CELEX: 51990PC0366
Language: en
Date: 1990-10-02
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON THE INTRODUCTION AND THE MAINTENANCE OF AGRICULTURAL PRODUCTION METHODS COMPATIBLE WITH THE REQUIREMENTS OF THE PROTECTION OF THE ENVIRONMENT AND THE MAINTENANCE OF THE COUNTRYSIDE

COMMISSION OF THE EUROPEAN COMMUNITIES
                                            C0MC90) 366 final
                                            Brussels, 2 October 1990
                         Proposal for a
                    COUNCIL REGULATION (EEC)
            on the introduction and the maintenance
       of agricultural production methods compatible with
     the requirements of the protection of the environment
             and the maintenance of the countryside
                  (presented by the Commission)
 ---pagebreak---                                       - 2-
                             Explanatory memorandum
                 Agriculture and Management of the countryside
Revision of some agricultural structural measures concerning extenslfication,
set aside and the environment.
1. INTRODUCTION
1 -1. The relationship between agriculture and the environment
The Commission (1), and also the Parliament (2) have frequently emphasized
the need to adapt agriculture gradually to the requirements of protecting the
environment and of natural resources and to the requirements of the
maintenance of the landscape and the countryside, and the need to revise the
Common Agricultural     Policy to take more       into account     concerns that
agriculture should be compatible with the environment and should have
production guidelines adapted to meet market requirements.
Besides, since the "Green paper" (3), the Commission has recognized that the
role of agriculture Is not only to produce food. Agriculture also plays an
increasingly important role as the main manager of the countryside and in
conserving the environment.
(1) The Future of Rural Society, C0M(88) 501 final, 28.7.88-,     Environment and
     Agriculture C0M(88) 338 final, 16.8.88.
(2) Report of Mr Roelants du Vivier on Agriculure and the Environment, PE
     101.184/fin., 3.2.86.
    Report of  Mr  Maher  on  the  future of  rural   society,  PE  127.268/fin.,
    28.4.89.
    Resolution on the implementation of the resolution on Agriculture and the
    Environment of 16.2.90, OJ No C 68, 19.3.90.
(3) Perspectives   for  the  Common  Agricultural  Policy,   C0M(85)   333  final,
     13.7.85.
 ---pagebreak---                                     - 3
1.2. Existing schemes with an impact on the environment
During the last few years, the Community has created a number of measures
aiming to improve the agricultural structures in the Community. These
measures   have  recently   been  revised   within    the    framework   of  the
implementation of the reform of the Structural Funds and the policy regarding
rural development. One of the most fundamental elements of this revision has
been to take better account of the requirements for the protection of the
environment within the framework of the          Improvement of agricultural
structures and of rural develpment.
Hence, the horizontal measures, in force throughout the Community (Objective
5(a) incorporate activities which maintain the countryside into agricultural
activities, aim at the adjustment of holdings with a view to the protection
of the environment and at making them subject to restrictions concerning,
directly or Indirectly, the protection of the environment (1).
Besides these, there are regional schemes (Objectives 1 and 5(b) which,
within the framework of rural development, provide for actions targeted
towards specific problems concerning the protection and the conservation of
the environment. Thus, many Community        Support    Frameworks   foresee an
environmental priority axis.
Also worth mentioning are the forestry actions decided             In 1989 (2),
especially those regarding forest development with a view to the conservation
of the soil and water and to erosion control in Objective 1 and 5(b) areas
(3) as well as those regarding the protection of forests against atmospheric
pollution and fires (4).
(1) See Regulation    (EEC) No 797/85 on        improving   the efficiency of
    agricultural structures In the version     introduced   by Regulation (EEC)
    No 808/89, 12.12.89.
(2) 0J No L 165, 15.06.89.
(3) Regulation (EEC) No 1610/89, 29.05.89.
(4) Regulations (EEC) Nos 3528 and 3529/86,   17.11.86.
 ---pagebreak---                                      - 4-
1.3. Measures affected by the present proposal
Among the existing horizontal measures there are three aiming directly or
indirectly at the objective of integrating environmental factors into the
Common Agricultural Policy, that need to be revised, either because in 1990
they reach the end of their first period of application or because of the
need for adjustment due to the requirements of environmental protection. The
measures In question are :
- premiums which the Member States can pay In environmentally sensitive areas
  to compensate farmers for their loss of Income as a result of pursuing
  farming practices which are compatible with the need to protect the
  environment. These farming practices may relate to a reduction In the use
  of fertilizers or plant protection products as well as to other farming
  practices in harmony with the environment and the countryside (e.g. by way
  of restrictions concerning the use of grassland such as stocking density,
  time and method of mowing, abstaining from draining etc).
  (Article 19 of Regulation (EEC) No 797/85)
- premiums for the extensifIcation of certain productions
   . either by way of a 20% reduction of the quantity produced ("quantitative
     method")
   . or by modifying production methods especially by way of a reduction In
     the use of intermediate products e.g. use of lower levels of fertilizer
     ("qualitative method"). The Member      States must   justify   that  the
     authorized method would, In general, result in the reduction of the
     product ion by 20%.
    (Article 1b of Regulation (EEC) No 797/85)
-   premiums to farmers who set aside at least     20% of   their  arable land
    (Article 1a of Regulation (EEC) No 797/85)
 ---pagebreak---                                        5 -
The re-examInatIon by the Council of the first two measures, (i.e. the
extensification scheme (Article 1b of Regulation 797/85) and the scheme for
the introduction or retention of production methods compatible with the
environment (Article 19 of Regulation 797/85) as foreseen in Article 6 of
Regulation (EEC) No 1760/87 (1), in 1990, after a period of 3 years from the
date of the Council's original decision, presents an opportunity to pursue
the goal of reinforcing the relationship between agriculture and the
environment in light of the experience gained.
2. Experiences gained and problems encountered during the implementation of
    the three measures
Even though the measures referred to above have only been effectively In
force for a maximum of two years in the Member States, a number of
conclusions can be drawn as to their efficiency and their contribution to the
achievement of the pursued goals.
2.1. Article 19
2.1.1. The practical scope of the scheme
The scheme Is at present only implemented in four Member States (UK, D, NL,
DK).   Current   experience,   however, demonstrates    that   the   required
demarcation of environmentally sensitive areas has considerably limited the
scope and the use of the scheme in relation to the essential aim, namely, in
general, to encourage the introduction of farming methods which are
compatible with the environment while at the same time contributing to the
solving of agricultural market problems.
In fact, It is in consequence of this limitation of the scheme to sensitive
areas that the measures adopted by the Member States often aim, In the first
place, at the protection of the flora and fauna or of specific blotopes in
numerous small or minuscule areas demarcated with a view to nature protection
and with a direct link to existing national legislation in the field. On the
other hand, the schemes have not allowed for problems concerning land
categories (e.g. grassland In general, field edges etc....).
(1) OJ No L 167,   26.6.87.
 ---pagebreak---                                      - 6 -
2.1.2. Problems encountered which cannot be solved by the existing provisions
Many areas in the Community are increasingly affected by an abandonment of
agricultural or forestry activities or even by an alarming depopulation.
These areas are consequently threatened by natural hazards such as erosion
and flooding or by fire risk.
It has turned out that the present Article 19 does not allow for a
contribution   towards resolving    the specific problems     related  to the
management of the countryside in those areas mentioned above.
 Indeed, afforestation of agricultural land does constitute one of the methods
to improve the problems of the areas In question. However, afforestation by
the competent public authorities cannot at the moment be sponsored by the
Community except in areas classified under Objectives 1 and 5(b) as set out
 in Article 1 of Regulation (EEC) No 2052/88.
2.2. Extenslfication
As far as extenslfIcation of production is concerned, presently only four
Member States (D, B, F and IT) have enforced it. The implementation of the
alternative method known as "production technique" is counteracted by
considerable difficulties originating mainly from the regulatory obligation
for the Member States to verify that the sectoral technical methods chosen
would In general lead to a reduction of at least 20% of the production. The
principal difference between this measure and the measure in Article 19 of
Regulation 797/85 Is that the latter is only applicable in areas demarcated
as sensitive beforehand, that a 20% reduction of the production is not
required and that the eligible premiums are lower.
Otherwise, the two measures clearly do overlap, even though they were
conceived with different goals (for the first measure, the reduction of
market surpluses and for the other, environmental protection).
2.3. set aside
For set aside it transpires that the existing provision does not permit
sufficient latitude to instigate uses of set aside land which are of public
utility and particularly not a management of this land in line with the
requirements of the environment. Besides, in certain cases the maximum
premiums do not cover the real costs caused by such management.
 ---pagebreak---                                      - 7 -
Similarly, it is ascertained that only an Insignificant part of the set aside
land has been afforested (less than 4%). In general it can be stated that
the existing scheme to encourage the afforestlon of agricultural land Is
insufficient to cover the Initiai period of approximately 20 years, this
being the period when afforested land is not profitable (the set aside
premium is limited to five years). Besides it appears that the financial
participation by the Community towards afforestation costs as set out in
Article 20 of Regulation (EEC) No 797/85 does not always cover the real costs
which may be much higher.
3. THE APPROACH PROPOSED
The first report on the implementation of the measures has demonstrated that
they need to be modified in order to fulfil their functions, I.e. at the same
time and right across the Community, to bring into account the requirements
for environmental protection and the situation of the agricultural markets.
In fact, every farmer, whatever the region in which he works and whatever the
type of production he undertakes, acts as a manager of the countryside and as
such contributes to agricultural production. Every farmer should therefore
be persuaded to continue or to adopt farming practices which respect the
environment and the countryside while also meeting market requirements.
A. Voluntary schemes for the farmers
    It is thus proposed :
1. Article 19 and extensIfIcation
to retain and complete the principles of the aid schemes in the present
measure for environmental protection and In the present qualitative method of
extensifIcation and to merge them into a single scheme with the following
principal characteristics :
a) obligatory measure
introduction of an aid measure which the Member States would be obliged to
apply throughout their respective territories designed to reduce pollution of
an agricultural origin through a substantial curtailment in the quantities of
fertilizers and plant protection products used, while encouraging methods of
farming which are      less intensive and thus better adapted to market
requirements.
 ---pagebreak---                                      - 8
The production and application of animal manure constitute a serious
environmental problem. However, given the complexity of the problem, whether
In terms of Its production or In terms of the methods of using the animal
manure, further thorough reflections are absolutely necessary. Hence, the
present proposal only applies to chemical fertilizers. But the Commission
has already recently started those reflections. It will, before 30 November
1990 present the outcomings and appropriate concerning the problems of
environmental protection proposals and animal stock-raising.
b) optional measure
 In the aid scheme referred to above the Member States may include incentives
to    introduce or retain other     farming practices compatible with      the
requirements of the protection of the environment and of natural resources or
with the requirements of the maintenance of the countryside and the
 landscape. This second level, which corresponds broadly to the existing
Article 19, may apply throughout the country or to designated areas of the
Member State, (geographical areas or categories of land, etc). As examples
the following could be mentioned :
- the maintenance of certain non-profitable productions
- land use practices, especially of grass-1 and (frequency, date and method of
   mowing, etc)
- the maintenance of "classical" agriculture (maintenance of hedgerows, walls
   and ditches, undertaking not to drain, etc).
c) areas threatened by natural hazards or fires
 In areas particularly threatened by natural hazards or by risk of fire,
especially engendered by the abandonment of agricultural          or forestry
activities, the Member States may introduce an aid scheme to meet services
provided such as the active upkeep of farmland or restoration of the
environment.
Furthermore, it is also proposed to encourage afforestation of land by the
competent public authorities, something which Is not yet covered by existing
measures.
2. Adjustment of the set aside scheme
To adjust the set aside scheme with a view to enhancing its environmental and
forestry aspects :
- by Introducing a supplementary premium in return for special undertakings
   given by the beneficiaries with a view to protecting the environment;
 ---pagebreak---                                      - 9 -
- by prolonging to 20 years the maximum period for which the set aside
  premium may be paid in the case of afforestation of land set aside from
  agrlcuitura! production, or, in the case of an ecological use of which the
  Community interest is well established;
-by   allowing the Commission     to adjust    the conditions for ai locating
  afforestation aid in the case of afforestation of land set aside pursuant
  to the Community set aside scheme.
B. Restrictions  imposed via Community actions
The Community's contribution within the framework of Article 19 is presently
limited to compensation     for commitments voluntarily undertaken by the
farmers. However, one of the fundamental problems is the issue of a payment
to farmers, with Community participation towards the compensation paid for
the restrictions imposed on them. This issue would be particularly pertinent
for provisions including restrictions extending considerably beyond a code of
good farming practice. This situation certainly reflects the Polluter Pays
Principle. But it should also be acknowledged that the distinction between
voluntarily undertaken restrictions and compulsory restrictions can lead to
unsatisfactory situations, especially where the Imposed restrictions could
threaten the existence of the family-farm type of agriculture. Thus, it
seems justified to make a provision so that,     in the case where restrictions
similar to those compensated for in the case of voluntary commitments are
imposed on farmers as a result of measures taken to apply             Community
legislation, the Commission should have the ability to allocate funds, on a
case by case basis, from Community resources to finance aid schemes,
according to the type of scheme applied.
c. Accompanying measures
To reconcile agriculture with a type of management in harmony with the
environment supposes a considerable effort for the farmers to acquire the
necessary technical background and training. This is particularly true for
agricultural practices in line with a code of good farming practice with a
view to the environment. This aim will be facilitated by the introduction of
a specific provision for assisting demonstration and training projects
relating to practices undertaken in this spirit.
 ---pagebreak---                                     - 10 -
D. The Implementation of the scheme
The implementation of the proposed measures lies with the Member States , as
is the case for all existing objective 5 l a ) measures referred to at        -f
Article 1 of Regulation 2052/88. Accordingfy, the Member         States must
stipulate :
- the undertakings to be given by farmers
- the amount of the payments to be granted in view of the agreement made and
  the resulting loss of Income. However, the maximum eligible amounts
  payable are those currently for extenslfication (see 2.1 above) and under
  Articles 19 or 20 (see 2.2 above).
The Commission will check and approve these measures using     the Management
Committee procedure (STAR Committee).
E. Community assistance
The levels of participation by EAGGF in the measures foreseen are those
applying to Objective 5a measures and set out in the framework of Regulation
(EEC) No 797/85.
4. BUPGETARY CONSEQUENCES
The financial impact of the environmental part of the proposal will be
subject to some delay given the time needed for implementation of the scheme
at national level, the time lag of one year between the incurment of the
costs at national level and the reimbursement from the Community.
Thus, it is estimated that the first financial impacts would not be incurred
before 1993. Given the fact that the proposal is meant to replace the
existing Article 19 and "qualitative" extensification, there would be some
financial compensation from what was budgeted for those two measures, and its
funding would be possible within the existing financial budgets for the
accounting periods 1989-1993.
The proposal in question could entail considerable costs where it develops
Into agricultural income support linked to environmental aims. However, the
financial impact should not be expected before well after 1993.
 ---pagebreak---                                    - 11 -
On an indicative basis and using a number of assumptions only valid for the
cereals sector figuring in the Annex to the financial sheet, the annual
expenditure from the Community's budget for assisting national costs for one
million hectares would be of the order of 47 MECU. This expenditure should
be compared to a reduction of the order of 100 MECU following a decreased
yield by 20% in this case.
The conditions under which the individual Member States would Implement the
scheme are uncertain at this stage. The present financial framework expires
in 1992. The financial impact after 1993 as well as the funding of the
measure would have to be reexamined according to the national schemes for
implementing the measure which would be adopted during 1991 if the proposal
could be agreed In 1990.
Concerning the proposal to adjust the set aside scheme to further the
environmental aims, this could have a financial effect from 1992. However,
following the hesitant development in the application of the set aside
scheme, It is considered that the additional cost In 1992 could be financed
without exceeding the ceiling fixed at 300 MECU for 1992 in terms of 1988
prices, or 354 MECU at 1992 price levels.
 ---pagebreak---                                       - 12 -
                                 Proposal for a
                           COUNCIL REGULATION (EEC)
                   on the Introduction and the maintenance
             of agricultural production methods compatible with
           the requirements of the protection of the environment
                    and the maintenance of the countryside
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
and in particular Articles 42 and 43 thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Parliament,
Having regard to the opinion of the Economic and Social Committee,
Whereas environmental considerations must be gradually integrated          into the
common agricultural policy and European agricultural practices;
Whereas farmers can serve society as a whole by introducing or continuing
to use production methods compatible with the increasingly urgent need for
protection  of  the environment    and   natural   resources   and  upkeep  of  the
landscape and the countryside-,
Whereas  the   Introduction   of   an   aid   scheme   to  encourage    substantial
reductions  In the use of     fertilizers    or  plant   protection   products  can
contribute not only to a reduction in pollution through farming but also to
the adjustment of a number of sectors to market requirements by encouraging
less intensive production methods; whereas, therefore, such a scheme could
 ---pagebreak---                                      - 13 -
replace the extensification scheme provided      for  in Article 1b of Council
Regulation (EEC) No 797/85 of 12 March 1985 on Improving the efficiency of
agricultural  structures1, as   last amended by Regulation (EEC) No 752/90 2
and defined in Article 4 of Commission Regulation (EEC) No 4115/88 3 ;
Whereas the scale of the problem requires that such a scheme be applicable
to ail farmers In the Community;
Whereas  such   a  scheme  must  at so  write it   possibte  to  encourage  the
Introduction   of  special  production  methods   to   solve specific  problems
related to the protection of the environment or the countryside;
Whereas many areas in the Community are threatened by increasingly serious
natural hazards such as soil erosion, flooding and the danger of fires, and
whereas the   introduction of special measures te encourage      the upkeep or
afforestation of land can reduce such hazards;
     1  OJ N o L 93, 30.3.1985, p. 1.
     2  OJ No L 83, 30.3.1990. p. 1.
     3  OJ No L 361, 29.12.1988. p. 13
 ---pagebreak---                                      - 14 -
Whereas the set-aside scheme provided for in Article 1a of Regulation (EEC)
No 797/85 should be adjusted to make It more compatible with environmental
requirements;
Whereas extending the period during which the set-aside premium        is granted
could encourage beneficiaries to afforest agricultural       land set aside under
the scheme;
Whereas both the Community and the Member States must increase their effort
to educate   and  inform  regarding   the  introduction   of  production  methods
which are compatible with the environment, and in particular regarding the
application of a code of good farming practice-,
Whereas the rules    laid down by Regulation     (EEC) No 797/85 regarding the
 implementation  of  measures   by  the   Member   States   and  the  Community's
financial contribution can apply mutatis mutandis to the measures provided
for in this Regulation,
HAS ADOPTED THIS REGULATION:
 ---pagebreak---                                   - 15 -
                                       Article 1
A common measure within the meaning of Article 2(1) of Regulation (EEC)
No 4256/88 4   is  hereby    Introduced    under   Objective    5(a)  as   defined    in
Article 1 of Regulation (EEC) No 2052/88 5 and intended:
    (I)    to   encourage    the   Introduction     or   continued   use   of    farming
           practices    compatible    with   the   requirements   of   protecting    the
           environment    and natural     resources, thereby contributing         to the
           adaptation and adjustment of agricultural production in line with
           market requirements-,
    (II)   to    encourage     upkeep    of    the     landscape   and    countryside,
           particularly     in areas sensitive       in this respect     and   in areas
           threatened by natural hazards and fires.
                                       Article 2
1.  Member   States shall, pursuant        to the common measure      referred     to in
    Article 1, Introduce an aid scheme to encourage farmers substantially
    to  reduce    their  use   of  fertilizers     and   plant  protection    products,
    thereby achieving      less intensive forms of production compatible with
    the need to protect the environment.
2.  The aid scheme shall consist        in an annual premium per hectare granted
    to farmers who undertake, for at least five years, to reduce their use
4  OJ No L 374, 31.12.1988, p. 25.
5  OJ No L 185, 15.7.1988, p. 9.
 ---pagebreak---                                 - 16 -
   of fertilizers and of plant protection products, provided that the use
   of such products Is not increased on other parts of their holdings and
   that other production capacity does not increase.
3. Member States shall determine:
   (a) the conditions    for granting    the aid,   in particular   the detailed
        rules  for  reducing   the use of    fertilizers  and  plant   protection
        products;
   (b) the amount of the aid on the basis of the undertaking made by the
        recipient  and  the   loss of   income, and   the extent   to which   the
        measure is to act as an incentive;
    (c) the undertaking to be made by the recipient, particularly with a
        view to verifying that the use of fertilizers and plant protection
        products is actually reduced;
    (d) the conditions under which      the premium may be granted where the
        farmer himself   Is not   In a position to make an undertaking for a
        period of five years.
4. Member States may, besides      the reduction in the use of fertilizers and
   plant   protection   substances,    extend   the   measure   to   include  the
    introduction of other farming practices compatible with protection of
    the environment and natural resources and with upkeep of the landscape
   and the countryside, as well as environmental         preservation   practices
    traditionally   linked   to   farming,   especially   in  areas    which  are
   particularly sensitive from this point of view.
5. This Regulation shall not apply to the spreading of animal manure.
 ---pagebreak---                               - 17 -
                                  Article 3
1. The maximum amount of the annual premium per hectare eligible for aid
   from the Fund shall be:
   - ECU 180 for annual crops and pasture
   - ECU 300 for specialized olive groves
   - ECU 900 for citrus fruits
   - ECU 600 for other perennial crops and wine.
2. Under conditions to be set by the Commission        in accordance with the
   procedure   laid down  in Article 25 of Regulation (EEC) No 797/85, the
   Fund may also contribute     to annual   premiums per   hectare granted by
   Member States to compensate     for  losses of   income resulting   from the
   compulsory    restrictions  referred   to   in  Article   2  following   the
   implementation In the Member States of measures adopted under Community
   rules.
                                  Article 4
1. Member States may, in areas particularly threatened by natural hazards
   (such as erosion and flooding) or fire due notably to abandonment of
   farming   or   large-scale  depopulation,    introduce  an  aid   scheme  to
   encourage the upkeep of abandoned farmland or woodlands.
 ---pagebreak---                              - 18 -
2. The aid scheme shall consist   in an annual premium per hectare granted
   to farmers within the meaning of Article 2(1)(a) of Regulation    (EEC)
   No 797/85 who undertake to be responsible for the upkeep of abandoned
   farmland or woodlands for at least five years.
3. The Member States shall determine
   (a) the areas referred to In paragraph 1;
   (b) the measures to be undertaken for the upkeep of land;
   (c) the conditions for granting the aid;
   (d) the amount of the premium, which may not be less than ECU 30 per
       hectare;
   (e) the conditions in which the premium may be granted to persons other
       than farmers, where no farmers are available.
4. The maximum amount of the annual premium per hectare eligible under the
   Fund shalI be ECU 150.
                                 Article §
   Where  a  beneficiary  under   the  set-aside  scheme  provided for  in
   Article 1b of Regulation   (EEC) No 797/85 undertakes to apply special
   measures for the upkeep of land set aside under this scheme with a view
   to protecting and Improving the environment, a premium of ECU 100 per
   hectare may be granted in addition to the aid for set-aside.
 ---pagebreak---                                   - 19 -
    Member   States shall determine the conditions of this undertaking and
    the amount of the additional premium.
2.  Where   a   beneficiary    under   the   set-aside     scheme   afforests      land   in
    respect of which set-aside aid has been granted, or where he uses this
    land for ecological      purposes of which the Community             interest   is welt
    established,    the aid may be granted          for   a period     of   not  more   than
    20 years.
    Member States shall determine the duration of such aid on the basis of
    the species or types of trees used for afforestation, as well as the
    duration and the conditions of use towards ecological ends.
3.  The Commission may,      in accordance with to the procedure              laid down in
    Article 25 of      Regulation   (EEC) No 797/85, adapt          the conditions for
    granting aid to afforestation, provided for in Article 20 of the said
    Regulation, when it is carried out on land taken out of production in
    application of the Community set-aside scheme.
                                       Article 6
Subject   to   the  maximum    eligible    amounts     laid  down     in   Article    20  of
Regulation    (EEC) No    797/85,    the   Fund  can    contribute      to   afforestation
operations carried out by the competent            authorities of Member         States on
farmland in the areas referred to in Article 4.
                                       Article 7
1.  The aid scheme provided for in Article 21 of Regulation (EEC) No 797/85
    may   cover   courses   of   Instruction    or   training    in    farming    practices
    compatible with protection of the environment and natural resources and
    the   upkeep    of   the   landscape    and   countryside,       in    particular    the
     introduction of a code of good farming practice.
 ---pagebreak---                                 - 20
    The    scheme   may   cover  demonstration    projects   concerning    farming
    practices compatible with protection of the environment. In particular
    the application of a code of good farming practice and assistance for
    training    and   education   initiatives   by   competent   local   or   non-
    governmental organizations in this field.
                                    Article 8
For the purpose of this Regulation, application of Article 1b of Regulation
(EEC)   No   797/85   shall  be  restricted   to   the  quantitative   method   of
extenslfIcation, as defined     in Article 4 of Regulation     (EEC) No 4115/88,
on the basis of the actual reduction In quantitative terms.
However, Member    States may continue to apply the extenslfication schemes
adopted before the entry into force of this Regulation and approved by the
Commission In accordance with Article 25 of the abovementioned Regulation.
                                    Article 9
1.  Articles 19 to 19c of Regulation (EEC) No 797/85 are hereby repealed.
    However, they shall continue to apply to aid granted before the entry
    into force of this Regulation.
 ---pagebreak---                                - 21 -
2.  The maximum amount eligible under the Fund for aid granted before the
    entry   into  force   of this   Regulation   pursuant  to   Article   19   of
    Regulation   (EEC) No 797/85   shall  be  Increased,  for  annual   premiums
    still to be paid after the Introduction of the measures provided for in
    this Regulation,    to the maximum   eligible  amount  resulting   from   the
    application of Article 3(1) of this Regulation.
                                  Article 10
Articles 24 to 28, 31 and 31a of Regulation (EEC) No 797/85 shall apply,
mutatis mutandis, to the common measure provided for in this Regulation.
Article 26(1), second sentence of Regulation (EEC) No 797/85 shall apply to
expenditure  incurred by the Member States within the framework of actions
provided for In Article 5(1) and (2) of this Regulation.
                                  Article 11
Without prejudice to the second paragraph of Article 8, Member States shall
take the necessary measures to     implement  this Regulation not    later   than
12 months after Its entry into force.
                                  Article 12
This Regulation shall enter   into force on the third day following that of
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 Council
 ---pagebreak---                                *- cLi
                          FINANCIAL SHEET
                             concern Ing
Proposal for a Council regulation concerning the environment,
agriculture and the management of the countryside.
1. Budget Ilne : B2-101 Improvement of agricultural structures
                    B2-500 Set aside "guidance"
                    B1- 40 Set aside "garantee"
2
  - Legal base : Art. 42, 43
3. Class IfIcatIon : Obligatory expenditure for "set-aside"
                       Non obligatory expenditure for structural
                       Intervent i on.
4. Purpose/description of the measure : The proposal replaces
    the existing version of article 19 of Reg. 797/85 and the
    scheme for qualitative extensIfI cat I on with a new scheme
    where the environmental aspect prevails. At the same time,
    and with a view to the environment, a modification of the
    set aside schme Is proposed.
5. Method of calculation .-
5.1. Form of expenditure : Reimbursement of a part of eligible
       national expenditure.
5.2. Community contribution : to be settled by the Commission
       in accordance with the provision In articles 26 and 27 of
       Reg. 797/85.
5.3. Caleu I at Ion : see annex.
6. Financial    Implication as regards operating appropriations :
6.1. Schedule of Commitment appropriations and payment
       approprlations (MECU)      C.E./C.P.
           Account Ing    Environment part (1)   Set-as I de
              year
               1990
              1991
              1992                    -            +4,2
              1993                  p.m.           + 4,5
6.2. Financing during current year :
7. Observât ions :
(1) Concerning the "environment" part of the proposal, the
     first financial Implications would not be felt before
     1993. T-fn that accounting year, and for the reasons set
     out In the annex, there would not be any extra expenses
     for the budget years 1989-93.
    With regard to the implications beyond 1993, for the
    reasons set out In the annex It would be pertinent to
    re-examine them as well as the funding of the measure In
    the light of the national schemes for Implementing the
    measure which would be adopted during 1991 when the
    decisions are to be taken on the new financial framework.
 ---pagebreak---                               - 23-
                              ANNEX
1. Proposal concerning a reduction In the use of fertilizers
    and plant protection products
The proposal replaces the scheme for qualitative
extensifIcation which amounts to a reduction In intermediate
consumption and the present scheme supporting the environment
(Art. 19 of Reg. 797/85).
Given that the new scheme would replace the two measures
mentioned above, there would be a financial compensation and
the funding would be possible within the budgets settled for
the period 1989-1993.
The table below Indicates the estimated expenses in MECU for
EAGGF-Gu i dance.
F InancI a I Env i ronment ExtensIfIcatI on TotaI  of which
    year                                          In obj. 1
                                                  regIons
    1990           7             10          17       0,1
    1991           8             13          21       6,0
    1992           8             15          23       8.0
    1993          10             17          27      11.0
    Total -      33             55           88      25.1
The use of the extensIfication scheme has not developped as
fast as foreseen. Thus, following the suppression of the
scheme for "qualitative" extensIfIcatI on,   It could be
estimated that an amount of the order of 35MECU would become
available for other uses including the present proposal.
The proposed scheme would have financial Implications as from
1993 : If It were adopted at the end of 1990, the Member
States would have one year at their disposal to lay down the
conditions for Implementing it and thus it would only have
effect at the national level as from 1992. Since it is a
measure to be refunded, the first expenses for EAGGF would be
 incurred In 1993.
 It is difficult to estimate exactly the financial extent of
the measure as the conditions under which It would be
 implemented by the Member States are unknown. Besides, Its
general implementation would be expected to be attained
gradually from 1992. However, some estimations of magnitude
could be made on a hypothetical basis.
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This, by limiting the estimation to the cereals sector,
simulations by RICA for two types of holdings with a reduction
of 10 % In the use of fertilisers and plant protection
products have given the following results :
               Holdings using             Holdings using
               high rates of              medium rates
               fertilizers                of fertilizers
               - Northern                 - Southern
                 Europe -                   Europe -
- loss of
   revenue       158 ECU/ha                  85 ECU/ha
- yield
   reductIon     20 %                       20 %
On the basis of the hypothesis : - average loss of revenu
                                      amounts to 135 ECU/ha;
                                    - Community assistance
                                      rate is 35 %;
So, for one million hectares affected, the cost for EAGGF-
GuI dance would be : 1 ml I I Ion ha    x   135 ECU/ha   x 35 % «
47,5 MECU.
The reduced costs for EAGGF-GuI dance In the wake of a yield
 reduction by 20 % for cereals would be 20 % (1 t/ha x 1 mio ha
x 105 ECU/t = 105 MECU).
 It should be noted that for 1993, the starting year for the
system, the acreage benefitting from the scheme would only be
a smaI I percentage of the one ml I I Ion hectares.
2. Proposal concerning particularly threatened areas by
    natural hazards
For the reasons set out under point 1, the scheme would only
be Implemented at national level as from 1992. In
consequence, the first expenses for EAGGF Guidance should be
expected from 1993.
Building on experiences with this type of scheme, it can be
assumed that after three years from 1992, the acreage of land
benefitting from the scheme would be approximately 250.000 ha
with a cost for EAGGF Guidance of :
250.000 ha x 50 ECU/ha x 35 % = 4,4 MECU.
To this amount should be added approximately 0,5 MECU yearly
originating from the afforestation measure provided for In
article 6 ÔT the proposal.
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The expenditure for the budget by accounting period would be :
      1993 : 1,5 MECU
      1994 : 3,0
      1995 : 4,9
The funding for 1993 could be contained inside the budgets set
for 1989-93 for objective 5a and objective 1, based on the
amounts released from the extensIfIcatIon scheme as explained
above.
3. Costs under article 7 of the proposal (pilot and
    demonstration projects)
The funding of the actions provided for by this article could
In 1993 lead to extra expenditure to the order of 1 MECU based
on the amounts released from the extensIfication scheme.
4. Modification of the set aside scheme
Maximum foreseeable costs for "set aside" in 1992
1. Ordinary scheme : 1,4 m I I I ion ha x 400 Ecu/ha x 49 % »
    274,4 MECU;
2. Non-food scheme : 440.000 ha x 280 Ecu/ha x 49 % -
    60,4 MECU;
3. Environmental scheme : 140.000 ha x 100 Ecu/ha x 30 % «
    4,2 MECU
    Total     : 339 MECU
    Ce I IIng : 354 MECU
 It can be concluded that the celling would not be passed.
Concerning the proposal to prolong the support period for
afforestation, this would rcot increase costs up to the horizon
of 1992 but It would prolong them in time.
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                                                            COM (90) 366 final
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