Explanatory Memorandum to COM(2006)489 - Amendment of Regulations (EEC) No 404/93, (EC) No 1782/2003 and (EC) No 247/2006 as regards the banana sector - Main contents
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| dossier | COM(2006)489 - Amendment of Regulations (EEC) No 404/93, (EC) No 1782/2003 and (EC) No 247/2006 as regards the banana sector. |
|---|---|
| source | COM(2006)489  |
| date | 20-09-2006 |
Community bananas account for only 16% of total EU supply. They are produced in four outermost regions situated in tropical or sub-tropical areas, except for few quantities (less than 2% of total) produced in Cyprus, Greece and continental Portugal.
In February 2005, following the extension of the Common Market Organisation in bananas (CMO) to ten new Member States and prior to a substantial change of the import regime to honour the agreements concluded in 2001 with Ecuador and the United States, the Commission published a report on the operation of the CMO i. This launched a wide-ranging debate on the future of the CMO, in a context shaped by the prospect of a conclusion of the Doha Round negotiations, of a new generation of partnership agreements with the ACP countries, the end of the exemption for bananas from the Everything But Arms agreement, and the renewal of the Union’s policy towards its outermost regions and the POSEI programmes specifically dedicated to supporting their agriculture i.
Drawing the first conclusions from this debate - which in the meantime profited from an independent evaluation on the operation of the CMO i - the Commission in October 2005 decided to propose a reform of the internal aspects of the banana CMO in 2006 and, in particular, of those aspects governing the granting of aid to European producers i. This reform proposal also answers the European Court of Auditors' recommendations in its Special report n° 7/2002 on the sound financial management of the Common Organisation of Markets on the banana sector i. In its reply, the Commission had stated that it was deeply convinced of the need to conduct an in-depth review of the aid scheme for Community producers and that the Court's report together with other elements such as the change to the tariff only import regime provided an opportunity to evaluate or even re-examine the market organisation's objectives.
In accordance with the commitment made to better regulation i, the preparation of the reform was preceded by an analysis of the economic, social and environmental aspects of the problems involved in its operation, including a public consultation on a set of options for reform.
Contents
- 2. Reasons and Objectives of the reform
- 3. Proposed Measures for Reform of the Banana CMO
- 3.1. Aid to producers in the outermost regions
- 3.2. Aid to producers in other banana regions
- 3.3. Producers' organizations
- 3.4. Obsolete provisions
- 4. Monitoring and evaluation
- 5. Budgetary impact of the proposal
- million EUR
- ANNEX VIIIa
The current aid scheme for banana producers is based on principles which for other common market organisations have been substantially reformed. Producers are artificially isolated from the market trends since the aid automatically compensates for price changes. Although the aid is limited to a maximum quantity of 867,500 tonnes for all the producer regions, there is no budget ceiling. The calculation of the aid, based on Community average prices, does not adequately take into account the particularities of each of the producing regions.
It is necessary to amend this regime on the basis of the main political priorities set up by the Sustainable Development and the Lisbon Strategies, as transposed in the objectives of the reformed Common Agricultural Policy. The reform's objectives are to:
– ensure a fair standard of living of the agricultural community in regions where bananas are produced, while stabilizing public expenditure;
– align the regime on the main principles of the reformed common market organisations – sustainability, competitiveness, market-orientation of producers – and ensure the respect of the international obligations of the Community, in particular WTO rules;
– take adequately into account the particularities of the producing regions. Bananas are one of the main agricultural crops of certain outermost regions of the Union, notably the French overseas departments of Guadeloupe and Martinique, the Azores, Madeira and the Canary Islands, where agricultural activities are handicapped by the remoteness, insularity, small size, and difficult topography of these regions. Local banana production is an important element of the environmental, social and economic balance of these regions.
In accordance with the commitment made to better regulation, the Commission assessed the impact of three possible options for reform: 'Decoupling', integrating the banana aid scheme into the decoupled single farm payment regime; 'Memorandum', closely matching the proposal presented by the principal producing countries; 'POSEI', incorporating the aid for banana producers into the existing POSEI programmes for the agricultural sectors of the outermost regions and envisaging the integration of the aid into the single farm payment regime for the continental producing regions. The impact assessment concluded that the POSEI option appears the most suited to achieve the objectives pursued.
In this context the Commission proposes to abolish the aid scheme in the CMO and replace it with 1) an increase in the budget allocation for the POSEI scheme that will become the only market support instrument for bananas in the outermost regions and 2) the inclusion of non outermost areas under banana cultivation into the single payment scheme, along with a budget transfer.
Title III of Council Regulation (EC) No 247/2006 of 30 January 2006 laying down specific measures for agriculture in the outermost regions of the Union i provides for the establishment of Community support programmes for the outermost regions containing specific measures to assist local lines of agricultural production. This instrument seems best adapted to support banana production in each of the regions concerned allowing the respective Member States to propose measures, in the framework of their overall support programmes, that take account of the regional particularities.
It is proposed to increase the budgetary allocation under Title III of Regulation (EC) No 247/2006 by a total amount of EUR 278,8 million in order to fully include Community support to banana producers in those programmes as of 1 January 2007, hence reinforcing the coherence of the strategies for support of agricultural production in these regions.
As regards production of bananas in the Community other than in the outermost regions (Greece, continental Portugal and Cyprus), it seems no longer necessary to provide for a specific aid scheme for bananas, given the small proportion of the total Community production concerned.
It is proposed to allow for the shift from production support to producer support, by abolishing the existing compensatory aid scheme for bananas and including it into the Single Payment Scheme set up by Council Regulation (EC) No 1782/2003 of 29 September 2003 i. Member States will establish the reference amounts and eligible hectares under the Single Payment Scheme on the basis of a representative period appropriate to the banana market and of appropriate objective and non-discriminatory criteria. It is proposed to increase the national ceilings for Greece and Portugal i by EUR 1,1 million and EUR 0,1 million respectively. An additional budget of EUR 3,4 million is proposed for the implementation of the Single Payment Scheme in Cyprus as of 2009, adjusted in accordance with the schedule of increments applied for the New Member States. The budgetary details are provided below.
The existing regime had as objectives to form producers' organisations in order that as many producers as possible be members of such organisations and limited the payment of the compensatory aid to producers members of recognized producers' organizations. The regime has succeeded in its first objective since the vast majority of Community producers are now members of producers' organisations. The second objective is obsolete since the compensatory aid scheme is to be abolished.
It is therefore proposed not to maintain any longer rules at Community level on producer organisations, thus leaving Member States free to adopt such rules, if necessary, targeted at the specific situations in their territories. Accordingly, it is proposed to abolish the scheme providing for assistance to encourage the establishment and administrative operation of producers' organisations. However in the interests of legal certainty and the protection of legitimate expectations, the continued payment of such assistance to recently recognised producers' organisations already benefiting from this assistance will be ensured.
It is proposed to delete a number of spent or obsolete provisions of Regulation (EEC) No 404/93, mainly as regards third country trade before the entry into force of the tariff-only import regime i, rural development programmes for banana producing regions, spent reporting provisions.
A report to the European Parliament and to the Council on the implementation of the POSEI programmes is planned for 2009. It will provide the opportunity for an in-depth analysis of the effectiveness and the adequacy of the POSEI instrument and now, with this proposal, the exercise will include the banana sector in the main producing areas. The ensuing conclusions will address the question of the balance between the various measures against the objectives pursued. If there are substantial changes to the economic conditions affecting livelihoods in the outermost regions, the Commission shall submit the report sooner.
The financial envelope included in the proposal is based on the average aid allocated to banana producers for the period 2000-2002. This period corresponds to the reference period used for the calculation of the financial envelopes for the 2003 and 2004 CAP reforms. The resulting envelope amounts to EUR 280 million for the sum of the producing Member States except Cyprus. It is proposed to distribute this amount amongst Member States using the same distribution percentages of 2000, following the request made by the producing Member States in their Memorandum of 20 September 2005 and in their common position of 22 May 2006: Spain 50.4%, France 46.1%, Portugal 3.1%, Greece 0.4%. As a result:
a) The following amounts will be added to the financial plans of the POSEI programmes:
| Financial year 2008 and further
French overseas departments + 129,
Azores and Madeira + 8,
Canary Islands +141,
TOTAL increase POSEI + 278,
b) The national ceilings for Greece and Portugal referred to in Article 41 of Regulation (EC) No 1782/2003 (Annex VIII) will be increased by EUR 1,1 million and EUR 0,1 million respectively for 2007 and the following years.
As concerns Cyprus, where banana producers are currently supported under the Single Area Payment Scheme (SAPS), it is proposed to add an additional budget of EUR 3,4 million to the national ceiling referred to in Article 71c of Regulation (EC) No 1782/2003 (Annex VIIIa), adjusted in accordance with the schedule of increments applied for the New Member States, and in particular:
National ceilings referred to in Article 71c
EUR '
Calendar year Czech Republic Estonia Cyprus Latvia Lithuania Hungary Malta Poland Slovenia Slovakia
+
+
+
+
+
+
Subsequent years +
The full aid amount of EUR 3,4 million has been calculated on the basis of the average banana production in Cyprus in the period 2000-2002 and on the basis of the average banana aid paid to EU producers for the same period.