Select Committee on European Scrutiny Twelfth Report


3 Reform of fruit and vegetables regime

(28318)

5572/07

+ ADD 1

COM(07) 17

Draft Council Regulation laying down specific rules as regards the fruit and vegetables sector and amending certain Regulations

Legal baseArticles 36 and 37EC; consultation; QMV
Document originated24 January 2007
Deposited in Parliament30 January 2007
DepartmentEnvironment, Food and Rural Affairs
Basis of considerationEM of 15 February 2007
Previous Committee ReportNone
To be discussed in CouncilApril 2007
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information awaited

Background

3.1 The Community regime for fresh fruit and vegetables was first introduced in 1966, and, although similar in many ways to the other commodity regimes then in force under the Common Agricultural Policy (CAP), its defining characteristic for many years was the extent to which it resulted in large-scale withdrawals of produce from the market at Community expense, followed in many cases by their destruction. As a result, the Commission put forward in 1996 proposals[11] for reforming the regime, aimed at increasing market orientation among growers and reducing reliance on withdrawals. The central element of this reform, subsequently contained in Council Regulation 2200/96,[12] was that financial support to producers organisations[13] should be provided through operational programmes, lasting for three to five years, and aimed at encouraging the use of environmentally friendly techniques and improving the quality, marketing and end value of produce.

3.2 The regime was subject to certain revisions in 2001, and it was originally intended that further reforms would be introduced in 2005 (at the same time as those for sugar). However, that process was delayed, and the Commission's proposals are now set out in the current document. This aims to improve the sector's competitiveness and to increase consumption, to reduce fluctuations in producers' incomes, to continue efforts to protect the environment, and to reduce where possible the administrative burden. It would also have a bearing on the support arrangements for processed fruit and vegetables set out in Council Regulation 2201/96.[14]

The current proposals

3.3 These proposals would make two key changes to the reforms agreed in 2000. First, whilst recognising the role which producer organisations can play, the Commission also points out that a high percentage of growers in the main producing Member States have chosen not to participate. It has therefore sought to increase the flexibility of, and simplify, the arrangements applying to such organisations, in part to make membership of them more attractive. Thus, producers (who at present must market all their produce through the organisation of which they are a member) would be free to join different producer organisations for different products, and the proportion of a producer's sales which may be sold direct to the consumer would in future be fixed by the Member State (subject to a minimum of 10%), rather than specified in the Regulation. In addition, the level of Community support would be increased from 50% to 60% in areas where less than 20% of production is marketed through producer organisations; in the new Member States, in order to encourage their creation; for mergers of producer organisations and trans-national organisations; and for organic production. The Commission also proposes, partly in response to a critical Report by the European Court of Auditors,[15] that Member States should establish a national strategy aimed at achieving more effective operational programmes, and providing for an ex-ante analysis, for objectives and performance indicators, for assessments of operational programmes and for the reporting obligations of producer organisations.

3.4 These steps would be accompanied by a change in the way in which the costs of produce withdrawal is reimbursed by the Community. Hitherto, producer organisations have received full reimbursement of withdrawal costs for specified products through Community Withdrawal Compensation Funds, and have also been able to use operational funds to top this up, or to withdraw other products not covered by the official withdrawal arrangements. The Commission now proposes that the Community Withdrawal Compensation Funds should be abolished, but that producer organisations should be able, as part of so-called "crisis management", to carry out withdrawals funded from their operational programmes on a 50:50 co-financing principle. Further crisis management tools —including green harvesting or non harvesting of fruit and vegetables, promotion and communication, training measures, harvest insurance, and support for the administrative costs of setting up mutual funds — could also be incorporated within an organisation's operational programme.

3.5 The other key change proposed is the abolition of coupled aids for certain products grown for processing, and the integration of fruit and vegetables into the Single Payment Scheme. Among other things, the former would involve an increase in the national budgetary ceilings for the Single Payment Scheme in those (largely southern) Member States which have previously benefited from those aids (worth about €800 million), whilst the latter would entail a lifting of the current ban on growing fruit and vegetables on land used to support Single Payment Scheme payment claims. In addition, Member States would be allowed to set criteria under which they allocate new Single Payment Scheme entitlements, or new reference amounts to add to existing entitlements, to all fruit and vegetable growers (not just those previously benefiting from processing aid), funded from within existing financial ceilings.

3.6 The proposals also include the following elements:

  • the inclusion of fruit and vegetables within the Single Payment Scheme will mean that the cross-compliance rules will apply to all growers receiving payments, thus helping to meet environmental concerns: in addition, the Commission proposes that a minimum of 20% of expenditure within the operational programmes of each producer organisation should be devoted to environmental matters (aimed at aspects such as cultivation practices, waste management, water quality protection, biodiversity and countryside upkeep), and that 60% of expenditure on organic production carried out in the framework of a producer organisation's operational programme should be co-financed by the Community;
  • in order to promote a healthy diet, the Commission proposes that producer organisations should include within their operational programmes action to promote consumption of fruit and vegetables by young people, and that the co-financing rate by the Community should be increased from 50% to 60% where this is targeted towards school-age children and young adolescents: in addition, any market withdrawals by producer organisations which are then distributed free to charities, schools, educational institutions and children's camps would be wholly funded by the Community;
  • in view of the continuing negotiations within the World Trade Organisation, the proposal does not deal with the legal framework for external trade, but the Commission has proposed the abolition of export refunds (which it says now apply to less than one-third of total exports); and
  • the Commission has proposed a simplification of marketing standards.

3.7 The Commission has also accompanied its proposals by an Impact Assessment, which suggests that the overall budgetary effect of the proposal will be largely neutral, in that any additional expenditure arising from the changes proposed for producer organisations will be offset by the abolition of export refunds and changes to the withdrawal arrangements.

The Government's view

3.8 In his Explanatory Memorandum of 15 February 2007, the Minister for Sustainable Farming and Food at the Department of Environment, Food and Rural Affairs (Lord Rooker) says that the proposals would constitute a major reform of both the fresh and processed fruit and vegetables regimes, which currently involve a combined annual expenditure of €1.5 billion, equivalent to some 3% of the budget for the Common Agricultural Policy, most of which benefits Mediterranean producers.[16] He says that, whilst the Government welcomes the proposed abolition of coupled processing aids, export refunds and withdrawals, the key issues for the UK are likely to centre around changes to the arrangements for financial assistance to the operational programmes of producer organisations, and the inclusion of land growing fruit, vegetables and potatoes within the scope of the Single Payment Scheme. In addition, the UK will wish to clarify what is envisaged in practice for new aspects, such as the promotion of consumption and crisis management.

Conclusion

3.9 The Minister has said that a Regulatory Impact Assessment is being prepared, and we believe that it would be sensible at this stage simply to report this document to the House, but to reserve judgement on what further action, if any, may be necessary until that Assessment is available. It would, however, be helpful if the Assessment could spell out clearly the full implications of the inclusion within the Single Payment Scheme of land used for growing fruit and vegetables, since these appear to be inherently complex, not least because of the different arrangements which we understand have applied hitherto under the Single Payment Scheme in the different parts of the UK.


11   (16532) - : see HC 51-i (1995-96), para 4 (22 November 1995). Back

12   OJ No. L.297, 21.11.96, p.1. Back

13   This was subject to the proviso such an organisation must have at least five grower members and a minimum turnover of €1 million. The Community funds 50% of eligible expenditure, up to a ceiling of 4.1% of the organisation's marketed turnover. Back

14   OJ No. L.297, 21.11.96, p.29. Back

15   Special Report No. 8/2006. (27824) 12859/06: see HC 34-xl (2005-06), para 8 (1 November 2006). Back

16   UK growers who are members of producer organisations currently receive some £30 million a year assistance for approved operational programmes. Back


 
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