Opinion of the European Economic and Social Committee on the "Proposal for a Council Regulation on the common organisation of the market in cereals" (COM(2003) 23 final — 2003/0008 (CNS))
Date: 2003-05-14
Institutions: European Economic and Social Committee
Subjects: EU agricultural market, cereals, common organisation of markets, market intervention

3.9.2003

EN

Official Journal of the European Union

C 208/39

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

(COM(2003) 23 final — 2003/0008 (CNS))

(2003/C 208/10)

On 10 February 2003 the Council decided to consult the European Economic and Social Committee,
under Article 37(3) 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 Mr Mascia.

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 104 votes to 2, with 15 abstentions.

1. Gist of the Commission proposal

1.1.
The proposal provides for a final 5 % reduction (of the
20 % proposed in Agenda 2000) to bring the cereals inter-
vention price down to EUR 95,35/t from 2004/2005, in order
to ensure that intervention is a real safety net. To avoid a
further accumulation of intervention stocks, as a result of the
lack of sufficient disposal outlets on internal and external
markets, rye is to be excluded from the intervention system.

1.2.
The Commission believes that, with the diminishing
role of intervention, a seasonal correction for intervention
price will no longer be justified. It therefore proposes to
abolish the monthly increment system.

1.3.
As a consequence of the cut in cereal intervention
price, area payments for cereals and other relevant arable crops
will be increased from EUR 63 to EUR 66/t. These will be
included in the single farm payment.

1.4.
The Commission also proposes abolishing refunds for
the production of starch and certain starch derivatives and
abolishing the minimum price for starch potatoes. At the same
time, aid to starch potato farmers would be incorporated into
the single farm payment scheme.

2.

Introduction

2.1.
As much as 40 % of workable agricultural land in the
European Union is invested in arable crops, with approxi-
mately 38 million hectares given to cereal cultivation. With
some 210 million tonnes produced in 2002, this represents a
major source of supply of both human and animal foodstuffs
and makes the European Union the world’s second largest
trader in cereals after the USA.

The sector has undergone two major COM reforms
2.2.
over the last ten years (MacSharry and Agenda 2000), resulting
in a more balanced market, a reduction in stock and increased
competitiveness on world markets, whilst maintaining high
standards in food safety.

2.3.

The two reforms achieved the following results:

— the intervention price, which has fallen by 50 % in the
last 10 years (and by 15 % in the last 3), no longer
represents a guaranteed price, potentially acting as an
incentive to accumulate surplus stock. It now plays the
role of a safety net for the market, which was the
Commission’s intention;

— there has been a dramatic reduction in stock subject to
intervention, whilst the quantity of cereals exported
on the world market without refunds has increased
proportionally.

2.4.
At the same time, the Commission has concluded
negotiations with its main trade partners with a view to
moving away from tariff protection to import quotas for
cereals. This agreement means that some 3 million tonnes
more of cereal may be imported into the EU. The Committee
would remind the Commission that in managing these quotas,
it must ensure that European producers’ interests are safe-
guarded.

3. Comments

The Committee considers that a further reduction of
3.1.
the intervention price would have the following effects, in
terms of costs/benefits:

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EN

Official Journal of the European Union

3.9.2003

— negligible effects on the competitiveness of the sector;

— weakening of border protection for basic cereals;

— no incentive to improve quality standards (e.g. protein

levels);

— additional costs for the EU budget (consequent increase in
compensation to producers) amounting to approximately
EUR 800 million. These costs will have to be met by
making savings in other sectors, as the Brussels European
Council
last October set a ceiling for agricultural
spending.

3.2.
It is worth recalling that, in its recent opinion on the
Commission Communication on the Mid-term review of the
CAP (1), the Committee emphasised that, as a result of price
cuts under Agenda 2000, one of the Commission’s main
objectives in the marketing sector, i.e. restoring the role of
intervention — particularly in the case of cereals — to the
level of a safety net, has already been achieved. The opinion
also states that the EESC was doubtful that the trend in world-
market prices could be used to justify the proposed 5 %
reduction in the intervention price for cereals, especially since
the Commission itself bases its forecasts on stable world
markets.

Regarding rye in particular, although it accepts the
imbalance in the

3.3.
Commission’s analysis of the structural
sector, the Committee nonetheless wonders whether:

— the drastic measures proposed might be staggered over a

( 1) OJ C 85, 8.4.2003.

Brussels, 14 May 2003.

longer period of time, with transitional measures adopted
in line with the provisions laid down in Article 29(2);

— incentives might be provided to promote schemes for
conversion to alternative crops to supplement the individ-
ual efforts recently made by farmers.

3.4.

The Committee would also like to stress that:

— due to the abolition of the scheme to refund production,
there will not be a safety net for the starch sector, which
does not benefit from import protection;

— the balance between the cereal starch and the other starch
sectors risks being upset by the introduction of the single
payment scheme in only one of these sectors.

3.5.
In order to ensure food safety and prevent unfair
competition or dumping, the health, environmental and labour
standards that apply to Community cereal production should
be taken into account with regard to imports from third
countries, especially in the context of WTO negotiations.

4. Conclusions

4.1.
The Committee calls on the Commission to carefully
consider the consequences of a further 5 % reduction in the
intervention price and the abolition of monthly increments,
and to weigh up the real need for it, in light of the fact that, in
recent years, public storage of cereals has been dramatically
reduced, and that Community preference might be weakened
as a result of
the Committee
this measure. Furthermore,
stresses the need for a greater degree of flexibility in the
proposed measures for rye.

The President

of the European Economic and Social Committee

Roger BRIESCH