CELEX: 51993PC0270
Language: en
Date: 1993-06-16
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulations (EEC) Nos 2328/91, 866/90, 1360/78, 1035/72 and 449/69 with a view to expediting the adjustment of production, processing and marketing structures as part of the reform of the common agricultural policy

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                             COM(93) 270 final
                                                             Brussels, 16 June 1993
                                          Proposal for a
                                COUNCIL REGULATION (EEC)
               amending Regulations (EEC) Nos 2328/91, 866/90, 1360/78, 1035/72
                     and 449/69 with a view to expediting the adjustment of
                     production, processing and marketing structures as part
                        of the reform of the common agricultural policy
                                 (presented by the Commission)
SMiUMtrumam
 ---pagebreak---                           EXPLANATORY MEMORANDUM
Objective 5(a) of the reform of the Structural Funds was designed to expedite the
adjustment of agricultural structures throughout the Community as part of the reform of
the common agricultural policy. It was implemented through the recasting and
strengthening of the existing socio-structural horizontal measures and included, up to
1992, when the reform of the common agricultural policy came into force, the following
measures:
(a)    improvement of the structures of production:
              aid for investments in agricultural holdings,
              setting-up aid for young farmers,
              aid for accounting on agricultural holdings,
              aid for mutual assistance, relief and management services,
              aid for vocational training in agriculture,
              aid for mountain and hill farming and farming in other less-favoured areas,
(b)    a contribution to improving the situation on agricultural markets:
              aid for the set-aside of arable land,
              aid for more extensive production,
              aid for the early retirement of farmers;
(c)    protection for environmentally sensitive areas;
(d)    forestry measures for agricultural land;
(e)    improvement of the structures for the processing and marketing of agricultural and
       forestry products:
              start-up aid for producer groups marketing agricultural products,
              investment aid for the food industry and firms engaged in the marketing and
              first processing of wood (before industrial factory sawing).
The measures under Objective 5(a) are unique in that they are the only measures under
the reform of the Structural Funds for which there exist Council regulations defining in
detail the conditions which beneficiaries have to satisfy in order to qualify for aid which
is part-financed by the Community. These conditions are essential if the common policy
on agricultural structures is to be fully integrated into the common agricultural policy
and they ensure a high degree of transparency in the use of Community funds. They
also provide objective yardsticks for monitoring operations.
The retention of horizontal structural measures for agriculture is justified by the fact that
the policy on price support and agricultural markets applies throughout the Community.
This requires a common policy on agricultural structures with horizontal instruments
which permit holdings and the food industry to adjust to changes in the common
organization of the agricultural markets.
 ---pagebreak---     The present regulations concerned with Objective 5(a) are:
          Regulation (EEC) No 2328/91, which covers measures for farmers (see 1(a) to (d)
          above);
          Regulations (EEC) Nos 1360/78, 1035/72, 866/90 and 867/90, which cover
          measures for the processing and marketing of products (see the first and second
          indents respectively of 1(e) above).
3.  The Commission believes that the coherence and effectiveness of all regional and rural
    development operations should be improved and that this can be achieved only through
    integrating the horizontal measures to improve agricultural structures more closely into
    the existing procedures for programming and partnership.
    That is why recent Commission proposals on assistance from the Structural Funds
    provide for an adjustment of the rules on common measures financed under Objective
    5(a).
    It should be noted that some integration has already taken place. Aid for the marketing
    and processing of agricultural products is covered by sectoral plans, Community support
    frameworks and programmes. Measures under Objective 5(a) in Objective 1 regions are
    fully integrated into the Objective 1 procedures for programming and partnership, at
    least as far as the determination of the total financial resources available for Objective
    5(a) in those regions is concerned.
    Nevertheless, the Commission would like to see greater clarity in budget planning at
    both Community and national level. Indicative financial envelopes for the Objective
    5(a) measures should be adopted through partnership for the six-year planning period.
    The Member States could also indicate more clearly their programming priorities among
    the measures to be implemented, the financing rates to be applied and the objectives in
    view. These indications could be adjusted in the light of changing circumstances by
    following the procedures used for all structural measures.
4.  The procedure for programming measures under Objective 5(a) is set out in the
    proposals for Council regulations amending the framework and coordinating regulations
    for the reform of the Structural Funds 0 \ The main stages are as follows:
    (a)   the Member States submit to the Commission their plans for measures under
          Objective 5(a) at the appropriate geographical level;
    (b)   the Commission considers these plans and draws up the Community support
          frameworks (CSFs), in partnership with the Member State, as follows:
                 in the case of the Objective 1 regions, measures under Objective 5(a) are
                 included in the CSFs for that Objective. Those CSFs are then presented to
                 the Committee on the Development and Conversion of Regions;
(i)
    COM(93) 67 and COM(93) 124.
 ---pagebreak---             -     in other cases, measures under Objective 5(a) relating to
                  agricultural structures are included in a single CSF for
                  each Member State which distinguishes the measures to be
                  implemented in Objective 5(b) areas from those for the rest
                  of the territory. That CSF is presented to the Committee
                  on Agricultural Structures and Rural Development.
       (c)  The Commission takes a decision on the applications            for
            assistance submitted by the Member States, which relate to the
            forms of assistance provided for by the Community rules.
       This form of programming for measures under Objective 5(a), based on
       CSFs with indicative financial envelopes, is designed to reconcile the
       requirements for budgetary clarity, coherence between the various
       measures and flexibility in implementation.
5.     This proposal for a single Council Regulation is intended primarily
       to introduce into the regulations mentioned on page 2 the methods of
       programming laid down in the proposals for Council Regulations
       amending the framework Regulation and the coordinating Regulation of
       the reform of the Structural Funds. Reference is made in the
       Objective 5(a) Regulations to the rules and procedures of those
       regulations in order to avoid any repetition.
       The Articles concerned are as follows:
                                          Regulations (EEC) Nos.
|   Reference to               2328/91 |  866/90   |  1360/78 |   1035/72
  - Programming               Art.1(3)    Art.2(1)   Art.12(2)  Art.36(2)
  - Plans                     Art.29(1)   Art.2(2)   Art.14(1) Art.36a(l)
  - CSF                       Art.29(2)   Art.2(3)   Art.14(2) Art.36a(2)
  - Applications for          Art.30(l)   Art.10    Art.l4a(l) Art.36b(l)
     assistance
  - Granting of assistance    Art.30(2) Art.15(1)   Art.l4a(2) Art.36b(2)
   - Payment of assistance    Art.33      Art.17     Art.15     Art.36c
   - Checks                   Art.36      Art.18       -  (*)       -  (*)
(*) : In the absence of provisions, those of Regulation       (EEC) No 4253/88
       apply.
 ---pagebreak--- It should be noted that the proposed revision of the Objective 5(a) regulations will
greatly simplify procedures and result in greater flexibility than is available under the
existing system.
The main elements of simplification concern the various stages of programming and are
as follows:
      The plans
       Of the five instruments under which Objective 5(a) assistance is currently
      provided, the two concerning aid for processing and marketing require the Member
       States to draw up two sectoral plans and result in the adoption of two sectoral
       CSFs.
       Under the system proposed by the Commission, there would be one plan and one
       CSF to cover all Objective 5(a) assistance. The sectoral plans will be
       discontinued. Furthermore, the content of an Objective 5(a) plan would be simpler
       than that of the present sectoral plans.
       Consideration of aid schemes proposed for Community part-financing
       Under the current procedure, the Commission considers the aid schemes proposed
       for Community part-financing in two stages: first the draft national rules and then
       the final text of the rules.
       The Commission is proposing that in future the aid schemes will be considered
       only once, when the CSF is approved.
       The forms of assistance
       At present assistance is financed:
             in the case of aid granted at the level of the holdings, by the repayment each
             year of part of the public expenditure disbursed during the previous year;
             in the case of aid to processing and marketing firms, by the part-financing
             of operational programmes.
       The Commission will leave the Member States to choose the forms of assistance.
       For those Member States which so wish, there could be a single operational
       programme covering all Objective 5(a) assistance for the period 1994-99.
       Furthermore, those Member States which so wish will be able to submit the plan
       and the programme in a single document.
             The content of applications for assistance
       Assistance to processing and marketing firms is currently covered by two very
       detailed operational programmes, in many cases composed of individual projects.
       Over recent years, this has led to the submission of almost 60 operational
       programmes per year, each for an average amount of only a few million ecus.
 ---pagebreak---          In future, the structure of these operational programmes will be aligned on the
         much more simple structure of the other Objectives (description of measures,
         conditions for eligibility, financing plan). This should result in one programme
         per Member State covering the whole of the period 1994-99.
   The Commission considers that the Member States are familiar with the measures as
   such under Objective 5(a) and the related conditions for eligibility and that these should
   therefore be retained. Hence the proposed changes (see next paragraph) have
   deliberately been kept to the absolute minimum.
   The new system will introduce into the financial procedures a flexibility which does not
   exist at present. As soon as Community appropriations for Objective 5(a) have been
   brought together under a single Objective 5(a) Community support framework, the rules
   in force will permit any transfers between instruments which prove necessary in the
   course of implementation following the simple procedures which already apply to the
   other Objectives (in general, a decision by the Monitoring Committee). Similarly, the
   system of advances will in future apply to all Objective 5(a) instruments whereas
   hitherto it has applied to only some of them.
7. This proposal also comprises some technical adjustments, as well as a limited number
   of changes to Regulations (EEC) Nos 2328/91 and 866/90.
   The proposed amendments to Regulation (EEC) No 2328/91 are intended to take into
   account the reform of the common agricultural policy:
   (a)   all the provisions concerning set-aside, extensification, forestry measures on
         agricultural holdings and the environment are deleted because these measures are
         now financed by the Guarantee Section of the EAGGF (amendments of Article 1
         and Titles I, II, VII and VIII of Regulation (EEC) 2328/91);
   (b)   the new provisions governing the common organization of the beef/veal market lay
         down stocking rates which, for the sake of consistency, should also apply to
         investment aid (amendment of Article 6);
   (c)   greater flexibility is proposed for investments which are not aimed at agricultural
         production, in order to facilitate diversification of farmers' activities (amendment
         of Article 12);
   (d)   aid for the management of agricultural holdings should be extended to include
         administrative support for farmers (amendment of Article 16);
   (e)   there has been a new definition of the areas in which durum wheat has been
         traditionally produced within the framework of the common organization of the
         market; in order to avoid a shift in where this crop is grown, it is undesirable to
         continue the compensatory allowance for natural handicaps which could hitherto
         be granted outside the traditional areas of production (amendment of Article 19);
 ---pagebreak--- 8.  There is also reason to extend certain special provisions adopted for the application of
    investment aid to agricultural holdings in Portugal and the former German Democratic
    Republic (GDR) where the situation as regards agricultural structures has not changed
    sufficiently since their integration into the Community.
    It is therefore proposed (Articles 37 and 38):
    (a)    in the case of Portugal, to continue to authorize more flexible conditions under the
           aid schemes for agricultural holdings as regards:
                 fixing the reference income,
                  aid to group-operated holdings,
                 granting of the compensatory allowance,
           which have also been extended through the derogations adopted by the Council in
           its Regulation (EEC) No 1600/92 of 15 June 1992 introducing specific measures
           for the Azores and Madeira relating to certain agricultural products(2) (Poseima);
    (b)    in the case of the former GDR, to extend for three years the derogations still in
           force pursuant to Regulation (EEC) No 2328/91.
9.  Finally, with regard to Regulation (EEC) No 866/90, it is proposed explicitly to include
    organic farming products among the priorities for assistance (amendment of Article 10
    of Regulation (EEC) No 866/90), to remove fishery and aquaculture products from the
    scope of the Regulation following the creation of the FIFG {Financial Instrument for
    Fisheries Guidance) but to include products similar to agricultural products which cannot
    be taken into account at present because they are not listed in Annex II to the EEC
    Treaty, for example perfume plants (amendment of Article 12).
10. In conclusion, the draft amendments to Regulations (EEC) Nos 2328/91, 866/90,
     1360/78 and 1035/72 follow the Commission guidelines adopted at the time of its
    proposals on the framework regulation and the coordinating regulation of the Structural
    Funds, as well as the EAGGF Guidance Section Regulation.
    Their essential features are the restriction to the strict minimum of the amendments to
    the Objective 5(a) measures and conditions for eligibility, a very considerable effort to
    simplify procedures and greater flexibility. It should therefore prove possible to carry
    out this exercise rapidly and concisely.
(2)
     OJNoL 173, 27.6.1992, p. 1.
 ---pagebreak---                                               Proposal for a
                                   COUNCIL REGULATION (EEC)
                amending Regulations (EEC) Nos 2328/91, 866/90, 1360/78, 1035/72
                       and 449/69 with a view to expediting the adjustment of
                       production, processing and marketing structures as part
                           of the reform of the common agricultural policy
    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^,
    Having regard to the opinion of the Economic and Social Committee(3),
    Whereas Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the
    Structural Funds and their effectiveness and on coordination of their activities between
    themselves and with the operations of the European Investment Bank and the other existing
    financial instruments(4) has been amended by Regulation (EEC) No ..../..(5), particularly as
    regards the programming of assistance from the Funds;
    Whereas Council Regulation (EEC) No 4253/88 of 19 December 1988 laying down provisions
    for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of
    the different Structural Funds between themselves and with the operations of the European
    Investment Bank and the other existing financial instrumenta } has been amended by
    Regulation (EEC) No ..../..(7), particularly as regards the programming of assistance from the
    Funds;
    Whereas Council Regulation (EEC) No 4256/88 of 19 December 1988 laying down provisions
    for implementing Regulation (EEC) No 2052/88 as regards the EAGGF Guidance Section(8)
    has been amended by Regulation (EEC) No ..../..(9), particularly in order better to integrate
    measures under Objective 5(a) into the programming of assistance from the Funds and
    because certain measures are now being financed by the EAGGF Guarantee Section;
    (,)
          OJ No
    (2)
          OJ No
    (3)
          OJ No
    (4)   OJNo 185, 15.7.1988, p. 9.
    (5)   OJNo
    (6)   O J N o L 374, 31.12.1988, p. 1.
    (7)   OJNoL
    (8)   OJ No L 374, 31.12.1988, p. 25.
    (9)   OJNoL
12)
 ---pagebreak--- Whereas under Article 2 of Council Regulation (EEC) No ..../..(10) the Council must, by
31 December 1993, decide on the adjustment of common measures financed under Article 2
of Regulation (EEC) No 4256/88 with a view to attaining the objectives laid down in
Regulation (EEC) No 2052/88, and in accordance with the rules, particularly those on
programming, laid down in Regulations (EEC) Nos 2052/88 and 4253/88, and in accordance
with Regulation (EEC) No 4256/88;
Whereas steps should be taken to ensure that the measures envisaged are compatible with the
reform of the common agricultural policy and that, in particular, they do not result in an
overall increase in production in sectors which are already in surplus;
Whereas, in this regard, the aid to agricultural holdings should be adjusted with regard to the
set-aside of arable land and the fixing of a stocking rate for beef cattle on holdings;
Whereas special rules have been adopted for the application of investment aid on agricultural
holdings in Portugal and in the territory of the former German Democratic Republic; whereas
the situation as regards agricultural structures in these parts of the Community has not
evolved sufficiently; whereas, therefore, certain of the provisions intended to improve the
situation can justifiably be extended in an appropriate form;
Whereas the rates for part-financing by the Community are now fixed as part of the
programming of assistance from the Structural Funds; whereas, however, in the case of aid
for the adjustment of production structures, the procedure applicable until 31 December 1992
to the fixing of these rates for regions not covered by Objective 1 should be applied until the
Community support frameworks including such aid take effect in accordance with Article 11
of Regulation (EEC) No 2052/88;
Whereas Council Regulation (EEC) No 2328/91 of 15 July 1991 on improving the efficiency
of agricultural structures01}, as last amended by Regulation (EEC) No 870/93°2), Council
Regulation (EEC) No 866/90 of 29 March 1990 on improving the processing and marketing
conditions for agricultural products(13), as amended by Regulation (EEC) No 3577/90°4%
Council Regulation (EEC) No 1360/78 of 19 June 1978 on producer groups and associations
thereof°5), as last amended by Regulation (EEC) No 746/9306), Council Regulation (EEC) No
 1035/72 of 18 May 1972 on the common organization of the market in fruit and vegetables0 ^
as last amended by Regulation (EEC) No 746/93, and Council Regulation (EEC) No 449/69
of 11 March 1969 on the reimbursement of aid granted by Member States to organizations
of fruit and vegetable producers08),
(io:
      OJNoL
      OJNoL      218, 6.8.1991, p. 1.
(12   OJNoL      91, 15.4.1993, p. 10.
(B:
      OJNoL      91, 6.4.1990, p. 1.
(M:
      OJ No L    353, 17.12.1990, p. 23.
(is:  OJNoL      166, 23.6.1978, p. 1.
de:   OJNoL      77, 31.3.1993, p. 14.
07    OJNoL      118, 20.5.1972, p. 1.
(is:  OJNoL      61, 12.3.1969, p. 2.
 ---pagebreak--- HAS ADOPTED THIS REGULATION:
                                           Article 1
Regulation (EEC) No 2328/91 is amended as follows:
1.  In Article 1,
    (a)   paragraph 2, first subparagraph, is amended as follows:
          (i)    the introductory text is replaced by the following.
                 "2.   In accordance with Articles 5(2)(b) and 11 of Regulation (EEC) No
                       2052/88, the EAGGF, hereinafter called 'the Fund', Guidance Section,
                       shall, acting under the common measure referred to in paragraph 1,
                       provide part-financing for national aid schemes concerning:"
            (ii) points (a), (f) and (g) are deleted;
          (iii) point (h) is replaced by the following:
                 "(h) vocational training measures connected with the measures referred to
                       in points (b), (c) and (d)."
    (b)   the second subparagraph is deleted.
    (c)   the following paragraph 3 is added:
           "3.   The common measure referred to in paragraph 1 shall be the subject of
                 programming under the conditions referred to in Article 11 of Regulation
                 (EEC) No 2052/88.
                 Applicants shall be entitled to aid as provided for in this Regulation only if
                 all the conditions of this Regulation are met and the financial resources
                 provided by the programming defined in Article 29 have not been
                 exhausted."
2.  Articles 2, 3 and 4 are deleted.
3.  The second subparagraph of Article 5(1) is deleted.
4.  Article 6 is amended as follows:
    (a)   The following is added to the first indent of paragraph 1 : "and, where necessary,
          with Community quality standards,"
    (b)   The first five subparagraphs of paragraph 4 are replaced by the following:
                                               10
 ---pagebreak---          "Aid may not be granted for investments as referred to in paragraph 1 which have
         the effect of increasing pig places.
         The place required by one breeding sow shall correspond to 6.5 fattening pig
         places."
   (c)   Paragraph 5 is replaced by the following:
         "5.   The aid referred to in paragraph 1 and granted for investments relating to the
               beef sector shall be restricted to livestock enterprises where the beef-cattle
               stocking rate does not, in the final year of the plan, exceed the following
               number of livestock units (LU) per hectare of forage area used for feeding
               the cattle: 3, 2.5 and 2 LU/ha for the plans ending respectively in 1994,
                1995 and 1996 or later.
               The LU conversion table is given in Annex I".
5. The fifth subparagraph of Article 7(2) is deleted.
6. In the second subparagraph of Article 9(4) the second and third indents are replaced by
   the following:
   "-    three times the amount per holding referred to in the first subparagraph of
         Article 7(2),"
7. The following indent is inserted after the last indent of Article 12(5):
   "-    aid for investments in agricultural holdings not relating to field crops or
         stockfarming,"
8. The heading of Title V is replaced by the following:
                                          "Title V
                      Other measures to assist agricultural holdings".
9. Article 16 is amended as follows:
   (a)   Paragraphs 1 and 2 are replaced by the following:
         "1.   Member States may, on request, grant aid to agricultural associations for the
               purpose of creating or developing services to assist farm management and
                which is to help cover their management costs.
         2.    The aid referred to in paragraph 1 shall be granted in respect of the work of
                staff responsible for providing individual assistance in the technical,
               economic, financial and administrative management of agricultural holdings."
                                             11
 ---pagebreak---     (b)   Paragraph 5 is replaced by the following:
          "5.   Member States shall fix the amount of the aid referred to in paragraph 1 per
                member of staff employed on a full-time basis on the work specified in
                paragraph 2. This amount shall be spread over the first five years of each
                member of staffs employment; it may be spread degressively over this
                period. The maximum eligible total of the aid shall be ECU 54 000 for each
                member of staff."
    (c)   In paragraph 6:
           (i)  in the first subparagraph, the words "farm management services" are
                replaced by "services to assist farm management",
          (ii)  in the second subparagraph, the figure "501.4" is replaced by "750".
10. Article 18 is amended as follows:
    (a)   The words "retirement pension" in the first subparagraph of paragraph 1 and in
          paragraph 2 are replaced by "retirement or early-retirement pension".
    (b)   In paragraph 2, the word "reimbursement" is replaced by "part-financing".
11. Article 19(1) is amended as follows:
           (i)  the first indent of (b)(i) is deleted;
          (ii)  the second sentence of (c) is deleted.
12. Articles 21 to 27 are deleted.
13. Tn the first subparagraph of Article 28(1), the words "Articles 3 and 5 to 16" are
    replaced by "Articles 5 to 16".
14. Article 29 is replaced by the following:
                                          "Article 29
    1.    Measures under this Regulation shall be included in the plans drawn up and
          presented by the Member States in accordance with Article 11(1) and (2) of
          Regulation (EEC) No 2052/88 and Articles 5, 6 and 7 of Regulation (EEC) No
          4253/88.
    2.    Measures under Articles 5 to 11, 13 to 20 and 28 of this Regulation shall be
          included in the Community support frameworks drawn up in accordance with
          Article 11(3) of Regulation (EEC) No 2052/88 and Articles 8 and 9 of Regulation
          (EEC) No 4253/88 and approved by Commission decision in accordance with
          Article 10 of Regulation (EEC) No 4253/88."
                                               12
 ---pagebreak--- 15. Article 30 is replaced by the following:
                                          "Article 30
    1.    Member States shall forward the following with the plans referred to in
          Article 29(1):
          (a)    an aid application presented in accordance with Article 14(1) and (2) of
                 Regulation (EEC) No 4253/88 relating to the measures referred to in
                 Article 29(2) and aid under Council Directives 72/159/EEC* and
                 72/160/EEC";
          (b)    all laws, regulations or administrative provisions concerning aid schemes to
                 implement the measures provided for in Article 29(2) as well as in
                 Article 12.
    2.    The Commission shall examine all the provisions referred to in paragraph 1 and
          shall decide on the grant of assistance from the Fund in accordance with
          Article 14(3) and (4) of Regulation (EEC) No 4253/88.
    *     O J N o L 96, 23.4.1972, p. 1.
    **    OJ No L 96, 23.4.1972, p. 9."
16. Articles 31 and 32 are deleted.
17. Article 33 is replaced by the following:
                                          "Article 33
    1.    Assistance shall be paid in accordance with Article 21 of Regulation (EEC) No
          4253/88; however, payment of the balance shall be subject to the conditions
          referred to in paragraph 4 of that Article and based on a statement of the
          expenditure incurred by the Member States during a calendar year, which is
          submitted to the Commission before 1 July of the' following year.
    2.    The Commission shall adopt detailed rules for the application of this Article after
          consulting the Committee referred to in Article 29 of Regulation (EEC) No
          4253/88."
18. Article 35 is replaced by the following:
                                          "Article 35
    1.    This Regulation shall be without prejudice to the right of Member States to adopt
          additional aid measures in the areas covered by this Regulation, with the exception
          of those covered by Articles 5 to 9, 11, 12(2), (3) and (4) and 17 on terms
          differing from those laid down therein, or in amounts exceeding the ceilings laid
          down therein, provided that Articles 92, 93 and 94 of the Treaty are not infringed.
                                              13
 ---pagebreak---     2.    Articles 92, 93 and 94 of the Treaty, with the exception of Article 92(2), shall not
          apply to the aid measures governed by Articles 5 to 9, 11, 12(2), (3) and (4) and
          17."
19. Article 36 is replaced by the following:
                                         "Article 36
    Checks shall be carried out in accordance with Article 23 of Regulation (EEC) No
    4253/88."
20. Article 37 is replaced by the following:
                                         "Article 37
    The following special provisions shall apply to Portugal until 31 December 1995:
    (a)   The Commission may, when taking decisions as referred to in Article 29(2),
          authorize Portugal, for the purposes of fixing the reference income within the
          meaning of Article 5(3), to apply a correction coefficient to the average gross
          income of non-agricultural workers throughout Portuguese territory. This
          coefficient may not exceed:
          - 1.7 for 1993,
          - 1.5 for 1994,
          - 1.3 for 1995.
    (b)   The Commission may, when taking decisions as referred to in Article 29(2),
          authorize Portugal to apply Article 9(1) to (4) to group-operated holdings of which
          only two-thirds of the members meet the condition referred to in Article 5(1 )(a).
          At the same time, the Commission shall determine the specific terms on which aid
          is to be granted to such group-operated holdings.
    (c)   The compensatory allowance within the meaning of Article 17 may be granted to
          farmers who farm at least 1 ha of utilized agricultural area in mainland Portugal."
21. Article 38 is amended as follows:
    (a)   In paragraph 1 :
            (i) points (a), (b) and (c) are deleted;
           (ii) the following is added to (f):
                 "The ceiling laid down in the second indent of the second subparagraph of
                Article 9(4) shall be increased to three times that volume of investment per
                holding";
          (iii) point (h) is deleted.
                                             14
 ---pagebreak---     (b)    Paragraph 2 is replaced by the following:
          "2.    Points (d) to (g) of paragraph 1 shall apply until 31 December 1996."
22. Article 39 is deleted.
                                              Article 2
Regulation (EEC) No 866/90 is amended as follows:
1.  The end of the last sentence of Article 1(1) from the word "namely" is deleted.
2.  The title of Title I is replaced by the following:
                                             "TITLE I
                                          Programming"
3.  Article 2 is replaced by the following:
                                             "Article 2
                          Plans and Community support frameworks
     1.   The common measure referred to in Article 1 shall be the subject of programming
           under the conditions referred to in Article 11 of Regulation (EEC) No 2052/88.
    2.    Measures under this Regulation shall be included in the plans drawn up and
           presented by the Member States in accordance with Article 11(1) of Regulation
           (EEC) No 2052/88 and Articles 5, 6 and 7 of Regulation (EEC) No 4253/88.
    3.     Investments under this Regulation shall be financed on the basis of the Community
           support frameworks referred to in Article 11(3) of Regulation (EEC) No 2052/88
           and Articles 8 and 9 of Regulation (EEC) No 4253/88 and approved by
           Commission decision in accordance with Article 10 of Regulation (EEC) No
           4253/88."
4.  Articles 3 to 7 are deleted.
5.  Article 8(1) is replaced by the following:
    "1.    Investments eligible for assistance from the Funds under this Regulation shall meet
           selection criteria fixing priorities and indicating investments which may not receive
           Community financing."
6.  Articles 9 and 10 are replaced by the following:
                                                 15
 ---pagebreak---                                           "Article 9
                                    Forms of assistance
   The Fund shall provide assistance in the implementation of the measure which is the
   subject of this Regulation by means of:
   (a)    the part-financing of operational programmes within the meaning of Article 5(2)(a)
          of Regulation (EEC) No 2052/88
          or
   (b)    the provision of global grants within the meaning of Article 5(2)(c) of Regulation
          (EEC) No 2052/88.
                                          Article 10
                                    Applications for aid
   Member States shall forward the following with the plans referred to in Article 2(2):
   (a)    an aid application presented in accordance with Article 14(1) and (2) of Regulation
          (EEC) No 4253/88;
   (b)    all laws, regulations or administrative provisions adopted to implement the
          common measure defined in Article 1 of this Regulation."
7. The following is added to Article 11(2):
   ", in accordance with Council Regulation (EEC) No 2092/91 of 24 June 1991 on organic
   production of agricultural products and indications referring thereto on agricultural
   products and foodstuffs*.
      O J N o L 198, 22.7.1991, p. 1."
8. Article 12(2) is replaced by the following:
   "2.    Investments under this Regulation shall concern the products listed in Annex II to
          the Treaty, to the exclusion of those concerning fishery and aquaculture products.
          However, investments concerning products falling within CN codes 4502, 4503
          and 4504 shall also be allowed.
          The Commission may accept investments concerning other products provided:
                aid recipients have direct contractual links with producers of the basic
                agricultural products or
                the products concerned are similar to those listed in Annex II to the Treaty."
                                              16
 ---pagebreak--- 9.  The third indent of Article 13 is deleted.
10. Article 14 is deleted.
11. In Article 15:
    (a)    paragraph 1 is replaced by the following:
           "1.   The Commission shall decide on the grant of assistance from the Fund in
                 accordance with Article 14 of Regulation (EEC) No 4253/88."
    (b)    paragraph 3 is deleted.
12. In Article 16(3) the words, "investments selected by the Commission for assistance from
    the Fund" are replaced by "investments eligible for assistance from the Fund".
13. Article 18 is replaced by the following:
                                         "Article 18
                                           Checks
    Checks shall be carried out in accordance with Article 23 of Regulation (EEC) No
    4253/88."
14. Articles 19, 19a and 20 and 22 are deleted.
                                          Article 3
Regulation (EEC) No 1360/78 is amended as follows:
1.  Article 12 is replaced by the following:
                                         "Article 12
     1.   The set of measures provided for in this Regulation shall constitute a common
          measure within the meaning of Article 2(1) of Council Regulation (EEC) No
          4256/88*.
    2.    The common measure referred to in paragraph 1 shall be the subject of
          programming under the conditions referred to in Article 11 of Council Regulation
          (EEC) No 2052/88**.
          Applicants shall be entitled to aid as provided for in this Regulation only if all the
          conditions of this Regulation are met and the financial resources provided by the
          programming defined in Article 14 have not been exhausted.
    * OJ No L 374, 31.12.1988, p. 25.
    ** OJ No L 185, 15.7.1988, p. 9."
                                              17
 ---pagebreak--- 2. Article 14 is replaced by the following:
                                        "Article 14
   1.    Measures under this Regulation shall be included in the plans drawn up and
         presented by the Member States in accordance with Article 11(1) and (2) of
         Regulation (EEC) No 2052/88 and Articles 5, 6 and 7 of Council Regulation
         (EEC) No 4253/88*.
   2.    Measures under Article 10(1), (2), (2a) and (3) of this Regulation shall be included
         in the Community support frameworks drawn up in accordance with Article 11(3)
         of Regulation (EEC) No 2052/88 and Articles 8 and 9 of Regulation (EEC) No
         4253/88 and approved by Commission decision in accordance with Article 10 of
         Regulation (EEC) No 4253/88.
   * OJNoL 374, 31.12.1988, p. 1."
3. The following Article 14a is inserted:
                                        "Article 14a
   1.    Member States shall forward the following with the plans referred to in
         Article 14(1):
         (a)   an aid application presented in accordance with Article 14(1) and (2) of
               Regulation (EEC) No 4253/88 relating to the measures referred to in
                Article 14(2) and aid under Council Regulation (EEC) No 389/82*;
         (b)   all laws, regulations or administrative provisions concerning aid schemes to
               implement the measures provided for in Article 14(2).
   2.    The Commission shall examine all the provisions referred to in paragraph 1 and
         shall decide on the grant of assistance from the Fund in accordance with
         Article 14(3) and (4) of Regulation (EEC) No 4253/88.
   *     OJNoL 51, 23.2.1982, p. 1."
4. Article 15 is replaced by the following:
                                        "Article 15
   1.    Assistance shall be paid in accordance with Article 21 of Regulation (EEC)
         No 4253/88; however, payment of the balance shall be subject to the conditions
         referred to in paragraph 4 of that Article and based on a statement of the
         expenditure incurred by the Member States during a calendar year, which is
         submitted to the Commission before 1 July of the following year.
                                             18
 ---pagebreak---     2.      The Commission shall adopt detailed rules for the application of this Article after
            consulting the Committee referred to in Article 29 of Regulation (EEC) No
            4253/88."
5.  Article 19 is deleted.
                                            Article 4
Regulation (EEC) No 1035/72 is amended as follows:
1.  The second subparagraph of Article 14b(2) is deleted.
2.  Article 36 is replaced by the following:
                                           "Article 36
     1.     The provisions laid down by regulation on the financing of the common
            agricultural policy shall apply to the market in the products referred to in
            Article 1.
    2.      Aid granted by the Member States in accordance with Article 14(1), (2) and (3)
            and Article 14b(l) and (2) shall constitute a common measure within the meaning
            of Article 2(1) of Council Regulation (EEC) No 4256/88*. The common measure
            shall be the subject of programming under the conditions referred to in Article 11
            of Council Regulation (EEC) No 2052/88**.
            Applicants shall be entitled to the aid referred to in the first subparagraph only if
            all the conditions of this Regulation are met and the financial resources provided
            by the programming defined in Article 36a of this Regulation have not been
            exhausted.
        O J N o L 374, 31.12.1988, p. 25.
        OJNo L 185, 15.7.1988, p. 9."
3.  The following Articles 36a, 36b and 36c are inserted:
                                          "Article 36a
     1.     Measures under Article 36(2) of this Regulation shall be included in the plans
            drawn up and presented by the Member States in accordance with Article 11(1)
            and (2) of Regulation (EEC) No 2052/88 and Articles 5, 6 and 7 of Regulation
            (EEC) No 4253/88*.
     2.     Measures under Article 36(2) of this Regulation shall be included in the
            Community support frameworks drawn up in accordance with Article 11(3) of
            Regulation (EEC) No 2052/88 and Articles 8 and 9 of Regulation (EEC) No
            4253/88 and approved by Commission decision in accordance with Article 10 of
            Regulation (EEC) No 4253/88.
                                                19
 ---pagebreak---                                             Article 36b
      1.    Member States shall forward the following with the plans referred to in
            Article 36a(l):
            (a)    an aid application presented in accordance with Article 14(1) and (2) of
                   Regulation (EEC) No 4253/88 relating to the measures referred to in
                   Article 36a(2);
             (b)   all laws, regulations or administrative provisions concerning aid schemes to
                   implement the measures provided for in Article 36a(2).
      2.    The Commission shall examine all the provisions referred to in paragraph 1 and
             shall decide on the grant of assistance from the Fund in accordance with
            Article 14(3) and (4) of Regulation (EEC) No 4253/88.
                                            Article 36c
      1.    Assistance shall be paid in accordance with Article 21 of Regulation (EEC) No
            4253/88; however, payment of the balance shall be subject to the conditions
             referred to in paragraph 4 of that Article and based on a statement of the
            expenditure incurred by the Member States during a calendar year, which is
             submitted to the Commission before 1 July of the following year.
      2.     The Commission shall adopt detailed rules for the application of this Article after
            consulting the Committee referred to in Article 29 of Regulation (EEC) No
            4253/88.
         OJNoL 374, 31.12.1988, p. 1."
                                             Article 5
Articles 1 and 7 of Regulation (EEC) No 449/69 are repealed.
                                             Article 6
This Regulation shall enter into force on the seventh day following that of its publication in
the Official Journal of the European Communities.
It shall apply from 1 January 1994.
 1.   However, the procedure for fixing Community part-financing rates as provided for in the
      first subparagraph of Article 31(2) of Regulation (EEC) No 2328/91 prior to its
      amendment by this Regulation shall continue to apply throughout the territory of the
      Community, including the regions not covered by Objective 1 as defined in Article 1 of
      Regulation (EEC) No 2052/88, until the Community support frameworks referred to in
      Article 11(3) of Regulation (EEC) No 2052/88 take effect.
                                                20
 ---pagebreak--- 2.   Articles 3 and 21 to 24 of Regulation (EEC) No 2328/91 shall continue to apply under
     the terms laid down in Article 11 of Council Regulation (EEC) No 78/92 of
     30 June 1992 on agricultural production methods compatible with the requirements
     of the protection of the environment and the maintenance of the countryside09).
3.   Articles 25, 26 and 27 of Regulation (EEC) No 2328/91 shall continue to apply under
     the terms laid down in Article 8 of Council Regulation (EEC) No 2080/92 of 30 June
     1992 instituting a Community aid scheme for forestry measures in agriculture(20).
Point 20 of Article I shall apply from 1 September 1992.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                                                          For the Council
                                                                           The President
° 9) OJ No L 215, 30.7.1992, p. 85.
(20)
     OJ No L 215, 30.7.1992, p. 96.
                                               21
 ---pagebreak---                WORKING             DOCUMENT
      Objective No 5(a) of the reform of the Structural Funds
                           (1994 - 1999)
                           Proposal for a
                 COUNCIL REGULATION (EEC)
amending Regulations (EEC) Nos 2328/91, 866/90, 1360/78, 1035/72
      and 449/69 with a view to expediting the adjustment of
      production, processing and marketing structures as part
         of the reform of the common agricultural policy
                                22
 ---pagebreak---      PROPOSAL FOR AMENDED COUNCIL REGULATION (EEC) No 2328/91 n
                      on improving the efficiency of agricultoraLstnictures
                                            Article 1
    With a view to expediting the adjustment of agricultural structures in the Community
    pursuant to Objective 5(a) as set out in Article 1 of Regulation (EEC) No 2052/88, a
    common measure within the meaning of Article 2(1) of Regulation (EEC) No 4256/88,
    to be implemented by the Member States, is hereby introduced with the following
    objectives:
      (i) to help restore the balance between production and market capacity;
     (ii) to help improve the efficiency of farms by developing and reorganizing their
          structures and by promoting supplementary activities;
    (iii) to maintain a viable agricultural community and thus help develop the social fabric
          of rural areas by ensuring a fair standard of living for farmers and by offsetting the
          effects of natural handicaps in mountain areas and less-favoured areas;
     (iv) to contribute to the safeguarding of the environment and the preservation of the
          countryside, including the long-term conservation of natural farming resources.
    In accordance with Articles 5(2)(b) and 11 of Regulation (EEC) No 2052/88, the
    EAGGF. hereinafter called 'the Fund', Guidance Section, shall acting under the common
    measure referred to in paragraph 1. provide part-financing for national aid schemes
    concerning:
    [a)    ...1 (set-aside: replaced by Regulations 1765/92 and 2078/92)
    b)    measures relating to investments in agricultural holdings, in particular to reduce
          production costs, to improve the living and working conditions of farmers, to
          promote the diversification of their activities, including the marketing of products
          on the farm, and to preserve and improve the natural environment;
    c)    measures to encourage the setting-up of young farmers;
    d)    back-up measures to assist agricultural holdings, involving the introduction of
          accounts and the launching of groups, services and facilities for the benefit of
          several holdings;
    e)     measures to support farm incomes and to maintain viable agricultural communities
          in mountain or less-favoured areas by means of agricultural aid for offsetting
          natural handicaps;
    [fl    ...) (environment premium: replaced by Regulation 2078/92);
    [g)    ...] (forestry measures; replaced by Regulation 2080/92)
n
  Text combining the existing Regulation and the proposed amendments underlined. The
                          parts between square brackets \ 1 are deleted.
                                               23
 ---pagebreak---     h)      vocational training measures connected with the measures referred to in points (b),
            (c) and (d).
    [ ... ] (method of financing set-aside: no longer relevant)
    The common measure referred to in paragraph 1 shall be the subiect of programming
    under the conditions referred to in Article 11 of Regulation (EEC) No 2052/88.
    Applicants shall be entitled to aid as provided for in this Regulation only if all the
    conditions of this Regulation are met and the financial resources provided by the
    programming defined in Article 29 of this Regulation have not been exhausted.
                                     [         TITLE I
                                      Set-aside of arable land
                                              Article 2          ]
                        (replaced by Regulations 1765/92 and 2078/92)
                                  [           TITLE II
                                  Extensification of production
                                                Article 3          ]
                               (replaced by Regulation 2078/92)
                                   [          TITLE III
                                     Conversion of production
                                              Article 4        ]
                                  (deleted because inapplicable)
                                             TITLE IV
                     System of aid for investments in agricultural holdings
                                              Article 5
    In order to contribute to the improvement of agricultural incomes and of living, working
    and production conditions on agricultural holdings, Member States shall pursuant to the
    common measure referred to in Article 1, introduce a system of investment aid to
    agricultural holdings where the farmer:
    a)      practises farming as his main occupation.
            Member States may, however, apply the aid scheme referred to in Articles 5 to 9
            to farmers who, while they do not practise farming as their main occupation, derive
            at least 50 % of their total income from farming, forestry, tourism or craft activities
            of activities for maintaining the countryside which qualify for public aid, carried
            out on the holding, provided that the proportion of income deriving directly from
            farming on the holding is not less than 25% of the farmer's total income and that
            offfarm activities do not account for more than half the farmer's total working time;
                                                 24
(4)
 ---pagebreak--- b)      possesses adequate occupational skill and competence;
c)      submits a plan for materially improving his holding. This plan must show by
        means of specific calculations that the investments are justified from the point of
        view of the situation of the holding and its economy and that implementation of
        the plan will bring about a lasting improvement of that situation, and in particular
        of the labour income per man-work unit (MWU) employed on the holding or is
        necessary for maintaining the present level of labour income per MWU.
d)      undertakes to keep simplified accounts entailing at least:
               the recording of the revenue and expenditure of the holding, with supporting
               documents,
               the drawing up of an annual balance sheet of the assets and liabilities of the
               holding.
[ ... ] (temporary derogation in respect of accounts: expired on 31 December 1991.)
The aid system referred to in paragraph 1 shall be limited to agricultural holdings:
        where labour income per MWU is less than the reference income referred to in
        paragraph 3,
        where improvement plans, as referred to in paragraph 1(c), do not provide for a
        labour income in excess of 120% of such reference income.
Member States may restrict the aid system referred to in paragraph 1 to agricultural
holdings which have a family character.
Member States shall fix the reference income referred to in paragraph 2 at a level not
exceeding the average gross wage of non-agricultural workers in the region.
The improvement plan referred to in paragraph 1 shall contain at least:
        a description of the initial situation,
        a description of the situation upon completion of the plan, drawn up on the basis
        of an estimative budget,
        an indication of the measures and in particular the investments planned.
Member States shall, for the purposes of this Regulation, define what is meant by the
expression 'farmer practising farming as his main occupation'.
This definition shall, in the case of a natural person, include at least the condition that
the proportion of income derived from the agricultural holding must be 50% or more of
the farmer's total income and that the working time devoted to work unconnected with
the holding must be less than half of the farmer's total working time.
On the basis of the criteria referred to in the foregoing subparagraph, the Member States
shall define what is meant by this same expression in the case of persons other than
natural persons.
                                             25
 ---pagebreak--- 6. In addition, Member States shall lay down the criteria for assessing the occupational skill
   and competence of the farmer, by reference to the standard of agricultural training
   received and/or to a minimum period of farming experience.
                                           Article 6
1. The aid scheme referred to in Article 5 may be applicable to investments relating to:
          the qualitative improvement and conversion of production in line with market
          requirements, and, where necessary, with Community quality standards,
          the diversification of activities on the holding, in particular by the introduction of
          tourism and craft activities or the manufacture and sale of farm produce on the
          farm,
          the adaptation of the holding for the purposes of reducing production costs and
          saving energy,
          the improvement of living and working conditions,
          the improvement of the hygiene conditions of livestock enterprises and compliance
          with Community animal welfare standards, or, failing these, national standards until
          Community standards are adopted,
          the protection and improvement of the environment.
2. The investment aid referred to in paragraph 1 may be refused or limited where the effect
   of the investments concerned is to increase the holding's production of products for
   which no normal market outlets can be found.
   The Council, acting by a qualified majority on a proposal from the Commission, shall
   adopt the necessary measures and shall define the products falling within the meaning
   of the preceding subparagraph.
3. Except where decisions subsequently taken pursuant to paragraph 2 provide otherwise,
   the aid provided for in paragraph 1 shall not be granted in respect of investments relating
   to milk production the effect of which is to exceed the reference quantity determined in
   accordance with rules on the additional levy for milk and milk products, unless an
   additional reference quantity has been granted beforehand as provided for in Article
   4(l)(c) of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules
   for the application of the levy referred to in Article 5(c) of Regulation (EEC) No 804/68
   in the milk and milk products sector, as last amended by Regulation (EEC) No 1630/91,
   or obtained by means of a transfer in accordance with Article 7(1) of that Regulation.
   In such cases, the granting of aid shall be subject to the condition that the investment
   does not serve to raise the number of dairy cows to more than 40 per MWU and more
   than 60 per holding or, where the holding has more than 1.5 MWU, does not serve to
   raise the number of dairy cows by more than 15%.
   On a proposal from the Commission, the Council shall adopt, at the latest six months
   after the expiry of Regulation (EEC) No 857/84, the conditions to which the granting of
   aid to investments entailing an increase in milk production shall be subject after the said
   Regulation expires.
                                               26
 ---pagebreak--- 4. Aid may not be granted for investments as referred to in paragraph 1 which have the
   effect of increasing pig places.
   The place required by one breeding sow shall correspond to 6.5 fattening pig places.
   Furthermore, where an improvement plan provides for investment in the pig production
   sector, the granting of aid in respect of such an investment shall be subject tp the
   condition that, upon completion of the plan, at least the equivalent of 35% of the
   quantity of feed consumed by pigs can be produced on the holding.
5. Aid as provided for in paragraph 1 and granted for investments relating to the beef sector
   shall be restricted to livestock enterprises where the beef-cattle stocking rate does not,
   in the final year of the plan, exceed the following number of livestock units (LU) per
   hectare of forage area used for feeding the cattle: 3, 2.5 and 2 LU/ha for the plans
   ending respectively in 1994, 1995 and 1996 or later.
   The LU conversion table is given in Annex I.
6. The investment aid referred to in paragraph 1 may not be granted in the egg and poultry
   sector.
                                          Article 7
1. The system of aid for investments referred to in Article 6(1) shall cover aid in the form
   of capital grants or the equivalent thereof in interest rate subsidies or deferred
   repayments, or a combination of these, in respect of the investments necessary to carry
   out the improvement plan but with the exception of expenditure incurred in buying;
   - land,
   - livestock in the form of pigs, poultry and calves for slaughter.
   With regard to the purchase of livestock, only the first purchase for which provision is
   made in the improvement plan may be covered.
   The system of aid may also cover guarantee for loans contracted and the interest thereon,
   where the security or personal guarantee provided is insufficient.
2. Capital grants as provided for in paragraph 1 may apply to a total investment of ECU
   60 743 per MWU or ECU 121 486 per holding. Member States may set these limits at
   lower levels.
   The value of the aid provided for in paragraph 1 expressed as a percentage of the amount
   of the investment, shall not exceed:
   a)     In the case of the areas referred to in Article 2 and 3 of Directive 75 /268/EEC:
          - 45% for fixed assets,
          - 30% for other types of investments;
                                             27
 ---pagebreak---       b) in the case of other areas:
              - 35% for fixed assets,
              - 20% for other types of investment.
      Where the aid is not granted in the form of a capital grant, Member States shall draw up
      each year a table showing the value of the aid, expressed as a percentage of the amount
      of the investment, taking into consideration the average annual rate of interests on non-
      subsidized loans, the value of the interest subsidy, the term of the loans, deferred interest
      subsidies and repayments and any other factor used for expressing the aid in grant
      equivalent terms.
      The Council, acting by a qualified majority on a proposal from the Commission, may
      authorize a Member State, for a specified period, to grant aid exceeding the level
      specified in the preceding subparagraph, if such action is warranted by the situation on
      the capital market in that Member State.
      [ ... ] (10% increase in aid: expired on 31 December 1991)
                                             Article 8
Member States may grant the aid referred to in Article 7 to farmers who, after completing an
improvement plan, continue to fulfil the conditions laid down in Article 5(1), provided that the
conditions laid down in Article 6 are met. However, the number of plans per beneficiary which
may be accepted during a six-year period shall be limited to two and the total investment
which may be considered in connection with the reimbursement of aid pursuant to Article 33
shall be limited to ECU 60 743 per MWU and ECU 121 486 per holding for that period.
                                             Article 9
 1.   An improvement plan within the meaning of Article 5(1 )(c) may relate to an individual
      holding or to a number of holdings grouped together with a view to the merger of all or
      part of these holdings.
2.    In the case of group-operated holdings, the improvement plan shall concern the group-
      operated holding and any parts of holdings which continue to be run by the group
      members.
3.    Member States may grant the aid referred to in Article 78 to group-operated holdings
      if all the members of such holdings satisfy the conditions laid down in Article 5(1).
4.    Except for aquaculture, the ceilings laid down in Articles 7(2) and 8 may be multiplied
      by the number of holdings belonging to the group. The ceilings laid down in Article 6(3)
      and (4) may only be multiplied by the number of such holdings in the case of a holding
      resulting from a complete merger.
      However, these ceilings may not exceed:
              120 cows,
              three times the amount per holding referred to in the first subparagraph of
              Article 7(2).
                                                28
 ---pagebreak---    per group-operated holding, including any parts of holdings which continue to be run by
   the group members.
5. In accordance with the procedure laid down in Article 30, the Commission may authorize
   a Member State to grant the aid referred to in Article 7, under the conditions stipulated
   in paragraph 4 above, to agricultural cooperatives whose sole objective is to manage an
   agricultural holding. At the same time, the Commission shall lay down specific
   conditions for the granting of aid to such cooperatives, as well as the conditions under
   which and the limits within which the volume of investment provided for in paragraph
   4 may be exceeded.
6. Member States shall lay down the conditions to be met by group-operated holdings, in
   particular:
   - their legal form,
   - their minimum duration, which must not be less than six years,
   - the formation of their capital,
   - the participation of members in management.
                                           Article 10
1. Member States may grant setting-up aid to young farmers under 40 years of age on
   condition that:
          the young farmer sets up as head of the holding, which means that he assumes
          civil and tax liability or joint liability for the management of the holding and the
          social status accorded in the Member State concerned to self-employed heads of
          holding,
          the young farmer sets up as a farmer practising farming as his main occupation or
          begins, after having set up as a part-time farmer, to practise farming as his main
          occupation,
          the occupational qualifications of the young farmer are at a satisfactory level at the
          time of his setting up or at the latest two years thereafter, and
          the holding requires a volume of work equivalent to at least one MWU, which
          must be achieved at the latest two years after the setting up.
2. The setting-up aid may comprise:
   a)     a single premium of a maximum eligible amount of ECU 10 000. The premium
          may be paid over a period not exceeding five years. Member States may replace
          the premium by an equivalent interest subsidy;
   b)     an interest subsidy on loans taken out with a view to covering the costs arising
          from setting up.
          The rate of interest subsidy shall be not more than 5% for a period of 15 years; the
          capitalized value of the interest subsidy may not exceed ECU 10 000.
          Member States may pay, in the form of a grant, the equivalent of the interest
          subsidy resulting from the volume and duration of the loans taken out.
                                               29
 ---pagebreak--- 3.   Member States shall define:
           the conditions governing setting up,
           specific conditions in a situation where a young farmer does not set up as sole
           head of the holding, in particular where he sets up as a member of an association
           or cooperative whose principal object is the management of an agricultural holding;
           these conditions must be equivalent to those required for setting up as a sole head
           of a holding,
           the agricultural training which a young farmer must have had at the time of his
           setting up, or must achieve within two years thereafter, in order for the premium
           to be eligible under the Fund,
           the conditions under which it will be recognized that the volume of work
           equivalent to at least one MWU has been achieved within the maximum time of
           two years after setting up,
           the amount of the setting-up aid.
                                           Article 11
Member States may grant young farmers under 40 years of age additional aid for investments
to be made under a material improvement plan within the meaning of Article 5(1 )(c),
amounting to a maximum of 25% of the aid granted pursuant to Article 7(2), provided that the
young farmer submits the improvement plan within five years of setting up and provided that
he possesses the occupational qualifications referred to in Article 10(1).
                                            Article 12
1.   Aid for investments in agricultural holdings satisfying the conditions laid down in
     Articles 5 and 9 which exceeds the amounts laid down in Article 7(2) increased, where
     appropriate, by the aid referred to in Article 11, are hereby prohibited, with the exception
     of aid:
           for  the construction of farm buildings,
           for  the relocation of farm buildings where this is done in the public interest,
           for  land improvement operations,
           for  investments for the purposes of environmental protection and improvement,
     provided that the granting of these higher amounts does not infringe the provisions of
     Article 5 of this Regulation and Articles 92 to 94 of the Treaty.
2.   Where Member States grant aid for investments in holdings which do not satisfy the
     conditions laid down in Article 5, such aid must be at least one-quarter less than the aid
     granted pursuant to Article 7, with the exception of aid for:
           energy saving,
           land improvement,
     which may reach the amount laid down in Article 7(2).
     Such aid may be granted for a total investment of ECU 60 743 per MWU and ECU 121
     486 per holding for a period of six years.
                                                30
 ---pagebreak--- 3. Notwithstanding paragraph 2, Member States may grant temporary aid for investments
   in small agricultural holdings which do not satisfy the conditions laid down in Article
   5(1).
   This temporary aid may be granted for investments up to ECU 25 252 only and may not
   be granted on terms more favourable than those provided for in Article 7, plus, where
   appropriate, the aid provided for in Article 11.
4. Aid for investments in holdings shall be prohibited where such investments do not satisfy
   the conditions laid down in Article 5 and where Article 7 does not permit the granting
   of such aid.
   However, the aid referred to in paragraph 2 and 3 may be granted:
          for investments in the sector of geese and ducks for the production of foie gras,
          for the purchase of cattle which may be encouraged under Article 7(1) even where
          it is not the first purchase.
   Moreover, as regards the holdings referred to in paragraphs 2 and 3, the number of dairy
   cows referred to in Article 6(3) shall be 40 per MWU and per holding.
5. The prohibitions and limitations provided for in this Article shall not apply to:
          aid for land purchase,
          subsidized operating loans the term of which does not exceed one marketing year,
          aid for the purchase of male breeding stock,
          securities for loans contracted, including interest,
          aid for investment in the protection and improvement of the environment, provided
          that it does not entail an increase in production,
          measures in respect of investments for the purpose of improving hygienic
          conditions or of compliance with Community animal welfare standards where these
          are stricter from Community standards, provided that these investments do not give
          rise to an increase in production,
          aid for investments in agricultural holdings not relating to field crops or
          stockfarming.
    provided that they are granted in accordance with Articles 92 to 94 of the Treaty.
                                          TITLE V
                        Other measures to assist agricultural holdings
                                          Article 13
1. Member States may introduce a scheme to encourage the introduction of accounting on
    agricultural holdings.
                                              31
 ---pagebreak---    The scheme shall involve granting to farmers whose main occupation is farming, and
   who apply therefore, an aid spread over at least the first four years during which
   management accounts are kept on their holdings, on the understanding that accounts will
   be kept for at least four years.
   Member States will determine the amount of such aid within a range of ECU 700 to 1
   050.
2. The keeping of accounts referred to in paragraph 1 shall:
   a)     comprise:
                 the preparation of annual opening and closing valuations,
                 the systematic and regular recording over the accounting year of the various
                 transactions in cash or in kind concerning the holding;
   b)     conclude with the presentation each year of:
                 a description of the general characteristics of the holding, and in particular
                 of the inputs,
                 a detailed balance sheet (assets and liabilities) and trading account
                 (expenditure and income),
                 the necessary data, including in particular the earned income per MWU and
                 the farmer's income, for assessing the efficiency of the management of the
                 holding as a whole and the profitability of the main enterprises of the
                 holding.
3. Where a holding is chosen by bodies appointed by Member States for the collection of
   accountancy data for the purposes of information and scientific study, in particular within
   the framework of the Community accountancy data network, and the farmer is in receipt
   of aid as provided for in paragraph 1, he must undertake to make available to those
   bodies, under conditions of anonymity, the accountancy data relating to his holding.
                                          Article 14
   Member States may, on request, grant to recognized groups which have as their object:
          mutual aid between holdings, including the use of new technologies and practices
          for safeguarding and improving the environment and preserving the countryside,
          the introduction of alternative farming practices,
          the more rational joint use of agricultural means of production,
          the operation of a group holding,
   and which are formed on or after 1 April 1985, launching aid as a contribution to their
   operating costs during not more than the first five years after their formation.
                                              32
 ---pagebreak---    Member States shall fix the amount of such aid by reference to the number of members
   and to the activity performed jointly, with the maximum amount being ECU 15 044 per
   recognized group.
   In addition, Member States shall determine the legal form of such groups and the
   provisions governing cooperation between members.
                                         Article 15
1. Member States may, on request, grant launching aid to contribute to covering the
   management costs of agricultural associations having as their object the provision of farm
   relief services.
2. In order to be eligible for the aid referred to in paragraph 1, the relief service must be
   approved by the Member States and employ at least one full-time worker who is fully
   qualified for the work he is called upon to perform.
3. Member States shall lay down the conditions for the approval of services as referred to
   in paragraph 1, and in particular:
          their legal form,
          the provisions governing their management and accounting practices,
          the type of replacement which may comprise the replacement of the farmer, his
          spouse or an adult worker,
          their minimum duration, which must not be less than 10 years,
          the minimum number of affiliated farmers.
4. Member States shall fix the amount of the launching aid referred to in paragraph 1,
   which shall not exceed ECU 12 035 per relief worker employed on a full-time basis in
   the work referred to in paragraph 2. This amount shall be spread over the first five years
   of each worker's employment; it may be spread degressively over that period.
                                         Article 16
1. Member States may, on request, grant aid to agricultural associations for the purpose of
   creating or developing services to assist farm management and which is to help cover
   their management costs.
2. The aid referred to in paragraph 1 shall be granted in respect of the work of staff
   responsible for providing individual assistance in the technical, economic financial and
   administrative management of agricultural holdings.
3. To be eligible for the aid referred to in paragraph 1, farm management services must be
   approved by the Member State and must employ on a full-time basis at least one member
   of staff qualified for the work specified in paragraph 2.
4  Member States shall lay down the conditions for the approval of services as referred to
   in paragraph 1, and in particular:
          their legal form,
          the provisions governing their management and accounting practices,
          their minimum duration, which must not be less than 10 years,
          the minimum number of affiliated farmers.
                                             33
 ---pagebreak--- 5. Member States shall fix the amount of the aid referred to in paragraph 1 per member of
   staff employed on a full-time basis on the work specified in paragraph 2. This amount
   shall be spread over the first five years of each member of staffs employment; it may
   be spread degressively over this period. The maximum total eligible amount of the aid
   shall be ECU 54 000 for each member of staff.
6. Member States may replace the system of launching aid provided for in paragraph 5 with
   a system of farm management aid for farmers practising farming as their main occupation
   who make use of the services to assist farm management referred to in paragraph 1.
   In this event, Member States shall set the aid up to a maximum of ECU 750 per holding,
   to be spread over at least two years.
                                        TITLE VI
                  Specific measures to assist mountain and hill farming
                        and farming in certain less-favoured areas
                                        Article 17
1. In regions which appear on the Community list of less-favoured farming areas within the
   meaning of Directive 75/268/EEC, Member States may grant an annual compensatory
   allowance to assist farming activities, such allowance to be fixed according to the
   permanent natural handicaps described in Article 3 of that Directive within the limits and
   subject to the conditions laid down in Articles 18 and 19 of this Regulation.
2. The granting of such a compensatory allowance which exceeds those limits or which fails
   to satisfy the conditions laid down in Articles 18 and 19 shall be prohibited in the areas
   appearing on the list referred to in paragraph 1.
                                        Article 18
1. Where Member States grant a compensatory allowance, farmers with at least three
   hectares of usable agricultural area who undertake to pursue a farming activity in
   accordance with the aims of Article 1 of Directive 75/268/EEC for at least five years
   from the first payment of a compensatory allowance shall be eligible for such an
   allowance; where a farmer gives up farming and the area concerned continues to be
   worked, he may be released from such undertaking; he shall be released from such
   undertaking in cases of force majeure, for example where his property is compulsorily
   purchased or purchased in the public interest; in addition, farmers in receipt of a
   retirement or early-retirement pension shall be released from such undertaking.
   However, in the Mezzogiorno, including the islands, in the regions in the French
   overseas departments and in the Greek, Portuguese and Spanish regions, the minimum
   utilized agricultural area per holding shall be two hectares.
2. Expenditure in respect of the compensatory allowances shall not be eligible for part-
   financing by the Fund under Article 31 where the farmer is in receipt of a retirement or
   early-retirement pension.
                                            34
 ---pagebreak--- Member States may lay down additional or limiting conditions for the grant of the
compensatory allowance, including conditions which encourage the use of practices
compatible with the need to safeguard the environment and preserve the countryside.
                                        Article 19
Member States shall fix the amounts of the compensatory allowance according to the
severity of the permanent natural handicaps affecting farming activities and having regard
to the limits set out below, although no allowance may be less than ECU 20.3 per LU
or, where appropriate, per hectare in the areas referred to in Article 3 of Directive
75/268/EEC:
a)    in the case of farms keeping cattle, sheep, goats or equines the allowance shall be
      calculated in relation to livestock numbers. The allowance may not exceed ECU
       102 per LU. The total amount of the allowance granted may non exceed ECU 102
      per hectare of total forage area of the holding. A conversion table for expressing
       cattle, equines, sheep and goats as LUs is given in Annex 1.
      However, in less-favoured agricultural areas where the permanent natural handicaps
       are serious enough to justify it, the local allowance granted may be increased to
      ECU 121.5 per LU and per hectare.
       The allowance shall be granted in respect of not more than 1.4 LU per hectare of
      the total forage area of the holding.
       Cows whose milk is intended for marketing may be taken into consideration for
      the calculation of the compensatory allowance only in the areas defined in Article
       3(3) of Directive 75/268/EEC, and in the areas defined in Article 3(4) and (5) of
      that Directive where dairying forms an important part of farming activity.
       When Member States exercise this right in the areas defined in Article 3(4) and (5)
       of the abovementioned Directive, the number of dairy cows per eligible farmer to
       be taken into consideration for the calculation of the compensatory allowance may
       not exceed 20;
b)     In the case of production other than of cattle, equines, sheep and goats, the
       allowance shall be proportional to the area farmed, less that devoted to the feeding
       of livestock and:
         (i) in all less favoured agricultural areas, less that given over to wheat growing:
       [- ...] (durum wheat outside traditional areas: deleted)
                    except areas given over to the growing of common wheat, in areas the
                    average yield from which does not exceed 2.5 tonnes per hectare used
                    for this product;
        (ii) in all less-favoured agricultural areas, less any areas which are full
               plantations of apple, pear or peach trees exceeding 0.5 hectares per holding;
                                            35
 ---pagebreak---          (iii)  in the less-favoured agricultural areas referred to in Article 3(4) and (5) of
                Directive 75/268/EEC, less any areas assigned to the production of wine,
                apart from vineyards the yield from which does not exceed 20 hectolitres per
                hectare, or the production of sugarbeet or intensive crops.
         The allowance may not exceed ECU 102 per hectare. However in less-favoured
         agricultural areas in which the severity of the permanent natural handicaps is great
         enough so to justify, the total amount granted may be increased to ECU 121.5 per
         hectare;
   c)    Member States may vary the compensatory allowance on the basis of the economic
         situation of the holding and of the income of the farmer qualifying for the
         compensatory allowance. [... ] (variation related to protection of the environment:
         replaced bv Regulation 2978/92).
2. Member States may refrain from granting the compensatory allowance for some or all
   of the types of production which may qualify under paragraph 1(b).
3. The maximum amount eligible under the fund shall be limited to the equivalents of 120
   units per holding, whether livestock units (LU) or area units (ha); moreover, beyond the
   equivalent of the first 60 units, the maximum amount eligible per LU or hectare shall be
   reduced to half the maximum amount of the allowance referred to in paragraph 1.
                                          Article 20
1. In the areas referred to in Article 17(1), Member States may grant aid to joint investment
   schemes for fodder production, including the storage and distribution of fodder, and for
   the improvement and equipping of pastures which are farmed jointly and, in mountain
   areas, to joint or individual investment in water points, in minor roads for immediate
   access to pastures, including mountain pastures, and in shelters for herds.
   However, where stock-breeding constitutes a peripheral activity in these areas, the aid
   provided for in the first subparagraph shall be extended to agricultural activities other
   than stock-breeding.
2. Where economically justified, the work referred to in paragraph 1 may include small-
   scale farm water supply measures compatible with protection of the environment,
   including small-scale irrigation works, and the construction or repair of shelters necessary
   for transhumance.
3. The amount of aid as referred to in paragraph 1 which is eligible for financing by the
   Fund may not exceed ECU 100 293 per joint investment project, ECU 500 per hectare
   of pasture improved or equipped and ECU 501.4 per hectare irrigated.
                                              36
 ---pagebreak---                            [            TITLE VII
                        Environment premium in sensitive areas
                                      Articles 21 to 24       ]
                             (replaced bv Regulation 2078/92)
                                   [     TITLE VIII
                                      Forestry measures
                                      Articles 25 to 27     ]
                             (replaced bv Regulation 2080/92)
                                          TITLE IX
                 Adjustment of vocational training to the requirements
                                    of modern agriculture
                                          Article 28
1. In so far as no provision is made for their financing in Council Regulation (EEC) No
   4255/88 of 19 December 1988 laying down provisions for implementing Regulation
   (EEC) No 2052/88 as regards the European Social Fund, Member States may, in regions
   where the need is apparent and with a view to the smooth implementation of the relevant
   measures, introduce a system of special aid for the improvement of the agricultural skills
   of persons covered by the measures referred to in Articles 5 to 16 and young farmers
   under 40 years of age.
   This system may comprise:
         courses of basic and advanced vocational instruction or training for farmers, family
         helpers and agricultural workers who have passed the minimum school-leaving age
         and courses of additional training for such persons, intended to prepare them for
         qualitative reorientation of production; the application of production practices
         compatible with protection of the landscape and acquisition of skills needed to
         enable them to manage their woodlands,
         courses of instruction or training for leaders and managers of producer groups and
         cooperatives, where this is necessary to improve the economic organization of
         producers and the processing and marketing of agricultural products from the
         region concerned.
         the courses of further training needed to achieve the level of vocational training
         referred to in Article 10 which must be of a minimum length of 150 hours.
2. The system referred to in paragraph 1 shall comprise aid:
   a)    for attendance at courses of instruction or training;
   b)    for the organization and provision of courses of instruction and training.
                                               37
 ---pagebreak--- 3. The expenditure incurred by Member States in granting the aid referred to in paragraph
   2(a) and (b) shall be eligible for assistance from the Fund up to a maximum amount of
   ECU 7 020 per person completing a course of instruction or training. Of this amount,
   ECU 2 507 must have been given for further courses on reorientation of production, with
   regard to production practices compatible with landscape protection and management of
   woodlands.
   The measures covered by this Article shall not include courses of instruction or training
   which form part of normal programmes or systems of agricultural education at secondary
   or higher level.
                                         TITLE X
                            General and financial provisions
                                         Article 29
1. Measures under this Regulation shall be included in the plans drawn up and presented
   by the Member States in accordance with Article 11(1) and (2) of Regulation (EEC) No
   2052/88 and Articles 5 to 7 of Regulation (EEC) No 4253/88
2. Measures under Articles 5 to 11, 13 to 20 and 28 of this Regulation shall be included
   in the Community support frameworks drawn up in accordance with Article 11(3) of
   Regulation (EEC) No 2052/88 and Articles 8 and 9 of Regulation (EEC) No 4253/8iTand
   approved by Commission decision in accordance with Article 10 of Regulation (EEC)
   No 4253/88.
                                         Article 30
1. Member States shall forward the following with the plans referred to in Article 29(1):
   a)    aid application presented in accordance with Article 14(1) and (2) of Regulation
         (EEC) No 4253/88 relating to the measures referred to in Article 29(2) and aid
         under Directives 72/159/EEC and 72/160/EEC;
   b)    all laws, regulations or administrative provisions concerning aid schemes to
         implement the measures provided for in Article 29(2) as well as in Article 12.
2. The Commission shall examine all the provisions referred to in paragraph 1 and shall
   decide on the grant of assistance from the Fund in accordance with Article 14(3) and (4)
   of Regulation (EEC) No 4253/88.
                                        [Article 31]
                          (deleted on account of programming)
                                             38
 ---pagebreak---                                        [Article 32]
                          (deleted on account of programming)
                                        Article 33
1. Assistance shall be paid in accordance with Article 21 of Regulation (EEC) No 4253/88;
   however, payment of the balance shall be subject to the conditions referred to in
   paragraph 4 of that Article and based on a statement of the expenditure incurred by the
   Member States during a calendar year, which is submitted to the Commission before
   1 July of the following year.
2. The Commission shall adopt detailed rules for the application of this Article after
   consulting the Committee referred to in Article 29 of Regulation (EEC) No 4253/88.
                                        Article 34
   Member States may lay down additional conditions as regards the implementation of the
   aid measures provided for in this Regulation.
                                        Article 35
1. This Regulation shall be without prejudice to the right of Member States to adopt
   additional aid measures in the areas covered by this Regulation, with the exception of
   those covered bv Articles 5 to 9. 11, 12(2),(3) and (4) and 17 on terms differing from
   those laid down in this Regulation, or in amounts exceeding the ceilings laid down
   herein, provided that Articles 92, 93 and 94 of the Treaty are not infringed.
2. Articles 92. 93 and 94 of the Treaty, with the exception of Article 92(2). shall not apply
   to the aid measures governed bv Articles 5 to 9. 11, 12(2).(3) and (4) and 17.
                                        Article 36
   Checks shall be carried out in accordance with Article 23 of Regulation (EEC) No
   4253/88.
                                        Article 37
   The following special provisions shall apply to Portugal until 31 December 1995:
                                            39
 ---pagebreak---    a)     The Commission may, when taking decisions as referred to in Article 29(2),
         authorize Portugal, for the purposes of fixing the reference income within the
          meaning of Article 5(3)^ to apply a correction coefficient to the average gross
         income of non-agricultural workers throughout Portuguese territory. This
         coefficient may not exceed:
          - 1.7 for 1993.
          - 1.5 for 1994.
          - 1.3 for 1995.
   b)     The Commission may, when taking decisions as referred to in Article 29(2),
          authorize Portugal to apply Article 9( 1 ) to (4) to group-operated holdings of which
          only two-thirds of the members meet the condition referred to in Article 5( 1 )(a).
          At the same time, the Commission shall determine the specific terms on which aid
          is to be granted to such group-operated holdings.
   c)     The compensatory allowance within the meaning ofArticle 17 may be granted to
         farmers who farm at least 1 ha of utilized agricultural area in mainland Portugal.
                                          Article 38
1. The following special provisions shall apply to the territory of the former German
   Democratic Republic:
   [a), b) and c)] (set-aside: provisions no longer apply)
   d)     When family holdings are being set up:
                 the condition in the first indent of Article 5(2) shall not apply,
                 Germany may grant the aid referred to in Articles 10 and 11 to farmers
                 below the age of 55 years. However, aid granted to farmers over the age of
                 40 years is not eligible under the Fund.
   e)     The conditions in the second subparagraph of Article 6(3) and the first indent of
          Article 9(4) shall not apply to aid granted in the context of the creation of new
          family holdings or the restructuring of cooperative holdings if the number of dairy
          cows on all the new or restructured holdings does not exceed the number of dairy
          cows held previously on the old holdings.
          If the Council has not adopted, by 31 December 1990, the arrangements for
          applications submitted from 1 January 1991 for investment aid in the pig
          production sector, the conditions in Article 6(4) and the second indent of the
          second subparagraph of Article 9(4) referring to the number of pig places shall not
          apply to aid granted in the context of the creation of new family holdings or the
          restructuring of cooperative holdings if the number of pig places on all the new or
          restructured holdings does not exceed the number of pig places previously held on
          the old holdings.
                                              40
 ---pagebreak---       f)    The volume of investment referred to in the first subparagraph of Article 7(2) shall
            be ECU 140 000 per MWU and ECU 280 000 per holding. The ceiling laid down
            in the second indent of Article 9(4) shall be increased to three times that volume
            of investment per holding.
      g)    In the context of the restructuring of cooperative holdings, Article 9(5) shall also
            apply to associations which do not adopt the legal form of a cooperative.
      h)    (provisions concerning less-favoured areas: expired 31.12.91)
2.    Paragraph 1(d) to (g) shall apply until 31 December 1996.
                                          [Article 39]
(lapsed transitional provisions on extensification and the environment)
                                           Article 40
1.    Regulations (EEC) No 797/85 and (EEC) No 1760/87 are hereby repealed.
2.    References to the Regulations repealed shall be construed as references to this Regulation
      and should be read in accordance with the correlation table in Annex II.
                                           Article 41
      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.
                                                41
 ---pagebreak---         PROPOSAL FOR AMENDED COUNCIL REGULATION (EEC) No 866/90 n
                                             Article 1
                               Objectives of the common measure
1.     A common measure within the meaning of Article 2(1) of Regulation (EEC) No 4256/88
       and under Objective 5(a), as defined in Article 1 of Regulation (EEC) No 2052/88, is
       hereby introduced with the aim of facilitating the improvement and rationalization of the
       treatment, processing and marketing of agricultural products. This measure shall also help
       to achieve Objectives 1 and 5(b)as set out in the said Article 1, namely promoting the
       development of those regions in which development is lagging behind and rural areas.
2.     To facilitate the improvement and rationalization of the treatment, processing and
       marketing of agricultural products, the EAGGF Guidance Section, hereinafter referred to
       as the 'Fund', may contribute to the financing of investments which satisfy at least one
       of the following criteria :
       a)    helping to guide production in keeping with foreseeable market trends or
             encouraging the development of new outlets for agricultural products, in particular
             through facilitating the production and marketing of new products or of high-
             quality products, including organically-grown products;
       b)    relieving the intervention mechanisms of the market organizations by furthering
             long-term structural improvement where this is needed;
       c)    being located in regions which are faced with special problems in adapting to the
             economic consequences of developments on the agricultural markets, or being of
             benefit to such regions;
       d)    helping to improve or rationalize marketing channels or processing procedures for
             agricultural products;
       e)    helping to improve the quality, presentation and preparation of products or
             encouraging a better use of by-products, particularly by recycling waste.
   ^ e x t combining the existing Regulation and the proposed amendments underlined. The
                          parts between square brackets [ ] are deleted.
                                                42
 ---pagebreak---                                             TITLE I
                                          Programming
                                            Article 2
                           Plans and Community support frameworks
1.    The common measure referred to in Article 1 shall be the subject of programming under
      the conditions referred to in Article 11 of Regulation (EEC) No 2052/88.
2.    Measures under this Regulation shall be included in the plans drawn up and presented
      by the Member States in accordance with Article 11(1) of Regulation (EEC) No 2052/88
      and Articles 5 to 7 of Regulation (EEC) No 4253/88.
3.    Investments under this Regulation shall be financed on the basis of the Community
      support frameworks referred to in Article 11(3) of Regulation (EEC) No 2052/88 and
      Articles 8 and 9 of Regulation (EEC) No 4253/88 and approved by Commission decision
      in accordance with Article 10 of Regulation (EEC) No 4253/88.
[Articles 3 to 7 are deleted.]
                                            Article 8
                                        Selection criteria
1.    Investments eligible for assistance from the Funds under this Regulation shall meet
      selection criteria fixing priorities and indicating investments which may not receive
      Community financing.
2.    The selection criteria shall be drawn up in accordance with the guidelines of the
      Community's policies, particularly the common agricultural policy.
3.    The selection criteria and, where applicable, amendments thereto shall be adopted by the
      Commission in accordance with the procedure laid down in Article 29 of Regulation
      (EEC) No 4253/88. The Decision shall be communicated to the Member States and
      published in the Official Journal of the European Communities.
                                                43
 ---pagebreak---                                           TITLE II
                         Operational programmes and global grants
                                          Article 9
                                    Forms of assistance
   The Fund shall provide assistance in the implementation of the measure which is the
   subject of this Regulation by means of:
   a)     the part-financing of operational programmes within the meaning of Article 5(2)(a)
          of Regulation (EEC) No 2052/88
          or
   b)     the provision of global grants within the meaning of Article 5(2)(c) of Regulation
          (EEC) No 2052/88.
                                         Article 10
                                    Applications for aid
   Member States shall forward the following with the plans referred to in Article 2(2):
   a)     an aid application presented in accordance with Article 14(1) and (2) of Regulation
          (EEC) No 4253/88;
   b)     all laws, regulations or administrative provisions adopted to implement the
          common measure defined in Article 1 of this Regulation.
                                         Article 11
                           Eligible investments and expenditure
1. To be eligible for aid from the Fund in the forms listed in Article 9, investments must
   relate to:
          rationalizing or developing the preparation, preservation, treatment and processing
          of agricultural products or recycling of by-products or manufacturing waste,
          improving marketing channels, including the transparency of price formation,
          applying new processing techniques, including the development of new products
          and by-products, or opening up new markets and innovative investments,
          improving product quality.
                                             44
 ---pagebreak--- 2. Special priority may be given to investments to improve the marketing structures for
   agricultural products, particularly if such investments encourage the development of new
   outlets by facilitating the marketing of new products or of high-quality products having
   characteristics which comply with the Community's policy on foodstuffs, including
   organically-grown products, in accordance with Council Regulation (EEC) No 2092/91
   of 24 June 1991 on organic production of agricultural products and indications referring
   thereto on agricultural products and foodstuffs*.
3. Eligible expenditure in respect of the investments referred to in paragraph 1 may include
   a)    the construction and acquisition of immovable property, with the exception of land
         purchase;
   b)    new machinery and equipment, including computer software and programmes;
   c)    general costs, such as architects', engineers' and consultants' fees and feasibility
         studies, up to a ceiling of 12% of the cost referred to in (a) and (b).
                                          Article 12
                  Products concerned and participation of the producers
1. Investments must contribute to improving the situation of the basic agricultural
   production sector in question; in particular, having regard to the specific nature of each
   sector, they must guarantee the producers of the basic products an adequate and lasting
   share in the resulting economic benefits.
2. Investments under this Regulation shall concern the products listed in Annex II to the
   Treaty, to the exclusion of those concerning fishery and aquaculture products. However,
   investments concerning products falling under CN codes 4502, 4503 and 4504 shall also
   be allowed.
   The Commission may accept investments concerning other products provided:
          aid recipients have direct contractual links with producers of the basic agricultural
          products or
          the products concerned are similar to those listed in Annex II to the Treaty.
3. Sufficient evidence must be given that the investments will be profitable.
   OJNoL 198. 22.7.1991. p. 1.
                                              45
 ---pagebreak---                                             Article 13
                                      Ineligible investments
The following investments shall be excluded :
      investments at the retail level,
      investments in the processing or marketing of products from third countries,
-     [ J
[Article 14 deleted]
                                            Article 15
                         Decision to grant aid and budget commitment
1.    The Commission shall decide on the grant of assistance from the Fund in accordance
      with Article 14 of Regulation (EEC) No 4253/88.
2.    The decision referred to in paragraph 1 shall be communicated to the authority referred
      to in Article 14(1) of Regulation No 4253/88 or to the intermediary referred to in Article
      16(1) of that Regulation, and to the Member State concerned.
3-    [ ]
                                            TITLE III
                                Financial and general provisions
                                             Article 16
                                       Aid rates and rules
1.    Aid from the Fund may not exceed, in relation to the eligible costs of the selected
      investments:
      a)     50% in the Objective 1 regions referred to in point 1 of Article 1 of Regulation
             (EEC) No 2052/88;
      b)     30% in other regions.
2.    Aid from the Fund shall in general take the form of capital grants. If other forms of
      assistance are used, they must not exceed the said capital grant equivalent.
3.    The Member States concerned must undertake to participate in financing the investments
      eligible for assistance from the Fund, to at least 5% of the eligible costs.
                                                 46
 ---pagebreak---       The financial contribution by the recipients referred to in Article 14(1) in relation to the
      eligible costs of selected investments must be not less than :
      a)     25% in the Objective 1 regions referred to in point 1 of Article 1 of Regulation
             (EEC) No 2052/88;
      b)     45% in other regions.
      Within the field of application of this Regulation, Member States may take aid measures
      which are subject to conditions or rules concerning granting which differ from those
      provided for in this Regulation, or, where the amounts of aid exceed the ceilings
      specified herein, on condition that such measures comply with Articles 92 to 94 of the
      Treaty.
                                           Article 17
                               Procedures for payment of the aid
1.    Payment of advances or balances to be carried out in accordance with Article 21 of
      Regulation (EEC) No 4253/88 shall be made to the authority designated in accordance
      with Article 14(1) of the said Regulation or, where applicable, to the intermediary
      referred to in Article 16(1) of that Regulation, the Member States concerned being duly
      informed of these payments.
2.    The authority or intermediary referred to in paragraph 1 shall check the supporting
      documents relating to the expenditure of the final recipients and ensure that they are in
      order before paying the Community contribution. It shall also make on-the-spot checks
      to verify that the information contained in the application corresponds to the true
      situation.
      Payment to final recipients must take place within six weeks of the date when the
      application was lodged, provided that the application contains all the documents required
      to establish that the expenditure was justified.
3.    At the end of each quarter the authority or intermediary referred to in paragraph 1 shall
      forward to the Commission a statement of the payments made to recipients.
4.    An implementation report shall be sent to the Commission every year.
                                            Article 18
                                             Checks
Checks shall be carried out in accordance with Article 23 of Regulation (EEC) No 4253/88.
[Articles 19, 19a and 20 are deleted] (transitional provisions: lapsed)
                                               47
 ---pagebreak---                                             Article 21
                Transitional provisions for payments in respect of projects under
                                  Regulation (EEC) No 355/77
1.    From 1 January 1991, the payment of aid in respect of the projects referred to in Article
      10(3) of Regulation (EEC) No 4256/88 shall be carried out in accordance with Articles
      17 and 18 of this Regulation.
2.    Member States shall, not later than 15 December 1990, communicate to the Commission
             the authorities they have designated to pay out the aid in question,
             the estimated amount of the payments for the first half of 1991, and
             the basis on which that estimate was calculated.
3.    On receipt of the duly substantiated communication, the Commission shall make an
      initial lump-sum payment; it will make additional payments on the basis of the quarterly
      Statements referred to in Article 17(3), according to the estimated needs communicated
      by the Member States.
[Article 22 is deleted] (transitional provisions: lapsed)
                                            Article 23
                                           Application
The Commission shall adopt detailed rules for the application of this Regulation in accordance
with the procedure laid down in Article 29 of Regulation (EEC) No 4253/88.
                                            Article 24
                                         Entry into force
This Regulation shall enter into force on 1 January 1990.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
                                                48
 ---pagebreak---               PROPOSAL FOR AMENDED REGULATION (EEC) No 1360/78(')
                                           TITLE IV
                                Financial and general provisions
                                           Article 12
1.     The set of measures provided for in this Regulation shall constitute a common measure
       within the meaning of Article 2(1) of Regulation (EEC) No 4256/88.
2.     The common measure referred to in paragraph 1 shall be the subject of programming
       under the conditions referred to in Article 11 of Regulation (EEC) No 2052/88.
       Applicants shall be entitled to aid as provided for in this Regulation only if all the
       conditions of this Regulation are met and the financial resources provided by Jhe
       programming defined in Article 14 of this Regulation have not been exhausted-
                                           Article 13
Before 1 January 1997 the Commission shall submit to the Council, on the basis of information
supplied by the Member States, a report on the results of the implementation of this common
measure.
                                           Article 14
1.     Measures under this Regulation shall be included in the plans drawn up and presented
       bv the Member States in accordance with Article 11(1) and (2) of Regulation (EEC)_No
       2052/88 and Articles 5 to 7 of Regulation (EEC) No 4253/88.           "           "
2.     Measures under Article 10(1). (2). (2a) and (3) of this Regulation shall be included in
       the Community support frameworks drawn UP in accordance with Article 11(3) of
       Regulation (EEC) No 2052/88 and Articles 8 and 9 of Regulation (EEC) No 4253/88'and
       approved bv Commission decision in accordance with Article 10 of Regulation (EEC)
       No 4253/88.
   r)
      Only Title IV is amended. Hie text combines me existing Tide IV and the proposed
          amendments underlined. The parts between square brackets [ ] are deleted.
                                               49
 ---pagebreak---                                              Article 14a
1.    Member States shall forward the following with the plans referred to in Article 14(1):
      a)     an aid application presented in accordance with Article 14(1) and (2) of Regulation
             (EEC) No 4253/88 relating to the measures referred to in Article 14(2) and aid
             under Regulation (EEC) No 389/82;
      b)     all laws, regulations or administrative provisions concerning aid schemes to
             implement the measures provided for in Article 14(2).
2.    The Commission shall examine all the provisions referred to in paragraph 1 and shall
      decide on the grant of assistance from the Fund in accordance with Article 14(3) and (4)
      of Regulation (EEC) No 4253/88.
                                              Article 15
1.    Assistance shall be paid in accordance with Article 21 of Regulation (EEC) No 4253/88;
      however, payment of the balance shall be subject to the conditions referred to in
      paragraph 4 of that Article and based on a statement of the expenditure incurred by the
      Member States during a calendar year, which is submitted to the Commission before
       1 July of the following year.
2.    The Commission shall adopt detailed rules for the application of this Article after
      consulting the Committee referred to in Article 29 of Regulation (EEC) No 4253/88.
                                            [ Article 16 ]
(deleted bv Regulation (EEC) No 3808/89)
                                              Article 17
      Should the Commission decide, pursuant to Article 2 of Regulation No 26 applying
      certain rules of competition to production of and trade in agricultural products, that
      Article 85 (1) of the Treaty is applicable to agreements, decisions or practices:
             by which persons referred to in Article 5(1), second indent, join together in a group
             fulfilling the conditions laid down in this Regulation, or groups form an association
             fulfilling the conditions of this Regulation,
             or by which the common rules referred to in Article 6(1 )(b) are adopted or
             executed,
      a decision relating thereto shall apply only from the date on which the Commission
      reached its conclusion.
                                                  50
 ---pagebreak---                                      Article 18
This Regulation shall not prejudice the right of the Member States to adopt, within the
sphere of this Regulation, additional aid measures, the conditions or procedures for the
granting of which differ from those laid down in this Regulation or the amounts of which
exceed the upper limits laid down therein, provided that these measures are taken in
accordance with Articles 92, 93 and 94 of the Treaty.
                                   [ Article 19 ]
(provisions partially covered by Articles 13 and 14a and by Regulation 4253/88)
                                     Article 20
This Regulation shall enter into force on the third day following its publication in the
Official Journal of the European Communities.
It shall apply as from the entry into force of the provisions referred to in Article 6(3),
second indent.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
                                         51
 ---pagebreak---              PROPOSAL FOR AMENDED REGULATION (EEC) No 1035/72(')
              on the common organization of the market in fruit and vegetables
                                            TITLE Ha
      Specific measures for nuts and locust beans
                                           Article 14b
      The second subparagraph of paragraph 2 is deleted (rate of cofinancing: replaced by
      programming)
                                            TITLE V
                                       General provisions
                                            Article 36
1.    The provisions laid down by regulation on the financing of the common agricultural
      policy shall apply to the market in the products referred to in Article 1.
2.    Aids granted bv the Member States in accordance with Article 14(1). (2) and (3) and
      Article 14b(l) and (2) shall constitute a common measure in the meaning of Article 2(1)
      of Regulation (EEC) No 4256/88.
      The common measure shall be the subiect of programming under the conditions referred
      to in Article 11 of Regulation (EEC) No 2052/88.
      Applicants shall be entitled to the aid referred to in the first subparagraph only if all the
      conditions of this Regulation are met and the financial resources provided by the
      programming defined in Article 36a of this Regulation have not been exhausted.
3.    Articles 1 and 7 of Regulation (EEC) No 449/69 are hereby repealed.
 r)
    Only Tides lia and V are amended in the articles mentioned. The proposed amendments
                                          are underlined.
                                                52
 ---pagebreak---                                         Article 36a
1. Measures under Article 36(2) of this Regulation shall be included in the plans drawn up
   and presented by the Member States in accordance with Article 11(1) and (2) _of
   Regulation (EEC) No 2052/88 and Articles 5 to 7 of Regulation (EEC) No 4253/88
2. Measures under Article 36(2) of this Regulation shall be included in the Community
   support frameworks drawn up in accordance with Article 11(3) of Regulation (EECJLNO
   2052/88 and Articles 8 and 9 of Regulation (EEC) No 4253/88 and approved by
   Commission decision in accordance with Article 10 of Regulation (EEC) No 4253/88^
                                        Article 36b
1. The Member States shall forward the following with the plans referred to in
   Article 36a(l):
   a)    an aid application presented in accordance with Article 14(1) and (2) of Regulation
         (EEC) No 4253/88 relating to the measures referred to in Article 36a(2);
   b)    all laws, regulations or administrative provisions concerning aid schemes to
         implement the measures provided for in Article 36a(2).
2. The Commission shall examine all the provisions referred to in paragraph 1 and shall
   decide on the grant of assistance from the Fund in accordance with Article 14(3) and (4)
   of Regulation (EEC) No 4253/88.
                                        Article 36c
1. Assistance shall be paid in accordance with Article 21 of Regulation (EEC) No 4253/88;
   however, payment of the balance shall be subiect to the conditions referred Jq_in
   paragraph 4 of that Article and based on ajitatement of the expenditure incurred by the
   Member States during a calendar year, which is submitted to the Commission before
   1 July of the following year.
2. The Commission shall adopt detailed rules for the application of this Article after
   consulting the Committee referred to in Article 29 of Regulation (EEC) No 4253/88.
                                            53
 ---pagebreak---                                                               COM(93) 270 final
                                                      DOCUMENTS
EN                                                                           03
                                 Catalogue number : CB-CO-93-328-EN-C
                                                             ISBN 92-77-57031-8
Office for Official Publications of the European Communities
L-2985 Luxembourg