CELEX: 51993PC0297
Language: en
Date: 1993-07-09
Title: Proposal for a COUNCIL REGULATION (EEC) on the grant of agri- monetary aid

CQMVIISSION OF THE EUROPEAN COMMUNITIES
                                                        C0M(93) 297 final
 ^ %-êm
                                                         Brussels, 9 July 1993
~l . * t. 'M
                                          Proposal for a
                                       INC IL REGULATION (EEC!
                               on the grant of agri-monetary aid
                                  (presented by the Commission)
             KMÉÉS
               Sit
 ---pagebreak---                                       u~
                         EXPLANATORY MEMORANDUM
Agricultural prices, expressed in national currencies, may be reduced
due   to   Community  agricultural   monetary   rules^).   These rules
stipulate that when certain price cuts occur "compensatory" (and
"national compensation") aids may be granted in essence to take account
of their negative impact on farm incomes.
When the reductions are only in national currencies regulation 3813/92
has already laid down certain rules under which compensatory aid may be
granted. When the reductions involve prices both in ecu and in national
currency no such rules have yet been laid down. The purpose of the
current proposal is to enable detailed implementing rules to be laid
down for compensatory aid provided for in article 8 of regulation
3813/92 as well as for national compensation aid provided for in
article 9 of that regulation.
The Commission is of the view that the implementing provisions for the
two types of aid involved should differ only when a uniform approach
would go against the basic concepts underlying articles 8 and 9 of
régulât ion 3813/92.
This proposal sets out how the ceiling on the total amount of aid would
be determined to avoid over-compensation but within the real and
practical constraint of assessing, with a degree of accuracy, the
impact on incomes of the price reductions. It also provides for a
minimum level of losses to be experienced before aid may be granted,
how aid could be paid to avoid market disruption and to ensure, where
appropriate, its decrease over time. The procedures to be followed have
been defined to ensure that all aid granted pursuant to the provisions
of articles 8 and 9 of regulation 3813/92 is in strict conformity with
Community rules.
(1) Council regulation (EEC) N' 3813/92, OJ L 387/1 of 31.12.92
 ---pagebreak---                                      ^
Three aspects of the current proposal require particular comment. One
 is the requirement in regulation 3813/92 for national compensation aid
to be directed towards the socio-structural field. A similar condition
was set in an earlier agri-monetary regulation (N* 1677/85) which also
required a Commission proposal to define this field. That proposal,
C0M(89) 382, failed to be adopted by the Council and is in the process
of being withdrawn. The Commission is now of the opinion that, for
purposes of     the current   proposal,  the delimitation of      "socio-
structural" must be wider than in its proposal tabled some four years
ago. The definition must be sufficiently wide to allow the aid to
fulfil the underlying objective of attenuating the short term negative
 impact on incomes of the price reductions, within the constraint of
avoiding market disruption.
The second aspect concerns avoidance of market disruption. To achieve
this vital end the proposal restricts aid only to production de-
coupled cash grants without any obligation upon the beneficiary
regarding   their  use, and    for certain defined    "socio-structural"
measures. These restrictions avoid aid being granted for actions
which could cause market disruption. It is therefore proposed that
Member states would be free to decide which farmers would receive aid,
and how much, subject only to respect of the ceiling on the total
amount of aid.
The third aspect concerns the maximum levels of aid. These levels
differ as between Member states because, and only to the extent that,
a given reduction in support prices affects income from farming to a
greater or lesser degree in the different parts of the Community. For
certain products a given reduction in support prices has a more marked
effect on overall producer income than is the case for other products.
Consequently, the differences in coefficients reflect the lack of
uniformity in the product mixes between Member States. The differences
also reflect the un-even impact on incomes between Member States of
other, technical    factors, such as intermediate consumption, when
support prices are cut.
Since these provisions are directly linked to Community     agricultural
monetary rules, action is required at Community level.
 ---pagebreak---                                             Proposal for a
                      Council Regulation (EEC) N*             /93
                                     of         1993
                       on the grant of agri-monetary aid
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having    regard    to   the    Treaty    establishing     the   European     Economic
Community;
Having regard     to Council      regulation    (EEC) N" 3813/92 of 28 December
1992 on the unit of account and the conversion rates to be applied for
the purposes of the common agricultural policy^ 1 ), and               in particular
Articles 8(4)     and 9(2) thereof,
Having regard to the proposal from the Commission,
Whereas Member States with floating currencies have been authorized by
Article 8 of Regulation (EEC) N" 3813/92 to grant compensatory aid when
prices in their national currencies are             reduced due to the application
of  the    provisions    of   Article     4   of   that  regulation    provided    the
conditions set in its Article 8 (1) are fulfilled; whereas Article 8(4)
of that regulation requires the Council to determine, on the basis of a
Commission    proposal,     the    parameters    within   which   such   aid   may  be
granted;
Whereas   all   Member   States     have  been    authorized   by Article     9(2) of
Regulation    (EEC) N" 3813/92 to grant           national   compensation    aid when
prices in their national currencies are cut due to an increase in the
correcting factor resulting from the application of the provisions of
Article 9(1) of      that   regulation; whereas Article 9(2) of Regulation
(EEC) N" 3813/92 specifies that such aid must be directed towards the
"socio-structural" field and may not be linked to production; whereas
there   is no    established      Community     definition   of   the  term    "socio-
structural" and consequently limits need to be set within which aid may
be  granted    pursuant    to    the   provisions     of  Article   9  (2) of     that
régulât ion;
(1) O.J. n' L 387 of 31.12.92, p. 1
 ---pagebreak---                                                 -6~-
Whereas     in order       to   respect      the   requirements      of   Article     8   (4) of
Regulation (EEC) N" 3813/82, minimum                  limits and maximum amounts of aid
need   to be determined           by the Council; whereas Article 9 (2) of                     that
 regulation     requires     the Council        to determine a procedure under               which
national     compensation        aid may      be granted; whereas         although     there      is
difference       between      the      conditions      which     give    rise     to    national
compensation aid provided for                in Article 9 (2) of Regulation (EEC) N*
3813/92, and to compensatory aid                 provided for in Article 8 (2) of that
regulation,       it    is    not     necessary       for    such    aids    to    be    treated
differently as regards the conditions for their grant to beneficiaries;
whereas    it is in the        interests of clarity and            legal certainty for the
Council    now     to  determine        the    implementing      provisions     for   both      the
compensatory aid and for the national compensation aid provided for in
Articles     8    and   9    of     Regulation       (EEC)    N"   3813/92;     whereas       that
regulation may have effects on producer                  incomes in both the agriculture
and the fisheries sector ;
Whereas    these     implementing        provisions must, within          the    limit    of    the
practical difficulty of quantifying the income loss flowing from price
reductions,      except      in    terms    of   an   approximation,      set    out    how     the
maximum    level of aid shall            be determined so as to avoid             the risk of
over-compensation        at    the    level    of   each Member      State; whereas         these
provisions must        in addition set          the minimum      threshold of      income     loss
below which       it would      be unnecessary         to permit     aid,   the    time    limits
within    which     aid    may     be    requested      and   granted    that     reflect       the
temporary     nature     of    the     impact    of   agri-monetary      developments         upon
incomes; whereas these provisions must also define the means by which
aid   may    be    granted      so    as   to    avoid    market    distortions,        and     the
procedures for authorization of aid which ensure its compatibility with
Community provisions,
Whereas,     to    facilitate        implementation       of   certain     aspects     of     this
Regulation, provision should be made for a procedure instituting close
cooperation between the Member States and the Commission,
Whereas,     since     these     provisions       are    directly     linked    to    Community
agricultural monetary rules, action is required at Community                         level.
 ---pagebreak---                                           -I.  -
HAS ADOPTED THIS REGULATION :
                                     Article 1
1.  This Regulation defines the limits, conditions and procedures to be
    applied in order that a Member State may grant compensatory aid due
    to the application of Article 8 of Regulation (EEC) N* 3813/92             and
    national   compensation aid due to the application of Article 9 of
    that Regulation.
2.  References    in   this   Regulation      to  agriculture,   farming   and  to
    farmers   shall     be   taken    to    include   analogous   activities   and
    operators in the fisheries sector.
                                     Art icle 2
1.  The total   level of aid      granted by a Member State over the entire
    period of its application shall in no case exceed double the annual
    agricultural      income    loss    estimated     in  accordance    with   the
    provisions of Article 3.
2.  A Member State may grant aid through :
    a)  annual payments to beneficiaries without conditions relating to
         its use and/or :
    b)  the measures listed in annex I.
3.  Aid granted under      the provisions of point       2.a) shall, as regards
    each beneficiary:
        be reduced for each annual         instalment by at least one third of
        the initial amount. No capitalization is permitted;
        be unrelated     to their current or future        levels of production,
        sales or purchases, but may be linked to total area of a farm
        or   to   its   total    labour    units.   Differentiation   of   amounts
        between beneficiaries shall be permitted.
 ---pagebreak---                                          -y-
4. Aid may be granted only to farmers the definition of a farmer being
   established by the Member State concerned on the basis of objective
   and non-discriminatory criteria. However, aid for measures                listed
    in Annex  I shall be deemed to be granted to farmers irrespective of
   the status of the recipient.
5. A  Member   State    intending     to grant   aid must    adopt   the  national
    implementing measure within the following periods after the date of
   completion of the relevant procedure provided in Article 4 :
        one year for aid referred to In point 2.a),
        two years for aid referred to in point 2.b).
6. The total aid granted shall be calculated taking :
        all amounts subject to the provisions of point 2.a), plus
        that  part   of   the amounts subject      to the provisions of       point
        2.b)  which    exceed    the   intensities   normally   accepted    by  the
        Commission    in the context of State aid policy.
                                     Article 3
1. The calculation of the loss of          annual agricultural    income shall in
   no case exceed the net Agricultural           Income of Farm Labour for the
   Member   State concerned multiplied by the price reduction              in this
   Member State adjusted       so as to     reflect the impact on agricultural
   incomes of    reductions     in the agricultural      conversion    rates. The
   calculation    of   the   loss of    annual  agricultural    income   shall   be
   determined    by   the   Commission     in  accordance   with   the   procedure
   provided in Art ice 12 of Council Regulation (EEC) No 3813/92.
 ---pagebreak--- 2. For   the purposes of         paragraph     1 the following         definitions       shall
   appI y :
   a)   the    net    agricultural        income   shall     be    the    annual     average
        calculated      using    data published      by the Statistical           Office of
        the European Communities            for  the   last    three years       available,
        expressed      in ecu multiplied by the average                correction      factor
        provided     for   in Article      1 (c) of Regulation          (EEC) N' 3813/92
        for the relevant year.
   b)   the   price    reduction      in   the  national     currency      of   the    Member
        State concerned shall, subject             to the provisions of           paragraph
        3,   correspond      to   the   percentage     decrease       in   prices     in   ecu
        resulting     from the application of the provisions of Article 9
        (1) of Regulation (EEC)            N' 3813/92 taking effect on 1st July,
        adjusted by an amount cot responding to :
             for fixed currencies, the percentage change in agricultural
             conversion      rate on     July   1st   in relation       to the rate one
             year ear Iier,
             for    floating      currencies,     the   percentage        change     in    the
             average     agricultural       conversion    rate    over     the   12   months
              immediately     preceding     the date of the request            referred to
              in Article 4 ( 1 ) , in relation to the corresponding                 average
             of the 12 months preceding that period,
   using the formula in Annex II.
3. When    the   loss     of    annual     agriculture      income      referred      to    in
   paragraph    1 of the Member        State concerned        is less than 1% no aid
   shall be granted. However, the price reduction upon which this loss
   was   calculated      shall     be    carried    forward      for     inclusion      in   a
   subsequent      income     loss    determination,        in    full     for    one     year
   following the date of the request referred to in Article 4 (1) and
   to the extent of two thirds for the second, and one third for the
   third such year. No account shall be taken of                    losses prior to the
   third year.
 ---pagebreak---                                                   - ^   -
                                             Art icle 4
 1.  A  request       for    aid   must     be   made      by   a Member        State    within     the
     fol lowing t ime Iimi ts :
          for     those    with    a    fixed    currency,        by   30th    June   of    the   year
          subsequent        to that of        the 1st      July    referred      to   in Article      3
          (2)b. This request shall, subject to the provisions of Article
          3   ( 3 ) , relate only         to the      impact     of    realignments over         a   12
         month period after 1st July of the preceding year.
          for    those with a floating currency, for the first                           time on or
         after      1st January        1994 and subsequently             least    12 months after
          tabling a request           for aid      in application of the provisions of
         Article 8 (1) of Regulation (EEC) N" 3813/92.
2.  The Council        decision provided for              in   Article 8 (4) of           Regulation
    (EEC) N* 3813/92 shall be preceded by a request                            for aid tabled        in
    conformity with the provisions of paragraph 1.
3.  The     Commission        shall      decide       the     maximum       level    of     national
    compensation        aid which may be granted                  due to the application of
    the provisions of Article 9 (2) of Regulation (EEC) N' 3813/92, at
    the request of the Member                State concerned,           in conformity with         the
    procedure       provided      for    in Article         93   (3) of      the   Treaty     and    in
    accordance       with     the   provisions        of    this    Regulation.        No   national
    compensation          aid    may      be    granted        until      the    Commission        has
    ascertained         its     compatibility          with       the     provisions       of    this
    régulât ion.
    The    Commission        shall     decide      on   whether       to   approve      a   national
    compensation         aid   within       two    months      of    receipt     of    the   request
    referred      to in paragraph          1. In the event           that the Commission         does
    not take a position within this time                       limit the measures          envisaged
    may be implemented provided the Member State has given prior notice
    to the Commission           of    its   intention so to act.              In the event of a
    Member    State seeking          to grant      aid under        a measure      involving     both
    compensatory        aid and national          compensation aid, this decision may
    not   be taken until          the Council         has acted        in accordance with          the
    provisions of paragraph 2 and, for the purposes of applying Article
    2 ( 5 ) , the date of         the Commission decision shall                  be deemed      to be
    that of the Council decision.
 ---pagebreak---                                       At -
                                Article S
This Regulation shall enter into force on the third day following its
publication in the Official Journal of the European Communities.
This  Regulation  shall   be  binding   in  its  entirety and  directly
applicable in all Member States.
Done at                                  For the Council
                                         The President
 ---pagebreak---                                          ANNEX I
Measures referred to in Article 2 (2) b)
a)  farm level aid measures :
        to improve agricultural product quality by quality control;
        to encourage and develop the joint use of machines
        for insurance against extraordinary weather conditions
        for combating animal and plant diseases
b)  agricultural product marketing aids for :
        launching producer groups;
        publicity for agricultural products.
C)  aid for agricultural research  in the following areas .
        computerization
        protection of the environment
        product diversification in line with CAP reform aims.
 ---pagebreak---                                 - Ai .-
                                         ANNEX I I
Formula referred to in Article 3 (2) b)
    The price reduction in national currency is defined as:
         II    x ( c + 1) -1
          To       100
where:
        c   is the percentage reduction of prices in ecu on 1st July of
        the   year   concerned, in  application  of Article  9  (1)  of
        Regulation (EEC) no 3813/92;
        For fixed currencies, Ti and To are the agricultural conversion
        rates on 1st July, respectively,   of the year concerned and of
        the preceding year;
        For floating currencies, Ti and To are the average agricultural
        conversion rates over   12 months preceding, respectively, the
        date of the request for aid, and the 12 months preceding that
        per iod.
 ---pagebreak---                                                              — -v*>.
                                                                                      miuts/mnmst?
     FINANCIAL                       STATEMENT
                                                                      DATE: 9 Jure 1993
1. BUDGET HEADING:                                                    APPROPRIATIONS:
2. TITLE:
   Council Regulation (EEC) No       /93 on the grant of agrlmonetary aid.
3. LEGAL BASIS: Articles 8 and 9 of Regulation (EEC) No 3813/92 of 28.12.1992
4. AIMS OF PROJECT:
   Lays down the rules for granting national or Ccmumity aid to compensate for the negative effects of the
   monetary real Ignments on farm inccmes.
                                    Period of 12 months   Current Financial Year   Following Financial Year
5. FINANCIAL IMPLICATIONS                                          1993                      1994
                                       (ECU mi 11 ion)         (ECU mi 11 ion)           (ECU mi 11 Ion)
5.0 EXPENDITURE
    - CHARGED TO THE EC BUDGET                                      (1)                       (1)
    - (REFUNDS/INTERVENTION)
    - NATIONAL ADMINISTRATION
    -OTHER
                                           1995                1996               1997                1998
5.0.1 ESTIMATED EXPENDITURE                (1)                 (1)                (1)                  (1)
5.2 METHOD OF CALCULATION:
6.0 CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET?
                                                                                                         YES/NO
6.1 CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET?
                                                                                                         YES/NO
6.2 IS A SUPPLEMENTARY BUDGET NECESSARY?
                                                                                                         YES/ND
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY?
                                                                                                         YES/NO
OBSERVATIONS:
(1) It is not yet possible to calculate the financial impact of this proposal since it depends on future
    currency trends and on how Member States apply the measure.
     In the case of fixed currencies, the aid is national aid. In the case of floating currencies (draclma,
    peseta, I ira, escudo and pound sterling), expenditure wi11 only occur if they are revalued. If alI the
    floating currencies revalue in the future, we estimate that the aid equivalent to a price reduction of
    1% as a result of the revaluations would give rise to maxinun expenditure of the order of
    ECU 260 mi 11 ion charged to the Oonmunity budget in the first year of application.
    However, it is very uniikely that there wi 11 be any expenditure prior to the 1995 budget.
 ---pagebreak---                                                    -Til,
                                                                      ISSN 0254-1475
                                                               COM (93) 297 final
                                                       DOCUMENTS
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                                 Catalogue number : CB-CO-93-333-EN-C
                                                             ISBN 92-77-57195-0
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