Regulation (EC) No 1337/2008 of the European Parliament and of the Council of 16 December 2008 establishing a facility for rapid response to soaring food prices in developing countries
Date: 2008-12-16
Institutions: Council of the European Union, European Parliament
Subjects: developing countries, economic consequence, economic policy, food price, increase in production, price increase, price of agricultural produce

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REGULATION (EC) No 1337/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

establishing a facility for rapid response to soaring food prices in developing countries

of 16 December 2008

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EURO-
PEAN UNION,

(4)

(5)

(6)

(7)

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 179(1) thereof,

Having regard to the proposal from the Commission,

Acting in accordance with the procedure laid down in Article 251
of the Treaty (1),

Whereas:

(1)

(2)

(3)

The volatility of food prices has put numerous developing
countries and their populations in a dramatic situation.
This food crisis, accompanied by a financial and energy cri-
sis and environmental deterioration, risks putting addi-
tional hundreds of millions of people in extreme poverty,
and in circumstances of hunger and malnutrition and calls
for increased solidarity with those populations. All the data
on the outlook for food markets lead to the conclusion
that the high volatility of food prices could continue in the
years to come.

As a complement to the European Union’s current devel-
opment policy instruments, a financing facility for a rapid
response to the crisis caused by volatile food prices in
developing countries should therefore be established by
this Regulation.

The European Consensus on Development (2), adopted by
the Council and the Representatives of the Governments of
the Member States meeting within the Council, the Euro-
pean Parliament and the Commission on 20 December
2005, states that the European Community (hereinafter
referred to as ‘the Community’) will continue to work to
international, regional and
improve food security at
national
this Regulation should
contribute.

to which goal

level,

(1) Opinion of the European Parliament of 4 December 2008 (not yet
published in the Official Journal) and Council Decision of 16 Decem-
ber 2008.

(2) Joint statement by the Council and the representatives of the govern-
ments of the Member States meeting within the Council, the European
Parliament and the Commission on European Union Development
Policy: ‘The European Consensus’ (OJ C 46, 24.2.2006, p. 1).

The European Parliament adopted on 22 May 2008 a reso-
lution on rising food prices in the European Union and the
developing countries, urging the Council to ensure coher-
ence of all food-related national and international policies
aiming at implementing the right to food.

During its meeting of 20 June 2008, the European Coun-
cil strongly reaffirmed its commitment to achieving a col-
lective Official Development Assistance (ODA) target of
0,56 % of Gross National Income (GNI) by 2010 and 0,7 %
of GNI by 2015, as set out in the Council conclusions of
24 May 2005, the European Council conclusions of 16
and 17 June 2005 and the European Consensus on
Development.

Acknowledging in its conclusions of 20 June 2008 that
high food prices were affecting the situation of the world’s
poorest populations and putting at risk progress towards
the achievement of all Millennium Development Goals
(MDGs), the European Council adopted an EU Agenda for
Action on MDGs which states that the European Union is
committed, in line with the Food and Agricultural Organi-
sation (FAO) Conference Declaration adopted by the FAO
High Level Conference on World Food Security on 5 June
2008 (the ‘FAO Conference Declaration’), to promote a
global partnership for food and agriculture and wishes to
play a substantial role in helping to bridge part of the
financing gap by 2010 in the areas of agriculture, food
security and rural development.

The European Council also concluded that in this endeav-
our the European Union will promote a more coordinated
and longer-term international response to the current food
crisis, in particular in the United Nations (UN) and in inter-
national financial institutions, that it welcomes the estab-
lishment of the High-Level Task Force on the Global Food
Security Crisis (HLTF) established by the UN Secretary-
General and is determined to play its full part in imple-
menting the FAO Conference Declaration. In this regard a
Comprehensive Framework of Action (CFA) has been
adopted by the HLTF, and international organisations and
regional organisations have launched their own initiatives.
The European Council also concluded that the European
Union will support a strong agricultural supply response in
developing countries, providing in particular the necessary
financing for agricultural inputs and assistance in using

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(8)

(9)

(10)

market-based risk management instruments, that the Euro-
pean Union will significantly enhance its support to public
and private investments in agriculture and more generally
encourage developing countries to develop better agricul-
ture policies, especially to support food security and rein-
force regional integration and that the European Union
will also mobilise resources to finance, beyond food aid,
safety nets for poor and vulnerable population groups.

Financial and material needs to fully address the conse-
quences and causes of the high food prices are very high.
The response should come from the international commu-
nity in its entirety and the Community has endeavoured to
contribute its fair share. The European Council of 20 June
2008 welcomed the Commission’s intention to come for-
ward with a proposal for a new fund to support agricul-
ture in developing countries, within the framework of the
current financial perspectives.

The Community response strategy should notably aim to
strongly encourage a positive short to medium-term sup-
ply response from the agricultural sector in developing
countries while at the same time also significantly reduc-
ing the negative effects of volatility of food prices on the
poorest in these countries. A supply-side response is also
in the interest of the Community in order to alleviate the
current pressure on agricultural prices.

humanitarian aid (2) to provide emergency assistance and
Regulation (EC) No 1717/2006 of the European Parlia-
ment and of the Council of 15 November 2006 establish-
ing an Instrument for Stability (3).

(11)

Those instruments, however, have already been mobilised
or reprogrammed in 2008 to the fullest possible extent to
address the negative effects of the volatile food prices situ-
ation in developing countries. To a very limited extent the
same could be done in 2009; however, that would be far
from being sufficient to respond to the needs.

(12) As a consequence, it is necessary to adopt a specific financ-
ing facility, complementary to existing external financing
instruments, to adopt urgent and supplementary measures
that address rapidly the consequences in developing coun-
tries of the present situation of volatile food prices.

(13) Assistance under this Regulation should be managed in
such a way as to increase the supply of foodstuffs to local
populations.

(14)

The measures adopted with this financing facility should
help developing countries to boost agricultural productiv-
ity in the next seasons, to respond rapidly to the immedi-
ate needs of the countries and their population and to take
initial steps needed to prevent as far as possible further
food insecurity situations, and also contribute to mitigat-
ing the effects of the volatile food prices globally, to the
benefit of the poorest people, of small-holder farmers and
also of European consumers and farmers.

The Community has at its disposal several instruments
focused on development assistance with a long-term per-
spective, in particular Regulation (EC) No 1905/2006 of
the European Parliament and the Council of 18 December
2006 establishing a financing instrument for development
cooperation (1), and the European Development Fund, pro-
viding ODA to African, Caribbean and Pacific (ACP) coun-
tries and Overseas Countries and Territories (OCTs)
(hereinafter referred to as ‘the EDF’), which have recently
been programmed in line with eligible countries’ medium
and long-term development priorities. Large-scale repro-
gramming under these instruments to respond to a short-
term crisis would jeopardise the balance and coherence
of the existing cooperation strategies with those coun-
tries. The Community also has at its disposal Council
Regulation (EC) No 1257/96 of 20 June 1996 concerning

(15)

The very nature of measures provided for under this Regu-
lation calls for the establishment of efficient, flexible, trans-
parent and rapid decision-making procedures for their
financing, with strong cooperation between all institutions
concerned.

(16)

Coherence and continuity must be ensured between short-
term measures aimed at providing relief to the populations
most directly and seriously affected by the soaring and/or
volatile food prices, and more structural measures intended
to prevent the recurrence of the current food crisis.

(1) OJ L 378, 27.12.2006, p. 41.

(2) OJ L 163, 2.7.1996, p. 1.
(3) OJ L 327, 24.11.2006, p. 1.

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(17)

(18)

(19)

(20)

It is necessary to provide for the protection of the Com-
munity’s financial interests in accordance with Council
Regulation (EC, Euratom) No 2988/95 of 18 December
1995 on the protection of the European Communities
financial interests (1), Council Regulation (Euratom, EC)
No 2185/96 of 11 November 1996 concerning on-the-
spot checks and inspections carried out by the Commis-
sion in order to protect the European Communities’
financial interests against fraud and other irregularities (2)
and Regulation (EC) No 1073/1999 of the European Par-
liament and of the Council of 25 May 1999 concerning
investigations conducted by the European Anti-fraud
Office (OLAF) (3).

Since the objectives of this Regulation cannot be suffi-
ciently achieved by the Member States and can therefore,
by reason of the scale of the action required, be better
achieved at Community level, the Community may adopt
measures, in accordance with the principle of subsidiarity
as set out in Article 5 of the Treaty. In accordance with the
principle of proportionality, as set out in that Article, this
Regulation does not go beyond what is necessary to achieve
those objectives.

The measures necessary for the implementation of this
Regulation should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures for the exercise of implementing powers con-
ferred on the Commission (4).

The different development instruments and this financing
facility shall be applied so as to ensure continuity of coop-
eration in particular as regards the transition from emer-
gency to medium-and long-term response. This Regulation
should fit in with a long-term strategy to contribute to
food security in developing countries, based on their own
needs and plans.

(21)

In order to ensure that the measures provided for in this
Regulation are effective and given their urgent nature, this
Regulation should enter into force on the day following
that of its publication,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject matter and scope

1.
The Community shall finance measures aimed at support-
ing a rapid and direct response to the volatile food prices in devel-
oping countries, addressing primarily the period between
emergency aid and medium-
to long-term development
cooperation.

(1) OJ L 312, 23.12.1995, p. 1.
(2) OJ L 292, 15.11.1996, p. 2.
(3) OJ L 136, 31.5.1999, p. 1.
(4) OJ L 184, 17.7.1999, p. 23.

The measures referred to in paragraph 1 shall benefit devel-
2.
oping countries, as defined by the Organisation for Economic
Cooperation and Development’s Development Assistance Com-
mittee (OECD/DAC), and their populations, in accordance with
the following provisions.

Those measures shall be adopted in accordance with the proce-
dure referred to in Article 13(2). They shall finance initiatives sup-
porting the purpose and objectives of this Regulation.

3. Whenever feasible the action programmes implemented by
entities eligible for funding under Article 4(1) shall be drawn up
in consultation with civil society organisations and implementa-
tion of projects funded through this financing facility shall involve
such organisations.

4.
To optimise the utility and impact of this Regulation,
resources shall be concentrated on a limited list of high-priority
target countries, identified on the basis of the set of criteria laid
down in the Annex, and in coordination with other donors and
other development partners through relevant needs-assessments
made available by specialised and international organisations such
as those of the UN system, in consultation with partner countries.

5.
To ensure the coherence and effectiveness of Community
assistance, where the programme to be implemented is of a
regional or cross-border nature, it may be decided, in accordance
with the procedure referred to in Article 13(2), that populations
of other developing countries not belonging to that region can
benefit from the programme in question.

6. Where support is to be provided for measures implemented
by international organisations, including regional organisations,
such organisations shall be selected in accordance with the pro-
cedure referred to in Article 13(2) and on the basis of their added
value, their comparative advantage and their capacity to imple-
ment programmes in a speedy and efficient manner in response
to the specific needs of the targeted developing countries in rela-
tion to the objectives of this Regulation.

Article 2

Objectives and Principles

The primary objectives of the assistance and cooperation

1.
under this Regulation shall be to:

(a)

encourage a positive supply response from the agricultural
sector in target countries and regions;

(b)

support activities to respond rapidly and directly to mitigate
the negative effects of volatile food prices on local popula-
tions in line with global food security objectives, including
UN standards for nutritional requirements;

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(c)

strengthen the productive capacities and the governance of
the agricultural sector to enhance the sustainability of
interventions.

basic food needs of the most vulnerable populations, includ-
ing children;

2.
A differentiated approach depending on development con-
texts and the impact of volatile food prices shall be pursued so
that target countries or regions and their populations are provided
with targeted, tailor-made and well adapted support, based on
their own needs, strategies, priorities and response capacities.

3. Measures supported under this Regulation shall be coordi-
nated with those supported under other instruments, including
Regulation (EC) No 1257/96, Regulation (EC) No 1905/2006 and
Regulation (EC) No 1717/2006, and the ACP-EC Partnership
Agreement (1), so as to ensure continuity of cooperation, in par-
ticular as regards the transition from emergency to medium- and
long-term response.

The Commission shall ensure that measures adopted under
4.
this Regulation are consistent with the Community’s overall stra-
tegic policy framework for the eligible country or countries
concerned.

(c) other small-scale measures aiming at increasing production
based on country needs: microcredit, investment, equipment,
infrastructure and storage; as well as vocational training and
support to professional groups in the agriculture sector.

3.
The implementation of these supporting measures shall be
in line with the Declaration on Aid Effectiveness adopted by the
High Level Forum on Aid Effectiveness, held in Paris, on 2 March
2005 (the ‘Paris Declaration on Aid Effectiveness’) and the Agenda
for Action adopted by the High Level Forum on Aid Effectiveness,
held in Accra, on 4 September 2008 (the ‘Accra Agenda for
Action’). It shall be focused on small and medium-sized farms for
family and food-producing agriculture, particularly those run by
women, and poor populations most affected by the food crisis,
avoiding any kind of distortion of local markets and production;
agricultural inputs and services shall as far as possible be locally
purchased.

4.
Administrative support measures which meet the objectives
of this Regulation may be financed up to a maximum of 2 % of
the amount referred to in Article 12.

Article 3

Implementation

Article 4

Eligibility

1.
Community assistance and cooperation shall be imple-
mented through a set of decisions to finance supporting measures
as described in Article 1, paragraphs (1), (2) and (3), which shall
be adopted in accordance with the procedure referred to in
Article 13(2). An overall plan for the use of this financing facility,
including the list of target countries referred to in Article 1(4) and
the balance between eligible entities referred to in Article 4(2)
shall be presented by the Commission and adopted in accordance
with the procedure referred to in Article 13(2). This overall plan
shall receive the opinion of
the committee referred to in
Article 13(1) before 1 May 2009.

The entities eligible for funding shall be, insofar as their pro-

1.
grammes contribute to the objectives of this Regulation:

(a) partner countries and regions, and their institutions;

(b) decentralised bodies in the partner countries, such as munici-

palities, provinces, departments and regions;

2.
Taking into account the specific country-level conditions,
supporting measures that shall be eligible for implementation are:

(c)

joint bodies set up by the partner countries and regions with
the Community;

(a) measures to improve access to agricultural inputs and ser-
vices including fertilisers and seeds, paying special attention
to local facilities and availability;

(d)

international organisations, including regional organisations,
international and
UN bodies, departments and missions,
regional financial institutions and development banks;

(b)

safety net measures aiming at maintaining or improving
the agricultural productive capacity, and at addressing the

(e) Community institutions and bodies, but only for the pur-
poses of implementing the support measures referred to in
Article 3(4);

(1) Partnership Agreement between the Members of the African, Carib-
bean and Pacific Group of States, of the one part, and the European
Community and its Member States, of the other part, signed in Coto-
nou on 23 June 2000 (OJ L 317, 15.12.2000, p. 3).

(f)

EU agencies;

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(g)

the following entities and bodies of the Member States, part-
ner countries and regions and any other third country com-
plying with the rules on access to the Community’s external
assistance set out in Regulation (EC) No 1905/2006, insofar
as they help to achieve the objectives of this Regulation:

(f)

(i) public or parastatal bodies, local authorities and consor-

tia or representative associations thereof;

(ii) companies, firms and other private organisations and

businesses;

(iii) financial institutions that grant, promote and finance
private investment in partner countries and regions;

(iv) non-State actors operating on an independent and

accountable basis;

(v) natural persons.

An appropriate balance shall be applied in the allocation of
2.
resources between the bodies listed in paragraph 1(d) of this
Article and other eligible entities.

Article 5

Types of financing

funds made available to the European Investment Bank (EIB)
or other financial intermediaries on the basis of Commission
programmes for the purpose of providing loans (in particu-
lar to support investment in and development of the private
sector), risk capital (in the form of subordinated or condi-
tional loans) or other temporary minority holdings in busi-
ness capital, and contributions to guarantee funds in
accordance with Article
(EC)
No 1905/2006, to the extent that the financial risk of the
Community is limited to these funds.

of Regulation

32

Article 6

Financing and Management procedures

1.
The measures financed under this Regulation shall be imple-
mented in accordance with Council Regulation (EC, Euratom)
No 1605/2002 of 25 June 2002 on the Financial Regulation
applicable to the general budget of the European Communities (1),
taking into account where appropriate the crisis-related nature of
the measures to be adopted.

2.
In the event of co-financing and in other duly justified cases,
the Commission may entrust tasks of public authority, and in par-
ticular budget implementation tasks, to the bodies referred to in
Article 54(2)(c) of Regulation (EC, Euratom) No 1605/2002.

Community financing may take the following forms:

(a) projects and programmes;

3.
In the case of decentralised management, the Commission
may decide to use the procurement or grant procedures of the
beneficiary partner country or region after verifying that they
respect the relevant criteria set out in Regulation (EC, Euratom)
No 1605/2002, provided that the conditions set out in Regula-
tion (EC) No 1905/2006 are met.

(b) budget support, especially sectoral budget support, if the
partner country’s management of public spending is suffi-
ciently transparent, reliable and effective, and if the condi-
tions for budget support set out in the relevant geographical
financing instrument have been met;

(c)

contributions to international or regional organisations and
international funds managed by such organisations;

(d) contributions to national funds set up by partner countries
and regions to attract joint financing from a number of
donors, or contributions to funds set up by one or more
donors for the purpose of the joint implementation of
projects;

Community assistance shall in principle not be used for

4.
paying taxes, duties or charges in eligible countries.

5.
Participation in the appropriate contractual procedures shall
be open to all natural and legal persons who are eligible pursuant
to the geographical development instrument applicable to the
country in which the action takes place, as well as to all natural
and legal persons who are eligible pursuant to the rules of the
implementing international organisation, care being taken to
ensure that equal treatment is afforded to all donors. The same
rules shall apply in respect of supplies and materials. Experts may
be of any nationality.

(e)

co-financing with entities eligible for funding as defined in
Article 4;

(1) OJ L 248, 16.9.2002, p. 1.

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Article 7

Budget commitments

Budget commitments shall be made on the basis of decisions
taken by the Commission.

Article 8

Protecting the Community’s financial interests

1.
Any financial agreement resulting from the implementation
of this Regulation shall contain provisions ensuring the protec-
tion of the Community’s financial interests, in particular with
respect to irregularities, fraud, corruption and any other illegal
activity,
in accordance with Regulation (EC, Euratom)
No 2988/95, Regulation (Euratom, EC) No 2185/96 and Regula-
tion (EC) No 1073/1999.

2.
Agreements shall expressly entitle the Commission and the
Court of Auditors to perform audits, including document audits
or on-the-spot audits of any contractor or subcontractor who has
received Community funds. They shall also expressly authorise
the Commission to carry out on-the-spot checks and inspections
as provided for in Regulation (Euratom, EC) No 2185/96.

3.
All contracts resulting from the implementation of assis-
tance shall ensure the rights of the Commission and the Court of
Auditors under paragraph 2 of this Article during and after the
performance of the contracts.

The Commission shall send its evaluation reports to the
2.
European Parliament and to the committee referred to in
Article 13 for information. Member States may request to discuss
specific evaluations in that committee.

3.
The Commission shall associate all relevant stakeholders,
including non-State actors and local authorities, in the evaluation
phase of
this
Regulation.

the Community assistance provided under

Article 11

Reporting

The Commission shall provide the European Parliament and the
Council with a report on the implementation of the measures,
including, as far as possible, on the main outcomes and impacts
of the assistance provided under this Regulation, no later than
31 December 2012. In December 2009 the Commission shall
provide the European Parliament and the Council with an initial
interim report on the measures undertaken. The reports men-
tioned in this Article shall pay particular attention to the require-
ments of the Paris Declaration on Aid Effectiveness and the Accra
Agenda for Action.

Article 12

Financial provisions

The total financial reference amount for the implementation of
this Regulation over the period 2008-2010 shall be EUR 1 billion.

Article 13

Committee

Article 9

Visibility of the European Union

The Commission shall be assisted by the Committee set up

1.
by Article 35(1) of Regulation (EC) No 1905/2006.

Contracts concluded by virtue of this Regulation shall include spe-
cific provisions that ensure the appropriate visibility of the Euro-
pean Union in all activities undertaken on the basis of those
contracts.

2. Where reference is made to this paragraph, Articles 4 and 7
of Decision 1999/468/EC shall apply, having regard to the pro-
visions of Article 8 thereof.

Article 10

Evaluation

The period laid down in Article 4(3) of Decision
3.
1999/468/EC shall be set at 10 working days for measures
adopted up to 30 April 2009 and 30 days for measures adopted
subsequently.

1.
The Commission shall monitor and review activities imple-
mented under this Regulation, where appropriate by means of
independent external evaluations, in order to ascertain whether
the objectives have been met and enable it to formulate recom-
mendations with a view to improving relevant future develop-
ment cooperation operations. Proposals by the European
Parliament or the Council for independent external evaluations
shall be taken into due account.

Article 14

Entry into force

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

It shall apply until 31 December 2010.

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

Done at Strasbourg, 16 December 2008.

For the European Parliament
The President
H.-G. PÖTTERING

For the Council
The President
B. LE MAIRE

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ANNEX

Indicative criteria to select target countries and allocate financial resources:

— Poverty levels and real needs of populations

— Food price developments and potential social and economic impact:

— Reliance on food imports

— Social vulnerability and political stability

— Macroeconomic effects of food price developments

— Capacity of country to respond and implement appropriate response measures:

— Agricultural production capacity

— Resilience to external shocks.

Indicative financial allocations to countries shall be based on the target country selection criteria and take into account the
population size of the target country.

Account will also be taken of other sources of financing available to the target country, at short term, from the donor com-
munity, to respond to the food price developments.