Brussels, 10/04/2006 (Agence Europe) - On 6 April, the European Commission invited parties interested to give their opinion on the changes to be made to Community rules on aid to European banana producers. “Probably in July”, it will adopt a proposal for reform of the internal aspects of the Common Market Organisation (CMO) for bananas, which governs aid to European producers. In order to fuel the debate during the consultation period, the steering group set in place within the Commission presented four reform options. These options are:
Status Quo: Without changing the system, producers would continue to benefit from income aid coupled to the quantity of bananas marketed and equal to the difference between the average price obtained on the market and an average flat-rate income (€640.30/tonne). Aid would remain limited to a maximum quantity of 867,500 tonnes for all the producer regions and would be excluded from the single payment regime introduced by CAP reform in 2003. Modulation (reduction of aid to strengthen rural development funding) would not apply in the outermost regions although these produce 98.7% of all Community bananas. The basic aid scheme would remain the only mechanism encouraging producers to seek remunerative prices. An aid supplement would continue to be granted to regions recording a price significantly lower than the average, such as the West Indies or, to a lesser extent, Madeira. In the more competitive regions, Community production should remain at current levels, although it would continue to fall in regions where valorisation of the production is considerably less than the Community average. “In a more liberalised and more competitive Community market, keeping the current aid scheme would imply a level of budget unpredictability hardly compatible with the current financial framework”, Commission experts analyse.
Memorandum from producer countries: According to the ideas set out in the memorandum signed in September 2005 by the four main producing countries (Spain, France, Portugal and Cyprus), each Member State would have a fixed annual budgetary envelope, which could be used according to the characteristics of its producing regions. Spain and France would allocate 60% of their appropriations to an aid for their traditional banana-producing holdings. A complement per tonne would be granted to holdings facing more difficult production conditions (open-air production in the Canaries and mountain-area production in the West Indies). The remaining budget would be used for the installation of new farmers, or for farm enlargement. In Portugal, aid would remain linked to the quantity of bananas produced. Cyprus calls for income support measures equivalent to those proposed for the other producing countries. Greece, which accounts for 0.3% of Community production, has not signed the memorandum. The signatories of the memorandum call for national financial envelopes to be equal to those received by producer countries for the marketing year 2000. The budget of €320 million proposed exceeds the historic aid for bananas and it would therefore be necessary to dip into the resources for other products to meet the financial perspectives, Commission experts point out. According to the steering group, this would correspond to average aid of over €11,000 per hectare, whereas the current level of aid (€8,800/ha) is already one of the highest of the CAP and has been criticised by the Court of Auditors and several non-producing Member States (such as the United Kingdom and Germany).
Decoupling: This option, which comes within the development of agricultural policy, would allow integration of compensatory aid for banana producers into the decoupled single payment system. The amounts of compensatory aid would in theory be incorporated into the single payment scheme. In Crete and Cyprus, where the single payment scheme is either already in place or will be set in place as of 2009, the integration of compensatory aid into the single payment scheme would represent an administrative simplification and should not undermine the socio-economic balance of the producing regions, since banana cultivation in these areas is secondary or marginal in relation to other crops, the steering group considers. At the time of CAP reform in 2003, the Spanish, French and Portuguese governments had, by using the opt-out provision, managed to have farmers in the Canary Islands, West Indies and Madeira excluded from the single payment scheme. Under these conditions, and considering the particularly high level of aid per hectare from which banana production benefits, the introduction of a single payment by holding for banana producers only could result in granting an abandonment premium. Implementation of decoupling would require that these regions set up an administrative system for the management and control of the single payment scheme, only applicable to bananas.
"POSEI": under this scenario, the financial resources of the banana CMO would be transferred to the POSEI programmes in favour of the extremely remote regions. The POSEI programmes contain specific measures to ensure the development of local agricultural products in the extremely remote regions, taking account of their specific handicaps. Within the limit of their budgetary envelope, the Member States will be able to define measures to support banana producers and decide to implement the compensatory aid system at a level close to the current regime, or to the aid regimes planned in the memorandum. The transfer of credits from the CMO will bring about a considerable increase in resources for the POSEI programmes, the management of which is followed attentively by a management committee, has sometimes come in for criticism (lack of transparency). According to the Commission's experts, "certain quarters are concerned about the pressure which such an increase could entail for the regional decision-makers".
The Commission points out that the new, solely tariff-based import regime for bananas entered into force on 1 January 2006. Customs duty of 176 euros a tonne is applied uniformly to imports, with the exception of the volume of 770,000 tonnes from the ACP countries, which is exempted from this tariff (EUROPE 9078). The liberalisation of the receipt is set to continue with the reform of the internal plank of the common market organisation (CMO) governing aid to European producers.