Report from the Commission to the Council and the European Parliament - The agricultural situation in the European Union – 2006 Report {SEC(2008) 2382}
Date: 2008-08-26
Institutions: European Commission
Subjects: EU Member State, agricultural situation, agricultural statistics, farm prices, farmers' income, reform of the CAP, report, rural development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.8.2008 
COM(2008) 525 final 

REPORT FROM THE COMMISSION  
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

The agricultural situation in the European Union – 2006 Report 

{SEC(2008) 2382} 

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REPORT FROM THE COMMISSION  
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

The agricultural situation in the European Union – 2006 Report 

INTRODUCTION 

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"The agricultural situation in the European Union — 2006 report", was completed in 
2007 and is published in conjunction with the General Report on the Activities of the 
European Union. 

ECONOMIC SITUATION AND FARM INCOMES 

Output from farms in 2006 was less than in 2005. In the crop sector output  fell by 
4% while in the animal sector it fell by 1%. 

In both crop and animal sectors, farmers received lower prices for their products. On 
average prices decreased by 2% in real terms. 

The number of farmers continued to decline (2% less in 2006 compared to 2005). 

On  average  incomes  of  farmers  increased  by  3%,  although  there  was  considerable 
variation  between  Member  States,  with  incomes  rising  substantially  in  some  and 
falling significantly in other. 

In 2006, the EU remained an overall net exporter of agricultural products. 

POLICY DEVELOPMENTS AND LEGISLATIVE INITIATIVES IN 2006 

The CAP reform 

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The  reform  of  the  CAP  continued  in  2006.  In  May,  the  Commission  published  a 
consultation  document  on  the  reform  of  the  fruit  and  vegetable  sector.  In  June  it 
called for a comprehensive reform of the wine sector. In September the Commission 
submitted  a  proposal  for  reform  of  the  banana  sector  (which  was  adopted  by  the 
Council in December.) 

Preparatory work began in relation to a number of review clauses contained within 
the 2003 and 2004 reforms, grouped together under the term "Health Check". 

In  2006,  the  Commission  took  forward  its  programme  for  the  simplification  of  the 
CAP with the presentation of an Action Plan (containing 24 proposals for legislative 
changes) and the adoption of a proposal for a single common market organisation. 

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Quality policy 

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In  March,  the  Council  adopted  a  regulation  on  the  protection  of  geographical 
indications and designations of origin for agricultural products and foodstuffs. It also 
adopted a regulation on agricultural products and foodstuffs as traditional specialities 
guaranteed. 

Organic farming 

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In  December,  the  Council  reached  agreement  on  a  "general  approach"  on  the 
proposal  for  a  Council  Regulation  on  organic  production  and  labelling.  The  new 
Regulation  is  a  corner  stone  of  the  Community  Action  Plan  for  Organic  Food  and 
Farming  and  constitutes  a  major  step  towards  the  further  development  of  organic 
farming in the EU. 

State aids 

12. 

The Commission received 319 notifications of state aid draft measures to be granted 
in the agricultural and agro-industrial sector. It started the examination of 27 state aid 
measures, which had not been notified previously under Article 88(3) EC Treaty. 

Assistance to the needy 

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In 2006, the European Union continued to distribute food products from intervention 
stocks to the needy. 

The Outermost Regions – Reform of the POSEI arrangements 

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Early  in  the  year,  a  reform  of  the  POSEI  arrangements  was  finalised  with  the 
adoption  of  a  Council  Regulation  laying  down  specific  measures  for  agriculture  in 
the outermost regions of the Union. 

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AGRICULTURAL MARKETS 

Crop products 

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World cereal production in the 2006/07 marketing year was less than the year before 
–  1 567  million  tonnes  –  compared  to  the  previous  year's  harvest  of  1 602  million 
tonnes. 

The harvest in the EU was also lower – by 6%. This was because farmers planted a 
smaller area of cereals and yields were lower. 

Animal products 

17. 

Concerning milk, EU farmers produced less in 2006 compared to the previous year 
(a decrease of 1%). This was because there were less dairy farmers. The remaining 
dairy  farmers  increased  their  average  herd  size  and  the  yield  per  cow,  but  these 
increases were not enough to offset the reduction in the number of dairy farmers. For 
the very first time, some Member States produced less milk than allowed under the 
regime of production quotas. 

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As  for  beef  and  veal,  there  was  a  slight  increase  in  production  of  0.4%.  This  was 
primarily due to an increase in the number of cows slaughtered in the UK following 
the return of over-thirty month cattle to the commercial market. 

In  2006,  farmers  produced  7.9  million  tonnes  of  beef  and  veal  while  EU  citizens 
consumed 8.2 million tonnes. 

As regards external trade, the EU exported around 239 000 tonnes of beef mainly to 
Russia, Switzerland, Croatia and Angola. On the other hand, the EU imported around 
510 000 tonnes of beef. Over 90% of the imports came from Brazil, Argentina and 
Uruguay. 

The overall situation of the EU sheep and goat market in 2006 was characterised by a 
reduced  flock  size.  There  was  an  outbreak  of  bluetongue  disease  –  in  a  location 
further  to  the  north  than  had  ever  previously  occurred  within  the  area  of  France, 
Germany and the Benelux countries. 

Concerning  pigmeat,  in  2006  prices  were  relatively  positive  but  after  the  summer 
there was a considerable increase in the cost of feedingstuffs. 

Regarding poultrymeat, both production and consumption fell during the first half of 
2006 due to media coverage of an outbreak of avian influenza. However, in the latter 
part of the year, production and consumption recovered. 

IMPLEMENTATION OF THE 2003 REFORM 

In 2005, ten Member States had started to implement the Single Payment Scheme of 
direct payments. In 2006, they were joined by five more. 

France, Spain, the Netherlands and Greece chose the historical model while Finland 
opted for the regional model. 

RURAL DEVELOPMENT 

Regarding  the  period  2000–2006,  there  were  68  rural  development  programmes, 
69 Objective 1 regional programmes and 20 Objective 2 regional programmes. The 
Objective  1  and  Objective  2  programmes  incorporated  a  number  of  rural 
development measures. 

During the same period, there was a very considerable number of Leader + projects 
(around 28 000). Many local action groups participated in transnational cooperation. 

In  2006,  expenditure  on  rural  development  amounted  to  EUR  9 199.2  million.  Of 
this,  the  EAGGF  Guarantee  provided  EUR  5 610.2  million  (for  the  rural 
development  programmes  and  Objective  2  programmes).  The  EAGGF  Guidance 
provided EUR 3 589 million (for the Objective 1 programmes). 

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Concerning the period 1994–1999, 45 programmes were closed. At the end of 2006, 
39 programmes remained open (out of 402 as of March 2003). 

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6. 

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ENVIRONMENT AND FORESTS 

In  September,  the  Commission  issued  a  Communication  entitled  "Development  of 
agri-environmental  indicators  for  monitoring  the  integration  of  environmental 
concerns  into  the  CAP".  This  Communication  reviewed  the  progress  made 
concerning  the  development  of  agri-environmental  indicators  and  actions  for  the 
future. 

The implementation of the “Biodiversity Action Plan for Agriculture” continued. The 
Commission  presented  a  Communication  on  "Halting  the  loss  of  biodiversity  by 
2010 and beyond – sustaining ecosystem services for human well-being". 

Regarding genetically modified crops, in March the Commission adopted a report to 
the Council and the European Parliament on experience gained in the Member States 
concerning the implementation of measures to address co-existence. 

The Commission's Communication to the Council and the European Parliament on a 
Forest Action Plan was adopted in June. The Council's conclusions on this plan were 
adopted by the Agriculture and Fisheries Council in October. 

FINANCING OF THE CAP IN 2006 

CAP  expenditure  is  funded  under  the  Financial  Perspectives  decided  at  the  Berlin 
Summit in 1999 and adjusted at the Copenhagen Summit at the end of 2002 to take 
account  of  the  financial  effects  of  the  enlargement  of  the  Union.  Thus,  during  the 
budget year 2006 new ceilings applied for the EU-25. 

ENLARGEMENT 

Regarding Bulgaria and Romania, a reinforced monitoring exercise was undertaken. 
Bilateral screening of agricultural legislation took place with Turkey and Croatia. 

INTERNATIONAL RELATIONS 

In  the  field  of  international  agricultural  relations,  the  first  half  of  the  year  was  a 
period of intense activity. The Commission participated very actively in negotiations, 
conducted  under  the  aegis  of  the  World  Trade  Organisation,  to  further  liberalise 
global  trade,  including  agricultural  trade.  However,  the  negotiations  (known  as  the 
Doha Development Agenda) did not achieve a high level of success. 

36. 

In the second half of the year, the EU started to pursue contacts with its main trading 
partners with a view to a resumption of negotiations at the beginning of 2007. 

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