CELEX: 51978PC0035
Language: en
Date: 1978-02-03
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 2305/70 on the financing of intervention expenditure in respect of domestic market in beef and veal (submitted to the Council by the Commission)

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COM (78) 35
Vol. 1978/0014
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUN1TIE
                                               COM(78)35 final
                                              Brussels , 3 February 1978
                                Proposal for a .
                            COUNCIL REGULATION   ( EEC )
             amending Regulation ( EEC ) No 2305 / 70 on the
             financing of intervention expenditure in respect
             of domestic market in beef and veal
               ( submitted to the Council by the Commission )
C0M ( 78 ) 35 final
 ---pagebreak---                       EXPLANATORY MEMORANDUM
Expenditure financed by the Guarantee Section of the EAGGF in respect
of the buying-in , storage and resale of agricultural products by the
intervention agencies , so-called second category intervention , are
presented in a financial account by agri cultural product on 31 December
of each year .
This balance sheet includes the valuation of end - of - year stocks .
In general ,, the valuation of end - of - year stocks is made on the basis of
the intervention price or of another price fixed within the common orga­
nization of markets and valid on the first day of the following financial
year , i.e. 1 January . However , 1 January 1978 also signals the final
stage of the alignment of agricultural prices in some new Member States .
Consequently , according to the rules in force , the intervention agencies
concerned must revalue the stocks to be carried forward to 1978 , wiiich
thereby gain in value . Of course , this gain will only materialize as
profit on resale , and meanwhile the funds tied up in the value of the
product are increased , resulting in higher interest costs . This pheno­
menon is of some importance in the beef and veal sector due to the size
of beef and veal stocks in Ireland .
 ---pagebreak--- Recently the Commission presented to the Council a Regulation laying
down general rules for the financing of intervention in respect of
buying-in „ storage and resale ( C0MC77 ) 723 ). To eliminate upvaluation
of stocks carried forward , this proposal provides that they be valued
at the buying-in price . However , it can only begin to apply with
respect to the stocks to be carried forward at the end of 1978 .
Consequently and ad hoc solution should be sought to deal with the
substantial upvaluation of end-1 977 carry-forward stocks in the beef
and veal sector and the consequential addition to interest charges
( see Financial Statement ). It is therefore proposed that the stocks
be valued at the prices valid on 31.12.1977 .
 ---pagebreak--- Proposal for a Council Regulation amending Regulation ( EEC ) N° 2305 / 70
on the financing of intervention expenditure in respect of the domestic
market in beef and veal
The Council of the European Communities ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to Council Regulation ( EEC ) N° 729/ 70 of 21 April 1970 on the
                                               1
financing of the common agricultural policy , as last amended by Regulation
( EEC) N° 2788/ 72^, and in particular Article 3 ( 2 ) thereof ,
Having regard to the proposal from the Commission ,
Whereas Council Regulation ( EEC ) N° 2305 / 70 of 10 November 1970 on the
financing of intervention expenditure in respect of the domestic market in
                3     .           . .    ...
beef and veal , as last amended by Regulation ( EEC ) N° 565 / 77 , provides
for intervention expenditure arising out of the buying-in , storage and
resale of the products in question to be determined by means of annual
accounts ; whereas these accounts include the value of the stocks to be
carried forward to the following year ;
Whereas the same Regulation provides that the value of the stocks to be
carried forward to the following year is to be determined on the basis of th
guide price valid on the first day of the following financial year ;
whereas this date coincides with the last alignment of prices provided for
in the Act of Accession , entailing an increase in value which is not rea­
 lized until the stocks in question are resold , but which has the effect of
 increasing the funds tied up in the value of the product from the beginning
of the financial year with a consequential addition to interest charges ;
   0J N° L 94 , 28.4.1970 , p. 13
 20J N° L 295 , 30.12.1972, p. 1
 30J N® L 249, 17.11.1970, p. 1
 40J N° L 72 , 19.3.1977, p. 3
 ---pagebreak---                                 - 2 -
Whereas , to prevent this situation arising , intervention agencies should
use the guide price valid on 3 ") * 1 2.1977 to calculate the value of the
stocks carried forward to the 1978 financial year ,
HAS ADOPTED THIS REGULATION :
                            Sole Article
The following subparagraph is added to Article 3 ( 1 ) ( a ) of Regulation ( EEC )
N° 2305 / 70 :
" However , for purposes of the account as of 31 „ 1 2 „ 1977 the Irish intervention
agency shall use the guide price valid on 31.12.1977 for the calculation
referred to above ",-
This Regulation shall be binding in its entirety and directly applicable in
all Member States .
Done at                                                  For the Council
                                                         The Président
 ---pagebreak---                        FINANCIAL              STATF.MFfIT                           r . m*i      " iw * u
                                                                                        date t  4.1.78
   1 . budget lxns concerned »       Article 651 - Item 6511
   2. action i         Proposal for a Council Regulation amending Regulation ( EEC ) N° 2305 / 70
       on the financing of intervention expenditure in respect of the domestic market                                                          i
       in beef and veal .
   3. legal basis :           Regulation ( EEC ) N° 729/ 70 - Article 3 ( 2 ).
  4. objectives :           To prevent a gain in value of end- of - year intervention stocks in the
      beef and veal sector owing to the final stage of alignment . of agricultural
      prices in the new Member States .
  5 . FINANCIAL CONSEQUENCE                     FOR THE KARKETINa YEAR            FINANCIAL YEAH          FOLLOhl »!3 j : :i AÎJCI AL YEAR
  5.0 EXPENDITURE                                                               LZZJ                              LJ.2 L
        -CHARGED TO THE EC BUDGET
          (x»»xj*/interve;/tiohs )                                             + 8                             - 8
        -CHAHGED TO NATIONAL ADMINISTO.      1)                                                                ~ 0,32
        ■KXATCCKDC 5KX STOCK XX'KXJMLXQRRUHB                                                                   - 8.32
 5.1 RGSBMflCX
        J0X.-X * Î*X>5M«£3C »K M» *«
         ΚΧΒΒβ Κί5ΤβΙΧ3«·Χ ΧΠϋΧίΕΒ Χ
       -ΝΧΚ&ΧΜ,
                                                                         YEAR                            YEAH
 5.0.1 pluma-vnual patterm cf expenditore the proposed measure concerns the 1977 and 1978
 5.1.1 koj*               MXMAX spc sgctzm                                                     financial years .
 5.2 METHOD OF CALCULATION
 Value of stocks to be carried forward calculated according to the                                                            206 Mu.a
                                                                                                                                     Mu .a .
 existing rules
 Value of stocks to be carried forward calculated according to the draft                                                      198
                                                                                                                              198 Mu.a
                                                                                                                                     Mu . a ..
 proposal
 Difference                                                                                                                       8 Mu.a .
 The proposed amendment has the effect of foregoing a gain in value on the end-of-
 year stock and thereby creates supplementary expenditure of 8 Mu.a . under the 1977
 Budget . On the other hand it will lead to a similar reduction in expenditure in re­
 lation to estimates at" the time of sale . In addition , for the 1978 Budget , the pro­
 posal will mean a reduction in interest charges on the funds tied up in the value
 o-f- tho goeda ■ On jiij.u.p^ i).a.l| (8 Mmat wfr-K w 0.5 )                 ■
6.0 FINANCING POSSIBLE WITH CREDITS INSCRIBED IN RELEVANT CHAPTER OF C0X0E8X BUDGET ?                                 YES/MÔ
6 .1                røse* sutxorx IMXATXX axwxatx bhutjesx M xsøxaeot xsaaocK *
6.2 JÈXOtX:»** * »*                     mXXX X?
6.3 CREDITS TO BE WRITTEN INTO FUTURE BUDGETS ?                                                                       YES/NO
COHŒNTS I
 1 ) Due to the fact that in the Member Sta-' concerned the rate of interest paid
        for the funds tied up in the value of '■.< ? goods significantly exceeds the 8 '/.
        financed by the EAGGF , the proposal wi I avoid national expenditure of about
        160 000 u.a .