Proposal for a Council Regulation amending Regulation (EC) No 1947/2005 as regards national aid granted by Finland for seeds and cereal seed {SEC(2007) 799}
Date: 2007-06-13
Institutions: European Commission
Subjects: Finland, State aid, aid system, cereals, common organisation of markets, import policy, seed

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.6.2007 
COM(2007) 323 final 

2007/0109 (CNS) 

REPORT FROM THE COMMISSION TO THE COUNCIL 

on the results of the aid authorised in Finland for certain quantities of seeds 
and certain quantities of cereal seed 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1947/2005 
as regards national aid granted by Finland for seeds and cereal seed 

(presented by the Commission)  

{SEC(2007) 799} 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

INTRODUCTION.............................................................................................................. 3 

THE SYSTEM OF NATIONAL AID TO SEED PRODUCTION .................................................. 3 

Aid for cereal seed ....................................................................................................... 3 

Aid for grass/clover seeds ............................................................................................ 4 

2.2.1.  Production .................................................................................................................... 4 

2.2.2. 

Implementation ............................................................................................................ 5 

2.2.3.  Modification of the aid................................................................................................. 5 

2.2.4.  Differentiation of the aid per region............................................................................. 5 

2.2.5.  Seed varieties within each species eligible for aid (Annex V) .................................... 6 

2.2.6.  Red clover (Trifolium pratense L.) – Annex VI, Table 1 ............................................ 6 

2.2.7.  Timothy (Phleum pratense L.) – Annex VI, Table 2 ................................................... 6 

2.2.8.  Meadow fescue (Festuca pratensis huds.) – Annex VI, Table 3.................................. 6 

2.2.9.  Cocksfoot (Dactilis glomerata L.) – Annex VI, Table 4.............................................. 7 

2.2.10.  Rye grass (Lolium perenne L.) – Annex VI, Table 5 .................................................. 7 

3. 

3.1. 

3.2. 

4. 

5. 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

7.5. 

7.6. 

8. 

IMPORTS OF SEED INTO FINLAND................................................................................... 7 

Imports of cereal seed – Annex VII – Tables 1 and 2.................................................. 7 

Imports of grass/clover seeds – Annex VII – Table 3.................................................. 8 

OTHER AID SCHEMES IN FINLAND ................................................................................. 8 

PRODUCTION OF GRASS/CLOVER SEEDS IN THE EU-15 AS A WHOLE.............................. 9 

SINGLE PAYMENT SCHEME ........................................................................................... 9 

SUMMARY AND OBSERVATIONS .................................................................................. 10 

Legal basis.................................................................................................................. 10 

Implementation of system .......................................................................................... 10 

Other aid schemes ...................................................................................................... 10 

Single Payment Scheme............................................................................................. 10 

Multiplication in other countries................................................................................ 10 

Cereal seed production............................................................................................... 11 

PROPOSAL ................................................................................................................... 11 

Note: 

The Annexes referred to in this report can be found in a Commission staff working 
document accompanying this report   
(http://ec.europa.eu/agriculture/markets/seeds/index_en.htm) 

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REPORT FROM THE COMMISSION TO THE COUNCIL 

on the results of the aid authorised in Finland for certain quantities of seeds 
and certain quantities of cereal seed 

1. 

INTRODUCTION 

In accordance with Article 8 of Council Regulation (EEC) No 2358/711, Commission 
Decision 2001/60/EC  of  9  January  20012  authorised  Finland  to  grant  aid  for  cereal 
seed  until  31 December 2005  (see  Annex I)  and  Commission  Decision 2001/61/EC 
of  9 January 20013  authorised  Finland  to  grant  aid  for  Red clover,  Timothy, 
Meadow fescue,  Cocksfoot  and  Rye grass  seeds  until  31 December 2005  (see 
Annex II). 

Under Article 8(2) of Council Regulation (EC) No 1947/2005, the Commission shall 
before 1 January 2006, on the basis of information supplied in good time by Finland, 
forward  to  the  Council  a  report  on  the  results  of  the  aid  authorised  for  certain 
quantities  of  seed  and  for  certain  quantities  of  cereal  seed,  together  with  any 
necessary proposals. 

This report is based on the information provided regularly by the Finnish authorities. 

2. 

THE SYSTEM OF NATIONAL AID TO SEED PRODUCTION 

Both authorizations cover exclusively cereal varieties and grass/clover varieties listed 
in the Finnish catalogue and which, except for small quantities cultivated in regions 
bordering on Finland, are grown solely in that Member State. 

The authorization for cereal seed aid fixes an upper limit on the eligible quantity of 
100 000 tonnes  and  a  maximum  aid  level  of  EUR 2,523  per  100 kilograms, 
representing a maximum amount of EUR 2,523 million (see Annex I). 

For  grass/clover  seed  production  aid  the  authorization  fixes  per  species  an  upper 
limit on the aid per hectare and on the eligible area, representing a maximum amount 
of EUR 1,814 million (see Annex II). 

2.1. 

Aid for cereal seed 

During  the  period  2000–2005  the  cereal  seed  production  increased  by  23%  from 
57 309 tonnes to 70 531 tonnes. 

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3 

OJ  L  246,  5.11.1971,  p. 1.  Regulation  as  last  amended  by  Regulation  (EC)  No 1782/2003  (OJ L 270, 
21.10.2003,  p. 1).  Repealed  and  replaced  by  Council  Regulation  (EC)  No 1947/2005  (OJ L 312, 
29.11.2005, p. 3). 
OJ L 21, 23.1.2001, p. 17. 
OJ L 21, 23.1.2001, p. 18. 

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During the same period, seed production of barley increased by 62%, of spring wheat 
by 163% and of autumn wheat by 70%. Oats seed production on the other hand came 
down, by 32%, just as Rye seed production, which decreased by 10%. 

Table 1 includes the information received from the Finnish authorities. It covers the 
period 2000–2005. 

Table 1 

Certified cereal seed production (in tonnes) in Finland in the years 2000 
to 2005 

Cereal 

2000 

2001 

2002 

2003 

2004 

2005 

Barley 

Oats 

Rye 

Spring wheat 

Autumn wheat 

24 638 

27 510 

660 

3 976 

525 

24 206 

24 889 

569 

4 909 

861 

25 578 

25 635 

887 

7 023 

1 056 

Total 

57 309 

55 434 

60 179 

Source: communicated by Finland. 

26 074 

24 209 

1 394 

11 362 

1 141 

64 180 

36 551 

20 431 

315 

10 252 

1 552 

69 101 

39 912 

18 665 

592 

10 471 

892 

70 531 

% change 
2000/2005 

62% 

-32% 

-10% 

163% 

70% 

23% 

While the aid level is fixed per 100 kg, the estimated average aid per hectare for the 
2000 to 2005 period is about €68/ha, and the trend is upwards, as shown in Table 2. 

Table 2 

Estimate  of  cereal  seed  aid  level  per  hectare,  based  on  average  historic 
yields and an aid level of EUR 2,523 per 100 kg 

2000 

2001 

2002 

2003 

2004 

2005 

Average 
2000 to 
2005 

Production (kg) 

57 308 772 

55 434 443

60 178 667

64 179 629

67 723 135 

70 531 482 

62 559 355

27 324 

2 097 

52,9 

24 436

2 269

57,2

20 639

2 916

73,6

21 379

3 002

75,7

21 699 

23 341 

3 121 

78,7 

3 022 

76,2 

23 136

2 704

68,2

Area (ha) 
Yield (kg/ha) (1) 
Aid level (€/ha) 
(1) 

Average yield of barley, oats, rye, winter and spring wheat. 

During the period 2000-2005, the average yield level for cereal seed production has 
increased  by  44%,  consequently  the  aid  level  per  hectare  has  seen  the  same 
development. 

The  varieties  of  cereal  seed  in  receipt  of  national  aid  between  2000  and  2005  are 
included in Annex III. From the list it becomes evident that the number of varieties, 
in particular for Barley, has increased significantly. 

2.2. 

Aid for grass/clover seeds 

2.2.1.  Production 

The production of grass/clover seed in the period 2000 to 2005 declined from a peak 
of 4 685 tonnes in 2001 to a trough of 1 654 tonnes in 2004, mainly due to weather 
variation. However, as can be seen from Table 3 the production in 2004 was below 
the six year average of about 3 163 tonnes. Timothy is the most important species. 

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Table 3 

Certified  grass/clover  seed  production  (tonnes)  in  Finland  in  the 
years 2000 to 2005 

Species 

2000 

2001 

2002 

2003 

2004 

2005 

Red clover 

Timothy 

Meadow Fescue 

Cocksfoot 

Rye grass 

53 

2 151 

423 

6 

45 

125 

3 781 

732 

3 

44 

68 

3 541 

468 

0 

31 

62 

2 594 

454 

2 

38 

4 

1 319 

318 

0 

13 

52 

1 908 

700 

0 

43 

Total 

2 678 

4 685 

4 108 

3 150 

1 654 

2 703 

% change
2000/2005 

-2% 

-11% 

66% 

-6% 

1% 

Source: communicated by Finland. 

2.2.2. 

Implementation 

During the period 2000–2005, the Finnish authorities have introduced, on their own 
initiative, some adjustments to the system for granting the aid, namely modification 
of the aid per hectare in the case of an overshooting of the maximum authorised area 
and a differentiation of the aid level per region. 

2.2.3.  Modification of the aid 

On several occasions during the period 2000–2005, the area approved by Finland and 
on  which  seeds  were  produced,  exceeded  the  maximum  area  indicated  in 
Commission Decision 2001/61/EC. 

For the distribution of the aid in such a case two methods were used. 

At first, during the period 2000 to 2002, an envelope was calculated by multiplying 
the  maximum  area  by  the  maximum  aid  per  hectare  as  defined  in  the  Commission 
Decision.  That  envelope  was  then  divided  by  the  national  area  approved,  which 
exceeded the maximum area authorised, resulting in a reduced aid level per hectare.  

In 2003  the  concept  of  the  aid  unit  coefficient  was  introduced  and  defined  as  “that 
proportion  of  a  unit  size  eligible  for  aid  and  the  subject  of  an  aid  application,  in 
respect of which aid is paid”. 

In  case  the  national  maximum  area  was  exceeded,  the  area  eligible  for  aid  was 
calculated by using the aid unit coefficient and linearly reducing the area approved of 
all applicants. 

In  practice,  using  an  aid  unit  coefficient  of  less  than  one,  results  at  an  individual 
farmer level, in aid being granted only on a part of each hectare applied for. 

2.2.4.  Differentiation of the aid per region 

In 2004  and  2005  the  level  of  aid  granted  to  seed  producers  varied  by  region (see 
Annex IV). The aid level was divided into two categories; one category for regions A 
and B  in  the  South  of  Finland  and  another  category  for  regions C1  to  C4,  in  the 
Northern part of Finland. 

The  reason  for  establishing  a  regional  differentiation  was  the  introduction  of 
additional  national  payments  for  the  agri-environmental  scheme  only  applicable  in 
regions A and B and consequently to avoid possible over-compensation. 

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2.2.5. 

Seed varieties within each species eligible for aid (Annex V) 

During the period 2000–2005 the list of seed varieties within each species in receipt 
of  authorised  national  aid  has  expanded  considerably  mainly  for  Timothy  and  Red 
clover. 

For  the  period 2000  to 2005,  the  evolution  per  species  aided,  details  of  the 
production,  the  area  approved  after  inspection,  the  yield,  the  area  corresponding  to 
the maximum aid and the aid per hectare are given in Annex VI. An analysis of these 
data leads to the comments in the following paragraphs. In the analysis reference is 
made to the average EU-15 yield level, which may be found in Annex VIII, Table 1. 

2.2.6.  Red clover (Trifolium pratense L.) – Annex VI, Table 1 

During  the  years  2000  to  2005  there  has  been  a  substantial  fluctuation  in  the  total 
quantity  of  Red  clover  produced  in  Finland,  ranging  from  125 tonnes  in 2001  to 
4 tonnes  in 2004.  The  decrease  is  due  mainly  to  a  dramatic  reduction  in  yield 
(188 to 10 kg/ha) and to a much lesser extent to a reduction in area. 

Average  yield  level  in  the  EU-15  during  the  period  2000–2005  varied  from 
260 kg/ha in 2004 to 380 kg/ha in 2000. 

Moreover, the area approved after inspection exceeded the maximum authorised area 
twice, in 2001 and 2002, and resulted in a reduced aid level per hectare. 

2.2.7.  Timothy (Phleum pratense L.) – Annex VI, Table 2 

Timothy  production  also  fluctuated  in  the  2000  to  2005  period,  ranging  from 
3 781 tonnes in 2001 to 1 319 tonnes in 2004. Both yield and area variation led to the 
disparity  in  volume  produced.  Yield  varied  from  527 kg/ha  in 2001  to  236 kg/ha 
in 2004. 

On  average,  the  yield  level  in  the  EU-15  during  the  period  2000–2005  varied 
between  280 kg/ha  and  530 kg/ha.  The  yield  levels  for  Timothy  production  in 
Finland are rather comparable with the EU-15 average figures during those years. 

Furthermore,  the  area  approved  after  inspection  on  which  Timothy  was  produced 
exceeded the maximum area authorised by Commission Decision 2001/61/EC during 
the  complete  period,  especially  in  the  years 2001,  2002  and  2003  when  the  area 
exceeded the maximum area authorised by more than 40%. 

The exceeding of the maximum area authorised led to a reduction of aid per ha in the 
period 2000–2002. As of 2003 use was made of an aid  unit coefficient,  which  was 
0,70 in 2003, 0,89 in 2004 and 0,97 in 2005. 

2.2.8.  Meadow fescue (Festuca pratensis huds.) – Annex VI, Table 3 

Production  of  Meadow  fescue  seed  ranged  from  a  high  of  732 tonnes  in  2001  to 
318 tonnes in 2004. 

Yield  figures  during  the  period  2000–2005  show  some  volatility,  with  the  yields 
ranging from 444 kg/ha in 2001 to about 200 kg/ha in 2004. 

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The  average  yield  level  in  the  EU-15 during  the  period  2000–2005  varied  between 
530 kg/ha and 750 kg/ha. 

Moreover, the area approved after inspection exceeded the maximum area authorised 
during each year, with a substantial overrun in 2003 of more than 44%. 

In 2000–2002 this led to a reduced aid level. An aid unit coefficient of 0,68 was used 
in 2003, 0,75 in 2004 and 0,74 in 2005. 

2.2.9.  Cocksfoot (Dactilis glomerata L.) – Annex VI, Table 4 

The production varied from 6 tonnes in 2000 to zero in 2004 and 2005. 

Yield levels of Cocksfoot seed varied from 339 kg/ha in 2003 to 23 kg/ha in 2002. 

On average in the EU-15, yield levels ranged from 790 kg/ha to 1 020 kg/ha during 
the period 2000–2005. 

During the period 2000–2003 the area approved after inspection for Cocksfoot seed 
production  remained  within  the  maximum  area  indicated  in  the  Commission 
Decision 2001/61/EC and in 2004 and 2005 there was no area approved. As a result, 
the aid level per hectare remained unchanged in the period 2000–2003. 

Interest in producing Cocksfoot seed is evidently fading. 

2.2.10.  Rye grass (Lolium perenne L.) – Annex VI, Table 5 

Production varied from 45 tonnes in 2000 to 13 tonnes in 2004. 

Rye  grass  seed  yield  in  Finland  varied  between  651 kg/ha  in  2001  and  180 kg/ha 
in 2004. 

Within  the  EU-15,  average  yield  levels  during  the  period  2000–2005  fluctuate 
between 1 090 kg/ha and 1 510 kg/ha. 

For the period 2000–2005, the area approved after inspection remained well within 
the maximum area set out in the Commission Decision. The aid granted per hectare 
remained unchanged and was at the maximum level. 

3. 

IMPORTS OF SEED INTO FINLAND 

3.1. 

Imports of cereal seed – Annex VII – Tables 1 and 2 

Imports  of  cereal  seed  increased  from  39 tonnes  in  2000  to  118 tonnes  in 2004  but 
came down to 5 tonnes in 2005 (Annex VII, Table 1). 

The import/production percentage in 2000 was 0,07%, in 2005 that percentage was 
even lower. 

The total quantity of certified cereal seed available on the Finnish market, domestic 
production  and  imports  (no  cereal  seeds  were  exported)  was  at  a  level  of 
57 347 tonnes in 2000 and at 70 536 tonnes in 2005 (Annex VII, Table 2). 

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Imports of cereal seed into Finland have experienced some growth during part of the 
period  covered,  with  a  temporary  upsurge  in 2003,  but  represent  a  very  small  part, 
even in 2003, of the total quantity of cereal seed available on the Finnish market. 

3.2. 

Imports of grass/clover seeds – Annex VII – Table 3 

Grass/clover  seed  imports  have  experienced  a  considerable  reduction  during  the 
period  2000 – 2005.  The  overall  quantity  came  down  by 79%  from  712 tonnes  in 
2000  to  152 tonnes  in 2005.  A  trough  of  142 tonnes  was  reached  in 2002. 
The reduction is mainly due to a decrease in imports of Timothy and Meadow Fescue 
seeds. 

The production of certified grass seed in Finland during the period 2000–2005 was at 
a level of 2 678 tonnes in 2000 and at a level of 2 703 tonnes in 2005. The share of 
imports  equalled  27%,  5%  and  6%  respectively  of  the  domestic  production  of 
grass/clover seeds in 2000, 2003 and 2005. 

On the basis of the data in Table 4 in Annex VII it becomes clear from the increase 
of  imports  in 2004,  that  imports  partly  replaced  the  shortfall  in  local  production 
during  that  same  year.  In  these  circumstances  it  is  reasonable  to  suggest  that  seed 
destined for the Finnish market can be grown outside Finland. 

Finally, the fact that domestic production of grass/clover seeds can be substituted by 
imports when domestic production is low shows that domestic production competes 
with imports for the same markets. 

4. 

OTHER AID SCHEMES IN FINLAND 

Aid systems based on the Act of Accession 

Based  on  Article 142  of  the  Act  of  Accession,  a  long  term  national  aid  scheme  is 
created for Finland and Sweden to compensate for climatic conditions (Nordic Aid). 
In  Finland  this  scheme  is  applicable  in  regions  C1 to C4  (see  Annex IV)  and  aid 
increases  as  one  goes  further  north.  It  is  payable  per  head,  per  hectare  or  as  a 
slaughter premium in regions C3 and C4. 

Based on Article 141 of the Act of Accession, there is an aid scheme permitting the 
granting  of 
regions A  and B 
(see Annex IV)  for  the  livestock  and  horticultural  sectors.  The  aid  consists  of 
investment aid at higher than normal intensities as well as income aid. 

transitional  and  degressive  national  aid 

in 

Other aid schemes 

In addition to the schemes listed above, there was also a national agri-environmental 
aid  scheme  in  Finland.  The  Decision  on  Article 141  support  authorised  additional 
agri-environmental  aid  in  form  of  incentive  payments  of  up  to  130%  of  the  basic 
payment. The incentive payments were in addition to co-financed agri-environmental 
payments and varied according to crop. 

Finally, in March 2005 a national Less Favoured Area (LFA) scheme was approved. 
This  scheme  allows  the  granting  of  a  basic  payment  and,  in  certain  cases,  an 

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additional  payment  for  areas  eligible  for  the  co-financed  compensatory  allowance. 
These payments are in addition to the co-financed compensatory allowances. 

In  Annex XI  a  brief  overview  is  provided  of  the  financial  support  from  various 
programs,  apart  from  the  national  aid  for  grass/clover  seeds  and  cereal  seed 
production, which a producer may receive in 2005. 

5. 

ASPECTS OF PRODUCTION OF GRASS/CLOVER SEEDS IN FINLAND AND THE EU-15  

An overview for the period 2000–2005 of the production, average prices and average 
yields for the EU-15 is given in Annex VIII. A comparison with Finnish data is also 
included in that Annex. 

Based on the overview it can be stated that: 

– 

– 

– 

– 

– 

Finnish  seed  yields  are  mostly  below  the  EU-15  average  except  for  Timothy 
which is on average similar (Annex VIII, Table 1); 

Finnish average prices are generally above the EU-15 average levels especially 
for Red clover (Annex VIII, Table 2); 

Finnish market receipts from seed production are in general below the EU-15 
average (Annex VIII, Table 3); 

the  Finnish  average  aid,  including  EU  and  national  aid  for  the  period  2000 
to 2004,  per  hectare  for  seed  production,  largely  exceeds  the  EU-15  average 
with the exception of Cocksfoot (Annex VIII, Table 6); 

the total Finnish receipts (including market and aid) for seed production for the 
period 2000 to 2004, per hectare is in most years above the EU-15 average for 
Red clover and Timothy but generally below the EU-15 average for Meadow 
fescue  and  Rye-grass.  Data  for  Cocksfoot  in  Finland  are  insufficient  to 
compare with EU-15 figures (Annex VIII, Table 7). 

6. 

SINGLE PAYMENT SCHEME 

As of the beginning of 2006 Finland applies the Single Payment Scheme, applying a 
dynamic  hybrid  regional  model.  Finland  is  divided  into  three  regions  and 
approximately 80% of CAP support is transferred into the regional flat rate payment. 
At the same time, some payments remain coupled and are paid as a complement to 
the flat rate payments. The aim is to arrive at an all sector inclusive flat rate payment 
in 2016, by gradually decreasing the level of complementary payments. 

All arable crop aid and Community seeds aid is fully decoupled, with the exception 
of the production of Timothy (Phleum pratense L.) seeds for which the aid remains 
coupled  in  accordance  with  Article  99  of  Council  Regulation  (EC)  No  1782/2003. 
Maintaining  coupled  aid  to  Timothy  production  will  more  than  likely  ensure  a 
continued high level of production of Timothy seeds in Finland. 

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7. 

SUMMARY AND OBSERVATIONS 

7.1. 

Legal basis 

The provision in the basic Regulation introduced by means of the Act of Accession, 
enabling Finland to grant national aid seems to be of a transitional nature as the text 
permits  the  Commission  to  forward  to  the  Council  not  only  a  report  but  also  “any 
necessary proposals” concerning the national aid scheme. 

7.2. 

Implementation of system 

Finland  is  authorised  to  grant  aid  to  growers  within  the  limits  of  the  areas  and  the 
amounts laid down in Decisions 2001/60/EC and 2001/61/EC. 

In 2000–2002 the aid appears to be distributed over the total production area, which 
sometimes exceeded the authorised area, leading to a reduced aid level. After 2002, 
the method of the aid unit coefficient was used. 

7.3. 

Other aid schemes 

Most of the schemes listed in Chapter 4, with the exception of the scheme based on 
Article 141 of the Act of Accession, are primarily intended as a compensation for the 
difficult climatic conditions in which Finnish farmers have to operate. 

Therefore  the  motivation  for  the  introduction  of  many  of  these  schemes  and  the 
national  production  aid  for  seeds  is  the  same,  and  the  cumulative  nature  of  aid 
schemes introduced for climatic reasons is evident. Since the aid schemes serve the 
same purpose, it is necessary to reconsider the relationship between the national aid 
scheme for seeds and cereal seed (already in existence for 12 years) and the other aid 
schemes. 

7.4. 

Single Payment Scheme 

Finland has chosen to apply a dynamic hybrid regional model as of 1 January 2006, 
decoupling the Community aid payments to the arable crop and the seeds sector with 
the  exception  of  Timothy  seeds  for  which  aid  will  remain  coupled.  Continuing 
indefinitely  the  national  aid  scheme  for  seeds  and  cereal  seed  production  would 
signify a permanent re-coupling of the sector and could undo the advantages of the 
2003 reform. It could also have WTO implications. 

Moreover,  Timothy  seed  is  multiplied  in  Finland  in  nearly  optimal  and  fairly 
competitive  conditions.  Maintaining  coupled  aid  for  Timothy  production  will  more 
than likely ensure a continued high level of production of Timothy seeds in Finland. 

7.5.  Multiplication in other countries 

Based on the increase of imports of grass/clover seed during 2004, a year in which 
local production experienced a strong shortfall and the upsurge in imports of cereal 
seed  in 2003,  it  seems  possible  to  multiply  grass/clover  seeds  and  cereal  seed, 
destined for the Finnish market and its specific climatic conditions, outside Finland. 

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7.6. 

Cereal seed production 

Cereal  seed  production  has  shown  a  growing  trend  during  the  period  2000–2005. 
Moreover, the average yield level for cereal seed production has increased by 44%, 
consequently the aid level per hectare has seen the same development. 

Moreover, the number of varieties in receipt of national aid has risen substantially, 
during the period 2000–2005. 

7.7. 

Imports into Finland 

During  the  period 2000  to 2005  the  quantity  of  imported  cereal  seed  was  at  a  very 
low  level.  The  volume  increased  somewhat  during  this  period  but  came  down  to  a 
very low level in 2005. 

During  the  period 2000  to 2005,  quantities  of  imported  grass/clover  seeds  fell 
by 79% and equalled 6% of domestic production 

The  fact  that  domestic  production  can  be  substituted  by  imports  when  domestic 
production  is  low  shows  that  domestic  production  competes  with  imports  for  the 
same markets. 

Therefore  it  can  not  be  excluded  that  the  national  aid  for  seeds  and  cereals  seed 
production  acts  as  a  barrier  to  imports,  by  making  the  Finnish  seed  production 
artificially competitive against imports from other Member States. 

8. 

PROPOSAL 

Based on the outcome of this report, a proposal for a Council Regulation is attached. 

The  proposed  measures  have  no  impact  on  the  general  budget  of  the  European 
Communities. 

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EXPLANATORY MEMORANDUM 

In  accordance  with  Article 8(2)  of  Council  Regulation  (EC)  No 1947/2005  the  Commission 
shall forward to the Council a report on the results of the national aid authorised in Finland for 
certain quantities of seeds and for certain quantities of cereal seed together with any necessary 
proposals. 

The findings on the results of the aid granted in Finland for seeds and cereal seed production 
are  made  clear  in  the  report  “on  the  results  of  the  aid  authorised  in  Finland  for  certain 
quantities  of  seeds  and  certain  quantities  of  cereal  seed”.  The  report  describes  the 
developments  within  the  seed  and  cereal  seed  sectors  in  Finland  during  the  period 2000 
to 2005. 

Based  in  particular  on  the  availability  of  other  aid  programs  which  compensate  Finnish 
farmers  for  the  climatic  conditions  in  which  they  operate,  the  need  to  avoid  double 
compensation  and  the  possible  distortion  of  competition  by  the  national  aid  scheme,  it  is 
proposed to abolish the possibility for Finland to grant national aid for seeds and cereal seed 
starting from 2011 with the exception of Timothy seeds for which aid has been terminated as 
of 2006. Article 8(2) of Council Regulation (EC) No 1947/2005 on the common organisation 
of the market in seeds and repealing Regulations (EEC) No 2358/71 and (EEC) No 1674/72 is 
amended accordingly. 

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2007/0109 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1947/2005 
as regards national aid granted by Finland for seeds and cereal seed 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 36 and the third subparagraph of Article 37(2) thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament4, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

to  Article 8(2)  of  Council  Regulation 

(EC)  No 1947/2005  of 
Pursuant 
23 November 2005 on the common organisation of the market in seeds and repealing 
Regulations  (EEC)  No 2358/71  and  (EEC)  No 1674/725,  Finland  may,  subject  to 
authorisation  by  the Commission, grant aid for certain quantities of seeds and cereal 
seed produced in Finland because of its specific climatic conditions. 

On  the  basis  of  information  sent  by  Finland  to  the  Commission,  the  Commission 
forwarded  to  the  Council  a  report6,  in  accordance  with  the  second  subparagraph  of 
Article 8(2) of Regulation (EC) No 1947/2005. That report shows that seeds and cereal 
seed  producers  in  Finland  have  access  to  and  benefit  from  other  aid  schemes,  which 
compensate Finnish farmers for the climatic conditions in which they operate. 

The  report  also  shows  that  the  production  volume  of  cereal  seed  in  Finland 
experienced  an  upward  trend  and  that  the  imported  quantity  of  cereal  seed  is  small 
compared to the domestically produced quantity. Furthermore, there is evidence in the 
report to show that when domestic seeds production decreased, imports increased and 
vice versa, leading to the conclusion that substitution of domestic seeds with imports is 
possible and that national Finnish aid may distort competition with imported products. 

Timothy  seed  is  multiplied  in  Finland  in  nearly  optimal  and  competitive  conditions. 
Maintaining coupled aid for Timothy production provides an incentive to production 
of  Timothy  seeds  in  Finland.  The  granting  of  national  aid  to  Timothy  seeds  should 
therefore cease. 

4 
5 
6 

OJ C …, …, p. … 
OJ L 312, 29.11.2005, p. 3. 
COM(2007) …. 

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(5) 

For  the  above  reasons  and  for  the  proper  functioning  of  the  single  market,  it  is 
appropriate  to  discontinue  the  possibility  for  Finland  to  grant  national  aid  for  seeds 
and cereal seed. However, in order to provide farmers in Finland with the opportunity 
to  prepare  for  a  situation  without  national  aid,  it  is  appropriate  to  grant  aid  for  the 
production  of  seeds  and  cereal  seed,  with  the  exception  of  Timothy  seeds,  during  a 
final, additional transitional period after which it will be abolished. 

(6)  With  a  view  to  an  interim  review  of  the  national  aid  system,  Finland  should  be 
required to provide a detailed report on the results of the national aid granted. 

(7) 

Regulation (EC) No 1947/2005 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

In Article 8 of Regulation (EC) No 1947/2005, paragraph 2 is replaced by the following: 

“2. 

Finland  may,  subject  to  authorisation  by  the  Commission,  grant  aid  for  certain 
quantities of seeds, with the exception of Timothy seeds (Phleum pratense L.), and 
for certain quantities of cereal seed produced solely in Finland up to and including 
the 2010 harvest. 

By  31  December  2008  at  the  latest,  Finland  shall  transmit  to  the  Commission  a 
detailed report on the results of the aid authorised." 

This Regulation shall enter into force on the third day following that of its publication in the 
Official Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, … 

For the Council 
The President 

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