Select Committee on European Scrutiny First Report


COM(01) 247

Draft Council Regulation on the common organisation of the market in sheepmeat and goatmeat.
Legal base:Articles 36 and 37 EC; consultation; qualified majority voting
Document originated: 16 May 2001
Forwarded to the Council: 16 May 2001
Deposited in Parliament: 20 June 2001
Department: Environment, Food and Rural Affairs
Basis of consideration: EM of 20 June 2001
Previous Committee Report: None
To be discussed in Council: After receipt of European Parliament opinion
Committee's assessment: Politically important
Committee's decision: Not cleared; further information requested


12.1  Unlike many other commodities under the Common Agricultural Policy (CAP), the market regime for sheepmeat and goatmeat does not include any provision for public buying (intervention) of surplus produce. Rather, the main instrument of support is the annual ewe premium payable (as its name suggests) to producers rearing at least 10 ewes, and based on the difference between the Community's basic price (set each year by the Council) and the average market price. An individual's eligibility for the premium is, however, limited to the number of animals for which they received premium in 1991, with a quantity being held in reserve for allocation to specific hardship and other priority cases. In addition, producers in less favoured areas (LFAs), where about 80% of all ewes and she-goats are located, are eligible for a supplementary payment (the "Rural World Premium"). This particular regime is also unusual in that the UK is a major beneficiary, accounting for about one-third of Community production, followed by Spain (22%) and France (13%).

The current proposal

12.2  This sector did not feature in the Agenda 2000 reforms of the CAP, but, as a result of a separate review of the effect of the market organisation on farmers' incomes, production and the environment, the Commission has now proposed a number of changes, as follows:

  • the current deficiency payment basis for calculating the ewe premium would be replaced by a flat-rate payment, the level proposed being 21 euros (about £12.90) per animal, based on the average premiums from 1993 to 2000, and the present arrangement allowing the premium to be paid in stages would be abolished;

  • the system of individual producer quotas would continue, and would not be replaced by regional ceilings: however, in the interests of simplification and transparency, the sum of individual limits per Member State would be published in the relevant Regulation;

  • unless they fatten lambs as "heavy carcases", producers who market milk or milk products at present receive a lower premium than those producing meat, in recognition of the additional source of income which this provides: in line with the change proposed for the annual premium, the level of premium for such producers would in future also be on a flat-rate basis, at 16.8 euros (£10.32) per animal, and this lower rate would apply to all producers marketing milk or milk products, including those fattening lambs;

  • at present, the Rural World Premium payable in the LFAs is also differentiated as between producers of meat and milk or milk products: it is proposed that there should in future be a single rate of 7 euros (£4.30).

12.3  The Commission says that the proposed change to the annual ewe premium will lead to greater stability and predictability, both for producers and for the Community budget, allow forward planning, and enable producers to respond more readily to market signals. It also considers that the modification will simplify the administration of the regime by avoiding the need for burdensome price reporting requirements, and that it will be better adapted to the objectives of the World Trade Organisation (WTO) by removing the link between the premium and prices and productivity. As to the proposed level of the annual ewe premium, the Commission says that, since sheep and goat farmers generally have the lowest average incomes of all sectors, it would not be appropriate to set the premium below the 1993-2000 average of 20.6 euros, and that there are in fact arguments for increasing it. These include the effect on sheepmeat prices of the price decreases for beef and other meats as a result of the Agenda 2000 reforms, and the removal of the current deficiency payment system, which gives a guaranteed increase in the premium when prices decrease.

12.4  The Commission estimates that the changes proposed would increase the annual cost of the regime, currently around 1.8 billion euros (£1.1 billion), by about 27 million euros (£17 million), though there would initially be a one-off saving, because it is proposed to abolish the system of advance payments.

The Government's view

12.5  In his Explanatory Memorandum of 20 June 2001, the Parliamentary Under-Secretary of State at the Department for the Environment, Food and Rural Affairs (Lord Whitty) says that, although the Government's attitude to this proposal has not been fully determined, there are no elements which could be considered particularly difficult for the UK. In particular, he welcomes the introduction of a flat-rate payment, and the protection of a supplementary payment to producers in the LFAs; and, although only about 6000 ewes out of the 19 million in the UK are the subject of a claim for milk production, he believes it is appropriate to maintain the present differential between such animals and those produced for their meat. He also draws attention to the WTO implications and to the reduction in the administrative burden highlighted by the Commission.


12.6  As the Minister suggests, the changes proposed appear on the face of it to have some merit. On the other hand, it is clear that this regime is of considerable importance to producers in the less favoured areas, not least in the UK. Consequently, before finally taking a view on these proposals, we would like to know whether the consultation exercise which the Government has launched reveals any particular concerns not already identified. In the meantime, we are not clearing the document.

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Prepared 30 July 2001