CELEX: 51993PC0109(02)
Language: en
Date: 1993-03-09
Title: Proposal for a COUNCIL REGULATION (EEC) amending Regulation (EEC) No 2072/92 fixing the target price for milk and the intervention prices for butter, skimmed-milk powder and Grana Padano and Parmigiano Reggiano cheeses for two annual periods from 1 July 1993 to 30 June 1995

COMMISSION OF THE EUROPEAN COBVMUNITIES
                                                    COM(93)109     final
                                                    Brussels, 9     March 1993
        Report on the s i t u a t i o n on
     the market for milk and milk
                                      products
                                (presented by the Coa«1ss1on)
                                     Amended proposal for a
                                    COUNCIL REGULATION (EEC)
  establishing an additional levy in the aille and nilk products sector
             (presented by the Commission pursuant to Article 149(3)
                                          of the EEC-Treaty)
                                         Proposal for a
                                   COUNCIL REGULATION (EEC)
          amending Regulation (EEC) No 2072/92 fixing the target price
      for milk and the intervention prices for butter, skimmed-mi Ik powder
    and Grana Padano and Paraigiano Reggiano cheeses for two annual periods
                                  from 1 July 1993 to 30 June 1995
                                (presented by the Commission)
                                      Amended proposal for a
                                     COUNCIL REGULATION (EEC)
               f i x i n g the threshold prices for c e r t a i n milk products
                                      for the 1993/94 n i l k year
           ( p r e s e n t e d by the Commission pursuant t o A r t i c l e   149(3)
                                         of the EEC-Treaty)
           REPORT FROM THE COMMISSION                   TO THE COUNCIL         ON
           THE PROGRESS MADE BY GREECE.                     SPAIN  AND      ITALY
                            IN  THE EFFECTIVE      APPLICATION      OF
                                   THE MILK QUOTA SCHEME
                                        AT 5 MARCH     1993
 ---pagebreak---  Report on the situation on
the market for milk and milk
           products
 ---pagebreak---                                     - 2 -
Introduction
In its 1991/92 price proposals presented to the Council in March 1991< 1 ),
the Commission drew attention to the worsening situation on the market for
milk and milk products, where intervention stocks were building up fast
despite stable or practically stable milk production.
Given the signs of stabilization in overall community consumption and the
lasting reductions in export possibilities on account of the political and
economic changes in the former USSR and central Europe and the uncertainty
following the Gulf War on the traditional, important markets in the Middle
East, the Commission considered that a 5% reduction in the guaranteed total
quantities was necessary to establish better balance on the market for dairy
products. Out of a concern to lessen the impact of such a reduction on the
market for beef and veal, the Commission proposed, and the Council approved,
an initial reduction not exceeding 2% in quantities not subject to the
additional levy for 1991/92.
The Commission Communication to the Council and the European Parliament
entitled "The Development and Future of the common Agricultural Policy"(2)
endorsed this analysis of the situation on the market for milk products. On
that basis the Commission considered a further reduction in the guaranteed
total quantities necessary and proposed to the Council that the additional
levy arrangements be extended (and simplified) and a reduction of 3% be made
in the quantities in steps of 1% over three twelve-month periods starting
from 1 April 1992 at the same time as the staggered reduction in the
institutional prices for milk< 3 ).
On 21 May 1992, as part of the reform of the common agricultural policy, the
Council adopted the Commission proposals on milk and milk products(3)
subject to a certain number of amendments I *) # <phe council decided that
there would be no 1% reduction in quantities for the 1992/93 period, thereby
confirming the Member States' guaranteed total quantities which it had fixed
for that period on 31 March 1992, subject to a final decision in the context
of the reform of the CAP(^). it further decided that before the beginning
of the 1993/94 and 1994/95 periods of the additional levy scheme the
Commission would present reports to the Council on the market situation
together, where appropriate, with proposals in order to permit the Council
to review decisions taken for those two periods. This report has been
drafted in response to that request.
 (1)    COM (91) 72 final of 1 March 1991.
 (2)    COM (91) 258 final of 22 July 1991.
 (3)    COM (91) 409 final of 31 October 1991.
 (4)    COUNCIL DOCUMENT No 6953/92 of 2 June 1992.
 (5)    Regulation (EEC) No 816/92, published in OJ No L 86, 1.4.1992, p
         83.
 ---pagebreak---                                      - 3 -
1.  Trends in the community market
The 2% reduction in the guaranteed total quantities for the 1991/92
twelve-month period, combined with the Community programme for the
restructuring of dairy production, the effects of which extended until the
end of 1992, together with the marked drop in production in the new Lander,
had a significant impact on milk collection in 1992. Output of intervention
products, i.e. butter and skimmed-milk powder, fell as a result by 7% and
20% respectively compared with 1991. Quantities bought into intervention
fell accordingly and the market seemed in better balance in 1992.
Intervention on the Community market (tonnes)
                                 1990          1991          1992
   BUTTER
   Stocks at 1 January          20  300      250  800      260  800
   Buying-in                   250  300      174  000       48  800
   Sales                        19  800      163  900      136  400
   Stocks at 31 December       250  800      260  800      172  700
   SKIMMED-MILK POWDER
   Stocks at 1 January            4 811      333  142      414 383
   Buying-in                   337  211      198  570
   Sales                          8 880      117  330      367 269
   Stocks at 31 December       333  142      414  383       47 114
However, these figures must be seen in relation to those for subsidized
consumption, which accounts for a significant proportion of Community
production.
 ---pagebreak---                                        - 4 -
subsidized consumption on the Community market (tonnes)
                                   1991          1992     Percentage
                                                            change
  BUTTER (Milk fat in butter equivalent)
   Buying-in (sales at
   reduced prices)               93 800        96 200        + 2,6%
   Products on market
    (subsidized)                 344 300       343 900       - 0,1%
   TOTAL                         438 100       440 100       + 0,5%
   Production                  1 800 000     1 660 000       - 7,8%
  Subsidized consumption as        24,3%        26.5%        + 9,1%
  a percentage of production
  SKIMMED—MILK POWDER (skimmed milk in skimmed-milk powder equivalent)
   Animal feed                    955 000       860 000      - 9 %
   Casein                         350 000       458 000      + 31 %
   TOTAL (SMP equivalent)      1 305 000     1 318 000       + 1 %
   Production of skimmed-      1 510 000     1 200 000       - 20 %
    milk powder
   Casein (SMP equivalent)        350 000       458 000      f 31 %
   TOTAL (SMP equivalent)      1 860 000     1 658 000       - 11 %
  Subsidized consumption as        70 %         79,5 %       + 13 %
  a percentage of production
Under these circumstances, the level of intervention stocks and accordingly
the market situation as a whole are to a very large extent determined by
disposal measures, i.e. the budget funds available to finance them, and by
exports, which are also subsidized and fluctuate more widely (see Annex I ) .
Community exports (tonnes)
            Exports                 1991          1992     Percentage
                                                               change
     Butter and butteroil       321 000a>     250 000 b )     - 22 %
     Skimmed-milk powder         253 000       389 000        + 54 %
 a)  incl. special exports to the former USSR, Albania, Romania and Bulgaria:
      107 000 and food aid: 12 600 t
b)    incl. special exports to former USSR and Albania: 40 000 t and food aid:
      5 500 t
 ---pagebreak---                                                         - 5 -
         2.    Trends on the world market
         The Community has a commanding position on the world market, both in terms
         of total production and the main products and in terms of share of the
         market, which is about 50% as a result of exports amounting in both 1991 and
         1992 to approximately 13 million tonnes milk equivalent (see also tables in
         Annex II).
         Community share of the world market
       Year              1983    1984    1985     1986     1987 1988     1989    1990       1991   1992*
Nilk equivalent
(nillion tonnes)          10     12.8    12.2     11.4     13.8 16.5     14.2    12.4       12.8     13
%                         44     48      45       41       48   54       51      49         49,5     50
Preliminary
         The reduction in Community stocks has not, however, affected the world
         market, where prices have varied little.
         International pricees (US dollars fob)
                                Butter            Butteroil            Cheese           Skimmed-milk powder
          Minimus
        GATT prices             1 350                1 625              1 500                 1 200
      1990 1st 6 months    1 350 - 1 550        1 600 - 1 900      1 700 - 2 000         1 200 - 1 700
            2nd 6 months   1 350 - 1 500        1 600 - 1 800      1 550 - 2 000         1 300 - 1 500
                                              |                 I
                                              1                 !                     1
      1991 1st 6 months    1 350 - 1 400        1 600 - 1 800                            1 200 - 1 400
                                                                   1 600 - 1 900
            2nd 6 months   1 450 - 1 850        1 675 - 2 250                            1 450 - 1 800
                                                                   1 600 - 2 100
                                                                 1                    1
                                              1                  1                    1
      1992 1st 6 months    1 350 - 1 600                                                 1 550 - 1 900
                                                1 625 - 1 950      1 750 - 2 100
            2nd 6 months   1 350 - 1 500                                                 1 550 - 1 900
                                                1 625 - 1 800      1 750 - 2 100
                                                                                      i
                                              1
         This stability in prices for products apart from skimmed-milk powder
         reflects the situation on the world market, which continues to be dominated
         by the consequences of the political changes in eastern Europe and the Gulf
         War.
         The market outlets which once existed in the former USSR and certain central
         European countries may be considered lost for years to come. The economic
         changes which have occurred in those countries have drastically reduced
         their consumption capacity. After the current restructuring period, those
         countries will probably reappear on the world market but as exporters, given
         their agricultural potential.
 ---pagebreak---                                     - 6 -
In the Middle East, export outlets cut off by the Gulf War remain uncertain.
More generally, currency fluctuations and the lack of a lasting solution to
the indebtedness of the developing countries may jeopardize any serious hope
of consolidation of the market.
In addition the upward trend in production, which is being confirmed in New
Zealand, in spite of the fact that producers there receive no price support,
and in Australia, as well as in the United States despite the fall in
support prices, against a background of static or even falling consumption
of milk fat in particular, is threatening the stability of the world market
so that it is likely to remain very precarious given the prospect of new
surpluses in the near future.
Lastly, it would be unwise to ignore the programme to win new markets
currently being financed by the United States (DEIP - Dairy Export Incentive
Programme), which is specifically targeted at the Community's traditional
markets.
3.  Control of production and balance on the market
Despite the difficulties connected with any quota system, the production
control scheme has given ample proof of its effectiveness. Since its
introduction, it has allowed progressive savings to be made through the fact
that it has not been necessary to dispose of 1.4 million tonnes of butter
and 2.8 million tonnes of skimmed-milk powder at reduced prices.
 ---pagebreak---                                                                              Application of too additional levy arranaoawnta
                             EC      i «uarantaad i  Quantity I           Allocation from           t   Quantity  i  Quantity i      Sroaa i Corraotioo t Xntarobanaai         Sat
                          (tonne*|   i      total i aaspondad i           Coaaunity raearvo         i  available  i delivered t diffaranoo i   for nilk t     diroet i difforaneo
                                     t   quantity i           i           i    SLOM     i   • 1 t   i             i            i           t         fat i     ealae i
                                     t      a   t       b     i     o     i      d      i     •     i f-a-b+o+d+ai      «      i   h-«-f   t      i      I     j       I   k-h+i*j
                          1984/83(1) l »» 324 000 l           I       31) l          0 t          0 t »• »17 000 I »» 2»3 2C1 I   -«23 73» I         142 I    SS U S   I  -SCO 402
                          1»SS/8«(1) I »• 070 574 l     -     l       3»3 i          0 t          0 I »• 471 S74 llOO 172 744 I  1 701 170 I          03 I   -37 131 I   1 «44 122
                          l»8«/87(2) 1103 »88 374 I     -     I       3*3 I          0 I          0 il04 381 374 llOS 073 2»7 I    f»l 723 t    lit 733 I     -• 31» I     001 »3»
                          1987/88(2) 1102 0»< 143 I 3 770 103 I       443 I          0 I          0 t »• 741 040 I »» 173 711 t    412 (71 I    433 »02 I   -2<S 031 I     303 522
                          1988/89(2) ilOl 03» 100 t S 3»< 405 I       443 I          0 t          0 I »« 105 «23 I »7 <1» 77< t  1 514 153 I    400 S0« I   -332 123 I   1 3»0 S3<
                          1989/90(2) 1100 209 222 I 4 317 «03 I       443 t    302 233 I  1 03» ••« t »7 «7« 730 I »7 »47 2»« I    270 350 I    77C 102 I   -372 «21 t     «74 032
                          1»»0/»1(2) llOO 35» 222 I 4 «7» 4 M t       443 I    302 233 t  1 03» ••« I »7 («4 »S5 t »< 701 «93 I -1 082 »«2 I  1 372 ««1 I   -402 808 t    -112 909
                          1991/92(3) ll0« «37 «93 I 4 983 ««« I       «43 I    «00 000 I  1 03» «8« tl03 734 915 il03 921 500 I    1«« 583 I        n.a. I       n.a. s       n.a.
                                     I            l           l           t            l            t             l       (p| l            t             l            I
                          1992/93(3) 1101 «72 000 t     -     i       443 i    «00 000 I  1 039 88« tlOJ 734 915 I       n.a. I            I             I            I
(a) Artiola Se(3| of Keuulation (EEC) Bo 804/CS.
(b) «.««illation (SEC) Mo 775/87.
(e), (d) and (a) Artiola 1 of «ovulation (EEC) So 154C/88.
(«) Meaber Stataa• daolarationa to tba Coaaieeion, aatiaataa or provisional daolarationa in tha eaaa of eartain Maabar Btataa.
(i) Artiola 12 of Regulation (EEC) Bo 1544/88.
(j| Artiola «a of Regulation (EEC) Mo 157/44.
(1) 10 Maabar Stataa.
(2) 11 Maabar Stataa.
(3) 12 Maabar Stataa.
n.a. not available
(p| provision»!
 ---pagebreak---                                                                               Application of additional levy arrangeaenta
                                                                                                                                                                             (•000 t)
                                         1991/92                                                                                                               1992/93
                 Ouaranteed i  Quantity    Allocation    SLOM (1)         Total   Deliveries I Adjustaent. i Interchanges Differenoe  Ouaranteed i Allocation t         SLOM        Total
                      total t auapended           froa                 quantity           (p| i   for ailk i        (3) i       after      total t        froa i         (H      quantity
                   quantity I               Coaaunity                available                l        fat t             t adjuataant   quantity i Coaaunity i                  available
                                              reserve                                         «        (J| t            i                        i    reserve i
       1                                                                                                                 t 10»7+«-<-4     11           12                      14-11-12*131
  EUR 12                                                             103 754.»                                                         101 «72.0      1 482.»          «00.0    103 754.9
  S                 3 025.5       144.3           32.1        «.«       2 919        2 994           130.0        180.0          25.2    2 «81.0          32.1                    2 919
                                                                                                                                                                         «.«
  DK                4 589.1       21».7           48.8                  4 427        4 424            10.2          0.0           7.1    « 349.4          48.»                    4 427
                                                              9.4                                                                                                        ».«
  D                28 514.4     1 340.2          234.2      141.0      27 549       2« 171            n.d.         n.d.                 27 154.2        234.2          1(1.0     27 549
  EL                  544.8        24.2            3.4                    S2«          578            n.d.         n.d.                    320.•           3.4                      52«
  E                 4 571.0       20». 2          9«.S                  4 458        5 931            n.d.         n.d.                  « 3(1.8         9C.S                     4 458
  r                24 1»«.0     1 153.«          254.3       «4.0      23 3<2       23 389           293.5        143.3         177.0   23 042.4        254.3           «4.0     23 3(2
  IRL               « »«3.2       237. «         353.8      118.0       5 199        S 201             0.0          «.3          -4.1    4 725.«        355.8          118.0      5 199
  X                 5 «20.1       3»5.»           88.0                  8 312        S 8C2            n.d.         n.d.                  « 224.2          «8.0                    S 312
                                                                                              (•)
  L                   249.1        11.9           27.7        1.7         2««          253            12.0          0.2          -0.4      237.2         27.7            1.7        2<(
  ML (4)           11 248.3       539.1          119.8       47.9      10 87C       10 534           381.0          2.4          3C.2   10 709.2        119.8           47.9     10 87(
                    1 743.4                                             1 743        1 584            n.d.         n.d.                  1 743.4                                  1 743
                                                                                              (»)
                   14 3»2.S                                            14 112       13 995           171.0           38                 13 073.0                                 14 112
source i Meaber State'a daolarationa
(1) SLOM t quantitiaa allocated pursuant to Article 3a of Regulation (EEC) Mo 857/84.
(2)  Adjuataents pursuant to Article 12 of Regulation (EEC) Mo 1S4C/88.
(1)  Intercbanqe purauant to Article «a of Regulation (EEC) Bo 857/84.
(4)  52 weeke.
(a)  Eurostat - Cronoa. Tbeae statistical data do not neeeaaarily oorreopond to dolivoriaa recorded under the arrangements,
(p) provisional
*    preliainary
 ---pagebreak---                                     - 9 -
While the scheme has definitely enabled deliveries to be kept down, even
below the levels set for most Member States, the tables set out earlier also
point to a growing tendency for those quantities to be exceeded if the fat
content of milk delivered is taken into account. This constant rise in the
fat content of milk delivered seriously endangers the balance of the market.
While the trend in consumption is stable in the Community and generally in
all developed countries, the trends by product show significant
variations(6); demand for partly skimmed milk, fresh (reduced-fat) milk
products and certain cheeses is rising by 1% to 2% per year while that for
whole milk, hard cheese and particularly butter is falling constantly by 2%
to 2.5% per year. The result is an overall decline in milk fat consumption
that is growing steeper every year and persistent difficulties on the
market for butter, clearly reflected in the market price, which is 91% of
the intervention price on average and has stayed between 89% and 94% of the
intervention price for the last three years (see Annex).
This downward trend in consumption of butter and milk fat, which is almost
certainly in part a response to dietary concerns, is also the result of
competition from butter imitation and replacement products. Products
competing with butter are now in a dominant position on the market for
yellow fats<6>.
In the face of a similar situation, Canada reduced its quota for
manufactured milk by 3% for the 1992/93 period. The United States, which
does not have a comparable system, reduced the support price for butter
twice in 1992 and plans a further reduction in 1993, thus considerably
altering the solid-non-fat ratio contribution to the value of milk, which
is USD 1 725/tonne or ECU 1 215/tonne for butter and USD 2 145/tonne or
ECU 1 511/tonne for skimmed-milk powder.
Such a reduction in prices for butter, which may help effectively to slow
down the development of imitation and replacement products, has the
definite advantage of encouraging consumption. In this respect, it should
be remembered (to emphasize the quantities involved) that approximately one
third of milk collected is still processed into butter and only 60% of that
butter is disposed of at the market price.
Conversely, it may be feared that the - in some cases substantial -
devaluation of the green rates of currencies which have recently been
readjusted within the EMS may result in a marked increase in prices for
butter and that this may be damaging to consumption in those Member states.
 (6) cf. Report on developments on the market in milk products and competing
     products - Fourth report from the Commission to the Council -
     C0M(93) 34 final of 5 February 1993.
 ---pagebreak---                                    - 10 -
Conclusions
On 21 May 1992 the Council decided on a reduction over two years of 2% in
the guaranteed total quantities and 5% in the intervention price for butter.
Since then the situation on the market, which appears on analysis to be
still exposed to the same pressures as those identified at the time, does
seem to be in better equilibrium than might have been feared in March 1992.
This glimmer of improvement in the market may be put down partly to the
trend in production in the new Lander, which is now 25% to 30% below the
reference quantities available for the region. In the short term, a better
adjustment hardly seems possible given the restructuring of holdings
currently under way.
In this connection, the Council must also take into account the efforts of
Spain and Italy over the last year to reduce their milk deliveries to within
the reference quantities available to them. Given the programme to
encourage the discontinuation of milk production implemented in 1992/93 by
Spain, a reduction of approximately 600 000 tonnes is expected in
deliveries in 1993/94. Similarly, the Italian authorities anticipate a fall
in production of around 300 000 tonnes in 1992/93. Overall, actual
quantities of milk collected in the Community in 1993/94 should not exceed
103 million tonnes, a figure which must be compared with the guaranteed
total quantity available for 1992/93 (103 755 000 tonnes).
Seen from the demand side, there is a persisting decline in consumption of
butter and milk fats and a move towards imitation and replacement products
assisted by the price edge enjoyed by the latter.
To sum up, the Commission considers that the situation on the market for
milk fat gives cause for much greater concern than the situation for milk
protein. Accordingly, before deciding on a further reduction in the
guaranteed quantities, a determined effort should be made to deal directly
with the imbalance on the market for milk fat. The Commission therefore
proposes that the 5% reduction in the intervention price for butter decided
by the Council in May 1992 should apply in full from this year and not be
staggered over two years. At the same time as this reduction, which only
covers milk processed into butter i.e. less than a third of Community
deliveries, it has been decided, as part of the CAP reform package, to
abolish the co-responsibility levy. The Commission has proposed that this
take effect on 1 April 1993. The impact on incomes will therefore be
slight.
Consequently, the 1% reduction in guaranteed quantities decided for 1993/94
could be deferred and its implementation reconsidered at the same time as
the 1% reduction decided for 1994/95, in the light of a new market analysis
to be presented before the end of 1993/94.
 ---pagebreak---                                     - 11 -
                                   ANNEX 1
                    Supply balance for buter C ) ('000 t)
                                  1990     1991  1992
-  Stocks at 1 January             124      335    302
-  Pub Iic -                       104      251    261
-  Pr ivate -                       20       84     41
-  Product ion                    1796     1800   1660
-   Import                          88       68     60
AvaiI able                        2008     2203   2022
   Consumpt ion                   1455     1580   1522
   normal market price -          1089     1148   1097
   special measures                366      432    435
   Export                          218      321    250
   Stocks per 31 December          335      302    240
   Pub Iic -                       251      261    172
   Pr ivate -                       84       41     68
   C)     Including former GDR as from 1991.
   The trend in internal disposal measures and exports and a comparison
   with butter production is given below:
                                                       (mid-year)
                                                  1990    1991    1992
    Internal disposal ('000 t)                     366     432     435
   of which
   - Pastry & ice-cream                            292     352     362
   - Non-profitmaking organizations                 37      37      36
   - Cooking butter                                 16      19      19
   - Other                                          21      24      18
   Exports ('000 t)                                218     321     250
   of which
   - Normal                                        202     201     205
   - Special pr ice                                  5     107      40
   - Food aid                                       11      13       5
   TOTAL                                           584     759     691
   - as a percentage of production                  33      42      41
   Subsidized butter for the internal market plus total exports exceeded
   41% of butter production both in 1991 and 1992 while it was only 33% in
   1990.
 ---pagebreak---                                                         - 12 -
                          SUPPLY BALANCE FOR SKIMMED-MILK POWDER ('000 t)
                                                      1990<*>  1991        1992
wmwmmwmmmi*mwÊimmm^mtwmmmtmimmmmmmmmmmmmmmmmmmmmmwmm*
(1) Public stocks at 1 January                           5      333         414
(2) Quantities available                              1672     1528        1205
      of which:
        - product ion                                 1665     1510        1200
        - imports                                        7       18           5
(3) EC consumpt ion                                   1067     1186        1140
       of which:
        - at fulI pr ice                               300      330         335
        -feed for calves                               767      856         805
(4) Exports                                            329      253         389
       of which : -
        - exported on market terms                     261      192         295
        - food aid                                      68       61          94(**>
(5) Balance - (2) - (3) - (4)                          276       89        -324
(6) Public stocks at 31 December                       333      414          47
(7) skimmed milk used in
      manufacture of casein                            334      350         458
       (SMP equivalent)
(*) excluding the former GDR.
(**) of which 44 000 tonnes covers emergency supplies to eastern Europe
                             SUBSIDIZED DISPOSAL OF SKIMMED MILK ('000 t)
                                                               1990   1991 1992
       1.       COMMUN ITY MARKET                              1166   1288 1317
                Of which
                - animal feed                                   832    939  859
                - casein                                        334    349  458
       2.       EXPORTS                                         329    253  389
       3.       TOTAL                                          1495   1541 1706
      4.        AS A PERCENTAGE OF PRODUCTION                    75     83   92
                (powder + casein)
 ---pagebreak---                                     - 13 -
                              A N N E X     I I
      Milk collection
       (million tonnes)           1990           1991              1992
    EC                         106.0            100.7             100.2
    CIS + Baltic Statesf1)     108.2            101.2               87.3
    USA                          66.8            67.4              67.8
    New Zealand                   7.3              8.1               8.5
    Australia                     6.4              6.6               6.7
(1) Estimated production.
 Butter production (tonnes)     1990             1991           1992 (p)
    EC                      2 013 000         1 800 000        1 660 000
    CIS                      1 740 000        1 504 000        1 420 000
    USA                        591 000          606 000           615 000
    New Zealand                276 000          269 000           286 000
    Australia                  106 000          107 000           111 000
(p) Provisional figures.
 Production of skimmed-milk     1990             1991           1992 (p)
       powder (tonnes)
    EC                       1 665   000      1 510   000      1 200    000
    USA                        399   000        398  000          390  000
    CIS                        300   000        274  000          263  000
    New Zealand                172   000        162  000          155  000
    Australia                  127   000        135  000          146  000
(p) Provisional figures.
 cheese production (tonnes)      1990            1991           1992 (p)
    EC                       5 150 000        5 170 000        5 270 000
    USA                      2 749 000        2 763 000        2 920 000
    CIS                        886 000          780 000           700 000
    Australia                   175 000         176 000           197 000
    New Zealand                 122 000         125 000           139 000
(p) Provisional figures.
                                     1990                     1991
         Share of market
        in milk equivalent  million           %       million            %
                             tonnes                    tonnes
    EC                         12.5        49            13.0         49.5
    New Zealand                 4.3        17             5.0         19.3
    Australia                    1.8        7.3           2.3          8.9
    USA                          0.3        1.2           0.7          2.7
 ---pagebreak---                                - 14 -
                       Amended proposal for a
               Council Regulation (EEC) No        /93
                            of
establishing an additional levy in the milk and milk products sector
 ---pagebreak---                                     - 15 -
                           Amended proposal for a
                   COUNCIL REGULATION (EEC) No         /93
                                Of
    establishing an additional levy in the milk and milk products sector
The sixth recital is deleted and replaced by the following three recitals:
N
   Whereas, under the reform of the common agricultural policy, the Council
   has decided to reduce the guaranteed total quantities by a further 2%
   over two twelve-month periods without prejudice to any review in the
   light of the market situation and the special conditions governing the
   implementation of the arrangements in certain Member States;
   whereas an analysis of the market shows that the situation regarding milk
   fat gives cause for much greater concern than that for milk protein;
   whereas an attempt should therefore be made first of all to remedy the
   imbalance on the market for milk fat before applying the 1% reduction to
   the guaranteed total quantities decided in principle for the 1993/94
   period; whereas that 1% reduction should accordingly be deferred and its
   entry into force should be reconsidered, in the light of a new market
   analysis, at the same time as that decided for 1994/95;
   Whereas, upon examination of the particular situations in Spain, Italy
   and Greece, it appears advisable on the basis of the current data to
   increase the guaranteed total quantity for Spain for 1993/94 at this
   juncture and to defer by at most three months the decisions regarding
   Italy and Greece; "
Article 3 is replaced by the following:
" Article 3
   1.   The sum of the individual reference quantities of the same type may
        not exceed the -corresponding guaranteed total quantities in each
        Member State.
 ---pagebreak---                                  - 16 -
2.    The guaranteed total quantities shall be as set out below, without
      prejudice to any revision in the light of the overall market
      situation and the particular situation in certain Member States:
      Member State          Deliveries (tonnes)   Direct Sales (t)
   Belgium                        2 919 720           373 193
   Denmark                        4 427 830               951
  Germany (1)                    27 549 481           150 038
  Greece                            525 985             4 528
   Spain                          5 200 000           366 950
   Prance                        23 362 797           732 824
   Ireland                        5 199 358            15 210
   Italy                          8 312 190           717 870
  Luxembourg                        266 499               951
  Netherlands                    10 906 664           102 307
   Portugal                       1 743 420           118 580
   United Kingdom                14 112 504           392 868
(1) Of which 6 157 620 tonnes covers deliveries to purchasers
      established in the territory of the new Lander and 58 801 tonnes
      covers direct sales in the new Lander.
      The total quantities given for Spain are hereby fixed for the
      1993/94 period.
3.    Where the Council decides to adjust the abovementioned total
      quantities to the prevailing market situation, the adjustments shall
      be expressed as a percentage of the total quantities for the
      preceding period. "
 ---pagebreak---                                      -17-
                                Proposal for a
                     COUNCIL REGULATION (EEC) No      /92
                               Of
         amending Regulation (EEC) No 2072/92 fixing the target price
     for milk and the intervention prices for butter, skimmed-milk powder
   and Grana Padano and Parmigiano Reggiano cheeses for two annual periods
                       from 1 July 1993 to 30 June 1995
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
and in particular Article 43 thereof,
Having regard to the Act of Accession of Spain and Portugal, and in
particular Article 234(3) thereof,
Having regard to the proposal from the Commission1,
Having regard to the opinion of the European Parliament2,
Having regard to the opinion of the Economic and Social Committee3,
Whereas, given the pressing need to improve the balance between supply and
demand, the Council has decided to extend as from 1 April 1993 the
additional levy arrangements introduced for milk and milk products and to
reduce the guaranteed total quantities fixed under those arrangements,
without prejudice to a review in the light of the market situation;
Whereas an analysis of the market shows that the situation regarding milk
fat gives cause for much greater concern than that for milk protein;
whereas, as a consequence, before applying the 1% reduction in the
guaranteed total quantities decided for the 1993/94 period, an attempt
should firstly be made immediately to remedy the imbalance on the market for
milk fat and to bring forward to 1 July 1993 the entry into force of the
reduction in the target price and the 5% reduction in the intervention price
for butter fixed by Council Regulation (EEC) No 2072/924,
1   0J No
2   OJ No
3   OJ No
4   OJ No L 215, 30.7.1992, p. 65.
 ---pagebreak---                                        -18-
HAS ADOPTED THIS REGULATION :
                                    Article 1
Article 2(1) of Regulation (EEC) No 2072/92 is hereby replaced by the
fol Iow i ng:
" (1)     For the period from 1 July 1993 to 30 June 1994
                                                    (ECU/100 kg)
                                           Community
                                            except                 Portugal
                                           Portugal
    (a)   Target price for milk               26,13                  26,13
    (b)   Intervention price for :
          - butter                           278,14                 278,14
          - skimmed-milk powder              172,43                 195,48
          - Grana Padano cheese:
            - between 30 and 60 days old     369,84
            - at least six months old        460,18
          - Parmigiano Reggiano cheese,
            at least six months old          509,04
                                    Art icle 2
This Regulation shall enter into force on the third day following its
publication in the Official Journal of the European Communities.
                This Regulation shall be binding in its entirety
                  and directly applicable in all Member States.
Done at Brussels,                                           For the CounciI
 ---pagebreak---                           -19-
                Amended proposal for a
        COUNCIL REGULATION (EEC) No       /93
                     Of
fixing the threshold prices for certain milk products
              for the 1993/94 milk year
 ---pagebreak---                                    -20-
                            Amended proposal for a
                     COUNCIL REGULATION (EEC) No       /93
                                 Of
            fixing the threshold prices for certain milk products
                           for the 1993/94 milk year
In Article 1(1), the table setting out the pilot products and the
corresponding prices is replaced by the following:
            Pilot product                       ECU/100 kg
        of group of products
                   1                               56,86
                   2                              193,83
                   3                              263,32
                  4                                98,75
                   5                              130,52
                  6                               311,95
                  7                               372,24
                  8                               312,24
                  9                               589,52
                  10                              336,75
                  11                              310,80
                  12                               94,26
 ---pagebreak---                                       FINANCIAL EVALUATION
/. INTRODUCTION
   The proposals      Include     the following      measures
       there will be a deferral           of the 1% reduction In quotas already               decided
       In principle        for 1993/94.       It Is assumed that            this    reduction       will
       Instead be applied as from the beginning of 1994/95, at the same time
       as the 1% reduction already decided for that year;
       the quota for deliveries            for Spain for 1993/94 will             be Increased by
       650 000 tonnes.          It Is also envisaged that before 1.7.1993,                a decision
       will be taken on an Increase In the quantities                    for 1993/94 for Greece
       and Italy.        Subject      to certain      conditions      being fulfilled.          It    Is
       assumed that there will            be Increases         respectively of 100 000 tonnes
       and 900 000 tonnes;
       the levels of the target price for milk and of the Intervention                             price
       for butter,        currently      envisaged     to apply as from 1.7.1994,                   will
       Instead apply as from 1.7.1993.                This leads to total            reductions,      as
       from 1.7.1993 of 5% for the Intervention                 price for butter and of 2,5%
       for the target          price.    There are also corresponding               adaptations       of
       threshold       prices.
   The 1993 budget and the financial                assessment of the Council's              decisions
   of May 1992 concerning the reform were drawn up on the assumption that
   the 1% quota reduction would be applied as from 1.4.1993,                         with a further
   1% reduction being applI cable as from 1.4.1994.                   It was similarly       assumed
   that the butter          intervention      price would be reduced by 2.5% as from
   1.7.1993 and by a further 2.5% as from 1.7.1994.                     Against this background
   and therefore        in relation       to the évaluât ion made at the time of the
   reform decisions,           the financial        Impact of the proposed measures Is
   assessed below.
2. FINANCIAL ASSESSMENT
   a)    Deferral     of the 1% decrease In quotas for 1993/94                      to   1994/95     and
         Increase    in quota for Greece of 100 000 tonnes
         (i)      Impact on milk        production
         In relation         to the level         foreseen    at the time of the                 reform
         decisions,      the delivery       quota for 1993/94 Is Increased by                 1.2 mio
         tonnes.     This should         lead to a corresponding                Increase     in     milk
         deliverles     and a consequent higher product ion of butter                    and  skimmed
         milk powder of 55 000 tonnes and 105 000 tonnes respectively.                             These
         additional     quantities      of butter and skimmed milk powder are                 allocated
         between the 1993 and 1994 financial              years as follows :
                                                                     tonnes
                                                        1993              1994
                 Butter               .             +   20 000       +    35 000
                 Skimmed milk       powder          +   40 000       +    65 000
 ---pagebreak---                                                   - 2 -
   Assuming       that      these additional               quantities       are exported            to     third
   countries,       the additional             cost to the EAGGF is the following                    -.
   1993                                                                                         Mlo ECU (B)
   Butter                               20 000 t X 1 690 ECU/t X 1.205                  (DT)              40.7
   Skimmed milk         powder          40 000 t x           645 ECU/t x 1.205          (DT)              31.1
   TOTAL                                                                                           +       71.8
   1994
   Butter                               35 000 t x 1 640 ECU/t X 1.205                  (DT)              57.4
   Skimmed milk         powder          65 000 t x           900 ECU/t x 1.205          (DT)              70.5
   TOTAL                                                                                           +      127.9
    In addition,         the maintenance of the 100 000 tonne increase                               In     quota
   for    Greece       in 1994/95 and onwards would also                            lead to an               extra
   expenditure        of 12 Mio ECU (B) in 1994 and of 21 Mlo ECU (B) for                                    1995
   and subsequent             years.
   (Il)      Compensât ion for            the reduction          of   quotas
   The financial           assessment made at the time of the reform                                   decisions
   took account           of compensation              to be paid to producers                  in 1994 in
   respect      of the 1% reduction                    of quotas        in 1993/94 (153 Mio ECU).
   Given that this quota reduction                        will     now be applied        as from          1994/95
    instead    of 1993/94,            these compensât ion payments will                    accordingly            be
   transferred        from 1994 to 1995.
   (iil)     Impact     on the beef             sector
   The financial           assessment made at the time of the reform                                    decisions
   also     took account            of the Impact on the beef sector                         of the          quota
   reduction       of 1% for 1993/94.                  it was estimated         that this would                lead
    to extra        beef       product ion          In     1994 of       76 000 tonnes,                  involving
   additional        public        storage         expenditure        of 189 Mio ECU. This                    extra
   expenditure        will     not now take place in 1994.                   Instead,       the extra         beef
   product ion will            arise       In 1995.        Assuming that        the extra         quant it les
   are purchased           into public            Intervention        and within       the intervent             ion
   ceiling,      the additional              public      storage     costs for that year would be
    181 Mio ECU.
b)  increase     in quotas         for     Spain    and      Italy
    (i)      Impact     on milk            production
   The envisaged            increase         in the delivery           quotas    for Spain and                 Italy
   cannot be dissociated                 from the measures which have been introduced                              to
   reduce      milk       product Ion in these                  two Member States.               For        Spain,
   measures for           the buying-up             of quotas        are designed         to reduce            milk
   product ion by a total                      of    0.8     mio tonnes,        whilst        for     Italy         a
   corresponding          reduction         of about 1.6 mio tonnes should be achieved by
                                                     v
    1.4.1995.
 ---pagebreak---                                                        - 3 -
             On the assumption          that Spain achieves           Its reduction      objective       within
             the 1993 financial            year but that the reductions              In Italy     are staged
             over three years (0.3 mlo tonnes in 1993, 0.65 mio tonnes In 1994 and
             0.65     mlo tonnes         In 1995),        the total       cumulative      impact     on milk
             delIverles       and the consequent cumulative              effect    on butter     and skimmed
             milk powder production              Is as follows     ;
                                                                 1993           1994             7995
                    Milk deliveries              (mlo    t)   - 7.70          -   1 .75       -   2.40
                    Butter      production       (1000 t)     - 50 000        -   85 000      - 7 75 000
                     Skimmed milk powder
                     production                  (1000 t)     - 95 000        -  155 000      - 210 000
              In terms       of their        disposal     cost on third         country    markets,       these
              reductions       In the product Ion of butter              and skimmed milk powder are
             estimated       to lead to the following            savings :
              1993                                                                               Mlo ECU (B)
             Butter                       :- 50 000 t X 1 690 ECU/t x 1.205 (DT) - - 101.8
             Skimmed milk        powder:- 95 000 t x             645 ECU/t x 1.205 (DT) - - 73.8
             TOTAL                                                                                  - 775.6
              7994
             Butter                        :- 85 000 t x 1 640 ECU/t x 1.205 (DT)                   - 768.0
             Skimmed milk        powder:-155        000 t x      900 ECU/t x 1.205 (DT)             - 768.7
             TOTAL                                                                                  - 336.7
              7995 and onwards
             Butter                        .-7 75 000 t x 1 580 ECU/t x 1.205 (DT)                  - 278.9
             Skimmed ml Ik powder:-210              000 t x      900 ECU/t x 1.205 (DT)             - 227.7
              TOTAL                                                                                 - 446.6
              (ii)     Impact     on the beef        sector
              The reduction         in milk product ion in the two Member States                      concerned
              will    require      the corresponding         removal of cows from the dairy                herd.
              Assuming the cows are slaughtered,                     the consequent        additional      meat
              production       and the extra costs of public                storage^1)     are assessed as
              follows     :
                                                        Quantity                   Cost
                                                         tonnes                Mlo ECU (B)
                                     1993             +     70 000               +    184
                                     1994             +     40 000               +     99
                                     7995             +     40 000               +      94
                                     TOTAL            +    150 000               +    377
    (1) Assuming        that     the    extra       quant it ies can be           purchased      within     the
        intervent     ion ceilings       for the years         concerned.
14)
 ---pagebreak---                                                        - 4 -
    (III)      Effect       of    the   Increases         in   quotas
    Given that the level of milk production                               In Italy        and Spain is          greater
    than current             quota levels            and will      not be lower than the new quota
    levels       now envisaged              for 1993/94,          the proposed quota increases                         for
    these two Member States                        do not lead to an Increase                      In del        Iveries.
     Instead,        the potential                financial       Impact of the additional                        quotas
    should be seen In terms of receipts                             foregone        from the application                of
    the super levy.                In this       respect,       each 100 000 tonnes of increase                          in
    the quota for 1993/94,                      is equivalent          to foregone          super levy          receipts
    calculated          as follows           :
     100 000 t x 261.40               ECU/t X 115% X 1.205 (DT) - 36.2                        Mlo ECU (B).
c)  Additional          reduction          In the Intervention               price      for   butter       and In      the
     target     price for milk as from                      1.7.1993
    The effet             of the proposal                  Is that        for     the period           1.7.1993          to
     30.6.1994,          Inst I tut Zonal prices will                 now be as follows             :
                                                                                                       ECU/tonne
                                                            Proposed             Previous              Variât     Ion
                                                          prices       (1)     prices        (1)
        Butter     Intervent Ion              price         2   746.60           2     818.90            -     72.3
        Butter purchase               price                 2   471.90           2     537.00            -    65.7
        Skimmed milk powder                   price          1   702.70           1    702.70
        Target       price                                     258.00                261.40                    3.4
   (1)      Taking Into            account the applicat             I on of     the monetary          correct      ion
            coefficient            of    1.012674.
     The financial                Impact of           these     price       reductions         for      the      1993/94
     marketing        year       Is assessed          below                                                               -.
     (I)       Export        rest I tut     Ions                                                         Mio ECU (B)
    Butter       and butterol1:              230 000 t x -65.1             ECU/t x 1.205          (DT) « - 78.0
     Skimmed milk powder                 :
    Other products                       : 10.4 mio t x -3.4               ECU/t x 1.205          (DT) « - 42.6
     (il)      Private         storage       for       butter
          Normal      aid                    200 000 t X - 4.4 ECU/t X 1.205                      (DT) - -          7.7
          Special         Increase            725 000 t x 65.1 ECU/t x 1.205                      (DT) - +           9.8
     (III)     Public        storage       for       butter
      . Financial            costs       - 0.7 Mlo ECU (A) X 1.205                    (DT) - - 0.7
      . Other        costs               + 6.7 Mlo ECU (A) x 1.205                    (DT) - + 8.0
      .      Depreciation                - 2.3 Mlo ECU (A) X 1.205                    (DT) - - 2.8
          TOTAL                                                                                               +      5.1
     (iv)    Aids      for     butter:       445 000 t x -65.1             ECU/t x 1.205          (DT) = - 34.9
     (v)     School        milk          : 575 000 t x -4.25               ECU/t x 1.205          (DT) = -          2.9
     TOTAL                                                                                                        -84.6
 ---pagebreak---                                                               - 5
           This total          saving      of 85 Mio ECU (B) for the quota year 1993/94                            is
           allocated        as follows          between the 1993 and 1994 financial                   years         -.
           1993 :        - 12 Mlo ECU (B)
           1994 :        - 73 Mlo ECU (B)
3. CONCLUSION
    The financial             impact      of     the     measures        proposed    can be summarized        in  the
    table shown below :
                                                                                                     Mio ECU (B)
                                                                         1993       1994        7995        1996
                                                                                                          onwards
       a)    Non-reduction            In quotas          of 1%
              in 1993/94        and increase              of
             0.1 mio t for Greece;                       quota
             reduction         of 2% from 1994/95                  :
             -    Increased        milk          production            +    72    +    140    +    21     +    21
             -   compensation            payments                                 -    153    +   153
             -    impact    on beef          sector                               -    189    +  181
        b)    Increase       In quotas        for        Spain
             and Italy         and Impact           of
             buylng-up         measures        :
             -   reduced       milk         production                 - 776      -    336    -   447     -   447
             -    impact    on beef          sector                    +   184    +     99    +    94
             -   super levy            receipts                           (1)         (1)        (D          (D
        c)   Additional          price          reduction
              from 1.7.1993           instead        of       1.7.
              1994 for       the butter                interven-
              tion    price      and the milk                target
             price                                                     -    12    -     73
        TOTAL                                                          +    68    - 572       +     2     -   426
     (1)   Each 100 000 tonnes                    of milk            removed from the appi Ication            of  the
           super levy corresponds                  to foregone           levy receipts     of 36 Mio ECU.
    Finally,         It should be noted that this assessment takes no account of the
     impact for the EAGGF of any Community contribution                                       which may be made
     towards the cost of the national                              buying-up    programmes being operated            in
     Spain and Italy              in order to reduce product ion by 0.8 mio tonnes and 1.6
     mio tonnes              respectively.
 ---pagebreak---                   COMMISSION
                  OF THE EUROPEAN
                  COMMUNITIES
                   REPORT FROM THE COMMISSION                  TO THE COUNCIL ON
                   THE PROGRESS MADE BY GREECE.                  SPAIN AND ITALY
                          IN THE EFFECTIVE                 APPLICATION OF
                                  THE MILK           QUOTA SCHEME
                                        AT 5 MARCH 1993
Address :                   Tel.: Oirect line : 293 94 79              Telex               22037 AGftEC B
LOI 120 - 10/39                   Exchange    : 299 11 11              Telegraphic address COVEUR Brussels
200. rw de la Loi                 Fox          : 296 23 25
9 - 1049 Brussels
 ---pagebreak---                       C O N T E N T S
INTRODUCTION
   Situât ion in 1992
   Request for additional quotas
PROGRESS AT 15 FEBRUARY 1993
   Preliminary comments
   Greece
   Spain
    Italy
CONCLUSIONS AND PROPOSAL
ANNEX      Reports transmitted by Greece, Spain and Italy
 ---pagebreak---                                  -  3 -
INTRODUCTION
Situation in 1992
Three Member States - Greece, Spain and        Italy  - had  not  fully
introduced the milk quota scheme by 1992.
Greece was entitled to apply country-wide compensations, which meant
that no additional levies were due until the national guaranteed
quantity was exceeded. This overrun in production first occurred in
the 1988/89 milk year. Additional levies were charged to the milk
industry by the Greek authorities in late 1992 for excess production in
1988/89, but have not yet been collected, and levies for 1990/91 and
subsequent milk years are still to be established.
In Spain, although individual reference quantities for deliveries were
provisionally allocated in 1987, no system was established to permit
additional   levies to be collected. Following a re-assessment of
production statistics in 1991, it transpired that production had
substantially exceeded the national reference quantity, with excess
deliveries amounting to some 1.5 million tonnes in 1990/91.
In Italy the national authorities had laid down a legal framework for
the collection of additional levies, but UNALAT, the association of
producer groups which represents practically the whole dairy industry,
had failed to apply it, and had in particular failed to allocate
individual reference quantities to its members, amongst other reasons
because production already exceeded the quota allocated to it. A full
re-assessment of production conducted in 1991 showed excess production
of some 2.5 million tonnes in that year.
Request for additional Quotas
The three Member States requested        increases   in their national
guaranteed quantities for deliveries. Spain and Italy asserted that,
as a result of shortcomings in their national production statistics,
production in the original reference year had been underestimated, and
therefore higher national guaranteed quantities should have been
claimed initially. All three asserted that structural changes, in
particular rapid urbanization, had led to increased demand for milk and
milk products, thus increasing the gap between demand and the national
production quotas.
 ---pagebreak---                                     - 4 -
The Council of Ministers agreed on 21 May 1992 (Greece and Spain) and on
16 December 1992 (Italy) to consider an Increase in the guaranteed total
quantities with effect from 1 April 1993 in order to permit a rapid
transition to full compliance with the quota arrangements. Certain
conditions were attached which each of the three Member States was required
to respect, in particular:
(a) an agency shall be established, having the general competence for the
    implementation and supervision of the additional levy system,
(b) individual reference quantities, based on their deliveries in 1991/92,
    shall be allocated to each producer, the total of which shall not exceed
    the guaranteed total quantity,
(c) the levies due shall be collected from the producers who have
    contributed to the excess production, after having shared out the excess
    quantities of other producers.
The additional guaranteed quantities envisaged and the arrangements       to
absorb the excess production, are summarized in Annex 1.
The three Memebr States were required to send to the Commission before
31 December 1992 (Greece, Spain) and 31 January 1993 (Italy), reports
attesting to the introduction In national regulations and the effective
Implementation of these provisions, which were to be sent to the Council
accompanied by appropriate proposals from the Commission.
 ---pagebreak---                                   -  5 -
PROGRESS AT 15 FEBRUARY 1993
Preliminary remarks
Commission officials have:
(a) examined   the reports which    each  of  the  three  Member  States
     submitted by the due date,
(b) examined the national regulations, whether adopted or still under
     consideration, which aim at applying the milk quota scheme,
(c) conducted inspection visits lasting three weeks to the responsible
     control departments and a selection of regional authorities,
     dairies, producer associations and producers in the three Member
     States in order to appraise the progress made in the field.
 It is apparent that the time required to fully introduce a quota system
covering all milk producers should not be underestimated.
Firstly the enabling legislation and the detailed implementing rules
must be proposed and adopted in a form which is workable in countries
as highly federalized as Spain and Italy.
Secondly procedures must be established for recording deliveries of
milk to each dairy or intermediary buyer, establishing its fat content,
identifying the producer and determining when the producer's individual
reference quantity has been exceeded.
The individual reference quantities have to be established, and the
opportunity given for appeals and reassessment.
Buy-up schemes cannot usefully be implemented      until  the claimants'
entitlements to quotas have been established.
A structure for inspections and supervision must be established to
verify production declarations, to ascertain cessation in the case of
buy-up, to ensure that all quantities of milk traded by intermediaries
are properly accounted for, and to ensure that the appropriate amounts
of levy are calculated and collected.
The Commission has examined the progress made by each of the three
Member States. It must be stressed that none had completed the
implementation process by mid-February 1993. Each aims to apply the
quota scheme as from 1 April 1993, i.e. as from the 1993/94 marketing
year, and none plans to collect additional levies for the 1992/93 milk
year. Only at the end of the 1993/94 marketing year, therefore, will
it be possible to confirm application of the system, as levies can then
be seen to be collected from those individual producers who exceed
their reference quantities.
 ---pagebreak---                                      - 6 -
    The Commission's main aim is to ensure that the milk quota scheme is
    effectively applied. Until then the Commission will continue through
    the clearance of accounts procedure to recover from the Member States
    concerned appropriate sums to compensate for their failure to collect
    additional levies on excess production. In this context it should be
    borne in mind that the additional levy is not intended as a source of
    revenue for the Community budget, but as a means of restricting milk
    production to a certain maximum quantity. This objective will be
    achieved only when the burden of the levy is borne by the individual
    producers rather than the Member States.
(5)
 ---pagebreak---                                   - 7  -
GREECE
Legal provisions
The Greek authorities adopted a legal basis for the implementation of
the milk quota scheme on 28 September 1984, and, in response to
Commission observations, amended this by adopting a replacement decree
on 14 July 1986. Formula "B" had been applied whereby all the dairies
were considered as one purchaser.
On 10 April 1992, the Ministry of Agriculture issued a circular which
established the procedure for the allocation of individual reference
quantities to each producer, one quantity for deliveries to dairies, or
intermediaries, and one for direct sales. The regional agricultural
directorates were required to perform administrative checks on all
claims for quotas, and to verify 10 X on the spot. DIDAGEP was
required to allocate the national guaranteed quantity between the
regional   directorates, which would     in turn   allocate   individual
reference quantities to producers. This procedure was to have been
completed by 10 January 1993.
Purchasers of milk are required to keep a record of the quantities
delivered by each producer and of the fat content and to collect the
additional levy due by producers exceeding their reference quantities.
Direct sales are declared at the end of each year to the competent
regional directorate, which establishes the amount of any additional
levy due.
The regional directorates are responsible    for all the controls    and
cross-checks    between  the   records   of   producers,   dairies   and
intermediar ies.
Implementation
Individual reference quantities
For the 1992/93 milk year, before the introduction of the revised
scheme, reference quantities were distributed to the dairy industry,
but there has been no meaningful distribution by the industry to the
 individual producers.
The introduction of the revised scheme has fallen considerably behind
the schedule laid down in the circular dated 10 April 1992. It is now
expected that DIDAGEP will allocate the 1993/94 reference quantities to
the regional directorates on 10 March 1993, instead of 15 November 1992
as laid down in the circular, and further time will be required for the
regional directorates to allocate individual reference quantities to
each producer.
 ---pagebreak---                                     - 8  -
The quant ities aval lab le on each producer's holding have been assessed
by the regional authorities in relation to the number of cows held and
to an estimate of their milk yields. The Commission has proposed that
the Greek authorities base the individual reference quantities not on
this rather arbitrary evaluation but on actual deliveries to dairies in
the 1991/92 milk year, as the Spanish and Italian authorities have
done. Moreover, the provisions regarding the milk fat content do not
comply with the Community regulations, as no individual average content
has been established.
Competent agency
A condition for the Council's agreement was that an agency is to have
general competence for the implementation and supervision of the
additional levy system, and in particular is to have the power to:
    check on the spot the accuracy of producers' and purchasers'
    declarations,
     calculate the levy due and collect it.
None has yet been appointed in Greece, but the authorities have
indicated their    intention to establish a Milk Board before the
beginning of the 1993/94 milk year.
The Commission considers that the principal obstacle to proper
implementation of the milk quota scheme in Greece is the lack of
central supervision and control which such a body should be exercising.
The present reliance on 56 regional directorates for all administration
and verification has been the main cause of delay in allocating
individual   reference quantities,      leads to unequal    treatment of
producers, and prevents any effective cross-check on quantities of milk
produced in one region but sold to an intermediary or dairy trading in
another.
Unlike Spain and Italy, there is as yet no provision in Greece for a
central record of production and deliveries or even any record at
regional level.
Conclusions
The Commission has informed the Greek authorities that it considers
that the essential prerequisites for the application of the milk quota
regime in Greece are the establishment of a central agency with the
means to record and monitor milk production and deliveries, and the
allocation of individual reference quantities based on deliveries to
dairies in the 1991/92 milk year. These requirements have yet to be
met.
On the basis of the unreliable production figures submitted by the
regional directorates, requests for individual reference quantities for
deliveries cover a total of some 775 000 tonnes, considerably more than
the 625 000 tonnes in the national guaranteed quantity which will
become available after the increase in the national quota. These
disquieting statistics, which indicate that production is increasing
much more rapidly than foreseen, underline the necessity for the
implementation of systems for accurate and timely recording of
production figures.
 ---pagebreak---                                   - 9 -
SPAIN
lega' provlslQns
The Spanish authorities have adopted substantial        legal provisions
covering   the   implementation of    the   Community   additional   levy
arrangements. Those      provisions    clearly    demonstrate     Spain's
determination to apply the arrangements. The first national texts
submitted for examination have been applicable from 1 April 1992 but
will have to be adapted to the regulations adopted by the Council and
the Commission governing the extension of the arrangements from 1 April
1993.
(a) Texts adopted in December 1991
    The basic text for the implementation of the arrangements is the
    Royal Decree of 30 December 1991 providing for a plan for
    restructuring the dairy sector.
   (i) It provides     for   the allocation of     individual   reference
       quantities to all producers and producer groups who declared and
       provided supporting documents for quantities marketed by them
       for 1985 (or, where applicable, 1983 or 1984). That quantity
       may be affected by the application of various percentages
       provided for in the Community regulations and may vary or change
       as provided for therein.
       The levy is payable where the individual quantity adjusted on
       the basis of the fat content of the products is exceeded and
       after quantities have been balanced out.
  (ii) A national reserve is set up and may be supplied from the
       various sources provided for       in Community    law, including
       programmes for the voluntary discontinuation of production.
       Such programmes, be they national or Community, can only permit
       the definitive discontinuation of production and not temporary
       discontinuation as provided for in Article 5(2) of the Decree.
       Quantities are allocated from the reserve in accordance with
       Community law.
    By a decree adopted on 30 December 1991 too, plans for the
    definitive discontinuation of milk production were implemented.
    That programme brings together in a single operation the various
    possibilities afforded by Community legislation in particular as
    regards the use of Community funds.
    From the legal viewpoint, the programme presentation is in line
    with the Community provisions while it is also pointed out that a
    resolution (see below) was adopted in July 1992 by SENPA to verify,
    by means of supporting documents and on-the-spot checks, that all
    production has actually been definitively discontinued.
 ---pagebreak---                                  - 70 -
(b) Texts adopted in 1992
    The Decree of 30 December 1991 summarized in (a) was followed by
    the Order of 26 June 1992 on the updating of individual reference
    quantities of milk producers affected by transfers before 1 April
    1991.
    To update the reference quantities, producers receiving transfers
    in whatever form before 1 April 1991 must make an application for
    registration as having an individual reference quantity on their
    own holdings since 1 April 1991. In addition they must have been
    engaged in production uninterruptedly (except in cases of force
    majeure) from the date of the transfer to that of submission of
    their appiicat ions.
    That Order should provide the Spanish authorities with a clear idea
    of the number and identity of persons with individual quantities at
    1 April 1993 when Council Regulation (EEC) No 3950/92 is affected.
    Following the agreement reached in the Council on 21 May 1992 to
    make its decision to increase Spain's guaranteed total quantity by
    500 000 tonnes subject to a certain number of conditions, on 30
    October 1992 the Spanish authorities adopted a Royal Decree
    implementing those conditions.
    Thus, the public body designated to apply and monitor the scheme is
    SENPA. The latter is authorized to caclulate the levy once the
    figures have been forwarded and production declarations received
    and verified. That authorization is very precise and ensures
    proper application of the scheme within the time limits laid down.
    There is also provision for the Ministry of Finance to take action
    for recovery of sums and to ensure effective execution of
    procedures.
    The text states clearly that individual reference quantities are to
    be allocated to producers and that all changes relating to
    quantities are to be registered.
 ---pagebreak---                                    7 ; -
    The basis for calculating such allocations has been altered as
    compared with the Decree of 31 December 1991 since a programme for
    the discontinuation of milk production has been applied and the
    Council has decided, subject to conditions, to increase Spain's
    guaranteed total quantity. At all events there is provision for a
    downward adjustment   in individual quantities so that the sum
    thereof does not exceed the guaranteed total quantity.
    At the same time as the Royal Decree was adopted, various
    resolutions were adopted by SENPA. Two of them relate to the
    declarations to be made by purchasers and by direct sellers.
    A third resolution lays down rules on the verification           and
    monitoring of definitive discontinuation of production.
    By the Royal Decree of 30 October 1992, followed by the Order of
    4 December 1992, the Spanish authorities supplemented and where
    necessary amended the texts adopted previously in order to comply
    more closely with the conditions which the Council laid down for
    the definitive decision to increase the Spanish guaranteed total
    quantity. The Spanish authorities have even implemented in advance
    of the time limit certain provisions which the Council only adopted
     in December 1992, such as the possibility purchasers enjoy of
    withholding advances to producers to ensure collection of the levy.
Appraisal
The Spanish authorities have adopted texts demonstrating their clear
determination to comply as closely as possible with the conditions* laid
down by the Council for a definitive increase in the guaranteed total
quantity. The legislation must be slightly amended to adapt it to the
regulations on the reform applicable from 1 April 1993.
The   legislation  is at variance with Community      requirements, in
particular in so far as it provides for a reduction in the reference
quantity where utilization is less than 75% over two consecutive
periods, except in cases of force majeure.
 ---pagebreak---                                  - 12  -
Implementation of the scheme
Allocation of individual reference quantities
SENPA, the body assigned general competence for implementation and
supervision of the scheme, has introduced the systems necessary to
record and cross-check declarations of milk deliveries, has obtained
from the dairies and the intermediaries the declarations concerning the
1991/92 marketing year and allocated a provisional individual reference
quantity and fat content to each producer by letter of notification in
December 1992.
SENPA has undertaken a programme of checks on declarations submitted by
milk   purchasers. Definitive   individual   reference   quantities for
deliveries will be allocated once these verifications have been
completed, once grounds for appeals against the provisional allocation
of reference quantities, lodged by some 2 0 % of milk producers, have
been examined and after confirmation by the Council of the increase in
the national guaranteed quantity. It is also intended to inform milk
purchasers before 1 April 1993 of individual quotas allocated.
A programme for the verification of declarations of direct sales must
also be completed before reference quantities can be allocated. In the
meantime, no accurate information is available on the quantities
covered by direct sales, estimated at some 10 % of total milk
product ion.
National buy-up scheme
The nationally funded repurchase programme was implemented in April
1992 and a total of 656 000 tonnes has been bought up (568 000 tonnes
of deliveries quota and 88 000 tonnes of direct sales quota).
Actual implementation is thus close to the target of the repurchase of
600 000 tonnes of delivery quota set in the agreement with the Council.
SENPA has carried out checks on compliance by the claimants, with
generally satisfactory results. This buy-up scheme was based on the
reference quantities distributed in 1987 and was implemented before
definitive reference quantities were established. However, as the
repurchase programme took place after 1991/92, any substitution of the
bought-up quantities by other producers will not be reflected in these
producers' quotas and will thus be eliminated          in 1993/94. The
effectiveness of the repurchase programme        is also supported by
slaughter    statistics, which show that      35 % more    heifers were
slaughtered in 1992 than in 1991 (205 826 slaughtered in 1992, 152 493
In 1991).
The repurchase scheme to be financed by the Community has not yet been
launched, pending confirmation of the Council's agreement, and
finalization of individual reference quantities.
 ---pagebreak---                                   - 73 -
Conclusion
Spain   has   made   considerable   progress   towards  the    effective
implementation of the milk quota regime by 1993/94.
The Commission has verified that SENPA, both at its head office and in
its departments in the regions in which most of the milk is produced,
is undertaking the controls necessary to establish a sound basis for
effective implementation and sees no reason why these controls should
not be completed before 1 April       1993 and definitive     individual
reference quantities allocated for deliveries.
Until verification of claims for direct sales quotas is completed and
the quantity of direct sales established, the Commission cannot confirm
that 150 000 tonnes of national guaranteed quantity are available for
transfer from direct sales to deliveries, as proposed in the agreement
with the CounciI.
 ---pagebreak---                                  - 74 -
ITALY
iQflal provisions
Framework law
The Framework Law laying down urgent measures for the dairy sector and
covering    the   implementation of   the Community    additional  levy
arrangements came into force on 19 December 1992.
(a) Allocation of individual reference quantities
To obtain an individual reference quantity, one must belong to a group
or be registered individually in lists published by the authorities.
Member producers have an A quota corresponding to quantities marketed
in 1988/89 (or from 1985/86 to 1987/88 in the event of exceptional
circumstances) and a B quota corresponding to the amount by which
quantities marketed in 1991/92 exceed those in 1988/89. Non-member
producers only have A quotas corresponding to the quantities allocated
to them in 1988 and which cannot exceed the quantities marketed in
1990/91 or 1991/92.
Reference quantities are all allocated subject to a decision by the
Council regarding the increase in Italy's guaranteed total quantity.
National measures will be taken for the difference, i.e. the B quota,
to be absorbed over three years.
To that end, AIMA is authorized to introduce programmes for the
voluntary discontinuation of production with the possibility of a
difference in the way A and B quotas are dealt with.
Even though the Community arrangements do not provide for the
allocation of two quotas per producer, the practical solution proposed
to absorb the production surplus may be accepted.
(b)   Calculation and payment of levy
In accordance with Article 3 of the Law, producer groups may manage
their members' quotas.
Article 5, 6 and 7 lay down provisions on payment of the levy.
Purchasers must draw up declarations of production by non-members and
forward them with those for members within the time limits laid down in
the Community regulations, in particular but not exclusively to AIMA.
 ---pagebreak---                                 - 15 -
For non-members, purchasers withhold the levy where the individual
quota is exceeded and pay it to the authorities within three months
from 31 March, deliveries made outside quotas being charged in full.
For members, the same amount is withheld but deliveries are balanced
out within four months from 31 March and payment takes place within 20
days of that time limit. Purchasers pay the levy to the authorities
and refund any sums over to the producers.
(c)   Penalties and controls
The text expresses a determination to ensure that the levy is paid by
those liable. Penalties apply at all stages of the process.
Controls are conducted by the regions and autonomous provinces within
their areas of responsibility and without prejudice to checks falling
within that of the judicial police and fraud prevention department.
Implementing rules
The Commission was consulted on the draft implementing rules, which are
to be adopted before 1 April 1993, and sees to it that they take
account of certain shortcomings or omissions in the Framework Law, i.e.
in partIcular:
    the fat content of the products delivered to be taken into account,
    the amendments to be made following the reform of the milk quota
    scheme in 1993/94,
    no discrimination to be made between members and non-members of
    producer organizations,
    the link between the individual quota and the land,
    the procedure for paying the levy where the quota for direct sales
     is exceeded.
The latest draft, forwarded on 22 February 1993, is basically   in line
with the Commission's comments.
 ---pagebreak---                                    -  76 -
  Appraisal
  The process of national       implementation  of   the additional    levy
  arrangements is under way.
  The national    law demonstrates clear determination to apply the
  Community additional levy arrangements as regards the allocation of
  individual reference quantities, payment of the levy and application of
  penalt ies.
  It seems probable that the implementing rules will be published in
  accordance with the timetable laid down and that they will supplement
  the provisions of the Law of 19 December 1992. A comprehensive legal
  framework will then exist.
  However, the Commission has drawn       the  attention  of  the   Italian
  authorities to the following points:
      management of quotas by producer groups, as provided for in Article
      3 of the Law, introduces a difference of treatment between member
      producers and non-members, in particular as regards the amount and
      payment of the levy due. In addition, such management no longer
      has any legal basis since Article 12(c) of Regulation (EEC)
      No 857/84, to which the national Law refers and which treats
      producer groups in the same way as producers, was not incorporated
       in Regulation (EEC) No 3950/92;
      Article 2(3) and (7) of the national Law, which reduce reference
      quantities to bring them into line with quantities actually
      marketed if the latter are less than the former, are at variance
      with the Community rules, which do not require producers to produce
       and market the whole of the reference quantity allocated to them.
 Implementation of the regime
Allocation of Individual reference quant ities
The Individual reference quantities were provisionally established In a
bulletin published on 19 January 1993. These provisional figures are being
verified and cross-checked by the producer associations, and It Is Intended
that the definitive Individual reference quantities will be published on
15 March 1993. It Is not at present Intended to notify each Individual
producer, although the Commission considers this to be an essential element
of an effective application of the quota regime.
Whilst those producers which benetlfed from repurchase programmes have been
eliminated from the lists of individual quota holders, the status of some
40 000 producers who ceased producing without compensation, and thus are
eligible to claim quotas, Is at present under examination.
Until January 1993, AIMA had relied entirely on UNALAT for the establishment
of the quantities delivered to each purchaser. On 27 January, AIMA sent to
all regional authorities Instructions to undertake checks on the data on
which the quota a Ilocations.were based.
 ---pagebreak---                                     - 17 -
During its missions to a selection of regions, producer associations and
purchasers, the Commis!son's departments found that the purchasers have kept
a sufficient record of deliveries and of fat content since 1988/89, and that
it is possible to verify the deliveries declared by the Producer
Associations for the 1988/89 and 1991/92 years to the purchasers' books and
records. The      regional  authorities    are  aware   of   their   control
responsibiI ities.
There is thus evidence that a sound basis exists for the allocation of
substantially all the deliveries quotas, and for a control over deliveries
and over the collection of supplementary levies. However, as the controls
by the regional authorities have only now begun to be implemented, a
verification of their effectiveness cannot yet be undertaken.
So far as concerns direct sales, the basis for declaration, control and levy
collection is provided for in the draft Implementing regulations.
Competent agency
The conditions to the Council's agreement require the agency having general
competence for the Implementation and the supervision of the system to have
the power to
    check on the spot the accuracy of the declarations of producers and
    purchasers,
    calculate the levy due and collect It.
In Italy, the responsibility for checks has been allocated not to a single
body such as AIMA, but to the regional authorities. The Commission's
departments will continue their close monitoring of the Implementation, and
verify in particular the adequacy of the controls to be exercised by the
regional authorities. The Commission considers It more appropriate for a
central body to undertake checks throughout the territory, so that full
assurance can be gained that the quantities on which levies are collected
are fuily ver if led.
Repurchase scheme
Three repurchase schemes had been undertaken before the Council's agreement,
a programme of 163 592 tonnes repurchased under regulation 1183 90, a
nationally financed repurchase programme of 440 000 tonnes established by
AIMA on 22 March 1991, and a programme of 285 853 tonnes under regulation
1637/91.
Except for some 10% of the claims under the last-mentioned programme which
are still being processed, the Italian authorities have verified that no
beneficiary has received a production quota.
The repurchase programme of up to 0,73 million tonnes mentioned In the
Council's agreement has not yet been implemented, pending a deflnltvie
agreement on EEC finance and the establishment of the quantity of surplus
production to be absorbed.
 ---pagebreak---                                    - 18 -
Conclusions on the progress made
A system which affects so many producers and so large an industry takes a
certain time to implement. The basic conditions, covering the essential of
all milk production, have been established, in that the enabling legislation
has been adopted, the individual production statistics established and
individual reference quantities provisionally allocated for deliveries.
The Commission's departments are satisfied that the next steps are in the
process of being taken, which are the adopting of the detailed Implementing
rules, and the establishment and Implementation of control           systems
throughout the regions.
It will take some further months before the progress on these next steps can
be verified, and all controls over repurchase programmes and quota
allocations completed, and indeed some years before the full application of
the quotas can be confirmed, as Is recognized in the Council's agreement
which provides for a time limit of 1 April 1995 for the full absorption of
excess production.
 ---pagebreak---                                   -  79
CONCLUSIONS AND PROPOSAL
As none of the three Member States has applied the regime, or is in a
position to collect supplementary levies, in the 1992/93 year, it will
not be until the end of the 1993/94 year that the final proof of
compliance, the collection of levies from producers exceeding their
 individual reference quantities, will be available for verification.
 It is therefore still too early for the Commission to confirm that all
the conditions of the Council's agreement have been met.
The Commission considers that, provided it respects its intentions
mentioned in this report, Spain has made, by 15 February 1993 all the
progress which, given the point of departure, can be reasonably
expected towards fulfilling the conditions.
Greece and Italy have made a substantial effort and progress to apply
the Council conditions taking into account particularly the difficult
initial situation and time available.
Nevertheless, further progress is required.
For Greece, the following conditions remain to be fulfilled:
     a) individual reference quantities have to be calculated on the
        basis of deliveries to purchasers in 1991/92, and individual fat
        reference quantities established,
     b) individual reference quantities have to be notified      to each
        producer, and communicated to the purchasers,
     c) a central agency must be established and equipped to verify the
        production records and the collection of levies due,
     d) an adequate record of     production must  be  established  both
        locally and centrally.
Similarly, for Italy the following conditions remain to be fulfilled :
     a) adoption of the implementing regulations,
     b) notification to each producer of the individual reference
        quantities and communication of these to the purchasers,
     c) establishment of a central agency for the effective verification
        of the quantities declared and of the quantities on which levies
        are charged.
     Moreover, the attention of the Italian authorities is drawn to the
     need to remove all discrimination between affiliated and non
     affiliated producers.
The Commission, therefore, proposes an interim solution whereby:
     a) The guaranteed quantity for deliveries for Spain be increased
        provisionally, for the 1993/94 year only by the amounts
        mentioned in Annex I.
 ---pagebreak---                            - zu -
(b) Greece and Italy are granted until 15 May 1993 to fulfil the
    conditions of the Council agreement so that, by the end   of
    July 1993 and on the basis of a further proposal from    the
    Commission, an increase of the guaranteed quantities     for
    deliveries may be considered for the 1993/94 milk year.
(c) It reports again to the Council in March 1994 on further
    progress made in the effective application of the milk quota
    scheme in the three countries concerned and proposes further
    measures to be taken in the light of such progress, and in
    particular states whether the increased quotas should be
    continued in 1994/95.
 ---pagebreak---                                   - 27 -
                PROPOSALS FOR ABSORBING EXCESS PRODUCTION
     SPAIN
                                                SPAIN
                                               (tonnes)
     Present quota
     - Deliveries                             4 550 000
     - Direct sales                              527 000
     Present estimated
      production                              6 000 000
     Difference between
      quota/production                        1 450 000
     National buy-up
      already decided                           600 000
     SOLUTION
    Revision quota                               500 000
    Direct sales
     transfer                                    150 000
    Buy-up financed
     by the Community                            200 000
  GREECE:   Quota is increased by 100 000 tonnes
                                                         Mi 11 ion tonnes
        ITALY
I.      Excess to be removed                                     2.47
II.     Of which to be removed without compensation
        in accordance with I ta Iian law                          0.84
III.    Net excess                                              1.63
IV.     Increase in wholesale quota                              0.9
V.      Amount to be bought up                                   0.73
VI.     Amount to be purchased with Community
        contribution (25% of V)                                  0.2
 ---pagebreak---                     - 22 -
                    ANNEX
REPORTS TRANSMITTED BY GREECE, SPAIN AND ITALY
 ---pagebreak--- HELLENIC REPUBLIC                                ATHENS, 30 November 1992
Ministry of Agriculture                          Ref : 210365
I.  Directorate for Management of Agricultural Products
    Animal Products Section                      To : EEC Commission
    Akharnon 241 10446 ATHENS                         VI/DI - Milk Products
     Information : G. Zakharopoulos
    Tel : 8626415
II. Directorate for Animal Production
    and Exploitation of Animal Products
    Milk Products Section                        Copies : EAGGF
    Kapnokopt ir iou 6                                    Greek Permanent
     Informat ion : E. Bol las                             Représentât ive
    Tel : 8215894
SUBJECT : Mi Ik quotas
Pursuant to the provisions of the Council's compromise document
No 6953/92/AGRI 53 of 2 June 1992 on reform of the CAP, we enclose the
report provided for in paragraph 6 of Annex II of that document.
         REPORT ON IMPLEMENTATION OF THE MILK QUOTA SYSTEM IN GREECE
1.   Implementation of the system
    Since the milk quota system was first implemented, and up to the present
time (92/93 milk year), Greece has been applying the quota system in
accordance with Formula B provided for in Council Regulation (EEC) No 857/84
and Commission Regulation (EEC) No 1546/88.
     In order to implement the provisions of these Regulations, the
Ministries of Agriculture and the National Economy published joint Decision
No 204930 of 1 August 1984, which was supplemented and amended by their
joint Decision No 39187 of 14 July 1986.
2.  Transfer of guaranteed quantities from direct sales to deliveries
     to dair ies
    Because of the structural changes which have occurred in Greece in
recent years in the way the milk produced is marketed, and in particular
 ---pagebreak---                                      - 2 -
because of the increase in deliveries instead of direct sales (as the result
of the steadily increasing demand by consumer's for standardized fresh milk
products and the implementation of health and veterinary regulations),
Community regulations were adopted, following a request by Greece, which
allowed the transfer of 110 000 tonnes of milk from direct sales to
deliver ies.
3. Taking into account the provisions of Regulations (EEC) No 1336/86 and
No 775/85 which reduced the overall guaranteed quantities of deliveries and
direct sales, and the continual structural changes which have occurred in
the areas which collect milk from industries (Formula B ) , and in order to
meet the consumer requirements specified in the previous paragraph, a number
of decisions were taken amending the basic implementing Decision
No 339187/86, although these only applied to Annexes A and B to that
Decision. (These Decisions are enclosed).
4.  Monitoring the system
    Pursuant to Decision 339187/86, responsibility for monitoring the system
has been assigned to the Regional Departments of the Ministry of
Agriculture, which in turn keep industries and producers informed about
implementation of the system in Greece.
     It should be stressed that until the 87/88 milk year there were no
serious problems, since overall quantities produced did not exceed the
guaranteed quantities specified, after taking into account the possibility
of making adjustments for any overruns at national level (Article 10 of
Regulation (EEC) 857/84).
    Beginning in the 88/89 milk year, production started to exceed the
overall guaranteed quantities specified. However, the continual changes
occurring in the industrial collection areas and the inherent administrative
impossibility of monitoring the system (because the shortage of computer
equipment, in particular, and staff made the task of inputting and
processing data extremely slow) resulted in a delay in the confirmation and
cross-checking of the original figures and consequently in the proportional
charging of additional levies to the industries concerned.
 ---pagebreak---                                     - 3 -
5.  Proportional charging of additional  levies
                                              9
    Pursuant to the relevant Community regulations and national decisions,
the Ministry of Agriculture adopted Decision No 205197 of 5 October 1992 on
the proportional charging of additional levies for the 88/89 milk year to
the industries concerned.
    The reasons for the delay in charging were explained in paragraph 4.
    The amount concerned - DR 164 913 628 - has already been charged by the
EAGGF departments.
6.  Overruns for the 89/90. 90/91 and 91/92 milk years
    With regard to the overruns for the 89/90, 90/91 and 91/92 milk years,
according to the provisional figures, it was agreed at bilateral meetings
between the Greek Ministry of Agriculture and the EAGGF held in Brussels on
8 October 1992 to suspend measures to charge these overruns by applying
retroactively the overall guaranteed quantities which are expected to be
allocated to Greece in the 93/94 milk year, increased by 100 000 tonnes.
7.  Direct sales
    With regard to the level of direct sales in the period since the
introduction of the quota system, we would remind you of document No 35092
of 11 June 1992 that we sent to the EAGGF departments, which states that the
figures on direct sales communicated to the Community's Statistical
Department are estimates applying only to the regional departments in each
area and are designed to establish a balance between the production and
consumption of milk in Greece. They cannot therefore be used as a basis for
charging additional levies.
8.  Monitoring the quota system in the 1992/93 milk year
    Because of the regular overruns since the 88/89 milk year, the Ministry
of Agriculture has held a series of discussions at regional level with the
authorities responsible and has contacted the sectors concerned in order to
ensure full compliance with our obligations under Community regulations.
 ---pagebreak---                                     - 4 -
    The relevant quotas have already been allocated in turn:
    (a) by the central departments of the Ministry of Agriculture to the
        regional departments in each prefecture;
    (b) by the regional departments of the Ministry of Agriculture to the
        local industries;
    (c) by the local industries to producers.
    It should be emphasized that all Greek producers now know their own
personal quotas (see enclosed model) after being informed by the local
industries.
9.  Appointing a body to control the system
    The enclosed draft law proposes a vote in Parliament on the appointment
of a Milk Board to manage the quota system.
    This draft law should be voted on before the end of the year and should
come into force at the beginning of the 93/94 milk year.
10. Future operation of the system beginning with the 1993/94 milk year
    So that Greece can comply in good time with the future proposals of the
Commission on reform of the CAP and the application of the quota system, the
Ministry of Agriculture published the enclosed circular No 176124 of
10 April 1992 setting out new procedures for applying the quota system.
    The procedures for allocating quotas to individual producers are
expected to be completed by the end of this year.
11. The departments of the Ministry of Agriculture will be pleased to
provide any further details or other information.
                                         Director-General
                                         G. Konstandin id is
 ---pagebreak---               MINISTERIO DE AGRICULTURE PESCA Y ALIMENTACION
REPORT FROM THE MINISTRY OF AGRICULTURE, FISHERIES AND FOOD TO THE
COMMISSION OF THE EUROPEAN COMMUNITIES
Re:                   Council a g r e e m e n t of 21.5.92 for a d a p t i n g t h e g u a r a n t e e d overall
                      q u a n t i t y for Spain: Allocation of individual q u o t a s .
             The consolidated text of t h e commitment to reforming t h e CAP in t h e
milk a n d dairy p r o d u c t s s e c t o r (Doc. 6953/92 of 2.6.S2) in Annexe II s e t s a
g u a r a n t e e d overall q u a n t i t y for Spain, t a k i n g effect from 1.4.93 and
e s t a b l i s h e s t h a t this decision is s u b o r d i n a t e to c e r t a i n conditions being
fulfilled, among which is t h e fact t h a t t h e Member S t a t e will, before 31.12.92,
p r o v i d e t h e Commission with a r e p o r t t e s t i f y i n g t h a t t h e established p r o v i s i o n s
h a v e b e e n i n t r o d u c e d into national legislation so t h a t t h e y can be applied
within t h e specified p e r i o d s (Annexe NQ 1 cf this r e p o r t ) .
National legislative p r o v i s i o n s
              (All t h e s e p r o v i s i o n s h a v e b e e n s e n t to t h e Commission.)
             1.- Provisions p a s s e d p r i o r t o t h e Council a g r e e m e n t of 21.5.92 (Annexe
N9 2):
             Although t h e s e p r o v i s i o n s do not form p a r t of t h e commitment, t h e y a r e
c o n s i d e r e d to b e of i n t e r e s t for u n d e r s t a n d i n g t h e problem of a p p l y i n g t h e
quota system in Spain a n d a s forming a b a c k g r o u n d to t h e provisions p a s s e d
in compliance with t h e said Council a g r e e m e n t :
              a) Royal Decree 2466/1986 which e s t a b l i s h e d t h e p r o c e d u r e for
determining t h e r e f e r e n c e q u a n t i t i e s p r o v i d e d for in (EEC) Regulations 804/68
of t h e Council and 857/84 of t h e Commission.
 ---pagebreak---        MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       This Royal Decree has allowed other provisions of lesser rank to be
passed and, on the basis of the obligatory statements from producers and
buyers established therein, and in spite of containing important loopholes and
mistakes, it was possible to make an allocation of provisional individual quotas,
which meant a major step towards the implementation of a quota system in
Spain.
       b) Resolution of the National Agrarian Products Service (SENPA) on the
statements to be made by companies buying milk and/or dairy products
(12.7.91).
       With the aim of fully complying with Community regulations, the
authorities of the Ministry of Agriculture, Fisheries and Food (MAPA- Miniterio
de Agricuitura, Pesca y Aiimentaciôn) considered it necessary to produce a
more precise report than the one deriving from traditional statistics. The data
provided by the obligatory statements from buyers indicated that the volume
of milk marketed in 1990 stood at 6,000,000 mt, which meant a surplus of some
1,450,000 mt above the overall quota.
       With this information it was decided to prepare a plan of action which
essentially consisted in reducing the average production by means of a plan
of voluntary abandonment and in requesting the Community authorities to
collaborate in order to be able to solve the problem of the effective
application of the quota system.
       c) Royal Decree 1888/1991 which established a restructuring plan for the
milk and dairy products sector.
       This constitutes the second basic legislative piece in the development
of the actions needed for applying the supplementary rate system. It consists
of a framework provision that considers the points established in (EEC)
Regulations 857/84 of the Council and 1546/88 of the Commission along with a
series of measures for improving production structures, especially with
regard to the quality of the milk.
       d) MAPA Order of 30 December 1991 which formalized a plan of voluntary
abandonment in milk production.
       This provision, as with all those that have regulated the abandonment
programmes, only affected producers who had been allocated a provisional
quota.
 ---pagebreak---        MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       The period in which producers could resort to abandonment to withdraw
from activity ended on 1 May 1992 and the quantity of quota bought came to
600,000 mt, so the surplus had been reduced to 850,000 mt.
       All this information and the situation of the milk producer sector prior
to Spain's membership, as contained in a Memorandum and complementary
documentation, was made available to the Commission in full detail and served
as tha basis the Council agreement of 21.5.92.
       2.- Provisions passed as a consequence of the Council agreement of
21.5.92 (Annexe N9 3).
       a) Resolution of 3 June 1992 from the SENPA on statements to be made
by buyers of cow's milk or dairy products deriving from cow's milk.
       Annexe II of the Council agreement establishes in section b) that the
individual reference quantity is equal to the quantity available at 31.3.92 or
otherwise to the production in the eighth period adjusted by a reduction
coefficient so that the sum of the individual reference quotas does not exceed
the guaranteed overall quantity.
       The aim of this provision was to discover the quantity of milk or dairy
products bought by the buyers in the eighth period as a necessary element
for allocating individual quotas.
       b) SENPA resolution of 22 June 1992 by which rules are established for
inspection and control of compensated abandonments in milk production.
       The aim of this provision is to guarantee that producers resorting to
abandoning the activity have actually complied with their commitment, and
 concerns both producers and economic agents related to the process (buyers
of milk and those acquiring the cows or the farm that ceased production).
       The Organization responsible for the control is the SENPA, which
 conducts inspections via its provincial services and, up to the present
 moment, has carried out several inspections (Annexe NQ 4).
 ---pagebreak---          MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       c) MAPA Order of 26 June 1992 on updating the individual reference
quantities of producers affected by acts of transference.
       The aim of this provision is to regularize the situation at the eighth
period of all producers who, due to inheritance or other reasons, transferred
their quotas prior to 1 April 1992, so that the allocations of the quotas
provided for in section b) of Annexe II of the commitment can be made to the
current producers.
        d) SENPA resolution of 20 July 1992 on the statements to be made by
the producers who directly sell certified milk or pasteurized milk.
       This provision deals with obtaining the necessary information for
allocating individual quotas in direct sale, which will be done as soon as the
process of allocating delivery quotas to buyers has been completed.
       e) Royal Decree 1319/1992 of 30 October which establishes specific rules
for applying the. supplementary rate system in the milk and dairy products
sector.
       This   provision complements Royal Decrees 2466/1986 and 1888/1991
closing the  cycle of basic regulations for the effective application of the quota
system in     Spain. At the same time it faithfully reflects the conditions
established   in Annexe II of the Council agreement of 21.5.92:
       - It establishes that the individual reference quantities will be allocated
by MAPA through the Directorate General of Farming Productions and Markets,
which will inform the producers, the competent Organization and the buyers
of those allocations.
        - The SENPA is appointed as the competent Organization with the
participation of the Ministry of Economy and Finance and will be responsible
for inspecting and controlling statements from buyers and producers, as well
as calculating and collecting the supplementary rates that are owed.
       A specific unit in the SENPA is created with the rank of Subdirectorate
(Subdirectorate General for Dairy Quotas) for carrying out these undertakings,
with the participation in these tasks of the State Agency for Tax
Administration on behalf of the Ministry of Economy and Finance.
 ---pagebreak---        MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       - The remaining articles contain the other conditions estabished in the
said Annexe II and all the steps for collecting the supplementary rate
considered in (EEC) Regulations 857/84 and 1546/88.
       Annexe N9 5 gives a graphic indication of the scheme for the work of
the Organizations involved and the general functioning of the supplementary
rate system.
       f) MAPA Order of 4 December 1992 regulating certain aspects relating
to the allocation of individual reference quantities of deliveries to buyers for
applying the supplementary rate system in the milk and dairy products sector.
       This provision, which develops Royal Decree 1319/1992, establishes the
steps for allocating the individual reference quantities and sets the criteria
to be taken into account:
       - For producers who had an allocated quota for the statement made on
the year 1985, they will be allocated that quantity without any reduction.
       - For the above producers whose production in the eighth period
exceeded the allocated quota for 1985, their allocation will be reduced by 10
percent of the excess.
       - For producers who did not make a statement in 1985, their allocation
will be reduced by 20 percent of the production marketed in the eighth
period.
       This Order contains an Annexe with a standard communication form for
producers regarding the allocation of the individual quota corresponding to
them, the part that may correspond to them concerning amplification of the
overall quota provided for in the Council agreement for 1.4.93 being left as
a variable.
        Communications on individual reference quantities are currently being
sent out and it is hoped that this will be completed in the present month of
December. In order to give the process more flexibility, the individual
communications signed by the Director General ôf Farming Productions and
Markets are being sent to the provincial Directors of MAPA, who in turn will
pass them on to each of the producers in his province.
 ---pagebreak---         MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       We understand that this legislative packet allows the supplementary rate
system to be applied in Spain with regard to deliveries to buyers and that it
complies with that specified in the conditions established in Annexe II of the
Council agreement.
       Nevertheless, the allocation of direct sale quotas is going to be tackled
immediately and a lesser rank provision will be passed for establishing certain
details on dealing with the process.
Information on the current        situation regarding   the application  of  the
legislation passed
       1.- Quantity of milk marketed in the eighth period.
       As has already been said, knowledge of this quantity was necessary
before allocating the individual quotas. This quantity appears in Annexe nS 6
after having deducted the quotas corresponding to the abndonments
established in MAPA Order of 30 December 1991.
       2.- Allocation of individual quotas.
       Taken as the starting point were the quantities of milk and dairy
products marketed in the eighth period and the application of the criteria
established in MAPA Order of 4 December 1992, taking into account the
amplification of thé overall quota provided for in the Council agreement. Thé
total figures, with the corresponding reductions, also appear in Annexe N2 6,
being subject to review in line with the result of inspections and controls
that are being conducted.
       Attached is an example of the individual communication that is being
sent to producers (Annexe 7).
 ---pagebreak---       MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
       3.- The competent Organization is formally constituted and consists of
the following staff:
       - Central services: 25 officials.
       - Inspectors throughout Spain not including the collaboration of the
State Agency for Taxes: 78.
        4.- Inspections and control.
       As has been stated, intensive inspections are being conducted, both on
abandonments (Annexe 4) and on the statements of buyers in the eighth
period (Annexe 8).
       5.-  Forecasts.
        a) In December, all communications of individuals quotas will have been
made.
        b) In January, the allocation of direct sale individual quotas is planned.
       c) In January, the provision for the abandonment plan of 200,000 mt,
provided for in the Council agreement of 21.5.92, will be passed.
        d) All inspections will continue and, prior to 31 March, it will be
possible to have a fairly precise result on the accuracy of the statements.
        6.- Cooperation with the Services of the Commission.
        The Spanish Government desires this cooperation and is willing to
facilitate whatever information may be necessary as well as a joint analysis of
 the problems that may arise from the effective implementation of the
supplementary rate system, due to the characteristics of the dairy sector in
our country.
 ---pagebreak---        MINISTERIO DE AGRICULTURA, PESCA Y ALIMENTACION
conclusion
       The points stated in this report confirm that Spain has passed the
necessary provisions for complying with the conditions established in Annexe
II of the Council agreement of 21.5.92 and that the said provisions are being
applied at this moment.
                                                    Maaria, IA uecemoer iyyz
 ---pagebreak--- OFFICE OF THE ITALIAN PERMANENT REPRESENTATIVE
TO THE EUROPEAN COMMUNITIES
Ref. 980                                           Brussels, 1 February 1993
Commission of the European Communities,
DG V L B . I.,
130 Rue de la LoI,
1040 Brussels
Subject:     Report on application of milk quota arrangements
Please find enclosed letter No C/336 of 30 January 1993 together with the
abovementioned report whereby the Italian authorities comply with their
obligations pursuant to the decisions of the Council (agriculture) meeting
on 14 to 17 December 1992.
A copy of the abovementioned report has been forwarded directly to the
Commission by the Ministry of Agriculture and Forestry by fax of
30 January 1993, a receipt for which is appended.
                                   Deputy Permanent Representative
                                   Rocco Antonio Cangelosi
 ---pagebreak--- Translation of letter from the Ministry of Agriculture and Forestry to the
Commission.
Subject:  Report on application of milk quota arrangements
In accordance with the decision of the Council meeting on agriculture of 14
to 17 December 1992, the report on the application in Italy of Community
regulations on milk quotas is enclosed.
                                                THE MINISTER
 ---pagebreak---                              REPORT ON MILK QUOTAS
Introduct ion
The application of the Community arrangements on milk quotas in Italy has
not gone smoothly, largely owing to the objective complexity of the system.
Prior to the adoption of Law No 468 of 26 November 1992 laying down urgent
measures for the dairy sector, the Italian legal framework covering milk
quotas was based on Decree No 258 of the Ministry of Agriculture of
7 June 1989.
 In accordance with a possibility opened by the Community regulations, the
abovementioned Decree provided for the allocation of an overall reference
quantity to UNALAT (Unione fra le associazioni di produttori di latte bovino
- association of cow's milk producer organizations) corresponding to the
quantities to which producer members were entitled.
Producers not members of UNALAT were granted quotas directly by the Ministry
of Agriculture, which published a list of successful applicants with the
relevant reference quantities in the Official Gazette.
 In the case of member producers, UNALAT was required to pay the additional
levy due.
 In the case of non-member producers, the purchasers withheld the additional
levy in place of the tax authorities.
 ---pagebreak---                                      - 2 -
Overall, the system laid down did not operate smoothly, in particular as
regards member producers, especially since when the arrangements came into
force, it became apparent that actual national production was substantially
higher than that indicated by the statistics used to calculate the national
quota.
In February 1992, by note to the President of the EC Commission, the Italian
Prime Minister (Présidente del Consiglio dei Ministri) outlined the
difficulties encountered in Italy in applying the milk quota arrangements
and requested an adjustment to the national quota.
Subsequently, at the summit of heads of State and Government held in Lisbon
in June 1992, the European Council called on the Ministers of Agriculture
meeting in the Council to put forward a proposal to solve the problems
ar ising in Italy.
At the Council meeting on agriculture in Brussels on 13 and 14 July 1992,
with a view to finding a speedy solution to the problem of quotas, the
 Italian Minister for Agriculture out Iined the commitments and efforts which
the Italian administration intended making to reduce milk production to
within the limits laid down by the Community.
It was also announced at that time that a law was to be adopted to define a
new framework of rules on milk quotas with a view to overcoming all the
obstacles which had hitherto prevented proper appi ication of the
arrangements.
A commitment to reduce national production by 1 600 000 tonnes within three
milk years was also announced. The first stage was to be completed in the
1992/93 milk year and to involve a reduction of 300 000 tonnes of mi Ik in
production.
 ---pagebreak---                                     - 3 -
This would call for the support of the Council and the Commission since the
efforts and sacrifices required of the Italian dairy industry were
considerable.
The provisions announced by the Minister for Agriculture were approved by
the Italian cabinet at a meeting held on 13 August 1992.
In September, examination of the provisions commenced in the two houses
after the summer break.
In November the provisions were definitively adopted by Parliament and
published in Offical Gazette No 286 of 4 December 1992 (Law No 468 of
26 November 1992).
The content of Law No 468/92
Law No 468/92, which came into force on 19 December 1992 (a fortnight
following publication in the Official Gazette in accordance with the general
rule applying), provides for reference quantities to be allocated to all
 Italian producers who produced milk in the 1988/89 milk year in the case of
members of producer organizations or in 1983 in the case of non-members.
Non-member producers are to be granted a quota equal to the reference
quantity already allocated to those producers in the current milk year by
the Ministry of Agriculture.
The list of this group of producers and the relevant reference quantities,
broken down into deliveries and direct sales, was published in the Annex to
the Ministerial Decree of 26 May 1992 (Official Gazette No 130 of
4 June 1992).
 ---pagebreak---                                     - 4 -
Reference quantities for member producers are divided, in the case of both
deliveries and direct sales, into A quotas, equal to production in 1988/89,
and B quotas, equal to the amount by which production in 1991/92 exceeded
that in 1988/89.
In order to bring Italian production within the limits laid down by the
Community regulations, AIMA is to implement a production discontinuation
programme with a system of compensation, or alternatively reductions are to
be made in the B quotas without any corresponding compensation being paid.
The quotas are allocated to individual producers, who are directly
responsible for any production in excess and are liable to any levy to be
paid thereon.
During the initial application phase, the Law provides that AIMA is to
publish a first list of producers allocated quotas and the relevant
reference quantities.
This first list of producers is to cover all producers, both members and
non-members, broken down by province.
After the abovementioned list has been published, producer organizations may
submit applications to AIMA to manage their members' quotas.
Immediately thereafter, AIMA is to publish a further list of all producers,
broken down by province, showing individual member producers under the
organization to which they belong.
 ---pagebreak---                                     - 5 -
This second list will be updated and published by 31 January each year for
use in the following milk year.
The lists are to be forwarded to the regional authorities, which are to make
them available immediately to operators at their premises in each provincial
capital.
 In addition to providing various types of services to their members, under
the milk quota arrangements producer organizations are responsible solely
for balancing out the surpluses and shortfalls produced by their members at
the end of the milk year.
They do not claim to have any power over the quotas of members, who remain
the sole persons entitled thereto and the sole parties responsible for them.
The collection of the levy is essentially the responsibility of the
purchaser.
Using the abovementioned lists, the latter must verify deliveries from each
supplier and when the producer exceeds his reference quantity, the purchaser
must immediately withhold an amount per litre of milk equal to the
additional levy in force.
Amounts are withheld by the purchaser from payments to producers, be they
members or not, and are paid after the end of the milk year.
When making payments in respect of member producers, the purchaser must take
account of balancing out effected by producer organizations.
The Law specifies that the quota belongs to the producer as manager of. an
agricultural holding.
 ---pagebreak---                                     - 6 -
In accordance with the possibilities afforded by Community regulations on
milk quotas, recently approved by the Council meeting on agriculture, Law
No 468/92 provides that milk quotas may be leased or transferred without
this implying the simultaneous leasing or transfer of the holding where
production takes place.
The Law provides for a series of penalties to which the various parties
 involved in the quota arrangements are subject where they fail to comply
with its provisions.
Checks on the system are largely the responsibility of the regions, which
receive all data necessary to verify the correct application of the
régulât ions as regards purchasers, producer organizations and producers.
Checks may also be conducted by AIMA, the Judicial police authorities and
the Central Fraud Prevention Inspectorate of the Ministry of Agriculture.
As regards direct sales, the producer himself is required to pay the levy
due directly, and in the case of member producers, payment is made through
the organization after balancing out between the shortfalls and surpluses
produced.
Lastly, Law No 468/92 provides that supplementary rules for its application
are to be adopted within four months of its entry into force.
 ---pagebreak---                                     - 7 -
Application of the Law - Lists of producers
Article 2(1) of the Law provides that within 30 days of its entry into
force, i.e. by 18 January 1993, AIMA is to publish lists of producers and
forward them to the regional authorities, which are to make them available
to operators at their premises in each provincial capital.
This first list is to include all producers entitled to a reference
quantity, by province, showing the relevant quotas.
No distinction is made between producers who are members of a producer
organization and non-members.
The list, which has already been prepared and forwarded to the regions
within the time limits laid down by the Law, shows:
1. Non-member producers who produced in 1983 and who took part in the
survey provided for in the Ministerial Decree of 30 September 1985. Such
producers were allocated reference quantities shown in the Annex to the
Ministerial Decree of 26 May 1992, published in the ordinary supplement to
Official Gazette No 130 of 4 June 1992. The list of non-member producers
was updated subsequently to take account of changes occurring in the period
elapsing between the commencement of the 1992/93 milk year and the entry
 into force of Law No 468/92 (19 December 1992);
2. Producers belonging to producer organizations who produced in the
1988/89 milk year. These were allocated A quotas equal to production in the
1988/89 milk year and possibly B quotas equal to the amount by which
production in 1991/92 exceeded that in 1988/89.
 ---pagebreak---                                     - 8 -
Given the high number of producers involved, the possibility cannot be ruled
out that the abovementioned list still contains certain errors or
inaccuracies due to a failure to record sales of holdings, successions and
the like.
A series of checks is being carried out at present to weed out any possible
mistakes.
To that end, last December lists of producers were forwarded to the
organizations concerned for the requisite corrections.
At present the lists are being returned to the organizations with
correct ions.
All producers who have taken part in the programmes for the discontinuation
of milk production implemented in Italy to date have naturally been deleted
from the lists even if they were producing in the 1988/89 milk year.
Applications from organizations to manage their members' reference
quantities must reach AIMA by 17 February 1993.
To that end an application form has been prepared for the purpose. It must
be accompanied by a list of members with the relevant identifying data.
AIMA will conduct all checks necessary on applications submitted by
organizat ions.
A second list of producers taking account of applications for authorization
of management by organizations is thus scheduled to be published in early
March.
 ---pagebreak---                                     - 9 -
The abovementioned list will be printed by AIMA and forwarded to the regions
for consultation by operators at their premises in each provincial capital.
This second list will show member producers grouped by organization and will
also take account of all corrections forwarded to AIMA in the meanwhile.
The lists will thus be made available to purchasers and producers before the
beginning of the 1993/94 milk year.
As mentioned above, the first list is of necessity provisional in nature and
includes 169 000 producers entitled to a quota covering a total of
11.95 million tonnes in reference quantities allocated.
To sum up, the allocation of individual quotas is being undertaken in
accordance with the time limits and rules laid down by the Law.
Detailed rules for implementing Law No 468/92
The Law as it stands is sufficient to start operations required for the
commencement of the 1993/94 milk year.
 It contains all the provisions necessary to allocate quotas and publish the
 Iists.
However, for certain procedures which need to be carried out during the milk
year and for checks thereon, it has been necessary to prepare provisions
containing implementing rules.
 ---pagebreak---                                     - 10 -
These implementing rules are intended to cover secondary aspects of the milk
quota system and accordingly do not prevent the Law from applying
immediately.
The Regulation, laying down those rules to be adopted within four months
from the entry into force of Law No 468/92, has already been drafted and
consultations are under way on the subject with the bodies assigned
responsibility for checks and with the main parties subject to the
procedures laid down with a view to ensuring that the system is fully
effective and complies as much as possible with the practical requirements
of those part ies.
In particular, the draft Regulation regulates in detail the requirements of
producers, purchasers and organizations, and introduces further provisions
 in addition to those laid down by Law No 468/92, with a view to more
efficient checks by inspection bodies.
To that end there is provision for a computerized, standardized system
enabling checks, including cross-checks, to be conducted on data by means of
specific data-processing procedures.
 It will accordingly be easy to detect any possible infringements punishable
by severe penalties under Law No 468/92.
Further detailed rules on the keeping of accounts have been laid down to
ensure that purchasers apply the system in all points.
For that purpose there is provision for a special register, to be endorsed,
 indicating in particular the fat content of milk from each producer.
In addition, purchasers are required to take two samples each month from
milk delivered by each producer to calculate its fat content.
 ---pagebreak---                                   . - 11 -
With a view to calculating any levy due, the purchaser must work out the
average fat content of milk delivered over the period concerned by each
producer.
Special attention has been paid to the wording of the provisions on direct
sales.
There is thus provision for careful checking of declarations which producers
must forward in accordance with Law No 468/92.
Checks involve verifying records held for tax purposes or commercial
documents to see whether the figures tally with data contained in the
abovementioned declarations concerning quantities of milk or milk equivalent
sold direct I y.
Checks relating to producers exempt under the provisions in force from the
obligation on keeping the abovementioned documents are aimed at ascertaining
whether the number of dairy cattle on the holding tallies with the quantity
of milk sold as given in the declaration.
Discontinuation of milk production - 1992
As mentioned above, at the Council meeting on agriculture in Brussels on 14
and 15 July 1992, the Italian delegation outlined the measures which the
 Italian authorities intended introducing to bring milk production within the
 limits laid down by the Community.
At that time it was pointed out that milk production would have to be
reduced by a total of approximately 1 600 000 tonnes in Italy over three
milk years as set out below:
 ---pagebreak---                                      12 -
1992/93 milk year       300 000 tonnes
1993/94 milk year       650 000 tonnes
1994/95 mi Ik year      650 000 tonnes
In order to implement the programme to reduce'mi Ik production, Law No 468/92
provides explicitly for the Ministry of Agriculture and Forestry to issue a
decree setting out the general criteria to be followed to bring quantities
allocated to individual Italian producers into line with Italy's reference
quantities over three years (Article 2(8)).
The programme will be implemented by AIMA, which may make use of production
discontinuation programmes involving compensation or may reduce B quotas
without paying any compensation (Article 2(9)).
With regard to the projected reduction of 300 000 tonnes during the current
milk year, it should be pointed out that a production discontinuation
programme in accordance with Regulation (EEC) No 1637/91 has already been
completed and compensation paid to a large extent.
That Regulation, which was adopted to allow the Member States to bring
within the limits reference quantities, which were reduced by 2% for the
1991/92 milk year, specified that the production discontinuation programme
financed by the Community was to be completed by 31 March 1992.
The operation could cover up to 3% of the national guaranteed quantity,
which in the case of Italy was around 270 000 tonnes.
By the Decree of the Minister for Agriculture and Forestry of
20 October 1991, the Italian authorities adopted measures for the
application of Regulation (EEC) No 1637/91 so permitting Italian producers
to benefit under the Community programme.
 ---pagebreak---                                     - 13 -
Subsequently, Regulation (EEC) No 1637/91 was amended by Regulation (EEC)
No 1188/92 to permit the Member States to extend the programme for the
discontinuation of milk production to 30 September 1992.
At 15 November 1991, the closing date for submission of applications laid
down by the Ministerial Decree of 29 October 1991, applications from
producers numbered approximately 11 500, covering a total of approximately
970 000 tonnes mi Ik.
Of that number, 6 963 applications were approved from producers who at
30 September 1992 had abandoned production quotas totalling 285 860 tonnes
(equal to approximately 320 000 tonnes actual production).
The objective of reducing production by around 300 000 tonnes in the 1992/93
milk year was thus clearly attained.
The expiry dates for the subsequent production discontinuation programmes to
be implemented in the two forthcoming milk years must coincide with the
termination of the milk year to permit measures relating to the additional
 levy to be applied more effectively.
The next milk production discontinuation programme will therefore probably
expire on 31 March 1994.
Actual reductions covered by the programme may vary depending on the real
needs, which will be assessed more accurately after the commencement of the
milk year, without prejudice to the objective, which consists in reducing
the overall quantities allocated to producers within the time limit laid
down by the Council Decision of last December.
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (93) 109 final
                                                      DOCUMENTS
EN                                                                              03
                                 Catalogue number : CB-CO-93-137-EN-C
                                                             ISBN 92-77-53860-0
Office for Official Publications of the European Communities
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