Council Regulation (EC) No 637/2008 of 23 June 2008 amending Regulation (EC) No 1782/2003 and establishing national restructuring programmes for the cotton sector
Date: 2008-06-23
Institutions: Council of the European Union
Subjects: EU programme, aid for restructuring, aid recipient, aid to agriculture, cotton, production aid, reform of the CAP

5.7.2008

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Official Journal of the European Union

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 637/2008

of 23 June 2008

amending Regulation (EC) No 1782/2003 and establishing national restructuring programmes for
the cotton sector

THE COUNCIL OF THE EUROPEAN UNION,

schemes for farmers (4) as inserted by Article 1(20) of
Council Regulation (EC) No 864/2004 (5) sets out rules
for the specific crop payment for cotton.

Having regard to the Treaty
Community, and in particular
Article 37(2) thereof,

establishing the European
the third subparagraph of

(2)

Having regard to the Act of Accession of 1979, and in
particular paragraph 6 of Protocol 4 on cotton (1) annexed
thereto, hereinafter ‘Protocol 4’,

Having regard to the proposal from the Commission,

Having regard to the Opinion of the European Parliament (2),

Having regard to the Opinion of the European Economic and
Social Committee (3),

Whereas:

7

in

of

2006

September

factors and circumstances of

By judgment of the Court of Justice of the European
Communities
case
C-310/04 (6) 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 estab-
lished by that Regulation it
actually exercised its
discretion, involving the taking into consideration of all
the relevant
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 legis-
lature [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
previous support scheme would suffice to guarantee the
objective set out in recital 5 in the preamble to Regu-
lation (EC) No 864/2004, namely to ensure the profit-
ability and hence the continuation of
that crop, an
objective reflecting that laid down in paragraph 2 of
Protocol 4’. The Court also ordered that the effects of
the annulment be suspended until the adoption, within a
reasonable time, of a new Regulation.

the total existing aid under

(1)

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

(3)

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

(1) OJ L 291, 19.11.1979, p. 174. Protocol as last amended by Regu-

(4) OJ L 270, 21.10.2003, p. 1. Regulation as last amended by Regu-

lation (EC) No 1050/2001 (OJ L 148, 1.6.2001, p. 1).

lation (EC) No 479/2008 (OJ L 148, 6.6.2008, p. 1).

(2) Opinion of 14 February 2008 (not yet published in the Official

(5) OJ L 161, 30.4.2004, p. 48, as corrected by OJ L 206, 9.6.2004,

Journal).

p. 20.

(3) Opinion of 8 May 2008 (not yet published in the Official Journal).

(6) 2006 ECR I-7285.

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(4)

(5)

(6)

(7)

(8)

(9)

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 socioeconomic 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 new scheme should meet the objectives set out in
paragraph 2 of Protocol 4: to support the production of
cotton in regions of
is
important for the agricultural economy, to permit the
income, and to
producers concerned to earn a fair
improvements at the
stabilise the market by structural
level of supply and marketing.

the Community where it

The scheme should also be consonant with a policy of
income support for farmers, which is the main guiding
principle of the reformed common agricultural policy
(CAP).

The de-coupling of direct producer support and the
introduction of the single payment scheme are essential
elements in the process of reforming the CAP. Regulation
(EC) No 1782/2003 introduced those elements
for
several agricultural products.

In order to meet the objectives underlying the reform of
the CAP as well as the objectives set out in Protocol 4,
the support for cotton should be largely de-coupled and
integrated into the single payment scheme. Since those
objectives cannot be sufficiently achieved by the Member
the need for
States and can therefore, by reason of
common action, be better achieved at Community
level, the Community may adopt measures, in accordance
with the principle of subsidiarity, as set out in Article 5
of the Treaty. In accordance with the principle of propor-
tionality, as set out in that Article, this Regulation does
not go beyond what is necessary in order to achieve
those objectives.

The complete and immediate integration into the single
payment scheme of the support scheme in the cotton
sector is likely to bring a significant risk of production
regions of
disruption to the
the
Community. Part of
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 as to achieve

cotton producer
support

the

the objectives set out in paragraph 2 of Protocol 4 while
also bringing the cotton scheme into the mainstream of
the CAP reform simplification process. To that end, in
the light of the evaluation carried out, it is justified that
the total available aid 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
and
ensures a fair income for farmers.

cotton-producing

regions

the

(10)

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

(11)

For environmental reasons, a base area per producer
Member State should be established.
the
eligible areas should be restricted to those authorised
by the Member States.

In addition,

(12) A fixed yield per hectare should be established per
producer Member State. It will determine, together with
the base area requirement, the overall capping of the
funds and the mainly decoupled nature of the scheme,
the programme production limiting character while at
the same time fulfilling the objectives of Protocol 4.

(13)

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

(14)

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

(15)

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

(16)

Besides the new regime on the specific payment
for
cotton, it would seem appropriate to adopt another set
of rules with the purpose of helping the cotton sector to
stabilise in the new legal and market context.

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(17)

(18)

(19)

(20)

(21)

To the extent that the presence of the ginning industry
appears necessary in the producer regions, the needs of
that industry would be sufficiently satisfied, inter alia, by
means of setting a minimum quality of cotton actually
harvested and by allowing inter-branch organisations to
enhance the quality of cotton. Moreover, considering the
is
significant over-capacity of
appropriate
to
support
restructuring process with a view to
improved market orientation.

it
additional measures

the ginning industry,

to provide

their

for

Furthermore,
it seems appropriate that market orien-
tation measures supporting specific quality schemes and
related promotion activities be introduced. Therefore,
restructuring in the cotton
national programmes for
relevant
sector
should be
measures should be financed by the Community,
it
should be left to Member States to select the right mix
for the needs of their respective constituencies, taking
regional particularities into account, where necessary.

established. While

the

The restructuring programmes should be submitted to
the Commission for verification of the compliance of
the measures with the conditions laid down in this Regu-
lation and its implementing rules. Member States should
be responsible for the implementation of such restruc-
turing programmes.

should be complementary to already
The measures
in Council Regulation (EC) No
existing measures
1698/2005 of 20 September 2005 on support
for
rural development by the European Agricultural Fund
for Rural Development (EAFRD) (1).

The measures in such programmes may include the full
the ginning
and permanent dismantling of part of
processing facilities to ensure a more viable ginning
industry. Support may also be provided for investments
in the ginning industry, geared towards improving the
economic performance of
such.
Furthermore, aid may be made available to machinery
contractors affected as a consequence of the restructuring
of the cotton sector.

enterprises

the

as

(22)

To enhance the quality of European cotton, farmers who
participate in specific quality schemes should receive, in
the framework of such programmes, specific support to
cover some of the related costs. Equally, information and
promotion actions for cotton covered by these quality
schemes should be supported.

In view of

the specific needs for restructuring and adaptation in the
the
main cotton production regions.
temporary aim to restructure and adapt
the cotton
sector, the programmes may be terminated on request
of the Member States, after which the annual budget for
restructuring programmes may be added to the national
ceiling of the Member State concerned for decoupled
payments as established in Annex VIII
to Regulation
(EC) No 1782/2003.

(24)

In view of the absence of ginning industry in Portugal
and the application of the Single Area Payment Scheme
to
in Bulgaria,
national programmes
restructuring in these two
Member States.

there is no need to allocate budget

for

(25)

In order to apply the new cotton aid scheme and the
scheme restructuring the cotton sector from the start of
the production season, this Regulation should apply as
from calendar year 2009,

HAS ADOPTED THIS REGULATION:

CHAPTER 1

CROP SPECIFIC PAYMENT FOR COTTON

Article 1

Amendment to Regulation (EC) No 1782/2003

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

1. In Title IV, Chapter 10a shall be 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

(23)

The allocation of the funds for the national restructuring
programmes among Member States should be based on

(1) OJ L 277, 21.10.2005, p. 1. Regulation as last amended by Regu-

lation (EC) No 146/2008 (OJ L 46, 21.2.2008, p. 1).

1.
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.

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

2. Member States shall authorise the land and the varieties
as referred to in paragraph 1 of this Article in accordance
with detailed rules and conditions 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-
1.
branch organisation” shall mean a legal entity made up of
farmers producing cotton and at least one ginner, carrying
out activities such as:

Article 110c

Base areas, fixed yields and reference amounts

The national base areas are hereby established as

1.
follows:

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

— Bulgaria: 3 342 ha,

— Greece: 250 000 ha,

— Spain: 48 000 ha,

— Portugal: 360 ha.

— drawing up standard forms of contract compatible with

Community rules,

— orientating production towards products that are better
and consumer demand,
consumer
and
quality

adapted to market needs
of
particularly
protection,

in aspects

Fixed yields in the reference period are hereby estab-

2.
lished as follows:

— updating methods and means

to improve product

quality,

— Bulgaria: 1,2 tonne/ha,

— Greece: 3,2 tonne/ha,

— Spain: 3,5 tonne/ha,

— Portugal: 2,2 tonne/ha.

3.
The amount of the aid per eligible hectare is estab-
lished by multiplying the yields laid down in paragraph 2
with the following reference amounts:

— Bulgaria: EUR 671,33,

— Greece: EUR 251,75,

— Spain: EUR 400,00,

— Portugal: EUR 252,73.

4.
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 3 for that
Member State shall be reduced proportionately to the
overrun of the base area.

— developing marketing strategies to promote cotton via

quality certification schemes.

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

Article 110e

Payment of aid

Farmers shall be granted the aid per eligible hectare

1.
pursuant to Article 110c.

2.
Farmers who are members of an approved inter-branch
organisation shall be granted an aid per eligible hectare,
within the base
laid down in Article 110c(1),
increased by an amount of EUR 2.’;

area

2.

in Article 156(2)(g) shall be replaced by the following:

5.
Detailed rules for the implementation of this Article
shall be adopted in accordance with the procedure referred
to in Article 144(2).

‘(g) Title IV, Chapter 10a, shall apply as from 1 January

2009 for the cotton sown as from that date.’.

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CHAPTER 2

NATIONAL RESTRUCTURING PROGRAMMES

FOR THE

Restructuring programmes shall become applicable three

2.
months after their submission to the Commission.

COTTON SECTOR

Article 2

Scope

1.
This Chapter lays down the rules governing the attribution
of Community funds to Member States and the use of those
restructuring
funds by Member States
programmes (hereinafter restructuring programmes) to finance
specific restructuring measures to assist the cotton sector.

through national

if the submitted programme does not comply with
However,
the conditions laid down in this Chapter and its implementing
rules, the Commission shall inform the Member State thereof. In
such a
revised
programme to the Commission. The revised programme shall
become applicable two months after its submission unless an
incompatibility persists in which case this paragraph shall apply.

the Member State

submit

case,

shall

a

2.

No support shall be granted:

3.
Paragraph 2 shall apply mutatis mutandis to changes in
respect of restructuring programmes submitted by Member
States.

(a)

for research projects and measures to support research
projects;

(b) for measures which are eligible for Community support

under Regulation (EC) No 1698/2005.

Article 3

General requirements

1.
The restructuring programmes must be compatible with
Community law and consistent with the activities, policies and
priorities of the Community.

2. Member States shall be responsible for the restructuring
programmes and ensure that they are internally consistent and
drawn up and implemented in an objective manner, taking into
account the economic situation of the producers and processors
concerned and the need to avoid unjustified unequal treatment
between producers and/or processors.

Member States shall be responsible for providing for and
carrying out the necessary controls and penalties in case of
non-compliance with the restructuring programmes.

Article 5

Budgetary allocation

1.
The annual budget for the restructuring programme per
Member State from the financial year 2010 onwards shall be as
follows:

— Greece: EUR 4,0 million,

— Spain: EUR 6,134 million.

Each Member State may decide to terminate its use of the
2.
restructuring programme to permanently transfer its annual
budget
to its
referred to in paragraph 1 of
national ceiling as determined in Annex VIII
to Regulation
(EC) No 1782/2003. This decision shall be communicated to
the Commission at the latest by 1 August of a given year and
shall apply to the direct payments granted under the following
calendar year. The communication shall also report on the
implementation of
and the
achievement of its objectives.

restructuring programme

this Article,

the

Article 4

Submission and application of restructuring programmes

1.
Each producer Member State shall, every four years and
for the first time by 1 January 2009, submit to the Commission
a draft four-year restructuring programme containing measures
in accordance with this Chapter.

3.
The transfer in paragraph 2 of this Article, as well as the
corresponding modification of paragraph 1 of this Article, shall
be adopted in accordance with the procedure referred to in
Article 144(2) of Regulation (EC) No 1782/2003 after the
Commission’s assessment of the implementation of the restruc-
turing programme in light of its objectives.

Before being submitted to the Commission the restructuring
programme
to consultation with the
competent authorities and organisations in the cotton sector.

shall be

subject

Each Member State shall submit one single draft programme
which may accommodate regional particularities.

Article 6

General rules concerning the financing of the restructuring
programmes

1.
Community support shall only relate to eligible expen-
diture incurred after the submission of the relevant restructuring
programme as referred to in Article 4(1).

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2. Member States shall not contribute to the costs of the
measures financed by the Community under the restructuring
programmes.

2005/06 with their agricultural machinery for
harvest of cotton,

the

Article 7

Eligible measures and beneficiaries

— have harvested cotton, which has been delivered to
ginning facilities affected by dismantling as referred to
in paragraph (1)(a) of this Article,

Restructuring programmes shall only contain one or more

1.
of the following measures:

and

(a)

full and permanent dismantling of ginning facilities;

(b) investments in the ginning industry;

(c) participation of farmers in cotton quality schemes;

(d) information and promotion activities;

(e) aid to machinery contractors, not exceeding losses incurred.

2.

Beneficiaries of the restructuring programmes shall be:

(a)

the beneficiaries of aid under Chapter IV of Council Regu-
lation (EC) No 1051/2001 of 22 May 2001 on production
aid for cotton (1) in the marketing year 2005/06, for aid
under the measures referred to in paragraph 1(a), (b) and (d)
of this Article;

(b) the beneficiaries of aid under Chapter 10a of Regulation
(EC) No 1782/2003, for aid under the measures referred
to in paragraph 1(c) and (d) of this Article;

(c)

the approved inter-branch organisations, as defined in
Chapter 10a of Regulation (EC) No 1782/2003,
for aid
under the measure referred to in paragraph 1(d) of this
Article;

(d) machinery contractors, for aid under the measure referred to

in paragraph 1(e) of this Article, which:

— have incurred demonstrable losses as a result of the

shortage of cotton to be harvested.

Article 8

Financial resources

The measures provided for in this Chapter shall constitute inter-
vention to regulate agricultural markets as
referred to in
Article 3(1)(b) of Council Regulation (EC) No 1290/2005 of
21 June 2005 on the financing of the common agricultural
policy (2).

Article 9

Implementing rules

Detailed rules for the implementation of this Chapter shall be
adopted in accordance with the procedure referred to in
Article 195(2) of Council Regulation (EC) No 1234/2007 of
22 October 2007 establishing a common organisation of agri-
cultural markets and on specific provisions for certain agri-
cultural products (Single CMO Regulation) (3).

Article 10

Entry into force and application

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

— are private persons or enterprises having worked under
contract of growers or ginners in the marketing year

It shall apply as from 1 January 2009.

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

Done at Luxembourg, 23 June 2008.

For the Council
The President

I. JARC

(1) OJ L 148, 1.6.2001, p. 3. Regulation repealed by Regulation (EC) No

1782/2003.

(2) OJ L 209, 11.8.2005, p. 1. Regulation as last amended by Regu-

lation (EC) No 479/2008.

(3) OJ L 299, 16.11.2007, p. 1. Regulation as last amended by
Commission Regulation (EC) No 510/2008 (OJ L 149, 7.6.2008,
p. 61).