CELEX: 51987PC0166
Language: en
Date: 1987-04-15
Title: PROPOSAL FOR A COUNCIL REGULATION (EEC) establishing a Community system of aids to agricultural income#PROPOSAL FOR A COUNCIL REGULATION (EEC) establishing a framework system for national aids to agricultural income#PROPOSAL FOR A COUNCIL REGULATION (EEC) establishing a Community scheme to encourage the cessation of farming#(submitted by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (87) 166
Vol. 1987/0096
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
lieu par le règlement (UE) 2015/496 du Conseil du 17 mars 2015 (JO L79 du 25. 3.2015, p. 1), ce
dossier est ouvert au public. Le cas échéant, les documents classifiés présents dans ce dossier
ont été déclassifiés conformément à l'article 5 dudit règlement ou sont considérés déclassifiés
conformément aux articles 26(3) et 59(2) de la décision (UE, Euratom) 2015/444 de la
Commission du 13 mars 2015 concernant les règles de sécurité aux fins de la protection des
informations classifiées de l'Union européenne.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as last amended by Council
Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
public. Where necessary, classified documents in this file have been declassified in conformity
with Article 5 of the aforementioned regulation or are considered declassified in conformity with
Articles (26.3) and 59(2) of the Commission Decision (EU, Euratom) 2015/444 of 13 March 2015
on the security rules for protecting EU classified information.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in diesem Akt in
Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben; beziehungsweise werden
sie auf Grundlage von Artikel 26(3) und 59(2) der Entscheidung der Kommission (EU, Euratom)
2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
 TEXTE PROVISOIRE                                              COM(87 ) 166 final
                                                               Brussels , 22 April 1987
                PROPOSAL FOR A COUNCIL REGULATION ( EEC )
                establishing a Community system of aids
                          to agricultural income
                PROPOSAL FOR A COUNCIL REGULATION ( EEC )
          establishing a framework system for national aids
                          to agricultural income
                PROPOSAL FOR A COUNCIL REGULATION ( EEC )
             establishing a Community scheme to encourage
                         the cessation of farming
                      ( submitted by the Commission )
                                                 12
                                                                  \
                                                                   V
 C0M(87 ) 166 final
                               If 2 7               éUriai
                                                           |1P
                                      Sorti du
                                            dû Secr«
                                               Sec'?
                                             Géncw*
                                        ooïz\&
 ---pagebreak---           Proposals concerning income aids in the agricultural sector
                        and incentives to cease farming
                                                                   page
1. Explanatory memorandum                                            1
2. Financial implications                                            6
3. Proposal for a Council Regulation setting up a
   Community system for income aids in agriculture                  17
4. Proposai for a Council Régulation setting out a
   framework for national aids to agricultural income               25
5. Proposal for a Council Regulation to set up a
   Community system of incentives to cease farming                  29
 ---pagebreak---                              Explanatory Memorandum
1.  In its Communication on the implementation of the Single European Act ("A
   new frontier for Europe " - COM(87 ) 100 final , 15 February 1987 ), the
   Commission outlined the general framework for the action it would be
   taking or continuing with a view to guiding and supporting the efforts to
   adjust to new conditions which the farming community now has to make . In
   this connection , it mentioned work being carried out to restore
   equilibrium on the agricultural markets , entailing a restrictive policy as
   regards prices , less rigid guarantees and intervention mechanisms , and
   fuller co-responsibility for farmers .
2. The Commission also made clear its awareness of the fact that the
   adjustments that have to be made to the CAP concern an industry which is
   in fact , in a Community of Twelve countries , extremely diversified :
   natural conditions and farm structures differ very widely , and these
   differences are also reflected in the widely varying contribution made by
   farming for local socio-economic equilibria . But the adjustments now
   being made are bound to impact more heavily on the economically and
   structurally weaker farms . Action taken by the Community must allow for
   this .
3. Accordingly , among the objectives of the schemes operated through the
   structural funds , the Commission has approved those of speeding up the
   adaptation of the structures of agricultural production and of encouraging
   rural development . In this context , specifically agricultural action is
   only one component of the overall Community effort : in so far as certain
   changes in the sector can be achieved only after an improvement in the
   economic environment as a whole , measures relating to a specific sector
   are underpinned by action taken using the Community 's "horizontal "
   instruments or policies .
4. As regards the means of action in the area of farm structures , the Council
   has just adopted a set of measures aimed mainly at encouraging the
   "extensif ication" of farming and at strengthening compensation provided
   for farmers who have to contend with hostile natural conditions in
   mountain and hill regions or less-favoured areas in which farming must
   continue if the environment is to be protected or regional development to
   be supported . These measures supplement and strengthen the machinery
   already available in this field .
5. More generally , in its Communication concerning the implementation of the
   Single European Act , the Commission emphasized the need to strengthen the
   action of the structural funds , to enhance their mutual consistency and to
   make the most of combined effects that can be obtained from more
   integrated approaches in Community action to promote cohesion and more
   harmonious development of the territory as a whole .
 ---pagebreak---                                         - 2 -
6. Action with regard to structures is the only kind of action which can get
   to the heart of the problem by gradually narrowing down certain
   disparities which are now a feature of Community agriculture ; but
   practical results can be obtained only in the medium and long term . Thus ,
   in order to ensure that the remedial action now being taken in the form of
   measures relating to the market should have a more balanced impact in the
   immediate future , the authorities have , in some cases , been compelled to
   approve direct compensation (buying back of milk quotas , beef /veal
   premiums , etc ) or to accommodate , by appropriate "modulations ", the more
   acurate problems in certain regions ( aids to small grain farmers , increase
   in the production aid for small olive oil growers and aid to durum wheat ,
   arrangements to allow for special problems certain countries have to
   contend with in determining the milk quotas , etc .). Obviously , however ,
   there are definite limits to an approach of this kind , which cannot be
   exceeded within a policy which must remain a common policy and which , as
   such , aims at the improved allocation of resources in terms of the
   comparative advantages enjoyed by each country and each region . Excessive
   action along these lines would also tend to inhibit the structural change
   and thus consolidate a situation which is already unsatisfactory , and , as
   a result , force the economies of certain regions further and further out
   of the Community mainstream .
7. In this context , the Commission takes the view that Community action would
   be all the more effective and consistent if it were also supported by
   instruments allowing direct and selective support of incomes .     Such
   instruments would allow of the support of the incomes of the economically
   weaker farmers , being those suffering most from the current adjustments to
   the markets , without this entailing incentives for all the farmers in
   given sectors or regions . The Community arrangements at present in force
   already authorize compensatory allowances , restricted to mountain and hill
   and less-favoured areas , a facility which has been strengthened by the
   Council 's recent decisions but which , so far , has been used to only a
   limited extent in most of the Member States . This facility concerns ,
   however , only part of the Community and the further extension of its scope
   is undesirable , since it could have a considerable impact on production :
   the compensatory allowance applies to all farmers regardless of their
   economic situation or situation as regards structures , and it is paid , at
   least within certain limits , on the basis of the farmer 's income ( LU and
   ha ). As for the scope for action at national level , income support aids
   are incompatible with the provisions of article 92 to 94 of the Treaty ,
   and are therefore prohibited . The political need for action in this field
   has , however , induced some Member States to find a way around this ban ,
   notably by using derogating Council decisions . The proliferation of
   initiatives along these lines , outside a framework defining , accurately ,
   at Community level , the limits and procedures for granting such aids ,
   would entail distortion in production and in trade and would be bound to
   hamper efforts to remedy the situation on the markets .
 ---pagebreak---                                          - 3 -
8.   Thus , the Commission is proposing the definition of a Community approach
      to income aids , which would have three separate but inter-related aspects :
     - a Community system for aids to farm incomes ;
     - a system providing a framework for national aids to farm incomes ;
     - a Community " pre-pension " system for farmers of 55 years and over .
9.   The relevant regulations would apply throughout the Community . But rates
     of EAGGF co-financing would be varied to balance the effort required in
     terms of regional , and even national , budgetary possibilities . The Member
     States would also enjoy some latitude in the choice , organization and
     intensity of action planned with a view to ensuring optimum effectiveness
     of resources granted at national level and at Community level , having due
     regard to specific local conditions . It is for the Member States to
     specify the arrangements they propose , which must be compatible with
     existing structures . Such latitude would also enable equilibrium to be
     ensured between measures relating to the markets , those affecting
     structures and those having a social character needed to adapt each
     regional agriculture to the new economic environment . Programmes drawn up
     by each Member State with a view to the implementation of the regulations ,
     which would include clear statements of the case , in social and economic
     terms , for the measures planned , would be implemented only after
     endorsement by the Commission .
10 . Th e purpose of a Community farm income aid system is to facilitate
     transition for "main occupation " farms placed in difficulties by current
     adjustments as regards the markets but which are in fact potentially
     viable . These are farms which , once equilibrium on the Community market
     has been restored , would be in a position to operate in economically
     satisfactory conditions . The scheme would be for five years only and the
     aid would be scaled down over that period . It would be co-financed from
     the Community budget , Community intervention being modulated to allow for
     uneven concentration of problems and the differing ability to pay of the
     various Member States .
11 . The purpose of providing a framework for national aids is in particular to
     achieve fuller knowledge and information as regards national income
     support schemes . The regulation defines the scope of action of the Member
     States by derogation from the provisions of Articles 92 to 94 of the
     Treaty . A very strict definition of potential beneficiaries and grant
     procedures for the aids should prevent inconsistencies between these
     national schemes and Community objectives , in particular as regards the
     effort to restore sound conditions on the markets : it is vital that
     farmers are not told one thing by one authority and the opposite by
     another . Thus , in this particular case , national action must be
     restricted to the social field , to avoid any significant impact on
     production .
 ---pagebreak---                                           - 4 -
12 . The introduction of a " pre-pension" system has two separate but mutually
     consistent objectives :
     - a social objective , being that of ensuring support in terms of incomes
        for a class of farmer - elderly farmers - hurt most by the crisis as
        they are less able to react and adapt their operations to changed market
        conditions ;
     and :
     - a contribution to restoring sound conditions on the market , where the
        " pre-pension " is combined with set-aside of land released ;
     or , alternatively ,
     - a contribution to the structural development of farms where land
        released by farmers taking the " pre-pension " would be assigned to the
        restructuring of farms which could , in this way , rise to the viability
        threshold .
     If the Member State decides to use this scheme , it can choose between the
     alternative " set-aside of released land " and the alternative "assignment
     to restructuring ", or make an arrangement offering both alternatives
     together , the beneficiary being free to choose . Where the " pre-pension "
     is combined with set-aside of land , EAGGF co-financing is uniform for the
     whole of the Community ; where the " pre-pension " is combined with
     restructuring , co-financing is modulated on the basis of levels of
     development and the proportion of farmers and farm workers in the region .
13 . The proposals on income aids and the " pre-pension" constitute an
     inter-related whole , balanced with action being taken at Community level
     as regards prices and markets with a view to achieving better equilibrium
     between supply and demand in agriculture . This overall cohesion and
     equilibrium must be ensured at all times during the adoption and
     implementation of the various measures in the various fields . Cohesion
     and equilibrium are also among the criteria which will be referred to by
     the Commision when assessing the programmes established by the Member
     States under the regulations proposed concerning aids to farm incomes .
 ---pagebreak---                              Aids to incomes and " pre-pension "
             ( Target and relationship with schems already being operated )
       Measures contemplated or in force (-) and direct or indirect effects of
          measures in question (*) from which the group concerned benefits
 Group of farms      Measures financed by     Measures involving Community co-financing
 referred to         the Member States        ( sometimes restricted to certain areas )
                     alone
 Viable farms                                 - "pre-pension" ( farmers of 55 years and
                                                 more ), but only if accompanied by set-
                                                 aside of land released ,
                                              – certain structural measures already in
                                                  force ( including measures to assist
                                                 mountain and hill and less-favoured
                                                 areas , "extensif ication " . )
                                              * indirect effect on the market due to the
                                                 reduction in production potential ( land
                                                 set aside in connection with the " pre¬
                                                 pension")
 Intermediate farms                          - Community income aid system
 ( potentially viable )
                                             - all structural measures already in force
                                                  ( this group of farms is the particular
                                                 target of conventional structual schemes )
                                             - "pre-pension" ( farmers of 55 years and
                                                 more ), with set aside and / or restructur¬
                                                 ing of land
                                             * restructuring ( on the basis of land
                                                 released under " pre-pension " scheme )
                                             * indirect effect on the market due to a
                                                 reduction in production potential ( land
                                                 set aside in connection with the "pre¬
                                                 pension")
""Social
   Social problem" - National aids           - "pre-pension" ( farmers of 55 years and
farms                  ( framework system )      more ) with set aside and /or restructur­
                                                 ing land
                                             - certain structural measures already in
                                                 force ( in paticular , measures for mountain
                                                 and hill and less-favoured areas )
                                             - action under the "horizontal " structural
                                                 funds ( ERDF , Social Fund , EIB , NCI ...)
                                             * restructuring ( thanks to land released in
                                                 connection with the "pre-pension" provided
                                                 that in this way it becomes viable )
                                             * indirect effect on the market due to a
                                                 reduction in production potential ( land
                                                set aside in connection with the "pre¬
                                                pension ")
 ---pagebreak---                                                  - 6 -                        ( PECO-317 )
         FINANCIAL              STATEMENT                    :-
         concerning a proposal for a Council Regulation establishing a Community system
         of income aids in agriculture
1 . Budget heading :     III B                     Title : to be determined
                                                           EAGGF , Guarantee Section
2 . Legal basis : Articles 42 and 43 of the Treaty
3 . Classification : Compulsory expenditure
                      ( EAGGF , Guarantee )
4 . Proposed description of the measure : to facilitate the adaptation of potentially
    viable farms to the new situation on the agricultural markets by the grant of
    temporary , degressive aids to income
5.    Method of calculation :
5.1 Form of expenditure : Community participation , varying according to region
5.2 Community contribution :       70% / 45% / 20% / 10% , according to region
5.3   Calculation : see Annex
6     Financial implications as regards operational appropriations :
6.1 Schedule of commitment appropriations and payment appropriations ( in ECU )
         Year
         1988                                   59
         1989                                 229
         1990                                 360
         1991                                 396
         1992                                 346
         Subsequent years                     ^ 10
         Total                              1 800
 6.2 Financing during current year : not necessary
                                          1988 budget : to be provided for
 7.    Observations :
 ---pagebreak---                                                 - 7 -
        FINANCIAL              STATEMENT             -
        concerning a proposal for a Council Regulation establishing a Community system
        of incentives to cease farming
1 . Budget heading :     III B   Item : 311       Title : EAOGF ( Guidance ) - Cessation of
                                                          farming and early retirement
2 . Legal basis : Articles 43 of the Treaty
3 . Classification : Compulsory expenditure
                      ( Compulsory reimbursements )
4 . Proposed description of the measure : to encourage early cessation of farming with
    a view to allocating released farmland :
    - to restructuring ,
    - to non-agricultural use
5.    Method of calculation :
5.1   Form of expenditure : reimbursement of part of national expenditure
5.2 Community contribution :      50% in case of non-agricultural use of released land
                                  or 50% / 25% / 0% ( according to region ) in cases of
                                  restructuring
5.3 Calculation : See Annex
6     Financial implications as regards operational appropriations :
6.1   Schedule of commitment appropriations and payment appropriations ( in ECU )
        Year                           EAGGF ( Guidance )
        1989                                   17
        1990                                   58
        1991                                   98
        1992                                 130
        1993                                 162
        Total ( Total )                      465
6.2   Financing during current year : not necessary
7.    Observations :
 ---pagebreak---                                 ANNEX TO THE FINANCIAL STATEMENT
                                AIDS TO INCOME AND " PRE-PENSION"
1 * Summary of financial implications of measures proposed , taken as a whole (m ECU )
1.1 Cost of aids to incomes ( EAGGF , Guarantee )
               Year            Total
        1988                      59
        1989                    229
        1990                    360
        1991                    396
        1992                    346
        Total 5 years         1.390
        Subsequent years        410
        Total cost            1.800
1.2 . Cost of "pre-pension" ( EAGGF , Guidance )( 1 )^
              Year         Restructuring      Abandonment of land     Total
        1989                          6                 11              17
        1990                         21                 37              58
        1991                         36                 62              98
        1992                         48                 82             130
        1993                         60                102             162
        Total 5 years              171                 294             465
(1)   This direct cost may be completed by indirect implications :
      - additional costs relating to afforestation of abandoned land ( see 6.2 ):
        49 m ECU for five years ,
      - the reduced expenditure for the EAGGF Guarantee Section resulting from
        the withdrawal of land from production : about 760 m ECU for five years
        ( see 6.3 . ).
 ---pagebreak---                                            9
1.3 . Situation once scheme is " run in " (" pre-pension ")
      Schemes of this type always start up slowly , partly because of the need
      to make the administrative arrangements at national or regional level .
      Consequently , the normal arrangements will be reached only after a number
      of years , with a further delay of one or two years as regards expenditure
      savings for the EAGGF Guarantee Section ( time-lag resulting from
      production and marketing cycles ).
      As a guide , the financial implications of the " pre-pension " measures ,
      once running normally , can be estimated as follows :
      Cost                                        m ECU per year
      - " pre-pension" / abandonment                     110
      - " pre-pension" / restructuring                    60
      Reduced expenditure
      - " pre-pension" / abandonment                     300
      For the aids to incomes , as the scheme is temporary and degressive , there
      can be no question of normal arrangements after " run-in ".
 ---pagebreak---                                                  - 10 -
2.      The basic data for the establishment of the financial estimates for the
        measures proposed are as follows :
                                                Aid to             "Pre-pension" with            :
                                                incomes     Restructuring        Abandonment     :
: Farms concerned ( 1 )                        Main         Main               Main              :
                                               occupation   occupation         occupation        :
                                                            ( 55 / 65 years )  ( 55 / 65 years ) :
: . income , as related to
:      regional average                        75% / 125%   up to 125%         all               :
: Rate of financing
: . I       ( GR / P / IRL / certain
:           regions of Sp and
:           I / N.IRL )                             70%             50%        )                 :
                                                                               \
                                                                               /                 ·
: . II      ( Certain regions of Sp                                            )                 :
:           and I / Corsica )                       45%             25%        )                 :
                                                                               )        50%      :
 : . Ill ( Certain regions                                                     )                 :
 :          of I and F )                            20%     )                  )                 :
                                                            )                  )                 :
 : . IV     (all the other regions )                10%     )                  )                 :
 : N.B.     The groups of regions are established (>n the basis of <i composite                  :
 :          index ( 3 / 4 GDP / head , 1 / 4 share of non-agricul turai employment ).            :
 : Number of farms potentially              :  .                              . -. . :
 : concerned ( Ό00 )                        :
 : Regions :            I                   :     566                402       )                 :
 :                     II                   :       31                37       )                 :
 :                   III                    :       91      )                  )       1.032     :
  :                    IV                   :     638       )        428       )                 :
  :              Total                      ï   1.326                867               1.032     :
  : of which qualifying for                 :                                          1.032     :
                                                1.326                439
  : Community financing                     :
  ( 1 ) The definitions are of the total population in statistical terms , not
         always corresponding to the terms used in the legal texts .
 ---pagebreak---                                         11
3. Application of the measures by the Member States will be voluntary not
   compulsory , and participation by the farmers will also be voluntary .
   This means that estimates of the number of participants must be
   cautious . On the basis of practical criteria , additional national or
   Community conditions and social factors in each Member State , the total
   number of farms covered for a five-year period of application is :
                                    Aid to          " Pre-pension " with
                                    incomes       Restructuring      Abandonment
     Farms ( Ό00 )                    A89                66               A0
     i.e . as % of the number
     potentially concerned
     qualifying for Community
     f inane ing                      37%                   15%            A%
   As regards the scheme for " pre-pension " with abandonment of land , the
   assumption is made that this scheme will apply mainly in the north of the
   Community . In view of the specific constraints on the application of
   this type of scheme ( in particular , abandonment of land and
   inter-relationship with milk quota system ), it may be estimated that a
   maximum of 10% of the potential beneficiaries would take the early
   retirement in the first five years .
   As regards the " pre-pension " measures , a second five-year period of
   application is proposed , after review by the Council . Account is not
   taken of this in the present estimates , which are restricted to
   quantification of the financial impact of the relevant measures until
   1993 .
A. Aid to incomes : simulations concerning " intermediate " farms suggest that
   the average loss of income resulting from a rigorous policy as regards
   prices (5 to 10% in real terms ) will total A. 000 ECU on average for the
   Community of Twelve . However , taking into account the ceiling of
   2 500 ECU AWU average and using the farm income indices published by
   EUROSTAT in 1987 , the amount to be referred to would be 3.300 ECU .     The
   aid is to be granted for five years on a declining scale :
   First year         3.300 ECU
   Second year        2.6A0 ECU
   Third year         1.980 ECU
   Fourth year        1.320 ECU
   Fifth year           660 ECU
   Total              9.900 ECU
 ---pagebreak---                                         12
   The average rate of Community financing would be 37% ( maximum 70% ,
   minimum 10% ).
   As for the start-up of the scheme , past experience with other innovations
   suggests that prudence is called for . The first payments at national
   level would not take place before 1988 . The assumption taken is the
   following in terms of all the beneficiary farms over a period of five
   years :
   Year of first payment             %            Farms
   1988                              10           31.800
   1989                              30           95.400
   1990                              30           95.400
   1991                              20           63.600
   1992                              10           31.800
                                   100           318.000
   This means expenditure chargeable to the Community budget of :
   489.000 farms ( 1 ) x 9.900 ECU x 37 = 1.800 m ECU , spread out as follows :
   : Year         Total
   :   1988         59
   :   1989        229
   :   1990        360
   :   1991        396
   :   1992        346
   :   1993        229
    :  1994        121
    :  1995         47
    :  1996         13
    : Total      1.800
1) See table paragraph 3 , page 11 .
 ---pagebreak---                                          13
5.  " Pre-pension " with restructuring :  as regards the grant of the allowance
    for farmers discontinuing farming with a view to restructuring , the
    assumption is made that , essentially , the scheme would be restricted to
    regions qualifying for Community participation . In view of the general
    level of incomes in these regions , it is proposed that an average
    allowance of 1.900 ECU / year should be taken ( to be compared with the
    eligible maximum , which is 3.000 ECU for married farmers between 55 and
    60 years of age and 2.000 ECU for married farmers who have reached the
    age of 61 ). Also , the allowance would be granted during an average of
    six years ( maximum duration 10 years , but not beyond the age of 70 years )
    The average rate of Community financing would be 48% ( max . 50% , min . 25% )
    This means expenditure chargeable to the EAGGF Guidance Section of :
    66.000 farmers x ( 1 ) 1.900 ECU x 6 years x 48% = 361 m ECU .
    Assuming retirements are as follows :
    10%  in 1988 , i.e .  6.600
    25%  in 1989 , i.e . 16.500
    25%  in 1990 , i.e . 16.500
    20%  in 1991 , i.e . 13.200
    20%  in 1992 , i.e . 13.200
                         66.000
    Expenditure will be spread out as follows :
    Year                                        EAGGF ( Guidance ) reimbursement
                                                              (m ECU )
    1989                                                           6
    1990                                                          21
    1991                                                          36
    1992                                                          48
    1993                                                          60
    Sub-total 1989-1993                                          171
    1994 and subséquent years                                    190
    Total for scheme                                             361
(1) See table paragraph 3 , page 11 .
 ---pagebreak---                                             - 14 -
6.    "Pre-pension" with abandonment of land
      The financial implications under this heading are of three kinds :
      - direct costs resulting from the payment of cessation allowances and
        premiums ,
      - indirect costs , for areas to be afforested pursuant to Article 20 of
        Regulation ( EEC ) No 797 / 85 ( aids to afforestation of farmland ),
      - reduced expenditure , for the EAGGF Guarantee Section , as a result of
        the abandonment of land .
6.1 . "Pre-pens ion" /abandonment - direct costs :     the hypothesis underlying all
      the calculations concerning this scheme is that the measure will be
      mainly applicable in the northern part of the Community .       However , the
      average area taken per farm is only 12 ha ( to be compared with the
      average of about 20 ha for these regions ) as the system is bound to be
      more attractive for small farmers . The land released is presumed to be
      used half and half for afforestation and other non-agricultural uses .
      The rate of Community financing is fixed at 50% .
      . The allowance will average 2.400 ECU per farmer per year ( max .
        3.000 ECU or 2.000 ECU depending on the age of the beneficiary ) and it
        would be paid for an average of six years ( following the reasoning
        adopted for the restructuring allowance ):
        40.000 farmers ( 1 ) x 2.400 ECU x 6 years x 50% = 288 m ECU
      . Agricultural workers would qualify for an average allowance of
        1.350 ECU /year for six years .      Their number is estimated on the basis
        of the number of farmers referred to above , at 10% , i.e. 4.000 :
        4.000 workers x 1.350 ECU x 6 years x 50% = 16 m ECU
      . The supplementary premium , without afforestation , would average
        200 ECU / ha /year ( max . 250 ECU ) and would be paid for six years :
        20.000 farms x 12 ha x 200 ECU x 6 years x 50% = 144 m ECU
      . The supplementary premium , with afforestation would average
        240 ECU / ha /year ( max . 300 ECU ) and would be paid for 15 years
        ( max . 20 years , without age limit ):
        20.000 farms x 12 ha x 240 ECU x 15 years x 50% = 432 m ECU
( 1 ) See table paragraph 3 , page 11 .
 ---pagebreak---                                                   15
      The 40.000 farmers leaving the land in the first five years would be as
      follows :
         Leaving in      No . of farmers     No . of hectares    Cumulative total / hectares
            1988               4.000                 48.000                  48.000
            1989              10.000               120.000                  168.000
            1990              10.000               120.000                  288.000
            1991               8.000                 96.000                 384.000
            1992               8.000                 96.000                 480.000
                              40.000               480.000
      Accordingly , the cost of the scheme would develop as follows (m ECU ):
                      Fixed allowance                Supplementary premium
         Year      Farmers           Workers       without       with               Total
                                                   afforest .    afforest .
         1989         4,9              0,3              2,4           3              10,6
         1990        17                0,9              8,5         10,4             36,8
         1991        28,8              1,6             14,4         17,3             62,1
         1992        38,3              2,1             19,2         22,9             82,5
         1993        47,5              2,6             23,8         28,5            102,4
         Sub-total 1989-1993                                                        294,4
         1994 and subsequent years
                    151,5              8,5             75,7        349,9            585,6
                    288,0             16,0            144,0        432,0            880,0
6.2 . " Pre-pens ion" / abandonment - indirect costs : it is estimated that in 85%
      of the cases of afforestation , the farmer will qualify for the
      afforestation aids provided for in Article 2 of Regulation ( EEC )
      No 797 / 85 . The aid granted would total 1.200 ECU / ha on average ( eligible
      maximum , 1.400 ECU / ha ). The rate of reimbursement under this heading is
      25% :
      20.000 farms x 85% x 12 ha x 1.200 ECU / ha x 25% = 61 m ECU
      This amount will be spread out over the years , depending on departures ,
      as follows :
      Year                                                m ECU
      1990                                                  6,1
      1991                                                15,2
      1992                                                15,3
      1993                                                12,2
      Sub-total 1989-1993                                 48,8
      1994                                                12,2
                                                          61
 ---pagebreak---                                              - 16 -
6.3 . "Pre-pension"/abandonment - reduced expenditure for the EAGGF Guarantee
       Section : the estimate is based on the following assumptions :
       - that 75% of the land set aside had been used for production of surplus
         items , a reduction in the output of which will save expenditure ;
       - that 25% of the land set aside had been used for production for which :
          . there is no EEC market organization , or
         . there is no expenditure , or
         . the decline in production will not affect expenditure (e.g. sugar ,
            C quota );
       - that the reductions in expenditure can be assessed on the basis of the
         expenditure relating to a marginal unit of output of cereals , as the
         cereals sector is both that in which at the present time development is
         most uncontrolled and that the expenditure for which can be regarded as
         being relatively representative of average expenditure .
         Thus , for common wheat , marginal expenditure , according to the latest
         estimates , is 750 ECU / ha , based on exports ; if reference were also made
         to costs connected with storage ( the most probable hypothesis in
         present conditions ), this cost would have to be increased by about
         150 ECU/ ha per year of storage .     This total cost , of 900 ECU/ ha , is in
         fact the lowest among the large sectors and lies in the middle of the
         range of the marginal expenditures of the various sectors ( from
         120 ECU / ha to 2.000 ECU / ha ).
         Half of the reduced expenditure would be achieved during the year
         following abandonment and half in the second year .
         This would give the following table :
         Year of        Hectares        Budget        Reduced expenditure (m ECU )
         departure      concerned      year        Year n+1  :  Year n+2       Total
         (1)
         1988             36.000         1989          16           –
                                                                                  16
         1989            126.000         1990          57          16             73
         1990            216.000         1991          97          57            154
         1991            288.000         1992         130          97            227
         1992            360.000         1993         162         130            292
                                                                                 762
( 1 ) 75% of the farmland withdrawn from production .
 ---pagebreak---                                           17 -
                                     Proposai for
                         Council Regulation ( EEC ) No   / 87
                                 of               1987
           establishing a Community system of aids to agricultural income
The Council of the European Communities ,
Having regard to the Treaty establishing the European Economic Commuinity , and
in particular Articles 42 and 43 thereof ,
Raving regard to the proposal from the Commission ( 1 ),
Having regard to the opinion of the European Parliament ( 2 ),
Having regard to the opinion of the Economic and Social Committee ( 3 ),
Whereas the medium and long-term prospects for both Community and world
agricultural markets and the accumulation of significant stocks in many
sectors make it necessary to adjust certain instruments of the common
agricultural policy in order to restore balance on the markets ; whereas during
the period of adaptation to the situation the adjustments are likely to entail
income difficulties for a section of the farming population whose holdings are
structurally weaker ;
Whereas holdings which , though fundamentally sound and potentially viable , are
not in a position in present circumstances to undertake the adjustments needed
to enhance their efficiency , because of structural handicaps or for lack of
the necessary capital , merit special attention at Community level ; whereas ,
with a view to helping them to overcome their present difficulties , a
Community system of aids to income for farmers and members of their families
practising farming as their main occupation on holdings which appear capable ,
despite their present weakness , of carrying on farming at a later date under
satisfactory economic conditions , after balance has been restored on the
Community markets ;
( 1 ) OJ No L
( 2 ) OJ No L
( 3 ) OJ No L
 ---pagebreak---                                            18
Whereas in order to facilitate the transition for the holdings concerned , it
appears necessary to be able to grant them temporary , degressive income aid
within a Community framework involving in particular a requirement for prior
approval from the Commission of income aid programmes drawn up by the Member
States , in accordance with criteria relating mainly to the economic situation
of the holdings concerned as compared with that of the holdings in the
geographical area in question as a whole ;
Whereas account should also be taken of the uneven distribution in the
Communty of holdings of the type concerned and of their relative concentration
in the Member States where budget funds and consequently the possibilities of
transitional aids are much smaller than in other Member States ; whereas the
cohesion sought by the Single Act therefore requires in the latter cases in
particular a Community system of aids to agricultural income ; whereas the
level of Community assistance must vary according to requirements and
available funds in the various regions of the Community ;
Whereas the purpose of the Community 's contribution is to restore balance on
the market for agricultural products while enabling the objective referred to
in Article 39(1 )( b ) of the Treaty to be achieved ; whereas such Community
measures may therefore be ranked as intervention within the meaning of Article
3 of Coucil Regulation ( EEC ) No 729 / 70 of 21 April 1970 on the financing of
the common agricultural policy ( 1 ), as last amended by Regulation ( EEC )
No 3769 / 85 ( 2 ),
HAS ADOPTED THIS REGULATION :
( 1 ) OJ No L 9A , 28 . A. 1970 , p. 13
( 2 ) OJ No L 362 , 31.12.1985 , p. 17
 ---pagebreak---                                           19 -
                                      Artide 1
1. A Community system is hereby instituted whereby the Member States may be
   authorized to grant aids to agricultural income as provided for in this
   Regulation .
2. Within the meaning of this Regulation , "aid to agricultural income " shall
   be understood as meaning any public financial contribution to the
   liquidity position of an agricultural holding granted without any
   reciprocal concession or any condition on its use by the recipients , with
   a view to improving the economic and social situation of the farmer and
   his family .
                                      Article 2
1. Aid to agricultural income shall fall within the scope of the Community
   system where :
   ( a ) it is covered by a programme drawn up by the Member State concerned in
         accordance with Article 3 ;
   ( b ) the recipients meet the conditions laid down in Articl A ;
   ( c ) the amount does not exceed the level determined in accordance with
         Article 5 ;
   ( d ) the amount is not determined by reference to :
         - prices ,
         - quantities of agricultural products , or
         - production factors , with the exception of labour .
2. Articles 92 and 94 of the Treaty shall not apply to the aids covered by
   this Regulation , with the exception of those referred to in Article 92(2 ).
                                      Article 3
1. The programme of agricultural income aids ( hereinafter referred to as
   " PAIA") shall include at least the following details :
   ( a ) the delimitation of the geographical scope of the PAIA in accordance
         with paragraph 2 , and the reasons for such delimitation ;
   ( b ) the objectives and the period within which it is expected to achieve
         them , indicating the information required to establish the average
         regional income and the average national income within the meaning of
         Articles 4 and 5 ;
 ---pagebreak---                                          - 20 -
   ( c ) the situation of the PAIA with regard to any other measures to
         encourage economic development , and employment and incomes in general
         in the area concerned , demonstrating the necessary coordination
         between those measures and those provided for in the PAIA ;
   ( d ) the overall annual amount of forecast expenditure resulting from the
         application of the PAIA , justifying that amount by reference to the
         socio-economic situation of the holdings concerned ;
   ( e ) elements warranting conformity with the objective that aids within the
         scope of this Regulation may not stimulate agricultural production ;
   ( f ) detailed conditions for granting the aids to agricultural income
         within the framework of the PAIA in question , in compliance with the
         conditions laid down in Articles 4 and 5 .
2. The geographical scope of the PAIA shall be delimited in terms of
   objective data so that it relates to an area in which the socio-structural
   characteristics of the agricultural holdings are broadly homogeneous .
   To that end the Member States shall take into account the initial
   situation and the trends which may be inferred therefrom , and in
   particular :
   ( a ) the economic and social situation of the area in general , and in
         particular the prospects for jobs outside agriculture ,
   ( b ) the importance of farming , the typical enterprises and the structures
         of the agricultural holdings ,
   ( c ) the economic data relating to the profitability of agricultural
         holdings , their financial situation ( capital and liabilities ) and the
         average level and distribution of family agricultural incomes .
3. PAIAs may limit the grant of aids to income only by way of an exception ,
   in specially warrented cases , to determined production sectors .
   In that case , the PAIA shall indicate , in addition to the data laid down
   in paragraph 1 , within the framework of the information referred to in the
   second subparagraph of paragraph 2 , the specific characteristics of the
   production sector(s ) concerned as compared to the agricultural holdings
   located in the PAIA area as a whole .
                                       Article 4
1. Farmers and members of their families working on the holding may qualify
   under the Community system only where the following conditions are met :
    (a ) The farmer must possess adequate professional skill and competence and
         must practise farming as his main occupation . The latter condition
         shall also apply to members of his family who may recieve income aid
         under the system .
    (b ) The overall family income from the holding per work unit must be less
          than 125% of the average regional income or , at the option of the
          Member State concerned , less than 100% of the average national income .
 ---pagebreak---                                              21
            "Overall faimily income " shall be understood as meaning the income of
            the farmer and the members of his family working on the holding ,
            including any non-agricultural resources . The family agricultural
            income to be taken into account shall be established on the basis of
            objective criteria relating to the holding .
            The average regional income shall be the average of the agricultural
            incomes from holdings per work unit , recorded in the area of
            application of the PAIA concerned on the basis of a multiannual
            reference period to be determined in accordance with the procedure
            laid down in Article 9 for the whole period of application of the
            system .
            The average national income shall be the average of the agricultural
            incomes from holdings per work unit , recorded within the national
            territory in accordance with the same procedure as the average
            regional income .
      ( c ) The holding must be in a position to yield , after a transitional
            period not exceeding five years , without further income aid under this
            system or that provided for in Regulaton ( EEC ) No     / 87 , at least
            the average regional income or , where appropriate , 80% of the average
            national income .
      ( d ) During the period referred to under ( c ), the aids shall be granted on
            a degressive basis to the individual recipients .
2.    For the purposes of paragraph l(a "), Article 2(5 ) and ( 6 ) of Regulation
      ( EEC ) No 797 / 85 shall apply .
3.    Evidence that the condition laid down in paragraph 1(c ) is met must be
      provided by a farm readjustment plan approved by the competent authorities
      of the Member State concerned . Such a plan shall not be required where an
      improvement plan has been approved under Article 2(l)(c ) of Regulation
      ( EEC ) No 797 / 85 and shows that the condition laid down in paragraph 1(c )
      above is met .
                                         Article 5
The level of aid to income per work unit shall be determined :
( a ) per farmer and per family member working on the holding , and
( b ) in such a way as to cover at most the difference between :
      - the existing overall family income from the holding , divided by the
         number of recipients on the holding , and
      - 125% of the average regional income or , where appropriate , the average
         national income .
 ---pagebreak---                                              22
                                         Artide 6
1.   Where a Member State contemplates introducing or amending a PAIA , it shall
     notify the Commission of the draft programme or the proposed amendment .
     The notification must contain the information required to enable it to be
     ascertained whether the conditions laid down in this Regulation are met .
     At the request of the Commission , the Member State concerned shall provide
     additional information .
2.   The Member State may not implement the planned measures before the
     Commission has approved the PAIA concerned .
     The Commission shall determine in particular whether the planned measures :
     ( a ) comply with the provisions of this Regulation , taking into account the
            objectives thereof , and
     ( b ) are consistent with the Communtiy 's objectives as regards the
            readjustment of markets .
3.   Within six months from the date of receipt of a draft PAIA or amendments
     thereto , the Commission shall decide whether to approve them after
     consulting the Committee provided for in Article 9 , on condition that all
     the information referred to in the second subparagraph of paragraph 1 is
     provided .
                                         Article 7
1 . Aids to agricultural income which are part of a PAIA approved in
     accordance with Article 6(3 ) and which are granted in accordance with the
     conditions laid down in Articles h and 5 of this Regulation shall qualify
     for Community financing , up to the limit of that part of the aid
     corresponding to a maximum of two work units per holding and 2 500 ECU per
     work unit per year .
2.    In order to determine the Community contribution to the financing of the
     eligible aids a Communiy list breaking down Communtiy regions into various
      categories shall be drawn up in accordance with the procedure laid down in
     Article 9 .
      That list shall be drawn up on the basis of a synthetic indicator taking
      into account :
      ( a ) as far as three quarters are concerned , the level of economic
            development measured by the indicator of Gross Domestic Product per
             inhabitant , and
      (b ) as far as one quarter is concerned , the share of agriculture m total
             employment , measured by the percentage of non-agricultural working
             persons in the total employed .
 3 . The Community shall finance expenditure resulting from the granting o
      eligible aids to agricultural income according to the category of the
       region where the holding concerned is located , at the following rates .
 ---pagebreak---                                        - 23 -
    - 70% where the regional synthetic indicator is less than 73% of the
      Community indicator ( category I );
    - 45% where the regional synthetic indicator is equal to or greater than
      75% but less than 85% of the Community indicator ( category II );
    - 20% where the regional synthetic indicator is equal to or greater than
      85% but less than 95% of the Community indicator ( category III );
    - 10% where the regional synthetic indicator is equal to or greater than
      95% of the Community indicator ( category IV ).
However , for the purpose of implementing this Article , Northern Ireland is
classified within the same category as the neighbouring regions of the
Republic of Ireland .
                                     Article 8
Detailed rules for the application of Articles 3 to 7 shall be adopted in
accordance with the procedure laid down in Article 9 .
                                     Article 9
1.  A Managment Committee for Agricultural Income Aids , hereinafter referred
    to as the "Committee ", shall be set up comprising representatives from the
    Member States and chaired by a Commission representative .
2.  Within the Committee , the votes of the Member States shall be weighted in
    accordance with Article 148(2 ) of the Treaty .   The Chairman shall not vote
3.  Where the procedure laid down in this Article is to be followed , the
    Chairman shall refer the matter to the Committee , either on his own
    initiative or at the request of the representative of a Member State .
4.  The Commission representative shall submit a draft of the measures to be
    adopted . The Committee shall deliver its opinion on those measures within
    a time limit which the Chairman may lay down depending on the urgency of
    the matters submitted for examination . The opinion shall be delivered by
    a majority of 54 votes .
5.  The Commission shall adopt measures which shall apply immediately .
    However , if they are not in accordance with the opinion of the Committee ,
    the measures shall be immediately notified by the Commission to the
    Council . In that case the Commission may deter application of the
    measures it has adopted for not more than one month from that notification
    The Council , acting by a qualified majority on a proposal from the
    Commission , may take a different decision within one month .
 ---pagebreak---                                         24 -
6.  The Committee may examine any other matter referred by its Chairman ,
    either on his own initiative or at the request of the representative of a
    Member State .
                                    Article 10
The measures provided for in this Regulation shall rank as interventions
within the meaning of Article 3 of Regulation ( EEG ) No 729 / 70 .
                                    Article 11
1.  By the end of a three years' period after entry into force of this
    Regulation , the Commission shall submit a report on the operation of this
    system to the Council and the Parliament on the basis of the informations
    provided by the Member States .
2.  After examining that report , the Council , acting in accordance with the
    procedure laid down in Article 43(2 ) of the Treaty , may decide , in the
    light of experience and changes in economic conditions to amend this
    system where necessary .
                                    Article 12
This Regulation shall enter into force on                 1987 .
It shall apply until                     [5 years after entry into force ].
This Regulation shall be binding in its entirety and directly applicable in
all Member States .
Done at Brussels                                 For the Council
                                                 The President
 ---pagebreak---                                            25
                                    P roposai for
                         Council Régulation ( EEC ) No     / 87
                                 of               1987
      establishing a framework system for national aids to agricultural income
The Council of the European Communities ,
Having regard to the Treaty establishing the European Economic Community , and
in particular Articles 42 and 43 thereof ,
Having regard to the proposal from the Commission ( 1 )
Having regard to the opinion of the European Parliament ( 2 ),
Having regard to the opinion of the Economic and Social Committee ( 3 ),
Whereas Council Regulation ( EEC ) No       / 87 of    1987 ( 4 ) introduces a
Community system of aids to agricultural incomes intended to make it easier ,
by granting income aids on a transitional and degressive basis , for
main-activity farmers and their families to reach a situaion where they can
pursue their activity in satisfactory economic conditions ;
Whereas , as regards the category of holdings in difficulty which are unable or
consider themselves unable to achieve such a situation , it is incumbent upon
the Community to lay down clear rules to ensure that action taken by the
Member States with regard to aids to agricultural income does not jeopardize
the bases of the commmon agricultural policy ; whereas a positive indication
should be given of those situations in which , outside the abovementiond
Community system , national aids to agricultural income may prove necessary to
maintain a fair standard of living for the farming community , in view of the
present general economic situation and in particular of the limited
opportunities for finding work outside agriculture for the farmers concerned ;
Whereas , to that end , in order to ensure that national measures have the
necessary transparency and that the Community conditions designed to safeguard
the Community 's objectives as regards the readjustment of markets in
particular are complied with , the grant of the income aids in question should
be made subject to prior approval by the Commission of income aid programmes
drawn up by the Member States which plan to implement such measures ,
( 1 ) OJ No L
( 2 ) OJ No L
( 3 ) OJ No L
( 4 ) See p.    of this Official Journal .
 ---pagebreak---                                             26
HAS ADOPTED THIS REGULATION :
                                        Article 1
The Member States may be authorized on the conditions laid down in this
Regulation to grant aids to agricultural income , as defined in Article 1(2 ) of
Regulation ( EEC ) No     / 87 , which do not come within the scope of the
Community system introduced by the abovementioned Regulation .
                                        Article 2
1.  Articles 92 to 94 of the Treaty shall not apply to the aids covered by
    this Regulation , with the exception of those referred to in Article 92(2 ).
2.  The provisions of this Regulation shall apply without prejudice to other
    specific or sectoral Community provisions .
                                        Article 3
1 . Aids to agricultural income shall be authorized only if
    a ) they are covered by a programme drawn up by the Member State concerned
        in accordance with Article 4 ,
    b ) the beneficiaries fulfil the conditions set out in Article 5(1 ), and
    c ) they do not exceed in amount the level determined in accordance with
        Article 5(2 ) of this Regulation .
2 . Aids to agricultural income are prohibited the amount of which is
    determined by reference to :
    -   prices ,
    - quantities of aricultural products , or
    - inputs , with the exception of labour .
 ---pagebreak---                                             27
                                        Artide 4
The programme referred to in Article 3(l)(a ), hereinafter called "PAIA II ":
-   may be introduced as a part of a PAIA within the meaning of Regulation
    ( EEC ) No      / 87 or as a separate programme ,
-   shall meet the requirements established in Article 3 of that Regulation ,
    complying however , as far as the detailed conditions for granting the aids
    are concerned , with the provisions of this Regulation , and in particular
    Article 5 thereof ,
-   shall warrent conformity with the objective that aids within the scope of
    this Regulation may not stimulate agricultural production .
                                        Article 5
1.  Farmers and members of their families working on the holding may receive
    income aid only where overall family income from the holding is less , per
    work unit , than the average income for the area or , at the option of the
    Member State concerned , 80% of the average national income .
2.  The level of the income aid per work unit shall be determined :
    a ) by farmer and by family member working on the holding , and
    b ) in such a way as to cover , at most , the difference between :
        -   the existing overall family income from the holding divided by the
            number of beneficiaries on the holding , and
        -   the average regional income , but in no case exceeding 90% of the
            average national income .
3.  As regards the definitions of the incomes referred to in this Article , the
    second to fourth subparagraphs of Article 4(l)(b ) of Regulation ( EEC )
    No       / 87 shall apply .
                                        Article 6
1.  Where a Member State is planning to introduce or amend a programme of
    national income aids in accordance with this Regulation , its shall submit
    to the Commission a draft of the PAIA II or of its amendment .     The
    submission must include the information necessary to determine whether the
    conditions set out in this Regulation are met .
    At the request of the Commission , the Member State concerned shall submit
    any further information required .
 ---pagebreak---                                         - 28 -
 2 . The Member State may not implement the measures planned before the
      Commission has approved the PAIA II concerned .
     The Commission shall examine in particular whether the planned measures ;
     a ) comply with the provisions of this Regulation , taking into account the
         objectives thereof , and
     b ) are consistent with the Community 's objectives as regards the
         readjustment of markets .
 3.  Within six months from receipt of a draft PAIA II or the amendments
     thereto , the Commission shall adopt a decision relating to their approval ,
     provided that all the particulars referred to in Article 4 and , where
     appropriate , the further information referred to in the second
     subparagraph of paragraph 1 of this Article have been supplied .
                                      Article 7
The Member States shall adopt the measures required to adapt to the provisions
of Articles 1 to 6 , within six months of the entry into force of this
Regulation , their existing agricultural income aid schemes , in so far as the
 latter are not authorized by other specific or sectoral Communtiy provisions .
                                      Article 8
Detailed rules for the application of this Regulation shall be adopted in
accordance with the procedure laid down in Article 9 of Regulation ( EEC )
No       / 87 .
                                      Article 9
1.   By the end of a three years' period after entry into force of this
     Regulation , the Commission shall submit to the Council and the Parliament ,
     on the basis of the informations provided by the Member States , a report
     on the operation of the framework system provided for in this Regulation .
2.   After examination of that repoprt , the Council , acting in accordance with
     the procedure laid down in Article 43(2 ) of the Treaty may decide , in the
     light of experience and changes in economic conditions and in agricultural
     incomes , to amend this framework system .
                                     Article 10
This Regulation shall enter into force on              1987 .
This Regulation shall be biding in its entirety and directly applicable in all
Member States .
Done at Brussels ,                                 For the Council
                                                   The President
 ---pagebreak---                                          - 29 -
                                     Proposai for
                         Council Regulation ( EEC ) No      /87
                                      of
                    establishing a Community scheme to encourage
                               the cessation of farming
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community , and
in particular Article A3 thereof ,
Having regard to the proposal from the Commission ( 1 ),
Having regard to the Opinion of the European Parliament ( 2 ),
Having regard to the Opinion of the Economic and Social Committee ( 3 ),
Whereas , given the outlook in the medium and long term for both the Community
and world markets for agricultural products , the achievement of market balance
calls for a prices policy that is likely , during the period of adjustment to
the new situation , to entail serious income difficulties for that section of
the farming population whose holdings are structurally weakest ;
Whereas , moreover , Council Regulation ( EEC ) No     /87 of       establishing
a Community system of aids to farm incomes ( A ) allows for the granting of
degressive aids where holdings can be adapted to suit the new situation ;
(1)  OJ No
(2)  OJ No
(3)  OJ No
(A ) OJ No
 ---pagebreak---                                        - 30 -
Whereas , accordingly , Council Regulation ( EEC ) No   / 87 of
establishing a framework system for national aids to farm incomes ( 5 )
specifies the circumstances in which such aids may be authorized in order to
maintain a fair standard of living for the farming population ;
Whereas these two Regulations should be supplemented by measures to help
farmers more than 55 years old , who generally have serious difficulty in
adjusting to the new situation ;
Whereas a scheme to encourage early retirement from farming would enable such
persons to stop farming on reasonable terms by providing them with an adequate
income ;
Whereas such a scheme would not only help to reduce production potential and
so aid market stability but also help to improve farm structures by increasing
both the size of holdings and the number of potentially viable holdings ;
Whereas , if agricultural production is discontinued on the agricultural area
concerned , the annual allowance must be supplemented by an annual premium per
hectare , particularly if the said area is afforested ;
Whereas the disappearance of holdings employing elderly family helpers and
paid workers in full-time agricultural work may entail for such persons the
loss of their employment and incoime ; whereas they should therefore be
provided with a source of income by the granting of an annual allowance ;
( 5 ) 0J No
 ---pagebreak---                                             - 31
Whereas the diversity of the causes , nature and gravity of the structural
problems in agriculture may call for regional differentiation of solutions ,
subject to adjustment with the passage of time ; whereas a contribution must be
made to the overall economic and social development of each region concerned ;
whereas the best results will be obtained if the Member States , using
Community criteria , themselves implement the common measure through their own
legislative , regulatory and administrative mechanisms ;
Whereas all the measures planned are in the interest of the Community , being
designed to attain the objectives listed in Article 39(l)(a ) of the EEC Treaty
including the structural changes necessary for the satisfactory functioning of
the common market ; whereas these measures therefore constitute a common
measure within the meaning of Article 6 of Council Regulation ( EEC ) No 739 / 70
of 21 April 1970 on the financing of the common agricultural policy ( 6 );
whereas provision should also be made for additional Community financing of
measures aimed at reducing production potential or for the concentration of
such financing on the areas referred to in Article       of Regulation ( EEC )
No            establishing a Community system of aids to farm incomes ;
Whereas , since the Community will help to finance the common measure , it must
be able to ascertain whether the action taken by the Member States to apply it
is consonant with the objectives to be attained ; whereas , to this end , a
procedure should be introduced for close cooperation between the Member States
and the Commission through the agency of the Standing Committee on
Agricultural Structures instituted by Article 1 of the Council Decision of
4 December 1962 on the coordination of policies on the structure of
agriculture ( 6 ); whereas , in the case of financial matters , this procedure
should involve consultation of the EAGGF Committee , as provided for in
Articles 11 to 15 of Regulation ( EEC ) No 729 / 70 ;
( 5 ) 0J No L 94 , 28 . 4.1970 , p. 13 .
( 6 ) OJ No L 136 , 17.12.1962 , p . 2892 / 62 .
 ---pagebreak---                                         32 -
Whereas Parliament and the Council should be able to examine annually , on the
basis of a report presented by the Commission , the results obtained from the
Community and national measures applied , so that they can assess the need for
supplementing or adjusting the arrangements introduced ;
 ---pagebreak---                                           - 33 -
HAS ADOPTED THIS REGULATION :
                                         Article 1
With a view to assisting the adjustment and reorganization of agricultural
structures and thus helping to restore the balance between production and
market outlets , a common measure within the meaning of Article 6(1 ) of
Regulation ( EEC ) No 729 / 70 , to be implemented by the Member States , is hereby
introduced in order to establish a scheme to encourage the cessation of
farming .
                                        Article 2
1.  Member States may :
    -  exclude all or part of their territory from the application of all or
       some of the measures provided for in Article 3 ;
    -  differentiate the application of such measures from one region to
       another .
2.  This Regulation shall not restrict the freedom of Member States to adopt ,
    within the scope of this Regulation , additional aid measures the
    conditions or terms of which differ from those laid down herein , provided
    that such measures are adopted in accordance with the provisions of
    Articles 92 to 94 of the Treaty .
                                        Article 3
1.  The scheme referred to in Article 1 may comprise :
    -   the granting of an annual allowance to farmers practising farming as
        their main occupation , subject to the conditions laid down in Article 4
       and 5 ;
    -   the granting of supplementary annual premium per hectare , subject to
       the conditions laid down in Article 6 ;
    -  the granting of an annual allowance to paid agricultural workers and
       permanent family helpers , subject to the conditions laid down in
       Article 11 .
2.  Member States may replace the annual allowances referred to in
    paragraph 1 , depending on the age of the beneficiary , by the payment of a
    single lump sum of equivalent effect .
    They may also replace the annual allowance referred to in the first indent
    of paragraph 1 by the supplementary premium per hectare referred to in the
    second indent of paragraph 1 plus an increment to ensure equivalent effect
 ---pagebreak---                                         - 34 -
                                       Artide 4
1.  The annual allowance referred to in the first indent of Article 3(1 ) may
    be granted to farmers who practise farming as their main occupation within
    the meaning of Article 2(5 ) of Regulation ( EEC ) No 797 /85 , who are over 55
    years of age and who permanently cease all farming activities , provided
    that :
    -  either agricultural production on the agricultural area of the holding
       is halted throughout the period from the time of cessation of farming
       to the time when the farmer reaches the normal retirement age as fixed
       by the social security arrangement currently applicable to farming in
       the Member State concerned . This period must be not less than five
       years but for this purpose it may be extended , where appropriate ,
       beyond the normal retirement age .
       In the case of leased holdings , Member States may permit up to
       one-third of the area to be taken over by the owner without the
       cessation of production on that fraction of the area ;
    – or the agricultural area of the holding is used to enlarge that of one
       or more other agricultural holdings , on condition that proof is
       furnished in accordance with Article 4(3 ) of Regulation ( EEC )
       No       / 87 that such holdings will be able to provide , after a
       transitional period not exceeding five years , at least the average
       regional income or , where appropriate , 80% of the average national
       income as defined in Article 4(l)(b ) of the said Regulation .     The
       farmer(s ) concerned must also undertake not to increase production of
       surplus products within the meaning of Article la of Regulation ( EEC )
       No 797 / 85 from the total area of their holding after enlargement .
2 . Member States may permit the beneficiaries of the annual allowance to
    continue to farm up to 10% , but not more than 1 hectare of the area of the
    holding , provided that commercial production is definitively halted .
 ---pagebreak---                                         35
                                     Artide 5
1. " Cessation of agricultural production " shall be taken to mean :
   -   either allocation of the agricultural area of the holding to
       afforestation or to a non-agricultural use compatible with the
       preservation of the quality of the environment ;
       or the halting of agricultural production on the areas of the holding ;
       in this case , the farmer who ceases farming may be required to maintain
       the agricultural area with a view in particular , to the preservation of
       the countryside , provided that all commercial production is
       discontinued .
2. The cessation of production within the meaning of paragraph 1 may be
   effected on equivalent agricultural areas of other holdings following an
   exchange of parcels as a consolidation measure which enables production
   costs to be reduced or afforestation to proceed in a rational manner .
 ---pagebreak---                                           - 36 -
    Artide 6
1 . The supplementary annual premium per hectare referred to in the second
    indent of Article 3(1 ) shall be granted to beneficiaries meeting the
    conditions set forth in the first indent of Article 4(1 ) and in
    Article 5 , per hectare of agricultural area actually withdrawn from
    agricultural production .
2 . Member States may also lay down rules whereby , in the case of a leased
    holding , the premium referred to in paragraph 1 may be paid in whole
    or in part to the owners of the agricultural area on which production
    is discontinued .
    Article 7
1 . If the beneficiary of the annual allowance referred to in the first
    indent of Article 4(1 ) discontinues milk production , the reference
    quantities allocated under Council Regulation (EEC ) No 804/68^ and
    released under the arrangement referred to in the first indent of
    Article 4(1 ) shall be suspended for the duration of payment of the
    annual allowance , and for at least five years , unless the beneficiary
    of the annual allowance receives compensation for the definitive
    abondonment of milk production as provided for in Council Regulation
    ( EEC ) No 1336 /86 2 .
1   0J No L 148 , 28 . 6.1968 , p.    1.
2   OJ No L 119 ,    8 . 6.1986 , p. 21 .
 ---pagebreak---                                           37
   The reference quantities suspended pursuant to this Article may not be
   reallocated for the duration of such suspension .
2. The supplementary annual premium per hectare reffered to in the second
   indent of Article 3(1 ) shall not be eligible for a financial contribution
   from the Fund if it is paid in respect of areas for which a premium for
   the definitive abondonment of areas under vines is paid pursuant to
                                        3
   Council Regulation ( EEC ) No 777 /85 .
   Article 8
   The Member States shall adopt decisions :
   -  as regards the age of beneficiaries ;
   -  as regards the use of the areas on which agricultural production is
      discontinued ;
   -  as regards the amount and duration of the annual allowance , taking into
      account the age of the beneficiary and the economic and social
      situation of agriculture in their country ;
   -  as regards the amount and duration of the supplementary premium per
      hectare , taking into account , in particular , the value of the land in
      terms of yield and the cost of its maintenance as referred to in the
      second indent of Article 5(1 ).
   Article 9
1. The Fund shall contribute , as provided in paragraph 2 , towards the
   expenditure incurred by Member States pursuant to the first indent of
   Article 4(1 ) and Article 6 , within the following limits :
3  OJ No L 88 , 28.3.1985 , p.' 8
 ---pagebreak---                                       - 38
   - the maximum eligible amount of the allowance shall be 3 000 ECU per
      year and per farmer practising farming as his main occupation , in the
      case of a married farmer whose spouse has worked solely or mainly on
      the farm and has no other remunerative work , and 1 875 ECU per year in
      all other cases , for a maximum duration of 10 years but not beyond the
      beneficiary 's seventieth birthday .
      Where appropriate , assistance from the Fund shall be limited to the
      amount of the annual allowance granted in addition to the retirement
      pension paid to the beneficiary under the national social security
      arrangements ;
      the maximum eligible amount of the supplementary premium shall be 250
      ECU per hectare per year for the period during which agricultural
      production is actually discontinued on the area concerned , provided
      that the said period does not exceed that specified in the first indent .
      If the agricultural area farmed by the beneficiary of the supplementary
      premium per hectare undergoes afforestation , the period of eligibility
      for the premium shall be extended to a maximum of 20 years and , in the
      case of farmers who do not qualify for the allowance referred to in
      Article 15§3 ) of Regulation ( EEC ) No 797 / 85 , the eligible amount shall
      be increased by a maximum of 50 ECU per hectare per year ;
   -  the maximum eligible amount shall be 350 ECU per hectare per year or ,
      in the case of afforestation , 400 ECU per hectare per year if the
      annual allowance is replaced by the supplementary premium per hectare .
2. The Fund shall reimburse to the Member States 50% of the eligible
   expenditure referred to in paragraph 1 .
 ---pagebreak---                                       - 39 -
   Artide 10
1. The Fund shall contribute , as provided in paragraphs 2 and 3 , towards the
   expenditure incurred by Member States in applying the scheme referred to
   in the second indent of Article 5(1 ), subject to the following limits and
   conditions :
   -  the maximum eligible amount of the annual allowance shall be :
      = 3 000 ECU per year per farmer practising farmins as his main
          occupation and ceasing to farm between 55 and 60 years of age , in
          the case of a married farmer whose spouse has worked solely or
          mainly on the farm and has no other remunerative work , and 1 875 ECU
          in all other cases ;
      =   2 000 ECU per year per farmer practising farming as his main
          occupation and ceasing to farm after his 61st birthday , in the case
          of a married farmer , and 1 250 ECU in all other cases .
      Where appropriate , assistance from the Fund shall be limited to the
      amount of the annual allowance granted in addition to the retirement
      pension paid to the beneficiary under the national social security
      arrangements ;
   -  the maximum duration shall be 10 years , byt not beyond the
      beneficiary 's 70th birthday .
2. The Fund shall contribute only towards the cost of allowances granted to
   beneficiaries who meet the conditions laid down for the granting of aids
   to income in Council Regulation ( EEC ) No ...   establishing a framework
   system for national aids to farm incomes and Council Regulation ( EEC )
   No   ... establishing a Community system of aids to farm incomes .
3. The Fund shall reimburse to Member States :
   -  50% of eligible expenditure in areas where the indicator     is less than
      75% of the indicator referred to in Article 7 of Council     Regulation
      ( EEC ) No ... establishing a Community system of aids to    farm incomes ;
   -  25% of eligible expenditure in areas where the indicator     is more than
      75% but less than 35% of the indicator referred to in Article 7 of the
      said Regulation .
 ---pagebreak---                                       - 40
   Artide 11
1. Member States may grant an annual allowance to paid workers and permanent
   family workers aged between 55 and the normal age of retirement fixed for
   the agricultural sector under the social security arrangements of the
   Member State concerned :
   -  who have been engaged i agricultural work for at least five years
      before lodging an application and who have spent at least 50% of their
      working time in agricultural work during this period
   -  who have been engaged in agricultural work on the holding for which the
      farmer receives the annual allowance pursuant to Article 3 for at least
      the last two years before the application was lodged ;
   -  who are covered by the social security arrangements ;
   -  who undertake not to engage in any further agricultural or remunerative
      work .
2. Member States shall determine the amount of the annual allowance taking
   due account , inter alia , of the economic and social situation of
   agriculture and of the beneficiary in their country . Member States may
   replace this allowance by a single lump-sum payment of equivalent effect .
3. The Fund shall contribute , as provided in paragraph 4 , towards the
   expenditure incurred by Member States in applying the scheme referred to
   in paragraph 1 :
   - where the scheme applied to the abondoned farm is eligible under the
       terms of Articles 9 og 10 ;
   - up to a maximum eligible amount of 2 000 ECU per year , in the case of
       the allowance for a paid worker or a married family worker , and 1 250
      ECU in other cases ;
   - provided that at most 2 allowances are paid per farm ;
    - subject to a maximum duration of ten years , but not exceeding the
       normal age of retirement referred to in paragraph 1 .
 ---pagebreak---                                       - 41
4. The Fund shall refund to the Member States :
   -  50% of eligible expenditure in the cases referred to in Article 9 ;
   -  in the cases referred to in Article 10 :
      =  50% of eligible expenditure in the areas referred to in the first
         indent of Article 10(3 ),
      =  25% of eligible expenditure in the areas referred to in the second
         indent of Article 10(3 ).
   Article 12
1. The estimated period of time required for carrying out the common measure
   shall be ten years .
2. Five years after this Regulation takes effect , the detailed rules for its
   application shall be reviewed by the Council , on a proposal from the
   Commission .
3. The Fund’s total contribution to the cost of the commoin measure is
   estimated at 465 million ECU for the first five years .
   Article 13
1. The Member States shall forward to the Commission :
   -  drafts of all laws , regulations or administrative provisions which they
      propose to adopt pursuant to this Regulation ;
   -  the texts of any existing provisions which may make it possible to
      implement this Regulation .
 ---pagebreak---                                        - 42
2 . When submitting , pursuant to paragraph 1 , drafts of laws , regulations or
    administrative provisions or the taxt of existing provisions , the Member
    States shall also submit an explanatory memorandum showing the
    relationship at regional level between the measures in question and
    economic and structural conditions in the agricultural sector .
3.  The Commission shall examine drafts forwarded in accordance with the first
    indent of paragraph 1 for the purpose of determining whether , having
    regard to the objectives of this Regulation and to the need for a proper
    connection between the various measures , such drafts comply with the
    Regulation and thus satisfy the conditions for a financial contribution by
    the Community to the measures referred to in Article 1 . Within two months
    of the receipt of any draft , the Commission shall , after consulting the
    Standing Committee on Agricultural Structure , issue an opinion thereon .
4.  Member States shall , on enactment of any law , regulation or administrative
    provision as referred to in paragraph 3 , forward the text thereof to the
    Commission .
    Article 14
1.  With regard to provisions the texts of which are forwarded pursuant to the
    second indent of Article 13(1 ) or to Article 13(4 ), the Commission shall
    examine whether , having regard to the objectives of this Regulation and to
    the need for a proper connection between the various measures , such
    provisions satisfy the Commission for at financial contribution by the
    Community to the common measure referred to in Article 1 . Within two
    months of the receipt of any text , the Commission representative shall ,
    after consulting the EAGGF Committee on the financial aspects , submit a
    draft decision thereon to the Standing Committee on Agricultural Structure .
 ---pagebreak---                                         - A3 -
2.    The Committee shall issue its opinion within a time limit to be fixed by
      its Chairman according to the urgency of the matters for examination . It
      shall decide by a majority of 5 A votes , the votes of Member States being
      weighted as laid down in Article 1A8(2 ) of the EEC Treaty . The Chairman
      shall not vote .
3.    The Commission shall adopt the decision . However , if the decision is not
      in accordance with the opinion issued by the Committee , it shall
      immediately be communicated to the Council . In that event , the Commission
      may defer application of the decision for a period not exceeding one month
      from the date of its communication .
      The Council , voting as provided for in Article A3(2 ) of the EEC Treaty ,
     may adopt a different decision within one month .
      Article 15
1.    Measures taken by Member States shall not be eligible for a financial
      contribution from the Community unless a favourable decision under Article
      1A has been taken in respect of the provisions relating thereto .
2.    The financial contribution from the Community shall be provided only in
      respect of eligible expenditure arising in connection with aid granted
      pursuant to decisions taken after the date on which this Regulation enters
      into force .
     Article 16
Detailed rules for the application of Article 9(2 ), 10(3 ) and 11(A ) shall be
adopted in accordance with the procedure laid down in Article 13 of Regulation
( EEC ) No 729 / 70 .
 ---pagebreak---     Artide 17
1 . Applications for reimbursement shall relate to expenditure incurred by
    Member States in the course of a given calendar year and shall be
    submitted to the Commission before 1 July of the following year .
2.  The granting of aid from the Fund shall be decided on in accordance with
    Article 7(1 ) of Regulation ( EEC ) No 729 / 70 .
3.  Payment on account may be authorized by the Commission .
A.  Detailed rules for the applicaion of this Article shall be adopted in
    accordance with the procedure laid down in Article 13 of Regulation ( EEC )
    No 729 / 70 .
    Article 18
Before 1 August each year , the Community and national measures in force
relating to this Regulation shall be examined in the context of an annyal
report which the Commission shall present to the European Parliament and the
Council and for which Member States shall send all necessary documentation to
the Commission .
The Council shall evaluate the results of such measures , taking into
consideration the rate of structural developement required to achieve the
objectives of the common agricultural policy , the effect on the production
objectives of the Community and on the harmonious development of the regions
of the Community , and the financial applications of the measures in question .
If necessary , the Council shall , in accordance with the procedure laid down in
Article A3 of the EEC Treaty , adopt appropriate provisions .
 ---pagebreak---     Artide 19
This Regulation shall enter into force on the third day following its
publication in the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable in
all Member States .
Done at
                                                 For the Council