CELEX: 51979PC0105
Language: en
Date: 1979-03-12
Title: PROPOSAL FOR A COUNCIL REGULATION (EEC) LAYING DOWN SPECIAL MEASURES IN THE RAW TOBACCO SECTOR IN RESPECT OF THE PERUSTITZA AND ERZEGOVINA VARIETIES (Submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
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DOCUMENTS "COM"
COM (79) 105
Vol. 1979/0053
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 ---pagebreak---           COMMISSION OF THE EUROPEAN COMMUNITIES
                                                      COM(79 ) 105 final .
                                                      Brussel , 12 March 1979
                         PROPOSAL FOR A COUNCIL REGULATION ( EEC )
                         LAYING DOWN SPECIAL MEASURES IN THE RAW
                            TOBACCO SECTOR IN RESPECT   OF THE
                           PERUSTITZA AND ERZEGOVINA VARIETIES
                     ( Submitted to  the Council by the Commission )
C0MC79 ) 105 final .
 ---pagebreak---                                EXPLANATORY MEMORANDUM
1 . Article 13 0 ) of the "basic " tobacco" Regulation (R 727/70 of 21 April 1970 )
     provides -that , where for a variety or a group of varieties of tobacco , the
     quantities bought-in by the intervention agency exceed , for a given crop , a
     fixed percentage of production or, in any case , a given quantity , the
  " Commission is required to submit a report to the . Council .
     Such a report , submitted to the Council in September 1978 ( Doc . Vl/229l /78 )
     highlights what are considered to have been the causes of the orisis in
     oriental tobaccos ( Xanti , Perustitza and Erzegovina) and, more particularly :
     - the imbalance at world level between supply and demand ;
     - the increase in the Community of cultivated areas , but especially of
        production due to the considerable increase in unit yields ;
     - the decline . in quality of Community production , due as much to the genetio
        degradation of the seed used as to the adoption of unwise cultivation
        techniques ;
     causes which caused the accumulation of enormous intervention stocks since
     the 1976 crop.
2. Although for the three crops 1 97 3/'l 974/1975 no more than 1.000 tonnes in all
     were taken into intervention , for the 1976 crop the figure was 13-024 tonnes
     and for the 1977 crop ( provisional figures ) about 6.000 tonnes , expressed in
     leaf tobacco .
     It is both interesting and useful , in connection with the measures which the
     Commission is proposing to adopt , to note how the situation differs markedly
     according to variety :
                                                  1976 .         1977 ( provisional )
     Xanti                             >        2.532              321
     Perustitza                                  3x683          2. 161
     Erzegovina                                 ©•809           3*542
     The provisional figures relating to the ,1977 crop, therefore , confirm what has
     already been emphasized by the Commission in its raport to the Council , namely ,
   • marketing difficulties have become structural only in the case of the Erzegovina
     varieties , in particular, and Perustitza. In the case of the Xanti variety, on
      the other hand, the figure recorded for the 1976 may be oonsidered as being
      exceptional .
                                                             /•
 ---pagebreak---                                        - 2 -
  3. In conclusion , it should be noted, that , for the seoond crop in succession , the
     two "ceilings" set by the Council (R. (EEC)l469^^ave been exceeded i. e. both
     the twenty per cent set on the volume of production and the absolute ceiling
     of 4-000 tonnes .               >
     It follows that the specific measures to be adopted in order to point the
     sector in the right direction are , in aooordance with the provisions of
     Article 13 ( 5 ) of Regulation 727/70 :
     - lowering of the level of the intervention price ,
     - quantitative limitation of quantities tàken into intervention.
4 . In view of what has been stated above ( see point 2 ) and of the fact that for
     the Xanti variety , on the one hand , the marketing difficulties are attributable
     solely to quota reasons and , on the other, also from a qualitative point of
     view , this variety has not suffered from the same degradation processes
     encountered in the case of the other varieties ( Perustitza and Erzegovina),
     the Commission oroposal involves a reduction in the intervention price from
     90 to 80 io of the norm price of the varieties Perustitza and Erzegovina only.
     This proposal is based on the provision laid down in Article 13 (4 ) » it is ,
     moreover , in line with the general direction which the Commission is recommen­
     ding in its proposal for an amendment to Article 13® which has been submitted
     to the Council together with the 1979 prices package . Possible recourse to
     quantitative restrictions on intervention was not considered possible and
     processing structure ( small farmers end numerous processing holdings ) which
     would , entail a complex administrative infrastructure at the checking stage .
5 . The Commission has , moreover, studied ( Article 13 ( 8 )) the consequences for
     producers of the measures proposed to the Council , both from the point of view
     of employment and of the standard of living. In this respect , it considers
                                                                                    ν
   1 its proposal "neutral " :
     - because it does not affect the level of the premium and , therefore , the
       possibility for growers of reaching the norm price in the case of quantities
.      normally saleable on the market ;                             -
     - because , in addition , the increase in earnings per hectare , which producers
       secured for themselves ty means of the intervention mechanism , must be
       considered an an exceptional situation which oannot be guaranteed under all
       oircumstances , following the adoption of cultivation techniques designed to
       ensure the greatest unit yield.
                                                                   /.
 ---pagebreak---                                    Earnings /hectare ( lire )
                             1970               1976          Increase
    Perustitza             1,148.152          2,840.623       + 247 t 4
    Erzegovina               865.072        , 2,734.243       + 3l6 , 1
    The Commission does not , therefore , consider that the lowering of the inter-
    vention price from 90 to 80 ?o of the norm price – in current production con-
    ditions ( high unit yields ) - may have negative effects on employment and on
    the standard of living of producers and that a programme of aid is necessary .
6 . Finally , in view of the initiatives takes by the Commission with the aim of
    implementing , as from the 1979 crop , a programme of agricultural research
 * for oriental tobaccos and of the prospeota which this promises of an improve­
    ment - in the medium term – in the quality of production , the Commission is
    proposing to Council that it adopt the lowering of the intervention price
    for the 1.97$ and 1980 crops .
 ---pagebreak---                                     Proposal for a
                         Council Regulation (EEC )
          Laying down special measures in the raw tobaoco sector in
          respect   of the Perustitza and Erzegovina varieties .
THE COUNCIL OP THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community , and in
particular Article 43 thereof ,
Having regard to Council Regulation (EEC ) NO 727/70 of 21 April 1970 on the common
organization of the market in raw tobaooo^\ as last amended by the Act of
Accession , and in particular Article 13(3 ) and (4 ) thereof,
Having regard to the proposal from the Commission,                                  #
                                                             (2)
Having regard to the Opinion of the European Parliament          ,                      ,
Having regard to the Opinion of the Economic and Social Committee^
Whereas it aooears "from the report of the Commission provided for in Article 1Z(1 )
of Regulation ( EEC ) No 727 / 70 that the quantities of tobacco of the Xanti-Yakei , Peru-;
stitza and Erzeqovina varieties from the 1976 crop taken over by the intervention
agencies are considerably greater than the quantities and the percentage of product !
                                                 (4)
fixed by Council Regulation ( EEC ) No 1469 / 70     , the threshold which actuates the
application of the measures laid down in Article 13 of Regulation ( EEC ) No 727 / 70 ;
whereas this trend has continued for the 1977 crop;                  .
Whereas even the prudent prices policy pursued as regards particularly these varieti
since the 1974 crop has not led to a reversal in the marketing situation; whereas
it is therefore necessary to have recourse to specific measures ; whereas , of              I
the various possible measures , a lowering of the intervention price appears                |
the most appropriate to re-establish a better balance betwaen production
and demand and to reduoe stocks ;                                                         ■ l
( 1 ) OJ No L 94 , 28 . 4.1970 , p.   1       '    v
(2)
( 3)
( 4 ) 0J No L 164 , 27 . 7.1970 , p. 35
 ---pagebreak--- Whereas it is evident- that the m&rkit* U*g difficulties e . pepler.^d
by the Xanti-fakk variety raay "be reg*p«ied a* 'being different ■ rom those of the
Psrusiitza and Erze^ovlr.* var.letiew €md due solely ta an except! or? ->l eituatii>n;
whereas , furthermore » i:n.s vwtri- :- . 5y   not Buffered the degradation processes
which have affected t""i« quality' of •'Vie two latter varieties| whereas, therefore ,
the measures envissa£-.?d should be applied only to the Perustitaa and Ecsegovina
varieties ;
Whereas , in view of the egricw.ltu          research ppogrssmo concerning oriental
tobaccos which will "be iKpl enacted s? frus the next oiop and of the prosfsote for
improvement in the quality ox" production which will result in the aediua term,
the measures envieag-ed should be applied to the next two crops ;
Whereas the measures envisaged ■ hs.-m no effect on the level of the prenium, thereby
allowing producers to obtain the norm price in respect of thops quantities which
may be sold normally or* the sarfcet ; vhere'asj furthensore t the increase in earnings
per hectare , secured by produces fay means of intervention and through the use
of a method of cultivation calculated to produce ■ a icaxirauTf yield f is to be
considered as not resulting- from ilis normal play of market forces 5 whereas ,
therefore , it does not appear warranted to propose a pi*©graaaa& of aid in this
sector ,
HAS ADOPTED THIS REGULATION s
                                   Article 1
For the 1979 and 1980 crops , the intervention price for tcbaoco of the Perustitza
variety and of the Er-zegovina variety shall be reduced from 9*3 to 80 ^5 of the
corresponding norm price .
                                   Article 2
This Regulation shall enter into force on ( entry into force of prices of the
1979 crop ),
This Regulation shall be binding in its entirety and direotly applicable in all
Member States ,                              ~
Done at                                                   For the Cour-ail
 ---pagebreak---                     FINANCIAL              STATEMENT
                                                                                      "•«* »     7.2.1979
    1 . BUDGET HEADING :          7011                                                AP^08IATIONS : 24,6 million £(JA
    2. TITLE : Draft Council Regulation laying down special measures concerning raw
        tobacco of the Peruatitza and Erzegovina varieties.
    j. LEGAL BASIS : - Article 13 of Council Regulation ( EEC ) No 727/70
    4. AIMS of PROJECT : Reduction of the intervention price for the two varieties in
        question because there is a surplus of these produots on the market ( see
'       explanatory memorandum ).
  I 5. UNANCIAL IMPLICATIONS                    I L
                                                    PERIOD OF 12 MONTHS CURRENT FINANCIAL YEAR
                                                                               <  79     Î
                                                                                                 F0L10UING UNANC1AL TEA*    I
  I 5.0 EXPENDITURE                                                                                4,8 million EDA          I
                                                  ι        ■ - ■-
          - CHARGED TO THE EC BUDGET                                                I
            CUSXXX' INTER KENT IONS )                4i8 million
  I       - NATIONAL ADMINISTRATION                       EUA                      I
                                                                                               I
                                                                                               !
  I       - OTHER
  1 5.1 RECEIPTS
          - OWN RESOURCES or THE EC
            ( LEVIES / CUSTOMS OUTIES )
  I       - NATIONAL
                                                         1981
     5.0.1 ESTINATED EXPENOITURÏ
                                                     4|8 million
     5.1.1
                                                           EUA
     3.2 HETHOO OF CALCULATION
                                           • 06 Annex
     S:inQUMua€XjrcTPGrjCT:)axx.xxjacK8QoaugqE3CTS3ray3ra0g&JL>ULgJigj&jL*xJ0£x0t3t3^^
                                                                                                                    mm
     y»Y7K YT *rirx.xja&i3ucataQcxasxxnacttKxma&
      6.3 UiLL FUTURE BUDGET APPRC81AT JCNS 8E NECESSART ?
                                                                                                                    TES /**
      OBSERVATIONS : There is a certain delay in carrying out buying in operations . For
       that reason the financial implications generally appear the year following that
       of the harvest .
 ---pagebreak---                                       A H H E X
Financial implications , aa a result of the change in the intervention price from
90 to 80 ^ of the guide price , for J
Perustitza
                                 -> Derived intervention prioei current - 3.053 u.a. /t
                                                                    proposed - 2.781 u.a. /t
Quantitative hypotheses : Reduction of 920 t per marketing year in the amounts bought-in }
                                Qitry into intervention of 1.240 t per marketing year.
Entry , removal      –       920 t at         12 u. a. /t        - 0,011 million u.a.
storage              –       920 t at         77 u. a. /t        - 0,070    "      »
financial oharges –          920 t at        176 u.a. /t         - 0,162    -      »
                             920 t at 2.073 u. a. /t
net los8
net loBB
                     –
                     -   1.240 t at          272 u.a. /t   il    - 1,900 . "
                                                                 - 0,337    "
                                                                                 ' "
                                                                 - 2,480 Billion u.a.
( 1 ) - ( 2.073 » 3.053 - 980 ) or the current derived price minus the selling price (ADA)
( 2 ) - ( 272 « the difference 'between the net loaa par tonne at the old price ( 3-053)
        and the net loss per tonne at the proposed price ( 2.781 ), i.e. 2.073 - 1.601
        272 ).
Erzegovina                           Derived intervention price :    current - 2*751 u.a. /t
                                                                    proposed « 2*507 u.a. /t
Quantitative hypotheses !        Reduction of 1.660 t per marketing year in the amounts
                                "bought-in ?
                                Entry into intervention of . 1.880 t per marketing year.
Entry , removal      -   1.660    t  at              72  u.a. /t   - 0,020 million u.a.
storage              –   1 . 660  t  at              77  u.a. /t   - 0,128    "      "
financial charges –      1.660    t  at             176  u.a. /t   - 0,292    "      "
                                                 1.853   u.a. /t
net loss
net losa
                     -
                     -
                         1.660
                         1.880
                                  t
                                  t
                                     at
                                     air a          244  u.a. /t
                                                                   - 3,000
                                                                   - 0,459
                                                                              "
                                                                              "
                                                                                     "
                                                                   - 3»899 million u.a.
( 3 ) - ( 1*853   - 2.751 -       893 ) or the current derived price minua selling price .
( 4 ) - ( 244 - the difference between the net loss per tonne at the old price ( 2.751 )
        and the net loss per tonne at the proposed prioe ( 2«507 )»             1.053 ~
        1.609 - 244 ).
Total financial implications             2,48
                                         3,90
                                         6.38 million u.a. • 6|95million