REGULATORY FUNDS FOR PIGMEAT
(21177)
7789/00
COM(00) 193
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Draft Council Regulation amending Regulation (EEC) No. 2759/75 on
the common organisation of the market in pigmeat.
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| Legal base:
| Articles 36 and 37 EC; consultation; qualified majority voting
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| Document originated:
| 11 April 2000
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| Forwarded to the Council:
| 14 April 2000
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| Deposited in Parliament:
| 2 May 2000 |
| Department: |
Agriculture, Fisheries and Food
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| Basis of consideration:
| EM of 15 May 2000
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| Previous Committee Report:
| None |
| To be discussed in Council:
| 19-20 June 2000
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| Committee's assessment:
| Politically important
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| Committee's decision:
| Cleared |
Background
16.1 The nature of pig production makes
it particularly susceptible to market stimuli. This in turn has
over the years given rise to the so-called "pig cycle",
under which prices fluctuate sharply in response to changes in
supply patterns. At the same time, compared with other commodities,
the régime under the Common Agricultural Policy (CAP) is
relatively light: for example, there is no provision for public
intervention, the main mechanisms being the availability of export
refunds and aids for private storage. This background, and in
particular the experience of the last four years — with
very high market prices in 1996 and 1997 followed by very low
prices in 1998 and 1999 — has in the Commission's view "clearly
demonstrated" the need for a regulatory mechanism to stabilise
producers' incomes.
The current proposal
16.2 The Commission has accordingly put
forward a proposal under which:
- Member States would be authorised to establish
a regulatory fund in their territory, allowing pig farmers to
participate on a voluntary basis;
- those pig farmers opting to participate would
have to do so for a period of not less than five years, and undertake
not to increase the number of their fattening places during their
period of membership;
- the funds would be financed by the producers
themselves, on the basis of a levy paid for each fattening pig:
the levy would be collected, and payments subsequently made, on
the basis of thresholds set by the funds and subsequently authorised
by the Commission;
- however, Member States would be able to grant
funds a degressive launching aid, and provide them with an interest
free loan, to be reimbursed in full, where a fund has to start
payments without having had the time to build up the necessary
financial reserves.
The Government's view
16.3 In her Explanatory Memorandum of 15
May 2000, the Minister of State (Commons) at the Ministry of Agriculture,
Fisheries and Food (The Rt. Hon. Joyce Quin) says that, while
the Government appreciates efforts to help the industry, it is
difficult to see how the proposal would be of benefit. She adds
that interfering in a relatively free market carries risks, and
that, by apparently bringing quotas into the pigmeat régime,
the proposal would run counter to the thrust of Agenda 2000, and
that, at a time when the political logic and financial pressures
are forcing the more regulated régimes to move towards
a freer market, it would be difficult to justify a decision which
took one of the lighter régimes in the opposite direction.
The Minister also suggests that there would difficulties in ensuring
that a fund could not be misused, either by individuals or by
Governments using it as way of channelling illegal State Aid to
their pig producers.
Conclusion
16.4 As the proposal makes clear, there
would be no obligation on a Member State to operate a regulatory
fund, or, where it chooses to do so, on individual producers to
participate. Nor, it would seem, is any Community funding envisaged.
To that extent, it is — as the Minister points out —
difficult to see how the proposal would benefit the pig industry.
Equally, in the event that the opportunity to establish such funds
were to be taken up, we note her reservations over the apparent
inconsistency between what is proposed and the general thrust
of the Agenda 2000 reforms, and over the potential for using the
funds as a channel for State Aids. Consequently, although we are
clearing the scheme on the grounds that it would appear to have
no great relevance to UK producers or any budgetary implications,
we think it right to draw it, and the Minister's comments, to
the attention of the House.
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