COUNCIL OFBrussels, 5 April 2006
THE EUROPEAN UNION
Secretary-General of the European Commission, signed by Mr Jordi AYET PUIGARNAU, Director
date of receipt: 4 April 2006
to: Mr Javier SOLANA, Secretary-General/High Representative
Subject: The agricultural situation in the European Union - 2004 Report
-Commission staff working document
Delegations will find attached Commission document SEC(2006) 423.
Encl.: SEC(2006) 423
COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 4.4.2006 SEC(2006) 423
COMMISSION STAFF WORKING DOCUMENT
Annex to the
Report from the Commission
The agricultural situation in the European Union
TABLE OF CONTENTS
1.ECONOMIC SITUATION AND FARM INCOME.................................................................4
1.1. Overview ......................................................................................................................4
1.3. Prices ............................................................................................................................9
1.4. Input prices .................................................................................................................12
1.5. Farm income ...............................................................................................................12
1.6. Farm accountancy data network (FADN) ..................................................................20
2.POLICY DEVELOPMENTS AND LEGISLATIVE INITIATIVES IN 2003 ............................ 27
2.1. CAP Reform -- second package ................................................................................27
2.2. Quality policy .............................................................................................................29
2.3. Organic farming..........................................................................................................33
2.4. Promotional measures ................................................................................................34
2.5. Simplification of agricultural legislation....................................................................35
2.6. State aids.....................................................................................................................36
2.7. Assistance to the needy...............................................................................................48
2.8. The Outermost Regions ..............................................................................................49
2.9. Information measures concerning the CAP................................................................52
2.10. Information and communication technology (ICT)....................................................54
2.11. Advisory committees and relations with bodies representing trade ...........................55
5.7. Spain .........................................................................................................................105
5.8. France .......................................................................................................................107
5.12. Latvia ........................................................................................................................112
5.14. Luxembourg .............................................................................................................113
5.15. Hungary ....................................................................................................................114
5.17. The Netherlands........................................................................................................116
5.18. Austria ......................................................................................................................117
5.19. Poland .......................................................................................................................119
5.21. Slovenia ....................................................................................................................122
5.22. Slovak Republic........................................................................................................123
5.23. Finland ......................................................................................................................124
5.24. Sweden .....................................................................................................................124
5.25. United Kingdom .......................................................................................................126
6.ENVIRONMENT AND FORESTRY...............................................................................127
1.ECONOMIC SITUATION AND FARM INCOME
1.The 2004 agricultural year was marked by an increase in crop production and a recovery or a stabilisation of production for livestock products, combined with favourable prices for livestock products and lower prices for crops. Input prices were substantially higher in 2004 mainly due to increased prices for energy, fertilisers and feeding stuff. Price developments were highly variable by sector and country. Under these circumstances agricultural income rose for the European Union as a whole by +
3.3 % in real terms. The actual range by country was from 11.5 % for the
Netherlands to + 107.8 % for the Czech Republic.
2.As far as the weather is concerned, the autumn 2003 weather conditions had been generally favourable for winter crops' sowings. A colder than average October was followed by a warmer than average period, particularly in central and eastern EU countries, Russia and Ukraine. Winter was characterised by higher seasonal temperatures in the central and eastern European areas with generally low risk of frost damage due to an extended and sufficient snow cover. Whereas in northern Spain, Portugal and north-west Italy were relatively dry, cumulated rainfall was higher in eastern and central EU countries, southern Spain, north-east Italy and northern Germany.
3.During spring 2004 the climatic conditions were satisfactory for crop growth and farming operations. Very scarce rainfall was recorded in France, Portugal and eastern countries, whilst in Mediterranean basin countries (except southern Greece) rainfall was above or exceptionally above historical average with sufficient water supplies for the winter crops. The northern countries recorded seasonable milder temperatures and more solar radiation which favour crop growth. Finally, in June in the western part of Europe higher than average temperatures were recorded particularly in western Ireland, western England, south-western France and Iberian Peninsula.
rise further. The slightly decrease in pig meat consumption in the whole EU cause mainly from a decline in the new Member States, due to a drop of pig meat production that was not compensated by higher imports from EU-15 Member States. Consumption of poultry meat was stable and sheep meat and goat meat consumption was only slightly up (+
0.6 %). Overall consumption of milk products continued to
show a slight upward growth. A slight increase in demand for butter (+ 0.5 %) and
cheese (+ 1.3 %) was registered whilst skimmed milk powder consumption declined
( 3 .5 %) in 2004 in both the new and old EU Member States.
6.Concerning the global economic situation, the world growth has matured in 2004 (world GDP growth is estimated at 5
%), the fastest pace since the seventies. The
surge in economic activity is driven by a number of factors, including supportive macroeconomic policies, historically low interest rates, and particularly strong growth in some emerging economies, such as China. The global recovery has put upward pressure on both fuel and non-fuel commodity prices. Oil prices rose sharply since the first quarter of 2004, peaked in October 2004 at about USD
55 per barrel (Brent
crude), before declining gradually to 42.1 USD/bl at the end of the year. This implies
that the average annual oil price in 2004 was 38 % higher than in 2003. The
persistence of higher oil prices and their volatility already dented world growth for 2004. It should also have adverse implications for the economic outlook of the next years.
7.In the European Union economic activity gathered pace this year and the growth rate is projected to have reached 2.5
% in 2004. Besides the external impacts from global
demand, the main factors behind this development include accommodative macroeconomic policies, low inflation, supportive financial conditions, widening profit margins and progress in structural reforms. The Euro recorded some highs against the dollar in February, followed then by a more moderate exchange rate before exhibiting again a strong growth against the dollar in the last months of 2004, closing the year at USD
8.Record growth in agricultural production exceeded global utilisation and led to lower prices for most cereals in 2004. Global meat and dairy products prices were somewhat above the levels of 2003. In the case of cereals world wheat prices (in dollars) were higher than in 2003 in the first half of the year but subsequently fell significantly given the record world harvest in summer 2004 thanks especially to exceptional production in Europe (EU-25, Balkan countries, Ukraine) and the Russian Federation, but also higher production in Far East Asia (India and China), Africa and South America, despite some decline in Central and North America and Australia. The EU production surplus led to a substantial fall in European cereal prices.
For meat products, the world market situation in 2004 has been mainly determined by sanitary crises and import restriction, leading to generally higher prices. Outbreaks of Pathogenic Avian Influenza in Far East and increased food safety concerns caused unprecedented drop in poultry meat consumption; consequently production in many disease-affected areas in Asia, particularly in Thailand, Vietnam and Indonesia, collapsed. Imports from Thailand, the second main poultry exporter to the EU, dropped. By contrast, high poultry prices induced strong production and exports gains in South America, particularly Brazil, Argentina and Chile. Despite the increased competition from South America and a decrease in shipments, the US maintained its position as the world's largest exporter of poultry meat. On the beef market, after the discovery of a BSE case in Canada in 2003, a first case was discovered in the US in 2004, leading to import restrictions for North American beef to Asia, particularly Japan. As a result of the BSE-related import bans on North American beef exports, the countries of South America, particularly Brazil, continued to increase their market shares with exchange rates which still remained favourable. Among the developed countries, Australia and New Zealand have maintained high level of exports but have been not able to cover the increased demand for beef from these countries. The EU, previously a large competitor in international markets, remained a net importer of beef for the second consecutive year. These developments on international markets generated a rise of pig meat output supported by higher prices and lower feed prices in the latter part of the year. The US thanks to a favourable exchange rate but also the EU and Brazil increased their exports of pig meat in 2004. Higher prices for meat during the year limited global meat consumption. The latter is estimated to have increased slowly, mainly due to the higher pig meat output, favoured by limitations on poultry and beef production. Sheep meat prices remained high in general, reflecting low supplies.
After the heavy fall at the beginning of 2002, world milk prices recovered in 2003 and increased substantially in 2004 owing to a sustained demand in Asia and a limited supply availability despite increasing production in Asia, Latin America and New Zealand. The substantial price increase was particularly marked for cheese, butter, skimmed milk powder and whole milk powder as dairy markets are very sensitive to supply changes. As a result export subsidies fell in both North America and Europe.
first nine months of 2004 deepened to EUR 3 426 million compared to
EUR 1 551 million in 2003.
10.For meat and dairy products intervention stocks fell in 2004, a sign of improved market conditions. On the contrary, cereals stocks are expected to increase significantly. Due to an exceptional harvest in 2004 and low international market prices, cereal intervention stocks are expected to reach 10 million tonnes in 2004 compared to 3.6 million in 2003. Particularly barley and soft wheat stocks would rise to 4.8 and 2.9 million tonnes respectively; on the other hand rye stock would decline from 3.3 to 2.3 million tonnes. Rice stocks declined due to reduced production in the major exporting countries and reached 600 000 tonnes at the end of the year 2004. After several poor harvests in the previous years wine production recovered in 2004 particularly in France and Italy. As a result wine stocks increased by 8 million tonnes in 2004. The stocks of wine alcohol increased slowly to around 2.5 million hectolitres of pure alcohol in intervention stocks at the end of 2004. Intervention stocks of bovine meat were fully disposed. Intervention (public) stocks of dairy products in the EU fell to their lowest levels since the autumn of 2002. Skimmed milk powder stocks dropped significantly over the year from 198 000 to 20 000 tonnes and butter stocks dropped by 53 000 tonnes to reach 170 000 tonnes at the end of 2004.
11.The latest information shows that the EU-25 cereal area increased by 2.5 % and
reached 52.6 million ha in 2004/05, from which 37.1 million ha in the old Member States. Looking at individual cereal, the area of most cereals increased, particularly for rye (+
8 %), wheat (+ 6 %), durum wheat (+ 4.2%) and maize (+ 2.7%). On the
other hand the area of barley ( 1.8 %) and oats ( 5.7 %) declined in 2004/05. The
most significant increase in cereal area is observed in the new Member States.
Total cereal production is estimated slightly above 281 million tonnes for 2004/05,
an increase of 21
% (about 50 million tonnes) compared to 2003/04. Cereal
production was about 220 million tonnes in the old Member States (+ 18 % in
comparison to 2003/04), and 61 million tonnes in the new Member States (+ 30 %).
This is mainly due to the good and some times excellent climatic conditions in Europe over the whole harvest season, and, to a minor extent, to the reduction in the mandatory set-aside rate. The increase in cereal production ranges from 2
13.Total EU-25 oilseed area was quite stable in 2004 (+ 1 % compared to 2003) with
rapeseed up 5 % to 4.4 million ha, sunflower seed down 5 % to 2.2 million ha and
soya bean down 6 % to 275 000 ha. Rapeseed area increased due to good price
prospects during sowing and very low frost damages compared to 2003/04. Total oilseed area is currently estimated to stand at 7 million ha, including 200 000 ha of non-food crops (the mandatory set-aside rate was reduced to 5
%). With the excellent
weather conditions, yields recovered after the low 2003 yields, by 23 % for rapeseed,
10 % for sunflower seed and even 39 % for soya bean, giving a total production of
19.5 million tonnes, 23 % higher than in 2003/04. Part of the 1.7 million tonnes
estimated as non-food, were rapeseed. The 2004/05 crop would be made of 14.6 million tonnes of rape seeds, 4.1 million tonnes of sunflower seeds and 860 000 tonnes of soyabeans.
14.The EU-25 linseed area settled at a very low level in recent years (100 000 hectares) and the 2004 production estimate is to reach 125 000 tonnes.
15.The protein crop area increased slightly by 2 % to reach 1.43 million hectare. A
slight increase in peas yield (3.3 t/ha) combined with a yield stability for beans and sweet lupines (2.8 t/ha) led to a total protein crop production of 4.5 million tonnes (up
% compared to 2003/04 marketing year).
16.EU sugar production in 2004 is estimated at 18.7 million tonnes (18.4 million tonnes from beet, and 0.3 million tonnes from cane or molasses), 2.7
% above the
18.2 million tonnes of 2003. After the severe drought that hit Southern and Central Europe in 2003, weather conditions have been favourable in most beet growing regions of the enlarged EU in 2004. The moderate decrease in area sown ( 1.7 %,
down to 2.15 million ha from 2.19 million ha in 2003) has in general been compensated by higher yields, although sugar content has been rather variable due to abundant precipitations. Production has significantly increased in Germany, where 4.1 million tonnes were produced, nearly 10
% more than in 2003 and Hungary
(increase by more than 70 % up to 450 000 tonnes compared to 260 000 tonnes in
2003). Among other Member States production has also increased in Italy (increase
19.The EU wine production rose 184.5 million hectolitres in 2004. The production in the 10 new Member States stood at 7.0 million hectolitres, whilst wine production in the EU-15 was around 177.5 million hectolitres (up by 13
% compared to 2003 and
highest since 1999). The overall EU production masks wide contrasts between producer countries: wine production remained stable in Spain (+
2 %) but increased in
Italy (+ 18 %), France (+ 23 %) and Germany (+ 28 %). The increase in production is
more intense for the table wine market up 14 % compared to 2003 in the EU-15
(+ 19 % in France and + 23 % in Italy).
20.Bovine meat production is estimated to stabilise at 8.1 million tonnes, up 0.6 %, for
2004. Falls in some Member States (e.g. France, Czech Republic, etc) were offset by rises in others (e.g. Germany, Italy, United Kingdom, etc).
21.The cyclical up of pig meat production of 2002 and 2003 is expected to lead to a slight decrease in 2004 ( 0.8 % at 21.1 million tonnes). Sharp decreases occurred in
the new Member States (e.g. 8 % in Poland and 10 % in Hungary) whereas
production increases continued in most EU-15 Member States (e.g. + 2.5 % in
Denmark, + 2.4 % in the Netherlands, + 1.2 % in Germany, + 1 % in Spain), except in
France ( 0.9 %) and in the United-Kingdom ( 2.1 %).
22.After the fall in production of 2003, mainly due to the Avian Influenza outbreak and the intense summer heat, poultry meat production recovered in 2004, but less than expected. Production is estimated to reach 11.1 million tonnes (+
23.Sheep meat/goat meat production also recovered from the drought conditions of summer 2003. In 2004, falls occurred only in France, Greece and Spain whereas growth was particularly sharp in Italy, in Ireland and in the United Kingdom. For EU-25, the overall increase of production is expected to reach 1
% on 2003.
24.The downward trend in dairy cow numbers in EU-15 is expected to continue and to reach 23.4 million heads at the end of year, a 2
% fall compared to end 2003. The
average milk yield on the other hand is expected to increase to 6 031 kilogram, up
Ireland (+ 2.3 %), Austria (+ 2.2 %), Denmark (+ 1.7 %) and Lithuania (+ 1.1 %), to
remain relatively stable in Spain (+ 0.6 %) and Greece (+ 0.3 %), but to decline in the
Netherlands ( 6.7 %), Hungary ( 4.7 %), Sweden ( 1.4 %) and France ( 1 %).
26.Prices of cereals developed differently among the EU Member States. High price drops are expected in Austria ( 22.1 %), Hungary ( 20.6 %), Ireland ( 12.9 %), the
Netherlands ( 7.1 %) and Belgium ( 7 %), but also in Sweden ( 4.4 %), Finland
( 2.5 %), Luxembourg ( 2.4 %) and Denmark ( 1.5 %). On the other side prices of
cereals are expected to increase significantly in the Czech Republic (+ 15.9 %), the
United Kingdom (+ 9.8 %), Greece (+ 5.5 %) and France (+ 4.8 %), but also in Latvia
(+ 3 %), Spain (+ 1.4 %) and Lithuania (+ 0.7 %). After the large falls recorded in 2002
and 2003 sugar beet prices recovered significantly in some EU Member States: Hungary (+
47 %), Belgium (+ 37.7 %), Latvia (+ 24.2 %), the Czech Republic
(+ 23.4 %) and Denmark (+ 14.4 %). On the contrary sugar beet price is expected to
decrease in Greece ( 17.2 %), Finland ( 10.3 %), Lithuania ( 5.5 %) and Spain
( 5.5 %). Wine and olive oil prices increased in nominal terms in most wine
producing countries, except from Spain and France were the prices remained almost stable. After rising continuously since 2000, the price index for horticultural products dropped in most EU Member States, except from Luxembourg, Hungary, Finland and Ireland were the nominal prices were up.
27.The overall index for animal products rose in most EU Member States but this masks wide-ranging changes by sector and by Member States. Pig meat price recovered notably from the last years decline in most EU Member States except from Greece where nominal price was down by 1.9
%. Beef and veal prices increased in most EU
countries but declined slightly in Sweden ( 6.4 %), Belgium ( 4.5 %) and Spain
( 2.6 %). Poultry meat prices rose or remained stable in most EU Member States but
decreased in Lithuania ( 5.5 %). Sheep and goats meat price was up in most
countries, except from the Netherlands ( 3.6 %), the Czech Republic ( 5.7 %),
Hungary ( 5.3 %) and Ireland ( 1.6 %). Milk price changes in nominal terms over
2003 varied significantly between countries: while milk price declined in some EU Member States it increased significantly in Latvia (+
34.4 %) and Lithuania
prices for quality durum wheat declined less and stayed at the end of the year by EUR 155 165.
29.Olive oil prices decreased ( 4.5 %) in general compared to 2003 but some increases
in extra virgin oil and virgin olive oil prices were registered in Greece.
30.In general, wine prices were slightly down in 2004 but this figure masks varying movements by wine category, region and country. Prices decreased in Germany, Luxembourg, the Czech Republic, France and Spain but increased in Italy, Greece and Portugal.
31.In general, bovine meat prices continued to improve in 2004. For young bulls (category R3) prices were quite stable, varying from EUR 260 to EUR 275 per 100 kg. During the first 18 weeks of the year they stayed around 1
% to 4 % below the
level of 2003. Thus they dropped slightly to EUR 260 when the enlargement took place and recovered progressively during the next 18 weeks. During the last 7 weeks of the year they stayed 3
% to 5 % above the prices of 2003. The price of cows
(category R3) rose more or less regularly up to the end of September then started to decline following the seasonal pattern. It must be noticed that from mid-August, they stood at the level of 1999 (before the cut of institutional price introduced by Agenda 2000). After two years at low level, steer prices started to recover during the last quarter of 2003. They continued to improve during 2004, reaching record levels in June, and then decreased to stabilise around EUR 267 per 100 kg during the last quarter of the year.
32.Following the low level of 2003, pig meat prices improved in 2004 with two remarkable increases during March and during June when they reached EUR 150 per 100 kg. Prices stayed around that level until the second part of October when they declined to EUR 140 kg with a progressive improvement during the end of the year.
33.During the first five months of 2004, poultry meat prices improved progressively from EUR 140 per 100 kg up to EUR 150 per 100 kg and fluctuated at this favourable level up to the end of the year. After the record level of the end of 2003, egg prices felt sharply during the first half of the year down to around EUR 80 per 100 kg and even less during August. They did not follow the seasonal pattern of increase in the second part of the year but remained at this low level up to the end of the year.
1.4. Input prices
36.In 2004 the purchase price index for standard consumption goods and services in agriculture rose in most EU Member States in nominal terms over 2003. Prices were particularly higher for feeding stuff, energy and fertilisers. Total input prices increased most in Hungary up 12.4
%, Greece up 7.7 %, the United Kingdom up 7.3 %
and the Czech Republic up 7 %. In other countries the index rose more slowly with
5.1 % in Spain, 4.2 % in France, 4 % in Sweden, 3.8 % in Ireland, 3.6 % in Austria,
3.4 % in Denmark, 3 % in Finland, 1.6 % in Belgium and 0.2 % in Luxembourg. Only
Lithuania registered a fall in nominal input prices by 3.1 %.
1.5. Farm income
37.The first estimates of farm income in 2004 provided by Eurostat on the basis of information sent by the Member States in December 2004, show an average increase
% in farm income (measured, in real terms, as the net value added at factor cost
per annual work unit) as compared to 2003 for the European Union as a whole. This improvement was caused by a marked increase by 53.8
% in the new Member States,
while it rose only slightly by 0.8 % in the old Member States. Incomes were up in
nineteen Member States, the strongest rates observed in most new Member States. Agricultural income in the Czech Republic (+
107.8 %), Poland (+ 73.5 %), Estonia
(+ 55.9 %), Latvia (+ 46.6 %) and Lithuania (+ 41.8 %) benefited most from the
introduction of enlargement. In the old Member States, a significant increase can be observed in Germany (+
16.6 %), Denmark (+ 12.2 %) and Luxembourg (+ 7.8 %).
Income was down in only six Member States. The largest drop in agricultural income is estimated in Belgium ( 8.8 %) and the Netherlands ( 11.5 %).
38.The main factor behind these changes is a sharp increase in agricultural output quantities as compared to 2003, notably for cereals, oilseed, wine, olive oil and potato sectors. The total volume of crop production rose by 12.5
%, while sharp decrease in
real crop prices was recorded ( 8.4 %). The real value of animal production, in
Changes in nominal farm-gate prices in 2004 and 2003 (%)
Crop products Livestock products Total
Member States 2004/2003 (p) 2003/2002 2004/2003 (p) 2003/2002 2004/2003 (p) 2003/2002
Belgique/België 0.3 1.9
Ceská Republika 9.8 0.9 5.4 5.0 6.9 3.7
Danmark 2.5 3.3 3.3 5.3 1.7 4.4
Deutschland 6.9 2.9 1.0
Elláda 1.2 13.5 2.1 1.3 0.3 9.4
Espańa 1.1 8.4 3.2 1.3 0.6 5.5
France 0.7 5.8 0.1 0.4 1.0 2.7
Ireland 11.3 5.8 4.5 1.3 2.3 0.4
Latvija 11.3 4.9 23.8 12.5 20.9 2.8
Lietuva 6.9 12.7 10.0 11.9 1.1 12.3
Luxembourg 3.0 6.1 4.6 0.1 4.4 1.0
Magyarország 12.5 19.5 3.4 7.2 4.7 6.4
Nederland 11.5 5.3 1.4 1.0 6.7 2.2
Österreich 1.8 8.7 2.4 3.7 2.2 0.4
Changes in nominal purchase prices for agricultural inputs in 2004 and 2003 (%)
consumption Investment Total
Member States 2004/2003 (p) 2003/2002 2004/2003 (p) 2003/2002 2004/2003 (p) 2003/2002
Belgique/België 1.8 0.1 0.4 1.4 1.6 0.1
Ceská Republika 7.8 2.1 2.2 1.3 7.0 1.6
Danmark 3.3 2.1 3.9 3.0 3.4 1.0
Deutschland 0.1 0.9 0.3
Elláda 9.2 4.4 3.5 3.5 7.7 4.2
Espańa 5.2 1.2 2.0 2.9 5.1 1.4
France 4.3 1.0 3.7 2.6 4.2 1.4
Ireland 4.3 2.7 1.6 1.7 3.8 2.5
Lietuva 3.1 3.6 3.1 3.6
Luxembourg 0.1 1.1 0.5 1.8 0.2 1.4
Magyarország 13.2 6.8 7.2 7.2 12.4 6.8
Nederland 1.7 2.5 2.0
Österreich 4.3 2.3 2.2 1.6 3.6 2.0
Nominal output price indices for agricultural products over the 2000 2004 (p) period
(2000 = 100)
Member States 2000 2001 2002 2003 2004 (p)
Belgique/België 100.0 97.5
Ceská Republika 100.0 110.9 100.1 96.4 103.3
Danmark 100.0 107.4 96.9 92.5 94.2
Deutschland 100.0 107.4 100.4 101.4
Elláda 100.0 106.1 113.6 123.0 123.3
Espańa 100.0 103.0 100.3 105.8 106.4
France 100.0 103.5 100.1 103.4 102.4
Ireland 100.0 104.3 100.0 99.6 101.9
Latvija 100.0 102.7 99.9 97.1 118.0
Lietuva 100.0 114.7 114.2 101.9 103.0
Luxembourg 100.0 101.8 99.5 100.5 104.9
Magyarország 100.0 106.0 104.1 110.5 105.8
Nederland 100.0 105.9 103.7 105.9 99.2
Österreich 100.0 106.7 101.7 102.1 104.3
Indices of nominal purchase prices for goods and services currently consumed
in agriculture over the 2000 2004 (p) period (2000 = 100)
Member States 2000 2001 2002 2003 2004 (p)
Belgique/België 100.0 102.6 102.8 102.7 104.5
Ceská Republika 100.0 105.1 103.4 101.3 109.1
Danmark 100.0 106.6 107.7 105.6 108.9
Deutschland 100.0 105.2 104.1 104.2 :
Eesti : : : : :
Elláda 100.0 101.5 103.7 108.1 117.3
Espańa 100.0 102.2 103.0 104.2 109.4
France 100.0 103.4 103.2 104.2 108.5
Ireland 100.0 104.8 106.1 108.8 113.1
Italia : : : : :
Kypros/Kibris : : : : :
Latvija 100.0 : : : 114.3
Lietuva 100.0 96.4 100.4 96.0 92.9
Luxembourg 100.0 104.0 104.5 105.6 105.7
Magyarország 100.0 112.1 112.3 119.1 132.3
Malta : : : : :
Nederland 100.0 107.8 108.5 110.2 :
Österreich 100.0 102.0 100.5 102.8 107.1
Polska : : : : :
Development of the agricultural income in the EU-25 over the 1999 2004 (p) period, in terms of annual change (%)
and cumulative growth (2000=100)
Annual growthCumulative growth
Development of agricultural income in the EU-15 Member States in 2004 (p) (% change versus 2003)
Development of agricultural income in the new Member States in 2004 (p) (% change versus 2003)
Development of agricultural income in the EU Member States
over the 1999 2004 (p) period (2000 = 100)
Member States 1999 2000 2001 2002 2003 2004 (p)
EU-25 95.6 99.1 105.3 97.9 99.4 102.7
Belgique/België 92.0 99.9 108.1 90.9 91.7 83.6
Ceská Republika 79.3 96.9 123.8 97.3 95.3 198.0
Danmark 83.8 101.7 114.4 85.6 82.6 92.7
Deutschland 79.7 97.9 122.4 89.6 87.3 101.8
Eesti 69.2 103.7 127.1 126.5 178.7 278.5
Elláda 98.2 99.3 102.5 100.0 99.0 101.7
Espańa 91.2 100.3 108.5 105.7 113.3 115.3
France 100.0 99.4 100.6 98.4 97.6 93.9
Ireland 90.5 105.5 103.9 99.0 99.3 98.0
Italia 102.3 98.7 99.1 94.9 95.7 97.0
Kypros/Kibris 103.7 99.3 97.0 94.4 98.7 97.3
Latvija 84.1 102.2 113.7 116.7 109.7 155.5
Lietuva 106.9 100.7 92.4 81.8 97.3 142.6
Luxembourg 103.6 98.7 97.7 100.4 96.0 103.5
Magyarország 106.1 93.8 100.2 85.2 85.0 109.0
Malta 105.7 95.1 99.1 99.0 91.1 93.9
Nederland 98.6 99.7 101.6 89.4 93.4 82.6
Österreich 89.7 97.0 113.3 107.8 105.2 105.8
Polska 93.9 95.9 110.2 88.6 82.4 143.0
Portugal 102.9 88.9 108.2 101.1 101.7 102.3
exceed a minimum economic size, measured in European Size Units (ESU), which differs from country to country ranging from 2 ESU to16 ESU for the years 2001 and 2002.
42.Table 1 shows the wide range of economic results among Member States for each type of farming, as measured by the Farm Net Value Added (FNVA).
43.The large differences in average income among Member States are inherent in the structure of their agriculture. The Member States with the highest average incomes are generally speaking those with a large number of large-sized farms specialising in arable crops, dairy or the less regulated sectors of production (pigs, poultry, horticulture ...). The southern Member States, with a large number of small farms engaged in `mixed' farming (crop and livestock production) or `other permanent crops' (mixes of different cropping enterprises) have average incomes usually below the EU average.
44.Table 2 shows the contribution of the balance of subsidies and taxes to FNVA. In 2001, the proportion of subsidies net of taxes to FNVA for EU-15 was almost 35
However, the differences among Member States and among types of farming were very significant.
45.In 2001, Finland and Sweden had an average FNVA lower than the balance of subsidies and taxes. This means that revenue from the market was not enough to cover production costs. On the other hand, the share of subsidies in FNVA was the lowest in the Netherlands, Belgium, Italy and Denmark.
46.Regarding types of farming the differences are also considerable. Net subsidies in the Drystock, Arable and Mixed types of farm were the highest as a proportion to income. The Horticulture and Vineyards types of farm were by far the least subsidised.
51.Per type of farm at the EU level the concentration is the highest for horticulture, various permanent crops combined, mixed cropping, general field cropping and vineyards. The lowest concentration is found in cattle-dairying, rearing and fattening combined, specialists dairying, mixed livestock -- mainly granivores, sheep/goats and other grazing livestock and specialist cattle-rearing and fattening.
52.The types of farm in which the concentration is the highest vary substantially from country to country. However, Specialists dairying is one of the least concentrated types of farm in practically all the countries.
53.Table 4 shows the degree of concentration according to the share of the 50 % of farms
with the highest total receipts.
54.At the EU level for all the types of farm this share is 91 %, while at the country level
it is between 72 % in Luxembourg and 89 % in Denmark. Per type of farm
horticulture is the most concentrated, followed closely by vineyards, general field
cropping, mixed livestock -- mainly grazing livestock and specialist cereals, oilseed and protein crops.
On the other hand the lowest concentration can be found in cattle-
Table 1 FARM NET VALUE ADDED (in EUR)
All farms Arable Horticulture Vineyards Other
permanent crops Dairy Drystock Pigs / poultry Mixed
2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002
B 64509 55271 63978 55150 72630 83026 79443 110207 54397 47236 46403 44501 95101 43396 71497 54357
DK 64042 47320 29583 23788 252993 244523 104764 93885 69018 72478 15622 15056 191415 85467 72175 43010
D 51533 49344 73891 60480 88425 95435 42253 47132 79789 82804 38747 40767 26624 33192 60853 37456 47227 42601
EL 10856 13825 11080 11558 21509 25011 9463 10574 8704 14290 15356 19448 15754 17803 59693 13461 16212
E 22211 23814 21875 22974 42175 46509 18293 21096 15368 16852 26037 23724 22938 27771 73440 57492 28809 38546
F 47638 48999 44279 47276 80800 92298 79527 80827 74697 79916 35036 35505 29195 33206 76089 34359 48694 47283
IRL 19708 18987 41491 36059 43032 37350 10579 11594 158965 37060 28668
I 17645 24119 12827 16651 34882 39194 19469 23307 12839 17732 52093 54503 24396 31228 144727 227140 28202 35519
L 57503 53579 21380 17078 68461 75205 57772 53505 50233 48601 161076 59897 48797
NL 99856 90941 88755 70212 231029 234786 149582 126066 81892 74863 16951 24154 77094 33642 50685 50901
A 33635 32469 35991 34789 36434 37401 27315 29808 31089 31772 30459 31820 42243 28918 36932 32068
P 7134 7747 5733 6060 7177 10966 9915 8259 4916 5156 12568 15314 6339 9410 49559 33470 6933 7277
FIN 31392 33237 20696 21762 56173 62093 22883 35275 36946 30558 29642 44191 45612 31116 37224
S 22813 22627 16422 17558 34062 36295 7629 8783 58312 24766 19493 15682
UK 59055 63616 70091 75714 161240 182398 301288 235041 78156 71442 18224 29363 128504 124242 58762 69733
EU-15 27924 30164 23943 25806 66609 73983 35337 38767 15034 18441 43093 42686 20474 24494 84989 62200 36313 36055
Table 2 BALANCE CURRENT SUBSIDIES AND TAXES AS % OF FARM NET VALUE ADDED
All farms Arable Horticulture Vineyards permanent crops Dairy Drystock Pigs / poultry Mixed
2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002
B 20,7 23,6 19,8 23,8 -0,5 -0,5 0,6 1,3 17,3 19,1 59,4 62,9 5,0 6,2 23,6 29,1
DK 25,6 38,6 50,9 66,7 1,8 2,2 1,1 0,9 23,6 25,7 120,4 158,4 9,9 22,6 28,6 58,3
D 41,8 49,7 51,4 65,5 4,4 3,8 14,2 15,5 7,5 7,8 32,3 37,1 91,1 100,7 24,6 42,6 51,5 65,3
EL 35,2 50,5 2,8 47,2 24,5 16,5 29,8 -1,0 34,4
E 26,3 24,6 47,5 43,2 1,5 2,5 4,9 8,1 26,3 21,7 4,1 5,3 35,1 35,1 3,5 2,2 30,4 30,8
F 41,5 69,3 2,3 0,0 8,4 34,7 86,5 10,7 54,9
IRL 56,2 67,9 52,0 64,9 21,1 27,0 102,4 111,7 6,5 53,6 72,7
I 22,4 19,5 41,8 39,1 1,5 1,1 5,7 2,9 18,3 14,6 9,5 7,3 30,1 32,9 3,4 1,6 25,0 23,2
L 65,4 70,1 140,6 169,4 16,9 20,2 66,0 67,9 94,6 96,2 35,7 73,9 99,9
NL 2,8 3,2 8,7 6,5 -1,3 -1,1 -0,2 -0,7 3,6 5,1 34,6 38,8 2,9 2,0 4,1 5,7
A 53,1 56,8 67,8 70,9 24,4 27,7 34,2 32,3 51,8 51,7 62,3 66,2 32,6 42,4 50,0 58,6
P 42,7 42,5 61,8 69,4 -0,2 0,9 8,0 5,9 41,9 31,4 29,0 22,0 78,9 66,2 0,1 2,1 60,5 59,1
FIN 116,6 115,6 154,3 147,9 45,7 42,8 56,1 104,1 105,6 162,5 195,9 115,3 111,4 146,1 133,4
S 100,4 106,4 121,4 115,7 74,9 74,8 311,2 282,3 21,8 55,5 132,6 178,3
UK 52,2 55,2 74,8 66,9 1,1 0,2 0,7 1,8 11,5 21,1 159,3 123,9 5,2 4,9 70,6 70,7
EU-15 34,7 35,9 54,7 54,8 1,6 1,5 3,7 4,2 19,4 17,1 25,7 28,8 73,5 73,1 9,5 11,6 45,9 52,4
TABLE 3 SHARE OF TOTAL RECEIPTS ( OUTPUT + SUBSIDIES) IN 2001
20 % OF FARMS WITH THE HIGHEST RECEIPTS
B DK D EL E F IRL I L NL A P FIN S UK EU-15
Specialist cereals, oilseed and protein crops 78 64 63 45 55 45 61 63 44 49 45 64 42 55 53 68
General field cropping 47 62 55 49 56 45 66 64 46 52 40 84 45 59 62 71
Specialist horticulture 52 77 51 48 61 55 55 54 64 58 83 75
Specialist vineyards 46 41 48 57 67 40 52 62 70
Specialist fruit and citrus fruit 40 63 52 45 52 54 62 52 43 68 41 64 67
Specialist olives 49 60 100 57 58 57
Various permanent crops combined 61 69 59 48 47 49 63 62 53 52 100 65 72
Specialist dairying 37 39 45 45 46 39 42 62 35 40 36 56 38 50 46 49
Specialist cattle-rearing and fattening 45 50 45 35 51 40 48 62 45 52 35 56 39 44 47 52
Cattle-dairying, rearing and fattening combined 41 77 43 67 40 40 56 60 34 55 34 72 67 58 50 48
Sheep, goats and other grazing livestock 100 100 41 41 47 42 53 48 44 60 41 55 39 84 49 51
Specialist granivores 41 45 40 47 58 50 98 64 44 51 40 72 42 48 58 56
Mixed cropping 56 71 67 46 57 50 100 62 49 57 42 57 65 69 75 72
Mixed livestock, mainly grazing livestock 40 47 47 40 53 42 61 45 48 40 54 37 48 78 64
Mixed livestock, mainly granivores 40 47 37 100 71 43 37 67 45 56 35 100 100 73 39 49
Field crops-grazing livestock combined 41 65 65 43 59 44 50 61 45 68 39 75 45 55 56 61
Various crops and livestock combined 45 52 42 44 47 45 67 43 53 41 56 49 48 49 60
All types of farming 48 63 54 50 61 49 59 69 39 58 41 67 45 56 61 69
TABLE 4 SHARE OF TOTAL RECEIPTS (OUTPUT + SUBSIDIES) IN 2001
50 % OF FARMS WITH THE HIGHEST RECEIPTS
B DK D EL E F IRL I L NL A P FIN S UK EU-15
Specialist cereals, oilseed and protein crops 78 86 86 75 82 78 86 86 97 81 75 88 74 82 83 91
General field cropping 80 88 81 79 82 77 92 86 86 82 73 95 75 87 87 91
Specialist horticulture 83 95 81 78 85 83 83 86 87 86 95 92
Specialist vineyards 77 70 75 85 86 74 81 86 91
Specialist fruit and citrus fruit 71 87 81 73 83 85 86 82 84 88 67 89 88
Specialist olives 80 87 82 82 83
Various permanent crops combined 88 88 86 77 78 80 84 87 88 81 91 89
Specialist dairying 71 73 76 79 77 72 75 86 67 72 69 85 70 79 78 79
Specialist cattle-rearing and fattening 76 85 76 70 81 72 79 86 77 82 70 83 75 76 76 83
Cattle-dairying, rearing and fattening combined 73 92 73 67 73 74 87 82 67 67 92 86 79 79 78
Sheep, goats and other grazing livestock 70 73 78 72 81 79 76 85 72 79 72 84 79 81
Specialist granivores 77 77 74 77 86 82 98 87 74 82 75 91 76 80 86 85
Mixed cropping 83 90 86 76 83 80 84 88 84 74 78 87 88 91 90
Mixed livestock, mainly grazing livestock 71 85 78 74 84 75 84 75 85 72 78 76 96 91
Mixed livestock, mainly granivores 72 76 71 87 74 69 89 75 86 68 96 72 81
Field crops-grazing livestock combined 73 89 85 76 87 77 78 85 80 86 72 90 78 83 84 88
Various crops and livestock combined 82 83 75 77 78 78 89 73 89 75 84 79 81 86 89
All types of farming 79 90 81 79 86 79 86 89 72 85 73 87 76 84 86 91
2.POLICY DEVELOPMENTS AND LEGISLATIVE INITIATIVES IN 2003
2.1. CAP Reform -- second package
55.As a next step in the CAP reform process started in 2003 and as a follow-up to the Commission's Communication of September 2003 to accomplish a sustainable agricultural model, the European Commission has presented proposals to reform the Common Agricultural Policy (CAP) rules on tobacco, olive oil and table olives, cotton and hops
1 Sustainability will be achieved by emphasising competitiveness,
stronger market orientation, improved environmental respect, stabilised incomes for farmers and a higher regard for the situation of producers in less-favoured areas (LFAs).
56.A significant part of the current production-linked payments will be transferred to the de-coupled single payment scheme agreed under the first package. In addition, and as with other direct aids to producers already reformed, the decoupled and the production aids adopted under this second package will have to comply with horizontal obligations like cross compliance, modulation and financial discipline.
57.The reform will enter into force in 2006 (2005 for hops).
58.The main specific elements agreed by the Council in Regulation (EC) No 864/2004 are the following:
59.From 2010 onwards, the current direct payment will be decoupled and integrated into the single payment scheme, but to avoid a disruptive effect, MS agreed on the one hand 4 year transition period (2006 2009) and on the other hand a financial envelope for restructuring tobacco producing areas (50
% of the tobacco envelope). From 2010
onwards, the total amount of each part (decoupled payment and restructuring envelope) will be EUR
63.For cotton, transfer of the part of the EAGGF expenditure for cotton during the 2000 2002 reference period into the funding of two support measures and of one tool transferring funds to structural measures:
· the single payment scheme: 65 % of the budget envelope for producer support
would be granted decoupled;
· taking into account the potential impact a full decoupling in the cotton sector could
have, and in particular the risk that production would be abandoned and of declining competitiveness of rural areas, 35
% of the budget envelope will be
destined for the granting to producers of an aid per hectare of cotton. Maximum Guarantee Areas have been set and the current proportional penalisation in case of overrun is maintained;
· an amount of EUR 21.9 million/year will be included in a rural development
envelope for cotton areas. This last envelope is shared between Member States according to the average area eligible for aid over the reference period and will be an integral part of the second pillar of the CAP;
· quality measures have been introduced as well as a new mechanism in order to
monitor the impact of the reform on production and trade.
2.1.3. Olive oil
64.A minimum of 60 % of the average production-linked payments during the reference
period 2000 2002, will be converted into entitlements under the single payment scheme for holdings larger than 0.3 ha. Smaller holdings will have their payments completely decoupled. This will be limited to olive-growing areas existing prior to 1 May 1998 (31 December 2001 for Malta and Cyprus) and to new plantings provided for under the programmes approved by the Commission (30 000 ha in Portugal, 3 500 ha in France).
69.For hops the subsidies will be fully decoupled but MS may keep 25 % maximum
70.In addition, as a follow-up to the options for reform presented in the September 2003 communication, the Commission presented to the Council and the Parliament on 14 July 2004 a Communication on the reform of the sugar sector (COM(2004) 499) to be followed by the legislative proposal in mid 2005. The submission of the legislative text was postponed in order to take into consideration the final ruling of the dispute settlement body (WTO) in the framework of the appeal made by Brazil, Australia and Thailand against the Community sugar regime.
2.2. Quality policy
2.2.1. Protected designations of origin (PDO), protected geographical indications (PGI) and Traditional Specificity Guaranteed (TSG) implementing rules
71.In order to ensure the transparency of the requirements in the specifications for names listed in the Register of protected designation of origin and protected geographical indications the Commission has adopted the Regulation (EC) No 383/2004
2 of 1
March 2004, laying down detailed rules for applying Council Regulation (EEC)
No 2081/92 as regards the summary of the main points of the product specification. Member States must now provide the Commission with updated forms to be published on the Official Journal when they apply to register a name or to amend specifications. In addition, summaries of specifications of products whose names have been registered under the simplified procedure should also be published.
72.In order to ensure continuing protection of the relevant geographical indications and designations of origin following the accession of the new Member States the Commission has adopted Regulation (EC) No 918/2004
3 of 29 April 2004,
introducing transitional arrangements for the protection of geographical indications and designations of origin for agricultural products and foodstuffs in connection with the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia. This Regulation has introduced a transitional period of six months to uphold the national protection, existing on 30 April 2004 in those new Member States, until a decision has been taken under Article 6 of Regulation (EEC) No 2081/92
"Münster Käse" designating a place in Germany. The period of coexistence is for fifteen years, after which the unregistered name shall cease to be used. During the coexistence period the name of the country of origin shall be clearly and visibly indicated on the label of the cheese bearing the name "Münster Käse".
74.Commission has adopted two Regulations which are technical adaptations of the detailed rules of application of Council Regulation (EEC) No 2081/92 and of the detailed rules for the application of Council Regulation (EEC) No 2082/92
certificates of specific character for agricultural products and foodstuffs. The accession of the new Member States renders it necessary to provide for the Community symbols, respectively logo PDO, PGI and TSG and indications in the new Member State languages. The Regulations are based on Article 57(2) of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, which allows the Commission to make the necessary adaptations to its acts.
75.The Commission has prepared and inserted in the website of the unit a Guide to Community Regulations in order to explain the purpose, scope and implication of Regulation (EEC) No 2081/92, on the protection of geographical indications and designations of origin for agricultural products and foodstuffs and of Regulation (EEC) No 2082/92, on certificates of specific character for agricultural products and foodstuffs. The Guide aims to provide a clear and concise approach to the procedure of registering names within a Community framework and to help consumers, producers and those interested to understand the Regulation both in theory and in practice. The guide also gives a presentation of the legal effects attached to the registration of names. The guide is addressed to the Member States and given the increasing interest in the protection of Geographical Indications from outside the EC is addressed also provide guidance to third countries and interested applicants.
2.2.2. New products names on the list
76.As provided for in Regulation (EEC) No 2081/92, the Commission has added 49 names (listed in the Annex) to the list of protected designations of origin and protected geographical indications; the list currently comprises a total of 681 products. Five modifications of the specifications of PDO/PGI are also listed in the Annex.
the registered PDO "Parmigiano-Reggiano", therefore the Commission proposed to the Council an EC common position according to which the work on this new standard should be abandoned and it proposed instead to update the standard on "extra hard grating cheese". This position was adopted by the Community, but no consensus could be reached in the Codex Committee. The question was then forwarded to the Commission of the Codex where the Commission reiterated the position taken by a qualified majority of the Member States.
79.Working Group on PDO/PGI of the Joint Committee of the Agreement for Agriculture between the European Community and Switzerland. The working group had the third meeting on the 26 of May in Berne and have progressed in the technical preparation of the next bilateral negotiation. They refer in particular on the equivalency of legislation, on the identification of problem cases in the EC and Switzerland and on the analysis of the bilateral Agreements between Switzerland and eight Member States and the Stresa Convention. A new expert group will be necessary and the Commission must prepare the mandate of negotiation to be proposed to the Council.
New names entered in the Registers of Designations of Origin and
Geographical Indications and of Traditional Specialities Guaranteed
and amendments since the 2003 Annual Report
State Product Type of product PDO/PGI/TSG
CZ Budjovické pivo Beer PGI
CZ Ceskobudjovické pivo Beer PGI
CZ Budjovický msanský var Beer PGI
DE Thüringer Leberwurst Meat products PGI
DE Thüringer Rotwurst Meat products PGI
DE Thüringer Rostbratwurst Meat products PGI
Mantequilla de l'Alt urgell y la Cerdanya or Mantega de l'Alt Urgell i la Cerdanya Oils and fats
ES Esparrago de Navarra* Fruits, vegetables and cereals PGI
EL Agios Mathaios Kerkyras Oils and fats PGI
FR Fraise du Périgord Fruits, vegetables and cereals PGI
FR Agneau de Pauillac Fresh meat (and offal) PGI
FR Agneau du Poitou-Charentes Fresh meat (and offal) PGI
FR Brioche vendéenne Bread, pastry, cakes,
FR Anchois de Collioure Fresh fish, molluscs and
FR Melon du Quercy Fruits, vegetables and cereals PGI
FR Valençay Cheese PDO
FR Domfront Other Annex I products PDO
FR Noix du Périgord Fruits, vegetables and cereals PDO
IT Spressa delle Giudicarie Cheese PDO
IT Farina di Neccio della Garfagnana Fruits, vegetables and cereals PDO
IT Carciofo di Paestun Fruits, vegetables and cereals PGI
IT Salame d'oca di Mortara Meat products PGI
IT Kiwi Latina Fruits, vegetables and cereals PGI
IT Valle de Belice Oils and fats PDO
IT Tergeste Oils and fats PDO
IT Miele della Lunigiana Other products of animal origin PDO
IT Lucca Oils and fats PDO
IT Lardo di Colonnata Meat products PGI
IT Terre Tarentine Oils and fats PDO
IT Cartoceto Oils and fats PDO
IT Nocciola del Piemonte* Fruits, vegetables and cereals PGI
PT Paia de Lombo de Estremoz e Borba Meat products
PT Paia de Estremoz e Borba Meat products PGI
PT Morcela de Estremoz e Borba Meat products PGI
PT Chouriço grosso de Estremoz e Borba Meat products
2.3. Organic farming
2.3.1. Action Plan
80.In June 2004, the Commission launched the European Action Plan (EAP) for organic food and farming in the form of a Communication to the Council and the European Parliament. The EAP analyses the current state of development of the organic sector in the European Union and lays down an overall framework for organic farming policy. It also sets out 21 actions, including regulatory initiatives, to advance Community policy favouring a further balanced development of the organic farming sector.
81.The Council adopted its conclusions endorsing the EAP in October 2004. The European Parliament is expected to deliver its opinion in the beginning of 2005. The Economic and Social Committee and the Committee of the regions delivered their opinions in December 2004.
82.The EAP is the outcome of a three-year long public consultation exercise, to which Member States, Community institutions, stakeholders and all interested people have contributed. In this regard, the Commission organised a public hearing, which took place in Brussels on 22 January 2004. More than 200 organisations and Agricultural Ministers from Member States, former Acceding and Candidate Countries and NGOs participated.
2.3.2. New regulations
83.On 24 February 2004, the Council adopted Regulation (EC) No 392/2004 amending Council Regulation (EEC) No 2092/91 on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs.
84.Regulation (EC) No 392/2004 envisages:
86.On 19 August 2004, the Commission adopted Regulation (EC) No 1481/2004 amending Council Regulation (EEC) No 2092/91. This Regulation allows the use in organic farming of casings not produced according to this production method, as organically produced casings are not available in sufficient quantities within the Community. The Regulation also allows further typography in the Organic farming logo graphic manual in order to take account of specific characters and accents in the official languages of the new Member States.
2.3.3. Working documents
87.Following issues have been addressed and are currently under examination:
-issues concerning availability of organically reared livestock,
-additions to sections A and B of Annex VI regarding non-agricultural ingredients and processing aids used in processed livestock products,
-evaluation of the need for feed materials of conventional origin and synthetic vitamins for ruminants,
-addition of some fertilisers and pesticides to Annex II,
-amendment to Annex III to include inspection requirements for the newly included operators,
-review of Article 11 on imports.
2.3.4. Further issues
88.The assessment of equivalency under Article 11(1) of Regulation (EEC) No 2092/91 was ongoing for several third countries. The technical assessment of India, Japan and Turkey progressed, the DG participated in a mission to India and new requests were received from Dominican Republic, Ecuador, Guatemala, and Honduras,. During negotiations with the US on a mutual recognition agreement, progress was made but a number of substantial differences in the regulatory provisions have been identified. Important follow-up actions in third countries whose standards and controls are already recognised as equivalent were carried out for Argentina and Switzerland. The Commission contributed to the development of the Codex Alimentarius guidelines on organic labelling.
measures. The eligible products and themes are defined in Commission Regulations (EC) No 2879/2000 and (EC) No 94/2002.
90.Programmes are proposed by professional organisations representative of the product sector concerned, and pre-selected by competent authorities of the Member States, who are responsible for the management and control of the approved programmes. The total annual budget for Community co-financing for approved programmes was EUR
48.5 million in 2004.
91.In 2004 the Commission approved for co-financing 13 new programmes operated outside the EU. The target countries of these programmes include Japan, Russia, USA, Canada, Australia, Brasil, China and non-EU European countries. The products promoted include quality wines, olive oil, cheeses, meat products and fruit and vegetables. Most programmes last for three years. Total EU co-financing for these programmes amounts to EUR
92.For the EU internal market the commission approved altogether new 46 programmes for a total budget of EUR
34.8 million of Community co-financing. Most programmes
last for three years. The promoted products include fruit and vegetables, organic products, products with a PDO or PGI denomination, flowers and plants, milk products, olive oil and to a limited extent beef. In 2004 the new Member States did not present any proposals for co-financing.
93.In addition to co-financing promotional programmes proposed by professional organisations in the Member States, the Commission can carry out high-level promotional missions and organise information campaigns on Community systems for geographical indications (PDO, PGI and TSG) and for organic products. In 2004 the Commission started three-year information campaigns in the USA, China and Japan. Commissioner Fischler made a promotional visit to China, visiting Beijing and an international food fair in Shanghai.
2.5. Simplification of agricultural legislation
94.Simplification continued to be an important objective in 2004, focussing in particular on making agricultural legislation as clear, transparent and easily accessible as possible, and on reducing the administrative workload imposed on farmers and the various authorities which are responsible for administering the provisions of the CAP within the Member States.
acts have been identified as obsolete and 216 Commission acts identified for removal from the Directory of Legislation in Force.
97.During the second part of 2004, Member States put forward simplification suggestions, as part of a Council Presidency exercise. During the discussion of these suggestions and the DG AGRI responses, which took place in the December meeting of the Agriculture Council, the Commissioner for Agriculture, Mrs Fischer Boel, undertook to present with a reflection paper on the possibilities and limitations of simplification in agriculture during the autumn of 2005.
2.6. State aids
2.6.1. Policy developments and legislative initiatives in 2004
188.8.131.52. De minimis aid
98.On 6 October 2004, the European Commission has adopted Regulation (EC)
No 1860/2004 on the application of Articles 87 and 88 of the EC Treaty to "de minimis" aid in the agricultural and fisheries sectors
9.The regulation exempts
national aid of up to EUR 3 000 per farmer and fisherman over three years from the
requirement of prior notification. This initiative will be a useful tool to help farmers in a crisis situation. To avoid distortions of competition, Member States granting such aid will have to respect an overall ceiling roughly equal to 0.3
% of agricultural or
fisheries output. Member States may grant aid fulfilling all the conditions of the regulation without prior approval by the Commission. But they will have to keep registers to show both ceilings have been respected.
99.If all Member States fully use this possibility, this would amount to an average amount of "de minimis" aid of around EUR
317 million per year for agriculture and
around EUR 27 million per year for fisheries, for the whole of the EU. In order to
offer more flexibility to Member States, the regulation sets out amounts to be respected over a period of three years (and not per year). The amounts that each Member State may grant per three-year period have been calculated by the Commission and are set out in an Annex. The three-year periods are mobile, so that for each new grant of "de minimis" aid, the total amount of such aid granted during the previous three years needs to be determined.
· "Aid for milk producers (Parmalat)" -- France10. On 14 July 2004, the
Commission decided that an aid of ca. EUR 200 000 for ca. 120 milk producers
that have not been paid for their deliveries to Parmalat was de minimis and therefore not covered by Article 87(1) EC. The aid intensity was in no case more than EUR
2 000 per producer. The aid was granted through partially taking over
the interest and capital payments for outstanding loans, up to 10 % of the annuity
and never more than EUR 2 000 per beneficiary.
· "Urgent provisions for agriculture (Parmalat)" -- Italy11. On 14 July 2004, the
Commission decided that aid of ca. EUR 995 per beneficiary (overall amount
EUR 1 327 per year and a total of EUR 3,98 million) is `de minimis' and therefore
not covered by Article 87(1) EC. The aid is granted through a 12-month suspension of social security payments for farmers who have been supplying Parmalat without having been paid for the delivered milk. The Commission also concludes that a subsidiary guarantee for credits offered to these farmers through a special bank guarantee fund, does not contain state aid because the guarantee is offered in line with market principles.
· "Aid to producer organisations" -- Spain12. On 7 May 2004 the Commission
adopted a final decision considering that a State aid which Spain intended to grant to olive oil producer organisations in Extremadura is not State aid in the meaning of Article 87(1) of the Treaty. The aid is granted to finance the costs of applying for the Community support for olive oil producers and amounts to ca. EUR
application. The decision considers that the producers' organisations, beneficiaries of the aid carry on their activity for the benefit of olive oil producers. The aid therefore allows members' contributions to the organisation receiving aid to be reduced or even eliminated. For this reason the real beneficiaries of the aid are the producers who benefit from lower annual contributions. As the total budget for the scheme aid is EUR
120 200 per year and the number of producers who benefit
from the scheme is said to be 11 500, the amount of aid per beneficiary and year is EUR
· For farmers (and only for farmers), some special rules are maintained. They are
first of all simplified by allowing Member States in all cases (and not only if restructuring is limited to small agricultural enterprises) to implement capacity reductions at sector level instead of the level of the farm receiving restructuring aid.
· It is clarified that capacity closures have to be permanent (and not only for five
years). Open farmland may be brought back into production after 15 years.
· Minimum capacity closure requirements are simplified.
· Where capacity closure is done at sector level, this must be achieved within a year
of granting the aid. To ensure that closure is not circumvented, the Member State must undertake not to grant investment aid for increasing capacities for five years.
· The "de minimis" threshold below which no capacity closure is required is
simplified and reformulated. As long as restructuring aid is not granted for more than 1
% of the production capacity of a given sector over any consecutive
12-month period, no capacity closures will be required.
103.Notifications of rescue and restructuring aid registered prior to 10 October 2004 will be examined in the light of the criteria in force at the time of the notification. However, compatibility of aid granted without Commission authorisation will be examined on the basis of the new guidelines if some or all of the aid is granted after their publication in the OJ, i.e. 1 October 2004.
184.108.40.206. Block Exemption Regulation
104.The new Commission Regulation (EC) No 1/2004 granting exemption for certain types of State aid accorded to small and medium-sized agricultural enterprises
entered into force on 24 January 2004. Member States will no longer be required to notify these aids to the Commission in advance to obtain approval.
105.Under Articles 3 and 19 of the Regulation, for individual aid or an aid scheme to be exempted, Member States must, `.At the latest ten working days before the entry into force of an aid scheme, or the granting of individual aid outside any scheme, exempted by this Regulation, [......], forward to the Commission, with a view to its publication in the Official Journal of the European Union, a summary of the information regarding such aid scheme or individual aid in the form laid down in Annex I.'
220.127.116.11. Procedures -- New Notification forms
107.The new Commission Regulation (EC) No 794/2004 of 21 April 200415 with details
for state aid notification procedures entered into force the 21 May 2004. This Regulation applies to all sectors including agriculture. This Regulation has notably make compulsory from the 21 of October 2004 on, the use of new and detailed notification forms for each type of state aid.
108.With the view of facilitating the use by Member States of the notification forms and their transmission to the Commission, the notification forms relating to the agricultural
sector are published at the following address:
109.The Regulation also introduces a new, simplified format for the annual state aid reports to be submitted in the field of agriculture. The format is also available at the above mentioned address.
18.104.22.168. Developments in the application of existing guidelines.
Promotion and advertising of quality products
110.In 2004, the Commission has decided several cases of state aid related to the promotion and advertising of agricultural products. The assessment of those measures and the taking of decisions had enabled the Commission,
· to clarify and develop the application of the Guidelines on the advertising of
agricultural products to quality labels and the establishment of criteria for the qualification of what can be considered as "quality product" by referring to the conditions of Article 24b(3) of Regulation (EC) No 1257/1999 as amended by Regulation (EC) No 1783/2003
· to set up the limits for the granting of state aid for so-called "joint promotions",
e.g. the limits for a direct linkage between a marketing organisation and individual companies (within the meaning of point 29 of the advertising guidelines, advertising activities which are jointly financed through public funds and one or more particular firm or firms must be considered to be incompatible with the rules due to the fact that the target group e.g. the consumer possibly can not distinguish whether an advertising measure for one or more particular firms is part of a publicly supported campaign or not)
2.6.2. Overall workload
111.The Commission received 252 notifications of state aid draft measures to be granted in the agricultural and agro-industrial sector. The Commission also started the examination of 13 aid measures, which had not been notified before under Article 88(3) of the EC Treaty. No review of existing aid measures pursuant to Article 88(1) of the EC Treaty was commenced or concluded. Overall the Commission raised no objections to 212 measures. Several of these measures were approved after the Member States concerned either amended them or undertook to amend them in order to bring them in line with Community state aids rules. The Commission started the procedure envisaged by Article 88(2) of the EC Treaty in respect of eight cases, where the measures concerned raised serious doubts of incompatibility with the common market. The Commission closed the procedure envisaged by Article 88(2) of the EC Treaty in respect of 14 cases, by taking in 10 of them a final negative decision, some of them with recovery.
2.6.3. Overview of cases
112.The overview of cases which follows includes a selection of some of the cases which raise the most interesting issues of State aids policy in the agricultural and agro- industrial sector in 2004.
113.On 19 February 2004, the Commission adopted a final positive decision20 declaring
compatible with the Treaty an aid for investments for environmental protection granted in France before 2000. A procedure had been opened because France had granted up to 60
% investment aid at a time when it was only possible to grant 35 %.
The rate of 35 % had also been authorised in a decision which France had not
respected by granting more aid. However, from 2000 on, the Commission increased the maximum aid rate allowed. This higher aid rate has been confirmed in Article 4 of the exemption Regulation (EC) No 1/2004. This Regulation applies retroactively to aid granted before its entry into force. On this legal basis, the aid was declared compatible.
per ton of waste than they get back in terms of benefits through free picking up of the waste so they do not derive any financial advantage.
Compensation for drought 2003
115.On 20 October 2004, the Commission decided not to raise objections regarding a State aid of ca. EUR
664 million in favour of farmers hit by the drought in 200322.
Compensation was paid through a combination of cash grants (EUR 339 million),
subsidised "catastrophe" loans (EUR 20 million), taking over of interest on
outstanding loans (EUR 20 million), consolidation loans (EUR 20 million to support
loans of EUR 225 million), postponement of payments due of direct taxes and VAT
(without charging additional interest due to the delay), cancellation of these taxes, non-payment of land tax, and postponement of social security contributions. The subsidy element contained in the taking over of interest on outstanding loans was considered de minimis. The aid intensity was up to 100
% of damages and the
duration varied depending on the type of aid.
116.On 14 December 2004, the Commission adopted a mixed positive and negative final decision with recovery on the so-called French "taxe d'équarrissage"
23.From 1997 to
2003, France levied a sales tax imposed on sales of both French meat and meat from other Member States ("taxe d'équarrissage"). The tax financed free removal of slaughterhouse waste and fallen stock. The tax first went into a special fund reserved for financing this aid. Following a Commission infringement procedure considering the tax on meat from other Member States discriminatory, France moved the tax proceeds into the general budget, and financed the aid from the general budget for the years 2001 and 2002.
117.The aid measures financed between 1997 and 2002 and amounting to a total of EUR
829 million, are in principle compatible with state aid rules. However, because
of the discriminatory financing from 1997 2000, aid of ca. EUR 400 million would
have to be found to be incompatible. But, as the reimbursement of the aid by farmers would not necessarily repair the discrimination against meat from other Member States caused by the tax levied at supermarket level. Therefore, under condition that France reimburses the tax levied on meat from other Member States, it is decided to declare the aid compatible. France has submitted an undertaking in this respect.
Article 141 of the Treaty of Accession
119.On 16 March 2004, the Commission decided to authorise the special support package notified by Finland under Article 141 of the Treaty of Accession
25.The decision is
the formal outcome of lengthy discussions and negotiations at the highest level, through the year 2003. The decision authorises Finland to grant between 2004 and 2007 special income support to farmers in Southern Finland, to the tune of ca. EUR
420 million, plus additional income aid in the form of incentive top-ups to
existing agri-environmental programmes in Southern Finland to the tune of EUR
225 million for the same period. The condition for granting the income aid is the
implementation of aid measures to promote investments, setting up of young farmers and business counselling to farmers.
Aid for machinery rings
120.On 19 May 2004 and on14 December 2004, the Commission has decided to terminate the formal investigation into the support granted for machinery rings in Bavaria, by means of two final decisions: a conditional decision
27 and a partially negative
decision with recovery.
121.Both decisions clarifies the Commission policy on state aid granted in connection with machinery rings, which are self-help organisations of farmers whose "core activities" include the management of farm relief and machinery sharing between farmers. Complaints received by the Commission pointed to a possible cross- subsidisation of other commercial ("non-core") activities of the rings. The Commission recognises, in principle, the positive role played by machinery rings in the agricultural sector, as they allow farmers to improve their efficiency by sharing costly machinery.
effectively preclude the granting of pure operating aid to the machinery rings themselves, or the cross-subsidisation of other commercial activities carried out by the machinery rings. Therefore, the Commission has concluded that any aid for which no evidence can be produced that it benefited only farmers is incompatible and should
Bad weather compensation program -- RAGBY
124.On 20 April 2004, the Commission has adopted a decision28 not to raise objections to
state aid of ca. EUR 60 million to compensate farmers and fishermen for losses
caused by catastrophes (landslides, floods), bad weather (frost, rain, storm, drought) and diseases between March 2002 and March 2003. Aid intensity: 50 80
% of losses,
or lump sum payments per 1 000 m˛ for certain cultures. The duration of the measure is of five years (aid will be paid in various steps).
Avian flu measures
125.On 8 September 2004, the Commission has adopted a decision not to raise objections to State aid of ca. EUR
11,3 million towards the cost of combating avian flu29. The
measure is a modification of the measure approved as N 700/2000. The announced aid intensity is up to 100
% and the duration of the measure to 1 January 2010.
Foot and mouth disease measures
126.On 8 September 2004, the Commission has adopted a decision not to raise objections to State aid of ca. EUR
2,7 million towards the cost of combating foot-and-mouth
disease30. The measure is a modification of the measure approved as N 700/2000. The
aid intensity is up to 100 % and the duration of the measure to 1 January 2010.
128.On 16 March 2004, the Commission adopted a final negative decision concerning state aid of ca. EUR
2,6 million to compensate processing companies for alleged
losses due to the blue tongue disease32. Aid to compensate farmers for their losses had
been authorised in parallel with the decision to open the procedure for the processing sector. The aid has been found incompatible because:
· our guidelines only foresee the possibility to compensate primary producers; losses
in turnover are part of normal business risk, and may be caused by various factors;
· the link between the losses and blue tongue has not been shown;
· there was a drought in Sardegna at the same time, that may also have led to
reductions in turnover;
· certain cooperatives may have had less raw material delivered (and hence suffered
losses) for other reasons than blue tongue.
129.Since the aid has not been paid out, no recovery is necessary.
AIMA -- poultry sector
130.On 19 May 2004, the Commission adopted a final negative decision to declare state aid of ca. EUR
10,3 million incompatible with the Treaty33. The aid is supposed to
compensate poultry producers in Italy for alleged losses due the dioxin scare in Belgium in 1999. Aid intensity: between EUR
7,95 and EUR 10,92 per 100 kg of
131.Italy claimed that the dioxin scare in Belgium caused a media scare in Italy, with a resulting drop in the consumption of poultry meat in Italy. Consequently, Italy proposed to compensate its own poultry producers. It argued that the dioxin scandal should not only be considered an "extraordinary event" in Belgium, but also in Italy.
132.Under state aid rules, the only way to authorise such a state aid would be to consider the effects of the dioxin scare an "extraordinary event". However, in its opening decision, the Commission had expressed serious doubts that one could follow this logic for the Italian market. The information received after the opening has not dispelled the doubts. Therefore, a final negative decision has been adopted. Since the aid has not been paid out, no recovery order was necessary.
under the present scheme is EUR 500 000 for individual companies and
EUR 5 million for co-operatives.
Regional intervention for the development of Confidi in the agricultural sector
134.On 10 May 2004, the Commission approved an aid35 of EUR 1 032 913,80 for
guarantees and EUR 516 456,90 for technical assistance in favour of Confidi, which
are co-operatives made up of undertakings of the agricultural sector and of associations thereof, managing guarantee funds.
135.Aid is granted, for a duration of five years, in view of:
· providing subsidiary guarantees to farmers or cooperatives, provided that the
guarantees are linked to operations financed by a regional/national aid scheme approved by the Commission and that the cumulating aid does not exceed the thresholds set in the Commission Decisions approving the aids;
· providing consultancy services to all the farmers operating in the region.
136.The cash grant equivalent of the aid for subsidiary guarantees is calculated as for subsidised loans, as the difference between market loan rates and the actual loan stipulated with the bank, following the existence of the guarantee, deduced the amount paid by the beneficiary.
Aids for the BSE crisis -- Law 49/2001. Articles other than Article 7a
137.On 1 December 2004, the European Commission has retroactively authorised36 Italy
to grant state aid of ca. EUR 169 million for the costs of compulsory destruction of
specific risk materials and the storage of low risk material as well as income aid for beef producers sector to counter the effects of the 2001 BSE crisis. The measures approved are part of Italian law n. 49/2001, partially approved by the Commission at the time when the 2001 BSE crisis occurred.
138.The income aid in favour of beef producers, granted via suspension and prolongation of tax deadlines and social security obligations is authorised under Article 87(2)(b) of the Treaty, the income aid to the downstream sector (slaughtering undertakings, wholesale and retail traders of meat) covered by the decision amounts to around EUR
· in this case of aid paid without Commission authorisation, the Court has
considered that recovery taken place seven years after payment, including interests, is legal and does not run foul of legitimate expectations (point 102);
· the Court confirms that even in case of notification, if the Commission does not
react within two months, granting of the aid by the Member State without informing the Commission about the payment ("Lorenz"-information) makes the aid non-notified (point 32/33).
22.214.171.124. C-159/01 Netherlands / Commission "MINAS"
141.In its ruling of 29 April 2004, the Court has fully upheld the final negative decision concerning aid granted to glasshouses and certain other horticultural producers via an exemption from a "nitrates tax" (MINAS). The Court notably holds:
· it is for the Member State to show that a tax differentiation for certain companies
is justified by the nature and general scheme of the system (point 43);
· the argument that the MINAS system is not intended to generate a tax revenue
does not suffice to exclude the exemption at issue outright from the classification as aid. It is not disputed that the exemption leads to a loss of resources which ought to be paid into the state budget.
126.96.36.199. C-110/02 Commission / Council
142.In its ruling of 29 June 2004, the ECJ's clarifies and strengthens the Commission's powers in the field of state aid control.
143.Background: On 25 November 1999 and 4 October 2000, the Commission had taken two final negative decisions concerning state aid Portugal had illegally granted to pig farmers to compensate them for low prices. The decisions obliged Portugal to recover the aid from the farmers. Portugal did not attack the decisions before the Court of Justice. Instead, much later, it asked the Council to authorise a new state aid corresponding to the amount of aid that would have to be recovered under the Commission decisions so that the farmers would not have to repay. The 21 January 2002, the Council used its special powers under Article 88(2) of the EC Treaty to unanimously authorise state aid in exceptional circumstances. The Commission attacked the decision saying it was a circumvention of the Commission decision, an abuse of power by the Council and that it would create legal uncertainty if the Council could at any time repeal a Commission decision that had entered into force.
the present case, the Council had taken its decision long after the Commission had taken a final decision;
· the Court also confirms that the Council may not adopt a decision to authorise new
state aid that "compensates" companies for the recovery of an aid that the Commission has declared incompatible in a final decision. The Council cannot block or annul the full effect of a Commission final negative decision ordering recovery. This is precisely what the Council had done in the present case;
· to ensure legal certainty, it is essential that contradictory decisions of the
Commission and the Council concerning the same aid are avoided.
188.8.131.52. C-345/02 Pearle BV
145.In its ruling of 15 July 2004, the Court of Justice has held that bye-laws adopted by a trade association governed by public law for the purpose of funding an advertising campaign organised for the benefit of its members and decided on by them, through resources levied from those members and compulsorily earmarked for the funding of that campaign, do not constitute an integral part of an aid falling under the notion of state aid of Article 87(1) EC. That funding was carried out by means of resources which that trade association, governed by public law, never had the power to dispose
184.108.40.206. C-173/02 Spain vs. Commission
146.In this ruling of 14 October 2004, the Court fully upheld a final negative decision with recovery concerning state aid paid by a Spanish region towards the costs of purchasing milk quota. The Commission considered such aid incompatible aid because the way it was done was not covered by the common market organisation (CMO) in the milk sector. The Court notably held that under the milk CMO, only state aid "expressly authorised" by this CMO is lawful.
147.The Court held that once the Community has established a common market organisation in a particular sector, it is for the Community to seek solutions to problems arising in the context of the common agricultural policy. Member States must therefore refrain from taking any unilateral measure in that area, even if that measure is likely to support the common policy of the Community. In the context of the common organisation of the market for milk products, only State aid expressly authorised by Regulation (EEC) No 3950/92, in particular Articles 5 and 8, is lawful
undertakings in the same Member State, not with undertakings of other Member States (see, to this effect, the ruling of 2 July 1974, Italy v. Commission, 173/73, ECR p. 709, points 36 to 39);
· impact on trade between Member States depends on the existence of actual
competition between undertakings established in the Member States in the sector concerned. There can be no doubt that the agriculture sector in the European Union is very competitive;
· Article 87(2)(b) of the EC Treaty must be interpreted restrictively. Only
disadvantages directly caused by natural disasters or other extraordinary occurrences may be compensated for under this provision. Therefore, there must be a direct link between the damage caused by the extraordinary occurrence and the State aid, and damages suffered by the producers concerned should be estimated as precisely as possible;
· the contested measures, that is, the tax rebate on sales of agricultural land and the
subsidized loans and guarantees, are implemented on the basis of land sold or loans taken out, regardless of the extent of damages suffered. Such measures do not therefore aim to compensate directly the losses suffered;
· the figures provided by Spain concerning fuel consumption by agricultural
undertakings are only averages and only concern two types of crops. According to the Court, Spain has not submitted comparative figures showing, on one hand, the amount of aid resulting from the tax rebate and, on the other, the losses suffered.
2.7. Assistance to the needy
150.The European Union has continued to implement its aid programme for the needy38.
This action consists of distributing agricultural products (processed or otherwise) from intervention stocks in the Union to associations working with deprived people on the ground in the Member States.
Free distribution of agricultural products
Member Appropriations Quantities (tonnes)
States allocated (EUR) cereals rice milk
(paddy rice) butter
powder beef / veal
Belgium 3 439 000 7 000 2 000 600
Denmark 168 000 53
Greece 12 030 000 26 000 16 630 1 879
Spain 74 125 000 70 000 27 975 7 230
France 52 503 000 83 386 29 077 500 15 200
Ireland 207 000 60
Italy 92 065 000 90 000 19 625 13 448
Luxembourg 42 00039
Poland 23 935 000 12 000 25 500 4 257
Portugal 15 297 000 15 000 16 500 2 476
Finland 2 933 000 15 500 595
Total EU40 213 744 000 318 833 137 307 28 571 17 674 53
2.8. The Outermost Regions
2.8.1. Amendment of the Council Regulations (agricultural -- POSEI)
152.The Commission adopted on 28 October 2004 a proposal for a Council Regulation for reforming the support schemes for agriculture in the EU's outermost regions as referred to in Article 299(2) of the EC Treaty.
153.These measures, first introduced in 1991 and 1992, have proved effective in promoting agriculture in and securing supplies to these regions
41 but the
administration of these arrangements leaves something to be desired: the management of the two strands of the POSEI schemes, i.e. the specific supply arrangements and support for local lines of production in the outermost regions, has proved somewhat inflexible. Adapting the supply balances to take account of even small fluctuations in demand requires the Commission to adopt legislation and the arrangements for supporting local lines of production require to be adjusted through an interinstitutional legislative procedure.
agricultural products which are essential in the outermost regions for human consumption, as agricultural inputs or for processing, and another section on support for local production.
155.The Regulation does not affect the sources of financing or the intensity of Community support. The Community will finance the programme under the EAGGF Guarantee Section at 100
% up to an annual ceiling established in the Council
Regulation. Part of this aid will have to be reserved for local agricultural production. The amounts have been calculated on the basis of the average expenditure on financing the specific supply arrangements during the reference period 2001 03 and on the basis of expenditure ceilings applicable to support for local production.
156.Part of the aforementioned amounts fall within the scope of Regulation (EC)
42 and are encompassed by the ceilings provided for in Annex VIII to
said Regulation. In order to comply with the obligation set forth in the second subparagraph of Article 70(2) of the aforementioned Regulation, the Commission will adapt accordingly the national ceilings set in said Annex VIII.
157.The exemptions from the general ("horizontal") agricultural provisions contained in the POSEI 2001 Regulations have been incorporated into this Regulation.
2.8.2. The CAP Reform
158.On 1 December 2004 the Commission obtained the favourable opinion of the Management Committee for direct payment on a draft regulation establishing detailed rules for the application of the aid programmes for the traditional activities connected with beef and veal as well as sheep and goat production and measures to improve product quality in the French overseas departments, in the Azores and Madeira and in the Canary Islands, within the limits of the consumption needs of these regions other than the Azores. These programmes are provided for by Article 9(1) of Regulation (EC) No 1452/2001, Articles 13(1) and 22(2) of Regulation (EC) No 1453/2001 and Article 5(1) of Regulation (EC) No 1454/2001.
159.The detailed rules refer in particular to the establishment, the content and the transmission of the programmes, the Community financing for the year 2005, the indicator of the development of the local production, the controls and payments as well as the annual report on the implementation of the programmes.
submission of the reports concerning the various support measures that Member States are required to submit to the Commission.
2.8.4. Specific supply arrangement (SSA)
162.On 11 December 2003 the Commission adopted Regulation (EC) No 14/2004 establishing the supply balances and Community aid for the supply of certain essential products for human consumption, for processing and as agricultural inputs and for the supply of live animals and eggs to the outermost regions under Council Regulations (EC) No 1452/2001, (EC) No 1453/2001 and (EC) No 1454/2001.
2.8.5. RUP aspects of the reforms -- sugar and bananas OCM
163.In July 2004, the Commission submitted to the Council and to the European Parliament its second communication on the reform of the sugar policy of the European Union, entitled "Accomplishing a sustainable agricultural model for Europe through the reformed CAP -- Sugar sector reform". The communication sets forth in particular a considerable drop in the price of sugar compensated by a direct aid to beet or cane producers. However, with regard to direct income support for farmers to compensate for price decreases, the Outermost regions will benefit from a special treatment by excluding direct payment from the single farm payment scheme, as is already the case in other reformed sector.
164.An in-depth evaluation of the common organisation of the market (CMO) in bananas and its implementation as of 1993 is currently under way and is to be completed in spring 2005. On the basis of this evaluation and the negotiations of Article XXVIII of the GATT, a proposal of modification of the CMO could be presented to the European Parliament and the Council in the second semester of 2005.
165.Awaiting the results of the evaluation the Commission services have prepared a factual report to be presented to the European Parliament and the Council. This report provides an overview of the CMO as of 1999. It analyses the economic trends in the sector as well as the common market organisation in its current shape.
· Commission Regulation (EC) No 1232/2004 of 2 July 2004 amending Regulation
(EC) No 14/2004 as regards Community aid for the supply of dairy products to Madeira and the Canary Islands Official Journal L 234, 3.7.2004, p. 5-6;
· Commission Regulation (EC) No 1137/2004 of 21 June 2004 amending
Regulation (EC) No 43/2003 laying down detailed rules for applying Council Regulations (EC) No 1452/2001, (EC) No 1453/2001 and (EC) No 1454/2001 as regards aid for the local production of crop products in the outermost regions of the European Union
Official Journal L 221, 22.6.2004, p. 3-5;
· Commission Regulation (EC) No 489/2004 of 16 March 2004 amending
Regulation (EC) No 20/2002 laying down detailed rules for implementing the specific supply arrangements for the outermost regions introduced by Council Regulations (EC) No 1452/2001, (EC) No 1453/2001 and (EC) No 1454/2001 Official Journal L 79, 17.3.2004, p. 18-22;
· Commission Regulation (EC) No 14/2004 of 30 December 2003 establishing the
supply balances and Community aid for the supply of certain essential products for human consumption, for processing and as agricultural inputs and for the supply of live animals and eggs to the outermost regions under Council Regulations (EC)
No 1452/2001, (EC) No 1453/2001 and (EC) No 1454/2001
Official Journal L 3, 7.1.2004, p. 6-27.
2.9. Information measures concerning the CAP
166.Council Regulation (EC) No 814/200043 provides for information measures relating
to the common agricultural policy, intended for both Member States and the outside world. Commission Regulation (EC) No 2208/2002
44 (which replaced Commission
Regulation (EC) No 1557/200145 and was modified by Commission Regulation (EC)
No 1820/200446 lays down detailed rules for applying Regulation (EC) No 814/2000
and introduces significant improvements to the scheme: simplification, transparency, better evaluation of the information actions proposed, better definition of the messages to communicate and means of distribution.
169.In the budgetary year 2004, a total of 31 specific measures were co-financed, 12 of which were part of 4 annual programmes. Co-financed measures included seminars, conferences, printed publications and audiovisual media productions, and the main topics included CAP reform, Rural Development, enlargement, consumer protection and sustainable production. A high proportion of the financed measures were organised by beneficiaries from Belgium and Spain. This reflects the fact that the European organisations whose projects were co-financed are mainly located in Brussels, and that a big proportion of the applications received were from Spain, but also Italy and France, while again there were very few demands from the Scandinavian countries.
170.Individual organisations which in the budgetary year 2004 were successful in obtaining co-financing of their information programmes included NGOs on a European scale such as COPA, CEA, WWF or Euromontana, but also national and regional organisations, representing the farming sector, or active in consumer protection, Rural Development, or environment protection. In addition, beneficiaries included some regional authorities and academic bodies, as well as media.
2.9.2. Conferences, events and fairs
171.During 2004 the Commission organised events covering a range of themes. In January there was a hearing on organic farming and in March there was an enlargement conference held in Sofia, Bulgaria. During the summer a meeting was held with the Communication directors of all Member States to consider communication strategy. In the autumn there was a press briefing on the proposals for regulations on rural development and in October a Leader+ European seminar was held on exchanging experiences and cooperation on the quality of life in rural areas.
172.The Commission was represented at various agricultural fairs, as for example in the Grüne Woche in Berlin, Salon de l'Agriculture in Paris, Fieragricola in Verona, Libramont agricultural fair in Belgium and Gornja Radgona in Slovenia.
175.Various missions were carried out during 2004, following requests from regional and/or specialised organisations (cooperatives, farmers, various intermediary bodies)
in order to explain the new regulations of the CAP, the consequences of the enlargement or the evolution of the WTO negotiations. In most cases, roundtables followed with national heads of the organisations, euroMP's, journalists and the public itself. Most areas, productions and countries are concerned by theses actions, sometimes prepared or followed by visits to Brussels in order to complete discussion and information.
2.10. Information and communication technology (ICT)
176.The use of up-to-date information and communication technologies (ICT) in DG Agriculture aims support the DG's administrative and operational needs and to improve and reinforce the exchange and processing of data and information in order to enhance CAP management and facilitate the sharing of information between the National and European Administrations, in line with the eEurope and eCommission
177.In this context in 2004 investments to maintain and further develop DG Agriculture's information systems and services have been made. Developments were driven by two major events: The Enlargement and the introduction of Accrual Accounting. Two important factors of ICT Security and governance were also to the fore.
2.10.1. The Enlargement
178.The integration of the 10 new Member State administrations into the processes of DG AGRI managed by Information Systems was well prepared and thus no significant disruption of the ICT services/systems was registered. Requests for adaptations of the reporting are still being received and they are treated as part of the normal maintenance of the Information Systems concerned.
our major information systems, (ii) the elaboration of an Information Security Policy document and (iii) first steps are taken towards the elaboration of an appropriate Secure Exchange and Storage of Agricultural Data (SESAD) framework for DG AGRI.
2.10.4. ICT Governance in DG AGRI
181.For several years now DG AGRI has clear procedures for the provision of important ICT services, user support and for managing the ICT functions and operations. In 2004 we added specific procedures in particular for managing the changes requested by users for the most important Information Systems. Work has also been carried out to align to COBIT standards and internal controls such as the Commission's 24 Internal Control Standards (this work continues in 2005).
2.11. Advisory committees and relations with bodies representing trade
2.11.1. Institutional Relations
182.DG AGRI Services participated actively in Committee discussions on agricultural issues in Council, European Parliament, the European Economic and Social Committee and the Committee of the Regions. Much of these discussions related to the reform of the tobacco, olive oil, cotton, hops and sugar sectors and Rural Development.
183.DG AGRI was represented in the European Parliament at all meetings of the Committee on Agriculture and Rural Development and at particular meeting of other Committees such as Budget, Budget Control, Environment, Public Health and Food Safety Petitions and International Trade together with attending all 15 Plenary Sessions of the Parliament.
184.DG AGRI services also participated in numerous meetings of NAT (EESC) and DEVE (COR) Committees on agriculture and Rural Development issues.
187.Comprehensive stakeholder consultation was ensured through 85 different meetings involving the participation of 2
500 representatives of socio-economic organisations,
additionally three special seminars on the reform of the tobacco, olive oil and cotton regimes were held involving stakeholders and regional political representatives and also a special discussion with development of NGO's in relation to CAP reform and the WTO negotiations.
3.1. Market developments -- Crop products
220.127.116.11. World market
188.World cereal production (excluding rice) in the 2003/04 marketing year rose against the previous year. The European Union and central and eastern Europe substantially reduced production, in contrast to the substantial production increases in North and South America and Australia. According to International Grains Council figures at the end of January 2005, the 2003/04 world harvest was 1 468 million tonnes against 1 449 million tonnes for the previous marketing year.
189.World wheat production fell from 566 million tonnes in 2002/03 to 554 million tonnes in 2003/04. The European Union (25 Member States) harvested 106.2 million tonnes of common and durum wheat (121.8 million tonnes in 2002/03). Wheat production in the CIS countries fell from the record level of 96.2 million tonnes in 2002/03 to 61.5 million tonnes in 2003/04. Production in Australia, which is a key traditional exporter of wheat, increased spectacularly from 10.1 million tonnes in 2002/03 to 24.9 million tonnes in 2003/04. The 2003 crop in the United States was 63.8 million tonnes against 43.7 million in 2002. In Canada production increased from 16.2 to 23.6 million tonnes as a result of higher yields.
tonnes on 1 July 2003): 3.3 million tonnes of rye, 0.1 million tonnes of barley and 0.2 million tonnes of wheat.
193.The total volume of world trade in cereals in 2003/04 was 207 million tonnes (102 million tonnes of wheat and 105 million tonnes of coarse grains) against 212 million tonnes the previous year. Trade was affected by the significant increase in maritime freight rates at the end of 2003.
194.World cereal production in 2004 has been estimated at 1 615 million tonnes, up by 147 million tonnes compared to the 1 468 million tonnes harvest obtained in 2003. Wheat production increased sharply, from 554 million tonnes to 618 million tonnes, thanks to large harvests in all the producer regions (particularly the EU); feed grain production increased from 914 to 997 million tonnes, thanks in particular to the continuing strength of United States maize production. World cereal consumption increased and is expected to reach 1 574 million tonnes. At the end of 2004/05 world stocks are increasing for the first time in 5 years, the estimate being 303 million tonnes (41 million tonnes more than in 2003/04). For world cereal trade a fall in volume can be expected (204 million tonnes, of which 102 million tonnes of wheat), due to lower demand and increased maritime freights.
18.104.22.168. Community market
195.Following decisions in the context of the Agenda 2000 reform package, the intervention price for the 2003/04 marketing year was fixed at EUR 101.31 per tonne (unchanged for the past 3 years). The level of aid for cereals also remained unchanged at EUR 63 per tonne of yield. In response to the decrease in the EU harvest caused by drought in the summer of 2003 and the sharp fall in world stocks, the set-aside rate was temporarily fixed at 5
% (against 10 % in 2002/03).
196.Community cereal production in 2003/04 was 230 million tonnes for the 25 Member States, 33 million tonnes less than the 2002/03 figure of 263 million tonnes. For the first time in several years, Community cereal production was less than consumption. The shortfall in common wheat and maize was particularly marked.
201.Increased cereal use was offset by the rise in cereal prices. Also, the dollar's fall lessened the effect of high prices in the oilseed/protein sector. Despite the high prices, use of cereals in animal feed fell by only 1 million tonnes (from 153 to 152 million tonnes).
202.Community exports in 2003/04 (including processed products) were only 19.5 million tonnes against 29.5 million tonnes the previous year. Commercial exports amounted to 9.4 million tonnes of common wheat (including flour), 6.2 million tonnes of barley (including malt), 2.0 million tonnes of maize and 0.5 million tonnes of rye and rye flour. The fall was due, in particular, to measures restricting cereal exports including the termination of export tendering for common wheat, barley and rye.
203.Durum wheat exports in the form of grain and meal fell to 0.9 million tonnes against 2.1 million tonnes the previous year. Oat exports also fell by 0.9 million tonnes to 0.5 million tonnes.
204.Oilseeds are used for producing oil, mainly intended for human consumption, and oil cakes, intended for animal feed. The economic situation of oilseeds sector depends on the trend of the seeds, oil and oil cakes prices. Vegetable oil can be consumed without modification or in the form of oil or artificial fats, like margarine.
205.The European Union is a net importer of oilseeds, vegetable oil and oil cakes. The annual imports of these products depend largely, on one hand, on the ratio between the prices for oilseeds, oil cakes and oil as well as the prices of other competing products intended for animal feed (such as cereals, foodstuffs containing maize gluten, etc.) and, on the other hand, on the marketing outlets that make it possible to export oil and oil cakes from the European Union. Total imports of oilseeds reached 17 millions tonnes in 2003/04 and 18 million tonnes in 2002/03, of which the main part was soya beans (90
3.1.3. Peas, field beans and sweet lupins
209.These products, which principal outlet is the animal feed industry, are in competition with a broad range of other raw materials.
210.The surfaces which benefited from compensatory aid in 2003/2004 were about 1.4 million hectares. Total production amounted to approximately 4.5 million tonnes.
211.Farming of flax in the European Union includes fibre flax (cultivated especially for fibre but also bearing seeds) and linseed (cultivated only for obtaining seeds). Seeds are used directly or are crushed to obtain oil (with industrial destination) and oil cake intended for animal feed.
212.The European Union imports large quantities of linseeds (526 000 tonnes in 2004 against 584 000 tonnes in 2003); Canada is the largest supplier (85
213.The EU linseed area settled at a very low level in recent years: 100 000 ha. The European production in 2004 is estimated to reach 125 000 tonnes.
3.1.5. Grain legumes (chick peas, lentils and vetches)
214.A specific measure for grain legumes was established in 1989. It comprises an aid per hectare, within a maximum guaranteed area (MGA), apart from the arable crops' system. With Regulation (EC) No 811/2000, this MGA was subdivided between chick peas and lentils, which are used for the human consumption, and vetches, which are used for animal feed.
215.Aid per hectare is fixed at EUR 181, the MGA amounts to 160 000 hectares for chick peas and lentils and to 240 000 hectares for vetches. When one of these MGAs is not reached, the balance is transferred to the different MGA before establishing the possible overrun. The overrun of the MGA leads to a proportional reduction of aid during the campaign in question.
219.The area put into obligatory set-aside in 2003/04 was about 4 mio ha, applying a set- aside rate of 10
%. In addition, 2.3 mio ha were put into set-aside under the voluntary
regime. In particular, about 900 000 ha of set-aside land was used for non-food oilseeds, mainly for biodiesel production. Total production of non-food crops cultivated in set-aside surfaces amounted to 2.3 million tonnes.
220.For the marketing year 2004/05 a reduction to around 2 mio ha (50 %) is expected due
to a temporary reduction in the mandatory set-aside rate to 5 %, as well as a similar
reduction in the set-aside surface intended for non-food crops, which would reach around 500 000 ha according to first estimations.
221.Under the CAP reform, a new aid of EUR 45 per hectare is granted for areas sown to energy crops. The support is limited to a maximum guaranteed area (MGA) of 1.5 mio ha. This regime has been applied during 2004 for the first time. According first estimations, which are made on the basis of Member States' communications, area under this scheme will reach about 303 000 ha, which represents 20
% of MGA
and around 35 % of traditional non-food set-aside oilseeds surface. It is expected that
production of energy crops under the new regime reaches about 1.1 mio tonnes.
222.During the marketing year 2003/2004, 2 700 000 tons of paddy rice have been harvested, which is above the average. But, as this rice was of poor milling yield --
% on average -- the production to sale was only 1 500 000 tons milled rice.
223.Hungary joined the Community on 1 May 2004, increasing the European rice area by 3 000 ha, which represents less than 1
% of the total area (400 000 ha).
224.Intervention buying was initially capped at 100 000 t, but this ceiling was increased by the Commission to 145 000 t during the buying-in period, according to the provisions of the rice reform (Regulation (EC) No 1785/2003). For the following marketing years, the ceiling is fixed at 75 000 t. Intervention stocks amounted to some 600 000 t on 1 September 2004.
(EC) No 1868/94 establishing a quota system in relation to the production of potato starch
48, the Commission presented a report on the allocation of quota within the
Community, accompanied by appropriate proposals49, in view to extend the current
quotas for the two marketing years 2005/2006 and 2006/2007, with the expectation of measuring effects of the CAP reform and the EU enlargement
In the framework of the 2003 CAP reform, the Council decided to introduce de- coupling in the potato starch sector from 2005/2006, while a part will be maintained coupled to the production. The present direct payment (EUR 110.54 / tonne of starch)
to producers of starch potatoes will be split in two parts within Council Regulation (EC) No 1782/2003
40 % will be integrated into the single farm payment, on the basis of the
historical deliveries to the industry
-the remainder (60 %) will be maintained as crop specific payment for starch
Market management instruments using refunds were practically limited in 2003/04 to export refunds on products based on maize and potato starch (in receipt of the same amount as maize starch). No export refunds were needed for wheat starch. Almost no production refunds were used in 2003/04.
22.214.171.124. World market
228.Following the huge surplus production in 2002/03 global sugar output has significantly decreased in 2003/04, although, after all, it was once again a "surplus" year (i.e. production exceeded consumption). According to the figures of F.O. Licht, ending stocks stood at 65.9 million tonnes at the end of August 2003, nearly two million tonnes lower than a year before. Subsequently the stock/consumption has been also reduced to 46.1
Marketing year Stock / consumption
*in million tonnes, raw value; Source: F. O. Licht (27.7.2004).
229.Looking merely at the production figures one could conclude that at last producers have responded appropriately to depressed world market prices and constant global overproduction. However that is not the case. The massive drop in production is first of all due to sharp decrease of output in India and also in Europe as a consequence of adverse weather conditions. Initially analysts have forecast 2003/04 production at around 146 million tonnes, however, revising it downwards as severe drought persisted in India but also in Central and Southern Europe. Although Brazilian sugar production has reached once again a record, it could only partially compensate the reduced output elsewhere. The 2003/04 campaign having reached its end, final estimates point to a rather balanced situation, some even suggesting minor deficit.
230.The world balance sheet data (September/August; raw value) for 2003/2004 include major
production decreases in the following regions: enlarged EU-25 ( 2.4 million
tonnes), India ( 6.8 million tonnes), Australia ( 0.3) and South Africa ( 0.3). Major
production increase has taken place in Brazil (+ 2.8), Pakistan (+ 0.5) and USA
(+ 0.4). For both Brazil and Pakistan the dynamic production increase of the previous
year has continued reaching record levels in 2003/04.
231.For Brazil, it has not posed a particular problem to further expand its already dominant sugar sector which has become the single major decisive factor in the global sugar trade. Production has kept growing in both the Central/South and the Northern producing regions, the latter usually representing 15-18
% of total Brazilian
232.Major producers in 2003/2004 were (raw value; in million tonnes) Brazil (26.7), India
EU-25 (19.8), China (10.9), USA (7.9), Thailand (7.4), Mexico (5.3),
Australia (5.4) Pakistan (4.3), South Africa (2.6), Cuba (2.5) and Columbia (2.6).
These countries produced about 78 % of the total global output. As in previous years the biggest traditional exporters were Brazil, EU, Thailand, Australia and Cuba, representing nearly 70% of total exports.
Quarter of year Raw sugar (cts/lb) White sugar (USD/t)
(New York No. 11) (London No. 5)
2003. Q1 8.15 228.62
2003. Q2 7.02 205.69
2003. Q3 6.49 197.09
2003. Q4 6.21 184.08
Average 2003 6.97 203.92
2004. Q1 6.01 199.52
2004. Q2 6.75 220.68
2004. Q3 7.98 240.74
2004. Q4* 9.2 251.32
Average 2004* 7.49 227.95
*forecast; Source: LMC.
236.It has to be noted that the weakening of the US dollar has continued throughout the period, reaching 1.3 against one EUR in the second half of 2004. Besides this, world trade was severely affected by high level of freight rates, mostly caused by rapid economic growth in China. The country buys significant quantities of various raw materials, thus pushing up transport costs.
237.After several years of surplus production, 2003/04 has been a rather balanced year, although the reduction of global stocks was moderate. In 2004/05, a major deficit is expected with a likely further decrease of output in India, Thailand and Cuba, which would be only partly compensated by the "usual" Brazilian record production. Although the Indian deficit of 2003/04 could have been covered mostly by existing stocks, massive imports may not be avoided probably in order to meet domestic demand in 2004/05. In addition Russia is also expected to increase its imports after a rather disappointing year in 2003/04, when imports were around one million ton below recent average. Consequently, markets are fundamentally rather optimistic, although volatility is foreseen to intensify depending on actual forecasts/rumours with regard to Brazilian output and Indian deficit. Furthermore stock levels continue to be very high, limiting potential additional price gains.
126.96.36.199. Community market
239.In the 2003/04 marketing year, following the long term trend, the sugar beet area has decreased once again compared to the previous year to 1.705 million ha ( 7.8%).
Therefore 2002/03, when the sugar beet area exceeded 1.8 million ha, seems rather an exception with its increasing beet areas. Besides the lower beet area, unfavourable weather conditions, particularly in Southern Europe, have contributed to a significantly lower sugar production in 2003/04. Community sugar production in white sugar equivalent has dropped to 15.2 million t from 17.2 million t in 2002/03 ( 11.6%), including 280 000 t from cane and 33 500 t from molasses. Production has
particularly decreased in Italy (0.5 million t), France (0.76 million t), Spain (0.28 million t) and Germany (0.26 million t). Sugar yield per ha has also decreased, although moderately to 8.92 t/ha ( 2.3%) from 9.13 t/ha in 2002/03.
240.The lower output has certainly affected the production of non-quota `C' sugar, which either has to be exported without refund or carried forward to the following campaign. `C' sugar production in 2003/04 has dropped to 2.7 million tonnes from 4.2 million in 2002/03. Out of the 2.7 million tonnes, 2.1 million has to be exported without refund while producers have decided to carry forward into the 2004/05 marketing year 0.6 million tonnes.
241.Total exports of sugar as such have dropped by 680 000 tonnes to 4 175 000 tonnes in 2003/04, including 2 220 000 tonnes `C' sugar exported without refund and 2 025 000 tonnes of quota sugar exported with refund. Most of the sugar exported with refund has been actually exported in the framework of a standing tender system.
242.In the 2003/04 marketing year, Community sugar consumption remained very stable at 12.9 million tonnes if compared to previous years. However, the quantity of sugar with production refund used by the chemical industry has increased significantly by 200 000 t (46
243.Following a very important quota reduction of 0.826 million tonnes for the 2002/03 marketing year, a significantly lower quantity of 206 000 tonnes was reduced in 2003/04. As foreseen by Article 10 of Council Regulation (EC) No 1260/2001, this moderate quota reduction was necessary, in order to comply with the Community's international commitments under the WTO as far as the limitation on export subsidization is concerned. The quantity `declassified' has thus become `C' sugar with the relevant obligation of export without refund or carry forward into the following marketing year.
245.As far as the 2004/05 marketing year is concerned, at the level of EU-25, Community sugar production is estimated at 18.7 million tonnes (18.4 million tonnes from beet, while 0.3 million tonnes from cane or molasses), 2.7
% more than in 2003. After the
severe drought that hit Southern and Central Europe in 2003, weather conditions have been favourable in most beet growing regions of the enlarged EU in 2004. The moderate decrease of area sown ( 1.7%, down to 2.156 million ha from 2.194 million
ha in 2003) has in general been compensated by higher yields, although sugar content has been rather variable due to abundant precipitation. Unlike in previous years, in 2004/05 it was not necessary to reduce Community quotas in order to comply with WTO commitments.
188.8.131.52. Legislative framework -- major developments
246.The basic Regulation of the sugar regime is Council Regulation (EC) No 1260/2001 of 19 June 2001 on the common organisation of the markets in the sugar sector.
247.With regard to enlargement of the EU, Commission Regulation (EC) No 60/2004 of 14 January 2004 laid down transitional measures in the sugar sector for the period 1 May 30 June 2004, in order to facilitate the transition of the New Member States from their regime to the EU CMO. In addition, the regulation established provisions to avoid speculative movements of sugar products and to eliminate excess quantities of sugar, isoglucose and fructose at the day of accession at the costs of the New Member States as foreseen the Act of Accession. The sugar CMO has become fully applicable in the NMS as from 1 July 2004, the start of the 2004/05 marketing year.
248.Regulation (EC) No 40/2004 of 9 January 2004 on proof of completion of customs formalities for the import of sugar into third countries as provided for in Article 16 of Regulation (EC) No 800/1999 was adopted in order to facilitate operators, obtaining the proofs of arrival at destination necessary in the case of differentiated refunds.
249.With Regulation (EC) No 1409/2004 of 2 August 2004 Regulation (EC)
51 was amended in order to improve the management of preferential
through the reformed CAP -- sugar sector reform"(COM(2004) 499). In this Communication the Commission has proposed a reform of the sugar CMO based on a significant reduction of sugar beet and sugar prices, as well of production quotas, allowing for the transferability of quotas between Member States, introducing private storage based on a reference price system for sugar to replace the intervention scheme. The reduction of beet prices would be partially compensated according to the proposal by direct payments to be integrated into the single farm payment.
252.Potatoes are one of the few agricultural products for which there is no common market organisation. In 1992 the Commission presented a proposal for a minimal common market organisation and put it forward again in 1995, but no agreement was reached and it was not accepted.
253.Potatoes are grown in all Member States of the Community. In 2003 the total area grown was 1 200 362 hectares, down from 1 254 000 hectares in 2002. Early potatoes were grown on approximately 104 000 hectares, slightly down from the area in 2002.
254.Total production in 2003 was around 41.1 million tonnes, some 4.6 million tonnes less than in 2002. Early potatoes accounted for about 2.9 million tonnes.
255.In 2002 human consumption of potatoes in the EU remained around the 28 million tonnes.
256.EU imports of potatoes for human consumption, mainly early varieties, were about 420 000 tonnes in 2003. Imports generally occur during winter and spring. The main suppliers are Southern Mediterranean countries.
257.Production in 2004 is estimated to be higher, 44.8 million tonnes, than in 2003.
258.Enlargement to the 10 new Member States on 1 May 2004, has approximately doubled the production area of potatoes. The potatoes production area in 2003 in the new Member States amounted 1.03 million ha, the total production was around 18 million tonnes. The main producer among the new Members States is Poland, which production area totalled 766 000 ha in 2003 or 7
EU-15 production of dried fodder, based on aid applications
Dried fodder 2002/03 2003/04
EU-15 Production % MGQ Production % MGQ
Dehydrated fodder 4 412.4 4 515 102.3 % 4 571 103.6 %
Sun-dried fodder 443.5 216 48.7 % 214 48.2 %
261.In 2003/04 aid was granted for 4.57 million tonnes of dehydrated fodder (103.6 % of
the MGQ) and 0.2 million tonnes of sun-dried fodder (48.2 % of the MGQ).
262.As subsidised production of dehydrated fodder exceeded the MGQ, the co- responsibility clause was applied: in order to remain inside the budget, the aid (EUR 68.83/t) was reduced
53 by 3.5 % (to EUR 66.45/t) in every Member State.
263.The aid was, however, paid in full for sun-dried fodder, subsidised production of which remained within the MGQ.
264.In the framework of the CAP reform, the Council adopted a new aid scheme for the dried fodder sector, with part of the current aid being replaced by decoupled aid to farmers.
· partial decoupling54: the total allocation to be decoupled under the single payment
scheme for each holding is limited to EUR 132 million; the amount broken down by Member State will be allocated by holding according to the quantities of green fodder delivered during the reference period (2000/01, 2001/02 and 2002/03).
· simplification of the aid scheme55:
-Single rate of aid: the aid payable to processing undertakings is fixed as a single amount for the two sub-sectors (dehydrated fodder or sun-dried fodder) at EUR 33 per tonne of dried fodder.
-Single MGQ: a single maximum guaranteed quantity is fixed for the two sub-sectors (dehydrated fodder and sun-dried fodder), equal to the sum of the old MGQs fixed by sub-sector. The new MGQ is divided into national guaranteed quantities (NGQ) for each Member State. The aid is paid in full if the Community production is less than or equal to the MGQ. If there is an overrun on the MGQ the aid will be reduced in each Member State which has exceeded its NGQ so as to avoid any overrun on forecast planned budget expenditure.
Dehydrated fodder and sun-dried fodder
33 4 960 723
· evaluation and report: before the end of September 2008 the Commission is to
present a report on this sector, based on an evaluation of the common organisation of the market in dried fodder, dealing in particular with the development of the areas of leguminous and other green fodder, the production of dried fodder and the savings of fossil fuels achieved.
The report is to be accompanied, if needed, by
184.108.40.206. Application of the old scheme in 2004/05
265.As the new aid scheme applies from 1 April 2005 onwards, the old scheme will remain in force in the 2004/05 marketing year.
This will be the first year to cover 25 Member States. The Act of Accession increases the EU-15 MGQ for dehydrated fodder by 104 823 tonnes for the new Member States, based on their average production in 1998/99 (0 for sun-dried fodder).
3.1.12. Fibre flax and fibre hemp
220.127.116.11. Fibre flax
266.According to the FAO, the total world area sown to fibre flax in 2003 was 480 000 hectares, of which 143 000 hectares in China. In the European Union, the areas sown were 103 000 hectares. The EU tends to import medium- and low-quality fibres, which are brought in from eastern Europe and Egypt, but supplies the whole world with high- and very high-quality fibres, since these are not produced anywhere else.
In 2003 it exported 136 000 tonnes of flax fibre, of which 108 000 correspond to long fibres and 28 000 to short fibres. Of the total exported quantities, 79 000 went to
China: the lower costs of spinning play a key role in the increase in exports to that country.
was a maximum guaranteed quantity of 75 250 tonnes, shared out between the Member States in the form of national guaranteed quantities. The corresponding figure for short-fibre flax and hemp fibre was 135 900 tonnes, also shared out between the Member States in the form of national guaranteed quantities. These maximum guaranteed quantities have been respectively increased up to 80 823 tonnes and 146 296 tonnes as from the 2004/2005 marketing year due to the EU enlargement. Each Member State may transfer part of its national long-fibre flax quantity to its national short-fibre flax and hemp fibre quantity and vice-versa, subject to a coefficient of equivalence.
270.The world area under cotton in 2003/04 was estimated at around 32.0 million hectares, with production estimated at some 20.5 million tonnes, as against 30.5 million hectares and 19.2 million tonnes in 2002/03.
271.Unginned cotton is not traded internationally, but the European Community, whose cotton-spinning capacity by far exceeds its fibre production, imports substantial quantities of ginned cotton, around 532 000 tonnes in 2003. The countries of central Asia, the CFA area countries, Syria and the United States are the main suppliers.
272.In the European Union, the scale of cotton cultivation is limited, in terms of both the area planted and the number of producers. However, it is concentrated in certain areas of Greece and Spain, where it plays a major socio-economic role, and is also grown on a very small scale in Portugal. The Community area planted with cotton raised in
2003: 463 000 hectares (as against 445 000 hectares in 2002) producing 1 274 000 tonnes of unginned cotton (975 000 tonnes in Greece and 297 000 tonnes in Spain) as against 1 444 000 tonnes in 2001. The European Union is about 50
in cotton fibres, its consumption in 2003 having been around 711 million tonnes.
273.The Community aid scheme provides for a guide price (EUR 106.30/100 kg) and aid
equivalent to the difference between the guide price and the world price is granted to ginners who pay a minimum price to the grower. If the production of unginned cotton exceeds a maximum guaranteed quantity (MGQ), the guide price and the minimum price are reduced. The reduction is less if the world price level allows expenditure on the aid scheme to be curbed.
276.Due to a high decrease in the Italy, Community production fell in 2003: 2 535 boxes were produced successfully, compared with 4 238 boxes in 2002 and 4 928 in 2001. They yielded 53 000 kilograms of cocoons in 2003 compared with 64 000 kilograms in 2002. As from the 2000/01 marketing year, aid is permanently fixed at EUR 133.26 per box.
3.1.15. Olive Oil
277.World production of olive oil averages some 3 157 000 tonnes, of which between
% and 80 % (around 2 444 000 tonnes in 2003/04) comes from the European
Union. The other main producers are Tunisia (280 000 tonnes), Syria (110 000 tonnes), Morocco (100 000 tonnes) and Turkey (75 000 tonnes). Production varies considerably from one year to another, and the world market fluctuates as a direct result of the Community market situation.
278.Estimated Community production eligible for aid in 2003/04, including olive-pomace oils, was around 2 632 672 tonnes, as against 2 086 203 tonnes in 2002/03.
279.In 2002/03, Community consumption was 1 918 500 tonnes (70 % of world
consumption). Preliminary forecasts for 2003/04 show a slightly increased consumption at around 1 978 500 tonnes.
280.Greece and Spain are normally the main suppliers, and Italy, although itself an exporting producer, remains the Community's main purchaser. In 2002/03, imports totalled 91 167 tonnes. Exports for the same marketing year reached 356 517 tonnes, 298 977 tonnes direct and 57 540 tonnes under the inward processing arrangements.
No export refunds have been paid since the 1998/1999 marketing year.
281.The second wave of the CAP reform adopted in April 2004 provides the following for the olive oil sector: A minimum of 60
% (Member States may decide by 1 August
2005 to set a higher decoupling rate) of the average production-linked payments during the reference period 2000-2002 will be converted into entitlements under the Single Payment Scheme (SPS) for holdings larger than 0.3 hectares. Olive farms smaller than 0.3 hectares will receive 100
decoupled element and not to the national envelope. Concerning market measures, the existing private-storage scheme is maintained while export refunds and refunds for the manufacture of certain preserved food are abolished. The reform will come into effect from the 2005/06 marketing year. The current support regime will continue to apply for the marketing year 2004/05.
282.Finally, in 2004 the second series of work programmes submitted by operators' organisations in the olive sector were launched with Community financing. The measures concern four areas: market follow-up and administrative management, improving the production quality of olive oil and table olives, improving the environmental impacts of olive cultivation and finally traceability, certification and quality protection.
3.1.16. Fresh fruit and vegetables
18.104.22.168. World markets and international trade56
283.World production of fresh fruit and vegetables57 has steadily increased in the last
years. It has grown by 36 % in volume in the period 1995-2003. Two-thirds of this
growth originates from China where production has increased by an outstanding 96 %
(from 250 millions tonnes in 1995 to 480 millions tonnes in 2003). Growth in the other large producers has been more modest: 38
% in India, 6 % in the EU and 3 % in
the USA. World production of fruit and vegetables reached 1 320 millions tonnes in 2003, an increase of 2.2
% compared with 2002. The share of vegetables was 63.7 %
(49.6 % in the EU). With 110 millions tonnes (stable compared with 2002), the EU
was the third largest world producer of fruit and vegetables after China (483 millions tonnes) and India (128 millions tonnes).
284.As regards citrus fruit, estimates for campaign 2003/2004 were of 93.5 millions tonnes, an increase of 1.9
% in comparison with the previous campaign. With a
since 1997. EU trade with the rest of the world in fresh vegetables has increased steadily in recent years. In 2003, EU imports and exports stood respectively at 1.2 million tonnes (+
7 % in comparison with 2002) and 1.5 million tonnes (+ 10.2 %).
287.An important part of EU exports of fruit and vegetables was destined to the ten countries that joined the EU in 2004. In 2003, these countries represented 34.7
EU exports of fruit and 27 % of those of vegetables.
22.214.171.124. Community market
288.In the Community in the period 2001-2003, the sector of fruit and vegetables represented an average of 16.4
% of total agricultural production. In the period 2000-
2002, annual production of vegetables in the Community (potatoes excluded) stood at 55 millions tonnes in average, of which 15 tonnes of tomatoes. Fruit production stood at 35 millions tonnes, of which almost ten millions tonnes of citrus fruits. With the enlargement of the EU to ten new members, EU production will increase to 64 millions tonnes for vegetables (+16% in comparison with EU 15) and to 40 millions tonnes for fruit (+
289.Community production of apples reached 8.1 millions tonnes in campaign 2003/2004, a significant diminution in comparison with the previous campaign ( 8.8 %).
Withdrawn quantities have significantly reduced in recent campaigns. They decreased from 3
% in 2000/2001 to 0.4 % in 2003/2004.
290.Community production of pears stood at 2.3 millions tonnes in 2003/2004, a decrease
% in comparison with the previous campaign. In 2003/2004, quantities
withdrawn from the market stood at 1.2 % of production (same level as in
291.For peaches, the 2003 campaign was very bad with a production of 2.2 millions tonnes, a significant decrease of production of 22.9
% in comparison with 2002.
Withdrawals consequently lowered significantly: they stood at 1.3 % of community
production in 2003/2004, against 1.5 % in the previous campaign. This is an
294.Production of apricots stood at 438 000 tonnes in 2003, 8.6 % less than in 2002.
Products withdrawn from the market represented 0.2 % of Community production in
2003, as in 2002 (0.8 % in 2001).
295.Production of citrus fruit reached 10.6 millions tonnes in 2002/2003, an increase of
% from the previous campaign. Spain was the largest producer with a share of
57 %, followed by Italy with 26 %. The Community produced six millions tonnes of
oranges in 2003/2004, 2.7 % less than in 2002/2003. With 1.7 million tonnes in
2003/2004, production of lemons increased by 6.6 % in comparison with 2002/2003.
296.In 2003/2004, production of cauliflower was stable in comparison with the previous campaign at 2.2 millions tonnes. The quantities of products withdrawn from the market have decreased markedly in the last few years and stood at only 0.6
community production in campaign 2002/2003. Withdrawals however increased in 2003/2004 at 2
% of the production of the Community.
297.After having steadily diminished since 2000/2001, tomato production increased in 2003 to 15.2 millions tonnes, a growth of 5.3
% in comparison with 2002. Production
in Italy, the main producer, reached 6.7 millions tonnes (43.8 % of all Community
production), an increase of 15.9 % from the previous campaign. Withdrawals
represented a minor share of total production of tomatoes destined to the fresh market
% for campaign 2003/2004).
126.96.36.199. Main legal and policy changes
298.In 2003 the Community initiated an exercise of simplification of the legislation of the fresh fruit and vegetables CMO with two main objectives: simplify existing rules and, if necessary, increase flexibility and subsidiarity in the implementation of the measures. This exercise extended into 2004 with the adoption of Regulation (EC)
No 103/2004 for intervention (withdrawals). Several changes were made, in particular free distribution was facilitated and controls were reinforced. The modalities of the communication by the Member States to the Commission of production prices were also updated with Regulation (EC) No 877/2004. In addition transitional regulations were adopted for the implementation of several measures of the CMO in the wake of the enlargement of May 2004 in order to extend and facilitate the access of the new Member States to these measures. As regards external trade, autonomous import quotas were opened for garlic and preserved mushrooms pending the results of the negotiations at the World Trade Organisation on the compensations related to the enlargement of the EU.
188.8.131.52. Community production
300.Banana production in 2003 decreased to 754 216 tonnes ( 4.6 %)in comparison with
the production of the year 2002.
301.It is estimated that the harvest in 2004 will be approximately 750 000 tonnes.
302.The compensatory aid for 200259 has been fixed at EUR 29.46 per 100 kg with
supplementary aid of EUR 5.15 per 100 kg for bananas produced in Guadeloupe and EUR 5,19 in Martinique. The cost of the compensatory aid for 2003 totalled EUR 239 million, compared with EUR 253 million in 2002.
303.In 2003 ACP banana imports were at the level of 787 007 tonnes, showing an increase of over 60 000 in comparison with the previous year. Banana imports from other countries amounted to 2 580 000, a similar figure as in 2002.
304.Imports under quotas A (2 200 000 tonnes) and B (453 000 tonnes) are open to imports from all countries, while the C quota (750 000 tonnes) is open only to imports from ACP countries.
305.Imports of bananas from third countries other than ACP countries under A and B quotas are subject to customs duty of EUR 75 per tonne. ACP bananas imported under A/B or C quotas are subject to zero duty.
184.108.40.206. Main legislative and policy developments
306.In view of the accession of the ten new Member States on 1 May 2004, an additional quantity of 300 000 tonnes has been made available for imports of bananas into the new Member States for the period 1 May-December 2004. This additional quantity was fixed on a transitional basis and should in no way prejudge the outcome of the negotiations within the context of the Article XXIV.6 GATT in which the European Union is engaged. The additional quantity due to its transitional character is managed separately, but using the same mechanisms and instruments as in the case of the tariff quotas A/B and C. For the year 2005, the additional quantity that has been made available for imports of bananas into the new Member States, is 460 000 tonnes.
7.8 in 2002), China (2.8 millions tonnes against 2.3 in 2002) and Turkey (two millions tonnes against 1.5 in 2002).
309.In 2003, Community production of tomato for processing increased by 17 % in
comparison with 2002 (production had been very poor in 2002). Growth was the highest in Italy where production increased by around one million tonnes from 4.3 to 5.3 millions tonnes. Raw material was utilised at 58
% for the preparation of
concentrates and 15 % for whole peeled tomatoes. The weight of "other products" in
tomato processing has been steadily increasing since the second half of the 1990s and reached 26.6
% in 2003 (25 % in 2002).
310.As a result of a very bad harvest in Greece, only 293 000 tonnes of peaches were processed into preserved peaches in the Community in campaign 2003/2004, a fall of 26.6% in comparison with the previous campaign and well below the record level of campaign 1999/2000 (582 000 tonnes).
311.Community production of preserved Rocha and Williams pears stood at 107 000 tonnes in 2003/2004, a fall of 15.6
% from 2002/2003. Italy remains the main
producer with 54 000 tonnes (50.4 % of total Community production), followed by
Spain (33.9 %) and France (14.1 %).
312.For campaign 2003/2004, Community thresholds for processing have been exceeded for pears, oranges, grapefruits and pomelos and tomatoes. As a consequence Community aid has been cut for campaign 2004/2005 as follows in the Member States where the national threshold was exceeded:
Decrease of Community aid to processing for campaign 2004/2005 in comparison
with the aid fixed by the Council (Regulations (EC) No 2201/96 and (EC) No 2202/96)
Member States and pomelos oranges pears tomatoes (1)
Greece 7% 0.64% 1.5%
315.With Regulation (EC) No 1493/1999 of 17 May 199960, the Council of the European
Union adopted the current common organisation of the market in wine. Under that Regulation, the Commission adapted in 2004 a number of measures in order to take into account the situation in the ten new accessing Member States, as well as :
-Commission Decision 2004/687/EC61 of 6 October 2004 fixing, for the 2004/05
marketing year and in respect of a certain number of hectares, an indicative financial allocation by Member State for the restructuring and conversion of vineyards under Council Regulation (EC) No 1493/1999.
316.Commission Regulation (EC) No 753/200262 laying down certain rules for applying
Council Regulation (EC) No 1493/1999 as regards the description, designation, presentation and protection of certain wine sector products, has been amended in order to facilitate the transition from the wine labelling regime that existed in the new Member States before the accession to the Community rules.
317.After several invitations to tender/public sales of wine alcohol, a total volume of 1 331 733 hectolitres of wine alcohol was sold, of which 241 733 hectolitres for new industrial uses and 1 090 000 hectolitres for motor fuel in the Community (bioethanol).
318.Wine production in the Community (excluding grape must not processed into wine) was as follows:
-1998/1999 : 162.562 million hectolitres,
-1999/2000 : 179.117 million hectolitres,
-2000/01 : 176,006 million hectolitres,
-2001/02 : 159.122 million hectolitres,
-2002/03 (provisional): 150.741 million hectolitres,
320.As regards the Community harvest for the current 2004/05 marketing year, forecasts indicate an important increase (+
14.6 % regarding to previous campaign and of
+ 12 % regarding to the average over the 10 previous campaigns) compared with the
previous marketing year. The main producing Member States have communicated the following 13
% in Greece and + 4 % in Spain.
Total production 2004/05
`000 hl 2000/01 2001/02 2002/03 2003/04 Forecast
Member State (May 2005)
Czech Republic 520 545 495 510 545
Germany 9 950 8 980 9 984 8 289 10 147
Greece 3 558 3 477 3 085 3 815 4295
Spain 45 572 33 937 39 419 47 300 49 038
France 59 740 55 339 51 966 47 519 58 845
Italy 54 088 52 293 46 200 46 650 55 000
Cyprus 570 503 240 400 414
Luxembourg 132 135 154 123 156
Hungary 4 329 5 450 3 500 3 900 4 800
Malta 67 62 70 70
Austria 2 337 2 531 2 599 2 556 2 579
Portugal 6 694 7 790 6 651 7 283 7475
Slovenia 1 097 1 090 900 671 506
Slovakia 427 332 540 500
Other EU-25 17 18 12 18 20
Total EU-15 182 088 164 500 160 280 163 553 (187 555)
Total EU-25 (189 031) (172 155) (165 599) 169 644 194 390
321.The European Union is the top world exporter with 13.8 million hectolitres (2004), slightly up from 12.78 million hectolitres in 2003. In 2004, the main traditional buyers of Community wine
63 were the United States with 3.949 million hectolitres,
Member State Area (ha) Financial allocation (EUR)
Germany 2 198 13 989 772
Greece 1 519 7 176 037
Spain 22 482 152 001 024
France 21 058 111 840 613
Italy 17 990 120 341 710
Luxembourg 10 81 856
Austria 1 837 7 798 847
Portugal 4 854 29 967 725
Total 71 948 443 197 584
325.Decision 2004/687/EC laid down indicative financial allocations for 2004/05 as follows
Member State Area (ha) Financial allocation (EUR)
Czech Republic 189 1 743 010
Germany 1 971 12 671 756
Greece 1 360 9 704 037
Spain 19 379 145 492 269
France 13 541 107 042 204
Italy 14 529 103 020 889
Cyprus 196 2 378 955
Luxembourg 14 112 000
Hungary 1 261 10 086 046
Malta 17 171 637
Austria 1 271 7 224 984
Portugal 6 987 44 532 820
Slovenia 172 2 919 879
Slovakia 801 2 899 514
Total 61 688 450 000 000
328.EU imports of raw tobacco amounted to 509 000 tonnes in 2003, 17 600 tonnes more than in 2002. The main suppliers were Brazil, the USA and Zimbabwe. EU exports in 2003 (192 000 tonnes) slightly increased compared to those in 2002. The main destinations were Russia, the USA and Ukraine.
329.Community leaf tobacco production is restricted by guarantee thresholds set by the Council in Regulation (EC) No 546/2002 in March 2002 for the years 2002 to 2005: 340 738 tonnes for 2002 and 334 064 tonnes for 2003, 2004 and 2005.
220.127.116.11. Main legislative and policy developments
330.The quota buyback for the 2003 harvest was a success resulting in 3 602 tonnes being bought back. 192 individual reconversion projects and 17 studies are being supported
by the Fund.
331.In April 2004, the Council decided that de-coupling will be carried out gradually over a four year transition period, starting in 2006. In these four years, at least 40
% of the
tobacco premia have to be included in the de-coupled single payment for farmers. Member states may decide to retain up to 60
% as a coupled payment. The coupled
payment may be reserved for producers in Objective1-regions or for farmers producing varieties of a certain quality. After the four year transition period, from 2010, tobacco aid will be completely de-linked from production. 50
% will be
transferred to the single farm payment and the remaining 50 % will be used for
restructuring programmes under the rural development policy.
332.For 2005 the current tobacco regime including the aids fixed for 2004 will apply. In 2006, the reform will start with the transfer of all or part of the current tobacco premium into entitlements for the single payment.
333.Following the enlargement on 1 May 2004, 4 new producer countries joined the EU:
Cyprus, Slovakia, Poland and Hungary. The quota of these new countries totals 52 353 tonnes. Poland has the highest quota (37 933 t).
18 079 tonnes. The linseed area was 6 561. The actual linseed production in 2003 rose to 8 375 tonnes (3 112 tonnes in 2002).
18.104.22.168. Main legislative and policy developments
338.Rice and other seed production in the 2003/4 marketing year have remained under the respective maximum guaranteed seed quantities for the Community. Consequently no aid reductions were applied.
339.Following the integration of the seed support in the 2003 CAP reform for application as from the marketing year 2005/6, detailed rules have been laid down in Regulations (EC) No 795/2004, No 796/2004 and No 1973/2004.
Following the accession the annual maximum quantity of seed other then rice eligible for Community aid for the EU as a whole has augmented from 305 752 tonnes to 332 842 tonnes (+
27 089 t).
22.214.171.124. World market
340.In 2003 the total world hop area was about 55 029 hectares (± 2,5 % down on 2002),
of which 53 121 hectares was in member countries of the IHGC (International Hop Growers' Convention) and the European Community. The five biggest growers are the EU (20 962 hectares, including Germany with 17 562 hectares), the USA (11 541 hectares), the Czech Republic (5 942 hectares), China (5 920 hectares) and Poland (2 172 hectares).
341.World production in 2003 amounted to approx. 84 333 tonnes, ± 13 % down on 2002.
The 6 099 tonnes of alpha acid (8 811 tonnes in 2002) produced was equivalent to an alpha acid yield of 7.2
%. Average yield per hectare was 1.53 tonnes, 10 % down on
347.The average price for hops sold on contract in 2003 was EUR 3 532/tonne, which is
lower than in 2002 (EUR 3 668/tonne). Hops sold on the spot market raised
substantially from EUR 2 908/tonne in 2002 to EUR 3 533/tonne in 2003.
348.Under the common market organisation for hops, aid is given to growers to enable them to enjoy a reasonable income. The Council has set it at EUR 480 per hectare (all varieties) for nine years running from the 1996 harvest year. The same amount is granted on areas temporarily resting or permanently grubbed up. In 2003 such areas amounted to 6 235 hectares (3 909 hectares in Germany).
349.The area harvested in 2004 is estimated to have fallen by approximately 3.6 % . Still,
hop harvest 2004 is considered to be of good quality.
126.96.36.199. Main legislative and policy developments
350.The hop sector is affected by the CAP reform in that, from 1 January 2005, it will be integrated into the single farm payment system. In that context, the complete decoupling of aid will enable producers to switch to other production while receiving
a stable income.
351.Flexibility is nevertheless possible at Member State level, in order to be able to respond to specific regional production characteristics; thus Member States may decide whether to keep part of the aid coupled (this must not exceed 25
they will pay directly to individual hop producers or producer groups. The latter will manage that budget according to collective needs in terms of variety conversion, market support, research, promotion, investment in equipment, etc. and divide the remaining portion among their individual members in proportion to the areas under hops.
352.Since the enlargement on 1 May 2004, the Community's area under hops has increased by almost 50
% (an additional 10 116 ha). The area in the 25 Member States
356.Production of live plants and flowers in 2003 was worth EUR 17 590 million. The Netherlands is the largest grower with approximately 30
% of the total, followed by
Italy, Germany and France.
357.In 2003 Community imports of flowers and plants from third countries was equivalent to 7% of Community production. There were 427 000 tonnes of imports, with a value of EUR 1 228 million, a decrease of 3% on 2002.
358.Cut flowers account for more than 50 % of all imports in the sector, most of which are
free of import duty under agreements with third countries (Generalised System of Preferences in the case of South America, Cotonou Convention for the ACP countries
359.Some cut flowers (roses and carnations) are exempt from customs duties under tariff quotas for two Mediterranean countries (West Bank and Gaza Strip, Jordan) provided a minimum import price is respected.
360.Kenya is the largest supplier of cut flowers to the Community: 54 500 tonnes in 2003, value EUR 208 million. The second largest exporter to the EU is Israel with 23 250 tonnes in 2003. Israeli exports were 13
% down on 2002, but Kenya's were up
11 %. Among other suppliers Costa Rica and the USA are the main exporters of
foliage, and Egypt and China are increasing their exports of live plants to the Community.
361.Exports from the Community rose by approximately 4 % in 2003 to 504 665 tonnes.
Their value increased also by 4 % to EUR 1 567 million. Biggest exports are of live
plants, then bulbs and tubers and then cut flowers. The value of live plant exports decreased by almost 3
% to 564 million while their volume increased by almost 6 % to
263 280 tonnes. Cut flower exports were up at 84 600 tonnes (+ 6 %) but value
decreased to EUR 465 million ( 9 %).
365.Overall demand66 in 2003/04 was practically unchanged from the previous year,
thanks to increased demand in the marketable feed for cattle (milk and meat) and decreased use of roughages due to bad climatic conditions, mainly drought. Apart a small increase in the feed demand for pigs, feed demand for other sectors remained stable.
366.About half of the total supply comes from feedstuffs generally not marketed (pasture, hay, silage) used mainly for ruminants. The other half, which can be used by all livestock, consists of feedstuffs (cereals, substitutes, cake, etc.) where competition as regards price and nutritional value is eager.
367.Total consumption by animals of the key marketable products67 is estimated at
210.2 million tonnes in 2003/04 in the European Union, in increase by 3.0 million tonnes compared to the previous year, but with important shifts between products.
Consumption comes from:
-domestically-produced products estimated at 150.1 million tonnes, about 0.9 million tonnes more than in the previous year, mainly from the cereal sector,
-net imports estimated at 60.1 million tonnes, about 2.0 million tonnes more than in the previous year, mainly because of higher imports of manioc and soya.
368.Total consumption of cereals by animals in 2003/04 is expected to be about 2.0 million tonnes lower at 118.0 million tonnes.
369.As regards substitutes subject to import quotas, the quota utilisation rate for manioc imports recovered from 26
% in 2002 to 33 % in 2003 for manioc from Thailand and
continued at 1 % for all other origins combined. The rate of use of the quota for sweet
potatoes originating in China remained at 0 % in 2003.
370.Industrial production of compound feedingstuffs for animals in the European Union68
is estimated at 124.8 million tonnes in 2003, 0.6 % less than in 2002, mainly because
371.By Member State in 2003 and for total production of compound feedingstuffs, the main increases were in Spain and in Germany; falls are mainly in the Netherlands.
372.Cereals incorporated into compound feedingstuffs69 in the EU amounted to around
55 million tonnes in 2003, at the same level as the previous year.
373.The main factor determining the composition of feed is still the prices of raw materials and their relative trends, together with the share of the various animal demands and the specific qualities sought. For 2004/05, the outturn of animal consumption of cereals will depend on the trend of demand by stock and the prices of imported products.
Animal consumption of key marketable products
rate of 2002/03 2003/04
KEY PRODUCTS import ANIMAL CONSUMPTION ANIMAL CONSUMPTION
EU IMP EXP TOTAL EU IMP EXP TOTAL
Common wheat T 38.9 5.6 - 44.5 35.8 3.5 - 39.3
Barley T 30.2 0.8 - 31.0 34.0 0.1 - 34.1
Maize T 30.6 1.4 - 32.0 27.1 1.5 - 28.6
Others T 11.3 1.2 - 12.5 15.1 0.9 - 16.0
TOTAL CEREALS 111.0 9.0 - 120.0 112.0 6.0 - 118.0
TOTAL SUBSTITUTES ex Annex D of
which: 19.9 8.6 - 28.5 19.9 10.1 - 30.0
Manioc 6 % C/T - 1.2 - 1.2 - 2.6 - 2.6
Sweet potatoes 0 C/T
CGF (corn gluten feed) 0 C 1.7 4.2 - 5.9 1.7 4.0 - 5.7
Brans T 10.3 0,1 - 10.4 10,2 - - 10.2
MGC (maize germ cake) 0 C 0.2 0.1 - 0.3 0.2 0.1 - 0.3
Citrus pellets 0 C - 1.5 - 1.5 - 1.5 - 1.5
Dried sugar beet pulp 0 C 5.3 0,4 - 5.7 5,3 0,5 - 5.8
Brewing and distilling residues 0 C 2.0 0.7 - 2.7 2.0 0.9 - 2.9
Various fruit waste 0 C 0,4 0,4 - 0.8 0,5 0,5 - 1.0
TOTAL OTHER ENERGY FEEDS, of
which: 2.0 3.0 - 5.0 2.0 2.9 - 4.9
Molasses T 0.6 2.4 - 3.0 0.6 2.3 - 2.9
Animal and vegetable fats (added to feed) 4-17 % C 1.4 0.6 - 2.0 1.4 0.6 - 2.0
TOTAL HIGH-ENERGY FEEDS 21.9 11.6 - 33.5 21.9 13.0 - 34.9
OILCAKE AND SEEDS (oilcake 6.7 38.5 2.4 42.8 6.5 42.1 2.4 46.2
3.2. Market developments -- Animal products
3.2.1. Milk and milk products
188.8.131.52. Milk in the world
374.Initial estimates suggest that world milk production (including cows' milk, buffalo milk, sheep's milk and goats' milk) should increase in 2004 by just over 5 million tonnes (0,8
%), to 606 million tonnes. The bulk of this increase will come from
buffalo milk, thanks to increased production in India. Virtually all (99.8 %) this type
of milk is produced in developing countries, Asia accounting for 97 %.
375.Within Asia, production in India, which derives more than half its milk from buffaloes, continues to grow. In 2004, India will produce 91.5 million tonnes and confirm its place as the world's second largest producer, after the European Union, drawing further ahead of the United States. Increased production is based on rising domestic demand in India. However, Indian per capita consumption is only 85 kg per year (less than one quarter of that in Western countries); milk for consumption accounts for three quarters of this. Pakistan, the other major producer in the region and the fifth in the world, will produce just under 30 million tonnes in 2004. Since 1996, production in Pakistan has grown by 2.9
% per year.
In South East Asia, the demand for dairy products continues to grow since the family income increases and in this way the consumer demands more sophisticated products with higher quality. The development of school milk programmes has permitted to enhance domestic demand in this region and also in China.
376.In Latin America, a very slight increase of just over 60.6 million tonnes is expected for 2004, milk output grows by 0.6
%. Main increases in milk production appear in
Mexico (+ 4.5 %), Argentina (+ 2.5 %) and in Brazil (+ 0.6 %). These three countries
correspond to 67 % of milk output in this region. Elsewhere, milk production
continues to increase in Peru (+ 3 %), be it small in absolute terms. Brazil is both the
largest producer of milk in the region (sixth in the world) and the largest importer among the Mercosur countries. Production in Brazil will reach 24.2 million tonnes in 2004, but internal consumption exceeds production giving rise to the need for imports from Argentina and Uruguay. Although imports into Brazil fell sharply between 1998 and 2001, they have risen since.
379.In Oceania, weather conditions played a particularly important role in the events of the marketing year with different results in New Zealand and Australia. Milk production in New Zealand rose by 1.8
% while in Australia it fell sharply and for the
second consecutive year. Prices on world markets which were very favourable compared with other sectors encouraged new investments in the milk sector.
380.The weather in Australia was very unfavourable over the last years, reducing milk production to 10.1 million tonnes, a fall of 2.5
% which added to the stronger drop in
the previous year of 10 %. The drought affected the whole country and severely
depleted fodder stocks, the number of cows and the availability of grassland. This followed a shortage of water for irrigation, particularly in Victoria, the state which produces most milk. Australian producers are indebted and dissatisfied with processors and the distribution chains, following the deregulation of the sector.
381.In New Zealand, production rocketed between 1999 and 2004, increasing by 34 % to
14.6 million tonnes and encouraged by a 17 % increase in the price of milk from NZD
3.63 to NZD 4.25. Furthermore, New Zealand forecasts an additional herd increase by
% in 2004 and 2 % in 2005. Milk deliveries are likely to continue increasing
during next years.
382.Excluding fresh products and casein, world trade in 2004 should reach 44 million tonnes of milk equivalent, to which the EU will contribute 10.4 million tonnes, or
% (New Zealand: 28 %, Australia: 15 %). That may be compared with 1996 when
the volume was 32 million tonnes of which the EU accounted for 36 %, or 12 million
tonnes (New Zealand: 21 %, Australia: 12 %).
184.108.40.206. The Community market
383.Dairy herds were expected to fall by 526 000 cows ( 2.2 %) by the end of 2004 to
23.5 million. Yield, however, should increase by 1.5 % to 6 033 kg per animal per
year. Milk production decreases by 0.5
% or 711 000 tonnes to 143.6 million tonnes
388.Per capita consumption of cheese should increase by 0.9 % per year (to
17.4 kg/person), very much less than the trend in the past of 2.7 % per year. Total
consumption should rise by 0.7 % to 7.9 million tonnes.
389.As regards milk powder, there a strong decline of production (6 %, or about 140 000
tons), can be noted bringing the total to 2.16 million tonnes. The decline of skimmed milk powder is partially compensated by an increase of whole milk powder and semi skimmed milk powder (16 500 tonnes, or an increase of 9
%). Therefore, the
production of skimmed milk powder (1.12 Mio t ) is reduced 17 %, while whole milk powder (722 000 tonnes) increased by 2.3
%. The production of buttermilk powder
progresses by 0.9 %.
390.Manufacture of condensed milk will fall by 5 %, but not more than the trend for the
last four years ( 6 %). After a sharp fall in 2002 ( 17 %), the production of casein
rose in 2003 and 2004 by 9 and 3 %, respectively. That means 450 000 tonnes of
additional liquid skimmed milk.
391.The very sharp fall in the number of dairy farms, by 7.7 %/year in the EU-15 between
1995 and 2004 can be noted (the number in 2004 was 513 406); the average number of cows per holding rose to 37 (ranging from 10 in Austria to 110 in the United Kingdom) and the amount of milk delivered per holding exceeded an average of 222 000 kilograms. There is a very wide range in the average quantity delivered per farm, ranging from 48 300 tonnes in Austria to 730 600 tonnes in the United Kingdom.
392.Total consumption of milk products, defined as the total of all uses made of milk available in the European Union, has tended to rise since 1996 by 0.3
% per year,
although it fell in 2002 before resuming an upward path since 2004.
393.Community stocks hit their lowest ever level in March 1996, when there was virtually no butter or skimmed-milk powder in public storage. Then stocks of skimmed-milk powder began to grow because of slack domestic and external demand. At the end of 1999, this trend was thrown abruptly into reverse by a sharp increase in demand, mainly on the world market, which meant that all public stocks of skimmed-milk powder could be disposed of in August 2000. Unfortunately, the situation deteriorated in 2002. However, in 2004, only 21 285 tonnes have been purchased for intervention.
3.2.2. Beef and veal
220.127.116.11. World market
395.According to FAO and EUROSTAT data, world beef production in 2003 amounted to 58.9 million tonnes, i.e. 1.5
% higher than its level in 2002. Beef production
represents just under a quarter of the world meat production.
396.The USA remains the main beef producing country with a share of 20.2 % of the
world production. Its 2003 production was 3.1 % below the level in 2002. Net beef
production in the EU accounted for 12.5 % of the world production in 2003. The
steady increase in the South American output of beef continues. Production expanded further in Brazil (+
2.9 %) in 2003, with its total output of 7.5 million tonnes
surpassing the EU supplies. Beef production also increased in Argentina (+ 3.7 %).
Beef production in China reached 6.2 million tonnes in 2003.
World beef production
2002 2003 % change 2003/2002
Argentina 2.700 2.800 + 3.7 %
Australia 2.028 2.073 + 2.2 %
Brazil 7.314 7.526 + 2.9 %
China 5.479 6.218 + 13.5 %
EU 15 7.466 7.359 1.4 %
Russian Federation 1.957 2.000 + 2.2 %
USA 12.288 11.906 3.1%
Source: FAO and EUROSTAT
18.104.22.168. Community market
implementation of the new CAP premium regimes. The total production for the EU-25 is estimated at 8.05 million tonnes, with the 10 new Member States accounting for around 8
%. Production in the new Member States has decreased in recent years, a
trend that is expected to continue in the near future.
399.Beef and veal consumption in the EU-15 in 2003 is estimated at 7.69 million tonnes,
an increase of 3
% compared with the level in 2002. For 2004 consumption is
expected to remain at a similar level, i.e. 7.63 million tonnes. The average per capita consumption is estimated at 19.9 kilograms in 2004. In general, consumption has remained rather firm, despite the relatively producer prices on the market. The total consumption for the EU-25 in 2004 is forecast at around 8.23 million tonnes. Per capita consumption of beef and veal in the new Member States is estimated at around 8.0 kilograms in 2004, well below the average level in the EU-15.
400.As regards external trade, the EU exported in 2003 around 442 000 tonnes of beef (meat and live animals in carcase weight equivalent). This volume was almost 20
lower than the level exported in 2002, which illustrates the balanced supply-demand situation on the Community market. The majority of exports were destined for the Russian market (60
%, mainly beef) as well as the Lebanon (12 %, mainly live
animals). In the period January to September 2004 total beef exports amounted to 295 000 tonnes, a 4.6
% decrease compared with the same period in 2003. For the
first four months of 2004 the figures relate to the 15 Member States, and thereafter they relate to the exports of the EU-25 to third countries. Discussions in the course of 2004 with the Russian authorities regarding veterinary certificates led to some fluctuations throughout the year in the volumes exported to that market. While the new EU Member States substantially increased their beef sales to other Member States after the EU enlargement in May 2004, their share in the beef exports to third countries has remained relatively small.
401.Beef imports in 2003 amounted to around 508 000 tonnes, approximately 6.7 %
higher than in 2002. Imports originated primarily from Brazil (55 % of the total
imports), Argentina (18 %), Poland (9 %) and Uruguay (5 %). In the period January to
September 2004 total beef imports amounted to 409 000 tonnes, with an increase observed in the imports at full duty illustrating the strong competitive position of some beef suppliers. Since 2003 the Community became a net importer of beef. Total beef imports exceeded the total Community exports by around 66 000 tonnes in 2003. Net imports of beef meat only amounted to approximately 98 000 tonnes. During the period January to September 2004, the total imports exceeded by around 114 000 tonnes the exports. When considering beef meat trade only, the net import amounted to 147 000 tonnes.
Heifers 274.6 + 4.1 %
403.In 2004 carcase prices have remained relatively stable for young bulls and heifers, while steer and cow prices have been among the highest in recent years. The firm price levels are mainly due to the tight supplies on the market, reinforced by the clearance of the intervention stocks as of spring 2004. During the last weeks of the year, some price decreases were observed in some Member States, as a result of the increased slaughter supplies in anticipation of the change in the CAP premium regimes as of 2005.
404.Beef producer prices in the new Member States have substantially increased since the accession to the EU, reflecting the intensified trade in both live animals and beef meat between the old and new Member States. The price adjustment was most obvious in the first two to three months after the enlargement, followed by a price stabilisation in most cases.
405.The overall satisfactory market situation allowed the Commission to gradually sell as of June 2002 the stock of public intervention beef. The largest part of the stock was sold during the period October 2002 to November 2003. The final quantities of the stock were disposed of by March 2004.
406.Since the introduction of the over-thirty-months scheme (OTMS) in the United Kingdom in the wake of the first BSE crisis in 1996, the scheme has removed between 750 000 and 900 000 animals annually from the British market, corresponding to approximately 250 000 tonnes of beef every year. Following a review of the scheme, the UK authorities announced early December 2004 the start of a gradual transition towards the lifting of the scheme and its replacement with a BSE testing system. It is anticipated that this may result in some increased supplies of essentially cow beef on the British market as of autumn 2005.
22.214.171.124. Beef labelling
407.European Parliament and Council Regulation (EC) No 1760/2000 lays down provisions for the compulsory labelling of the origin (country of birth, fattening and slaughtering) of animals from which beef comes from and for voluntary labelling indications related to breeds, types of production, feedingstuffs, extensive breeding, etc.
3.2.3. Sheepmeat and goatmeet
409.The overall situation of the EU sheep and goat market has been satisfactory until the declaration of bluetongue disease in the Southern Iberian Peninsula in October 2004. Prices were at the highest historical levels since the spring of 2001 (foot and mount crisis) due to a major reduction of supply from which recovery has been very slow and very limited. Among the bluetongue effects, however, there was a very substantial price fall in the affected area which had a significant impact on the EU's average.
410.Heavy70 lamb prices in 2001 2004 follow a seasonal pattern and were at a high level
(until the appearance of bluetongue) throughout the Community within the range of 340 475 euro per 100 kg carcase weight. Light
71 lamb prices have also a seasonal
pattern and were at very high levels on average, ranging from over EUR 450 to 770 per 100 kg carcase weight, with a major reduction due to the bluetongue associated problems.
411.The world's largest producer of sheep and goat meat is China, where production expands year by year attaining 3 800 million tonnes in 2004
72.The European Union
comes second with more than 1 million tonnes, followed by India, Australia, Pakistan, New Zealand, Iran, Turkey and Sudan.
412.Although the Chinese output is by far the largest, still the country has little presence in the world market due to the fact that domestic consumption absorbs most of the national production. World trade in sheep meat is dominated by New Zealand and Australia, accounting for more than 80
% of world exports. Other notable suppliers
are Romania, Argentina, Uruguay, Bulgaria, Chile and FYROM.
413.Community export is almost inexistent. The European Union imports a quantity corresponding to over one fifth of its needs. The main suppliers are New Zealand and Australia, accounting for 84
% and 8 % of total Community imports, respectively. The
Greece, a quarter in Spain and a significant number of them in France, Italy and Portugal.
126.96.36.199. Main legislative and policy developments
416.The first come, first served system has been adopted as the quota management for all the third countries from 2004 onwards (1 May for New Zealand and Australia, 1 January for other countries)
73 in replacing the licence system. Following a smooth
transition from one system to the other in 2004, this change represents a major modernisation and simplification of the sheep and goat import quota management system.
417.The Council adopted the Council Regulation on the CAP reform in September 2003
74.Chapter 11 of that Regulation deals with sheep and goat premiums.
The new detailed rules implementing the Council Regulation has been published75.
Chapter 12 deals with sheep and goat premiums.
418.In 2003, world production of pigmeat rose by 3.3 % to 98.6 million tonnes (source:
FAO). China remains the leading producer in the world with 47.8 million tonnes,
% more than the previous year. The European Union is second with annual
production of 17.8 million tonnes. This was an increase of + 0.4 % compared to the
previous year. In 2004, Community production is expected to increase further by +
1.1 % to 18.0 million tonnes. The United States is the third largest producer of
pigmeat, at 9.1 million tonnes, 1.4 % more than in 2002.
419.Due to the increase in EU production, in 2002 and 2003, production and consumption were unbalanced. The prices in the year 2003 started below average, peaked in de middle of the year, and returned to a very low level in the end of the year. The annual average price for 2003 was EUR 127.3/100kg and was 6.1
% lower than in 2002. In
The main destinations for exports of pigmeat, including fats and offals, in 2003 were Russia and Japan. To Russia 287
456 tonnes were exported (19.1 % of the EU total
pigmeat exports), to Japan 282 491 tonnes (18.7 %), followed by Hong Kong and
China with 178 981 tonnes (11.9 %).
3.2.5. Poultry meat
World production of poultry meat (1 000 t)
States Brazil China Japan Russia India
land EU-15 UE-25 World
1998 15 178 4 969 11 349 1 212 690 710 1 210 8 823 62 400
1999 16 039 5 647 11 951 1 213 748 820 1 180 9 148 65 333
2000 16 416 6125 12 873 1 195 754 1 081 1 194 8 939 69 156
2001 16 761 6 380 12 866 1 216 861 1 250 1 336 9 381 71 643
2002 17 268 7 239 13 262 1 229 937 1 401 1 414 9 383 11 109 74 377
2003 17 468 7 967 13 687 1 218 1 034 1 600 1 291 9 066 10 880 75 823
2004 E 9 149 11 063
2003/98 15.08 60.3 20.6 0.4 49.8 125 6.6 2.7 - 21.5
Source: FAO, European Union
423.Since 1998, the world production of poultry meat has increased regularly and in a substantial way (+
21.5 %). If overall that increase has been slowing down since 2001,
the percentages of growth are very heterogeneous according to the producing countries. Among the large producing regions, production increased at a higher rate than the average in India, in Brazil, in Russia, in China and in the United States (with increases varying between 15
% and 125 % between 1998 and 2003). In the European
Union, since 1998, the average increase has been 2.7 % with however falls of
production in 2000 (avian influenza in Italy) and 2003 (avian influenza in the Netherlands and Belgium).
2003/04, 215 500 tons of poultry were exported with export refunds, i.e. 20 % only of
428.15 500 tons of de-boned poultry meat and 2 500 tons of turkey meat can be imported without customs duties each year, to which 10 400 tons with reduced rate of duties within the framework of the quotas of minimum access and 11 900 tons under other bilateral agreements are added (Turkey, Israel, Chile) should be added.
429.Poultry meat prices which reached a high level as from May 2003 following the appearance of the avian influenza maintained themselves at a rather high level for all 2004, oscillating between 140 and 150 EUR/100 kg.
World production of eggs in shells (1 000 t)
States Mexico Brazil Japan Russia India China EU-15 World
1998 4.731 1.461 1.467 2.536 1.827 1.623 17.532 4.934 51.823
1999 4.912 1.635 1.509 2.539 1.846 1.683 18.510 5.066 53.833
2000 4.998 1.788 1.539 2.535 1.894 1.749 19.433 5.289 55.405
2001 5.084 1.892 1.604 2.514 1.960 1.870 20.229 5.328 52.766
2002 5.131 1.900 1.547 2.514 2.022 2.000 21.288 5.259 54.564
2003 5.123 1.882 1.550 2.500 2.040 2.200 22.333 5.185 55.828
2004 E 5.303
2003/98 8.2 28.2 5.5 1.5 11.6 35.5 27.3 5 7.7
Source: European Union, FAO
430.The world production of eggs in shell has increased by 7.7 % (TAV) between 1998
more than 2 %, not without having an important impact on the prices which reached
historically low levels (lower than 80 EUR/100kg for several months). These prices
should hardly go back to higher levels before the summer 2005 in view of the placings.
433.The common market organization is similar to that of the poultry meat.
434.With regard to the trade, export refunds are remained stable by the WTO in a volume
400 egg equivalent tons in shells in 2003/04. Since the summer 1995, the
exported quantities remained below the limitation agreed upon under the WTO agreement. During the GATT year 2003/2004, only 41
% of the volumes and 7.5 % of
the budget were used. Volumes will be used in better proportion during the marketing year 2004/2005 in view of the level of the prices and of overproduction situation in the EU.
188.8.131.52. World situation
435.In 2003, world honey production reached 1.31 million t what represents a slight increase (+
2.5 %) in relation to the previous year (FAO source). China remains first
world producer with production of 273 000 t. The EU-15 remains in second position
with 125 000 t, while the EU-25 produces 166 000 t.
Honey world production by country (1000 t.)
1999 2000 2001 2002 2003
China 236 252 255 258 273
UE 25 153 150 159 156 166
UE 15 115 111 119 116 125
United States 94 100 100 100 82
honey imports in 2003. China slipped into eleventh place behind Mexico, Hungary, Turkey, etc., since following the detection of residues of veterinary medicines in certain products of animal origin (including honey), the Commission took certain protective measures with regard to Chinese animal products in 2002. The import of honey from China was banned until 31 August 2004.
438.Pursuant to the new Council Regulation (EC) n° 797/200476 replacing Regulation
(EC) N°1221/97, on measures improving general conditions for the production and marketing of apiculture products, the Commission has adopted the decisions approving the national programmes for the marketing years 2005 2007.
4.1. Developments in 2004
439.The agrimonetary measures adopted in 2004 were limited to fixing the exchange rates to be applied to direct aids in Member States not having adopted the euro. Taking account of the EU enlargement on 1 May, specific exchange rates were fixed
converting, into the national currencies of the new Member States, the amounts that usually have an operative event for the exchange rate fixed at 1 January. Likewise, specific exchange rates were fixed for the conversion into national currency of the amounts to be granted under the Single Area Payment Scheme (SAPS) in the new Member States applying that scheme, i.e. the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland and Slovakia
5.RURAL DEVELOPMENT IN 2004
440.For the period 2000 2006 the rural development programming consists of the
following: 68 rural development programmes (RDPs) (co-financed by EAGGF Guarantee), 69 Objective 1 region programmes (operational programmes and single programming documents) with rural development measures (co-financed by EAGGF Guidance) and 20 for Objective 2 region with rural development measures (co-financed by EAGGF Guarantee).
execution (compared to annual appropriations) reached 98 %, meaning that almost all
the budget available for 2004 was spent. By member state, there was overspending (member states that spent more than their annual financial allocation) in Germany, Ireland, Luxembourg, Netherlands, Austria and Finland and underspending in the rest of the countries. Guarantee spending up to 2004 represents 68
% of the financial
allocations for 2000 2006 programming period.
444.Payments for EAGGF-Guidance reached 3 426 Million EUR in 2004 (calendar year):
2 962,6 Million for 2000 2006 programmes (Objective 1: 2 709,0; Leader+: 238,8;
PEACE: 14,8) and 463,8 million for the closure of 1994 1999 programmes.
445.The closure of the 1994 1999 programmes has reasonably progressed in 2004. 164 programmes remained open at the end of 2004 (out of the 402 received in March 2003). For the 164 programmes still open, an estimated amount of 700 million EUR (out of a RAL of 1 milliard EUR) remains to be paid. An important RAL subsists for Spain (230 mio EUR), France (191 mio EUR), Italy (188 mio EUR) and Germany (135 mio EUR).
446.At the end of 2004, the total payments for the 2000 2006 programmes represent 42 %
of the financial plan for the 2000 2006 programming period. According to the n+2 rule established in Regulation (EC) No 1260/1999, 23.96 million EUR were decommitted in 2004. These decommitments affected nine rural development programmes (4 German programmes, 2 Irish, 1 Italian, 1 Spanish and 1 of the Netherlands).
447.52 RDP modifications were approved by the Commission during 2004.
448.73 Leader+ programmes have been approved for the period 2000 2006. The payments in 2004 for these programmes amounted to 238 million EUR from EAGGF Guidance. Due to the lead time of this initiative (e.g. selection of Local Action Groups -- LAGs), the first years of the programming period were characterised by a low financial execution. Although the payments up to 2004 represent only 15.9% of the amount programmed for the whole programming period, considerable progress has been made in the year 2004.
5.1.1. Rural development programmes (EAGGF Guarantee)
451.Three Rural Development Programmes for the period 2000 2006 were approved for
Belgium: one federal and two regional (Flanders and Wallonia) programmes. The total public cost for these three programmes amounts to EUR 849.0 million, of which the EAGGF contributes with EUR 360.6 million.
184.108.40.206. Modifications of the RDP
452.In 2004, three amendments of the Flemish RDP were approved by the Commission. The 2003 amendment was approved by Decision C(2004) 1490 of 15 April 2004 and related to changes in the less favoured areas measure and to the introduction of new measures for the protection of hamsters and support for agri-environmental advice. The 2004 amendment was approved by Decision C(2004) 4412 of 11 November 2004 and related to a thorough review of several agri-environment measures. A further amendment was approved by Decision C(2004) 5875 of 30 December 2004, which related to the introduction of a new measure providing support for meeting standards.
453.The 2003 amendment of the Walloon RDP was approved by Decision C(2004) 2930 of 22 July 2004. It related to a complete review of the agri-environment measures.
454.Under the notification procedure, three amendments of the Flemish RDP were received in 2004: on 15 January in relation to the agro environment measure "reduced input of crop protection substances and fertilisers", on 16 April in relation to the measure "support for the marketing of quality agricultural products", and on 18 June in relation to the agri-environment measure "protection against soil erosion". Finally, under the information procedure, the Commission received two amendments to the financial plan of the Walloon RDP, on 31 March and 23 September, respectively.
220.127.116.11. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
5.1.3. Leader+ programme
458.Belgium has two Leader+ programmes: one for Flanders, involving total public expenditure of EUR
8.6 million, and one for Wallonia involving total public
expenditure of EUR 23.2 million.
459.In Flanders, five LAGs were selected, covering 12 % of the Region's territory and
6 % of its population. For Wallonia, fifteen LAGs were selected, covering 32 % of the
Region's territory and 12 % of its population. The two regional Leader+ network
units became fully operational in 2004, and the two Regions have agreed that the Walloon network unit would act as national contact point where appropriate.
460.By Decision C(2004)2307 of 18 June 2004, the Commission approved certain amendments to the Flemish Leader+ programme, relating to the arrangements for cooperation between territories and to the administrative provisions of the programme.
461.At the end of 2004, after five years of implementation, the total financial execution is
% in relation to the total amount of EAGGF-Guidance expenditure foreseen for
the period 2000 2006, that is EUR 0.8 million on a total of EUR15.9 million.
5.2. Czech Republic
5.2.1. Rural development programmes (EAGGF Guarantee)
462.The Czech Horizontal Rural Development Plan was approved by Decision C(2004) 3290 of 3 September 2004. The budget of the programme is EUR
during the period of 2004 2006, which will be complemented with national public funding of EUR
135.7 million. The horizontal rural development plan aims to
mitigate the differences in farm profitability in less-favoured areas that result from natural conditions, to improve the unfavourable age structure of farmers, to reduce the share of arable land in the total agricultural land area and to provide to a sufficient extent for the farming of agricultural land in conformity with the principles of Good Farming Practice.
contribution from EAGGF amounts to EUR 173.9 million during the period
2004 2006, which will be complemented by national public funding of EUR
76.7 million. As regards measures, special emphasis is laid on replacement of
outdated technologies, increase of competitiveness, consolidation of land ownership, protection of environment as well as to the stabilisation of existing work places in the Czech rural areas. The Czech Republic, except for the territory of its capital city is entirely classified as Objective 1 area.
5.3.1. Rural development programme (EAGGF Guarantee)
466.The total public cost of the Danish Rural Development Programme 2000 2006 is EUR
829.6 million including the EU contribution of EUR 348.8 million from the
EAGGF, Guarantee Section. The programme includes support for investments in holdings, organic farming, training, less favoured areas, agri-environment, improving processing and marketing of agricultural products, promoting the adaptation and development of rural areas and forestry.
18.104.22.168. Modifications of the RDP
467.The Danish authorities notified to the Commission modifications of the Rural Development Programme which concerned changes in support rates for agri- environmental measures and for less favoured area measures.
468.Proposals to modify the Rural Development Programme, for which a Commission Decision is required, were submitted in July 2004. The modifications mainly concern amendments of the existing measures as well as four new measures on agri- environment, training and forestry. The Commission decision is expected to be adopted early 2005.
22.214.171.124. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
472.The programme is progressing well. The payments in 2004 amounted to EUR 1.7
million. After four years of implementation the financial execution is 16 % in relation
to the amount foreseen for the programming period 2000 2006.
5.4.1. Rural development programmes (EAGGF Guarantee)
126.96.36.199. Modifications of the RDP
473.In 2004 Germany introduced one amendment concerning the German Framework Regulation and 11 requests to amend the regional programmes. In 2004 a consolidated financial table for Germany was established summarising all regional financial tables. The consolidated financial table was already amended once in 2004. Additionally 13 amendments were notified to the Commission.
474.The amendments introduced the following new measures: animal welfare, support of use of farm advisory services by farmers, funding of management of integrated rural development strategies by local partnerships and also support for farmers participating in food quality schemes. Some minor changes were done under the agri- environment schemes.
475.All amendments were approved before the end of the financial year.
188.8.131.52. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
476.For the year 2004 the consolidated financial table lays down an EU contribution of EUR
784.800 million. For the period of 16 October 2003 to 15 October 2004 the EU
contribution for the plan came to approximately EUR 799.864 million.
477.From the beginning of the programming period, global financial execution for EAGGF Guarantee is 70
% in relation to the budget foreseen for 2000 2006, that is,
in one region, EAGGF received no additional money from ERDF or ESF. Funds were also shifted between the measures of priority 5.
5.4.4. Annual Reports
481.The annual reports for the year 2003 showed that in general the implementation of measures relating to the most important measures such as Article 33 measures and agri-environmental measures were satisfactory. The uptake of the investment aid, lagging behind the forecasts until 2003, has further improved.
5.4.5. Leader+ Programme
482.In 2004 all 13 German regional programmes were amended. In total EUR 4.64 million indexation funds were allocated. Two regions did not make use of the additional funds and the money was reallocated to the other regions. Due to the low demand until now, most regions also made a shift from Action 2 (support for cooperation between rural territories) to Action 1 (Integrated territorial rural development strategies of a pilot nature). The measures of Leader+ were rarely subject of amendments.
483.Due to the n+2 rule in four Leader+ programmes a total amount of EUR 4,531 million had to be decommitted.
5.5.1. Rural development programme (EAGGF Guarantee)
484.The total EAGGF (Guarantee) budget 2004 2006 for the Estonian Rural Development Programme is EUR 150.5 million. The total eligible public cost of the programme is EUR 188.16 million.
184.108.40.206. Modifications of the RDP
488.The measures for supporting advisory service, the Leader initiative, forestry and land improvement have not been approved operational by the national authorities. We are encouraging the authorities to launch the measures without further delay.
5.6.1. Rural development programme (EAGGF Guarantee)
489.The rural development programming document (RDP) for Greece accounts for EUR
2 686.4 million, with an EU-contribution of EUR 993.4 million from the
EAGGF Guarantee Section. It includes the 4 accompanying measures. Despite good payment levels, the RDP still encounters some difficulties particularly with regards to the agri-environmental actions.
220.127.116.11. Modifications of the RDP
490.A modification was notified to the Commission in 2004.
18.104.22.168. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
491.In 2004 payments reached to EUR 125.6 million (corresponding to 85.5 % of the
EAGGF Guarantee budget planned for 2004).
492.Since the beginning of the programming period, the overall financial implementation for EAGGF Guarantee has reached 64.9
% of the planned amount for 2000 2006, i.e.
an amount of EUR 644.7 million has been paid out of the foreseen amount of EUR 993.4 million.
5.6.2. Operational programmes or Single Programming Documents
493.The national mono-fund EAGGF Guidance Section programme for Greece was approved by the Commission on 6 April 2001. The Community contribution to this programme is of EUR
5.6.3. Leader+ Programme
495.There is only one Leader+ programme for Greece. It was approved on 19 November 2001 with a total cost, after the 2004 indexation, of EUR
368.7 million of which
EUR 186.13 million is the EAGGF Guidance Section contribution. In 2002, the
management Authority selected the 40 local action groups as provided by the programme. The programme was amended in August 2004 following the midterm evaluation and planned indexation. The monitoring committee met twice in 2004.
496.For 2004, the payments amount to EUR 19.820 million.
497.The accumulated EAGGF Guidance Section payments (EUR 39.613 million) since
the beginning of the 2000 2006 programming period account for 21 % of the total
budget of the programme.
5.7.1. Rural development programme (EAGGF Guarantee)
498.In 2000, the Commission approved 2 horizontal plans ("accompanying measures" and "improvement of structures") and 7 regional programmes (Aragon, Catalonia, Bask Country, Navarre, Balearics, La Rioja, Madrid).
22.214.171.124. Modifications of the RDP
499.On 24 March the Commission has approved an amendment of the rural development programme of Aragon. This amendment increases the maximal aid intensity for the measure "Training" and modifies both exceptions to Article 37(3) of Regulation (EC)
No 1257/1999 and sectors involved in measure "processing and marketing of agricultural products". This amendment completes a series of minor adjustments (which do not require any new Commission decision) submitted as "notification" to STAR Committee in March 2004.
500.On 19 November, the Commission has approved an amendment of the rural development programme of Navarre. This amendment increases the financial ceiling of the measure "processing and marketing of agricultural products" and introduces two Natura 2000 actions in the framework of the measure `compensatory allowances in favour of areas with environmental restrictions' (Article 16 of Regulation (EC)
126.96.36.199. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
503.For this period, payments have reached EUR 515.3 million (98.4 % of the EAGGF-
Guarantee budget planned for 2004).
504.After 5 years of implementation, the global financial expenditure amounts to EUR
2.392 million, which represents 68.7 % of the EUR 3.481 million expenditure
planned for 2000 2006.
5.7.2. Operational programmes or Single Programming Documents
505.In 2000 and 2001, the Commission approved 2 horizontal programmes (one mono- fund for "Improvement of Structure"' in objective 1 areas and one multi-fund for "Technical Assistance") and 10 multi-fund regional programmes (Andalucia, Asturias, Cantabria, Castilla la Mancha, Castilla y Leon, Extremadura, Galicia, Murcia, Canarias and Valencia), supplemented by their programme complement.
506.During 2004, the Commission amended the operational programmes and their programme complements in the framework of the mid-term review, in order to incorporate the additional EAGGF-Guidance funds resulting from the performance reserve allocation (EUR
213.25 millions). Accordingly, individual EAGGF envelopes
have increased for all programmes except for Technical Assistance. In addition, the Spanish Authorities have taken advantage of this exercise to reallocate funds between different measures within several programmes.
507.After 5 years of implementation, the global financial expenditure amounts to EUR
2 367.816 millions, which represents 47.2 % of the EUR 5 021.2 million
expenditure planned for 2000 2006.
5.7.3. Leader+ Programme
5.8.1. Rural development programme (EAGGF Guarantee)
188.8.131.52. Modifications of the RDP
512.On 25 September 2003, the French Authorities submitted a draft amendment of the National RDP, in order to take account of the appropriations released from the modulation (213 million EUR). The new funds were allocated to agri-environment actions. The amendment was approved by a Commission Decision on 15 March 2004.
513.On 23rd December 2003, the Commission received from the French authorities a second amendment request, which was approved on 7 October 2004.
514.It adapts priority "Orienting farms towards sustainable agriculture by investing in orchards". It covers also the main features of the support measures for investments in the farms, less-favoured areas, agri-environment, processing and marketing of agricultural products and environmental protection. Finally, it adapts the financial table according to Commission Decision C(2004) 592, which fixes the new indicative allocations of the appropriations relating to the measures of rural development under the European Agricultural Guidance and Guarantee Fund, Guarantee Section, for the period
2000 2006. This decision increases France's EAGGF-Guarantee
appropriations by 10.8 million EUR in 2004, by 2.4 million EUR in 2005 and by 195.8 million EUR in 2006.
184.108.40.206. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
515.During this period, payments reached EUR 843.4 million (98.98 % of the EAGGF
Guarantee Section's budget planned for 2004 (EUR 852.1 million)).
516.After 5 years of implementation, the overall financial implementation for EAGGF guarantee is 59.1
% of the amounts planned for 2000 2006, i.e. a carried out amount
5.8.3. Leader+ Programme
521.The French National Programme on Community Initiative Leader+ was adopted on 8 August 2001 under the form of a global grant. Accordingly, the National Centre for Setting-up of Farming Structures (CNASEA) was designated as management authority. The total Community contribution amounts to EUR 268,1 million.
522.The implementation is carried out by 140 Local Action Groups (LAGs), which were selected in 2002. Their action plans were set up in 2003, after signature of bilateral conventions with CNASEA.
523.Payments reached EUR 32.685 million in 2004, although the expenditure statements
carried out did not allow avoiding the N+2 de-commitment. The financial implementation since 2000 has reached EUR
62 million, which represents 23 % of the
total budget appropriations for 2000 2006.
5.9.1. Rural development programme (EAGGF Guarantee)
524.The total public expenditure of the programme is EUR 3 675.1 million, including an
EU contribution of EUR 2 388.9 million from the European Agricultural Guidance
and Guarantee Fund, Guarantee Section. The programme covers all rural areas and includes support for early retirement, less-favoured areas, agri-environment and afforestation.
220.127.116.11. Modifications of the RDP
525.In 2004 Ireland introduced one amendment concerning the agri-environment measure (REPS). Payments are increased up to the maximum allowed (EUR
200/ha) subject to
additional undertakings for farmers. Moreover degressive payments are introduced for any hectare of land declared in the scheme. A revised financial table taking into account the adjusted allocation in the in the Commission Decision C(2004) 592 was notified to the Commission.
decommitment (2004 Commission Decision). The EAGGF-Guidance section contribution for the 2000 2006 period amounts to EUR
164.34 million. Up to the end
of 2004, 22 % of the EAGGF funds have been absorbed (EUR 36.224 million).
528.EAGGF Guidance contributes to the PEACE II operational programme in the Border Regions. No decommitment of EAGGF credits is at stake.
529.In 2004 the Community Support Framework and Regional Operational Programmes were amended. Due to the mid term review the performance reserve was allocated to the structural fund programmes for the regional development. No performance reserve was allocated to EAGGF.
5.9.3. Leader+ Programme
530.In 2004 the Leader+ programme was amended and EUR 845 878 indexation funds
were allocated to Ireland. These funds were allocated to Action 1 (Integrated territorial rural development strategies of a pilot nature). Additional EUR
41 .000 has
been shifted from Action 2 (support for cooperation between rural territories) to Action 1.
531.The EU contribution 2000 2006 now amounts at EUR 48.745 million. After 5 years
of implementation, the financial expenditure amounts to EUR 13.4 million, which
represents 28 % of the initial budget of EUR 47.9 million for 2000 2006.
5.10.1. Rural development programme (EAGGF Guarantee)
532.In Italy 21 rural development programmes are cofinanced by EAGGF. The total amount of public expenditure of the rural development programmes for Italy amounts
8 815.2 million including a Community contribution of EUR 4 473.1 million
provided by the EAGGF Guarantee Section.
5.10.2. Operational programmes or Single Programming Documents
18.104.22.168. Amendments of the OPs or SPD
536.The seven Regions Obj.1 (Sicily, Sardegna, Calabria, Basilicata, Campania, Puglia and Molise) are covered by multi-fond operational programmes. In 2004 the Commission approved modifications of the OPs in all the 7 Regions following the results of the Mid Term Evaluation and the distribution of the performance reserve at community (+
4 %) et national level (+ 6 %). The increase of EU contribution due to
the performance reserve amounts to EUR 309.7 million. Therefore the total amount of
EAGGF contribution (Guidance section) in the Operational Programs amounts to EUR
3 292.3 million EUR for the entire programming period 2000 2006.
22.214.171.124. Level of payments in 2004
537.The 7 regions of the Objective 1 benefited from an EAGGF contribution of EUR 418.9 million in terms of payments in 2004. Since the beginning of the programming period, the paid amounts (EUR
789.2 million) have been accounting for 25 % of the
amount of the EAGGF Guidance Section planned for the whole programming period (EUR
3 292.3 million)
5.10.3. Leader+ Programme
538.For the programming period 2000 2006, Italy has approved 21 Regional Programmes and 1 National Network Programme. During 2004 five programmes have been modified with Commission decision (Campania, Sardegna, Toscana, Friuli and Network). Modifications concerned primarily the adaptation of several measures of the programme to take account of the effective implementation and the reprogramming of the financial scheme.
539.For the programme Leader+ Lazio, a Commission Decision has been approved in 2004 to decommit an amount of EUR
1.118 million EUR of EAGGF contribution in
5.11.1. Rural development plans (EAGGF Guarantee)
543.Cyprus is the only country among the new Member States to benefit from the Community solidarity as defined for obj.2 regions.
544.The Commission approved in 2004 the Rural Development Plan (2004 2006) for Cyprus, to be co financed by the "European Agriculture Guarantee and Guidance Fund" (EAGGF) Guarantee section. The Rural Development Plan (2004 06) for Cyprus will cover the areas of the country under effective control of the internationally recognised government of the Republic of Cyprus.
545.The Rural Development Plan (2004 06) for Cyprus represents 58 % of the overall
Community financial contribution during the current programming period and the remaining 42
% regards ERDF, ESF and FIFG contributions. The EAGGF contributes
with a total amount of EUR 74.8 million during this period and will be complemented
by national public funding of EUR 69.08 million and by EUR 14.42 million additional
State Aids. In addition it is estimated that the private sector will contribute with EUR.33.91 million. It is the most important programming document from the financial point of view, reflecting the importance of the sector in the country and the attention paid to this sector by the Cypriot authorities.
546.The programme includes a broad range of rural development measures which give a special emphasis to the Improvement of the Infrastructure and the Competitiveness of the rural economy of the country, the Strengthening and the Diversification of the rural areas and the Protection of the Environment. The general aim is to foster the sustainable economic development of the rural areas and to improve the prosperity of the population living in the countryside. The plan intends not only to respond to the structural needs of Cyprus agriculture and rural economy but aims also to improve its competitiveness and multi-functionality, to accelerate its economic diversification, to promote entrepreneurship and finally strengthen its export-oriented growth and interaction with tourism.
126.96.36.199. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
550.For the period of 1 January 2004 to 15 October 2004, the EU contribution for the Plan equals the advance payment of EUR
7.48 million (10 % of the total amount of the
5.12.1. Rural development plans (EAGGF Guarantee)
551.In the 2004 the Commission approved the Latvian Rural Development Plan (RDP) 2004 2006. The total public cost is EUR
410.1 million, including a contribution of
EUR 328,1 million from EAGGF-Guarantee. The programme includes support for
producer groups, meeting standards, less favoured areas, agri-environment, early retirement and support for semi-subsistence farms.
188.8.131.52. Modifications of the RDP
552.No modifications submitted in 2004.
184.108.40.206. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
553.The total amount paid by the end of 2004 was EUR 32.8 million (10 % of the entire
budget foreseen for the 2004 2006 programming period).
5.12.2. Operational programmes or Single Programming Documents
554.In 2004 the Commission approved the Latvian Single Programming Document (SPD) for Objective 1. The programme includes support for investments in agricultural holdings, setting up of young farmers, training, improving processing and marketing of agricultural products, promoting the adaptation and development of rural areas and forestry and development of Local Actions (Leader+ Type measures).
558.The Plan contains the following measures: Early retirement, LFA, Agri-environment, Afforestation of agricultural land, Support for semi-subsistence farms undergoing restructuring, Meeting standards, Technical assistance, Complimentary national direct payments and SAPARD over-commitments.
220.127.116.11. Modifications of the RDP
559.No modification submitted in 2004.
18.104.22.168. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
560.The advance payments from the Commission have been transferred. No spending by Lithuania has been declared for 2004.
5.13.2. Operational programmes or Single Programming Documents
561.In 2004 the Commission approved the Objective 1 programme for Lithuania. EAGGF contributes with EUR
122.898 millions to the SPD, which is 13.7 % of the total
Structural Fund envelope for the period 2004 2006.
562.The measures chosen for implementation are the following: Investments in agricultural holdings, setting up of young farmers, Training, Improving processing and marketing of agricultural products, Forestry, Promoting the adaptation and development of rural areas and Leader+ type measure.
5.13.3. Level of payments
563.No spending by Lithuania has been declared for 2004.
5.14.2. Leader+ Programme
567.In 2004, the programme absorbed EUR 473
568.The report concerning the mid term evaluation was submitted and will be subject of an update in 2005. Indeed at the time of the first report, it was too early to draw conclusions regarding the implementation of the programme.
569.A financial modification was carried out to take into account the indexation
5.15.1. Rural development plans (EAGGF Guarantee)
570.The National Rural Development Plan was approved by Commission decision n° C(2004)3235 of 26 August 2004.
571.The total public expenditure to implement the plan is set at EUR 754.14 million for
the period 2004 to 2006. This includes a contribution from the EAGGF Guarantee Section of EUR
602.30 million. Expenditure is eligible from 13 April 2004 onwards.
572.The programme includes support for measures aimed at: safeguarding and improving the conditions of the environment through a number of agri-environmental schemes, support to help farmers to comply with the new demanding EU standards in the field of environmental and hygiene prescriptions, afforestation of agricultural land;
providing additional income and job opportunities for farmers on weaker areas through compensatory allowances for less favoured areas; increasing the economic viability, financial conditions and market positions of producers through the early retirement measure, support for semi-subsistence farms undergoing restructuring and to the establishment and starting up of producer groups. Technical Assistance will assist in the implementation of the priorities and measures of the programme and contribute to the achievement of its objectives.
SAPARD, stopped. The starting date of eligibility of expenditure part financed by the EAGGF under the operational programme was therefore set at 30 September 2004.
577.The total public expenditure for the operational programme is set at EUR 428.5
million for the period 2004 2006. This includes a financial contribution of EUR 317.2
million from the European Union: respectively EUR 312.8 million from the EAGGF,
Guidance Section, and EUR 4.4 million from the Financial Instruments for Fisheries
578.The operational programme is based on the following priorities: 1) Establishment of competitive basic material production in agriculture through support to investments in the agriculture and fisheries sector; setting-up of young farmers and acquisition of adequate skills and targeted training for persons involved in agricultural activities and in the conservation of landscape; 2) Modernisation of food processing; 3) Development of rural areas, through diversification of the agricultural activities and expansion of rural business activities, improvement of the infrastructure, preservation of the natural and cultural heritage and strengthening rural communities through the implementation of the Leader+ approach. Technical Assistance will assist in the implementation of the programme.
22.214.171.124. Level of commitments and payments in 2004
579.On the basis of the decision approving the programme, the Commission made a Community budget commitment of EUR
74.16 million (of which EUR 73.13 million
for the EAGGF and EUR 1.02 million for the FIFG) and a payment on account of
EUR 31.72 million (of which EUR 31.28 million for the EAGGF part financed
measures and EUR 0.43 million for the FIFG part financed measures).
5.16.1. Rural development plans (EAGGF Guarantee)
580.The Rural Development Programme for Malta aims to modernise holdings with respect to quality and competitiveness in order to offer more differentiated, higher quality products and services to domestic consumers and foreign tourists, to promote environmentally friendly production methods in line with rural heritage, to diversify and develop the multifunctional role of rural enterprises and to improve and expand the capacity building in order to ensure the successful implementation of the Rural Development Plan. The total cost of the programme is EUR
126.96.36.199. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
582.On the basis of the decision approving the programme, the Commission made a Community budget commitment of EUR
8.1 million and an advance payment on
account of EUR 2.69 million. No payments by the Maltese authorities have been
5.16.2. Operational programmes or Single Programming Documents
583.The Single Programming Document under Objective 1 of the Structural Funds, for which Malta as a whole is eligible, contains two measures which are Investments in Agricultural Holdings and Improving the Marketing and Processing of Agricultural Products. Total public expenditure is that of EUR 6 million and the EU contribution
is that of EUR
584.On the basis of the decision approving the programme, the Commission made a Community budget commitment of EUR
983 219 and an advance payment on account
of EUR 420 000. No payments by the Maltese authorities have been carried out.
5.17. The Netherlands
5.17.1. Rural development programme (EAGGF Guarantee)
585.The total public cost of the rural development programme for the Netherlands is EUR
951.60 million, including an EU contribution of EUR 417 million from the
European Agricultural Guidance and Guarantee Fund, Guarantee section (EAGGF- Guarantee).
188.8.131.52. Modifications of the RDP
5.17.2. Objective 1 Programmes
591.Flevoland is classified as a phasing out Objective 1 region. In 2004 the Commission provided a performance reserve of EUR
6 million to the Single Programming
Document. An amount of EUR 470.000 million was added for EAGGF for this
programme. In 2004 an amount of EUR 700 000 of EAGGF was committed for this
592.The results of the mid-term evaluation of this programme have been discussed this year.
593.A modification of the Flevoland Objective 1 programme, concerning the indexation and the performance reserve was approved by Commission Decision by the end of 2004.
5.17.3. Leader+ Programme
594.In the Netherlands 4 Leader+ programmes were approved.
595.In 2004 for all the four Leader+ programmes new modifications have been sent and approved. Modifications mostly concerned indexation and changes in priorities. For 2004 EUR
13.8 million was foreseen. Since the adoption of the Leader+ programmes
a total amount of EUR 26 million EU contributions was paid (28 % of the total budget
for the period). The selection and implementation of projects under priority 1 is running well. Priority 2 "trans-national co-operation" is lagging behind schedule.
5.18.1. Rural development programme (EAGGF Guarantee)
596.The total public cost of the Austrian Rural development Programme 2000 2006 is EUR
6 570.06 million, including an EU contribution of EUR 3 208.10 million from
the EAGGF Guarantee Section. The programme includes support for investments in holdings, setting up of young farmers, training, less favoured areas, agri-environment, improving processing and marketing of agricultural products, promoting the adaptation and development of rural areas and forestry.
2003 to 15 October 2004 the payments of EAGGF-Guarantee amount to approximately EUR
468.18 million (almost 100 % of the available funds).
599.From the beginning of the programming period, global financial execution for EAGGF-Guarantee is 71.6
% in relation to the total budget foreseen for 2000 2006,
that is EUR 2 286.14 million on a total of EUR 3 208.1 million.
184.108.40.206. Annual Report
600.The annual report for 2003 showed that the implementation of measures relating to the most important measures as less-favoured areas and agri-environmental measures were satisfactory.
5.18.2. Objective 1 Programmes
601.The total public cost of the Austrian Objective 1 programme (Burgenland) for the programming period 2000/2006 is EUR
365.1 million, including an EU contribution
of EUR 117.315 million.
220.127.116.11. Operational programmes or Single Programming Documents
602.The 3rd modification of the Austrian Objective 1 programme was approved by Decision C(2003) 3975 of 21 October 2003 and the fourth modification of the Austrian Objective 1 programme was approved by Decision C(2004) 3961 of 8 October 2004. The fifth modification is on the way to be approved. The modifications are mainly dealing with the distribution of the contribution of the funds.
18.104.22.168. Level of payments in 2004
603.The programme foresees public expenditures for RDP measures (EAGGF) in 2004 totalling of EUR
7.5 million and an EU (EAGGF) contribution of EUR 5.6 million.
Since the adoption of the objective 1 programme Burgenland an amount of EUR
607.As result of public tender 56 local actions groups have been selected under the programme. The groups cover 46 996 sq. km or approximately 45
% of the territory
with a population of 2 175 079 inhabitants.
608.The programme foresees expenditures in 2004 totalling EUR 26.9 million. This
includes an EU contribution of EUR 12.6 million and a contribution of
EUR 9,6 million from the private sector.
609.Since the adoption of the Austrian Leader+ programme an amount of EUR
47.5 million has been paid (63.3 % of the total budget for the period 2000
2006). Concerning the n+2 rule no problem was encountered during the year 2004.
5.19.1. Rural development plans (EAGGF Guarantee)
610.The Polish authorities presented the final version on 12 August 2004; this document was approved by Commission Decision of 6 September 2004. The programme offers a set of instruments to help restructuring the agricultural sector and its environmental sustainability and contains the following measures: early retirement, Support for semi-subsistence farms undergoing restructuring, support for less-favoured areas, support for agri-environment and animal welfare, support for farms to meet the EU standards (environmental protection, public health, and animal health and welfare).
611.Complementary measures include afforestation of agricultural land, support to agricultural producers' groups and technical assistance. RDP funding also supplements the direct payments and finances the outstanding projects approved under the SAPARD programme.
612.The total public expenditure foreseen for the period 2004 2006 is EUR 3 571.8
million of which the EU-contribution makes up EUR 2 866.4 million.
617.The first priority is to support changes and adjustments in the agricultural and food sector. It includes support for farm investment, for setting up of young farmers investments in food processing and marketing firms which intend to bring them to EU standards and closer to consumer demands. As a complement to investment aid, soft measures are provided in the form of vocational training and farm advisory services.
618.The second priority is aimed at sustainable development of rural areas. Measures to facilitate land reparcelling and ameliorate agricultural water management as well as infrastructure for farming households are designed to improve farm structure and broader environmental sustainability. Assistance to rural diversification, inter alia into tourism, craft, services and adding value to farm produce are envisaged. Support to village renewal, improving cultural and natural heritage of rural areas is expected to increase the attractiveness of rural areas for business development. A support is envisaged to Leader+ like activities, which aims to support grassroot level initiatives, and enhance the broad institutional cooperation, promote innovation and rural networks. A separate measure is designed to help the forestry potential damaged by a hurricane in North-East Poland.
619.Technical assistance measures are planned to facilitate the monitoring, implementation and evaluation of the SOP.
620.The total public expenditure foreseen for the period 2004 2006 is
EUR 1 784.1 million of which the EU-contribution makes up EUR 1 192.6 million.
5.20.1. Rural development programme (EAGGF Guarantee)
621.The total public expenditure for the three Rural Development Programmes (Mainland Portugal, Açores and Madeira) is set at EUR
2 005.525 million for the period 2000
2006. This includes a contribution from the EAGGF, Guarantee Section, of EUR 1 516.8 million.
5.20.2. Operational programmes or Single Programming Documents
22.214.171.124. Modifications of the operational programmes
625.All the eight Portuguese OPs (five regional OPs of Mainland Portugal Norte, Centro, Alentejo, Lisboa e Vale do Tejo and Algarve , OP Madeira, OP Azores and Mainland OP "Agriculture and Rural Development") were modified due to the allocation of the EU performance reserve and the national reserve.
626.The OP Technical Assistance has included an EAGGF measure from 2004 to 2006 with an amount of EUR 250 000.
627.The national reserve allocated approximately EUR 111 million to EAGGF with the
following distribution: Mainland OP "Agriculture and Rural Development" EUR 60.5 million; OP Centro EUR 4 million; OP Alentejo EUR
628.The EAGGF amount allocated to OP Alentejo from the national reserve is to be used in the Alqueva project. In fact, a total of EUR
143.4 million was allocated to this
project, of which EUR 46.9 million to EAGGF (secondary irrigation system) and
EUR 96.5 million to ERDF (primary irrigation system).
629.The performance reserve allocated approximately EUR 58 million to EAGGF, with
the following distribution: OP "Agriculture and Rural Development" EUR 45.3
million; OP Madeira EUR 8 million; OP Azores EUR 3 million, OP Lisboa e Vale do
Tejo EUR 1.7 million.
630.OP Norte, Centro and Alentejo each reduced their EAGGF amounts by EUR 1.5 million (transfer of EUR
4.5 million to OP "Agriculture and Rural
631.In the context of the Mid-Term Review, a new action ("Setting-up and modernisation of small scale handicraft enterprises") was included in the five regional OPs of Mainland Portugal and one other in the Mainland OP "Agriculture and Rural Development" ("Innovative actions for development and improvement of support infrastructures in agriculture").
635.In 2004, the Leader+ Programme was modified twice : the first modification aimed notably to take into consideration the 2
% indexation of the 2004, 2005 and 2006
commitment appropriations; the second modification aimed at improving certain aspects of the programme management, following the main findings and recommendations of the mid-term evaluation.
5.21.1. Rural development plans (EAGGF Guarantee)
636.The Slovene Rural Development Plan was approved by the Commission Decision C(2004) 3224 of 24 August 2004. The financial contribution from EAGGF amounts to EUR 281,6 million during the period of 2004 2006, which will be complemented with national public funding of EUR
71.5 million. The Rural Development Plan aims
to ensure the goals of the rural development policy through two main priorities: sustainable development of agriculture and countryside, and economic and social restructuring of agriculture. The first objective shall be achieved through agri- environmental measures and support to less-favoured areas while measures aiming at early retirement and meeting standards shall contribute to economic and social restructuring.
126.96.36.199. Modifications of the RDP
637.No modifications were submitted in 2004.
188.8.131.52. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
638.For the year 2004 the consolidated financial table lays down an EU contribution of EUR
84.7 million. For the period of 26 February 2004 (the eligibility date) to
15 October 2004 the EU contribution for the Plan amounts for EUR 28.16 million
which represents the advance payment (10 % of the overall amount for the Plan).
5.22. Slovak Republic
5.22.1. Rural development plans (EAGGF Guarantee)
641.The Rural development plan of the Slovak Republic 2004 2006 was approved in July 2004, by the Commission Decision C(2004) 3238. The budget of the programme represents EUR
397.1 million which are completed by EUR 123.5 million from
Slovak national budget and by EUR 41.1 million of the private expenditures. The
overall amount allocated for the Rural development plan is of EUR 561.8 million. The
plan has 2 priorities and contains 14 measures. The global objective of the Plan is to improve efficiency in the agricultural production sector and the quality of life of rural populations "Multifunctional agriculture and sustainable rural development".
642.The specific objectives of the Plan are:
a)to support the development of rural economy and to guarantee improvement of the standard of life of rural populations;
b)to improve the development of rural areas through access to infrastructure services, thus retaining population of rural communities;
c)to guarantee environmental protection and biodiversity of rural environments, while taking care of sustainability of utilisation of rural resources.
184.108.40.206. Modifications of the RDP
643.No modifications were submitted in 2004.
220.127.116.11. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
644.The advance payments from the Commission have been transferred.
5.23.1. Rural development programme (EAGGF Guarantee)
646.In 2000 the Commission approved three rural development programmes, two for the continental Finland and one for Ĺland Islands, which is an autonomous province of Finland.
18.104.22.168. Modifications of the RDP
647.No modifications were submitted in 2004.
22.214.171.124. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
648.For this period Finland claimed an EU contribution for the programmes approximately of EUR
330 million. This means that the total budget of EUR 321
million was (over) spent (3 %).
649.From the beginning of the programming period, global financial execution for EAGGF-Guarantee is 70
% in relation to the total budget foreseen for 2000 2006,
that is EUR 4 000.5 million on a total of EUR 5 711.1 million.
5.23.2. Operational programmes or Single Programming Documents
650.In 2000 the Commission approved two Single Programming Documents (SPDs) for Objective 1 implemented in Finland: Eastern Finland and Northern Finland.
126.96.36.199. Level of payments in 2004
651.After four years of implementation an amount of EUR 78.79 million (39.97 %) has
been paid out of the total budget 2000 2006.
afforestation of non-agricultural land and promoting the adaptation and development of rural areas and forestry.
188.8.131.52. Modifications of the RDP
655.A proposal to modify the Rural Development Programme for Sweden, for which a Commission decision is required, was submitted to the Commission in July. The modification proposal concerned agri-environment and the promotion of the adaptation and development of rural areas and was considered by the management committee in December with a view to having a Commission decision adopted early 2005.
184.108.40.206. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
656.The level of payment is 98.08 % (expenditure/envelope), the total expenditure
amounts to EUR 163.79 million compared to an envelope of EUR 167 million.
657.From the beginning of the programming period, global financial execution for EAGGF-Guarantee is 72.5
% in relation to the total budget foreseen for 2000 2006,
that is, EUR 819.1 million on a total of EUR 1 129.9 million.
5.24.2. Operational programmes or Single Programming Documents
220.127.116.11. Level of payments in 2004
658.In 2000 the Commission approved the Objective 1 programmes for Norra Norrland and Södra Skogslänsregionen.
659.After four years of implementation the financial execution is 38.83 % in relation to
the funds committed in the beginning of the programming period for Objective 1 Norra Norrland. The corresponding figure for Objective 1 Södra Skogslänsregionen amounts to 45.76
%. This means that for Objective 1 Norra Norrland, an amount of
5.25. United Kingdom
5.25.1. Rural development programme (EAGGF Guarantee)
663.There are four Rural Development Programmes for the period 2000 2006: England, Northern Ireland, Scotland and Wales. The total cost for these programmes is EUR
3 200 million, of which the EAGGF Guarantee section contributes with
EUR 1 168 million.
18.104.22.168. Modifications of the RDP
664.The respective authorities of the United Kingdom notified the Commission of modifications to the Rural Development Programmes for England, Scotland, Northern Ireland and Wales. The changes concerned the measures for training, less favoured areas, agri-environment, forestry and the adaptation and development of rural areas.
665.Proposals to modify the Rural Development Programmes for England, Scotland, Wales and Northern Ireland for which a Commission decision is required, were submitted to the Commission in 2004. The modifications concern the measures for support to less favoured areas, for agri-environment and animal welfare. In the case of the Scotland modification it was proposed to introduce the measures for training, the adaptation and development of rural areas and participation in food quality schemes. The Northern Ireland 2003 modification to the LFA measure was approved by Commission Decision of 29 November 2004.
22.214.171.124. Level of payments in the period from 16 October 2003 to 15 October 2004 (EAGGF
666.The level of payment for all UK Rural Development Programmes is 91 % of the
EAGGF-envelope for the year 2004. The total expenditure amounts to EUR
155 million compared to an envelope of EUR 171 million.
Further claims for payment were made before the end of December 2004 and these will be paid in 2005. All the programmes reached their respective N+2 targets.
671.The total amount paid out of EAGGF-Guidance for the PEACE II Programme
managed jointly with Ireland was EUR 18 million (41 % of the envelope of
EUR 44 million for the years 2000 2004).
5.25.3. Leader+ Programme
672.The UK has four Leader+ programmes: England, Northern Ireland, Scotland and Wales with 55 Local Action Groups. The total cost of the four programmes amounts
266 million, of which the EAGGF contributes with EUR 113 million.
673.By the end of 2004 a total amount EUR 31 million was paid (27 % of the total budget
for the 2000 2006 programming period).
674.All the programmes reached their respective N+2 targets.
6.ENVIRONMENT AND FORESTRY
6.1. Other environmental measures
675.In the wake of its January 2000 and March 2001 communications entitled "Indicators for the integration of environmental concerns into the common agricultural policy"
and "Statistical information needed for indicators to monitor the integration of environmental concerns into the common agricultural policy"
80, the Commission
provided the conceptual input for the IRENA81 project and presented an analytical
framework including the identification of a set of 35 agri-environmental indicators as well as the available sources of information for compiling that set of indicators. IRENA follows a Memorandum of Understanding for cooperation on agri- environmental indicators between several Commission services and the European Environmental Agency. Fact sheets for the 35 indicators, an Indicator Report and an Indicator-based Assessment Report were produced in 2004. A Commission Communication (in the fourth quarter 2005) will report to the Council and to the European Parliament on the development of agri-environmental indicators and on potential data needs to improve, update and extend the indicators.
specific ad hoc working group was established in 2003 and met several times at the end of 2003 and the beginning of 2004 to take stock of the main achievements related to the relevant policy measures of the BAP for Agriculture as implemented at Community and national levels. Its contribution was included into the Commission report presented at Malahide. The outcome of the Malahide Conference was discussed in the Council (Environment) in June 2004. Council conclusions were adopted requesting the Commission to define priorities and targets in all sectors concerned and to propose in 2005 specific measures able to contribute to the objective of halting European biodiversity loss by 2010.
677.Council Regulation (EC) No 870/2004 establishing a Community programme on the conservation, characterisation, collection and utilisation of genetic resources in agriculture
83 was adopted in May 2004. This new Community programme covers
actions that aim to support, complement or coordinate at Community level work undertaken at local, regional, or Member State level in line with the aims of the CAP towards sustainable agriculture. Smaller-scale measures may also cover in situ/on- farm genetic resources conservation activities (reproduction of genetic resources by farmers, on their own farm). The actions will be trans-national, taking into account, where appropriate, bio-geographic regional aspects. The work programme for the implementation of the Community programme is foreseen to be adopted by the Commission in December 2004.
678.Agriculture plays a determining role in other Community initiatives aimed at safeguarding the environment. The measures currently being carried out to protect surface water and groundwater
84 are one example of this. Under the Nitrates
Directive, Member States must draw up action plans in designated vulnerable zones in order to reduce nitrate pollution at source. The 1979 Birds Directive is another relevant Community initiative, which obliges Member States to protect the habitats of their wild bird populations. Lastly, an ecological network known as "Natura 2000" has been set up under the 1992 Habitats Directive. The lists of sites of Community importance for the Macaronesian
85 and Alpine86 biogeographical regions were
adopted by the Commission respectively in 2001 and 2003. In order to address the issue of appropriate Community financial support for the implementation of the Natura 2000 network, the Commission adopted in July 2004 a Communication on financing Natura 2000
sustainable use of pesticides. This strategy is to complement the existing legislative framework, which focuses on the beginning and end of the life cycle of pesticides. The Commission also presented a communication entitled "Towards a thematic strategy for soil protection"
90, which constitutes a first step towards drawing up a
genuine Community protection strategy and is both descriptive and action-orientated, thus providing a full picture of this complex issue that can serve as a basis for future work. The Commission communication "Towards a thematic strategy on the sustainable use of natural resources"
91 also seeks to stimulate debate on a framework
for exploiting and managing resources in line with the objectives of the European Union's rural development strategy. A further example is Directive 3004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage
92, adopted by the European Parliament and the Council in April 2004. This
Directive aims at setting up a system of environmental liability under the "polluter pays" principle to prevent or repair environmental damage affecting biodiversity, water and soil.
In January 2004, the Commission published its Communication "Stimulating Technologies for Sustainable Development: An Environmental Technologies Action Plan for the European Union"
680.Following the adoption in 2003 of Commission Recommendation 2003/556/EC94 on
guidelines for the development of national strategies and best practices to ensure the coexistence of genetically modified crops with conventional and organic farming several Member States notified national or regional measures to the Commission during the year 2004. The Commission evaluated these notifications according to the principles stated in the Recommendation. In 2005, the Commission will report to the Council and the European Parliament, based on information from Member States, on the experience gained in the Member States concerning the implementation of measures to address coexistence, including, if appropriate, an evaluation and assessment of all possible and necessary steps to take.
683.Implementation report of the EU Forestry Strategy. The Council Resolution of 15 December 1998 on a Forestry Strategy
97 for the EU stipulates that the Commission
should present an implementation report of the Forestry Strategy in five years. The Commission is currently preparing this implementation report in close co-operation with the Member States and in open consultation and dialogue with relevant interest groups. Between 13 August and 22 September 2004, the Commission carried out an internet-based consultation in order to obtain the opinion of relevant stakeholders on a draft version of the Commission Staff Working Document on the implementation of the EU Forestry Strategy.
684.Within the context of the Ministerial Conferences on the Protection of Forests in Europe (MCPFE), the Commission took part in the MCPFE Expert Level Meeting held in Warsaw on 14-15 October 2004. The meeting focused on the review of progress in the implementation of the work programme adopted after the 4
th Ministerial Conference on the Protection of Forest in Europe (Vienna, 2003). The
MCPFE process involves more than 40 European countries, including all EU-25 Member States, and the European Community.
7.FINANCING OF THE CAP IN 2004
685.CAP expenditure is funded under the Financials Perspectives decided at the Berlin Summit in 1999 and adjusted at the Copenhagen Summit at the end of 2002 to take account of the financial effects of the enlargement of the Union to include the ten new countries. Thus, new ceilings apply for the EU-25 as of the budget year 2004.
686.The Financials Perspectives for EU-15 and for EU-25 for the budget years 2004 2006 are as follows:
2000 2001 2002 2003 2004 2005 2006
current current current current current current current
prices prices prices prices prices prices prices
Total for CAP under Agenda 2000
688.The Council adopted the 2004 Draft Budget (containing estimates for the EU-10) in July 2003. The appropriations in Subheading 1a were reduced by EUR
as compared to the PDB while the ones for Subheading 1b were maintained at the level of the PDB. EAGGF Guarantee Section appropriations accordingly totalled EUR
47 713.9 million, of which EUR 41 177.9 million for Subheading 1a and
EUR 6 536.0 million for Subheading 1b.
689.At the end of October 2003 the Commission adopted Letter of Amendment No 2/2004 to the Preliminary Draft Budget (containing estimates for the EU-10) in order to take account of developments on the agricultural markets and recent agricultural legislation. The Amending Letter to the PDB set appropriation requirements for the 2004 financial year at EUR
46 781.4 million, of which EUR 40 245.3 million was
allocated to market measures and EUR 6 536.0 million to rural development.
690.In December 2003 following the consultation procedures between the three institutions, the Budget for 2004 (for the EU-15) was adopted as follows:
-for Subheading 1a, appropriations for 2004 were fixed at EUR 39 958.4 million,
ie. EUR 2 810.6 million below the ceiling.
-for Subheading 1b, appropriations for 2004 were fixed at EUR 4 803.0 million
i.e. EUR 1 733.0 million below the ceiling.
691.In April 2004 the Budgetary Authority adjusted, through BRS 1/2004, the 2004 Budget for the EU-25 as follows:
-for Subheading 1a, appropriations for 2004 were fixed at EUR 40 245.3 million,
ie. EUR 2 523.7 million below the ceiling.
-for Subheading 1b, appropriations for 2004 were fixed at EUR 6 536.0 million
i.e. at the level of the ceiling.
692.In December 2004 the Budgetary Authority reduced, through BRS 10/2004, the 2004 Budget's appropriations as follows:
7.1.3. The EAGGF and its financial resources
694.Agricultural policy also generates revenue in the form of sums collected under the common market organisations. This revenue, which forms part of the Union's own resources
99, consists of:
-levies, which are variable charges on imports from non-member countries of agricultural products covered by the common market organisations; such charges are intended to compensate for the difference between prices on the world market and prices agreed within the Union. Under the Agreement on Agriculture following the Uruguay Round of multilateral trade negotiations, levies have been replaced by fixed import duties since 1995;
-levies collected under the common organisation of the market in sugar; these are divided into production levies on sugar and isoglucose, sugar storage levies and additional elimination levies which ensure that farmers and sugar manufacturers finance the cost of disposing of sugar which is surplus to Community internal consumption.
Charges accruing to the Union's own resources under the common agricultural policy
(amounts prior to deduction of collection costs)
Type of charge 1998 1999 2000 2001 2002 2003100 2004101
Agricultural levies Sugar levies 1 102.2 1 187.3 1 198.4 1 132.9 1 180.2 1 011.8 859.0
1 070.1 1 203.6 1 196.8 840.0 864.8 383.2 359.9
Total 2 172.3 2 390.9 2 395.2 1 972.9 2 045.1 1 395.0 1 218.9
695.It should be noted that there are other sources of agricultural revenue. Under the common organisation of the market in milk and milk products, producers pay an additional levy if milk quotas are exceeded. This revenue does not, however, form part of the Union's own resources and is considered to be part of the measures to stabilise agricultural markets. It covers the additional expenditure brought about by the production overrun on the quotas and is thus deducted from that expenditure.
-other intervention relating to the common market organisations (EUR 5 405.1 in
-other expenditure, principally rural development (EUR 4 706 million in 2003).
697.Direct payments to producers are thus currently by far the largest type of aid.
698.The EAGGF Guarantee Section also finances the accompanying measures introduced under the CAP reform in 1992 to assist farmers with projects to protect the environment, maintain the landscape, develop the use of woodland resources or transfer their holdings with a view to early retirement, plus, under the 1999 reform, other rural development measures, including compensation granted in less-favoured areas under the second pillar of the CAP.
699.Furthermore, as a result of the reorientation and later the reform of the CAP, the EAGGF Guarantee Section has been used to finance, in whole or in part, various specific measures for the management of agricultural markets such as the distribution of agricultural products to the needy in the Community, measures to combat fraud, measures to promote quality and measures designed to compensate for the geographical isolation of the French overseas departments (Poseidom), Madeira and the Azores (Poseima), the Canary Islands (Poseican) and the Aegean islands.
126.96.36.199. Public stocks
700.Between 1 October 2002 and 30 September 2003, when the public storage accounts were closed, the quantities and book value of public intervention stocks developed as follows. The book value of products in storage fell from
EUR 1 419.94 million at the
end of the 2002 financial year to EUR 1 266.60 million at the end of the 2003
financial year. The share of cereals and rice slightly diminished, these two products now accounting for around 51
% of the total value of products in storage. The
remaining 49 % comprises milk products (43.5 %), beef and veal (2 %) and alcohol
-Decision of 15 May 2003 (2003/364/EC) under Article 5(2)(c) of Regulation (EEC) No 729/70 thirteenth Decision
-Decision of 27 June 2003 (2003/481/EC) on the financial treatment to be applied in certain cases of irregularity by operators (OLAF)
-Decision of 22 July 2003 (2003/536/EC) under Article 5(2)(c) of Regulation (EEC) No 729/70 fourteenth Decision
702.The expenditure recovered from Member States comes to EUR 382.49 million
(including EUR 5.28 million for OLAF).
703.The agricultural expenditure audit departments also performed the other tasks allocated to them:
-195 on-the-spot inspection missions in the 15 Member States and ten Sapard countries, including checking of direct expenditure;
-51 discussions with the Member States on the findings of inspection missions in respect of 1999, 2000, 2001 and 2002;
-the work of the European Parliament's Budgetary Control Committee in the context of the discharge of the 2001 budget;
-the replies to the Court of Auditors' 2002 annual report, special reports and Statement of Assurance for 2002;
-the decentralised management of the Sapard programme for new measures at nine Sapard paying agencies;
7.1.6. Expenditure on agricultural markets in 2004
704.The provisional uptake of EAGGF Guarantee Section appropriations for the 2004 financial year (expenditure by the Member States from 16 October 2003 to 15 October 2004) amounted to EUR
44 714.3 million, i.e. 99.2 % of the appropriations
entered under Titles 05, 11 and 17 of the budget.
-Total expenditure for Subheading 1a (the CAP, covering Titles 05, 11 and 17 amounts to EUR
38 293.5 million, i.e. EUR 251.4 million under the
corresponding budget's appropriations
Total expenditure for Subheading 1b (Rural Development) amounts to EUR 6 420.8
million, i.e. EUR 115.2 million under the corresponding budget's appropriations.
7.2. EAGGF Guidance Section
705.Implementation of the reform of the Structural Funds since 1 January 1989 has gradually changed the nature of the assistance granted by the EAGGF Guidance Section. In the first programming period from 1989 to 1993, a share of Community contributions was still taken up by the annual reimbursement of national expenditure and the remainder by part-financing of operational programmes. In the second reform of the Structural Funds covering the period 1994 1999, the entire Community contribution was programmed in the form of operational programmes.
706.In accordance with the conclusions of the Berlin European Council in 1999, a third programming period for the Structural Funds was introduced to run from 2000 to 2006. EAGGF Guidance Section involvement in this new period on the basis of Council Regulations (EC) No 1260/1999 (the general Structural Fund Regulation) and No 1257/1999 (support for rural development) only covers Objective 1 areas, the Community Initiative Leader+ programme and technical assistance.
707.For the new period from 2000 to 2006, there is no decrease in Community support for rural areas, although the EAGGF Guidance Section allocations for the new period might give such an impression. In actual fact, measures targeting agricultural structures and the diversification of rural areas (former Objectives 5(a) and 5(b)) outside Objective 1 regions and compensatory allowances, which up to 1999 were funded by the EAGGF Guidance Section, are now covered by the EAGGF Guarantee Section.
commitments under programmes from previous periods which were wound up by 31 December 2001 and the final balance of which will in principle be paid by the end
710.However, by way of exception, an amount of EUR 148 million was committed in 2000 to cover the outstanding part of the last tranche (1999) of the 1994 99 programming period. This was because, as a result of the lack of budget allocations at the end of the 1999 financial year and the late adoption of the last programming adjustment decisions outside the accounting deadline, it was not possible to commit all of the 1994 99 Structural Fund CSF programmes and Community Initiative programmes in 1999 (Tables 7.2.1a and 7.2.1b).
711.The new programmes for the EAGGF Guidance part of Objective 1 and PEACE comprise 70 single programming documents and operational programmes, of which only 35 were adopted by a Commission decision in time to be covered by commitments/payments in the 2000 financial year on account of delays in the approval procedure in 2000. At the beginning of 2001, authorisation was granted to carry over commitment appropriations for 20 other programmes from 2000 to 2001 and, for the remaining 15 programmes, a request was made, in accordance with the 1999 Interinstitutional Agreement, for the appropriations to be transferred from the year 2000 to the years 2002 06. As a result, in 2001 all the 70 OPs
/ SPDs had been
712.As regards the Leader+ Initiative, on account of a lengthier procedure following the adoption of the guidelines, none of the 73 programmes provided for was adopted by the end of 2000 and, consequently, it was requested in 2001 that all the appropriations be transferred from the year 2000 to the years 2000 06. Seventy programmes were adopted in 2001 and the remaining three were adopted in 2002.
Table 7.2.1a Expenditure by Objective, 2000 06 period
(Commitment appropriations, EUR million)
Objective 2000 2001 2002 2003 2004 2005 2006
Community Support Frameworks
Objective 1: 2000 06 period (regions lagging behind)
1 239.3 3 237.2 2 639.1 2.764.1
Former Objectives 1 and 6 (1994 99 period)
76.9 ****** ****** ***** ***** ****** ******
Former Objective 5(a) (1994 99 period)
29.4 ****** ****** ****** ****** ****** ******
Former Objective 5(b) (1994 99 period)
1.0 ****** ****** ****** ****** ****** ******
Leader+ : 2000 06 period
271.3 356.8 346.6
Previous CIPs (1994 99 period)
37.0 ****** ****** ****** ****** ****** ******
2000 06 period: innovative measures and technical assistance
Previous transitional measures/technical assistance (1994 99 period)
3.7 0.3 ****** ****** ****** ****** ******
Table 7.2.1b Expenditure by Objective, 2000 06 period
(Payment appropriations, EUR million)
Objective 2000 2001 2002 2003 2004 2005 2006
Community Support Frameworks
Objective 1: 2000 06 period (regions lagging behind)
587.6 1 276.9 1 474.7 2.166.9
Former Objectives 1 and 6 (1994 99 period)
1 353.2 488.3 5.1 176.5
Former Objective 5(a) (1994 99 period)
803.1 69.4 79.2 89.2
Former Objective 5(b) (1994 99 period)
629.9 142.9 26.1 66.2
Leader+ : 2000 06 period
81.9 74.9 87.6
Previous CIPs (1994 99 period
) 178.4 79.8 10.3 17.3
2000 06 period: innovative measures and technical assistance
Previous transitional measures/technical assistance (1994 99 period)
6.5 5.8 1.6 7.5
TOTAL 3 558.7 2 145.0 1 672.1 2.612.9
7.2.2. Execution of 2003 budget
713.In terms of the appropriations available in 2003, including those originally entered in the budget together with transfers and carryovers (EUR
development measures which will be fully integrated as at present into development programmes, in combination with the other Structural Funds;
-outside the Objective 1 regions, the source of finance for rural development measures will be the EAGGF Guarantee Section.
717.For Objective 1, execution in 2002 represents the fourth instalment committed in respect of the 55 programmes adopted in 2000, and the third instalment committed in respect of the 15 programmes adopted in 2001, which were rebudgeted. All payments (EUR°2
166.9 million) executed in 2003 were reimbursements made for the
70 current programmes, representing an amount equivalent to 79 % of the instalment
committed in 2003.
718.For the Leader+ Initiative, the commitments made in 2003 were for the third instalment of the 51 programmes adopted in 2001 and the second and third instalments of the 22 remaining programmes adopted late in 2001. All (EUR 87.5 million) payments made in 2003 were reimbursements, representing an amount equivalent to 25
% of the instalment committed in 2003.
719.For programmes from previous programming periods, payments executed in 2003 were EUR°356.7 millions, representing an amount equivalent to 49
% of the
payments appropriations in 2003. This level of utilisation of payments appropriations is attributable to the fact that the outstanding payments constitute the final balance payable under these programmes, for which it is necessary to submit the rather complex final implementing report giving the results of the checks carried out, and the Member States were therefore late in presenting the requests for final balances, which were submitted to the Commission by 31 March 2003. The final balance of which programmes from previous periods must in principle paid by the end of 2005.
Table 7.2.2 Implementation of EAGGF Guidance Section budget in 2003
2000 06 programming period Previous programming periods
Total Objective 1 PEACE Former Objectives 1 Former Former
(Objective 1) LEADER+ Innovative measures/
Technical assistance and 6 Objective 5(a) Objective 5(b) Former CIPs Former transitional
Belgique/België 9,724 6.965 2,500 0,260
Danmark 2,8 2,800
Deutschland 553,434 509,864 43,570
Elláda 412,394 382,294 30,100
Espańa 864,084 782,387 81,698
France 147,768 103,668 44,100
Ireland 35,291 24,790 2,601 7,900
Italia 563,533 516,834 46,699
Luxembourg 0,300 0,300
Nederland 14,300 0,700 13,600
Österreich 19,309 6,103 12,400 0,807
Portugal 348,384 321,784 26,600
Suomi/Finland 40,166 31,066 9,100
Sverige 23,342 16,742 6,600
United Kingdom 77,256 52,270 6,073 18,600 0,313
Total 3.112,085 2.755,466 8,674 346,566 1,380
Belgique/België 16,047 0,026 0,654 14,000 1,147 0.219
Danmark 1,043 1,043
Deutschland 545,407 477,813 4,688 51,424 5,757 5,726
Elláda 136,282 129,292 6,990
Espańa 810,060 792,439 16,003 0.358 .0,565 0,664 0,031
France 102,360 91,305 10,555 0,500
Ireland 16,610 4,182 0,000 2,124 10,270 0,034
Italia 577,802 334,502 3,594 150,496 26,816 54,604 7,663 0,127
Luxembourg 0,100 0,100
Nederland 4,198 0,586 3,612
Österreich 25,934 6,498 4,519 0,687 7,002 5,316 1,835 0,077
Portugal 294,151 263,659 22,524 1,341 6,537 0,091
Suomi/Finland 23,435 18,312 4,861 0,051 0,210
Sverige 22,243 14,653 3,969 2,852 0,356 0,412
United Kingdom 37,002 33,658 0,000 2,949 0,348 0,048
720.The Directorate-General for Agriculture carries out regular evaluations of common market organisations and measures applicable to agriculture. The purpose of these evaluations is to contribute to policy preparation and decision making by providing information on the effectiveness, efficiency and impact of measures financed by the CAP. Evaluations examine in particular the impact of CAP measures on market equilibrium, producers' incomes and production structures, the environment and rural development. Evaluation reports are publicly available on the Europa website.
7.3.1. Evaluation of market-related measures
721.In the field of market policies, evaluations of the tobacco and olive oil CMOs were completed. A contract was signed for wine; a call for tenders was published for bananas and preparatory work is well advanced on pork, eggs and poultry, as well as the environmental effects of CMOs relating to permanent crops.
7.3.2. Evaluation of structural and rural development measures
722.In the field of rural development policies, a study on mainstreaming Leader innovations launched in 2003 was finalised en 2004.
8.1. Main developments
8.1.1. Agricultural accession negotiations and related activities
723.The Accession Treaty for the ten acceding countries entered into force on 1 May 2004. The Regulation
109 adapting the texts of the CAP reform to take account of
enlargement and Decision110 adapting the Act of Accession to take account of the
726.DG AGRI worked closely with DG Enlargement on preparing the Commission's impact study on Turkish accession, drafting the chapter on agriculture and contributing to the chapters on economic and budgetary matters. The Commission recommendation of 6 October (COM (2004) 656 final) proposed opening negotiations with Turkey, to start with the organisation of screening (comprehensive process of examination) of the acquis. . The European Council of 16/17 December decided that negotiations should be opened with Turkey on 3 October, subject to various conditions. To this end the European Council invited the Commission to prepare a negotiating framework for the Council. DG AGRI is contributing to the production of this framework.
727.Substantial contributions were made to the Commission Opinion on Croatia's application for accession, adopted on 20 April. . The above-mentioned strategy paper on the enlargement process set out a proposed pre-accession strategy and recommended financing for Croatia's inclusion in the existing PHARE, ISPA and SAPARD instruments. The European Council of 16/17 December invited the Commission to prepare a negotiating framework for the Council with a view to opening accession negotiations with Croatia on 17 March 2005, provided that there is full cooperation with ICTY. Negotiations will start with organisation of screening of the acquis. In the meantime work continues in the context of the Stabilisation and Association Agreement, as requested by the Council in June 2004.
728.DG Agriculture contributed substantially to the questionnaire handed over to the government of FYR Macedonia on 1 October, to be completed as a prerequisite for consideration of its membership application.
729.The result of the referendum on the reunification of Cyprus having proved negative, the Council adopted on 29 April the `Green Line' Regulation
111 setting out the terms
under which the relevant provisions of EU law apply to the frontier between the north and south of the island. DG AGRI has been fully involved in the drafting and implementation of this Regulation, and in the Commission's subsequent proposals on direct trade and financial aid. DG AGRI also contributed to the most recent Commission proposal in this area, which concerns amendments to the Green Line Regulation to facilitate future liberalisation of trade in agricultural products, in particular citrus fruit. All three proposals (Direct Trade, Financial Aid and Green Line Amendment) are currently blocked in the Council by Cyprus.
management adopted in 2001, 2002 and 2003. For the following countries further conferral decisions were adopted in 2004, which permitted them to start the implementation of additional measures envisaged in their programmes: in February for Estonia, and in April for Slovenia and Hungary.
732.As at the end of 2004, EUR 2 215 million (cumulative amount of Community
contribution) has been committed to final beneficiaries by the ten Sapard Agencies, corresponding to 102
% of the available Community funds for the years 2000 2003
and relating to 37 444 approved projects. The situation regarding the countries which
joined the Union in May and the other two which are due to join at a later stage is as
· All new Member States have continued contracting projects under Sapard up until
the moment when they were able to start contracting under the new rural development instrument in accordance with the provisions of Commission Regulation (EC) No 1419/2004. A total of 34 541 projects, corresponding to EU
1 496 million of EU contribution has been committed by the national Sapard
Agencies to the final beneficiaries. This amount represents 112 % of the EU
contribution available under Sapard. According to Regulation 1418/2000 this level of "over commitment" can be, if needed, co-financed by their relevant Rural Development Programmes.
· The Bulgarian and Romanian Sapard Agencies in total contracted 2 903 projects
involving EUR 719 million of EU contribution. This amount represents 84 % of the
amount available for 2000 2003 and around 45 % of the amount available for their
entire programming period (2000 2006).
733.In relation to 2003 expenditure, the Commission by its decision of 28 September 2004 cleared the accounts of the Sapard Agencies in seven countries. The decisions clearing the accounts of the three remaining countries will be taken at a later stage.
734.The mid-term evaluation reports of the Sapard programmes were analysed by the Commission in 2004. Relevant conclusions and recommendations of the reports were taken into account for the purpose of modifying the programmes for Bulgaria and Romania. This information was considered for post-accession instruments for the new Member States.
credits were allocated by Commission Regulation (EC) No 1419/2004 of 4 August 2004. This Regulation sets out the rules regarding the continuation of the application of the Annual and Multi-Annual Financing Agreements in the new Member States until the closure of the Sapard programmes, including certain necessary adaptations of these agreements to take into account the new status of these countries.
738.On 16 November the Council adopted a modification of the Sapard Regulation (EC)
No 1268/1999 of 21 June 1999. The modification was made in order to allow Bulgaria and Romania to benefit from similar conditions as those granted to the new Member States, namely, a Leader type measure and the improved aid limits.
739.Additionally, the Council adopted on 20 December 2004 Regulation 2257/2004 modifying the three pre-accession instruments, PHARE, ISPA and Sapard to take into account Croatia's candidate status
740.Furthermore, a draft Annual Financing Agreement 2004 was adopted by the Commission allowing to start negotiations with Bulgaria and Romania. A total amount of EUR
225.2 million in commitment appropriations was assigned to the
instrument for 2004.
741.One of the constraints identified by the Commission in respect of the implementation of Sapard concerned the difficulties faced by farmers and rural businesses in gaining access to suitable credit facilities for co-financing their projects. The Commission has therefore adopted a decision to expand the scope of the PHARE SME financial facility to include a Rural Sub Window. The facility is being implemented by the Council of Europe Development Bank in co-operation with Kreditanslalt für Wiederaufbau (CEB/KfW) and by the EBRD. Contribution Agreements with both IFIs were signed in 2004. The first project begun in Bulgaria in 2004.
744.On 21 December 2004, the panel established upon request by the United States (WT/DS174) and Australia (WT/DS290) concerning Regulation (EC) No 2081/92 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs issued its final reports to the parties. Overall, the reports largely vindicate the EC's view that its system of GI protection is compatible with WTO rules. Two main issues were at stake. First, the US and Australia argued that the EC GI regime discriminates contrary to WTO rules, because it allows registration of GIs relating to areas outside the EU only under certain conditions (notably the conditions of reciprocity and equivalence) which do not apply to registration of GIs relating to areas inside the EC. The EC has made clear that Regulation 2081/92 does not require the condition of reciprocity and equivalence for the protection of geographical indications originating in WTO members. Secondly, the complainants had challenged the EC discipline on the relationship between GI rights and prior trademark rights. The EC has always considered that the coexistence of GIs with prior trademarks as provided for by the Regulation is in conformity with WTO rules.
745.On 15 October 2004, the panel requested by Australia (WT/DS265), Brazil (WT/DS266) and Thailand (WT/DS283) on the EC's common market organisation for sugar and its application and implementation circulated its final reports to WTO members. The panel found that the EC provides export subsidies in excess of its WTO commitments in relation to "C sugar" and to the exclusion of 1.6 million tonnes of ACP and Indian sugar from export reduction commitments. The EC will appeal the panel's findings in January 2005.
746.On 4 March 2004, the panel requested by the United States (WT/DS291), Canada (WT/DS292) and Argentina (WT/DS293) concerning certain EC measures affecting the approval and marketing of biotech products (GMOs) was composed. The complainants claim violations of a number of WTO provisions, notably in the SPS Agreement, in relation to the alleged standstill in the EU GMO/GM food approval procedures, the alleged failure of the EC to consider or approve, without undue delay, applications for the approval of certain products and certain safeguard measures adopted by a number of EC Member States. The issuance of the final reports of the panel is expected in the course of 2005.
claims by the United States that the Canadian Wheat Board violates Article XVII of the GATT on state trading enterprises and the national treatment principle in the Canadian grain handling and rail transportation system.
188.8.131.52. Doha Development Agenda: the "Agreed Framework"
749.In March 2000 (one year before the end of the implementation period of the Uruguay Round commitments) the negotiations on agriculture began based on Article 20 of the WTO Agreement on Agriculture. Article 20 commits WTO Members to continue the reform process in agriculture taking into account past experience, the effects of past commitments on trade and non-trade concerns. In November 2001, the fourth WTO ministerial Conference was held in Doha, Qatar. The declaration issued on 14 November launched new negotiations (the Doha Development agenda DDA) on a range of subjects, and included the negotiations already underway in agriculture and services. No agreement was reached at the September 2003 Ministerial Conference in Cancun but work resumed in spring 2004 and led to a very successful outcome of the trade talks which took place in Geneva the last two weeks of July with the conclusion of a framework agreement (= Agreed Framework) on 1 August 2004.
750.The Agreed Framework sets out the key parameters for negotiations in five key areas agriculture, industrial tariffs, trade facilitation, development issues and services. The results include a balanced deal on agriculture. The framework locks in the recent reforms of the EU's Common Agricultural Policy (CAP). Overall levels of the most trade distorting domestic support will have to be substantially reduced and a down payment of 20
% of this reduction is foreseen in the first year of the implementation
of the agreement. The Blue Box and the Green Box have been preserved.
751.On export competition, the EC has used its conditional offer to eliminate export subsidies in order to ensure the parallel elimination of all other trade distorting elements used by our trading partners to subsidise their own exports, such as export credits surplus disposal in the guise of food aid and State Trading Enterprises.
9.1.2. Organisation for Economic Cooperation and Development (OECD)
754.EU Member States account for 19 of the OECD members and are the major contributors to the OECD budget, including voluntary contributions. The Commission participates actively in the work of this organisation, in particular, as far as agriculture is concerned, in the Committee for Agriculture (COAG), its working parties and at the interface with the Committees on Trade and Environment (Joint working parties).
755.Core to COAG activities is the annual preparation of a mid-term market prospect for the main OECD agricultural commodities (the `Agricultural Outlook' report) and the yearly review of the main developments in the agricultural policies of member countries ("Agricultural Policies, Markets and Trade in OECD Countries", generally known as the "Monitoring report"). A similar review focuses on the main developments of major non-OECD members, whether economies in transition or emerging countries. These reviews include in particular a calculation of aggregated estimates of support to farmers, the "Producer Support Estimate" (PSE) expressed as the percentage share of public financing (budgetary payments and economic transfers from consumers and taxpayers caused by policy measures) in the overall income of the farming sector and the "Total Support Estimate" (TSE) for the whole agriculture and food sector, which indicates the degree of support in the OECD economies expressed in a percentage share of GDP.
756.Other regular COAG activities address agriculture and trade, agri-environment, rural development, agricultural structures and statistics, the Agricultural Knowledge System (extension, education and research) and international standards (in particular, certification of seeds, forestry reproductive material and tractors). OECD work on Agri-Environmental Indicators was continued in 2004, the volume 4 report will sum up both the expert work defining more precisely the selected indicators and the availability and quality of data. It is scheduled for mid 2005.
paper on Non-governmental provision of public goods exemplified through case studies. Expert meetings on biomass and support measurement allowed valuable scientific feed-back for the further development of sector studies.
759.The interface between agriculture and environment continued the working programme on indicators and agricultural impact measurement on the environment. The last event in a series of workshops was held to produce a methodology indicator on Farm Management. A sector study on the impact of arable cultures on the environment followed the one on dairy production and on pigmeat production.
760.Horizontal issues of importance to agriculture are being addressed through other OECD bodies such as regulatory reform, governance, e-commerce, a code for multinational companies, sustainable development and territorial development.
All these activities have produced valuable material for the EU, particularly as regards the process to reform the agricultural sector and ongoing multilateral negotiations. However, the credibility of the organisation could further be improved if a major factor of incoherence between the OECD Economics and Agriculture Directorates were removed. This is due to the lack of communication between these services resulting in contradictory statements in macro-economic and structural evaluation of agricultural policies by the ECO directorate untainted by the good analytic work carried out in the Directorate for Agriculture.
9.1.3. Generalised System of Preferences (GSP)
761.The aim of the GSP is to foster the integration of developing countries into the world economy and the multilateral trading system. The GSP focuses on the needs of the poorest beneficiary countries through, in particular, the so-called "Everything But Arms" initiative which is incorporated into the GSP.
762.In 2003 the EU extended and adapted the Generalised System of Preferences in force, Council Regulation (EC) No 2501/2001, for the period from 1 January 2005 to 31 December 2005. This latter date will see the expiry of both the originally ten-year guidelines for the period 1995 to 2004, as extended for 2005, and of the last implementing Regulation for the years 2004 to 2005. The new guidelines and their first implementing Regulation should normally enter into force on 1 January 2006. A proposal for a new Council Regulation is under discussion at the EU Council during the last trimester of 2004.
9.1.4. United Nations Food and Agricultural Organisation (FAO)
765.As a member of FAO, the EC took part in the work of the various technical committees. The EC attended in particular:
· the 18th session of the Committee on Agriculture (COAG) (Rome, 9 10 February),
· the 30th session of the Committee on World Food Security (Rome, 20 23 September
· Donors' meeting on the SARD project (Sustainable Agricultural and Rural
Development, 30 April 2004),
· the 24th FAO Regional Conference for Europe (Montpellier, France, 5 7 May
· the 20th Session Intergovernmental Group on Meat ad Dairy products, Winnepeg,
Canada (17 20 June 2004),
· the 30th Session Committee on World Food Security (20 23 September 2004),
· the 127th Session of FAO Council (Rome, 22 27 September 2004)
presenting its agricultural, fisheries and forestry policies and setting out its approach
to food security.
766.The Commission also participated and played an active role in:
· the follow-up to the World Food Summit Plan of Action
· the Intergovernmental Working Group (IGWG) for the elaboration of a set of
voluntary guidelines to support the progressive realization of the Right to adequate food in the context of national food security established following a decision by the World Food Summit five years later;
· the FAO's technical contribution to developing countries in the context of the new
trade negotiations within the WTO. The Commission also contributed to the FAO's discussions on trade-related but non-commercial issues, such as the multifunctional aspects of agriculture and its links in less advanced countries.
769.The International Sugar Agreement remains in force until 31 December 2005 after its two years prorogation at the end of 2003.
770.The International Olive Oil and Table Olives Agreement will be replaced by a new Agreement after the conclusion of negotiations held during 2004 with this purpose. The agreed text will be submitted to a World Conference at UNCTAD during the first quarter 2005 and it will be ratified by IOOC members afterwards. Until its entry into force, an extension of the current agreement will become necessary at the end 2004.
771.Concerning the management of this organization, a round of negotiations held in 2004 led to a complete renewal of the management staff as of the end 2004, including a new Executive Director. The new Financial Delegate, who took charge of his post in April 2004, together with the new management team appointed in October 2004 will manage the organisation as a college on the basis of the new rules.
184.108.40.206. Commodity Dependant Developing Countries
772.Internationally traded agricultural commodities, such as coffee, cocoa and cotton are, directly or indirectly, major sources of employment and income for millions of people in developing countries. Through taxation and redistribution, they make major contributions to the provision of basic services such as health and education in these countries. But many countries' economies, export earnings and national budgets are highly dependent on a very limited number of agricultural commodities. In Burundi, for example, export revenues depend for almost 80
% on coffee. In more than 50
countries, three or fewer primary commodity exports constitute at least 20 % of export
revenue. Price characteristics of the agricultural markets and caught many countries in a vicious circle of declining income, persistent poverty and dependence.
773.The Council adopted on 27 April 2004 an EU action plan, on the base of two proposals from the Commission
112, aiming at helping developing countries fight
excessive dependency to agricultural commodities, both by enhancing their export performance and reducing their vulnerability from price fluctuations. The initiatives involve a comprehensive EU action plan addressing commodity dependency and, in the specific case of cotton, a wide-ranging strategy for the support to the cotton sector in Africa. African cotton producing countries and the EU agreed, in Paris 6 July 2004, to establish a cotton partnership and to implement a joint cotton action plan
ocean, Southern Africa development Community (SADC), Pacific region and Caribbean region;
· Seminar 28 April 2004 EU CAP reform;
· ACP-EC Joint Working Party (JWP) on Rice, ACP House, 20 July 2004; the
Commission presented the results of the Article XXVIII negotiations on rice and the consequent changes to the MFN and to the ACP preferential tariffs coming into force on 1 September 2004;
· "EPA EU Sustainability Impact Assessment", launched by the Commission is now
in phase II;
· Seminar, 28 September 2004 on the EU, Regional Integration and Trade for the
Southern African Development Community
220.127.116.11. South Africa
775.Further discussions were held on outstanding issues of the EU/South Africa wine & spirits agreements on one hand as well as well as of the EU/South Africa TDCA on the other hand. Specific discussions were held on TDCA preferences South Africa should apply on certain Community cheeses.
9.2.2. EFTA countries and EEA Agreement
776.The Agreement on the European Economic Area (EEA114) has been modified for
taking into account the enlargement of the EU, after a ratification procedure in all EEA States including new EU Member States. In this context, the preferential tariff concessions in agricultural products granted by Norway to the EU have been extended, as from 1 May 2004
115, on the basis of pre-existing preferential trade flows
between acceding countries and Norway. These additional concessions consist in duty free quota of 1400t of frozen strawberries, 950t of frozen raspberries, blackberries and other berries, 100t of rye grass seed, 1300t of apple juice and 1000t of cat food.
vegetables. Parties also agreed to resume bilateral trade negotiations in agriculture in 2005, so to continue their efforts of progressive liberalisation of agriculture in the framework of the EEA agreement.
779.Intensive bilateral activities took place in 2004 in relation to EU enlargement and to the completion of the so-called "bilateral II" negotiation package. This latter extends significantly the set of bilateral agreements and channels of bilateral co-operation. Most of these new agreements need to be first ratified. It includes notably a new agreement on agricultural processed products replacing existing one in the 1972 EC-CH Free Trade Agreement
780.Bilateral activities relating to agricultural commodities have been increasing since the entry into force in June 2002 of the Agreement between the EC and the Swiss Confederation on trade in agricultural products
118, in the framework of the Joint
Committee on Agriculture created by this Agreement. The Joint Committee on Agriculture monitor and manages the Agreement thanks notably to ten working groups of the Joint Committee: phytosanitary, animal feed, seeds, wines, spirit drinks, organic products, fruits and vegetables, dairy, geographical indications, enlargement. This aims at implementing, complementing and updating all annexes of the Agreement, with respect to the evolution of EC acquis and Swiss legislation
781.At the EU-Switzerland Summit on 19 May 2004 Parties agreed to adapt retroactively as from 1 May 2004 bilateral tariff concessions by taking into account pre-existing preferential trade flows between acceding countries and Switzerland. Non preferential trade flows subject to GATT Article XXIV.6 have also been taken into account in this bilateral arrangement. Autonomous measures
120 have been adopted in 2004 pending
the consolidation of the adaptation of annexes I and II of the Agreement in 2005 after completion of respective procedures by Parties.
782.Bilateral concessions in the meat sector, initially foreseen by the Agreement but not enforced in 2002 on the basis of the Joint Declaration on meat products attached to the Agreement, are entering into force on 1 January 2005
783.The Joint Committee on Agriculture also made progress in the implementation of the declarations attached to the Agreement. Expert work started with a view to the equivalency of Swiss legislation relating to spirit drinks and to labelling of poultry relating to the type of farming. The PDO/PGI working group did an extensive technical work preparatory to mutual protection of geographical indications and designations of origin of agricultural products and foodstuffs, as foreseen by the corresponding joint declaration attached to the Agreement. Parties need now to agree to a negotiation process for achieving such mutual protection. In this respect, the rejection by Swiss authorities on 10 September 2004 of all oppositions to the registration of the denomination "Emmentaler", as a protected Denomination of Origin on the Swiss territory, attracted a lot of attention, because of the importance of the generic use of the denomination Emmental in the EU cheese production. Some EU dairy companies have lodged an appeal in Switzerland. Registration is suspended pending completion of this legal case.
784.Relations with the People's Republic of China centred on ongoing discussions on questions relating to market access.
785.Commissioner Fischler led in March 2004 a mission to China to promote EU agriculture exports.
18.104.22.168. Japan, South Korea and Thailand
786.Relations with Japan, South Korea and Thailand focussed on market access and administrative cooperation. Progress was made in a number of areas and discussions are ongoing in particular for certain fruit, meat and dairy products. Information exchange meetings were held on the Common Agricultural Policy, rural development, and Geographical Indications.
this product in order to ensure that relevant preferential imports in the EU from that country are in line with this definition.
791.In the context of the Indian request for Community approval of a number of their accreditation agencies for exports of organically produced agricultural products to the EU, the EC evaluated Indian relevant information and sent an FVO inspection team to that country.
9.2.4. Middle East and Mediterranean Region
792.The European Union and Syria concluded negotiations on a Euro-Mediterranean Association Agreement in October 2004, which should be ratified and enter into force in 2005. In the framework of the Barcelona process, Association Agreements have now been concluded with all Mediterranean countries. The Interim Agreement with the Palestinian Authority since 1997 was reviewed during 2004 as regards agriculture. The Agreements from 2000 with Israel and Morocco were reviewed during 2003 and the revised arrangements entered into force in January 2004. Negotiations on the revision of the Agreement with Jordan, which entered into force in 2002, were initiated in 2004. The Agreement with Egypt signed in 2001 entered into force on
1 June 2004.
793.The discussions on the Adaptation Protocols following enlargement were finalised with all Mediterranean Partners. New concessions as regards import of agricultural products originating in Egypt, Israel, Morocco and Tunisia, and as regards export of agricultural products to Israel were agreed. Their formal adoption is expected to be achieved during the first quarter of 2005, while application of the new concessions will be retroactive to 1 May 2004.
794.Negotiations on the agricultural part of the future Free Trade Agreement with the Gulf Co-operation Council were provisionally concluded, pending agreement being reached in other sectors covered by the FTA.
new arrangements is expected in early 2005. In addition, work began on the adaptation of the Wine Agreements with these countries to update recognition, protection and control of wine, spirit drinks and aromatised wine names.
9.2.7. Latin America
799.Mercosur: Intense negotiations were held with Mercosur with a view to concluding an EU-Mercosur bi-regional Association Agreement by the agreed October 2004 deadline. The deadline was not met, however, and negotiations will continue in 2005. This Agreement would include a liberalization of trade in all sectors in agriculture as well as agreements on trade in wines and spirit drinks and on protection of geographical indications for other agricultural products.
800.The EU Agreements with Mexico and Chile underwent technical adaptations during 2004 to take account of enlargement. Under the review clause of the Agreement, a further re-negotiation on agriculture concessions, already launched in 2004, will continue in 2005 for both countries. Similarly, technical adaptations of the Wine and Spirit agreements was undertaken and progress achieved on the protection of Community geographical indications, in particular on the use of EU generics in Chile.
801.Central America and Andean Community: At the EU-LAC Summit in Guadalajara in May 2004, the parties agreed to open a joint assessment evaluation of the economic integration process with Central America and the Andean Community respectively. This work will be undertaken in 2005.
9.2.8. NIS countries
802.Relations with the Russian Federation have been fruitful as regards the achievement of an agreement in April on the Russian market access proposal for the accession to the WTO. In this field, it has to be noticed the positive implementation by Russia of its tariff rate quota for meat where the EU obtained a significant share part and a reasonable level of import duties for its exports of main agricultural products (i.e. cheese, malt, olive oil) into Russia. However the situation was tense during the first quarter of the year, due to the forthcoming enlargement of the EU in May and the Russian claims of trade losses, in particular of agricultural products. Thus, exports of EU products of animal origin were halted for a week early June on the grounds of insufficient sanitary guarantees and tight deadlines were imposed for the adoption of a single veterinary certificate.
9.2.9. North America: USA, Canada
22.214.171.124. United States
805.Intensive negotiations on a comprehensive EU/US wine agreement continued throughout 2004 with a view to facilitating the trade in wine while improving protection for the European and American names used in winemaking and guaranteeing oenological standards used by winemakers. This agreement, which would be a first phase agreement, would also cover the issue of labelling of optional particulars. A great deal of progress has been made the last quarter of 2004 and only a few outstanding issues remain to be solved before reaching an agreement.
806.In the "Hormones" case, despite the Council's adoption of legislation bringing EC provisions into compliance with the WTO ruling in 2003, the US continued to apply 100 % ad valorem tariffs on USD 116.8 million of EU exports. On 8 November 2004 the EC requested formal WTO "consultations" on the US continued suspension of certain of its concessions and related obligations. The EU challenges the United States' continued imposition of sanctions against EU exports because of the EU's ban on hormone beef. The EU believes these sanctions are illegal since the EU has removed the measures found to be WTO-inconsistent in the WTO dispute on hormone beef dating from 1998.
807.The Community and the US are engaged into bilateral negotiations with a view to mutually recognising the equivalency of the organic production systems applied by each Party. This should facilitate trade in products originating from organic production methods while ensuring the integrity of the organic production method. While substantial progress had been made in the negotiations over the last two years, since May 2004, the talks have come to a standstill and no further road map has been laid out.
808.The Commission continued to make representations to the US following the adoption in 2002 of rules implementing the US Bioterrorism Act. The Act is now fully enforced even though the final rules on recordkeeping have not yet been published. There is the possibility for a significant impact, including in particular for small operators (farms are exempt, but farms that also pack or bottle are included), but so far the reactions from the EU industry have been mitigated. The Commission will continue to follow this issue closely with a view to having a clear picture of actual impact on EU trade.
concluded by the first quarter of 2005. The expected outcome of the negotiations is
mainly on poultry.
811.After two years of negotiation, the EC-Canada Agreement on trade in wines and spirit drinks was concluded and signed at Niagara-on-the-Lake on 16 September 2003. The agreement officially entered into force on 1 June 2004. It provides for an end to the generic use of EU wine and spirits names in Canada in three phases, beginning with the entry into force for most names, up to 31 December 2013 when the last four names (Chablis, Champagne, Port and Sherry) will be no longer classed as generic. The Parties also agreed on compositional standards for wines and spirit drinks. Trade disciplines applicable to Canada's Provincial Liquor boards were strengthened by a series of amendments to a 1989 agreement that followed a successful WTO Panel brought by the EC. The Parties also set down a framework for continuing discussions on matters such as the rules on labelling wines and spirits. The Agreement, which is expected to enter into force in June 2004, ends the trade tension that existed between Canada and the EC for over ten years. Canada is a key market for EC wine and spirit exports, importing products worth over EUR
500 million a year. After entry into force
initiatives were taken for setting up a Joint Committee for monitoring the agreement, recognition of GI's on both sides, as well as setting up procedures certification of wineries.
812.Canada continued to apply 100 % ad valorem tariffs on CAD 11.3 million of EU
exports pursuant to the "Hormones" case.
817.During the annual EC/New Zealand Agri Trade Talks, views were exchanged on the market situation of dairy and meat products, as well as on the state of play of the agriculture negotiations in the WTO.