Report from the Commission to the Council on the state of implementation of Regulation (EC) No 2200/96 on the common organisation of the market in fruit and vegetables
Date: 2001-01-24
Institutions: European Commission
Subjects: cultural organisation, fruit, producer organisation, production aid, vegetable

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 24.01.2001
COM(2001) 36 final

REPORT FROM THE COMMISSION TO THE COUNCIL

on the state of implementation of Regulation (EC) No 2200/96
on the common organisation of the market in fruit and vegetables

REPORT FROM THE COMMISSION TO THE COUNCIL

on the state of implementation of Regulation (EC) No 2200/96
on the common organisation of the market in fruit and vegetables

Table of Contents

Foreword ............................................................................................................................... 3

1.

1.1.

1.2.

1.3.

1.4.

1.5.

2.

Introduction.............................................................................................................. 4

World Supply and demand........................................................................................ 4

World Trade ............................................................................................................. 5

Supply and demand in the EU................................................................................... 6

The EU trade ............................................................................................................ 7

Production structure and income situation................................................................. 7

Reviewing the Common market organisation for fruit and vegetables..................... 10

2.1.

The classification of products and marketing standards........................................... 10

2.1.1. Marketing standards ............................................................................................... 10

2.1.2.

Food safety standards ............................................................................................. 12

2.2.

Producer organisations ........................................................................................... 13

2.2.1.

Producer organisations and fruit and vegetable production...................................... 13

2.2.2.

Producer organisations and their market segment ................................................... 15

2.3.

2.4.

2.5.

2.6.

2.7.

2.8.

2.9.

Interbranch organisations and agreements............................................................... 20

Intervention arrangements and withdrawals ............................................................ 21

Operational Funds and their utilisation ................................................................... 24

Eco-conditionality .................................................................................................. 27

The case of nuts...................................................................................................... 29

Citrus processing aid .............................................................................................. 30

Coexistence of the F&V regime and the new Rural Development regulation .......... 32

2.10.

Budgetary issues..................................................................................................... 32

2

Foreword

In July 1994 the European Commission presented to the Council and Parliament its communication on
the development and future of Community policy in the fruit and vegetable sector (COM(94) 360 final
– 27 July 1994). This outlined the major challenges the European fruit and vegetable sector would
have to face up to the end of the century and the implications for future policy development.

In the Commission’s view the main objective was to help and encourage EU producers to meet the
challenges of a more open and competitive market by strengthening their assets, namely:

–

–

–

the quality of their products,

their dynamism and ability to adapt to a changing market,

services offered alongside the supply of a range of varied and healthy products.

To this end, the Commission proposed reinforcing the positive features of the market organisation –
market orientation, decentralisation of management and grouping of supply – while simplifying and
redirecting budgetary expenditure towards measures that would contribute to a sound future and
respond to the environmental demands of European society.

The communication was well received by the Council and the whole fruit and vegetable sector. The
Commission presented its proposals for Council regulations concerning the reform of the sector on
4 October 1995 (COM(95) 434 final).

After two years of discussion in the Council, regulations for fresh fruit and vegetables, citrus and
processed fruit and vegetables were finally adopted on 28 October 1996.

Article 56 of Regulation (EC) No 2200/96 provides that “by 31 December 2000 the Commission shall
send the Council a report on the operation of this regulation, accompanied by any proposal that may be
required”. Article 9 of Regulation (EC) No 2202/96 state that the Commission shall submit to the
Council, on the basis of two years' operation, a report on the application of [the citrus] scheme,
together with appropriate proposals, if necessary. Trade arrangements with third countries were not
affected by the '96 reform and therefore were not reviewed in the framework of this report.

On 12 July 2000 the European Commission adopted a proposal to amend the common organisation of
the market (COM) for fruit and vegetables. This proposal was aimed at providing solutions to
shortcomings that had to be addressed urgently, with a view to possible amendments to the market
organisation being implemented from the 2001/02 marketing year.

On 2 and 3 October 2000 a two-day seminar for producer organisations was organised by the
Commission to look at how the '96 reform had been implemented in the different Member States and
to focus on possible improvements that could be introduced into the basic regulation to make it operate
more effectively.

This report aims to describe the current situation. It is intended as a background for policy proposals
that might be made at a later stage, depending on the outcome of the debate that will take place in the
Council, within the sector and more broadly in society. It is a first step in answering the Council’s
request of October 1996 to examine the situation of the sector and to come forward with new
proposals if necessary.

3

1.

1.1.

INTRODUCTION

World Supply and demand1

On average, 1998-1999 world production of fruit and vegetables was slightly
more than 1 100 million tonnes: fruit amounted to 530 million tonnes and
vegetables to 470 million tonnes. Asia is the leading production region with a
share of nearly 56%, followed by Latin America & the Caribbean 12%, the EU
10%, Africa 9% and North America 7%. The world's largest fruit and vegetables
producer overall is China (29%), then the EU (10%), India (10%) and the
US (7%).

World production of fruit and vegetables by main regions in million t
(Average 1996/98)

Asia

607

Latin Amer & Caribbean

157

Western Europe

European Union (15)

120

118

Africa

107

North America Developed

85

CECs

32

Oceania

9

Average world production 1996/98:
1139 million t

0

100

200

300

400

500

600

700

Source: FAO

World consumption for the same period (960 million tonnes) was more or less
180 million tonnes lower than production. Again Asia is the leading region with
59% of the total, followed by the EU (10%), Africa (9%), North America (8%)
and Latin America & the Caribbean (8%). The world's top consumer is China
with a share of 30% followed by India and the EU (10%) and the US (7%).

At world level there is a strong trend towards increased production, with
consumption increasing at a slower pace. In some developing countries most
increased domestic
production growth potential seems oriented towards
consumption, while in others export-oriented production is being developed.

1

FAO figures, also for the EU (to be consistent). All fruit & vegetables excluding potatoes. The
aggregates are therefore wider than products covered by the common organisation of the market for
fresh fruit and vegetables.

4

World consumption of fruit and vegetables by main regions in million t

(Average 1996/98)

542

Average world consumption 1996/98:
959 million t

Asia

Western Europe

European Union (15)

North America Developed

Latin Amer & Caribbean

Africa

CECs

25

Oceania

6

100

97

90

85

85

0

100

200

300

400

500

600

Source: FAO

Fruit and Vegetables - World production and consumption

t
n
o

i
l
l
i

m
n

i

n
o
i
t
p
m
u
s
n
o
c

700

600

500

400

300

200

100

0

t
n
o

i
l
l
i

m
n

i

n
o
i
t
c
u
d
o
r
p

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Fruit - Consumption

Vegetables - Consumption

Fruit - Production

Vegetables - Production

1.2.

World Trade

In recent years annual trade has hovered around EUR 50 billion in value and
70 million tonnes. In value, on average 1996-1998, the US was the world's
leading exporter with a share of 18%, followed by the EU with 12%, China 7%,
Mexico 7% and Turkey 5%. Over the same period, the leading importer was the
EU with 27% of the total, followed by the US (18%), Japan (11%) and Canada
(6%). Two countries had an important trade deficit, the EU (-EUR 9 billion) and
Japan (-5 billion EUR), while surpluses were registered mainly in China
(+EUR 3 billion), Mexico (+EUR 2.5 billion) and Turkey (+EUR 2 billion). As
the top net importer, the EU is the largest solvent market.

5

Fruit and vegetables - World major importing countries in %

(Total imports 49.3 billion $) (Average 1997/98)

EU (15) excl.Intra-Trade

United States of America

18,3

27,1

Japan

Canada

11,2

6,1

Russian Federation

3,2

Switzerland

Brazil

India

Singapore

Poland

Saudi Arabia

Others

2,3

2,0

1,6

1,4

1,3

1,3

0

5

10

15

20

Source: FAO

Fruit and Vegetables - World major exporting countries in %
(Total Exports 42.4 billion $)

United States of America

EU (15) excl.Intra-Trade

18,1

11,6

Mexico

Turkey

Brazil

Chile

Ecuador

Argentina

Canada

South Africa

Costa Rica

Australia

New Zealand

Others

6,9

5,6

3,6

3,3

3,0

3,0

2,9

2,1

2,1

1,8

1,8

Source: FAO

0

5

10

15

20

25

30

24,3

25

30

34,1

35

40

The products most traded world-wide were citrus fruit with 4.4 million tonnes or
EUR 2.6 billion, apples (3.2 million t and EUR 2.1 billion), onions (3 million t
and EUR 1 billion) and tomatoes (2 million t and EUR 1.6 billion).

1.3.

Supply and demand in the EU2

the last years, EU-15 total vegetable production represented about
Over
55 million tonnes, the leading MS was Italy with 15 million tonnes followed by
Spain with 11.5 million tonnes. EU-15 total fresh fruit production was slightly

2

Eurostat figures.

6

over 30 million tonnes, of which 9 million tonnes were citrus fruit. Spain was
the leading MS with 10 million tonnes of which 5.5 million tonnes was citrus
fruit, followed by Italy with 9.5 million tonnes of which 3 million tonnes of
citrus fruit.

Early in the '80s EU vegetable production was around 45 million tonnes, nearly
20% lower than today; for total fresh fruit
including citrus the figure was
27 million tonnes or 12% lower than today.

On the demand side, the trend of EU consumption is stable for fresh fruit and
vegetables with respectively 29 million t and 41 million t, equivalent to a per
capita consumption of 92 kg and 133 kg. By contrast consumption of processed
fruit, mainly fruit juice, shows a sharply upwards trend.

1.4.

The EU trade

The EU is an active operator on the world market. Among fresh products, main
imports are citrus, apples (60% coming from New Zealand, Chile and South
Africa), tropical/exotic fruit and grapes. Fruit juices, mostly concentrated frozen
citrus and apple juice, also represent important imports.

After potatoes (which are not covered by the COM) onions and tomatoes are the
most imported fresh vegetables. Frozen and dried vegetables represent a much
higher volume.

The EU mainly exports citrus fruit (oranges, clementines and lemons) apples
and grapes while onions and tomatoes are the most exported vegetables.
Traditional destinations are Russia, CECs, Switzerland and Norway.

1.5.

Production structure and income situation

Fruit and vegetables occupy around 4% of the EU Utilised Agricultural Area
(UAA). The relative importance of the sector is extremely variable from one
Member State to another: 27,8% in Spain, 26.3% in Italy, 24.6% in Greece and
19.9% in Portugal against 2.7% for Denmark, 4.3% for Ireland or 5% for
Sweden. The most important fruit and vegetable growing regions are located in
Greece, Spain and Italy.

Table 1: Most important regions

Region

MS

Importance of F&V in
Final Agricultural Output

Andalucia
Murcia
Provence-Alpes-Côte d'Azur
Emilia-Romagna
Campania
Puglia
Sicilia

E
E
F
I
I
I
I

39.6%
51.8%
36.0%
24.9%
38.0%
35.7%
44.9%

Importance of Regional
F&V output in final EU
F&V production
6.5%
2.5%
2.4%
3.0%
2.7%
3.3%
4.1%

7

In 1997 - the last available Farm Structure Survey – there were 636 000
holdings with an average size of 4.1 ha producing fresh fruit and vegetables in
the EU. Only 14.5% of these were vegetable oriented. Specialised commercial
holdings, i.e. with an economic size over 16 ESU3, numbered 63 000 with an
average size of 22.5 ha. Between 1990 and 1997, the number of specialised
holdings decreased by 21% while their average area increased by 28%.
Specialised vegetable holdings are on average 6 ha larger than specialised fruit
holdings.

3

Economic size is expressed in European Size Units. The value of the ESU was 1200 ECU for the
1997 survey.

8

Area in ha

EU 12 - Agricultural area per holding

25

20

15

10

5

0

Total number
of holdings
15 350

Total number
of holdings
16 040

Total number
of holdings
58 420

Total number
of holdings
64 840

Total number
of holdings
80 410

Total number
of holdings
123 850

Total number
of holdings
555 800

Total number
of holdings
691 700

Specialised field vegetables
holdings > 16 ESU

All specialised field vegetables
holdings

Specialised fruit holdings > 16 ESU

All specialised fruit holdings

1997

1990

As the fruit and vegetable sector is labour intensive, net value added generated
per hectare is always much higher than the average net value added per ha for
agriculture as a whole. But results for income per work unit are less good, in
particular for fruit and for the southern Member States. The income for
specialised vegetable holdings is often substantially higher than for specialised
fruit holdings.

9

2.

REVIEWING THE COMMON MARKET ORGANISATION FOR FRUIT AND
VEGETABLES

Even if the fruit and vegetables covered by the Common Market Organisation
represent more than 15.8% of the EU's Final Agricultural Production i.e. more
than cereals (9.3%) or beef (9.8%), as fruit and vegetable production is split
between many products it is not considered one of the “big” agricultural sectors.
Moreover, the architecture of the COM is very specific, determined as it is by
the particular characteristics of fresh fruit and vegetables, e.g. quality standards,
perishability and producer organisations.

2.1.

The classification of products and marketing standards

2.1.1. Marketing standards

Standardisation has played a crucial role for forty years as a classification
system for fresh fruit and vegetables, contributing to market transparency and
development.

Marketing standards were first elaborated when the trade in fresh fruit and
vegetables started to develop at the end of the 19th Century. With long distance
trade gaining in importance several countries, among them Italy,
the
Netherlands, Spain and the USA, set quality standards applicable to their
production and trade (mainly exports).

The work initialised in October 1949 by the Working Party on Perishable
Products of the Economic Commission for Europe of the United Nations
(UN/ECE) was consolidated from 1962 onwards by the OECD, which set up a
“scheme for
fruit and
vegetables” whose objective is a harmonised implementation of marketing
standards.

the international standards for

the application of

In the EU and the USA the implementation of standards has been a method of
classifying products into pre-defined categories to be used along the whole
marketing chain.

They allow the description of products and give indications on their market
value without requiring physical presentation. Classification and withdrawal
from market of unsatisfactory products makes the market more transparent, and
price may become meaningful, referring to a standardised product (category,
sizing, presentation, …). Far
from hampering the exchange of fruit and
vegetables, the effective implementation of standards and the reliability of the
system appears to be ways of favouring trade and ensuring the free movement of
produce. The implementation of international standards for fruit and vegetables
on domestic and world markets reduces transaction costs between economic
actors along the fruit and vegetable marketing chain, and is therefore
appreciated by them.

Beyond these institutional marketing standards, many operators have developed
their own private standards attached to specific brand requirements.

10

By defining rules for identification, standardisation reduces economic uncertainty in exchanges
between the economic players. In particular standardisation removes doubts about product
standards and uncertainty as regards the behaviour of economic operators. Buyers will give
preference to producers whose tested products are in full conformity with standards.

Standardisation has been necessary because:

– producers and buyers have no direct relationship,

– physical presentation of products is, most of the time, excluded,

– brand development is extremely limited due to the structure of the agri-food chain, i.e.
atomisation of low volume production on the supply side and the difficulty of providing
an extensive and diversified range of products throughout the year.

The role of marketing standards explains why some – but not all - of the main
competitors on the world market
(e.g. South Africa, New Zealand) are
participating in standardisation activities at international level. Moreover, in the
present situation, where the consumer is confronted with an ever wider choice
and supply amplified by the increasing globalisation of the fruit and vegetable
trade, standardisation has gained in importance. Fruit and vegetable suppliers
look for ways to differentiate themselves from their competitors and target
particular market segments.

In this respect, quality aspects are gaining more and more importance, e.g.
freshness,
food safety, environmentally friendly
production, region of origin, sugar content. Phytosanitary issues are also
becoming a driver of competitiveness.

taste, colour,

traceability,

The 1996 regulation aimed at maintaining and updating standards,
closely with work carried out
UN/ECE).

linking
in the international arena (in particular the

The Commission has reviewed most of the marketing standards enforced before
the reform. It also set standards for some new products (avocados, melons, and
watermelons). At present quality standards are defined for 35 products listed in
Annex I of the basic regulation

Nowadays standardisation is no longer used as an instrument of market
management. By introducing fixed classes for products tradable on the fresh
market (Class I and II, and for some products Class Extra) and requiring only
compliance with minimum requirements for products shipped to the processing
industry,
the European Commission renounced the use of standards for
managing the market. This position has been followed consistently since the
new regulation was implemented4. Therefore retaining in the basic regulation
the possibility of marketing under exceptional circumstances (Article 4) or
exporting products (2nd sentence of Article 9(1)) not complying with market
standards may appear slightly anachronistic. The question is whether these
obsolete measures should stay in the regulation.

4

The Management Committee discussed this matter in relation with the market situation of peaches
in the year 2000. A vast majority of Member States were of the opinion that marketing restrictions
due to the oversupply of peaches should not be implemented.

11

Taste quality standards have been timidly introduced into some marketing
standards regulations:

–

–

–

–

a minimum juice content for citrus,

a degree of ripeness of at least 6.2%, assessed by the Brix test for kiwis,

a refractometric index of the pulp of at least 8% for melons,

the possibility to indicate the minimum sugar content expressed in Brix
degrees and/or the maximum firmness for peaches, nectarines, tomatoes
and melons.

It is noticeable that the last three indents refer to sugar content. In addition,
nearly all-marketing standards include a clause for sufficient development and
satisfactory ripeness of fruit and vegetables.

As shown by these examples, some progress has been made on possible criteria
for organoleptic standards even if analytical methods are still under scrutiny. It
is an open question whether a systematic reference to optional criteria already
used by traders should be introduced. In this case, some simple and meaningful
criteria could be sugar content, acidity, relationship sugar/acidity, content in dry
matter.

On the other hand, some observers argue that in a market situation in which
more than half of domestic production and in some Member States two thirds of
supply reaches the final consumer through fewer than 5 operators, regulatory
marketing standards are nowadays superfluous. The counter argument usually
advanced is that a small share of product may have a very disruptive impact on
the market. Controversy on the role and importance of marketing standards is
not yet closed. This issue probably merits a calm and thorough debate to
reinsure the EU position.

2.1.2.

Food safety standards

Food safety standards are not part of the basic regulation although they
transparency and a better response to final
contribute to improving market
residue levels
consumer demand. The strengthening of
(Directive
contaminants
(Regulation (EC) No 194/97) would give impetus to this momentum.

requirements for
and
76/895/EEC)

90/642/EEC and Directive

The question of the possible insertion of SPS (food safety) standards into the
COM marketing standards is implicitly raised. For example the codex standards
for apples drawn up by the Codex Alimentarius Commission (FAO/WHS)
include contaminants (maximum levels) and pesticide residues (maximum
residue limits). Regrouping all standards under the same legal framework would
increase clarity and transparency and might also lead to a better consistency and
co-ordination between different systems/control procedures (which are presently
distinct).

12

2.2.

Producer organisations

2.2.1.

Producer organisations and fruit and vegetable production

Confronted with the unsatisfactory functioning and weaknesses of producer
organisations the 1996 reform put great emphasis on their renewal. Often
considered, together with marketing standards, as being the cornerstone of the
fruit and vegetable market organisation, producer organisations had definitely to
extend their role beyond subsidised withdrawals to the grouping of supply, the
marketing of produce and to play a relevant role in the improvement of the
environmental performance of this sector. In a more competitive and open
market POs should also enable producers better to react and adapt to market
signals.

To face a growing concentration of demand, it is necessary to strengthen the
position of producers in the market by increasing the grouping of supply. This
objective is explicitly mentioned in the ’96 Regulation. Voluntary membership
of producers and efficiency in delivering services to members, together with the
obligation for producer-members to market their entire production through their
producer organisation, were considered basic requirements to operate in a larger,
more open and more competitive market. Different categories of producer
organisation may be set up: some are specialised in marketing citrus, nuts,
mushrooms or products intended for processing (mainly tomatoes), others are
multi-product for fruit, vegetables or generally for all kind of fruit and
vegetables.

New rules in particular require members to market
their entire production
through their producer organisation. In exchange, democratic rules should
enable farmers to scrutinise their organisation, which has to provide members
with the technical assistance needed in adopting environmentally sound
agricultural practices.

Member States recognise producer organisations according in particular to a
minimum number of producers and minimum volume of marketable production.
Two possibilities were offered to producers: either to create new organisations
or to benefit from a 5 year transition period to allow producer organisations
recognised under the previous Regulation (EC) No 1035/72 to fulfil the new
requirements. Article 13 offers a 5-year
transition period for producer
organisations recognised under former Regulation (EEC) No 1035/72. It does
not appear necessary to renew or extend this clause.

A direct comparison with former producer associations is only partially helpful
in assessing the effectiveness of the new rules and roles assigned to new
producer organisations. Moreover such analysis is also difficult due to the lack
of systematic data reporting in the past.

13

Annex I of Regulation (EC) No 412/97 spells out the criteria for recognition. Criteria set are
different both for Member States and type of producer organisation. To set up a producer
organisation requires a minimum of 5 producers. The higher the number of producers, the
lower the minimum value of marketed production. Thus the highest requirement, i.e. for
5 producers, was set at EUR 3 million. In the specific case of nuts and mushroom POs this
amount was lowered to EUR 0.25 million.

Nevertheless Article 2(2) offers Member States the possibility “to replace the volume of
production set out in Annex I by a percentage of the marketable production of a producer
organisation in terms of the average total production of the economic region where the
producers in the organisation are established. This percentage shall not be lower than 15%. In
such cases, the minimum number of producers shall be twenty for the producer organisations”.

Only 5 Member States (B, D, EL, I, A) have taken up this opportunity to increase the minimum
criteria.

At present nearly 1 400 Producer Organisations channel about 40% of all fruit
and vegetable production. This represents a value of about EUR 12.5 billion.
But while in the Netherlands and Belgium more than 70% of all fruit and
vegetable production is marketed through producer organisations,
this
percentage is much lower in the three most important producing Member States:
less than 30% for Italy, 50% for Spain and 55% for France.

The number and size of Producer Organisations is extremely diversified among
Member States: 5 Member States (B, DK, A, FIN, S) have fewer than 10 POs
while 4 Member States have more than 100 (EL, E, F, I). This heterogeneity
concerns not only the number of Producer Organisations but is reflected in the
number of members and the production marketed by each PO.

Percentage of the value of all fruit and vegetables marketed through recognised POs
(Average 1999/2000)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

NL

B

F

E

S

DK

D

I

UK

IRL

A

EL

FIN

P

L

All fruit and vegetables marketed through a recognised PO

All fruit and vegetables not marketed through a recognised PO

14

Breakdown of the value of all fruit and vegetables marketed directly or through recognised POs
(Average 1999/2000)

7000

6000

5000

€

4000

i

o
M
n

i

3000

2000

1000

0

E

F

I

NL

D

EL

UK

B

P

A

IRL

FIN

DK

S

L

Value of all fruit and vegetables not marketed through a recognised PO

Value of all fruit and vegetables marketed through a recognised PO without an Operational Programme

Value of all fruit and vegetables marketed through a recognised PO with an Operational Programme

2.2.2.

Producer organisations and their market segment

Most surprisingly, these differences between Member States cannot be seen
when comparing cumulative production values marketed by POs. The number of
POs and the importance of marketed production is nearly the same for most
Member States: 10% and 20% of POs represent respectively around 40% and
60% of the production marketed by POs. However Belgium and the Netherlands
on the one side, and Portugal on the other show drastically different trends.

Average value of production marketed by POs for 1st Decile
million EUR
600

524

500

400

300

200

100

0

90.9

43.3

35.7

29.8

28.4

B+NL (*)

I
(*) first 2 deciles

D

F

UK

E

9.3

EL

4.7

P

62.4

EU-15

15

Comparison of production marketed via POs and total marketed production
in the 15 MS

)

%
n
i
(

i

s
O
P
a
v
d
e
t
e
k
r
a
m

n
o
i
t
c
u
d
o
r
P

80

60

S

40

IRL
DK

20

ÖS

FI

P

0

L

0

B

NL

UK

D

EL

F

E

8
2
Total production marketed (billion EUR)

4

6

I

10

As far as the economic dimension of Producer Organisations is concerned, an
important share of the overall production marketed through POs is concentrated
on a small number of POs. Moreover, their economic dimension is not related to
the share of production marketed through them in each Member State. Only in
the Netherlands and Belgium do Producer Organisations have a volume of
production close to or higher than EUR 100 million and market more than 70%
of Fruit and Vegetables. In most of the other Member States whose POs have a
small or medium dimension - between EUR 5 to 20 million - the production
marketed through them represents less than 55% of the overall production.

EU-15 : Cumulative value of production marketed by POs

R
U
E
n
o

i
l
l
i

m

10

8

6

4

2

0

20% of POs =
70% of total value
marketed by POs

10% of POs =
56% of total value
marketed by POs

0

200

400

600

800

1.000

Cumulative Number of POs

16

Regional analysis sheds light on the present weaknesses of the organisation of
fruit and vegetable production. In a few regions POs control a high share of the
regional fruit and vegetable final output. In these cases, POs have generally
reached a satisfactory economic size (the Netherlands, Belgium, West of France,
Limousin, Murcia, Trentino Alto Adige, Emilia Romagna).

There are even fewer regions where a high share of F&V final agricultural
output is correlated with an important level of production organisation: Trentino
Alto Adige (I), Murcia (E) and Emilia Romagna (I).

On the other side, weak economic organisation still persists in regions where
in the regional final agricultural output: South of Italy,
F&V is important
Comunidad Valenciana, Andalucia, Algarve and Greece.

17

EU-15 : Average value of production marketed by POs
breakdown by class

million EUR

70

60

50

40

30

20

10

0

10

20

30

40

50

60

70

80

90 100

class (centile)

Nevertheless, it is not possible to make any direct link between the regional
importance of F&V production and the degree of production organisation. The
this
diversity of
phenomenon as illustrated in the Graph “POs and F&V final output at regional
level”.

Italy and Spain highlights

regional cases

in France,

Table 2 : Producer organisations

VMP 1

VMP 2

VMP 3

No. POs

(Valueof
marketed
productionof
Member
States)

(Valueofmarketed
productionviaall
POs)

(Valueofmarketed
productionviaPOs
whohaveanOPor
AP)

MS

million EUR million EUR % million EUR

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

1 038.43

167.5

1 735.84

2 159.38

6 768.57

4 889.19

186.51

8 700.0

5.0

738.14

48.54

593.97

325.00

71%

29%

34%

15%

738.14

46.79

528.56

156.91

3 391.51

50% 3 108.34

2 709.93

55% 2 461.01

17.62

9%

16.66

2 347.84

27% 2 034.28

0.00

0%

0.00

2 279.0

1 618.61

71% 1 591.38

344.11

782.49

174.61

166.22

59.88

61.13

22.51

67.02

1 740.96

457.91

17%

8%

13%

40%

26%

59.88

35.13

19.71

67.02

446.38

Total

31 137.81

12 459.63

40% 11 310.19

%of
VMP2

100%

96%

89%

48%

92%

91%

95%

87%

0%

98%

100%

57%

88%

100%

97%

91%

18

total

with OP/AP

Average value
of production
marketed
by PO

(requesting
aid)

%of
total

million EUR

6

6

59

106

536

340

6

120

0

14

4

39

9

7

75

6

5

36

57

414

278

5

88

0

11

4

24

5

7

68

1 327

1 008

100%

123.02

83%

61%

54%

77%

82%

83%

73%

0%

79%

100%

62%

56%

100%

91%

76%

8.09

10.07

3.07

6.33

7.97

2.94

19.57

0.00

115.62

14.97

1.57

2.50

9.57

6.11

9.39

s
O
P
a

i

v
d
e
t
e
k
r
a
m
n
o
i
t
c
u
d
o
r
p
f
o
%

l

i

a
n
o
g
e
R

POs and F&V final output at regional level

100

80

60

40

20

0

0

F

P

D

I

E

B+NL

500 1.000 1.500 2.000 2.500 3.000 3.500

Regional F&V final output (million EUR)

The ’96 reform has not yet led to any substantial and global increase in the
economic dimension of POs.
already established Producer
Important,
Organisations
inserted in a well-structured economic environment have
apparently been able to benefit fully from the opportunities offered by the ’96
reform. (See also §2.5 on operational funds and their utilisation). Moreover the
differentiation between types of PO introduced by the Council has not impelled
any move towards increased PO specialisation.

It would appear important to induce some emulation between POs in order to
incite them to streamline their activity and improve services delivered. This
process has to be re-launched and could give rise to several questions:

–

Should different types of POs be retained?

– Why not leave producers the freedom to decide which PO they want to

join for which product?

–

Should the ceiling of 25% of production that may be sold directly to
consumers be reduced?

their operational

The basic regulation offers Producer Organisations the opportunity to delegate
management of
to an association of producer
funds
organisations. Many POs welcomed this possibility. The role of an association
of producer organisations is at present limited to establishing, implementing and
submitting operational programmes, while they could represent a gradual and
flexible solution to overcoming the problem of the economic dimension
limitation of many producer organisations. This would mean that associations of
producer organisations would have to be granted the same legally established
rights as its constituents,
in order to comply with competition rules. The
question would then be whether and how this process should be supported.

19

2.3.

Interbranch organisations and agreements

Interbranch organisations were recognised by the ’96 Regulation. They are
defined as legal entities made up of representatives of economic activities linked
to the production and/or trade and/or processing of Fruit and Vegetables.
Among their powers is the right to lay down rules in respect of production and
marketing, that are stricter than Community or national rules. Their recognition
is subject to their representing a significant share of production in the area in
which they operate. At present only five interbranch organisations have been
recognised: two in France- - INTERFEL for fresh fruit and vegetables and
ANIFELT for fruit and vegetables for processing, and three in Spain - AIPEMA
for pears and apples, AILIMPO for lemons and grapefruit, INTERCITRUS for
fresh and processed citrus (oranges, mandarins, clementines, satsumas).

Notwithstanding Article 81(1) of the Treaty, agreements made by recognised
interbranch organisations are authorised. Agreements have to be notified to the
Commission to be enforced. As shown in Table 3, only France, and to a lesser
extent
the Spanish citrus sector, have made extensive use of interbranch
agreements.

Table 3: Interbranch agreements

Interbranch
Organisations

INTERFEL
ANIFELT
INTERCITRUS
AILIMPO
AIPEMA

No. of agreements

Member
State
France
France
Spain
Spain
Spain

notified now in
force
24
3
1
4
-

30
8
1
4
0

No. of fruit
concerned

6
2
4
4
-

No. of
vegetables
concerned
5
1
-
-
-

General
agreement
for F&V
1
-
-
-
-

There are 2 main reasons for this use. In most countries the weakness of
level prevents them from
regional or national
producer organisations at
representing most of the production geared towards trade and processing. In
other regions and/or countries, the reason is the different structure of the fruit
and vegetable chain: the production sector has put in place a marketing interface
that avoids the use of the Community interbranch agreement.

The introduction of some modifications could make interbranch agreements
more attractive. Article 20(2) requires the prior notification of agreements to the
Commission and specifies that an agreement may not be implemented until two
months after receipt of all the details required. Moreover, in cases where an
interbranch organisation operating in a specific area (region, group of regions,
Member State) is considered to represent a given product, i.e. where it accounts
for at least two thirds of the production and/or trade in and/or processing of the
product, the Member State concerned may, at the request of the interbranch
organisation, extend its rules to other operators in the area in question. The rules
for which such an extension may be requested must however have been in force
for at least one marketing year.

These two conditions might appear excessively constraining, in particular for the
fruit and vegetable sector, which is often required to respond quickly to market
signals.

20

As already enacted by the basic regulation for wine, a solution to avoid the two
month delay in implementing agreements would be simply to bring rules to the
attention of operators, by publication in the Official Journal of the Member State
concerned. This would at the same time signal implementation of the rules,
which would likewise be notified to the Commission. The Commission would
then check that they complied with Community law.

As with the legal solution adopted in the wine sector, the requirement for one
year's enforcement before authorising any extension might also be dropped
without weakening the Commission's control.

Finally on this topic of extension of rules, interbranch organisations may request
financial contributions (Article 22(2)) for activities they carry out, from groups
which are not members but which benefit from these activities. This possibility
may however only extend to products grown in the region(s) concerned and not
to products imported from third countries. Given the jurisprudence of the Court
of Justice a broader application than the present one would require an explicit
decision of the Council.

2.4.

Intervention arrangements and withdrawals

Under the new regime producer organisations have the possibility of making
withdrawals of any of the products covered by the regime, in whatever quantity
and for whatever period they consider appropriate. For 16 products mentioned in
Annex II of the Regulation (EC) No 2200/96, producer members of POs may
benefit from EU withdrawal compensation up to a ceiling of 10% of the quantity
marketed by the producer organisation, although this 10% ceiling will only be
reached at the end of a 6-year transition period, i.e. marketing year 2002/03.

Table 4: Withdrawals: ceilings applied during transition period

Year

Citrus

Melons,
watermelons

Apples,
Pears

Other Annex II
products

1997/1998
1998/1999
1999/2000
2000/2001
2001/2002
2002/2003

35%
30%
25%
20%
15%
10%

10%
10%
10%
10%
10%
10%

50%
45%
40%
30%
20%

8.50%

10%

Moreover,
imbalances
in order to forestall possible widespread structural
leading to large volumes of withdrawals, an intervention threshold was foreseen
for 11 products listed in Annex II. An overshoot of the intervention threshold
triggers a reduction in community compensation in the following marketing
year. This happened with cauliflower, peaches and nectarines during the
1999/2000 marketing year and therefore a reduction of compensation applies for
2000/01.

In addition, the payment of community compensation was simplified by setting
a single amount for each product, valid throughout the European Union. A

21

variation ranking from -44% to +9% according to the product has to be
implemented during the transition period.

Table 5 : Withdrawal community compensations for some products

Peaches
Apples
Nectarines
Cauliflowers
Apricots
Pears
Mandarines
Lemons
Tomatoes
Oranges
Clementines

1996/97*
19.49
14.74
22.57
11.69
23.40
12.79
15.66
14.02
5.77
13.45
11.98

Average amount for
2000/01
1997/98
12.45
14.65
9.56
10.69
14.78
17.39
7.73
9.34
16.06
18.90
9.10
10.18
14.26
16.15
13.15
13.37
5.47
6.44
14.13
14.33
12.9
12.74

from 2002
10.99
8.81
13.04
7.01
14.17
8.39
13
13
4.83
14
13

2000/1996
in %
-36%
-35%
-35%
-34%
-31%
-29%
-9%
-6%
-5%
5%
8%

2002/1996
in %
-44%
-40%
-42%
-40%
-39%
-34%
-17%
-7%
-16%
4%
9%

Note:
* Amounts are calculated on the basis of Member States declarations for 1996/97.
Before the '96 reform institutional prices were possibly decreased by some coefficient according to some
criteria (presentation, etc.).

Non members of producer organisations may benefit
from community
withdrawal compensation at a 10% reduced rate and for a volume limited to
10% of their marketed production.

The dramatic reduction in volumes withdrawn - 50% down on the 5 year pre-
reform period - has mainly been due to the co-responsibility of producer
organisations in withdrawals, i.e. the implementation of reduced withdrawal
ceilings for each producer organisation, rather than to the reduction in the unit
amount of Community compensation. This reduction in withdrawn volumes,
insofar as it entails a reduction in waste materials, also has a positive
environmental consequence.

The decline in withdrawals has applied to all Annex II products and in all
Member States. At EU level only withdrawals for nectarines still represent more
than 10% of production. At Member State level withdrawals appear not to have
been significantly curbed for tomatoes in Spain, cauliflower in the United
Kingdom, or for nectarines and peaches in France.

Table 6: Withdrawals of Annex II products

Quantities of Annex-II products
withdrawn
Community compensation paid
Number of products
Supplement to Community compensation million
Number of products getting supplements

million

000 t

1997/98

1998/99

1999/2000*

€

€

1 401

155.8
16
8.5
11

916

92.1
16
6.8
13

693

74.7
9
4.0
7

Note: For marketing year 1999/2000 incomplete data, Italy missing, data for citrus, pears and

apples not available.

Traditionally it is considered that withdrawals have a dual effect:

–

on the one side they create an artificial outlet for fresh products,

22

–

on the other they tend to prevent market prices from falling too low.

A comparison of withdrawals before (1991-1996) and after the ’96 reform has
been carried out for five products (cauliflower, tomatoes, peaches, nectarines,
apples). Up to 1996, an analysis of monthly prices and withdrawals shows both
effects applying. After the ’96 reform the use of withdrawals as a market outlet
tends
in
withdrawals inducing them to restrict the use of withdrawals to support a bottom
price.

the co-responsibility of producer organisations

to disappear,

MONTHLY MARKET PRICE and WITHDRAWALS
APPLES EU-15 (July 1991 - June 1999)

Withdrawals (t)

pre reform post reform

600.000

500.000

400.000

300.000

200.000

100.000

0
20

30

pre reform

Y = bx

a = -4.62 b=3.6E+11 (r² = 0.65)

post reform : regression NS

40

50
Prices (EUR/t)

60

70

80

MONTHLY MARKET PRICES and WITHDRAWALS
TOMATOES EU-15 (June 1991 - December 1998)

withdrawals (t)
50.000

40.000

30.000

20.000

10.000

0

30

40

50

60

70

80

90

100

pre reform

a

Y = bx

prices (EUR/t)

a = -2.28 b=6.3E+7 (r² = 0.35)

post reform : regression NS

23

2.5.

Operational Funds and their utilisation

All
recognised producer organisations may receive Community financial
support to set up an operational fund. This fund is financed half by members of
the producer organisation and half by EU contribution. Not all producer
organisations request Community financial support. But the number of producer
organisations requesting support has grown faster than the number of recognised
producer organisations and now the difference has
shrunk to nearly
200 producer organisations (representing around 5% of the value of marketed
production).

At present the amount granted to producer organisations is capped by a double
ceiling of 4.5% of the value of the marketed production of each producer
organisation, provided that the total amount of financial support represents less
than 2.5% of the production marketed by all producer organisations. In spite of
this constraining and complex mechanism, aid granted has increased sharply
during the first years of the reform. Expenditure now covers 95% of POs and the
ceiling of 2.5% has been reached. Under the present rules any increase in the aid
granted to producer organisations will come from an increment of production
marketed by them, i.e. through new POs, or new members, or more production.

Table 7: Producer Organisations with an Operational Programme

Number of Producer Organisations
with an Op. Prog.
Value of Production marketed by
POs with an Op. Prog.
Production marketed by POs with
Op. Pr. versus Production of all POs
Aid requested
Aid granted

€

€
€

million

%

million
million

1997

1998

1999

2000
(e)

1997/2000
in %

680
8 586

1 447
845
9 974

1 327
1 008
11 310

1 333
1 120
12 186

65%
42%

79%

84%

91%

95%

20%

226
119

312
238

423
311

436
321

93%
170%

The percentage of aid granted tends to be over 2.2% (of production value
marketed by POs) among important or big producing Member States with two
notable exceptions: Portugal and Greece with respectively 1.11% and 0.82% in
1999. Thus not only are these two Member States in a weaker position in terms
of production marketed through producer organisations - respectively 8% and
15% in 1999 - but their producer organisations do not even benefit from the
support they are theoretically entitled to.

The distribution of aid among producer organisations reflects their economic
dimension, with a higher concentration in the biggest POs:

–

–

–

–

10% of POs get 50% of aid granted and on average EUR 1.9 million per PO,

20% of POs get 64% of aid granted and on average EUR 0.43 million per PO,

47% of POs get less than EUR 100 000,

27% of POs get less than 50 000 EUR.,

24

EU-15 : average aid granted to POs
distribution by class
(each class represents 101 POs)

million EUR

2

1.5

1

0.5

0

47% of POs get less
than 100 000 EUR

27% of POs get less
than 50 000 EUR

10

20

30

40

50

60

70

80

90

100

class (centile)

Operational funds may be used to finance:

–

–

market withdrawals
compensation, and to top up Community withdrawal compensation,

for products not benefiting from Community

an operational programme after approval by the competent authorities of
the Member State.

Table 8: Withdrawals financed by operational funds
Non Annex II products
Number of products withdrawn
Quantities withdrawn
Compensation paid
Number of Products > 1000 t
Quantities withdrawn of products > 1000 t
Number of products > 0,1 million
Compensation paid by products >
0,1 million

000 t
million

million

000 t

€

€

€

€

Annex II products
Number of products withdrawn
000 t
Quantities withdrawn
Community Compensation paid
million
Supplement to Community compensation million
Number of products getting supplements

€
€

1997/98
28
9.4
1.5
4
6.9
5

1.3

1997/98
16
1 401
155.8
8.5
11

1998/99
29
28.7
2.0
5
2.4
3

1999/2000*
30
15.1
1.5
3
1.0
3

1.4

1.1

1998/99
16
916
92.1
6.8
13

1999/2000*
9
693
74.7
4.0
7

Note:

For marketing year 1999/2000 incomplete data, Italy missing, data for citrus, pears and
apples not available.

The amount paid to supplement Community compensation is more than twice
the amount paid for withdrawals of Non-Annex II products. The amount
dedicated to withdrawals is less than 0.5% of the operational fund. This is far
from the ceiling that could be used for that purpose at PO level and which has
gradually to be reduced from 60% to 30%, in 2002/03, of the operational fund of
each PO.

25

In fact, in the context of the more open and competitive market resulting from
the 1994 GATT Agreement, operational programmes were inserted in the new
regime in order to re-direct budget support and speed up the adjustment of the
fruit and vegetable sector and promote a more environment oriented operation of
the sector.

Article 15(4)(a) indicates which measures may “in particular” be financed. This
enumeration mentions:
improvement of product quality, boosting products'
commercial value, promotion of the products targeted at consumers, creation of
organic product lines, the promotion of integrated production or other methods
of production respecting the environment and the reduction of withdrawals. The
following point (§4 (b)), anticipating the future Rural Development Regulation
inclusion of
(Regulation (EC) No 1257/1999) makes compulsory the
environmental measures into operational programmes. Furthermore, the last
point of §4 requires producer organisations to provide in their programmes for
the technical and human resources required to ensure compliance with
marketing standards, plant-health standards and rules, and maximum permitted
levels of residues.

Proposed operational programmes shall not cover operations or expenditure on
the list of ineligible operations and expenditure given in the Annex of the
implementing regulation (Regulation (EC) No 411/97).

Unfortunately it is not possible to provide a systematic insight into the use of
operational funds. In fact no centralised yearly reporting routine is at present
enforced. In future, based on a harmonised questionnaire, it would be possible to
have a clearer picture of environmental measures implemented in operational
programmes and the share of operational funds dedicated to these later.
However, a case study carried out
in Spain in 1998 of 332 operational
programmes sheds light on the utilisation of funds. Programmes were broken
down into eight categories of measures for a total amount of EUR 54 million
(22.5% of the EU total). The following graph summarises the results:

Irrigation
11%

Improvements to
packing centres
29%

Seedbeds and
glasshouses
29%

General
machinery
4%

Specific
machinery
6%

Seeds, root
s tocks,
packaging
6%

Initial processing
1%

Environmental
meas ures
14%

26

2.6.

Eco-conditionality

The environmental consequences of the fruit and vegetable sector are closely
related to generally intensive production and high input
levels. This is
particularly true for pesticides since product marketability often requires
repeated applications so that regions with the highest pesticide use rates in the
EU tend to have an important fruit and vegetable output. Whilst in the southern
MS very high levels of water use namely through irrigation relate to the fruit
and vegetable sector, in some northern MS fruit and vegetable production tends
to involve a considerable use of energy input. The management of wastes
including withdrawn produce and used plastics is also a matter of environmental
concern. Finally, the effects of the sector on the landscape are mixed with
positive contributions in regions of aesthetic values associated with traditional
fruit tree orchards and negative impacts with the proliferation of greenhouses in
highly specialised areas.

Council Regulation (EC) No 2200/96 several times mentions the need for the
fruit and vegetable sector to take better account of environmental aspects. First
of all, Article 11(1)(b)(4) specifies that producer organisations have “in
particular the aim of promoting the use of cultivation practices, production
techniques and environmentally sound waste-management practices in particular
to protect the quality of water, soil and landscape and preserve and/or encourage
biodiversity”.

Article 15(4)(b) on the setting up of operational funds specifies that operational
programmes financed by them have to “include action to develop the use of
environmentally sound techniques by the producer members with regard to both
cultivation practices and the management of waste materials”. It makes explicit
reference to the first article of Regulation (EEC) No 2078/925 concerning
agricultural production methods compatible with the requirements of the
protection of the environment and the maintenance of the countryside.

Article 1 of Regulation (EEC) No 2078/92 specifies that environmentally sound techniques aim
to encourage:

– the use of farming practices which reduce polluting effects of agriculture,

– an environmentally favourable extensification of crop farming,

– ways of using agricultural land which are compatible with protection and improvement of
the environment, the countryside, the landscape, natural resources, the soil and genetic
diversity.

As the list of techniques in Article 15(4)(b) is not exhaustive,
the fields
mentioned in Annex III may also be quoted as areas for the development of
environmentally sound techniques: the use of fertilisers and manure, the use of
plant-health products and other crop protection methods, maximum residue
the
content

in fruit and vegetables of plant-health products and fertilisers,

5

Repealed by Regulation (EC) No 1257/1999.

27

disposal of by-products and used material, and the destruction of products
withdrawn from the market. Article 15(4)(a) also mentions the creation of
organic product
lines and the promotion of integrated production or other
methods of production respecting the environment.

The commitment to environmental concern is strengthened even further by
Article 15(4)(c), which spells out that operational programmes have to include
“the technical and human resources required to ensure compliance with plant-
health standards and rules, and maximum permitted levels of residues”.

A national
relating to
framework for drawing up general conditions
environmental measures has to be established by Member States and then
submitted to the Commission. The Commission may ask for modifications to the
proposed framework if it finds that it does not enable the aims set out in
Article 174 of the Treaty and in the Community programme of policy and action
in relation to the environment and sustainable development to be attained.

The wording of the provision indicates that
the Regulation envisages the
possibility, as a starting point, of a relatively low level of utilisation of
environmentally sound techniques and requires this to be improved, without
necessarily defining the minimum standard to be attained. The provision aims
more to start and implement a process.

Measures which may be classified as “good agricultural practice” and/or
Community/Member States' compulsory environmental measures which are
excluded from the scope of application of Regulation (EC) No 1257/1999
cannot be included in operational programmes. Such measures must in any case
through
be respected by all farmers,
farming.

to avoid damaging the environment

All Member States have sent their national environmental frameworks to the
Commission. Good agricultural practices, including compulsory measures, are
clearly excluded from the scope of operational programmes. But it is sometimes
less clear whether the measures mentioned go beyond good agricultural practice.
Where compulsory measures are particularly stringent compared to those of
other Member States,
to apply community
there have been requests
requirements pragmatically with a view to ensure that farmers can comply with
this higher national standards.

Environmentally sound measures allowed to form part of an operational
programme may obviously overlap with agri-environmental measures provided
for under Regulation (EC) No 1257/1999. This raises the question of
consistency between the various measures and the minimum level required in
operational programmes. The minimum requirements laid down in the agri-
environmental schemes do not explicitly form part of
the operational
should make sure that any
programmes. Nevertheless, Member States
contradiction is avoided between operational programmes and measures carried
out under agri-environmental policies. The necessary steps have to be taken to
avoid funding the same measures twice. Most Member States do not seem to
pay the necessary attention to encouraging real complementarity between these
instruments.

28

Up to now the Commission services have not had the possibility of carrying out
an impact assessment of these measures. Most Member States have provided the
Commission with a detailed list of eligible environmental measures to be
introduced into operational programmes. Although the information in the hands
of the Commission is incomplete, the first impression is that the mechanism
would be satisfactorily applied.

Another important environmental aspect explicitly mentioned in the regulation
concerns the destination of products withdrawn from the market. Producer
organisations “must respect the environment, particularly as regards water and
landscape quality” (Article 23(2)). In this case too Member States shall establish
a national framework for the general conditions relating to withdrawals,
incorporating methods which respect the environment. The Commission may
ask for modifications if needed. On their side producer organisations have to
notify within the reporting system full details concerning the measures taken to
ensure environmentally sound practice in connection with withdrawals, to their
competent national authorities, which shall forward the information to the
Commission.

Most Member States have sent detailed information to the Commission on this
their present national
issue, but some others have tended to consider that
environmental legislation covers in a satisfactory way the requirements of
Regulation (EC) No 2200/96 and that no specific framework has to be
elaborated.

2.7.

The case of nuts

In 1989, Regulation (EEC) n° 1035/72 (Title IIa) introduced specific measures
for the nut sector, in order to make good the inadequacy of production and
marketing facilities. These measures cover five products: almonds, hazelnuts,
walnuts, pistachios and locust beans.

The principal measure is the financing of 10-year quality and marketing
improvement plans, presented by producer organisations.

Plans qualify for 55% public funding (of which EU 45%, Member State 10%)
subject to a maximum amount per hectare. Financing of the measure is intended
to be temporary and digressive in the maximum level of aid paid.

The measures were repealed by Regulation (EC) No 2200/96. However existing
plans may continue to term: the last will expire in 2006.

Five Member States have POs using this scheme: E, F, I, EL, P. In total some
92 POs 6 run improvement plans. They represent over 600 000 ha of nuts. Spain
represents by far the greatest area (95%) with FR and IT sharing the remaining
5%. EL and PT have negligible areas.

6

This figure can vary due to mergers and cessation of activities etc.

29

EU expenditure on these specific measures from 1990-1999 was EUR
725 million. Expenditure for plans that have not expired is budgeted from 2000
to 2006 to be a further EUR 250 million.

Spain has been the largest beneficiary of the scheme (95% of total expenditure).
in regrouping supply (example: 85% of
Spain has been highly successful
almonds). In France 90% of walnut area has been included in plans. However
Italy, Greece and Portugal have been slow to implement the measures. As a
result only a small proportion of nut areas has been included in these Member
States.

Reg. 2200/96 also introduced in 1997 a (smaller-scale)
hazelnuts,
conditions. This scheme ends in 2000.

flat-rate aid for
to help producers face up to temporarily difficult economic

EU nut production via producer organisations (whether or not in existing plans)
is eligible for other additional support measures:

–

–

operational fund scheme of Regulation (EC) No 2200/96 (general support
mechanism for fruit and vegetables),

structural measures of Regulation (EC) No 1257/1999 (rural development
plans).

A number of nuts plans expired in 2000.

Expenditure by producer organisations in the more economically viable areas
improvements
has been on income
(orchards/marketing) and has helped producer organisations to become more
competitive.

on structural

support

also

but

However, for a substantial area, expenditure has been mainly on income support
(normal farming input costs) to improve product quality. This area is chronically
non-competitive (extensive, less-favoured areas and marginal production) in
market terms, although it does play an important role in maintaining rural
population and environmental effects (anti-erosion, fire-breaks).

2.8.

Citrus processing aid

The modification of the support regime for processed citrus approved in 1996
had a double aim:

–

–

on the production side to avoid that processing become a systematic
market outlet for production initially oriented to the fresh market,

on the processing industry side to allow re-orienting towards new products
(eg. chilled citrus juice) for which EU industry may be competitive.

30

The reformed system of aid for the processing of citrus fruit is based on the
following elements:

–

–

–

–

contracts between processors and producers through their producer
organisations,

an aid for producers granted through their producer organisations,

a free negotiation of purchase price for the raw material between producer
organisations and the processing industry,

a system of thresholds for each product (oranges, lemons, grapefruit and
small citrus fruits).

An increase in aid was granted for producer organisations which conclude a
pluriannual contract specifying minimum quantities. This possibility has been
used mainly in Italy and Greece and to a much lesser extent in Spain, where
most citrus production is oriented towards the fresh market.

To prevent systematic recourse to processing as an alternative outlet, a
maximum quantity for processing was set, the overrunning of which would
entail a reduction in aid. In spite of this constraining mechanism - aid was
reduced by 42%, 32% and 30% during the 1997/98, 1998/99 and 1999/2000
marketing years, respectively - the price received by producers for 1999/2000 in
Portugal and Spain was around or higher than the minimum price in force before
1997. In Italy and Greece the lower prices paid to producers mainly reflect the
processing industry's difficulty in adapting to this new situation and also the
quality of the raw material. In fact, where the citrus processing industry has been
able to adapt to final consumer demand in producing chilled or pasteurised
citrus juice, the price paid for the raw material has seen a positive development.

The abandonment of a minimum price had no disruptive effect on the citrus
processing sector and clearly initiated a trend towards a better valorisation of
citrus by the processing industry in three out of four producing Member States.

Table 9 : Processed oranges - Price Evolution 1996 - 1999

Member
State

Orange type

Amount
covered by
processors

Price paid by processors

Minimum
price

Amount received by producers

EUR/100 kg

EUR/100 kg

EUR/100 kg

EUR/100 kg

1996/97

1997/98

1998/99

1999/2000

1996/97

1997/98

1998/99

1999/2000

Portugal Winter orange

Late

Navel

White

Late

White

Pigmented

Spain

Italy

Greece

4.75

4.75

4.75

4.75

4.75

4.75

4.75

4.75

4.49

4.79

5.38

6.58

1.75

3.35

0.59

4.92

6.89

5.94

6.53

7.72

3.04

6.59

1.48

14.18

14.18

14.18

14.18

14.18

14.18

14.18

14.18

10.31

10.61

11.2

12.4

7.57

9.17

6.41

11.71

13.68

12.73

13.32

14.51

9.83

13.38

8.27

12.95

14.44

14.17

15.37

16.58

8.77

12.12

8.18

5.99

7.48

7.21

8.41

9.62

1.81

5.16

1.22

31

2.9.

Coexistence of the F&V regime and the new Rural Development regulation

Measures foreseen in the operational programmes of POs and financed by
operational funds may overlap with measures financed within the framework of
structural policy, i.e. presently Rural Development Plans of Rural Development
Regulation (Reg. (EC) No 1257/1999).

The need for consistency between measures financed by Rural Development and
those financed by the COM lead to the categorical imperative that measures
included in Rural Development Plans do not counteract the political guidelines
of the COM nor weaken them. On the contrary, rural development plans should
be complementary to the COM and in particular:

–

–

–

rural development support should be available to PO members without
discrimination,

rural development plans should not enable non-recognised POs to
overcome the COM requirements regarding recognition,

similarly the regrouping of supply by POs should not be weakened by the
inclusion in Rural Development Plans of marketing measures in favour of
producers who are not member of POs.

Such a conflict does not exist for those measures already excluded from the
scope of the COM by implementing regulation (Regulation (EC) No 411/97)
e.g. investment for processing fresh products.

In order to strengthen the consistency and coherence between rural development
and COM measures Member States or regions have, if necessary, to specify in
their Rural Development Plans measures falling within the scope of the COM.
An exception has to be requested and justified (in accordance with Article 31(3)
of Regulation (EC) No 1750/1999 and Article 37(3) of Regulation (EC)
No 1257/1999). Member States or regions determine the type of measures that
may be financed in the Rural Development Plan. These measures then will not
be eligible for financing in operational programmes funded by the COM, and
vice versa. In order to set a clear cut separation between the two instruments,
some regions or Member States have chosen precise criteria such as the amount
of investment.

2.10.

Budgetary issues

Since 1997 withdrawals have sharply declined, but for 2000 might be higher
than calculated in the financial statement of COM(95) 434. After a slow start
operational funds have reached the expected amount in 2000. Spending for
citrus processing has always - with the exception of 1998 - been higher than
expected. In total, spending for citrus, fresh fruit and vegetables has been
maintained below the level entered in the ’95 financial statement.

32

Table 10: Budget spending 1996-2000 (million EUR)

Financial
statement

Spending Financial
statement

Spending Financial
statement

Spending Financial
statement

Spending Financial
statement

Spending

1996

1996

1997

1997

1998

1998

1999

1999

2000

2000*

Exports refunds

Withdrawals

Operational Funds

Nuts

Sub-total

Other measures

Total fresh F&V (1)

98.5

330.7

128.7

105.0

662.9

172.0

834.9

73.4

192.9

0.0

81.3

347.6

136.0

483.6

92.2

216.6

180.1

100.0

588.9

107.0

695.9

67.0

293.2

6.4

77.3

443.8

19.0

462.8

85.9

202.4

205.8

101.3

595.4

55.0

650.4

40.8

138.3

239.0

110.3

528.4

104.4

632.8

79.6

186.1

231.6

102.1

599.4

45.0

644.4

23.2

90.6

256.4

93.6

463.7

40.8

504.5

73.3

156.3

257.3

104.1

591.0

50.0

641.0

34.7

169.2

264.7

96.0

564.6

0.0

564.6

Citrus (2)

189.4

234.6

186.5

244.1

182.9

113.2

179.3

202.7

175.7

194.7

Total (1) + (2)

1024.3

718.2

882.4

706.9

833.3

746.1

823.7

707.2

816.7

759.3

* Real and estimated spending

Differences between spending for operational funds and the yearly aid granted
to POs (cf. Table 7 § 2.5) lay in delays between commitments and payments. In
this initialisation period delay was spread over 4 years, but should progressively
be reduced to three.

National and Community checks

The special corps of inspectors in the fruit and vegetable sector of the European
Commission carried out control missions within the Member States throughout
the 1999. The objective of these missions was to verify the application of
Community regulations relative to common quality norms, and an assessment of
quality controls was carried out in order to evaluate the working of official
quality control services.

The conclusions of each report have been transmitted to the different Member
States concerned in their own language. A summary of the findings made in
each Member State will be the focus for discussion during a meeting of fruit and
vegetable experts at the beginning of 2001.

33