed as a guaran-
teed national quantity (GNQ) of 1 200 000 tonnes for Greece,
350 000 tonnes for Spain and 1 500 tonnes for each of the
other Member States, the latter quantity, if not produced, being
redistributed proportionately between Greece and Spain.

2.5.
Bearing in mind all the factors mentioned above which
point to the need to adapt cotton production in the EU, the
ESC feels that the Commission proposal to increase the level
of co-responsibility by 20 % (from 0,5 % to 0,6 %) cannot be
accepted as it aims to discourage production and control
expenditure. Furthermore, it is well known that the increase in
budgetary expenditure is a cyclical phenomenon and does
not justify an increase in co-responsibility. The increased
expenditure is due to the fall in world prices which, from
an average of EUR 35,498/100 kilos in 1995-1996, fell to
EUR 19,7/100 kilos in 1999-2000. Recently, world prices
have started to rise again, especially since China exhausted its
stocks. In any event, the ESC feels it is unthinkable that EU
cotton producers should be penalised because of the trade
policy of third countries, just as it is unthinkable that the EU
should propose a structural reform to tackle a cyclical blip.

2.2.
The cotton sector is of considerable socio-economic
importance in certain EU regions. It provides employment for
some 300 000 families in the primary sector and for more
than 100 000 individuals in the secondary sector. Cotton’s
share of final agricultural production in Greece was, in 1998,
of the order of 10 %. The proportion is up to 4 % in some
areas of Spain (Andalusia).

2.5.1.
By proposing an increase in co-responsibility, the
Commission is seeking to shift the impact of this short-term
external factor onto cotton producers, even though the system
of deficit payments was set up to protect producers from such
short-term occurrences. Once the world market has recovered,
the increased co-responsibility proposed by the Commission
will continue to restrict the incomes of cotton producers.

2.3.
There is a major shortage of cotton in the EU. The
annual demand for teased cotton in the EU is 4,5 million
tonnes, which corresponds to 1,5 million tonnes of ginned
cotton. Most of this demand (around 2/3) is met by imports
from third countries.

2.4.
In the ESC’s view, the enormous shortfall in EU cotton
production, its major socio-economic importance to certain
regions, the fact that the product is not a foodstuff, as well as
increasing demand for cotton on world markets, necessitate
bringing EU cotton production into line with current pro-
duction criteria, with a parallel adjustment
in budgetary
expenditure. The Committee feels that the total maximum
be
guaranteed

per marketing

quantity

should

year

Brussels, 29 March 2000.

The ESC welcomes the Commission’s intention that

2.6.
aid be paid in full to the beneficiaries.

The ESC feels that the proposed addition of 15 % to
2.7.
the estimated production referred to in Article 13(3) should be
removed. The ESC feels that an advance payment should be
made to cotton producers based on the estimated quantity to
be produced and that final settlement should be made towards
the end of April at the latest.

2.8.
The ESC feels that the reactivation of producer groups
and promotion of inter-branch organization in the sector by
means of institutional consolidation, as in other sectors of the
CAP, will help to solve the sector’s problems.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

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C 140/35

APPENDIX

to the Opinion of the Economic and Social Committee

The following amendments, which received more than a quarter of the votes cast, were rejected in the course of the
debate:

Point 1.4

Delete the final sentence of this point:

‘When designating the surface areas eligible for aid, account should be taken of the socio-economic characteristics of
producers in addition to the other criteria.’

Result of the vote

For: 8, against: 10, abstentions: 3.

Point 1.5.1

Replace the word ‘biological’ with ‘integrated’.

Result of the vote

For: 8, against: 19, abstentions: 2.