Report from the Commission to the Council and the European Parliament on the simplification of the common market organisation in fruit and vegetables
Date: 2004-08-10
Institutions: European Commission
Subjects: citrus fruit, common organisation of markets, fruit, nut, producer organisation, report, simplification of legislation, vegetable

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 10.8.2004 
COM(2004) 549 final 

REPORT FROM THE COMMISSION  
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

on the simplification of the common market organisation in fruit and vegetables 

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Foreword 

The present document aims to describe how the Commission managed to follow, in the years 
2002, 2003 and 2004, the Council requests to act on certain areas of shortcomings identified 
in the functioning of the fruit and vegetables common market organisation (CMO). 

It is also intended to stimulate a debate in the Council, in the European Parliament and within 
the  sector1.  Depending  on  the  outcome  of  this  debate,  the  report  could  be  followed  by 
legislative proposals in due course. 

This  document  will  be  followed  by  a  working  document  of  the  Commission  services 
presenting: 

– 

– 

– 

an analysis of the principal figures of the sector (trends on world and EU supply and 
demand,  on  world  and  EU  trade  as  well  as  on  production  structure  and  income 
situation in EU); 

an  analysis  of  the  implementation  of  one  of  the  CMO’s  pillars,  the  producer 
organisations (POs) and the related Operational Funds; 

an analysis of budgetary issues in the recent years. 

1. 

BACKGROUND 

1.1. 

1994–1996 

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).  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  Commission  presented  its  proposals  for  Council  regulations  on  October  1995 
(COM(95) 434  final).  Regulations  (EC)  No  2200/96,  No  2201/96  and  No  2202/96, 
respectively for fresh fruit and vegetables, processed fruit and vegetables and citrus 
were finally adopted in October 1996. 

1.2. 

2000–2002 

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

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is  available  on 

This  document 
following  address 
http://europa.eu.int/comm/agriculture/publi/reports/fruitvegsimpl/index_en.htm. 
Stakeholders  may 
participate  in  the  debate  sending  their  comments  on  the  report  to  the  following  e-mail  address: 
AGRI-C4-REFSIMPL@cec.eu.int. 

the  Commission’s  website  at 

the 

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The  amendments  foresaw  the  abandonment of  the  classical  minimum  price  system. 
After  a  discussion,  the  Council  adopted  in  December  2000  Regulation  (EC) 
No 2699/2000 amending the three above mentioned regulations. 

The main modifications consisted in: 

•  Fresh  sector:  the  introduction  of  a  unique  ceiling  for  the  EU  contribution  to 
Operational  Funds.  The  ceiling  finally  retained  was  4,1%  of  the  Value  of  the 
Marketed Production (VMP) of each Producer Organisation (PO)2. 

•  Processed products (tomato, pears and peaches): a change on the aid, previously 
paid  to  the  processors  in  function  of  the  final  produce  and  conditional  to  a 
minimum-price  system,  and  now  paid  to  producers,  through  POs,  for  the  raw 
material.  The  scheme  is  based  on  contracts  between  recognised  POs  and 
processors approved by the Member States. The aid is given to POs according 
the  quantity  of  raw  material  delivered  to  processors  under  the  contracts. 
Community and national processing thresholds are established and whenever a 
Community  processing  threshold  is  overrun,  the  aid  fixed  for  the  product  in 
question  is  reduced  in  all  the  Member  States  in  which  the  corresponding 
threshold has been overrun. 

•  Citrus: an increase in thresholds for lemons, oranges and small citrus, as well as 

the establishment of national processing thresholds. 

In January 2001, a report on the application of the fresh fruit and vegetables CMO 
and  of  the  citrus  scheme,  was  presented  to  the  Council  (COM(2001) 36  final).  No 
concrete proposals of amendments were contained in this document, conceived with 
the aim to describe the state of implementation of the 1996 reform. 

In  July  2001,  the  European  Parliament  adopted  a  resolution  on  the  Commission 
report, where some weaknesses of the sector still existing after the 1996 reform were 
stigmatised,  and  in  particular  an  insufficient  supply  organisation,  combined  with 
multilateral  or  bilateral  agreements  with  third  countries  facing  the  EU  fruit  and 
vegetables sector to an increasingly open and competitive environment. 

To  this  end,  the  Parliament  called  on  the  Commission  to  present  changes  to  the 
current  regulatory  framework  with  the  aim  to  improve  the  concentration  of  supply, 
make more efficient the use of the operational programmes and establish a specific 
permanent aid scheme for nuts. 

In February 2002, the Spanish Presidency drafted a memorandum identifying certain 
points  calling  for  further  examination  with  a  view  to  their  consideration  by  the 
Commission. This document was examined first by the Working Party on Fruit and 
Vegetables,  after  by  the  Special  Committee  on  Agriculture  and  then  forwarded  as 
draft  conclusions  to  the  Council  at  the  close  of  proceedings.  That  document  was 
discussed  by  the  Council  on  27  June  2002  in  view  of  Council  conclusions.  They 
called on the Commission to: 

2 

In  the  original  text  of  the  '96  reform,  the  amount  granted  to  producer  organisations  was  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. 

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1. 

2. 

3. 

4. 

5. 

6. 

7. 

propose amendments to the rules concerning the establishment and functioning 
of  the  operational  funds,  giving  greater  independence  to  POs,  within  clear 
margins  of  flexibility,  on  condition  that  POs  are  transparent  and  democratic, 
and comply with the competition rules; 

simplify  the  administrative  life  for  POs,  provided  that  the  correct  use  of  the 
resources is monitored and ensured; 

promote  POs  in  those  Member  States  which  have  yet  to  achieve  a  balanced 
level  of  organisation  and  in  regions  with  large-scale  production  of  fruit  and 
vegetables  and  weak  economic  organisation,  by  means  of  initiatives  such  as 
cross-border  POs,  the  merging  of  existing  organisations  and  the  setting  up  of 
associations of POs, whilst avoiding the creation of dominant positions. 

propose  clear  rules  allowing  Member  States  more  room  for  manoeuvre  as 
regards the recognition of POs; 

encourage  a  policy  of  promoting  high-quality  products  obtained  under 
environment-friendly  conditions,  and  give  incentives,  within  the  existing 
financial  framework,  for  traceability  and  for  organic  or  integrated  production 
or  production  obtained  under  certified  schemes;  regarding  the  introduction  of 
organoleptic parameters, first ensure that objective evaluation criteria exist; 

amend the existing provisions so that the investments of producer organisations 
can be financed by the operational funds or in the rural development context, as 
long as double funding is avoided; 

carry out the appropriate analyses and submit a report on the matter, together, 
if necessary, with suitable proposals on: 

• 

the  question  of  the  marketing  of  wild  berries,  and  mushrooms  and  sour 
cherries in certain areas of the European Union; 

•  encouraging farmers to adopt measures likely to improve risk management 
in  this  sector.  For  instance,  including  the  cost  of  the  insurance  policies 
among the expenses eligible to the operational fund; 

•  nuts and locust beans; 

•  promoting the grouping of supply in regions with insufficient development 

During the debate in the Council, the Commission replied that: 

1. 

2. 

3. 

4. 

5. 

simplification were also a Commission's priority; 

the  relationship  between  the  CMO  and  Rural  Development  rules  had  to  be 
improved as well as the efficient use of both instruments; 

shared the Council's views on the support of POs, in particular in regions with 
a low degree of organisation; 

the  idea  of  harvest  insurance  being  eligible  to  the  operational  Fund  would  be 
examined; 

on  organoleptic  criteria,  consumer  concerns  must  be  taken  into  account  and 
such criteria must be included in commercial standards; 

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6. 

Finally,  on  the  Council  request  to  submit  a  report  on  certain  areas,  the 
Commission reaffirmed that: 

•  certain measures (on nuts for instance) were already under examination for 

a submission to the Council at a later stage, 

•  certain 

requests, 

the 
in  particular  on  simplification, 
Commission's  competence  and  would  be  treated  under  the  comitology 
procedure, 

fell  under 

• 

the  remaining  points  would  be  examined  by  the  Commission,  who  will 
present a report if necessary. 

2. 

FOLLOW-UP  OF  THE  PRESIDENCY  CONCLUSIONS  AND  SIMPLIFICATION  OF  THE 
EXISTING LEGISLATION 

2.1. 

Other motivations for simplifying and improving the existing legislation 

Besides  the  follow-up  of  the  Presidency  conclusions,  other  motivations  for  the 
simplification process were: 

• 

to  follow  the  2000  Court  of  Auditors  annual  report,  which  call  on  the 
Commission  to  pursue  in  a  more  effective  way  the  objective  of  improving  the 
concentration of supply, in particular in regions where the level of organisation 
is particularly low; 

• 

to  follow-up  the  adoption  by  the  Commission  in  February  2003  of  a 
Communication on "Updating and simplifying the acquis". 

2.2. 

Changes in the regulatory framework 

2.2.1. 

Simplification in the fresh fruit and vegetables 

In December 2002, as a first step in the direction of simplification requested by the 
Council  Presidency  conclusions  of  June  2002,  the  Commission  presented  a 
Discussion  Document  to  the  Fruit  and  Vegetables  Management  Committee.  This 
document  examined  the  questions  raised  during  the  six-year  experience  of 
implementing  the  1996  reform,  focusing  on  POs,  Producer  Groups  (PGs)  and  their 
related  instruments,  the  Operational  Funds  (OFs)  and  the  Operational  Programmes 
(OPs). 

The major ideas behind this exercise were: 

– 

– 

– 

to simplify existing rules, in particular in order that New Member States could 
benefit from the experience acquired by the existing Member States; 

to  increase  legal  security  for  both  POs  and  national  administrations,  by  the 
means of an additional clarification of existing provisions; 

to increase subsidiarity and flexibility, when needed. 

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After  a  constructive  discussion  in  the  framework  of  the  Management  committee,  a 
broad  consensus  was  established  and  the  Committee  voted  positively3  in  July  and 
October  a  set  of  three  regulations  recasting  completely  the  existing  rules.  A  set  of 
more  than  130  interpretative  notes  drafted  since  the  ’96  reform  have  been 
superseded, with the aim to increase transparency and legal security, in particular for 
the new Member States. 

The points hereafter relate the main elements retained in the simplification package. 

2.2.1.1.  Regulation (EC) No 1432/2003 on POs recognition 

•  More  room  for  subsidiarity  has  been  given  to  the  Member  States  to  adapt  the 
minimum  criteria  on  recognition  to  their  peculiarities.  A  clarification  has  been 
made on the faculty given to the Member Sates to allow Non Producer Members 
to become members of POs. 

•  The use of product withdrawn for free distribution has been stimulated. 

•  Dynamic POs are encouraged to work together and more room for collaboration 

is allowed. 

•  Transnational  POs:  clarification  of  rules  and  responsibilities  between  different 

Member States. 

2.2.1.2.  Regulation (EC) No 1433/2003 on Operational Funds and Operational programmes 

•  Simplification on financial contributions of members to the OF. MSs may allow 
POs to contribute to the OF using their own funds generated by the sell of fruit 
and vegetable products of their members and setting levies at different levels for 
their members. 

• 

Increased legal security and simplification on eligible expenditure: introduction 
of  promotion  of  individual  PO  trademarks;  facilities  for  Associations  of  POs; 
introduction of a lump sum system for certain types of costs. 

2.2.2. 

Simplification in the processed fruit and vegetables (tomatoes, peaches and pears) 

In  the  processed  fruit  and  vegetable  sector,  the  same  simplification  process  as 
described  above  was  launched  in  March  2003.  Improvements,  simplifications  and 
developments  were  discussed  and  approved4  by  the  Management  Committee  on 
23 July,  and  then  published  on  29  August  2003  as  Regulation  (EC)  No  1535/2003. 
The main modifications introduced are the following: 

•  Clarification of the definitions and concepts used in the aid scheme. 

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Regulation  (EC)  No  1432/2003  was  approved  with  a  favourable  opinion  (70  votes  in  favour, 
17 abstentions, EL, E and S being against the possibility for the MS to allow POs membership to non 
producer). Regulation (EC) No 1433/2003 failed to reach an opinion (60 in favour, 27 abstentions). D, 
E and S were against the wider room for subsidiarity existing in the new proposal, and EL protested for 
certain  Greek  demands  not  being  taken  into  account.  Regulation  (EC)  No  1943/2003  reached 
unanimity. 
All the MS in favour but Portugal who abstained, claiming for not penalising the underdeclaration of 
surfaces in the case of tomatoes. 

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• 

Improved mechanisms, procedures and deadlines for applying the regime. 

•  Simpler and clearer mechanisms for checks under the aid regime, while ensuring 
Integrated 

increased  compatibility  with 

the 

the  effectiveness  and  an 
Administration and Control System (IACS). 

2.2.3. 

Simplification in the citrus sector 

The  same  simplification  process  started  for  the  citrus  sector  in  March  2003.  The 
Management Committee approved unanimously a final text, which was published on 
2  December  2003  as  Regulation  (EC)  No  2111/2003.  A  series  of  significant 
simplifications were introduced in the aid scheme, summarised as follows: 

•  Periods  and  quantities  under  contracts.  A  new  short-term  contract  (of  at  least 
five  months)  is  provided,  while  multiannual  contracts  are  maintained.  More 
flexibility  is  provided  to  short-term  and  multiannual  contracts,  in  particular  as 
regards additional national measures to be taken by Member States. 

• 

In  those  Member  States  that  have  a  national  threshold,  contracts  shall  be 
concluded only with approved processors. 

•  Clarification of the definitions and concepts used in the aid scheme. Improved 

mechanisms, procedures and deadlines for applying the regime. 

•  Simpler and clearer mechanisms for checks under the aid regime, while ensuring 

the effectiveness of the control system. 

2.2.4. 

Simplification in the intervention scheme 

A simplification process was launched equally for the intervention scheme in autumn 
2002 and has allowed the adoption of Regulation (EC) No 103/2004. Main directions 
of the amendments agreed are: 

• 

• 

facilitation of free distribution of withdrawn fresh fruit and vegetables through 
NGOs within the Community (but not to third countries as food aid), 

reinforcement  of  checks  ex-ante  given  the  risks  due  to  the  main  destination  of 
withdrawn products (destruction), 

•  more  responsibilities  of  MS  on  several  issues  such  as  delays  for  notifications 
and payments, concrete contents of checks, attribution of withdrawn products to 
recipients, environmental conditions of withdrawals, etc. 

2.2.5. 

Simplification in the management of export refunds and reduction of expenses 

In November 2001, following the changes in the Council regulation made in the year 
2000,  a  new  tendering  system  (A3)  was  introduced  in  the  management  of  export 
refunds  for  fresh  fruits  and  vegetables.  Since  March  2002,  the  means  of  the  export 
refund rates of the licenses awarded under A3 system have been used as indicative 
rates for the following export period, leading to a routine way to fix the export refund 
rates and to a general decrease of these rates. 

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2.2.6.  The specific case of nuts 

The  Council  introduced  since  1989  specific  measures  for  the  nut  sector.  The 
principal measure was the financing of 10-year quality and marketing improvement 
plans, presented by producer organisations. The Council approved twice a one-year 
extension  for  plans  expiring  in  2000  and  2001:  in  20015  and  in  20026.  During  the 
discussion  on  the  second  extension,  the  Council  and  the  Commission  made  a  joint 
declaration7  according  to  which  no  more  extensions  of  improvement  plans  will  be 
given for the coming years. 

In  2002,  the  Commission  staff  presented  to  the  Council  a  working  paper8  with  an 
analysis  of  the  nut  sector,  which  came  to  the  conclusion  that,  despite  the  positive 
effects of the improvement plans, nut production in the EU remains chronically non-
competitive  overall.  However,  nut  production  still  plays  a 
fundamental 
multifunctional role in protecting and maintaining the environmental, social and rural 
balance in many regions. 

Starting from these conclusions, in the more general framework of the CAP reform, 
the  Commission  proposed  in  2003  a  shift  towards  a  complete  new  system:  a  direct 
payment based on area. The main characteristics of the new scheme, adopted in the 
framework  of  Council  Regulation  (EC)  No  1782/2003  and  in  force  since  2004,  are 
the following: 

•  A Maximum Guaranteed Area (MGA), divided into National Guaranteed Areas 
(NGA), combined with an average Community aid for nuts (almonds, hazelnuts, 
walnuts, pistachios and locust beans) of EUR 120,75 per hectare per year, paid 
directly  to  producers.  Member  States  may  differentiate  the  aid  in  function  of 
products by increasing or decreasing the national guaranteed area (NGA), within 
the  limit  of  a  ceiling  calculated  by  multiplying  the  NGA  by  the  average 
Community aid. 

•  Member States can add to the Community aid a national aid up to a maximum of 

EUR 120,75 per hectare per year. 

•  Eligibility  conditions  have  been  adopted  in  the  management  committee9 

concerning, in particular, minimum plot size and tree density. 

3. 

SIMPLIFYING  THE  CMO:  A  LISTENING  COMMISSION.  CONCLUSIONS  AND 
QUESTIONS FOR THE FUTURE 

The previous chapters of this report showed how the Commission in 2003 and 2004 
simplified  the  existing  legal  framework  ensuring  a  follow-up  of  the  Council 
presidency conclusions of 2002. 

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8 
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Council Regulation (EC) No 558/2001 of 19.3.2001 (OJ L 84, 23.3.2001, p. 1). 
Council Regulation (EC) No 545/2002 of 18.3.2002 (OJ L 84, 28.3.2002, p. 1). 
SN 1838/02, 20.3.2002. 
SEC(2002) 797. 
Commission Regulation (EC) No 2237/2003 of 23.12.2003 (OJ L 339, 24.12.2003, p. 52). 

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In  order  to  stimulate  and  focus  the  debate  on  possible  improvements  that  could  be 
introduced in due time into the basic regulation to make it operate more effectively, 
this reports aims also to raise some strategic questions: 

– 

Is  there  a  need  to  reform  the  basics  of  the  CMO  as  established  by  the  1996 
reform? 

–  What can be done in order to simplify the implementation of the CMO for POs 

and make POs services more attractive for producers? 

–  What  can  be  done  to  improve  the  grouping  of  supply  in  regions  where  the 

organisation is weak, in particular in the new Member States? 

– 

Should the specific cross-compliance for fruit and vegetables be maintained or 
integrated  in  the  new  cross  compliance  framework  developed  in  the  CAP 
reform? 

–  What  can  be  done  to  improve  the  supply  of  quality  products  and/or  products 

obtained under environmentally friendly conditions? 

–  What can be done to ensure a better crisis management? 

– 

– 

– 

Is  there  a  need  to  introduce  radical  changes  in  the  specific  aid  schemes  for 
processed products and citrus? 

How  can  the  coherence  of  the  fruit  and  vegetables  regime  and  the  Rural 
Development regulation be improved? 

How can a better use of the current budget be ensured? 

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