CELEX: 51988PC0553
Language: en
Date: 1988-10-21
Title: Proposal for a COUNCIL REGULATION (EEC) laying down the conditions and procedures for the granting of aid for the conversion of agricultural production (presented by the Commission)

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COM (88) 553
Vol. 1988/0190
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                          COM(88 ) 553 final
                                                          Brussels ,, 21 October 1988
                          Proposal for a
                    COUNCIL REGULATION ( EEC )
      laying down the conditions and procedures for the
              granting of aid for the conversion
                   of agricultural production
                 ( presented by the Commission )
                                   \ · · * -V. · ;
                                    ■ ι ί ; ι · · · · .'*   '
                              - bS 'J " 7
                             Sorti é
 ---pagebreak---         • >'
                                     EXPLANATORY MEMORANDUM
 Council Regulation ( EEC ) No 797 / 85(1 ) on improving the efficiency of
 agriculture structures , as last amended by Regulation ( EEC ) No 1137 / 88(2 ),
 establishes an aid scheme to encourage farmers to switch to products which are
 not in surplus .    Article lc(2 ) of the Regulation states that the Council will
 adopt , on the basis of a Commission proposal , a list of products to which
 farmers may switch , with detailed rules of application and conditions for
grant of the aid .
The purpose of product conversion in this way is to help adapt surplus
production to market requirements . But situations vary widely in the
different regions of the Community , and to accommodate this , the Commission is
proposing that a list of product groups towards which conversion can be
accepted should be drawn up and that the Member States should be authorized to
specify within this list the various relevant products . In doing this work ,
the Member States will comply with the criteria set out in this draft
Regulation , the main aims being to avoid the emergence of new surplus products
and to ensure uniform application of the scheme .
The Commission has worked out criteria whereby conversion can be guided
towards products with internal levels of production which do not cover
Community demand and which do not systematically attract Community subsidies -
there are already , under the market organisations , schemes that can
specifically act as incentives to production of certain items ( e.g. adaptation
of the price hierarchy , varietal conversion , quality measures , etc .). As an
example , the conversion scheme for oilseeds and protein crops does not apply
to products such as rape and soyabeans , which already receive support under
their market organisation , but does apply to other products in this group , for
example , certain food legumes ( chick peas , lentils and beans ).
( 1 ) OJ No . L 93 , 30.03.1985 , p.l
( 2 ) OJ No . L108 , 29.04 . 1988 , p.l
                                                                                   l
 ---pagebreak---                                         - 2 -
It is also planned to authorise conversion to non-Annex-II products , including
animals for the production of fibres and fur , since , in some cases , their
production can be seen as a farming activity or as being closely linked
thereto , especially where scope for conversion to non-surplus agricultural
products is limited .
In view of the problems hampering disposal of various types of meat for the
Community , it is being proposed that the conversion scheme be restricted to
animals used for recreation and the production of fibres and fur .
The Commission recognises the importance of " varietal " conversion ,
i.e. conversion within a product group towards varieties which are more in
line with market demand , or towards " quality" products , but it takes the view
that the best way to encourage them is to use separate regulations . Thus its
intention is to promote varietal conversion under the market organisations
with the introduction , for example , of price hierarchy systems , and it is
studying a facility under which labels recognised at Community level could be
created for products of " biological " farming . The Commission is also planning
to encourage such " biological " farming practices within its extensif ication
scheme . As far as wood production is concerned , the Commission is seeking to
emphasise the potential of afforestation in conversion in agriculture , and is
therefore intending to put forward measures to encourage afforestation of
agricultural land in a separate communication on forestry .
As regards the nature of the aid , the Commission is proposing the adoption of
a system of special aids per hectare , based on income loss due to conversion .
It is proposed that the maximum aid amounts should be differentiated according
to the type of product from which the farmer is switching , as follows :
                                                                                 J
 ---pagebreak---                                        - 3 -
Product discontinued                                 Maximum annual amount
Crops on arable land                                   600 ECU / ha
Permanent crops excl . citrus fruit                  1 500 ECU / ha
Citrus fruit                                         2 200 ECU / ha
Cattle farming                                         200 ECU per livestock unit
                                                                     ( LU )
Sheep and goats                                        300 ECU / LU
Pigs                                                   100 ECU/ pig place
Poultry                                                100 ECU / 100 head
Eggs                                                   250 ECU/ 100 laying hens
These amounts are flat-rate figures for total income losses attributable to
the switch to a new enterprise at the beginning of the conversion period ,
i.e. when the income to accrue from the new product cannot yet be obtained .
As the income from the new product increases gradually during the early years ,
before reaching optimum levels , the aid will be paid during five years , the
amount being gradually scaled down during the fourth and fifth years where the
conversion is to permanent crops . Where the farmer switches to annual crops ,
or other product groups generating income from the very first years following
conversion , the aid will be granted for three years and the amount gradually
scaled down over the second and third years .
Within this framework the Member States will be responsible for determining
the aid amounts on the basis of specific commitments entered into .
 ---pagebreak---                                        Proposai for a
                                    COUNCIL REGULATION ( EEC )
           laying down the conditions and            procedures     for the granting
                  of aid for the conversion of agricultural production
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty           establishing the European Economic Community ,
Having regard to Council Regulation ( EEC ) No 797 / 85 of 12 March 1985 on
improving the efficiency of agricultural structures(l ) , as last amended by
Regulation ( EEC ) No 1337 / 88(2 ), and in particular Article lc(2 ) thereof ,
Having regard to the proposal from the Commission ,
Whereas, for the purposes of defining those products conversion to which can be_ authorized, allowance must
 be made for the varying situations in the different regions of the Community, and whereas a list of
 products or product groups should be established and the Member States should also be authorized
to specify the various relevant products , having due regard to certain
criteria avoiding , first and foremost, the generation of new surplus products
and ensuring uniform implementation of the scheme ;
Whereas , to allow for changes on the agricultural markets and the possible
development of certain products even at local level , provision should be made
to enable the Commission to modify the list ;
( 1 ) O.J. No L 93 of 30.03.1985 , p. 1
( 2 ) O.J. No L 108 of 29.04 . 1988 , p. 1
 ---pagebreak---                                            ?
Whereas , to prevent speculation of any kind , areas recently converted to
surplus products must be barred from the scheme ;
Whereas , in view of the growing need to protect the environment and maintain
the countryside , provision should be made to require the farmer to keep
converted farmland in good heart ;
Whereas the aid amounts are to be determined by the Member States on the basis
of income losses due to the income differential after conversion ; whereas
maximum amounts must be set , differentiated according to crops , and a period
during which the aid can be paid must be set allowing for the time needed to
switch to the new enterprise ;
HAS ADOPTED THIS REGULATION :
                                       Article 1
This Regulation lays down the conditions and detailed rules of the aid scheme
designed to encourage the conversion of production referred to in Article lr.
of Regulation ( EEC ) No 797 / 85 .
                                       Article ?
1 . Production conversion qualifying for the Community aid scheme may be
    implemented towards the following product groups :
    - oilseeds and protein plants , particularly for human consumption ;
    - dried fruit , berries , small fruit or tropical and sub-tropical fruit ;
    - medicinal or aromatic plants or plants intended for the production of
      spices ;
    - plants for use in the textile industry , paper-making and chemicals
      including the production of energy ;
    - pets or animals for non-food purposes , in particular for the production
      of fibres or furs ;
    - ornamental plants and flowers .
 ---pagebreak---                                              3
2 . On the basis of the list referred to in paragraph lj         Member States
     shall specify in detail those agricultural products conversion to which may
     be allowedj always provided :
    (a ) that the products concerned :
         - do not qualify , in the framework of a common market organisation , for
           Community subsidies such as production or processing aids ,
           intervention in the form of storage ,    financial compensation for
           withdrawal operations and buying in , or export refunds ;
         - are not intended mainly for consumption in the form of meat ;
         - are not products for which there is a trade balance surplus at
           Community level ;
    (b ) that conversion to such products :
         - yields operating advantages for the farmers ;
         - fosters , at Community level, a manner of development of the territory
  p        properly related to land suitability .
3 . Under the procedure laid down in Article 25 of Regulation ( EEC ) No . 797 / 85 ,
     the Commission may alter the list referred to in -
     paragraph 1 , having due regard , in particular , to the criteria referred to
     in paragraph 2 .
                                        Article 3
Only producers who undertake to switch production from surplus products to        non -
surplus products within the meaning of Article 1c(1 ) of Regulation ( EEC ) No
797 / 85 ,  indicated by the Member States in accordance with Article 2(2 ) of
this Regulation, may qualify for aid under the conversion scheme .
                                                                                        I
 ---pagebreak---                                         - 4 -
                                      Article 4
1 . To qualify for conversion aid , the producer must show to the satisfaction
    of the competent authorities that he has been producing the original
    product for a reference period to be fixed by the Member States _o_n the
    basis of criteria to be determined by the Commission in accordance with the
    procedure laid down in Article 25 of Regulation ( EEC ) No 797 / 85 .
2 . To protect the environment and natural resources , the producer shall ensure
    that 'converted agricultural land is kept in good heart .
                                      Article 5
1 . Conversion      aid shall be granted by hectare        6f   land      or
    by livestock unit involved in the conversion .
2 . The amount of the aid shall be determined by the Member States , having due
    regard to the income accruing from production before conversion and to the
    income deriving from the new enterprise . The maximum annual aid amounts
    are listed in the Annex .        Where the farmer converts to annual crops
    or to products not listed in Annex II to the Treaty , the aid shall be
    granted throughout a three-year period minus 25% and 30% respectively in
    the second and third years . Where the farmer converts to permanent crops ,
    the aid shall be paid for a period of five years minus 25% and 30%
    respectively in the fourth and fifth years .
 ---pagebreak---                                     Article 6
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
 ---pagebreak---                                            ANNEX
                              Maximum annual aid amounts
                            ( referred to in Article 5(2 )
Product discontinued                                        Maximum annual amount
Crops on arable land                                             600 ECU / ha
Permanent crops , excl . citrus fruit                          1 500 ECU / ha
Citrus fruit                                                   2 200 ECU / ha
Cattle farming                                                   200   ECU per livestock
                                                                             unit ( LU )
Sheep and goats                                                  300 ECU / LU
Pigs                                                             100   ECU / pig place
Poultry                                                       100 ECU / 100 head
Eggs                                                             250   ECU / 100 laying
                                                                                 hens
  ( 1 ) LU conversion factors for cattle , sheep and goats are given in the Annex
        to Council Regulation ( EEC ) No . 797 / 85 of 12 Harch 1985 .
 ---pagebreak---      FINANCIAL               STATEMENT                   concerni ng : a proposa L for a Council Regulation
      laying down the conditions and detailed rules for the granting of aid for the
     conversion of agricultural production .
  1 . Budget heading : m B        lie® : 300       Ti tie : Specific structural schemes directly linked
                                                              to policy relating to the markets .
  2. Legal basis : Reg > ( EEC ) No _ 797 / 35 ^ Art . 1c ( 2 )
  3 . Classification :           N Co*pulsory expondlturo/ Non-conpulsory expenditure
  4. Purpose/description of the neasure : Definition of the rules for the granting of aid for
                                              the conversion of agricultural production .
 5.     Method of calculation
 5.1 Fora of expenditure :        reimbursement of a part of the eligible public expenditure
 5.2 Conaunity contribution :        25%
 5.3    Calculation :     See Annex
 6.     Financial iapllcation as regards operating appropriations
 6.1 Schedule of coanltaent appropriations and payaent appropriations (a ECU )
                     Year                      C.A.                      P.A.
                     19 90                       1                        1
                     19 91                       1.8                      1.8
                     19 92                      2.7                       2.7
                     19 93                      3.1                       3.1
                     19 94                      3.5                       3.5 '
                    following years             9.1                       9.1
                    Total                      ?1                        2JLZ
        Mnanclng during current year :     not required .
7. Observations : This updating of the financial estimate is supplied for guidance .
    The principle as to the aid scheme in question was agreed by the Council in its
    Regulation ( EEC ) No 1760/87, and its cost , together with that relating to
     ex tens i f i cat i on" was the subject of a financial statement presented with
    COM ( 86 ) 199 final / 3 .
 ---pagebreak---                                ANNEX TO FINANCIAL STATEMENT
Subject :     Financial estimate relating to the conversion of agricultural
              production .
POSSIBILITIES
Five main situations may occur :
1 . Conversion of arable crops to other arable crops ( e.g. cereals to
     industrial products , aromatic plants , medicinal plants ) ( A/A).
2 . Conversion of arable crops to permanent crops ( e.g. cereals to jojoba , soft
     fruit , nuts ) ( A/ P ).
3 . Conversion of permanent crops to other permanent crops ( e.g. fruit trees to
     nuts , tropical fruit ) ( P / P ).
4 . Conversion of " extensive” livestock production to other " extensive”
     livestock production ( e.g. cattle , sheep to cashmere , angora ) ( E/ E ).
5 . Conversion of intensive livestock production to other intensive livestock
     production ( e.g. pigs , poultry to fur , etc .) ( I / I ).
Estimated quantities and aid rates are as follows :
:    Conversion                 Annual quantities                 Average unit aid
                                                                     ( 1st year )
:     A/A                       3 000 ha                           200  ECU/ ha    (1)
:     A/ P                      3 000 ha                           400  ECU/ ha    (2)
:     P/P                       1 000 ha                         1.200  ECU/ ha    (2)
:     E/E                       3 000 LU (= + 3.000 ha )           100  ECU/ GVE   (1)
:     I/I                      10 000 pig places                    50 ECU/ place  (1)
                                        ( or equivalent for
                                          poultry )
( 1 ) Conversion to production which is profitable from the first year .
( 2 ) Conversion to production which is profitable only after several years .
 ---pagebreak---                                                  ?
Conversion to annual crops and livestock
A/A :     3.000 ha        x 200 ECU x 25 % * 0,15 m ECU
E/E :     3.000 LU        x 100 ECU x 25 % = 0,075 m ECU
I / I : 10.000 places       x50 ECU x 25 % = 0.125 m ECU
- 1st year                                        0,350 m ECU
- 2nd year (- 25 %)                               0,263 m ECU
- 3rd year (- 30 % )                              0,245 m ECU
        Year of                    Cost to be borne by EAGGF ( Guidance ) in :
      conversion                          :          :          :         :    Following
                       1990        1991      1992        1993      1994         years
    1989            0,35          0,263     0,245
    1990                          0,35      0,263       0,245
    1991                                    0,35        0,263     0,245
    1992                                                0,35      0,263           0,245
    1993                                                          0,35            0,508
    1994                                                                          0,858
                    0,35          0,613     0,858       0,858     0,858           1,611
                     i.e . a total of 5,148 m ECU
Conversion to permanent crops
A/ P :   3.000 ha X     400 ECU X 25 * = 0,3       m   ECU
P/P :    1.000 ha X 1.200 ECU X 25 % = 0j_3        m   ECU
- 1.    year                                 0,6   m   ECU
- 2.    year                                 0,6   m   ECU
- 3.    year                                 0,6   m   ECU
- 4.    year (- 25 % )                       0,45  m   ECU
- 5 . year (- 30 % )                         0,42  m   ECU
:      Year of                      Cost to be bonne     by EAGGF ( Guida nee ) in :       :
:     conversion                                                                following  :
                       1990        1991   :  1992        1993   :  1994            years   :
:   1989            0,6           0,6    : 0,6          0,45   :  0,42
:   1990                -
                                  0,6    : 0,6          0,6    :  0,45          0 , 42    :
:   1991                -           -
                                         : 0,6          0,6    :  0,6           0 , 87    :
:   1992                -           -
                                         :    -         0,6    :  0,6           1 , 47    :
:   1993                -           -
                                         :    -           -
                                                               :  0,6           2,07      :
:   1994                -           -    :                -
                                                               :                2,67      :
                    0,6           1,2    : 1*1          2,25   : 2,67            7,5      :
f
                    i . e . aí . otal of 16,02 m EC:u .
                                                                                             M
 ---pagebreak---                                          3
SUMMARY (m Ecu )
: Cost to be borne by                Conversion towards               Total
: EAGGF ( Guidance ) in          annual         permanent
                                   crops          crops
:         1990                   0,35              0,6                 0,95
:         1991                   0,613             1,2                 1,813
:         1992                   0,858             1,8                 2,658  :
:         1993                   0,858             2,25                3,108  :
:         1994                   0,858             2,67                3,528
   Following years               1.611             7.5                 9.111  :
:         Total                  5,148            16.07               21.168  :
Reduced EAGGF ( Guarantee )
The conversion schemes will result in less expenditure having to be borne
by the Guarantee Section . The actual saving will depend on possibilities
chosen as regards hectarages and products . On the basis of the areas and
the numbers of livestock shown above and simplified hypotheses as regards
products ( cereals , lemons , beef /veal and pigmeat ) , savings are put at a
tentative 8 m ECU in 1990 , increasing to 40 m ECU by 1994 .