Brussels, 24/01/2007 (Agence Europe) - As expected, on 24 January, the European Commission adopted proposals for large-scale reform of the Common Market Organisation (CMO) for fresh and processed fruit and vegetables, to assist this sector which is under some pressure (see EUROPE 9347). It is confronted by the power of the large distribution chains, which can set the prices they want and is also facing strong competition from third country products.
The Commission proposes to make the fruit and vegetable sector part of the single farm payment scheme (aid with no link to production level), to encourage the setting up of producer organisations (POs) and to allow these organisations to finance economic crisis management measures. To implement decoupling of aid and make available additional Community funds to producers, the Commission proposes to abolish not only aid to processed products, but also export subsidies and product withdrawal funded by the EU (except for free distribution). The reform will be implemented from 1st January 2008. The Commission will present its proposal to European Agriculture Ministers on Monday 29 January.
At a press conference, Agriculture Commissioner Mariann Fischer Boel explained the reasoning behind the EU's launch of “wide-ranging” reform of the sector: -fruit and vegetable producers are subject to increasing pressure from retail giants that set market conditions (they account for between 70% and 90% of the market in Germany, France, the Netherlands, the United Kingdom and the Scandinavian countries); - there is also tough competition from third countries through their quality products at lower prices (the EU trade balance remains negative, with imports worth €16 billion in 2005, and exports of €5 billion); - the CMO in fruit and vegetables is the only sector (apart from wine) not yet covered by the wave of reforms begun in 2003 (cereals, meat and milk in 2003, olive oil, tobacco and cotton in 2004, sugar in 2005 and bananas in 2006).
The Commission is not proposing to reduce Community funding for the sector (€1.5 billion), but to spend it more intelligently, and particularly to encourage farmers to join POs. In 2004, 33.7% of total EU production was marketed through producer organisations, much less than the target of 60% set by the Commission for 2013. The amounts vary from one Member State to another: under 15% in Poland (and in the other new Member States), in Greece and in Portugal, to over 80% in Belgium, Ireland and the Netherlands. In Italy and Spain, the proportions are 31% and 33% respectively, and in France it is 46%. In 2005, the total EU production of fruit and vegetables was worth €45 billion, with more than 50% of that going to Spain and Italy, followed by France, Greece, the Netherlands, Germany and Poland.
Ms Fischer Boel set out the main thrust of the proposed reform:
Decoupling aid: the introduction of the single farm payment scheme automatically means the removal of current aid for processed products. Ms Fisher Boel says that decoupling of aid will help “improve the sector's competitiveness and market orientation”. The total amount transferred, under the proposal, to the single payment scheme comes to around €800 million per year from 2008. The three Member States which most benefit from the current system of aid for processing (tomatoes, citrus fruit and dried grapes) would be the main beneficiaries of this funding: 40.7% for Italy, 24% for Greece and 21.5% for Spain.
Aid to POs: as a general rule, proposed Community aid would remain limited to 50% of the real cost of operational programmes. The ceiling of 4.1% of the value of the marketed product for each PO would remain. The Commission proposes to increase Community co-funding from 50% to 60% in areas where production marketed through POs is less than 20% or when the programme is submitted by a PO in one of the Member States which joined the EU in 2004. In addition, producers in new Member States who wish to acquire the status of producer organisations will be eligible for addition national and Community aid for a period of five years. The Community funding set aside for operational funds is €695 million in 2008 and up to €1 billion in 2013.
A rampart against crises: POs will be able to implement crisis management measures (market withdrawal, green harvesting, promotion, training, insurance of crops, mutualisation funds) with 50% Community co-funding.
Promotion of consumption: Community co-funding could rise to 60% (from 50%) when promotion is aimed at children and adolescents (€6 million annually is set aside for this purpose). Market withdrawals, amounting to 5% of the quantity marketed by each PO, can be distributed with 100% Community funding to charities, schools and children's holiday camps, hospitals, retirement homes and prisons. €8 million is available for this purpose every year.
Better environmental protection: every operation programme should devote at least 20% of its expenditure to environmental measures. There will be a 60% Community co-financing rate for organic production in each operational programme. (lc)