Opinion of the Economic and Social Committee on the "Proposal for a Council Regulation amending Regulation (EEC) No 2358/71 on the common organisation of the market in seeds and fixing the aid granted in the seeds sector for the 2002/2003 and 2003/2004 marketing years"
Date: 2001-09-12
Institutions: European Economic and Social Committee
Subjects: aid to agriculture, common organisation of markets, seed

C 311/30

EN

Official Journal of the European Communities

7.11.2001

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation
amending Regulation (EEC) No 2358/71 on the common organisation of the market in seeds and
fixing the aid granted in the seeds sector for the 2002/2003 and 2003/2004 marketing years’

(2001/C 311/07)

On 17 May 2001, the Council decided to consult the Economic and Social Committee, under Article 37
of the Treaty establishing the European Community on the above-mentioned proposal.

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 19 July 2001. The rapporteur
was Mr Lio´ lios.

At its 384th plenary session (meeting of 12 September 2001) the Economic and Social Committee
adopted the following opinion by 92 votes in favour, with three abstentions.

1.

Introduction

In its draft amendment to the relevant directive (1), the
1.1.
Commission argues that, in its opinion, the European Union
seed sector has suffered a number of serious problems in
recent years. According to the Commission, there has been a
major increase in the area sown to seeds and in the quantities
produced, while exports and the stocks held by the Community
have also risen. The danger is that this will upset the balance
of the market for seeds. The Commission also states that there
has been a constant rise in budget spending for the sector,
accelerating during 1999 and 2000 to reach EUR 109,5
million.

On the basis of

1.2.
recommends:

these findings,

the Commission

— maintaining the amounts of aid to be granted to the seeds
sector for the 2002/2003 and 2003/2004 marketing
years at current levels;

— doing away with the distinction between the three
varieties of Lolium perenne L. seeds and fixing a single rate
of aid for the 2002/2003 and 2003/2004 marketing
years;

— introducing a stabilising mechanism for seed production,
with the exception of rice seed for which there is already
one in place. This stabiliser will be similar to the one in
place for rice seed.

2. Comments

2.1.
The Community recognised the special nature of the
market for certain seeds in timely fashion and for that reason
adopted the directive on the common organisation of the

market in this area in 1971 (2). The sector’s specific nature has
since grown increasingly more marked and complex owing to
problems that have arisen in the food chain (see point 2.5.5).

2.1.1.
Seed cultivation is very important for the employ-
ment and earnings of producers, the socio-economic balance
of several rural regions in the EU,
the preservation of
biodiversity and, in part at least, the security of the EU seed
supply (Article 33(1) of the Treaty establishing the European
Community).

The situation on the market for seeds is such that it
2.2.
does not ensure producers a fair income. Therefore,
in
accordance with Article 3(1) of Council Regulation (EEC)
No 2358/71, aid must be granted for the production of
these products. The absence of other mechanisms (price
intervention, border protection, etc.) in the COM for seed
makes the system of fixing the lump sum of aid per hectokilo
of seed produced all the more important for the functioning
of the market.

2.2.1. With regard to fixing aid levels, the Commission
recommends maintaining the current amounts, for the sole
purpose of controlling budget spending for the sector. This
proposal is acceptable in principle, but it should be mentioned
that a fundamental point has been overlooked. Article 13 of
Regulation (EEC) No 358/71 specifically requires consideration
to be given to the objectives of Article 33 of the Treaty
establishing the European Community. This article states
that one of the most important objectives of the common
agricultural policy is ‘to ensure a fair standard of living for
the agricultural community, in particular by increasing the
individual earnings of persons engaged in agriculture’. The
shortage of data and adequate documentation in the proposal
gives rise to doubts as to whether the Commission proposal is
bearing this in mind.

(1) COM(2001) 244 final — 2001/0099 (CNS).

(2) Council Regulation (EEC) No 2358/71, OJ L 246, 5.11.1971, p. 1.

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2.2.2.
The Commission proposes that the amounts of aid
fixed for the various types of seed covered by the COM should
take effect for the 2002/2003 and 2003/2004 marketing
years. Until 1999, these amounts were fixed annually as part
of the ‘price package’. With Regulation (EC) No 1405/1999 (1)
(on the common organisation of the market in seeds and
fixing the aid granted in the seeds sector for the 2000/2001 and
2001/2002 marketing years), the Council fixed the amounts
for a two-year market period, as usual. If indeed the Com-
mission, as mentioned in its proposal, referred to the criteria
listed in Article 3(2) of Regulation (EEC) No 2358/71,
in
relation to foreseeable developments, then it would seem
advisable to extend the validity of these amounts to more
market periods; then the sector’s professionals would be able
to plan their activities within a more stable environment.

2.3.
The types of seed covered by the COM are referred to
in the annex to the proposal. For two of them the proposal
states zero aid, which in practice amounts to their exclusion
from the system. The specific situation in the market and the
principle of equal treatment could justify the entry of certain
seed types (e.g. cotton) into the aid system. Apparently the
Commission did not consider this option.

that

The Commission’s proposal

2.4.
there should no
longer be any differentiation between the three varieties of
Lolium perenne L. had already been decided by the Council
(Regulation (EC) No 1405/1999 Annex I). In its opinion on
this subject (2), the ESC commented on the need for a single
rate of aid to be fixed for this type of seed so as not to place
certain seed producers at a disadvantage by reducing support
for a specific variety. The Commission makes no reference to
this comment in its proposal.

2.5.
Unlike the other two proposals, the Commission’s
proposal to introduce a stabilising mechanism similar to that
for rice seed would mark a radical change in the sector.

be interpreted as indirectly blackmailing the sector, something
which is not particularly positive for an EU institution.

In addition,

2.5.2.
in attempting to justify the need to
introduce a stabilising mechanism, the Commission mentions
that there has been a major increase in areas sown to seed and
production in the seed sector with a parallel increase in exports
and stocks at Community level. These statements made in the
absence of comparative data should be treated with scepticism.
The statements may be dismissed in the case of varieties in the
categories of grasses and small-seed legumes, all of which are
subject to a cyclical production chain. Such seed varieties may
be used only for sowing, and storage is therefore both normal
and necessary. Seed companies which own the seed varieties
concerned plan production on the basis of volume of stocks
and taking account of market prospects for the variety in
question; in this way, production is, in the long term, adjusted
to match consumption via self-regulation.

2.5.3.
The choice of 1994 as year of reference is question-
able as during that year the area sown to seed was at the lowest
level of the last decade and in 1995 three new countries joined
the EU, all of which produce seed. The freedom to import
under the present system and the fact that the EU is a major
importer of seed have a substantial impact on the volume of
stocks, affecting producer prices and production.

2.5.4.
Cyclical growth in the production of grasses peaked
in 1998 and that of legumes in 1999, while a decrease in the
areas sown to seed and production can be observed which
should curb the level of spending on aid for the sector. This
reflects the normal pattern for seed varieties that may be used
only for sowing. Thus, the sector can clearly self-adjust both
to market demand and to the Community budget, without the
need for a stabilising mechanism.

2.5.1.
In the document, the Commission is most frank in
its explanatory memorandum, making it quite clear that the
main reason for introducing a stabiliser to the system is
the need to curb related budget spending. Naturally, the
Commission links the fixing of aid with the introduction of
the stabiliser, arguing that ‘keeping the aid at the current level
is acceptable only if a stabiliser mechanism is introduced to
keep spending within reasonable limits’ (3). This wording could

2.5.5.
The Commission’s report does not mention the likely
effects of introducing a stabiliser, on producers and on the
functioning of the system. Furthermore, no consideration is
given to the recent more general developments in the agricul-
tural sector leading to an increase in production of certain
plant
types (e.g. protein fodder plants for environmental
purposes).

(1) OJ L 164, 30.6.1999, pp. 17-22.
(2) Opinion on the Commission proposal on the prices for agricul-
tural products (1999/2000) of 28.4.1999, OJ C 169, 16.6.1999,
p. 20.

(3) Cf. Explanatory Memorandum — COM(2001) 244 final —

2001/0099 (CNS).

As for the type of stabiliser, the Commission states
2.5.6.
that it will be similar to that for rice seed. The application of
the rice stabiliser stems from the specific nature of the rice
market and system, which differ significantly from those of
other types of seed. In the case of rice, however, stockbuilding
and cyclical fluctuations are eliminated owing to its use for
human consumption.

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2.5.7.
Once the stabiliser is applied in the form of national
guaranteed quantities, the level of support may not be the
same throughout the Community as intended by Article 3(1)
of Regulation (EEC) No 2358/71. Seed growers in the various
Member States risk having their aid arbitrarily reduced or
eliminated altogether since some seed trading companies own
the seed types concerned and plan the volume of production.

2.5.8.
The proposal for the stabiliser mechanism is general
and vague. There is no mention of the maximum guaranteed
quantity (MGQ), specific means of calculating it, the link
between exceeding the MGQ and a reduction in aid, or
other basic elements that are a feature of every stabilising
mechanism. The decisions being taken by the Commission are
too important for the future of the sector to be taken not by
the Council but by the management committee, violating the
principle of consulting the other institutions of the EU such as
the ESC.

3. Conclusions

The ESC endorses the Commission’s proposal

3.1.
maintain the current level of aid to the seed sector.

to

3.2.
The ESC suggests that the Council and the Commission
should discuss the possibility of making this aid valid for
longer than the next two marketing years.

3.3.
The ESC is disappointed that the Commission has not
considered its view on ending the differentiation with regard
to Lolium perenne L. It invites the Council and the Commission
to fix a single level of aid for this species so as not to put
certain seed producers at a disadvantage.

The ESC recommends examining the possible need to

3.4.
allow certain other seeds into the system.

3.5.
The ESC rejects the Commission’s proposal for the
introduction of a stabiliser mechanism on the grounds that it
is ambiguous, vague and insufficiently documented and also
appears unnecessary.

3.6.
The ESC is doubtful as to whether in its report,
alongside budget spending, the Commission considered other
important objectives of the Treaty establishing the European
Community and broader developments in the EU’s agricultural
sector.

Brussels, 12 September 2001.

The President

of the Economic and Social Committee

Göke FRERICHS