Glossary of the Common Agricultural Policy and the agenda 2000 reform.
Date: 2018-02-13
Institutions: Directorate-General for Parliamentary Research Services
Subjects: EAGGF, EU expenditure, agricultural productivity, common organisation of markets, reform of the CAP, single market

CAP Glossary

EUROPEAN PARLIAMENT

Directorate-General for Research

WORKING PAPER

GLOSSARY
OF THE COMMON AGRICULTURAL POLICY
AND THE AGENDA 2000 REFORM

Agriculture, Forestry and Rural Development
Series

AGRI 118  EN

QA-48-02-052-EN-N

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PE 168.468

This publication is available in French and English.

CAP Glossary

A list of recent publications under the Series « Agriculture, Forestry and Rural
Development » can be found at the end of this document.

The opinions expressed are those of the author and do  not necessarily reflect the position
of the European Parliament.

Reproduction  and  translation  are  authorised,  except  for  commercial purposes,  provided
the source is acknowledged and the publisher is given prior notice and sent a copy.

PUBLISHER:

European Parliament
L - 2929 Luxembourg

AUTHOR:

Joaquín Garaulet
Lawyer

EDITOR:

Albert Massot-Martí / Margret Schelling
Directorate-General for Research
Division for Agriculture, Fisheries, Regional Policy,
Transport and  Development Cooperation
Tel.: (32-2) 284 43616 / +352/4300.24104
Fax: (32-2) 284 44984 / +352/4300.27719
E-mail: amassot@europarl.eu.int / mschelling@europarl.eu.int

Manuscript completed in June 1999.

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CAP Glossary

EUROPEAN PARLIAMENT

Directorate-General for Research

WORKING PAPER

GLOSSARY
OF THE COMMON AGRICULTURAL POLICY
AND THE AGENDA 2000 REFORM

Agriculture, Forestry and Rural Development
Series

AGRI 118  EN
06-1999

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PART  A  –  THE  BASIS  FOR  THE  COMMON  AGRICULTURAL  POLICY
AFTER AGENDA 2000

CAP Glossary

INTRODUCTION

OBJECTIVES,
PRINCIPLES AND
INSTRUMENTS OF THE
CAP

The Treaty of Rome included provisions on agriculture but the negotiators decided
not to define the mechanisms of the common agricultural policy (CAP). The Treaty
set out the objectives of this policy (ex Article 39) and stated that agriculture was
included in the common market.
In 1960 proposals by the Commission of the European Communities (hereafter
‘Commission’) on the drawing up and implementation of the CAP provided the
basis for the prices and markets policy. In 1962 the Community adopted an initial
package of agricultural measures including the creation of the six common
organisations of the market (COM) (cereals, pigs, eggs, poultry, fruit and
vegetables, wine), the creation of the European Agricultural Guidance and
Guarantee Fund (EAGGF) and the establishment of the financing rules.

There have been three significant reforms:
- 1992: Treaty on European Union (MacSharry reform)
- 1995: the GATT Marrakesh  Agreement, relating to the Uruguay Round
negotiations and the agriculture agreement
- 1999: Agenda 2000

1. OBJECTIVES

Article 33(1) of the Treaty of Amsterdam (ex 39) lays down the objectives to be
achieved by the common agricultural policy at intra-Community level:

1. to increase agricultural productivity by promoting technical progress and by
ensuring the rational development of agricultural production and the optimum
utilisation of the factors of production, in particular labour;

2. to ensure a fair standard of living for the agricultural community, in particular
by increasing the individual earnings of persons engaged in agriculture;

3. to stabilise markets;

4. to assure the availability of supplies;

5. to ensure that supplies reach consumers at reasonable prices.

2. PRINCIPLES

The CAP is based on three principles:

1. The single market, which has a two-fold meaning: the application to agricultural
products of the rules on free movement of goods between the Member States and
the setting of common prices and aids, in  euros, regardless of the Member State
where the economic operators are based.
If this principle is to be applied correctly there has to be common management of
prices, aid payments and competition rules, harmonised health and administrative
provisions and a common policy on external trade.

2. Community preference: it seeks to achieve the objectives of the TEU (Article

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CAP Glossary

33(1)) at two levels:
- through protection at the frontier of the Community market against massive low-
priced imports of agricultural products from third countries, so as to guarantee the
incomes of European farmers;
- through protection against world market fluctuations, in order to maintain stability.

The essential objective of this principle is to prevent Community production being
supplanted by imported products that seek to penetrate the Community market at
any price.

The basic mechanisms of the principle of Community preference used to achieve
this essential objective were variable import levies and export refunds. Originally
they did not apply in all COMs, but only in the most protectionist ones, as some of
them used the classic, and less protectionist, system of customs duties.

However, this principle was never absolute and unconditional, as shown by the
rulings of the Court of Justice of the European Communities. This fact was
confirmed by several exceptions (for example in the Lomé Convention, the
Generalised System of Preferences, the concessions to Mediterranean countries or,
lastly, the agriculture agreement of the GATT Uruguay Round where tariffication
led to the disappearance of the variable import levy. Furthermore, the current access
and minimum access clauses and the reduction in subsidised exports in terms of
volume and value are reducing Community preference).

3. Financial solidarity: expenditure deriving from the implementation of the CAP
must be borne by all the Member States on a common basis and regardless of
national interest. Thus in 1962 a common  agri-cultural fund was set up, the EAGGF
(see below, point 2 of Part A).
3. INSTRUMENTS

There are three instruments:

1. The markets policy established in 1962 and implemented through the  common
organisations of the market (COM).

2. The rural, social and structural policy, established in 1972, which is intended
to adapt and modernise agricultural structures and to maintain the European model
of agriculture based on the development of multifunctional agriculture based on the
land. Rural policy became the second pillar of the CAP following the Berlin
agreement in March 1999 (see below, points 6 and 9.V. of Part A).

3. Harmonisation of national legislation for questions not covered by the COMs.
However, this aspect has been transferred to public health policy under the Treaty of
Amsterdam.

EAGGF

? The European Agricultural Guidance and Guarantee Fund (EAGGF) ensures
the funding of the CAP on a common basis. It has two sections:

- the EAGGF - Guarantee section which finances (totally and exclusively) the
expenditure of the common organisations of the market: i.e. the measures intended
to regularise the agricultural markets and the refunds for exports to third countries.
Depending on the products the operations may take the form of intervention prices,
production aid or premiums, compensatory aid for withdrawal of products from the
market or storage aid.

With Agenda 2000 the EAGGF Guarantee section has become almost the only

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source of funding for all agricultural expenditure.

The EAGGF Guarantee section also funds:
- non-objective 1 rural development activities, with the exception of the Community
rural development initiative (LEADER PLUS);
- the Community financial contribution to specific veterinary measures, control
activities in the veterinary sector, eradication and monitoring programmes for
animal diseases (veterinary measures) and plant health measures;
- information campaigns relating to the common agricultural policy and certain
assessments of measures financed by the EAGGF Guarantee section.

- the EAGGF Guidance section allows more effective continuation, using an
integrated approach, of the Community and national measures for financing rural
development measures covered by activities under Objective 1 and the Community
rural development initiative (LEADER PLUS).

? In the conclusions on Agenda 2000 the Council set three priority  structural
objectives:

Objective 1 seeks to promote the development and structural adjustment in the
regions which are lagging behind. Objective 1 status for 2000-2006 will be given to:

- regions where the per capita GDP is less than 75% of the Community average;

- regions on the periphery of the Union (French overseas departments, the Azores,
Madeira and the Canaries) which are all below the 75% threshold;

- regions eligible to receive current Objective 6 funding for 1995-1999 pursuant to
the Act of Accession for Finland and Sweden.

Objective 2 is intended to support economic and social conversion in areas in
structural difficulties. They include areas undergoing social and economic change in
the industrial and services sectors, rural areas in decline (outside Objective 1
regions), urban areas in difficulties and areas in crisis which are dependent on
fisheries, defined on the basis of objective criteria set in the legislative texts. A
maximum 18% of the Union’s population will be covered by the new Objective 2,
of whom 5% in rural areas.

Objective 3 seeks to support the adjustment and modernisation of education,
training and employment policies and systems. It applies outside Objective 1
regions.

? Given the added value that the Community initiatives can bring to the main
objectives, the number of initiatives will be reduced to the following four initiatives:

LEADER (rural development)

INTERREG (transfrontier, transnational and interregional cooperation)
EQUAL (transnational cooperation to combat any form of discrimination and

-
-
inequality on the labour market)
-
5% of the structural funds commitment appropriations should be earmarked for
Community initiatives and 1% of these appropriations will be reserved for
innovative activities and technical assistance.
- URBAN (economic and social renewal of towns and urban areas in crisis to
encourage sustainable development).
69.7% of the structural funds’  funding will be allocated to Objective 1, 11.5% to
Objective 2, 12.3% to Objective 3 and 5% to Community initiatives.

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GUIDELINE

CAP Glossary

In February 1992 the European Council decided that the guideline would include all
agricultural expenditure under the EAGGF Guarantee section except for expenditure
under the European fisheries guarantee fund and reimbursement to the Member
States of depreciation costs for stocks of agricultural products and, specifically
disposal of butter in public intervention stores.
The ultimate aim was to reduce the EAGGF Guarantee section as a percentage of
the Community’s total budget and, following Council decisions, the EAGGF
Guarantee section’s share of the Community’s  budget fell by 11 points between
1988 and 1992, equivalent to a real saving (margin of expenditure in relation to the
guideline) of more than ECU 16 billion which were intended for financing other
policies.
In the Agenda 2000 reform the agricultural guideline will remain unchanged and
will be reconsidered, on the basis of a report to be submitted to the Council by the
Commission, before the first enlargement of the Union.
The European Council considered that the reform can be implemented within a
financial framework which takes greater account of real expenditure levels and
seeks to stabilise agricultural expenditure (rubric 1) during 2000-2006 in real terms,
i.e. including inflation (estimated at 2% per year by the ECB) even if, for individual
commodities, compromise figures are given on the basis of prices in euros at 1999
values.
There will be average annual expenditure of EUR 40.5 billion plus 14 billion for
rural development.
The agricultural guideline, expressed in EUR millions was set, under the  financial
perspective for 2000-2006, as follows:

- Heading 1 (agriculture):
2000: EUR 40 920 million
2001: EUR 42 800 million
2002: EUR 43 900 million
2003: EUR 43 770 million
2004: EUR 42 760 million
2005: EUR 41 930 million
2006: EUR 41 660 million

- Agricultural expenditure (excluding rural development and accompanying
measures):
2000: EUR 36 620 million
2001: EUR 38 480 million
2002: EUR 39 570 million
2003: EUR 39 430 million
2004: EUR 38 410 million
2005: EUR 37 570 million
2006: EUR 37 290 million

- Rural development and accompanying measures:
2000: EUR 4 300 million
2001: EUR 4 320 million
2002: EUR 4 330 million
2003: EUR 4 340 million
2004: EUR 4 350 million
2005: EUR 4 360 million
2006: EUR 4 370 million

See Annex I Financial Perspective.

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The financial perspective provides the framework for Community expenditure over
several years. It is the result of an interinstitutional agreement between the European
Parliament, the Council and the Commission and indicates the maximum amount
and the structure of foreseeable Community expenditure. It is adjusted annually by
the Commission to take account of prices and trends in Community GNP. It should
be noted, however, that the financial perspective is not the equivalent of a
multiannual budget as the annual budgetary procedure remains essential to
determine the actual amount of expenditure and the distribution between the various
budget lines.

In the Agenda 2000 communication the Commission proposed a financial reference
framework that would be concluded for a seven year period (2000-2006). Although
the financial perspective cannot incorporate expenditure linked to new member
states until actual accession, the Commission proposal still has three interesting
features with regard to enlargement:

? Agricultural funding would be increased to include a new rural development
policy, veterinary measures, an agricultural pre-accession instrument, with a
margin remaining available with a view to enlargement;

? The funding of the structural funds intended for the 15 Member States would be
progressively reduced from 2002 onwards  by concentrating priorities on a
smaller number of regions. Furthermore structural measures would include a
new pre-accession instrument;

? The amount allocated to external action would be increased by 2% a year to

cover increases in pre-accession aid under the PHARE programme.

The financial framework proposed by the Commission is based on the
continuation until 2006 of the current ceiling on expenditure of 1.27%
of Community GNP.

PRODUCTION
MANAGEMENT
MEASURES

These measures may be known as quotas, guarantee thresholds, maximum
guaranteed quantities (MGQs) and maximum guaranteed areas ( MGAs).

ASSESSMENT OF THE
1992 CAP REFORM

These are drastic production management measures restricting the benefits of
prices/aid payments/institutional mechanisms to a certain quantity, above which the
financial coresponsibility of the producer is triggered (super-levy, abatement of aid,
etc.). Quotas apply in the sugar and milk sectors, guarantee thresholds in the tobacco
and processed fruit and vegetables sectors and maximum guaranteed quantities
apply in the olive oil, cotton, fodder and banana sectors.

They were introduced as budgetary stabilisers under the 1983/84 reform and then
became more widespread in 1988, with the aim of reducing expenditure under the
EAGGF Guarantee section.

The 1992 or MacSharry reform marked a real turning point for the CAP, in
particular because it involved transferring a significant part of support from the
consumer to the tax-payer. Thus the CAP started to move away from a prices and
market guidance policy towards an incomes policy. One striking effect of the 1992
reform was to alter the arrangements for public support of agriculture, moving from
support through prices to support by means of direct aid payments.

This reform also marked the start of greater account being taken of the demands of
environmental protection, land occupancy and the establishment of young farmers.

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CAP Glossary

It also facilitated the conclusion of the international trade negotiations known as the
Uruguay Round which started in 1986 and finally produced the Marrakesh Treaty of
15 April 1994 which contains an agreement on agriculture (see item 83 of Part B
below).

The 1992 reform comprised two complementary parts:

- The first concerned the price and support system. It provided for a drop in
guaranteed prices to bring them closer to world prices, full compensation for loss of
income by granting supplementary direct aid payments to farms, efforts to manage
production by introducing set-aside measures and putting a ceiling on entitlement to
premiums for animals. The reform sought to reduce the imbalances, stimulating
demand through lower prices and establishing instruments for supply quotas, and to
anticipate the results of the Uruguay Round with regard to tariff protection, the level
of support and the reduction of subsidised exports.

- The second part was based on a group of accompanying measures (see below point
7 of Part A).

The 1992 reform of the common agricultural policy was a great success and
produced considerable improvement in market balances and a decrease of public
stocks in most of the reformed sectors.

In the case of cereals, set-aside has helped to keep production under control, while
price competitiveness has allowed significant additional quantities to be sold on the
internal market, mainly for animal feed. Market prices increased much more than
had originally been forecast. As a result producers were over-compensated in the
last few years.

In the case of oilseeds, too, the observed market prices have mostly been
considerably higher than the reference price so that producers have benefited from
the franchise in four years out of five.

In the beef and veal sector the market situation developed favourably and
intervention stocks fell rapidly until the BSE crisis intervened in March 1996.

The general trend in per capita  agricultural income has been positive, increasing
by 4.5% a year on average between 1992 and 1996, the situation varying depending
on the Member State and the type of farming practised.

The 1992 CAP reform stressed the environmental dimension of agriculture. The
measures accompanying the reform included agri-environmental measures, which
were of considerable importance and were generally well received by the general
public and by farmers.

AGENDA 2000 REFORM The agreement reached at the Berlin European Council on 24 and 25 March 1999

marked a deepening and extension of the 1992 reform, substituting more direct aid
payments for price support measures and backing up this process with a coherent
rural policy. The direct aid payments will be set at an appropriate level while
avoiding overcompensation.

The priority objectives in drawing up the CAP reform proposals were the following:

- The reform must improve the competitiveness of European agriculture on both
domestic and external markets. A market-driven approach will facilitate the gradual
integration of the new Member States and  help prepare the Union for the next

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round of WTO negotiations. Lower prices will benefit consumers.

- Food safety and quality are two important aspects of competitiveness. There is a
fundamental obligation to guarantee the food safety to consumers and to maintain a
quality product policy.

- Questions of the compatibility of production methods with environmental
requirements and animal welfare aspects are also increasingly important.

- The key objectives of the CAP are still to ensure a fair standard of living for the
agricultural community and to contribute to the stability of farm incomes. In this
context the questions of modulation, redistribution of income support among
farmers and the preservation of sustainable agriculture are increasingly important.

- Another important area is the integration of  environmental objectives and
development of the role that farmers can and should play in managing natural
resources and landscape conservation.

- The need to create complementary or alternative sources of income and
employment for farmers and their families, either on-farm or off-farm, given that
employment opportunities in agriculture itself are declining.

The new rural development policy, which becomes the second pillar of the CAP,
will help to establish a coherent and sustainable framework assuring the future of
rural Europe.

MEASURES
ACCOMPANYING THE
REFORMS

The 1992 reform was accompanied by a series of measures which, although not
intended as a substitute for the structural policy, have provided complementary
measures for the rural communities. They were common measures seeking to offer a
range of possibilities for rural development and covered three areas:

- Environmental protection (Council Regulation (EEC) No 2772/95; OJ L 288,
1.12.1995, p.35).

- Early retirement (Council Regulation (EEC) No 2773/95; OJ L 288, 1.12.1995,
p.37).

- Reafforestation of agricultural land (Council Regulation (EEC) No 231/96; OJ
L 30, 8.2.1996, p. 33).

- Agenda 2000 consolidated this aspect and introduced compensatory payments
for mountainous and other less-favoured areas.

Mountainous regions and other less-favoured agricultural areas receive
compensatory payments aimed at to help maintain agricultural activity and prevent
depopulation in these areas through:

- Measures to improve quality and switch production,
- On-farm diversification, in particular through tourism, crafts or the production and
sale on the farm of farm products,
- Improvement of  health conditions in stockfarming,
- Protection and improvement of the environment.

The  payments  are  intended  to  provide  compensation  for  production
costs  which  are  generally  higher  and  they  benefit  over  1.2  million

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farms,  representing  55%  of  the  Community’s  agricultural  land.  The
aid  payments  form  the  largest  proportion  of  the  EAGGF  Guidance
commitments under Regulation (EEC) No 2328/91 on improving the
efficiency of agricultural structures (OJ L 218, 6.8.1991, p.1).

DURATION OF THE
AGENDA 2000 REFORM

The reform covers a seven year period (2000-2006).

For milk the reform of the sector will be applicable with effect from the 2005-2006
marketing year and the quota scheme will be extended until 2007-2008.

SECTORS REFORMED
UNDER AGENDA 2000

I. Arable crops (cereals, oilseeds and protein plants).
II. Beef and veal
III. Milk and dairy products
IV. Wine
V. Rural development

1. ARABLE CROPS

The arable crops sector covers cereals, oilseeds and protein crops (COP) and non-fibre flax.

?   Cereals: intervention prices for cereals are to be reduced by 15%, applicable in two equal steps of 7.5%

during the marketing years 2000/2001 and 2001/2002.

2000/2001 marketing year: EUR 110.25/t
2001/2002 marketing year: EUR 101.31/t.

Market developments will be scrutinised from the 2002/2003 marketing year onwards
to decide whether additional reductions must be applied.

?   There is an increase in the direct aid payment (area payment) to EUR 63, such that there is confirmed

compensation for about 50% of the fall in intervention prices (See item 16 of Part B).

?    The monthly increases scheme is maintained (see item 45 of Part B below).

§  The basic rate of compulsory set aside is set at 10% for the whole period 2000/2001
to 2006/2007, with compensation  of EUR 63/tonne. Small producers (producing less
than 92 tonnes) are exempt from this basic rate of compulsory set aside.

The payment period is from 16 November to 31 January (instead of 16 October to 31
December).

The  Member  States  may  grant  a  national  aid  payment  of  up  to  50%  of  the  costs
associated  with  the  establishment  of  multiannual  crops  intended  for  biomass
production on land set aside.

In the case of voluntary set-aside for up to five years there is the possibility of fixing at national level
the maximum area which can be set aside per holding, the minimum being 10% of arable land (see item
81 of Part B below).

§ 

 Export tax. Application of this tax by the Commission only as a safeguard measure in extreme
emergencies.

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CAP Glossary

§ 

§ 

 General scheme for the reform. Producers who apply for a compensatory payment under this scheme
are required to withdraw from production some of the land they farm and they receive compensation in
exchange. This scheme is applicable to all producers of arable crops.

 Base areas: there is a final increase for the new German  Länder of 150 000 hectares with effect from
2000/2001 and an increase of 60 000 hectares of the irrigated base area in Portugal for irrigation
investments started after 1 August 1992.

? Maize: Member States may define specific historic reference yields or specific base areas to which the

cereals reference yield applies, making a distinction between irrigated and non-irrigated land.

? Grass silage: possibility for Member States where maize is not a traditional crop to make grass silage
eligible for the direct arable aid payment and to define specific base areas for production, applying the
cereals reference yield.

? Linseed:  alignment  in  three  annual  steps  to  the  aid  for  cereals:  EUR  82.26/t  for  the
2000 harvest, EUR 75.63 for 2001, EUR 63 for 2002 (to be multiplied by the cereals
reference yield).

? Oilseeds and protein crops: alignment in three annual steps of the specific payment for  oilseeds to the

aid for cereals: EUR 82.26/t for the 2000 harvest, EUR 75.63 for 2001, EUR 63 for 2002; these
amounts must be multiplied by the yield of the historic regional reference yield for cereals and may not
be less than EUR 63/t.

The reference price scheme and the advance payment scheme are to be abolished in 2000. The
maximum guaranteed area will also be maintained in 2000/2001 and 2001/2001 at 5 482 million
hectares, less set aside of at least 10%. Overshoot of the MGA will cause a reduction in direct aid
payments, which may not however be less than EUR 58.67 and EUR 63 respectively. At the end of
these two transitional marketing years the Commission will submit to the Council a report on market
developments accompanied, if necessary, by appropriate proposals should the production potential
deteriorate seriously.

For protein crops the aid (including the supplement) should be set at EUR 72.50/tonne with effect from
2000/2001.

? Potatoes for the production of starch: a minimum price has been set at EUR 194.05/tonne
in 2000/2001 and EUR 178.31/tonne with effect from 2001/2002, less compensation of EUR
98.74 and EUR 110.54 per tonne of starch respectively.

2. BEEF AND VEAL

? The basic price will be set at EUR 2 224/t,  i.e. a reduction of 20% in three equal steps
from  2000/2001  to  2002/2003.  The  changes  will  be  introduced  gradually  so  as  to
reduce the current intervention price (EUR 2 780/t) in three steps.

?      The  basic  price  (for  private  storage)  will  be  set  at  the  end  of  the  third  and  last

reduction in the level of aid, i.e. on 1 July 2002.

? Aid  for  private  storage  will  be  granted  when  the  average  price  on  the  Community

market falls below 103% of the basic price, from 1 July 2002 onwards.

? Premiums

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- young male bovine animals (see item 52 of Part B below)
- slaughter (see item 73 of Part B below)
- suckler cows (see item 76 of Part B below)
- extensification (see item 25 of Part B below)
- deseasonalisation (see item 15 of Part B below)

? National  global  amounts:  the  Member  States  may  introduce  a  global  amount  of
Community  appropriations  to  supplement  the  payments  for  male  and  female  bovine
animals  including  dairy  cows.  In  this  way  the  Member  States  can  deal  with  the
regional  differences  in  the  production  practices  and  conditions  which  are  likely  to
complicate restructuring.

Global amounts in EUR millions:

Belgium
Denmark

Germany
Greece
Spain
France

Ireland

Restrictions:

39.4 Luxembourg 
11.8 Netherlands
88.4 Austria
3.8 Portugal
33.1 Finland
93.4 Sweden

3.4
25.3

12.0
6.2
6.2
9.2

31.4 United Kingdom 63.8
65.6

Italy

- Ceiling per holding. Member States may set a maximum number of special premiums for male
bovine animals other than 90 animals per holding which will allow them, should the regional
ceiling be exceeded, to exempt small farmers from the reduction (see item 8 in Part B below).

- Stocking density. A stocking density of two livestock units per hectare to be maintained for
eligibility for the male bovine animal and suckler cow premiums (see item 74 in Part B
below).

?

Intervention: from 1 July 2002 onwards a safety net system will be established which will be triggered
when the market price is less than EUR 1560 per tonne (See item 71 in Part B below).

? The European Council asks the Commission to ‘follow closely’  the European beef market and to take
the relevant measures, including ad hoc intervention buying-in through the management committee, in
the event of serious disturbance of the market.

3. MILK AND DAIRY PRODUCTS

? Intervention price: this reform provides for a 15% drop in
intervention prices in three steps.

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? Quotas: a 1.5% linear increase in  quotas  is planned. The reform will be implemented in three steps with

effect from the 2005/2006 marketing year and there will thus be an extension of the current quota
scheme until 2007/2008. This is without prejudice to decisions on the specific additional dairy quotas
for Italy, Spain, Ireland, Northern Ireland and Greece for the marketing years 2000/2001 and
2001/2002. The total increase for the whole Community is 2.4% or 2 831 500 tonnes.

? Compensation for loss of income: Producers may receive a premium, granted per calendar year, per
holding and per tonne of individual reference quantity eligible for the premium and available on the
holding:

EUR 5.75 for the 2005 calendar year,
EUR 11.49 for the 2006 calendar year
EUR 17.24 for 2007 and subsequent calendar years.

The individual reference quantity eligible for the premium is equal to the individual reference quantity
of milk available on the holding on 31 March of the calendar year in question, subject to reductions if
the relevant total quantities for that Member State have been exceeded.

? National global amounts: These will be introduced with effect from 2002. The Member States will, on
an annual basis, make additional payments to producers in their country on the basis of objective
criteria so as to ensure equal treatment between producers and to avoid all distortion of the market or of
competition. These additional payments may take the form of supplements to premiums and/or area
payments.

? Undertaking by the Fifteen to carry out a mid-term revision in 2003 on the basis of a Commission report

so that the current quota system can expire after 2008.

? The planned intervention price for  butter is as follows:

EUR 328.20/100 kg from July 2000 to June 2005,
EUR 311.79/100 kg from 1 July 2005 to 30 June 2006,
EUR 295.38/100 kg from 1 July 2006 to 30 June 2007,
EUR 278.97/100 kg from 1 July 2007 onwards.

? The intervention price for skimmed milk powder is as follows:

EUR 205.52/100 kg from July 2000 to June 2005
EUR 195.24/100 kg from 1 July 2005 to 30 June 2006
EUR 184.97/100 kg from 1 July 2006 to 30 June 2007,
EUR 174.69/100 kg from 1 July 2007 onwards.

4.WINE

? Vine planting scheme. The prohibition on planting vines is extended until 31 July 2010, but with the

creation of new reserves of planting rights up to 68 000 hectares (or 2% of the Community’s area under
vines) until 31 December 2003 for the production of quality wines psr or table wines for which there are
outlets.

Note: Community regulations place wines in two main categories: quality wines psr and table wines.
For table wines the letter R distinguishes red wine and the letter  A the white wine.

RI: wine with an actual alcoholic strength by volume
between 10% and 12%.

RII: wine with an actual alcoholic strength by volume between 12.5% and 15%.
RIII: wine from Portugieser type vine varieties.
AI: wine with an actual alcoholic strength by volume between 10% and 13%.
AII: wine from Sylvaner or Müller-Thurgau type vine varieties.

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CAP Glossary

AIII: wine from Riesling type vine varieties.

? A Community reserve of 17 000 hectares will be allocated
by the Commission through the management committee to
regions which can prove that they need additional area.

? Member States are able to create a national reserve, but must prove that they have an efficient system
for the transfer of rights. The rights will be valid for a  five year term but Member States will have the
possibility of extending them for up to eight years.

? The purpose of the additional rights is to regularise the new vines planted before 1 August 2000, in

infringement of national and Community provisions.

Regularisation for each hectare can be achieved in two
ways:

Either by purchasing replanting rights for 1.5 hectares, 1 hectare being for the purpose of

-
regularisation and 0.5 hectare being allocated to the reserve.

Or by purchasing from the reserve the rights to 1 hectare at a price which is 150% of the

-
normal price.

? When a producer can prove that he grubbed up vines without receiving any payments from public

funds, he could be granted new planting rights retroactively. He will have to pay an administrative fine,
the amount of which will be determined by the Member State. None of this will affect the new planting
rights granted to the Member State.

? When a Member State is able to prove to the Commission that it has unclaimed rights which would still
be valid if they had been applied for, these rights may be used to respond to requests for retroactive
regularisation up to a limit of 1.2% of the area under vines.

? To receive these rights the Member States must establish a national inventory containing information on

the areas, varieties and planting rights (see item 46 in Part B below).

? An additional reserve of 1000 hectares will also be allocated to take into account certain traditional

technical exemptions (reparcelling, experimental  wine-growing, root stock nurseries, etc.).

? A restructuring and  varietal conversion system will be established to adapt production to market

demand. It will have total funding of EUR 400 million up to a limit of 54 000 hectares per wine year for
the whole of the Community.

50% of the costs of this measure will be provided by the
Union (75% in the Objective 1 areas), the balance being
the responsibility of the producers receiving the support.

Once a Member State has received its allocation (expressed
in hectares and euros), it can distribute it across a greater

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CAP Glossary

number of hectares. The Member State can supplement
from national funding the reduced amount per hectare to
reach the initial limit per hectare.

? Abandonment premiums: the programme for permanent
abandonment of wine-growing, targeted more specifically
on regions affected by surpluses, has been maintained.  The
Commission assumes a total area grubbed up annually of
5000 hectares and an average premium of EUR 9000 per
hectare (see item 30 of Part B below).

? Market management mechanisms: the Member States may impose a maximum  yield (in hectolitres per
hectare) on the production of table wine as a condition for benefiting from the advantages of the COM.
The current quality wines psr scheme will remain the responsibility of the Member States. On the
various types of distillation that exist, see item 17 of Part B).

? Oenological practices: maintenance of rules on the enrichment of wines using sucrose. (see item 19 in

Part B below).

The Council is responsible for authorising the various oenological practices and the Commission for
determining the tolerance limits which, initially, will remain set at their current level. The limits for
sulphur dioxide, sorbic acid and potassium sorbate will continue to remain the responsibility of the
Council.

The coupage of red and white wines will continue to be authorised until 31 July 2005 in regions where
it has been the traditional practice.

? Trade with third countries: the  coupage of Community wines with imported wines and of Community
musts with imported musts remains prohibited. Winemaking using musts originating in the country is
also not authorised in the European Union. However certain exemptions will be approved by the
Council so that the EU satisfies its international obligations. In this case the imported wines and those
produced from imported musts are required to be labelled clearly and comprehensively so that there can
be no confusion at all with Community wines.

5. RURAL DEVELOPMENT

Rural development has become the second pillar of the CAP.

The new rural development policy is based on the two principles of decentralisation of responsibilities and
flexibility. The Member States are responsible for submitting proposals for rural development programmes,
acting at the appropriate geographical level and drawing on the large range of measures provided for under
the regulation, in relation to their needs and priorities. The single regulation, which combines nine previous
regulations, illustrates clearly the desire to simplify Community legislation.

One of the main innovations was to regroup a series of rural development measures into a single and
coherent package, making available three different forms of support to all rural  areas :

- Strengthening the agriculture and forestry sector. The main measures relate to the modernisation
of farms and the processing and marketing of quality agricultural products. The viability of farms will

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CAP Glossary

also be strengthened by measures to assist young farmers to set up in farming and by improved
conditions for early retirement. For the first time the forestry sector was recognised as an essential
aspect in rural development and a new measure was provided to support the environmental functions of
this sector.

- Improving competitiveness of rural areas. The main objectives are to maintain the quality of life of
rural communities and encourage diversification and the creation of new activities. The measures are
designed to create new sources of income and jobs.

- Preserving the environment and Europe’s unique rural heritage. The agri-environmental
measures will represent decisive progress towards recognition of the multifunctional role of agriculture
and the promotion of environmentally appropriate farming methods. The integration of environmental
aspects into the CAP is to be strengthened by extending the compensatory payments, traditionally for
the less-favoured areas, to areas where farming is restricted because of specific environmental
constraints.

Outside the least developed regions of the European Union, the objective 1 regions, the rural development
measures will be financed from a single source, the EAGGF Guarantee Section.
The measures financed under the single regulation on rural development are:

- Investment in holdings: the maximum amount of aid is set by the Member States. The total value of
Community aid, expressed as a percentage of the amount of eligible investment, is limited to a maximum of
40% and 50% for less-favoured regions. These percentages increase to 45% and 55% respectively when the
investments are made by young farmers.

The investments must relate to one or more of the following objectives:

- Reduction of production costs, improvement and refocusing of production, best possible quality,
conservation and improvement of the natural environment, health conditions and animal welfare standards,
encouragement for diversification of on-farm activities.

- Establishment of young farmers. Single premium of EUR 2 500 for young people aged under 40 who
are setting up for the first time as head of a farm holding. This amount may be increased, by up to double
the amount, taking into account the economic structure of the holdings in the region concerned. The
premium may be granted in the form of interest rate subsidies for loans contracted to cover costs relating to
establishment.

- Early retirement aid. Annual premiums of EUR 15 000 per farmer and EUR 3 500 per farm worker of at
least 55 years of age. This aid may not be paid for a total period of more than 15 years per farmer and 10
years per farm worker.

The aid ceases to be paid when the farmer reaches 75 years of age and does not continue beyond the normal
retirement age of the farm worker. If the farmer receives a pension, this early retirement aid is granted as a
supplementary payment.

- Compensatory payments. EUR 25 to 200 per hectare of agricultural land granted in less favoured
regions, mountainous areas and areas subject to environmental constraints. The amount of the payments
alters depending on the situation and the region’s specific development objectives, the seriousness of the
permanent natural handicaps affecting farming and the type of production.

- Agri-environmental measures. Annual support per hectare (EUR 600 for annual crops, EUR 900 for
specialist perennial crops and EUR 450 for other land uses) is granted to farmers giving  agri-environmental
commitments for a minimum five year period. A longer period may nevertheless be set for certain types of
undertaking.

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CAP Glossary

- Improvement of processing and marketing of products. Aid limited to 50% of the total investment
eligible in objective 1 regions and 40% elsewhere.

- Afforestation of agricultural land. Annual premium of EUR 725 per hectare for farmers and producer
groups and EUR 185 for any other individual. The premium is paid for a maximum of 20 years.

- Aid for the conservation and improvement of ecological stability of woodlands. Premium varying
from EUR 40 to 120 per hectare depending on the costs involved.

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CAP Glossary

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CAP Glossary

PART B - ALPHABETICAL GLOSSARY

1.

ADDITIONAL MILK LEVY
(prélèvement supplémentaire
laitier)

2.

AGRI-MONETARY SYSTEM
(régime agri-monétaire)

In the milk and dairy products sector the additional levy system,
initially set up on 2 April 1984, has been extended over eight new
consecutive twelve month periods starting on 1 April 2000. This
additional levy is imposed on producers of cows’  milk on amounts of
milk or milk-equivalent delivered to a purchaser or sold directly for
consumption during the twelve months in question and which exceed a
set reference quantity.

The aim of this scheme is to reduce the imbalance between supply and
demand on the market for milk and dairy products and the resulting
structural surpluses.

The introduction of the euro on 1
January 1999 is a positive development
for the CAP because of the stability of
prices, growth in competitiveness in
relation to various national productions,
simplification and increased
transparency of procedures.

The launch of the euro means there is no
longer any justification for maintaining
the specific monetary system for the
agricultural sector. As a result there has
been a reform of the agrimonetary
system involving in particular the
abolition, from 1 January 1999, of the
agricultural exchange rate system, the
‘green rate’, distinct from the official
exchange rate, and also the abolition of
the system of asymmetric exemptions.

The purpose of the old system was to ensure the smooth functioning of
the market organisation arrangements under the CAP, in particular by
guaranteeing a certain stability for prices and other amounts set in  ecu.
This system alleviated the effects of exchange rate fluctuations in the
agricultural sector.

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CAP Glossary

The principles of the new agrimonetary system are as follows:

- from 1 January 1999 prices are paid in  euros and aid is granted and
collected in euros;

- abolition of the agricultural exchange rate, the green  ecu, as part of the
CAP;

- there will no longer be any need to convert into the national currencies
of the Member States involved as their parity with the Euro was fixed
irrevocably on 1 January 1999;

- for the other Member States (United Kingdom, Sweden, Denmark and
Greece) conversion will be made using the real value of their currency
against the Euro.

The abolition of the green rate does not involve the abolition of the
operative event. This event which determines the value of an
agricultural amount, whether price or aid, on a given date has been
maintained for the Member States outside the euro zone. This means
that the value of a subsidy will be defined by the rate on the day of the
operative event (in general the day when the economic aim of the
operation in question is achieved) and not on the actual payment date.

As well as the abolition of the green rates, the new agrimonetary system
includes two categories of measures: transitional provisions to ensure
the introduction of the Euro in the CAP and a simplified scheme for the
four Member States that are not participating in the single currency.

- Firstly, the transitional measures apply to all Member States and allow
compensation to be given for losses of agricultural income which result
from a fall in the green rate (revaluation) following the introduction of
the Euro. A 2.6% exemption is applied for prices and support measures
other than direct aid. As the reduction of support prices varies from -
1.1% to -1.9% for the countries participating in the  euro no
compensation for loss of income will be applied to them. The EAGGF
Guarantee section will finance compensation in the event of falls in
direct aid and other sums (sums relating to structural or environmental
factors) at 100% for the first year and 50% for the following two years.
The Member State can finance the difference from its national budget if
it so chooses.

- The agrimonetary system for the states which are not members  of the
euro zone, the second part of the provision, provides that the conversion
into national currency of payments under the CAP should use parities
fixed in relation to the euro on 1 January 1999. The losses of
agricultural income resulting from revaluations occurring before 1
January 2002 may be compensated under similar conditions to those
provided under the transitional measures, apart from certain
adjustments. It is also planned that the states remaining outside the
single currency may provide CAP payments in Euro and not in the
national currency, provided that the sums paid are  not greater than the
amounts in national currency.

The agrimonetary system is based on the basic Council regulation (EC)

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3.

4.

AID FOR SWITCHING
VARIETIES (aide à la
reconversion variétale)

AID FOR THE USE OF
CONCENTRATED MUSTS
(aide à l’utilisation de moûts
concentrés)

5.

BASIC PRICE (prix de base)

BUDGETARY
NEUTRALITY (neutralité
budgétaire)

CAP Glossary

2799/98; OJ L 349, 24.12.1998.

In the hops sector, the problems of marketing bitter hops prompted the
Community to establish a special aid for switching to aromatic varieties
for which there are more outlets on the Community market. Council
Regulation (EC) No 1554/97 of 22 July 1997 (OJ L 208, 2.8.1997,
p.1)provides for the possibility of switching varieties permanently, i.e.
with no restrictions on area or time.
In the wine sector, this aid for concentrated grape musts and rectified
concentrated grape musts has been applied since 1982 and has been
intended to improve the competitive position of Community musts, in
particular as regards using them for increasing the alcoholic strength of
wine products or for chaptalisation (see item 19 in part B).

The amount of aid is set in euros in relation to the strength by volume
and by hectolitre of concentrated grape musts or rectified concentrated
grape musts, taking account of the difference between the costs of
enrichment using the products referred to above and sucrose.
The basic price allows the amount of a premium to be determined or
helps to stabilise market prices and provides a reference point for the
triggering of intervention measures. It is set in the same way as the
target price in the sheep, goat, pig and sugar (sugar beet) sectors. It is
adjusted on a seasonal basis in the sheep and goat sector.
The budgetary neutrality of the Union’s production is an original aspect
of the regulations on sugar, isoglucose and inulin syrup. Since the
1986/1987 marketing year the costs of disposing of surplus Community
production must be covered by the producers’  contributions, such that
only those expenses relating to preferential imports are a net cost for the
Community budget.

BUFFER STOCK (stock
régulateur)

The buffer stock alleviates the effects of fluctuations in harvests in the
olive oil sector.

CEILING PER HOLDING
(plafond par exploitation)

COMMUNITY TOBACCO
RESEARCH AND
INFORMATION FUND (fond
communautaire de recherche
et de formation)

10.

COMPENSATORY TAXES
(taxes compensatoires)

In the beef and veal sector, the Member States have the possibility of
setting a maximum number of special premiums for male bovine
animals other than that of 90 animals per holding. In this case small
farmers who request premiums for only a certain number of animals, to
be decided at national level, may be exempted from the reduction in the
number of premiums resulting from requests for premium in excess of
the regional ceiling,  (see point 9 II in Part A).

In the tobacco sector this fund, which is financed by a deduction not
exceeding 2% of the premium, allows action programmes to combat
tobacco smoking (and in particular  information  on the dangers
associated with tobacco consumption), research on the cultivation of
raw tobacco (to develop or create varieties and cultivation methods that
are less harmful to human health, better geared to market conditions
and more environmentally friendly) and the creation or development of
alternative uses for raw tobacco. Regulation No 1636/98, 20 July 1998;
OJ L 210, 28.7.1998, p.23.

Compensatory taxes were applied to products from third countries,
equivalent to the difference between the reference price and the last
entry price available lower than the reference price. They were applied
for certain fruit and vegetables. For the current arrangements, see item

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6.

7

8.

9.

11.

CONTROL AGENCY (agence
de contrôle)

CAP Glossary

79 of Part B.
The aim of this agency is to monitor the Community tobacco scheme.
The supervisory agency is responsible  for checking fully all deliveries
of tobacco to first processing undertakings, drawing up a control
certificate, carrying out frequent unannounced inspections of the first
processing undertakings, proposing, where appropriate, the application
of administrative or legal penalties as a result of these controls.

Each Member States must set up its own administratively autonomous
control agency, but the agency is voluntary where the Member State’s
guarantee threshold is less than 45 000 tonnes. Funding is the
responsibility of the Member State and the Community at up to 50%.
Commission Regulation (EEC) No 85/93 of 19 January 1993, OJ L 12,
20.1.1993, p.9

For olive oil, Regulation (EEC) No 2599/97, OJ L 351, 23.12.1997, p.
17, requires each Member State with production over 3 000 tonnes to
create a specific agency responsible for the controls and activities
relating to the olive oil production aid scheme. The Community must
not be responsible for more than 50% of funding.

12.

13.

14.

CONVERSION (reconversion) Aid scheme intended to encourage conversion of production to non-
surplus products (Cf Title III of Regulation (EEC) No 2328/91; OJ L
218, 6.8.1991, p.1). The Council, acting by a qualified majority on a
proposal from the Commission, adopts the list of products towards
which conversion can be approved and the conditions and arrangements
for the granting of aid.
Conversion aids are also provided under some of the COMs (hops, fruit
and vegetables, bananas, wine).

CREDIT INSURANCE
(garantie de crédit)

System of insurance for medium-term loans created for certain eastern
European countries to enable them to import agricultural and food
products originating in the Community.

CULTIVATION REGISTERS
(casiers
des plantations)

There are vineyard, olive and citrus registers. These registers enable
follow up of and checks on plantings, production and the related public
funding by providing data on production potential and ensure better
operation of the Community aid scheme for these products.

Some of the aid to producers will be earmarked for financing the
establishment of the register which must, moreover, be updated
regularly.

The register should make it possible, for each holding, to determine the
total area, with the land registry reference to the plots it contains, the
total number of trees, olive trees or vines, the names of the owners of
each plot, the split between specialised and mixed olive areas, the break
down by variety, the cultivation system used, the age, the state of the
crop and production.

Registers have been established in the olive oil sector (Regulation (EC)
No 1638/98; OJ L 210, 28.7.1998, p. 32, on the olive register), the wine
sector (Regulation (EC) No 1627/98; OJ L 210, 28.7.1998, p.8, Article
80, providing for the establishment of a Community vineyard register)
and the citrus fruit sector, since the 1990/1991 marketing year
(Regulation (EC) No 1198/90; OJ L 119, 11.5.1990, p. 59, establishing

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15.

DESEASONALISATION
PREMIUM (prime à la
desaisonalisation)

16.

DIRECT AID PAYMENTS
(PREVIOUSLY
COMPENSATORY
PAYMENTS) FOR
REFORMED SECTORS
(aides directes (avant
paiements compensatoires) au
titre des secteurs réformés)

CAP Glossary

a Community register of citrus cultivation).

A development during the 1998/99 to 2000/2001 marketing years, for
the olive register, has been a geographical information system (GIS)
based on computerised aerial photography  which is based on the
register’s data base with additional information from the crop
declarations linked to applications for aid. The Member State checks
that the information in the crop declarations and the information in the
GIS corresponds.

When in a Member State the number of
steers slaughtered during the year is
more than 60% of the total number of
male bovine animals slaughtered
annually and the number of steers
slaughtered during the period from 1
September to 30 November is over 35%
of the total annual slaughter of steers,
producers may benefit, on request, from
this premium in addition to the special
premium.

The amount of the premium is set at:

- EUR 72.45 per animal slaughtered
during the first 15 weeks of the year;
- EUR 54.34 per animal slaughtered during the 16 th and 17th weeks of
the year;
- EUR 36.23 per animal slaughtered during the 18 th to the 21st week of
the year;
- EUR 18.11 per animal slaughtered during the 22 nd and 23rd weeks of
the year.
The change of description is intended to
de-couple direct aid from production.

The aid is intended to compensate farmers for loss of income following
the sharp drop in institutional  prices which are being aligned with world
market prices.

The aid received (EUR/ha) is equivalent
to the sum obtained by multiplying the
direct Community payment (EUR/t) by
the regional reference yield per hectare

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CAP Glossary

(t/ha).

The reference yield was raised to 2.9 t/ha for Spain and 3.9 t/ha for
Italy. There has been no increase in reference yields for Finland and
Sweden but there is a measure with equivalent effect which involves
taking into account the specific costs of drying cereals by means of a
supplement to the direct payment of EUR 19/t.
Direct aid:
- 

for  cereals, set-aside and grass silage:
is increased to EUR 58.67/t in 2000/2001, it is increased to EUR
63/t from 2001/2002 onwards.
This is compared with EUR 54.34/t in 1999/2000 for cereals and
68.83 for set-aside.
The EUR 63/t may be increased from 2002/2003 to take account of
a new reduction in the intervention price for cereals.
For protein crops:
EUR 72.50/t from 2000/2001 onwards (as opposed to 78.49);
For non-fibre flax:
EUR 88.26/t in 2000/2001 (as opposed to 105.10)
EUR 75.63/t in 2001/2002 ,
EUR 63/t from 2002/2003 onwards.
For oilseeds:
EUR 81.74/t in 2000/2001 (as opposed to 94.24),
EUR 72.37/tin 2001/2002,
EUR 63/t from 2002/2003 onwards.
(Until 2001/2002 aid may be calculated on the basis of oilseed
yields expressed in terms of cereals, by applying a coefficient of
1.95; thereafter it should be on the basis of the cereals yield).

- 

- 

- 

17.

DISTILLATION (distillation)

Dates for payment of aid: during the period 16 November to 31
January following the harvest.

To obtain this direct aid, sowing must have taken place before 31 May
preceding the harvest and before 15 May preceding the harvest the
request must have been submitted together with the reference
documents identifying the land in question (1 document for the area
sown, 1 document for set-aside).

Distillation is the preferred instrument for intervention on the market
under the COM for wine. It is intended to withdraw surplus production
from the market at a minimum guaranteed price. The wine is then
processed into alcohol for oral consumption and, for the part not
absorbed by this market, for the fuel market.

A minimum purchase price is guaranteed, which differs according to
the type of distillation. The distiller who respects these minimum prices
receives an aid for selling the alcohol produced or for delivering this
alcohol to intervention bodies in the case of compulsory distillations.
There are two different types of distillation:

? voluntary distillation: with three categories:

- preventive distillation: the producer

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CAP Glossary

may make voluntary use of this
possibility if he considers that he will
have problems marketing all of his crop.
This distillation, payable at 65% of the
guide price, may be deducted from the
amount for compulsory distillation.

- support distillation: in a wine year during which compulsory
distillation was decided on or authorised in certain cases by the
Commission, for a limited quantity the producers receive a guaranteed
minimum price fixed at 82% of the guide price for each type of wine.

- distillation under special support measures for long-term storage
contract holders: is designed to guarantee to winegrowers that their
wine will not be disposed of at a price below the activating price,
provided that they have concluded long-term storage contracts.

The last time this type of distillation was used was in the 1990/1991
wine year.

? compulsory distillation: there are also three categories which cover:

- the by-products of wine-making: in
order to avoid overpressing of marc and
lees and the placing on the market of
poor-quality wines with low natural
alcoholic strength.

- wine other than table wine: concerns surplus wine from the Cognac
area, wine from table grapes, grapes for drying, etc.

- table wines: this distillation is decided on by the Commission when
the availabilities recorded at the beginning of the wine year exceed the
level of normal demand by more than four months’  supply or when
production exceeds the level of normal demand by more than 9% or
when the weighted average of the representative prices is less than 82%
of the guide price.

Agenda 2000 reform: preventive distillation, distillation under special
support measures and compulsory distillation of table wines will be
abandoned over a seven year period (2000-2006).

Specific distillation measures are
planned for the market for alcohol for
oral consumption. The average
minimum price paid by the distillers to

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18.

ENLARGEMENT
(élargissement)

CAP Glossary

wine producers will be EUR 2.488 per
degree of alcohol.

A crisis distillation measure, which can be used on a voluntary basis,
will be introduced to manage exceptional situations where the market is
disturbed and where there are quality problems. The Commission can
allow access of quality wines psr to this distillation only if a Member
State requests it.

The distillation of by-products of wine-making and dual-purpose grapes
remains in place and the alcohol produced may be used for human
consumption.

Enlargement will considerably increase the Union’s agricultural
potential and will extend the European market for basic and processed
agricultural products to over 100 million additional consumers. Trade in
these products between the existing and new Member States will be
completely liberalised.

The extension of the CAP in its present form to the new Member States
would cause problems. Given the existing price differences between the
applicant states and the Union, the price levels applicable under the
CAP being in general markedly higher, and despite the prospect that to
a certain extent these differences will have been removed between now
and the dates of accession, even the gradual introduction of CAP prices
would tend to encourage surplus production, in particular of livestock,
and would thus create even larger surpluses. The restrictions imposed
by the World Trade Organisation (WTO) on subsidised exports would
prevent the enlarged Europe from selling its surpluses on other markets.
The extension of the CAP would also involve significant budgetary
costs, estimated at about EUR 11 billion a year, of which almost two-
thirds would be required for direct payments to farmers.

Substantial increases in agricultural prices and the direct transfer of
significant sums to farmers would have an adverse economic and social
effect in the new member states. Furthermore, direct payments,
designed as a payment to compensate for certain price reductions would
not be justified in the case of farmers in the new member states who
would, rather, be facing price increases.
Given the growing imbalances that are anticipated on the Union’s
markets after 2000 (even without enlargement), adjustments of current
support policies would probably be necessary. The 1995 Agricultural
Strategy Paper had already suggested a reorientation of the CAP
towards direct income support as opposed to price support and towards
encouraging rural development and environmental protection policies.
Such a reorientation would help to reduce the price discrepancy and
would facilitate the structural adjustment process of the new Member
States.

Under these circumstances, instead of making direct payments to
farmers a substantial proportion of the resources, at least during a
transitional period, could be used for structural reforms and rural
development in these countries.

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CAP Glossary

It is vital that the implementation of the Community  acquis and
monitoring of this process is carried out satisfactorily in the applicant
countries to safeguard animal and plant health and guarantee public
health protection throughout the Community. This condition should be
met before establishing free movement of agricultural products without
frontier checks. The implementation of these measures will require
substantial investments and a great deal of time.

Agenda 2000 contains a more detailed analysis of the effects of
enlargement on EU policies, in particular with regard to agriculture and
the structural funds. The findings confirm that EU enlargement may
bring considerable political and economic advantages and enable
progress to be made in Community policies.
(See Annex II on the Financial Perspective for 21 Member States)

Enrichment is an  oenological practice designed to increase the natural
alcohol levels in wine. It involves using either sucrose or musts. In the
first case, the name ‘chaptalisation’  is also used. Enrichment using
sucrose is a technique applied traditionally in a large number of wine-
growing regions in the centre and north of the Community. The
alcoholic strength derived from sucrose costs about a third of the cost
required to obtain alcoholic strength from grapes. To ensure that
producers from the south are not penalised by this practice, an aid for
the use of concentrated musts and rectified concentrated musts to
increase the alcoholic strength of wine was introduced in 1982.

The principle of Community preference is
responsible for this price. It is the price
set at the frontier such that the products
imported by the Community do not
flood the domestic market and do not
jeopardise sectoral regulations. This
price seeks to avoid imported products
being sold on the Community market at
prices below a certain threshold.
It applies in the following sectors: cereals, rice, white sugar, olive oil,
protein crops, milk and dairy products, wine, fruits and vegetables,
pigmeat, poultry and eggs and seeds.

For cereals and fruit and vegetables the entry price can prompt the
application of variable duties at the frontiers.

The euro is the official currency of
eleven Member States of the European
Union, with a fixed conversion rate
against their national currency with
effect from 1 January 1999. From now

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19.

ENRICHMENT
(enrichissement)

20.

ENTRY PRICE (prix
d’entrée)

21.

EURO

CAP Glossary

on the value of the Euro against the
dollar and all the other currencies,
including those of the four Member
States that have remained outside the
Euro zone, will fluctuate in line with
market conditions.

Although the Euro notes and coins will not appear until 1 January 2002,
it has been possible for consumers, retailers, all types of undertaking
and public administrations to use the new currency since 1 January
1999 as a representative money, i.e. on cheques, travellers cheques,
bank transfers, credit cards, bank cards and electronic charge cards.

The rates of exchange are as follows: 1 euro
= BEF 40.3399
= DEM 1.95583
= ESP 166.386
= FRF 6.55957
= IEP .787564
= ITL 1936.27
= LUF 40.3399
= NLG 2.20371
= ATS 13.7603
= PTE 200.482
= FIM 5.94573
These rates were published in the Official Journal (OJ L 359,
31.12.1998)
(see item 2 of Part B)

The Agenda 2000 reform proposals are designed to give substance to
what should be the European model for agriculture. The essential
characteristics are:
- 

a competitive agricultural sector which can cope with the world
market without excessive use of subsidies, which are less and less
acceptable at international level;
an agricultural sector where production methods are sound,
environmentally friendly and able to supply quality products;
a richly diverse agricultural sector which is responsible not only for
production but also for maintaining the diversity of the landscape
and an active and vibrant rural community generating and
maintaining jobs;
a simpler more understandable agricultural policy with a clear
dividing line between what should be decided at Community level
and what should be the province of the Member States;
an agricultural policy which makes clear that the expenditure
involved is justified by the services which society expects farmers
to provide.

- 

- 

- 

- 

22.

EUROPEAN MODEL FOR
AGRICULTURE (modèle
agricole européen)

23.

EXPORT REFUNDS
(restitutions à l’exportation)

Export refunds allow Community

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CAP Glossary

producers to sell their products on the
world market. The aim is to cover the
difference between the Community price
and the world market price. It allows
dealers to participate in international
trade at competitive prices.

The refunds are set by the Commission
either for a certain period, or as a
supplement and for limited amounts by
means of tendering for those products
for which this procedure appears
appropriate. Except in this last case, the
list of products and the amount of the
refund are set at least once every three
months.

The refunds are set taking into account the current situation and the
probable price trends for the products on the world and Community
markets, the aims of the COM for the sector concerned, the restrictions
deriving from the relevant agreements concluded; marketing and
transport costs; the concern to avoid disturbances of the Community
market and the economic aspect of the planned exports.

The refund is granted only on request and on presentation of the
relevant export certificate. The amount of the refund applicable on
export is that which applies on the day when the request is made for the
certificate. It is paid when proof is provided that the products are of
Community origin, have been exported outside the Community and, in
the case of a differentiated refund, have reached the destination for
which a refund was set.

Provision is made for refunds (though they are not necessarily applied)
in the following sectors: cereals, rice, sugar, isoglucose, olive oil,
certain fresh and processed fruits and vegetables, wine, milk, beef
and veal, sheepmeat and goatmeat, pigmeat, eggs and poultrymeat.

Note: the agriculture agreement of the GATT Uruguay Round provides
for a fall both in the refunds budget and in the volume of subsidised
exports. (see item 83 in Part B)

Reduction of production  by using less intensive methods of crop or
livestock production. This objective is encouraged through premiums
granted under the  COMs (beef and veal, for example) and through the
aid system established in relation to structural policy (see Title II of

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24.

EXTENSIFICATION
(extensification)

CAP Glossary

Regulation (EEC) No 2328/91; OJ L 218, 6.8.1991, p.1). (see item 25
of Part B)

25.

EXTENSIFICATION
PAYMENT (prime à l’élevage
extensif (ou prime à
l’extensification))

This premium is applicable in the  beef and veal sector. To encourage
production that is more extensive and takes greater account of
environmental considerations, the special premium or premium for
young male bovine animals and the suckler cow premium may be
supplemented by an extensification payment.

The amount of the extensification payment is set as follows:
(LU=livestock unit)

? in 2000 and 2001:

EUR 33 between 2 and 1.6 LU/ha
EUR 66 if less than 1.6 LU/ha

? from 2002 onwards:

EUR 40 between 1.8 and 1.4 LU/ha
EUR 80 if less than 1.4 LU/ha.

For the granting of this premium all temporary and permanent pasture is
taken into account and all other areas used for fodder crops, except for
arable crops as defined under Community regulations. The pasture must
represent at least 50% of the total declared forage area.  Member States
are responsible for defining their pasture area, on the understanding that
these should be areas of grassland which, according to local agricultural
practice are recognised as being intended for pasture for cattle or sheep,
which does not exclude mixed use of this land (pasture, hay, silage)
during the same year.

This premium also applies to dairy cows belonging to holdings in
mountain areas when such holdings provide over 50% of national milk
production.

Farm Accountancy Data Network – based on the agricultural
accountancy offices in each Member State. Offices participate on a
voluntary basis as there is confidence in the project (Cf. Regulation
(EEC) No 1256/97; OJ L 174, 2.7.1997, p.7). Its purpose is the creation
and systematic follow-up of a farm accountancy data network on the
income and economy of agricultural holdings in the European Union.

As part of its policy of cooperation with
developing countries and to ensure an
adequate response to situations where
food supplies are not secure because of
serious shortages or crises, the
Community implements food aid
measures and actions to support food
security for the developing countries (Cf.
Regulation (EEC) No 1292/96, OJ L 166,

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26.

FADN (RICA)

27.

FOOD AID AND SPECIFIC
ACTIONS TO SUPPORT
FOOD SECURITY (aide
alimentaire et actions
spécifiques d’appui à la
sécurité alimentaire)

CAP Glossary

5.7.1996, p.1).

Community aid should be integrated as fully as possible into
development policies, in particular in the agriculture and  agri-food
sector and into the food strategies of the countries concerned.
Community aid will underpin the policies developed by the beneficiary
country to deal with poverty, nutrition, health care, environmental
protection and rehabilitation, with special attention being paid to the
continuity of programmes, in particular when the country is emerging
from a crisis situation.

In the last revision of the Lomé Convention’s financial protocol in 1995
the provisions relating to food aid set a minimum annual contribution
for the Community and its Member States of 1 755 000 tonnes in wheat
equivalent. The Council is responsible for allocating this amount
between the Community and the Member States and for drawing up the
list of countries and organisations eligible for Community aid. A
Commission decision sets the total quantities of food aid and draws up
the list of products which can be supplied as food aid.

28.

29.

FREE DISTRIBUTION OF
FOODSTUFFS (distribution
gratuite de denrées
alimentaires)
GRADING SCALE FOR
CARCASES (grilles de
classement des carcasses)

Community food aid measures for the poorest people in the Member
States. They are provided with foodstuffs from intervention stocks (Cf.
Regulation (EEC) No 2535/95; OJ L 260, 31/10/95, p.3).

Community market prices relate to the grading scale for  carcases, which
is based on the degree of fat cover of the animals. Carcase refers to the
whole body of the slaughtered animal after bleeding, evisceration and
skinning and presented in accordance with the characteristics of the
species.  This scale allows the market prices for beef and veal,
sheepmeat, goatmeat and pigmeat to be established.

30.

GRUBBING UP PREMIUMS
(primes d’arrachage)

These premiums are intended to cover costs resulting from grubbing up
in order to bring production potential (areas under vines) into balance
with the market in the  wine sector.

31.

32.

GUIDE PRICE (prix
d’objectif)

GUIDE PRICE (prix
d’orientation)

During the reform of the COM for fruit and vegetables the Council
adopted a programme in 1996  for grubbing up apple, pear, peach and
nectarine trees. This programme covered a maximum area of 20 000
hectares divided equally (10 000 hectares) between apple and pear trees
and between peach and nectarine trees. The initial distribution between
the Member States can be adjusted at a later stage to take account of
actual demand.
The guide price is set in the protein crops and dried fodder sectors in
the same way as for the target price.

This price corresponds to the target
price as its aim is to guide production in
a given direction, while also providing
protection against massive imports.

It is set for the table wine sector. This price is set by the Council before
the first of August each year for each of the types of table wine (RI, RII,

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PE 168.468

33.

HORIZONTAL
REGULATIONS
(réglementation horizontale)

34.

IMPORT AND EXPORT
CERTIFICATES (certificats
d’importation et
d’exportation)

CAP Glossary

RIII, AI, AII, AIII)  at a level which ensures correct remuneration for
the producer. It was set on the basis of the average rates noted during
the previous two marketing years and the price trend during the current
marketing year. At present the guide prices for wine are following the
same trend that has been adopted by the Council for all agricultural
products.

The Agenda 2000 reform, as far as the
horizontal regulations are concerned,
makes provision for:

- environmental requirements. Member States must define the
appropriate environmental measures to be applied by farmers and the
associated penalties, in particular the reduction of direct aid payments,
where there are environmental infringements.

- a system authorising Member States to modulate the direct payments
per holding in relation to the number of jobs on the holding or the
overall wealth of the holding.

- funds made available from the reduction in aid payments, following
controls or modulation, which are available to the Member States as
additional Community support for agri-environmental measures, less-
favoured areas, early retirement and reforestation.

This certificate, for which there is a
standard Community form, is issued by
the Member States to any Community
undertaking which requests it. All
import or export operations are subject
to the presentation of a certificate and
the issue of this certificate is subject to
the payment of a deposit which
guarantees that the undertaking to
import or export during the term of the
certificate is fulfilled.

The deposit is thus released only when the operator provides evidence
that he has completed the operation within the period of validity of the
certificate, except in the case of force majeure.

Where there are risks of serious disturbance of the Community market,
the Commission may adopt safeguard measures and temporarily
suspend the issue of such certificates.

This statistical document allows the Commission to check the
Community’s undertakings with regard to imports or exports.

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CAP Glossary

35.

INDIVIDUAL BASE
AREA  (surface  de  base
individuelle)

The individual base area applies to arable crops for calculating the
amount of direct aid. The individual base area is established for each
holding as an average of the hectares used for arable crops or set aside
under the programmes financed from public funding in 1989, 1990 and
1991.

36.

INSTITUTIONAL PRICES
(prix institutionnels)

37.

INTERVENTION PRICE
(prix d’intervention)

38.

INWARD PROCESSING
TRAFFIC (IPT) (trafic de
perfectionnement actif (TPA))

39.

MARKET PROMOTION
PREMIUMS (CITRUS
FRUIT) (primes de
pénétration (agrumes))

40.

MARKETING AIDS (aide à la
commercialisation)

Agricultural support prices and other amounts set by the Council (on a
proposal from the Commission and after consultation of the European
Parliament) and forming part of the COM operation. These prices are
often set for a standard quality, the scales being used to set prices for
the other qualities.

The price intended to provide price support and guarantee farmers’
incomes. The Community guarantees this price to producers when
domestic supply is higher than demand and the market price falls below
a certain level which is less than the target price. It is known as the
intervention price as, under certain conditions, it triggers intervention
by the public authorities who purchase the surplus supply to stabilise
the market by using bodies set up for this purpose. This buying-in price
is appreciably lower than the target price and lower than the
intervention price in certain cases. It applies to the following sectors:
cereals (all cereals), rice (paddy), white sugar, butter, skimmed milk
powder and beef and veal.

IPT is a customs scheme which allows
third country products entering EU
territory to be exempt from import
duties when they are to be reexported
after processing.

The Council, acting by a qualified majority on a proposal from the
Commission, may in specific cases totally or partially exclude use of
this scheme, in so far as this is necessary for the smooth operation of
the COM in a given sector.
If the situation is exceptionally urgent and if the Community market is
disturbed by the inward processing scheme the Commission, at the
request of a Member State or on its own initiative, may decide to adopt
measures which are immediately applicable with a maximum validity of
6 months.
These premiums are paid by the Member State and can be reimbursed
under the EAGGF to increase Community outlets by promoting the
marketing of citrus fruit produced in the Community on Community
markets other than those of the producer country.

In the sugar and isoglucose sector, they facilitate the sale of raw sugar.
They provide aid for transporting and refining sugar from the French
overseas departments refined in the Union in ‘pure’  refineries. Such aid
can also be granted for refining raw beet sugar to safeguard supplies to
these refineries. This marketing aid is granted per tonne and is
calculated taking several factors into account such as the flat rate FOB
amount, sea freight costs and storage.
In the milk and dairy products sector aid is granted for skimmed milk,

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PE 168.468

41.

MARKETING YEARS
(campagnes de
commercialisation)

42.

MINIMUM GUARANTEED
PRICE (prix minimal garanti)

CAP Glossary

skimmed milk powder, butter and skimmed milk powder used for
animal feed.

Marketing years set the dates during which the various prices and aids
are applied on the Community market. For cereals, oilseeds and
protein crops, sugar, milk, beef and veal and pigmeat, the year runs
from 1 July to 30 June of the following year. For non fibre flax the
year runs from 1 August to 31 July. For olive oil it runs from 1
November to 31 October and for wine from 1 September to 31 August.
For sheepmeat and goatmeat it runs from the first Monday in January
to the day before this day the following year.

In the sugar sector this price is defined as a percentage of the basic
price, depending on whether it relates to A sugar beet (98% of the basic
price) or B sugar beet (65% of the basic price). It corresponds to the
price at which the processing company, which holds the A and B
quotas, is required to purchase the standard quality (at 16 ° sugar
content) raw material (sugar beet). This minimum price is increased in
areas for which an intervention price based on white sugar is fixed.

A minimum price is also fixed for potatoes intended for the
production of potato starch of EUR 194.05 per tonne for the
marketing year 2000-2001 and 178.31 for the marketing year 2001-
2002. This price applies to the amount of potato delivered to the factory
and required to produce one tonne of starch.

43.

MODULATION OF AID
(modulation des aides)

With effect from 1 January 2000, Member States may decide to reduce
direct aid (by a maximum of 20%) in cases where:

1. 

2. 

the labour employed on the holding,
expressed in annual work units, falls
below a threshold set by the national
authorities; (annual work unit
means the national or regional
average annual working time of
adult farm workers employed
throughout the calendar year).
The overall prosperity of the holding, expressed as a standard
gross margin, is above a certain limit.

3.  The total payments granted under
the support schemes exceed a limit
which is also set at national level.

The savings which result and those from cross-compliance (observance
of environmental criteria) may be used by the Member State to
supplement Community funding for early retirement measures,
payments for less-favoured areas and areas subject to environmental
restrictions, agri-environmental provisions, afforestation measures and
rural development.

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44.

MONETARY RESERVE
(réserve monétaire)

45.

MONTHLY INCREASES
(majorations mensuelles)

46.

NATIONAL INVENTORY
(inventaire national)

47.

NATIONAL RESERVE
(réserve nationale)

48.

OFFER PRICE FREE-AT-
FRONTIER (CIF PRICE)
(prix d’offre franco-frontière
(prix caf)

CAP Glossary

To prevent premiums being ‘chased’, provision has been made that no
payment will be made to beneficiaries who have artificially created the
necessary conditions to be eligible for such payments so as to gain an
advantage which runs counter to the aims of the support scheme.

Budgetary mechanism introduced by the European Council of February
1988 providing a cushion against the fluctuations in  euro/dollar parity.
The monetary reserve receives transfers from the EAGGF Guarantee
Section when expenditure falls as a result of rises in the dollar and it
finances  EAGGF expenditure which can occur following depreciation
in the North-American currency. It was set at EUR 500 million in 2000
and 2001, EUR 250 million in 2002 and 0 from 2003 to 2006.

The aim of these increases is to reduce the storage costs and to regulate
the disposal of cereals throughout the marketing year. They are applied
to the intervention and threshold prices throughout all or part of the
cereals marketing year.  The  Agenda 2000 reform will maintain the
current scheme of monthly increases, i.e. seven increases of one
Euro/tonne applied cumulatively during the months of November to
May.

In the wine sector the Member States are required to prepare this
monitoring tool containing information on the areas, varieties and
planting rights. It must be completed by 31 December 2001 at the latest.
It may be drawn up on a regional basis.

In the beef and veal sector each Member State holds a national reserve
of rights to the suckler cow premium for the chosen base year. The
Member States use their reserves for allocating rights to the premium,
in particular to new entrants, young farmers and other priority
producers. Where rights to the premium are transferred without transfer
of the holding a percentage of these rights, not exceeding 15%, is ceded
without compensation to the national reserve of the Member State.

In the sheepmeat and goatmeat sectors the Member States will set an
initial national reserve of at least 1% and at most 3% of the sum of the
individual limits of their producers. The  amounts  which fall within this
reserve will be deducted from the rights to the premium of individual
producers.

This price is established in relation to the
most representative possibilities for
purchase – outside the Community – in
terms of quality and quantity observed
over a fixed period. It affects several
products (cereals, olive oil, meat, etc.)
for which a protection price is set vis-à-
vis low priced imports.

CIF import prices are also used to determine an import duty in addition

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PE 168.468

49.

ORGANIC FARMING
(agriculture biologique)

50.

PRE-ACCESSION AID
INSTRUMENTS (instruments
de l’aide de préadhésion)

CAP Glossary

to the import price. To this end CIF prices are checked on the basis of
representative prices for the products in question on the world market or
on the Community import market for the product.

Organic farming refers to an agricultural system based on drastic
restrictions on fertilisers and pesticides. Production rules are very
strictly laid down to protect the environment and to encourage
sustainable agricultural development. It also refers to the scheme
providing Community rules on labelling and on the monitoring of
agricultural products and foodstuffs produced using organic methods
(Cf. Regulation (EEC) No 468/94; OJ L 59, 3.3.1994, p.1). Organic
products may be marketed as such only after checks and certification.

On 18 March 1998 the Commission
submitted its proposals on the pre-
accession aid instruments. These
include:

-  a regulation on coordinating aid to the

applicant countries.

-  The PHARE regulation which will continue to provide pre-

accession aid.

-  A pre-accession structural instrument (ISPA) which will support

the transport networks and environmental protection.

-  An agricultural pre-accession instrument. (SAPARD: Special
Action for Pre-accession measures for Agriculture and Rural
Development).

The aim of the first regulation referred to above is to ensure
coordination and consistency between the support granted under the
pre-accession assistance of the PHARE programme, the structural
instrument (ISPA) and the agricultural instrument. The fields of action
covered by each instrument are defined therein. Any action or measure
to be financed under the pre-accession assistance can benefit only from
a single instrument.

Agricultural pre-accession instrument:

A special financial aid available under the agricultural pre-accession
instrument is granted to the applicant countries to support agriculture
and rural development. This assistance seeks to implement activities to
support the process of economic and social reform which is underway
in these countries and to prepare and facilitate the integration of their
economies into the Community economy (enhanced pre-accession
strategy).

Aims:

The proposal for a regulation establishes the framework for Community

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CAP Glossary

aid for agriculture intended to be granted from 1 January 2000 to the 10
CEEC applicant countries. This aid meets the conditions referred to
under the accession partnerships and seeks to:

-  Resolve the most pressing and specific problems of long-term

adjustment of the agricultural sector and rural areas in the applicant
countries;

-  Contribute to the implementation of the Community acquis relating

to the CAP and associated policies.

The activities likely to be covered by this assistance are:

- 
- 

- 

Investments in agricultural holdings;
Improvement of processing and marketing of agricultural and
fisheries products;
Improvement of structure for quality checks and veterinary and
plant health checks;

-  Agricultural production methods geared to environmental

protection and conservation;

-  Development and diversification of economic activities;
-  Creation of replacement and management services for agricultural

holdings;

-  Creation of producer groups;
-  Renovation and development of villages and protection of the rural

heritage;
Improvement of land and reparcelling;

- 
-  Creation and up-dating of land registers;
- 
Improvement of vocation training;
-  Development and improvement of rural infrastructures;
-  Management of water resources;
- 
-  Technical assistance for measures covered by the regulation,

Forestry

51.

PREFERENTIAL IMPORT
QUOTAS (contingents
préférentiels à l’importation)

including studies as part of the preparation and follow up of the
programme.

These quotas limit the amounts of
agricultural products which can be
imported from certain third countries
enjoying preferential conditions as a
result of  the Community’s unilateral,
bilateral or multilateral relations.

After the GATT agreement there has been a change in the system and
import quotas fall into one of the three following categories: current
access, minimum access and non-GATT quotas:

- Minimum access: the GATT agreement provides that each signatory
country will open quotas to third countries. The import possibilities
which are offered are, for each group of products, 5% of consumption
of the base period 1986-1988. This does not mean that there is an
obligation to import but that a reduced customs duty is to be granted for

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PE 168.468

52.

PREMIUM FOR YOUNG
MALE BOVINE ANIMALS
(SPECIAL PREMIUM)
(prime aux jeunes bovins
mâles (ou prime spéciale))

CAP Glossary

this quantity. Aggregation is the concept of minimum access per group
of products and not by product. This concept has been recognised by
the United Nations.

- Current access: Import tariff concessions already granted prior to the
entry into force of the agreement must be maintained at least at their
1986-1988 level.
- The non-GATT quotas are the preferential agreements relating to the
countries of central and eastern Europe concluded after 1988.

The special premium for young male
bovine animals, which has existed since
1987, is allocated to any producer of
cattle up to a regional ceiling of 90
animals per year and per holding.

From 2002 onwards the basic special premium for male animals will be
raised in three stages to EUR 210 for bulls (uncastrated male bovine
animals) and EUR 300 for steers (castrated male bovine animals). The
premium will be paid once for bulls and twice (2 x 150) for steers.

This premium is granted not more than once in the life of each bull after
the age of 9 months (or a minimum  carcase weight of 185 kgs) or twice
in the life of each steer at 9 months and 21 months.

For male animals the scheme includes a series of regional reference
ceilings which indicate how many are entitled to premiums.

The regional ceilings for the special premium for male animals are set
on the basis of figures supplied for 1996 after updating. The ceiling is
calculated in accordance with the Council declaration of November
1996. (Provision is made for a 5% threshold). For the three new
Member States the ceilings are set at the level provided for in the
accession treaty.

Belgium: 235 149
Denmark: 277 110
Germany: 1 782 700
Greece: 143 134
Spain: 713 999
France: 1 754 732
Ireland: 1 077 458
Italy: 598 746

Luxembourg: 18 962
Netherlands: 157 932
Austria: 423 400
Portugal: 175 075
Finland: 250 000
Sweden: 250 000
United Kingdom*: 1 419 811

* +100 000 : provisional figure until the export of animals under 6
months of age is permitted.

The premium for bulls takes account of the possibility of keeping the
aid for arable crops for silage maize.

Furthermore, producers may be entitled, under certain slaughter
conditions, to a premium in addition to the special premium, namely the
deseasonalisation premium (see item 15).

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PE 168.468

53.

PREMIUMS FOR SHEEP
AND GOATS (primes des
ovins et caprins)

54.

PRIVATE STORAGE
(stockage privé)

CAP Glossary

For sheep the amount of the premium is set for each region, taking
account of market prices during the marketing year. A distinction is
made between the producers of heavy lambs and light lambs. All
producers of sheep’s milk or any other product based on sheep’s milk is
deemed to be a producer of light lambs.
To be eligible a sheep must be at least one year old or have lambed at
least once.

The premium is calculated by taking the loss of revenue (difference
between the basic price and the arithmetic average of the market prices
noted during the marketing year) and applying either a ‘heavy lamb’  or
a ‘light lamb’  technical coefficient (80% of the first).

For goats the premium is equivalent to
80% of that paid per sheep to producers
of heavy lambs.

Until the end of the 1994 marketing year the premium was paid at the
full rate for up to 1000 animals per producer in the less  favoured areas,
and 500 animals per producer in the other areas. For any animals over
this figure the premium was reduced by 50%. Since the 1995 marketing
year these ceilings have been abolished and the Member States have
had to recalculate the individual limits so that the numbers above the
1000/500 animals referred to above are reduced by 50%.

The premiums are payable in three stages. Two advances of 30% are
paid during the marketing year, the first under the budget year in which
the marketing year commenced. The second and the remaining 40% are
paid at the end of the marketing year under the subsequent budget year.

Since the 1992/1993 marketing year, for holdings in mountain areas and
less favoured areas a flat-rate aid has been set at ecu 6.641 per head for
sheep (heavy carcases) and ecu 4.589 per head for sheep (light
carcases) and goats.

Private storage enables the market to be stabilised without having too
great an effect on the traditional marketing channels. This aid requires
the establishment of a storage contract, concluded with the intervention
board of the Member State concerned.

The amount of aid is set taking into
account the storage costs and the
foreseeable trend in prices of the
product in question. If, when the
product is removed from storage, the
market has changed adversely and this
could not have been predicted on
storage, the amount of the aid can be

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PE 168.468

55.

PROCESSING AID (aides à la
transformation)

CAP Glossary

increased.

In the milk and dairy products sector this aid is granted for cream and
unsalted and salted butter produced from cream or milk in a dairy in the
Community. It also applies to top grade skimmed milk powder  and
grana padano cheese at least 9 months old, parmigiano reggiano at least
15 months old and provolone at least 3 months old. The granting of
private storage aid may be allowed for long-keeping cheeses and for
cheeses made from sheep and/or goats’  milk requiring at least six
months maturing.

In the beef and veal sector after 1 July 2002 the decision to grant such
aid may be made when the average price on the Community market is
likely to remain less than 103% of the basic price. The aid may be
granted for fresh or chilled meat from adult bovine animals, presented
as carcases, half carcases, compensated quarters, hind or fore quarters,
graded in accordance with the Community grading system (Cf.
Regulation (EEC) No 1208/81).

It applies also in other sectors such as cereals, sugar, isoglucose, wine
(table wine, grape must, concentrated grape must and rectified
concentrated grape must), sheepmeat, goatmeat, pigmeat, textile
plants and silkworms.

Processing aid is granted in the processed
fruit and vegetables sector (and covering
tomato-based products, peaches and
pears in syrup and/or natural fruit juice,
prunes, dried figs and dried grapes). It
became necessary to grant this aid
because of the discrepancy between the
prices of Union products and imported
products and it seeks to ensure an
adequate income for producers by
ensuring that the processing industry
observes a minimum price which it
undertakes to pay to producers in order
to benefit from this aid. The purpose of
this aid is to make the processed
products which use Community
vegetables or fruits competitive by
comparison with imported products.

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56.

PRODUCER GROUPS
(groupements de producteurs)

CAP Glossary

Each year, before the start of the marketing year, the Commission sets a
minimum price per product using the management committee
procedure, taking into account the minimum price for the previous year,
the trends in the basic price of the fresh products and the need to ensure
the normal sale of fresh products to the various destinations.

Set up on the initiative of producers,
these groups are formed to help the
producers who are members to adjust
production and supply to the
requirements of the market by means of
common production rules, in particular
on product quality or use of organic
practices, rules on marketing and
production (in particular through the
exchange of information on harvesting
and availabilities).

They are supported by Community measures under the COMs (fresh
fruit and vegetables, olive oil, tobacco, etc.) or under the structural
policy (Cf.  Council Regulation (EC) No 952/97, 20 May 1997; OJ L
142, 2.6.1997, p.30).

57.

PRODUCTION AID (aide à la
production)

This aid seeks to ensure a fair income for
producers.

In the olive oil sector, there are two schemes:
-  The normal scheme for olive growers whose average production is

at least 500 kg/year of olive oil and the amount paid relates to the
quantity of oil actually produced.

There is a maximum guaranteed quantity of 1.35 million  tonnes for
which the full amount of aid is granted. When production exceeds the
MGQ, possibly increased by the carry-over from the previous year,
production aid is reduced on a proportional basis. This mechanism for
stabilising expenditure has been applied to the intervention price for
olive oil since 1993, however the reduction in the event of overshoot
cannot exceed 3%.

-  The scheme for small producers whose production is on average
less than 500 kg, provided that the olives have actually been
pressed. This quantity is assessed on the basis of the number of
olive trees cultivated, their production potential and their yield
which is fixed on a flat rate basis.

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CAP Glossary

In the milk and dairy products sector, production aid is granted for
milk used in animal  feedingstuffs and milk used in the production of
casein.

For rice the aid is granted for the broken rice used in the Community in
the starch and brewing industries.

For cotton, the Community aid scheme provides for a target price and
an aid equal to the difference between this price and the world price
granted to ginning plants  that pay a minimum price to the producer. If
unginned cotton production exceed a maximum guaranteed quantity
(MGQ) the target price and the amount of aid are reduced
proportionally.
For tinned pineapple the aim is to maintain competitive prices for the
industry in relation to the prices in the main non-member producer
countries and to ensure appropriate payment to the producers of fresh
pineapples. The aid is granted to processors who undertake to pay
producers at least the minimum price fixed each year. It provides
compensation for the difference between the Community price and the
price of products imported from third countries.

For seeds the common organisation of
the market in this sector provides for the
granting of aid for the production of
basic seed and certified seed of some
forty species of agricultural plants,
including different forage species, rice
and flax. The level of the aid is set for
two years, but can be altered if there is a
risk of disturbance of the Community
market.

For hops, Council Regulation (EC) No 1554/97 of 22 July 1997 (OJ L
208, 2.8.1997, p.1) provides for a single amount for all the  varietal
groups set at ecu 480 per hectare with effect from the 1996 harvest for a
five year period.

For fibre flax and hemp the Council sets two flat rate aid amounts per
hectare harvested. The aid for flax differs depending on the area of
production and the type of harvest, based on past cereal yields per
hectare.

For silk worms aid is granted per box of eggs produced successfully.

A and B quota sugar and A and B quota isoglucose are what the
undertaking can sell directly on the Community market or the world
market. The expenditure on market support for these two quotas is
covered by a basic maximum levy of 2% of the intervention price for
white sugar applied to all production within quotas A and B. Where

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58.

PRODUCTION LEVY
(cotisation à la production)

59.

PRODUCTION REFUNDS
(restitutions à la production)

60.

PRODUCTS NOT COVERED
BY ANNEX II (produits hors
annexe II)

61.

PROMOTION MEASURES
(mesures de promotion)

CAP Glossary

there is a shortfall a B levy, limited to a maximum of 37.5% of the
intervention price for white sugar applies to B quota sugar and
isoglucose. These levies are payable in May and December. If they are
not sufficient to cover the disposal costs for the year’s surpluses, the
producers are subject to a supplementary levy payable in December, set
by the Commission and applied in the form of a uniform coefficient on
the levies. The manufacturers of sugar and the sugar beet growers share
the cost of levies in proportion to their sugar revenues, i.e. 40% and
60% respectively.
Note: The A quota determines the amounts of sugar which benefit from
price support, less 2% producer levy, the B quota represents the
quantities purchased at a price corresponding to 68% of the intervention
price for sugar, which can be reduced by up to 60.5% of the
intervention price if there are insufficient levies to cover the
expenditure for disposal of the Union’s production.

These refunds are granted to processors who obtain their supplies from
Community producers in certain sectors. These refunds allow the
processors to be competitive in relation to imported processed products
made from raw materials purchased more cheaply on the world market.
The refunds are applied for certain  processed fruits and vegetables
(products based on tomatoes, peaches and pears in syrup and/or natural
fruit juice, prunes, figs, tinned pineapples and dried grapes) and for the
production of starch from maize or wheat or potato starch and  starch
products used for the manufacture of certain chemical products.

In the olive oil sector there is an aid granted to facilitate sale  of olive oil
to the canning industry.
Trade arrangements applied to certain goods resulting from the
processing of agricultural products and not covered by Annex II of the
Treaty (Cf. Regulation (EEC) No 2491/98; OJ L 309, 19.11.1998,
p.28).

Promotion measures are to be found in the quality beef and veal sector
and for apples and citrus fruit, milk and dairy products, grape juice, live
plants and floricultural products and olive oil.
(Cf Commission Regulation (EC) No 481/1999 of 4 March 1999 laying
down general rules for the management of promotional programmes for
certain agricultural products. OJ L 57, 5.3.1999, p.8)

For flax and hemp a certain percentage of
the flat-rate per hectare aid is
earmarked for financing promotional
measures and for researching new
markets. The same principle is also
applied to other products such as olive
oil.

For citrus fruit the financial compensation premiums to promote
processing of certain varieties of oranges and lemons are paid to
processors provided they observe a minimum price set before the

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62.

PROTECTIVE CLAUSE
(clause de sauvegarde)

CAP Glossary

beginning of each marketing year.

Exceptional measures which may be
taken in respect of imports that disturb,
or threaten to disturb, the Community
market and thus to jeopardise the aims
of Article 33 of the Treaty of Amsterdam
(ex Article 39).

Reference should also be made to the safeguard clause, which is
completely different and relates to the WTO (see item 70 below).

63.

QUALITY POLICY (politique
de qualité)

Scheme setting out:

64.

QUALITY STANDARDS
(normes de qualité)

65.

QUANTITATIVE IMPORT
RESTRICTIONS (restrictions
quantitatives à l’importation)

66.

REGIONAL BASE AREA
(surface de base régionale)

67.

REGULATORY IMPORT
LEVY (prélèvement
régulateur à l’importation)

a) a framework of Community rules on the protection of geographical
indications and designations of origin for agricultural products and
foodstuffs (Cf. Regulation (EEC) No 1068/97; OJ L 156, 13.6.1997,
p.10);

b) a framework of Community rules under which certificates of
specific character can be obtained and monitored at Community level
(Cf Regulation (EEC) No 2082/92, OJ L 208, 24.7.1992, p.9, amended
by 194 N).

These aim to give added value to high-quality products and to
encourage producers to supply quality products. They are applied to
several agricultural products in particular, in the fresh  fruit and
vegetables sector and to floricultural products.

These restrictions allow the quantity of imports to be limited and they
apply to certain fresh fruit and vegetables (import calendars). In the
list of undertakings made to the WTO, the European Union included
adjustments to the calendars for application of the entry prices, with the
calendars for tomatoes, courgettes and cucumber being extended to
cover the whole year.

The regional base area applies to arable crops for calculating the
amount of direct aid payments. The regional base area is the average of
the areas on which cereals, oilseeds and protein crops (COP area) were
cultivated in 1989, 1990 and 1991 increased, if necessary, by areas set
aside under the schemes financed from public funding. Region refers to
a Member State or a region within a Member State. Member States
have the possibility of opting for a system of individual reference areas
per producer or a system of regional reference areas. In the latter case
they must draw up regionalisation plans and specify the criteria used to
define the various production zones and their yields.

The regulatory import levy was the
difference between the entry price and
the offer price at the Community

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68.

REMNANT REGULATION
(règlement ‘solde’)

69.

REPRESENTATIVE
MARKET PRICE (prix
représentatif de marché)

CAP Glossary

frontier. It was intended to provide
funds for the Community budget as an
own resource. It applied in the cereals,
rice, white sugar, olive oil, protein crops,
milk and dairy products, beef and veal,
sheepmeat and goatmeat, pigmeat, eggs
and poultrymeat sectors.

Following the agreement under the GATT Uruguay Round these
variable amounts have been replaced by fixed customs duties which
will be reduced gradually over the next six years (see items 78 and 79
of Part B).

This regulation establishes embryonic provisions for certain, apparently
unrelated, products listed in Annex II of the Treaty (Cf Regulation
(EEC) No 195/96; OJ L 26, 2.2.1996, p.13). This regulation provides
only minimum protection on the external market (without any price
guarantees or aid granted).

In the olive oil sector this price is set
annually by the Council for the
marketing year at a level which allows
olive oil to be disposed of in a normal
manner, bearing in mind the probable
trends in the market for vegetable oils
and fats.

In the table wine sector each week the Commission sets the average
production price for each representative market for the type of wine in
question, where the representative market price is the price
corresponding to the weighted average of all the average prices set for
the RIII, AII and AIII types and the weighted average of half the
average prices set for the RI, RII and AI types.

Note: R refers to red wine and A to white wine.
RI: wine with an actual alcoholic strength by volume between 10% and
12%.
RII: wine with an actual alcoholic strength by volume between 12.5%
and 15%.
RIII: wine from Portugieser type vine varieties.
AI: wine with an actual alcoholic strength by volume between 10% and
13%.
AII: wine from Sylvaner or Müller-Thurgau type vine varieties.
AIII: wine from Riesling type vine varieties.

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CAP Glossary

70.

SAFEGUARD CLAUSE

(clause de sauvegarde spéciale) This safeguard clause is applied in the
context of the WTO and tariffication.
The European Union can activate this
special clause and apply the
supplementary customs duties (equal to
30% of the existing tariff equivalents) in
two cases: when the volume of imports
exceeds a certain threshold or when the
price of imports falls below a certain
threshold.

- When the volume of imports exceeds a certain level,
the threshold for activating the safeguard clause will be:

-  125% of the average imports (1986-1988) when the

possibilities for market access for a product (defined as
imports as a percentage of  the corresponding domestic
consumption during the three previous years) will be
less than or equal to 10%;

-  110% of the average imports (1986-1988) when the

possibilities for access to the market will be greater than
10% but less than or equal to 30%;

-  105% of the average imports (1986-1988) when the

possibilities for access to the market will be greater than
30%.

Any additional duty will be maintained only until
the end of the year concerned and may not exceed
one third of the customs duty normally applicable.

- In the case of a fall in the price of imports, the
clause may be applied if the import price falls below
an activating price equivalent to the average
reference price for 1986-1988. An additional
customs duty may be levied as follows:

- 

if the difference between the import price and the
activating price is = 10% of the activating price, no
additional duty will be imposed;

- 

if this difference is > 10% but = 40% the duty will be

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CAP Glossary

- 

- 

- 

equal to 30% of the amount over 10%;

if this difference is > 40% but = 60%, the duty will be
equal to 50% of the amount over 40%, plus the duty
authorised under the previous paragraph;

if this difference is > 60% but = 75%, the duty will be
equal to 70% of the amount over 60%, plus the duties
authorised under the two previous paragraphs;

if this difference is > 75% the duty will be equal to 90%
of the amount over 75%, plus the duties authorised
under the three previous paragraphs;

As far as cereals are concerned, the difference between the import price
and the intervention price may not exceed 55% of the latter.

Intervention purchases made in the  beef and veal sector. This
automatic intervention system will be established from 1 July 2002
onwards. It would be activated when, in a Member State or a region of
a Member State, the average market price for male bovine animals is
less than EUR 1560 per tonne over two consecutive weeks. Ad hoc
intervention purchases will be organised by the Commission in the
Member State concerned using the management committee procedure.

71.

SAFETY NET (filet de
sécurité)

72.

SIMPLIFIED ARABLE
CROPS REFORM SCHEME
(régime simplifié de la réforme
pour les cultures arables)

Producers who apply for a compensatory payment under this scheme
are not subject to the set-aside requirement and receive a single per
hectare aid for all crops (equivalent to the cereals aid applicable in the
region). Only small-scale producers can benefit from this scheme, i.e.
those whose annual production does not exceed 92 tonnes of cereals.

73.

SLAUGHTER PREMIUM
(prime à l’abattage)

A slaughter premium is paid directly to
the farmer, subject to a retention period.
From 2002 onwards the premium will be
EUR 80 for bulls, steers, dairy cows,
suckler cows and heifers (in all cases
from the age of 8 months) and EUR 50
for calves (from 1 to 7 months of age
with a carcase weight of less than 160
kg).

During 2000 the premium will be EUR 27 per adult animal and EUR 17
for calves. During 2001 the premium will increase to EUR 53 and 33
respectively.

In each Member State two ceilings are set for this premium, one for
adult animals (bulls, steers, cows and heifers) and the other for calves.

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74.

STOCKING DENSITY
LIMITS (limites de densité)

75.

STORAGE LEVY (cotisation
de stockage)

76.

SUCKLER COW PREMIUM
(prime à la vache allaitante)

CAP Glossary

They are calculated in relation to the number of animals slaughtered in
1995 together with the number of exports to non-member countries for
that year, on the basis of Eurostat data or any other official statistical
publication approved by the Commission.

In the beef and veal sector access to various premiums (premium for
male bovine animals and suckler cow premium) has been made subject
to a limit on stocking density for animals carried on a holding, such that
only holdings with a maximum density of two livestock units (LU) per
hectare of forage area can obtain these premiums. This density is
calculated by including all livestock on the holding, including sheep
and goats (see item 9 II in Part A).

Each month holders of sugar (producers, processors, wholesalers)
receive payments intended to cover the various costs of storage, i.e.
technical and financial costs, insurance. These payments are financed
through storage levies collected when the manufacturer markets the
sugar. The Commission sets the levy, taking into account the amount of
sugar subject to the scheme and the average number of months during
which this sugar is stored before reaching the retail sector.

In the agricultural price round for 1999/2000 the Commission proposed
that the monthly reimbursement of storage costs should move from
EUR 0.38 to 0.33 per 100 kg, i.e. a reduction of 13.2%.

Suckler cow refers to a cow of a meat
breed or a cow born of a cross with one
of these breeds and belonging to a herd
intended for rearing calves for meat
production.

The premium was established in 1980 and has been modified several
times. It is intended for producers who do not supply milk or dairy
products from their holding for twelve months from the day on which
the application for the premium is made, or where milk production is
less than or equal to 120 000 kgs. However Member States may alter
this quantity or deviate from it.

The premium is granted provided that, for at least six consecutive
months from the day on which the demand was lodged, the producer
keeps  a number of suckler cows at least equivalent to 80% and heifers
to 20% of the numbers for which the premium has been requested.

This premium is granted on request within the restrictions of the
individual ceilings per year and per producer.

The sum will increase as follows until the agreed compromise amount
(EUR 200) has been reached.
- EUR 163 for 2000
- EUR 182 for 2001
- EUR 200 from 2002 onwards.

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CAP Glossary

The supplementary national premium, which is additional to the  suckler
cow premium, will increase from EUR 30.9 to 50 per head, provided
that this does not cause discrimination between stockfarmers in the
Member State concerned.

Member States in which over 60% of the suckler cows and heifers are
reared in mountain regions may pay the  suckler cow premium for
heifers, not under the individual quota but by allocating, to a separate
national ceiling, a part equivalent to a maximum of 20% of the national
ceiling.
National ceilings are set for all the rights to  suckler cow premiums at
the following levels:

Belgium: 394 253
Denmark: 112 932
Germany: 639 535
Greece: 138 005
Spain: 1 441 539
France: 3 779 866
Ireland: 1 102 620
Italy: 621 611

Luxembourg: 18 537
Netherlands: 63 236
Austria: 325 000

Portugal: 277 539
Finland: 55 000
Sweden: 155 000
United Kingdom: 1 699 511

Price set by the Council of Ministers for standard quality products and
the price which the COM aims to ensure for producers during a
marketing year. It is set for olive oil and milk. For milk, for example,
the target price,  expressed in EUR per 100 kg of milk containing 3.7%
fat delivered to the dairy, is set at:

- 30.98 for the period from 1 July 2000 to 30 June 2005;
- 29.23 for the period from 1 July 2005 to 30 June 2006;
- 27.47 for the period from 1 July 2006 to
30 June 2007;

- 25.72 from 1 July 2007 onwards.

77.

TARGET PRICE (prix
indicatif)

78.

TARIFF EQUIVALENTS
(équivalents tarifaires)

All the protection measures applied at borders (variable levies,
compensatory taxes) were transformed into fixed customs duties,
known as tariff equivalents. (see items 79 and 83 in part B)

79.

TARIFFICATION
(tarification)

All the protective measures at frontiers
have been converted into fixed customs
duties known as tariff equivalents. These
equivalents are being reduced by 36%
between 1995 and 2000. This rate of
reduction is the mathematical average of
all the tariff equivalents, but the
reduction is modulated for each product.

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80.

TOBACCO PREMIUMS
(primes de tabac)

CAP Glossary

The reference period is 1996-1998.

For cereals a special capping mechanism on tariffs was established to
avoid the level of protection exceeding the 1995 level. The entry price
level can thus not exceed 155% of the Community intervention price at
a given moment (in relation to the  protection which existed in 1995: an
intervention price of ecu 100/tonne and a threshold price of ecu
155/tonne). A fixed reference price is thus being recreated based on a
certain cif price of the product imported, which is similar to the old
threshold prices. This is where the safeguard clause applies ( see item 70
in Part B).

There is a special mechanism for fruit and vegetables. The tariff
equivalent is applied in steps, with a large step as soon as the  cif price
deviates more than 8% in relation to the entry price. It is intended to
discourage third country exporters from offering products at prices that
are too low. This system does not apply to imports of products where
the price is not fixed on their entry into the European Union but only
when they are sold to the final purchaser. For three products the
European Union has not considered it useful to set an entry price:
aubergines, round head lettuce and broad-leaf endive. Imports of these
three products are subject to standard customs duties.

The reform of the COM (Cf Council Regulation (EC) No 1636/98, 20
July 1998; OJ L 210, 28.7.1998, p.23) in the raw tobacco sector was
far-reaching, with measures to encourage the production of better
quality tobacco, to take greater account of environmental protection, to
contribute to research into the least harmful qualities of tobacco, to
enable producers to switch production and to strengthen controls in the
sector.

With effect from the 1999 harvest a
system of premiums has been applied,
with the amount fixed for the 8 varieties
cultivated in the Community (flue-cured,
light air-cured, dark air-cured, fire-
cured, sun-cured, basmas, katerini and
kaba koulak). For the amounts of these
premiums see Council Regulation (EC)
No 660/1999 of 22 March 1999; OJ L 83,
27.3.1999, p.10.

A supplementary amount is granted for flue-cured, light air-cured and
dark air-cured tobaccos cultivated in Germany, Belgium, France and
Austria. This amount is equivalent to 65% of the difference between the
premium granted for tobacco and the premium applicable for the 1992
harvest.

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81. WITHDRAWAL OF

ARABLE LAND (SET-
ASIDE) (retrait des terres
arables (‘gel des terres’)

CAP Glossary

The premium includes a fixed part, a variable part and a specific aid.
The variable part accounts for 30 to 45% of the total premium and may
be adjusted within this range in relation to the  varietal group and the
Member State. This part will become effective gradually up to the 2001
harvest.

The fixed part is paid either to the producer group, which redistributes it
to each member of the group, or to each individual producer who is not
a member of a group.

The specific aid is granted to the producer group and may not exceed
2% of the total premium.

Defined as setting aside a given
percentage of an area on which cereals,
oilseeds and protein crops (COP area)
were grown for harvest the previous
year. This scheme is compulsory for
producers who request direct aid under
the general scheme. It thus does not apply
to the small producers (of less than 92
tonnes). The scheme provides for the
withdrawal of 10% of land for the
period 2000/2001 to 2006/2007. The land
left fallow is subject to rotation.
For voluntary set-aside of up to five years the maximum limit of the
area which can be set aside per holding may be fixed at national level,
with a minimum of 10% of arable land. Small producers may make use
of this withdrawal of arable land.

Set aside applies to the whole of the
reference area (and not for each crop
taken separately) and is eligible for a
compensatory payment of EUR 63/ha
with effect from the 2000/2001
marketing year.

The set aside requirement does not apply to areas which, until 31
December 1991, were woodland, pasture, permanent crops or crops
intended for non-food production. The hectares set aside may be used to
produce a non-food crop (human or animal).
If there is an overshoot on the national COP area each farmer will have
the COP area he has declared for the purpose of receiving aid reduced
by the same percentage as the overshoot. The percentage will be added
to the set-aside rate the next year without any compensation.

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CAP Glossary

Member States have the possibility of granting a national aid
representing up to 50% of the costs associated with the establishment of
multiannual crops for the production of biomass on land set aside.

Note: in the oilseeds sector, because of the agriculture agreement in the
Marrakesh Treaty which takes over from the GATT agreements, a
ceiling on the area sown was set at 4.9 million hectares (penalties
applied to production aid should there be an overshoot). Production for
non-food use of oilseeds grown on set-aside land is limited to 1 million
tonnes soya cake equivalent.

82. WORLD MARKET PRICE

(prix de marché mondial)

Calculated by the Commission on the basis of objective data. It is used
to calculate certain production aids (cotton, dry fodder, etc.) or export
refunds.

83. WORLD TRADE

ORGANISATION (WTO)
(organisation mondiale de
commerce (OMC))

The World Trade Organisation (WTO)
stemmed from the multilateral
negotiations known as the Uruguay
Round. The agreement setting up the
WTO was signed in Marrakesh on 15
April 1994 and entered  into force on 1
January 1995. It is being implemented
for agriculture between 1995 and 2000
and includes:

I. The agriculture agreement, which has several sections:

? Access to the market:

-  Tariffication: variable levies are transformed into fixed customs

duties known as tariff equivalents. These are being reduced by 36%
on average and by a minimum of 15% between 1995 and 2000, on
the basis of data for 1986-1988. For cereals a provision was
included that the gap between the import price at the frontier and
the intervention price should not exceed 55% of the intervention
price. This section of the treaty is very important as the  external
protection at frontiers determines the European Union’s margin for
manoeuvre in its price policy.

-  Minimum access: the signatory countries must open a tariff quota

at a reduced rate of duty for amounts representing at least 3% of
domestic consumption in 1995 and 5% in 2000 for each product
sector. (see item 51 in Part B)

-  Current access: the tariff concessions for imports already granted
prior to the entry into force of the agreement are maintained. (see
item 51 in Part B)

-  The safeguard clause, with additional duty, is introduced where the

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CAP Glossary

amounts imported exceed a certain level or where there is a drop in
import prices. (see item 70 of Part B)

-  The consultation clause: this clause, which is used where

Community imports of cereals substitute products increase, has
been improved. A mutually satisfactory solution must be found
when there is an increase in imports of cereal substitute products
by comparison with average imports for 1990-1992.

? Subsidised exports:

They must be reduced by 36% in value and 21% in volume by
comparison with the 1986-1990 reference period (a more recent
reference period, 1991-1992, is authorised for certain products). The
reductions are spread over a six year period from 1995 to 2000. They
are carried out year by year and category by category (grouped in 20
categories of agricultural products). Commitments made with regard to
volume are more binding than those with regard to value in view of the
reductions in support in the Community following the CAP reform.

?  Internal support:

- Global support (expressed solely in terms of price): internal aid for
agriculture calculated in the form of global support measures must be
reduced by 20% by comparison with the reference period 1986-1988.

- Product support (expressed in terms of price and CAP aid): is kept at
its 1992 level. The aid is classified in three boxes. The green box covers
aid payments excluded from reduction commitments, insofar as they are
considered to have no effect on the volumes produced or traded, i.e.
they are totally decoupled from production. This box covers aid for
training, services to farmers, research, environmental protection and
food aid. The blue box groups aid payments linked to the reduction of
production and which, under certain conditions, are exempt from
reduction. This box includes aid granted under the reformed CAP, in
particular that for up to a maximum of 85% of basic production, that
granted for a fixed headage of cattle. The yellow box includes all other
aid payments which are reputed to have an effect on levels of
production and trade. Such aid is covered by the reduction
commitments.

For oilseeds there is a special agreement, the Blair House compromise,
concluded between the United States and the European Union in
November 1992 and which was then included in the  Marrakesh Treaty.
The European Union undertook to set a ceiling of 4.9 million hectares
on the production area for food use, with penalties applied on
production aid should that ceiling be exceeded, and to restrict its
production for non-food use on set-aside to 1 million tonnes equivalent
of soya cake.

II. Sanitary and phyto-sanitary agreement (SPS)

The agreement sets out the rights and obligations of states, as they
affect trade, on measures relating to the safety of food products, the
protection of animal health and the conservation of plants. It recognises
the right of governments to adopt measures to protect human health

54

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CAP Glossary

provided that these measures are based on scientific reasoning and do
not constitute a covert method of trade protectionism.

The agreement encourages governments to harmonise their national
legislations on the standards of international organisations such as the
Codex Alimentarius and the International  Epizootics Office.

III. Agreement on intellectual property

This agreement (Trade-Related Aspects of Intellectual Property Rights:
TRIPS) constitutes a multilateral framework for protection of
intellectual property which affects in particular designations of
geographical origin in the wines and spirits sector.

An outline of the basic characteristics of this truly international
organisation, which had 134 members on 10 February 1999, including
the European Union and its Member States individually appears below.

The WTO requires its members to comply with all obligations deriving
from the agreements concluded. (Unlike GATT, to which each member
country could belong on an à la carte basis).

To solve trade disputes, the system for dispute settlement has become a
quasi judicial mechanism which is automatic and binding and which
authorises trade retaliation spread across the economic sectors.

At present WTO members cannot object to a ruling by a special
arbitration group or the appellate  body as there must be consensus
among the members to object to the decisions of these bodies. In this
situation they must either amend their legislation or accept that they
will suffer retaliatory trade measures.

An agriculture committee was set up and constitutes a permanent
framework for the exchange of information and recommendations
between members on the trends in agriculture and agricultural policies
throughout the world.

For agriculture the move from GATT to the WTO was of fundamental
importance because of the monitoring of national agricultural policies
by an international body and the operation of the system of world
agricultural trade.

The WTO will remain in this form until November 1999 when the third
ministerial conference for the new WTO round of world trade
negotiations will start in Seattle, also known as the Millennium Round.

55

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Equivalents

English

French

Additional milk levy
Agri-monetary system
Aid for switching varieties
Aid for the use of concentrated
musts
Basic price
Budgetary neutrality
Buffer stock
Ceiling per holding
Community tobacco research
and information  fund
Compensatory taxes
Control agency
Conversion
Credit insurance
Cultivation registers
Deseasonalisation premium
Direct aid payments (previously
compensatory payments) for
reformed sectors
Distillation
Enlargement
Enrichment
Entry price
Euro
European model for agriculture
Export refunds
Extensification
Extensification payment

FADN
Food aid and specific actions 
to support food security
Free distribution of foodstuffs

Prélèvement supplémentaire laitier
Régime agri-monétaire

Aide à la reconversion variétale
Aide à l’utilisation de moûts concentrés

Prix de base
Neutralité budgétair
Stock régulateur
Plafond par exploitation
Fond communautaire de recherche
et de formation
Taxes compensatoires
Agence de contrôle
Reconversion
Garantie de crédit
Casiers des plantations
Prime à la desaisonalisation
Aides directes (avant paiements
compensatoires) au titre des secteurs
réformés
Distillation
Elargissement
Enrichissement
Prix d’entrée
Euro
Modèle agricole européen
Restitutions à l’exportation

Extensification

Prime à l’élevage extensif (ou prime à
l’extensification)
RICA
Aide alimentaire et actions spécifique
d’appui à la sécurité alimentaire

Distribution gratuite de denrées
alimentaires

Grading scale for carcases
Grubbing up premiums
Guide price
Guide price
Horizontal regulations
Import and export certificates
Individual base area

Grilles de classement des carcasses
Primes d’arrachage

Prix d’objectif
Prix d’orientation
Règlementation horizontale
Certificats d’importation et d’exportation
Surface de base individuelle

56

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Institutional prices
Intervention price
Inward processing traffic (IPT)
Market promotion premiums
(citrus fruit)
Marketing aids
Marketing years
Minimum guaranteed price
Modulation of aid
Monetary reserve
Monthly increases
National inventory
National reserve
Offer price free-at-frontier
(cif-price)
Organic farming
Pre-accession aid instruments
Preferential import quotas
Premium for young male bovine
animals (special premium)
Premiums for sheep and goats
Private storage
Processing aid
Producer groups
Production aid
Production levy
Production refunds
Products not covered by annex II
Promotion measures
Protective clause
Quality policy
Quality standards
Quantitative import restrictions
Regional base area
Regulatory import levy
Remnant regulation
Representative market price
Safeguard clause
Safety net
Simplified arable crops reform scheme

Slaughter premium
Stocking density limits
Storage levy
Suckler cow premium
Target price
Tariff equivalents
Tariffication
Tobacco premiums
Withdrawal of arable land (set-aside)
World market price
World Trade Organisation (WTO)

Prix institutionnels

Prix d’intervention
Trafic de perfectionnement actif (TPA)

Primes de pénétration (agrumes)

Aide à la commercialisation

Campagnes de commercialisation

Prix minimal garanti
Modulation des aides

Réserve monétaire

Majorations mensuelles
Inventaire national

Réserve nationale
Prix d’offre franco-frontière (prix caf)

Agriculture biologique

Instrument de l’aide de préadhésion

Contingents préférentiels à l’importation
Prime aux jeunes bovins mâles (ou prime
spéciale)

Primes des ovins et caprins

Stockage privé

Aides à la transformation

Groupements de producteurs
Aide à la production

Cotisation à la production

Restitutions à la production

Produits hors annexe II

Mesures de promotion

Clause de sauvegarde

Politique de qualité

Normes de qualité
Restrictions quantitatives à l’importation

Surface de base régionale

Prélèvement régulateur à l’importation
Règlement ‘solde’
Prix représentatif de marché

Clause de sauvegarde spéciale

Filet de sécurité

Régime simplifié de la réforme pour les cultures

arables
Prime à l’abattage

Limites de densité

Cotisation de stockage
Prime à la vache allaitante
Prix indicatif
Equivalents tarifaires
Tarification
Primes de tabac
Retrait des terres arables (‘gel des terres’)
Prix de marché mondial

Organisation Mondiale de Commerce (OMC)

57

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French

English

CAP Glossary

Agence de contrôle
Agriculture biologique
Aide alimentaire et actions spécifiques 
d’appui à la sécurité alimentaire
Aide à la commercialisation
Aide à la production
Aide à la reconversion variétale
Aide à la transformation
Aide à l’utilisation de moûts concentrés
Aides directes (avant paiements 
compensatoires) au titre des secteurs 
réformés
Campagnes de commercialisation
Casiers des plantations
Certificats d’importation et d’exportation
Clause de sauvegarde
Clause de sauvegarde spéciale
Contingents préférentiels à l’importation
Cotisation à la production
Cotisation de stockage
Distillation
Distribution gratuite de denrées alimentaires
Elargissement
Enrichissement
Equivalents tarifaires
Euro
Extensification 
Filet de sécurité
Fond communautaire de recherche et 
de formation
Garantie de crédit
Grilles de classement des carcasses
Groupements de producteurs
Instruments de l’aide de préadhésion
Inventaire national
Limites de densité
Majorations mensuelles
Mesure de promotion
Modèle agricole européen
Modulation des aides
Neutralité budgétaire
Normes de qualité
Organisation Mondiale de Commerce (OMC)
Plafond par exploitation
Politique de qualité
Prélèvement régulateur à l’importation
Prélèvement supplémentaire laitier
Prime à l’abattage
Prime à la desaisonalisation
Prime à l’élevage extensif (ou prime 
à l’extensification)
Prime à la vache allaitante
Prime aux jeunes bovins mâles 

Control agency

Organic farming
Food aid and specific actions
to support food security
Marketing aids
Production aid

Aid for switching varieties
Processing aid
Aid for the use of concentrated musts
Direct aid payments (previously

compensatory payments) for

reformed sectors
Marketing years
Cultivation registers
Import and export certificates

Protective clause
Safeguard clause
Preferential import quotas
Production levy
Storage levy

Distillation
Free distribution of foodstuffs
Enlargement

Enrichment

Tariff equivalents
Euro

Extensification
Safety net
Community tobacco research and
information fund

Credit insurance
Grading scale for carcases
Producer groups
Pre-accession aid instruments
National inventory
Stocking density limits

Monthly increases

Promotion measures

European model for agriculture

Modulation of aid
Budgetary neutrality
Quality standards
World Trade Organisation (WTO
Ceiling per holding

Qualitiy policy
Regulatory import levy
Additional milk levy

Slaughter premium
Deseasonalisation premium
Extensification payment

Suckler cow premium
Premium for young male bovine

58

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CAP Glossary

(ou prime spéciale)
Prime d’arrachage
Primes de pénétration (agrumes)

Prime des ovins et caprins
Prime de tabac
Prix de base
Prix d’entrée
Prix d’intervention
Prix de marché mondial
Prix d’objectif
Prix d’offre franco-frontière (prix caf)
Prix d’orientation
Prix indicatif
Prix institutionnels
Prix minimal garanti
Prix représentatif de marché
Produits hors annexe II
Reconversion
Régime agri-monétaire
Régime simplifié de la réforme pour 
les cultures arables
Règlement ‘solde’
Règlementation horizontale
Réserve monétaire
Réserve nationale
Restitutions à l’exportation
Restitutions à la production
Restrictions quantitatives à l’importation
Retrait des terres arables (‘gel des terres’)
RICA
Stock régulateur
Stockage privé
Surface de base individuelle
Surface de base régionale
Tarification
Taxes compensatoires
Trafic de perfectionnement actif (TPA)

animals (special premium)
Grubbing up premiums

Market promotion premiums
(citrus fruit)
Premium for sheep and goats
Tobacco premiums
Basic price
Entry price
Intervention price

World market price

Guide price

Offer price free-at-frontier (cif-price)
Guide price

Target price
Institutional prices
Minimum guaranteed price
Representative market price

Products not covered by annex II

Conversion

Agri-monetary system

Simplified arable crops reform
scheme
Remnant regulation
Horizontal regulations
Monetary reserve

National reserve

Export refunds
Production refunds

Quantitative import restrictions
Withdrawal of arable land (set-aside)

FADN

Buffer stock

Private storage
Individual base area

Regional base area

Tariffication
Compensatory taxes

Inward processing traffic (IPT)

59

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CAP Glossary

ANNEXES

60

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ANNEX I: FINANCIAL PERSPECTIVE FOR THE EU - 15

In millions EUR - 1999 prices - Commitment appropriations

2000

2001

2002

2003

2004

2005

2006 Total 2000/2006 %2000/2006 %1999

AGRICULTURE 

CAP expenditure 

40920

42800

43900

43770

42760

41930

41660

36620

38480

39570

39430

38410

37570

37290

Rural development/accompanying 

4300

4320

4330

4340

4350

4360

4370

measures/veterinary measures

STRUCTURAL OPERATIONS

32045

31455

30865

30285

29595

25959

29170

Structural funds

Cohesion fund

INTERNAL POLICIES

EXTERNAL ACTION

ADMINISTRATION

PRE-ACCESSION AID

Pre-accession structural instruments

PHARE (applicant countries)

29430

28840

28250

27670

27080

27080

26660

2615

5900

4550

4560

900

3120

520

1040

1560

2615

5950

4560

4600

900

3120

520

1040

1560

2615

6000

4570

4700

650

3120

520

1040

1560

2615

6050

4580

4800

400

3120

520

1040

1560

2515

6100

4590

4900

400

3120

520

1040

1560

2515

6150

4600

5000

400

3120

520

1040

1560

2510

6200

4610

5100

400

3120

520

1040

1560

TOTAL COMMITMENT APPROP.

91995

93385

93805

93005

91465

90795

90260

TOTAL PAYMENT APPROPRIATIONS

89590

91070

94130

94740

91720

89910

89310

Payment appropriations as % of GNP

1.13% 1.12% 1.13% 1.11% 1.05% 1.00% 0.97%

297740

267370

30370

209374

195010

18000

42350

32060

33660

4050

21840

3640

7280

10920

644710

640470

AVAILABLE FOR ACCESSION (Payment 

4140

6710

8890

11440

14220

45400

Other expenditure

1600

2540

2030

4680

2450

6640

2930

8510

3400

10820

12410

33190

CEILING ON PAYMENT APPROP.

89590

91070

98270

101450 100610 101350 103530

685870

46.20%

45.10%

33.00%

30.00%

35.70%

32.70%

3.00%

6.50%

5.00%

5.20%

0.60%

3.40%

0.60%

1.10%

1.70%

100

3.00%

6.40%

5.60%

4.70%

1.20%

1.30%

1.30%

100

Ceiling on payment approp. as % GNP
                                                              61                                                                 PE 168.468
Contingency margin 

0.14% 0.15% 0.09% 0.08% 0.12% 0.14% 0.14%

1.13% 1.12% 1.18% 1.19% 1.15% 1.13% 1.13%

Own-resources ceiling.

1.27% 1.27% 1.27% 1.27% 1.27% 1.27% 1.27%

Source: EC Commission and original work

ANNEX II: FINANCIAL PERSPECTIVE FOR THE EU - 21

In millions EUR - 1999 prices - commitment appropriations

2000

2001

2002

2003

2004

2005

2006 Total 2000/2006

AGRICULTURE 

CAP expenditure

40920

42800

43900

43770

42760

41930

41660

36620

38480

39570

39430

38410

37570

37290

Rural development/accompanying

4300

4320

4330

4340

4350

4360

4370

measures/veterinary measures

STRUCTURAL OPERATIONS

32045

31455

30865

30285

29595

25959

29170

Structural funds

Cohesion funds

INTERNAL POLICIES

EXTERNAL ACTION

ADMINISTRATION

PRE-ACCESSION AID

Pre-accession structural instruments

PHARE (applicant countries)

ENLARGEMENT

Structural activities

Internal policies

Administration

29430

28840

28250

27670

27080

27080

26660

2615

5900

4550

4560

900

3120

520

1040

1560

2615

5950

4560

4600

900

3120

520

1040

1560

2615

6000

4570

4700

650

3120

520

1040

1560

6450

1600

3750

730

370

2615

6050

4580

4800

400

3120

520

1040

1560

9030

2030

5830

760

410

2515

6100

4590

4900

400

3120

520

1040

1560

2515

6150

4600

5000

400

3120

520

1040

1560

2510

6200

4610

5100

400

3120

520

1040

1560

11610

14200

16780

2450

7920

790

450

2930

3400

10000

12080

820

450

850

450

TOTAL COMMITMENT APPROP.

91995

93385

100255 102035 103075 104995 107040

TOTAL PAYMENT APPROPRIATIONS

89590

91070

98270

101450 100610 101350 103530

of which: enlargement

4140

6710

8890

1440

14210

Payment appropriations as % of GNP

1.13% 1.12% 1.14% 1.15% 1.11% 1.09% 1.09%

                                                              62                                                                 PE 168.468
Contingency margin

0.14% 0.15% 0.13% 0.12% 0.16% 0.18% 0.18%

Own resources ceiling

1.27% 1.27% 1.27% 1.27% 1.27% 1.27% 1.27%

Source: EC Commission and own work

297740

267370

30370

209374

195010

18000

42350

32060

33660

4050

21840

3640

7280

10920

58070

12410

39580

3950

2130

702780

685870

35390

CAP Glossary

PE 168.468

CAP Glossary

BIBLIOGRAPHY

European Parliament :

- Fact sheets on the European Parliament and the activities of the European Union, Directorate-
General for research of the European Parliament (PE 162.500).

- "La politique agricole commune et l’Euro", Working document of the European Parliament’s
Directorate-General for Research,  Agriculture, Fisheries and Forestry Series, AGRI 105 FR.

- "Consecuencias del acuerdo en la Ronda Uruguay del GATT para el sector agrario en la Union
Europea", Working document of the European Parliament’s Directorate-General for Research,
Agriculture, Fisheries and  Forestry Series, E-6.

- "La reforma de la Política Agricola Común de 1992. Las decisiones del Consejo de mayo de
1992 y de junio de 1993", Working document of the European Parliament’s Directorate-General
for Research , Agriculture, Fisheries and Forestry Series, W-12-parts I and II.

- Agricultural negotiations in the Uruguay Round of GATT, Working document of the European
Parliament’s Directorate-General for Research, Agriculture, Fisheries and Forestry Series, W-6
Part II.

European Commission :

- "Agenda 2000" - "For a stronger and  wider Union" - and - "The challenge of enlargement" -
COM(97) 2000 final Vol I and Vol II.

- Directorate-General for Agriculture of the Commission of the European Communities:

Campagne 1996-1997 pour les suivantes secteurs:Huile d'olive; Cultures arables; Sucre;
Tabac; Vin; Fruits et légumes; Viandes; Lait, Cahiers de la PAC.
Hors-série: "Le régime agrimonétaire du marché unique" et "Le GATT et l'agriculture
européenne".

- Fact Sheets of the Commission of the European Communities:

 "La réforme du secteur du tabac"
 "Vers la réforme du secteur de l'huile d'olive"
 "L'euro et la réforme du régime agrimonétaire".

- Newsletters of the Commission of the European Communities:

Nos:  2, 5, 6, 8, 9, 10 ( March 1999 Berlin European Council) and special issue, Agriculture
Council, Agenda 2000.

- Proposal from the Commission of the European Communities concerning the fixing of
agricultural prices (1999/2000). COM(1999)38 final.

- Proposals for Council Regulations (CE) concerning the reform of the common agricultural
policy. COM(1998)158 final.

PE 168.468

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-  1997 report on the agricultural situation in  the European Union, Commission of the European

Communities.

Other sources :

- Agra-Europe, Hebdomadaire de l'agence d'information agro-économique Agra Presse.

- Dicopac, "Le guide de la nouvelle Europe Verte", Agra-Europe, 1992.

- Carrau, J.G. "El  régimen agromonetario del euro",  Revista Valenciana d'estudis autonòmics, no
26, 1999, pages 163-179.

- "La agenda 2000. Reforma y ampliación de la Unión Europea", Revista ICE (Información
Comercial Española), no 776, Fevrier 1999.

- Loyat, J. et Petit, Y.  "La politique agricole commune (PAC)", Collection réflexe Europe,. ed.la
documentation Française, 1999.

- Marre, Beatrice "La PAC en quête de nouvelles missions", Assemblée Nationale,Delegation
pour l'Union europénne, Rapport d'information, no 1247, 1998.

- Massot Martí, Albert, La Política Agrícola Común, 1999.

- Chambres d'Agriculture, no 876, avril 1999.

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