Brussels, 18/01/2007 (Agence Europe) - On Wednesday 24 January, the European Commission is due to adopt a legislative proposal for the in-depth reform of the common market organisations (CMOs) for fresh and processed fruit and vegetables. It plans to include these products in the single farm payment scheme (“decoupled” aid not linked to the level of production), introduced in a number of sectors since the reform of the Common Agricultural Policy in 2003, to put in place crisis management measures and to improve support for producer organisations. The financial consequences of this reform for the Community budget, due to come into effect on 1 January 2008, are virtually nil. The increase in the single payment scheme budget ceilings will be compensated for by the removal of premiums to processed fruit and vegetable producers, and of export refunds and aid for market removal.
Decoupling aid: the Commission is proposing to increase current single payment scheme ceilings by €769 million in 2008, €831 million in 2009 and €783 million from 2010 to 2013 (and following years), to enable the fresh and processed fruit and vegetable sector to become part of the scheme. This budget envelope will be of benefit especially to large processed fruit and vegetable producers: 40% of the total sum will, therefore, go to Italy, 25% to Greece and 22% to Spain. The Commission suggests that it should be up to individual Member States to determine the reference amounts and number of hectares able to benefit from the aid. In addition, aid for potato producers is also to be decoupled.
The inclusion of the fruit and vegetable sector in the single farm payment scheme means, the Commission says, the removal of aid to fruit and vegetables for processing (tomatoes, citrus fruits, pears, nectarines, peaches, dried figs, prunes and dried grapes), which currently account for over €400 million annually of Community funding (out of a total budget of €1.5 to €1.7 billion annually).
Producer organisations: the Commission is proposing to make it easier for producer organisations (POs) to operate. POs are legal entities responsible for planning the production, supply and marketing of products, reducing production costs and also developing environmentally-friendly techniques. The Commission, then, proposes making current rules on the producer organisations' range of products and on sales direct to consumers (including outside the organisation) more flexible. To further enhance the work of POs, the Commission is proposing that Member States be authorised to extend certain rules (production, marketing, environmental protection) to producers who are not members of the PO of the region concerned. Finally, producers in the new Member States who wish to acquire the status of producer organisations could receive national and Community funding over a transition period.
Operational programmes: despite pressure from farmers in the sector, Commission plans do not include increasing Community aid for operational programmes (implemented by POs). Community aid will, then, remain at 4.1% of the value of produce marketed by the PO. Financial aid from the EU budget is, as a general rule, limited to 50% of real expenditure.
Crisis management: this is the second main line of the proposed reform, after the decoupling of aid. Fruit and vegetables are perishable foodstuffs, whose level of production cannot be predicted. Surpluses can perturb the market. That is why POs currently receive 100% of the costs of withdrawal for some products (Community compensation for market withdrawal) and for the free distribution to the disadvantaged.
The commission notes a gradual reduction in funds allocated for market removal, thanks to better coordination of supply and demand. The fruit and vegetable market, however, continues to be subject to periods of crisis. To remedy this situation in the future, the Commission proposes a wider range of measures for POs. At their disposal will be: withdrawal from the market, unripe harvesting or the non-harvesting of fruit and vegetables, promotion and communication, training, insurance of crops and sharing the administrative costs for the setting up of a mutualisation fund. Crisis management measures must not, however, says the Commission, represent more than one third of expenditure committed to operational programmes implemented by POs.
Purchases for poor people: Community pension payments of €32 million a year, funded entirely from the EU budget, will be eliminated. The Commission is in its place proposing the introduction of the following rules: Community aid is limited to 50% of the amount of spending by producer organisations on pensions operations. Community funding for pensions could be brought up to 100% but only in the following conditions: quantities that are withdrawn are only purchased for free distribution to charitable works, charitable foundations, penitentiaries, schools, holiday camps, hospitals and hospices; pensions do not go above 5% of the production value as marketed by each producer organisation. The Commission is planning on an €8 million annual budget for free distribution of these products.
Environmental concerns: the Commission is proposing several provisions to ensure that fruit and vegetable producers take environment concerns more into account (modes of production, management of used materials, protection of water quality, maintaining biodiversity and upkeep of landscape). The introduction of fruit and vegetables into the single payment system compels producers to respect the cross-compliance principle on aid (payments are only granted if criteria, notably that on the environment, are respected). At least 20% of spending on each operation programme should be for environmental measures. The Commission has noticed a sharp rise in demand for organic vegetables. In this context, the proposal introduces a Community co-funding rate of 60% (as opposed to the 50% in general) for organic production in each operation programme.
Promotion: The WHO recommends that consumers eat a minimum of 400 grams of fruit and vegetables a day. In the EU only Greece and Italy attain this threshold. The Commission is proposing to increase the EU's co-funding rate to 60% for action promoting fruit and vegetables to children and school age adolescents.
Trade with third countries: as the WTO negotiations on the Doha Round are still ongoing, the proposal does not amend rules on external trade (entry prices, tariff quotas, trigger volume etc). The Commission is proposing, however, to eliminate export discounts for fruit and vegetables, which are becoming increasingly rare. In effect, according to the Commission, export discounts represent less than a third of total exports and the value of export subsidies is only between 0.8% and 8.9% for the prices of these products.
Community production of fruit and vegetables accounts for 3.1% of the Community budget and represents 17% of total EU agriculture production. Out of the 9.7 million farms surveyed in 25 Member States, 1.4 million farms produced fruit and vegetables and 660,000 specialised in this production. (lc)