7 Reform of fruit and vegetables regime
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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
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| Legal base | Articles 36 and 37EC; consultation; QMV
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | SEM of 8 May 2007
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| Previous Committee Report | HC 41-xii (2006-07), para 3 (7 March 2007)
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| To be discussed in Council | 11-12 June 2007
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
7.1 The Community regime for fresh fruit and vegetables was first
introduced in 1966, and its defining characteristic for many years
was the extent to which it resulted in large-scale withdrawals
of produce, followed in many cases by its destruction. As a result,
the Commission drew up in 1996 proposals,[17]
aimed at increasing market orientation among growers and reducing
reliance on withdrawals. In particular, this specified that financial
support to producers organisations should be provided through
operational programmes, and aimed at encouraging the use of environmentally
friendly techniques and improving the marketing of produce.
7.2 In January 2007, the Commission put forward this
document, aimed at improving the sector's competitiveness, increasing
consumption, reducing fluctuations in producers' incomes, protecting
the environment, and reducing the administrative burden. In doing
so, it suggested two key changes. The first sought to simplify
the arrangements applying to producer organisations, in part to
make membership of them more attractive, and suggested that the
level of Community support should be increased from 50% to 60%
in certain circumstances (for example, in areas where less than
20% of production is currently marketed through such organisations).
In addition, the way in which the costs of produce withdrawn are
reimbursed by the Community would be changed, so that, instead
of receiving full reimbursement through Community Withdrawal Compensation
Funds, producer organisations would 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.
7.3 The other key change proposed involved the abolition
of coupled aids for certain products grown for processing, and
the integration of fruit and vegetables into the Single Payment
Scheme. 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,
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 fruit and vegetable growers.
7.4 In our Report of 7 March 2007, we noted the Government's
view that the proposals would constitute a major reform of the
regimes in question, which currently involve an annual expenditure
of €1.5 billion, most of which benefits Mediterranean producers.[18]
Also, whilst the Government welcomed the proposed abolition of
coupled processing aids, export refunds and withdrawals, it considered
that the key issues for the UK were 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.
7.5 We commented that, since a Regulatory Impact
Assessment was being prepared, we believed that it would be sensible
to reserve judgement on what further action, if any, might be
necessary until that was available. We did, however, add that
it would 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.
Supplementary Explanatory Memorandum of 8 May
2007
7.6 We have now received a supplementary Explanatory
Memorandum from the Minister for Sustainable Farming and Food
at the Department for Environment, Food and Rural Affairs (Lord
Rooker), indicating that the German Presidency intends that the
Council on 11-12 June 2007 should adopt the proposal. The Minister
has also provided a copy of the Regulatory Impact Assessment which
had been used to seek views on the proposals, and on which the
Government has invited responses by 7 June 2007.
7.7 That Assessment points out that there are currently
about 10-12,000 producers in the UK, with about 35% of production
supplied by members of some 60 producer organisations, and that
fruit and vegetables[19]
account for 3% and 13% respectively of the value of agricultural
production in the UK. In the main, the Assessment suggests that
the UK can support many of the elements in the proposal, including
the decoupling of aids for products grown for processing and the
abolition of export refunds, the abolition of Community withdrawal
compensation, and the incorporation of areas growing fruit, vegetables
and potatoes within the Single Payment Scheme.
7.8 On the other hand, there are aspects of the proposal
which the UK wished to challenge during the negotiations, such
as enabling producer organisations to carry out withdrawals on
a 50:50 co-financing basis, and the practicalities of incorporating
land growing fruit vegetables and potatoes within the Single Payment
Scheme (where the Assessment says that the possible allocation
of new entitlements or reference amounts needs to be clarified
and account taken of the different methods of decoupling within
the UK). The Assessment also draws attention to the admission
in the Commission's own impact analysis that "….the
quantification of the impact of the different reform options has
been limited due to the great diversity of the sector, incompleteness
or lack of comparability of existing date and the absence of modelling
tools that could represent the envisaged changes". It also
says that "under the circumstances, the impact analysis has
had to remain essentially qualitative bearing in mind the reform's
political and economic aims."
7.9 Unfortunately, despite our having specifically
asked that the Regulatory Impact Assessment should set out clearly
the full implications of the inclusion within the Single Payment
Scheme of land used for growing fruit and vegetables, the Assessment
provided does little more than indicate that this might be problematic,
without explaining why (or what might be done about it). We have
therefore sought in Annex I to summarise our understanding of
the background to the current proposal, and the rationale behind
it. In essence, the main effect of the proposal would be to lift
the general restriction on the growing of fruit, vegetables and
potatoes on land used to support an annual claim for payment under
that Scheme, imposed in 2003 at the behest of some other Member
States, in order to address concerns over potentially unfair competition
from cereals growers. However, it would enable those Member States
still concerned about competition from cereals growers to retain
some restriction, if they so wish, over the growing of fruit and
vegetables on eligible land. Either way, the level of payments
received by individual producers under the Scheme would not be
affected.
Conclusion
7.10 Quite apart from the fact that the consultation
period ends barely a week before we are told this proposal may
be adopted by the Council, we are concerned that the Regulatory
Impact Assessment provided should have explained so inadequately
the implications of the inclusion within the Single Payment Scheme
of land used for growing fruit and vegetables, particularly as
the relevant arrangements under the Scheme (including their application
within the UK) are so inherently complex.
7.11 However, we understand that removal of the
restriction on the growing of fruit, vegetables and potatoes on
land under the Single Payment Scheme is in line with UK thinking,
and with the basic thrust of the wider reforms to the Common Agricultural
Policy adopted at that time. That being so, the main outstanding
issue would appear to be the extent to which Member States still
concerned about competition from cereals growers would be able
to retain some restriction over the growing of fruit and vegetables
on eligible land, a point on which the UK is anxious to retain
a measure of flexibility, given the different arrangements which
currently apply in England and Northern Ireland, as opposed to
Scotland and Wales. In view of this, and of the general support
which the UK has given to the revised arrangements applying to
producer organisations, we are on balance now prepared to clear
the document.
17 (16532) - : see HC 51-i (1995-96), para 4 (22 November
1995). Back
18
UK growers who are members of producer organisations currently
receive some £30 million a year assistance for approved operational
programmes. Back
19
The three most valuable of these are carrots, strawberries and
mushrooms. Back
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