Proposal for a Council Regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards the support scheme for cotton {SEC(2007) 1481} {SEC(2007) 1482}
Date: 2007-11-09
Institutions: European Commission
Subjects: aid to agriculture, common agricultural policy, common organisation of markets, cotton, producer organisation

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 9.11.2007 
COM(2007) 701 final 

2007/0242 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1782/2003 establishing common rules for direct support 
schemes under the common agricultural policy and establishing certain support schemes 
for farmers, as regards the support scheme for cotton 

(presented by the Commission) 

{SEC(2007) 1481} 
{SEC(2007) 1482} 

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EXPLANATORY MEMORANDUM 

1) 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

On  7  September  2006,  the  European  Court  of  Justice  annulled  the  2004  cotton  reform, 
concluding that infringement of the proportionality principle had occurred as: 

– 

– 

– 

the EC failed to carry out an impact study; 

the EC failed to consider direct labour costs in the evaluation and decision process; 

the EC failed to take into consideration the impact of the new regime on the ginning 
industry  which,  although  not  included  in  the  Protocol,  is  directly  linked  to  the 
business of cotton production. 

Consequently, a particular attention was devoted to these elements during the various steps of 
impact analysis conducted by the Commission's services. 

This  proposal  introduces  a  new  cotton  regime  which  aims  to  encourage  a  competitive, 
sustainable and market-driven cotton sector, while safeguarding the Protocol commitments. 

•  General context 

The cotton sector, despite being of limited significance to the EU as a whole, contributing only 
0.15%  to  the  final  agricultural  output,  has  strong  regional  importance  in  the  two  main 
producing Member States. Around 76% of the EU's total output (about 1.45 million tonnes of 
raw  cotton)  is  grown  in  Greece.  In  2005  9.0%  of  Greece's  total  agricultural  production  was 
cotton while in Spain, the other main EU producer, cotton contributed 1.3%. A small amount 
of cotton is also grown in Bulgaria; Portugal no longer grows cotton. 

In  Greece,  most  of  the  380 000  ha  devoted  to  growing  cotton  is  located  in  three  regions: 
Thessaly,  Macedonia-Thrace  and  Sterea  Ellada.  In  Spain,  production  is  concentrated  in 
Andalusia,  mainly  in  the  provinces  of  Seville  and  Cordoba.  The  total  area  under  cotton  in 
Spain was about 65 000 ha in 2007. 

In the EU, most farms growing cotton are characterised by their small size (Greece 4.5 ha and 
Spain  11.0  ha)  and  large  number  (79 700  in  Greece  and  9 500  in  Spain).  In  Greece,  cotton 
holdings  have  a  higher  degree  of  specialisation;  Thessaly  is  devoted  almost  exclusively  to 
cotton production. 

In  recent  years,  the  environmental  impact  of  cotton  has  attracted  attention.  Dependent  on 
irrigation  and  fertilisers,  cotton  is  widely  associated  with  low  biodiversity  and  soil 
impoverishment.  In  addition,  the  intensive  use  of  phytosanitary  products,  especially 
insecticides, and leaf defoliants to assist with harvesting are a source of concern. 

At  the  processing  level,  a  mixture  of  private  enterprises  and  co-operatives  convert  the  raw 
cotton to its usable state through the ginning process, which separates cotton fibres from the 
seed.  The  capacity  of  Spain's  29  ginning  plants,  nearly  half  of  which  are  co-operatives,  far 
exceeds its production. In Greece the ginning capacity is more in balance with production and 
a lower proportion of plants are run by co-operatives (20 out of 73). 

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Internationally,  the  EU  is  a  minor  player,  contributing  only  about  2%  to  the  world's  total 
production  of  cotton.  The  main  producing  countries  are  China  (24%),  the  USA  (20%)  and 
India (14%). 

The EU is one of the world's net importers of cotton. World cotton exports are dominated by 
the USA, which currently exports about 2.75 million tonnes, or 36.5% of world trade. 

The  biggest  cotton  consumers  are  those  countries  with  established  manufacturing  industries. 
China  uses  32%  of  the  world's  cotton,  followed  by  the  USA  (14%)  and  India  (7%).  EU's 
consumption of around 0.6 million tonnes of ginned cotton (2.7% of the world total) is mostly 
concentrated in Italy, Portugal and Germany. 

The fact that the EU is a marginal producer of cotton implies that the impact of EU production 
on  the  evolution  of  world  market  prices  has  been  negligible.  This  is  further  strengthened  by 
the fact that the EU does not use export subsidies for this sector and offers duty free access. 
Though policies of other developed and developing countries have had a significant effect on 
world cotton prices, the main factor contributing to the price decline is increased competition 
from synthetics. 

In Europe, the first cotton support regime was set up with the accession of Greece to the EC in 
1980,  then  extended  to  Spain  and  Portugal  in  1986.  A  Protocol  annexed  to  the  Accession 
Treaty stated that the Community shall ensure the support of cotton production in the regions 
where  it  is  important  for  the  agricultural  economy.  The  support  system  should  permit  the 
producers concerned to earn a fair income and include the grant of an aid to production. 

The  initial  regime  was  based  on  a  "deficiency  payment"  granted  to  processors,  who  paid  a 
minimum price to the farmers that supplied them with unginned cotton. The aid and minimum 
price were based on the difference between an internal target price and the world market price. 
This regime prompted a big expansion of the whole EU cotton sector. 

In  recent  years  the  CAP  has  undergone  a  fundamental  reform,  aimed  at  increasing 
competitiveness, food safety and quality, stabilising farm incomes, integrating environmental 
concerns  into  agricultural  policy,  developing  the  vitality  of  rural  areas,  simplification  and 
strengthening decentralisation. The main guiding principle of the 2003 CAP reform process is 
to move away from price and production support towards decoupled income support. 

In order to bring cotton more in line with other sectors, the Council in April 2004 adopted a 
new regime for cotton, based on a decoupled income aid and a crop specific (area) payment, 
both paid directly to cotton farmers. It came into force in January 2006. 

•  Existing provisions in the area of the proposal 

Chapter  10a  of  Title  IV  of  Council  Regulation  (EC)  No 1782/2003  of  29  September  2003 
establishing  common  rules  for  direct  support  schemes  under  the  common  agricultural  policy 
and establishing certain support schemes for farmers sets out rules for the specific payment for 
cotton.  The  provisions  of  this  chapter  have  been  annulled  by  the  judgement  of  the  Court  of 
Justice  of  7  September  2006  in  case  C-310/04.  The  effects  of  the  annulment  had  been 
suspended until the adoption, within a reasonable time, of a new regulation. 

•  Consistency with the other policies and objectives of the Union 

Not applicable. 

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2) 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Consultation methods, main sectors targeted and general profile of respondents 

In  order  to  assist  in  the  preparation  of  this  proposal  and  its  impact  assessment,  two 
independent studies were commissioned to, respectively, analyse the socio-economic aspects 
of cotton and to evaluate the environmental impact of the regime. In the framework of the two 
studies, data collection and the assessments of impacts were based on specific questionnaires 
addressed to stakeholders, and interviews carried out by experts. 

The  Commission  services  also  organised  workshops  and  seminars  involving  the  interested 
parties. These consultations were in addition to the regular meetings with sector professionals 
organised  in  the  framework  of  the  Advisory  Committee  for  Cotton  and  the  Management 
Committee for Natural Fibres. Meetings were also organised with labour representatives and 
NGOs  active  in  the  field  of  development  policy  and  environmental  protection,  as  well  as 
academics  with  specialist  knowledge  of  the  cotton  sector  and  the  authorities  in  the  regions 
where the cultivation of cotton plays an important role. 

An open consultation was conducted over the internet from 8 May 2007 to 22 June 2007. The 
Commission received 320 responses. It provided additional feedback from a broader public. 

•  Collection and use of expertise 

Scientific/expertise domains concerned 

agro-economics and statistics 

Methodology used 

Independent studies and a consultation of stakeholders 

Main organisations/experts consulted 

See above 

Means used to make the expert advice publicly available 

The results of the consultation will be available on:  
http://ec.europa.eu/agriculture/consultations/cotton/index_en.htm. 

•  Impact assessment 

The Commission carried out an impact assessment listed in the Commission Legislative and 
Work Programme 2007 available on the Europa website. 

3) 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The new cotton regime should have the following goals: 

o 

the  continuation  of  agricultural  activity  as  a  component  of  the  sustainable 
development of the cotton-producing regions; 

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o 

o 

o 

o 

o 

o 

the compatibility of the support options for cotton producers with the principles of the 
reformed CAP; 

the  compatibility  of  the  support  options  for  cotton  producers  with  the  EU's  WTO 
commitments and the limitation of any negative impact on developing countries; 

the stability and control of the EU budget; 

the competitiveness and market orientation of the EU's cotton sector; 

the reduction of the impact of cotton production on the environment; 

simplification of the management of the support regime for cotton producers. 

In order to meet these objectives, this Proposal recommends that 65% of the resources devoted 
to supporting the cotton sector before the 2004 reform continue to be integrated in the Single 
Payment Scheme. Like other farmers benefiting from decoupled support, cotton growers will 
enjoy a certain stability of income, while having the freedom to adapt to market developments. 

The  remaining  35%  would  continue  to  be  linked  to  cotton  production,  as  an  area  payment. 
These  coupled  payments  are  designed  to  ensure  the  continuity  of  cotton  growing  at  a  level 
sufficient to safeguard the ginning industry in those regions where it represents an important 
economic activity. 

The  European  Court  of  Justice  raised,  in  particular,  the  question  of  the  justification  for  the 
decoupling rate chosen. The question is how to embed the cotton regime in the CAP reform, 
while  at  the  same  time  respecting  the  objectives  of  the  Cotton  Protocol  in  the  Acts  of 
Accession of Greece and of Spain and Portugal. 

Analyses  and  complementary  questionnaires  carried  out  in  the  context  of  the  Impact 
Assessment illustrated the different production structures and factors influencing the farmer's 
decision-making process. Quantitative modelling tools are unable to determine with certainty 
the  relationship  between  supply  and  coupled  payments.  Nevertheless,  there  is  consensus 
among the simulations carried out that, in the medium term, a coupled rate of support of about 
35% would favour the continuation of cotton production – so respecting the Protocol – while 
adhering to the principles of the CAP reform. 

In  2004  the  Council  decided  to  set  the  coupling  rate  at  35%  although  the  Commission  had 
proposed 40%. Returning to a higher rate of coupling would now entail a heavy workload for 
Member State administrations, as well as lowering the Single Farm Payment made to cotton 
farmers.  

From  an  administrative  point  of  view,  any  upwards  modification  of  the  coupling  rate  would 
imply  a  reduction  of  the  decoupling  rate  and,  consequently,  the  recalculation  of  all  the 
payment  entitlements  allocated  in  2006  to  the  historical  producers  of  cotton  in  the  Member 
States concerned. By contrast, maintaining the 35% coupling rate would not entail any further 
administrative burden. 

If a higher decoupling rate than 65% were to be set, it would risk the extensive disruption of 
the  cotton  sector.  Therefore,  after  analysing  possible  scenarios,  as  described  in  the  Impact 
Assessment, the Commission has reached the conclusion that, in order to meet the stated goals, 
the  current  balance  between  coupled  and  decoupled  support  should  be  continued  with  some 
additional minor modifications to the regime.  

It is proposed that the maximum area should remain unchanged at 450 597 ha (370 000 ha in 
Greece, 70 000 ha in Spain, 360 ha in Portugal and 10 237 ha in Bulgaria). The level of area 

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payment  would  also  remain  unchanged  and  will  be  proportionately  reduced  in  the  event  of 
payment claims exceeding the maximum area of a Member State. 

Both  the  decoupled  and  crop-specific  area  payment  will  continue  to  be  subject  to  cross-
compliance criteria, which will lead to more environmentally-friendly cotton production in an 
income-neutral manner. 

The crop-specific payment would be granted per eligible hectare of cotton, on condition that 
the area is maintained at least until harvest, with no obligation to  deliver or sell cotton. The 
cotton would have to meet minimum requirements: "sound and fair" and of marketable quality. 

It  is  proposed  that  inter-branch  organisations  should  be  supported,  in  order  to  help  better 
coordinate the marketing of cotton, to draw up contracts between growers and processors and 
to promote quality. 

The  financial  transfer  for  restructuring  in  the  cotton-growing  regions,  provided  for  in 
Article 143d of Council Regulation (EC) No 1782/2003 (€22 million per year as from budget 
year  2007)  has  already  been  made  available  to  the  EAFRD  and  included  in  the  annual 
breakdown  by  Member  State  of  Community  support  to  rural  development,  by  Commission 
Decisions  2006/410/EC  and  2006/636/EC.  Thus,  in  the  period  2007  to  2013,  an  additional 
amount  of  €154  million  will  be  available  as  ad ditional  Community  support  for  measures  in 
cotton  producing  regions.  This  could  allow  Member  States  to  further  assist  for  instance  the 
restructuring process of cotton-growing holdings and the ginning industry. 

In  order  to  support  the  promotion  of  EU  cotton,  the  creation  of  a  "label  of  origin"  is 
recommended. This was explicitly asked for by stakeholders during the consultation process. 

In March 2006, the Commission committed itself to undertake a policy review of the operation 
of  Regulation  (EC)  No 510/2006  on  the  protection  of  geographical  indications  and 
designations  of  origin  for  agricultural  products  and  foodstuffs.  In  this  framework  the 
Commission will study the possibility of including cotton in the scope of the Regulation. 

To develop the image of Community cotton and promote its use, the Commission will analyse 
the  relevance,  efficacy  and  efficiency  of  including  certain  cotton  products  entirely  produced 
and  manufactured  in  the  EU  in  the  list  of  products  eligible  for  information  and  promotion 
actions. 

•  Legal basis 

Article 37(2) of the Treaty establishing the European Community and Protocol No 4 on cotton 
(annexed to the 1979 Act of Accession). 

•  Subsidiarity principle 

The proposal leaves the important elements under the responsibility of the Member States: 

– 
– 
– 
– 
– 

approval of areas for cotton production, 
approval of varieties, 
approval of inter-branch organisations, 
distribution of payment rights, 
definition of environmental rules. 

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•  Proportionality principle 

The proposal complies with the proportionality principle because it corresponds to the general 
objectives  of  the  common  agricultural  policy  and  at  the  same  time  respects  the  obligations 
imposed by Protocol No 4. 

•  Choice of instruments 

Proposed instruments: Council regulation introducing a new support scheme on cotton which 
replaces the regime annulled by the Court of Justice by the judgement of the Court of Justice 
of 7 September 2006 in case C-310/04. 

4) 

BUDGETARY IMPLICATION 

The national base area and the amount of aid per eligible hectare remain unchanged compared 
with the current situation. However, with the decrease of the coupled payment for farmers who 
are  members  of  an  approved  inter-branch  organisation  from  €10/ha 
granted to these farmers is reduced from €4.4 million to €1.4 million, which would offset any 
additional expenditure on information and promotion. 

to  €3/ha,  the  amount 

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2007/0242 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1782/2003 establishing common rules for direct support 
schemes under the common agricultural policy and establishing certain support schemes 
for farmers, as regards the support scheme for cotton 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having  regard  to  the  Act  of  Accession  of  Greece,  and  in  particular  paragraph 6  of  Protocol 
No 4 thereto on cotton1, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the European Economic and Social Committee3, 

Whereas: 

(1) 

(2) 

Chapter  10a  of  Title  IV  of  Council  Regulation  (EC)  No 1782/20034  as  inserted  by 
Article 1(20) of Council Regulation (EC) No 864/20045 sets out rules for the specific 
payment for cotton. 

By  judgement  of  the  Court  of  Justice  of  the  European  Communities  of  7 September 
2006 in case C-310/046 Chapter 10a of Title IV of Regulation (EC) No 1782/2003 was 
annulled  for  breach  of  the  principle  of  proportionality,  in  particular  with  reference  to 
the circumstance that "the Council, the author of Regulation (EC) No 864/2004, [had] 
not shown before the Court that in adopting the new cotton support scheme established 
by  that  regulation  it  actually  exercised  its  discretion,  involving  the  taking  into 
consideration of all the relevant factors and circumstances of the case, including all the 
labour  costs  linked  to  cotton  growing  and  the  viability  of  the  ginning  undertakings, 
which it was necessary to take into account for assessing the profitability of that crop" 
and  that  the  Court  had  not  been  enabled  "to  ascertain  whether  the  Community 

1 

2 
3 
4 

5 
6 

OJ L 291, 19.11.1979, p. 174. Protocol as last amended by Regulation (EC) No 1050/2001 (OJ L 148, 
1.6.2001, p. 1). 
OJ C …, …, p. …. 
OJ C …, …, p. …. 
OJ  L  270,  21.10.2003,  p. 1.  Regulation  as  last  amended  by  Regulation  (EC)  No 552/2007  (OJ  L 131, 
23.5.2007, p. 10). 
OJ L 161, 30.4.2004, p. 48. 
2006 ECR I-7285. 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

legislature  [had  been]  able,  without  exceeding  the  bounds  of  the  broad  discretion  it 
enjoys in the matter, to reach the conclusion that fixing the amount of the specific aid 
for  cotton  at  35%  of  the  total  existing  aid  under  the  previous  support  scheme  would 
suffice to guarantee the objective set out in recital 5 in the preamble to Regulation (EC) 
No 864/2004,  namely  to  ensure  the  profitability  and  hence  the  continuation  of  that 
crop,  an  objective  reflecting  that  laid  down  in  paragraph 2  of  Protocol  No 4".  The 
Court also  ordered that the effects of the annulment be  suspended  until the  adoption, 
within a reasonable time, of a new regulation. 

A new scheme of specific payment for cotton needs to be adopted in conformity with 
the Court's judgement in case C-310/04. 

The new scheme should meet the objectives, set out in paragraph 2 of Protocol No 4 on 
cotton  annexed  to  the  Act  of  Accession  of  Greece  (‘Protocol 4’),  to  support  the 
production  of  cotton  in  regions  of  the  Community  where  it  is  important  for  the 
agricultural economy, to permit the producers concerned to earn a fair income, and to 
stabilise the market by structural improvements at the level of supply and marketing. 

All  the  relevant  factors  and  circumstances  pertaining  to  the  specific  situation  of  the 
cotton  sector,  including  all  the  elements  necessary  to  assess  the  profitability  of  that 
crop,  should  be  taken  into  consideration.  To  this  end,  an  evaluation  and  consultation 
process was launched: two studies were carried out on the socio-economic and on the 
environmental  impact  on  the  cotton  sector  in  the  Community  of  the  future  cotton 
support scheme and specific seminars and an internet consultation were organised with 
stakeholders. 

The de-coupling of direct producer support and the introduction of the single payment 
scheme  are  essential  elements  in  the  process  of  reforming  the  common  agricultural 
policy (CAP) aimed at moving away from a policy of price and production support to a 
policy  of  farmer  income  support.  Regulation  (EC)  No 1782/2003  introduced  those 
elements for several agricultural products. 

In  order  to  meet  the  objectives  underlying  the  reform  of  the  CAP,  the  support  for 
cotton should be largely de-coupled and integrated into the single payment scheme. 

A  complete  integration  in  the  single  payment  scheme  of  the  support  scheme  in  the 
cotton sector is likely to bring a significant risk of production disruption to the cotton 
producer regions of the Community. Part of the support should therefore continue to be 
linked to the cultivation of cotton through a crop-specific payment per eligible hectare. 
Its amount should be calculated in such a way so as to achieve the objectives set out in 
paragraph 2  of  Protocol 4  while  also  bring  the  cotton  scheme  into  the  mainstream  of 
the CAP reform process and simplification. To that end, in the light of the evaluation 
carried out, it is justified that the total available aid per hectare per Member State is set 
at 35% of the national share of the aid that went indirectly to the producers. Such a rate 
allows the cotton sector to move towards long-term viability, promotes the sustainable 
development of the cotton-producing regions and ensures a fair income to farmers. 

(9) 

The remaining 65% of the national share of the aid that went indirectly to the producers 
should be available for the single payment scheme. 

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(10)  For  environmental  reasons,  a  base  area  per  Member  State  should  be  established  in 
order  to  limit  the  areas  sown  under  cotton.  In  addition,  the  eligible  areas  should  be 
restricted to those authorised by the Member States. 

(11) 

(12) 

In  order  to  meet  the  needs  of  the  ginning  industry  eligibility  for  the  aid  should  be 
related to a minimum quality of cotton actually harvested. 

In  order  to  allow  producers  and  ginners  to  enhance  the  quality  of  the  cotton,  the 
establishment  of  inter-branch  organisations,  to  be  approved  by  the  Member  States, 
should be encouraged. The Community should contribute indirectly to the activities of 
those  organisations  by  increasing  the  aid  to  those  farmers  who  are  members  of  the 
organisations. 

(13) 

In order to apply the new cotton aid scheme from the beginning of the calendar year, 
this Regulation should apply as from 1 January 2008. 

(14)  Regulation (EC) No 1782/2003 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 1782/2003 is hereby amended as follows: 

(1) 

In Title IV, Chapter 10a is replaced by the following: 

"CHAPTER 10A 
CROP SPECIFIC PAYMENT FOR COTTON 

Article 110a – Scope 

Aid  shall  be  granted  to  farmers  producing  cotton  falling  within  CN  code  5201 00  under  the 
conditions laid down in this Chapter. 

Article 110b – Eligibility 

1. 

2. 

The aid shall be granted per hectare of eligible area of cotton. In order to be eligible, 
the  area  shall  be  located  on  agricultural  land  authorised  by  the  Member  State  for 
cotton  production,  sown  under  authorised  varieties  and  actually  harvested  under 
normal growing conditions. 

The  aid  referred  to  in  Article 110a  shall  be  paid  for  cotton  of  sound  and  fair 
merchantable quality. 

Member States shall authorise the land and the varieties as referred to in paragraph 1 
in  accordance  with  detailed  rules  and  conditions  adopted  in  accordance  with  the 
procedure referred to in Article 144(2). 

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Article 110c – Base areas and amounts 

1. 

The national base areas are hereby established as follows: 

– 

– 

– 

– 

Bulgaria: 10 237 ha, 

Greece: 370 000 ha, 

Spain: 70 000 ha, 

Portugal: 360 ha. 

2. 

The amount of the aid per eligible hectare shall be as follows: 

3. 

4. 

1. 

– 

– 

– 

– 

Bulgaria: EUR 263, 

Greece:  EUR 594  for  300 000  hectares  and  EUR 342,85  for  the  remaining 
70 000 hectares, 

Spain: EUR 1 039, 

Portugal: EUR 556. 

If the eligible area of cotton in a given Member State and in a given year exceeds the 
base area laid down in paragraph 1, the aid referred to in paragraph 2 for that Member 
State shall be reduced proportionately to the overrun of the base area. 

However,  for  Greece  the  proportionate  reduction  shall  be  applied  in  respect  of  the 
amount  of  the  aid  fixed  for  the  part  of  the  national  base  area  composed  of  the 
70 000 hectares in order to respect the global amount of EUR 202,2 million. 

Detailed rules for the implementation of this Article shall be adopted in accordance 
with the procedure referred to in Article 144(2). 

Article 110d – Approved inter-branch organisations 

For the purpose of this Chapter, an "approved inter-branch organisation" shall mean a 
legal entity made up of farmers producing cotton and at least one ginner, carrying out 
activities such as: 

– 

– 

– 

– 

– 

helping to coordinate better the way cotton is placed on the market, particularly 
through research studies and market surveys, 

drawing up standard forms of contract compatible with Community rules, 

orientating production towards products that are better adapted to market needs 
and  consumer  demand,  particularly  in  aspects  of  quality  and  consumer 
protection, 

updating methods and means to improve product quality, 

developing  marketing  strategies  to  promote  cotton  via  quality  certification 
schemes. 

2. 

The Member State in whose territory the ginners are established shall approve inter-
branch  organisations  that  respect  criteria  to  be  adopted  in  accordance  with  the 
procedure referred to in Article 144(2). 

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Article 110e – Payment of aid 

1. 

2. 

Farmers shall be granted the aid per eligible hectare pursuant to Article 110c. 

Farmers who are members of an approved inter-branch organisation shall be granted 
an  aid,  per  eligible  hectare  within  the  base  area  laid  down  in  Article 110c(1), 
increased by an amount of EUR 3." 

(2) 

In Article 156(2), point (g) is replaced by the following: 

"(g)  Title IV, Chapter 10a, shall apply as from 1 January 2008 for the cotton sown as 

from that date." 

Article 2 

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

It shall apply as from 1 January 2008. 

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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FINANCIAL STATEMENT 

1. 

BUDGET HEADING: (nomenclature 2007) 

2. 

3. 

4. 

5. 

5.0 

APPROPRIATIONS: 
Budget 2007 
€2 111 Mio 
€261 Mio 

05 03 01 02 
05 03 02 40 
TITLE: 
Council  Regulation  amending  Regulation  (EC)  No  1782/2003  establishing  common  rules  for  direct 
support  schemes  under  the  common  agricultural  policy  and  establishing  certain  support  schemes  for 
farmers, as regards the support scheme for cotton. 
LEGAL BASIS: 
Article 37(2) of the Treaty 
AIMS: 
Following the reform of the cotton sector by Council Regulation (EC) No 864/2004 and the judgement 
of  the  European  Court  of  Justice  of  7  September  2006  in  case  C-310/04  annulling  Chapter  10a  of 
Title IV of Council regulation (EC) No 1782/2003, this proposal aims at introducing new provisions on 
specific payment for cotton. 
FINANCIAL IMPLICATIONS 

12 MONTH 
PERIOD 

FINANCIAL 
YEAR 
2007 
(EUR million) 
– 

FINANCIAL 
YEAR 
2008 
(EUR million) 
277,1 

CHARGED TO THE EC BUDGET 

EXPENDITURE 
– 
(REFUNDS / INTERVENTIONS) 
– 
– 

NATIONAL AUTHORITIES 
OTHER 

(EUR million) 
– 

5.1  REVENUE 

– 

– 

– 

OWN RESOURCES OF THE EC  

– 
(LEVIES / CUSTOMS DUTIES) 
– 

NATIONAL 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 

5.0.2  ESTIMATED EXPENDITURE 
5.1.2  ESTIMATED REVENUE 

5.2  METHOD OF CALCULATION: see Annex. 

2009 
277,3 
– 
2014 
278,3 
– 

2010 
277,4 
– 

2011 
277,5 
– 

2012 
277,8 
– 

2013 
278,1 
– 

2015 
278,6 
– 

2016 
278,9 
– 

2017 onwards
279,1 
– 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

YES NO 

6.1  CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF 

THE CURRENT BUDGET? 

6.2  WILL A SUPPLEMENTARY BUDGET BE NECESSARY? 
6.3  WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? 
OBSERVATIONS: 
The  proposal  does  not  change  the  current  ratio  between  coupled  and  decoupled  aid  and  does  not  modify  the 
provisions  for  the  decoupled  aid.  As  far  as  the  coupled  aid  is  concerned,  this  proposal  does  not  entail  any 
additional expenditure compared to the current regime as the base areas and the level of aid remain unchanged. 
However,  the  decrease  of  the  coupled  payment  for  farmers  who  are  member  of  an  approved  inter  branch 
organisation will produce a saving of €3 million. 

YES NO 
YES NO 
YES NO 

EN 

13 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
1 – Crop specific payment for cotton (Greece, Portugal, Spain) – budget item 05 03 02 40 

ANNEX 

Base area 
Level of aid 

Base area 
Level of aid 

and 

Greece 
300 000 ha 
€594/ha 

70 000 ha 

€342,85/ha 

Spain 
70 000 ha 

€1 039/ha 

Portugal 

360 ha

€556/ha

sub-total 1 
Increase of the level of aid for producers members of an approved 
inter-branch organisation 
Base area 
level of aid 

sub-total 2 

Total 

Total EU 15 for each budget year 

€202 199 500 

€72 730 000 

€200 160

370 000 ha 

€3/ha 
€1 110 000 

70 000 ha 
€3/ha 
€210 000 

360 ha

€3/ha
€1 080

€203 309 500 

€72 940 000 

€201 240

€276 450 740

2 – Bulgaria : inclusion in the SAPS – Item 05 03 01 02 
Base area 
Level of aid 
Total 

10 237 ha 
€263/ha 
€2 692 331 

Budget year 
2008 
2009 
2010 
2011 
2012 
2013 
2014 
2015 
2016 

2017 onwards 

Total expenditure : 1 + 2 
Budget year 
2008 
2009 
2010 
2011 
2012 
2013 
2014 
2015 
2016 

2017 onwards 

Phasing-in rate  
for Bulgaria 

25% 
30% 
35% 
40% 
50% 
60% 
70% 
80% 
90% 

100% 

€673 083 
€807 699 
€942 316 
€1 076 932 
€1 346 166 
€1 615 399 
€1 884 632 
€2 153 865 
€2 423 098 

€2 692 331 

Total 
€277 123 823 
€277 258 439 
€277 393 056 
€277 527 672 
€277 796 906 
€278 066 139 
€278 335 372 
€278 604 605 
€278 873 838 
€279 143 071 

EN 

14 

   EN