CELEX: 51995PC0405
Language: en
Date: 1995-07-19
Title: Proposal for a COUNCIL REGULATION (EC) determining the standard quality of rice

it**     COMMISSION OF THE EUROPEAN COMMUNITIES
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                                             Brussels, 19.07.1995
                                             COM(95) 405 final
                              Proposal for a
                    COUNCIL REGULATION (EC)
                determining the standard quality of rice
                     (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                 Explanatory Memorandum
1.        Introduction
The Community market in rice is structured around two main types of rice, japonica and
indica, corresponding to two separate consumption traditions.
The outlook for the development of rice-growing depended to a large extent on this dual
structure.
Present market equilibria are satisfactory on the whole. The moderate increase in area in
certain Member States has been offset by a decline in output due to increasingly frequent
drought.
The structural surplus in japonica rice either finds outlets in the traditional neighbouring
 markets around the Mediterranean, or is used to meet the Community's food aid
 commitments. Community production of indica rice has enabled the processing industry
 to take advantage of having different supply sources for raw materials.
 The obligations resulting from the GATT Agreement imply, first of all, changing from
 a system of floor prices based on the threshold price to a system of ceiling prices
 superimposed on the system of customs duties resulting from tarification of the former
 system of variable levies. Moreover, these duties will be gradually cut by 36% from 1995
 to 2000.
 The GATT Agreement raises a new challenge for Europeanrice-growing,brought directly
 face to face with competition and the uncertainties of the world market, both at the level
 of agricultural production and at that of the industrial processing of paddy rice into milled
  rice.
  The Commission believes that, in view of the further need to avoid any distortion of
  competition as a result of the new system for cereals introduced in 1992, the response to
  this new situation should be sought mainly through a substantial drop in producer prices,
  which should be accompanied by measures to restore competitiveness, in terms of quality,
  in relation to the imported product. Moreover, the Community market will have to face
  wider cyclical variations in price; consequently, the intervention mechanism, in its present
  form, is no longer compatible with the probable new scenarios. It should be reformed to
  provide more flexible management tools and ensure increased market fluidity.
  2.       Fall in producer prices
  The outlook for new market equilibria, in terms of prices, gives rise to a multitude of
   possible scenarios, which make it impossible to evaluate the extent of the price reduction
   needed to meet competition from the imported product as duties are cut pursuant to the
   GATT Agreement. The Commission estimates that prices will have to fall by between
   15% (ECU 53/t) and 34% (ECU 119/t). At this stage, it is pointless and unnecessary to
   determine a priori the level of the eventual price cut. Consequently, the best approach
   is to choose to keep to a minimum target of 15%, subject to market developments and
   trends, especially in terms of prices and sales into intervention if any.
                                          I
 ---pagebreak--- 3.        Compensatory aid
The reduction in producer prices will alter the profitability of the crop. Arrangements
should therefore be introduced for compensatory production aid with a view to
maintaining present income levels. The amount of aid is fixed on the basis of agricultural
yields observed in the various Member States and the size of the price reduction.
For the establishment of basic yields, it is proposed that reference should be made to the
three-year period 1992-94, except in the cases of Spain and Portugal for which the more
representative period of the last three years preceding the drought (1989-91 for Portugal
and 1990-92 for Spain) should be used.
Average yields in tonnes/ha:
       Italy       Portugal         Spain          Greece        France        French
                                                                               Guiana
       5.82          4.74           6.35            7.48          5.29          7.41
4.        Maximum guaranteed area
In view of the introduction of this area-linked compensatory aid scheme, a maximum
guaranteed area should be fixed to maintain production targets compatible with the needs
 of the market and to comply with the commitments undertaken in the framework of the
 GATT Agreement regarding trade exports.
 It is proposed to set the maximum area on the basis of the three-year period 1992-94,
 except in the cases of Spain and Portugal for which the more representative period of the
 last three years preceding the drought (1989-91 for Portugal and 1990-92 for Spain)
 should be used.
 Average area in ha:
       EU         Italy      Portugal        Spain       Greece      France      French
                                                                                 Guiana
    396 607      228 034      32 884        89 711       18 731      23 500       3 747
 Compliance with the maximum area should be ensured by reducing the aid sharply
 enough to obtain a disincentive effect upon producers. If the Community maximum
 guaranteed area (CMGA) is exceeded by up to 5% in a given crop year, the amount of
 compensatory aid for the current crop year will be cut by 6 points for each percentage
  point of overshooting.
                                          3
 ---pagebreak--- If the area given over to rice exceeds 105% of the CMGA, aid will be cut further in
the Member States responsible for exceeding their national maximum guaranteed area
(NMGA) by more than 5%.
5.       Quality policy
The market mechanisms devised when the common organization of the market in rice was
set up have not been substantially modified since their adoption.
Innovations in the arrangements for trade with third countries introduced pursuant to the
GATT Agreement have led the Commission to give serious consideration to the
compatibility of certain market management measures, in particular intervention, with
trade arrangements that are no longer based on a system of levies, but on a fixed customs
 duty, which by its nature cannot absorb changes in world prices or fluctuations in
 currency exchange rates as the levy could.
 Account must also be taken of the need to reform the common organization of the
 market on the basis of stricter quality criteria. In other words, the Commission takes the
 view that Community rice growing must adopt a strategy for a gradual improvement in
 the quality of output. As demand is moving towards products with a very high level of
 quality and an advanced technology content, and as imported products compete primarily
 at the top of the range, the competitiveness of the Community product needs to be
 restored. The entire rice production sector, from the farmer to the processor, is concerned
 by this challenge.
 From this point of view, the Commission feels that it is necessary to make proposals that
 can result in production of paddy rice of a quality matching the supply needs of a
 processing industry which now has direct access to third country products.
 The parameters for defining the standard intervention quality should be reinforced to align
 them on the production standards of the third countries that export to the Community
 market.
 Premiums and penalties applied to the intervention price when the product is taken over
  should play a greater role in market regulation, reflecting and even accentuating the price
  differentials for different qualities and varieties of rice.
 Demand for rice on the Community market is structured by variety. However, mainly
  because there is no differentiated support for different varieties, Community production
  has concentrated on the most productive varieties rather than the varieties for which
  market demand is strongest. The Commission believes that certain varieties should be
  encouraged; to this end, it proposes correction factors based on the yield of the various
  varieties compared with the most productive variety.
  The Commission also feels that the compensatory aid scheme should be used as an
  incentive to the production of certain varieties, in a manner consistent with a quality
  strategy more closely tailored to market demand.
                                            V
 ---pagebreak--- 6.      Precautionary intervention
Since the common organization of the market was introduced, intervention has been used
only in exceptional cases and for small quantities, in 1990, 1991 and 1992. Intervention
should remain an exceptional event, what has been called a "safety net." In the rice
sector, it is very expensive to take over intervention stocks and, as the product is liable
to rapid deterioration, storage may be difficult.
As already pointed out, the market will be exposed to the uncertainties of the world
market; it is to be expected that massive intervention will be needed, in view of the
volatility not only of the world market, but also, and especially, of the Community
market.
The Commission does not think that the intervention mechanism as at present designed
is compatible with the new arrangements for trade with third countries: short-term
developments on the world market could have repercussions on the internal market that
would lead to the buying in of a considerable volume of rice.
To avoid having to take large quantities into intervention in this type of situation, the
Commission proposes the introduction of a precautionary intervention scheme, under
which the producer stores the product for four months, at his own expense, subject to an
 advance payment equal to 60% of the price. During this period the producer may seek
 a more advantageous outlet on the market, and sell the product after informing the
 intervention agency. During the same period, the Commission may, for its part, offer the
 product in precautionary intervention for sale, according to the rules already laid down
 for sale under an intervention scheme. Actual removal to the warehouses of the
 intervention agency, taking over and, obviously, payment of the balance, would be
 possible only where the rice had already been in precautionary intervention.
 This scheme would make for compatibility between the intervention arrangements and the
 cyclical and short-term development of the world market.
 7.      Changes to intervention arrangements
 The Commission reserves the right to propose other measures, pursuant to the so-called
 management committee procedure, with a view to restoring intervention as a safety net
  and an exceptional occurrence. These measures intended as disincentives to intervention
  would also aim at improving the fluidity of the market.
  It would be proposed:
          that where products were brought under precautionary intervention arrangements
          or removed to the warehouses of the intervention agency a period of four months
          should be allowed for payment;
          that the intervention period should be limited to four months (May to August).
                                          r
 ---pagebreak--- When reforming the common organization of the market in rice, it is appropriate
to adjust the Community rules and remove certain obsolete arrangements that in
some cases have never been applied.
                               ê
 ---pagebreak---                                     (//& proposal for a
                              COUNCIL REGULATION (1ÏC)
                           determining the standard quality of rice
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EEC) No 1418/76 of 21 June 1976 on the common
organization of the market in rice, and in particular Article 3(1) thereof,
I laving regard to the proposal from the Commission,
Whereas the intervention price for paddy rice should correspond to a specific standard quality;
whereas that quality is determined by Council Regulation (EEC) No 1423/76 of 21 June 1976
determining standard qualities for rice and broken rice ;
Whereas, with regard to quality, trends in demand for rice on the Community market as well
as the guidelines followed in the reform of the common organization of the market make it
appropriate to re-determine the standard quality taking account of both the quality
characteristics of Community production and the most representative qualities of imported
rice; whereas it follows from those factors as well as other factors in the reform of the
common organization of the market that requirements should be made more stringent and the
system provided for by the above-mentioned Regulation should be replaced;
HAS ADOPTED THIS REGULATION:
       OJNoL 166, 25.6.1976, p. 20.
 ---pagebreak---                                           Article 1
The standard quality of paddy rice for which the intervention price is fixed shall be defined
as follows:
(a)   rice of a sound and fair marketable quality, free of odour;
(b)   moisture content: 15%;
(c)   yield of wholly milled rice:
           72% by weight of the total yield;
           63% by weight in whole grains (with a tolerance of 3% of clipped grains) of which
           a percentage by weight of wholly milled rice grains which are not of unimpaired
           quality:
           -  chalky grains:             1.5%
           -  grains striated with red:  3%
           -  spotted grains:            0.5%
           -  stained grains:            0.25%
           -  yellow grains:             0.02%
           -  amber grains:              0.05%.
                                          Article 2
For the purposes of this Regulation, the definition of grains which are not of unimpaired
quality shall be as shown in the Annex.
  J
                                          Article 3
 Regulation (EEC) No 1423/76 is hereby repealed. References to Regulation (EEC) No
 1423/76 should be taken as references to this Regulation.
 ---pagebreak---                                            Article 4
This Regulation shall enter into force on 1 September 1996.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
                                        °)
 ---pagebreak---                                                  ANNEX
           Definition of nrain. and broken grains which are not of unimpaired quality
A. Whole grains:
     Grains from which only part of the end has been removed, irrespective of characteristics
  . produced at each stage of milting.
B. Clipped grains                                                                                   ':'
     Grains from which the entire end has been removed.
 C proken grains or broken rice:
   ' Grains from which a part of the volume greater than the end has been removed ; broken grains
      include:
     — large broken grains (pieces of grain of a length not less than half chat of a grain, but not
          constituting a complete grain); '.
      — medium broken grains (pieces of grain of a length not less than a quarter of theiength
          of a grain but which are smaller than the minimum she of large broken grains*);
      — fine broken grains (pieces of grain less dun a quarter of the size of a grain but too large
          to pass through a sieve with a mesh of 1*4 mm);
      — fragments (small pieces or panicles of grain which can pass through a sieve with a mesh
          of 1*4 mm); split grains (pieces produced by « longitudinal splk in the grain) come under
          this definition.
 O. Green grains:
       Grains which are not fully ripened.
' E. Grains showing natural malformation:
       Natural malformation means malformation, whether or not of hereditary origin, as compxrrd
       with the morphological characteristics typical of the variety.
  F. Chalky grains:
       Grains at least three-quarters of thé surface of which looks opaque and chalky.
  G. Grains striated with red:'
       Grain* showing longitudinal red srriarions of differing intensity-and shades, due to residues
       from the pericarp.
  H. Spotted grains:
       Grains showing a well-defined small circle of dark colour of more or less regular shape:
       spotted grains also mdude those which show slight bled: «mations on the surface only;
        the ttriatiofu and spot* must not show * yellow or dark aureole.
 'X Stained grains:
        Grains which have undergone, on a small area of their surface, an obvious casings ira'thar
        natural colour; the stains may he of different colours (blackish; seddish» brown); deep black
      . striations m also to bs regarded as stains. If the* colour of the stains -is_ Wnoemiy marked/
        (black, pin's, geddish-orown) f$ be immediately visible and if they cover an area $m I©» thm
        half that of the orsin, the grains must he ccoskWd to be yellow grains
J„. Yellow grains:
     Ydlow grains are those which have undergone, totally or partially,, otherwise than by ftying
     a change in their natural colour and havetaken on a lemon or change-yellow tone.
K. Amber grains:
    Amber gr«ns are those which have ot«Jergo«e, otn«rwse d u n by Aying, a d i c k US^-^CT
    chans£ m colour over the whole surface; this chatige sJcen rfe cokra of the grains to a 1 ^
   ' amber^yeuow.
                                                10
 ---pagebreak---                                                                   ISSN 0254-1475
                                                            COM(95) 405 final
                                              DOCUMENTS
EN                                                                            03
                                     Catalogue number : CB-CO-95-444-EN-C
                                                             ISBN 92-77-92837-9
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