Explanatory Memorandum to COM(2000)433 - Amendment of Regulation (EC) No 2200/96 on the common organisation of the market in fruit and vegetables, Regulation (EC) No 2201/96 on the common organisation of the market in processed fruit and vegetables and Regulation (EC) No 2202/96 introducing a Community aid scheme for producers of certain citrus fruits - Main contents
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| dossier | COM(2000)433 - Amendment of Regulation (EC) No 2200/96 on the common organisation of the market in fruit and vegetables, Regulation (EC) No ... |
|---|---|
| source | COM(2000)433  |
| date | 12-07-2000 |
The 1996 reform of the fruit and vegetable CMO was implemented from January 1997 onwards. The Commission is to submit a report to the Council on the operation of the CMO by end 2000 (for fresh produce / citrus). This report is in progress and its finalisation is dependent on the submission of information from Member States.
However, four important issues have arisen which need addressing urgently. These are the rigidity of the current arrangement for processed tomatoes, the level of the guarantee quantities (quotas or thresholds) for processed tomatoes, pears and citrus fruit, a simplification of the operational fund system and an improvement of the export refunds management for fresh products. At the same time, the two other existing regimes (processed peaches/pears and citrus) can be adapted in line with the new arrangement for tomatoes.
For processed tomatoes, the arrangement needs to be rationalised and simplified, taking the most effective elements from the existing systems for tomatoes, peaches and pears:
1. Use thresholds instead of quotas (as in the current peaches/pears and citrus regime);
2. Express thresholds in raw materials (as in the present tomato quota regime) instead of in processed products;
3. Sub-divide Community thresholds into national thresholds (as in the present tomato quota regime);
4. Pay aid directly to the producer organisations (as in the citrus regime);
5. Fix the aid by the Council on a permanent basis (as in the citrus regime).
Since tomato plantings take place in the first quarter of the year, a new arrangement has to be in place at the latest at the beginning of 2001.
For operational funds, the current administrative procedure is complicated and cumbersome. A simplification is therefore required.
For export refunds, the current management systems do not take fully into account the precise needs of the individual operators. It must therefore be improved.
Therefore, based on the above, the following amendments are proposed:
1. Rationalisation of the arrangements for processed tomatoes, peaches/pears and citrus fruit;
2. Adaptation of the thresholds for processed tomatoes, pears and citrus regimes, within a budgetary neutrality;
3. Simplification of the financing system of operational funds;
4. Improvement of the management of export refunds for fresh fruit and vegetables.
The amendments 1, 2 and 4 would be applicable from the 2001/2002 marketing years of each product. As far as processed products are concerned, that means from June, July or October 2001 according to the products.
The amendment 3 would be applicable for assistance paid in respect of operational funds from 2001 onwards.
These amendments greatly simplify current regulations, and in particular in the processed tomato sector. At the same time, the different regimes are brought into line with each other. These amendments will benefit growers who, via their organisations, will manage better the marketing of their production. A more flexible processing arrangement will enable market operators to adapt better their production to market developments. Planning by producer organisations of operational programme expenditure will be greatly simplified, since the amount of aid available now will be known to all producer organisations when drawing up their operational programmes.
Contents
- 1. Rationalisation of the arrangement for processed tomatoes, peaches/pears and citrus fruit
- 1.1. Generalisation of Community arrangements into national thresholds
- 1.1.1. Tomatoes
- 1.1.2. Tomatoes, peaches/pears and citrus fruit
- 1.2. Direct payment of aid to producer organisations
- 1.3. Fixing of aid by the Council on a permanent basis
- 2. Adaptation of the thresholds for processed tomatoes, pears and citrus fruit within budgetary neutrality
- 2.1. Tomatoes and pears
- 2.2. Citrus fruit
- 3. Simplification of the financing system of operational funds
- 4. Management of export refunds for fresh products
- Summary table of proposed adjustments for processed products and citrus
The Community system of aid for the processing of fruit and vegetables, except citrus fruit (Regulation n° 2201/96), is based on the principle of a minimum price to the producer paid by the processor and of compensatory aid granted to the processor for the obtained finished products, for 3 groups of products:
- processed tomatoes subject to a Community quota, allocated by Member State and revised every year. Aid is granted only within the limits of these quotas,
- peaches and pears in syrup, subject to a Community threshold. Aid is decreased uniformly in each Member State in the event of Community overrun of threshold.
The 1996 reform of the Community system of aid for the processing of citrus fruit (Council Regulation (EC) No 2202/96) provides:
- that processors must conclude contracts with producer organisations,
- for aid for producer organisations for the quantities delivered for processing. The level of this aid is laid down in the Council Regulation and is therefore no longer linked to the cost of the raw material in third countries,
- a system of Community thresholds for each product or product group (oranges, lemons, grapefruits and small citrus fruits), the volumes of which did not change,
- the free negotiation of the purchase price for the raw material between producer organisations and processors in accordance with supply and demand.
In 1999, as decided in the 1998 price package in response to a problem identified earlier, the marketing year to which the reduction of aid applies following an overrun of the threshold was changed.
Rather than applying in the marketing year in which the overrun takes place, the reduction of aid applies in the following marketing year. This has the benefit of greater simplicity, improved cash flow for producers and costs no more than the previous arrangement. This amendment applies from the 1999/2000 marketing year.
In the light of the above, the following amendments are proposed for these regimes:
Experience has shown that the current mechanism of mobile quotas, applied to tomatoes leads to the transfer of quotas to those Member States which exceed their quotas the most, to the detriment of the other Member States.
An urgent solution is needed to correct this while avoiding the rigidity of a fixed quota system.
It is proposed to replace the current arrangement by the processing threshold already applied for peaches and pears.
To take account of variable production trends between Member States the Community thresholds will be divided into national thresholds, for peaches/pears and citrus fruit on the basis of the quantities processed with aid during the last 3 marketing years, and for tomatoes on the basis of the current quota allocation.
In case of an overrun of the Community threshold, the reduction of aid will only occur in those Member States for which the national threshold has been overrun.
The thresholds for peaches and pears, currently expressed in finished product, are converted into raw material, as is the case for tomatoes and citrus fruit.
For peaches and pears, mixtures of these fruit in syrup are added to Annex 1 (processed products for which aid is given for raw material used), in order to clarify existing arrangements.
It appears necessary to simplify the arrangement for paying aid for tomatoes and peaches/pears and to introduce more flexibility into the relation between producers and processors, as is the case for citrus.
It seems therefore to be advisable to grant Community aid directly to the producers, via producer organisations as is presently the case for citrus fruit. Aid will be fixed for the quantity of raw material intended for processing. In this context, the fixing of a minimum price becomes obsolete.
For tomatoes, this results in a simplification in that a single amount of aid will be fixed (instead of current 16 different amounts for finished products).
The amount of aid for tomatoes, peaches and pears is currently fixed by the Commission, for each marketing year, mainly on the basis of trends in world costs of raw material.
This project sets aid for the processing of tomatoes, peaches and pears on the basis of the aid granted during the 2000/2001 marketing year, for an indefinite period. The Commission would intervene only to reduce aid in a given marketing year if thresholds were overrun.
For 2000/2001, the aid was reduced by one third for peaches compared with the previous marketing year, and by 50% compared with the average aid granted in the mid-90s. This can be explained by the increase in world raw material prices, and for the 2000/2001 marketing year also by the decrease in the euro exchange rate.
This phenomenon has also occurred in pears but to a lesser extent.
For tomatoes, for the first campaign of application, aid is reduced by 9,1% in anticipation of a possible overrun of the threshold during this campaign. This is in order to prevent a budgetary overshoot. If there were a lower overshoot, the aid would be automatically re-established in proportion.
2. Adaptation of the thresholds for processed tomatoes, pears and citrus fruit within budgetary neutrality
To take account of increasing demand, the thresholds are increased by 10% for tomatoes and pears. There is a corresponding decrease in aid to ensure budget neutrality.
There has been a strong increase in demand in recent years in particular for juice not made from concentrate. This is a competitive sector into which Community production should be encouraged to focus, compared with other sectors of more doubtful market potential (e.g., juice from concentrate for which Brazil has a significant technical advantage).
This has stimulated an increase in production, an overshoot of the threshold and consequently a substantial decrease in the level of aid.
However, a side effect of this decrease in the level of aid is an increase of the difference between the aid and the Community withdrawal compensation, making intervention more attractive. Under the existing rules the maximum percentage that can be withdrawn by each producer organisation will be 10% at the end of the transitional period (2002). It is judged that the decrease in aid will create a real risk that withdrawals will reach this maximum of 10%.
In the face of this, 2 measures are foreseen:
- to take account of the increased demand, the threshold should be increased,
- to avoid high levels of withdrawals, the maximum permitted quantity of withdrawals should be reduced.
The result of these measures would be to maintain budget neutrality and reduce the quantities of withdrawn product. This will affect those POs mainly producing for withdrawal, whereas the dynamic POs (using withdrawal only marginally) remain practically unaffected. This solution therefore reinforces the trend for efficient marketing of the production, instead of withdrawals.
This draft proposes to:
- increase the thresholds by 10% for oranges, lemons and small citrus fruits,
- reduce the quantity of each citrus fruit, which can be withdrawn from the market to 10% of the marketed production of each producer organisation for the 2001/02 marketing year and to 5% of that marketed production from the 2002/03 marketing year onwards. The CWC will be maintained at its current level.
Under Regulation (EC) n° 2200/96, financial assistance to producer organisations is subject to 2 ceilings. The first ceiling limits assistance to a maximum of 4,5% of the value of marketed production of each individual producer organisation (4,0% for 1997 and 1998). The second ceiling limits the total amount of assistance to a maximum of 2,5% (2,0% for 1997 and 1998) of the sum of value of marketed production of all producer organisations.
On the basis of these 2 ceilings, a final ceiling can be calculated each year, which applies to individual producer organisations.
The final ceilings applied to date were 2,92% (1998) and 3,61% (1999). In 1997, the total assistance requested was below the 2% overall ceiling, and the maximum individual ceiling of 4% therefore could apply.
Real expenditure is dependent on the level of organisation of producers and the level of assistance requested by each producer organisation. The level of organisation, currently at 40%, is considerably lower than the level of 60% previously forecast. Currently there is no sign of a significant increase in the level of organisation.
Real expenditure (aid applications) has been 199 Mio EUR (1997), 238 Mio EUR (1998) and 311 Mio EUR (1999). The increase in assistance in 1999 is mainly due to the 0,5% increase of the overall ceiling.
Experience to date has shown that the second ceiling introduces a degree of complication and inconsistency for the implementation of operational funds and programmes. In the light of this experience, procedures could be simplified for producer organisations, national administrations and Commission services by setting a single ceiling.
Budgetary neutrality would be maintained as experience has shown that the spread of aid applications is roughly linear from 0,1 to 4,5% and does not appear to be sensitive to the 2,5% ceiling. Those producer organisations currently requesting no aid, or aid under 2,5% (43% of the 1368 recognised producer organisations) will continue to be able to request aid up to the ceiling. Those requesting aid above the ceiling would continue to be limited by the ceiling.
Expenditure increases are only likely to occur as a result of an increase in the level of organisation, which currently is rather low, as indicated above. This in itself represents a significant budgetary saving compared with forecasts.
This draft limits assistance to 3,25 % of the value of marketed production of each producer organisation.
Under the present management regime of export refunds for fresh fruit and vegetables, the levels of the refunds granted within a given issuing system are the same for all operators. However, from the experience gained from the A2 system it appears that the needs are different from one operator to another. In order to take this situation into account, it is advisable to lay down provisions allowing the Commission to fix the level of these refunds by way of a tender system, in addition to the current range of issuing systems.
>TABLE POSITION>
(*) existing national quotas.