9 Community financing of intervention
costs under the Common Agricultural Policy
| (28330)
5433/07
COM(07) 12
| Draft Council Regulation amending Regulation (EEC) No. 1883/78 laying down general rules for the financing of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section
|
| Legal base | Article 37 EC; consultation; QMV
|
| Document originated | 17 January 2007
|
| Deposited in Parliament | 31 January 2007
|
| Department | Environment, Food and Rural Affairs
|
| Basis of consideration | EM of 5 February 2007
|
| Previous Committee Report | None, but see footnotes 34 and 35
|
| To be discussed in Council | No date set
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
9.1 Under the Common Agricultural Policy (CAP), Member States
are obliged to buy from producers those agricultural products
which are subject to intervention arrangements. This in turn requires
them to borrow the necessary funds, which are then reimbursed
within two months by the Guarantee Section of the European Agricultural
Guidance and Guarantee Fund (EAGGF), on the basis of a uniform
rate of interest for the Community as a whole, which currently
stands at 3.2%. According to the Commission, this arrangement
has led to problems, notably in those Member States where higher
rates of interest apply, and in particular Hungary, where interest
rates are currently around 8%, and where intervention stocks of
maize currently stand at 4.3 million tonnes.
The current proposal
9.2 The Commission has accordingly proposed that, in those Member
States where interest rates are more than twice the uniform Community
rate, a correcting mechanism[33]
should be applied. This arrangement — which
will cover the years 2007 and 2008 effectively extends a similar
measure[34] introduced
for 2005 and 2006, and will add €9.3
million to the Community budget in 2007 and €10.4
million in 2008. However, the Commission has also proposed recently[35]
that the intervention facility for maize should be suspended from
1 November 2007, and believes that the two should be considered
together.
The Government's view
9.3 In his Explanatory Memorandum of 5 February
2007, the Minister for Sustainable Farming and Food at the Department
of Environment, Food and Rural Affairs (Lord Rooker) says that
the UK recognises the difficulties faced by some new Member States,
but points out that the fundamental problem here has been created
by high interest rates, which are a matter for national management
rather than a Community concern. He adds that, since the UK did
not support the similar measure proposed in 2005, it will not
be able to support this measure now.
Conclusion
9.4 We are content to clear this somewhat technical
proposal, but we are drawing the Minister's comments on it to
the attention of the House.
33 The budget would meet those costs arising from the
difference between the uniform Community rate, and that applying
in the Member State concerned. Back
34
(26360) 6206/05: see HC 38-xii (2004-05), para 7 (23 March 2005) Back
35
(28181) 16922/06: see HC 41-viii (2006-07), para 2 (30 January
2007). Back
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