Opinion of the European Economic and Social Committee on the "Proposal for a Council Regulation on the common organisation of the market in rice" (COM(2003) 23 final — 2003/0009 (CNS))
Date: 2003-05-14
Institutions: European Economic and Social Committee
Subjects: common organisation of markets, intervention price, production aid, rice

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CAP are clearly a backwards step in this respect. Moreover,
supplementing the second pillar by modulation alone would
weaken the complementarity between the two pillars of the
CAP. With regard to improving product quality, food safety

and environmental protection the proposals are a step in the
right direction. Although adequate resources are not provided
for this, the Committee believes that these could be increased
in the next reform of the Structural Funds.

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council
Regulation on the common organisation of the market in rice’

(COM(2003) 23 final — 2003/0009 (CNS))

(2003/C 208/18)

On 10 February 2003 the Council decided to consult the European 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 25 April 2003. The rapporteur
was Mrs Maria Luisa Santiago.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 7 votes to 6 with 9 abstentions.

1.

Introduction

As part of the mid-term review of Agenda 2000, the
1.1.
Commission proposes modifying the current regulation on the
common organisation of the market in rice (1), as follows:

— One-step reduction of the intervention price by 50 % to
an effective support price of EUR 150/t in line with world
prices.

— Increase in the current direct aid from EUR 52/t to EUR

177/t, broken down as follows:

— EUR 102/t as part of the single farm payment and
paid on the basis of historical rights limited by the
current maximum guaranteed area.

( 1) Council Regulation (EC) No 3072/95.

— EUR 75/t as a crop-specific aid for rice production,
which will be multiplied by each country’s yield, as
laid down in the 1995 reform.

— Reduction in the maximum guaranteed area from

433 423 ha to 392 801 ha.

— Replacement of the public intervention system by a
private storage scheme, the rules governing which will be
drawn up by the Management Committee, which will be
triggered only when the market price is less than the
support price (EUR 150/t) for a period of two consecutive
weeks.

— Triggering of a special measure when the market price
for paddy rice is below EUR 120/t for a period of two
consecutive weeks and is likely to remain below this
price.

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— Introduction of a system of degression, with reductions
varying from 1 % in 2006 to 19 % in 2012, according to
the different tranches and different periods and stages of
application.

The Commission bases this proposal on the fact that it
1.2.
considers the current Community rice market to be seriously
unbalanced owing to the increase in domestic output and
imports.

1.2.1.
The Commission believes that the present imbalance
will be exacerbated even further and probably reach an
unsustainable level in the years to come as a result of expected
increases in imports from third countries following the
implementation of the ‘Everything but Arms’ initiative (see
current proposal).

on rice farming, without which the community would lose its
structure. The economic fabric of these rural areas encompass-
es more than just farmers’ families, but also cooperatives,
fertiliser and pesticide companies, machinery and equipment
companies and the husking industry, all of which are directly
and indirectly dependent on rice cultivation. Also associated
with rice-growing areas are irrigation communities that man-
age irrigation zones specifically designed for and adapted
to rice cultivation; the maintenance and survival of these
communities will be jeopardized if rice farming is abandoned.
In order to secure sustained economic development in these
areas it is vital to consolidate the multi-functional nature of
farms and to diversify economic activity. Farms in rice-
producing areas are typical of particular rural communities
with traditional economic bases and ways of life, where the
impact of implementing the Commission proposal will be
much greater and where a serious threat hangs over social
cohesion.

2. General comments

2.1.
The Commission intends to create, as a compensation
for the drop in prices, an income payment per farm and a crop
specific aid reflecting the role of rice production in traditional
production areas (1). It is a positive sign that this has been
recognised, but it is not enough in view of the specific and
irreplaceable environmental role played by rice farming.

2.1.1.
Rice farming in the EU is limited to very specific
geographical areas near river deltas and flat wetlands with
poor local drainage. The flooding system inherent to this type
of farming stops groundwater levels rising — groundwater
near river mouths is salty — preventing soil disintegration
and clay disagglomeration. Waterlogged land attracts various
typical migratory species of aquatic fauna such as storks,
capped herons, water hens and snipes, which have opted for
rice paddies as their natural habitat. There is a particular type
of flora associated with rice paddies too; maintaining wetlands
through rice farming also ensures conservation of this flora.
The value of rice paddy ecosystems is unparalleled in terms of
landscape and hunting opportunities. Large rice-growing areas
are located within nature reserves and protected areas,
operating alongside them and often underpinning these ecosys-
tems which are specifically protected for the purpose of
maintaining biodiversity.

2.1.2.
The concentration of rice-farming in specific areas,
the workforce employed in this sector, the type of machinery
used and the fact that rice is a seasonal crop allowing farmers
to do other work, all creates a distinctive kind of multi-
functional rural community built up around and dependent

2.2.
The Committee regrets that the measures proposed by
the Commission may not be enough to prevent rice farming
becoming unsustainable in the future, as the Commission itself
predicts.

2.3.
Indeed, the proposal to bring the price of Community
rice into line with the price of rice imported from less
developed countries (LDCs),
in order to ensure that rice
produced in the EU is competitive, cannot be achieved as long
as the EU’s current system of calculating import duties remains
in place.

The Committee believes that,

2.3.1.
if any changes are
made to the COM in rice, the current system of variable import
duties must at the same time be replaced with a system of
fixed duties in order to break the existing link between the
intervention price and the level of import duties. Any reform
must anticipate the internal impact on Member States’ agri-
culture but must also call for a study to be carried out into the
impact of international agreements that have been or will be
concluded under the auspices of the WTO. Such a study
should also cover the effects of the ’Everything but Arms’
agreement on the less developed countries in terms of farmers’
incomes, agricultural job creation and re-investment of the
benefits, so that an assessment can be made of the expected
results of the agreement.

( 1) COM(2003) 23 final — 2003/0009 (CNS), 5th whereas.

2.3.2.
The Committee points out that, during the Uruguay
Round of negotiations, the same reference prices were used
for rice as for other cereals, and no account was taken of initial
processing costs. The correction mechanism introduced at that

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time — headnote 7 — gave rise to the current imbalance in
the sector (1).
in the
intervention price leads to an automatic, disproportionate fall
in import duties.

In fact, with this system, any fall

particular importance: there is a husking industry in northern
European non-producer countries interested in lower raw
material prices and in maintaining protection on milled rice.

2.3.3.
Basmati rice benefited from these circumstances:
imports rose from 60 000 tonnes to 200 000 tonnes. Under
this system, rice has come on to the European market which
is similar to basmati rice but of lower quality, and its
authenticity is difficult to check.

The effect of the ‘Everything but Arms’ (EBA) initiat-
2.3.4.
ive was a political choice by the European Union, which did
not take account of the impact on European rice farming and
which enabled rice from other sources to come onto the
European market without any real benefits for the less
developed countries.

On the world market, European rice production is
2.4.
insignificant, not even amounting to 0,4 % of worldwide
production. However the European market is much sought
after internationally because of the potential for growth in
consumption identified in the countries of northern Europe.
The biggest exporter of rice in the world is Thailand, followed
by Vietnam, India and the United States which, despite being
the fourth largest rice exporter, plays a predominant role in
setting and steering prices. Rice is one of the commodities
quoted on the Chicago stock exchange and many investors
buy and sell rice which they do not intend to process, but
which they deal in only for investment purposes, speculating
on price increases and the possibility of selling it subsequently
at higher prices. Fluctuations in international rice prices are
subject
to heavy speculation and may bear no relation
whatsoever to the situation of rice production in Europe.

2.4.1.
In the European Union, rice is only produced around
the Mediterranean and even there only in specific areas, as
referred to above. Thus rice production only concerns some
regions and tends to be viewed as being of secondary
importance, even by national and Community authorities,
despite the huge importance it has for the people in the
producing regions.

2.4.3.
These circumstances have triggered a significant
upsurge in imports which has led to a gradual increase in the
amount of rice in intervention stocks.

The whole thinking behind this proposal focuses on
2.5.
the problem of
intervention and the financial resources
associated with it. The Committee agrees that this problem has
to be resolved, but feels that the solutions which have been
put forward seem more designed to encourage farmers to
change to other crops rather than to make adjustments to rice
farming. It should be stressed that rice-growing land, because
of its particular features, is difficult to use for other crops. If
this type of farming is made financially unviable, the logical
consequence will be that it will be abandoned, with all that
this entails in terms of negative social, employment and rural
development repercussions, over and above the responsibility
that it will imply for any concomitant environmental damage.

2.5.1.
The volume of rice stored in public intervention is
high; this is the reason behind the imbalance in the market,
not a rise in domestic production as stated in the proposal.
European milled rice production fell by 14 % from
1 667 000 tonnes in 1997/1998 to 1 436 000 tonnes in
2000/2001, while European rice consumption rose by 31 %
between 1990 and 2000 and will continue to do so when the
new, non-rice producing countries join the EU.

2.6.
The impact studies of the proposed mid-term review
of the CAP, commissioned by the Commission from various
universities, reached different conclusions as regards its conse-
quences and the maintenance of the European rice sector’s
competitiveness. Some studies forecast an increase in imports
while others are sure that imports will fall. Nevertheless they
are unanimous in their assessment that European production
will drop, possibly by as much as 29 %; none however have
analysed the environmental
impact or the socio-economic
impact on rice farming (2).

3. Specific comments

2.4.2.
Although the processing industries are located near
the production areas, often organized as producer cooperat-
ives, there is one exception in the Community which is of

3.1.
The proposed effective support price, which is less
than the lowest rice production costs in the EU, is not fully
compensated by the increase in aid and will therefore lead to a
incomes. The Committee believes that rice
fall

in farmers’

( 1) OJ C 14, 16.1.2001.

(2) DG Agri — Impact analyses. March 2003.

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farming is essential to maintaining specific flora and fauna,
and to conserving saline areas, and must therefore be given
particular attention. Compensation must be 100 % of the
fall
in prices, also reflecting the current level of incomes.
Intervention under the current arrangements is not only geared
to producers. Any operators can apply as long as their rice is in
suitable batches and meets the minimum quality requirements.

3.2.
The private storage scheme proposed by the Com-
mission is poorly defined and makes no provision for monthly
increments, which play a key role in market fluidity. The
Committee is concerned that the new system may give rise to
even greater imbalances in the markets.

3.2.1.
The introduction of a private storage scheme and
protection mechanism that address the situation concerning
prices must be clarified and quantified. It is still not known
which mechanisms will trigger private storage.

3.2.2.
The Committee feels that instead of complicated
arrangements that have already proved ineffective in other
sectors,
it would be preferable to keep to the standard
intervention, but with new rules only giving producers access
in times of crisis. In order to prevent a serious disturbance of
the market in paddy rice in the last months of the marketing
year 2003/2004 (1) the Commission is limiting the intake of
rice to intervention stocks to 100 000 tonnes. The rice placed
on the market on that date will be rice which is being grown
at that time. Since rice is harvested between September and
October, it is clear that manufacturers will try to buy rice at a
price which is very close not to the current effective support
price but to the proposed intervention price. Farmers who,
during that marketing year, are still receiving aid at current
levels will suffer untenable losses. The only way to prevent
such speculation will be to keep intervention operating without
restrictions during the transitional year.

The Maximum Guaranteed Areas laid down in Regu-
3.3.
lation (EC) No 3072/95 have been studied in depth. There are
no grounds for adjusting them on the grounds of an occasional
reduction in the area farmed owing to abnormal climatic
conditions — such as the water shortages experienced in some

irrigation perimeters during 2000 following a period of severe
drought — all the more so since after enlargement rice
consumption will rise, as confirmed by Commission impact
studies.

3.3.1.
If these areas are adjusted, and at the same time the
penalties imposed on the specific aid for exceeding them are
maintained, there is a higher risk that these penalties will cause
considerable damage, in particular for small farms, of which
there are many in most rice producing countries. The current
penalty system must be replaced with a liner system in keeping
with that for other field crops.

3.3.2.
Prior to implementation of the penalty system, there
should be an annual scheme for area compensation between
Member States, entailing no obligations for the following
years, applying to areas ranging from those which are not
under cultivation to those where the maximum guaranteed
area is being fully used. Penalties should apply to Member
States which have exceeded the Maximum Guaranteed Areas
only when the Community’s guaranteed area has been exceed-
ed. This is the only way to harness the Union’s full production
potential and the opportunities offered by the budget earmar-
ked for this sector.

3.4.
The hygiene, environmental and labour standards that
apply to Community rice production should be applied to rice
imported from third countries, in order to ensure food safety
in Europe and prevent unfair competition or dumping.

3.5.
There should be steps to boost rice consumption in
the Community based on promotional campaigns highlighting
rice as a natural food grown in conditions which help preserve
ecological habitats; special emphasis should be placed on
varieties of the Japonica species.

3.6.
The Committee believes that the current reform does
not meet the proposed objectives of improving the equilibrium
of the market and enhancing the crop’s competitiveness (of
rice farming) in the world market. Priority must be given to
revising current import criteria during WTO negotiations.

3.7.
This viewpoint is shared by the Commission itself
which, at the Special Committee on Agriculture of 23 July
2002, confirmed its recommendation to modify both the EU
and the WTO’s commitments concerning rice imports and to
take account of the Council’s intention to review this issue
before the end of the year.

4. Conclusions

— Rice is a crop vital

in preserving the ecosystems of
wetland areas for which there are no alternative farming
options.

— Farmers must be fully compensated for the imposed drop

( 1) COM(2003) 23 final — 2003/0009 (CNS), 27th whereas.

in the price.

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— The intervention system must be retained with its current
features, namely the level of the intervention price should
be the proposed effective support price.

— The import arrangements must be geared to the survival
of the sector from the point of view of both financial
aspects and food safety for the public at large.

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on ‘Access to European Union
citizenship’

(2003/C 208/19)

On 21 January 2003 the European Economic and Social Committee decided to draw up an opinion,
under Article 29(2) of its Rules of Procedure, on ‘Access to European Union citizenship’.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 2 April 2003. The rapporteur was Mr Pariza
Castaños.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 88 votes in favour and 40 votes against, with
8 abstentions.

1.

Introduction

1.1.
The European Convention has been working for
months on drafting a Constitutional Treaty for the European
Union. The EESC is participating in the work of the Convention
through its observers, who bring to Convention debates the
various proposals and recommendations adopted by the EESC
in its opinions and its resolution addressed to the European
Convention.

1.2. With regard to European immigration and asylum
policy, as derived from the Treaty of Amsterdam and the
Tampere European Council, the EESC has drawn up various
opinions through which it
is helping to ensure that the
European Union has an appropriate common policy and
transparent legislation based on equal treatment, equal rights
and obligations, and the fight against all forms of discrimi-
nation.

On 9 and 10 September 2002,

the EESC — in
1.3.
cooperation with the European Commission — organised a
conference attended by representatives of the social partners

and major social organisations from 25 European States, to
promote the integration of immigrants and refugees in Euro-
pean societies and to obtain new commitments from civil
society (1).

1.4.
The immigrant population of the Member States is set
to rise. All the experts agree that for demographic, economic
and social reasons immigration is going to increase and that a
large number of these people will settle on a long-term or
permanent basis (2). Furthermore, mobility between Member
States will increase as freedom of movement evolves. Mobility

(1) The conference also analysed other matters relating to immi-
gration, such as the situation of people ‘without papers’. It was
concluded that when there is proper legislation allowing for
the legal and transparent management of immigration, illegal
immigration will decrease. These people must be treated fairly
and the Member States must do their best to regularise their
situation.

(2) COM(2001) 127 final, EESC opinion OJ C 36, 8.2.2002