Commission staff working document - The agricultural situation in the European Union – 2006 Report {COM(2008) 525}
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, 26/08/2008 
SEC(2008) 2382 

COMMISSION STAFF WORKING DOCUMENT 

The agricultural situation in the European Union – 2006 Report 

{COM(2008) 525} 

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COMMISSION STAFF WORKING DOCUMENT 

The agricultural situation in the European Union – 2006 Report 

TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

1.6. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

2.7. 

2.8. 

2.9. 

Economic situation and farm income........................................................................... 6 

Overview ...................................................................................................................... 6 

Production .................................................................................................................. 10 

Prices .......................................................................................................................... 13 

Input prices................................................................................................................. 16 

Farm income............................................................................................................... 16 

Farm accountancy data network (FADN) .................................................................. 26 

Policy developments and legislative initiatives in 2006 ............................................ 32 

CAP Reform............................................................................................................... 32 

Quality policy............................................................................................................. 33 

Organic farming ......................................................................................................... 36 

Promotional measures ................................................................................................ 37 

Simplification of agricultural legislation ................................................................... 38 

State aids in the agricultural sector ............................................................................ 39 

Assistance to the needy .............................................................................................. 47 

The Outermost Regions.............................................................................................. 48 

Information measures concerning the CAP ............................................................... 49 

2.10. 

Information and communication technology (ICT) ................................................... 51 

2.11. 

Inter-institutional and NGO relations......................................................................... 52 

3. 

Agricultural markets................................................................................................... 53 

3.1. 

Market developments — Crop products .................................................................... 53 

3.1.1.  Cereals........................................................................................................................ 53 

3.1.2.  Oilseeds ...................................................................................................................... 54 

3.1.3.  Peas, field beans and sweet lupins ............................................................................. 55 

3.1.4.  Linseed ....................................................................................................................... 55 

3.1.5.  Grain legumes (chick peas, lentils and vetches) ........................................................ 56 

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3.1.6.  Non-food production.................................................................................................. 56 

3.1.7.  Rice ............................................................................................................................ 57 

3.1.8.  Starch.......................................................................................................................... 57 

3.1.9.  Sugar .......................................................................................................................... 57 

3.1.10.  Potatoes ...................................................................................................................... 61 

3.1.11.  Dried fodder ............................................................................................................... 62 

3.1.12.  Fibre flax and fibre hemp........................................................................................... 64 

3.1.13.  Cotton......................................................................................................................... 65 

3.1.14.  Silkworms .................................................................................................................. 65 

3.1.15.  Olive Oil..................................................................................................................... 65 

3.1.16.  Fresh fruit and vegetables .......................................................................................... 67 

3.1.17.  Bananas ...................................................................................................................... 68 

3.1.18.  Processed fruit and vegetables ................................................................................... 69 

3.1.19.  Wine ........................................................................................................................... 71 

3.1.20.  Tobacco ...................................................................................................................... 73 

3.1.21.  Seeds .......................................................................................................................... 74 

3.1.22.  Hops ........................................................................................................................... 74 

3.1.23.  Flowers and live plants............................................................................................... 75 

3.1.24.  Animal feed (EU-25).................................................................................................. 77 

3.2. 

Market developments — Animal products ................................................................ 79 

3.2.1.  Milk and milk products .............................................................................................. 79 

3.2.2.  Beef and veal.............................................................................................................. 81 

3.2.3.  Sheep meat and goat meat.......................................................................................... 84 

3.2.4.  Pigmeat....................................................................................................................... 85 

3.2.5.  Poultry meat ............................................................................................................... 86 

3.2.6.  Eggs............................................................................................................................ 87 

3.2.7.  Honey ......................................................................................................................... 88 

4. 

5. 

6. 

The CAP Reform in 2006 .......................................................................................... 89 

Agrimonetary arrangements....................................................................................... 94 

Rural development in 2006 ........................................................................................ 94 

6.1. 

Belgium ...................................................................................................................... 96 

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6.2. 

6.3. 

6.4. 

6.5. 

6.6. 

6.7. 

6.8. 

6.9. 

Czech Republic .......................................................................................................... 98 

Denmark..................................................................................................................... 99 

Germany................................................................................................................... 101 

Estonia...................................................................................................................... 102 

Greece ...................................................................................................................... 103 

Spain......................................................................................................................... 105 

France....................................................................................................................... 107 

Ireland ...................................................................................................................... 109 

6.10. 

Italy .......................................................................................................................... 110 

6.11.  Cyprus ...................................................................................................................... 112 

6.12. 

Latvia........................................................................................................................ 113 

6.13. 

Lithuania .................................................................................................................. 114 

6.14. 

Luxemburg ............................................................................................................... 116 

6.15.  Hungary.................................................................................................................... 117 

6.16.  Malta ........................................................................................................................ 118 

6.17. 

The Netherlands ....................................................................................................... 120 

6.18.  Austria ...................................................................................................................... 121 

6.19. 

Poland....................................................................................................................... 124 

6.20. 

Portugal .................................................................................................................... 125 

6.21. 

Slovenia.................................................................................................................... 126 

6.22. 

Slovakia.................................................................................................................... 128 

6.23. 

Finland...................................................................................................................... 129 

6.24. 

Sweden ..................................................................................................................... 131 

6.25.  United Kingdom....................................................................................................... 132 

7. 

7.1. 

7.2. 

8. 

8.1. 

8.2. 

8.3. 

Environment and forestry......................................................................................... 134 

Environmental measures .......................................................................................... 134 

Forestry measures..................................................................................................... 137 

Proposal for financing the CAP in 2006 .................................................................. 137 

EAGGF Guarantee Section ...................................................................................... 138 

EAGGF Guidance Section ....................................................................................... 141 

Evaluation ................................................................................................................ 148 

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9. 

10. 

Enlargement ............................................................................................................. 149 

International relations............................................................................................... 150 

10.1. 

International organisations and agreements ............................................................. 150 

10.1.1.  World Trade Organisation (WTO)........................................................................... 150 

10.1.2.  Organisation for Economic Cooperation and Development (OECD)...................... 151 

10.1.3.  Generalised System of Preferences (GSP)............................................................... 153 

10.1.4.  United Nations Food and Agricultural Organisation (FAO).................................... 153 

10.1.5.  Commodities and international commodity agreements.......................................... 154 

10.2.  Bilateral and regional trade relations ....................................................................... 154 

10.2.1.  ACP countries .......................................................................................................... 154 

10.2.2.  EFTA countries and EEA Agreement...................................................................... 155 

10.2.3.  Asia .......................................................................................................................... 156 

10.2.4.  Middle East and Mediterranean Region................................................................... 157 

10.2.5.  Western Balkans and Turkey ................................................................................... 158 

10.2.6.  Latin America........................................................................................................... 159 

10.2.9  NIS countries............................................................................................................ 159 

10.2.7.  North America: USA, Canada.................................................................................. 160 

10.2.8.  Oceania..................................................................................................................... 162 

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1. 

ECONOMIC SITUATION AND FARM INCOME 

1.1. 

Overview 

1. 

2. 

3. 

The 2006 agricultural year was marked by a decrease in the production of both crops 
and  livestock  products,  though  in  conjunction  with  very  favourable  prices  for 
livestock products and higher prices for crops. Input prices were somewhat higher in 
2006 on average in the EU-25 as substantial increases in energy prices were not offset 
by  decreases  in  prices  for  other  inputs.  However,  price  developments  were  highly 
variable across sectors and countries. The first estimates sent by Member States show 
a slight increase of + 0.4% in agricultural incomes in real terms as compared to 2005 
in the European Union as a whole. The actual figures by country varied from – 10.2% 
for Ireland to + 14.3% for the Netherlands. 

As far as the weather was concerned, weather conditions in the autumn of 2005 had 
been generally favourable for winter crop sowings. However, crops were sown later 
than normal in many eastern European countries as a result of rain-delayed summer 
harvests.  A  mild  autumn  helped  to  accelerate  sowings  and  plant  emergence,  with 
in  November.  Winter  and  spring  were 
seasonably  cold  weather  returning 
characterised  by  relatively  low  seasonal  temperatures  for  most  EU  regions,  with 
particularly  difficult  conditions  in  the  Black  Sea  region.  During  the  summer,  all  of 
western  and  central  Europe  (from  northern  Spain  to  the  Baltic  countries)  registered 
temperatures  well  above  the  normal  seasonal  values.  Frequent  and  persistent  heat 
waves accompanied by dry conditions characterised the whole month of July. At the 
same time, the drought moved northward across the continent, particularly affecting 
those  areas  where  winter  crops  were  still  at  their  sensitive  stage.  Registered 
temperatures were the highest for the last thirty years. In August, the weather turned 
abnormally cold, especially in France, Germany, the Czech Republic and Austria. In 
June, recorded precipitation was above average in Spain, central and northern France, 
the Czech Republic, Bulgaria, Greece and Ukraine, whereas in other countries rainfall 
was  below  the  normal  seasonal  levels.  Well  below  normal  rainfall  was  recorded  in 
July  throughout  Europe  except  in  northern  Spain,  northern  and  south-east  France, 
southern  Italy  and  Greece.  During  this  period  (June-July),  the  United  Kingdom, 
Ireland,  eastern  France,  Germany,  Poland,  the  Baltic  countries  and  northern  Italy 
were particularly hit by the drought. In contrast, August saw abundant rainfall across 
all  of  Europe  except  in  southern  Spain  and  Portugal.  By  the  end  of  September  dry 
weather returned to central Europe, Germany and north-east France. 

In 2006/07, demand for cereals within the European Union was expected to remain 
stable  with  a  slight  increase  in  industrial  use  (biofuels)  and  a  moderate  decrease  in 
feed use. As regards livestock products, EU-25 meat consumption slightly declined 
as  decreases  in  poultry  and  sheep  and  goat  consumption  were  not  fully  offset  by 
increases in beef, veal and pork consumption. Total EU-25 beef consumption saw an 
overall  increase  of  2.0%  compared  to  the  previous  year,  driven  by  increased 
availability and lower prices. Greater availability on the domestic market and a partial 
shift in consumer preferences from poultry meat to pigmeat in the course of the avian 
flu  scare  led  to  an  increase  in  pigmeat  consumption  throughout  the  EU.  Due  to  the 
influenza  scare,  overall  EU-25  poultry  meat  consumption  decreased 
avian 
considerably (– 2.6%) in 2006. The temporary drop in demand at the peak of the scare 
was especially high in Greece, France and Italy. Sheep meat consumption declined by 

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4. 

5. 

6. 

2.1%  in  2006,  as  higher  imports  attracted  by  relatively  favourable  domestic  prices 
were offset by lower net domestic production. Overall consumption of milk products 
continued to grow slightly. Demand for cheese and fresh dairy products increased in 
the  EU-25,  while  butter  consumption  decreased  slightly  and  skimmed  milk  powder 
consumption remained relatively stable in 2006 in both the new and old EU Member 
States. 

As  regards  the  global  economic  situation,  the  outlook  for  the  world  economy 
remained positive in 2006, with solid growth of 5.1% expected. After several years of 
strong  growth,  the  US  economy  began  to  slow,  as  a  result  of  a  cooling  residential 
housing market and lower consumer spending. However, growth in other regions, in 
particular Asia, was set to remain robust. The positive outlook was also supported by 
the  fall  in  energy  prices  in  autumn  2006,  following  the  dramatic  price  hikes  in 
summer 2006 due to geopolitical tensions in the Middle East. Despite high oil prices, 
GDP growth in the first half of 2006 was surprisingly strong, thanks to stronger than 
expected  growth  in  the  United  States,  Asia  (excluding  Japan)  and  the  oil-exporting 
countries.  Economic  growth  was  accompanied  by  a  stronger  expansion  in  world 
trade, with global imports of goods and services (excluding the EU) set to grow by an 
average 8.8% in 2006. Movements in equity prices also supported the positive growth 
outlook.  Following  a  sharp  correction  in  equity  prices  in  mid-May,  global  equity 
markets then resumed their long-term upward trend and some equity indices reached 
all-time  highs.  Oil  prices  continued  to  surge  over  the  summer  reaching  new  record 
levels  of  just  below  USD  80  per  barrel  (Brent  crude  futures)  in  early  August.  This 
increase was mainly driven by concerns about supply disruptions due to geopolitical 
tensions  in  the  Middle  East  along  with  supply  disruptions  in  Alaska.  The  easing  of 
these tensions, combined with downward adjustments in demand growth projections 
by the International Energy Agency (IEA), a milder than usual hurricane season in the 
Gulf of Mexico, and higher than expected oil stocks in the OECD countries, led to a 
significant drop in oil prices to below USD 60 per barrel in October. The downward 
adjustment in oil prices was expected to prove favourable for the growth outlook in 
the oil-importing countries and the US economy in particular. Nevertheless, oil prices 
were  expected  to  remain  relatively  high,  in  view  of  the  continuing  tight  balance 
between supply and demand, with additional supply coming on stream only slowly. 

In the European Union, economic activity accelerated strongly and economic growth 
reached  + 2.8%  in  2006,  marking  the  strongest  expansion  since  2000.  Economic 
growth  was  underpinned  by  robust  growth  in  domestic  demand,  especially 
investment,  which  rose  in  response  to  steady  increases  in  capacity  utilisation, 
improved  corporate  balance  sheets,  benign  financial  conditions  and  wide  profit 
margins.  Exports,  in  turn,  continued  to  be  supported  by  the  strong  world  economy. 
The euro started at relatively moderate level against the dollar at the beginning of the 
year, standing at USD 1.21, followed then by a gradual increase from April 2006, and 
closed the year at USD 1.33. 

Global  meat  and  dairy  product  prices  were  well  above  2005  levels.  The  year  2006 
was  marked  by  an  exceptional  increase  in  the  prices  of  cereals,  in  particular  wheat 
and  maize,  which,  by  November  2006,  reached  levels  not  seen  for  a  decade.  Poor 
harvests in key producing countries and fast-growing demand for biofuel production 
were  the  main  drivers  of  grain  prices.  A  sharp  drop  in  world  wheat  production  in 
2006, due to lower outputs in nearly all major exporting countries, resulted in one of 
the  tightest  periods  for  world  wheat  supply  and  demand  in  more  than  two  decades. 

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While international wheat prices continued upward during 2006, production prospects 
deteriorated,  especially  in  several  wheat-exporting  countries.  Concerns  about  the 
prospects  for  wheat  crops  in  major  producing  countries  in  the  southern  hemisphere 
(especially  drought-devastated  Australia),  and  limited  exports  from  Ukraine,  raised 
prices  still  further.  Rising  world  prices  boosted  sales  from  the  European  Union 
despite the strong euro and the absence of export refunds. The production shortfalls in 
many parts of the world during 2006 were expected to result in a large drop in world 
wheat  inventories  to  their  lowest  levels  since  the  early  1980s.  The  main  reductions 
were  expected  among  major  exporters,  namely  the  United  States,  Australia,  the 
European  Union,  Canada  and  Ukraine.  In  contrast,  ending  stocks  increased  in  India 
following  large-scale  imports,  and  in  China,  where  wheat  production  reached  high 
levels, wheat stocks were expected to stabilise. Total cereal utilisation was forecast to 
increase  in  2006  due  mainly  to  higher  food  consumption  and  feed  use,  as  weaker 
prices in previous years encouraged greater use of low-quality wheat for animal feed. 

The  upward  movements  in  international  maize  prices  since  September  2006  were 
mainly  influenced  by  the  tighter  domestic  situation  on  the  United  States  market, 
which is the most critical given that the United States is the world’s largest producer 
as well as the largest consumer and exporter of maize. In addition, the trade situation 
was  marked  by  reduced  exports  from  Argentina  and  China.  In  November  2006,  the 
United States maize export price stood around 70% higher than in the corresponding 
period in 2005. Global rice prices were up since the beginning of 2006 and increased 
continually until the end of the year. The arrival of the new harvest eased the situation 
only temporarily, and firm prices were expected to continue, reflecting generally tight 
supplies in exporting countries.  

World  market  prices  for  soybean  strengthened  at  the  beginning  of  2006  but 
subsequently weakened, mainly due to a record world soybean output, with a record 
crop harvested in the United States and Argentina. 

After  three  years  of  deficit,  global  sugar  production  recovered  in  2006,  with  record 
production  forecast  in  Brazil  and  India  and  a  recovery  to  normal  output  levels, 
particularly in Thailand and the United States. In contrast, EU sugar production was 
expected  to  decline  by  23%  due  to  the  sugar  reform,  which  however  was  partially 
offset  by  increases  elsewhere  in  Europe.  While  world  sugar  prices  largely  retreated 
from the highs reached in February 2006 and were approaching their long-term trend 
by  the  end  of  October  2006,  the  sugar  market  remained  particularly  prone  to  large 
demand fluctuations and price volatility. 

Global  meat  markets  were  expected  to  recover  gradually  in  the  aftermath  of  the 
animal disease outbreaks that had plagued the sector over the past four years. Global 
meat output was set to rise by nearly 6 million tonnes to almost 276 million tonnes in 
2006.  However,  global  poultry  prices  plummeted  by  nearly  20%  since  mid-2005  as 
avian  influenza  outbreaks  were  reported  in  more  than  40  previously  unaffected 
countries in Europe, the Middle East and Africa. Poultry prices in the United States 
and Brazil, the main suppliers of the global trade, dropped significantly. Rebounding 
import  demand,  however,  allowed  export  prices  to  recover  by  the  end  of  the  year. 
Low demand and prices depressed output growth to its lowest level in two decades. 
For the Russian Federation, the world’s largest importer, poultry imports were set to 
decline due to uncertainty about the issuing of import licenses and a strong recovery 
in domestic production. However, global demand was forecast to recover soon, with 

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11. 

12. 

13. 

14. 

Africa  and  Middle  East  resuming  traditional  importing  patterns,  while  Brazil,  the 
United States and Europe were set to increase exports. 

Despite  tight  world  beef  supplies,  brought  about  by  foot-and-mouth  disease  (FMD) 
outbreaks  in  Brazil,  bovine  spongiform  encephalopathy  (BSE)  trade  bans  on  North 
American beef, and Argentinean export bans, beef prices were only marginally down 
from  2005  levels.  Supported  by  a  recovery in  North  America  and  Asia,  global  beef 
output was forecast to increase by 2.5% in 2006. Production in developed countries 
was projected to increase by over 2%, reversing the decline over the past four years. 
Meanwhile,  EU  beef  supplies  were  expected  to  rise  with  the  abolition  of  the  BSE-
related  ‘over-thirty  month’  slaughter  policy.  The  beef  trade  was  expected  to  rise  by 
3% to 6.7 million tonnes. South American beef exports declined in 2006 on account 
of Argentina’s export ban, after major  gains over the past five  years. However, this 
gave a boost to exports from other beef exporters such as the United States.  

Abundant supplies in 2006 put pressure on pigmeat prices, which fell by 16% in 2006 
compared with 2005. In particular, high stocks in Japan, the recipient of nearly one-
quarter  of  the  global  trade  in  pigmeat,  led  to  a  considerable  decline  in  Japanese 
import  prices.  Global  pigmeat  production  was  expected  to  expand  by  5%,  with  a 
favourable  outlook  in  China,  Brazil,  Mexico  and  Vietnam.  In  developed  countries, 
output expanded only marginally, as only the United States was expected to expand 
output in response to steady returns. The pigmeat trade was expected to increase by 
4%,  supported  by  strong  demand  in  Asia  and  the  Russian  Federation.  This  was 
despite lower imports by Japan. While shipments from Brazil and the United States 
were expected to rise, exports from Canada and the European Union were restrained 
by less competitive prices due to their strong currencies. 

Sheep  meat  prices  remained  competitive  relative  to  other  meats,  prompting  higher 
growth in Asia, in particular China, India, Iran and Pakistan. Production in the main 
exporting  region  of  Oceania  rose,  due  to  drought-induced  slaughtering,  and  output 
also recovered in Argentina and Uruguay, reflecting government programmes aimed 
at reviving the sector. 

International prices for the major traded dairy products softened over most of 2006, 
due  to  increased  exports  by  Oceania  and  some  emerging  Latin  American  countries. 
By  the  end  of  the  year,  however,  dairy  product  prices  showed  some  signs  of 
strengthening. Further prospects depended largely on the export situation in Australia, 
which  experienced  drought  problems  in  2006,  and  on  the  export  position  of  the 
European  Union,  mainly  characterised  by  significantly  reduced  intervention  stocks 
and  lower  export  refunds  since  2005.  Compared  with  2005,  prices  for  whole  milk 
powder, cheese and butter were down by 6%, 9% and 21%, respectively. Reflecting 
lower supplies, skim powder prices were up slightly compared with 2005. World milk 
production  grew  by  an  estimated  2.2%,  thanks  mainly  to  production  expansion  in 
developing  countries  in  Asia  (China,  India  and  Pakistan)  and  countries  in  South 
America. On the other hand, developed countries recorded near-zero growth in 2006, 
with lower production in Australia and the European Union, but increased output in 
New Zealand and the United States. 

15. 

In the first nine months of 2006 the overall value of Community agricultural exports 
increased  strongly  by  8%,  with  wide  divergences  across  agri-food  products.  The 
increase  was  particularly  marked  for  sugar  and  sugar  confectionery  (+ 21%),  coffee 
and  tea  (+ 17%),  animal  or  vegetable  fats  and  oils  (+ 15%),  tobacco  (+ 14%), 

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16. 

preparations of vegetables, fruit and nuts (+ 12%), and beverages and spirits (+ 10%). 
Exports  only  fell  for  lacs,  gums,  resins  and  vegetable  saps  (– 11%).  Cereal  exports 
were forecast to remain close to the previous year’s level. Given firm demand on the 
domestic market and the import restrictions imposed by the EU on Brazil following 
the outbreak of foot-and-mouth disease (FMD), EU-25 beef exports were expected to 
fall considerably in 2006. In 2006, EU-25 pigmeat exports were expected to rise, with 
relatively  favourable  conditions  on  the  Russian  market.  In  contrast,  poultry  meat 
exports  were  projected  to  decline  again  in  2006.  The  overall  value  of  agricultural 
imports rose by 6% in the first nine months of 2006 as compared to the same period 
in  2005.  However,  the  European  Union  remained  a  net  exporter  of  agricultural 
products,  with  its  agricultural  trade  balance  improving  significantly  due  to  higher 
exports. The overall trade surplus in agricultural products in the first nine months of 
2006 increased to EUR 6 976 million as against EUR 3 008 million in 2005. 

Intervention  stocks  of  cereals  were  expected  to  decrease  for  the  second  consecutive 
year in 2006 (– 5 million tonnes), a sign of improved market conditions on the world 
market  and  relatively  stable  domestic  demand.  Difficult  climatic  conditions  in  the 
southern hemisphere and higher demand on the world market led to a strong increase 
in cereal prices and consequently to lower public stocks. Public stocks of soft wheat 
and barley fell to 1.0 and 1.5 million tonnes respectively. On the other hand, maize 
stocks,  mainly  in  the  landlocked  regions  of  central  Europe,  grew  (+0.9  million 
tonnes) for the third consecutive year to 6.5 million tonnes. Rice stocks fell strongly 
due  to  reduced  imports  from  third  countries  to  the  new  Member  States  and  were 
estimated  at  430 000  tonnes  at  the  end  of  the  year  2006.  Table  wine  stocks  in  July 
2006 stood at 69 million hectolitres, of which 45 million hectolitres were at producer 
level. The intervention measures decided in 2006 were designed to decrease stocks by 
4 million hectolitres to the average for the previous five years (41 million hectolitres). 
Compared  to  the  period  2002–2004,  when  EU  table  wine  stocks  stood  at  
33–37 million  hectolitres,  table  wine  stocks  remained  high,  especially  in  France. 
Stocks  of  quality  wine  amounted  to  99  million  hectolitres,  of  which  72  million 
hectolitres  were  at  producer  level.  The  intervention  measures  decided  in  2006  were 
intended  to  decrease  stock  levels  by  1.4  million  hectolitres.  Stocks  of  quality  wine 
remained high (+4%), particularly in Italy (+20%) and Portugal (+9%) compared to 
the  average  stock  levels  over  the  previous  five  years.  As  from  2005,  intervention 
buying-in,  hardly  ever  used  for  sugar  since  the  introduction  of  the  common  market 
organisation  in  1968,  became  an  important  instrument  for  regulating  the  market.  A 
total of 0.55 million tonnes was taken into intervention in 2006, but offers practically 
stopped from May 2006. Tenders for the resale of intervention stocks attracted higher 
interest than in 2005 and consequently 850 000 tonnes were sold. By the end of 2006 
about  900 000  tonnes  remained  in  intervention.  Intervention  stocks  of  beef  had  all 
been disposed of since the beginning of 2004. Intervention stocks of dairy products in 
EU-25 fell to their lowest levels since the autumn of 2002. No skimmed milk powder 
stocks  remained  as  from  the  beginning  of  2006  while  butter  stocks  fell  by 
60 000 tonnes to 70 000 tonnes at the end of the year. 

1.2. 

Production 

17. 

According  to  the  latest  information,  the  EU-25  cereal  area  is  estimated  to  have 
declined by 1.9% to about 50.5 million ha in 2006. The main reasons for this decrease 
were less favourable climatic conditions in some EU regions, especially in spring and 
summer, which had a strong impact on yields, and continuing implementation of the 

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2003  CAP  reform  (in  particular  ‘decoupling’).  Looking  at  individual  cereals,  areas 
fell particularly for durum wheat (– 11%), triticale (– 8.8%), maize (– 4.8%), and oats 
(– 4.0%). On the other hand, the areas under common wheat (– 0.4%), barley (+ 0.0%) 
and rye (– 0.4%) remained relatively stable in 2006. 

Total cereal production is estimated at 245 million tonnes for the 2006/07 marketing 
year,  a  decrease  of  5%  (about  13  million  tonnes)  compared  to  2005/06.  Cereal 
production  stood  at  nearly  191  million  tonnes  in  the  old  Member  States  (– 3.5%  in 
comparison  to  2005/06)  and  54  million  tonnes  in  the  new  Member  States  (– 9.7%). 
This  was  mainly  due  to  the  less  favourable  climatic  conditions  and  to  the  full 
implementation of the CAP reform. The decline in cereal production ranged from 5% 
for  common  wheat  to  13%  for  triticale.  Significant  decreases  are  also  estimated  for 
durum  wheat  (– 12%),  maize  (– 10%),  oats  (– 7%),  rye  (– 7%),  and  soft  wheat  
(– 8.9%). Only barley production increased slightly (+ 2%). 

All cereals had lower yields in comparison to 2005. Average cereal yields were about 
4.85 t/ha, 3.1% lower than in 2005. The highest yield declines are estimated for rye  
(– 6.7%),  maize  (– 5.4%)  and  common  wheat  (– 4.5%).  However,  barley  yields 
increased by an estimated 2%, leading to higher production. 

France remained the leading cereal producer in the EU with 61 million tonnes (– 4%). 
It  was  followed  by  Germany  with  44  million  tonnes  (– 5%)  and  Poland  with 
24 million tonnes (– 8%). Due to favourable weather conditions, cereal production is 
estimated to have increased in Spain (+ 25%) and Portugal (+ 55%). 

Rice  production  was  slightly  lower  in  2006  as  compared  with  the  previous  year, 
mainly  due  to  due  to  a  switch  in  the  types  of  rice  sown,  as  around  9%  of  the  areas 
sown in the previous year with indica rice were sown with the lower-yield japonica 
variety in 2006. The first production estimate for 2006 was about 2% lower at around 
1.53 million tonnes (milled equivalent). The total area under rice remained stable at 
around 410 000 ha. 

The  total  EU-25  oilseed  area  increased  in  2006  (+6.7%  compared  to  2005)  with 
rapeseed  up  by  7.8%  to  5.1  million  ha,  while  the  soybean  area  remained  almost 
unchanged  at  286 000  ha.  The  sunflower  seed  area  also  increased  by  7%  to 
2.16 million ha. The rapeseed area increased due to a favourable price outlook at the 
time of sowing and the prospects of greater use of rapeseed for biodiesel production. 
The total oilseed area increased to an estimated 7.5 million ha, including 0.8 million 
ha  for  non-food  set  aside  and  0.8  million  ha  for  energy  crops.  With  less  favourable 
weather  conditions,  yields  were  lower  compared  to  the  yields  recorded  in  2005,  by  
– 8.3% for rapeseed, – 0.5% for sunflower seed and – 5.6% for soybean, although the 
total production of 20.1 million tonnes was 0.5% higher than in 2005/06. The 2006/07 
crop was expected to comprise 15.3 million tonnes of rapeseed, 3.9 million tonnes of 
sunflower seed and 828 000 tonnes of soybean. Rapeseed accounted for about 95% of 
the 2.6 million tonnes of non-food oilseed production. 

The  EU-25  linseed  area  remained  at  a  very  low  level  (112 000  hectares)  and  2006 
production is estimated to have reached 140 000 tonnes.  

The protein crop area was expected to decrease somewhat to 1.4 million hectares in 
2006 (– 4%). A limited increase in pea yield (2.9 t/ha) combined with yield stability 

18. 

19. 

20. 

21. 

22. 

23. 

24. 

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11 

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25. 

26. 

27. 

28. 

29. 

for  beans  and  sweet  lupins  (2.7  t/ha)  led  to  a  slightly  lower  total  protein  crop 
production of 4.0 million tonnes as compared to the previous year. 

The introduction of the sugar sector reform on 1 July 2006 had an important effect on 
EU-25 sugar production. The area sown dropped by nearly 20% from 2.2 million ha 
in  2005/06  to  1.77  million  ha  in  2006/07.  This  substantial  reduction  reflected  the 
1.2 million tonnes of sugar quota eliminated for the marketing year 2006/07 and the 
‘preventive  withdrawal’  of  2.5  million  tonnes  of  sugar  quota  in  2006/07.  This 
‘preventive withdrawal’ was an exceptional measure to facilitate the transition from 
the  previous  sugar  regime  to  the  reformed  regime.  The  beet  area  decreased  in  all 
producing Member States by about 10–15%, with some countries seeing even larger 
decreases such as Italy (more than – 50%), Greece (– 35%) and Finland (– 20%). Due 
to  closure  of  the  only  sugar  factory  in  Ireland,  no  sugar  beet  was  sown  there. 
Therefore,  sugar  production  is  estimated  to  have  been  16.5  million  tonnes 
(16.2 million  tonnes  from  beet,  and  0.3  million  tonnes  from  cane  or  molasses)  in 
2006,  substantially  below  the  20.3  million  tonnes  in  2005.  As  in  the  previous  year, 
weather conditions were fairly favourable in 2006 for most beet-growing regions of 
the enlarged EU, which had a positive effect on the sugar content of the beet. Sugar 
production  fell  to  3.3  million  tonnes  in  Germany  (– 0.8  million  tonnes)  and 
3.4 million tonnes in France (– 0.7 million tonnes).  

Olive oil production in 2006 (marketing year 2005/06) is estimated at 1.965 million 
tonnes  (825 000  tonnes  in  Spain,  673 000  tonnes  in  Italy,  424 000  tonnes  in  Greece, 
32 000  tonnes  in  Portugal,  6 000  tonnes  in  Cyprus,  4 500  tonnes  in  France  and 
500 tonnes in Slovenia). This represented a 15% decline  compared  to the harvest of 
2005, mainly due to unfavourable climatic conditions. Following the cessation of the 
production  aid  scheme  from  the  marketing  year  2005/06,  production  figures  were 
based on Member State estimations. 

Initial  estimates  point  to  very  different  developments  in  fruit  production  across  all 
sectors. A production increase was forecast for citrus (+8%), with total production to 
reach  a  record  11  million  tonnes,  with  the  highest  increases  in  oranges  (+10%)  and 
small  citrus  fruit  (+12%).  For  peaches  and  nectarines,  figures  indicate  relatively 
stable  production  (+0.4%)  in  comparison  to  2005.  The  production  of  pears  was 
expected to have increased (+2%), whereas the production of apples declined by an 
estimated 6% for the second consecutive year. As regards vegetables, only few data 
were available. No consolidated figures are yet forthcoming on the total production of 
fresh  tomatoes,  but  considerable  production  decreases  were  registered  in  the  two 
largest producer countries: Italy (– 12%) and Spain (– 21%) in comparison with 2005. 
The  production  of  tomatoes  for  industrial  processing  decreased  for  the  second 
consecutive year by almost 25% to 8 million tonnes in 2006 compared to 2005, after 
record production in 2004.  

Initial estimates show that EU wine production in 2006 remained almost the same as 
the previous year at about 173 million hectolitres. Production fell significantly in Italy 
(– 6%), Hungary (– 16%) and Slovenia (– 16%), but increased in Spain (+ 5%). 

Beef  and  veal  production  in  the  EU-25  is  estimated  to  have  increased  in  2006  to 
8.0 million tonnes, up by 2%. This increase was due mainly to the end of the ‘over-
thirty months scheme’ (OTMS) in the UK with more beef entering the market. 

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30. 

31. 

32. 

33. 

34. 

According  to  the  most  recent  estimates,  pigmeat  production  was  expected  to  have 
increased  slightly  (+ 0.3%)  to  21.2  million  tonnes  in  2006,  mainly  due  to  growing 
production in Spain, the Netherlands and Poland. 

Due  to  the  drop  in  poultry  meat  consumption  provoked  by  the  avian  influenza 
scare, poultry meat production in the EU-25 is estimated to have declined by 2.3% to 
10.7 million tonnes in 2006. 

For the EU-25, sheep/goat meat production decreased by an estimated 2.5% overall 
in  2006,  with  considerable  falls  in  the  United  Kingdom  and  Ireland  following  the 
implementation of the CAP reform. 

The downward trend in dairy cow numbers continued in the EU-25, with an estimated 
22.3 million head at the end of the year, a 2.6% fall compared to the end of 2005. The 
average milk yield on the other hand increased to an estimated 6 300 kilos, up 1.8%. 
This gives a milk production figure of 140 million tonnes, down 1.6% compared to 
2005. Deliveries to dairies in EU-25 are estimated to have fallen by almost 1.2% to 
130 million tonnes in 2006. Deliveries were projected to decrease more in the EU-15 
(– 1.2%)  than  in  the  new  Member  States  (– 0.8%)  compared  to  2005.  After  two 
consecutive years of strong increases in milk deliveries in the new Member States, the 
quota  ceilings  were  reached  in  some  countries,  leading  to  a  slowdown  in  milk 
production.  Only  the  United  Kingdom,  Sweden  and  possibly  Hungary  had  a 
production pattern structurally below their quotas over the previous few years. 

Butter  production  is  estimated  to  have  decreased  by  5.2%  to  slightly  below 
2.1 million  tonnes  in  2006.  Cheese  production  continued  to  increase:  an  overall 
increase  of  2.8%  resulted  in  a  production  of  8.4 million  tonnes.  For  milk  powder  a 
decrease  of  about  8–9%  to  1.9  million  tonnes  in  2006  was  expected,  due  to  a 
reduction  in  skimmed  milk  powder  production  by  10%  and  whole  milk  powder  by 
7% in the previous year. At the milk production levels in 2006, the protein supply in 
the  EU-25  was  becoming  rather  tight,  although  EU  fat  needs  were  still  sufficiently 
covered. 

1.3. 

Prices 

Producer prices 

35. 

The  first  estimates  available  in  December  2006  indicated  different  developments  in 
agricultural  producer  prices  across  the  EU  in  nominal  terms.  Producer  prices  were 
expected  to  have  increased  most  in  Latvia  (+ 15.5%)  and  Lithuania  (+ 12.0%),  but 
also  in  Poland  (+ 9.4%),  Hungary  (+ 8.4%),  the  Netherlands  (+ 7.1%),  Belgium 
(+ 6.9%),  Cyprus  (+ 5.8%),  Austria  (+ 5.7%),  Slovenia  (+ 5.4%),  Sweden  (+ 5.4%), 
Germany  (+ 4.9%),  Ireland  (+ 4.5%),  Luxembourg  (+ 3.3%),  Estonia  (+ 4.0%), 
Denmark (+ 3.0%), the Czech Republic (+ 1.4%) and the United Kingdom (+ 1.2%). 
They remained relatively stable in Italy (+ 0.9%) and Slovakia (– 0.6%), but declined 
in Finland (– 9.4%), Spain (– 7.5%), Greece (– 7.1%), France (– 2.8%), Malta (– 2.3%) 
and Portugal (– 1.3%).  

36. 

The prices of cereals showed no uniform trend as they increased in several Member 
States,  sometimes  strongly,  but  continued  to  decrease  in  others.  High  price  drops 
were  expected  in  Spain  (– 35.7%),  Finland  (– 34%),  Portugal  (– 33.1%),  Greece  
(– 31.3%),  but  also  in  Cyprus  (– 14.1%),  France  (– 11.6%)  and  Slovakia  (– 3.2%). 

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37. 

Other  countries  registered  rising  prices,  with  the  highest  increases  in  Belgium 
(+ 27.3%),  Austria  (+ 26.7%),  the  Netherlands  (+ 26.6%),  Estonia  (+ 19.3%)  and 
Sweden (+ 19.1%). In contrast, sugar beet prices were estimated to have decreased in 
most Member States with the exception of Slovakia (+ 11.4%) and Portugal (+ 4.9%). 
Wine  prices  increased  in  nominal  terms  in  most  wine-producing  countries,  except 
Italy, Portugal and Slovenia, where prices decreased, and Spain, where they remained 
stable. Consequently, the overall price index for crop products increased in most EU 
Member  States,  except  in  Spain,  Finland,  Greece,  Malta,  France  and  Italy,  where 
nominal prices went down.  

The overall price index for animal products rose in most EU Member States in 2006, 
but  this  masked  wide-ranging  changes  by  sector  and  by  Member  States.  Pigmeat 
prices increased in most EU Member States by + 5.6% on average, except for Poland 
(– 5.5%),  Slovakia  (– 3.5%),  Malta  (– 2.2%),  Finland  (– 2.2%),  the  Czech  Republic  
(– 1.7%)  and  the  United  Kingdom  (– 0.6%),  where  nominal  prices  were  down.  Beef 
and  veal  prices  increased  on  average  by  + 1.1%  in  most  EU  countries,  but  declined 
sharply  in  Portugal  (– 18.8%),  Greece  (– 13.7%),  Finland  (– 9.4%),  the  United 
Kingdom  (– 5.6%),  France  (– 5.3%)  and  Slovakia  (– 2.7%).  Poultry  meat  prices 
showed no uniform trend: they declined in most Member States, most notably in the 
Czech Republic (– 20.1%), but increased in Spain, Italy, France, Cyprus, Latvia and 
Portugal  and  remained  nearly  unchanged  in  Malta,  Hungary,  Austria  and  Slovenia. 
Sheep and goat meat prices fell on average across the EU-25 (– 5.0%), but this masks 
significant differences: they were down in Greece, Spain, France, Cyprus, Lithuania, 
the  Netherlands,  Poland,  Portugal,  Finland  and  Sweden,  but  increased  in  other 
Member  States.  Milk  price  changes  in  nominal  terms  compared  with  2005  varied 
significantly between countries: while the price of milk declined in some EU Member 
States, it increased significantly in Cyprus (+ 24.0%) and Latvia (+ 14.8%), also rising 
in Lithuania (+ 7.8%), Austria (+ 5.4%), Slovakia (+ 5.1%), Hungary (+ 3.8%), Greece 
(+ 2.8%),  Slovenia  (+ 1.9%)  and  the  Netherlands  (+ 1.4%).  Egg  prices  increased  in 
most  Member  States  but  fell  in  Malta  (– 5.1%),  Slovakia  (– 4.3%),  the  Czech 
Republic  (– 3.3%),  Slovenia  (– 2.4%),  Greece  (– 1.6%)  and  Austria  (– 1.2%),  while 
remaining relatively stable in Ireland and Luxembourg. 

Market prices 

38. 

In general, cereal prices increased substantially in 2006, particularly at the end of the 
year. During the first three months of the year, the price for bread-making common 
wheat was around EUR 116 per tonne, for durum wheat EUR 158-160 per tonne, for 
maize  EUR 120  per  tonne,  for  feed  wheat  EUR  102-104  and  for  malting  barley 
EUR 130-133. Cereal prices then increased slightly over the next months, registering 
some  sharp  increases  starting  from  September-October,  and  were  still  increasing  at 
the end of the year. In December 2006, prices reached EUR 155 per tonne for bread-
making common wheat and EUR 159 per tonne for feed maize, whereas durum wheat 
and  malting  barley  prices  were  about  EUR  180  per  tonne.  These  prices  were 
considerably higher compared to previous years as a consequence of firm demand on 
the  world  market,  slightly  lower  production  and  stable  demand  on  the  domestic 
market. 

39. 

Paddy rice prices remained high in 2006, well above the intervention prices, and even 
increased  after  the  beginning  of  the  new  marketing  year  in  September.  Indica  rice 

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14 

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40. 

41. 

42. 

43. 

44. 

45. 

46. 

prices ranged between 13% and 66% above the intervention price, while japonica rice 
prices were even higher, ranging between 25% and 98% above the intervention price. 

During 2006, rapeseed prices continued to rise: in January 2005 rapeseed was quoted 
at about EUR 190 per tonne (in Rouen), but in January 2006 went up to EUR 215 per 
tonne  and  in  December  2006  up  to  EUR  275  per  tonne.  Sunflower  seed  saw 
considerable fluctuations: in June 2005 the price peaked at EUR 260 per tonne, then 
fell to EUR 200 per tonne in January 2006, but by the end of 2006 went up again to 
EUR 250 per tonne. The prices quoted for soybeans in Chicago were relatively stable, 
but in the last quarter of 2006 rose sharply to about USD 250 per tonne. 

In view of the large quantities of sugar sold out of intervention in 2006, market prices 
were  above  the  white-sugar  reference  price of EUR 632  per tonne in most Member 
States. Under the sugar reform, the reference price replaced the previous intervention 
price. 

In  2006  olive  oil  prices  increased  strongly  (+ 22%)  compared  to  2005  and  reached 
historically record levels. 

Prices for table wine remained relatively stable at a low level in Spain and Italy, with 
average producer prices between EUR 2 and 2.4 per hectolitre for white table wines 
and between EUR 2.5 and 2.8 per hectolitre for red table wines. At the end of 2006 a 
slight  increase  was  recorded  in  Italy.  In  France  the  prices  for  table  wine  decreased 
until  August  but  increased  slightly  afterwards.  In  December  2006  producer  prices 
stood at EUR 3.4 per hectolitre for white table wines and EUR 2.7 per hectolitre for 
red  table  wines.  These  prices  were  about  13%  lower  compared  to  the  previous 
marketing year. 

In general, bovine meat prices were relatively high in 2006 (even above the already 
steep  2005  prices).  For  young  bulls  (category  A R3),  prices  followed  a  comparable 
seasonal  pattern  to  2005,  but  were  around  9%  higher  in  absolute  terms,  peaking  at 
EUR 331 per 100 kg in March 2006. The price of cows (category D O3) was about 
2.5% higher than in 2005, after a continuous increase during the first half of the year. 
Peaking  at  EUR  250  per  100  kg  in  July  2006,  the  price  started  to  decline  in  late 
the  seasonal  pattern.  Steer  prices  (category  C R3)  were 
summer  following 
considerably higher compared to 2005, reaching EUR 306 per 100 kg in late spring 
followed by a less pronounced seasonal decline during the summer. 

to  develop  relatively  favourably,  achieving 

the 
Pigmeat  prices  continued 
exceptionally high prices of the year 2001 at EUR 164 per 100 kg in summer 2006. 
Due  to  the  avian  influenza  scare,  poultry  meat  prices  were  well  under  their 
(relatively high) 2005 level in the first half of 2006, reaching a low point at around 
EUR  130  per  100  kg  in  March  2006.  During  the  second  half  of  the  year,  however, 
prices  improved  progressively  to  reach  a  remarkable  EUR 165  per  100  kilo  in  late 
summer 2006.  

Due  to  lack  of  availability,  sheep  meat  prices  stayed  relatively  high  in  2006, 
reaching  extraordinarily  high  levels  during  the  summer  period.  For  heavy  lamb, 
prices fluctuated above the levels of 2005, between EUR 404 and EUR 467 per kilo, 
following the seasonal pattern. For light lamb, prices were in general also higher than 
in 2005, varying between EUR 575 and EUR 688 per kilo. 

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47. 

Prices  for  milk  products,  which  were  relatively  strong  in  2005,  remained  firm  in 
2006. As in the previous year, the introduction of the second step in the support price 
cuts agreed under the 2003 CAP reform had no immediate effect on prices, except for 
butter,  where  prices  were  already  below  the  intervention  buying-in  level  before  the 
intervention  price  cut.  Towards  the  end  of  2006,  domestic  prices  for  butter  and 
skimmed milk powder increased sharply to well above the buying-in price. At the end 
of  the  year,  skimmed  milk  prices  were  30%  and  butter  prices  10%  above  the 
intervention price level. A similar trend was observed for whole milk powder prices. 
Meanwhile,  cheese  prices  remained  relatively  high  throughout  the  whole  year.  This 
favourable  price  environment  allowed  substantial  sales  out  of  butter  intervention. 
Consequently,  aid  levels  were  reduced  for  most  refunds  and  internal  disposal 
measures.  Only  the  refund  for  butter  was  increased.  All  aids  for  skimmed  milk 
powder were fixed at zero.  

1.4. 

Input prices 

48. 

In  2006  the  purchase  price  index  for  standard  consumption  goods  and  services  in 
agriculture  rose  in  nominal  terms  in  most  EU  Member  States  compared  with  2005. 
Prices were particularly higher for energy and fertilisers. Total input prices increased 
most in Latvia (8.8%), Portugal (6.6%), the Netherlands (5.9%), Hungary (5.4%) and 
Slovakia (5.2%). In other countries, they rose more slowly: 4.5% in Finland, 4.2% in 
Ireland,  3.8%  in  Greece  and  in  the  United  Kingdom,  3.7%  in  Slovenia,  3.4%  in 
France,  3.3%  in  Spain,  2.5%  in  both  Sweden  and  the  Czech  Republic,  2.3%  in 
Luxembourg and Austria, 2.2% in Belgium and 0.8% in Denmark. Only Cyprus and 
Malta registered a slight fall in nominal input prices by 0.5% and 0.7%, respectively. 

1.5. 

Farm income 

49. 

50. 

The  first  estimates  for  farm  income  in  2006,  provided  by  Eurostat  on  the  basis  of 
information sent by the Member States in December 2006, show an average increase 
of + 2.6% in  income from agricultural  activities (measured, in real terms, as the net 
value added at factor cost per annual work unit) compared to 2005 for the European 
Union as a whole. Incomes were up in 15 Member States, with the strongest increases 
observed in the Netherlands (+14.6%), France (+8.6%), Austria (+4.1%), the Czech 
Republic  (+6.4%),  Latvia  (+3.3%),  and  Poland  (+1.5%).  Income  was  down  in  ten 
Member States. It is estimated to have fallen in Lithuania (– 2.0%), Ireland (–  10.2%), 
Finland (– 6.2%), Malta (– 5.5%), Estonia (– 4.4%), Italy (– 4.2%), Slovenia (– 2.7%), 
Hungary (– 0.6%), Luxembourg (– 2.9%) and Slovakia (– 0.8%). 

The main factors behind these changes were: a sharp decrease in agricultural output 
quantities as compared to 2005, notably for cereals, industrial crops, potato, olive oil 
and  wine,  resulting  in  an  overall  drop  in  the  total  volume  of  crop  production  by  
– 3.9%,  whereas  crop  prices  fell  by  – 1.7%  in  real  terms.  In  addition,  animal  output 
decreased  slightly  (– 0.7%),  while  animal  prices  were  down  (– 1.7%)  in  real  terms. 
Crop  and  animal  production  stabilised  in  nominal  terms  thanks  to  strong  nominal 
prices.  However,  the  continued  introduction  of  the  CAP  in  the  new  Member  States 
led  to  a  further  rise  in  the  subsidies  granted  to  the  farm  sector,  to  EUR  5.4  billion 
(including  national  top-ups),  up  from  EUR  1.2  billion  in  2003,  EUR  3.8  billion  in 
2004  and  EUR  4.7 billion  in 2005.  The strong rise in oil prices drove up prices for 
energy,  lubricants,  fertilisers,  feed  and  services  for  agriculture.  Total  input  costs 
increased  on  average  in  real  terms  (+ 1.7%),  mainly  due  to  a  significant  surge  in 

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energy, 
intermediation services and a further reduction in quantities used. 

lubricant  and  fertiliser  prices,  despite  falling  prices  for  financial 

51. 

Lastly,  the  structural  decline  in  the  agricultural  labour  force,  the  final  fundamental 
factor affecting income movements, is estimated at – 2.2% in 2006 compared to 2005 
for the whole EU. This moderate reduction constitutes a marked slowdown compared 
to  the  early  2000s.  The  largest  reduction  in  agricultural  labour  was  recorded  in 
Lithuania (– 7.9%), Luxembourg (– 6.6%), the Czech Republic (– 5.7%), and Hungary 
(– 4.8%). The agricultural labour force increased only in Italy (+ 1.1%) and remained 
unchanged in Malta and Ireland. 

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Changes in nominal farm-gate prices in 2006 and 2005 (%) 

Crop products 

Livestock products 

Total 

Member States 

2006/05 (p) 

2005/04 

2006/05 (p) 

2005/04 

2006/05 (p) 

2005/04 

EU-25 

Belgique/België 

Česká Republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France  

Ireland  

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg  

Magyarország 

Malta 

Nederland  

Österreich 

Polska 

Portugal 

Slovenija 

Slovensko 

0.5 

8.0 

4.3 

1.6 

8.0 

9.9 

–8.5 

–13.5 

–1.7 

8.7 

–0.4 

1.8 

21.0 

18.0 

10.1 

11.0 

–4.0 

10.6 

7.5 

8.9 

0.6 

8.6 

0.7 

Suomi/Finland 

–14.2 

Sverige 

United Kingdom  

8.3 

7.0 

(p) provisional — Source: Eurostat 

9.9 

1.5 

–20.7 

–5.2 

–4.2 

–3.0 

2.4 

4.3 

–8.5 

7.3 

–4.6 

0.2 

8.6 

12.8 

–3.8 

–0.6 

–0.4 

0.7 

–2.4 

–2.7 

10.6 

1.3 

–10.8 

–7.5 

–4.7 

–5.7 

0.6 

6.1 

–1.6 

3.7 

2.2 

0.7 

–3.4 

3.7 

–4.3 

3.1 

3.7 

11.4 

10.4 

6.7 

0.1 

4.5 

–1.1 

2.9 

4.1 

–1.9 

–3.8 

2.5 

–1.9 

–5.6 

3.5 

–2.3 

–1.2 

0.9 

1.9 

0.2 

1.3 

3.8 

5.2 

1.5 

0.3 

–0.7 

–2.4 

1.5 

15.7 

13.5 

–0.1 

1.8 

–2.9 

2.5 

3.1 

–1.0 

–1.3 

1.3 

1.4 

–0.6 

0.6 

–1.4 

0.5 

6.9 

1.4 

3.0 

4.9 

4.0 

–7.1 

–7.5 

–2.8 

4.5 

0.9 

5.8 

15.5 

12.0 

3.3 

8.4 

–2.3 

7.1 

5.7 

9.4 

–1.3 

5.4 

–0.6 

–9.4 

5.4 

1.2 

4.8 

1.1 

–6.8 

–1.4 

–0.9 

2.7 

3.1 

3.2 

–4.6 

0.5 

–3.8 

0.7 

13.1 

13.1 

–0.9 

0.7 

–1.8 

1.4 

1.1 

–1.9 

5.1 

1.3 

–2.4 

–3.0 

–1.4 

–3.2 

EN 

18 

   EN 

Changes in nominal purchase prices for agricultural inputs in 2006 and 2005 (%) 

Intermediate 
consumption 

Investment 

Total 

Member States 

2006/05 (p) 

2005/04 

2006/05 (p) 

2005/04 

2006/05 (p) 

2005/04 

EU-25 

Belgique/België 

Česká Republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France  

Ireland  

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg  

Magyarország 

Malta 

Nederland  

Österreich 

Polska 

Portugal  

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 

United Kingdom  

: 

–0.1 

2.7 

0.5 

: 

3.3 

3.9 

3.1 

3.4 

4.5 

: 

–0.4 

9.5 

5.9 

2.8 

5.3 

–0.7 

6.7 

2.0 

: 

7.4 

4.9 

6.3 

4.9 

2.3 

4.0 

–2.2 

5.3 

–0.1 

1.1 

–0.1 

5.1 

5.6 

1.5 

1.5 

4.3 

–2.2 

8.3 

17.1 

8.7 

3.7 

–1.2 

2.8 

0.5 

–0.2 

2.4 

–4.5 

0.0 

0.3 

2.9 

1.0 

1.8 

(p) provisional — Source: Eurostat 

: 

2.9 

1.3 

2.2 

: 

: 

3.6 

3.6 

3.4 

2.5 

: 

–1.2 

5.2 

: 

1.5 

6.3 

1.3 

2.8 

2.7 

: 

1.2 

1.2 

1.0 

3.8 

3.1 

2.4 

2.3 

10.0 

3.2 

4.0 

1.6 

: 

3.8 

4.7 

3.0 

2.7 

3.6 

3.6 

23.2 

: 

0.6 

4.5 

–3.6 

2.3 

3.8 

–5.0 

1.9 

4.3 

2.9 

4.5 

3.9 

4.1 

: 

2.2 

2.5 

0.8 

: 

: 

3.8 

3.3 

3.4 

4.2 

: 

–0.5 

8.8 

: 

2.3 

5.4 

–0.7 

5.9 

2.3 

: 

6.6 

3.7 

5.2 

4.5 

2.5 

3.8 

–1.6 

3.7 

0.4 

1.7 

0.4 

: 

5.1 

1.9 

1.8 

4.0 

0.1 

7.9 

18.0 

: 

2.5 

–0.4 

2.7 

1.0 

1.3 

2.3 

–3.6 

1.3 

0.9 

3.5 

1.6 

2.0 

EN 

19 

   EN 

Nominal output price indices for agricultural products over the 2002–2006 (p) period 
(2000 = 100) 

Member States 

EU-25 

Belgique/België 

Česká Republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France  

Ireland  

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg 

Magyarország 

Malta 

Nederland  

Österreich 

Polska 

Portugal  

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 

United Kingdom  

2002 

101.8 

94.7 

100.1 

96.9 

100.0 

: 

113.6 

100.3 

99.9 

100.0 

106.4 

: 

106.7 

114.2 

99.5 

104.3 

110.3 

103.7 

101.7 

94.8 

101.8 

109.9 

106.8 

103.7 

102.1 

103.3 

(p) provisional — Source: Eurostat 

2003 

105.2 

97.7 

96.4 

92.5 

101.3 

: 

123.6 

105.8 

103.6 

99.6 

112.0 

: 

104.7 

101.9 

100.5 

110.5 

106.1 

104.9 

102.1 

96.6 

105.2 

113.5 

101.5 

99.0 

100.6 

109.9 

2004 

105.1 

99.7 

102.9 

94.9 

99.7 

127.4 

121.2 

106.8 

101.9 

101.8 

109.7 

121.0 

124.1 

102.9 

103.6 

104.5 

98.8 

99.6 

101.5 

105.7 

97.5 

112.2 

103.8 

102.0 

99.2 

113.2 

2005 

103.9 

100.8 

95.9 

93.6 

98.8 

130.8 

125.0 

110.2 

97.2 

102.3 

105.5 

121.9 

140.3 

116.4 

102.7 

105.2 

97.0 

101.0 

102.6 

103.7 

102.5 

113.7 

101.3 

98.9 

97.8 

109.6 

2006 (p) 

104.5 

107.7 

97.3 

96.6 

103.7 

134.8 

117.9 

102.7 

94.4 

106.8 

106.4 

127.7 

155.8 

128.4 

106.0 

113.6 

94.7 

108.1 

108.3 

113.1 

101.2 

119.1 

100.7 

89.5 

103.2 

111.8 

EN 

20 

   EN 

Indices of nominal purchase prices for goods and services consumed  
in agriculture over the 2002–2006 (p) period (2000 = 100) 

Member States 

EU-25 

Belgique/België 

Česká Republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France  

Ireland  

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg  

Magyarország 

Malta 

Nederland  

Österreich 

Polska 

Portugal  

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 

United Kingdom  

2002 

105.8 

102.8 

103.4 

107.7 

104.1 

103.7 

102.9 

103.2 

106.1 

105.5 

102.0 

100.8 

104.5 

113.1 

101.8 

107.2 

100.5 

109.5 

103.3 

116.1 

101.5 

107.2 

103.7 

(p) provisional — Source: Eurostat 

2003 

107.8 

102.7 

101.3 

105.5 

104.2 

108.1 

104.1 

104.2 

108.8 

107.4 

106.5 

96.0 

105.6 

119.8 

101.5 

109.0 

102.8 

113.0 

107.6 

121.5 

102.5 

109.3 

106.5 

2004 

2005 

2006 (p) 

113.0 

102.6 

108.8 

108.8 

108.6 

114.8 

117.8 

108.3 

107.9 

113.1 

112.6 

144.7 

115.2 

92.9 

105.6 

131.0 

108.0 

111.1 

106.8 

121.0 

113.0 

131.8 

114.7 

105.1 

113.5 

114.0 

112.8 

108.0 

108.7 

110.0 

108.5 

120.6 

124.4 

109.9 

109.5 

118.0 

110.1 

156.7 

134.9 

101.0 

109.5 

129.4 

111.0 

111.5 

106.6 

123.9 

107.9 

131.8 

115.1 

108.2 

114.6 

116.0 

116.6 

109.4 

110.8 

113.5 

123.2 

129.3 

112.8 

112.7 

121.7 

112.4 

157.7 

147.6 

104.7 

111.6 

134.7 

108.3 

115.9 

110.0 

130.1 

110.2 

134.4 

121.0 

112.6 

116.4 

122.0 

EN 

21 

   EN 

 
 
 
 
 
 
 
8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

Development of agricultural income in the EU-25 over the 2000–2006 (p) period — annual change (%)  
and cumulative growth (2000=100) 

Annual growth

Cumulative growth

5,2%

3,3%

5,5%

2,5%

2,6%

-3,4%

1999

2000

2001

2002

2003

2004

annual growth

cummulative 

(p) provisional — Source: Eurostat 

-7,2%

2005

2006

115

110

105

100

95

90

EN 

22 

EN 

 
  
 
Development of agricultural income in the EU-25 Member States in 2006 (p) (% change versus 2005), part 1 

6,4%

5,8%

5,1%

2,6%

8,6%

1,7%

0,3%

3.3%

2,0%

2,6%

-4,4%

-4,2%

-10,2%

10%

5%

0%

-5%

-10%

-15%

BE

CZ

DK

DE

EE

EL

ES

FR

IE

IT

CY

LV

EU-25

(p) provisional — Source: Eurostat 

EN 

23 

EN 

 
  
 
Development of agricultural income in the EU-25 Member States in 2006 (p) (% change versus 2005), part 2 

14,3%

-0,6%

-2,0%

-2,9%

-5,5%

4,1%

1,5%

0,8%

2,6%

-0,1%

-2,8%

-3,8%

-3,6%

-9,2%

20%

15%

10%

5%

0%

-5%

-10%

-15%

LT

LU

HU

MT

NL

AT

PL

PT

SI

SK

FI

SE

UK

EU-25

(p) provisional — Source: Eurostat 

EN 

24 

EN 

 
  
 
Development of agricultural income in the EU Member States  

over the 2001–2006 (p) period 

(average 2000 = 100) 

Member States 

2001 

2002 

2003 

2004 

2005 

2006 (p) 

EU-25 

105.2 

101.6 

104.1 

109.8 

101.8 

104.5 

Belgique/België 

Česká Republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France  

Ireland  

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg  

Magyarország 

Malta 

Nederland  

Österreich 

Polska 

Portugal  

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 

United Kingdom  

96.7 

127.2 

115.3 

127.0 

116.7 

103.8 

108.0 

100.9 

98.6 

98.0 

112.1 

120.5 

92.6 

100.8 

107.9 

113.5 

93.4 

113.9 

115.0 

106.4 

86.3 

113.6 

98.6 

107.8 

107.0 

86.6 

99.6 

81.6 

108.9 

109.2 

100.6 

104.8 

97.7 

93.7 

96.6 

112.3 

116.0 

86.0 

101.9 

91.4 

113.8 

79.6 

107.2 

103.9 

101.4 

117.6 

106.7 

97.5 

119.2 

118.1 

89.5 

87.3 

79.6 

83.0 

154.8 

93.5 

118.3 

95.9 

92.9 

96.7 

107.5 

126.2 

96.6 

93.8 

93.4 

109.2 

85.5 

107.2 

102.9 

123.0 

88.9 

100.3 

96.9 

118.0 

137.6 

89.8 

138.8 

91.0 

125.2 

226.5 

85.3 

110.6 

93.5 

90.4 

98.0 

96.9 

206.7 

150.4 

91.0 

148.6 

110.7 

80.1 

107.5 

199.6 

142.5 

141.3 

129.7 

95.3 

106.4 

128.1 

88.6 

143.3 

95.0 

113.8 

237.1 

81.7 

99.4 

87.4 

104.1 

94.0 

94.9 

212.3 

191.4 

86.3 

153.9 

109.1 

84.4 

107.2 

163.4 

128.8 

143.9 

120.9 

108.5 

99.1 

123.5 

(p) provisional, (e) estimate — Source: Eurostat  

90.9 

152.5 

100.5 

119.7 

226.7 

83.1 

99.6 

94.9 

93.4 

89.9 

96.8 

222.6 

203.8 

89.7 

160.8 

103.3 

99.0 

114.2 

170.0 

130.4 

140.0 

119.9 

101.7 

100.3 

123.8 

EN 

25 

   EN 

 
1.6. 

Farm accountancy data network (FADN) 

52. 

53. 

54. 

55. 

56. 

57. 

58. 

59. 

60. 

The FADN is used to calculate the output, costs and incomes of commercial farms in 
the EU  from  observed data collected  in  a  survey of harmonised  farm accounts.  The 
survey provides valuable information on how farm incomes vary according to type of 
farming  and  location,  which  is  not  apparent  from  the  global  averages  for  the 
agricultural  sector  as  a  whole.  This  section  presents  some  information  by  type  of 
farming and by country.  

When looking at following tables, it is important to take into account that FADN uses 
a  threshold  and  collects  information  only  for  commercial  farms.  This  means  that  it 
covers only farms that exceed a minimum economic size, measured in European Size 
Units (ESU), which differs from country to country, ranging from 1 ESU to16 ESU 
for the years 2004 and 2005. 

Table  1  shows  the  wide  range  of  results  among  Member  States  for  each  type  of 
farming, as measured by the Farm Net Value Added (FNVA).  

The  large  differences  in  average  income  among  Member  States  are  inherent  in  the 
structure  of  their  agriculture.  The  Member  States  with  the  highest  average  incomes 
are  in  general  those  with  a  significant  number  of  large-sized  farms  specialising  in 
arable crops, dairy produce or the less regulated sectors of production (pigs, poultry, 
horticulture,  etc.).  Those  Member  States  with  a  large  number  of  small  farms  have 
average incomes usually below the EU average. 

Table  2  shows  the  contribution  of  subsidies  and  taxes  to  FNVA.  In  2004,  the 
proportion  of  subsidies  net  of  taxes  in  FNVA  for  the  EUR-25  was  slightly  above 
36%.  However,  the  differences  among  Member  States  and  among  types  of  farming 
were considerable. 

In 2004, Finland, Slovenia and Sweden had an average FNVA lower than subsidies 
net  of  taxes.  This  means  that  revenues  from  the  market  were  not  enough  to  cover 
production costs. On the other hand, the share of subsidies in FNVA was the lowest 
in the Netherlands, Italy, Spain and Belgium.  

Regarding  types  of  farming,  the  differences  are  also  considerable.  Net  subsidies  for 
drystock, mixed and arable farm types were the highest as a proportion of FNVA. The 
horticulture and vineyard types were by far the least subsidised.  

In 2005, Finland had an average FNVA lower than subsidies net of taxes. In contrast, 
the  Netherlands  was  the  country  with  the  lowest  share  of  subsidies  in  FNVA, 
followed by Italy, Belgium and Spain.  

FADN data can also be used to analyse the degree of concentration in the agricultural 
sector.  This  is  shown  in  Tables  3  and  4  with  data  for  2005.  In  order  to  avoid  the 
problems  caused  by  the  presence  of  some  negative  values  for  FNVA,  the  variable 
used is total receipts from farming, i.e. receipts from market sales and from subsidies. 

61. 

Table  3  shows  the  top  20%  of  farms  with  the  highest  total  receipts  per  type  of 
farming, per country and for the EU as a whole. 

EN 

26 

   EN 

 
62. 

63. 

64. 

65. 

66. 

For the EU and for all types of farming, the 20% of farms with the highest receipts 
account for 72% of total receipts. However, the degree of concentration varies across 
countries. Luxembourg, Austria, Belgium, France and Finland have the lowest degree 
of  concentration  with  41,  41,  48,  48  and  49  percent,  respectively.  Furthermore,  the 
average receipts per farm are usually higher for these countries. In contrast, the Czech 
Republic, Hungary, Cyprus and Estonia have the highest degree of concentration with 
87, 84, 80 and 79 percent, respectively. 

For individual types of farming, the degree of concentration at EU level is highest for 
mixed livestock (mainly granivores) with 80% —, followed closely by various crops 
and  livestock  and  combined  and  specialist  horticulture.  The  lowest  concentration  of 
54%  can  be  found  in  specialist  olives,  specialist  cattle  rearing  and  fattening,  and 
specialist dairy farming. 

However,  the  types  of  farming  with  the  highest  degree  of  concentration  vary 
considerably  from  country  to  country.  Conversely,  specialist  cattle  rearing  and 
fattening is one of the least concentrated in practically all countries except for Italy.  

Table 4 shows the degree of concentration for the 50% of farms with the highest total 
receipts. 

At  EU  level,  for  all  types  of  farming,  this  figure  is  92%,  ranging  at  country  level 
between  73%  in  Luxembourg  and  96%  in  the  Czech  Republic.  Where  individual 
types of farming are concerned, the combination of field crops and grazing livestock 
is  the  most  concentrated  with  94%,  followed  closely  by  various  crop  and  livestock 
combinations and specialist granivores. On the other hand, the lowest concentration, 
80%, is found in specialist olives, followed by specialist cattle rearing and fattening, 
specialist dairy farming, sheep/goats and other grazing livestock. 

EN 

27 

   EN 

 
Table 1 — FARM NET VALUE ADDED (in EUR)

All farms 

Arable 

Horticulture 

Vineyards 

Other 
permanent crops 

Dairy 

Drystock 

Pigs / poultry 

Mixed 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

68 787 

71 311 

63 946 

63 639 

88 864 

92 903 

. 

. 

127 136 

151 434 

53 809 

60 335 

58 258 

53 678 

84 362 

91 136 

64 967 

70 276 

6 566 

5 629 

8 878 

5 950 

. 

. 

4 541 

2 846 

740 

1 431 

. 

. 

17 100 

18 931 

83 966 

. 

15 896 

. 

90 648 

85 319 

85 267 

73 276 

56 619 

46 629 

19 773 

28 083 

14 413 

27 218 

73 490 

75 762 

36 073 

43 168 

113 787 

102 995 

161 049 

160 986 

66 481 

74 985 

36 084 

50 207 

301 218 

270 321 

. 

. 

83 147 

98 521 

107 745 

113 894 

. 

. 

164 458 

181 056 

83 207 

77 741 

63 290 

59 046 

73 755 

59 682 

93 756 

99 871 

58 113 

49 889 

56 108 

64 057 

49 723 

50 718 

43 039 

44 614 

79 962 

77 877 

72 738 

67 746 

11 883 

13 558 

10 897 

11 493 

30 385 

30 071 

13 997 

15 745 

9 097 

11 756 

. 

. 

20 345 

21 623 

 . 

.  

15 979 

17 610 

29 297 

24 652 

28 914 

18 899 

73 815 

46 406 

22 892 

15 826 

17 846 

17 508 

41 391 

50 452 

37 918 

37 012 

80 583 

73 148 

49 187 

40 918 

22 217 

25 992 

11 327 

15 116 

8 802 

10 907 

. 

. 

50 835 

50 756 

47 788 

44 622 

80 667 

90 064 

94 407 

85 351 

18 913 

18 415 

18 509 

15 513 

5 335 

13 241 

20 742 

19 223 

20 488 

21 273 

38 486 

35 012 

. 

. 

. 

29 743 

29 210 

24 686 

22 141 

93 409 

90 724 

24 500 

11 131 

10 623 

13 661 

11 637 

10 024 

16 902 

. 

. 

. 

26 254 

53 967 

52 902 

12 425 

. 

11 792 

12 755 

12 419 

11 326 

MT** 

. 

22 481 

. 

12 468 

. 

. 

. 

. 

 . 

25 034 

77 419 

64 261 

. 

 . 

. 

. 

.  

. 

90 825 

101 452 

58 484 

85 030 

203 948 

219 699 

76 518 

4 610 

19 115 

. 

. 

. 

. 

. 

. 

. 

. 

. 

54 617 

54 238 

. 

20 856 

18 553 

22 575 

69 712 

37 460 

41 256 

29 189 

32 264 

45 542 

64 349 

50 542 

51 709 

5 338 

36 910 

53 683 

9 462 

16 770 

50 170 

43 276 

23 802 

28 352 

47 110 

48 372 

12 551 

13 426 

. 

. 

35 730 

39 589 

18 399 

66 634 

75 621 

32 717 

32 220 

229 450 

235 203 

32 271 

31 984 

4 520 

10 693 

11 244 

7 762 

. 

56 646 

60 383 

50 748 

50 676 

15 015 

11 417 

13 085 

20 355 

17 737 

6 123 

. 

38 335 

. 

 . 

. 

. 

. 

. 

. 

8 941 

9 270 

41 632 

36 709 

95 256 

227 381 

8 089 

8 492 

45 622 

. 

. 

180 288 

137 454 

79 771 

91 720 

32 561 

21 297 

77 586 

105 003 

39 189 

61 214 

31 398 

33 013 

37 837 

35 391 

. 

35 113 

30 901 

49 028 

34 374 

26 733 

29 829 

29 493 

28 947 

32 804 

48 082 

31 557 

33 554 

7 558 

8 805 

8 976 

8 585 

8 830 

6 217 

9 169 

5 463 

16 460 

18 517 

. 

9 299 

10 077 

10 274 

29 973 

29 550 

16 535 

14 934 

74 797 

76 782 

29 744 

34 345 

22 586 

21 452 

67 390 

100 158 

52 619 

63 510 

4 895 

7 957 

2 031 

3 778 

. 

. 

. 

116 854 

. 

. 

. 

. 

. 

5 553 

. 

. 

. 

. 

. 

8 876 

5 308 

8 239 

11 212 

7 036 

9 993 

8 650 

11 877 

14 029 

20 655 

8 271 

20 668 

20 703 

11 112 

9 062 

32 900 

71 278 

4 878 

7 695 

5 429 

5 935 

40 792 

39 866 

27 552 

31 449 

53 178 

68 455 

27 937 

28 873 

42 027 

51 512 

25 016 

30 622 

35 379 

80 705 

24 386 

32 927 

5 602 

14 350 

4 558 

6 204 

17 181 

5 961 

6 323 

35 205 

115 405 

32 826 

86 200 

. 

. 

. 

. 

181 954 

238 177 

3 603 

5 123 

. 

. 

. 

. 

. 

. 

UK* 

69 137 

79 250 

71 084 

85 159 

175 226 

244 728 

. 

205 149 

185 867 

81 786 

90 785 

36 070 

37 874 

151 520 

179 668 

64 806 

70 198 

B* 

CYP 

CZ 

DK 

D 

EL 

E 

EE 

F 

HU 

IRL 

I 

LT 

L 

LV 

NL 

A 

PL 

P* 

FIN 

S 

SK 

SI* 

EUR-25 

27 802 

27 787 

25 583 

23 441 

69 364 

66 809 

38 519 

34 957 

17 164 

17 490 

42 688 

46 799 

24 222 

25 591 

52 515 

62 020 

21 178 

21 198 

Source: FADN results 2004, 2005 (weighted: population FSS 2005, classification SGM 2002) *2005 data for B, UK, P, PL and SI are provisional. **2004 data for MT are not available 

EN 

28 

EN 

 
  
 
 
  
  
  
Table 2 —CURRENT SUBSIDIES NET OF TAXES AS % OF FARM NET VALUE ADDED 

All farms 

Arable 

Horticulture 

Vineyards 

Other 
permanent crops 

Dairy 

Drystock 

Pigs / poultry 

Mixed 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

2005 

2004 

26.2 

0.9 

2.1 

. 

72.5 

. 

. 

7.9 

2.1 

2.9 

2.8 

1.6 

14.5 

2.5 

11.3 

1.1 

5.3 

. 

4.7 

3.3 

3.4 

4.2 

1.7 

19.4 

. 

2.6 

7.6 

1.1 

4.8 

. 

. 

. 

. 

. 

. 

. 

. 

–4.3 

–0.3 

45.2 

–2.6 

. 

0.0 

44.8 

4.8 

. 

. 

. 

. 

. 

52.1 

37.9 

59.4 

37.5 

50.0 

60.0 

77.1 

77.0 

59.7 

. 

30.9 

58.2 

83.7 

31.6 

14.3 

. 

. 

. 

45.6 

72.7 

229.4 

107.2 

75.9 

95.9 

65.8 

54.3 

. 

. 

. 

16.3 

–1.3 

–1.5 

84.6 

. 

.  

52.4 

2.2 

14.7 

34.5 

6.4 

1.4 

3.7 

8.4 

16.6 

36.6 

10.3 

117.4 

9.3 

16.2 

32.4 

6.4 

1.2 

–17.5 

8.8 

18.0 

59.5 

16.8 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

22.9 

–3.6 

0.8 

1.5 

1.1 

. 

1.8 

6.2 

. 

6.4 

B* 

CYP 

CZ 

DK 

D 

EL 

E 

EE 

F 

HU 

IRL 

I 

LT 

L 

LV 

22.6 

46.5 

37.1 

36.2 

46.6 

32.1 

21.6 

53.5 

48.7 

47.4 

76.2 

18.0 

40.7 

77.1 

62.9 

23.7 

55.3 

51.7 

31.6 

47.3 

30.8 

25.3 

51.5 

50.1 

52.2 

79.8 

19.6 

48.6 

80.5 

62.2 

23.9 

59.8 

32.3 

55.3 

55.7 

37.4 

36.1 

80.3 

73.7 

52.9 

59.6 

27.6 

45.9 

189.2 

. 

68.3 

MT** 

. 

39.6 

. 

NL 

A 

PL 

P* 

FIN 

S 

SK 

SI* 

UK* 

EUR-25 

6.8 

67.7 

25.2 

48.5 

139.7 

100.6 

64.9 

100.7 

59.1 

36.3 

10.2 

69.1 

33.7 

50.8 

150.8 

91.7 

82.2 

63.1 

56.4 

38.5 

17.3 

75.2 

31.9 

75.3 

201.4 

113.8 

51.1 

161.8 

76.2 

49.9 

EN 

4.8 

0.7 

10.2 

27.7 

17.7 

9.5 

49.9 

13.4 

0.1 

27.4 

6.4 

31.7 

11.0 

1.2 

15.8 

. 

. 

. 

. 

. 

29 

3.3 

3.1 

25.4 

27.3 

186.2 

101.6 

. 

52.2 

45.0 

54.2 

49.9 

60.4 

118.0 

125.7 

5.4 

28.6 

31.5 

. 

12.2 

3.6 

7.1 

25.7 

. 

18.3 

12.7 

42.5 

12.5 

36.8 

28.5 

29.3 

. 

13.9 

33.0 

9.1 

40.3 

51.8 

33.8 

44.1 

13.1 

39.6 

49.4 

51.8 

34.0 

14.3 

38.0 

78.4 

69.8 

12.1 

73.1 

28.9 

32.0 

. 

. 

33.2 

. 

46.8 

17.9 

44.4 

53.4 

37.7 

41.2 

22.5 

38.6 

78.0 

60.5 

19.0 

70.5 

31.7 

35.5 

112.0 

128.7 

74.6 

81.1 

180.2 

121.7 

72.5 

28.5 

37.6 

29.6 

36.6 

41.6 

48.6 

1.7 

17.1 

5.2 

0.5 

6.6 

15.0 

26.0 

. 

81.6 

36.2 

. 

38.6 

3.4 

90.3 

. 

101.2 

85.3 

24.8 

26.4 

116.8 

. 

35.9 

7.9 

87.3 

37.5 

36.4 

107.6 

112.4 

118.1 

34.0 

3.9 

13.4 

23.6 

7.0 

15.1 

19.2 

9.8 

. 

. 

. 

. 

. 

. 

40.4 

37.3 

53.0 

35.4 

32.3 

54.2 

67.3 

49.0 

66.8 

29.8 

44.7 

103.2 

73.8 

61.4 

. 

. 

. 

. 

. 

. 

. 

47.0 

. 

106.3 

105.3 

47.3 

94.6 

33.5 

85.3 

26.3 

92.8 

253.2 

228.7 

175.8 

131.5 

126.5 

52.7 

85.7 

33.0 

102.0 

235.4 

177.9 

151.5 

125.6 

127.2 

72.6 

73.1 

15.8 

6.3 

70.5 

. 

. 

–0.3 

42.4 

17.0 

–0.9 

–1.2 

34.8 

17.7 

–0.6 

123.6 

100.8 

49.1 

22.6 

. 

. 

3.8 

13.1 

2.9 

12.4 

12.1 

74.3 

33.2 

79.8 

187.2 

142.0 

49.3 

160.4 

78.5 

50.3 

2005 

29.1 

53.1 

39.2 

54.2 

34.8 

38.2 

56.8 

68.9 

51.3 

71.2 

31.0 

49.6 

113.5 

71.5 

13.3 

70.9 

49.1 

110.7 

186.2 

105.7 

63.4 

114.3 

78.5 

53.8 

EN 

 
  
 
 
  
  
Source: FADN results 2004, 2005 (weighted: population FSS 2005, classification SGM 2002)*2005 data for B, UK, P, PL and SI are provisional.**2004 data for MT are not available 

TABLE 3 — SHARE OF TOTAL RECEIPTS ( OUTPUT + SUBSIDIES) IN 2005 

THE 20% OF FARMS WITH THE HIGHEST RECEIPTS 

B  CYP  CZ DK  D  EL

E  EE

F  HU 

IRL 

I  LT

L  LV MT  NL  A  PL  P  FIN 

S 

SK 

SI  UK  EU-25 

Sp. cereals, oilseed and protein crops 

General field cropping 

Specialist horticulture 

Specialist vineyards 

61 

51 

57 

74 

87 

69 

72 

65 

74 

Specialist fruit and citrus fruit 

49 

51 

Specialist olives 

Various permanent crops combined 

Specialist dairying 

Sp. cattle rearing and fattening combined 

Cattle dairying, rearing and fattening  

Sheep, goats and other grazing livestock 

Specialist granivores 

Mixed cropping 

Mixed 
livestock 

livestock,  mainly 

grazing 

Mixed livestock, mainly granivores 

37 

42 

41 

43 

40 

77 

63 

69 

62 

43 

63 

Field crops/grazing livestock combined 

41 

Various crops and livestock combined 

84 

88 

72 

47 

67 

55 

51 

46 

47 

61 

50 

46 

53 

42 

42 

71 

49 

51 

54 

49 

44 

44 

45 

43 

49 

51 

44 

40 

72 

45 

43 

49 

57 

57 

58 

58 

56 

58 

58 

47 

51 

49 

58 

64 

56 

45 

50 

68 

52 

80 

78 

All types of farming 

48 

80 

87 

64 

56 

51 

64 

79 

73 

77 

52 

57 

72 

67 

75 

71 

80 

52 

36 

67 

40 

44 

45 

58 

58 

52 

60 

38 

39 

37 

45 

49 

51 

77 

82 

55 

80 

74 

89 

87 

80 

70 

69 

75 

70 

58 

56 

70 

62 

70 

64 

51 

76 

66 

40 

48 

49 

46 

41 

86 

67 

37 

47 

78 

65 

60 

55 

64 

74 

39 

42 

45 

48 

90 

84 

84 

62 

46 

56 

46 

63 

51 

66 

65 

43 

41 

47 

47 

37 

37 

38 

43 

37 

41 

40 

57 

56 

79 

79 

44 

51 

54 

41 

49 

41 

62 

41 

56 

73 

53 

59 

82 

72 

45 

48 

44 

63 

69 

58 

63 

48 

45 

52 

73 

49 

46 

74 

51 

52 

60 

48 

51 

58 

54 

53 

50 

57 

49 

56 

60 

65 

59 

44 

43 

53 

54 

61 

53 

53 

69 

72 

76 

72 

65 

54 

73 

54 

54 

64 

55 

70 

73 

73 

80 

73 

77 

72 

57 

73 

59 

41 

74 

73 

57 

41 

61 

65 

49 

56 

77 

58 

59 

1. Where no figures are indicated the sample size is too small for the relevant category 2. Data for B, UK, P, PL and SI are provisional  

EN 

30 

EN 

 
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
 
 
  
  
  
 
  
 
  
  
 
 
  
 
 
  
 
  
 
 
 
 
  
  
 
  
  
 
 
  
  
  
  
  
 
  
  
  
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
  
  
  
  
  
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
 
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
TABLE 4 — SHARE OF TOTAL RECEIPTS (OUTPUT + SUBSIDIES) IN 2005 

THE 50% OF FARMS WITH THE HIGHEST RECEIPTS  

B  CYP  CZ  DK  D  EL  E  EE 

F  HU 

IRL 

I 

LT

L  LV MT  NL  A  PL  P  FIN S 

SK  SI  UK  EU-25 

Sp. cereals, oilseed and protein crops 

General field cropping 

Specialist horticulture 

Specialist vineyards 

Specialist fruit and citrus fruit 

Specialist olives 

Various permanent crops combined 

Specialist dairying 

82 

85 

80 

70 

Sp. cattle rearing and fattening combined  73 

Cattle dairying, rearing and fattening  

Sheep, goats and other grazing livestock 

Specialist granivores 

Mixed cropping 

72 

78 

Mixed livestock, mainly grazing livestock  

Mixed livestock, mainly granivores 

Field crops/grazing livestock combined 

Various crops and livestock combined 

All types of farming 

73 

74 

83 

78 

90 

81 

76 

78 

87 

87 

91 

96 

88 

86 

83 

92 

85 

97 

98 

82 

98 

96 

93 

96 

91 

91 

94 

85 

92 

74 

76 

89 

89 

80 

92 

89 

81 

81 

76 

81 

86 

79 

75 

79 

72 

74 

87 

79 

73 

88 

79 

83 

78 

80 

80 

78 

76 

74 

76 

86 

76 

79 

75 

76 

78 

80 

88 

80 

93 

91 

84 

84 

83 

84 

80 

84 

81 

78 

81 

76 

81 

86 

89 

79 

86 

80 

82 

87 

92 

78 

76 

84 

86 

81 

86 

71 

72 

71 

75 

80 

81 

73 

72 

75 

77 

79 

91 

95 

83 

96 

96 

91 

98 

83 

97 

93 

96 

95 

94 

88 

88 

92 

88 

84 

80 

88 

86 

89 

87 

81 

93 

87 

87 

92 

87 

85 

87 

90 

76 

74 

70 

65 

82 

86 

78 

68 

70 

67 

85 

90 

91 

89 

86 

76 

82 

76 

99 

86 

77 

86 

83 

75 

74 

75 

80 

70 

70 

69 

73 

72 

68 

76 

73 

73 

82 

87 

83 

86 

72 

79 

89 

79 

89 

86 

73 

78 

83 

79 

79 

75 

82 

81 

83 

84 

93 

93 

93 

73 

73 

78 

75 

90 

85 

91 

85 

73 

87  77 

83  91 

87  82 

  80 

79  86 

  88 

91  78 

76  81 

84 

81  92 

80  82 

91  94 

76 

81 

77  80 

77  83 

77 

80  83 

82  83 

77 

74 

80 

87 

93 

77 

92 

92 

80 

81 

85 

79 

82 

86 

96 

86 

94 

77 

77 

74 

87 

95 

81 

84 

90 

80 

75 

89 

90 

84 

73 

84  87 

79 

84 

95 

84 

84 

91 

91 

92 

91 

86 

80 

89 

84 

84 

88 

84 

93 

90 

89 

92 

94 

93 

92 

1. Where no figures are indicated the sample size is too small for the relevant category 2. Data for B, UK, P, PL and SI are provisional 

EN 

31 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. 

POLICY DEVELOPMENTS AND LEGISLATIVE INITIATIVES IN 2006 

2.1. 

CAP Reform 

67. 

The year 2006 saw a number of key initiatives in both pillars of the CAP. Although 
the Doha Round of world trade talks encountered major obstacles in July, a number 
of the Commission’s 5-year strategic objectives for the CAP were achieved. 

CAP Reform  

68. 

69. 

70. 

As  regards  CAP  reform,  the  Commission  brought  two  more  sectors  into  the  reform 
process. In June 2006, the Commission called for a comprehensive reform of the wine 
sector  with  the  aim  of  increasing  the  competitiveness  of  EU  wine  producers  and 
winning  back  market  share,  while  preserving  the  best  traditions  of  EU  wine 
production and reinforcing the social and environmental fabric of rural areas. 

This was followed in September by a proposal for reform of the banana sector, which 
was  adopted  by  the  Council  in  December.  The  aim  of  the  reform  was  to  bring  the 
former  aid  scheme  for  banana  producers  into  line  with  reforms  in  the  other 
agricultural sectors, while ensuring a fair standard of living for EU banana producers 
and taking account of the particularities of the regions where bananas are grown. 

The first step towards reform of the fruit and vegetables sector began in May 2006, 
with  the  launching  of  a  consultation  document  on  options  for  the  reform.  The 
Commission’s approach was to seek ways of aligning the instruments for the common 
market  organisation  in  fruit  and  vegetables  closer  to  the  approach  of  the  reformed 
CAP, strengthening the coherence between the structural measures in the sector and 
corresponding  measures  in  rural  development  policy;  and  re-orienting  the  sector’s 
marketing standards towards promotion of quality and sustainable development. 

Cereals intervention 

71. 

In December 2006, the Commission made a proposal to abolish the system of public 
intervention purchases for maize from the 2007/08 marketing year. At the end of the 
2005/06 marketing season, EU maize intervention stocks had spiralled to 5.6 million 
tonnes,  or  40  percent  of  total  intervention  stocks.  The  current  system  needed  to  be 
changed  in  order  to  prevent  stocks,  which  are  bought  and  stored  at  public  expense, 
rising even more in future (forecast to reach as much as 15.6 million tonnes by 2013). 
Ending intervention for maize was intended to allow the EU cereals market to find a 
new balance and ensure that intervention regained its original purpose as a safety net.  

Preparation for the ‘Health Check’ of the 2003 CAP Reform 

72. 

At  the  time  of  the  adoption  of  the  2003  and  2004  CAP  reform  package,  a  series  of 
review  clauses,  covering  the  period  2007  to  2009,  were  introduced  in  the  final 
agreements, with the Council asking the Commission to report on both the decoupling 
instrument  behind  the  new  single  payment  scheme  and  certain  agricultural  markets. 
The  preparatory  analytical  work  for  carrying  out  these  reviews,  collectively  termed 
the ‘Health Check’ of the 2003 CAP Reform, began in 2006. 

EN 

32 

   EN 

 
Simplification 

73. 

In  2006, 
the  Commission’s  Directorate-General  for  Agriculture  and  Rural 
Development — DG AGRI — took forward its programme for simplification of the 
CAP with the presentation in October of an Action Plan containing 24 proposals for 
legislative change, and the adoption in December of a proposal for a single common 
market organisation to regulate the markets for the different products covered by the 
hitherto 21 separate common market organisations,. The aim of these initiatives was 
to cut the red tape associated with the current CAP and provide professionals working 
with the legislation a text that was clearer and more accessible. 

2.2. 

Quality policy 

PDO-PGI regulation adopted on 20 March 2006 — TSG regulation adopted on 20 March 
2006  

74. 

75. 

76. 

77. 

On  20  March  2006,  the  Council  adopted  Council  Regulation  (EC)  No  510/2006  on 
the protection of geographical indications and designations of origin for agricultural 
products  and  foodstuffs  (OJ  L93,  31.3.2006).  The  Regulation  is  designed  to  clarify 
and  streamline  the  rules  for  the  registration  of  protected  geographical  indications 
(PGIs) and protected designations of origin (PDOs) and to ensure full compatibility 
with the findings of two WTO panels (complaints WT/DS174 and WT/DS290 lodged 
by the United States and Australia). 

In order to make the registration process more efficient, the new regulation simplifies 
procedures  and  clarifies  the  role  of  the  Member  States  and  the  Commission  in 
approving  applications.  The  centrepiece  of  the  regulation  is  the  establishment  of  a 
well-defined  ‘single  document’  for  applications,  containing  all  the  information 
needed for registration, publicity and inspection purposes. This document will also be 
published. The regulation also seeks to increase the use of the official abbreviations 
(such as ‘PGI’) and the EU logos with a view to improving consumer recognition. 

Regulation  (EC)  No  510/2006  on  protection  of  geographical  indications  and 
designations  of  origin  will  bring  the  scheme  into  conformity  in  the  two  areas 
criticised  by  the  WTO:  firstly,  by  formally deleting the requirement for ‘reciprocity 
and  equivalence’  from  the  regulations  and,  secondly,  by  allowing  third  country 
operators  to  submit  applications  and  objections  directly  rather  than  through  their 
governments.  

Following the adoption of the regulation, the Commission made a declaration on the 
future policy review of the geographical indications policy. With this declaration, the 
Commission undertook to carry out a review of the operation of the regulation and its 
future  development.  Some  particular  items  for  consideration  are  identified  in  the 
declaration:  1.  Identification  of  PDO  and  PGI  products  as  ingredients.  2.  Use  of 
alternative  instruments  such  as  trademarks  (e.g.  collective  or  certification  TM)  to 
protect geographical indications. 3. Scope of products covered by the regulation with 
particular  attention  to  salt,  mixed  herbs,  wicker  products  and  condiments.  4. 
Identification  of  the  origin  of  raw  materials.  5.  Criteria  used  to  assess  the  generic 
status  of  a  name.  6.  Design  of  the  Community  symbols  identifying  geographical 
indications and protected designations of origin.  

EN 

33 

   EN 

 
78. 

79. 

80. 

81. 

On  14  December,  the  Commission  adopted  Regulation  (EC)  No  1898/2006  laying 
down  detailed  rules  of  implementation  of  Council  Regulation  (EC)  No  510/2006. 
Rules on the use of names and their linguistic versions are clarified. The geographical 
area is to be delimited without ambiguities. In order to guarantee origin, measures to 
ensure proof of origin should be included in the specifications. The Regulation also 
sets  out  criteria  to  justify  packaging.  Finally,  it  contains  models  for  applications, 
objections, amendments and cancellations.  

On  20  March,  the  Council  also  adopted  Council  Regulation  (EC)  No  509/2006  on 
agricultural products and foodstuffs as ‘traditional specialities guaranteed’, replacing 
Regulation (EC) No 2082/92. Although the latter was not the subject of a WTO panel 
ruling, the new Regulation includes similar changes regarding third countries as in the 
case of the PDO/PGI Regulation.  

At the time of the adoption of the Regulation, the Commission made a declaration on 
a  future  policy  review  to  address  the  scope  of  product  designations,  the  use  of 
geographical  terms  and  the  possibility  of  representative  bodies.  In  addition, 
registration and objection procedures were to be streamlined. 

During  2006,  Commission  tabled  a  proposal  for  a  Regulation  laying  down  detailed 
rules  for  the  implementation  of  Regulation  (EC)  No  509/2006.  The  proposal  was 
discussed  in  the  Standing  Committee  on  Traditional  Specialities  Guaranteed  on 
several occasions. 

New products names on the list 

82. 

83. 

84. 

As  provided  for  in  Regulations  (EEC)  No 2081/92,  (EC)  No  510/2006  and  (EC) 
No 509/2006, the Commission has added 7 names (listed in the Annex) to the list of 
protected  designations  of  origin  and  protected  geographical  indications,  which  now 
currently comprises a total of 712 entries. One amendment to the specifications of a 
registered PGI name is also listed in the Annex. 

The  Commission  has  rejected  one  application  for  registration,  deciding  not  to  enter 
the  name  in  the  ‘Register  of  protected  designations  of  origin  and  protected 
geographical indications’, also listed in the Annex. 

The  relative  small  number  of  names  added  to  the  list  was  because  the  period  of 
6 months  for  objections  was  extended  for  28  applications  already  published  under 
to  Council 
Regulations  (EEC)  No 2081/92  and  No 2082/92,  having  regard 
Regulations (EC) No 510/2006 and No 509/2006 of 20 March 2006. 

International issues 

Panel result and implementation time 

85. 

The  Commission  presented  a  proposal  to  the  Council  in  December  2005  for  a  new 
Council  Regulation  in  order  to  take  into  account  the  findings  of  the  WTO  panel 
(WT/DS  174  and  WT/DS  290)  on  Regulation  (EEC)  No  2081/92.  The  Council 
adopted  a  new  Council  Regulation  (EC)  No  510/06  on  20  March  2006,  therefore 
within the ‘reasonable period of time’ due to expire on 3 April 2006. This regulation 
takes into account the panel’s findings, in particular by allowing direct applications or 
objections  to  the  Commission  by  operators  in  third  countries  and  by  repealing 

EN 

34 

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provisions  on  the  reciprocity  of  legislation,  and  at  the  same  time  simplifies  and 
streamlines the general registration procedures. 

Codex Alimentarius 

86. 

The Commission took part in the meeting of the Codex Committee on Milk and Milk 
Products  in  Queenstown,  New  Zealand,  on  27  March  to  1  April  2006  concerning  a 
proposal  to  commence  work  on  a  Parmesan  cheese  standard.  In  2005,  the  Codex 
Alimentarius  Commission  (CAC)  had  decided  that  work  on  a  new  ‘Parmesan’ 
standard  would  not  be  started.  The  CAC’s  conclusions  were  addressed  to  the 
CCMMP.  The  EC  thereupon  agreed  not  to  launch  work  under  the  title  ‘Parmesan’. 
The  point  was  not  discussed  and  no  conclusions  were  drawn.  However,  statements 
made  by  the  US  and  EC  delegations  were  noted.  No  further  discussions  in  other 
Codex Committee meetings took place in 2006.  

EC/Switzerland  

87. 

During 2006, the working group on PDO/PGI issues did not meet. Several meetings 
on legal issues relating to the form of a future agreement on reciprocal protection of 
geographical  indications  were  held  during  2006.  At  the  sixth  meeting  of  the 
EC/Switzerland  Joint  Committee  on  Agriculture  on  8  December  2006,  preparatory 
discussions on the protection of geographical indications were held. A draft mandate 
including  negotiations  on  PGI  was  prepared  by  the  Commission  for  the  European 
neighbourhood countries to be transmitted for approval to the Council.  

Pilot  project  on  Food  Quality  Assurance  and  Certification  Schemes  managed  within  an 
Integrated Supply Chain — Phase 2 

88. 

Following  the  first  phase  of  the  pilot  project,  which  focused  mainly  on  national 
reviews  of  quality  assurance  and  certification  schemes  in  7  European  countries,  the 
second  phase  concentrated  on  an  in-depth  analysis  of  selected  quality  assurance 
schemes by way of 9 case studies. This work, undertaken by JRC-IPTS (Seville), was 
concluded in December 2006. It aimed to assess the costs and benefits of food quality 
assurance  schemes  to  farmers,  processors,  retailers  and  consumers,  with  a  special 
focus on small-scale farmers, and to analyse the contribution of these schemes to the 
development of rural areas. The final reports on the project found that, while data are 
scarce, the results showed that food quality assurance can add value at various stages 
in  the  integrated  supply  chain.  However,  existing  schemes  have  a  wide  variety  of 
objectives, rules and organisational structures, which made it difficult for the project 
to  draw  generally  applicable  conclusions.  It  was  noted  that  some  only  cover  very 
small  niche  markets,  while  others  operate  at  the  business-to-business  level  without 
any consumer interface. Most certified products command a price premium according 
to the project reports, but this is not always sufficient to compensate for the additional 
costs of complying with the specifications.  

Database of Origin and Registration (DOOR)  

89. 

The IT project DOOR (Database of Origin and Registration) was launched in 2005 to 
support agricultural product quality policy by providing a modern information system 
to  manage  the  entire  registration  process  for  PDO/PGI  and  TSG.  DOOR  will  allow 
on-line  applications  (from  Member  States  and 
third  countries),  workflow 
management within DG AGRI, and dissemination of public data.  

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35 

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90. 

In  2006  a  study  on  the  project’s  feasibility  was  carried  out  and  a  system  prototype 
was delivered. The project’s global implementation plan (GIP) was endorsed by the 
Regulatory Committee on designations of origin and geographical indications and the 
Regulatory Committee on certificates of specific character. 

New names entered in the Registers of Designations of Origin and 
Geographical Indications and of Traditional Specialities Guaranteed  
and amendments since the 2005 Annual Report 

Member 
State 

Product 

Type of product 

PDO/PGI/TSG

ES 
ES 
ES 
FR 
ES 
IT 
IT 
IT 
FR 

‘Montes de Granada’ 
‘Acete de la Rioja’ 
‘Antequera’ 
‘Huile d’olive de Nice’ 
‘Pimiento Asado del Bierzo’ 
‘Fico Bianco del Cilento’ 
‘Melannurca Campana’ 
‘Nocciola di Giffoni’* 
‘Choucroute d’Alsace’ ** 

Oils and fats 
Oils and fats 
Oils and fats 
Oils and fats 
Fruits, vegetables and cereals 
Fruits, vegetables and cereals 
Fruits, vegetables and cereals 
Fruits, vegetables and cereals 
Vegetable preparations 

PDO 
PDO 
PDO 
PDO 
PGI 
PDO 
PGI 
PGI 
PGI 

* 
Amendments to the Register made in accordance with Article 9 of Regulation (EEC) No 2081/92. 
**  Commission  Decision  to  reject  an  application  in  accordance  with  Article  2(2)(b)  of  Regulation  (EEC) 

No 2081/92. 

2.3. 

Organic farming 

New regulations 

91. 

92. 

In  December  the  Council  reached  an  agreement  on  a  ‘general  approach’  on  the 
proposal 
labelling 
for  a  Council  Regulation  on  organic  production  and 
(COM(2005) 671  –  2005/278  (CNS)).  The  new  Regulation  is  to  repeal  Council 
Regulation (EEC) No 2092/91 and will apply as of 1 January 2009.  

The new Regulation is a cornerstone of the Community Action Plan for Organic Food 
and Farming (EAP) and represents a major step forward towards ensuring the further 
development of the organic sector by:  

– 

– 

– 

– 

implementing the EAP for organic food and farming; 

contributing to simplification and better regulation; 

promoting the ‘common concept’ of organic production;  

providing for a permanent import regime. 

93. 

The Council also adopted a transitional regulation on the import of organic products 
(Council  Regulation  (EC)  No  1991/2006),  ensuring  the  continuity  of  organic  trade 
with third countries. 

EN 

36 

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The following application rules were adopted by Commission Regulations: 

94. 

95. 

96. 

97. 

98. 

Regulation (EC) No 592/2006 amending Annex II of Regulation (EEC) No 2092/91 
by  deleting  the  expiry  date  of  the  authorisation  to  use  composted  or  fermented 
household waste in organic products. 

Regulation (EC) No 699/2006 amending Annex I of Regulation (EEC) No 2092/91 as 
regards conditions of access for poultry to open-air runs. 

Regulation (EC) No 780/2006 amending Annex VI of Regulation (EEC) No 2092/91 
by introducing a harmonised list of additives and processing aids that can be used in 
the processing of organic livestock products. 

Regulation  (EC)  No  956/2006  amending  Regulation  (EEC)  No  94/92  by  entering 
India in the list of third countries offering equivalent guarantees on organic products. 

Regulation  (EC)  No 1851/2006  amending  Annex  I  to  Council  Regulation  (EEC) 
No 2092/91 as regards uptake of conventional feed during periods of transhumance 

Further issues 

99. 

Work  on  the  assessment  of  equivalence  under  Article  11(1)  of  Regulation  (EEC) 
No 2092/91  on  organic  farming  continued  for  several  third  countries.  Progress  was 
made  on  the  technical  assessment  of  Guatemala,  Tunisia,  Chile,  Colombia  and 
Turkey.  New  requests  were  received  from  Mexico,  Nicaragua,  Uruguay,  Bolivia, 
Canada, Paraguay and El Salvador. 

100. 

The  Commission  contributed  to  the  further  development  of  the  Codex  Alimentarius 
guidelines on organic labelling 

2.4. 

Promotional measures 

101. 

Council  Regulations  (EC)  No 2702/951  and  (EC)  No 2826/20002  provide  for 
Community support for measures to provide information on and promote agricultural 
products in third countries and on the internal market. Community promotion policy 
covers  a  number  of  products,  stressing  their  general  characteristics  and  common 
themes such as quality, safety, labelling and particular production methods as well as 
respect  for  animal  welfare  and  the  environment  in  their  production.  It  aims  to  add 
value  to  national  and  private  initiatives  by  supporting  or  encouraging  the  Member 
States and private companies in their own promotion measures.  

102. 

Programmes are proposed by professional organisations representative of the product 
sector  concerned,  and  are  pre-selected  by  the  competent  authorities  of  the  Member 
States,  who  are  responsible  for  the  management  and  control  of  the  approved 
programmes.  The  total  annual  budget  for  Community  co-financing  for  approved 
programmes was EUR 42 million in 2006. 

103. 

In 2006, the Commission approved co-financing for 10 new programmes outside the 
EU.  The  main  target  countries  include  China,  India,  Russia  and  the  USA.  The 

1 

2 

OJ L 327, 21.12.1999, p. 7. 

OJ L 328, 23.12.2000, p. 2. 

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37 

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products promoted include quality wines, olive oil, cheeses, meat products and fruit 
and  vegetables.  Most  programmes  last  for  three  years.  Total  EU  co-financing  for 
these programmes amounts to EUR 9.08 million. 

104. 

105. 

For  the  EU  internal  market,  the  Commission  approved  32  new  co-financing 
programmes with a total budget of EUR 30.4 million. Most programmes last for three 
years. The promoted products include fruit and vegetables, organic products, products 
with  a  PDO  or  PGI  designation,  flowers  and  plants,  milk  products,  olive  oil  and  a 
newly eligible product, poultry meat. 

In  2006,  the  Commission  continued  with  the  implementation  of  action  1  of  the 
European Action Plan on organic food and farming, aiming to launch a coordinated 
campaign to promote organic farming. The first year of this contract was 2006-07. A 
contractor was selected and the terms of the first annual specific contract were agreed. 
The campaign aims to provide various materials free of charge to actors in the EU’s 
organic farming sector: a website, radio spots, TV spots, brochures, etc. It is to last 
for three years. 

2.5. 

Simplification of agricultural legislation 

106. 

107. 

108. 

109. 

Simplification continued to be an important objective in 2006, as ‘better regulation’ 
continues to increase in political importance within the context of the Lisbon Agenda. 
The  first  ‘delivery  year’,  following  the  publication  of  the  Communication3  on 
simplification of the CAP, was particularly successful. In 2006, DG AGRI developed 
different simplification activities: the Action Plan for the Simplification of the CAP 
(20 projects), the Conference ‘A Simple CAP for Europe — a challenge for all’, and 
other  supporting  initiatives  such  as  the  publication  of  the  Fact  Sheet  on  the 
simplification  of  the  CAP  and  the  Communication4  from  the  Commission  formally 
recognising that some Community legislation in  the field  of agriculture has become 
obsolete.  

Stakeholders  from  the  private  sector  and  national  administrations  were  consulted 
within  the  Simplification  Experts  Group,  chaired  by  DG  AGRI  and  composed  of 
Member  State  representatives,  and  the  CAP  Advisory  Group,  composed  of  NGO 
the 
representatives.  In  addition,  DG  AGRI 
administrative burden on farms resulting from the 2003 CAP reform. 

launched  a  study 

to  measure 

Last but not least, DG AGRI contributed some important simplification proposals to 
the Commission’s Simplification Rolling Programme to implement the commitments 
made  in  the  Commission’s  Communications5  on  simplification  of  the  regulatory 
environment.  

As  regards  the  ‘Single  CMO’  outlined  in  a  Commission  Communication6,  the 
Commission adopted a legislative proposal on 18 December 2006 providing for one 
common legislative framework for all 21 existing common market organisations. This 
proposal complements existing policies intended to streamline and harmonise the vast 
existing legislation. 

3 

4 

5 

6 

COM(2005) 509. 

OJ C 148, 24.6.2006, p. 29. 
COM(2005) 535 and COM(2006) 690.  
COM(2005) 509. 

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38 

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2.6. 

State aids in the agricultural sector 

Policy developments and legislative initiatives in 2006 

Overall workload 

110. 

The  Commission  received  319  notifications  of  draft  state  aid  measures  in  the 
agricultural  and  agro-industrial  sector.  It  also  started  the  examination  of  27  aid 
measures that had not been notified before under Article 88(3) EC Treaty. No review 
of  existing  aid  measures  under  Article  88(1)  EC  Treaty  was  commenced  or 
concluded.  Overall,  the  Commission  raised  no  objections  to  268  measures.  Several 
measures were approved after the Member States concerned either amended them or 
undertook to amend them in order to bring them into line with Community state aid 
rules. The Commission started the procedure under Article 88(2) EC Treaty in respect 
of 3 measures that raised serious doubts as to compatibility with the common market.  

111. 

Under Articles 3 and 19 of Regulation No 1/20047, certain types of state aid to small 
and  medium-sized  agricultural  enterprises  are  exempted  from  the  state  aid  rules.  In 
2006, Member States communicated to the Commission the summaries of 118 such 
measures.  The  Commission  publishes  these  summaries  on  the  internet  at  the 
following address: http://ec.europa.eu/agriculture/stateaid/exemption/index_en.htm. 

State aid — type of aid measure used 

112. 

Between 1 January and 31 December 2006, 268 decisions (on 241 new notifications 
and 27 non-notified aid measures) were taken. Though these notifications frequently 
cover more than one type of aid (for instance investment aid may be combined with 
aid  for  consultancy  costs,  or  technical  support  with  aid  for  encouraging  quality 
products),  an  analysis  of  the  amounts  spent  on  the  different  types  of  aid  provides  a 
useful  overview  of  the  aid  instruments  used  by  the  various  Member  States  in  the 
agriculture sector. 

7 

Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized 

enterprises active in the production, processing and marketing of agricultural products (OJ L 1, 3.1.2004, p. 1). 

EN 

39 

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Table 1: Total expenditure by primary objective in the agriculture sector, EU-25, 
notifications 2006 (in million euros) 

Type of Aid 

Notified aid¹ 

Non-notified aid¹ 

Advertising 

Animal diseases 

Conservation of traditional landscapes 

Culture and heritage conservation 

Early retirement 

Encouraging quality products 

Environmental protection 

Fallen stock 

Innovation 

Insurance premiums 

Diversification of farm activities 

Investment in agricultural holdings 

2.15 

157.26 

43.38 

16.06 

16.06 

40.10 

327.13 

0.90 

258.55 

289.81 

111.52 

293.83 

Investment in proc. & marketing 

1 147.11 

Livestock sector 

Natural disasters 

Plant diseases 

Relocation of farm buildings 

R & D 

Setting up of young farmers 

Start-up of producer groups 

Technical support for consultancy 

Technical support for promotion etc. 

TSE tests 

Other 

37.77 

755.44 

10.21 

16.06 

414.70 

17.06 

25.88 

69.37 

25.27 

77.91 

68.23 

2.50 

2.35 

1.26 

7.03 

14.64 

28.00 

33.6 

2.15 

93.6 

¹ 

The amounts given here were not spent in 2006 but were notified (or registered as non-notified) in 2006 and would / could be spent 
in the coming years. 

EN 

40 

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Table 2: Overview per Member State of the most important types of measures in 2006  
(in percentages, figures in bold above the EU-25 average) 

Type of aid as 
% of all 
measures / 

Measures per 
Member State 

Aid for 
investments¹ 

Aid to 
compensate for 
damage to 
agricultural 
production or 
means of 
agricultural 
production² 

Aid to 
encourage the 
production and 
marketing of 
quality 
agricultural 
products 

Aid for 
Research and 
Development 

EU (268) 

AT (11) 

BE (4) 

CY (3) 

CZ (16) 

DE (30) 

DK (6) 

EE (2) 

EL (3) 

ES (26) 

FI (3) 

FR (13) 

HU (6) 

IE (2) 

IT (82) 

LV (4) 

LT (7) 

LX (0) 

MT (0) 

NL (9) 

PL (3) 

PT (4) 

SE (2) 

SL (1) 

SK (4) 

12.18 

39.64 

0 

62.98 

2.08 

9.78 

2.67 

0 

0 

69.35 

0 

28.58 

8.54 

49.80 

2.99 

0 

46.02 

– 

– 

15.63 

0 

0 

0 

0 

0 

UK (26) 

21.67 

31.82 

2.97 

1.32 

0 

28.44 

35.06 

0 

38.00 

31.74 

16.05 

100.00 

0.45 

91.46 

0 

26.47 

35.88 

13.11 

– 

– 

6.62 

99.78 

57.28 

100.00 

100.00 

0 

41.95 

26.36 

41.73 

0 

32.02 

13.15 

6.09 

0 

0 

68.26 

3.97 

0 

6.09 

0 

50.20 

1.47 

0 

0 

– 

– 

0.40 

0 

0 

0 

0 

100.00 

4.73 

13.15 

0 

98.68 

0 

33.52 

9.79 

0 

0 

0 

0 

0 

9.79 

0 

0 

40.62 

28.07 

0 

– 

– 

1.33 

0.22 

0 

0 

0 

0 

0 

¹ = 

Conservation of traditional landscapes, Diversification of farm activities, Investment in agricultural 
holdings and Relocation of farm buildings. 

² =  Animal  diseases,  Insurance  premiums,  Natural  disasters,  Plant  diseases  and  Adverse  weather 

conditions. 

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41 

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New Legislation 

113. 

114. 

115. 

On 6 December 2006, the Commission adopted new rules on the granting of state aid 
in  agriculture.  These  rules  consist  of  two  parts,  namely  an  Exemption  Regulation8, 
under which Member States do not have to notify state aid to small and medium-sized 
farms  provided  that  certain  requirements  are  met,  and  State  Aid  Guidelines9,  which 
complement the Exemption Regulation and lay down the rules applicable to notified 
aid.  

The two documents cover the period from 2007 to 2013 and have been designed as 
part of the Commission’s state aid action plan to achieve less and better targeted state 
aid.  The  main  changes  that  the  new  rules  introduce  are  greater  coherence  with  the 
Commission’s rural development policy and a more differentiated approach towards 
small and medium-sized enterprises on one hand and large enterprises on the other. In 
line with the Lisbon agenda aim to move to more horizontal types of aid, support for 
companies active in processing and marketing will be largely aligned with the general 
rules  for  non-agricultural  enterprises.  Horizontal  legal  texts,  such  as  the  Exemption 
Regulation (EC) No 70/200110 or the ‘de minimis’ Regulation (EC) No 1998/200611, 
are  from  2007  onwards  applicable  to  companies  active  in  the  processing  and 
marketing of agricultural products.  

Quicker crisis support for farmers and simplified administration of agricultural state 
aids  —  this  is  the  objective  of  the  new  Exemption  Regulation.  In  particular,  the 
inclusion  for  the  first  time  of  compensation  for  animal  and  plant  diseases  and  bad 
weather  losses will greatly  speed up the  granting of  state aid in crisis situations. At 
the same time, the new regulation will encourage better risk management. From 2010 
onwards,  bad  weather  aid  will  be  reduced  if  the  farmer  has  not  taken  out  insurance 
against such risks and drought compensation will be conditional upon implementation 
of  the  Water  Framework  Directive12,  which  requires  an  adequate  contribution  from 
the sector. The new Block Exemption Regulation applies only to primary agricultural 
production  and  no  longer  covers  the  processing  and  marketing  of  agricultural 
products13. 

116. 

The new Guidelines furthermore introduce some additional aid categories as of 2007. 
These new categories comprise aid for compliance with demanding national standards 
that  go  beyond  Community  requirements,  ‘Natura  2000’  payments  and  payments 
linked  to  Directive  2000/60/EC  (Water  Framework  Directive),  aid  in  the  form  of 
exemption  from  excise  duties  under  Directive  2003/96/EC14  (taxation  of  energy 
products and electricity), and aid to the forestry sector. 

8 

9 

10 

11 

12 

13 

14 

Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized 

enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001 (OJ L 358, 16.12.2006, p. 3). 

Community Guidelines for State Aid in the Agriculture and Forestry Sector 2007 to 2013 (OJ C 319, 27.12.2006, p. 1). 

Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized 

enterprises (OJ L 10, 13.1.2001, p. 33). 

Commission  Regulation  (EC)  No  1998/2006  of  15  December  2006  on  the  application  of  Articles  87  and  88  of  the  Treaty  to  de  minimis  aid,  OJ  L  379, 

28.12.2006, p. 5. 

Directive 2000/60/EC of the European Parliament and of the Council (Water Framework Directive), OJ L 327, 22.12.2000, p. 1. 

With the exception of Article 9 (Aid for producer groups). 

Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the  Community  framework  for  the  taxation  of  energy  products  and  electricity,  OJ  L  238, 

31.10.2003, p. 51. Directive as last amended by Directive 2004/75/EC (OJ L 157, 30.4.2004, p. 100). 

EN 

42 

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117. 

Following  the  adoption  of  the  new  State  Aid  Guidelines,  the  rules  applied  by  the 
Commission  in  assessing  the  compatibility  of  state  aid  measures  with  the  common 
market have changed. Since the notification form is a detailed questionnaire based on 
the rules now in force, some parts have had to be amended. New compulsory state aid 
notification  forms15  were  thus  likewise  adopted  in  December  2006,  modifying 
Regulation (EC) No 794/2004. 

Outlook for 2007 

118. 

119. 

Under Commission Regulation (EC) No 1860/200416, national support for farmers is 
considered ‘de minimis’, and thus not subject to Commission approval, if it does not 
exceed  €3 000  per  farmer  over  any  period  of  three  years  and  does  not  breach  the 
overall  ceiling  on  total  ‘de  minimis’  support  for  each  Member  State  (this  ceiling  is 
fixed at around 0.3% of the overall agricultural production of each Member State).  

This  ‘de  minimis’  rule  was  introduced  on  1  January  2005.  The  experience  gained 
subsequently indicated that an increase in the individual amount of €3 000 per farmer 
over  three  years  and/or  an  increase  in  the  overall  ceiling  per  Member  State  would 
contribute  to  further  simplification  of  the  ‘de  minimis’  rule  and  therefore  to  better 
regulation for the common agricultural policy., The Commission therefore decided to 
increase the ‘de minimis’ thresholds and to modify the existing Regulation in 2007. 

Overview of cases 

120. 

The  following  overview  of  cases  looks  at  some  of  those  cases  that  raised  the  most 
interesting  issues  of  state  aid  policy  in  the  agricultural  and  agro-industrial  sector  in 
2006. 

France 

Rescue aid to poultry companies hit by the avian flu crisis 

121. 

On the 15 May and 1 June 2006, the Commission decided not to raise objections to 
three  rescue  aid  measures  aiming  to  provide  liquidity  support  for  6  months  to  the 
French  poultry  companies  Hubbard  SAS  (€4.5m),  SA  Tilly-Sabco  (€3.6m),  and 
DUC SA  (€6.5m)  in  the  form  of  reimbursable  advances  by  the  French  state.  The 
poultry companies were found to be in difficulty due to the avian flu crisis that broke 
out in October 2005 and the embargo placed on French poultry products by several of 
their main export markets. The Commission concluded that the aid was in line with 
Community  legislation,  in  particular  the  Community  guidelines  on  state  aid  for 
rescuing  and  restructuring  firms  in  difficulty  (2004/C 244/02),  for  the  following 
reasons: 

– 

– 

the rescue aid was limited to the minimum necessary; 

the reimbursable advances were provided at an interest rate comparable to those 
for  loans  to  healthy  firms  and  in  particular  the  reference  rate  adopted  by  the 
Commission; 

15 

16 

The new notification forms can be found in the Annex to Commission Regulation (EC) No 1935/2006 of 20 December 2006 (OJ L 407, 30.12.2006, p. 1). 

Commission Regulation (EC) No 1860/2004 of 6 December 2004 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the agriculture 

and fisheries sectors (OJ L 325, 28.10.2004, p. 4). 

EN 

43 

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– 

the  companies  undertook  to submit  a  restructuring  plan  by  the  end  of  the  six-
month period. 

Germany 

Transfer of nature protection land 

122. 

123. 

124. 

125. 

126. 

On 26 April 2006, the Commission authorised Germany to transfer ownership of land 
for free for the development of sustainable nature protection areas. The authorisation 
opened  the  way  for  the  development  of  sustainable  nature  protection  areas  (mostly 
Natura 2000 areas) with a total size of 32 000 hectares in the Länder of Mecklenburg-
Western  Pomerania,  Brandenburg,  Saxony-Anhalt,  Saxony,  Thuringia  and  Lower 
Saxony.  

Only  land  in  nature  protection  areas,  national  parks,  and  biosphere  reservations  is 
eligible  for  this  transfer.  The  new  owners  —  the  Länder  or  the  environmental 
protection foundations and associations — must maintain and develop these areas in 
line with nature protection goals.  

Only  transfers  to  environmental  protection  foundations  and  associations  were 
considered  as  state  aid,  as  these  organisations  practice,  at  least  marginally,  an 
economic  activity.  Most  of  the  land  was  transferred  to  the  Länder.  These  transfers 
were regarded as transactions between different levels of a federal state and therefore 
not as state aid. 

The transfer is for free and strict nature protection restrictions have to be respected at 
all  times.  These  nature  protection  obligations  give  rise  to  significant  costs,  severely 
limiting the economic use of the forest areas. Support will not be given for these areas 
under the first and second pillars of the Common Agricultural Policy.  

As the economic value of the land has not been established by tender or an evaluation 
by  independent  valuers,  the  Commission  assumed  a  residual  value  to  exist  even 
where the nature protection obligations are taken into account. The aid was authorised 
following existing practice that considers forestry measures positively on the basis of 
the social benefit, the positive effects on the environment, the enhanced value of the 
forest, and the new products made possible. Therefore, investment aid for sustainable 
forestry is allowed up to 100% of the value of the land.  

127. 

Some small areas are still used for agricultural purposes on a lease basis up to the end 
of the contract. Thereafter, no agricultural activity will be allowed. The lease income 
is within the limits of ‘de minimis’ aid. 

Bavarian Animal Health Service 

128. 

Following a complaint, the Commission launched a procedure under Article 88(2) EC 
Treaty regarding  a measure under  Article 14(1) of the Law on support for Bavarian 
agriculture (Gesetz zur Förderung der bayerischen Landwirtschaft — LwFöG). These 
measures (‘general measures’) are of a precautionary nature relating to the production 
of milk and meat and to the rearing of pigs, poultry, sheep and fish. The Commission 
has  no  evidence  whatsoever  that  in  the  past  only  100%,  and  not  possibly  more,  of 
actual (and necessary) expenditure has been reimbursed in all cases. Besides farmers, 
a possible recipient of aid might be also the Bavarian Animal Health Service. 

EN 

44 

   EN 

 
129. 

130. 

The complainant states that, through the veterinary surgeons it employs, the Bavarian 
Animal  Health  Service  not  only  takes  precautionary  measures  but  also  provides 
veterinary care services. 

According to the complainant, this distorts competition because the support provided 
for  the  ‘general  measures’  enables  the  Bavarian  Animal  Health  Service  to  offer 
competitive (i.e. care) services more cheaply. 

Financing of Hessische Staatsweingüter 

131. 

132. 

133. 

134. 

By  decision  of  20  December  2006,  the  Commission  opened  a  formal  investigation 
procedure  under  Article  88(2)  EC  Treaty  to  look  into  the  financing  of  Hessische 
Staatsweingüter (the biggest vineyard in Germany and 100% owned by the Land of 
Hessen). 

Hessische Staatsweingüter was loss-making for a long time. Until the end of 1992 the 
losses  were  borne  by  the  Land  of  Hessen.  The  Commission  presumed  that  this  loss 
coverage might constitute operating aid, which would be incompatible with state aid 
rules. The amount involved seemed to be some €2.3 million. 

In  2003  the  Hessische  Staatsweingüter  GmbH  was  created.  The  Land  of  Hessen 
injected equity capital amounting to €2.225 million into this newly created company 
in  2003  and  2004.  The  Commission  assumed  that  the  capital  was  provided  by  the 
Land of Hessen on  excessively favourable terms  (not  asking  for  a  minimum  rate  of 
return) and therefore contained a state aid element. 

A new wine cellar is being built with an equity contribution from the Land of Hessen 
amounting  to  €7.5  million,  to  be  provided  in  the form of an equity-like shareholder 
loan  (Partiarisches  Darlehen).  The  Commission  is  to  investigate  whether  this 
measure constitutes State aid.  

Netherlands 

Holland Malt — negative decision 

135. 

136. 

137. 

On 26 September 2006 the Commission gave a negative decision following its formal 
investigation  in  case  C  14/2005.  The  planned  intervention  in  the  Dutch  malt  sector 
consisted  of  a subsidy amounting to some €7.4 million for an investment project of 
Holland  Malt  BV  (a  collaboration  between  Bavaria  NV  and  Agrifirm,  a  cereal 
farmers’ cooperative) for the establishment of a production plant in the north of the 
Netherlands. The aim of  this project was to integrate the entire chain in the storage 
and processing of malting barley and the production and trading of malt.  

The  Commission  decided  that  the  planned  assistance  was  not  compatible  with  the 
common  market  as,  on  the  basis  of  the  information  available  to  it,  there  was  over-
capacity on the malt market between 2003 (when the aid was granted) and 2006 (the 
date of the decision, at which time the factory was fully operational). 

The claim by Holland Malt regarding the segmentation of the malt market — high-
quality  ‘premium  malt’  for  the  production  of  ‘premium  beer’  —  was  not  accepted. 
The  Commission  saw  the  malt  market  as  a  single  market,  as  the  products  on  the 
market are interchangeable.  

EN 

45 

   EN 

 
138. 

On 12 December 2006 Holland Malt appealed against this Decision before the Court 
of First Instance of the European Community.  

Green Fund Midden Delfland  

139. 

The Green Fund Midden-Delfland is an environmental fund that aims to maintain an 
open  agricultural  landscape  with  a  high  environmental  and  cultural  value.  Different 
municipalities in this area contribute to the fund. From the yearly return of this fund, 
payments are made to farmers for a total of 20 services, from which the farmers can 
choose. These services concern nature, biodiversity, landscape and cultural heritage. 
For every service performed, a farmer receives a certain number of points. For every 
point,  an  allowance  of  €10  is  paid.  The  fund  has  a  yearly  budget  of  €400 000.  The 
contracts with individual farmers for their environmental and landscape services last 
5 to 10 years.  

United Kingdom 

Extension to the Farm Nutrient Management Scheme  

140. 

141. 

On 7 December 2006, the Commission authorised the United Kingdom to grant aid of 
€224  million  for  investment  in  manure  storage  facilities  in  order  to  help  ensure 
compliance  with  action  programme  measures  to  be  introduced  under  the  Nitrates 
Directive. 

Due  to  the  special  situation  in  Northern  Ireland,  the  long  negotiations  with  the 
Commission  on  the  Nitrate  Action  Programme  and  the  difficulties  in  implementing 
previous  schemes,  the  Commission  granted  a  further  extension  up  to  31  December 
2008. The UK authorities agreed that only a reasonable period could be accepted as a 
period  of  grace  for  investment  to  comply  with  Community  standards,  i.e.  up  to  36 
months from the date on which the standards become mandatory.  

Cattle Compensation Scheme 

142. 

143. 

On 7 December 2006, the Commission authorised the United Kingdom to grant aid of 
€147  million  as  compensation  for  the  animal  diseases  bovine  brucellosis,  bovine 
tuberculosis,  enzootic  bovine  leukosis  and  bovine  spongiform  encephalopathies 
(BSE) from 1 February 2006 to 31 January 2012.  

As the European Court of Justice has held that clear and precise obligations  arising 
from acts of the Community legislature are not ‘imputable to the [Member] State’17, 
support  for  BSE  under  Article  13(4)  of  Regulation  (EC)  No  999/2001  was  not 
considered to be state aid. 

Court of First Instance 

T 146/03 

144. 

The Court of First Instance partially annulled Commission Decision 2003/293/CE on 
measures adopted in 2002 by Spain in the agricultural sector following the increase in 
fuel prices. 

17 

CFI case T-351/02, Deutsche Bahn v Commission, judgment of 5 April 2006, [2006] ECR 2006 Page II-01047, paras 101 et seq.  

EN 

46 

   EN 

 
                                                 
145. 

146. 

147. 

This  decision  was  also  appealed  by  the  Kingdom  of  Spain  regarding  the  measures 
considered to be incompatible state aids. The Court of Justice rejected the appeal and 
confirmed the Commission Decision (Judgment of 11/11/2004) on this point. 

The  judgment  of  the  Court  of  Justice  only  annulled  that  part  of  the  decision 
concerning the measure authorising cooperatives to distribute a certain type of fuel to 
non-member  third  parties,  without  being  subject  to  the  limit  of  50%  of  the  total 
amount of transactions with members and without having to set up a legal entity. The 
Commission took the view that this measure did not constitute state aid. 

The  reason  for  annulling  this  part  of  the  decision  was  the  lack  of  justification.  The 
Court held that the Commission decision failed to state clearly and unequivocally the 
reasons  why  the  tax  arrangements  applicable  to  agricultural  cooperatives  did  not 
constitute  an  advantage  for  the  purposes  of  state  aid  and  did  not  give  sufficient 
reasons for the assessment that the measures concerned were not state aid. 

2.7. 

Assistance to the needy 

148. 

The European Union continued to implement its aid programme for the needy18. This 
action  consists  of  distributing  agricultural  products  (processed  or  otherwise)  from 
intervention  stocks  in  the  EU  to  associations  working  with  deprived  people  on  the 
ground in the Member States. 

149. 

The table below shows the breakdown of this amount and the quantities that can be 
withdrawn from stocks in each participating Member State. 

18 

Council Regulation (EEC) No 3730/87 of 10 December 1987 (OJ L 352, 15.12.1987, p. 1) and Commission Decision 2004/766/EC of 5 November 2002 (OJ 

L 339 of 16.11.2004, p. 13). 

EN 

47 

   EN 

 
                                                 
Free distribution of agricultural products 
(2006) 

Member States 

Quantities (tonnes) 

Appropriations allocated 
(EUR) 

Cereals 

Rice 

Butter 

Sugar 

Belgium 

Greece 

Spain 

France 

Ireland 

Italy 

Latvia 

Lithuania 

Hungary 

Malta 

Poland 

Portugal 

Slovenia 

Finland 

Total 

3 064 940 

7 127 822 

53 793 470 

48 059 949 

355 874 

12121 

73726 

75 851 

2 800 

15 000 

28 000 

55 000 

73 538 420 

115 253 

20 000 

2 096 236 

2 489 508 

6 764 115 

401 030 

43 408 602 

13 306 532 

1 334 827 

3 637 860 

19 706 

16 000 

63 587 

1 877 

85 608 

17 287 

1 262 

18 500 

5 000 

600 

20 000 

14 000 

600 

450 

13 560 

10 564 

120 

6 833 

7 230 

2 743 

Luxembourg 

34 959 

Grants for 
purchase on 
the market 
(EUR) 

Skimmed 
milk powder 

4 538 402 

2 000 

3 500 

33 849 510 

33 295 

101 734 

6 185 397 

863 810 

1 274 443 

4 847 

1 700 

300 

500 

259 414 143 

500 778 

161 000 

41 500 

12 847 

46 846 591 

2.8. 

The Outermost Regions 

Reform of the POSEI arrangements (agriculture) 

150. 

151. 

19 

20 

21 

Following  detailed  discussions  over  the  course  of  2005,  the  reform  of  the  POSEI19 
arrangements  was  finalised  with  the  adoption  and  publication  in  early  2006  of  a 
Council  Regulation  laying  down  specific  measures  for  agriculture  in  the  outermost 
regions of the Union20. A few weeks later the Commission adopted an implementing 
Regulation21.  

The reform changed the approach to providing assistance to the outermost regions by 
encouraging  participation  in  decision-making  and  by  allowing  more  flexibility  in 
adapting the support actions to their specific needs, while ensuring a sufficient level 
of monitoring and control.  

POSEI — Programme d’Options Spécifiques pour l’Éloignement et l’Insularité. 

Council Regulation (EC) No 247/2006 of 30 January 2006 (OJ L 42, 14.2.2006, p. 1). 

Commission  Regulation  (EC)  No  793/2006  of  12  April  2006  (OJ  L  145,  31.5.2006)  laying  down  certain  rules  for  applying  Council  Regulation  (EC) 

No 247/2006 laying down specific measures for agriculture in the outermost regions of the Union. 

EN 

48 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
152. 

153. 

154. 

The Regulation provided for the submission of programmes by the Member States to 
be  approved  by  the  Commission  and  implemented  in  the  course  of  2006.  The  three 
Member  States  concerned  submitted  draft  POSEI  programmes  in  April  2006.  The 
French  programme  was  approved  in  October  and  the  Spanish  programme  in 
November 2006, while the Portuguese programme was approved a few months later 
(April 2007). 

These  programmes  include  a  section  on  specific  supply  arrangements  for  those 
agricultural  products  that  are  essential  in  the  outermost  regions  for  human 
consumption,  agricultural  inputs  or  processing,  and  another  section  on  support  for 
local production. 

The Regulation establishes annual budgetary ceilings for each of the Member States, 
including the maximum amount to be allocated for the specific supply arrangements, 
as from the financial year 2007. The Community finances the programme under the 
EAGGF  Guarantee  Section  at  100%  up  to  the  annual  ceiling.  The  amounts  are 
calculated  on  the  basis  of  the  average  expenditure  to  finance  the  specific  supply 
arrangements during the reference period 2001–2003 and on the basis of expenditure 
ceilings on support for local production. 

The inclusion of banana aid in POSEI 

155. 

The reform of the banana sector was adopted by the Council at the end of 200622. The 
previous common market organisation for bananas was abolished and a new scheme 
was  created  with  most  of  the  banana  aid  transferred  to  the  POSEI  regime,  whose 
annual budget almost doubled from the initially allocated €338.8m to €617.6m for the 
financial year 2008. 

156. 

This reform was to enter into force as from 1.1.2007 and the POSEI Member States 
were requested to submit to the Commission in early 2007 the draft amendments to 
their overall programmes in order to introduce the new banana scheme. 

2.9. 

Information measures concerning the CAP 

157. 

Council  Regulation  (EC)  No  814/200023  provides  for  information  measures  relating 
to the common agricultural policy, intended for both Member States and the outside 
world.  Commission  Regulation  (EC)  No 2208/200224  (which  replaced  Commission 
Regulation (EC) No 1557/200125 and was modified by Commission Regulation (EC) 
No 1820/200426) lays down detailed rules for applying Regulation (EC) No 814/2000 
and introduces significant improvements to the scheme: simplification, transparency, 
better  evaluation  of  the  information  actions  proposed,  and  better  definition  of  the 
messages to communicate and the means of distribution.   

The  objectives  of  the  CAP  information  measures  as  defined  by  Regulation  (EC) 
No 814/2000 are to: 

22 

23 

24 

25 

26 

EN 

Council Regulation (EC) No 2013/2006 of 19 December 2006 (OJ L 384, 29.12.2006, p. 13) amending Regulation (EEC) No 404/93, (EC) No 1782/2003 and 

(EC) No 247/2006 as regards the banana sector. 

OJ L 100, 20.4.2000, p. 7. 

OJ L 337, 13.12.2002, p. 21. 

OJ L 205, 31.7.2001, p. 25. 

OJ L 320, 21.10.2004, p. 14. 

49 

   EN 

 
 
 
                                                 
– 

– 

– 

– 

help explain the CAP as well as implement and develop it, 

promote the European model of agriculture and help people understand it, 

provide information for farmers and others living in rural areas, 

raise public awareness of the issues and objectives of the CAP. 

158. 

An  evaluation  of  the  measures  under  this  Regulation  was  carried  out  as  part  of  the 
Commission’s  evaluation  policy  for  the  period  2000–2005  and  completed  in 
December 200627. The full text as well as the summary are to be found on the Europa 
website: 
http://ec.europa.eu/agriculture/eval/reports/cap_info/index_en.htm  

Grants 

159. 

160. 

161. 

A  large  number  of  applications  for  grants  were  again  forthcoming  under  the  2006 
exercise — for CAP information measures between 1 July 2006 and 30 June 2007. A 
total of 101 applications were received, 42 for annual programmes and 59 for specific 
measures. 

In the  budgetary year 2006,  grants were awarded to 36 beneficiaries for  20  specific 
measures and 16 annual programmes (containing 47 actions). Co-financed measures 
included  seminars,  conferences,  printed  publications  and  audiovisual  media 
productions. The main topics included: CAP and CAP reform; rural development; the 
WTO;  questions  relating  to  enlargement,  quality,  food  safety,  sustainability  and  the 
environment; and organic farming;  

Individual  organisations  that  were  successful  in  obtaining  co-financing  for  their 
information programmes in 2006 included NGOs at European, national and regional 
level,  representing  farming,  rural  development,  and  environmental  protection 
interests. In addition, beneficiaries included regional public authorities and the media. 

Conferences, events and fairs 

162. 

163. 

During  2006  the  Commission  organised  a  conference  on  the  simplification  of 
agricultural  legislation  and  held  several  smaller  events  on  current  topics  such  as 
organic  farming  and  rural  development  on  its  stands  at  various  agricultural  fairs 
during  the  year.  There  were  also  208  information  visits  where  presentations  were 
provided for visitor groups from within Europe or from the rest of the world. Topics 
ranged from general information on the CAP to requests for details on specific areas 
of its application. 

The  Commission  was  represented  at  various  agricultural  fairs,  including  Grüne 
Woche  in  Berlin,  Salon  de  l’Agriculture  in  Paris,  Roskilde  in  Denmark,  Farmari  in 
Finland, the World Ploughing Championships in Ireland, Hungexpo in Hungary and 
Libramont in Belgium. Support was also given to Fieragricola in Verona, Agrotika in 
Thessaloniki and Agrocomplex in Slovakia. 

27 

European Commission, DG AGRI Contract AGRI 2005/0421, Evaluation of the Information Policy on the Common Agricultural Policy, December 2006. 

EN 

50 

   EN 

 
 
                                                 
Publications 

164. 

The regular publications programme was maintained with the help of the Publications 
Office and an external contractor. A number of specific fact sheets, reports, leaflets, 
bookmarks,  postcards,  posters,  conference  proceedings  and  newsletters  on 
international and rural issues were published.  

Access to documents 

165. 

In 2006, the interest manifested by EU citizens in obtaining internal documents from 
DG  AGRI  continued  to  rise,  although  not  as  significantly  as  in  2005.  Compared  to 
2005,  the  number  of  requests  made  by  EU  citizens  under  Regulation  (EC) 
No 1049/2001  on  access  to  Council,  European  Parliament  and  Commission 
documents  in  the  area  of  agriculture  and  rural  development  rose  by  around  8%  in 
2006, to about 200. 

Missions 

166. 

Various  missions  were  carried  out  during  2006,  following  requests  from  regional 
and/or specialised organisations (cooperatives, farmers, various intermediary bodies) 
to  explain  the  new  CAP  regulations,  the  consequences  of  enlargement  or  the 
evolution  of  the  WTO  negotiations.  In  most  cases,  round  tables  were  held  with  the 
national  heads  of  these  organisations,  MEPs,  journalists  and  the  public.  These 
activities  were  sometimes  prepared  or  followed  by  visits  to  Brussels  for  further 
discussion and information. 

2.10. 

Information and communication technology (ICT) 

167. 

168. 

DG AGRI  makes  use  of  up-to-date  information  and  communication  technologies 
(ICT)  to  support  its  administrative  and  operational  needs  and  to  improve  and 
reinforce  the  exchange  and  processing  of  data  and  information  in  order  to  enhance 
CAP  management  and  facilitate  the  sharing  of  information  between  the  Member 
States and the European administration. 

Accordingly,  investments  were  made  in  2006  to  maintain  and  further  develop  DG 
AGRI’s information services and systems, to keep pace with the CAP reform and the 
new  Commission  accounting  system.  The  analysis  and  development  of  new 
information  systems  continued  (AGREX  3,  ISAMM,  RDIS,  see  below),  along  with 
further work on additional security layers (SESAD) for transmission of data between 
DG  AGRI  and  its  Member  State  partners.  Other  activities  worth  noting  were  the 
progress made on Disaster Recovery (see below) and ICT Governance. 

Information Systems 

169. 

The  year  2006  saw  the  continued  renewal  of  the  main  financial  management 
information  system  (AGREX  3  for  the  guarantee  funds  and  ISAMM  for  market 
mechanism  management).  As  regards  the  RDIS  project  for  the  development  of  an 
information  system  to  support  the  new  rural  development  programme,  the  core 
system was delivered in 2006, with further work required into 2007 and beyond. The 
major priority was to align these new systems to user requirements. There was further 
development  of  AMIS  QUOTA  for  the  management  of  agricultural  import  tariff 
quotas, ANGE BLEU for compiling consolidated agricultural legislation, DG AGRI’s 

EN 

51 

   EN 

 
data  warehouse  for  analysis  (AGRIVIEW),  and  various  other  information  system 
areas  (CATS  for  clearance  of  accounts  data,  APA  for  the  publication  of  periodical 
acts, DOOR for an origin and registration database, etc.). 

Infrastructure and DRP (Disaster Recovery Plan). 

170. 

In 2006 DG AGRI’s main information system servers were further aligned with DG 
DIGIT’s  Data  Centre  infrastructure.  On  the  basis  of  the  Service  Level  Agreement 
with  DIGIT  concerning  DG  AGRI’s  disaster  recovery  procedures,  a  successful  test 
was held of the DRP for DG AGRI’s financial information systems. 

ICT Governance in DG AGRI 

171. 

line  with 

the  Commission  Communications  on 

In 
ICT  Governance  and 
Interoperability, work has continued to bring DG AGRI’s ICT systems into line with 
DIGIT  standards  and  internal  control  requirements,  such  as  the  Commission’s  24 
Internal  Standards,  in  order  to  improve  the  governance  of  ICT-related  services, 
investments and procedures. 

2.11. 

Inter-institutional and NGO relations 

172. 

173. 

174. 

DG AGRI participated actively in committee discussions on agricultural issues in the 
Council, the European Parliament, the European Economic and Social Committee and 
the  Committee  of  the  Regions.  In  Parliament,  the  main  political  discussions  on 
agricultural matters are held in the Committee on Agriculture and Rural Development 
and in the plenary sessions. Important subjects debated in 2006 were the reforms of 
the  CMO  for  bananas  and  the  CMO  for  wine,  exceptional  market  support  for  the 
poultry sector following the avian flu outbreaks, PGI/PDO, organic farming, market 
support measures, risk management, the 2007 budget (in particular the discussions on 
voluntary modulation in rural development), and the ongoing WTO negotiations. As 
in  previous  years,  DG  AGRI  was  called  upon to  reply  to  a  large  number  of  written 
and oral questions. Furthermore, 98 letters from MEPs were answered. 

YEAR 

‘H’ 
Questions 
AGRI-
Leader 

‘H’ 
Questions 
AGRI-
Associated 

‘O’ 
Questions 
AGRI-
Leader 

‘O’ 
Questions 
AGRI-
Associated 

Written 
Questions 
AGRI-
Leader 

Written 
Questions 
AGRI-
Associated 

2006 

33 

57 

4 

6 

244 

800 

DG AGRI was represented at all meetings of the European Parliament’s Committee 
on  Agriculture  and  Rural  Development  and  at  some  meetings  of  other  Parliament 
Committees such as Budget, Budget Control, Environment, Public Health and Food 
Safety,  Petitions  and  International  Trade.  It  also  attended  the  plenary  sessions  of 
Parliament. 

Following  the  2005  Interinstitutional  Agreement,  DG  AGRI  continued  its  close 
collaboration with the European Economic and Social Committee and the Committee 
of  the  Regions,  actively  participating  in  their  agricultural  policy  deliberations,  in 
particular  in  their  study  groups,  hearings,  and  the  NAT  (EESC)  and  DEVE  (COR) 
Committees. 

EN 

52 

   EN 

 
Consultations  with  agricultural  non-governmental  organisations  and  the  socio-economic 
sector 

175. 

DG  AGRI  has  the  longest-established  and  most  comprehensive  stakeholder 
consultation  process  in  the  Commission.  A  major  means  of  consultation  is  the 
Advisory  Group  structure,  comprising  both  sectoral  and  horizontal  groups.  The 
structure and focus of the Advisory Groups has evolved over the years to take account 
of CAP reforms and the broader interest shown in agricultural policy beyond its food 
production role.  

176. 

In  2006,  DG  AGRI  organised  77  meetings  with  CAP  stakeholders,  involving  the 
participation of 2 600 experts representing a broad range of interests.  

3. 

AGRICULTURAL MARKETS 

3.1.  Market developments — crop products 

3.1.1.  Cereals 

World market 

177.  World  cereal  production  (excluding  rice)  in  the  2006/07  marketing  year  declined 
compared  with  the  previous  year.  The  EU-27’s  total  cereal  harvest  in  2006/07  was 
266 million tonnes, 17 million tonnes (or 6%) lower than the 2005/06 crop. The area 
under cereals decreased by 1.9 million ha and the cereal yield decreased by 0.17 t/ha, 
or  3%.  All  EU  cereals  apart  from  barley  (+2.5%)  saw  production  decline  from 
2005/06, ranging from a 1.5% decrease for durum wheat to 10% and 15% decreases 
for  barley  and  maize,  respectively.  Average  cereal  yields  compared  to  the  previous 
year  were  slightly  higher  for  the  EU-15  (5.58  t/ha  vs  5.50  t/ha)  but  lower  for  the 
EU-10 (3.23 t/ha vs 3.86 t/ha). 

178. 

According to International Grains Council (ICG) figures, the 2006/07 world harvest, 
at  the  end  of  November  2007,  was  1 567  million  tonnes  as  against  1 602  million 
tonnes for the previous marketing year. 

179.  World wheat production according to the IGC decreased from 620 million tonnes in 
2005/06  to  591 million  tonnes  in  2006/07.  The  European  Union  (EU-25)  harvested 
126  million  tonnes  of  common  and  durum  wheat  (135  million  tonnes  in  2005/06). 
Wheat production in the CIS countries decreased from 92 million tonnes in 2005/06 
to  85.5m  t  in  2006/07.  Production  in  Argentina,  a  traditional  exporter  of  wheat, 
increased from 12.6 million tonnes in 2005/06 to 14.6 million tonnes in 2006/07. The 
wheat  crop  in  the  United  States  decreased  from  57.3  million  tonnes  in  2005  to 
49.3m t in 2006. In Canada, production fell as well from 26.8 million tonnes in 2005 
to 25.3m t. Due to adverse climatic conditions, Australia harvested a significant lower 
wheat crop of only 9.8 million tonnes (25.4 in 2005). 

180.  World wheat consumption in 2006/07 was 609 million tonnes (624 million tonnes in 
2005/06), i.e. 18 million tonnes greater than production. Feed grain consumption was 
1014 million tonnes (991 million tonnes in 2005/06), due to significant maize demand 
for bioethanol in the US. 

EN 

53 

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181. 

The ICG’s harvest data for 2006/07 indicate a stable world coarse grain production, at 
around 980 million tonnes. The United States maize harvest decreased slightly from 
282  million  tonnes  to  268  million  tonnes.  Production  of  feed  grains  in  all  the  CIS 
countries  increased  from  58.8 million  tonnes  in  2005/06  to  62.4 million  tonnes  in 
2006/07. 

182.  World cereal stocks decreased significantly, the 2006/07 estimate being 263 million 
tonnes (as against 316 million tonnes in 2005/06 and 329 million tonnes in 2004/05), 
comprising only 119 million tonnes of wheat (137 last year) and 144 million tonnes 
of feed grains (182 last year). In the EU, stocks held by the intervention agencies on 
1 November 2007 totalled 0.5 million tonnes, mainly maize. 

183. 

The  total  volume  of  world  trade  in  cereals  in  2006/07  was  222  million  tonnes 
(111 million  tonnes  of  wheat  and  111  million  tonnes  of  coarse  grains)  as  against 
215 million tonnes the previous year. 

184.  World  cereal  production  in  2007  is  estimated  at  1659  million  tonnes  (+79  million 
tonnes  compared  to  2006).  Wheat  production  increased  only  slightly  to  603  million 
tonnes in 2007, due to smaller crops in the EU and Australia. Feed grain production 
increased  significantly  from  979  million  tonnes  in  2006/07  to  an  estimated  1056 
million tonnes in 2007/08, due to a record US crop. For the world cereal trade, IGC 
2007/08  estimates  are  104  million  tonnes  for  wheat  (111  the  previous  year)  and 
121 million tonnes for coarse grain (111). 

Community market 

185. 

186. 

187. 

The  EU-27’s  total  cereal  harvest  in  2006/07  is  estimated  (as  at  November  2007)  at 
266 million tonnes, 17 million tonnes or 6% lower than the 2005/06 crop. The cereal 
area  decreased  by  1.9 million  ha  to  56.8  m  ha  and  the  cereal  yield  decreased  by 
0.17 t/ha,  or  3%,  to  4.69  t/ha.  All  EU  cereals  apart  from  barley  (+2.5%)  saw 
production decline from 2005/06, ranging from a 1.5% decrease for durum wheat to 
10%  and  15%  decreases  for  barley  and  maize,  respectively.  Average  cereal  yields 
compared  to  the  previous  year  were  slightly  higher  for  the  EU-15  (5.58  t/ha  vs 
5.50 t/ha) but lower for the EU-10 (3.23 t/ha vs 3.86 t/ha). 

Utilisable cereal production in the EU-27 was 264 million t. In 2007/08 the forecast is 
for the EU-27 cereal area to shrink marginally by 0.4% to about 56.5 million ha.  

This forecast, combined with today’s yield estimates, would lead to a production of 
256  million  tonnes,  10  million  tonnes  (or  3.4%)  lower  compared  to  the  modest 
2006/07  crop.  Due  to  adverse  climatic  conditions  during  spring  and  harvest,  the 
average  yield  is  estimated  to  be  4.55  t/ha,  a  decrease  of  2.5%  compared  to  the 
previous year. 

3.1.2.  Oilseeds 

188. 

Oilseeds are used for producing oil, intended for human and industrial consumption, 
and oil cakes, intended for animal feed. The economic situation of the oilseed sector 
depends  on  seed,  oil  and  oil  cake  prices.  Vegetable  oil  can  be  consumed  without 
modification or in the form of oil or artificial fats, such as margarine.  

EN 

54 

   EN 

 
189. 

190. 

191. 

192. 

193. 

The total oilseed area in the EU-25 was quite stable in 2006 (+ 6% compared to 2005) 
with  rapeseed  up  15%  to  5.9  million  ha,  sunflower  seed  decreasing  slightly  to  2.00 
million ha and soybeans increasing by 1.4% to 257 000 ha. The total oilseed area is 
currently  estimated  at  7.7  million  ha,  including  833  000  ha  under  the  non-food  set-
aside  scheme  and  677  500  ha  under  the  energy  crop  scheme.  Under  good  weather 
conditions,  total  production  was  about  20.5  million  tonnes,  slightly  higher  than  in 
2005/06.  The  2006/07  crop  was  expected  to  comprise  15.6  million  tonnes  of 
rapeseed, 4.1 million tonnes of sunflower seed and 839 000 tonnes of soybeans. 

The  European  Union  is  a  net  importer  of  oilseeds,  vegetable  oil  and  oil  cakes.  The 
annual  imports  of  these  products  depend  largely  on  the  relationship  between  the 
prices  for  oilseeds,  oil  cakes  and  oil  and  the  prices  of  other  competing  products 
intended  for  animal  feed  (such  as  cereals,  foodstuffs  containing  maize  gluten  feed, 
etc.) and also on the market for exports of oil and oil cakes from the European Union. 
Total  imports  of  oilseeds  remained  stable  at  17.1  million  tonnes  in  2006,  mostly 
soybeans (84%).  

The  total  quantity  of  crushed  oilseeds  in  the  European  Union  (EU-25)  came  to 
35 million tonnes in 2005/6, compared with 31 million tonnes in 2004/5. This mainly 
comprised soybeans (39%), rapeseed (42%) and sunflower seed (15%). 

Total  EU-25  imports  of  oil  cakes  came  to  31.4  million  tonnes  in  2006,  as  against 
31.7m t in 2005. 

European  consumption  is  currently  characterised  mainly  by  the  growing  use  of 
oilseed oils in the non-food sector. Rapeseed oil constitutes the prime example: only 
39% of the total quantity of rape oil available on the European market is used in the 
food sector while 61% goes to the non-food sector, in particular for the production of 
bio-diesel. The boom in the demand for rape oil as renewable energy and the resulting 
high prices will probably contribute to a slight decline in rape oil consumption within 
the food sector.  

3.1.3.  Peas, field beans and sweet lupins 

194. 

195. 

These  products,  the  principal  outlet  for  which  is  the  animal  feed  industry,  compete 
with a broad range of other raw materials.  

The  area  benefiting  from  compensatory  aid  in  2005/06  came  to  about  1.4  million 
hectares. Total production amounted to approximately 4.7 million tonnes. 

3.1.4.  Linseed  

196. 

197. 

Flax is farmed in the European Union for fibre flax (especially for fibre but also for 
seeds) and linseed (only for seeds). Seeds are used directly or are crushed to obtain oil 
(for industrial use) and oil cake for animal feed.  

According  to  Oil  World,  the  European  Union  imports  large  quantities  of  linseed 
(500 000 tonnes in 2005/06 as against 480 000 tonnes in 2004/05), Canada being the 
largest supplier (85%). 

EN 

55 

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198. 

The  EU  linseed  area  has  been  quite  small  in  recent  years,  but  in  2006  increased  in 
comparison  to  the  previous  year  to  133 000  ha.  European  production  in  2006  is 
estimated at 192 000 tonnes. 

3.1.5.  Grain legumes (chick peas, lentils and vetches)  

199. 

200. 

201. 

202. 

A specific measure was introduced by Council Regulation (EC) No 762/89 for grain 
legumes in 1989. It provides for aid per hectare within a maximum guaranteed area 
(MGA), in addition to arable crop support. Regulation (EC) No 811/2000 subdivided 
this  MGA  between  chick  peas  and  lentils,  which  are  used  for  human  consumption, 
and vetches, which are used for animal feed.  

The aid per hectare is fixed at EUR 181. The MGAs were originally 160 000 hectares 
for chick peas and lentils and 240 000 hectares for vetches, but were raised with the 
accession  of  the  new  Member  States  to  162 529  ha  and  259 473  ha,  respectively. 
When one of these MGAs is not reached during a marketing year, the unused balance 
has  to  be  reallocated  to  the  other  MGA  for  that  marketing  year  before  an  overrun 
occurs.  

The  aid  for  grain  legumes  was  affected  by  the  2003  CAP  reform  as  well.  Those 
Member  States  deciding  to  apply  the  Single  Payment  Scheme  (SPS)  after  a 
transitional  period  in  accordance  with  Article  71  of  Council  Regulation  (EC) 
No 1782/2003 could continue to grant coupled aid for grain legumes up to a certain 
national  financial  ceiling.  If  this  ceiling  was  breached,  the  aid  per  farmer  had  to  be 
reduced proportionately for that year. This option could be used until the end of 2006.  

Support for grain legumes was taken up by Austria, France, Greece, Italy, Spain and 
UK  in  2004.  In  2005,  only  3  countries  decided  to  make  use  of  this  aid  —  France, 
Greece  and  Spain.  In  France,  there  was  an  overshoot  of  the  area,  so  a  reduction 
coefficient (0.64) was applied. In 2006, no Member State chose to apply the scheme 
and  to  give  coupled  aid  for  grain  legumes.  As  from  2007,  due  to  the  expiry  of  the 
transitional  period  under  Article  71  of  Council  Regulation  (EC)  No 1782/2003, 
Member States can no longer apply this scheme.  

3.1.6.  Non-food production 

203. 

204. 

205. 

The non-food set-aside regime has been in force since the 1992 CAP reform. The area 
payment for set-aside land has been EUR 63 per tonne multiplied by the cereal yield, 
from  2001/02  onwards.  The  2003  CAP  reform  integrated  the  set-aside  obligation 
within the single payment scheme and allowed set-aside land to be used for non-food 
production. The new Member States are exempted from obligatory set-aside in as far 
as they apply the single area payment scheme (SAPS). 

In  2006,  the  compulsory  set-aside  area  was  about  3.8m  ha.  Around  1m  hectares  of 
this area was used for non-food production (mainly oilseeds for biodiesel). 

Under the CAP reform, a new aid of EUR 45 per hectare is granted for areas sown 
with energy crops. The support was limited to a maximum guaranteed area (MGA) of 
1.5m ha for the period 2004-2006. This regime was applied in 2004 for the first time, 
supporting an area of 0.31m ha. According to data from the Member States, this area 
was about 0.55m ha in 2005 and 1.23m ha in 2006. 

EN 

56 

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3.1.7.  Rice 

206. 

207. 

208. 

209. 

During  the  2005/06  marketing  year,  some  2 635 000  tonnes  of  paddy  rice  were 
harvested,  which  is  above  average.  Milling  yields  were  59%  on  average,  and 
production  for  sale  was  some  1 564 000  tonnes  of  milled  rice.  The  areas  sown 
decreased compared to the previous year, down to around 412 000 ha (– 4%). 

EU  paddy  rice  prices  were  even  higher  than  in  the  previous  marketing  year,  well 
above the intervention price (EUR 150/t). Indica rice prices were commonly between 
16%  and  74%  above  the  intervention  price,  while  japonica  rice  prices  were  even 
higher, between 20% and 92% above the intervention price. 

Intervention stocks amounted  to  around 300 000  t of paddy rice at the beginning of 
the  marketing  year  but  were  reduced  to  about  60 000  t  at  the  end  of  August  2006, 
through  sales  on  the  internal  market  and  also  through  aid  for  the  most  needy.  No 
stocks were bought by the intervention agencies during the buying-in period (April to 
July). The intervention buying-in ceiling is fixed at 75 000 t per marketing year.  

Based  on  the  licences  issued,  imports  increased  compared  to  the  previous  year  by 
12%, to around 732 000 t in milled rice equivalent, including 656 000 t of indica rice. 
Broken  rice  imports  also  increased  markedly  (+ 52%)  to  around  189 000  tonnes. 
Conversely,  exports  decreased  by  13%,  to  about  121 000  t  in  milled  equivalent, 
including 95 000 t of japonica rice. 

3.1.8. 

Starch 

210. 

211. 

In 2005/06, the cereal starch market was relatively stable, for both maize-based and 
wheat-based  products.  Total  EU-27  production  was  estimated  at  around  7.8 million 
tonnes, produced from 13.9 million tonnes of cereals. 

EU-27 potato starch production, which is quota-restricted, was 2.6% above quota in 
2005/06,  due  to  excellent  weather  conditions,  making  use  of  the  5%  flexibility 
margin. In accordance with Council Regulation (EC) No 1868/94 establishing a quota 
system in relation to the production of potato starch28, a new Council Regulation was 
published  in  June  2007  to  extend  the  current  quotas  to  the  two  marketing  years 
2007/08 and 2008/09, so as to include the quota system for potato starch in the Health 
Check review29. 

212. 

In 2005/06, export refunds for products based on maize and potato starch (receiving 
the  same  amount  as  maize  starch)  and  production  refunds  (differentiated  between 
cereal and potato starch) both showed an upward trend. As in the previous marketing 
year, no export refunds were needed for wheat starch. 

3.1.9. 

Sugar 

World market 

213. 

2006  started  with  high  hopes  on  the  part  of  sugar  producers  but  ended  with  major 
disappointment and concerns for the future. Early 2006 was characterised by strong 

28 

29 

EN 

OJ L 197, 30.7.1994, p. 4.  

OJ L 156, 16.6.2007, p. 1. Regulation amending Regulation (EC) No 1868/1994 (OJ L 197, 30.7.1994, p. 4). 

57 

   EN 

 
                                                 
optimism  in  the  sugar  markets,  as  many  were  expecting  raw  sugar  prices  to  reach 
$cts 20/lb and white sugar prices to rise to $500/t, not seen for more than 20 years. 
Raw sugar prices finally peaked at close to $cts 19/lb in February and white sugar at 
$484/t. The positive sentiment was encouraged by the deficits of the preceding years, 
along  with  increasing  oil  prices  and  intense  investment  in  commodity  markets. 
However,  all  changed  when  the  initial  forecasts  of  a  large  crop  in  India  were 
announced and the probability of a global surplus increased, not only for 2005/06 but 
also for 2006/07. In consequence, prices were highly volatile throughout 2006, and by 
December  raw  sugar  prices  had  fallen  below  $cts 12/lb  and  white  sugar  prices  to 
$350/t.  In  addition  to  the  price  volatility,  the  white  sugar  premium  increased 
significantly, reflecting the — temporarily — tight white sugar supply caused by the 
sharp  reduction  in  EU  sugar  exports.  At  the  end  of  2006,  the  white  sugar  premium 
(i.e.  the  difference  between  white  sugar  and  raw  sugar  prices)  was  quite  firm  at 
around $100/t. 

214. 

Initially,  the  sugar  balance  at  global  level,  as  in  preceding  years,  was  expected  to 
continue to be slightly in deficit or at most in equilibrium in 2005/06 (Oct/Sept). By 
the summer of 2006, however, forecasts were revised and it became clear that sugar 
markets were heading towards surplus once again. Production reached 152.5m t (raw 
value),  representing  an  increase  of  more  than  10m  t  from  the  previous  year,  while 
consumption grew only moderately by about 1% to 146.2m t. As a result, especially 
in  view  of  another  major  surplus  expected  for  2006/07,  it  came  as  no  surprise  that 
sugar prices collapsed by the end of 2006 and continued to decrease further in 2007 
as well.  

October/September  Production*  Consumption*

Surplus or 
deficit* 

Stock / 
consumption ratio 
(%) 

2003/04 

2004/05 

2005/06 

2006/07 

(1) 

(2) 

(3)=(1)-(2) 

143 751.8 

141 504.3 

141 089.5 

144 063.4 

152 587.3 

146 196.2 

+ 2.25 

- 2.97 

+ 6.39 

167 274.2 

150 406.0 

+ 16.86 

(4) 

47.2 

42.1 

44.1 

50.8 

* 

in million tonnes, raw value; Source: F. O. Licht (24.7.2007). 

The surplus/deficit excludes unrecorded consumption, which is estimated at around 2-4m t/year. 

215. 

The main reason behind the 2005/06 surplus was increasing Indian sugar production. 
While the sugar output of 14.6m t and 13.7m t in 2003/04 and 2004/05, mainly due to 
adverse  weather  conditions,  lagged  well  behind  the  domestic  demand  of  18-20m  t, 
production  jumped  by  7m  t  in  2005/06  to  21m  t.  Production  increased  radically  in 
2006/07 as well, to over 30m t. In Brazil, sugar production was somewhat lower in 
2005/06 (27.8m t) than in the previous year (28.7m t). However exports continued to 
increase and reached 19.2m t (+ 1.4m t). As for 2006/07, output is expected to exceed 
30m  t  and  exports  20m  t.  Brazil  thus  continues  to  dominate  the  global  sugar  trade. 
Russian  beet  sugar  production  saw  impressive  growth  in  2005/06  with  output 
reaching 2.7m t (raw value). Beet sugar output increased in 2006/07 as well to 3.7m t. 
These  improvements  are  due  to  considerable  investment  in  technology  both  at  field 
and factory level. In consequence, raw sugar imports are decreasing, and fell by 1m t 

EN 

58 

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to  3m  t  in  2005/06.  Chinese  sugar  output  fell  below  10m  t  in  2005/06  to  9.8m  t. 
However, production was expected to grow to a record 13m t (raw value) in 2006/07. 
Production in Australia remained roughly unchanged at 5.4m t in 2005/06 and exports 
reached 4.5m t. For 2006/07 output was expected to remain below 5m t, and exports 
below  4m  t.  Sugar  production  fell  to  a  particularly  low  level  in  Thailand  with  only 
5m t.  Due  to  stable  consumption,  exports  fell  by  more  than  one  million  t  to  only 
2.3m t. The situation is likely to improve considerably in 2006/07, when production 
should reach 7m t, with exports exceeding 4m t. 

216. 

The price situation in 2005–2006 (average of quarters) is shown in the following table 
together with the longer-term outlook.  

Quarter 

2005. Q1 
2005. Q2 
2005. Q3 
2005. Q4 

Average 2005 

2006. Q1 
2006. Q2 
2006. Q3 
2006. Q4 

Average 2006 

2007. Q1 
2007. Q2 
2007. Q3* 
2007. Q4* 

Average 2007* 

Raw sugar ($cts/lb) 
(New York No 11) 

White sugar ($/t) 
(London No 5) 

8.91 
8.62 
9.97 
12.46 

9.99 

17.06 
16.43 
13.40 
11.64 

14.63 

10.65 
9.18 
9.70 
8.85 

9.60 

262.1 
251.5 
295.8 
308.2 

279.3 

427.0 
465.6 
417.9 
376.7 

421.9 

336.8 
322.5 
286.4 
265.2 

302.7 

* 

forecast; 

Source: LMC (Sugar& Sweeteners Quarterly: Sept. 2007) 

217. 

The USD continued to decline, not only against the EUR but also the Brazilian real, 
reducing the profitability of Brazilian sugar exports.  

Community market 

218. 

In  the  2005/06  marketing  year,  the  sugar  beet  area  remained  practically  unchanged 
compared to the previous year at 2.163m ha. Due to fairly good weather conditions, 
Community  sugar  production  exceeded  20m  t  to  reach  20.3m  t,  representing  a 
moderate increase. Of this quantity, 275 000 t was produced from sugar cane (France 
DOM  and  Spain)  and  40 000  t  from  molasses  (Austria  and  Germany).  Production 
exceeded  4m  t  in  both  Germany  and  France,  while  sugar  output  reached  2m t  in 
Poland, 1.3m t in the UK, 1.8m t in Italy and 1.1m t in Spain. The average yield was 
9.27 t  per  ha,  slightly  up  on  the  previous  year,  ranging  from  5.2  t/ha  in  Latvia  to 
12 t/ha in France. 

219. 

Taking into account both the sugar carried forward from 2004/05 to 2005/06 and that 
carried  forward  from  2005/06  to  2006/07,  total  production  reached  20.2m t, 

EN 

59 

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220. 

221. 

222. 

223. 

224. 

225. 

comprising  15.45m  t  under  quota  and  4.7m  t  of  ‘C’  sugar.  All  ‘C’  sugar  had  to  be 
exported without refund. 

Total exports of sugar as such reached record levels during 2005/06 due to the large 
quantity of ‘C’ sugar exports, as the EU started to comply with the findings of a WTO 
panel  on  the  Community  sugar  export  policy.  Altogether,  8.5m  t  of  sugar  was 
exported  during  2005/06  (July/June),  comprising  2.7m  t  with  refund  and  5.8m  t 
without refund. Furthermore, an estimated 0.9m t was exported in processed products. 
After careful analysis of the sugar balance for 2005/06, it was decided to reduce the 
guaranteed  quantity  under  the  production  quota  by  1.89m  t  in  order  to  ensure  a 
balanced market (see Regulation (EC) No 1609/2005). 

Consumption  in  2005/06  is  estimated  at  16.2m  t  in  the  EU-25,  excluding  the 
quantities used by the chemical industry. 

In the common market organisation for sugar, the production of isoglucose and inulin 
syrup  for  marketing  in  the  Community  is  also  limited  by  production  quotas.  The 
production of isoglucose was 478 000 t, including 455 000 t under quota and 23 000 t 
of ‘C’ isoglucose. Inulin syrup was produced in 3 Member States with a total output 
of  248 400  t.  (Under  the  sugar  reform,  as  from  the  2006/07  marketing  year,  all  the 
inulin syrup quota was withdrawn, so this product is no longer produced in the EU.) 

Offers  into  intervention  continued  in  2006.  Although  intervention  buying-in  had 
hardly ever been used previously for sugar, operators offered significant quantities for 
intervention  in  2005  due  to  a  major  surplus  on  the  Community  sugar  market.  In 
addition to the 1 324 286 t bought in during 2005 a further 572 143 t was offered in 
2006. In all, 1 896 429 tonnes of sugar was thus bought in by the Community. This 
indicated  a  price  level  below  the  €631.9/t  intervention  price.  However,  the  monthly 
quantities  offered  into  intervention  started  to  decrease  as  from  April  2006  and  only 
3 000 t was accepted into intervention during the second half of 2006.  

Following the sugar reform, the intervention option became more restricted and less 
attractive.  Consequently,  no  offers  were  made  from  October  2006.  When  tenders 
were  opened  for  the  resale  of  the  intervention  sugar  on  the  Community  market, 
842 770 t were sold.  

For  the  2006/07  marketing  year,  Community  sugar  production  is  estimated  at 
16.2 million  tonnes  (white  value),  representing  a  major  decline  compared  to  the 
previous  marketing  year.  The  area  sown  with  sugar  beet  dropped  significantly  to 
1.7m ha, indicating the success of the preventive measures introduced by Regulation 
(EC) No 493/2006. 

Legislative framework — major developments 

226. 

The sugar CMO was substantially reformed in 2006: following the political decision 
in November 2005 the new provisions entered into force on 1 July 2006. Since then, 
the  basic  regulation  for  the  sugar  regime  has  been  Council  Regulation  (EC) 
No 318/2006 of 20 February 2006 on the common organisation of the markets in the 
sugar  sector.  Under  the  sugar  reform,  the  institutional  prices  will  decrease 
considerably over a 3-year transitional period. The white sugar reference price, which 
replaces  the  previous  intervention  price,  will  be  reduced  to  €404.4/t  as  from  the 
2009/10 marketing year from €631.9/t in 2006/07. 

EN 

60 

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227. 

One  aim  of  the  sugar  reform  is  to  achieve  a  sustainable  balance  on  the  Community 
sugar  market.  Sugar  production  and  consequently  sugar  quotas  therefore  have  to  be 
reduced.  To  this  end,  a  temporary  restructuring  scheme  was  introduced  by  Council 
Regulation (EC) No 320/2006 of 20 February 2006 establishing a temporary scheme 
for  the  restructuring  of  the  sugar  industry  in  the  Community  and  amending 
Regulation (EC) No 1290/2005 on the financing of the common agricultural policy. 

To implement the sugar reform the following Commission Regulations were adapted:  

– 

– 

– 

– 

– 

– 

Regulation (EC) No 950/2006 — on preferential imports (non-LDC); 

Regulation (EC) No 951/2006 — external trade; 

Regulation (EC) No 952/2006 — management of the quota system; 

Regulation (EC) No 967/2006 — out-of-quota production; 

Regulation (EC) No 968/2006 — restructuring scheme; 

Regulation  (EC)  No  1100/2006  —  on  imports  from  the  least  developed 
countries (LDC) during 2006/07–2008/09. 

228. 

229. 

230. 

In order to facilitate the transition from the old sugar regime to the reformed CMO, 
Commission  Regulation  (EC)  No  493/2006  was  amended  to  include,  among  other 
things, a provision for preventive withdrawal. This aimed to reduce sugar production 
under quota by 2.5 million tonnes. 

Following the conclusions of a WTO panel on the EU’s sugar export policy, it was 
decided  that  applications  for  export  licences  for  ‘C’  sugar  should  no  longer  be 
accepted  even  before  the  entry  into  force  of  the  reform.  This  was  implemented  by 
Commission Regulation (EC) No 769/2006. 

As with the 2004 enlargement, specific provisions needed to be adapted in the sugar 
sector  to  integrate  Bulgaria  and  Romania,  but  also  to  avoid  possible  speculative 
stockpiling.  These  amendments  were  introduced  by  Commission  Regulation  (EC) 
No 1832/2006 of 13 December 2006 laying down transitional measures in the sugar 
sector by reason of the accession of Bulgaria and Romania. Among other things, the 
Regulation established raw sugar tariff quotas for the acceding countries and defined 
their isoglucose quota for the period from 1 January to 30 September 2007. 

231. 

Regarding  the  sugar  trade  with  Western  Balkan  countries,  discussions  were  finally 
concluded with Croatia. Commission Regulation (EC) No 2006/2006 fixed the sugar 
export quota for Croatia at 180 000 t as from the 2007/08 marketing year. 

3.1.10.  Potatoes 

232. 

233. 

In 2006, the area under potatoes in the EU-27 totalled 2.24 million hectares, i.e. 2% 
less than the year before. In the EU-15, this area was 1.15 million hectares, or 1.8% 
less than in 2005. The entry of Romania and Bulgaria added over 300 000 ha to the 
EU potato area (278 000 ha in Romania and 24 000 ha in Bulgaria).  

The feared increase in the potato area as a consequence of the sugar reform did not 
materialise.  Overall,  the  pressures  caused  by  the  conversion  of  sugar  land  in  some 
regions  were  offset  by  the  reduction  in  potato  land  observed  in  other  areas.  At  the 

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61 

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234. 

235. 

236. 

237. 

238. 

239. 

240. 

same  time,  exceptionally  high  cereal  prices  did  not  encourage  new  potato  planting 
while  the  high  price  of  seeds  also  emerged  as  an  important  factor  constraining  new 
planting.  

The production of potatoes in the EU-27 decreased from 32.3 million tonnes in 2005 
to  56.7  million  tonnes  in  2006  (-8.9%).  Bad  weather  resulted  in  lower  yields 
(25.3 t/ha, down by -7% compared with 2005 levels). Most Member States reported 
lower  stocks  of  ware  potatoes  while  quality  problems  were  observed  in  the  main 
producing  areas.  Weather  was  favourable  in  Romania  and  Bulgaria  and  the  potato 
harvest  increased  in  these  two  countries  (4  million  tonnes  in  Romania  and 
386 000 tonnes in Bulgaria in 2006). 

As a consequence of the drop in production, potato prices increased significantly in 
2006, although the weather did not greatly encourage potato consumption. Producer 
prices  for  ware  potatoes  were  as  much  as  2-3  times  higher  than  those  recorded  in 
2005.  

Interestingly, new investment in potato land in southern Europe focused particularly 
on  processing  varieties  in  2006.  This  was  due  to  the  production  fall  in  northern 
continental  Europe  (temporary  effect),  but  could  also  represent  the  beginning  of  a 
structural  shift  towards  processing  varieties  in  southern  Europe  too  (where  the 
consumption of table potatoes still represents 70-80% of total potato consumption).  

In continental Europe, the  specialisation process continued steadily. Despite the fall 
in production, French operators strengthened their position as the main EU suppliers 
of  potatoes  for  table  use.  Their  shipments  to  southern  Europe,  especially  to  the 
Iberian peninsula, increased in 2006. On the other hand, French manufacturers were 
tending  to  use  more  and  more  Belgian  potatoes  for  making  French  fries  and  potato 
chips (crisps). 

The low production of raw potatoes in 2006 did not affect the market shares of EU 
potato manufacturers. There are many factors constraining imports so as to ‘protect’ 
the EU market from products originating in Canada or the US. The main factors are 
transport  costs  (€0.25/kg  for  frozen  potatoes,  even  higher  for  chips)  and  consumer 
tastes. 

A focal point for future development is eastern and central Europe. More and more, 
operators  prefer  to  locate  processing  plants  there  rather  than  ship  from  western 
Europe.  As  result,  the  processing  industry  is  strongly  expanding,  although  storage 
capacity remains a limiting factor.  

Big countries such as China and India are still importing frozen potatoes from the EU 
and North America and are likely to continue to do so for the next 5-10 years because 
of  structural  constraints.  However,  consumption  is  increasing  there  and  production 
sites are destined to expand in these areas as well. 

3.1.11.  Dried fodder 

241. 

Dried fodders are protein-rich products (minimum 15%) obtained by artificial drying 
(dehydration) or natural (sun) drying of lucerne, other leguminous crops and certain 
grasses. 

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242. 

As  part  of  the  CAP  reform,  the  Council  adopted  a  new  aid  scheme  for  the  dried 
fodder sector, to apply as from the 2005/06 marketing year with part of the current aid 
being replaced by decoupled aid to farmers. 

Partial decoupling30 

243. 

The  total  amount  to  be  decoupled  under  the  single  payment  scheme  is  limited  to 
EUR 132 million. The amount for each Member State will be allocated according to 
the quantities of green fodder produced during the reference period (2000/01, 2001/02 
and 2002/03). 

Simplification of the aid scheme31: 

244. 

245. 

Single aid rate: the aid payable to processing undertakings is fixed as a single amount 
for the two sub-sectors (dehydrated fodder or sun-dried fodder) at EUR 33 per tonne 
of dried fodder. 

Single MGQ: a single maximum guaranteed quantity (MGQ) is fixed for the two sub-
sectors (dehydrated fodder and sun-dried fodder), equal to the sum of the old MGQs 
for  each  sub-sector.  The  new  MGQ  is  divided  into  national  guaranteed  quantities 
(NGQ) for each Member State. The aid is paid in full if Community production is less 
than or equal to the MGQ. If there is an overrun on the MGQ the aid will be reduced 
in  each  Member  State  that  has  exceeded  its  NGQ  so  as  to  avoid  any  overrun  on 
forecast budget expenditure. 

Dried fodder 

Dehydrated fodder  
and sun-dried fodder 

Aid 
(EUR/tonne) 

33 

MGQ 
(tonnes) 

4 960 723 

246. 

The following table shows the eligible quantities for 2005/06. 

EU-25 production of dried fodder 
(tonnes) 

2005/06 

EU-25 

MGQ32 

Production 

Stocks 

% MGQ 

Dried fodder 

4 960 723 

4 347 553 

189 829 

88% 

247. 

Evaluation and report: by the end of September 2008 the Commission is to present a 
report  on  this  sector,  based  on  an  evaluation  of  the  common  organisation  of  the 
market  in  dried  fodder,  looking  in  particular  at  the  development  of  the  areas  of 
leguminous and other green fodder, the production of dried fodder and the fossil fuel 
savings  achieved.  The  report  is  to  be  accompanied,  if  necessary,  by  appropriate 
proposals. 

30 

31 

32 

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 (OJ L 270, 21.10.2003, p. 1), Annex VII-D. 

Council Regulation (EC) No 1786/2003 of 29 September 2003 on the common organisation of the market in dried fodder (OJ L 270, 21.10.2003, p. 114). 

Maximum guaranteed quantity, Council Regulation (EC) No 1786/2003 of 29 September 2003. 

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3.1.12.  Fibre flax and fibre hemp 

Fibre flax 

248. 

In  2006,  the  EU  continued  to  play  a  central  role  in  world  flax  production.  Even 
though  the  EU-25  accounted  for  only  20%  of  the  world  flax  area,  its  high  yields 
(1.14 tonne/ha) meant that European production represented as much as 53% of world 
production. Due to modest yields, Chinese and Russian flax production is relatively 
small taking into account the areas cultivated. In 2006, 173 000 tonnes of both long 
and short fibres were produced in the European Union under contract (112 000 tonnes 
of  long  flax  fibres  and  31 000  tonnes  of  short  flax  fibres).  In  Europe,  flax-growing 
areas  were  concentrated  in  five  main  producing  countries:  France  (74%),  Belgium 
(15%),  the  Netherlands  (4.2%).  and  the  Czech  Republic  (2.6%).  According  to  the 
French General Association of Flax Producers (AGPL) the total world area sown with 
fibre flax in 2006 was 539 000 ha, of which 200 000 ha were cultivated in China. In 
the European Union, the area sown was 107 570 ha (including 102 740 ha sown under 
contract). The EU imports medium- and low-quality fibres from Egypt, but supplies 
the  whole  world  with  high-quality  and  very  high-quality  fibres,  since  these  are  not 
produced  anywhere  else.  According 
the  EU  exported 
77 300 tonnes of flax fibre in 2004. European exports to China have grown by about 
10% every year since 2001 — the lower costs of spinning in China playing a key role.  

to  Eurostat/Comext, 

249.  Market prices (in euros) for fibre flax fell by around 10% in 2006 as against 2005 and 
by as much as 40% over the previous 4 years. This was due partly to the rise in the 
euro  against  the  US  dollar  and  also  to  the  increase  in  production  after  the  poor 
production  levels  in  the  year  2001/02  due  to  bad  weather  conditions.  On  the  other 
hand,  sales  of  long-fibre  flax  in  France  and  in  Belgium  increased  compared  to  the 
previous year. At the beginning of 2007, however, prices went up again (in particular 
for long flax). 

Fibre hemp 

250. 

The EU has a relatively small share of world hemp production with 14 250 ha (among 
which 13 910 ha under contract). The world area planted with fibre hemp was around 
168 000 hectares  in  2006.  The  EU  accounted  for  only  6%  of  the  world  hemp  area, 
with  China  cultivating  about  150  000  ha.  Fibre  production  under  contract  in  the 
European  Union  decreased  in  2006  to  21 650  tonnes  compared  to  2005  levels 
(26 700 tonnes).  Traditionally,  it  has  been  concentrated  in  France  and,  to  a  lesser 
extent,  in  the  United  Kingdom,  Germany,  the  Czech  Republic,  Poland,  Italy  and 
Hungary. Trade with third countries is very limited. 

Legislative framework: main developments 

251. 

In  2006/07,  processing  aid  was  EUR 160  per  tonne  for  long  flax  fibre  and 
EUR 90 per  tonne  for  short  flax  fibre  and  for  hemp  fibre.  For  long  flax  fibre,  there 
was an EU maximum guaranteed quantity of 80 878 tonnes, shared out between the 
Member  States  in  the  form  of  national  guaranteed  quantities.  The  corresponding 
figure  for  short  flax  fibre  and  hemp  fibre  was  146 265  tonnes,  also  shared  out 
between  the  Member  States  in  the  form  of  national  guaranteed  quantities.  Each 
Member State may transfer part of its national short flax fibre and hemp fibre quantity 
to  its  national  long  flax  fibre  quantity  and  vice  versa,  using  a  coefficient  of 
equivalence. 

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3.1.13.  Cotton 

252. 

253. 

254. 

255. 

256. 

The  world  area  under  cotton  in  2005/06  was  estimated  at  around  34.62  million 
hectares,  with  production  estimated  at  some  25.20  million  tonnes,  as  against 
36.00 million hectares and 26.00 million tonnes, respectively, in 2004/05. 

Unginned cotton is not traded internationally, but the European Union, whose cotton-
spinning capacity by far exceeds its fibre production, imports substantial quantities of 
ginned cotton — around  400 000 tonnes in 2005.  The  countries of central Asia, the 
ACP countries, Egypt, Turkey and the United States are the main suppliers.  

In the European Union, the scale of cotton cultivation is limited, both in terms of the 
area planted and the number of producers. However, it is concentrated in certain areas 
of Greece and Spain, where it plays a major socio-economic role, and is also grown 
on a very small scale in Portugal. The EU area planted with cotton decreased in 2005: 
450 000 hectares (as against 460 000 hectares in 2004) producing 1 478 232 tonnes of 
unginned cotton (1 122 445 tonnes in Greece and 355 348 tonnes in Spain) as against 
1 504 600 tonnes in 2004. The European Union is about 81% self-sufficient in cotton 
fibres, its consumption in 2005 having been around 620 000 tonnes. 

The Community aid scheme provides for a guide price (EUR 106.30/100 kg). An aid 
equivalent to the difference between the guide price and the world price is granted to 
ginners who pay a minimum price to the grower. If the production of unginned cotton 
exceeds  a  maximum  guaranteed  quantity  (MGQ),  the  guide  price  and  the  minimum 
price are reduced. The reduction is lower if the world price level allows expenditure 
on the aid scheme to be cut. 

The  guide  price  is  reduced  by  50%  for  production  over  and  above  the  national 
guaranteed  quantity  (249 000  tonnes  for  Spain  and  782 000  tonnes  for  Greece), 
provided that it remains lower than 362 000 tonnes in Spain and 1 138 000 tonnes in 
Greece.  Beyond  that  level,  the  reduction  is  increased  by  2%  for  each  step  of 
4 830 tonnes  in  Spain  and  15 170  tonnes  in  Greece.  In  the  2005/06 marketing  year, 
the  guide  price  was  reduced  by  21.9%  in  Greece,  21.40%  in  Spain  and  0%  in 
Portugal.  

3.1.14.  Silkworms 

257. 

258. 

Silkworm  rearing  is  practised  in  Greece,  Italy  and,  to  a  lesser  extent,  France,  Spain 
and Bulgaria. It accounts for only a tiny part of the EU’s agricultural activity and of 
world  silk  production.  In  certain  regions  such  as  Thrace,  Veneto  and  Marche, 
however, it represents an important activity. 

Due  to  an  increase  in  Italy  and  Greece,  Community  production  went  up  again  in 
2006:  5 667 boxes  were  produced,  compared  to  3 520  boxes  in  2005  and  3 043  in 
2004.  They  yielded  96 367  kilograms  of  cocoons 
to 
79 186 kilograms  in  2005.  As  from  the  2000/01  marketing  year,  aid  is  permanently 
fixed at EUR 133.26 per box. 

in  2006  compared 

3.1.15.  Olive oil 

259. 

According  to  the  International  Olive  Council  (I.O.C.),  world  production  of  virgin 
olive  oil  reached  some  2 600 000  tonnes  during  the  2005/06  marketing  year 

EN 

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260. 

261. 

262. 

263. 

264. 

265. 

266. 

(1/10/2005–30/9/2006).  About  75%  of  this  quantity  was  produced  in  the  European 
Union,  other  major  producer  countries  being  Tunisia  (220 000  tonnes),  Turkey 
(115 000  tonnes),  Syria  (100 000  tonnes)  and  Morocco  (75 000  tonnes).  A  specific 
feature  of  olive  oil  production  is  its  very  marked  volatility,  both  in  space  and  time. 
Yields  on  the  same  holding  can  vary  sharply  from  one  year  to  another,  depending 
especially  on  weather  conditions  and  biological  variations  in  the  olive  trees.  The 
world  market  therefore  fluctuates  as  a  direct  result  of  the  Community  market 
situation. 

Based  on  production  declarations  by  the  Member  States  under  the  new  CMO 
(Regulation  (EC)  No 865/2004),  Community  production  for  2005/06  (1/11/2005–
30/6/2006) was 1 919 000 tonnes compared to 2 329 000 tonnes in 2004/05 (– 18%). 
Spain,  Italy  and  Greece  were  the  three  major  producers  in  the  Community,  with 
825 000 t (43% of the total), 636 000 t (33%) and 424 000 t (22%), respectively. 

Spain,  Italy  and  Greece  were  the  two  major  Community  olive  oil  suppliers  on  the 
internal  market:  their  intra-EU  exports  were  330 000  t,  136 000  t  and  122 000  t 
respectively  (53%,  22%  and  20%,  respectively,  of  total  intra-EU  trade).  Italy  and 
France remained the Community’s main consumers (42% and 16% of total intra-EU 
trade). 

During 2005/06, extra-EU imports totalled 164 000 tonnes while extra-EU exports for 
the same period reached 352 000 tonnes (119 000 tonnes under the inward processing 
scheme). Italy is the main exporter (52% of total extra-EU exports), while the main 
destination is the United States (44% of total extra-EU exports). As from 2005/06, the 
export refund system has been abolished.  

For  the  2005/06  marketing  year,  Community  olive  oil  consumption  is  estimated  at 
1 885 000 tonnes (or 71% of total world consumption).  

During the 2005/06 marketing year, prices remained significantly above the average 
price  levels  for  previous  marketing  years.  Depending  on  the  categories  of  olive  oil 
and  the  Member  States,  average  2005/06  prices  were  50  to  70%  above  the  average 
prices for the five previous marketing years.  

Forecasts  for  2006/07  point  to  a  clear  increase  in  production  of  more  than  10%, 
mainly in Spain. As a consequence, 2006/07 may see consumption increase by 12%. 

Council  Regulation  (EC)  No  865/2004  of  29  April  2004  on  the  new  common 
organisation  of  the  market  in  olive  oil  and  table  olives  applied  from  the  2005/06 
marketing  year.  Following  adoption  of  the  implementing  Commission  Regulation 
(EC)  No  2080/2005,  laying  down  detailed  rules  for  operators’  organisations  in  the 
olive sector, their work programmes and the financing thereof, two programmes were 
approved  in  2006  and  started  to  be  implemented  in  Italy  and  Greece,  providing  for 
EU support of €36 million and €11 million per year, respectively, until 2009. Another 
programme  for  France  was  to  be  approved  in  2007.  The  measures  to  be  financed 
cover  five  areas:  market  follow-up  and  administrative  management  in  the  olive  oil 
and table olives sector; improvement of the production quality of olive oil and table 
olives;  improvement  of  the  environmental  impacts  of  olive  cultivation;  traceability, 
certification and quality protection; and finally the dissemination of information.  

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3.1.16.  Fresh fruit and vegetables 

World markets and international trade33 

267.  World  production  of  fresh  fruit  and  vegetables34  has  steadily  increased  in  recent 
years. It grew by 34% in volume over the period 1997-2006. 67% of this growth was 
in China, where production increased by a remarkable 83% from 296 million tonnes 
in 1997 to 542 million tonnes in 2006. Growth among the other large producers was 
more  modest:  27%  in  India  and  3%  in  the  EU.  In  the  USA,  production  fell  by  7% 
over the same period. World production of fruit and vegetables reached 1 430 million 
tonnes  in  2006,  an  increase  of  1.3%  compared  with  2005.  The  share  of  vegetables 
was  63.2%  (50.2%  in  the  EU).  With  122.3  million  tonnes,  the  EU  was  the  world’s 
third  largest  producer  of  fruit  and  vegetables  after  China  (542  million  tonnes)  and 
India (125.4 million tonnes), followed by the USA with 64.4 million tonnes.  

268. 

Total  EU  imports  of  fresh  fruit  and  vegetables  amounted  to  16.0  million  tonnes  in 
2006,  with a value of  €14.5  billion.  Total EU exports of fresh fruits and vegetables 
totalled 5.8 million tonnes, with a value of €3.7 billion. The EU runs a trade deficit in 
fresh fruit and vegetables: in 2006, exports were only 36.6% of imports in terms of 
volume. The main suppliers of fresh fruit and vegetables are Costa Rica, Ecuador and 
South  Africa.  The  main  destinations  for  EU  exports  are  Russia,  Switzerland  and 
Egypt. 

Community market 

269. 

270. 

271. 

272. 

273. 

In  the  period  2003-2006,  the  fruit  and  vegetables  sector  in  the  Community 
represented  12.3%  of  total  agricultural  production.  In  the  period  2003-2005,  the 
annual  production  of  vegetables  (potatoes  excluded)  stood  at  36.1  million  tonnes, 
including  17.1  million  tonnes  of  tomatoes.  Fruit  production  stood  at  26.4  million 
tonnes, including 10.6 million tonnes of citrus fruits.  

Community  production  of  apples  was  9.0  million  tonnes  in  the  2005/06  marketing 
year (a drop of 11.9% compared with the previous year). Withdrawn quantities have 
been  significantly  reduced  in  recent  years.  They  decreased  from  3%  in  2000/01  to 
0.39% in 2005/06. 

Community production of pears stood at 2.3 million tonnes in 2005/06, a decrease of 
17%  compared  with  the  previous  marketing  year.  In  2005/06,  the  quantities 
withdrawn from the market accounted for 0.81% of production.  

In  2005/06,  the  production  of  peaches  was  3.1  million  tonnes,  a  small  decrease  of 
0.4%  compared  with  2004/05.  Withdrawals  represented  2.37%  of  Community 
production in 2005/06, as against 2.2% in the previous year. 

The  production  of  nectarines  in  2005/06  stood  at  0.7  million  tonnes,  a  decrease  of 
46.1%  in  comparison  with  2004/05.  Withdrawals  accounted  for  3.86%  of  total 
production in 2005/06 (4.0% in 2004/05). 

33 

34 

Source: FAO: http://www.fao.org. 

FAO aggregates exclude potatoes but include all kinds of grapes. 

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274. 

275. 

276. 

277. 

278. 

In  2005/06,  the  production  of  table  grapes  in  the  Community  stood  at  2.1  million 
tonnes, a decrease of  10.3%  in  comparison  with 2004/05.  Products withdrawn from 
the market (0.001% in 2005/06) represented a negligible share of production. 

The  production  of  apricots  was  538 000  tonnes  in  2005/06,  a  decrease  of  24.9%  in 
comparison  with  the  previous  marketing  year.  Products  withdrawn  from  the  market 
represented 0.47% of Community production in 2005/06 (0.1% in 2004/05). 

The Community produced 6.8 million tonnes of oranges in 2005/06, 16% more than 
in 2004/05. With 1.5 million tonnes in 2005/06, the production of lemons increased 
by 7% in comparison with 2004/05. 

Cauliflower  production  was  2.3  million  tonnes,  a  decrease  of  3.5%  in  comparison 
with the previous marketing year. The quantities of cauliflower withdrawn from the 
market  in  the  2005/06  year  accounted  for  0.31%  of  Community  production  (1%  in 
2004/05). 

Tomato  production  was  14.6  million  tonnes  in  2005/06,  a  decrease  of  12.2%  in 
comparison  with  2004/05.  Production  in  Italy,  the  main  producer,  was  6.4  million 
tonnes (43.6% of all Community production), a decrease of 11.5% from the previous 
marketing  year.  Withdrawals  represented  0.46%  of  the  total  production  of  tomatoes 
for the fresh market (4.6% in 2004/05). 

Main legal and policy changes 

279. 

280. 

281. 

In 2006, apple producers in the Community found themselves in a difficult situation, 
due,  among  other  things,  to  a  significant  increase  in  imports  of  apples  from  certain 
countries  in  the  southern  hemisphere.  To  improve  the  monitoring  of  apple  imports, 
the  Community  adopted  Commission  Regulation  (EC)  No 179/2006  introducing  a 
system of import licences for apples imported from third countries. 

The  Community  also  adopted  Commission  Regulations  (EC)  Nos  430/2006, 
431/2006 and1790/2006 approving operations in Senegal, Kenya and Turkey to check 
conformity with the marketing standards applicable to fresh fruit and vegetables prior 
to  import  into  the  Community.  As  a  result,  imports  of  fresh  fruit  and  vegetables 
checked at the time of export by the authorities of one of these countries will in future 
be checked only on the basis of a reduced number of lots when they are imported into 
the Community. 

In  2006,  the  Community  also  adopted  Commission  Regulation  (EC)  No 2000/2006 
amending Regulation (EC) No 1870/2005 by reason of the accession of Bulgaria and 
Romania  to  the  European  Union.  This  Regulation  contains  special  provisions  to 
ensure that importers in Bulgaria and Romania have access to the import tariff quotas 
for garlic.  

3.1.17.  Bananas 

Community production 

282. 

In 2006, banana production in the Community was 641 754 tonnes, a decrease of 1% 
in comparison with 2005. 

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283. 

The compensatory aid for 200635 was fixed at EUR 18.56 per 100 kg, plus a further 
EUR 15.42 per 100 kg for bananas produced in Guadeloupe, EUR 13.95 per 100 kg 
for Martinique and EUR 3.58 per 100 kg for Greece. The cost of compensatory aid 
for 2006 totalled EUR 156.2 million, compared with EUR 70.2 million in 2005.  

Imports 

284. 

the  overall  volume  of  bananas 

In  2006, 
the  EU-25  was 
4 185 018 tonnes,  compared  to  3 727 014  in  2005,  which  represents  an  increase  of 
12.3% with respect to 2005. Exports by MFN countries to the EU rose by 10.7% in 
comparison with 2005 (from 2 963 339 to 3 279 276 tonnes), while imports from ACP 
countries were 18.6% higher than in 2005 (rising from 763 675 to 905 742 tonnes). 

imported 

into 

Main legislative and policy developments 

285. 

286. 

On 29 November 200536, the Council adopted a regulation introducing a new import 
regime for bananas from 1 January 2006. The new regime consists of an autonomous 
MFN tariff37 of EUR 176 per tonne and a duty-free TRQ38 for bananas of ACP origin 
up to 775 000 tonnes.  

After  having  published  a  report  to  the  European  Parliament  and  the  Council  on  the 
operation of the common organisation of the market in bananas (CMO)39, and having 
launched a wide-ranging debate on the reform of the internal aspects of the CMO (in 
particular the aid to European producers, supported by an independent evaluation on 
the  operation  of  the  banana  CMO40  published  in  autumn  2005),  the  Commission 
prepared an impact assessment of this reform and adopted a proposal. This proposal 
led to a Council Regulation41 replacing the current aid scheme for banana producers 
in the outermost regions with a budget transfer of EUR 278.8 million to the POSEI 
scheme. For banana-growing areas outside the outermost regions, aid totalling EUR 
1.2 million is now included in the single payment scheme. 

3.1.18.  Processed fruit and vegetables 

World markets and international trade 

287. 

The information available on processed fruit and vegetables remains incomplete. For 
the Community, a large part of this information concerns only products that receive 
processing aid.  

288.  World  production  of  tomatoes  for  processing  stood  at  30.5  million  tonnes  in  2006, 
5.3%  lower  than  in  2005  (32.2  million  tonnes).  The  main  producers  were  the  USA 
(9.6  million  tonnes  as  against  9.2  million  in  2005),  the  EU  (8  million  tonnes  as 

35 

36 

37 

38 

39 

40 

41 

Commission Regulation (EC) No 485/2007 of 30 April 2007 (OJ L 114, 1.5.2007, p. 3).  

Council Regulation (EC) No 1964/2005 of 29 November 2005 (OJ L 316, 2.12.2005, p. 1). 

Commission Regulation (EC) No 2014/2005 of 9 December 2005 (OJ L 324, 10.12.2005, p. 3). 

Commission Regulation (EC) No 2015/2005 of 9 December 2005 (OJ L 324, 10.12.2005, p. 5) and Commission Regulation (EC) No 219/2006 of 8 February 

2006 (OJ L 38, 9.2.2006, p. 22). 

COM(2005) 50 final, February 2005. 

Evaluation 

of 

the 

common 

organisation 

of 

the 

market 

in 

bananas, 

carried 

out 

by 

COGEA, 

http://europa.eu.int/comm/agriculture/eval/reports/bananas/index_fr.htm. 

Council Regulation (EC) No 2013/2006 of 19.12.2006 (OJ L384, 29.12.2006, p. 13). 

EN 

69 

   EN 

 
                                                 
against 10.1 in 2005), China (4.3 million tonnes as against 3.2 in 2005) and Turkey 
(1.4 million tonnes as against 1.6 million tonnes in 2005). 

Community market 

289. 

290. 

291. 

292. 

In  2006,  Community  production  of  tomatoes  for  processing  decreased  by  24%  in 
comparison with 2005. The largest fall was in Spain, where production decreased by 
1.2 million tonnes from 2.6 to 1.4 million tonnes.  

In 2006, the production of peaches for processing into preserved peaches decreased in 
comparison to 2005 by 13.3% to 502 000 tonnes. 

Community  production  of  preserved  Rocha  and  Williams  pears  stood  at  112 000 
tonnes  in  2006/07,  a  slight  increase  of  1.4%  from  2005/06.  Italy  was  the  main 
producer with 56 500 tonnes (around 50% of total Community production), followed 
by Spain (25%) and France (13%). 

For  2006/07,  Community  thresholds  for  processing  were  exceeded  for  tomatoes 
(19.7%),  pears  (6.2%),  oranges  (24.8%)  and  small  citrus  (26.9%).  Community  aid 
was consequently cut for 2007/08 in the Member States where the national thresholds 
were exceeded: 

Decrease in Community processing aid for 2005/06, compared with the levels fixed by 
Council Regulations (EC) No 2201/96 and (EC) No 2202/96 

MS 

Small citrus 

Oranges 

Greece 

Spain 

Italy 

Portugal 

Cyprus 

Netherlands 

12% 

62.3% 

80.66% 

53.27% 

8% 

55.91% 

52.88% 

Pears 

68.47% 

4.76% 

94.15% 

(1) 

The reduction does not apply to processing into whole peeled tomatoes. 

Tomatoes (1) 

9.29% 

For  dried  grapes,  the  base  amount  of  aid  is  €3 569  per  hectare.  This  aid  is  only 
granted to specialised areas that meet certain yield criteria. 

Main legal and policy changes 

293. 

In  2005,  in  order  to  amend  some  anomalies  in  counting  processed  raw  material 
against the processing thresholds of Member States, notably in the case of tomatoes, 
the  Commission  adopted  Regulation  (EC)  No  1663/2005  of  11  October  2005 
amending  Regulation  (EC)  No  1535/2003  laying  down  detailed  rules  for  applying 
Council  Regulation  (EC)  No  2201/96  as  regards  the  aid  scheme  for  products 
processed from fruit and vegetables. In addition, to expand the range of possible uses 
of  the  products  to  be  sold  from  storage,  the  Commission  adopted  Regulation  (EC) 
No 1051/2005  of  5  July  2005  to  amend  Regulation  (EC)  No  1622/1999  by  adding 
direct animal feed and use in composting and biodegrading processes. 

294. 

In  2007,  the  Council  adopted  the  reform  of  the  fruit  and  vegetables  CMO.  For 
processed  products,  the  production  aid  schemes  are  replaced  by  the  single  payment 

EN 

70 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
scheme with the possibility of leaving part of the aid coupled to the processing of raw 
material for a transitional period. 

3.1.19.  Wine 

295. 

296. 

297. 

298. 

299. 

300. 

The  Commission  launched  a  public  debate  on  future  policy  by  holding  a  wine 
seminar  with  stakeholders  on  16 February 2006.  The  Advisory  Group  on  Wine  has 
also discussed potential  reform scenarios. In addition, many bilateral meetings have 
been organised with a wide range of stakeholders. Two working papers on the Wine 
CMO and on the wine economy in the EU42 explain the current situation, including 
the difficulties and problems of the wine sector. 

On  22 June 2006,  the  Commission  adopted  a  Communication  to  the  Council,  the 
European  Parliament,  the  European  Economic  and  Social  Committee  and  the 
Committee of the Regions entitled ‘Towards a sustainable European wine sector’43. 

This  Communication  presents  the  Commission’s  current  assessment  of  the  existing 
wine CMO in the light of the realities of the European and international markets, aims 
to identify the problems and offers a number of possible ways forward. Its purpose is 
to formally initiate discussion with all stakeholders and European institutions with a 
view to making legislative proposals to address, among other issues, excessive wine 
stocks,  overproduction,  and  the  need  for  a  simpler,  more  transparent  and  more 
market-oriented  policy,  and  furthermore  to  contribute  to  a  culture  of  responsible 
drinking and to reducing alcohol-related harm throughout the EU. 

This Communication is in line with the principles agreed for the common agricultural 
policy (CAP) reform of 2003, the Göteborg European Council44 conclusions calling 
for  more  sustainable  development,  and  the  Lisbon  Strategy45  to  strengthen 
competitiveness and ensure simplification and better regulation. 

It  is  accompanied  by  an  impact  assessment  to  ensure  compatibility  with  relevant 
Community policies46. 

At  169.5m  hl,  Community  wine  production  in  2006  (excluding  grape  must  not 
processed into wine) was slightly above the average production level for the previous 
five years:  

Year 

Wine production 

Average 5 years 

Average 10 years 

2002-2003 

2003-2004 

2004-2005 

2005-2006 

2006-2007 

150.9m hl 

154.2m hl 

186.0m hl 

165.7m hl 

169.5m hl 

164.5m hl 

163.9m hl 

165.2m hl 

163.3m hl 

165.3m hl 

162.0m hl 

161.4m hl 

164.8m hl 

166.1m hl 

166.2m hl 

42 

43 

44 

45 

46 

EN 

Available on the internet at: ec.europa.eu/agriculture/capreform/wine/index2_en.htm. 

COM(2006) 319 final, 22.6.2006. 

Presidency Conclusions, 15-16 June 2001. 

COM(2005) 24 final. 

SEC(2006) 770, 22.6.2006. 

71 

   EN 

 
                                                 
301. 

As regards the Community harvest (including grape must not processed into wine) for 
the  2006/07 marketing  year,  Member  States  have  communicated  the  following 
estimates. 

Total production 
’000 hl 
Member State 

Czech Republic 
Germany 
Greece 
Spain 
France 
Italy 
Cyprus 
Luxemburg 
Hungary 
Malta 
Austria 
Portugal 
Slovenia 
Slovakia 
Other EU-25 
Total EU-15 
Total EU-25 

2002/03 

2003/04 

2004/05 

2005/06 

2006/07 
provis. 

Diff. 
2006//05 

495 
9 984 
3 098 
39 419 
51 966 
46 200 
240 
154 
3 500 
62 
2 599 
6 677 
900 
340 
13 

540 
8 291 
3 804 
48 620 
47 519 
44 087 
400 
123 
3 800 
100 
2 556 
7 283 
671 
540 
18 

605 
10 107 
4 295 
50 062 
58 845 
53 135 
282 
156 
5 272 
70 
2 734 
7 481 
944 
410 
23 

439 
9 256 
3 997 
40 466 
52 553 
53 062 
197 
135 
3 567 
70 
2 264 
7 254 
886 
302 
25 

432 
8 995 
3 938 
43 081 
53 300 
54 535 
220 
124 
3 271 
65 
2 269 
7 532 
829 
320 
26 

160 111 

165 648 

162 300 

168 351 

186 838 

169 012 

194 420 

174 473 

173 800 

178 936 

–2% 
–3% 
–1% 
+6% 
+1% 
+3% 
+12% 
–8% 
–8% 
–7% 
0% 
+4% 
–6% 
+6% 
+4% 

+3% 

+3% 

302. 

303. 

304. 

305. 

Contracts concluded in 2006/07 for the distillation of potable alcohol under Article 29 
of Regulation (EC) No 1493/1999 came to 14.9 million hectolitres of wine, exceeding 
the  available  budget  resources  and  the  absorption  capacity  of  the  potable  alcohol 
sector, so were reduced to 11 million hl.47 

Due the excellent harvest of 2004/05, intervention was needed in the wine sector to 
reduce  stocks  of  table  and  quality  wines.  Crisis  distillations  were  again  decided  in 
order  to  eliminate  5.4m  hl  of  wine,  stored  mainly  in  France  (2.6m  hl)  and  Italy 
(1.9m hl). 

Sales of wine alcohol from public intervention stocks for other ‘new’ industrial uses 
were phased out in 2006. Due to increasing demand for bio-ethanol, the price of wine 
alcohol went up from approx. €38/hl in January to €50/hl in December 2006. 

The  European  Union  is  the  world’s  main  exporter  with  16.8  million  hl  valued  at 
€5 450m.  The  main  buyers  of  Community  wine48  in  2006  were  the  United  States 
(4.3m  hl),  Russia  (3.3m  hl),  Switzerland  (1.6m  hl),  Canada  (1.5m  hl)  and  Japan 
(1.1m hl).  During  the  same  period,  the  European  Union  imported  11.5m  hl  with  a 
value  of  €2  435m  mainly  from  Australia  (3.2m  hl),  Chile  (2.2m  hl),  South  Africa 
(2.1m hl) and the United States (2.0m hl). 

47 

48 

OJ L 23, 27.1.2006, p. 10. 

Source: EC-COMEXT EEC Special trade since 1988. 

EN 

72 

   EN 

 
 
                                                 
306. 

In  2006,  EU  budget  expenditure  on  measures for  the  wine  sector  rose  to  €1 487  m, 
with  restructuring  measures  and  distillation  aid  accounting  for  30%  and  33%, 
respectively. 

Measures 

2005 ( €m) 

2006 (€m) 

in % 

Restructuring of vineyards 

Grubbing-up 

Distillation (all) 

Public storage alcohol 

Must aid 

Private storage wine & must 

Export refunds 

446 

31 

321 

185 

198 

70 

17 

441 

67 

486 

198 

185 

90 

19 

30% 

4.5% 

33% 

13% 

12% 

6% 

1.5% 

TOTAL 

1 269 

1 487 

100% 

Diff. 

–1% 

+116% 

+51% 

+7% 

–7% 

+29% 

+12% 

+17% 

307.  With a view to restructuring and converting vineyards under Council Regulation (EC) 
No 1493/1999, the Commission approved financial allocations to Member States for 
a specified number of hectares, taking account of compensation paid to winegrowers 
for  loss  of  income  during  periods  when  vineyards  are  not  in  production. 
Decision 2006/701/EC  laid  down  indicative  financial  allocations  for  2006/07  as 
follows49: 

Member State 

Area (ha)* 

Financial allocation (EUR) 

Czech Republic 

Germany 

Greece 

Spain  

France 

Italy 

Cyprus 

Luxembourg 

Hungary 

Malta 

Austria 

Portugal 

Slovenia 

Slovakia 

TOTAL 

1 214 

1 906 

1 118 

19 567 

12 734 

13 056 

150 

11 

1 211 

16 

1 066 

3 918 

122 

400 

56 489 

2 869 670 

12 690 042 

8 725 230 

159 524 473 

110 973 729 

99 825 428 

2 033 953 

84 000 

9 688 862 

107 545 

6 449 988 

32 626 123 

2 400 955 

2 000 000 

450 000 000 

* 

Member States have the possibility to spread this amount over a larger area. 

3.1.20.  Tobacco 

Market developments 

308. 

Compared with 2005 prices, EU market prices were similar or higher for tobaccos of 
most groups in 2006. 

49 

OJ L 290, 20.10.2006, p. 41. 

EN 

73 

   EN 

 
                                                 
309. 

EU imports of raw tobacco amounted to about 555 000 tonnes in 2005 and 550 000 
tonnes in 2006 (decrease of 5 000 tonnes). EU exports were approx. 192 000 tonnes 
in 2005 and 198 000 tonnes in 2006 (increase of 6 000 tonnes). 

Main legislative and policy developments 

310. 

In  April  2004,  the  Council  decided  that  decoupling  would  be  carried  out  gradually 
over  a  four-year  transition  period,  starting  in  2006.  Over  these  four  years,  at  least 
40%  of  the  tobacco  premiums  would  have  to  be  included  in  the  decoupled  single 
payment  for  farmers.  Member  States  may  decide  to  retain  up  to  60%  as  a  coupled 
payment. The coupled payment may be reserved for producers in Objective-1 regions 
or for farmers producing varieties of a certain quality. After the four-year transition 
period, from 2010, tobacco aid will be completely uncoupled from production. 50% 
will be transferred to the single farm payment and the remaining 50% will be used for 
restructuring programmes under rural development policy. 

311. 

For 2005 the old tobacco regime, including the aids fixed for 2004, still applied. In 
2006,  the  reform  started  with  the  transfer  of  all  or  part  of  the  tobacco  premium  to 
entitlements for the single payment.  

3.1.21.  Seeds 

Market developments 

312. 

313. 

314. 

315. 

In  the  2006/07  marketing  year,  total  certified  seed  production  covered  by  the  CMO 
for seeds (excluding hybrid maize) was an estimated 559 055 tonnes. The total seed 
area was 421 239 hectares.  

In 2006 the volume of Graminae seed grown was approximately 258 507 tonnes and 
the  volume  of  Leguminosae  seed  about  193 315  tonnes.  Graminae  accounted  for 
247 358 hectares and Leguminosae for 131 627 hectares. 

Rice  seed  production  in  2006  went  down  to  76 605  tonnes  as  estimated  by  the 
Member States compared to 2005, and the area also shrank to 12 804 hectares. 

Fibre flax seed was grown on 21 258 hectares in 2006, with an estimated production 
of  16 420  tonnes.  The  linseed  area  was  5 567  and  linseed  production  was 
approximately 6 151 tonnes in 2006. 

Main legislative and policy developments 

316. 

Following the integration of seed support in the 2003 CAP reform as from the 2005/6 
marketing year, detailed rules were laid down in Regulations (EC) Nos 796/2004 and 
1973/2004.  

3.1.22.  Hops 

World market 

317. 

In 2006 the total world hop area was about 49 526 hectares (a minor decrease of 1.6% 
compared  to  2005).  The  largest  growers  were  the  EU  (30 000  hectares,  including 
Germany  with  17 170  hectares,  the  Czech  Republic  with  5 414  hectares  and  Poland 

EN 

74 

   EN 

 
with  2 234  hectares),  the  USA  (approx.  11 884  hectares)  and  China  (about 
3 544 hectares). 

318.  World production in 2006 amounted to approx. 85 570 tonnes, around 9% down from 
the  year 2005. The  7 102 tonnes of alpha acid produced (7 903 tonnes  in 2005)  was 
equivalent  to  an  alpha  acid  yield  of  8.3%.  The  average  yield  per  hectare  was 
1.73 tonnes. 

Community market 

319. 

320. 

321. 

Hops are grown in twelve Member States (Belgium, the Czech Republic, Germany, 
Spain, France, Hungary, Austria, Poland, Portugal, Slovenia, Slovakia and the United 
Kingdom).  The  total  area  in  2006  was  29  983  hectares,  of  which  57%  was  in 
Germany. 

The 2006 harvest of 43 062 tonnes was 20% lower than in 2005. The average yield 
was also lower: 1.4 tonnes/hectare as against 1.8 tonnes /hectare in 2005. 

The  2006  harvest  had  an  average  alpha  acid  content  of  7.1%  for  all  varieties  in  the 
Community. This was equivalent to 3 046 tonnes of alpha acid for beer production in 
2006. 

Main legislative and policy developments 

322. 

323. 

The  hop  sector  is  affected  by  the  CAP  reform  in  that,  from  1  January  2005,  it  was 
integrated into the single farm payment system. The complete decoupling of aid will 
enable producers to switch to other production while receiving a stable income. 

Flexibility  is  nevertheless  possible  at  Member  State  level  in  order  to  be  able  to 
respond to specific regional production characteristics: Member States can thus opt to 
keep  part  of  the  aid  coupled  (up  to  25%),  which  may  be  paid  directly  to  individual 
hop  producers  or  producer  groups.  The  latter  will  manage  that  budget  in  line  with 
collective needs in terms of variety conversion, market support, research, promotion, 
investment in equipment, etc. 

3.1.23.  Flowers and live plants 

World markets and international trade 

324. 

The information on world markets in flowers and live plants in 2006 is incomplete. 
World  production  of  flowers  and  pot  plants  represents  only  part  of  floricultural 
production.  The  world  area  devoted  to  flowers  and  pot  plants  in  2005  was  approx. 
495 000  hectares.  With  49%,  China  held  the  largest  share  of  this  area.  The  EU 
accounted  for  around  19%,  while  India,  USA,  Japan  and  Mexico  were  other  major 
flower-producing countries.  

325.  World  production  of  flowers  and  pot  plants  in  2005  was  valued  at  around  €26 000 
million.  The  EU’s  share  in  the  world  production  of  flowers  and  pot  plants  was 
approx.  38%.  The  United  States  (17%),  Japan  (12%)  and  Taiwan  (9%)  were  also 
major producers.  

EN 

75 

   EN 

 
Community market 

326. 

327. 

328. 

329. 

330. 

331. 

In  2006,  the  total  area  for  the  production  of  flowers  and  live  plants  (including  cut 
flowers and cut foliage, potted plants, bedding and balcony plants and nursery plants, 
conifers  and  hardy  perennial  plants,  bulbs  and  corms)  in  the  EU  was  an  estimated 
178.3 thousand hectares. Production is highly concentrated in the Netherlands, where 
the  area  devoted  to  the  production  of  flowers  and  ornamental  plants  in  2006  was 
41.8 thousand  ha.  In  Germany,  flowers  and  ornamental  plants  were  cultivated  on 
28.0 thousand ha. With 26.7 thousand ha, France came in third place followed by the 
United Kingdom (25.8 thousand ha) and Italy (11.1 thousand ha).  

The  production  value  of  flowers  and  live  plants  in  the  EU  in  2006  is  estimated  at 
€1920.8  million.  The  Netherlands,  Italy,  Germany,  France  and  the  United  Kingdom 
had the highest market values for flowers and ornamental plants within the EU. The 
Netherlands  had  the  largest  production  value  in  the  EU,  their  share  in  total  EU 
production of flowers and ornamental plants being about 31%. Italy came second in 
the EU with 15%, while Germany (14%) and France (13%) ranked third and fourth 
followed by the United Kingdom (6%). In most EU Member States the production of 
flowers  and  ornamental  plants  in  2006  was  stable  in  comparison  with  the  previous 
year. 

The  value  of  total  imports  of  flowers  and  ornamental  plants  in  2006  was  almost 
€1365  million.  Cut  flowers  and  cut  foliage  represented  77%  of  total  imports  of 
flowers and ornamental plants in 2006. Potted plants, bedding and balcony plants and 
nursery  plants  came  second  with  18%,  followed  by  bulbs  and  corms  (4%)  and 
conifers and hardy perennial plants (1%).  

Cut flowers and cut foliage were imported mainly from Kenya (30% of imports from 
third  countries),  Colombia  (11%),  Israel  (10%)  and  Ecuador  (10%).  The  main 
countries  of  origin  for  potted  plants,  bedding  and  balcony  plants  and  nursery  plants 
were China (14%), Kenya (13%) and Costa Rica (13%). Conifers and hardy perennial 
plants  were  imported  mainly  from  Egypt  (16%),  Israel  (12%),  China  and  Japan 
(11%). Chile was the country of origin for 16% of bulbs and corms imported into the 
EU. Bulb and corms were also imported from Israel (12%), China and Japan (11%).  

In 2006, the value of exports of ornamental flowers and plants from the EU to third 
countries  came  to  €1560.5  million.  Cut  flowers  and  cut  foliage  represented  32%  of 
total  exports  of  flowers  and  ornamental  plants.  Bulbs  and  corms  came  second  with 
31% followed by potted plants, bedding and balcony plants and nursery plants with 
30%.  Conifers  and  hardy  perennial  plants  represented  7%  of  the  total  exports  of 
flowers and ornamental plants.  

The main EU export destination for cut flowers and cut foliage in 2006 was Russia, 
representing 29% of total EU exports. Other destinations were Switzerland (24%), the 
USA (19%) and Norway (8%). Potted plants, bedding and balcony plants and nursery 
plants were exported mainly to Switzerland (30%), Russia (12%), Norway (11%) and 
the  USA  (8%).  Conifers  and  hardy  perennial  plants  were  exported  mainly  to 
Switzerland (26%), Russia (14%),  Turkey (11%)  and  Norway  (11%).  The  main  EU 
export  destination  for  bulbs  and  corms  in  2006  was  the  USA  (33%),  followed  by 
Japan (14%), Switzerland (7%) and Russia (7%). 

EN 

76 

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Main legal and policy changes 

332. 

There were no legal or policy changes in the flower and live plants sector in 2006. 

3.1.24.  Animal feed (EU-25) 

333. 

334. 

Animal feed uses large quantities of agricultural products. It is the main outlet for the 
Community production of cereals and oil seeds and virtually the only use for permanent 
grassland and fodder from arable land.  

About  half  of  the  total  supply  comes  from  feedstuffs  generally  not  marketed  (pasture, 
hay, silage), which is used mainly for ruminants. The other half, which can be used by 
all livestock, consists of feedstuffs such as cereals, substitutes and oil meals. 

335. 

For 2005/06, the total consumption by animals of the key marketable products50 in the 
European Union is estimated at 246 million tonnes. 

336. 

Consumption comprised: 

– 

– 

domestically produced products estimated at 188.0 million tonnes, mainly from 
the cereal sector, 

net imports estimated at 61.1 million tonnes, mainly because of higher imports 
of soya. 

337. 

338. 

Total  consumption  of  cereals  by  animals  in  2005/06  was  expected  to  reach 
155.5 million tonnes. 

Industrial production of compound feedingstuffs for animals in the European Union51 
is estimated at 142.0 million tonnes in 2005 and 141.7 million tonnes in 2006. 

EU-25 industrial production of compound feedingstuffs by animal category 

Compound feedingstuffs for 

all bovine animals (dairy and beef) 
pigs 
poultry 
other 

TOTAL compound feedingstuffs 

2005 

37.9 
47.2 
45.5 
11.3 
141.9 

2006 

38.2 
48.1 
44.0 
11.4 
141.7 

(million tonnes)

difference  % variation 

+0.3 
+0.9 
–1.5 
+0.1 
–0.2 

+0.8 
+1.9 
–3.3 
+0.9 
–0.1 

50 

51 

EN 

Covering  most  marketable  feed  used  in  the  Community  by  the  compound  feedingstuffs  industry  and  on  the  farm  (own  consumption  and  purchases  of  raw 

materials) and estimated in the detailed table below ‘Animal consumption of key marketable products (estimates EU-25)’ Source: DG AGRI. 

Provisional figures for EU-25 excluding Greece and Luxembourg; source: European Feed Manufacturers’ Federation (FEFAC). 

77 

   EN 

 
                                                 
Animal consumption of key marketable products 

(estimates EU-25) 

KEY PRODUCTS 

GRAIN CEREALS 
Common wheat 
Barley 
Maize 
Others 

TOTAL CEREALS 
TOTAL SUBSTITUTES ex–Annex D of which: 
Manioc 
Sweet potatoes 
CGF (corn gluten feed) 
Brans 
MGC (maize germ cake) 
Citrus pellets 
Dried sugar beet pulp 
Brewing and distilling residues 
Various fruit waste 
TOTAL OTHER ENERGY FEEDS, of which: 
Molasses 

Animal and vegetable fats (added to feed) 

TOTAL HIGH-ENERGY FEEDS  
OILCAKE AND SEEDS (oilcake equivalent), of which: 
Soya 
Rape 
Sunflower 
Other 
OTHER PROTEIN FEEDS, of which: 
Protein crops 
Dried fodder and related 
Fish meal and meat meal 
Skimmed-milk powder 

TOTAL HIGH-PROTEIN FEEDS 
GRAND TOTAL, KEY PRODUCTS 
EU-25 Key products index 2002/03 = 100 [244.9m t] 
* consumption index 
* livestock demand index 

Import 
duty rate

T 
T 
T 
T 

6% C/T 
0% C/T 
0% C 
T 
0% C 
0% C 
0% C 
0% C 
0% C 

T 
4–17% C

0% C 
0% C 
0% C 
0% C 

2–5% C 
0–9% C 
0–2% C 
T 

(million tonnes)

2005/06 

ANIMAL CONSUMPTION 

EU 

IMP 

EXP 

TOTAL 

53.2 
35.4 
37.0 
23.9 
149.5 
20.3 
– 
– 
1.7 
10.4 
0.2 
– 
5.5 
2.0 
0.5 
2.0 
0.6 
1.4 

22.3 
6.5 
0.5 
4.7 
1.3 
– 
9.7 
3.5 
4.8 
1.0 
0.4 

16.2 
188.0 

3.5 
0.1 
1.5 
0.9 
6.0 
9.1 
0.3 
– 
5.3 
– 
0.1 
1.5 
0.5 
0.9 
0.5 
3.2 
2.6 
0.6 

12.3 
40.9 
32.5 
1.0 
2.4 
5.0 
1.9 
1.1 
0.1 
0.7 
– 
42.8 

61.1 

– 
– 
– 
– 
– 
0.0 
– 
– 
– 
– 
– 
– 
– 
– 
– 
0.0 
– 
– 

– 
2.4 
2.0 
0.2 
0.1 
0.1 
0.5 
– 
0.2 
0.3 
– 
2.9 

2.9 

56.7 
35.5 
38.5 
24.8 
155.5 
29.4 
0.3 
– 
7.0 
10.4 
0.3 
1.5 
6.0 
2.9 
1.0 
5.2 
3.2 
2.0 

34.6 
45.0 
31.0 
5.5 
3.6 
4.9 
11.1 
4.6 
4.7 
1.4 
0.4 
56.1 
246.1 

100.5 

100.5 

Notes:  T = Tariff since 1.7.1995; C = bound under GATT; % = import duty as at 1.7.1995; 0 = exempt. 

EN 

78 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.  Market developments — Animal products 

3.2.1.  Milk and milk products 

Milk in the world 

339. 

Initial  estimates  suggest  that  world  milk  production  (including  cow’s  milk,  buffalo 
milk,  sheep’s  milk  and  goat’s  milk)  reached  653  million  tonnes  in  2006,  which 
represents an increase of 1.5% compared to 2005. Cow’s milk represents 84% of total 
production  and  buffalo  milk  12%.  The  remaining  4%  comes  from  sheep,  goats  and 
camels. 

340.  Within  Asia,  production  in  India,  which  derives  more  than  half  its  milk  from 
buffaloes, continues to grow. In 2006, India produced 96 million tonnes, confirming 
its place as the world’s second largest producer after the European Union. Production 
is expected to increase further, based on rising domestic demand. Pakistan and China 
are  other  major  producers  in  the  region.  China  produced  36  million  tonnes  and 
Pakistan  31  million  tonnes.  Pakistan  is  expected  to  increase  production  at  the  same 
rate as India. However, China saw an increase of only 13% in 2006, less than in the 
previous  years  when  growth  was  more  than  20%.  China  is  now  the  second  largest 
producer in the region and number four in the world. In South East Asia, demand for 
dairy  products  continues  to  grow  due  to  increases  in  family  income  and  a  more 
western diet, including more dairy products. 

341. 

342. 

343. 

344. 

Latin  America  had  a  production  of  66  million  tonnes  in  2006,  an  increase  of  0.6% 
compared to 2005. Further increases are expected, particularly in Mexico, Argentina, 
Brazil and Chile. These four countries account for 70% of milk output in this region. 
Elsewhere  in  the  region,  milk  production  continues  to  increase  as  well,  though 
remaining small in absolute terms. Brazil is the largest producer of milk in the region 
(seventh in the world). Production in Brazil reached 25.5 million tonnes in 2006, an 
increase of 3% compared to the year before. So far, Brazil is not developing as a large 
exporter of milk products. Chile on the other hand is increasing its dairy exports. 

The former Soviet republics saw their milk production increase in 2006 by 0.8% to 
65 million tonnes, but with some variation from one country to another. In the former 
Soviet  Union,  production  increased  0.6%.  A  further  increase  is  expected  with 
government  support  to  help  restructure  the  industry.  In  Russia,  the  fifth  largest 
producer in the world, production was expected to reach 31.3 million tonnes in 2006. 
In the Ukraine, the other large producing country in the region, production decreased 
by 3.2% to 13.3 million tonnes. 

In 2006, milk production in the United States grew by 2.8% to 82.4 million tonnes, 
the  second  year  of  growth  in  a  row  after  three  years  of  stagnation.  In  Canada, 
production remained stable at 7.8 million tonnes. 

In Oceania, weather conditions played an important role in production levels, though 
with different results in New Zealand and Australia. Milk production in New Zealand 
increased  by  3%  to  15  million  tonnes,  while  in  Australia  production  in  the  2006/07 
milking  season  fell  by  5%  to  9.5  million  tonnes  due  to  drought.  New  Zealand,  the 
largest dairy exporter in the world, is expected to continue its gradual growth, while 
Australia’s production is expected to decline further. 

EN 

79 

   EN 

 
345.  World  market  prices  fell  slightly  after  high  levels  in  2005.  However,  the  reduced 
production in Australia, one of the main exporting countries in the world, and reduced 
availability  from  the  EU,  combined  with  continued  strong  demand  on  the  world 
market, resulted in increasing prices for dairy commodities at the end of 2006. From 
August  to  December,  prices  for  WMP  and  SMP  increased  from  $2000/tonne  to 
$3000/tonne. For Cheddar, prices increased from $2600/tonne to $2800/tonne. Butter 
prices increased from $1600/tonne to $1800/tonne. 

The Community market 

346. 

The dairy herd fell by 2.8% to 22.3 million. Yields, however, increased by 1.5% to 
6 225 kg per animal per year. 

347.  Milk  production  decreased  by  0.8%  to  141.4  million  tonnes  (including  deliveries  to 
industry, direct sales and use on the farm). Milk deliveries decreased to 130.7 million 
tonnes. In 2006, the first signs of structural under-quota production appeared. Before 
2006,  quotas  were  always  more  or  less  filled  in  each  Member  State.  There  was  a 
structural decline in Sweden, UK and Hungary, but milk production fell in France as 
well.  

348. 

Drinking milk production remained fairly stable at around 33.5 million tonnes in the 
EU-25.  Production  of  cream  for  consumption  increased  by  1.4%  to  2.5 million 
tonnes, while yoghurt showed a 2.4% increase. 

349. 

Butter production decreased by 4.8%, or 107 000 tonnes, to 2.07 million tonnes. 

350. 

351. 

352. 

353. 

354. 

355. 

Consumption  of  butter  increased  in  2006  to  1.97  million  tonnes.  Per  capita 
consumption  was  4.3  kg  per  year,  although  there  was  a  wide  range  between  the 
various Member States, with France accounting for 8.2 kg per year per person while 
the average Greek only consumed 600 grams. 

Total  cheese  production  increased  again  in  2006,  by  2.2%  or  180 000  tonnes. 
Production rose in the dairies but not on the farms. 

In  2006,  per  capita  consumption  of  cheese  increased  by  1.8%  per  year  to 
17.9 kg/person. This divided into 18.2 kg/person in the EU-15 and 11.9 kg/person in 
the 10 new Member States (NMS). 

As regards milk powder, production decreased by 7.2% to 1.87 million tonnes. The 
production  of  skimmed  milk  powder  decreased  to  0.86  million  tonnes  while  whole 
milk, semi-skimmed milk and butter milk powder together fell to 1 million tonnes. 

Production  of  casein  in  2006  is  likely  to  have  fallen.  In  2005  5.9  million  tonnes  of 
skimmed milk were processed into 175 000 tonnes of casein. 

At the end of 2006 the EU had 1.3 million dairy farmers, 157 000 fewer than in 2005. 
The  number  of  farmers  is  falling  gradually  in  all  Member  States,  but  Poland  alone 
saw a drop of 100 000 in 2006. The average number of cows per holding rose to 16 
(ranging  from  2.0  in  Latvia  to  252  in  the  Czech  Republic).  The  amount  of  milk 
delivered  per  holding  was  90 000  kg.  However  the  average  for  the  EU-15  was 
252 000 and for the 10 NMS only 20 000. Again, there was a very wide variation in 

EN 

80 

   EN 

 
356. 

357. 

358. 

359. 

360. 

361. 

the  average  quantity  delivered  per  farm,  ranging  from  7 600  tonnes  in  Lithuania  to 
1 569 600 tonnes in the Czech Republic. 

Total consumption of milk products, defined as the total of all uses made of milk in 
the European Union, has risen since 2003 by 1% per year. 

In  2006,  only  SMP  was  bought  into  intervention.  Intervention  stocks  were  empty 
halfway through 2006. This is evidence of a rather tight supply-demand situation in 
2006 for the milk protein market in the EU. 

For  butter,  61 500  tonnes  were  bought  into  intervention.  Despite  this  rather  large 
increase, 119 000 tonnes were sold from intervention, mainly at the end of the year. 
Stocks  were  reduced  by  the  end  of  the  year  to  62 000  tonnes.  This  shows  that  the 
EU-25 market for milk fat was also getting tighter.  

On  1  July  2006  institutional  prices  were  reduced  by  7%  for  butter  and  by  5%  for 
to  €259.50/100 kg  and  €174.70/100 kg,  respectively. 
skimmed  milk  powder, 
Domestic  prices  for  milk  products  decreased  for  butter  and  WMP  in  line  with  the 
intervention price cuts. Prices for SMP resisted the intervention price cut. Prices for 
cheeses decreased slightly after three years of stability. 

Exports showed a mixed picture in 2006. 252 000 tonnes of butter and butter oil were 
exported. This was a big decrease compared to previous years, where exports were far 
above 300 000 tonnes. For skimmed milk powder, exports were down by more than 
55%,  caused  by  limited  availability.  Exports  of  WMP  and  casein  fell  by  15%  and 
32%,  respectively.  Exports  of  whey  powder  developed  more  positively,  growing  by 
+3.4%  to  320 000  tonnes,  while  cheese  exports  also  increased  by  5%  to 
586 000 tonnes. Lactose exports increased by 27% to 94 000 tonnes. 

It  should  be  noted  that  these  exports  were  achieved  with  much  reduced  refunds. 
Between 2004, the start of the dairy reform, and the end of 2006, WMP refunds were 
reduced  by  78%,  butter  refunds  by  45%  and  cheese  refunds  by  59%.  Refunds  for 
SMP were even cut to zero in June 2006. Internal disposal aids for casein production 
and  SMP  in  animal  feed  were  reduced  to  zero  in  October  2006.  Whey  powder  and 
lactose never were eligible for export refunds.  

3.2.2.  Beef and veal 

Community market 

362. 

363. 

Based  on  the  November/December  2006  survey,  the  total  EU-25  bovine  herd 
amounted  to  84.7  million  head.  This  was  a  decrease  of  1.1%  compared  with  the 
preceding  year.  The  bovine  herd  increased  in  Denmark  (+ 0.5%),  Greece  (+ 2.6%) 
and  Lithuania  (+4.8%),  but  decreased  in  several  Member  States,  particularly  in 
Germany (– 2.5%), Italy (– 1.8%), the Netherlands (– 1.9%), Poland (– 1.9%) and the 
United Kingdom (– 2.6%). 

In  2006,  net  beef  and  veal  production  in  the  EU-25  was  an  estimated  7.89  million 
tonnes, an increase of 0.4% compared with 2005. This slight increase was primarily 
due to more slaughtering of cows in the UK following the return of over-thirty month 
cattle to the normal commercial market. 

EN 

81 

   EN 

 
364. 

365. 

366. 

367. 

368. 

In  2006,  beef  and  veal  consumption  in  the  EU-25  was  an  estimated  8.19  million 
tonnes. Consumption was around 0.3% up on 2005. Average per capita consumption 
is  estimated  at  17.7  kilograms,  although  the  level  in  the  10  new  Member  States 
(6.3 kilograms) remained well below that in the EU-15 (19.9 kilograms). 

As regards external trade, the EU-25 exported around 239 000 tonnes of beef (meat 
and live animals in carcass weight equivalent) in 2006. This was 16.3% lower than in 
2005.  The  majority  of  exports  were  for  the  Russian  market  (62.7%)  along  with 
Switzerland  (4.4%),  Croatia  (4.2%)  and  Angola  (3.4%).  The  general  decrease  in 
exports to third countries can be explained by several factors, including tight supply 
on the Community market, the strong competitive position of third country suppliers 
(in particular from South America) on the world market and the unfavourable euro-
dollar  exchange  rate.  Moreover,  in  view  of  prevailing  market  circumstances,  export 
refund levels were reduced on various occasions. 

EU-25 beef imports in 2006 amounted to around 510 000 tonnes, corresponding to a 
3.8% decrease compared with 2005. Over 90% of imports came from Brazil (64.6% 
of  total  imports),  Argentina  (16.2%)  and  Uruguay  (8.8%).  This  decrease  contrasts 
with the upward trend seen in recent years. However, following the outbreak of foot-
and-mouth  disease  in  Brazil  in  late  September  2005,  the  EU  introduced  import 
restrictions  on  three  main  beef-producing  states  in  Brazil.  Moreover,  the  Argentine 
government  decided  in  spring  2006  to  suspend  temporarily  its  beef  exports,  in  an 
attempt  to  curb  inflation  on  the  domestic  market.  As  both  countries  are  by  far  the 
most  important  third-country  suppliers  of  beef  to  the  EU  market,  this  affected  beef 
supplies in the Community.  

From  2003,  the  Community  became  a  net  importer  of  beef.  Despite  the  slight 
decrease  in  EU  beef  imports  in  2006,  the  overall  trade  deficit  in  the  beef  and  veal 
sector increased further to around 265 000 tonnes.  

Due  to  tight  supply  on  the  market,  reinforced  by  reduced  supplies  from  Brazil  and 
Argentina, EU beef producer prices were very firm in 2006. During the first half of 
2006, the avian influenza scare in some Member States boosted demand for beef and 
particularly veal, which pushed prices further upwards. Overall, average EU-25 prices 
for the carcasses of adult bovines in 2006 were as follows: 

Average price in EUR/100  kg 
carcass weight 

% change 2006/05 

Young bulls 

Steers  

Cows 

Heifers 

315.8 

299.5 

237.8 

314.2 

+ 4.2% 

+ 3.9% 

+ 7.9% 

+ 7.0% 

Producer  prices  for  carcasses  of  adult  male  bovines  were  around  4%  higher  than  in 
2005,  while  prices  for  cow  and  heifer  carcasses  were  between  7  and  8%  up  on  the 
preceding year. 

EN 

82 

   EN 

 
 
369. 

Following  the  introduction  of  the  UK’s  older-cattle  disposal  scheme  (OCDS)  on 
23 January 2006, a total of 150 000 bovines born before August 1996 were disposed 
of52. This compares with the total of around 706 000 cattle disposed of during 2005, 
the last full year of the operation of the former over-thirty month scheme (OTMS) in 
the UK. 

370. 

For  OCDS  disposals  during  2006,  the  compensation  paid  was  €360/head,  of  which 
50%  was  financed  by  the  EU  and  the  remaining  50%  by  the  UK  authorities.  The 
scheme will remain in place until the end of 2008. 

Main legislative and policy developments 

371. 

372. 

Regulation  (EC)  No  1760/2000  of  the  European  Parliament  and  the  Council  lays 
down provisions for the compulsory labelling of the origin (country of birth, fattening 
and slaughtering) of beef animals and for voluntary labelling indicating breeds, types 
of production, feedingstuffs, extensive breeding, etc. Three years after the entry into 
force  of  this  Regulation,  the  Commission  published  in  2004  a  report  on  the 
application  of  the  beef  labelling  scheme,  which  was  discussed  in  the  Council. 
Subsequently,  the  Commission  prepared  a  draft  regulation  amending  Commission 
Regulation (EC) No 1825/2000, with the aim of simplifying some of the compulsory 
labelling requirements (scrap trimmings, cut meat and meat from bovine heads). This 
draft  was  discussed  with  the  Member  States  in  the  course  of  2006.  In  addition,  the 
text was presented for consultation to the European Parliament.  

During the discussion of this report, several Member States asked the Commission to 
come  forward  with  a  proposal  to  introduce  a  harmonised  definition  of  veal  at  EU 
level.  In  order  to  prepare  for  this  work,  the  Commission  launched  an  internet 
consultation  on  the  subject  in  spring  2005  and  organised  a  public  hearing  with  all 
interested  stakeholders  in  June  2005.  Against  this  background,  the  Commission 
prepared its proposal for a Council regulation on the names under which meat from 
bovine animals up to 12 months of age should be marketed in the EU53. The names to 
be  used  in  each  of  the  Member  States  are  listed  in  the  annex  to  the  proposed 
regulation.  A  distinction  is  made  between  sales  descriptions  to  be  used  for  meat 
obtained from bovine animals aged 8 months or less and those for meat from animals 
aged over 8 months but not older than 12 months. 

373. 

Following the 2004 enlargement of the EU, the Community had to negotiate with the 
WTO  adjustments  to  its  import  tariff  regimes  for  an  expanded  EU  of  25  Member 
States. As a result, various tariff quotas in the beef and veal sector were amended in 
the course of 2006 (see table below). 

52 

53 

Regulation (EC) No 716/96, as amended by Regulation (EC) No 2109/2005. 

COM(2006) 487 final of 8 September 2006. 

EN 

83 

   EN 

 
                                                 
Import quota

Previous 
quantity

Netted-out 
quantity

Applies from

LIVE ANIMALS
erga omnes
erga omnes

Live bovines for fattening
Cows, heifers, bulls of 
mountain breeds

169000
5000

5000

BEEF
erga omnes

Frozen beef for processing

50700

24070
710

711

54703
(+ 4003)

1.7.2006
1.7.2006

1.7.2006

Import quota

Previous 
quantity

Additional 
quantity

Applies from

New Zealand

High-quality beef

Australia

High-quality beef

300

7000

1000

150

Brazil

High-quality beef

5000 adjust definition

+ 500 t from 01.01.2006
+1000 t from 01.07.2006
+75 t for 2005-2006
+ 150 t from 01.07.2006
1.1.2007  

3.2.3. 

Sheep meat and goat meat 

374. 

375. 

376. 

The overall situation on the EU sheep and goat market in 2006 was characterised by a 
reduced  flock  size  and  a  Bluetongue  outbreak  further  north  than  ever  before  in  the 
Benelux countries, France and Germany. However, this had a relatively weak market 
impact  with  visible  price  reductions  only  in  the  Netherlands.  The  overall  price 
situation was satisfactory.  

Heavy54  lamb  prices  in  2006  followed  a  seasonal  pattern  and  were  high  throughout 
the Community. The average price was EUR 419/100 kg carcass weight, 5.2% higher 
than in 2005. However, prices were unexpectedly low in November-December (4.4% 
down on the previous year). The high average was driven by firm prices in the UK, 
France and Germany. Light55 lamb prices developed similarly to heavy lamb, but the 
annual average (EUR 589/100 kg carcass weight) remained 3% lower than in 2005. A 
major  factor  in  the  low  average  price  was  Spain,  the  biggest  light  lamb  producer, 
where prices were 6.4% lower than in 2005. 

The  world’s  main  sheep  meat  and  goat  meat  producer  is  China,  accounting  for  a 
quarter (26%) of world  production. In 2006, total world production was 12 016 000 
tonnes  with  China  accounting  for  3 250 000  tonnes.  China  is  followed  by  the  EU 
(1 032 000  tonnes  or  9%),  Australia  (6%)  and  New  Zealand  (5%).  A  large  share  of 
sheep meat is produced by African countries (17%), mainly Nigeria and Algeria, but 
their  individual  production  is  relatively  marginal  in  comparison  with  the  big 
producers56. 

377. 

Although Chinese output is by far the largest, the country still has little presence in 
the world market due to the fact that domestic consumption absorbs most of national 

54 

55 

56 

Heavy lambs are lambs weighing 13.1 kg (carcass weight) or more. 
Light lambs are lambs weighing 13 kg (carcass weight) or less. 
FAO statistics 156, 25.6.2003. 

EN 

84 

   EN 

 
                                                 
378. 

379. 

380. 

production. World trade in sheep meat is dominated by New Zealand and Australia, 
accounting  for  more  than  80%  of  world  exports  (452 000  and  390 000  tonnes, 
respectively, in 2006). 

Community exports remained almost non-existent. The European Union imports over 
one  fifth  of  its  needs,  making  it  one  of  the  world’s  leading  importers  next  to  the 
Asian/Pacific countries. The main suppliers of sheep and goat meat are New Zealand 
and  Australia,  which  accounted  for  78%  and  6.9%  of  total  Community  imports  in 
2006,  respectively.  New  Zealand’s  share  increased  from  72%  in  2005.  In  contrast, 
Uruguay’s  and  Argentina’s  shares  dropped  from  nearly  5%  to  3.1%  and  2.6%, 
respectively.  Live  animals  were  primarily  imported  from  Romania  (3.6%  of  total 
imports)  and  Bulgaria  (2.2%).  The  principal  destinations  of  sheep  meat  from  New 
Zealand were the UK, Germany and France. The share of chilled meat in imports in 
2006 was 22%.  

Imports  enter  the  Community  mainly  under  tariff  rate  quotas  exempt  from  import 
duties. For market management reasons, these quotas are managed on a calendar year 
basis.  New  Zealand  has  the  largest  tariff  rate  quota  with  227 854  tonnes  in  carcass 
weight  equivalent, 
tonnes)  and  Australia 
(18 786 tonnes).  In  2006,  New  Zealand,  Australia  and  Uruguay  all  met  99%  of  the 
quota.  Chile  and  Iceland  were  also  above  50%  (82%  and  51%  respectively),  while 
only 35% of the quota available for Argentina was imported.  

followed  by  Argentina 

(23 000 

According  to  the  livestock  surveys,  the  sheep  and  goat  population  in  the  European 
Union with 25 Member States was 98 million head. Five Member States, the United 
Kingdom,  Spain,  Greece,  France  and  Italy,  accounted  for  about  85%  of  total  sheep 
and goat numbers. The proportion of goats in the EU is about 12%, of which nearly 
half are found in Greece, a quarter in Spain and significant numbers in France, Italy 
and  Portugal.  In  2006,  the  sheep  flock  contracted  in  most  Member  States,  the  drop 
being dramatic in Ireland (– 10% compared to 2005) but also noteworthy in Spain and 
France (– 3% in both). At the same time, sheep numbers increased in Italy (+ 3.4%). 
These  changes  are  related  to  structural  adjustments  in  the  sector,  with  farms 
concentrating  into  bigger  and  more  efficient  units  and  small  farms  going  out  of 
business. In Italy, prices were good in 2006, which encouraged the expansion of the 
sheep flock. 

Main legislative and policy developments 

381. 

In 2006, there were no major legislative or policy developments in the sheep and goat 
sector. 

3.2.4.  Pigmeat 

382. 

In 2006, world production of pigmeat rose by 1.9% to 105.5 million tonnes (source: 
FAO).  China  remained  the  leading  producer  in  the  world  with  52.9  million  tonnes, 
3.4% more than the previous year. The European Union was second with an annual 
production  of  21.4  million  tonnes.  This  was  an  increase  of  1.2%  compared  to  the 
previous  year.  In  2007,  EU  pigmeat  production  was  expected  to  increase  by  2%  to 
21.7  million  tonnes,  plus  360 000  t  due  to  the  accession  of  Bulgaria  and  Romania. 
The United States was the third largest producer of pigmeat with 9.6 million tonnes in 
2006, 1.8% more than in 2005. 

EN 

85 

   EN 

 
383. 

384. 

385. 

386. 

The  average  EU  price  for  2006  was  EUR  145.3/100kg  (+4.5%  up  on  the  previous 
year), which was relatively positive for pig producers. In 2007, the average price was 
expected  to  be  lower  at  around  EUR 135/100 kg,  with  feed  costs  increasing 
considerably after the summer. An aid scheme for private storage was introduced on 
29 October 2007.  

EU  per  capita  consumption  of  pigmeat  remained  stable  in  2006  at  43.0 kg  per 
capita/year. 

In 2006, the European Union exported 1.59 million tonnes of pigmeat (carcass weight 
equivalent). In the same year, imports increased to 20 000 tonnes. 

The main destination for EU pigmeat exports in 2006 was Russia (33% of the EU’s 
exports), followed by Japan with 12% and Hong Kong and China with 9%. In 2006, 
the  share  of  exports  receiving  refunds  was  estimated  at  about  5%  of  total  pigmeat 
exports. 

3.2.5.  Poultry meat 

World production of poultry meat (1000 t) 

United 
States 

Brazil  China  Japan  Russia

India 

Thai-
land 

Argen-
tina 

UE-25  World 

16 416 

6 125  12 873 

16 761 

6 380  12 866 

17 268 

7 239  13 262 

17 468 

7 967  13 687 

18 007 

8 895  14 170 

18 506 

8 724  14 628 

1 195

1 216

1 229

1 218

1 237

1 338

754

861

937

1 034

1 030

1 345

1 081

1 250

1 401

1 600

1 715

1 973

1 194

1 336

1 414

1 291

0 964

10 235 

10 777 

10 971 

10 719 

11 140 

781 

906 

1 036

1 050 

11 091 

69 156

71 643

74 377

75 823

78 559

84 186

12.7 

42.4 

13.6 

11.9 

78.3 

82.5 

–149 

34 

8.4 

21.7 

2000 

2001 

2002 

2003 

2004 

2005 
%TAV 
2005/00 

Source: FAO, European Union 

387. 

388. 

Since  2000,  world  production  of  poultry  meat  has  increased  regularly  and 
substantially (+ 21%). The overall increase has been slowing down since 2001, with 
growth  varying  widely  among  producing  countries.  Among  the  larger  producing 
nations,  production  increased  faster  than  average  in  India,  Brazil,  Russia,  and 
Argentina.  

The European Union’s production decreased considerably in 2003 (– 6%) due to the 
avian influenza scare in the Netherlands and Belgium, and the production cutbacks in 
several  Member  States  (France,  Italy,  Sweden).  Production  in  the  EU-25  started  to 
recover in 2004 (+ 1.4% compared to 2000) without, however, attaining the level of 
2002. In 2005, production started to decrease again due to the avian influenza crisis in 
the  last  quarter.  Both  the  production  and  consumption  of  poultry  meat  dropped 
substantially  during  the  first  half  of  2006  due  to  media  coverage  of  the  avian 
influenza  situation  (by  up  to  70%  in  certain  Member  States)  and  then  recovered 
during the latter part of the year. 

389. 

In 2006, EU imports of poultry meat decreased by 5% to 580 000 tonnes mainly due 
to lower demand for poultry meat in the EU. At the same time, EU exports remained 

EN 

86 

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390. 

391. 

392. 

393. 

stable  at  975000  tonnes  thanks  to  high  export  refund  rates  and  exceptional  use  of 
refunds for poultry cuts. 

There  is  no  direct  support  for  poultry  meat  on  the  internal  market.  However,  the 
poultry  CMO  was  modified  at  the  beginning  of  2006  in  order  to  introduce  a  legal 
basis  to  provide  financial  support  to  the  sector,  which  was  strongly  affected  by 
consumer concerns about avian influenza.  

During the GATT year 2005/06, 226 500 tonnes of poultry were exported with export 
refunds.  It  should  be  noted  that  export  refunds  were  exceptionally  provided  for 
poultry  cuts  between  November  2005  and  October  2006  in  order  to  shift  quantities 
from the EU market. 

In  2006,  15 500  tonnes  of  de-boned  poultry  meat  and  2 500  tonnes  of  turkey  meat 
could be imported duty-free, along with a further 10 400 tonnes subject to a reduced 
rate  of  duty  under  minimum  access  quotas  and  11 900  tonnes  under  other  bilateral 
agreements (Turkey, Israel, Chile).  

During the year 2005, poultry meat prices were fairly good during the 9 first months 
of the year, fluctuating between EUR 145 and 160/100 kg. However, prices dropped 
sharply between September 2005 and April 2006 (down to €130/100 kg) because of 
the  drop  in  consumption  caused  by  media  coverage  of  avian  influenza.  Prices 
recovered  only  in  the  second  half  of  2006.  Since  then  they  have  remained  at 
historically high levels. 

3.2.6.  Eggs 

  United 
States 

World production of eggs in shells (1 000 t) 

Mexico  Brazil 

Japan  Russia 

India  China  EU-25  World 

2000 
2001 
2002 
2003 

2004 
2005 
% 
2005/00 

4 998 
5 164 
5 131 
5 180 
5 278 

5 329 

1 788 
1 892 
1 900 
2 063 
2 198 

2 276 

1 539 
1 606 
1 547 
1 632 
1 682 

1 749 

2 535 
2 514 
2 529 
2 530 
2 480 

2 482 

1 894 
1 960 
2 032 
2 044 
2 005 

2 080 

1 749 
1 870 
2 190 
2 222 
4 486 

19 433 
20 229 
25 009 
26 446 
27 612 

6 185 
6 302 
6 602 
6 324 
6 475 

55 405 

52 766 

59 667 

61 581 

63 358 

2 539 

28 645 

6 279 

65 156 

6.7 

27.2 

13.6 

–2 

10 

46 

47 

1.6 

17.5 

Source: European Union, FAO 

394.  World  production  of  eggs  in  shell  increased  by  17.5%  between  2000  and  2005. 
Although the average increase in the United States was higher than in the European 
Union,  the  EU-25  still  holds  second  place  after  China.  China  has  experienced  very 
strong growth, + 47% between 2000 and 2005, and is the world’s leading producer of 
eggs. India also saw a sharp increase in production between 2000 and 2005 (+ 46%). 

395. 

The principal importing countries remain the EU and Japan (egg products) and Hong 
Kong (eggs in shell). The volume of Community (EU-25) exports decreased in 2005 
(– 5%) to 259 000 t, due to relative high prices within the EU. Imports also decreased 

EN 

87 

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by 6% in 2005 (46 000 t). In 2006, imports increased by 2% s and exports increased 
by 8%. 

396. 

Prices were exceptionally low during the first half of 2005, recovering only slightly in 
the summer. In 2006, since EU production continued to decrease (– 2%), leading to 
limited supply, prices increased further to recover their long-term average level. 

397. 

The common market organisation is similar to that for poultry meat.  

398. 

Regarding exports with refunds, 50 000 t were exported in the GATT year 2006/07, 
representing 44.7% of the GATT ceilings. Since December 2006, export refunds for 
eggs in shell have been fixed at zero. 

3.2.7.  Honey 

World situation 

399. 

In 2005, world honey production reached 1.41 million t, which represents an increase 
of  2.6%  in  relation  to  the  previous  year  (FAO  source).  China  remained  the  world’s 
main producer with 299 000 t. The EU-25 remained in second place with 174 000 t. 

Honey world production by country (1000 t) 

2001 

2002 

2003 

2004 

2005 

China 

EU 15-25 

United States 

Argentina 

Turkey 

Ukraine 

Mexico 

254 

123 

84 

80 

60 

60 

59 

268 

117 

78 

83 

75 

51 

59 

295 

126 

82 

75 

70 

54 

57 

298 

170 

83 

88 

74 

58 

57 

299 

174 

79 

93 

82 

71 

51 

WORLD (total) 

1 264 

1 284 

1 338 

1 380 

1 417 

European market 

400. 

401. 

Self-sufficiency in the European Union (EU-25) was 55% during the marketing year 
2004/05, which represents a sharp increase in relation to the previous marketing year 
due to EU enlargement. Human consumption remains stable at 0.7 kg per capita per 
year.  

EU imports decreased slightly in 2006 (– 0.8%) to 146 500 tonnes. Argentina remains 
the EU’s leading supplier, accounting for 50% of total Community honey imports in 
2006 (66 000 t out of 135 000 t).  

Despite increasing during 2006 (8 000 t as against 6 700 t), EU exports remained very 
low. 

402. 

Compared to 2005, EU import prices increased in 2006 (€1.47/kg as against €1.3/kg) 
but remained very low compared to export prices (€4.77/kg). 

EN 

88 

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4. 

THE CAP REFORM IN 2006 

403. 

The Single Payment Scheme entered its second year of implementation in 2006.  

404. 

From 1 January 2005, all EU farmers receiving direct payments have to comply with 
the cross-compliance conditions. Cross-compliance links the full payment of support 
to  compliance  with  certain  rules  relating  to  agricultural  land  and  to  agricultural 
production  and  activity  in  the  areas  of  the  environment,  public,  animal  and  plant 
health,  animal  welfare,  and  good  agricultural  and  environmental  condition  of  the 
land57.. 

Entries in the SPS  

405. 

Ten Member States implemented the Single Payment Scheme in the first year, while 
five  more  introduced  it  in  2006.  France,  Spain,  the  Netherlands  and  Greece  have 
chosen  the  historical  model,  which  distributes  the  reference  amounts  based  on  the 
support received by individual farmers over a reference period. Finland has opted for 
the regional model, which allocates at least part of the reference amount according to 
the area farmed in the year of implementation.  

406. 

The table gives an overview of the implementation of the CAP in the Member States, 
including  the  recoupling  options  chosen,  which  vary  significantly  among  Member 
States depending on the specific situation of the sectors involved. 

Integration of the sugar sector  

407. 

408. 

The  sugar  sector  was  decoupled  in  200658,  leading  to  the  integration  of  sugar  beet, 
cane and chicory support within the Single Payment Scheme.  

Among  the  countries  applying  the  Single  Area  Payment  Scheme  (SAPS),  separate 
sugar  payments  are  made  to  farmers  by  the  Czech  Republic,  Latvia,  Lithuania, 
Hungary, Poland and Slovakia. 

57 

58 

Articles  4  and  5  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 (OJ L 270, 21.10.2003, p. 1). 

Commission Regulation (EC) No 658/2006 of 27 April 2006 amending Regulation (EC) No 795/2004 laying down detailed rules for the implementation of the 

Single Payment Scheme provided for in Council Regulation (EC) No 1782/2003 (OJ L 116, 29.4.2006, p. 14). 

EN 

89 

   EN 

 
                                                 
Which sectors remain coupled 

Implementation of the second wave of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 

Overview of the implementation of direct payments under the CAP in Member States 

Annual Report 2006 

MS 

Start 
SPS 

Regions 

Model 
SPS / SAPS 

Belgium 

2005  North:  Flanders 
+ Brussels 

SPS historical 

Decoupling 
of dairy 
payment 
2006 

2005  South: Wallonia 

SPS historical 

2006 

– suckler cow premium 100% 
– slaughter premium calves 100% 
– seeds (some species) 100% 
– suckler cow premium 100% 
– seeds (some species) 100% 

Czech 
Republic 
Denmark 

2005  One region 

Germany 

2005  Länder 

(Berlin  included 
in  Brandenburg, 
Bremen 
in 
Lower 
Saxony 
and  Hamburg  in 
Schleswig-
Holstein) 

SAPS 

SPS static 
hybrid 
SPS dynamic 
hybrid moving 
to a flat-rate 
model 

2005 

2005 

– special male bovine premium 75% 
– sheep and goat premium 50% 

– tobacco coefficient for decoupling: 1 

– tobacco coefficient for decoupling: 1 

– separate sugar payments 

– 

– hop payments 25% coupled 
– tobacco coefficient for decoupling: 0.4 

Estonia 

SAPS 

– 

EN 

90 

EN 

 
  
 
 
 
 
 
 
 
 
 
MS 

Start 
SPS 

Regions 

Model 
SPS / SAPS 

Greece 

2006 

– 

SPS historical 

Decoupling 
of dairy 
payment 
2007 

Spain 

2006 

– 

SPS historical 

2006 

France 

2006 

– 

SPS historical 

2006 

Ireland 

2005 

– 

SPS historical 

2005 

Which sectors remain coupled 

Implementation of the second wave of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 

– seeds  
– Article 69 application:  
= 10% of the ceiling for arable crops, 
= 10% of the ceiling for the beef sector, 
= 5% of the ceiling for the sheep and  
goat sector 

– seeds 100% 
– arable crops 25% 
– sheep and goat premiums 50% 
– suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% 
– Article 69 application: 
= 7% of the ceiling for the bovine sector, 
= 10% of the ceiling for dairy payments 
– outermost regions 100% 
– arable crops 25% 
– sheep and goat premium 50% 
– suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% 
– seeds (some species) 
– outermost regions 100% 
None 

– Article 69 application: 
2% of the ceiling for tobacco, 
= 4% of the ceiling for olive oil, 
= 10% of the ceiling for sugar 
– 2% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003). 
Annex VII, points H and I:  
– tobacco and olive oil coefficient for decoupling: 1 
– tobacco coefficient for decoupling: 0.4 
– olive oil coefficient for decoupling: 0.936 
– Article 69 application: 
= 5% of the ceiling for the tobacco sector, 
= 10% of the ceiling for the cotton sector, 
= 10% of the ceiling for sugar 

– 10% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003) 
– hop payments 25% coupled 
Annex VII, points H and I: 
– olive oil coefficient for decoupling: 1 
– tobacco coefficient for decoupling: 0.4 

– 

EN 

91 

EN 

 
  
MS 

Start 
SPS 

Regions 

Model 
SPS / SAPS 

Italy 

2005 

– 

SPS historical 

Decoupling 
of dairy 
payment 
2006 

Which sectors remain coupled 

Implementation of the second wave of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 

– seeds 100% 
– Article 69 for quality production 
= 8% of the ceiling for the arable sector, 
= 7% of the ceiling for the bovine sector, 
= 5% of the ceiling for the sheep and 
goat sector 

– Article 69 application:  
= 8% of the ceiling for sugar  
– 5% deduction in the olive oil sector for the funding of working 
programmes established by producer organisations (Art. 110(i) of 
Reg. 1782/2003 and Art. 8 of Reg. 865/2003) 
Annex VII, points H and I: 
– olive oil coefficient for decoupling is increased to 1 
– tobacco coefficient for decoupling: 0.4 
–  for  the  region  Puglia,  the  decoupling  coefficient  for  tobacco  is 
100% 

Cyprus 
Latvia 
Lithuania 
Luxemburg 

2005 

one region 

Hungary 
Netherlands 

2006 

Austria 

2005 

Poland 
Portugal 

2005 

– 

– 

– 

SAPS 
SAPS 
SAPS 
SPS static 
hybrid 
SAPS 
SPS historical 

2005 

2007 

SPS historical 

2007 

SAPS 
SPS historical 

2007 

EN 

– separate sugar payments 
– separate sugar payments 

– separate sugar payments 

– 

– 

– 

– tobacco 100% decoupled 
– hop payments 25% coupled 

– separate sugar payments 
– Article 69 application: 
= 10% of the ceiling for the olive oil sector, 
= 10% of the ceiling for sugar 
– tobacco coefficient for decoupling 0.5 
– olive oil coefficient for decoupling: 1 

None 

– slaughter premium calves 100% 
– slaughter premium bovine adults 100% 
– seeds for fibre flax 100% 
– suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% 

– suckler cow premium 100% 
– slaughter premium calves 100% 
– slaughter premium bovine adults 40% 
– sheep and goat premium 50% 
– seeds 100% 
– outermost regions 100% 
– Article 69 application:  
= 1% (arable crops, rice, bovine and  

ovine sectors) 

92 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regions 

Model 
SPS / SAPS 

Decoupling 
of dairy 
payment 

Which sectors remain coupled 

Implementation of the second wave of the CAP reform (tobacco, 
cotton, olive oil and hops) and the reform of the sugar sector 

MS 

Slovakia  
Finland 

Start 
SPS 

2006 

three regions 
(based on 
reference yield) 

SAPS 
SPS dynamic 
hybrid moving 
to a flat-rate 
model 

Sweden 

2005 

United 
Kingdom 

2005 

five regions 
(based on 
reference yield) 
England normal 

2005 

England — 
moorland 

2005 

England — SDA 
minus moorland 

2005 

Scotland 

2005 
2005  Northern Ireland 

Wales 

SPS static 
hybrid 

SPS dynamic 
hybrid moving 
to flat-rate 
payment 
SPS dynamic 
hybrid moving 
to flat-rate 
payment 
SPS dynamic 
hybrid moving 
to flat-rate 
payment 
SPS historical 

SPS historical 
SPS static 
hybrid 

2006 

2005 

2005 

– sheep and goat premium 50% 
– special male bovine premium 75% 
– Article 69 application: 
= 2.1% of the ceiling for arable crops, 
= 10% of the ceiling for the bovine sector 
– seeds (timothy seed)  
– special male bovine premium 74.55% 
– Article 69 application: 
= 0.45% of total ceiling 
None 

None 

None 

– Article 69 application: 
= 10% of the ceiling for the bovine sector 

None 
None 

– separate sugar payments 

– 

– 

– 

– 

– 

– 

– 
– 

Abbreviations:  SPS = Single Payment Scheme, SAPS = Single Area Payment Scheme 

EN 

93 

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5. 

AGRIMONETARY ARRANGEMENTS 

Developments in 2006 

409. 

The agrimonetary arrangements apply to payments to beneficiaries by Member States 
that have not adopted the euro. A new Commission Regulation was adopted in 2006 
and has applied from 1 January 2007.  

410. 

The main aims of the new Regulation are:  

– 

– 

– 

to  simplify  the  procedure  for  establishing  the  exchange  rates  for  certain 
measures  (measures  of  a  structural  or  environmental  character,  the  apiculture 
programme,  and  certain  prices  and  amounts  in  the  sugar  sector)  by  removing 
the  need  for  the  Commission  to  determine  the  average  exchange  rates.  The 
exchange rate to be used is the rate most recently fixed by the European Central 
Bank prior to the ‘operative event’ in question. The Member States do not need 
to await a Commission Regulation fixing the average exchange rates; 

to  establish  the  operative  event  on  the  first  day  of  the  month  for  legal  acts 
coming into force during that month for a number of prices, in order to ensure 
certainty for the operators concerned and reduce the administrative burden for 
the paying agencies concerned; 

furthermore,  to  harmonise  operative  events  and  exchange  rates  in  the  relevant 
sector legislation in course of the codification procedure. 

6. 

RURAL DEVELOPMENT IN 2006 

411. 

Rural development programming for the period 2000–2006 consists of the following: 
68  Rural  Development  Programmes  —  RDPs  —  (co-financed  by  EAGGF 
Guarantee),  69  Objective-1  region  programmes  —  operational  programmes  and 
single  programming  documents  —  with  rural  development  measures  (EAGGF 
Guidance  co-financed)  and  20  Objective-2  region  programmes  with  rural 
development measures (EAGGF Guarantee co-financed). 

412.  With  the  enlargement  of  the  European  Union  on  1  May  2004,  a  special  rural 
development regime was introduced for the new Member States — ‘Temporary Rural 
Development  Instrument  (TRDI)’.  Across  the  EU-10,  there  are  two  types  of 
programming:  10  RDPs  co-financed  by  the  TRDI  and  9  Objective-1  region 
programmes,  covering  most  of  the  new  Member  States  (co-financed  by  EAGGF 
Guidance).  

413. 

414. 

In  2006,  Community 
EUR 9 199.2 million (Guarantee and Guidance combined).  

expenditure  on 

rural  development 

amounted 

to 

Payments  for  EAGGF  Guarantee  amounted  to  EUR  5 610.2  million  in  the  2006 
financial  year  (from  October  2005  to  October  2006).  The  Community  average 
execution  (compared  to  annual  appropriations)  reached  98.1%,  meaning  that  almost 
all  the  budget  available  for  2006  was  spent.  By  Member  State,  there  was 
overspending (Member States that spent more than their annual financial allocation) 
in  Belgium,  Greece,  Spain,  France,  Ireland,  Luxembourg,  the  Netherlands,  Austria, 

EN 

94 

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415. 

416. 

417. 

418. 

Finland  and  Sweden,  and  underspending  in  the  remaining  countries.  EAGGF 
Guarantee  spending  in  2006  accounted  for  99.7%  of  financial  allocations  for  the 
2000–2006 programming period. 

Payments for EAGGF Guidance reached EUR 3 589 million in 2006 (calendar year): 
3 562.1  million  for  2000–2006  programmes  (Objective  1:  3  192.9;  Leader+:  361.1; 
PEACE: 8.1) and EUR 26.9 million for the closure of 1994–1999 programmes.  

In 2006 (calendar year), payments for the ‘Temporary Rural Development Instrument 
(TRDI)’ amounted to EUR 2 115.7 million and for SAPARD to EUR 213.7 million 
(EUR  12.7  million  for  Romania  and  Bulgaria  and  EUR  201  million  for  the 
completion  of  pre-accession  assistance  for  eight  new  Member  States).  For  the  three 
financial  instruments  together  (Obj.  1,  SAPARD  and  TRDI),  EUR  2 943.9  million 
was paid to the new Member States. 

45 of the 1994–1999 programmes were closed in 2006 and 39 programmes remained 
open  at  the  end  of  2006  (out  of  the  402  received  in  March  2003).  Of  the 
39 programmes  still  open,  11  of  them  are  closed  in  practice  but  the  final 
decommitment  is  awaiting  the  end  of  judicial  procedures  at  national  level  or  a 
Commission decision regarding the Article 24 procedure. For 11 other programmes, 
the  pre-closure  letter  has  been  sent  to  the  Member  State  proposing  the  outstanding 
sum  to  be  paid.  Closure  of  the  other  17  is  in  hand.  Outstanding  commitments  for 
these programmes at the end of 2006 amounted to EUR 347.6 million, some of them 
significant:  Spain  (EUR  138  million),  Portugal  (EUR  91  million)  and  Italy 
(EUR 76 million). 

At  the  end  of  2006,  total  payments  for  the  2000–2006  programmes  financed  by 
EAGGF  Guidance  accounted  for  68%  of  the  financial  plan  for  the  2000–2006 
programming  period.  Under 
in  Regulation  (EC) 
No 1260/1999,  EUR  9.3  million  was  decommitted  in  2006.  These  decommitments 
affected  fifteen  Leader+  programmes  (EUR  7.8  million)  and  four  Objective-1 
programmes  (EUR  1.5).  The  Member  States  affected  are  Spain  (9  programmes), 
Greece (4 programmes), Germany (3 programmes), Italy (2 programmes) and France 
(1 programme). 

the  n+2  rule  established 

419. 

In  2006,  the  Commission  approved  32  RDP  amendments,  one  of  them  through 
written  consultation  of  the  STAR  Committee,  and  6  amendments  to  SAPARD 
programmes.  

420. 

Three  legislative  documents  were  approved:  the  Transition  rules,  the  Control 
regulation and the Implementing rules. 

421.  Monitoring  indicators  for  the  execution  of  Leader+  in  2004  show  a  total  of 

28 052 projects over the period 2000–2004. The top five fields of assistance are:  

– 

– 

– 

– 

– 

physical investment (assistance to SME and handicraft) — 9.4%;  

physical investment in tourism — 9.1%; 

renovation and development of villages and protection and conservation of the 
rural heritage — 9.0%; 

non-physical investment in tourism — 8.4%;  

encouragement of tourism activities — 7%. 

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422. 

By mid-2006, 231 transnational cooperation projects had been notified to the Leader+ 
European Observatory. At least 369 Local action groups are involved in transnational 
cooperation,  on  average  4  per  project.  The  Predominant  theme  (34%  of  projects)  is 
best use of natural and cultural resources. Another two themes chosen by a quarter of 
projects are quality of life and use of new know-how and new technologies. 

423. 

Leader+  measures  are  applied  in  6  new  Member  States  (under  Objective-1 
programmes for the period 2004–2006), with 257 existing Local Action Groups and 
190 Local Action Groups implementing local development strategies. 

6.1. 

Belgium 

Rural development programmes (EAGGF Guarantee) 

424. 

Three Rural Development Programmes for the period 2000–2006 were approved for 
Belgium:  one  federal  and  two  regional  (Flanders  and  Wallonia)  programmes.  The 
total  public  cost  for  these  three  programmes  amounted  to  EUR  842.6  million,  of 
which the EAGGF contributed EUR 332.7 million. 

Amendments to RDPs 

425. 

426. 

In  2006,  three  amendments  to  the  Belgian  Rural  Development  Programmes  were 
submitted  and  approved  by  the  Commission.  The  amendments  only  concerned  the 
financial plans and all related to the increase in the EAGGF allocation for Belgium, 
pursuant to Decision 2006/289/EC. 

Under the notification procedure, no amendments to Belgian RDPs were received in 
2006. Under the information procedure, the Commission received two amendments to 
the financial plan of the Flemish RDP (on 28 September and 10 October) and three 
amendments to the financial plan of the Walloon RDP (on 12 May, 27 September and 
11 October).  

Level of payments in the period from 16 October 2005 to 16 October 2006 

427. 

428. 

The total 2006 budgetary allocation for Belgium amounted to EUR 75.9 million. The 
level of payments for the three programmes amounted to EUR 73.6 million, which is 
96.9% of the annual allocation.  

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  99.3%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 330.4 million out of a total of EUR 332.8 million. 

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents 

429. 

A  Single  Programming  Document  was  approved  for  Belgium:  phasing-out  of  the 
Objective-1  SPD  for  the  Hainaut  province  (Wallonia).  Total  public  expenditure  for 
this  SPD  amounted  to  EUR 1 357.9  million,  of  which  the  Structural  Funds 
contributed  EUR 671.2  million.  The  EAGGF  Guidance  contribution  amounts  to 
EUR 43.1  million,  which  is  6.4%  of  the  total  Community  contribution.  These 
amounts  take  account  of  indexation,  of  the  performance  reserve  allowances  and  of 
mid-term transfers between Funds (approved in 2004), of two transfers from the IFOP 

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in  2004  and  2005  and  one  transfer  back  to  the  IFOP  in  2006  (for  an  amount  of 
EUR 1 million). 

Level of payments in 2006 

430. 

Global  financial  execution  for  EAGGF-Guidance  since  the  beginning  of  the 
programming period to the end of 2006 has been 52.6% of the total budget for 2000–
2006, i.e. EUR 22.6 million out of a total of EUR 43.1 million.  

Leader+ programme 

431. 

432. 

433. 

434. 

Belgium  has  two  Leader+  programmes:  one  for  Flanders,  involving  total  public 
expenditure  of  EUR 8.0  million,  of  which  EUR  4.0  million  EAGGF  Guidance,  and 
one  for  Wallonia,  involving  total  public expenditure  of  EUR 20.7  million,  of  which 
EUR 10.3 million EAGGF Guidance. These amounts include the indexations of EU 
contributions adopted by Decisions C(2005) 489 and C(2005) 488, respectively, and 
of decommitments pursuant to the N+2 rule adopted by Decisions C(2005) 3077 and 
C(2005) 5594, respectively. 

In Flanders, five Local Action Groups were selected, covering 12% of the Region’s 
territory  and  6%  of  its  population.  For  Wallonia,  fifteen  Local  Action  Groups  were 
selected, covering 32% of the Region’s territory and 12% of its population. The two 
regional  Leader+  network  units  became  fully  operational  in  2004,  and  the  two 
Regions have agreed that the Walloon network unit would act as the national contact 
point where appropriate.  

By  Decision  C(2006) 4832  of  6  October  2006,  the  Commission  approved  an 
amendment to the Flemish Leader+ programme, namely, to the financial plan and in 
particular a shift in funding from axes 2, 3 and 4 to axis 1. 

At the end of 2006, after seven years of implementation, the total financial execution 
for  the  two  programmes  was  46%  of  total  EAGGF  Guidance  expenditure  for  the 
period 2000–2006, i.e. EUR 6.6 million out of a total of EUR 14.3 million (total EU 
contribution after decommitments). 

Rural development policy 2007–2013 

National Strategy Plan 

435. 

A  first  version  of  the  NSP  for  Belgium  was  submitted  on  15  November  2006.  The 
NSP  focuses  objectives  on  improving  the  competitiveness  of  the  agro-food  sector, 
diversifying  the  economy  in  rural  areas,  increasing  the  employment  rate,  improving 
the environmental situation and preserving the rural heritage. The planned breakdown 
by axis of the EAFRD allocation (EUR 418.6 million) for Belgium as a whole is as 
follows:  48.1%  for  axis 1;  35.9%  for  axis 2;  8.7%  for  axis 3;  5.0%  for  axis 4 
(Leader); and 2.3% for technical assistance. 

Rural Development Programmes 2007–2013 

436. 

For  the  programming  period  2007–2013,  Rural  Development  policy  will  be 
implemented  in  Belgium  through  two  RDPs:  one  for  Flanders,  with  an  EAFRD 
allocation of EUR 224.5 million, and one for Wallonia, with an EAFRD allocation of 

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EUR 194.1 million. The first version of the Flemish RDP was officially submitted on 
8 December 2006. The Walloon RDP was not submitted in 2006.  

6.2. 

Czech Republic 

Rural development programmes (EAGGF Guarantee) 

437. 

The  Czech  Horizontal  Rural  Development  Plan  was  approved  by  Decision 
C(2004) 3290  of  3  September  2004.  The  EAGGF 
contribution  was 
EUR 542.8 million  for  the  period  2004–2006,  to  which  is  added  national  public 
co-financing  of  EUR  135.7  million.  The  horizontal  rural  development  plan  aims  to 
mitigate  the  differences  in  farm  profitability  in  less  favoured  areas  that  result  from 
natural conditions, to improve the unfavourable age structure of farmers, to reduce the 
share  of  arable  land  in  total  agricultural  land  area  and  to  provide  for  farming  of 
agricultural land in conformity with the principles of Good Farming Practice. 

Amendments to the RDP 

438. 

439. 

440. 

On  1  March  2006,  DG  AGRI  received  a  proposal  to  amend  the  Horizontal  Rural 
Development Plan of the Czech Republic for 2004–2006. The Czech authorities have 
so  far  reimbursed  beneficiaries  of  two  agri-environmental  measures,  integrated 
production  of  vine  and  fruits  and  organic  farming,  at  a  certain  percentage  of  the 
income  foregone/cost  incurred.  To  provide  more  of  an  incentive,  the  Czech 
authorities  intend  to  increase  this  percentage,  without  impacting  on  the  financial 
table. The Commission took note of this amendment on 2 May 2006. 

On  30  October  2006,  DG  AGRI  received  a  proposal  for  an  amendment  to  the 
Horizontal Rural Development Plan of the Czech Republic for 2004-2006, namely, to 
the  financial  table  of  the  HRDP,  without  impacting  on  the  overall  EAGGF 
contribution  and  without  exceeding  the  20%  of  total  eligible  public  expenditure 
threshold,  as  stipulated  by  Article  51  (2)  of  Commission  Regulation  (EC) 
No 817/2004. The Commission took note of this amendment on 22 December 2006. 

On  22  December  2006,  the  Czech  authorities  notified  an  amendment  to  the 
Horizontal  Rural  Development  Plan  for  2004–2006.  The  proposal  changes  several 
conditions  relating  to  agri-environmental  measures  designed  to  make  for  smoother 
implementation of the programme. The Commission took note of this amendment on 
2 March 2007. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

441. 

Since  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 408 million, i.e. 75% of the total budget allocation for that period. 

Objective-1 Programmes (EAGGF Guidance) 

442. 

The Operational Programme for Rural Development and Multifunctional Agriculture 
was approved by Commission Decision C(2004) 2689 of 2 July 2004. The financial 
contribution from EAGGF amounted to EUR 173.9 million for the period 2004–2006, 
which is complemented by national public funding of EUR 76.7 million. As regards 
measures,  special  emphasis  is  laid  on  the  replacement  of  outdated  technologies, 

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increased  competitiveness,  consolidation  of  land  ownership,  protection  of  the 
environment and the stabilisation of existing workplaces in Czech rural areas. 

Amendments to the OP 

443. 

The  Czech  authorities  decided  to  transfer  allocations  from  FIFG  to  EAGGF,  to 
transfer  the  allocation  of  technical  assistance  to  several  measures,  and  to  perform 
other transfers. The proposal was received on 27 September 2006, and approved by 
Decision C(2006) 7276 of 27 December 2006. 

Level of payments in 2006 

444. 

Since  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 73 million, i.e. 43% of the total budget allocation for that period. 

Annual Report 

445. 

446. 

The 2006 Annual Report for the RDP was received on 28 June 2007 and approved by 
letter of 29 August 2007.  

The 2006 Annual Report for the OP was received on 28 June 2007 and approved by 
letter of 14 September 2007 

Rural development policy 2007–2013 

National Strategy Plan  

447. 

The draft NSP was received on 20 September 2006. The Commission sent the final 
assessment  letter  on  6  December  2006.  All  the  main  comments  in  the  letter  were 
taken into account when preparing the RDP 2007–2013.  

Rural Development Programmes 2007–2013 

448. 

The  Czech  Republic  submitted  the  first  admissible  version  of  the  RDP  on 
7 December 2006. The total public contribution amounts to EUR 3 615.8 million. The 
anticipated  breakdown  per  axis  is  as  follows:  Axis 1  –  22%,  Axis 2  –  55%,  
Axis 3 – 17% and Axis 4 – 5%.  

6.3. 

Denmark 

Rural development programme (EAGGF Guarantee) 

449. 

The  total  public  cost  of  the  Danish  Rural  Development  Programme  for  2000–2006 
was EUR 725.9 million, including an EU contribution of EUR 330.1 million from the 
EAGGF,  Guarantee  Section.  The  programme  includes  support  for  investments  in 
holdings, organic farming, training, less favoured areas, agri-environment, processing 
and marketing of agricultural products, food quality schemes, and the adaptation and 
development of rural areas and forestry.  

Amendments to the RDP 

450. 

Under the notification procedure, the Danish authorities notified the Commission of 
one amendment in February 2006 concerning changes in support rates for a number 

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of measures under agri-environment. A financial communication was submitted to the 
Commission in October 2006.  

451. 

In  June  2006,  the  Commission  received  a  request  for  financial  amendments  to  the 
programme. This amendment was approved by Commission Decision C(2006) 4006 
of 31 August 2006. By this decision, the initial financial contribution was decreased 
from  a  total  public  amount  of  EUR  829.6  million  to  EUR  725.9  million,  and  the 
EAGGF part from EUR 348.8 million to EUR 330.1 million.  

Level of payments in the period from 16 October 2005 to 15 October 2006  

452. 

The 2006 plan provides for total public expenditure of EUR 136.2 million, including 
an  EU  contribution  of  EUR 74.4  million,  of  which  EUR  74.1  million  was  paid  out, 
leading to 99.6% utilisation of the funds under the programme. 

453. 

Over  the  period  2000–2006,  the  global  financial  execution  was  99.9%,  or 
EUR 329.9 million out of EUR 330.1 million in total. 

Annual report 

454. 

The annual report for 2006 was expected to be received in 2007. 

Leader+ Programme 

455. 

456. 

The  total  public  allocation  for  the  Danish  Leader+  Programme  (2000–2006)  was 
increased  in  2004  following  indexation  and  now  amounts  to  EUR 34.6  million, 
including an EU contribution of EUR 17.3 million.  

By  Commission  Decision  C(2006)  5035  of  19  October  2006,  the  programme  was 
amended  to  reflect  the  request  from  the  Danish  authorities  to  change  the  allocation 
between  Priorities.  The  programming  complement  was  amended  accordingly. 
Payments in 2006 amounted to EUR 1.4 million. After six years of implementation, 
financial execution remained at 70.4% of the amount earmarked for the programming 
period 2000–2006. 

Rural development policy 2007–2013 

National Strategy Plan  

457. 

The Danish NSP sets four major objectives for the programme, these being: 

1) more entrepreneurs and local jobs in rural areas, 2) greater competitiveness in the 
food  and forestry sector, 3) varied landscapes, rich nature and a clean environment, 
and  4)  attractive  living  conditions  in  rural  areas.  The  NSP  was  not  officially 
submitted in 2006. 

Rural Development Programmes 2007–2013 

458. 

Denmark will have a single rural development programme. The total public cost for 
the  Rural  Development  Programme  is  EUR  830.3  million,  including  an  EU 
contribution of EUR 444.7 million. The RDP was not officially submitted in 2006.  

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6.4. 

Germany 

Rural development programmes (EAGGF Guarantee) 

Amendments to the RDP 

459. 

In 2006, Germany introduced seven amendments concerning the German Framework 
Regulation  and  five  requests  to  amend  the  regional  programmes.  A  further  two 
amendments to the German Framework Regulation and one regional programme were 
also notified by Commission decision. 

460. 

All amendments were approved before the end of the financial year. 

Level of payments in the period from 16 October 2005 to 15 October 2006  

461. 

462. 

The consolidated financial table for 2006 specifies an EU contribution of EUR 940.6 
million.  For  the  period  from  16  October  2005  to  15  October  2006,  the  EU 
contribution  to  the  plan  came  to  EUR 938.5  million,  showing  underspending  of 
EUR 2.1 million. 

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming period has been 99.97% of the budget for 2000–2006, i.e. EUR 5 463.0 
million out of a total of EUR 5 465.1 million. 

Objective-1 programmes (EAGGF Guidance) 

Operational programmes on Single Programming Documents 

463. 

Six  German  Länder  are  classified  as  Objective  1  regions:  Berlin,  Brandenburg, 
Mecklenburg-Western  Pomerania,  Saxony,  Saxony-Anhalt  and  Thuringia.  In  2006, 
the  four  regional  OPs  of  Berlin,  Mecklenburg-Western  Pomerania,  Saxony  and 
Thuringia  were  amended.  All  amendments  were  approved  before  the  end  of  the 
financial year. 

Level of payments in 2006 

464.  Measures  other  than  accompanying  measures  are  paid  from  the  EAGGF  Guidance 
Section for these regions. The total eligible costs for 2006 were EUR 635.6 million, 
including  an  EAGGF  Guidance  contribution  of  EUR  500.1  million.  In  2006,  EUR 
509.2  million  was  paid,  of  which  EUR  64.6  million  on  2006  commitments.  Taken 
over the period 2000–2006, almost 85.6% of EAGGF funds have been used. 

Annual Reports 

465. 

In  2006,  the  first  version  of  one  annual  report  was  not  admissible.  All  the  other 
annual  reports  were  satisfactory  and  matched  the  forecasts.  All  annual  reports  were 
approved before the end of the financial year.  

Leader+ Programme 

466. 

In 2006, eleven German regional programmes were amended. The rather low demand 
for Action  2 (Support for cooperation between rural territories) resulted in a budget 

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transfer  to  Action  1  (Integrated  territorial  rural  development  strategies  of  a  pilot 
nature). Leader+ measures were rarely the subject of amendments. 

Rural development policy 2007 – 2013 

National Strategy Plan 

467. 

The German Framework Regulation was not submitted in 2006.  

Rural Development Programmes 2007–2013 

468. 

Eight  of  the  14  German  regional  rural  development  programmes  were  submitted  at 
the end of 2006.  

6.5. 

Estonia 

Rural development plan (EAGGF Guarantee) 

469. 

The programme consists of the following measures: support for less favoured areas, 
agri-environmental support, support for afforestation of agricultural land, support for 
semi-subsistence farms undergoing restructuring, meeting standards, complements to 
direct  payments  and  technical  assistance.  The  total  EAGGF  (Guarantee)  budget  for 
2004–2006  for 
to 
EUR 150.5 million.  The 
the  programme  was 
EUR 188.2 million. 

the  Estonian  Rural  Development  Programme  amounted 

total  eligible  public  cost  of 

Amendments to the RDP 

470. 

An  amendment  to  the  RDP  was  approved  by  the  Commission  by  Decision 
C(2005) 5541  in  December  2005.  The  amendment  introduces  a  compensatory 
payment to farmers  in  areas  with environmental  restrictions (NATURA 2000 areas) 
and  increases  the  budget  for  agri-environmental  measures.  Another  amendment 
notification not requiring a Commission decision was received by the Commission on 
19 October 2007. It concerns changes to the Financial Table according to the actual 
take-up  of  RDP  measures.  Unspent  budget  on  the  measures  mentioned  will  be 
channelled  to  finance  mainly  applications  for  agri-environment  support  (but  also 
support for semi-subsistence farms) for the year 2007.  

Level  of  payments  in  the  period  from  16  October  2006  to  15  October  2006  (EAGGF 
Guarantee) 

471. 

The  total  amount  spent  during  the  period  on  measures  in  the  RDP  was 
EUR 105.2 million. The level of payments in the period up to 15 October 2006 was 
70%. 

Objective-1 Programmes (EAGGF Guidance) 

472. 

The whole of Estonia is classified as an Objective-1 region. The total EAGGF budget 
for  2004–2006  amounted  to  EUR  56.8  million  and  the  total  eligible  public 
expenditure of EAGGF-related measures was EUR 78.8 million.  

473. 

The  Commission  received  a  request  for  an  amendment  to  the  Programme 
Complement  on  29  May  2007  concerning  changes  to  the  Financial  Table.  The 

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changes  concern  the  use  of  funds  from  measures  where  take-up  was  lower  than 
expected  to  finance  the  most  popular  measure  —  3.1  Investment  in  agricultural 
holdings. 

474. 

The  Leader  approach  was  first  applied  in  autumn  2006  through  measure  3.6  Local 
initiative-based  development  projects  —  Leader.  Action  groups  to  prepare  local 
development  strategies  were  selected,  as  were  three  action  groups  to  implement 
existing  strategies.  The  Leader  information  centre  was  established  as  a  support 
structure  for  LAGs.  By  the  beginning  of  2007,  24  LAGs  had  been  chosen  (three  of 
them started to implement their strategies). LAG activities cover 85% of the Estonian 
territory. 

Level of payments in 2006 

475. 

In 2006, payments amounted to EUR 13.6 million, i.e. 24.0% of the total Community 
budget for the period 2004–2006.  

Rural development policy 2007–2013 

National Strategy Plan 

476. 

On 22 September 2006, the Commission acknowledged receipt of the NSP.  

477. 

The  main  objective  of  axis  1  (40%  of  funds)  is  to  improve  the  competitiveness  of 
most agricultural holdings and the processing industry to such an extent that, by the 
end  of  the  programming  period  (2013),  farmers  will  be  able  to  manage  on  reduced 
market support and direct payments. The objective in the forestry sector is to raise the 
long-term competitiveness of forestry to a level that ensures the restoration of forest 
potential in areas damaged by natural disasters and fires. 

478. 

The main objective of axis 2 (39% of funds) is to ensure agricultural land use and the 
preservation of traditional landscapes and high nature value areas by environmentally 
sound farming practices and sustainable forest management.  

479. 

The main objective of axis 3 (21% of funds) is the diversification of rural enterprise 
and improvement in the quality of life in rural areas. 

480. 

The main objective of axis 4 (10% of funds) is to promote local initiative. 

Rural Development Programmes 2007–2013 

481. 

Public expenditure to implement the Estonian rural development programme is EUR 
924.9  million  for  the  whole  period,  the  maximum  contribution  from  the  EAFRD 
being EUR 714.7 million. 

6.6. 

Greece 

Rural development programme (EAGGF Guarantee) 

482. 

The  Rural  Development  Programme 
to 
EUR 2 138.1 million,  with  an  EU  contribution  of  EUR  1 030.4  million  from  the 
EAGGF  Guarantee  Section.  It  is  structured  over  six  measures:  early  retirement, 

for  Greece 

amounts 

(RDP) 

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483. 

484. 

compensation for less favoured areas, agri-environmental aid, forestry support, food 
quality and meeting standards.  

In 2006, a considerable number of new contracts were signed; indeed 67% of active 
contracts  were  signed  in  2006.  Most  of  these  contracts  were  for  the  protection  of 
agricultural  land  from  nitrate  pollution,  organic  farming  and  the  protection  of  the 
traditional olive grove of Amfissa in mainland Greece.  

In  2006,  payments  totalled  EUR  226.9  million,  including  payments  in  accordance 
with Article 39 of Regulation (EC) No 1290/2005. Accumulated payments since the 
beginning of the 2000–2006 programming period amount to EUR 1 028.8 million. 

Amendments to the RDP 

485. 

Τhere has been one request for a Commission amending decision to take account of 
Commission Decision 2006/289/EC amending the allocations by Member State under 
the  EAGGF  Guarantee  Fund  for  the  period  2000–2006,  including  the  amount  from 
modulation.  Furthermore,  there  have  been  financial  amendments  to  the  financial 
tables  in  the  programme  and  an  amendment  communicated  to  the  Commission  by 
notification.  

Level of payments in the period from 16 October 2005 to 15 October 2006  

486. 

487. 

In 2006, payments totalled EUR 226.9 million (i.e. 99.3% of the EAGGF Guarantee 
budget for the period).  

Overall  financial  implementation  of  EAGGF  Guarantee  since  the  beginning  of  the 
i.e. 
programming  period  has  been  99.8%  of 
EUR 1 028.8 million out of the amount scheduled of EUR 1 030.4 million.  

the  amount  for  2000–2006, 

Objective-1 programme (EAGGF Guidance) 

Operational programmes or Single Programming Documents 

488. 

489. 

The  national  mono-fund  EAGGF  Guidance  Section  programme  for  Greece  was 
approved by the Commission on 6 April 2001. The Community  contribution to this 
programme  is  EUR 1 482.7  million.  On  24  November  2004,  the  Commission 
approved  a  decision  for  a  mid-term  review  of  this  programme,  which  included  an 
additional amount of EUR 250 000 from the programming and performance reserves. 
On 15 December 2005, the Commission approved a decision for an amendment to the 
programme  designed  mainly  to  address  the  needs  of  the  rural  population  more 
effectively, to restore the damage caused by the adverse weather conditions that have 
afflicted Greece since 2003 and to include provisions in Technical Assistance for the 
preparation of the new programming period.  

The  regional  multi-fund  programmes  approved  during  the  first  half  of  2001  and 
amended  in  2004  in  the  light  of  the  mid-term  review  cover  a  total  cost  of 
EUR 10 914.4 million, with a total Community contribution of EUR 7 041.7 million, 
to  which  the  EAGGF  Guidance  Section  contributes  EUR 1 026.9  million.  All  the 
programming complements were also adopted by the monitoring committees. These 
committee meetings took place during November-December 2006 and some projects 
facing  implementation  difficulties  had  to  be  reconsidered  with  the  competent 
authorities of the Member States as part of the mid-term review.  

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490. 

On  7  December  2006,  a  common  amendment  was  approved  by  the  Commission, 
amending  the  25  Operational  Programmes  of  Greece,  including  the  national  mono-
fund programme for Greece and the EAGGF component of the 13 regional multi-fund 
programmes consisting both of financial re-profiling and of new eligibilities.  

Level of payments in 2006 

491. 

In  2006,  payments  totalled  EUR 219.1  million.  The  accumulated  payments  of  the 
EAGGF  Guidance  Section  (EUR 786.6  million)  since  the  beginning  of  the  2000–
2006 programming period account for 53% of the scheduled budget.  

Leader+ Programme 

492. 

There is only one Leader+ programme for Greece. It was approved on 19 November 
2001  with  a  total  cost,  after  the  2004  indexation,  of  EUR 368.7  million,  of  which 
EUR 186.1  million  is  the  EAGGF  Guidance  Section  contribution.  In  2002,  the 
managing  authority  selected  40  local  action  groups  as  provided  for  by  the 
programme.  The  programme  was  amended  in  August  2004  following  the  mid-term 
evaluation and planned indexation. The monitoring committee met twice in 2005.  

493. 

For 2006, payments amounted to EUR 28.2 million.  

494. 

The accumulated EAGGF Guidance Section payments (EUR 97.3 million) since the 
beginning  of  the  2000–2006  programming  period  account  for  52.3%  of  the  total 
budget of the programme. 

Rural development policy 2007–2013 

National Strategy Plan  

495. 

Increasing  the  competitiveness  of  the  primary  sector  is  the  main  objective  of  the 
Greek National Strategy Plan. Other strategic objectives involve the protection of the 
environment,  the  sustainable  development  of  natural  resources,  an  improvement  in 
the  quality  of  life  in  rural  areas  and  diversification  of  the  rural  economy.  The  NSP 
was not officially submitted in 2006. 

Rural Development Programmes 2007–2013 

496. 

The Rural Development Programme for Greece (2007–2013) describes the situation 
in the rural areas of the Region and puts forward a strategy to address the strengths 
and weaknesses found, along with the axes and measures to implement the strategy. 
The total public cost of the plan is EUR 5 077 million, of which the contribution of 
EAFRD is EUR 3 707 million. The RDP was not officially submitted in 2006. 

6.7. 

Spain 

Rural development programme (EAGGF Guarantee) 

497. 

In 2000, the Commission approved two horizontal plans (“accompanying measures” 
and  “improvement  of  structures”)  and  seven  regional  programmes  (Aragon, 
Catalonia, Basque Country, Navarre, Balearics, Rioja, Madrid).  

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Amendments to the RDP 

498. 

In  2006,  the  last  year  of  the  2000–2006  programming  period,  the  Commission 
approved 11 Decisions amending Spanish RDPs (nine of them making changes to the 
financial  tables  of  each  PDR  as  a  result  of  new  funds  provided  by  Commission 
Decisions 2006/289/EC and 2006/332/EC). In addition, two notifications of technical 
changes were made in the CAP accompanying programme. Finally, in order to make 
up  the  budgetary  allocations  up  to  the  end  of  the  programming  period,  15  financial 
Communications were approved by the Commission in September and October 2006. 

Level of payments in the period from 16 October 2005 to 15 October 2006 

499. 

The  2006  EAGGF  Guarantee  allocation  for  Spain  was  set  at  EUR  692.2  million 
(which  includes  EUR  107  million  from  modulation).  Payments  for  the  same  period 
amounted  to  EUR  678.7  million,  i.e.  98.1%  of  that  allocation.  After  7  years  of 
implementation,  the  global  financial  expenditure  amounts  to  EUR  3  608.4  million, 
which accounts for 99.6% of the EUR 3 621.8 million expenditure planned for 2000–
2006. 

Objective-1 programmes 

Operational programmes or Single Programming Documents 

500. 

501. 

In 2000 and 2001, the Commission approved two horizontal programmes (one mono-
fund  for  “Improvement  of  Structure”’  in  Objective-1  areas  and  one  multi-fund  for 
“Technical  Assistance”)  and  ten  multi-fund  regional  programmes  (Andalucia, 
Asturias, Cantabria, Castile-la Mancha, Castile-Leon, Extremadura, Galicia, Murcia, 
Canary Islands and Valencia), supplemented by their programme complement.  

During  2006,  the  majority  of  the  Operational  programmes  were  amended  by  the 
Commission, accompanied by adaptations to their programme complement as part of 
the  update  of  the  financial  tables  and  necessary  final  technical  changes  to  such 
programmes.  It  should be mentioned that no  further decisions may  be adopted after 
the end of 2006. 

Level of payments in 2006 

502. 

After  seven  years  of  implementation,  global  financial  expenditure  amounts  to  EUR 
4 281  million,  which  is  82%  of  the  EUR  5  233  million  of  expenditure  planned  for 
2000–2006.  

Leader+ Programme 

503. 

504. 

505. 

By  the  end  of  2002,  the  Commission  had  approved  18  Leader+  programmes  (one 
horizontal programme and 17 regional programmes). 

Seventeen  programmes  are  currently  implemented  under  global  grants,  and  one 
(Basque  Country)  under  a  common  Operational  Programme  with  a  programme 
complement. A total of 145 Local Action Groups have been created. 

During  2006,  the  Commission  adopted  amending  decisions  for  15  Spanish 
programmes,  nine  to  decommit  the  part  of  the  funds  committed  in  2004  and  not 
settled at the end of 2004 (N+2 Rule). At the same time, several of these programmes 

EN 

106 

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have  been  financially  reprogrammed.  The  other  six  decisions  were  for  financial 
changes  between  axes  designed  to  finalise  the  2000–2006  programming  period. 
Finally,  financial  changes  between  measures  (not  requiring  a  Commission  decision) 
were made to several Leader+ programmes (Aragon, Castile-la Mancha, Castile-Leon 
and Basque Country).  

506. 

After  seven  years  of  implementation,  global  financial  expenditure  amounts  to  EUR 
276 million, which is 55% of the EUR 500 million of expenditure planned for 2000–
2006 (after indexation). 

Rural development policy 2007–2013 

National Strategy Plan 

507. 

The Spanish NSP was not officially submitted in 2006.  

Rural Development Programmes 2007–2013 

508. 

509. 

Due to its political structure, Spain implements its rural development policy through 
rural  development  programmes  (RDPs)  established  at  regional  level  by  the 
Autonomous  Communities.  In  this  respect,  17  regional  programmes  and  two 
horizontal programmes relating to the framework and the rural network are expected 
to be submitted. 

The  total  Spanish  budget  for  the  2007–2013  programming  period  is  EUR  13 814.1 
million  (EUR  15 800.2  million  taking  into  account  national  aid),  of  which  EAFRD 
support  amounts  to  EUR  7 213.9  million  (Convergence  regions:  EUR  4 943.6 
million).  

6.8. 

France 

Rural development programme (EAGGF Guarantee) 

510. 

One  national  Rural  Development  Programme  (RDP)  for  the  period  2000–2006  was 
approved  for  France.  The  total  public  cost  of  this  programme  amounted  to 
EUR 9 671.1  million,  of  which  the  EAGGF  contributed  EUR  4 821.2  million. 
Furthermore,  a  rural  development  axis  was  included  in  each  of  the  20  Objective-2 
regional  programmes.  The  total  public  cost  for  these  20  programmes  amounted  to 
EUR 1 570.2 million, of which the EAGGF contributed EUR 679.3 million. 

Amendments to the RDP and rural development axis of Objective-2 programmes 

511. 

512. 

On 25 April 2006, the Commission received a request from the French Authorities for 
an  amendment  to  the  RDP,  which  was  approved  on  3  November  2006.  The 
amendments introduce new actions under the “investments in farms” measure and a 
new agri-environmental measure called “Plan végétal pour l’environnement”. 

This decision also covered the amendment of the Financial Plan to include both the 
national  RDP  and  the  rural  development  axis  of  the  20  Objective-2  regional 
programmes. Following this amendment, the maximum total public expenditure and 
EAGGF  contribution  are  set  at  EUR  11 241.4  million  and  EUR  5 500.5  million, 
respectively. 

EN 

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513. 

In 2006, the Monitoring Committees approved draft SPD amendments for most of the 
regions. These amendments were forwarded to the Commission and were adopted as 
formal amendments to the SPDs. 

Level of payments in the period from 16 October 2005 to 15 October 200659 

514. 

515. 

During this period, payments totalled EUR 1 189.1 million of the EAGGF Guarantee 
Section budget for 2006 (EUR 1 197 million).  

After  six  years  of  implementation,  overall  financial  implementation  for  EAGGF 
Guarantee is 99.9% of the allocation for 2000–2006. 

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents 

516. 

Six  French  regions  are  classified  under  Objective  1:  the  four  overseas  departments 
(Guadeloupe, Martinique, French Guiana, Réunion), Corsica and, in part, the region 
of  Nord/Pas-de-Calais  (the  three  Douai,  Valenciennes  and  Avesnes-sur-Helpe 
districts). The latter two are receiving phasing-out support.  

Level of payments in 2006 

517. 

Payments for 2006 amounted to EUR 82.5 million, taking the total payments for the 
2000–2006 period to EUR 450.4 million. 

Leader+ Programme 

518. 

519. 

520. 

The  French  National  Programme  of  the  Community  Initiative  Leader+  was  adopted 
on 8 August 2001 in the form of a global grant. Accordingly, CNASEA (the National 
Centre  for  Farm  Planning)  was  designated  as  the  management  authority.  The  total 
Community contribution amounts to EUR 263.6 million.  

The  programme  is  implemented  by  140  Local  Action  Groups  (LAGs),  which  were 
selected  in  2002.  Their  action  plans  were  set  up  in  2003,  following  the  signing  of 
bilateral agreements with CNASEA. 

Payments  totalled  EUR  39.2  million  in  2006,  although  the  expenditure  statements 
made  it  impossible  to  avoid  N+2  decommitments.  By  Commission  Decision 
C(2006) 2039  of  26  May  2006,  the  EAGGF  contribution  to  this  programme  was 
reduced  by  EUR  5.5  million.  Funding  since  2000  has  totalled  EUR  137.3  million, 
which accounts for 52.1% of the total budget appropriations for 2000–2006. 

Rural development policy 2007–2013 

National Strategy Plan  

521. 

A first version of the NSP for France was submitted on 23 November 2006. The NSP 
focuses  objectives  on  improving  the  competitiveness  of  the  agro-food  sector, 
diversifying  the  economy  in  rural  areas,  increasing  the  employment  rate,  improving 

59 

Payments in accordance with Article 39 of Regulation (EC) No 1290/2005 are included for 2006. 

EN 

108 

   EN 

 
                                                 
the environmental situation and preserving the rural heritage. The planned breakdown 
by  axis  of  the  EAFRD  allocation  (EUR  6.4  billion)  for  France  as  a  whole  is  as 
follows: 35% for axis 1; 55% for axis 2; 10% for axis 3; 5% for axis 4 (Leader) and 
2% for technical assistance. 

Rural Development Programmes 2007–2013 

522. 

For  the  programming  period  2007–2013,  Rural  Development  policy  will  be 
implemented  in  France  through  six  RDPs:  one  for  mainland  France,  one  for  each 
overseas department (Guadeloupe, French Guiana, Martinique, Réunion) and one for 
the island of Corsica. The RDPs were not officially submitted in 2006. 

6.9. 

Ireland 

Rural development programme (EAGGF Guarantee) 

523. 

The total public expenditure of the programme is EUR 3 675.1 million, including an 
EU  contribution  of  EUR 2 388.9  million  from  the  European  Agricultural  Guidance 
and  Guarantee  Fund,  Guarantee  Section.  The  programme  covers  all  rural  areas  and 
includes  support  for  early  retirement,  less  favoured  areas,  agri-environment  and 
afforestation. 

Amendments to the RDP 

524. 

In 2006, the Irish Authorities notified the Commission of amendments to their Rural 
Development Programme. These changes included the Early Retirement Scheme and 
Afforestation measures. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

525. 

For  the  period  from  16  October  2005  to  15  October  2006,  EU  expenditure  for  the 
programme  amounted  to  EUR 378.3  million,  which  is  in  line  with  the  spending 
profile of the programme. 

Over the period 2000–2006 all funds were completely utilised. 

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents (EAGGF Guidance) 

526. 

The  EAGGF  Guidance  Section  contributes  to  Rural  Development  measures  under 
two Operational Programmes (Operational Programmes for the Border, Midlands and 
Western  region  and  the  Southern  and  Eastern  region)  in  the  Community  Support 
Framework 
to 
(2000–2006).  The  EAGGF  Guidance  Section 
EUR 153.6 million.  In  addition,  EAGGF  Guidance  has  contributed  to  the  special 
programme PEACE II for the border counties of Ireland and Northern Ireland. 

amounts 

Level of payments in 2006 

527. 

In  2006,  payments  (excluding  PEACE  II)  totalled  EUR  34.4  million.  Cumulative 
EAGGF Guidance payments up to the end of 2006 amounted to EUR 105.3 million, 
or 68.5% of the amount scheduled for the 2000–2006 programming period. 

EN 

109 

   EN 

 
528. 

By the end of 2006, the total amount paid out of EAGGF Guidance to Ireland for the 
2000–2004  PEACE II  Programme  (managed  jointly  with  Northern  Ireland)  was 
EUR 9.2 million (73% of the allocation of EUR 12.6 million). 

Leader+ Programme 

529. 

allocation 

from  EAGGF  Guidance 

The 
to 
EUR 48.7 million, 65% of the total public expenditure for the period. By the end of 
2006,  a  total  amount  of  EUR 26.4  million  had  been paid (54% of the total EAGGF 
allocation for the 2000–2006 programming period).  

for  2000–2006 

amounted 

Rural development policy 2007–2013 

National Strategy Plan 

530. 

In  2006,  the  Irish  authorities  formally  submitted  to  the  Commission  their  National 
Strategy  Plan  for  rural  development  for  the  2007–13  programming  period. 
Discussions took place between the Commission and the Irish authorities throughout 
2006 on the analysis, strategy and priorities identified in the NSP. 

Rural Development Programmes 2007–2013 

531. 

Discussions were held with the Irish managing authorities concerning the preliminary 
submission of the Rural Development Programme. Total expenditure over the period 
was  EUR  4  298.8  million,  of  which  the  EAFRD  contribution  should  be 
EUR 2 339.9 million. 

6.10. 

Italy 

Rural development programme (EAGGF Guarantee) 

532. 

In Italy, 21 rural development programmes are co-financed by EAGGF. Total public 
expenditure  on  rural  development  programmes  for  Italy  amounts  to  EUR 8 744.3 
million,  including  a  Community  contribution  of  EUR  4 512.3  million60  provided  by 
the EAGGF Guarantee Section.  

Amendments to the RDP 

533. 

The  Commission  approved  amendments  to  the  following  RDPs:  Friuli-Venezia 
Giulia,  Trento,  Veneto.  The  amendments  concerned  primarily  the  adaptation  of 
several measures of the programme to take account of effective implementation and 
reprogramming of the financial scheme. The amendment to the RDPs of the Regions 
of Friuli-Venezia Giulia and Trento refers to the introduction of a measure designed 
as a compensatory payment for Less Favoured Areas. The amendment to the RDP of 
the  Region  of  Veneto  concerned  the  introduction  of  a  specific  measure  for 
consultancy services. 

534. 

In 2006, the Commission approved the single financial table for all Italian RDPs, as 
presented in accordance to Article 48(1) of Regulation (CE) 817/04. 

60 

EN 

Data refer to the Total Allocation “Berlin”; contribution of EUR 4 624.2 million represents the Total Allocation 2006/289/EC (modulation included). 

110 

   EN 

 
                                                 
Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

535. 

536. 

As  at  15  October  2006,  expenditure  in  the  current  financial  year  for  all  21  rural 
development  programming  documents  financed  by  EAGGF  Guarantee  amounted  to 
EUR  590.9  million  of  Community  contribution,  which  accounts  for  99.7%  of  the 
annual budget earmarked. 

Overall  financial  implementation  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  99.9%  of  the  amount  planned  for  2000–2006,  i.e. 
EUR 4 622.5 million against an amount earmarked of EUR 4 624.2 million61. 

Operational programmes or Single Programming Documents 

Amendments to the OPs or SPD 

537. 

The  seven  Objective-1  regions  (Sicily,  Sardinia,  Calabria,  Basilicata,  Campania, 
Apulia  and  Molise)  are  covered  by  multi-fund  operational  programmes.  After  the 
distribution  of  the  performance  reserve  at  Community  (+ 4%)  and  national  level 
(+ 6%),  the  total  EAGGF  contribution  (Guidance  section)  in  the  Operational 
Programmes  amounts  to  EUR 3 292.3  million  for  the  entire  programming  period 
(2000–2006). 

Level of payments in 2006 

538. 

The seven Objective-1 regions benefited from an EAGGF contribution of EUR 513.5 
million  in  terms  of  payments  in  2006.  Since  the  beginning  of  the  programming 
period,  the  paid  amounts  (EUR  2 140.7  million)  have  accounted  for  65.6%  of  the 
amount of the EAGGF Guidance Section planned for the whole programming period.  

Leader+ Programme 

539. 

540. 

541. 

For  the  2000–2006  programming  period,  Italy  approved  21  Regional  Programmes 
and one National Network Programme. In 2006, three programmes (Apulia, Liguria 
and Sicily) were amended by Commission decision to adapt certain measures of the 
programmes  to  take  account  of  their  effective  implementation,  with  slight 
reprogramming of their financial scheme. 

Following  indexation,  the  total  amounts  of  public  expenditure  planned  for  the 
Leader+  programmes  for  Italy  amounts  to  EUR 490.3  million  for  the  programming 
period, including a Community contribution of EUR 281.6 million. 

For  the  22  Leader+  programmes,  the  Italian  regions  benefited  from  an  EAGGF 
contribution of EUR 64.1 million in terms of payments in 2006. Since the beginning 
of the programming period, the paid amounts (EUR 165.9 million) have accounted for 
58.9%  of  the  amount  of  the  EAGGF  Guidance  Section  planned  for  the  whole 
programming period.  

61 

Total execution includes expenditure/reimbursement based on Decision C(2006) 4368 of 6.10.2006. 

EN 

111 

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Rural development policy 2007–2013 

National Strategy Plan 

542. 

The  NSP  indicates  priorities  in  the  light  of  the  Community  strategic  guidelines  and 
ensures coherence and coordination with national and regional priorities: 

– 

– 

– 

increasing the competitiveness of the agricultural and forestry sector,  

sustainable  use  of  natural  resources  and  landscape  conservation,  maintaining 
agricultural activities and decreasing the risk of abandonment, 

promoting the diversification of the rural economy and local development. 

543. 

544. 

The  NSP  includes  an  overall  socio-economic  and  environmental  analysis.  It  covers 
thematic  and  territorial  priorities  and  major  quantified  objectives,  including 
monitoring and evaluation indicators. 

In  addition,  the  NSP  provides  a  breakdown  of  EAFRD  resources  between  the 
21 regions,  and  indication  to  guarantee  complementarity  with  the  CAP  and  the 
Structural Funds. 

Rural Development Programmes 2007–2013 

545. 

For  the  period  2007–2013,  the  national  rural  development  plan  consists  of  21  rural 
development  programmes  (EAFRD  co-financing)  for  each  of  the  19  Italian  regions 
and  for  the  two  autonomous  provinces  of  Trento  and  Bolzano,  and  a  network 
programme. The EAFRD contribution amounts to EUR 8 292 million. 

6.11.  Cyprus 

Rural development plans (EAGGF Guarantee) 

546. 

547. 

548. 

549. 

Cyprus  is  the  only  country  among  the  new  Member  States  to  benefit  from 
Community solidarity as defined for Objective-2 regions.  

The  Commission  approved  in  2004  the  Rural  Development  Plan  (2004–2006)  for 
Cyprus,  to  be  co-financed  by  the  “European  Agriculture  Guarantee  and  Guidance 
Fund” (EAGGF) — Guarantee Section. The Rural Development Plan (2004–06) for 
Cyprus covers the areas of the country under effective control of the internationally 
recognised government of the Republic of Cyprus. 

The Rural Development Plan (2004–06) for Cyprus accounts for 58% of the overall 
Community  financial  contribution  during  the  current  programming  period.  The 
EAGGF  contributed  a  total  amount  of  EUR 74.8  million  during  this  period,  which 
will  be  complemented  by  national  public  funding  of  EUR 69.1  million  and  by 
EUR 14.4 million of additional State aid. In addition, the private sector is expected to 
contribute EUR 33.9 million.  

The  programme  includes  a  broad  range  of  rural  development  measures,  which  give 
special emphasis to improving the infrastructure and the competitiveness of the rural 
economy of the country, consolidating and diversifying rural areas and protecting the 
environment. The Department of Agriculture of the Ministry of Agriculture, Natural 
Resources  and  Environment  of  Cyprus  is  the  Managing  Authority,  and  a  Paying 

EN 

112 

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Agency (CAPO) has been established. Most of the calls for expression of interest for 
the various measures of the Rural Development Plan (2004–06) of Cyprus have been 
published. 

Amendments to the RDP 

550. 

Two financial notifications  not requiring a Commission Decision were submitted in 
2006. 

Level of payments in the period from 16 October 2005 to 15 October 2006 

551. 

Over the period, payments amounted to EUR 22.9 million and accumulated payments 
since the beginning of the programme, including advance payments, amount to EUR 
39.9 million, or 53% of the EAGGF contribution. 

Rural development policy 2007–2013 

National Strategy Plan  

552. 

The National Strategy for Cyprus was officially received on 15 December 2006. The 
main  objectives  are  to  increase  the  competitiveness  of  the  primary  and  secondary 
agricultural sector in Cyprus and revive the Cypriot countryside, while protecting the 
environment and supporting the indigenous developmental potential of rural regions 
by adopting a bottom-up approach. 

Rural Development Programmes 2007–2013 

553. 

The  Cypriot  Rural  Development  Programme  for  2007–2013  was  submitted  on 
22 December 2006. It describes the situation in the rural areas of the Region and sets 
out the strategy chosen to address the strengths and weaknesses found, along with the 
axes  and  measures  to  implement  that  strategy.  The  total  public  cost  of  the  plan  is 
EUR 325 million, of which the contribution of EAFRD is EUR 162.5 million. 

6.12.  Latvia 

Rural development plan (EAGGF Guarantee) 

554. 

Total  public  costs  amount  to  EUR 410.1  million,  including  a  contribution  of 
EUR 328.1  million  from  EAGGF  Guarantee.  The  programme  includes  support  for 
producer groups, meeting standards, support for farmers in less favoured areas, agri-
environment, early retirement and support for semi-subsistence farms. 

Amendments to the RDP 

555. 

There  were  two  notifications  and  one  amendment  requiring  a  Commission  decision 
submitted during 2006. Notifications concerned amendments to the measures “Agri-
environment”,  “LFA”,  “Meeting  standards”,  “Early  retirement”,  and  “Technical 
assistance”. The amendment requiring a Commission decision concerned the transfer 
of  funds  to  the  measures  “Agri-environment”  and  “Support  for  semi-subsistence 
farms”,  where  commitments  exceeded  the  budget  that  had  been  earmarked. 
Amendments to financing were made within the priority and therefore do not affect 
the financial table. 

EN 

113 

   EN 

 
Level of payments from 16 October 2005 to 15 October 2006 (EAGGF Guarantee) 

556. 

The  level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006 
reached EUR 215.0 million, i.e. 65.5% of the total Community budget for the period 
2004–2006.  

Operational programmes or Single Programming Documents (EAGGF Guidance) 

557. 

The Latvian Single Programming Document (SPD) for Objective 1 includes support 
for  investments  in  agricultural  holdings,  setting-up  of  young  farmers,  training, 
improving  processing  and  marketing  of  agricultural  products,  promoting  the 
adaptation and development of rural areas and forestry and developing local actions 
(Leader+ measures).  

558. 

The  total  public  cost  of  the  EAGGF  Guidance  part  of  the  Latvian  Single 
Programming  Document  for  2004–2006  was  EUR 138.6  million,  including  an  EU 
contribution of EUR 91.9 million. 

Level of payments in 2006 

559. 

In  2006,  payments  reached  a  level  of  EUR  24.8  million,  i.e.  27.0%  of  the  total 
Community contribution for the period 2004–2006. 

Rural development policy 2007–2013 

National Strategy Plan  

560. 

The Latvian National Strategic Plan was received officially on 8 December 2006. The 
financial breakdown by axis is 50% for Axis 1, 30% for Axis 2, 20% for Axis 3 and 
2.5% for Axis 4. The strategy defines four priorities for Latvia: 

– 

– 

– 

– 

development of capacities of rural people 

enhancement of labour-generated income in rural territories 

sustainable management of rural natural resources 

development of rural living environment. 

Rural Development Programmes 2007–2013 

The Latvian rural development programme was not officially submitted in 2006. 

6.13.  Lithuania 

Rural development plans (EAGGF Guarantee) 

561. 

562. 

Total  public  expenditure  for  the  Rural  Development  Plan  (2004–2006)  was 
EUR 611.9  million,  and  the  maximum  contribution  from  the  EAGGF  Guarantee 
section EUR 489.5 million. The programme covers the whole of the country. 

The  Plan  contains  the  following  nine  measures:  Early  retirement,  LFA,  Agri-
environment,  Afforestation  of  agricultural  land,  Support  for  semi-subsistence  farms 
undergoing  restructuring,  Meeting  standards,  Technical  assistance,  Complementary 
national direct payments and the Carry-over of SAPARD overcommitments. 

EN 

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Amendments to the RDP 

563. 

In 2006, Lithuania submitted three notifications of amendments to the RDP, none of 
which required a Commission decision. These amendments concerned inheritance of 
entitlement under the Early retirement measure, sanctions for the LFA measure, and 
provisions  for  replanting  forest  in  case  of  natural  disasters  within  the  Afforestation 
measure. All the notifications have already come into force.  

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

564. 

565. 

EAGGF  Guarantee  expenditure  for  the  period from 16 October 2005 to 15 October 
2006  amounted  to  EUR  140.0  million,  or  78.6%  of  the  annual  allocation 
(EUR 178.1 million for 2006). 

Cumulative  EAGGF  Guarantee  payments  from  the  start  of  the  programming  period 
(2004)  amount  to  EUR  248.8  million,  or  50.8%  of  the  total  Community  budget 
earmarked for the 2004–2006 programming period. 

Operational programmes or Single Programming Documents 

566.  Within  the  Objective-1  programme  for  Lithuania,  which  covers  the  whole  country, 
the EAGGF Guidance contribution amounted to EUR 122.9 million, which is 13.7% 
of the total Structural Fund allocation for the period 2004–2006. 

567. 

The  seven  EAGGF-funded  measures  included  in  the  SPD  are:  Investments  in 
agricultural  holdings,  Setting-up  of  young  farmers,  Training,  Improving  processing 
and  marketing  of  agricultural  products,  Forestry,  Promoting  the  adaptation  and 
development of rural areas and the Leader+ measure. 

Level of payments in 2006 

568. 

The  total  EAGGF-Guidance  expenditure  declared  by  Lithuania  for  2006  was  EUR 
45.1  million.  Cumulative  EAGGF  Guidance 
to 
EUR 52.5 million,  or  42.7%  of  the  allocation  earmarked  for  the  2004–2006 
programming period. 

amounted 

payments 

Rural development policy 2007–2013 

National Strategy Plan 

569. 

The NSP for Lithuania was officially submitted to DG AGRI on 7 August 2006. 

Rural Development Programmes 2007–2013 

570. 

There  is  one  Rural  Development  Programme  for  the  whole  of  Lithuania,  with  total 
public  expenditure  of  EUR  2.26  billion  for  the  period  2007–2013.  This  includes  a 
contribution from the EAFRD of EUR 1.74 billion for the programming period. The 
RDP was not formally submitted in 2006. 

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115 

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6.14.  Luxembourg 

Rural development programme (EAGGF Guarantee) 

571. 

The  total  public  cost  for  the  National  Rural  Development  Programme  amounted  to 
EUR 294.1 million, of which the EAGGF contributed EUR 92.6 million.  

Amendments to the RDP 

572. 

The  STAR  Committee  of  July  2006  endorsed  an  amendment  to  the  Rural 
Development  Plan  for  Luxemburg.  The  Commission  Decision  approving  this 
amendment was issued on 30 August 2006 (reference C(2006) 3969).  

Level of payments in the period from 16 October 2005 to 15 October 2006  

573. 

The  2006  allowance  of  the  EAGGF  Guarantee  Section  for  the  Grand  Duchy  of 
Luxembourg amounted to EUR 14.5 million. EU expenditure was EUR 11.9 million, 
which is 81.8% of the total. 

574. 

Global  financial  execution  for 
EUR 90.0 million out of a total of EUR 92.6 million. 

the  period  2000–2006 

is  now  97.2%,  or 

Leader+ Programme 

575. 

576. 

The  programme  involves  total  public  expenditure  of  EUR 9.27 million,  including 
EUR 2.14 million for the EAGGF contribution. This amount includes the indexation 
approved  on  30  November  2004  (C(2005)  4673).  Four  LAGs  were  selected  in 
Luxembourg, covering 90 000 inhabitants, and a fifth is financed by national funds. 

At  the  end  of  2006,  after  six  years  of  implementation,  the  total  financial  execution 
was  41.8%  of  the  total  amount  of  EAGGF  Guidance  expenditure  planned  for  the 
period 2000–2006, i.e. EUR 0.9 million out of a total of EUR 2.1 million. 

577. 

The  national  Leader  network  unit  became  fully  operational  in  2004,  but  had  been 
restructured by the beginning of 2006. 

Rural development policy 2007–2013 

National Strategy Plan  

578. 

The first version of the NSP for the Grand Duchy of Luxembourg was submitted on 
16  October  2006.  The  NSP  focuses  objectives  on  improving  the  competitiveness  of 
the  agro-food  sector,  sustaining  farmers’  incomes  and  improving  the  environmental 
situation. The planned breakdown by axis of the EAFRD allocation (EUR 90 million) 
for Luxembourg as a whole is as follows: 29% for axis 1; 59% for axis 2; and 12% 
for axis 3. The Leader approach axis accounts for 5.9% of the EAFRD contribution. 
Luxembourg will not use EAFRD funds for technical assistance 

Rural Development Programmes 2007–2013 

579. 

For  the  programming  period  2007–2013,  Rural  Development  policy  will  be 
implemented  in  Luxembourg  with  an  EAFRD  allocation  of  EUR  90  million.  The 
RDP was not formally submitted in 2006. 

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6.15.  Hungary 

Rural development plans (EAGGF Guarantee) 

580. 

There  is  one  Rural  Development  Plan  for  the  whole  of  Hungary,  with  total  public 
expenditure  of  EUR 754.1  million  for  the  period  2004  to  2006.  This  includes  a 
contribution from the EAGGF, Guarantee Section, of EUR 602.3 million.  

Amendments to the RDP 

581. 

The  plan  was  amended  by  Commission  Decision  C(2006)  7301  of  29  December 
2006.  The  amendment  concerned  a  reduction  in  the  financial  allocation  for  the 
measures “Meeting standards”, “Less favoured areas” and “Semi-subsistence farms” 
in favour of greater funding for the measures “Complements to direct payments” and 
“Agri-environment” in 2006.  

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

582. 

In  the  decision  approving  the  programme,  the  Commission  made  a  Community 
budget commitment of EUR 219.2 million for 2006. In 2006, the Commission made 
interim payments of EUR 233.1 million.  

583. 

Financial execution from the beginning of the programming period amounted to EUR 
429.7 million, i.e. 71.3% of the EAGGF budget for 2004–2006.  

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents  

584. 

There  is  one  Agriculture  and  Rural  Development  Operational  Programme  for 
Community structural assistance under Objective 1, covering the whole of Hungary. 
Total public expenditure for the operational programme was set at EUR 428.5 million 
for the period 2004–2006. This includes a contribution of EUR 317.2 million from the 
European  Union:  EUR 312.8  million  from  the  EAGGF,  Guidance  Section,  and 
EUR 4.4 million from the Financial Instruments for Fisheries Guidance, respectively.  

Amendments to the OP 

585. 

The operational programme was amended by Commission Decision C(2006) 2204 of 
30  May  2006.  The  amendments  involve  adjustments  to  the  Leader+  measure,  for 
which  implementing  tasks  have  been  reassigned  to  the  regional  offices  of  the 
Intermediate  Body  further  to  the  reorganisation  of  the  Ministry  of  Agriculture. 
Secondly,  the  beneficiaries  of  the  Leader+  measure  have  been  changed  with  the 
addition  of  the  Managing  Authority  for  Activity  1  −  Acquisition  of  skills.  The 
adjustment did not involve any financial amendment.  

Level of payments in 2006 

586. 

In  the  decision  approving  the  programme,  the  Commission  made  a  Community 
budget commitment of EUR 135.3 million for the EAGGF. 

EN 

117 

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587. 

588. 

The  Commission  made  an  interim  payment  of  EUR 146.1  million  for  EAGGF  part-
financed measures. 

Financial  execution  for  EAGGF  part-financed  measures  from  the  beginning  of  the 
programming period amounted to EUR 220.1 million, which is 70% of the budget for 
2004–2006.  

Rural development policy 2007–2013 

National Strategy Plan 

589. 

The NSP sets the development priorities for agriculture and rural development in line 
with  the  Community  Strategy  Guidelines:  1)  contributing  to  the  competitiveness  of 
agriculture,  food  production  and  forestry  (axis  1),  2)  observing  the  principles  of 
sustainable development and the protection of natural values and biodiversity (axis 2), 
and 3) enhancing entrepreneurship and providing access to services throughout rural 
areas (axis 3). The document was not formally submitted in 2006. 

Rural Development Programmes 2007–2013 

590. 

There  is  one  Rural  Development  Programme  for  the  whole  of  Hungary,  with  total 
public  expenditure  of  EUR  5.1  billion  for  the  period  2007–2013.  This  includes  a 
contribution  from  the  EAFRD  of  EUR 3.8  billion  for  the  programming  period.  The 
document was not formally submitted 2006. 

6.16.  Malta 

Rural development plans (EAGGF Guarantee) 

591. 

There  is  one  Rural  Development  Programme  covering  all  rural  areas  of  Malta.  The 
total  cost  of  the  programme  was  EUR 33.6  million.  The  contribution  of  EAGGF, 
Guarantee Section, amounted to EUR 26.9 million.  

Amendments to the RDP 

592. 

There  have  been  two  amendments  to  the  Plan.  The  first  concerned  the  transfer  of 
EUR 400 000 from the “Producer Groups” to the “Less favoured areas” budget and 
the second involved the establishment of new aid rates and a new investment period 
of two years for applications to be received under the “Meeting Standards” measure 
in 2007. 

Level of payments in 2006 

593. 

In  the  decision  approving  the  programme,  the  Commission  made  a  Community 
budget  commitment  of  EUR 9.8  million.  The  Commission  made  two  interim 
payments amounting to EUR 7.9 million.  

594. 

Financial execution since the beginning of the programming period has amounted to 
EUR 18.7 million, which is 69.5% of the budget earmarked for 2004–2006.  

EN 

118 

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Operational programmes or Single Programming Documents (EAGGF Guidance) 

595. 

The  Single  Programming  Document  under  Objective  1  of  the  Structural  Funds,  for 
which  Malta  as  a  whole  is  eligible,  contains  two  measures  part-financed  by  the 
EAGGF Guidance Section: Investments in Agricultural Holdings and Improving the 
Marketing and Processing of Agricultural Products. The total public expenditure for 
these measures was EUR 6 million, of which an EU contribution of EUR 4.2 million. 

Amendments to the OP 

596. 

No amendments were submitted in 2006.  

Level of payments in 2006 

597. 

In  the  decision  approving  the  programme,  in  2006  the  Commission  made  a 
Community budget commitment of EUR 1.8 million. 

598. 

In 2006, the Commission made four interim payments amounting to EUR 0.9 million.  

599. 

Financial  execution  for  EAGGF  part-financed  measures  from  the  beginning  of  the 
programming  period  amounted  to  EUR  1.5  million,  which  is  36.5%  of  the  budget 
earmarked for 2004–2006.  

Rural development policy 2007–2013 

National Strategy Plan 

600. 

The NSP sets the development priorities for agriculture and rural development in line 
with the Community Strategy Guidelines:  

1)  Improving  the  competitiveness  of  the  agricultural  sector  by  focusing  on  the 
priorities  of  knowledge  transfer,  modernisation  of  holdings,  adding  value  to 
agricultural  products  in  terms  of  quality  and  competitiveness  in  an  effort  to  offer 
more diverse, higher quality products and services to domestic consumers and foreign 
tourists, thus making farming a viable and more attractive career choice for younger 
people. 

2)  Improving  the  environment  and  the  countryside  by  encouraging  the  retention  of 
agricultural  activity  and  promoting  environmentally  friendly  production  methods  in 
line with rural heritage. 

3) Improving the quality of life in rural areas through the conservation and utilisation 
of the rural, natural and cultural heritage, thereby enhancing the multifunctional role 
of rural areas.  

The document was not formally submitted in 2006. 

Rural Development Programmes 2007–2013 

601. 

There is one Rural Development Programme for the whole of Malta, with total public 
expenditure  of  EUR  100.3  million  for  the  period  2007–2013.  This  includes  a 
contribution from the EAFRD of EUR 76.7 million for the programming period. The 
document was not formally submitted in 2006. 

EN 

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6.17.  The Netherlands 

Rural development programme (EAGGF Guarantee) 

602. 

The  total  public  cost  of  the  rural  development  programme  for  the  Netherlands  was 
EUR 1  042.6  million,  including  an  EU  contribution  of  EUR 435.1  million  from  the 
EAGGF Guarantee Section. 

Amendments to the RDP 

603. 

604. 

The  STAR  Committee  of  March  2006  endorsed  an  amendment  to  the  Dutch  Rural 
Development  Plan.  The  amendment  consisted  of  adopting  good  farming  practice, 
adapting methods for the calculation of aid for agri-environmental measures, adding 
two  new  agri-environmental  packages  and  a  measure  in  support  of  voluntary 
participation  in  food  quality  schemes.  The  Commission  Decision  approving  this 
amendment was issued on 15 May 2006 (reference C(2006) 2028).  

The STAR Committee of June 2006 endorsed an amendment of the financial plan to 
increase 
to  Decision 
2006/289/EC.  The  Commission  Decision  approving  this  amendment  was  issued  on 
1 July 2006 (reference C(2006) 3574). 

the  EAGGF  allocation  for 

the  Netherlands,  pursuant 

605. 

Furthermore, six financial communications, including a revised financial table, were 
received in 2006. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

606. 

607. 

The  2006  budgetary  allocation  for  the  Netherlands  amounted  to  EUR  71.1  million. 
The  level  of  payments  for  the  programme  amounted  to  EUR  68.3  million,  which  is 
96.1% of the allocation.  

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  99.3%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 435.1 million.  

Objective-1 Programmes (EAGGF Guidance) 

Operational Programmes or Single Programming Documents 

608. 

One Single Programming Document was approved for the Netherlands: the phasing-
out  of  the  Objective-1  SPD  for  Flevoland.  An  update  of  the  mid-term  review  was 
completed,  which  meant  a  transfer  of  EUR  2.1  million  EAGGF  from  measure  2.1 
(consolidating  the  agricultural  sector)  to  2.3  (enhancing  rural  areas).  A  proposal  for 
an amendment was submitted to the Commission at the end of the year. 

Level of payments in 2006 

609. 

Global  financial  execution  for  EAGGF  Guidance  since  the  beginning  of  the 
programming  period  has  been  69%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 7.2 million out of a total of EUR 10.4 million. 

EN 

120 

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Leader+ Programme 

610. 

In  the  Netherlands,  four  Leader+  programmes  were  approved:  one  for  the  South 
region, involving total expenditure of EUR 48.4 million, of which EUR 19.6 million 
EAGGF Guidance; one for the Randstad region, involving total expenditure of EUR 
39.5 million, of which EUR 19.6 million EAGGF Guidance; one for the East region, 
involving total expenditure of EUR 46.7 million, of which EUR 18.9 million EAGGF 
Guidance,  and  one  for 
total  expenditure  of 
EUR 71.7 million, of which EUR 25.5 million EAGGF Guidance. 

the  North  region, 

involving 

611. 

For  the  Randstad  Leader+  programme,  it  was  found  that  the  declaration  of 
expenditure  transmitted  to  the  Commission  was  incorrect  and  consequently  a 
recovery  note  amounting  to  EUR  1.1  million  was  issued  by  the  Commission  in 
February 2006.  

612. 

Since the approval of the Leader+ programmes, a total amount of EUR 48.6 million 
of EU contribution has been paid (58% of the total budget for the period). 

Rural development policy 2007–2013 

National Strategy Plan 

613. 

The first version of the NSP for the Netherlands was submitted on 17 August 2006 
and,  following  discussions  with  the  Netherlands  and  interservice  consultations,  an 
amended version was submitted on 27 November 2006. The NSP focuses objectives 
on  promoting  innovation  and  structural  adjustments,  reducing  the  environmental 
pressure  resulting  from  agriculture  and  horticulture  production,  diversifying  the 
economy in rural areas, boosting micro-enterprises and providing better services for 
and  accessibility  to  rural  areas.  The  breakdown  by  axis  of  the  EAFRD  allocation 
(EUR 486.5 million) for the Netherlands is as follows: 30% for axis 1; 30% for axis 
2; 30% for axis 3 and 10% for axis 4. 

Rural Development Programmes 2007–2013 

614. 

For  the  programming  period  2007–2013,  Rural  Development  policy  will  be 
implemented in the Netherlands through a single RDP, with an EAFRD allocation of 
EUR 486.5 million. The first version of the Dutch RDP was officially submitted on 
27 December 2006. 

6.18.  Austria 

Rural development programme (EAGGF Guarantee) 

615. 

The  total  public  cost  of  the  Austrian  Rural  Development  Programme  (2000–2006) 
was EUR 6 811.0 million, including an EU contribution of EUR 3 258.6 million from 
the EAGGF Guarantee Section. The programme prevailingly supports investments in 
agricultural holdings, setting-up of young farmers, training, less favoured areas, agri-
environment,  improving  processing  and  marketing  of  agricultural  products,  and 
promoting the adaptation and development of rural areas and forestry. 

EN 

121 

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Amendments to the RDP 

616. 

In  2006,  Austria  proposed  three  amendments  to  the  Austrian  RDP,  which  were 
approved. Two amendments concerned measures and were introduced as notifications 
pursuant  to  Article  51(5)  of  Regulation  (EC)  No 817/2004.  The  third  amendment 
concerned  a  revision  of  the  overall  financial  table  and  required  a  new  Commission 
Decision C(2006) 4114 of 7 September 2006. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

617. 

618. 

The  plan  provided  for  total  public  expenditure  of  EUR 1  008  million  in  2006, 
including  an  EU  contribution  of  EUR 500  million.  For  the  period  from  16  October 
2005 to 15 October  2006,  EAGGF  Guarantee payments amounted to approximately 
EUR 499.4 million, which is 99.9% of the annual Community contribution. 

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  99.9%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 3 257.9 million out of a total of EUR 3 258.6 million.  

Annual Report 

619. 

The  monitoring  tables  for  2006  showed  that  measures  had  been  implemented 
satisfactorily and in accordance with forecasts.  

Objective-1 Programmes (EAGGF Guidance) 

620. 

total  public  cost  of 

the  Austrian  Objective-1  operational  programme 
The 
(Burgenland)  for  the  programming  period  2000–2006  was  EUR 389.9  million, 
including  an  EU  contribution  of  EUR 282.9  million.  Of  this,  the  agricultural 
fund/total  public  expenditure  amounted  to  EUR  162.7  million,  including  an  EU 
contribution (EAGGF) of EUR 43.7 million. 

Operational programmes or Single Programming Documents 

621. 

In  2006,  one  amendment  to  the  Austrian  Objective-1  operational  programme  was 
introduced and approved in 2007 by Decision C(2007) 1409 of 23 March 2007. The 
amendment concerned financial and non-financial aspects. 

Level of payments in 2006 

622. 

The programme provided for public expenditure for RDP measures (EAGGF) in 2006 
totalling  EUR  8.9  million  and  an  EU  (EAGGF)  contribution  of  EUR 6.7  million. 
Since  the  adoption  of  the  Objective-1  programme  for  Burgenland,  an  amount  of 
EUR 36.3 million  (EU  contribution)  has  been  paid  (around  83%  of  the  total  budget 
for the whole period), of which EUR 4.9 million in 2006. 

Annual Report 

623. 

The  annual  report  includes  a  brief  analysis  and  tables  on  priority  and  measure 
indicators. There have been no major changes in socio-economic trends or national, 
regional and sectoral policies.  

EN 

122 

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Leader+ Programme 

624. 

625. 

626. 

627. 

The  Leader+  programme  for  Austria  was  approved  by  Decision  C(2001)  820  of 
26 March  2001.  During  the  period  2001–2006,  total  expenditure  under  the 
programme  amounted  to  EUR 164.4  million.  This  includes  an  EU  contribution  of 
EUR 76. 8 million  and  a  contribution  of  EUR 59  million  from  the  private  sector 
(these figures already include indexation amounts). 

The Austrian Leader+ programme covers eight regions of Austria, with the exception 
of the urban area of Vienna. 

Following  a  public  tender,  56  local  actions  groups  have  been  selected  under  the 
programme. The groups cover 46 996 sq. km or approximately 45% of the territory, 
with a population of 2 175 079 inhabitants or about 23% of the total population. 

The  programme  provided  for  expenditure  in  2006  amounting  to  EUR 32.3  million. 
This  includes  an  EU  contribution  of  EUR 15.1  million  and  a  contribution  of 
EUR 11.6 million from the private sector. 

628.  Since 

the  adoption  of 

the  Austrian  Leader+  programme,  an  amount  of 
EUR 50.6 million has been paid (65.8% of the EAGGF budget for the period 2000–
2006), of which EUR 19.5 million in 2006. No problems were encountered regarding 
the n+2 rule during the current period or in 2006. 

629. 

In  2006,  one  amendment  was  proposed.  It  concerned  financial  amendments  within 
each  Title  and  required  a  new  Commission  Decision  (C(2006)  4830  of  6  October 
2006). 

Rural development policy 2007–2013 

National Strategy Plan 

630. 

The  Austrian  national  strategy  plan  lays  down  Austria’s  primary  aim  of  continuing 
with  the  previous  overall  strategy  of  ensuring  sustainable  agriculture,  supporting 
farmers and foresters in extensive management of agricultural and forestry land, and 
of maintaining rural landscapes. Thus, emphasis is put on axis 2 measures. To ensure 
competitiveness for Austrian farmers and foresters, support for investment in the food 
sector  was  increased  appreciably  compared  to  the  previous  programming  period. 
Support for the diversification of rural economy, especially for micro-enterprises and 
local tourism, will be raised considerably. Another strategic goal is the improvement 
of the quality of life by safeguarding the rural heritage. 

Rural Development Programmes 2007–2013 

631. 

Austria  implements  one  Rural  Development  Programme  2007–2013  for  its  entire 
territory. Total public expenditure amounts to EUR 7 822.0 million and the EAFRD 
contribution  is  EUR  3  911.4  million  (average  EAFRD  co-financing  is  50%  in  non-
convergence  regions  and  75%  in  the  convergence  region  of  Burgenland).  The  RDP 
was not officially submitted in 2006. 

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6.19. 

Poland 

Rural development plans (EAGGF Guarantee) 

632. 

The  Rural  Development  Plan  for  Poland  was  approved  on  6  September  2004.  The 
total  public  expenditure  earmarked  for  the  period  2004–2006  was  EUR 3 571.8 
million, of which the EU-contribution amounted to EUR 2 866.4 million.  

Amendments of the RDP 

633. 

634. 

635. 

In  2006,  the  Polish  authorities  forwarded  two  notifications  of  amendments  and  two 
financial notifications.  

The  first  amendment  notification  concerned  the  specification  of  periods  when  a 
payment claim can be submitted by beneficiaries of the agri-environment measure. To 
rationalise the handling of applications, the Polish authorities have decided to change 
this period. 

The second amendment notification concerned two amendments: for the meeting EU 
standards  measure  the  maximum  time  to  complete  projects  for  natural  fertiliser 
storage  was  extended  to  31  December  2007;  the  second  amendment  concerned  the 
extension of the producers’ group list to include red deer and fallow deer producers 

636. 

Two  small  financial  reallocations  covering  1.55%  of  the  total  budget  entered  into 
force on 17 July and 29 December 2006. 

Level of payments in the period from 16 October 2005 to 15 October 2006 

637. 

Payments for the financial year 2006 amounted to EUR 901 million.  

Objective-1 programme (EAGGF Guidance)  

Operational programmes or Single Programming Documents 

638. 

One  Sectoral  Operational  Programme  (SOP  −  “Restructuring  and  modernisation  of 
the food sector and rural development 2004–2006”) was approved for Poland. Total 
public  expenditure  amounted  to  EUR  1.8  million,  of  which  the  EAGGF  Guidance 
contribution was EUR 1.2 million. 

Level of payments in 2006 

639. 

The  total  EAGGF  Guidance  expenditure  declared  by  Poland  and  paid  by  the 
European  Commission  in  2006  was  EUR  192.4  million  (or  16%  of  the  EAGGF 
allocation for 2004–2006). Cumulative EAGGF Guidance payments until the end of 
2006  amounted  to  EUR  869.2  million  (including  advance  payments  of  EUR  190.8 
million). 

Amendments to the operational programmes 

640. 

One  amendment  was  approved  on  14  December  2006  by  Commission  Decision 
C(2006) 6884. It concerned the transfer of funding between the two priorities of the 
Programme. 

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Rural development policy 2007–2013 

National Strategy Plan  

641. 

After a series of working meetings, the official version of the National Strategy Plan 
was  received  on  22  August  2006.  This  document  was  subjected  to  interservice 
consultation,  as  a  result  of  which  the  Commission  sent  an  assessment  and  several 
recommendations  for  adjustments  in  October  2006.  The  document  was  adjusted  in 
December 2006.  

Rural Development Programmes 2007–2013 

642. 

One national programme covers the whole of Poland. The contribution of the EAFRD 
budget to the programme is EUR 13.2 billion. An official admissible version of the 
Rural Development Programme 2007–2013 was not submitted in 2006. 

6.20. 

Portugal 

Rural development programme (EAGGF Guarantee) 

643. 

The total public expenditure for the three Rural Development Programmes (Mainland 
Portugal, Azores and Madeira) was set at EUR 1 982.2 million for the period 2000–
2006.  This  includes  a  contribution  from  the  EAGGF,  Guarantee  Section,  of 
EUR 1 275.6 million. 

Amendments to the RDP 

644. 

In  2006,  there  were three amendments to  the  decisions  approving  the  RDP and 
three financial communications. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

645. 

646. 

The  2006  EAGGF  Guarantee  allocation  for  Portugal  was  set  at  EUR  252.1  million 
(which includes EUR 22.9 million from modulation). Payments for the same period 
amounted to EUR 232.3 million, i.e. 92.2% of that allocation. 

Overall  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming period in Portugal has amounted to EUR 1 256.1 million, i.e. 98.5% of 
the total allocation for 2000–2006. 

Operational programmes or Single Programming Documents (EAGGF Guidance) 

Amendments to the operational programmes 

647. 

Reprogramming  of  the  Community  Support  Framework  for  Portugal  (2000–2006): 
amendments  in  all  OPs  with  EAGGF  allocations,  except  OP  Algarve:  (OP 
Agriculture  and  Rural  Development,  OP  North,  OP  Centre,  OP  Lisboa  e  Vale  do 
Tejo,  OP  Alentejo,  OP  Azores,  OP  Madeira  and  OP  Technical  Assistance).  Global 
EAGGF decommitment due to transfers to other Structural Funds: EUR 24 659 835. 

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648. 

The OP Lisboa e Vale do Tejo has also been amended to include an increase in the 
EAGGF contribution of EUR 6 319 736 (SEC(2006) 173 final — Article 157 of the 
Financial Regulation).  

Level of payments in 2006 

649. 

As  from  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 1.5 million, i.e. 66% of the total budget (EUR 2.3 million) for the period 2000–
2006. 

Leader+ Programme 

650. 

651. 

Portugal  has  a  single  national  Leader+  Programme.  The  total  EAGGF  contribution, 
Guidance Section, amounts to EUR 164 million. 

Since  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 114 million, i.e. 69% of the total budget allocation for that period. 

652. 

In 2006, the Leader+ Programme was amended once. 

Rural development policy 2007–2013 

National Strategy Plan  

653. 

An official version of the NSP was not submitted in 2006. 

Rural Development Programmes 2007–2013 

654. 

There will be four rural development programmes for the period 2007–2013: RDP for 
Mainland  Portugal,  RDP  Azores,  RDP  Madeira  and  the  National  Network 
Programme.  The  total  EAFRD  contribution  for  the  four  programmes  for  the  whole 
period  is  set  at  EUR  3.93  billion.  None  of  the  four  RDPs  for  2007–2013  was 
submitted to the Commission in 2006. 

6.21. 

Slovenia 

Rural development plans (EAGGF Guarantee) 

655. 

The  Slovene  Rural  Development  Plan  was  approved  by  Commission  Decision 
C(2004) 3224 of 24 August 2004. The financial contribution from EAGGF amounted 
to  EUR  281.6  million  during  the  period  2004–2006,  which  will  be  complemented 
with national public funding of EUR 71.5 million. The Rural Development Plan aims 
to  ensure  the  goals  of  rural  development  policy  through  two  main  priorities: 
sustainable development of agriculture and the countryside, and economic and social 
restructuring  of  agriculture.  The  first  objective  will  be  achieved  through  agri-
environmental measures and support for less favoured areas, while measures aiming 
at  early  retirement  and  meeting  standards  will  contribute  to  economic  and  social 
restructuring.  

Amendments to the RDP 

656. 

One  amendment  to  the  Slovene  RDP  was  submitted  in  2006.  This  amendment 
concerned  the  reallocation  of  funds  from  measures  for  less  favoured  areas,  early 

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retirement, complements to direct payments and the SAPARD programme to the agri-
environment measure. This amendment did not require a new Commission Decision.  

Level of payments in the period from 16 October 2005 to 15 October 2006 

657. 

658. 

The  consolidated  financial  table  for  2006  lays  down  an  EU  contribution  of  EUR 
102.5 million, while an amount of EUR 118.9 million was paid out in the period from 
16 October 2005 to 15 October 2006.  

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  approximately  84.4%  of  the  total  budget  for  2004–
2006, i.e. EUR 237.6 million out of a total of EUR 281.6 million.  

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents (EAGGF Guidance) 

659. 

The Slovene Single Programming Document was approved by Commission Decision 
C(2004)  2122  of  18  June  2004,  which  was  amended  in  2006  by  Commission 
Decision C(2006) 3673 of 8 August 2006. This amendment did not concern EAGGF 
funds.  One  of  the  four  identified  priorities  of  this  Programme  is  restructuring  of 
agriculture, forestry and fisheries. Within this priority, the financial contribution from 
EAGGF  amounted  to  EUR  23.6  million  for  the  period  2004–2006,  which  will  be 
complemented by national public funding of EUR 23.6 million. As regards measures 
supported  through  EAGGF,  emphasis  is  laid  on  increasing  economic  efficiency  and 
competitiveness and meeting demands for food safety and quality. Importance is also 
attached to forest management in order to improve the economic and ecological value 
and functions of forests. This is closely connected with support for the development 
of  tourism  and  the  promotion  of  alternative  sources  of  income  in  rural  areas.  The 
whole territory of Slovenia is classified as an Objective-1 area.  

Amendment to the OP or SPDs 

660. 

No amendments were submitted in 2006. 

Level of payments in 2006 

661. 

662. 

The  consolidated  financial  table  for  2006  lays  down  an  EU  contribution  of 
EUR 10.2 million  and  total  public  costs  of  EUR  20.4  million,  while  an  EU 
contribution of EUR 5.2 million was paid out. 

Global  financial  execution  for  EAGGF  Guidance  since  the  beginning  of  the 
programming  period  has  been  approximately  38.8%  of  the  total  budget  for  2004–
2006, i.e. EUR 9.2 million out of a total of EUR 23.6 million.  

Annual Reports 

663. 

The annual reports for 2006 showed that in general implementation of the measures 
of Rural Development Plan is well advanced, while implementation of the measures 
of the Single Programming document is satisfactory. 

EN 

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Rural development policy 2007–2013 

National Strategy Plan 

664. 

The  National  Strategy  Plan  sets  out  to  strengthen  the  multifunctional  role  of 
agriculture  and  at  the  same  time  to  emphasise  the  need  for  restructuring  of  the 
agriculture  and  food  processing  industry.  The  National  Strategy  Plan  pays  special 
attention to maintenance of the cultural landscape and environmental protection and 
to the maintenance of settlement and rural identity in the countryside. It addresses the 
multifunctional role of forests. Its priorities will also contribute to the economic and 
social enhancement  of the countryside and introduce new approaches  for increasing 
employment opportunities in rural areas.  

Rural Development Programmes 2007–2013 

665. 

Slovenia will implement one Rural Development Programme 2007–2013 for its entire 
territory,  the  whole  of  which  is  classified  under  the  convergence  objective.  Total 
public  expenditure  amounts  to  EUR  1  159  million  and  the  EAFRD  contribution  is 
EUR 900 million (average EAFRD co-financing: 77.7%). 33% of total public funds 
have been  earmarked (axis 1) for the objective of improving the  competitiveness of 
agriculture and forestry. As regards the objective of improving the environment and 
the countryside, 52% of total public funds are to be spent (axis 2). In addition, 11% of 
total public funds have been set aside to improve the quality of life in rural areas (axis 
3).  

6.22. 

Slovakia 

Rural development plans (EAGGF Guarantee) 

666. 

The Rural Development Plan of Slovakia (2004–2006) was approved in July 2004 by 
Commission  Decision  C(2004)  3238.  The  EAGGF  contribution  to  the  programme 
amounted to EUR 397.1 million, to which EUR 123.5 million of national public co-
financing  and  EUR  41.1  million  of  private  co-financing  were  added.  The  overall 
amount  allocated  for  the  rural  development  plan  is  EUR  561.8  million.  The  global 
objective is to improve efficiency in the agricultural production sector and the quality 
of  life  of  rural  populations  —  “Multifunctional  agriculture  and  sustainable  rural 
development”.  

667. 

The specific objectives of the Plan are:  

– 

– 

– 

to support the development of the rural economy and to guarantee improvement 
in the standard of living of rural populations;  

to  improve  the  development  of  rural  areas  through  access  to  infrastructure 
services, thus retaining the population of rural communities;  

to  guarantee  environmental  protection  and  biodiversity  of  rural  environments, 
while taking account of the sustainability of the utilisation of rural resources. 

Amendments to the RDP 

668. 

On  6  July  2006,  the  Slovak  authorities  submitted  amendments,  making  financial 
reallocations,  which  reduce  the  overall  minimum  total  eligible  public  expenditure 

EN 

128 

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established  in  Decision  C(2004)3238.  This  proposal  was  approved  by  Commission 
Decision C(2006) 6475 of 5 December 2006. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

669. 

Since  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 272 million, i.e. 69% of the total budget allocation for that period. 

Objective-1 Programmes (EAGGF Guidance) 

670. 

The  Slovak  Operational  Programme  Agriculture  and  Rural  Development  was 
approved  by  Commission  Decision  C(2004)  2791  of  12  July  2004.  The  financial 
contribution from EAGGF amounted to EUR 181.2 million for the period 2004–2006, 
to which national public funding of EUR 72.8 million is added. Major attention has 
been  given  to  the  maintenance  and  creation  of  competitive  jobs  in  rural  areas.  The 
Slovak  Operational  Programme  thus  focuses  on  investment  in  the  farming  sector 
(including the diversification of farm activities), the processing and marketing sector, 
and the fisheries and the forestry sector. 

Level of payments in 2006 

671. 

Since  the  beginning  of  the  programming  period,  payments  have  amounted  to 
EUR 106 million, i.e. 58% of the total budget allocation for that period. 

Rural development policy 2007–2013 

National Strategy Plan  

672. 

The NSP for Slovakia 2007–2013 was received on 18 December 2006. 

Rural Development Programmes 2007–2013 

673. 

Slovakia  will  have  one  Rural  Development  programme  for  the  next  programming 
period 2007–2013. The total public contribution amounts to EUR 2 562.6 million. 

6.23. 

Finland 

Rural development programme (EAGGF Guarantee) 

674. 

In  2000,  the  Commission  approved  three  rural  development  programmes,  two  for 
Mainland Finland and one for the Åland Islands, which is an autonomous province of 
Finland.  

Amendments to the RDP 

675. 

Proposals  to  amend  three  Finnish  Rural  Development  Programmes  (Horizontal, 
Regional  and  Åland  Islands)  were  approved  by  Commission  Decisions  in  October 
2006. The proposals for amendments concerned adjustments to the financial tables of 
these Rural Development Programmes.  

EN 

129 

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Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

676. 

677. 

For  2006,  the  total  expenditure  under  EAGGF  Guarantee  for  Finland  amounted  to 
EUR 247.8 million, which is 100.0% utilisation of the funds planned for this period. 

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  99.9%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 2 229.1 million out of a total of EUR 2 230.7 million. 

Operational programmes or Single Programming Documents (EAGGF Guidance) 

678. 

In 2000, the Commission approved two Single Programming Documents (SPDs) for 
Objective-1 regions in Finland: Eastern Finland and Northern Finland. 

Level of payments in 2006  

679. 

After six years of implementation, an amount of EUR 138.2 million (68.5%) has been 
paid out of the total budget for 2000–2006. 

Leader+ Programme 

680. 

681. 

In  2001,  the  Commission  approved  one  Leader+  programme  for  Finland;  25  Local 
Action Groups (LAGs) were selected and are supported by a national network. 

After five years of implementation of the programme, an amount of EUR 37.1 million 
(65.9%) has been paid out of the EUR 56.4 million committed for 2001–2006. 

Rural development policy 2007–2013 

National Strategy Plan 

682. 

The National Strategic Plan for Finland was submitted on 23 August 2006. Financial 
allocation by axis is 11% for Axis 1, 78% for Axis 2, 11% for Axis 3 and 6% for Axis 
4. The strategy defines three priorities for Finland:  

– 

– 

– 

Agriculture  and  Forestry  are  practised  in  an  economically  and  ecologically 
sustainable and ethical way throughout the country. 

Rural  economies  should  be  diversified  and  employment 
competitive businesses, new enterprises and networking. 

improved  by 

Local initiative should be encouraged to guarantee viability and quality of life 
in rural areas.  

Rural Development Programmes 2007–2013 

683. 

684. 

Finland  is  covered  by  two  programmes:  Mainland  Finland  and  Åland  Islands.  The 
Åland Islands RDP was not officially submitted in 2006. 

The  Mainland  Finland  RDP  was  officially  submitted  on  23  December  2006.  Total 
financing  envisaged  for  the  Mainland  RDP  accounts  for  EUR  6.6  billion  of  public 

EN 

130 

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financing,  of  which  EUR  2.1  billion  is  EAFRD  funding.  Financial  allocations 
between axes are largely in line with the National Strategic Plan. 

6.24. 

Sweden 

Rural development programme (EAGGF Guarantee) 

685. 

the  Commission  approved  one 

In  2000, 
rural  development  programme 
(accompanying  measures  covering  the  entire  country,  other  measures  covering  non-
Objective-1  regions).  The  total  public  cost  of  the  Swedish  Rural  Development 
Programme  for  2000–2006  was  EUR 2 558.7  million,  including  a  contribution  of 
EUR 1 129.9 million from EAGGF Guarantee. After modulation and redistribution of 
available  surpluses,  the  total  EAGGF  allocation  was  increased  by  a  further 
EUR 24.1 million.  The  programme  includes  support  for  investments  in  agricultural 
holdings, setting-up of young farmers, training, less favoured areas, agri-environment, 
improving  processing  and  marketing  of  agricultural  products,  afforestation  of  non-
agricultural  land  and  promoting  the  adaptation  and  development  of  rural  areas  and 
forestry. From 2005, commitments relating to modulation started to be used. 

Amendments to the RDP 

686. 

Two  notifications  and  one  amendment  requiring  a  Commission  decision  were 
submitted  during  2006.  Both  the  notifications  and  the  amendment  concerned 
adjustments to the financial table. The amendment requiring a Commission decision 
was  due  to  modulation  and  redistribution  stemming  from  available  surpluses.  The 
Decision was taken on 19 October 2006. 

Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

687. 

688. 

The  level  of  payment  for  the  period  is  100.0%  (expenditure/allocation),  with 
expenditure and allocation amounting to EUR 164.2 million.  

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  100.0%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 1 154.0 million out of a total of EUR 1 154.04 million. 

Operational programmes or Single Programming Documents (EAGGF Guidance) 

689. 

In  2000,  the  Commission  approved  the  Objective-1  programmes  for  the  Norra 
Norrland and Södra Skogsläns regions. 

Level of payments in 2006  

690. 

After  six  years  of  implementation,  the  financial  execution  is  72.9%  of  the  funds 
committed  at  the  beginning  of  the  programming  period  for  the  Objective-1  Norra 
Norrland  region.  The  corresponding  figure  for  the  Objective-1  Södra  Skogsläns 
region amounts to 69.7%. This means that an amount of EUR 38.1 million has been 
paid  out  of  the  EUR 52.3  million  available  for  the  period  2000–2006  for  the 
Objective-1  Norra  Norrland  region.  The  corresponding  figures  for  the  Objective-1 
Södra Skogsläns region amount to EUR 44.4 million out of EUR 63.7 million.  

EN 

131 

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Leader+ Programme 

691. 

692. 

In  2001,  the  Commission  approved  one  Leader+  programme.  In  total,  12  Local 
Action Groups have been selected.  

After  six  years  of  implementation,  financial  execution  is  57.5%  of  the  amount 
available for the whole of the programming period, i.e. EUR 23.7 million paid out of 
the EUR 41.2 million (including indexation 2004–2006). 

Rural development policy 2007–2013 

National Strategy Plan 

693. 

The National Strategy for Sweden was officially received on 22 September 2006. The 
NSP needed to be updated by letter on 21 December 2006. The breakdown between 
axes is 15% for axis 1, 70% for axis 2 and 12% for axis 3. The Leader axis is set to be 
6%. The main objectives are economic growth and entrepreneurship, environment as 
a  resource,  sound  development  in  rural  areas  and  an  integrated  approach.  There  are 
five additional horizontal priorities, such as Organic farming, Renewable energy, etc. 

Rural Development Programmes 2007–2013 

694. 

The Swedish Rural Development Programme was submitted on 22 September 2006. 
The programme comprised EUR 3 917 million of public expenditure for the period, 
of which EUR 1 826 million in Community support. The programme is in line with 
the financial allocation and priorities set out in the NSP. In total, EUR 64.8 million of 
payments were made in 2007 relating to payments for the fourth quarter of 2006. 

6.25.  United Kingdom 

Rural development programme (EAGGF Guarantee) 

695. 

There are four Rural Development Programmes for the period 2000–2006: England, 
Northern  Ireland,  Scotland  and  Wales.  The  total  cost  for  these  programmes  was 
EUR 3 200 million, of which the EAGGF Guarantee section contributed EUR 1 243 
million. 

Amendments to the RDP 

696. 

697. 

The respective authorities of the United Kingdom notified the Commission of several 
amendments  to  their  Rural  Development  Programmes.  These  changes  included  the 
measures  for  less  favoured  areas,  agri-environment,  animal  welfare  and  financial 
issues. 

In  2006,  there  were  no  proposals  submitted  to  the  Commission  to  amend  the  Rural 
Development Programmes for which a Commission decision would be required. The 
Northern  Ireland  2005  amendment  to  the  agri-environment  and  animal  welfare 
measures was approved by Commission Decision of 30 January 2006. The England 
2005  amendment  to  agri-environment  measures  was  approved  by  Commission 
Decision of 14 February 2006. 

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Level  of  payments  in  the  period  from  16  October  2005  to  15  October  2006  (EAGGF 
Guarantee) 

698. 

699. 

The  level  of  payment  for  all  UK  Rural  Development  Programmes  is  81%  of  the 
EAGGF  allocation 
to 
EUR 233.5 million compared to an allocation of EUR 288.8 million. 

total  expenditure  amounted 

the  period.  The 

for 

Global  financial  execution  for  EAGGF  Guarantee  since  the  beginning  of  the 
programming  period  has  been  95.5%  of  the  total  budget  for  2000–2006,  i.e. 
EUR 1 187 million out of a total of EUR 1 243 million. 

Objective-1 programmes (EAGGF Guidance) 

Operational programmes or Single Programming Documents 

700. 

EAGGF  Guidance  support  is  available  only  in  regions  eligible  for  Objective  1  (or 
regions in transition): Cornwall and the Scilly Isles, Merseyside, Northern Ireland (in 
transition),  South  Yorkshire,  Highlands  and  Islands  (in  transition)  and  West  Wales 
and  the  Valleys.  In  addition,  EAGGF  Guidance  has  contributed  to  the  special 
programme PEACE II for Northern Ireland and the Border Counties of Ireland.  

Level of payments in 2006 

701. 

The  total  amount  (excluding  PEACE  II)  paid  by  the  end  of  2006  was  EUR  266 
million (74.7% of the total budget planned for the 2000–2006 programming period, 
i.e.  EUR  357  million).  Further  claims  for  payment  were  made  before  the  end  of 
December  2006  and  these  will  be  paid  in  2007.  All  the  programmes,  with  the 
exception of the transitional programme for the Highlands and Islands, achieved their 
respective N+2 targets. 

702. 

By  the  end  of  2006,  the  total  amount  paid  out  of  EAGGF  Guidance  to  Northern 
Ireland for the 2000–2004 PEACE II Programme (managed jointly with Ireland) was 
EUR 28.4 million ( 91% of the allocation of EUR 31.2 million). 

Leader+ Programme 

703. 

The  UK  has  four  Leader+  programmes:  England,  Northern  Ireland,  Scotland  and 
Wales,  with  55  Local  Action  Groups.  The  total  cost  of  the  four  programmes 
amounted to EUR 266 million, of which the EAGGF contributed EUR 115 million.  

704. 

By the end of 2006, a total amount of EUR 72 million had been paid (63% of the total 
budget for the 2000–2006 programming period). 

705. 

All the programmes achieved their respective N+2 targets. 

Rural development policy 2007–2013 

National Strategy Plan  

706. 

In 2006, the UK authorities submitted informally to the Commission a first draft of 
the  National  Strategy  Plan  for  rural  development  for  the  2007–2013  programming 
period.  Discussions  took  place  between  the  Commission  and  the  UK  authorities 
throughout 2006 on the analysis, strategy and priorities identified in the NSP. 

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Rural Development Programmes 2007–2013 

707. 

Discussions  were  held  with  the  respective  managing  authorities  concerning  the 
preliminary  submissions  of  the  Rural  Development  Programmes  for  England, 
Northern Ireland, Scotland and Wales. 

7. 

ENVIRONMENT AND FORESTRY 

7.1. 

Environmental measures 

708. 

the 

towards 

indicators 

to  monitor  progress 

In the wake of its January 2000 and March 2001 Communications entitled ‘Indicators 
for the integration of environmental concerns into the common agricultural policy’62 
and  ‘Statistical  information  needed  for  indicators  to  monitor  the  integration  of 
environmental  concerns  into  the  common  agricultural  policy’63,  the  Commission 
launched  the  IRENA64  operation  for  the  development  of  a  set  of  35  agri-
integration  of 
environmental 
environmental concerns within the CAP. IRENA was a joint exercise between several 
Commission services and the European Environment Agency. It was completed at the 
end  of  2005,  resulting  in  fact  sheets  for  40  (sub-)indicators  and  their  corresponding 
data sets, an Indicator Report (‘Agriculture and environment in EU-15’), an Indicator-
Based  Assessment  Report,  and  an  Evaluation  Report.  In  September  2006,  the 
Commission  issued  a  Communication  entitled  ‘Development  of  agri-environmental 
indicators  for  monitoring  the  integration  of  environmental  concerns  into  the  CAP’ 
[COM(2006) 508].  The  Communication  reviewed  the  progress  made  with  the 
development  of  agri-environmental  indicators  through  IRENA,  and  identified  key 
challenges  and  actions  for  future  work.  In  December  2006,  the  Agriculture  and 
Fisheries  Council  adopted  conclusions  welcoming  the  progress  made  with  IRENA 
and  giving  a  broad  mandate  to  the  Commission  to  continue  work  on  the  indicators 
along  the  lines  proposed  in  COM(2006)  508,  in  close  cooperation  with  the  relevant 
institutions  of  the  Member  States.  A  Memorandum  of  Understanding  is  under 
preparation to lay down the basis for cooperation amongst the partners involved in the 
future work, with a view to meeting the Council’s requests.  

709. 

Under Council Regulation (EC) No 1782/2003, Member States must implement cross 
compliance  with  statutory  management  requirements,  including  in  the  area  of  the 
environment, and  minimum  standards  for  good  agricultural  and  environmental 
conditions. Moreover, Member States were required by 1 January 2007 to set up farm 
advisory systems covering at least those requirements and standards. In this context, a 
two-year  (2005-2006)  study  entitled  ‘Study  on  environmental  Cross-compliance 
Indicators in the context of the Farm Advisory System’ (CIFAS study) was launched 
at  the  beginning  of  2005.  The  study was  carried  out  by  the  European  Environment 
Agency  (EEA)  under  the  guidance  of  a  steering  group with  representatives  of 
different  Commission  services.  The  study’s  primary  aim  was  to  help  in  the 
development  of  the  farm  advisory  systems  and  to  support  the  implementation  of 
environmental cross compliance in the Member States. Special attention was given to 
the  development  of  farm-level  indicators. The study was completed in March 2007. 

62 
63 
64 

EN 

COM(2000) 20 final. 

COM(2001) 144 final. 

IRENA is the acronym for ‘Indicator Reporting on the integration of ENvironmental concerns into Agriculture policy’. 

134 

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The main study outputs were: a database containing the standards and other relevant 
information  on  environmental  cross-compliance  requirements  applicable  at  farm 
level; an inventory of the farm advisory tools and systems developed to help farmers 
meet  these  requirements;  and  a  platform  for  the  exchange  of  information  and 
experiences  between  Member  States.  The  information  gathered  in  the  project  was 
disseminated  to  the  Member  States  and  to  other  relevant  actors  via  an  interactive 
website  (www.ewindows.eu.org/cifas)  and 
through  seminars  and  workshops 
organised in nine Member States between November 2006 and March 2007. The full 
study report (‘Report on recommended farm advisory tools’) is available on the above 
website. 

The implementation of the ‘Biodiversity action plan for agriculture65, adopted by the 
Council in  June  2001  and  by  the European Parliament in March 2002, continued in 
2006.  The  main  instruments  to  support  the  conservation  of  farm-dependent 
biodiversity and habitats are integrated within the first and second pillars of the CAP. 
The Commission presented a Communication on ‘Halting the loss of biodiversity by 
2010  and  beyond  —  sustaining  ecosystem  services  for  human  well-being’66.  This 
Communication includes an EU action plan up to 2010 and beyond, which contains 
measures  considered  necessary  to  halt  the  loss  of  biodiversity,  and  to  restore 
biodiversity in the longer term. 

Council Regulation (EC) No 870/2004 establishing a Community programme on the 
conservation,  characterisation,  collection  and  utilisation  of  genetic  resources  in 
agriculture6 was adopted in April 2004. The Community programme includes actions 
to support, complement or coordinate at Community level work undertaken at local, 
regional,  or  Member  State  level  in  line  with  the  aims  of  the  CAP  and  sustainable 
agriculture.  The  measures  may  also  cover  in  situ/on-farm  genetic  resource 
conservation  activities  (reproduction  of  genetic  resources  by  farmers  on  their  own 
farms).  The  actions  must  be  trans-national,  taking  into  account,  where  appropriate, 
bio-geographic  regional  aspects.  Two  calls  for  proposals  for  the  Community 
programme  were  published,  one  in  July  20057  and  the  other  in  April  20068.  The 
72 proposals  received  in  response  to  these  two  calls  were  assessed  by  the 
Commission against the eligibility criteria, and by independent experts on the basis of 
published  award  criteria.  As  a  result,  17  actions  involving  179  organisations  in  the 
EU-25 as well as in 12 non-EU countries were selected for co-funding. 

Agriculture plays a crucial role in other Community initiatives aimed at safeguarding 
the environment. The current measures to protect surface water and groundwater67 are 
one example of this. Under the Nitrates Directive, Member States must draw up and 
implement  action  plans  in  designated  vulnerable  zones  in  order  to  reduce  nitrate 
pollution  at  source.  The  1979  Birds  Directive  is  another  relevant  Community 
initiative,  which  obliges  Member  States  to  protect  the  habitats  of  their  wild  bird 
populations. Lastly, an ecological network (the ‘Natura 2000’ network) has been set 
up under the 1992 Habitats Directive. The lists of sites of Community importance for 
the Macaronesian68, Alpine69, Continental70, Atlantic71, Boreal72 and Mediterranean73 

710. 

711. 

712. 

65 

66 

67 

68 

69 

COM(2001) 162 final, volume III. 

COM(2006) 216 final. 

COM(2003) 550 final. 

OJ L 5, 9.1.2002, p. 16. 

OJ L14, 21.1.2004, p. 21. 

EN 

135 

   EN 

 
                                                 
713. 

714. 

bio-geographical regions were adopted by the Commission in 2001, 2003, 2004, 2005 
and  2006,  respectively.  In  order  to  address  the  issue  of  appropriate  Community 
financial support for the implementation of the Natura 2000 network, the Commission 
adopted a Communication on financing Natura 200074 in July 2004. The funding of 
Natura 2000 was further integrated within the Common Agricultural Policy through 
the  adoption  of  a  new  Rural  Development  Regulation75  for  the  period  2007–2013, 
which provides financing opportunities for agricultural and forestry activities that are 
beneficial for biodiversity protection. 

The Sixth Environment Action Programme (6th EAP) remains the main driver of EU 
environment  policy  until  2012.  In  addition  to  providing  the  basis  for  environmental 
policy initiatives, this Action Programme takes into account the obligation laid down 
in the Treaty to integrate environmental protection requirements within the definition 
and implementation of other Community policies and activities. For its environmental 
policy instruments, the Commission thus set out to develop seven thematic strategies, 
most of them having strong links with agriculture. In 2006, the Commission adopted 
the last three of these strategies: the thematic strategy on the urban environment76, the 
thematic strategy on the sustainable use of pesticides77 and the thematic strategy for 
soil  protection78.  The  strategy  on  the  sustainable  use  of  pesticides  is  intended  to 
complement the existing legislative framework, which focuses on the beginning and 
end  of  the  pesticide  lifecycle.  The  thematic  strategy  for  soil  protection  is  both 
descriptive and action-oriented, thus providing a full picture of this complex issue so 
as to serve as a basis for future work.  

Following the adoption in 2003 of Commission Recommendation 2003/556/EC79 on 
guidelines for the development of national strategies and best practices to ensure the 
co-existence of genetically modified crops with conventional and organic farming, a 
number  of  Member  States  have  notified  national  or  regional  measures  to  the 
Commission.  The  Commission  has  evaluated  these  notifications  in  accordance  with 
the  principles  set  out  in  the  Recommendation.  In  March  2006,  the  Commission 
adopted  a  report  to  the  Council  and  the  European  Parliament,  based  on  information 
from  Member  States,  on  the  experience  gained  in  the  Member  States  with  the 
implementation of measures to address co-existence. In this report, the Commission 
proposed a number of future actions that could be taken in this area. The Commission 
then  organised,  jointly  with  the  Council  Presidency,  a  stakeholder  conference  on 
co-existence,  which  took  place  in  Vienna  on  4–6  April  2006.  In  May  2006,  the 
Council  adopted  conclusions  calling  on  the  Commission  to  engage  in  a  series  of 
actions in relation to co-existence. In particular, the Council invited the Commission: 
to come forward, as soon as possible, with Community labelling thresholds for seeds; 
to develop guidelines for crop-specific co-existence measures; to intensify the use of 
COEX-NET for information exchange among the Member States; to explore ways of 

70 

71 

72 

73 

74 

75 

76 

77 

78 

79 

OJ L 382, 28.12.2004, p. 1. 

OJ L 387, 29.12.2004, p. 1. 

OJ L 40, 11.2.2005, p. 1. 

OJ L 259 , 21.9.2006 , p. 1. 

COM(2004) 431 final. 

OJ L 277, 21.10.2005, p. 1. 

COM(2005) 718 final. 

COM(2006) 372 and 373 final. 

COM(2006) 231 and 232 final. 

OJ L 189, 29.7.2003, p. 36. 

EN 

136 

   EN 

 
                                                                                                                                                          
minimising  potential  cross-border  problems  related  to  co-existence;  to  explore 
solutions for areas where farm-level co-existence is difficult to achieve; to strengthen 
research on co-existence and make research results available to the Member States; to 
study the national civil liability systems with regard to co-existence; and to explore if 
further steps towards common principles for co-existence should be taken. 

7.2. 

Forestry measures 

715. 

716. 

717. 

718. 

The Commission Communication to the Council and the European Parliament on an 
EU Forest Action Plan, COM(2006) 302 final, was adopted on 15 June 2006. Council 
Conclusions  on  the  EU  Forest  Action  Plan  were  adopted  by  the  Agriculture  and 
Fisheries Council on 25 October 2006. 

Cooperation  and  coordination  with  the  Member  States  continued  through  the 
Standing Forestry Committee. In the course of 2006, the Committee met 6 times. Two 
Working  Groups  within  the  Standing  Forestry  Committee  were  established  for  the 
implementation  of  specific  actions  in  the  EU  Forest  Action  Plan.  Similarly,  3 
meetings of the advisory group on forestry and cork were held during the year. 

The  implementation  of  the  preparatory  action  on  the  development  of  an  internet-
based European Forest Information and Communication Platform (EFICP) continued 
during 2006. 

Concerning  the  implementation  of  projects  and  programmes  for  the  protection  of 
forests  against  atmospheric  pollution  and  fires  under  Council  Regulation  (EC) 
No 3528/8680  and  Council  Regulation  (EC)  No 2158/9281,  a  total  of  8  projects  and 
programmes were closed, reducing the number of open contracts to 1 by the end of 
the year. 

8. 

PROPOSAL FOR FINANCING OF THE CAP IN 2006 

719. 

CAP  expenditure  is  funded  under  the  Financial  Perspective  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 to include the ten new 
countries. Thus, new ceilings apply to the EU-25 as of the budget year 2006.  

720. 

The Financial Perspective for the EU-15 and EU-25 for the budget years 2005-2006 
was as follows: 

2000 
current 
prices 

2001 
current 
prices 

2002 
current 
prices 

2003 
current 
prices 

2004 
current 
prices 

2005 
current 
prices 

2006 
current 
prices  

41 738 

44 530 

46 587 

47 378 

49 305 

51 439 

52 618 

37 352 

40 035 

41 992 

42 680 

42 769 

44 598 

44 847 

4 386 

4 495 

4 595 

4 698 

6 536 

6 841 

7 771 

Total  for  CAP  under 
Agenda 2000 

a) markets 

(sub-ceiling 1(a)) 
b) rural development 
(sub-ceiling 1(b)) 

80 

81 

OJ L 326, 21.11.1986, p. 2-4 (Finnish and Swedish special editions, Chapter 3, Volume 22, p. 59). 

OJ L 217, 31.7.1992, p. 3 (Finnish and Swedish special editions, Chapter 3, Volume 44, p. 3). 

EN 

137 

   EN 

 
 
                                                 
8.1. 

EAGGF Guarantee Section 

Budgetary procedure 

Stages of the budgetary procedure 

721. 

722. 

723. 

The  2006  Preliminary  Draft  Budget  (PDB)  was  adopted  by  the  Commission  and 
proposed to the Budgetary Authority in April 2005. The appropriations proposed for 
the  EAGGF  Guarantee  Section  totalled  EUR 51 412.3  million,  i.e.  EUR 43 641.3 
million for subheading 1a and EUR 7 771.0 million for subheading 1b.  

The  Council  adopted  the  2006  Draft  Budget  in  July  2005.  The  appropriations  in 
subheading 1a  were  reduced  by  EUR 150.0  million  as  compared  to  the  PDB,  while 
the  appropriations  for  subheading 1b  remained  unchanged  from  the  PDB.  EAGGF 
Guarantee  Section  appropriations  accordingly 
totalled  EUR 51 262.3  million, 
comprising  EUR  43 491.3  million  for  subheading  1a  and  EUR 7  771.0  million  for 
subheading 1b. 

In November 2005, the Commission adopted Letter of Amendment No 2/2006 to the 
Preliminary Draft Budget in order to take account of developments on the agricultural 
markets and recent agricultural legislation. The Amending Letter to the PDB reduced 
the appropriation requirements for the 2006 financial year to EUR 51 050.7 million, 
of  which  EUR 43 279.7  million  was  allocated 
subheading  1a  and 
EUR 7 771.0 million to subheading 1b. 

to 

724. 

In December 2005, following the consultation procedure between the Council and the 
European Parliament, the Budget for 2006 was adopted by the European Parliament 
as follows:  

– 

– 

for subheading 1a, appropriations for 2006 were fixed at EUR 43 279.7 million, 
i.e. EUR 1 567.3 million below the ceiling. 

for subheading 1b, appropriations for 2006 were fixed at EUR 7 771.0 million, 
equal to the ceiling. 

725. 

In December 2006, the European Parliament reduced, through AB 6/2006, the initial 
budget  appropriations  for  subheading  1a  by  EUR  860.0  million  to  EUR 42 419.7 
million. 

The appropriations for subheading 1b were unchanged. 

The EAGGF Guarantee Section in the context of the general budget 

726. 

Of the overall initial commitment appropriations of EUR 121 190.9 million entered in 
the  2006  general  budget,  an  amount  of  EUR 51 050.7  million,  i.e.  42.1%,  was 
allocated to the EAGGF Guarantee Section. In 2005, Guarantee Section commitments 
accounted for 42.6% of commitments in the general budget. 

EN 

138 

   EN 

 
The EAGGF and its financial resources 

727. 

Agricultural  policy  also  generates  revenue  in  the  form  of  sums  collected  under  the 
common  market  organisations.  This  revenue,  which  forms  part  of  the  Union’s  own 
resources82, consists of: 

– 

– 

levies,  which  are  variable  charges  on  imports  from  non-member  countries  of 
agricultural  products  covered  by  the  common  market  organisations;  such 
charges  are  intended  to  compensate  for  the  difference  between  prices  on  the 
world  market  and  prices  agreed  within  the  Union.  Under  the  Agreement  on 
Agriculture  following  the  Uruguay  Round  of  multilateral  trade  negotiations, 
levies have been replaced by fixed import duties since 1995; 

levies  collected  under  the  common  organisation  of  the  market  in  sugar;  these 
are divided into production levies on sugar and isoglucose, sugar storage levies 
and additional elimination levies to ensure that farmers and sugar manufacturers 
finance the cost of disposing of any sugar that is surplus to Community internal 
consumption requirements. 

Charges accruing to the Union’s own resources under the common agricultural policy 

Revenue 

(EUR million) 

Type of charge 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Agricultural levies 
Sugar levies 

1 198.4 

1 132.9 

1 180.2 

1 011.8 

1 313.4 

1 350.8 

1 291.8 

1 196.8 

840.0 

864.8 

383.2 

401.6 

695.1 

151.6 

Total 

2 395.2 

1 972.9 

2 045.0 

1 395.0 

1 715 .0 

2 045.9 

1 443.4 

728. 

It  should  be  noted  that  there  are  other  sources  of  agricultural  revenue.  Under  the 
common  organisation  of  the  market  in  milk  and  milk  products,  producers  pay  an 
additional  levy  if  milk  quotas  are  exceeded.  This  revenue  does  not,  however,  form 
part of the Union’s own resources and is considered to constitute part of the measures 
to stabilise agricultural markets. It is offset against the additional expenditure brought 
about by production overruns on the quotas. 

EAGGF Guarantee Section expenditure 

Expenditure 

729. 

EAGGF Guarantee Section expenditure comprises: 

– 

– 

– 

– 

export refunds (EUR 3 051.9 million in 2005);  

public and private storage (EUR 851.5 million in 2005); 

direct aids (EUR 33 700.8 million in 2005); 

other  intervention  relating  to  the  common  market  organisations  (EUR 4 496.6 
in 2005); 

82 

The Union’s other own resources are: the levy on VAT, customs duties collected under the common customs tariff, and Member States’ contributions. 

EN 

139 

   EN 

 
                                                 
– 

other expenditure, principally rural development (EUR 6 827.3 million in 
2005). 

730. 

Direct aid payments to producers are by far the largest type of aid. 

731. 

Furthermore, the EAGGF Guarantee Section has been used to finance, in whole or in 
part,  various  specific  measures  for  the  management  of  agricultural  markets,  such  as 
the distribution of agricultural products to the needy in the Community, measures to 
combat fraud, measures to promote quality, and measures designed to compensate for 
the  geographical  isolation  of  the  French  overseas  departments  (Poseidom),  Madeira 
and the Azores (Poseima), the Canary Islands (Poseican) and the Aegean islands. 

Public stocks 

732. 

Between 1 October 2004 and 30 September 2005, when the public storage accounts 
were  closed,  the  book  value  of  products  in  storage  increased  from  EUR 798.24 
million to EUR 1 747.11 million. The share of cereals and rice accounted for around 
73.5% of the total value of products in storage, milk products accounted for 11.0%, 
sugar for 10.8% and alcohol for 4.8%. 

Expenditure on agricultural markets in 2006 

733. 

734. 

735. 

The uptake of EAGGF Guarantee Section appropriations for the 2006 financial year 
(expenditure  by  the  Member  States  from  16  October  2005  to  15  October  2006) 
amounted  to  EUR 49  865.2  million,  i.e.  99.3%  of  the  appropriations  entered  under 
Titles 05, 11 and 17 of the budget. 

Total  expenditure  under  subheading  1a  (the  CAP,  covering  Titles  05,  11  and  17) 
amounted  to  EUR 42 175.3  million,  i.e.  EUR 1 104.4  million  below  the  initial 
appropriations. 

Total expenditure for subheading 1b (Rural Development) amounted to EUR 7 689.9 
million, i.e. EUR 124.5 million below the initial appropriations. (An amount of EUR 
43  400  000  was  carried  over  from  budget  year  2005  and  was  committed  in  budget 
year 2006). 

Clearance of accounts 

736. 

The  Commission  adopted  the  following  decisions  on  the  financial  and  conformity 
clearance of the EAGGF Guarantee Section accounts and for SAPARD: 

– 
– 

– 

Decision 2006/322/EC of 28 April 2006 in respect of the 2005 financial year;83 

Decision  2006/334/EC  of  28  April  2006  under  Article  5(2)(c)  of  Regulation 
(EEC)  No  729/70  and  Article  7(4)  of  Regulation  (EC)  No  1258/1999  – 
21st Decision84; 

Decision  2006/554/EC  of  27  July  2006  under  Article  5(2)(c)  of  Regulation 
(EEC)  No  729/70  and  Article  7(4)  of  Regulation  (EC)  No  1258/1999  – 
22nd Decision85;  

83 

84 

OJ L 118, 3.5.2006, p. 20. 

OJ L 124, 11.5.2006, p. 21. 

EN 

140 

   EN 

 
                                                 
– 

– 

– 

– 

Decision 2006/4329/EC of 29 September 2006 in respect of the 2005 financial 
year relating to the clearance of the accounts presented by the Czech Republic, 
Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia on the one 
hand  and  Bulgaria  and  Romania  on  the  other,  for  expenditure  financed  under 
the  special  accession  programme  for  agriculture  and  rural  development 
(SAPARD) in 2005; 

Decision  2006/5928/EC  of  7  December  2006  relating  to  the  clearance  of  the 
final  balance  of  the  special  accession  programme  for  agriculture  and  rural 
development (SAPARD) in the Czech Republic; 

Decision  2006/932/EC  of  14  December  2006  under  Article  5(2)(c)  of 
Regulation EEC No 729/70 and Article 7(4) of Regulation (EC) No 1258/1999 
– 23rd Decision86;  

Decision  2006/936/EC  of  14  December  2006  in  respect  of  the  2003  financial 
year as regards certain paying agencies in Germany and the United Kingdom87. 

737. 

738. 

The  expenditure  recovered  from  Member  States  under  decisions  21,  22  and  23 
amounted to EUR 555.5 million in the financial years 1998 to 2005. 

In 2006, the Commission services responsible for the audit of agricultural expenditure 
performed  184  audits  with  missions  to  the  25  Member  States  and  2  SAPARD 
countries  and  held  85  bilateral  meetings  with  the  Member  States  on  the  findings  of 
audit missions for the years 1997–1999 and 2001–2005. 

8.2. 

EAGGF Guidance Section 

739. 

740. 

In accordance with the conclusions of the Berlin European Council in 1999, a third 
programming  period  for  the  Structural  Funds  was  introduced  to  run  from  2000  to 
2006. Support from the EAGGF Guidance Section during this period under Council 
Regulations  (EC)  No  1260/1999  (the  general  Structural  Fund  Regulation)  and 
No 1257/1999  (support  for  rural  development)  only  covered  Objective-1  areas,  the 
Community Initiative Leader+ programme and technical assistance. Objective-1 areas 
in  the  new  Member  States  also  began  to  receive  EAGGF  Guidance  assistance  in 
2004. 

For the period from 2000 to 2006, there was no decrease in Community support for 
rural areas, although the EAGGF Guidance Section allocations for the period might 
give  such  an  impression.  In  fact,  measures  targeting  agricultural  structures  and  the 
diversification  of  rural  areas  (former  Objectives  5(a)  and  5(b))  outside  Objective-1 
regions and compensatory allowances, which up to 1999 were funded by the EAGGF 
Guidance  Section,  are  now  covered  by  the  EAGGF  Guarantee  Section.  Since  2004, 
the EAGGF Guarantee section has also covered the support received by new Member 
States under the Transitional Instrument for Rural Development 

741. 

Consequently,  Community  support  for  the  four  accompanying  measures,  i.e. 
compensatory allowances for less-favoured areas and areas subject to environmental 
constraints  (funded  up  to  1999  by  the  EAGGF  Guidance  Section),  early  retirement, 

85 

86 

87 

OJ L 218, 9.8.2006, p. 12. 

OJ L 355, 15.12.2006, p. 95. 

OJ L355, 15.12.2006, p. 107. 

EN 

141 

   EN 

 
                                                                                                                                                          
agri-environmental  measures  and  woodland  management,  is  funded  out  of  the 
EAGGF Guarantee Section throughout the Community. Community support for other 
rural  development  measures  in  areas  outside  Objective 1  is  also  funded  from  the 
EAGGF Guarantee Section.  

Funding in the 2000–2006 programming period 

742. 

743. 

744. 

745. 

In the 2000–2006 programming period, the EAGGF Guidance Section contributed to 
Objective-1  regions  (‘regions  whose  development  is  lagging  behind’),  the  Leader+ 
Initiative  and  technical  assistance  as  indicated  above.  It  also  continued  to  cover 
payment commitments under programmes from previous periods which were wound 
up by 31 December 2001 and where the final balance was in principle to be paid by 
the end of 2005.  

However,  by  way  of  exception,  an  amount  of  EUR  148  million  was  committed  in 
2000  to  cover  the  outstanding  part  of  the  last  ‘tranche’  (1999)  of  the  1994–99 
programming period. This was because, as a result of the lack of budget allocations at 
the  end  of  the  1999  financial  year  and  the  late  adoption  of  the  final  programming 
adjustment decisions after the accounting deadline, it was not possible to commit all 
the  spending  under  the  1994–99  Structural  Fund  CSF  programmes  and  Community 
Initiative programmes by the end of 1999 (Tables 7.2.1a and 7.2.1b). 

The programmes for the EAGGF Guidance part of Objective 1 and PEACE comprise 
70 single  programming  documents  and  operational  programmes  (EU 15),  of  which 
only  35  were  adopted  by  a  Commission  decision  in  time  to  be  covered  by 
commitments/payments  in  the  2000  financial  year,  on  account  of  delays  in  the 
approval  procedure  in  2000.  For  the  new  Member  States  (EU 10),  9  other 
programmes were adopted. 

As regards the Leader+ Initiative, on account of the lengthier procedure following the 
adoption  of  the  guidelines,  none  of  the  73 programmes  was  adopted  by  the  end  of 
2000, so a request was made in 2001 to transfer all the appropriations from the year 
2000  to  the  years  2000–06.  Seventy  programmes  were  adopted  in  2001  and  the 
remaining three were adopted in 2002. 

EN 

142 

   EN 

 
Table 7.2.1a — Expenditure by Objective, 2000–06 period 

(Commitment appropriations, EUR million) 

Objective 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Community Support Frameworks 

Objective 1: 2000–06 
period (regions 
lagging behind) 

Former Objectives 1 
and 6  
(1994–1999 period) 

Former Objective 5(a) 
(1994–1999 period) 

Former Objective 5(b) 
(1994–1999 period) 

1 239.3  3 237.2  2 639.1  2 764.1  3 311.5 

3586.7 

76.9 

******  ****** 

***** 

*****  ******  ****** 

29.4 

******  ******  ******  ******  ******  ****** 

1.0 

******  ******  ******  ******  ******  ****** 

Community Initiatives 

Leader+: 
2000–2006 period 

Previous CIPs  
(1994–1999 period) 

Technical assistance 

period: 
2000–2006 
innovative  measures 
and 
technical 
assistance 

Previous transitional 
measures/technical 
assistance  
(1994–1999 period) 

0.0 

271.3 

356.8 

346.6 

355.3 

375.9 

37.0 

******  ******  ******  ******  ******  ****** 

0.0 

0.0 

1.1 

1.4 

1.7 

2.4 

3.7 

0.3 

******  ******  ******  ******  ****** 

TOTAL 

1 387.3  3 508.8  2 997.0  3.112.1  3 668.5 

3965.0 

EN 

143 

   EN 

 
 
 
 
 
Table 7.2.1b — Expenditure by Objective, 2000–06 period 

(Payment appropriations, EUR million) 

Objective 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Community Support Frameworks 

Objective 
period 
behind) 

1: 
(regions 

2000–06 
lagging 

Former Objectives 1 and 6 
(1994–99 period) 

Former  Objective  5(a) 
(1994–99 period) 

Former  Objective  5(b) 
(1994–99 period) 

Community Initiatives 

Leader+: 
2000–06 period 

Previous CIPs 
(1994–99 period) 

Technical assistance 

2000–06  period:  innovative 
technical 
and 
measures 
assistance 

Previous transitional 
measures/technical 
assistance (1994–99 period) 

587.6 

1 276.9 

1 474.7 

2 166.9 

2 709.0 

2764.6 

1 353.2 

488.3 

5.1 

176.5 

235.3 

221.4 

803.1 

69.4 

79.2 

89.2 

67.7 

190.2 

629.9 

142.9 

26.1 

66.2 

53.6 

17.5 

0.0 

81.9 

74.9 

87.6 

238.8 

334.5 

178.4 

79.8 

10.3 

17.3 

106.7 

58.3 

0.0 

0.0 

0.2 

1.7 

1.7 

2.4 

6.5 

5.8 

1.6 

7.5 

0.6 

0.0 

TOTAL 

3 558.7 

2 145.0 

1 672.1 

2.612.9 

3 413.4 

3588.9 

Execution of 2005 budget 

746. 

In terms of the appropriations available in 2005, including those originally entered in 
the  budget  together  with  transfers  and  carryovers,  the  execution  of  the  2005  budget 
for  the  whole  of  the  EAGGF  Guidance  Section  was  98.5%  and  99.9%  for 
commitment  (EUR 3965.0  million)  and  payment  appropriations  (EUR 3589.9 
million), respectively. 

747. 

The year 2005 was the sixth in the 2000–06 programming period. During this period, 
the  source  of  funding  for  rural  development  programmes  depended  on  the  type  of 
measure and the geographical area. 

748. 

The  source  of  financing  for  rural  development  measures  differed  according  to 
geographical area as follows: 

– 

– 

in  regions  eligible  under  Objective  1  (regions  whose  development  is  lagging 
behind), the EAGGF Guidance Section continued to finance rural development 
measures integrated within development programmes, in combination with the 
other Structural Funds; 

outside the Objective-1 regions, the source of financing for rural development 
measures was the EAGGF Guarantee Section. 

EN 

144 

   EN 

 
 
 
 
 
 
 
 
 
 
Community Initiatives are funded under the EAGGF Guidance section. 

749. 

750. 

751. 

For  Objective  1,  payments  (EUR  2753.1  million)  executed  in  2005  were 
reimbursements  made  for  the  79 current  programmes,  representing  77%  of  the 
instalment committed in 2005.  

For 
the  Leader+  Initiative,  payments  (EUR  375.8)  made 
reimbursements, representing 88.9% of the instalment committed in 2005. 

in  2005  were 

For  programmes  from  previous  programming  periods,  payments  executed  in  2005 
amounted  to  EUR  487.4  million.  These  payments  constituted  the  final  balance 
payable  under  these  programmes,  for  which  rather  complex  final  implementing 
reports had to be submitted giving the results of the checks carried out. 

EN 

145 

   EN 

 
Table 7.2.2 — Implementation of the EAGGF Guidance Section budget in 2004 

2000–06 programming period 

Previous programming periods 

Total 

Objective 1 

PEACE 
(Objective 1)

LEADER+ 

Innovative measures/ 
Technical assistance 

Former Objectives 1 
and 6 

Former 
Objective 5(a)

Former 
Objective 5(b)

Former CIPs 

Former transitional 
measures 

A — Commitments 

Belgique/België 

Ceská republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France 

Ireland 

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg 

Magyarország 

Malta 

Nederland 

Österreich 

Polska 

Portugal 

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 
United Kingdom 

Other 

Total 

8.071 

55.634 

3.098 

511.284 

18.621 

521.865 

935.168 

137.106 

20.913 

580.402 

0.000 

33.026 

41.786 

0.412 

7.193 

55.634 

– 

469.007 

18.621 

487.611 

845.519 

89.980 

11.937 

533.158 

– 

33.026 

41.786 

– 

104.415 

104.415 

1.400 

17.538 

20.572 

398.156 

341.428 

7.868 

60.477 

44.599 

24.899 
70.732 

1.400 

2.270 

6.537 

398.156 

311.196 

7.868 

60.477 

34.180 

17.163 
49.535 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

5.424 
3964.894 

– 
3586.668 

– 
0.000 

0.878 

– 

3.098 

42.277 

– 

34.255 

89.649 

47.125 

8.976 

47.244 

– 

– 

– 

0.412 

– 

– 

15.268 

14.035 

– 

30.232 

– 

– 

10.419 

7.736 
21.197 

3.056 
375.858 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

2.369 
2.369 

– 
0.000 

– 
0.000 

– 
0.000 

– 
0.000 

– 
0.000 

EN 

146 

EN 

 
  
 
2000–06 programming period 

Previous programming periods 

Total 

Objective 1 

PEACE 
(Objective 1)

LEADER+ 

Innovative measures/ 
Technical assistance 

Former Objectives 1 
and 6 

Former 
Objective 5(a)

Former 
Objective 5(b)

Former CIPs 

Former transitional 
measures 

7.668 

16.503 

11.110 

611.068 

20.960 

374.695 

949.057 

289.313 

40.505 

544.776 

0.000 

32.351 

7.547 

0.593 

42.842 

0.252 

13.615 

20.785 

137.048 

251.938 

1.615 

31.152 

28.626 

22.529 

127.570 

4.752 
3588.869 

4.973

16.503

–

477.877

20.960

272.237

770.884

103.587

22.846

437.234

– 

32.351

7.547

– 

42.842

0.252

1.269

8.620

137.048

229.704

1.615

31.152

21.799

13.623

98.152

– 

– 

– 

– 

– 

– 

– 

– 

11.547

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2753.074

– 
11.547

2.695

– 

2.792

36.623

– 

29.523

97.925

36.108

6.113

40.065

– 

– 

– 

– 

– 

0.140

9.742

12.165

– 

22.234

– 

– 

6.802

6.558

22.616

2.383
334.483

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2.369
2.369

147 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

48.068

35.310

63.798

57.275

44.489

2.132

5.588

221.351

– 

– 

4.405

147.279

2.865

0.379

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 
190.238

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

6.896

1.433

– 

– 

1.423

13.191

– 

9.136

18.569

0.906

– 

6.816

13.307

2.323

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

0.073

0.281

0.215

1.213

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

0.025 

17.469

58.315

0.025 

EN 

B — Payments 

Belgique/België 

Ceská republika 

Danmark 

Deutschland 

Eesti 

Elláda 

España 

France 

Ireland 

Italia 

Kypros/Kıbrıs 

Latvija 

Lietuva 

Luxembourg 

Magyarország 

Malta 

Nederland 

Österreich 

Polska 

Portugal 

Slovenija 

Slovensko 

Suomi/Finland 

Sverige 

United Kingdom 

Other 

Total 

EN 

 
  
 
 
8.3. 

Evaluation 

752. 

The Directorate-General for Agriculture and Rural Development carries out regular 
evaluations of measures applicable to agriculture. The purpose of those evaluations is 
to contribute to policy preparation and decision making by providing information on 
the effectiveness, efficiency, and relevance of measures under the CAP. In particular, 
the  evaluations  examine  the  impacts  of  CAP  measures  on  market  equilibrium, 
producer  incomes,  production  structures,  rural  development,  and  the  environment; 
they may be retrospective and/or  prospective. Evaluation reports  are  made  publicly 
available on the Europa website. 

Evaluation of measures relating to markets and income support 

753. 

754. 

In the field of market policies, four evaluation projects were completed during 2006: 
three  concerned  measures  under  the  common  market  organisation  for  fruit  and 
vegetables (citrus, processed tomatoes, peaches, nectarines and pears) and the fourth 
analysed CAP support measures for energy crops. 

Contracts  were  signed  at  the  end  of  the  year  for  seven  new  evaluation  projects 
concerning:  support  measures  for  dried  fodder;  market-related  measures  under  the 
common  market  organisation  for  beef  and  veal;  beef  extensification  premiums; 
crisis-management  for  fruits  and  vegetables;  cross-compliance;  the  environmental 
effects  of  support  measures  for  arable  crops;  and  the  environmental  impact  of 
support measures targeting beef and dairy products. 

Evaluation of structural and rural development measures 

755. 

756. 

In  the  field  of  rural  development  policies,  two  evaluation  projects  were  completed 
during  2006.  These  concerned  measures  in  Less  Favoured  Areas  (LFA)  and  a 
‘synthesis’ study on Leader+ evaluations carried out by Member States. At the end of 
2006,  a  new  contract  was  signed  for  an  evaluation  project  to  examine  Nordic 
measures. 

In the field of rural development, intensive work was carried out to build up the new 
Common  Monitoring  and  Evaluation  Framework  (CMEF)  for  the  programming 
period  2007–2013,  including  the  preparation  of  an  evaluation  network  for  rural 
development policies. 

Cross-cutting evaluation projects 

757. 

Two cross-cutting evaluations were carried out in 2006: these were an evaluation of 
the  impact  of  export  support  measures  on  food  security  and  an  evaluation  of  the 
information  policy  of 
for  Agriculture  and  Rural 
Development (DG AGRI). 

the  Directorate-General 

Prospective evaluations 

758. 

Four impact assessments were carried out in 2006 to prepare policy proposals. These 
concerned measures relating to bananas, fruit and vegetables, wine, and biofuels. 

EN 

148 

   EN 

 
9. 

ENLARGEMENT 

Bulgaria and Romania 

759. 

760. 

761. 

762. 

For Bulgaria and Romania (the two new acceding countries), a reinforced monitoring 
exercise  was  held  in  2006.  DG  AGRI  contributed  to  two  Commission  monitoring 
reports (May and September 2006) on the progress made by these countries towards 
accession.  It  assessed  the  state  of  preparation  for  the  agricultural  common  market 
organisations, in particular the establishment of paying agencies/IACS. 

The  Commission  also  adopted  an  ad-hoc  regulation  on  the  basis  of  the  Accession 
Treaty to establish a ‘mechanism for appropriate measures in the field of agricultural 
spending  in  respect  of  Bulgaria  and  Romania’.  This  mechanism  allows  the 
Commission  to  reduce  monthly  and  intermediate  payments  to  these  two  Member 
States by 25% in the event of serious deficiencies in their IACS. 

The Commission introduced transitional measures in order to help the new Member 
states  prevent  surplus  stocks  and  avoid  the  risk  of  deflection  of  trade,  and  thus 
adverse  effects  on  the  common  organisation  of  agricultural  markets  due  to  the 
accession of the new Member States. 

DG  AGRI  prepared  an  amendment  to  the  Act  of  Accession  with  Bulgaria  and 
Romania  in  order  to  ensure  the  application  of  the  new  acquis  in  the  rural 
development and sugar sector adopted after signature of the Accession Treaty. 

Croatia and Turkey 

763. 

764. 

Substantial  contributions  were  made  by  DG  AGRI  to  the  screening  exercise  on 
Chapter  11  ‘Agriculture  and  Rural  Development’  for  Croatia  and  Turkey.  The  first 
part  of  the  screening  was  multilateral,  with  Croatia  and  Turkey  together  for  the 
presentation of the acquis, and took place in December 2005. The second part of the 
screening  exercise  was  conducted  bilaterally  with  the  two  candidate  countries  in 
January  and  February  2006.  Croatia  and  Turkey  presented  their  agricultural 
legislation and the gaps with the acquis were discussed.  

Following  the  screening  report,  the  Member  States  did  not  consider  Croatia  to  be 
sufficiently  prepared  for  negotiations  on  this  Chapter,  and  established  an  initial 
benchmark  for  agricultural  statistics:  Croatia  was  requested  to  prepare  a  strategy 
paper  with  the  aim  of  reinforcing  the  collection  and  processing  of  agricultural 
statistics.  Together  with  DG  ESTAT  and  DG  ELARG,  DG  AGRI  prepared  a 
‘Guidance document’ in order to help Croatia meet the benchmark. 

Enlargement package 2006 

765. 

DG  AGRI  contributed  substantially  to  the  2006  enlargement  package  of  reports  on 
the  candidate  countries  (Croatia,  Turkey  and  the  Former  Yugoslav  Republic  of 
Macedonia) and the potential candidate countries (Albania, Bosnia and Herzegovina, 
and  Serbia  including  Kosovo  and  Montenegro).  It  also  contributed  considerably  to 
the comprehensive monitoring reports on the preparedness of Bulgaria and Romania 
for  accession,  which  identified  the  areas  where  increased  efforts  were  required  and 
which would be subject to reinforced monitoring. 

EN 

149 

   EN 

 
Pre-accession assistance 

766. 

DG  AGRI  supported  DG  ELARG  in  the  granting  of  pre-accession  support  — 
PHARE  (for  Bulgaria,  Romania  and  Croatia)  —  and  in  Transition  Facility 
programming (i.e. support for institution building) for the ten new Member States in 
relation to agriculture and rural development. Technical advice was also provided to 
TAIEX for short-term activities. 

10. 

INTERNATIONAL RELATIONS 

10.1. 

International organisations and agreements 

European Neighbourhood Policy 

767. 

The Commission attaches particular importance to development and implementation 
of  the  European  Neighbourhood  Policy  (ENP).  DG  AGRI  contributed  to  the 
communication adopted by  the Commission on 9  November 2006 on  proposals for 
trade  and  rural  development  aspects  of  the  Action  Plans  agreed  with  various 
countries.  

10.1.1.  World Trade Organisation (WTO) 

WTO dispute settlement 

768. 

769. 

770. 

771. 

A  second  public  hearing  in  the  cases  against  the  United  States  and  Canada 
concerning  their  continued  suspension  of  obligations  in  the  hormones  dispute 
(WT/DS320; WT/DS321) took place on 2 and 3 October 2006. The final report to the 
three parties was expected at the end of November 2007. 

The  report  of  the  panel  requested  by  the  United  States  (WT/DS291),  Canada 
(WT/DS292) and Argentina (WT/DS293) concerning certain EC measures affecting 
the approval and marketing of biotech products (GMOs) was adopted at the Dispute 
Settlement  Body  (DSB)  meeting  on  21  November  2006.  The  EC  agreed  with  the 
three complaining parties that the reasonable period of time for the EC to implement 
the recommendations and rulings of the DSB should be 12 months from the date of 
adoption of the report, thus 21 November 2007 at the latest. 

Following an ad hoc arbitration procedure under the terms of the Annex to the Doha 
waiver for the Cotonou Agreement, Honduras, Nicaragua and Panama requested on 
30 November 2005 consultations on the new EC import regime for bananas applying 
as from 1 January 2006 under  Article 21.5. Consultations were held on 19 January 
2006. 

Following the entry into force of the current import regime for bananas on 1 January 
2006, the EC and several Latin American suppliers (Ecuador, Costa Rica, Colombia 
and  Guatemala)  participated  in  a  monitoring  and  review  process  under  the  good 
offices  of  Norway  to  seek  a  mutually  agreed  solution  to  the  banana  dispute.  This 
process was suspended upon Ecuador’s decision to request WTO dispute settlement 
consultations  on  16  November  2006.  The  consultations  with  Ecuador  were  held  on 
14 December 2006.  

EN 

150 

   EN 

 
772. 

773. 

774. 

Consultations requested by Argentina on EC measures concerning garlic took place 
on 5 October 2006. 

At the request of the EC, consultations with Mexico took place on 5 May 2006 on 
Mexico’s ‘definitive countervailing measures’ on olive oil from the EC. 

At the request of the EC, consultations took place with India on 20 and 21 December 
2006 on Indian measures affecting the importation and sale of wines and spirits from 
the EC. 

Doha Development Agenda 

775. 

776. 

The  first  half  of  2006  was  a  period  of  intense  activity,  following  the  Hong  Kong 
Ministerial  Meeting  in  December  2005.  Key  players,  including  the  EC,  pursued  a 
large  number  of  contacts  at  both  technical  and  political  levels.  These  contacts 
culminated  in  the  29  June–1  July  ministerial  meetings  in  Geneva,  where  ministers 
met in various formats: G6 (EC, US, India, Brazil, Japan and Australia), the ‘Green 
Room’  (about  30  countries  together)  and  the  WTO  Trade  Negotiations  Committee 
(entire WTO membership). 

The  objective  was  to  find  a  common  platform  for  the  triangle  ‘agricultural  market 
access  —  domestic  support  —  NAMA’.  The  EU  played  a  constructive  part  in  the 
discussions,  which  however  ended  in  deadlock  because  of  lack  of  progress  on  US 
domestic support and agricultural market access in developing countries. Eventually, 
Members  formally  invited  the  WTO  Director-General  Pascal  Lamy  to  act  as  a 
facilitator  and  consult  members  intensively  and  widely  in  order  to  establish 
modalities. Following a failed meeting of the Heads of State and Government among 
six  major  participants,  Pascal  Lamy  announced  in  July  2006  the  indefinite 
suspension of negotiations. Concluding the Doha round by the end of 2006, the goal 
set in 2005, was now impossible. 

777. 

In the second half of 2006, during the hiatus, the EU established several bilateral and 
multilateral  contacts  with  our  main  trading  partners  with  the  view  to  resuming  the 
negotiations in the beginning of 2007. 

10.1.2.  Organisation for Economic Cooperation and Development (OECD) 

778. 

779. 

to 

the  OECD  budget, 

EU  Member  States  account  for  19  of  the  OECD’s  members  and  are  the  major 
including  voluntary  contributions.  The 
contributors 
Commission participates actively in the work of this organisation, in particular, as far 
as  agriculture  is  concerned,  in  the  Committee  for  Agriculture  (CoAg),  its  working 
parties,  and  at  the  interface  with  the  Committees  on  Trade  and  the  Environment 
(Joint working parties). 

CoAg’s core activities include the annual preparation of a mid-term market outlook 
for the main OECD agricultural commodities (the ‘Agricultural Outlook’ report) and 
the  yearly  review  of  the  main  developments  in  the  agricultural  policies  of  member 
countries (‘Agricultural Policies, Markets and Trade in OECD Countries’, generally 
known  as  the  ‘Monitoring  Report’).  A  similar  review  focuses  on  the  main 
developments  in  major  non-OECD  members,  whether  economies  in  transition  or 
emerging countries. These reviews include in particular the calculation of aggregated 

EN 

151 

   EN 

 
estimates  of  support  for farmers, the  ‘Producer Support Estimate’ (PSE), expressed 
as  the  percentage  share  of  public  financing  (budgetary  payments  and  economic 
transfers from consumers and taxpayers as a result of policy measures) in the overall 
income of the farming sector, and the ‘Total Support Estimate’ (TSE) for the whole 
agriculture  and  food  sector,  which  indicates  the  degree  of  support  in  the  OECD 
economies expressed as a percentage share of GDP. 

The  2005-2006  working  programme  continued  to  focus  on  the  cause-effect 
relationship  between  policies  (e.g.  decoupling  and  appropriate  targeting),  i.e. 
objectives and outcomes (economic and other effects). 

2006  was  the  second  year  of  the  two-year  working  programme,  starting  with  a 
substantial carry-over of studies from the previous year. 

In  2006,  the  Committee  for  Agriculture  (CoAg)  also  discussed  for  the  first  time  a 
multi-year  programme  of  outreach  activities  for  non-member  economies  together 
with an outreach strategy, for which two events were held in the same year in Buenos 
Aires,  Argentina,  for  Latin  America  and  in  Dakar,  Senegal,  for  Africa.  While  the 
Commission  participated  in  the  South  America  event,  its  absence  in  Dakar  was 
noted.  CoAg  also  held  a  fruitful  joint  meeting  with  the  Development  Assistance 
Committee  Poverty  Network  on  policy  coherence,  as  a  precursor  to  the  Global 
Forum on Africa, which drew on new joint projects for Africa with IFAD and DAC, 
the NEPAD review and the Sahel and West Africa Club. 

Another  key  area  was  economic  impact  measuring,  involving  essentially  the 
updating  of  the  in-depth  Screening  of  China’s,  Brazil’s  and  South  Africa’s  and 
India’s  agricultural  policies  and  a  Study  on  the  distributional  effects  of  trade  and 
agricultural policy reform based on information from Brazil, Mexico, Italy, Malawi 
and the US, a document that was released in the early 2006.  

The  analysis  of  changes  in  the  food  economy  continued  with  a  further  set  of  three 
studies on: the future role and likely impacts of private and public food standards; the 
economic  impacts  of  market  concentration  in  the  food  chain;  and  corporate 
responsibility challenges and business practices in the agro-food sector. 

In  2006,  OECD  continued  with  core  activities  such  as  the  outlook  report  and  the 
report  on  the  monitoring  and  evaluation  of  agricultural  policies  in  its  abbreviated 
version  called  ‘At  a  Glance’.  Part  of  this  latter  report  (the  Commodity  PSE)  came 
under heavy criticism from the European Commission since it contained information 
no longer warranted by the support figures supplied — €17bn of decoupled payments 
could no longer be earmarked for commodity allocation. CoAg agreed to suspend the 
Commodity  PSE  and  to  accelerate  work  on  the  new  PSE  classification,  which  was 
approved  in  its  basic  outline  by  the  APM  (Working  Party  on  Agricultural  Policies 
and Markets) in the same year. 

OECD carried out a number of analytical studies on: the impact of policies on land 
prices  and  mobility;  the  role  of  compensation  in  the  reform  process;  information 
deficiencies  and  non-market  valuation  and  its  policy  responses;  and  finally  on  the 
degree of ‘jointness’ with regard to rural development and food security, which was 
followed  by  a  workshop  on  jointness,  recognising  the  general  existence  of  this 
phenomenon and offering new approaches to deal with it.  

780. 

781. 

782. 

783. 

784. 

785. 

786. 

EN 

152 

   EN 

 
787. 

788. 

The  Joint  Working  Party  on  Agriculture  and  Trade  continued  with  impact  studies 
looking into the level and distribution of trade liberalisation effects and the effect on 
trade and trade policy of policy responses to societal concerns. 

Finally, the Joint Working Party on Agriculture and Environment continued with its 
study of the relationship between agricultural and environmental outcomes, through 
an  analysis  of  linkages  and  policy  instruments  such  as  cross-compliance,  and  with 
the  editing  discussion  on  the  fourth  volume  of  the  Agri-Environmental  Indicator 
Series,  now  scheduled  for  the  end  of  2007.  (A  workshop  held  in  Washington  in 
March  2007  looked  at  the  challenges  of  how  to  incorporate  agro-environmental 
indicators within policy-making.) 

789.  With  the  acceptance  of  the  Economic  Policy  Development  Review  process  by  the 
Commission,  a  new  chapter  of  relations  with  the  OECD  was  opened,  with 
agricultural policy follow-up being an important part of this. (The first report of this 
kind on the European Union was started and published in 2007).  

10.1.3.  Generalised System of Preferences (GSP) 

790. 

791. 

The  aim  of  the  GSP  is  to  foster  the  integration  of  developing  countries  within  the 
world economy and the multilateral trading system. The GSP focuses on the needs of 
the  poorest  beneficiary  countries,  in  particular  through  the  ‘Everything  But  Arms’ 
initiative, which is incorporated in the GSP. 

A new GSP scheme was adopted on 27 June 2005, through Council Regulation (EC) 
No 980/2005. This regulation applies from 1 January 2006 to 31 December 2008, but 
the provisions concerning the special incentive scheme for sustainable development 
and good governance (also known as ‘GSP-plus’) have already applied since 1 July 
2005.  The  special  arrangements  to  combat  drug  production  and  trafficking  under 
Regulation No 2501/2001 were repealed from that same date.  

792. 

From 1 January 2006 to 31 December 2008, there are three types of arrangement for 
beneficiary countries under the EU’s GSP in Regulation (EC) No 980/2005: 

793. 

all beneficiary countries can benefit from the general arrangement; 

794. 

the special incentive arrangement for sustainable development and good governance 
(‘GSP+’)  provides  additional  benefits 
implementing  certain 
international  standards  in  human  and  labour  rights,  environmental  protection,  the 
fight  against  drugs,  and  good  governance  (Commission  Decision  2005/924/EC 
contains the list of GSP+ beneficiary countries); 

for  countries 

795. 

the special arrangement for the least-developed countries (LDCs), which provides the 
most favourable treatment of all, with the aim of granting the LDCs ‘duty-free and 
quota-free’ access to the EU’s market (with phase-in periods for sugar and rice).  

10.1.4.  United Nations Food and Agricultural Organisation (FAO) 

796. 

As  a  member  of  FAO,  the  EC  took  part  in  the  work  of  the  various  technical 
committees. The EC attended in particular: 

EN 

153 

   EN 

 
– 

– 

– 

– 

the  34th  session  of  the  European  Commission  on  Agriculture  (ECA)  (Riga, 
Latvia, 7 June 2006); 

the  International  Conference  on  Agrarian  Reform  and  Rural  Development 
(ICARRD) — Puerto Alegre, Brazil, 6–10 March 2006; 

the 131st session of the FAO Council — November 2006; 

the  32nd  session  of  the  Committee  on  World  Food  Security  October–
November 2006. 

10.1.5.  Commodities and international commodity agreements  

797. 

798. 

799. 

800. 

801. 

The Food Aid Convention (FAC), at its 96th session on 1 June 2007, was extended 
for one year until 30 June 2008, with the possibility of further extension subject to 
the 1995 Grains Trade Convention remaining in force. Due to the links between the 
FAC  and  the  negotiation  of  food  aid  disciplines  within  the  chapter  on  export 
competition at the WTO, the re-negotiation of the FAC was postponed.  

At its 25th Session on 11 June 2007, the International Grains Council agreed that the 
1995  Grains  Trade  Convention  would  be  extended  for  a  further  two  years  until  30 
June 2009. 

The International Sugar Agreement remained in force until 31 December 2005 after 
being extended for two years at the end of 2003. 

The new International Agreement on Olive Oil and Table Olives, 2005, entered into 
force  provisionally on 1  January 2006. A new  management  team  took  office  at  the 
end  of  2004.  An  administrative,  operational  and  financial  restructuring  of  the 
organisation is under way. 

Concerning  the  management  of  this  organisation,  a  round  of  negotiations  held  in 
2004  led  to  a  complete  renewal  of  the  management  staff  as  of  the  end  2004, 
including  a  new  Executive  Director.  The  new  Financial  Delegate,  who  took  up  his 
post  in  April  2004,  together  with  the  new  management  team  appointed  in  October 
2004, will manage the organisation as a college on the basis of the new rules. 

10.2.  Bilateral and regional trade relations 

10.2.1.  ACP countries 

802. 

Economic  Partnership  Agreement  (EPA)  negotiations:  the  Commission  was 
involved, as planned, in negotiations with the six different regional EPA groupings, 
i.e.  Central  Africa,  West  Africa,  Eastern  and  Southern  Africa  (ESA),  the  Southern 
Africa  Development  Community  (SADC)  region,  the  Pacific  region  and  the 
Caribbean region.  

South Africa  

803. 

Further  discussions  resulted  in  progress  on  the  resolution  of  certain  outstanding 
agricultural issues with the EU/South Africa TDCA. Specific discussions were held 
on TDCA preferences that South Africa should apply to certain Community cheeses, 

EN 

154 

   EN 

 
in  particular  the  opening  of  the  cheese  TRQ  that  South  Africa  had  committed  to 
under the TDCA. 

804. 

805. 

In  the  context  of  the  EU/South  Africa  agreement  on  trade  in  wine  and  spirits, 
meetings  between  the  parties  provided  an  opportunity  to  discuss  a  wide  range  of 
issues  of  interest  to  both  sides.  In  particular,  following  agreement  by  the  parties  in 
2006 to  give priority to setting up the Joint Committee envisaged in the wines  and 
spirit  agreement,  work  towards  finalising  the  rules  of  procedure  of  the  Joint 
Committee made progress.  

[The  Commission  reiterated  the  importance  of  the  ratification  of  the  agreement  on 
trade  in  wine  and  spirits  by  South  Africa,  but  South  Africa  noted  that  due  to  the 
outstanding  issues concerning trademarks  and geographic indicators it was not in a 
position to submit the agreement to its parliament for ratification.] 

10.2.2.  EFTA countries and the EEA Agreement 

EEA 

806. 

Norway 

807. 

The European Economic Area (EEA) comprises the EC, EU Member States and the 
following EFTA states: Norway, Iceland and Liechtenstein. The regular uptake of the 
acquis by the EFTA states as regards the internal market included, as usual, the latest 
EC  legal  acts  in  domains  such  as  organic  agriculture,  veterinary  and  phytosanitary 
measures, food, biotechnology, etc88. Protocol 47 of the Agreement on the EEA89, on 
the abolition of technical barriers to trade in wine, was also significantly revised in 
200688. 

Bilateral  trade  negotiations  on  agriculture  under  Article  19  of  the  EEA  agreement 
finally  resumed  in  2006,  following  undertakings  by  the  Parties  in  the  Exchange  of 
Letters  of  20  June  2003  concerning  additional  trade  preferences  for  agricultural 
products90. 

808. 

A  Norwegian  proposal  aiming  to  modify  the  domestic  regime  for  the  outward 
processing of agricultural products was subject to vigorous internal debate in Norway 
and to intense bilateral contacts in 2006, because of its potential damaging effects on 
consumers, bilateral trade, industry and regional integration.  

Iceland 

809. 

Bilateral negotiations under Article 19 of the EEA agreement, with a view to further 
liberalising bilateral trade in agricultural products between the parties on a reciprocal 
and  mutually  beneficial  basis,  were  finalised  at  the  end  of  2006.  The  Exchange  of 
Letter was signed on 22 February 200791. 

http://secretariat.efta.int/Web/EuropeanEconomicArea/introduction. 

OJ L 1, 3.1.1994, p. 3. 

OJ L 156, 25.6.2003, p. 49. 

OJ L 61, 28.2.2007, p. 29. 

88 

89 

90 

91 

EN 

155 

   EN 

 
                                                 
Liechtenstein 

810. 

Given  the  strong  ties  between  Liechtenstein  and  Switzerland,  notably  the  Customs 
Union  between  these  two  countries,  Liechtenstein  asked  to  be  included  in  the 
Agreement  between  the  EC  and  the  Swiss  Confederation  on  trade  in  agricultural 
products92. The EC and Switzerland were both in favour, and tripartite negotiations 
were finalised at the end of 2006. It also proved necessary to prepare a Decision of 
the EEA Joint Committee in order to clarify the triangular relationship between the 
EC, Switzerland and Liechtenstein in the field of agriculture, both for tariff and non-
tariff  issues,  due  to  the  fact  that  Liechtenstein  is  part  of  the  EEA  Agreement  but 
Switzerland is not. Both texts are to be adopted in parallel, in 2007.  

Switzerland 

811. 

The Joint Committee on Agriculture, created by the Agreement between the EC and 
the Swiss Confederation on trade in agricultural products93, met for the sixth time on 
6 December 2006. It reviewed bilateral trade conditions and addressed in particular 
the  following  issues:  respective  developments  in  the  field  of  geographical 
indications,  with  the  focus  on  the  registration  of  the  name  ‘Emmentaler’  on  Swiss 
import  certificate  requirements  for  cheeses  and  organic  products, 
territory, 
preferential  trade  in  sausage  products,  adaptation  of  the  Agreement  to  take  into 
account  the  enlargement  of  the  EU  to  27  Members  and,  more  generally,  future 
developments  in preferential trade. The parties further  worked towards the opening 
in  2007  of  bilateral  negotiations  on  the  mutual  recognition  of  geographical 
indications and for updates and improvements to the text of the bilateral Agriculture 
Agreement and its Annexes. The evolution of bilateral trade in agricultural products 
was  regarded  as  favourable  by  both  parties.  Also  worth  noting  were  two  decisions 
adopted  by  the  Joint  Committee  on  Agriculture  late  in  2005:  Decision  3/200594  on 
trade adaptation following EU enlargement to 25 Members and Decision 4/200595 on 
organic products, updating the Agreement to reflect the evolution of the EC acquis 
and Swiss legislation. 

812. 

At  the  request  of  Switzerland,  exploratory  talks  on  the  possibilities  for  ambitious 
bilateral trade liberalisation in the agro-food sector took place at the end of 2006. A 
decision by the Swiss Federal Council on such possibilities was expected in 2007. 

10.2.3.  Asia 

ASEAN 

813. 

In  2006,  contacts  were  pursued  with  Thailand  on  possible  future  cooperation  on 
geographical  indications  and  on  manioc.  Following  a  mandate  from  the  Council  to 
start negotiations with Thailand to change the regime for importing manioc into the 
Community to a ‘first come first served’ system, preparatory consultations were held 
with Thailand.  

92 

93 

94 

95 

OJ L 114, 30.4.2002, p. 132. 

OJ L 114, 30.4.2002, p. 132. 

OJ L 346, 29.12.2005, p. 33. 

OJ L 346, 29.12.2005, p. 44. 

EN 

156 

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814. 

The Vision Group (EU–ASEAN) agreed that there was a solid case for a bi-regional 
Free Trade Agreement between the EU and ASEAN and suggested that negotiations 
could start in 2007.  

China 

815. 

816. 

817. 

India 

818. 

819. 

820. 

Japan 

821. 

In November 2006, DG AGRI and the Chinese Ministry of Agriculture held the first 
meeting under the ‘dialogue on agriculture’ between the EU and China. The meeting 
covered  trade  in  agricultural  products,  including  market  access  issues,  quality 
products, policy information and food technologies. 

Under  the  EU-China  arrangements  on  sanitary  and  phytosanitary  (SPS)  issues, 
discussions were held with China on overcoming non-tariff barriers to EU agriculture 
exports to China. 

In  the  context  of  the  EU-China  Memorandum  of  Understanding  on  Geographical 
Indications  (GIs),  DG  AGRI  and  AQSIQ  exchanged  views  on  their  respective  GI 
legislations and the procedures for registering GIs in each other’s territories. 

In  June,  India  was  included  in  Commission  Regulation  (EC)  No  94/1992  on  the 
equivalence  of  organic  production  methods  for  certain  agricultural  products.  This 
was a major achievement for India, opening the door for Indian quality products on 
the EC market. 

In  collaboration  with  the  authorities  of  India  (and  Pakistan)  work  continued  on  the 
development of the DNA protocol for basmati rice; it involved sampling missions to 
both countries during the harvesting period. 

Talks and coordination took place on the establishment of a revised Working Group 
on Agriculture  and Marine Products and arrangements  were  made  for  a  meeting  of 
this Group in early 2007. 

At  their  annual  meeting  in  Tokyo  on  1  June  2006,  the  EC  and  Japan  exchanged 
information  on  their  respective  pigmeat  markets.  These  exchanges  of  information 
aim  to  avoid  any  disruption  of  trade.  The  Japanese  authorities  have  recourse  to 
safeguard  measures  when  pigmeat  imports  reach  a  trigger  level.  Japan  is  a  major 
market  for  EU  pigmeat  producers.  These  safeguard  measures  were  not  applied  in 
2006. 

10.2.4.  Middle East and Mediterranean Region 

822. 

On the basis of a mandate for ambitious trade liberalisation with the Mediterranean 
partners  adopted  by  the  Council  in  November  2005,  negotiations  have  started  with 
Morocco  (February  2006  in  Rabat),  Israel  (June  2006  in  Tel-Aviv)  and  Egypt 
(February 2007 in Cairo). The negotiations are progressing satisfactorily with good 
prospects  of  success  in  the  first  quarter  of  2008.  Tunisia  undertook  to  open 
negotiations before the end of 2007. Informal talks with Algeria have been initiated 

EN 

157 

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in  order  to  establish  a  dialogue  and  cooperation  on  matters  of  common  interest  in 
agriculture. For Jordan, the new concessions entered into force in January 2006. 

10.2.5.  Western Balkans and Turkey 

823. 

824. 

825. 

826. 

827. 

828. 

829. 

830. 

Negotiations on an SAA (Stabilisation and Association Agreement) were conducted 
with  several  Western  Balkan  countries  (Albania,  Bosnia  and  Herzegovina  (BiH), 
Serbia and Montenegro). The provisions of the SAA on trade in agricultural products 
fully  incorporate  all  the  provisions  in  the  Autonomous  Trade  Preferences  already 
granted  to  all  Western  Balkans  countries  on  a  unilateral  basis  under  Council 
Regulation  (EC)  No 2007/2000.  The  SAA  also  includes  agricultural  concessions 
given to the EU on a more gradual and asymmetric basis, along with a protocol on 
reciprocal  preferential  concessions  for  certain  wines  and  the  reciprocal  recognition, 
protection and control of wine, spirit drinks and aromatised wine names.  

The SAA negotiations with Albania were finalised in early 2006. In addition to the 
general  provisions  described  above,  Albania  undertook  to  unilaterally  invalidate 
trade  marks  that  coincided  with  Community  geographical  indications  (GIs).  The 
Interim Agreement on the SAA, covering trade and trade-related issues, entered into 
force on 1 December 2006. 

The  SAA  negotiations  with  Bosnia  and  Herzegovina  (BiH)  were  launched  on 
25 November 2005 and were finalised at a technical level on 13-14 December 2006. 

Negotiations for an SAA with Serbia and Montenegro were put on hold in May 2006 
on  account  of  non-cooperation  with  the  International  Criminal  Tribunal  for  the 
former  Yugoslavia.  Following  the  21  May  2006  referendum  and  Montenegro’s 
independence, the General Affairs and External Relations Council (GAERC) decided 
on  12  June  2006  to  separate  SAA  negotiating  directives  for  Serbia  and  for 
Montenegro.  Negotiations  with  Serbia  remain  suspended  until  the  political  criteria 
are met.  

Negotiations with Montenegro were resumed in September 2006 and were finalised 
at a technical level on 1 December 2006.  

Drafts  of  an  SAA  with  BiH  and  Montenegro  include  the  unilateral  protection  of 
geographical indications for agricultural and fishery products and for foodstuffs other 
than wine and spirits. 

Ahead  of  the  accession  of  Bulgaria  and  Romania  to  the  EU,  the  Council  gave  the 
Commission  a  mandate  to  negotiate  the  technical  adaptation  of  bilateral  trade 
agreements. Preparatory work and consultations with certain countries to prepare the 
exercise were launched at the end of 2006. 

DG  AGRI  finalised  negotiations  with  Croatia  on  a  quota  for  duty-free  imports  of 
180 000  tonnes  of  sugar  (with  some  reciprocal  concessions  for  the  EU)  through  an 
Additional Protocol to the Stabilisation and Association Agreement (SAA). This new 
arrangement, applicable from 1 January 2007, permits Croatia to export sugar duty-
free  under  a  TRQ  and  replaces  the  previous  unlimited  duty-free  access  under  the 
SAA. DG AGRI also addressed the issue of the increase in imports of a mixture of 

EN 

158 

   EN 

 
cocoa  powder  with  a  high  sugar  content  from  Croatia,  in  order  to  prevent 
circumvention of the sugar quota.  

831. 

The process of adapting the bilateral trade agreement between the EU and Turkey to 
take into account the accession of the 10 new Member States was finally concluded. 
Decision  2/06  of  the  EC-Turkey  Association  Council  was  issued  on  17  October 
2006, updating the trade concessions on agricultural products.  

10.2.6.  Latin America 

Mercosur 

832. 

Chile 

833. 

Mexico 

834. 

During 2006, both parties agreed to wait for further clarification in the DDA before 
actively  resuming  the  negotiations  on  a  bi-regional  EU-Mercosur  association 
agreement.  

Exploratory  talks  on  possible  further  trade  liberalisation  on  agricultural  products 
(‘Evolution  clause’)  of  the  Association  Agreement  were  initiated.  The  Commission 
also asked to discuss issues relating to the protection of EU geographical indications. 

Talks  on  the  review  clause  on  agriculture  and  the  standstill  clause  of  the  FTA 
continued in 2006.  

Central America/Andean Community 

835. 

Based on a joint assessment of the economic integration process in both regions, and 
following  the  conclusions  of  the  May  2006  EU-LAC  Summit  in  Vienna,  the  EU 
prepared  for  the  start  of  negotiations  on  comprehensive  EU-CAN  and  EU-CA 
Association  Agreements,  including  political  dialogue,  cooperation  and  a  trade 
chapter. The first negotiation rounds were expected to take place in late 2007. 

10.2.9  NIS countries 

Russia 

836. 

The  Memorandum  of  Understanding  establishing  the  principles,  objectives  and 
structure  of  dialogue  in  the  field  of  agriculture  and  rural  development  between  the 
Ministry  of  Agriculture  of  the  Russian  Federation  and  the  European  Commission’s 
Directorate-General  of  Agriculture  and  Rural  Development  was  signed  by  the 
Russian  Minister  of  Agriculture  and  Commissioner  Fischer  Boel  in  Moscow  on 
13 April  2006.  This  dialogue  establishes  the  framework  for  future  cooperation 
between the two sides. 

837. 

The first meeting under the EU-Russia Agriculture Dialogue was held in Brussels on 
19-20  October  2006,  with  the  following  technical  structure:  (i)  agricultural  rural 
development,  (ii)  markets  for  agricultural  products  and  (iii)  innovation  and  new 
technologies. 

EN 

159 

   EN 

 
Ukraine 

838. 

The  Memorandum  of  Understanding  establishing  the  principles,  objectives  and 
structure of a dialogue in the field of agriculture and rural development between the 
Ukrainian Ministry of Agrarian Policy and the European Commission’s Directorate 
General of Agriculture and Rural Development was signed by the Ukrainian Minister 
of Agriculture and Commissioner Fischer Boel in Brussels on 19 October 2006. This 
dialogue establishes the framework for future cooperation between the two sides. 

839. 

The  first meeting  under the EU-Ukraine Agriculture Dialogue  was  held in Kiev  on 
14  December  2006,  with  the  following  technical  structure:  (i)  agricultural  rural 
development, (ii) markets for agricultural products.  

Georgia 

840. 

The  first  exploratory  talks  were  held  with  the  Georgian  authorities  on  a  bilateral 
agreement  on  the  protection  of  geographical  indications  for  wines  and  spirits.  This 
agreement  is  one  of  the  topics  and  activities  envisaged  in  the  EU-Georgia  ENP 
Action Plan. 

10.2.7.  North America: USA, Canada 

United States 

841. 

842. 

843. 

844. 

On  10  March  2006,  the  bilateral  EU-US  agreement  on  trade  in  wine  entered  into 
force. The agreement followed 20 years of negotiations and aimed to facilitate trade 
in  wine  while  improving  protection  for  European  and  American  names  used  in 
winemaking  and  guaranteeing  reciprocal  acceptance  of  oenological  standards  used 
by winemakers. 

This first-phase agreement provided that the parties were to begin negotiations within 
90  days of the date of entry into force of the agreement with a view to concluding 
one or more further agreements to facilitate trade in wine between the parties.  

Consequently,  negotiations  on  the  second-phase  agreement  were  formally  launched 
in Washington on 5 June 2006. Further progress and a common understanding were 
reached at the meetings on 20–21 September in Brussels and on 6–7 December 2006 
in  Washington,  where  issues  concerning  the  implementation  by  both  sides  of  the 
first-phase agreement and the identification of common interests for a second-phase 
agreement were addressed. 

.In the ‘hormones’ case, the EU continues to challenge the United States’ continued 
imposition  of  sanctions  against  EU  exports  because  of  the  EU’s  ban  on  hormone 
beef.  The  EU  believes  these  sanctions  are  illegal  since  the  EU  has  removed  the 
measures  found  to  be  non-compliant  with  WTO  rules  in  the  WTO  dispute  on 
hormone  beef  dating  back  to  1998.  These  ‘consultations’  failed  to  resolve  the 
dispute,  so  panels  (with  the  USA  but  also  with  Canada)  were  established  on  17 
February 2005. The first hearing took place in September 2005, but the report by the 
panels, expected by summer 2006, was postponed to 2007. 

845. 

In  August  2006  the  Commission  was  informed  that  GM  rice  LL601  from  Bayer, 
which was not intended to be commercialised and was supposed to be grown only in 

EN 

160 

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field trials in the US, had entered the food and feed supply chain. After the detection 
of the unapproved GM LL601 rice in US bulk rice exports, the Commission adopted 
emergency measures requiring that all shipments of long-grain rice originating from 
the  US  be  tested  and  accompanied  by  a  certificate attesting  that the product is free 
from GM rice LL601. Following positive tests on imports that were actually certified 
free from LL601, the emergency measures were intensified.  

846. 

847. 

Following  the  emergency  measures,  imports  of  rice  from  the  USA  almost  totally 
stopped  in  August  2006.  This  created  problems  in  particular  for  the  use  of  import 
licenses issued in July and August for approximately 30 000 tones of rice originating 
in the USA, as part of the July tranches of the import quotas agreed following WTO 
negotiations (Regulation (EC) n° 327/98).  

To resolve this situation, the Commission adopted at the end of October Regulation 
(EC)  No  1610/2006  to  extend  until  the  end  of  2006  the  validity  of  these  import 
licenses, as well as to allow imports from all third countries under licenses for erga 
omnes (all-country) quotas even if the licenses were originally issued for rice of US 
origin,  and  to  allow  flexible  use  of  the  certificates  regarding  the  type  of  rice  to  be 
imported, where it corresponded to the same processing stage. 

848. 

The Corn Gluten Feed Monitoring Group continued to meet. 

Canada 

849. 

The EC-Canada Agreement on trade in wines and spirit drinks officially entered into 
force on 1 June 2004. It provides for an end to the generic use of EU wine and spirits 
names in Canada in three phases, beginning for most names with the entry into force 
of  the  Agreement  and  lasting  up  to  31  December  2013  when  the  last  four  names 
(Chablis,  Champagne,  Port  and  Sherry)  will  be  no  longer  classed  as  generic.  The 
parties  also  agreed  on  compositional  standards  for  wines  and  spirit  drinks.  Trade 
disciplines applicable to Canada’s Provincial Liquor Boards were strengthened by a 
series  of  amendments  to  a  1989  agreement  following  a  successful  WTO  Panel 
requested  by  the  EC.  The  parties  also  established  a  framework  for  continuing 
discussions on matters such as the rules on labelling wines and spirits. Canada is a 
key market for EC wine and spirit exports, importing products worth over EUR 500 
million a year. After entry into force and during 2006, initiatives were taken to set up 
a Joint Committee for monitoring the agreement. The rules of procedure of this Joint 
Committee  were  adopted  by  a  Council  Decision  of  12  October  2006.  On 
29 November  2006  the  Commission  decided  to  request  WTO  consultations  with 
Canada  on  its  new  fiscal  measures  affecting  wine  and  beer.  The  draft  Canadian 
measures  provide  excise  tax  relief  to  Canadian  wine  and  beer,  while  leaving  the 
excise tax on imported EU wine and beer intact.  

850. 

For  the  Commission  this  tax  discrimination  amounts  to  a  breach  of  the  1989 
EU-Canada agreement on trade in alcoholic beverages, as last amended by the 2003 
EU-Canada  agreement  on  trade  in  wine  and  spirits.  These  proposals  are  also 
inconsistent  with  Canada’s  obligations  under  the  WTO  and  in  particular  GATT 
Article III. 

851. 

Canada  continued  to  apply  100%  ad  valorem  tariffs  to  EU  exports  worth 
CAD 11.3 million on account of the ‘hormones’ case. 

EN 

161 

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852. 

853. 

As  part  of  the  ongoing  negotiations  on  a  Trade  and  Investment  Enhancement 
Agreement, the EU and Canada continued regular discussions on the improvement of 
the protection granted to geographical indications. 

In the dairy sector, Canada established specific border controls and taxes on EU milk 
ingredients and, despite EU enlargement, Canada did not took account of traditional 
cheese exports from the ten new Member States. Regular exchanges on these issues 
took place during 2006, although no specific results were achieved. 

10.2.8.  Oceania 

Australia 

854. 

855. 

At the annual EC/Australia ATMEG meeting, views were exchanged on the market 
situation  for  major  commodities,  market  access  issues,  the  WTO  agricultural 
negotiations,  and  recent  policy  developments  in  the  EU  and  Australia.  An  in-depth 
discussion was held on rural development. 

Negotiations  on  a  new EC/Australia  agreement on trade in wine continued in  2006 
on  the  one  remaining  outstanding  issue,  i.e.  a  limited  number  of  trademarks 
registered  in  one  party  but  containing  or  consisting  of  geographical  indications 
protected  by  the  other  party.  It  was  hoped  to  conclude  these  negotiations  at  the 
beginning of 2007. 

New Zealand 

856. 

857. 

During  the  annual  EC/New  Zealand  agri-trade  talks,  views  were  exchanged  on  the 
market situation of dairy and meat products as well as on the state of play with the 
agriculture  negotiations  in  the  WTO.  An  in-depth  discussion  was  held  on  rural 
development. 

Consultations  were  held  with  New  Zealand  on  a  new  arrangement  for  the  EC’s 
current access tariff quota for New Zealand butter in order to bring the management 
system for this quota into line with the ruling of the European Court of Justice in the 
Egenberger case. This new arrangement entered into force at the beginning of 2007. 

EN 

162 

   EN