Committee Reports > List of Committees > Joint > 1976 > Committee on the Secondary Legislation of the European Communities > Report No. 23 - Agricultural Prices for 1976-1977

APPENDIX

Memorandum

1. Introduction

The Commission’s proposals are set out in two volumes (R/3166/75) which contain (a) a general explanatory memorandum, (b) notes on individual products and the overall financial implications, (c) an explanatory memorandum on a proposal to amend the Disadvantaged Farming Areas Directive and (d) 33 draft Regulations and a draft Directive.

2. General level of price increases

The prices proposed represent increases over those for 1975/76 ranging from 1.3% to 9.5% for individual commodities. The average over the whole range is 7.5%.

COPA proposed an overall increase of 10.5% ranging from 9 to 25% in the case of individual products.

3. Method of price calculation

This year the Commission has employed a so called “objective” method of calculating the price increase required to keep the incomes of a sample of “reference” modernised farms in line with trends in average non-farm income. On this basis the “needed” price was calculated at 4.6% but this figure reflected very rapid increases in Italian farm prices; excluding Italy the increase would be 9.1%. As already stated the actual increase proposed is 7.5%.

4. Milk and Milk Products

The proposals include measures designed to curb over-production and reduce the stocks of skimmed milk powder held in intervention. The main proposals are—

(i) Increase in guide price for milk of 2% from 1st March, 1976 and 4.5% from 16th September, 1976;

(ii) Abolition of a fixed intervention price for skimmed milk powder as from September, 1976 and its replacement by a “guide price”, with intervention purchases thereafter by tender procedure within a price range of 94% to 102% of the guide price;

(iii) Provision for Community contributions to national programmes for milk consumption in schools;

(iv) Compulsory inclusion of 2% by weight of skimmed milk powder in compound animal feeding stuffs for an 8-month period beginning in March, 1976;

(v) Payments to milk producers who undertake to stop delivering milk to the market;

(vi) A subsidy for the production of whole milk powder; and

(vii) A slight increase in the Community contribution to the general consumer butter subsidy, but that contribution would in future only be payable on butter produced within the Community.

Having regard to our pattern of production the lower Winter price will be disadvantageous for Ireland.

Stocks of skimmed milk powder exceeded 1,000,000 m.t. at the beginning of last December. By the compulsory incorporation of skimmed milk powder in compound animal feeding stuffs, the Commission hopes to dispose of 600,000 m.t. In this connection Ireland is less dependant on compound feeding than other Member States.

Intervention buying does not operate in the case of cheese and the price of this product will be affected only in so far as it reflects the price of milk.

It is thought that milk production should continue to be profitable in Ireland the modest nature of the increases notwithstanding. The Accession Act provisions continue to apply in our case.

COPA proposed a price increase of 9%. It favours using skimmed liquid milk on the farm whenever this might be technically applicable and a new premium system for the non-delivery of milk and milk products. It also wants strengthening of the policy of food aid to third countries, the conclusion of long-term contracts with third countries and the revision of the maximum quantities of butter exported by New Zealand to the United Kingdom.

5. Beef Sector

The general increase proposed in the guide price is 8%. By virtue of the Act of Accession the increases applicable to the guide prices in Ireland and the United Kingdom will be 12.6%. The intervention price is to be fixed at 90% of the guide price.

It is proposed to phase out before 1st May the slaughter premium of 52 u.a. for adult cattle.

Present indications are of a movement to a position of relative scarcity in this sector.

COPA wants a 10% increase. It has expressed opposition to any reopening of Community frontiers until prices are stabilised at 103% of target price. At present the ban on imports is not quite total: it cannot be because of GATT and other conventional obligations. There is however opposition to the present ban such as it is. COPA also wants intervention to be raised to 93% of the guide price and is opposed to recent amendments by the Commission to the list of beef products that may be brought into intervention. It has called for price-related measures to assist producers when the market support system does not, by itself, provide a reasonable guarantee.

6. Cereals

Apart from the intervention price for feed wheat which is to fall by 6%, the various price increases proposed vary between 5.5 and 9.5%. The main features of this year’s proposals are (a) final departure from the system of regionalised prices and (b) a move towards a single intervention price for barley and wheat the main objective being to place the price for feed wheat on the same level as other feed grain. A separate reference price would be set for bread-making wheat at a level 15% above the intervention price for barley.

Ireland is, of course, an importer of wheat. As far as other cereals are concerned the object should be to fix prices at sufficiently high levels to give the producer a reasonable return but not so high as to attract imports.

COPA favours increases between 10 and 13%. It accepts the necessity for a better price relationship between various cereals and suggests the following basis subject to certain safeguards viz. barley 100, rye 104, feed wheat 106, maize 110 and bread wheat 120.

7. Fruit and Vegetables

In this sector the Commission is required to propose a basic price and a buying-in price. Its proposals for 1976/77 would involve an increase of 8% in prices actually paid to the producers for all products in the event of market intervention except in the case of apples and pears, for which the increase is limited to 4%.

COPA has asked for an increase of 10.5%. It has protested against a Commission decision authorising further application of national aids on the grounds that it leads to competition distortion among glass-house producers when some Member States grant aids and others do not. It also demands that a degressive Community aid should be granted by FEOGA.

8. Sugar

The increase in sugar prices proposed is 8%.

In Ireland the position tends to be influenced by imports but it is not anticipated that there will be any imports during the year.

COPA has sought an increase of 13%.

9. Monetary Measures

The main proposal is to revalue the representative units used for converting units of account into the national currencies of France, Germany and the Benelux Countries for the purpose of the Common Agricultural Policy. No adjustment is proposed for the “green” pound.

10. Disadvantaged Areas Scheme

The Commission is proposing that the FEOGA contribution be increased from 25 to 40%. In its tenth report the Joint Committee strongly pressed for an increased FEOGA contribution.

COPA wants the contribution to be 50% as originally proposed by the Commission. It also wants the maximum payment to be raised from 50 to 60 u.a. per livestock unit.