PERSPECTIVES fOR THE COMMON AGRICULTURAL POLICY

INTRODUCTION

The Real ProblemThe Economic Envi ronmentBalancing the Agricultural MarketsThe Need for PerspectivesDiversifying the Instruments of the CAPThe Need for Choices

PART I - AGRICULTURAL POLICY AT A TURNING POINT

A. Economic and social objectives of the CAP

B. Agri cul tural pol i cy faces const raints

The international constraintThe budgetary constraints

C. The risk of renationalisation

D. The basic principles ... and prospects for the future

PART II - EUROPEAN AGRICULTURE TODAY

A. Agriculture in the Community of Ten - An overview

Agri cul ture in the economyEmployment and incomesAgriculture s heterogeneity - Regional diversity

B. The enlargement of the Community

PART III - AGRICULTURAL MARKETS - CONCEPTS fOR THE FUTURE

A. Price poLicy or quantitative restrictions - A fundamentalchoi ce

B. Incomes and employment - The consequences

Page

I-IX

C. Reorientation of production

1. Cereals - A key.stone of the agricultural policy2. Alternative production

D. Diversification of outlets - New uses for a.griculturalproducts

L Bio-ethanol2. Sugar and starch3. Future uses

E. External trade - A balance to be restored

An externalExportsImportsStreamlininginstruments

regime adopted to the needs of the future

and diversifying external trade pol icy

PART IV - A ROLE TO PLAY - AGRICULTURE IN SOCIETY

A. Agri cu l ture and envi ronment

Regulation and control of practices harmful of theenvi ronmentPromotion of practices friendly to the environment

C. Income aids - One problem, several answers

B. Integration in the economy - A need for regional development 53

1. The necessity of income support2. Options for action

. Option A : Pre-pension for farmersand 0 lderOpti on B :Opt i on C :Opt i on D :

of .5.5 yea rs

A structural approachA social approachA buying out approach

Stati.stical Annex

PERSPECTIVES fOR THE COMMON AGRICULTURAL POLICY

INTRODUCTION

The common agricultural pol icy has sustained the development ofCommunity agri culture over more than twenty years, with results thatare substantial and positive. However, with the changes that havetaken place in the European economy, and at the world level, theagricultural policy is faced with new chaUenges and must now looktowards the year 2000. In the coming years, the rate of change oftechni ca l and economi c factors affecting the agri cul tura l sector willaccelerate the development of biotechnology, which has profoundimplications not only for the utilisation of agricultural products,but also for production techniques, is onLy one example.

It is duty of the Community institutions, taking account of the viewsof the professional organisations concerned, to develop a globalstrategy which will permit Europe s agricultural population - to whomthe Community has specific .obligations under Article 39 of the Treaty- to face these challenges in the best conditions. It was for thatreason that the Commission decided soon after taking office inJanuary 1985 to launch a general debate on the perspectives for thecommon agricultural policy.

For that purpose, the Commission has decided to put its reflections inthe form of a consultative document ("green paper") which it nowtransmits to the Community institutions and other parties concerned .the Community level. This document presents a number of basi c optionsfor the future development of the agricultural policy. The commis.sioninvites the institutions and other organisations to formulate thei rown reflections and comments in the coming months. Taking account ofthe views expressed in the course of the debate, the Commission willpresent its conclusions in an appropriate form towards the end of1985.

The Commission underl ines that the present document is not intended toprejudge the conclusions which it wi U reach and that it wi It takefull account of the views to be expressed in those consultations. Italso underlines that the present document is complementary andselective in nature compLementary, since it follows and completesthe line of reflection already made by the preceding Commission; andselective, since it tries to identify the principal fields in whichpolitical choices are required, without implying that other aspects ofthe common agri cultural pol icy can be neglected.

The Rea l Problem

The common agricultural poliCY is a cornerstone of the Europeanconstruction. It WaS in this sector, from 1962 onwards, that aprofound effort towards economic integration was commenced by theoriginal Six Member States, in parallel with the creation ofa commonmarket in industrial goods. In this sense the CAP was and remainspart of the ' marriage contract' of the European Community; it wasaccepted by the new members who joined the Community in 1973 and 1981and wi II be adopted by the new members who are to join in 1986.

During its life the CAP has passed through different stages ofdevelopment, as regards both the markets pol icy and the structurespolicy it has experienced continual adaptations, to meet newsituations which Were not foreseen by the 'founding hthers ' who metat Stresa in 1958. In the first 15 years, technical progress inagri cul ture and good conditions in other sectors of the economypermitted a rather rapid rural exodus. Since the mid-1970s, theeconomic crisis has s lowed down the outflow of labour fromagri culture, and the high level of unemployment has created conditionsin which an acceleration of the rural exodus would be intolerable;however, the demographic structure of Community agri culture is suchthat a certain decline in numbers working in agriculture can in anycase be expected.

The European Community therefore is already confronted with thequestion whether it wishes to maintain .a substantial number of \"orkersin agriculture. To that question there can be only a positive reply.The need to maintain the soci al ti ssue in the rural regions, toconserve the natura l envi ronment and to safeguard the landscapecreated by two millennia of farming, are reasons which determine thechoice of society in favour of a ' Green Europe ' which at the same timeprotects employment possibilities for those in agriculture and servesthe long-term interest of all Europe s citizens. The enlargement ofthe Community to include Spain and Portugal wi II accentuate thediversity of European agriculture and its specific nature bycomparison with agricultures elsewhere in the world. An agriculture onthe model of the USA .lith vast spaces of land and few farmers, neither possible nor desirable in European conditions, in which thebasic concept remains the fami ly farm.

If this choice is confirmed by the Community institutions - and it isaLready the choice of the Commission - the challenge which must befaced is how to ensure the maintenance of a signifi cant number ofpersons in agriculture by means which do .not result in unacceptablewaste of economic and fi nanci aL resources. Agri culture, like the restof the economy, is subject to the laws of supply and demand. A

III

continuing accumulation of surpluses, due to the imbalances of pricesand markets, is not a satisfactory option for the CAP. Theagri cultural export vocation of the Community cannot be served byassimilating it to an instrument of surplus disposal; and the problemsof the third world, in which many millions of persons remain hungry,cannot in the long term be resolved by the agriculture of thedeve loped count ri es.

For these reasons the Commission has already tried, over a number ofyears, to adapt the instruments of the CAP, so that Europe s farmersare no longer encouraged to produce for public intervention - that is,for markets which do not exist. The Council and the Parliament haveaccepted the need for such a reorientation of the CAP. What remainsnow is to complement the decisions already taken in such a way as tocreate the economic, social and poLitical conditions in which thereforms already begun can be successfully achieved.

Such diversification of the instruments of the CAP by complementarymeasures concerning both the market organisations and the structuraland social objectives of the pol icy, should be made in conformity withthe basic principles (unity of the market, Community preference,financial solidarity) and without abandoning the reforms decided bythe Council in 1982-1984 (restrictive price policy, guaranteethresholds, etc.

The economi c envi ronment

The advance of technical and economic progress in agriculture is notlimited to Europe; it is transforming agriculture in all parts of theworld - in the agricultural exporting countries, who are theCommunity s competitors on the world market, and in the developingcountries who are faced with the need to implement thei r own foodstrategies. Since the Community wishes to maintain its r.oLe ininternational trade, thi.s implies that the CAP must take account ofthe international realities.

At the same time, agri.culture is by no means the only sector of theEuropean economy undergoing rapid mutation, with the resulting socialproblems of adaptation; the high level of unemployment is only asymptom of the diffi cul ti es which the European economy is experiencingin adapti ng to the new envi ronment. There are many demands on publ i cexpenditure, both at the Community level and the national level, toease the problems faced by the sectors in difficulty and to encouragenew sectors to develop. Since budgetary resources are limited, thisimplies that the CAP has to take account of financial constraints.

Balancing the agricultural markets

Since the beginning of the 1980s the Community has taken a number ofsteps to adapt the pol i cy of pri ces and markets, in vi ew of thestructural surpluses in several sectors. In an important series ofdecisions in 1984, the Counci l accepted the need for a restrictiveprice policy, with the application of guarantee thresholds forproducts in surplus or for which budgetary expenditure may increaserapidly.

Unless the Community succeeds in giving to market prices a greaterrole in guiding supply and demand within the ag.ricuLtural pol icy, itwill be drawn more and more into a labyrinth of administrativemeasures for the quantitative regulation of production. It cannot bein the long-term interest of Europe s agri culture wishing to exploitits productive potential to extend the empire of quotas. If higherpri ces were envisaged within the framework of quotas

there would bethe risk of resistance from consumers and of the development ofsubstitute products. Such an approach would also tend to threaten theunity of the agri cultural markets and the solidarity of theagricultural policy. That is why, in its price proposals for 1985/86,the Commission concluded "there can be no alternative to pursuing apri ce policy mo.re adapted to the realities of the internal andexternal markets but taking account of the Community

s obligations tothe agri cultural population

This approach also implies that more attention should be paid to thedemands of consumers in terms of quality (as well as

quantity) of foodat reasonable prices, and to the requirements of the food industry.

The need for perspectives

But if the agricultural policy does not provide farmers with positive

perspectives and with the hope of a sounder framework for the nextgeneration, it will not fulfil the role which the Community hasassigned to it. In such a case, the policy would inevitably undergo aprocess of renational isationwith all the attendant consequences for

European integration, and this must be avoided.

There is no "miracle solution" to these problems. But there arepossibilities which can be exploitedprovided that the agriculturalsector is willing to accept the

challenge. If the constraints of amore market-oriented policy for prices and markets are acceptedshould be possible to release n~w resources to diversify theinstruments of the CAP and to create new outlets for agricultural

production. With this approach, farmers would be asked to accept aroLe not only as technicians, but as managers and entrepreneurs.Employment possibi l ities for the agri cultural workforce could also bebetter secured.

The purpose of this consultative document is to indicate a number ofthe options which .may be considered

At the level of production although there are difficulties on anumber o mar ets, or w ich reforms of the market organi.sationsmust be pursued, the sector most urgently in need of review is thatof cereals to which an important part of this document is devoted.At the same time, the possibilities of alternative production havebeen considered, with a view to promot ng ex ng an even novelcrops; a l though a reba lanc ing of the pri ce hi era rchy wou ld help tofaci l itate such developments, budgetary resources may also beneeded.

At the leveL of out lets the development of modern techno logyes possib e new uses for agri cul turat products, parti cularly for

industri aL and energy uti l i sations the analysis in this documentows t at t ere a potent for increased demand but that

under present conditions, it is of limited scope, and raisesimportant questions of financing. In this context the document alsoexamines the Community s role in external agricultural trade, where

number of options should be cons ere s ev ent thatexports must be made under competitive conditions, and in thiscontext the question of the f. nanciaL coresponsibi l ity of producersalso arises.

Diversifying the instruments of the common agricultural policy

Up to now the CAP has been characteri sed by an emphasis .on theinstrument of price support, an emphasis which is reflected in theshare which the Guarantee Section takes of the CommunityAgri cul tural Guidance and Guarantee Fund. This imba lance between pri cesupport and other measures is not what the original designers of theCAP intended, and has resulted in the pol icy using one principaLinstrument for the achievement of diverse objectives. Since the limitsof this approach have now been reached the question is inevitablyposed which complementary instruments should be developed.

Important steps have recently been taken in this sense with theCouncil' s decisions on the new agricultural structures policy, andIntegrated Mediterranean Programmes. Further reflection is necessary

on the means by which the place of agriculture in socii'ety can bebetter assured, taking accoung particularly of the situaUon of familyfarms. This is all the more necessary because of

the impact of a restrictive price policy on agricultural incomes;

the risk of growing polarisation between the differentagri cul tures in Europe, ranging from those with a good structure infavourable economic conditions, to those with natural handicaps inthe context of a poorly deve loped regional economy;

the challenge of enlargement.

The Community must ensure that the social and economic conditions ofthose working in agri cul ture are not prejudiced by these developments,and that the social fabri c of the rural .regions is not destroyed by anaccelerated departure of the agri cul tural workforc.e. In some regions,agri cultural employment and activity, even if maintained by subsidies,is simply indispensable if depopulation of the countryside is to beavoided. The maintenance of a significant number of persons inagri culture is not, however, incompatible with the development - whichshould be encouraged - whereby a part of thei r income is derived fromnon-agri cul tural sources (part-time farming).

That is why in this consultative document the Commission sets out anumber of options to be considered in the following fields

the role of agri cul ture as .a protector of the envi ronment;. in ourindustrial ised soc ety, t is ro s perce to be ncreasinglyimportant and if agri cul ture were wi II ing to accept newdisciplines in this context, society should recognise it byproviding financial resources;.

the better integration of agriculture in regional developmentsi nee not a II the problems o agr cu ture can reso d bagricultural policy alone, it is imperative to consider whatcontribution other pol icies can make; in fact, agricultural pol icyhas to be seen in the broader perspective of overall rural policy;.

the question of di rect income aids for agri cul ture; in the contextof a restrictive price po icy, it is necessary to envisagecomplementary measures in the form of income aids.

VII

As regards income aids, the Commission emphasises that the optionsdescribed in this consultative do.cument require careful examinationand dis.cussion. Although certain .measure.s of di rect income aid alreadyexi st within the CAP (for example, compensatory payments in mountainand less-favoured areas) thei r extension on a wider scale would poseimportant political, administrative, and financial questions,particularly in view of the selectivity which would be a necessaryfeature of such a system. The complexity of this problem - includingthe resistance of the agri cultural population to measures of thecharacter of ' assistance

' -

requi res much reflection. Therefore theopti ons described are not to be considered as proposals, but as thebasis for a better-informed debate on the subject. Two points are tobe pa rt i cu la r ly emphas i sed:

an essential eLement of any system of income aids would be afinanCial participation of the Community, in accordance with theneed for solidarity parti cularly towards the poorer regions; thiswould be the logical counterpart of the burden of income supportbeing partially shifted from the markets policy;

there would be a complementarity between any system of income aidsand measures for regional development designed to create otherpossibilities of income for agriculture; without a more dynamicregional pol icy the need for specific income aid for agri culturewou ld be greate r.

The need for choices

As has already been stated the acceptance of the constraints of amore market-oriented policy (which in any case is more or less imposedon the Community by the realities of economic life) couLd liberatefinancial resources for the development of new instruments ofagri cultural pol icy. As regards outlets on the internal and externalmarkets of the Community, there is also the question of a possiblefinancial participation by producers.

But a certain number of choices wi II have to be made, taking accountof the fact that expenditure under the CAP wi II have to respect thelimits that follow from application of the financial guidelines, whichmean that the rate of growth in agri cultural expenditure must be lessthan the rate of growth in own resources.

Some of the options mentioned in this document have been quantified inbudgetary terms (for example, options concerning income aids) but inother cases quantification is by nature extremely difficult (for

VIII

example" external trade options). It need hardly be emphasised thatif i:he C(.'mmuni tj' W'Jre to embark on new categories of expenditure infavour of agriculture (for example" income aids) or to increasesignificantly e)(i~ting categories (for example, subsidies foroutlets), then compensatory economies would need to be effected. general, it may be remarked that

* A restrictive price policy implies lower expenditure on marketmeasures (intervention, restitutions, aids for products) and thiswould take effect in two phases - a first phase in which certainprices would either be reduced or increase less than they wouldotherwise have done, and a second phase in which production ofcertain surplus products would either be reduced or have a lowerrate of increase.

Other options mentioned in this document would go in the oppositedi rect i on both in the budgetary sense (higher expendi ture) and inthe social sense (measures to help agricultural incomes throughalternative production or outlets, measures of direct income aid,etc.

) .

The choices to be made concern essentially the balance between thesetwo factors, and the time-period over which they could be expected tooperate, taking account of the fact that during a transitional period- because of the time-lags inherent in the agricultural economy - theycould result in higher overall expenditure, leading later to lowerexpendi ture.

The choices also concern the financial effort to be devoted tostructural policy, and the balance between such efforts at theCommunity and national levels respectively; in this context, it isevident that there arise fundamental questions of financial solidarityand the North-South balance within the Community.

* *

The approach outlined in this consultative document , which engages theCommunity institutions and organisations in a debate on the optionsfor the CAP, requires political courage and realism.

In face of the aspirations of Europe s agricultural population, itwould be equally unjust to present falsE;! perspectives as to offer noperspectives. But the Commission considers that if the task ofadapting the Common Agricultural Policy is approached with rigour as

regards the analysis, and prudence as regards the choices to be made,there can be hope as regards the perspectiv~s for the future ofEurop~an agri cul ture.

PART I

AGRICULTURAL POLICY AT A TURNING POINT

A. Economic and social objectives of the CAP

1. The objectives of the Common Agricultural Policy, as laid downin article 39 of the EEC Treaty, remain as valid today as when theTreaty was signed in 1957. The task of the Community is not to reviseor reinterpret those aims, but to ensure that the means of puttingthem into effect are adapted to the rea l iti es of the present day. Theobjectives of the CAP are both economic and social in nature.

2. The economic objectives have in many respects been wellachieved. Over the last 25 years, the modernisation of Europeanagriculture has continued, and even accelerated, with the applicationof modern equipment and techniques to farming, often with the help ofinvestment aids from the public authorities at regional, national andCommunity level. This spectacular advance has been assisted by theopening up of common European market, through the removal ofnational barriers to trade in the Community, and by the stableenvi ronment of market and pri ce guarantees created by the CommonAgricultural Policy. The resulting increases in food production havegiven a reinforced security of supply for Europe consumers, atprices which by comparison with those prevai ling in other developedeconomies are reasonable and stable.

a. However, this development of production has outstripped theincreases in ~onsumption of agricultural products within the Communityand the outLets on world markets; the resulting imbalances on theagri cul tural markets have led to growing surpluses in many sectors,whose disposal is expensive to the Community budget and in terms ofthe a llocat i on of economi c resources. The CAP has to demonst rate thatit can make the most efficient use of the economic and financialresources at its disposal.

b. In the development of the common agricultural policy, attentionhas to be paid not only to the stabi l isation of agricultural marketsbut also to the demands of consumers in terms of qual ity of food, andto the changing requi rements of the food industry which is responsiblefor processing a large part of the Community agri culturalproduction. It is therefore nec~ssary to take into account theinterests of consumers and the food indust ry, and to reassess on acontinuing basis the factors which influence demand both in terms of

quantity and structure so that policies can be adopted accordingly.The most important of these influences are advances in technologyleading to the introduction of new products, changes in populationlevels and age structure, consumer preferences, particularly thoseinfluenced by health concerns, and trends in catering and marketing offoods.

3. Europe has also played an increasing role in worLd trade, beingnot only the world' s first importer of food, but its second exporter.Our increasing dependence on world markets brings bothresponsibilities and risks, obliging us to take more and more accountboth of the state of the world economy and of the position of ourtrading partners. If it was at one time possible to view the Common

AgM cultural Pol icy as insulated from the influence of world markets,that is no longer the case, as the forces of international competitionmore and more determine the framework in which European agriculturemust operate.

4. The challenge for the Community now is to reconci le the successof the CAP in achieving its economic objectives with the need tocontinue to fulfil the sociaL objective of assuring a fai r standard ofliving for the agricultural population. The continuing outflow oflabour from agriculture to other sectors of the economy, where growthof demand has Led to the creation of new jobs, has contributed to along-term increase in labour productivity. Those working inagriculture and sharing the overall income of the agricultural sector,have been able to enjoy an increase in incomes.

5. However the increase in incomes in money terms has been moreand more .affected not only by general pri ce inflation, which increasesthe costs of agricultural inputs, but by the market imbalances whichhave obliged the Community to pursue a more ri gorous poli cy for theprices of agri cul tural outputs. Thus in recent years, the increases inagri cultural pri ces have been less rapid than the increases inagricultural costs, and agricultural incomes in real terms have notkept pace with incomes in the rest of the economy. To some extent, thecost/price squeeze has been offset by technical progress, as the basicfactors of land equipment and labour combine to provide an increasedvolume of outputs for the same volume of inputs.

6. This advance of productivity will even accelerate, as new breedsof animals, new varieties of crops, and new machinery and techniquesare introduced into agriculture. The agri cultural labour force wiLLcontinue to decline, but the rate at which it does so will be temperedby two limit ing factors the availabil ity of employment in othersectors of the economy, and the need to maintain a minimum viablepopulation on the land in the rural zones of the Community. The point

has already been reached in some regions of the Commun:i.ty where themaintenance both of the social structure and of 'the naturalenvi ronment is threatened by rural depopulation.

a. In the present conditions of limited economic growth in Europe,and taking account of the ever-increasing importance of theconservation of nature and the maintenance of the fabric of ruralsociety, there is a need to maintain a significant number of farmerson the land; the basic question is therefore whether this aim can bepursued without leading to a waste of resources and an accumulation ofsurpLuses.

7. The Common Agricultural Policy is therefore at a turning pointparti cularly as regards the achievement of its social objectives. Theold model of agriculturaL policy, in which increases in income couldbe obtained by increases in the volume of production at ever higherguaranteed pri ces - and pri ces guaranteed, moreover, for an unlimitedquantity of production - can no longer be reconci led with the economicand financiaL reaLities. It is now wideLy accepted that an agricuLturewhich does not produce for the market - that is, with a view to thedomestic and external outlets - is an agriculture which has no soundlong-term prospects. That is why the present Commission, like itspredecessors, has insisted on the need for a more market orientedapproach for the CAP, which will permit it to live within theconstraints of the present situation.

B. Agricultural policy facesconstraintso..

8. The constraints which the agricultural policy faces are notdifferent in nature from those facing other sectors of Europeeconomy. On the one hand agri cul ture, like most other sectorsusing inputs of manpower raw materials, energy and equipment for thepurpose of producing outputs which are placed on domestic markets andexternal markets in competition with other supl iers. It should beunderlined in this context that the sectors downstream of agricultureperform an increasingly important roLe in processing and marketing theproducts of agriculture. The processing industry and the distributivetrades, which create added value and employment comparable inimportance to agri cul ture itself, function in an intensivelycompet i t i ve env i ronmen t .

9. On the other hand, agri cul ture, like other sectors, i s thebeneficiary of substantial amounts of budgetary aid from the publicauthorities for the stabilisation of markets, for the improvement ofproduction structures, and for the assistance of incomes. An effortfrom public finances is justified in view of the special

circumstances and ro le of the agri cultural sector, and the problems ofadjustment which it experiences; by comparison with public expenditureon agricuLture in other developed countries, the volume of Europeexpenditure on agriculture is not abnormal, particularly if account istaken of the cost per head of the agri cultural population and the factthat some of the expenditure is attributable to non-agri cul turalconsiderations (such as trade policy and development policy).

10. But, li ke publ ic expenditure for other sectors it must besubject to overall budgetary constraints. This is as true foragri cul tural expendi tures at the Community level as it is at thenational and regional level. Indeed, it is an error to view theCommunity European Agri cul tural Guidance and Guarantee Fund inisolation from the agricultural expenditures of Member States. Whatcounts is the effective coordination and orientation of the overallpubli c effort in favour of agri culture within the Community.

Such considerations illustrate two of the principal constraints towhich the Common Agri cultural PoL icy must adjust in coming years

external commercial conditions, and

the availabil ity of publi c financial resources,Community s own resources.

particularly the

The international constraint - The agricultural econo8Y world-wide

11. The developments of recent years have demonstrated, sometimesdramatically, the interdependence of agriculture in different regionsof the world, and the increasing imbalance between demand and supply.

The long-term trend in the increase in the volume of agri culturalproduction in the Community has been 1. 5 to 2 % per year althoughinternal demand has increased by only about 0. 5 % per year. Thisspectacular surge in agricultural production in Europe will continueand could we II gather momentum in coming years, especially in regionswhere important productivity reserves sti II exist.

12. On the other hand demand for agri cultural products in theCommunity and most other industrialised countries is expected to growonly very slowly. Needs in the developing countries and in someEastern European countries are high but thei r effective commercialdemand will be a matter of availabil ity of foreign exchange. In somecases (oi l exporting developing countries, newly industrial isedcountries, the USSR) the capacity to pay exists and may well lead to

increases in demand. In other cases (most ACP countries and a numberof less deve loped count ri es in As ia and Lat in Ameri ca) the futuredevelopment of demand will depend on the development of agriculturalproduction and economic growth in the countries concerned and theirscope for obtaining credit.

Although the Community has succeeded in exporting a growing share ofits agri cultural production on wor ld markets, the question ari seswhether it can continue to provide a full guarantee of prices andmarkets for this production if consumers in third countries are notprepared to pay the Community pri ceo

13. Even if one remains optimistic abo.ut the prospects for thedevelopment of external demand, one should be aware of the risks of afurther intensification of competition on world market. Otheragri cultural producers and exporters - with sometimes even betterproduction structures - wi II take the same advantage of technicalprogress as European agri culture. Many countries whi.ch in the pastimported food are trying to develop their own agricultural potential,and are beginning ' to succeed - for example, India, China. With suchincreases in production international competition is likely toincrease; and if the switch to lower p.ri ces contemplated in respect ofUS agri cul tural pol icy is confi rmed, this could well lead to furtherstrain on world markets. All these elements taken together suggestthat there are possibi l iti es for further increases of Communityexports of agri cul tural products , but not necessari ly at the same rateas in recent years or for the same products.

The Community must play its part to restore order and stabil ity andavoid confl i ct on world markets, and expects similar action from itsmajor trading partners.

The budgetary constraints - prospects for the coming years

14. Over the last 10 years , the Community s agri cultural expendituregrew on average by some 7 % each year in real terms, whereas itseconomic potential - as measured by the gross domestic product -increased by about 2 % per year during the same period. The overa IICommunity budget increased by 9 % per year in real terms, mainly dueto the introduction and the development of new policie.s.Correspondingly the . part of agricultural expenditure in totalbudgetary expenditure decreased and counted in 1984 for two thi rds ofthe tota l budget.

15. Looking at the economic nature of agricultural expenditure,export restitutions have increased considerably over the last decade.This trend reflects to a certain extent growing surplus production inthe Community. It introduces at the same time an element of growinguncertainty into agri cultural expenditure, since the level ofrestitutions largely depends on world market developments and dollarexchange rates.

16. In the near future, restitutions will probably continue toincrease, mainly due to an expected decrease of world market prices, apossible drop in the dollar exchange rate and a further expansion exports. Storage costs in the Community would perhaps decrease inrelative terms if production does not increase. On the other hand,production aids wi II continue to increase, since for a large part theyare a function of world prices.

17. An important item of the further development of agriculturalexpenditure wi II be the effects of enlargement, in particular in thecase of Spain where a number of product benefiting from quiteimportant production aids are produced in large quantities. Accordingto first estimates, agricultural guarantee expenditure in Spain wouldbe relatively moderate in 1986 (520 Mio Ecu) but would then increaserapidly and double already in 1988. In contrast, guarantee expenditurein Portugal would remain at a low level in the foreseeable future.

18. In any case, it is clear that Community agri cultural expenditurecannot grow at rates comparable with those of the past. To illustratethe point under present circumstances (Commission s preliminary draftbudget) an increase in agricultural expenditure of 7 % in real terms(= average annual increase during th.e Last 10 years) would already in1986 lead to a transgression of the new limit (1 4 % of VAT) of theown resources regime which wi II enter into effect in that very year.The introduction of the financial guidelines, under which agriculturalexpenditure is to increase less rapidly than the Community s ownresources, together with the new cei ling for own resources, wi IIreduce considerably the margin for further increases in agri culturalexpendi ture.

19. As far as agricultural expenditure in the structural field isconcerned (EAGGF Guidance Section) , it was initially intended when thestructures pol icy was introduced that some 25 % of the CommunitytotaL agri cul tural expenditure should be devoted to structuralactivities. Such a proportion, however has never been reached , andtoday structural expendi ture for agri cul ture comes to about 5 % oftotal agri cul tural expenditure in the Community budget. The globa l

financial framework for structural policy which has been defined bythe Counci l early this year for the period 1985-1989 would in no wayallow an increase in this proportion.

On the other hand the urgent need for structural adjustment in manyagricultural regions of the Community has repeatedly been stressedduring the last few years. The Integrated Mediterranean Programmesproposed by the Commission represent a valuable, though still limitedresponse to these problems. They wi II be financed partly by additionalbudgetary means and partly by a reallocation of means within theexisting structural funds. As far as the size of the agriculturalGui dance fund is concerned t here must be some doubts as to whet he.r thefinancial framework fixed by the Council will be sufficient.

20. The introduction of reform measures in the Community s pri ce andmarket support,. as decided by the Council in 1984 and theirconsistent application over a longer period would imply growingadjustment pressures and thus even increase the need for appropriatestructural measures (modernisation of farms, creation or reinforcementof advisory networks, training and reconversion schemes, promotion ofprocessing industries etc.

).

This would clearly require a fair amountof publ ic expenditure. Thus, there wi II be a reinforced need for moresubstantial and more effective intervention by the Communitydifferent structural funds, complemented by the financial efforts ofMember States. In this way, a better balance can be achieved betweenthe volume of public expenditure for support of agricultural pricesand markets, and that for longer-term structuraL reforms.

C. The risk of renational isation

21. Within the framework described above, considerable efforts wi be required to maintain the level of expenditure on agriculturalpri ces and markets within reasonable limits. The experience of thenegotiations for 1985/86 ag.ri cultural prices shows how diffi cult isthe task, parti cuLarly when the Community has accumulated large publicstocks (mi lk products, beef cereals, etc.

),

which have to beprogressively reduced, not only to avoid excessive costs of storage,but also to permit a sounder management of the agri cultural markets.The adjustments necessary in the coming years in the Community s pri ceand market regulations wi II require a series of difficult decisions,both for the Community institutions and for the agricultural world , asproducers themselves have been asked to accept more financialresponsibi l ities for the di sposal of production beyond certain limits.

Unless the Common Agricultural Policy is adapted to these differentconstraints in a satisfactory manner, grave political strains wi II beexperienced, which could threaten to undo what the pol icy has up tonow achieved.

22. In this context, it is not only a question of the ri sk of aproliferation of national aids to agriculture, which are known alreadyto represent a large amount. Such aids, which could be more easilYafforded by the richer Member States, who often have a relativelysmall agri cultur.al population, could - depending on the nature of theaids - result in discrimination and distortion of competition, whi paradoxically encouraging more surplus production. The Commission mustcontinue to be vigi lant in its control of national aids to agricultureand ensure that they are in conformity with Community rules.

There would also be the risk of ' self-defence ' measures at nationalfrontiers, for the protection of national agri cultural markets, whichcould set in train an irreversible process of disintegration of thecommon ma rket .

Such a development must above all be avoided. The Community mustreinforce, not weaken, its internaL market, and is now in factembarked on creating a real internal market by 1992 which includesthe dismantl ing of technical barriers to agri cultural trade. Theel imination of monetary compensatory amounts also remains a continuingpreoccupation of the agricultural policy.

D. The basi c principles.

23. The Commission reaffirms that the adaptations to be made, in thelight of the foregoing considerations, must respect the basicprinciples of the Common Agricultural Policy and the objectives of theTreaty. At the same time, the progress which has been made in recentyears in reforming the mechanisms of the pol icy must be consol idated :in fact it is not so much a question of inventing a new course forthe CAP, as of creating the economic and political conditions in whichthe reforms already commenced can be successfully achieved.

24. It is well to remember that the efforts now being undertakenwere already in the minds of the representatives of the originalMember States of the Community, when they adopted a declaration at theConference of Stresa in 1958 in the following terms;

A close correlation should be established between the policy foradapting structures and the pol icy for markets. Structuraladaptation should help to bring about a convergence of costs ofproduction and a rational ori$ntation of production. Market policyshou ld be conducted so as to encourage the improvement ofproductivity. A balance should be sought between production and thepossibi l ities for outlets, taking account of the exports andimports which can be made

, .

and of the special isation appropriate tothe economic structures and natural conditions of the Community.The effort thus made to increase productivity should allow theapplication of a price policy which avoids excess production andallows agri cul ture to remain or become competitive.

The improvement of agricultural structures should allow the capitaland labour employed in European agriculture to attain or maintain alevel of remuneration comparable with those which they wouldreceive in other sectors of the economy. Given the importance ofthe family structure in European agriculture, and the unanimousdesi re to preserve its family character, every means should beimployed to increase the economic and competitive capacity offamily farms. Professional retraining of the agricultural workforce, and a greater industrialisation of the rural regions, shouldallow a gradual solution to the problems otherwise posed bymarginal farms which cannot become economically vi able

25. The decisions of the Council in .recent years on agriculturalpri ces and markets and the further decisions on agri culturalstructures pol icy in 1985 represent an important step in thisdi rection. It remains to complete them with a longer-term review ofthe prospects for the common agricultural policy.

...

and prospects for the future

26. A longer-term perspective is necessary for a number of reasonsin agricultural policy. First of all, farmers have to take theirdecisions on a pluriannual basis. When they decide to rear animals, toplant crops, to purchase machines, to construct bui ldings, they do soon a hori2:on .of several years. That is why they ne.ed an agriculturalpolicy providing a well defined and stable gramework in which they canmake thei r plans. 27. Sometimes, these plans are even made with a view to the nextgeneration. Most farms in the Community are fami ly farms and thetransition from one family generation to another is very important.Long-term investment decisions, choices for education and training,and the decision whether to remain in farming, largeLy depend on theprospec ts expect ed for the next gene rat i on.

10.

28. Finally, the agricultural sector cannot be separated from therest of the economy. Its activities are closely linked to activitiesin other sectors, industries and services. Europe is the world'biggest importer and second biggest exporter of agricultural products.All this requi res that the Community inte.grates its agri culturalpol i cy into its overa II scheme for the deve lopment of its economy,having in mind the need for a prudent use of resources and Europeresponsibilities in the world.

11.

PART II

EUROPEAN AGRICULTURE TODAY

A. Agriculture in the Community of Ten - An Overview

Agriculture in the Economy

1. Relatively speaking, the economic importance of agri culture hasbeen declining over the last decade, as has been that of industry. Itscontribution to the domestic product decreased both at the Communitylevel and in the individual Member States. This contribution varieshowever considerably from one Member State and from one region toanother. And much the same holds true for employment in agriculture,which decreased between 1960 and 1983 by some 60 %. However, thedecrease in employment has s lowed down in the last 10 years, mainlybecause of the deterioration of the general economic envi ronment. Itmust be recalled that the relative decline of the agricultural sectoraffects the various regions to a different extent. The consequences ofthis decline ar. particularly serious when agriculture stillrepresents a major sector of the regional economy, unless developmentsare encouraged in other sectors such as to offset the negativeeffects.

2. Agriculture role in the economy extends beyond itscontribution to domestic product and the employment which it provides.Like other sectors, it requi res investment and thus also contributesto the formation of national assets. Agricultural products areexported and imported sometimes in large quantities. Economicactivity in agri culture is closely l inked with activities in theindustries on which it depends for supplies (farm ma.chinery,agricultural chemicals). and in the food industries for which itproduces the raw materials. Finally, incomes created in theagri cul tural sector lead to consumer demand and thereby support thegeneral economic environment, especially in regions with a highproportion of the working population employed in agriculture.

3. As compared to most other sectors, there is a substantialintervention on the part of the Community and Member States in theagricultural sector to assist the incomes of the agriculturalpopulation. According to provisional results of studies by the OECDit woukd appear that the different forms of subsidies (in form ofmarket intervention) represent sOme 20 % of the value of totalagricultural production in the Community. But subsidies that areintended to help agri cul ture do not necessarily go fully to the

12.

sector. They may be lost by market processes to other sectors whichsupply agriculture and can pl' ofit from higher prices. These suppliersmay even be located outside the Community. F'inally, intervention inthe agricultural sector has had quite uneven regional effects"favouring to some extent the st rong producers in the ri ch.er regions.

4. The subsidisation of agriculture is normally justified by socialpoliCY objectives (wider distribution of wealth and ownership,maintenance of people in independent situations) by the unstablenature of world agricultural markets, and by reference to Article 39of the EEC Treaty. But it is also justified by environm~ntalconsiderations. In fact, agriculture can play an important part inpreserving and looking after the countryside. In some regions withpoor soils and harsh climatic conditions, agricultural activity - evenif maintained by subsidies - would appear to be simply indispensableif the depopulation of the countryside is to be avoided and a minimumof soc i al infrastructure to be mai ntained. However, the deve lopment o'technology in agriculture is not always positive for the environment,and its negative effects (soil and ground water deterioration) arecriticized.

5. In contrast with most other sectors, the fami ly unit clearly isthe predominant source of labour in agriculture. In 1979/80 in theCommunity of Ten out of a total agri cultural working population ofsome 14 million persons (full-time and part-time together) about one

million were regular non-family workers, whereas almost 13 million had

some family relationship with the farm household, being either holdersor related to the holder (fami ly workers). 95 % of all hoLdings employonly fami ly workers on a regular basis (70 % in the United Kingdom,99 % in Greece).

6. Almost three quarters of the farm holders in 1979-80 were aged45 years or more. This means that, because of human mortality andreti rement it may be expected that the majority of holdings willchange hands before the end of the century.

7. There is still a considerable need for structuraL development inthe EC. The average farm size is about 16 hectares, but more than 60 %of all holdi ngs have less than 10 hectares. With thei r present patternof producti on, over half of the agri cul tural holdings in the Community

absorb less than the equivalent of one full-time worker in total aslabour input. These IIpC1rt-time holdings" are over-represented in lessfavoured areas (more than 60 % of all holdings in these areas). Inmany cases holders working on these holdings have no other activityand suffer from underemployment.

13.

EmploYT i1"t and incof61es

8. Till:: phenomenon of underemployment or "hidden unemployment" inagri cultur-e is widespread. It is parti cularly important in Italy andGreece. In particular in some regions of the Me;zzogiorno more than50 % of all holders spend less than half of normal "work-yearengaged in agri cul tural work, but have no other activity.

9. On the other hand, working less them a normal "work-year" on thefarm does not necessarily imply hidden unemployment. With theexception of Italy and Greece, a majority of the holders working onlyhalf-time in agriculture have a gainful outside activity, and in mostcases even a major one.

10. In fact, part-time farming combined with a gainful outsideactivity has taken on such proportions that it would be an error toignore this phenomenon. Despite the unfavourable economic climate ithas become more and more common over the past ten years. To mostpart-time farmers, thei r non-farming activities are more importantthan their farming activities, both as a source of income and in termsof working hours involved. Outside activities are most common onsmaller farms. Part-time farming may mark a phase of transition, butcan also very well represent a satisfying way of life in its ownright. Its deve lopment is closely l inked to the development of theregiona l economy.

11. The growing importance of part-time farming with gainful outsideactivities corrects to some extent the overall picture of lowagricultural incomes. This picture needs a further qualification inthe sense that the average values normally recorded for incomes hidequite important differences in profitability between professionalholdings employing at least one person full-time and other holdings.Nevertheless and in spite of certain statistical problems ofcomparison it appears true that the average agri cul tural income perannual work unit (equivalent of one full-time worker) is low andsometimes even very low (Ireland, Greece) and that its development hasbeen relatively unfavourable in some countries over the last decade.

However there exist serious statistical problems in any incomecompari son between agri cul ture and other sectors; such a compari sonrequires a detailed evaluation including, for farmers such elementsas non-agricultural earnings already mentioned, but also importantbenefi ts of the rural way of life (dwell ing, consumption of ownproduction, etc.

14.

Agriculture s heterogeneity - Regional diversity

12. European agri cul ture is ext remely heterogeneous and incomes,structures, natural conditions of production and the economicenvironment vary considerably from one region to another. One mustalways keep in mind the regional dimension of the agriculturalproblem. At the regi onal leve l the dispari ties in terms .of therelative weight of agriculture in the economy, and of productivity andincomes, are even greater than at the national level. Together withthe .great diversity of geOgraphical and climatic conditions,. thisfactor makes necessary the modulation of the agricultural policyaccording to regional situations.

In many cases negative factors apPear to accumulate : poorly developedeconomic envi ronment (sometimes combined with high regionalunemployment rates and growing demographic pressures) .. unfavourablenatural conditions for agri cul tural production, and bad productionstructures come together and lead to poor economic performance. Thisis for instance often the case in certain Mediterranean regions, andcertain other less-favoured regions in the Community. In most of theseregions the share of agri cul ture in total employment is relativeLyhigh. This is more an indicator of a low level of regional economicdevelopment than a sign of an efficient regional specialisation inagriculture. It is an objective of the agricultural policy tocont ribute to the deve lopment of such di sadvantaged zones incoordination with other structuraL policies~ since diversification ofthe economy is the long-term solution for the problems of theseregions, agriculture must assist it by inducing activities upstreamand downstream.

B. The enlargement of the Community

13. The accession of Spain and Portugal will alter appreciably thesea le of our agri cul ture. The number of .holdings will increase bymore than 50 % and the number of farmers and farmworkers by 35 %;since productivity is lower in these two countries than in the otherten countries, the immediate increase in final agricultural output(without taking account of the important reserves for increasedproductivity in the longer term) would be only 13 %. The impact of thenew enlargement on the value of agri cul tural production wi II be muchthe same as that which occurred when Denmark Ireland and theUnited Kingdom joined in 1973.

14. On the other hand the third enlargement is much more importantthan the two preceding enlargements, in 1973 and 1981 both in termsof the si ze of the agri cultural economies in the new countries and interms of its impact on Community Mediterranean regions heavi lydependent upon agri culture. The new expans ion of the Community bri ngs

15.

in countries which have not yet reached the same stage of economicdeve lopment as the present members. The gross domestic product perinhabitant expressed in purchasing power is 72 % in Spain and 47 % inPortugal of the Community average, partly because their farm sectorsare much larger and much less efficient than in the other countries.Agri cul ture accounts for 18 % (Spain) and 27 % (Portugal) of the totallabour force, but its contribution to gross domestic product isbetween a quarter and a third of this proportion (7 to 8 % of GDP);in the present Community, this discrepancy, which measures thedifference in efficiency between the farmsec::tor and the other sectorsis on average much smaller (8 % of the population accounting for 4 %of GDP).

15. The two new countries both have the same difficulties in termsof climate (rainfall which is low or ill-distributed over the year)and in te rm.s of topography (many h ill areas). Also , from t he poi nt ofview of production structures, the coexistence of a group of verylarge farms alongside very small holdings, heavily fragmented, willaggravate structural difficulties in the enlarged Community. To someextent the Community already has to contend with some of thesedifficulties in certain southern regions.

16. A major consequence of these differences from the point of viewof production is that the two new countries have become efficientproducers of Mediterranean products while for other items (cereals,meat, milk) they are less competitive. However, the low level ofyields for these products show that production could develop rapidlyunder favourable economic conditions. This means that the neW

countries and the present Community wi II tend to complement oneanother for these types of northern products, whi le the favourablecompetitive position for Spanish and Portuguese Mediterranean productsaccounts for the present heavy f low of exports to the Community ofTen. The accession of these countries will greatly reduce theCommunity s negative trade balance in agriculture; it will go downfrom - 23 6 to -16, 6 bi llion Ecu.

17. The transition period has been designed, on lines which are alittle different as between Spain .and Portugal, in such a way as toallow them to adopt complete ly by the end of the period the CAPmechanisms, the free circulation of products, and a substantialimprovement of agricultural structures. However, it is clear that thisprocess of improvement of the agri c.ul tural economy of the twocountries wi II have to be . continued beyond the period of transition.

18. The transitional measures laid down in the accession Treaty wi take effect from 1 January 1986 for the structural aspects of the CAPand from 1 March 1986 for the other aspects. The Commission has tried,

16.

during its process of reflection on the options for the future toavoid a confr.ontation between such options and elements affecting thenegotiations, which are not therefore referred to directly in thisdocument. In the drawing up of proposa ls for the future of the CAP, assoon as the ana lysis of this matter has been developed sufficiently,the results of the negotiations wi II of course taken into account.

17.

PART III

AGRI CUL TURAL MARKETS - CONCEPTS fOR THE fUTURE

A. Price pOlicy or quantitati\fe restrictions - A fundalilental choice

1. Technical progress, in particular in the biological field, willlead over the next 15 years to quite considerable increases in yieldsper hectare or per livestock unit, whereas demand in the Community andmost other industrialised countries is expected to expand only slowly(if at all). Demand in less developed countries will sti II increasebut at lower rates than in the past. All these developments togetherwill result . in increases in structural surpluses if no measures aretakeh to achieve a better adjustment of supply to demand.

Thus in the coming years, there wi II be an urgent need to ensure abetter balance of markets and to eliminate structural surpluses. Inother words, the Community must for economic and financial reasons,achieve a better control of the growth of production.

2. A realistic - and this means under present circumstances and forcertain products a restrictive - price policy, together with a numberof well di rected accompanying measures could solve this problem atleast in a medium term perspective. This would imply that the economicfunction (market orientation) of pri ce poL icy is stressed at theexpense of its social function of income support. It has becomeincreasingly difficult for pri ce pol icy over the last 15 years tofulfil this second function and there are doubts whether price policywith its relatively low degree of selectivity is the best suitedinstrument for such a purpose in view of the important diversity ofagricultural situations in the Community.

The idea of a more market oriented price policy is not new and it isinteresting in thi.s context to look at the history of agriculturalprice policy in the European Community. Broadly speaking, four phasesmay be distinguished

Until the early seventies annual price in.creases remained onaverage below inflation rates. This real decrease in prices,however, was offset to some extent by productivity increases due totechnical progress;

18.

From 1972 to 1977, there was st ill slight decrease ofagricultural pri~es in real terms (- 1 % on average per year) asfar as price decisions in Ecu at the Community level wereconcerned; but due to agri-monetary adjustments, prices in nationalcurrencies increased in real terms (+ 2,5 % per year). Thisincrease combined with continuing techni.cal progress created important incentive to produce, the results of which in theexisting system of unlimited guarantees were

. a steady expansion of agricultural supplies

. a sub-optimal factor mobi l ity

. an increasing burden on the budget.

In face of these financial threats price policy became more res-trictive between 1977 and 1981 (average real pri ce decreases of 2-3 % per year in national currencies). This was accompanied by agrowing gap between average agricultural incomes and averageincomes in the overall economy, while reduction in productiongrowth could not be observed during the first years. In the early1980s the restrictive price policy combined with a more favourablesituation on world markets resulted in a release from budgettens ions.

Growing income pressures and the improved budgetary situation ledfrom 1981 to 1984 again to a less restrictive price policy, andthat at a moment where first limitations in the growth ofproduction could be observed. The following new increase ofproduction growth resulted in the financial crisis of the Communityand the pr ice poli cy measures of 1984 and 1985.

3. Two main conclusions have to be drawn from these deveLopments atthe level of production

The development of pri ceS (including possible decreases in realterms) in the context of a restrictive pol icy must be such as togive clear signals to producers; such a policy must be sufficientlymarked in order not to be overcompensated by technical progress, soas to have a real effect at the level of production;

Although in the short-term, and in certain limited cases, this maylead to increases in production, as some farmers seek to covertheir fixed costs by means of higher output, the overall result oflower pri ces is a lower rate of increase in product ion; however,there may be a time-lag of sometimes several years before the

19.

transition to a market-orientated pri ce policy will show its fullimpact; it therefore has to be pursued consistently over a longerperiod of time.

If these two conditions are not fulfilled the ri sk is high that theprice policy will fail to have its effect on production.

4. During the last decade, in view of the difficulties on themarkets the Community has developed a number of instruments tocomplement the price policy. Already in 1977 a mechanism oft coresponsibil ity ' was introduced in the milk sector in the form of alinear coresponsibil ity levy paid by producers, with certainexceptions; however, this was not effective in checking the increasesin mi lk production. In 1980 the Commission advocated that a generalprinciple of coresponsibi l ity should be introduced whereby all or partof the cost of production in excess of a certain quantity - to befixed in the light of internal demand in the Community and itsexternal trade - should be borne by farmers themselves. In 1981 theconcept of ' guarantee threshoLds ' was elaborated; if these thresholds,which are fixed in terms of overall Community production, areexceeded producers cannot expect to obtain the full guarantee forthei r production. In the following years guarantee thresholds werefixed for a number of products (mi lk cereals, processed fruit andvegetables oi lseeds) in most cases, the action to be taken if thethreshold is exceeded consists of an indi rect limitation or reductionin the general level of prices or aids.

a. In 1984 the Council not only approved the Commissionguidel ines for guarantee thresholds, but underlined the need tointroduce them for products in surplus or for which budgetaryexpenditure is liable to increase rapidly. However, in the case ofmilk in the face of continuing increases in production, the Councildecided to apply the principle of guarantee thresholds by means of asystem of quotas at the level of dairies or individual enterprises. Inthis way, the system of collective responsibility (reduction ofaverage returns for all producers) was modified in favour of a systemof individual responsibi l ity (reduction of marginal returns forproduction in excess of the quota) in the milk .sector as indeed hadalready been the case for the sugar sector since the inception .01 themarket organisation, which represented the first application of theprinciple of coresponsibil ity.

b. The advantages of a quota system include its immediate effect inrestraining production and the possibility in principle of relievingthe Community budget of the cost of di sposal of production in excessof certain levels (however this has not proved to be the case inpractice in recent years under the system of sugar quotas because ofthe dramatic fall in world market prices). In the case of milk, quotasWere perce ived as a I lesser evi l' as compared with the al ternat ive

20.

option of a reduction in producer pri ces of as much as 12

%.

Thedi$advantages of a quota system include the problems of negotiation,management control and revision of the quotas; the freezing ofproduction structures, which inhibits the development of productivityand hinders regional special isation within the Community; theconferring of a capital vaLue in the sense of a ' right to produceand the risk of renational isation.

5. It is sometimes claimed that a quantitative limitation of theprice guarantee, at the level of the individual producer, would permit

higher level of pri ces for production within the guaranteedquant ity; and thus even a di fferentiation of pri ce guaranteesaccording to the si ze of the enterpri sea But the argument that a quotasystem wouLd allow prices to rise more rapidly and thereby improveincomes does not really hold when it is closely examined. For if thelimitation of quantity is compensated by higher prices for producers,that in turn reduces demand on the home markets sets incentives forsubstitution, makes Community production less competitive, anddiminishes the opportunitie.s agri cultural products could have as rawmaterials for industrial purposes. As a result, further reductions ofquotas become necessary, with a negative impact on incomes.

6. These considerations suggest that quotas cannot be more than apalliative. The only sound approach in the medium and long term is togive market prices a greater role in guiding supply and demand. Suchan approach would apply to products where market imbalances existthreaten to develop; it should however be modulated to take account ofthe severity of the market imbalances of specific market situations,and of the need for a rational hierarchy of prices and the role ofdifferent products in the formation of agricultural incomes.

B. Incomes and employment - The consequences

7. Whatever approach is chosen for adjusting supply and demandwill have consequences for incomes and employment whi ch cannot beignored. Improved yields through technical progress on one side,sLowdown of production increases and incomes on the other si de, willcreate a pressing need for structural adjustment in the agriculturalsector.

8. European agriculture is a kaleidoscope of diverse situations -situations which wi II become even mor.e diverse after enlargement. Apart of the holdings, with good structures and favourable conditionscould well survive a strict price policy. In other cases variousadjustment processes would take place from full- and part-timefarming into other sectors or into the labour market (in or outside

21.

the region), but also from full-time fa.rming to part-time farmingcombined with other activities. In some zones outmigration could leadto a significant depopulation together with some abandonment of land.In other regions there is a risk that underemployment ("hiddenunemployment") in agriculture would increase, particularly in thoseregions where a relatively high proportion of the active population isworking in agri cuLture, where farm structures are bad, where regionalunelllployment rates are already high and where demographic pressuresare growing (most regions of Southern Italy, Greece and Ireland). Thenegative impact of diminishing purchasing power of the farmingpopulation on the regional economy could well amplify the problem.

9. Income pressures would be parti cularly strong on marginal andsub-marginal holdings. These might, however, react in quite differentways. Many of the", are part-tillle holdings and in many .cases theholder his wife, or other household members have outside gainfulactivities.. Where the agricultural in.come represents only a smallproportion of the totaL income there could well be no reaction at allor reaction with a considerable time lag (inter-generationadjustment). But there would also be a big number of smaller holdingswith no off-farm incomes which would experience growing difficultiesof economic survival. Finally, debts and a possible decrease in thevalue of land (which often serves as a guarantee) could lead evenhighly modernized holdings into difficulties.

10. All these considerations Lead inevitably to the key question ofthe maintenance of the rural fabri c, and the alternative orsupplementary income and employment possibi l ities. Such possibi l itiesexist, partly in the agricultural sector itself partly outsideagriculture. But they have to be promoted. The Commission thereforeconsiders it necess.ary to examine these possibilities and to indicatea number of options for action.

Reorientation of production

11. The Community must adapt its agri cultural production so thatsupply is brought more in line with demand. This process has alreadybeen engaged for many of the products subject to a common organisationof the market, for which the guidelines advocated by the Commission inearlier documents remain valid see, for example, the importantmemoranda II Gui de li nes for European Agri cu l ture of October 1981(cOM(81) 608) and "Common Agri cultural Pol icy" of July 1983 (COM(83)SOD) .

22.

12. In the present document which is selective in nature, theCommission does not attempt to review all the mark.et organisations,despite the fact that several of them will in the coming months andyears be the object of signifi cant proposals. For example

Oils and fats adaptation of the market organisation will benecessary a ter enlargement of the Community.

Sugar proposals wi II soon be made for the arrangements to beintroduced after the present system of quotas expires at the end ofthe 1985/86 marketing year.

Tobacco the cost to the Community budget of varieties for whichere is l itt le market demand requi res the continuation of efforts

to reorient production in this sector.

Milk products : there is still a grave imbalance between supplY andemand n t is sector; the system of quotas recently introducedmust be carefully monitored and if necessary proposals forimprovements wi II be made; the Commission intends to submitproposals before November 1985 for a Community system of premiumsfor cessation of milk delivery, and will make a general report onthe operation of the quota system at the end of the 1986/87marketing year.

- Beef : th.e Commission reserves the possibil ity to make furtherproposals for adaptation of the regulations in this sector, where aserious market imbalanc~ continues.

Without underestimating the problems to be resolved in these and othersectors, the Commi ssion considers it desi rabLe in the presentdocument, for the reasons already explained, to consider the cerealsector in more detai l. Because of the interrelationship betweencereals and other crop products, and between the prices of cereals andthe costs of livestock production, the policy to be pursued in thissector has profound implications for the common agricultural policy asa whole.

1. Cereals ~ a keystone of the agricultural policy

13. Whi le the area of land devoted to cereals in the Community hasnot increased, there has been a switch of production from barley tosoft wheat and the spectacular increases in yields made possible by

23.

new nrf :t1es ar-d techniques have led to higher productionparti culi'lrly of \-.!h~at (average increase of 3 % per year). TheComm"ission nas "-i;;~. ;;i:'tedly drawn attention to the divergence of thetrends of suppLy ~r:::1 demand; the E!::ceptionally large harvest of 1984resulting in a very high lev~l of public stocks, has highlighted theproblem. Extrapolation of the development of yields in the Communityof Ten suggests that the very large harvest of 1984, which amounted to155 million tons could be a normal level of production by 1990,compared with the level of 125 million tons which was the average inthe period 1980-1983. Although Community exports of cereals haveincreased to record levels, the future prospects for world demand -even on optimistic assumptions - do not suggest that export marketscan be relied on to absorb the future increases in Communityproduction. As for domestic markets, if there was a significantreduction in the Level of inte.rnal pri ces, a maximum of 12 milliontonnes more Community cereals could perhaps be absorbed by 1990taking account of enlargement and on the most optimistic assumptionsconcerning existing and future outlets for animal feed (and in thiscontext it would mean assuming success in partially replacing importedcereaLs substitutes) the production of starch for the chemical andpharmaceutical industry, and the production of ethanol.

14. In such analyses, the future leveL of Community cereaLs pricesis a key factor affe.cting both supply and demand, and the cost ofsubsidies for disposal. The Commission has advocated for several yearsthat European cereals pri ces should come more into line with those ofour competitors on world markets, and the Council in 1982 introduced asystem of guarantee thresholds, which should result in the pri ce beingreduced "if the threshold is exceeded. But the experience of the1985/86 price negotiations showed how difficult it is for the Councilto put such a policy into practice, if it is not complemented by othermeasures concerning farm incomes.

15. The Community therefore now faces a real di lemma. The prospectis for supply of cereals to grow significantly faster than demand, andfor the surplus to become impossible for the Community to manage or tofinance. The choi ce is therefore between signifi cant reductions incereals pri ces in re.al terms or the introduction of additionalmeasures of supply management (gestion de l' offre). The Commission hasalready made clear- its preference for action through the pricemechanism but it considers it necessary also to analyse in thisconsultative document the panoply of other possible measures.

16. In such an analysis one must not forget the Large number offarms growing cereals - 3 75 million - and the diversity of theirsituation. In 7 Member States, more than SO % of farmers grow somecereals, but a large part of Community production comes from a fewfarms. At one extreme we can dist inguish

. "

special i sts , notably in the

24.

Paris basin and the East of England, with large and efficientbusinesses; at the other extreme, throughout the Community, manyfarmers produce cereals as part of a mixed farming system, frequentlywith livestock. An intermediate group of medium-sized farms isdependent on cereals, to a high degree in certain regions. Generallyincomes for cereals growers are relatively favourable, compared withother agri cultural incomes, in most Member States; specialist cerealsproducers on suitable land enjoy incomes markedly above the averagefor thei r region.

Nor must one forget that there are several types of cereals, withcomplicated interrelationships between their different markets andprices. Although the principal difficulty is the surplus of softwheat, there are over-supply problems for durum wheat, whi le maize isin deficit.

17. Before analysing the options concerning prices, it should beremarked that the institutional prices of cereals, fixed by theCommunity institutions, have decreased in recent years in real terms(after taking a.ccount of inflation), but not by very much; and ifthese pri ces are expressed per hectare (rather than per ton) they haveeven increased in real terms. However, such institutional pricesrepresent only a theoretical level of support, and the gap betweeninstitutional prices and market prices has in fact increased for anumber of reasons (limitation of intervention, increased delay inpayment for intervention, etc. ) since 1983.

i) The pri ce inst rument

18. If the use of the price mechanism is intensified in the cerealssector, with signifi cant reductions in prices in real terms over aperiod of time after taking account of increases in yield per hectareone could sti II expect a modest continuing increase in production;this could however be absorbed by the expansion of outlets, Community prices become more competitive. This approach would optimiseinternal Community utilisation, and reduce the cost of exportrestitutions. Such a price policy would however affect small and bigproducers to the same extent, and could not be envi saged without someform of income aid for the most vulnerable producers, who would appearto be the middle-sized group rather dependent on cereals production.

Such aid would have to be selective, for a classic "deficiencypayments system in the cereals sector would be unacceptablyexpensive one interesting optiort would be a limit of aid perhectare, as the Commission has in the past proposed for durm wheat.

25.

in The guarantee: threshold system

19. The system of guarantee thresholds in the cereals sector has notso far been pern;it d,d to operate as originally intended. An optionwould be to apply th~ pri ce redu.ction immediately in the season whenthe threshold is exceeded, rather than in the following season. F.romthe point of view of agri cultural incomes this approach would be morelogical, since prices would be reduced at the same time as an increasein quantities; however, it would increase risks on the market at thebeginning of the season.

iii) Intervention mechanisms

20. An option worth examining is to confine intervention for cerealsto the end of the season (Apri l-May); this would avoid the competitionbetween intervention purchases and export sales, which is sometimesexperienced at the beginning of the season. It is through theintervention system that the Community can act to halt or reverse thetrend of production towards lower quality cereals, generallyassociated with higher yields. It is in any ca.se necessary to considerdifferentiating intervention prices at purchase and sale, to avoid theaccumulation of unmarketable stocks of lower qualities.

iv) A coresponsibi l ity levy

21. A levy could be charged on cereals preferably at the firstpoint of sale, to create additional resources for financing newoutlets for cereals or as a contribution towards the cost of exportrestitutions.. Whether such a levy should be differentiated accordingto the si ze of farm, in order to take account of different incomesituations would have to be considered, as would the question of itsappl i cation to imported products.

v) A CereaLs Board

22. The possibility of a Board in the cereals sector, includingrepresentat i ves of the economi c i nteres ts concerned meri ts

examination, particularly if a financial contribution by producers tothe cost of exports is envi saged. One option would be a regulatorybody (office, bureau) exercising a development role in the exportfield, and a coordinating role in supply management within thecommun i ty .

26.

vi) Quotas

23. It sholl ld not be supposed that a quota system could not beapplied in the cereals sector if the administrative difficultiescould be overcome for sugar and mi lk many of the practical problemscould no doubt be overCOme for cereals. Unlike milk and sugar, cerealsare easi ly stored and transported, and a major part is used for animalfeed;. nevertheless, despite the problems of control, a system ofquantitative restrictions could in principle be envisaged at the pointof first sale. The objections to quotas are more fundamental, and havealready been enumerated in an earlier part of this document higherprices, lower demand, and the prospect that incomes would not improve.

vii) Diversion of land for other uses ("set-aside

24. One option for reducing the supply of cereals would be to payfarmers to leave thei r land fallow or to use thei r land for othercrops, or for non-agricultural purpose$. But the cost of suchsubsidies would be high and sati sfactory monitoring would requi re anadministrative infrastructure which does not exist in all MemberStates. Even in the United States, where conditions for such IIset-aside" measures are more favourable than in Europe, the; r effi caci ty

has been questioned.

25. The Commission observes that these different possibilitiesshould not be considered as exclusive of each other but could beapplied in combination. What is clear however, is that unless theCommunity pursues in the cereals sector the option of a rigorous pricepolicy outlined under;) it will be obliged to introduce one or moreof the other measures for management of the supply of cereals.

Alternative production

26. The combined effects of marketing difficulties and a cautiouspri ce pol i cy wi II oblige farmers increasingly to seek out new oralternative lines of production, depending on techni cat and economicfactors at regionaL level and the structures of individual holdings.

27. Agri cultural research the di sseminat ion of knowledge and thecounsell ing services ha"e for some time been providing the variousfarming interests with a wide range of data.

28. However even if the scientific data avai lable are adequate, itis nonetheless true that the farmer s final decision to switch toanother line of production depends on a number of economic factors

27.

(cost of conversion and effect of such conversion on income inrelation to labour involved) and socio-technological factors (propertraining, adjustment in standard of living, etc.

In this context, it must be pointed out that, with few exceptions, thechangeover to al ternat ive crops has been a slow process, and may beeven more s low in future.

29. There are in fact at least three factors the combination ofwhich determines the rate of change in productive farming:

a) the technical and economiccounse II ing servi ces;

effectiveness research and

b) market demand and the adaptation of production,marketing structures to new requirements;

processing and

c) the extent to which agri cultural pol icy guarantees support, orfai ls to provide such support, for the new line of production ascompared with that which is to be replaced.

factors relating to research and counselling

30. As regards the first factor it is necessary to strengthenresearch and counselling services so that the farmer is provided withas complete a technical-economic inventory as possible of all thepossibi l ities for conversion.

In this respect the initiatives taken by the Community ( ) will makesubstantial contribution . towards the establishment of thisinventory. Tak ing ac count of f ac tor b) the inventory must be more

particularly concerned with the alternative crops which in certaineconomic ci rcumstances, are likely to be fai rly easy to market,depending on the rate of supply in the Community and the outlook fordemand.

31. In this connection it should be noted that in the Community -whose own supplies of .raw materials used for making feedingstuffs fallwell short of its need - demand for such inputs goes far to determinethe crops farmers grow and their disposal.

Oecision of December 1983 on the common research programme.

28.

32. Alternative crops should also be listed and classified inrelation to the existing surplus crops which they are to replace,namely:

those using extensive areas of farmland (cereals and mi lk);

fruit growing (fruit in general, citrus fruit, olives);

specialized crops (tomatoes for processing,vari et i es of tobac co).

vi neyards, certain

Agronollllic factors and alternativ~ types of production

33. In view of the various agronomic factors which restrict andcondition the choice made by farmers (nature of th.e soil, weatherresistance to diseases and pests farming techniques, current andforeseeable yields) the following would appear as possibleal ternat ives:

a) extensive types of farming

oi heeds and protein crops (such as bitter lupins and cuphea)are the ideal and natural replacement for surplus products(particularly cereals). They make for a better rotation ofcrops. There are no major problems as regards pr.oductiontechni ques.

ce rtain areas current ly ~nder cerea ls or permanent grals couLdbe replaced partly or wholly by wood crops, either densely orwidely spaced, for the production of bulk wood fibre for pulping(poplar, eucalyptus, willow and ash), small diameter woodbiomass for the production of energy (poplar, willoweucalyptus) single stem wood products for quality woodincluding veneer (oak, beech , maple, cherry, walnut). This wouldinvove a fundamental change in the timescale of farmingoperations and in certain cases, necessitate changing the si zeof holdings to accomodate this change in timescale. Where suchtree crops are widely spaced they could be combined withgrazing.

b) Frui t growing:

Generally speaking, the natural replacement would be other fruit-producing ligneous species, either species the produce of whichcould be marketed more easi ly or some new type of production.

29.

In the fi rst category, mention may be made of almonds, hazelnuts,carobs and pistachio nuts; in the same category, there is thejojoba for which the production technique now seems to have beenperfected.

It should be noted that in the case of vines and perhaps even ol ivetrees, if grown on level ground, there are other alternatives (suchas annual crops) which wouLd seem agronomically feasible.

c) SpeciaLized crops

These are intensive crops which require a plentiful suppLy ofwater. Here the natural replacement would consist of otherintensive crops e.g. medicinal plants. The scope for replacementwould seem relatively limited, however, given the relative lack ofdemand for such products.

In certainalternative.

regions, cotton could concei vab ly valid

34. There are some other va lid alternatives which would, howeverhave relatively l itt le impact on the solution of the probLems inquestion.

These would be small-sea le replacement crops which could provide anappreciable income at local level. They include traditional small-fruit crops, small-scale stockfarming (beekeeping) and fish-farming.

These secondary types of production which for historical or socio-economic reasons, have ei ther been abandoned or become marginalactivities yield products which are in short supply within theCommun i ty. Encouragement fo r these products wou ld invo lve theharmonization of market ing conditions and the provision of processingfacilities.

35. Conversion to new varieties is another alternative. In the veryshort term it would enable certain uncommon (but highly marketable)varieties to be included in the rotation of crops as a replacement forproducts in structural surplus.

36. Lastly, there is scope for new methods of production. This wouldmean departing from those types of mass production which are heavilydependent on agri cultural pol icy and turning towards new types of

30.

production requiring fewer raw materiaLs and even". in certain cases,reintroducing finished products for direct consumption which can bemarketed from the farm itself. In this context particular thoughtshould be given to the market ing aspects and the possibi l ity coexistence with "classical" agriculture.

Economic factors and alternative types of production

37. As already pointed Ol,lt, the farmer s final decision depends notonly on agri culturaL factors but also on a number of economic factors.Moreover account has to be taken of the costs to be met from publ icfunds (EAGGF or national budgets) if a decision was taken to providesufficient incentive for the development of the alternative cropsconcerned. The options have to be considered with a rigorous economicapproach taking account of the possible markets, and whetherproduction could be continued on a long-term basis after some initialfinancial encouragement, or would entail continuing budgetary cost.

38. In view of the foregoing,foLlowing

consideration may be given to the

a) Extensive types of farming

An expansion of oi lseed and protein crops would pose no problems asregards production techniques, the necessary investments, labour,storage and marketing.

Except in the case of rape, the potential for expanding demand isvery considerable. Even in the case of rape the new double-zerovarieties should heLp to increase demand from compounders.Community support is already available, except for safflower.Thanks to such supp.ort production is expanding (or has alreadyexpanded) to a substantial extent.

To make such crops more attractive to farmers, and to speed up.their development, only a very slight increase in support (inrelative or absolute terms) would be necessary. aut a significantproblem exists;. because of the absence of external protection, theoi lseed and protein crops are a very heavy burden on the Communitybudget.

Encouragement (such as temporary compensation for loss of income)would also be necessary if certain areas currently under permanentgrass or cereals Were to be repLaced by ligneous crops. Given the

31.-

trade deficit of the Community in wood and wood products,afforestation of marginal land must be examined as an alternativeproduction system for farmers. In this regard it is necessary toidentify the products actuatly consumed in the Community, wheredeficits exist and to determine what can economically be producedin greater quantities on land released from agriculturalproduction.

Such measures could be very costly to the budget. There is alsoreason to think that only the less productive land would qualifyfor incentives.

b) Fruit crops

The types of fruit crop .which could replace those currently insurplus or likely to be in surplus receive scant protection on thewhole and qualify for little or no support at the moment. Theirintroduction means a period when the farmer receives no return for10 to 15 years. Compensation would have to be granted if thesetypes of production were to have any chance of development.

It should be noted, however, that the Community demand for suchfruit, which is not satisfied by current production, is extremelylimited. Thus, the new areas which could be taken over by suchcrops would be very small.

As regards jojoba, a new line of production for which there wouldseem to be a considerable market, its deveLopment appears to dependon the solution of the problems relating to its introduction,including the question of how to make optimum use of the product.Here again, temporary incentives could be necessary.

As regards the possible replacement of vines and olive trees byannual crops, it should be noted that in the present ci rcumstancesthere is a risk that farmers may opt for other surplus types ofproduction.

Lastly, there is also the possibility of replacing fruit trees byligneous crops but in this event the non-productive period forwhich some compensatory income would have to be provided would beat least as long as in the cases examined earlier.

32.

c) Spec i a li zed crops

Cotton-growing is already supported in the Community. If it is tobe promoted in regions other than the traditional areas to replacesurplus crops, a processing ;md marketing infrastructure at presententirely lacking must be built up.

In most cases, the same considerations are valid for quite a largenumber of other products, each having modest expansion potentialbut the development of which is at the present time hampered by thelack of proper marketing and processing facilities.

Necessary adjust~ts of the CAP

39. Should the Community decide to review the general di rection ofits agricultural production the action to be taken would depend on

the product s to be encouraged.

There is no space here for an exhaustive analysi s, but, depending onthe specific situation peculiar to each product or region, it reasonable to go on the assumpti on that one or more of the fo llowingmeasures cou ld be envi saged

1) adaptation of the EEC market organizations for the products havingsuch organi zat ions;

2) aids to encourage farmers to switch to other products (within firm

limits, and restricted in time);

3) incentives for thefacil it i esneeded;

creation of the processi ng and ma rket i ng

4) creation of the legal framework needed for the harmonization of thequality standards for these products, to facilitate their marketingand consumer information (e. g., labelling);

5) incentives to applied research and to technical and economiccounselling on ways and means of switching products.

40. From the angle of the budget decisions would have to be taken

to determine what overall appropri ation could be assigned toimplementing these new guidelines.

33.

A last point is that the final cost to be budgeted for will depend the support sti II being paid out for surplus products and on pol icywith regard to external trade (imports).

D. Diversification of outlets - ne~ uses for agricultural products

41. The idea of promot ing new uses for agri cultural products (mostlyindustrial uses), like the idea of developing alternative production,has gained growing importance in the debate about future prospects. Infact, agri culture always has produced - although to a very limitedextent - raW materi a ls for non-food uses : wood, wool, cotton, hemp orflax are such products. A relatively new development which hasmanifested itself in the last decade is the use .of agri cul turalmaterials as a source of organic chemical products. There are a numberof possibilities in these fieLds which could Lead to new marketoutlets for agri culture and help to maintain income and employmentcapacities in rural regions both in the agricultural sector and inprocessing industries. The development of bio-technology 'represents anincreasing challenge for the future : fo.r industry, for agriculture asa potential supplier of raw material, .and for the cooperation betweenthe two.

42. Still another domain where the Community must find a coherentst ra tegy to promote the most effi c i ent use of its resources of landand labour is the use of agri cultural products as raw materials forenergy production. The use of bio-ethanol in motor cars has often beensuggested. The debate on this issue has sometimes been quite hot-tempered and a realistic appreciation of existing possibilities andlimitations is necessary.

1. Bio-ethanol as an alternative source of energy : opinions are

43. The Commission has on several occasions put forward thesuggestion that agriculture could help in the development of the newsources of energy.

Bio-ethanol is often presented as a future al ternative source ofenergy. Being of agricultural origin it is, unlike fossil fuels,renewable. It is obtained by fermentation, viz. the directfermentation of plant .sugar (beet, moLasses, etc. ), or the indirectfermentation of raw materials containing starch (wheat, maize,potatoes, etc.

).

Agricultural alcohol cannot, however be used topower all the cars on the Community s roads, since that would requiremaj or changes in engine design. Brazi l, a heavy producer of bio-

34.

ethanol, has already brought in those changes, but in the Community,such a step could only be introduced very gradually. The informationat present avai labLe suggests that in the Community, bio-ethanol couldbe envisaged mainly as an additive (5 % without manufacturers having

to indicate the actual quantity used) or as an auxiliary solvent (2 to3 %) in petrol, to help it meet the technicaL and energyspecifications of European engines. Used in this way, bio-ethanolwould be technically acceptable because of its ability to raise the

octane rating and thus partially replace lead in petrol.

The policy on the protection of the environment ( ) calls for unleaded

petrol to be made avai lable to consumers in the Community as from 1989

and it is also recommended to reduce the present permitted leadcontent of pet rot.

44. As a matter of fact the cost of ethanol (mainly that ofagricultural origin) is a limiting factor. Present figures show thatthe costs of competing products fall within a range of 20-35 ECU/hl,

e. about 25-70 % less than bio-ethanol' s costs; this gives an ideaof the subsidies required in order to make the fermentation of basicagri cul tural products into alcohol a viable proposition economically.Any such programme for the incorporation of bio-ethanol into gasoline

wou ld requi re the fi nanc ing of the gap between the costs of bio-ethanol and of competing products. In present conditions a completecompensat i on of the cost gap by the budget would requi re large-sea le

subsidies and thus involve a very considerable budgetary expenditure.It would, however, be hazardous to put forward preci Se estimates as to

the sums involved.

45. Marketing large quantities of bio-ethanol by incorpor.ating it inmotor fuel would, however, present a number of advantages foragri culture. It would provide fresh outlets for products which areoften in surplus. Although the new biofuel industry s raw materials

would initially consist of sugar beet and, to a lesser extent, cereals

and potatoes, they could at a later stage be replaced by vegetableproducts which can yield more alcohol and which can be grown inregions si tuated further to the south (chicory, Jerusalem artichokes,etc.

46. Setting up a bio-ethanol production industry will requi resuitable processing facilities and, above all, appropriate legislation

and incentives, thus placing an additional burden on the Community

budget. Few sugar refineries are currently capable of producing low-cost ethanol; in the case of other raw materials such as wheat, ttJereare few processing plants, if any. The development of such a

1) Directive 85/210/CEE of 20 March 1985.

35.

production therefore would imply the setting up of a network ofprocessing undertPkings; these would have to be large enough toachieve economies of scale and would have to be given guaranteesregarding the supply of raw materials.

It has to be remembered that some Community financial means havealready been devoted to deve loping facil iti es for production of bio-ethanol in the framework of the Commission energy demonstrationprojects.

47. The gap between agricultural alcohol' s selling price and itsoffer pri ce tends to be fai rly large (the figure per tonne currentlyexceeds the level of EAGGF spending on the disposal of the basicproducts concerned both within the Community and elsewhere). Of allthe raw materials concerned it is sugar beet which appears to carrythe lowest costs.

48. As fo r

cons idered thi s budget ary aspect, di fferent options could be

defraying in full th.e difference between bio-ethanol' s offer priceand its selling price : t e budget cost wou oubt ess

igh and would be diffi cult to estimate because of the possiblesudden changes in the market prices for fuel;

defraying part of the pri ce differential the advantage with thistype o d is that t e cost wou d partly be borne by the farmersand would, on the whole, be lower.

It would, however be necessary to avoid distorting competitionbetween the various basic products (sugar, wheat, etc.

);

andbetween bio-ethanol and other oxygenates.

49. It must be emphasized that the prices of raw material is animportant element in those calcuLations. A reduction in these priceswould evidently make the budgetary cost lower.

SO. It must be stressed, however that the volume of agriculturalproducts which could find an outlet in the bio-ethanol sector would inany case be relatively limited. Bio-ethanol is by no means the onlyoctane-enhancer for there. are other competitive products on themarket (for example, MTBE, TBA).

36.

2. Sugar and starch : guaranteed but limited outlets

51. Industries in the non-food sector are already major users ofsugar and .starch. This is especially true in the case of starch, sincethey take up about 50 % of the total quantity produced(1. 7 million tonnes). The biggest users include the paper andcardboard industry, which accounts for 50% of the total quantity ofstarch supplied to industry, and the chemicals and pharmaceuticalsindustry (e.

g.

the manufacture of penici II in) and texti les and gluesand pastes. The industrial biotechnology used consists mainly offermentation, and some traditional or enzymatic synthetic processes.Glucose and sugar are in many cases interchangeable as raw materialsin parti cular in the chemical industry; it is only in the finalstages of the development of the industrial process that the decisionis taken as to which agricultural substrate should be used a choicewhich is obviously largely dictated by the purchase price concernedand by the pri ce received for by-products. Accordingly, since glucoseproduced from starch and the sucrose found in molasses (importedlevy-free) are sold at a lower pri ce than suga. they tend to be usedin various fermentation processes. Under the Community rules which arenow in force, the EAGGf pays a production refund (at 'present 30-40 ECU/tonne) in respect of Community-produced sugar and starchsupplied to processors, in order to reduce the costs which they faceas a re.sult of the high pri ce of the raw material. The refundscurrently paid offset only part of the difference between theCommunity and world market prices for the basic substrate (50 % in thecase of wheat and 10 % in the case of sugar).

52. The non-food use of starch, potato starch or sugar could welLexpand thanks to recent advances in biotechnology. Clearly, if theCommunity does not allow these expanding industries to obtaincompetitively-priced carbohydrates of agricultural origin, much of theinvestment wi II go to non-member countries. It is estimated that bythe year 2000 the industrial consumption of starch wi II have doubled(to 3 million tonnes), while that of sugar wi II rise from its presentlow level to 0.5 million tonnes. These estimates are based on theassumption that the Community price for the raw material will be at anacceptable leveL, and that industry wi II by then be using processeswhich at present are still at the research stage. The highest growthin non-food use would be in the chemical industry (e.

g.

themanufacture of biodegradable plastics).

52. a. The production of .proteins for use in feedingstuffs represents aspecial case. Lysine, an amino acid which is a vital part of the foodintake of monogastric animals in particular, can be produced on anindustrial scale via the fermentation of carbohydrates obtained fromstarch , beet or molasses. It can be added to cereals, for instance andcan in some case. replace soya-bean cake. Its production can be

37.

increased, provided processors are able to obtain thei r raw materialsat GompetHive p,'ices (in relation to the world market). The Communitymarket could, once this is achieved", absorb an estimated 40 - 60. 000tonnes of lysine in the 1990s (as against about 15.000 tonnes atpresent) thus providing an outlet for about 90 - 130.000 tonnes ofcarbohydrates", the raw materia ls used. Moreover, incorporating lysinein feedingstuffs would help dispose of an additional 1 3 - 2 milliontonn es of ce rea l s .

53. The non-food use of starch and sugar wi II continue to increaseover the next five years. In this respect, processors feel that theyshould be allowed freely to negotiate the terms on which they obtaintheir raw materials, since in such matters reliability and continuityof supply are just as important as pri ceo

54. The Commission has presented to the Council modifications to theexisting regime. For starch the production refund would be eliminatedfor the protected food use, but for non-protected uses wouldcompensate for the difference in Community and world pri ces of rawmaterials. For sugar non-protected users would have access to C (worldpri ce) sugar.

It is desi rable that a deci sion is reached swiftly on a simple andtransparent system to ensure the access by Community industries to rawmaterial supplies at world prices.

The Council is currently discussing those Pf'oposals.howeve I', a number of problems concerning

There remain

the continuity of sugar supplies (sugar quotas);

the routes for fixing the refund;.

th: f'0t2 cj.:.nsh.

;p

betu::::e(J suga,. ~~c;! ,;,; "'de.: ,-

'"'-

;;.,~;.; ~C"..i',,:; jJ: ,

:.:",,:;.

the vaf'ious circumstances in '4fdch a pf'oducU'JT1 ",,(;.md .;~/ic; ;1Ctpayable.

3. Future uses

55. Sio-ethanol and the sugar and starch used in the processingindustry are two types of bio-industrial products for which there issome potential o' de\,elopm/?nt;:. the new outlet$: !.Iill be fiJainly for

38.

agricultural products which are at present in surplus, viz. wheat andsugar beat. Discussions should now take pLace as to how to encouragethis new type of demand.

56. For other types of bio-industrial products, however, thepotential increase in the demand for basic agricultural raw materialscannot be estimated on the basis of the results produced by theresearch carried out so far. This concerns

the production of substances which have a high level of added value(e.

g.

enzymes, vitamins and amino acids) and which command pricesin excess of 3 000 ECU/tonne. Europe s chemicals industry should inany case mOve increasingly towards the processing of suchsubstances from sugar and starch given that there is now stiffermarket competition from organic substances produced in non-membercountries from fossil hydrocarbons;

the search for plants capable of producing greater quantities ofstarch and sugar - if demand rises - at lower cost. This isobviously a long-term task but it could be speeded up thanks togenetic engineering.

In addition, studies should be carried out, in coordination with theagro-food industries, to review possible developments in humanconsumption in the 1990s and whether there are real outlets inside andoutside the Community for certain surplus productions (for example,grape jui ceinstead of wine).

E. ExternaL trade - a balance to be restored

57. The increase of production through technical progress, with aquasi-stagnation of the internal demand for traditional agriculturalproducts, raises the question of the conditions under which theCommunity could increase its agricultural exports.

58. Although it would appear to be difficult to make any preci seforecasts over the next ten to fifteen years, different analyses cometo the conclusion that demand for agri cul tural products in theCommunity and most other industrialized countries will expand onLyvery s lowly. Nevertheless, these markets wi II evidently remain veryimportant. Demand in less-developed countries wilL still increase, butat a lower rate th.an in the past. A forecast for East Europeancountries and the USSR is difficult to make. Competition for availableexport markets wi II thus .become stronger.

39.

59. In these ci rcumstances, although there is a real prospect of theCommunity being able to parti cipate in the foreseeable expansion ofworld trade in agricultural produce, this will only be possible ifsuitabLe adjustments are made to its external trade arrangements so asto enable the Community to conduct its export policy on a soundeconomic basi s.

External trade arrangements adapted to the demands of the future

60. Two major questions arise as regards the Community s externaltrade arrangements for agri cul ture

What adjustments must be made to the Community s present exportarrangements if it is to go on supplying the world market with itsexports of food and other agri cultural products?

Would it be possible to adjust the existing import arrangements sothat they were better ba lanced commercially and caused less of adrain on the budget?

61. Examination of these questions is based on the assumption thatthe Community

wi II maintain its position on world markets for import and export;

wi II retain a system of variable import levies and variable exportrefunds as a mechanism for stabilizing its internal market accordance with the Treaty objectives;

will keep Community preference, which is a transposition atCommunity level of the priority given to domestic produce onnati ona l ma rket s.

Exports : areproduce rs ?

they the responsibi l ity the Community the

62. The Community s expanding role in world trade in agriculturalproduce gives it a responsi bit ity towa rds the world market. It hasbecome the major exporter of dai ry produce and beef and the secondexporter of cereals and sugar and is a leading exporter of wine,spirituous beverages and processed products.

40.

63. This situation is certainly a reflection of the continuingincrease of European agri cul tural production, but it also derives fromthe maintenance of export arrangements made at time when theCommunity normally was less than self-sufficient for most agri.culturalproducts, i.e. its exports of any given product generally fell shortof corresponding imports.

Under this system, export refunds were merely the corollary of asystem designed to support and stabi l ize the internal market.

64. The Community has now become a net exporter on a structuralbasis, of most staple items, and the unrestricted maintenance ofexport refunds has meant that exported products enjoy the same pri ceand disposal guarantees as the product sold on the internal market.The price gap as between internal and .world markets and the exportrisk have thus remained entireLy a charge on the Community budget.

At the same time, Community producers have been isolated from pricemovements on the world market which have thus been unable toinfluence production, even though a growing share of Communityproduction is now exported.

65. If the Community is to retain a substantial share of worldexports of foodstuffs and other agri cul tural products, and if itsexports are to be the expression of a real export pol icy rather thanthe mere di s()osal of surpluses, it is necessary to review the presentmechanisms, which were introduced in other ci rcumstances (when theCommunity was an importer).

In so far as new export surpluses emerge or old ones increase (instructural terms) an increasing share of the export risk may have tobe borne, in one way or another, by the producers themselves.

66. Indeed this is a development that has already start.ed. In theparticular case of sugar, the market organization has faci litiesenabl ing the expo rt risks to be charged to the produce rs themse lves, acertain quantity being at the charge of all producers, and the surplus(C sugar) being at the charge of the individual who produces it.

For other products guarantee threshoLds and quantitative qualitative limits on intervention, introduced in recent years, enablethe supply/demand relationship to be allowed for to some extent whenprices and aids are being fixed.

41.

67. As for exports, arrangements whereby the producers themselvescan take over export risks, if they were to be systematically

introduced, could be incorporated into the market organizationsthrough the following approaches, expressed in simplified terms

a) by restricting to .specified quantities the price and disposal

guarantees granted by the Community al levels above world prices..

Beyond these quantities, di sposal would be the responsibility of

the producers themselves, at world market prices.

This approach could normally be implemented in two ways

quota restriction of production quaLifying for a guarantee, allexcess production being compulsori ly exported

at world market

conditions, i.e. without refund. However, machinery of ttliskind would entail strict monitoring of production and marketing- in fact the introduction of a quota system,

an option which

for the reasons already discussed in this document is not

considered to be desirable for all sectors.

ii) a levy paid by the producer to cover some or all of export

refund costs. Such a mechanism should be designed to avoid

intervention of quantities normally exported.

The degree of producer co-responsibi l ity could be var:il:d and therecould be different ways of applying these principles (

b) Perhaps in the longer term, support prices could be fixed at a

level close to those of other exporting countries, especially

wherever, for a given product, the wor ld market accounted for a

significant share of Community production.

This is, however, a practical proposition only where average worldmarket pri ces are regarded as sufficient for the European producer(which does not exlude combination with the payments which Europeanproducers wouLd receive independently of thei r

production). Here

too the detailed articulation of the instruments used for such anapproach could be varied.

2) It should be noted that the system applied to sugar combines the

two forms CC sugar and B quota), but in the case of sugar it wasrelatively easy to solve the problem of distributing the quotas

among producers and the problems associated with control.

42.

c) For products for which there was l i tt le or no external protectionsupport for production would be only in the form of production aid.

In this case, the extent to which market changes affect theproducer is determined by the limits set with regard to quantitiesand/or aid amounts. Export refunds would apply, but only as anequivalent to internal aid. The present arrangements for rape.seedare an example of such a scheme.

68. The choice between the various options set out above must allowfor the current situation of each market organization and for th.Community s international rights and obligations with regard to importprotection against identical products or substitutes and subsidieswhich have the di rect or indi rect effect of increasing exports andreducing i mpo rt s.

69. Th~ options to be chosen with regard to export arrang~ments musttherefore differ from product to product and be. developed in properrelationship with measures taken with regard to the fixing of prices,guarantee thresholds, coresponsibi l ity or intervention.

70. In the case of processed products, for which export refunds arebased on the di fference between Community and wor ld market pri ces forthe basi c products there is also the question of how to relate theproducers ' share in the export risk to the amount of basic productincorporated. The export of high value added products is making ani ncreas ing cont ributi on both to the demand for agri cul tural rawmaterials and to economic activity in the Community. The availabilityof raw materials of sufficient quality at competitive prices isess~ntial for the maintenance of this activity. Whi lst preserving thepossibi l ity of inward processing arrangements any reform of the exportsystem should continue to assure the adequate compensation to theindustry for the difference between Community prices and world pricesof the raw materials incorporated in exported products.

IIIIPQrts: fflQre balanced external protection?

71. When the Community set UP its import system twenty years ago,the Community opted for a protection arrangement based on variablelevi es for the staple Community farm products and for l itt le or noprotection against products in which it was very far from self-sufficient (products equivalent to and competing with certain Europeanproducts and items which it did not produce or couLd not produce all).

43.

72. The Community negotiated this overall arrangement within GATTthe concession of freedom to impose protection on some items beingthus offset by the "binding" of low or ni l protection a,gainst otheritems. A result of this is that any change in bound protection for the'latter category of products must be negotiated with the other.countries against compensation. There is thus little or no externalprotection against, in particular, vegetable fats, vegetable proteinsand certain energy products for livestock feed. This situation has hadtwo main consequences.

73. The Community has had to include in the relevant marketorganizations either aid schemes enabl ing the price-supportedCommunity product to compete with the same or corresponding importproduct or production aids (deficiency payments) designed to cover thefarmer s revenue gap. Thus, aids had to be introduced for olive oiloilseeds and even butter, the disposal of skimmed-milk as animal feed,and casein, to name only the main items.

74. Secondly, imports of products subject to low or zero protection,especially various feedingstuffs, have expanded considerably becauseof their price advantage and have resulted in a discouragement of theuse of Community cereals in animal feed and have contributed togrowing surpluses of certain livestock products, parti cularly mi products and beef, and have thus contributed to increasing theCommunity s exports of these products.

75. As agricultural output in the Community has increased, theseaids and export refunds have become more and more costly. Thedi sequi l ibri a in the Community s external trade arrangements h~ve alsocont ributed to the artifici al maintenance both of certain productionstructures and certain trade flows owing their existence largely tothe differences in prices for equivalent and competing productsbrought about on the Community market by internal pri ce supportmeasures.

76. Is there any way of changing this situation? One approach mightbe to establ ish some kind of trade-off between high protection and lowprotection without increasing the general average level of protectionof European agriculture. This would make it possible to

a) provide more scope for diversifying agricultural production and theuses made of products in the Community;

44.

b) achieve budget savings on a number of aid schemes;

c) facilitate a reorientation of the common pri ce pol icy and

consequently an orientation of production more closely reLated tomarket forces.

77. At the international level, changes of this kind would call fordiffi cult negotiations since increasing some of the currently boundlow or zero rates of protect i on is li kely to have adverse effectS onthose trading partners who would not see sufficient benefitS from anyreductions in high tariffs which the Community might offer in return.However, it is not impossible that comprehensive multi lateralnegotiations on agriculture involving major alterations to theconcessions granted each other by the main partners could produce someprogress towards a better ba lance in the community s external trade

arrangements; moreover, the Community could make use of the fact thatit has initiated an adaptation process of the CAP, concerningparticularly increased disciplines for producers (see do.cument COM(83)

500, paragraphs 3. 14-16) and that this c.reates certain rights andderogat ions from GATT obl i gati ons.

78.. Against this, it must not be forgotten that the adjustmentsimplicit in a more balanced framework of external protection comparedwith the present si tuat ion wou ld have a varying impact on differenttypes of production within the Community. For this reason, too, any

change serving to restore the balance of external protection, however

desi rable, must also be gradua

Strea.l ining and diversifying external t.rade pOl icy instrullents

79. Apart from the fundamental options concerning external tradearrangements, many ideas could be entertained as to the adjustment,improvement or diversification of the external trade arrangements.

80. Leaving aside certain adjustments to the mechanisms of importprotection which could form the subject of hi lateral or multi lateraltrade negotiations leading to compensating concessions, it is mainly

on the export side that the possibility of adjusting and diversifyingpol icy instruments arises.

81. The objectives, in respect of the adjustment of present exportinstruments, would be :

45.

to manage the system in such a way as to minimize budget cost andto avoid disrupting the world market, which of course th1! Communityhas no interest in disturbing~

to enhance the awareness of exporters and of the managers of thesystem of the rapid developments on the world market, so that theycan respond to them in thei r decision-making.

With this in mind, the approach to adjustment could include

The use of tendering procedures for products other than wheat,barley, sugar, would make it easi er to control the management ofrefunds under more competitive conditions.

Adjustments to the way refunds are c.alculatedmeeting several criticisms

with a view to

the main criticism is that if the Community is one of the leadingexporters of a product in the world (beef, sugar, meal, malt, milkproducts) it is difficult if not impossibLe to determine therepresentati ve wor ld market pri ce on which to base the rate ofrefund. Here the adjustments should reflect tighter management anddiscipline on the part of the Community;

spec ifi c cri ti ci sms :

in some cases refunds mi ght not be necessary,in other cases refunds might be reduced.

It should also be considered whether refunds shouldaccording to qual ity and intended use or destination.

varied

82. In the context of a Community which has a real wish to make anagri cul tural export pol i cy, the diversifying of export pol i cyinstruments is import. The aim should be to enable the Community toadapt more closely to the diversity .of financial situations in thoseareas of the world where demand for agricultural products is likely togrow in the years to come.

83. Accordingly, it may be advisable to seek ways and means ofcombining the fixing or advance fixing of refunds and the use ofexport credits to make the most of the advantages avai lable on themarkets yielding continuity in export flows.

46.

84. Community intervention with regard to export credits could takea number of forms, inc luding :

traditional credit-insurance, i.e. assumption of the risk offailure .to repay loans, either through the harmonization ofexisting intervention schemes at national level, or through theestabl ishment of specific fund bui lt up for example bycontributions from the exporters themselves;

the reduction of exchange risks by the encouragement of the use ofthe ECU in export credi ts;

interest subsidies, a measure applied to industrial products inac.cordance with the code of the OECD and for which a tendencyalready exists in Member States in respect of agriculturalproducts.

The availabil ity at Community level of export credits, combined withsolvency guarantees, could also enhance the attractiveness of IImulti-annual" supply contracts (cf. the Commission s 1981 proposal on whichthe Commission requests a decision to the Counci l).

85. Although a careful distinction shouLd continue to be madebetween gifts of food aid and sales on commercial terms, it must berecognized that there are countries which are not among the poorestbut which sti II lack the financial resources to meet aU their foodrequi rements.

The provision of food aid is often advocated by the agriculturalorganisations; and publ ic opinion also finds it difficult tounderstand that the Community is overloaded by surpluses, whi le large part of the world' s population suffers from hunger. However,this probLem of food aid goes far beyond the confines of agriculturalpolicy; it is the task of society as a whole to reflect on the matterand to find adequate solutions.

There may therefore be a good case for setting up, particularly withinthe framework of the national food strategi es of the developingcountries, an intermediary fac i l ity which would help them to purchasefoodstuffs commercially on concessionary terms without this beingallowed to interfere with development policy priorities. Theestabl ishment of such a scheme would have to be in conformity with the

47.

international arrangements in this matter and should not be allowed inany way to hamper the dri ve to greater food seL f-suffi c: i ency among the

developing countries.

48.

PART IV

A ROLE TO PLAY - AGRICULTURE IN SOCIETY

1. Emphasis has often been placed on the role which agricultureplays in supplying the population with food. In this respect Europeanagri culture has achieved some notable successes, even if Europe s everdecreasing dependence on food imports has been partly offset by itsfarmers ' dependence on energy and feed imports.

It is clear that the suppLy of food wi II in any case remain theessential function of European agriculture, not only for thepopulation of the Community but also for other countrie.s which needsuch supplies, be it on the basis of market transactions.

2. Much has already been said , too, on the role of agri culture as asector of economic activity which makes a contribution to the domesticproduct, provides employment, contributes to the formation of nationalassets has close links with other sectors of economic activity andthrough its exports, has a positive effe.ct on the Community s tradebalance. Thus, agricultural activity is of crucial economic importancefor a number of regions and countries in the Community.

3. In considering the future development of the agri culturalpolicy, one must not forget the nature of agriculture also as anactivity of enterpri se, in which individual farmers have the libertyand responsibility to adjust their production in the light of thechanging economi c envi r.onment and the commerci al real ities. It cannotbe the role of public authorities to substitute themseLves for theindependent farmer in this context, so as to el iminate the advantagesand risks of the entrepreneur. On the contrary, the policy must bedeveloped in such a way as to encourage the responsibi l ity of farmersand to make full use - within the limits of their socio-economicsituation - of their capacity for innovation, both in their individuaLdecisions as managers, and in the context of cooperative ventures.

4. With this in mind the Commission nevertheless conside.rs itnecessary, in view of the indications already given concerning thedevelopment of markets and prices, to examine certain wider aspects ofthe place of agri cul ture in soci ety.

49.

a. It is nos to be supposed that the principal result of the neworientations adopted by the Common Agricultural Policy in the last twoor three years could be the large scale movement of people out offarming into unemployment, the impoverishment of sma II farmers, thegiving up of fami ly farms, and the abandoning of the countryside.Since agri cul turein its diverse forms is at the heart of the Europeanmodel of society, it is necessary to reflect on the role ofagri cul ture in Europe.

b. Agai nst this background,following aspectS

it is desi rable to take account of the

The need for agri cul tura l pol i cy to take more account ofenvironmental policy, both as regards the control of harmfulpractices, and the promotion of practices friendly to theenvironment; in this way agriculture, which is itself a victim ofpollution from other sources, can expect other sectors to make agreater effort to protect the envi ronment.

The fu ller integrati on of agri culture into the general economy,parti cularly by means of regi onal deve lopment plans for the ruralzones of the Community.

The possibi l ity of new forms of income support for the agri culturalsector, wh i ch wou ld permit the pri ce and market regulat ions toperform the function of regulating supply and demand moreefficiently, without causing unacceptable social problems for theagricultural population. Selective and specifications would help toprotect the special character of the Community s agriculture, itsregions and its fami ly farms, taking account of the problems posedby soci al and geographic di sparities.

A. A chalLenge for the future: agriculture and environMent

S. The role of agriculture in a modern industrialized economy isincreasingly perceived to include not only the strategic, economic andsocial functions mentioned before, but also the conservation of therural environment. At a time when the Community is self-sufficient inmany agri cultural products and therefore obliged to manage itsproductive capacity in a prudent way, environmental considerationseven gain in relative importance.

6. As a matter of fact agri cul ture has a di r.ect and profoundimpact on the envi ronment of the European Community : two-thi rds ofthe surface of the Community is devoted to agri cultural production. Inthe last decades , agri cul ture - or at least some important parts of it

has undergone a technological revolution which has profoundly

50.

changed farming practices. There is growing concern about the effectsof such changes on the environment - a concern which is expressed notonly among the urban population but aLso among those engaged inagri culture, whose basic resources are soi l, water and the geneticdiversity of plant and animal species.

7. Although environmental considerations have already been takeninto account in the CAP in recent years, especially in the developmentof the socio-structuraL policy, it is neces.sary to consider whatfurther measures could be envisaged in the perspective of the nextdecade. The problems are most evident in the Northern regions of theCommunity , where the introduction of modern agri cuLtural techniques ismore advanced but they are manifesting themselves also in theMediterranean regions, and sometimes in specific ways (forest fires inar id zones).

ReguLation and control of practices harmful to the environment

8. Changes in farming practices and the development of modernagri cul tural techniques have played an important role in the increasein agricultural activity over the Last decades. But they have alsobeen ident ifi ed as a cause - and someti mes even as the maj or cause -of the extinction of species of flora and fauna and of the destructionof valuable ecosystems such as wet lands, and in some cases haveincreased ri sks of ground and surface water pollution.

In this context, agriculture has to be considered as a sector ofeconomic activity which like other sectors with potentially harmfulactivities should be subject to reasonable public prescriptions andcontrols designed to avoid deterioration of the envi ronment. general, the principle of "polluter pays" would apply, and it wouldnot be normal for farmers to expect to be compensated by the publicauthorities for the introduction of such rules.

9. The expanding use of pesticides and chemical fertilisers,although crucial for efficient agricultural production, includes anumber of environmental risks, especially with regard to their longterm effects and in the case of excessive usage. The excessive use offerti lisers whether of natural origin (animal wastes, etc. ) orindustrial origin (chemical ferti lisers) results in pollution of watersupplies by nitrates; the problem appears to be most serious in areaswith a heavy concentration of livestock but it is also caused bychemical fertilisers. In the case of pesticides, which arebiologically active and often highly toxic chemicals, definition ofproduct standa rds with respect to envi ronmental ri sks approval ofproducts before use restriction of product distribution to persons

51.-

with proved qualifications and faci lities to advise on storing,handl ing and application of the products, warnings against excessiveusage, are measures which could be envisaged in a fi rst stage to limitthese risks. In addition, it would be necessary that the agri culturaladvisory and extension services, even more than in the past, providecompetent advi ce to farmers, and that research efforts to deve lop newand less harmful products or methods are supported.

10. Common action is aLso needed to control the problems arisingfrom intensive livestock production - common action, not only in theinterest of protecting the environment but aLso with a view toensuring fai r conditions of competition. Such action could take theform of the issue of permits for the construct i on of buildings forintensive livestock production and for the exercise of suchactivities. The conditions of such permits would have to includeprovisions for prior evaluation of the environmental impact, hygienestandards, suffi c i ent capac ity for storing and if necessary, forconditioning the animal wastes as well as appropriate plans for theirspreading on the land or for other non-polluting uses.

11. Appropriate planning procedures, including a full environmentalimpact assessment, should also be introduced for major projectsaffecting the use of land (reparcelLing, changes in the water regime,roads, etc. especially in the case of public funding of suchprojects. A particular problem in this context is the drainage ofagri cul tural land. It is encouraged in a II Member States by aids frompublic authorities and is assisted in some cases by Community funds.There is growing evidence, however, that the intensification andextension of drainage particularly in the wetlands has Led to thedegradation or loss of important habitats for wi ldlife. Thedestruction of such valuable ecosystems is generally irreversible, andth.e question is therefore posed whether public aids for this activityare any longer justified, particularly since the Community has passedsel f-sufficiency for many agri cut tural products. It would be desi rableto conduct a review of agricultural drainage, with a view to limiting,or even in some cases or regions prohibiting the use of public aidsfor this purpose.

Promotion of practices friendLy to the environment

12. At least as important as the "passive protection of theenvironment is a pol icy designed to promote farming practices whichconserve the rural environment and protect specific sites. Generallyspeaking such practices would be less intensive (and thereby lessproductive) and could have - to some llmited extent - an effect on thegrowth of agri cul tura l product ion.

52.

13. Two types of action could be envisaged in this context not onlyin less-favoured areas or marginal zones, but in many other regions ofthe Community

1. Measures in order to introduce or maintain agri culturalpractices compatible with the need for the protection of nature. il lust rate the point, elements of such measures could be thesuspension of agri cultural activity during certain periods of theyear observance of low limits on use of fertilizers and pesticides;acceptance of rules for the use of pasture; abandonment of drainageand irrigation works; change of use to other agricultural production,or planting of trees, maintainance of stone walls or hedges or ponds.

The zones for such management measures would be

zones where agriculture should be maintained in certain traditionalforms (e.g. buffer zones adjoining nature reserves, zones for theprotect i on of groundwat er) ;

ecological corridors in areas of highly developed agri culture (e.a strip of 5-10 m along watercourses, ponds and coasts such ameasure would protect not only habitats but water as a resourceitself) .

In some zones where the environmental balance is particularlythreatened practices friendly to the environment could be madecompulsory by law. In other cases, they could be introduced on avoluntary bas is in the form of management cont racts between publ i cauthorities and the farmers concerned.

In all these cases agriculture would contribute to the conservation ofthe rural environment and thus produce a public good. It could well beargued that society should recognize the resulting external benefitsby providing the financial resources to permit farmers to fulfil thistask. Corresponding payments would at the same time support anddiversify farmers incomes and contribute to the control ofproduct ion.

2. Buying out or renting out of land by publi authorities forenvironmental purposes (protection of nature and wi ldl ife, creation ofecological refuges or corridors, provision of recreational amenities).In many cases farmers could even be asked to stay On the land and tomanage it according to its new functions. In cases where farmersdefinitely want to leave their land, this function could be taken over

53.

by neighboursand allow them to diversify their incomes. In particularin Member States with high population densities and growingenvironmental problems such an alternative may be worth considering.

14. According to some estimates, up to 10 % of the Communityagri cultural surface could be used reasonably for such purposes. Themedium and long term environmental objective would be to create acoherent network of larger protected ~ones, interlinked by ecologicalrefuges and corridors which would faci Litate exchange of species, thuscontributing to their preservation and development. At the same time,the measures suggested would - to a limited extent - supplement anddiversify the incomes of the farmers ' concerned and could in somecaseS even have a stimulating effect on rural tourism.

B. Integration in the econo.y - A need for regional developaent

15. The importance of the general economic environment inparti cular at the regional level for structural change inagri cut ture has been under lined in the past by numerous studies.Economic growth perspectives for the foreseeable future are perhapsbetter than they were in the last decade. This wi II certainlyfaci l itate the necessary structural adjustments in agriculture. Theextent, however, to which this positive effect will playa role shouldnot be overestimated. First of all economic growth rates will remainrelatively low as compared to those of the 1960s and early 1970s.Secondly the link between economic growth and employment expansionwould appear to be less cLose than it has been in earlier periods. Andthirdly, most regions - and in particular most agricultural regions -suffer today from high unemployment rates and a great deal of hiddenunemployment the reduction of which would already require a quiteconsiderable expansion of economic activity. In some regions (SouthernItaly, Greece, Ireland) the problem may even be reinforced by growingdemographic pressures.

16. Thus, without any doubt the pressing need for structuraladjustment in agri cul ture wi II make it necessary within the next 10 to15 years to use all the possibi l ities avai lable to create newemployment within the agri cul tural problem regions. The improvedprospects for overall economic growth could support such efforts butnot replace them. Possibilities of alternative employment in theagricultural sector (such as for example, relief services) should beused to the full as long as they are reasonable in economic terms. Butthey will not be sufficient. Therefore, job creation outsideagri cul ture wi II become a key issue for many agri cultural problemregions. These jobs should correspond as closely as possible to the

54.

needs of the agri cultural popuLation in order to maintain andrei nforce the soci a l tissue of the rura l regi ons. Two types of jobscould be envisaged for this purpoSe

Jobs that allow the farming fami ly to stay on the farm. In thiscategory fall first of all th.e more traditional forms of part-timefarming with supplementary activities on the farm (agro-tourism,handcraft , etc. ) or outside the farm (part-time jobs in othersectors). One may also think of new part-time jobs in other sectorsthat could become possible through new communication technologies.And finaLLy there are limited possibilities for some farm familiesto stay on the farm, but to use the total land for non-agriculturalpurposes holiday camps, lei sure parks, golf .courses, etc. Suchpossibilities should be promoted. At the moment they are oftenhampered by tax legislation or land use regulations.

FuLL-time employment outside agriculture. One may think in thiscontext in particular of the development of small and medium sizeenterprises in rural regions , the promotion of craft industries andregionaL tourism.

17. In most cases programmes of regional development wouLd have tobe integrated, i.e. we II coordinated multi-sectoral approaches,elaborated and monitored in cLose cooperation bet.ween the Communityand the Member Stat es and regions concerned and concentrating allavailable means on the same overall objectives. In all these cases itis not so much a question of agri cul ture, but rather of developing theregional economy as a whole.

18. The new structural pol icy for agri culture and the reform of theregional fund go into the same direction and represent a valuableframework for the coming years greater coordination betwe.Community and national pol icy at the regional level focussing on alimited number of priorities to avoid spreading resources too thinly,concentrat ing the avai table means on the least prosperous - and mostlyagri cultural - regions in order to promote thei r economic development.The decision now adoPted on the Integrated Mediterranean Programmesfinally stresses once again the general philosophy the Commissionfavours in this context giving preference to financing developmentprogrammes rather than individual , often widely di spersed projects andto a close coordination of the different instruments within a coherentframework.

19. It is clear, however that prqgrammes of regional developmentwould have the character of medium and long term oriented investment.Measures _to launch such programmes would have to be taken now. They

55.

would requi re a hi r amount of additional public expenditure duringthe take-off phase (creation of economic incentives and advisorynetworks, training and reconversion schemes, infrastructureinvestments) but their full effect in income and employment termswouLd only be felt in a number of years. However, if they weresuccessful they would certainly represent the most rational solutionin the long run.

c. Inco.e aids - One probLe8, sev,ral answers

1. The necessity of income support

20. The adjustments in agricuLtural policy will create a newsituation for European agriculture to which it will have to adapt. support this . adaptation the most coherent and rational solution inmedium and long term perspective would appear to be

faci l itating structural adjustments in the agri cultural sector;

promoting alternative production and new uses for agriculturalproducts in order to create al ternat ive income and employmentpossibi lities within the sector;

stimulating the development of the economic environment in ruralregions in order to create additional income and employmentpossibilities outside the agricultural sector.

21. Measures to attain these objectives would have to be taken now.However

many of them would have a .character of " investments , i.e. theirfull impact would only be felt after a certain number of years;

there may be number of regiona l situat ions where thepossibilities of creating alte.rnative employment are very limitedor would be extremely costly, but where a permanent agriculturalactivity is needed to conserve and protect the countryside and tomaintain a desirable minimum economic and social tissue.

22. The following options aim at suggesting some possible answers tothese problems by means of di rect income aids. Although for thepurpose of illustration they are presented as different concepts, theycould be combined or adapted to the diversity of situations inEuropean agri cul ture. It is emphasised that these options are in no

56.

way propositions, but are presented as a basis for discussion and a

means of clarification; they do no prejudge the choices which may

eventually be made in this matter.

22.a. As far as direct income aids are concerned the Commission

stresses that great care would have to be taken to keep, as far as

possible, such schemes neutral with respecf to production andcompatible with market policy. Special attention would also have to bepaid to the practical administrative aspects if such schemes were tobe i nt roduc ed

23. Such systems of income aid already exist at present. The mostimportant one is that of farmers in mountain and other less favoured

areas covering about 37 % of the agri cultural area and 38 % of theholdings in the Community. Its objective is to maintain landscape and

minimum density of population through the maintaining ofagri cul tural activity and therefore to compensate natural handi caps

with which farmers in these areas have to cope.

23.a. The Commission considers however that deficiency payments(payments per unit of output) could create new incentives to

produce;.

such an approach would have a low degree of selectivity and could

therefore become very costly.

24. Four basic types of possible aid systems are presented in thischapter as a starting point for discussion a pre-pension scheme, a

system with a structural policy component, a system with a socialorientation, and a buying-out system with an envi ronmental objective.

To indicate the order of magnitude of the financial costs involved, a

budgetary estimate is given for each of the oPtions. These estimatesare based on the available statistics for the Community of Ten; must be emphasised that in a Community of Twelv.e the sums involvedwould be substantially greater, because of the importance of small-

scale agriculture in Spain and Portugal.

Already the Commission, in referring to the possibility of income aidsin document COM(83) 500, suggested that such aids could be financedwholly or partly from the Community budget. Community participation isnecessary since

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income support provided by the CAP would be partially shifted fromsuppo rt through the market organi sati OnS to support through di rectincome ai d;

in any case, Community financing is the necessary complement tocommon rules and criteria, so as to maintain conditions of faircompetition in agri culture throughout the Community;

in the case of aids for environmental reasons, such action would bein the interest of the Community as well as that of Member Statesand regi ons.

It could not be envi saged that there shou ld be no Commun i typarticipation, for agriculture in many countries has been a centralelement in the creation of the Community. There are alsoconsiderations of solidarity which imply that the stronger members ofthe Community should not dominate the weaker; without this solidarity,the future not only of European agri cul ture but of the Communityitself would be compromised.

While Community participation is necessary to avoid a progressiverenational isation of the CAP the absence of a national participationwould mean a lesser degree of national responsibi l ity for control andgood management of an aid system.

25. The Community participation would have to be fixed with respectto overall budgetary restrictions and in accordance with budget needsin other fields of Community activity. Also, different formulas shouldbe examined such as the modulation of the Community participationaccording to the agri cul tural situat ion in the different MemberStates, as well as according to the Member States ' financial capacity.In any case such a modulation would reflect the principle offinancial solidarity between countries.

2. Options for action

Option A : Pre-pension for farmers of 55 years and older

26. An ai d in form of a pre-pension scheme could be paid to olderfarmers (~5S years) who would abandon their agricultural activity.Such a pre-pension could. be granted up to 65 years, when thebeneficiaries of the scheme would be integrated in the normal nationalpension systems.

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27. A pre-pension scheme was already introduced in the CAP in 1972by means of Directive 72/160. However, it did not attain itsobjective.s. In fact, the scheme provided for an amount per beneficiaryof approximately 1.000 Ecu per year eligible for Communityreimbursement provided that the liberated land was taken up by otherfarmers presenting development plans in accordance with Directive72/159. The Member States were allowed to pay a higher indemnity fromnational funds. The insufficient amount of indemnity and the strictconditions concerning the attribution of liberated land seriouslylimited the impact of Directive 72/160. The number of bl!neficiariesful fi II ing the conditions for Community reimbursement was only 5. 500for the period 1972 to 1983. In addition to this number a further84. 000 farmers benefited from retirement annuities which were not thesubject of Community reimbursement due to the non-respect of the fullprovisions of the Directive. The vast buLk of these farmers wereaccounted for by two Member States namely France and Germany where theindemnity provided was about 3. 500 Ecu per beneficiary per Year. Inthe case. of these two Member States the number of retiring farmersrepresented 10 % of farmers in the age-group 55-64.

28. Based on the experience of the past ten years, a new scheme

should offer an amount considerabLy above 1.000 Ecu per person peryea

should not be linked to conditions too difficultespecia lly in agri cultural problem regions.

to fulfil,

29. On the other hand a pre-pension scheme of the type proposedwould have to be limited to far.mers whose main occupation is agri culture. There are at present some 600. 000 main occupation farmersin the age group from 55 to 64 years in the Community of Ten. However,according to past experience, only a part of them would participate inthe scheme. Their final number would depend on the restrictiveness ofagri cultural pri ce pol icy over the next few years , and of the level ofthe pens ion.

30. According to first estimates a pre-pension of 3. 000 to 4. 000Ecu per year close by 15 %of the main occupation farmers of 55 to 64years would cost between 270 and 360 mi II ion Ecu per year.

Option B : A structural approach

31. The basic idea of this option is that there are a number offarms which in the longer run could be fully viable in economic termsand the development of which is at present promoted by the new

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structural policy (farm improvement plan provided for in Regulation

(EEC) n

()

797/85). The consistent application of a strict price policyover several years could create immediate economic difficulties formany of them which at the limit could lead them into bankrupcy. Inthis context attention has to be drawn to the problem of indetedness.In fact, a number .of modern farms which made important investmentefforts in the past and could well be viable in economic terms, wouldsuffer from both income pressures and a possible decrease in the valueof land which often serves as a guarantee for the loans obtained. Inthis context attention has to be drawn to the problem of indebtednessand to the question of how the Guidance Section of the EAGGF couldrespond to it. In fact, a number of modern farms which made importantinvestment efforts in the past and could well be viable in economicterms, would suffer from both income pressures and a possible decreasein the value of land which often .serves as a guarantee for the loansobtained. At least some of them could, however, well adapt to the newsituation if they got, during a transitional period some financialrel ief. At the same time, those farmers who would not be able toadjust thei r business would have sufficient time to " opt out" for

alternative employment or, if it exists, a pre-pension scheme (if theyare 55 to 64 years old).

32. It would be in the logic of this option to limit the income aidto professional farmers e. farmers who get more than 50 %of thei rtota l i ncome rom ag culture and who work more than half of theirworking time in this sector. In order to introduce the necessaryselectivity the aid would be limited to professional farmers whoseagri cultural incomes fall below a certain percentage (e.

g.

75 %) ofthe comparable income at the regi.onal level.

33. The aid would be temporary (e.

g.

limited to a 5 year "period oftransition giving t armer a financial relief during some yearsin order to allow him to decide on his future and to make thenecessary adjustments. Furthermore in order to avoid too abrupt acut-off at the end of the transitional period the aid would need to bedegressive.

34. To simplify the administration of the system, the aid could becalculated as a flat- rate allowance per unit of production (hectare

livestock unit). is unit rate wou d be modu ated according to theaverage regional economic value per unit of production as well asaccording to the type of production in question.

35. According to a first estimate, some 1 9 mi llion farmers would beconcerned by such a scheme, and its cost could amount to 4. 000 - 6.000mi II ions Ecu over the whole period of five years (depending on theconcrete assumptions made).

60.

Although its basic idea is to give financial reLief during a limitedperiod of time (5 years) in order to allow farmers who are able to doso, to make the necessary structural adjustments, the system wouldalso apply to a large number of margihal and submarginal holdingswithout any prospects of economic viability in the future.

For them it would mainly represent a transitional social measure.There is a .risk, however particularly for farmers belonging to thislatter category that beneficiaries would. not adapt to the newsi tuat ion as long as thei r losses are at least approximately offset bythe aid, as would be the case during the first years of application ofthe scheme.

Option C .: Asocial approach

36. The basic idea of this option is that although structural changein agri cul ture should not be hampered it has to be canalized in a waythat avoids intolerable social pressures. As long as no alternativeincome and employment possibi l Hi es are avai lable an income aid schemefor farmers should help to avoid social hardship, thus attenuatingadjustment pressures without, however neutralizing them completely.Such a system should be a last resort. It would therefore have to behighly selective (i e. to concentrate on those who are really poor)and intervene only when other mechanisms of solidarity, especially thesol idarity between members of the same household, have played the roleone can reasonably expect them to play.

37. The total income of farmers Cagricultural + extra-agricultural)would be compared to the comparable income (average gross wage income)at the regional lev.el. Only those farmers could benefit from the aidwhose total income would be X % below the comparable income or less.The difference between the totaL income and the X % of the comparableincome would be paid in the form of an income aid after deduction ofa flat-rate calcuLated for fami ly members with a gainful outsideactivity li ving in the farm household. This flat- rate should at leastin some way represent their "benefits" from living in the householdbut should not be high as compared to their off-farm incomes in ordernot to di scourage the search for outside activities.

38. The scheme would not be degressive in a strict sense. But itcould well be limited to the present generation of farm holders andthus become self-eliminating. Since only the difference between totalincome and a modest proportion (e.

g.

50 %) of comparable income wouldbe covered, its selectivity would be ensured and an incentive

61.

maintained to look for alternative employment opportunities offered atthe regional level. In many cases, the income aid could also belimited to "management contracts" for environrnental purposes.

39. According to a first rough estimate, about 1 - 1 5 millionfarmers would be concerned by such a scheme and it could imply costsin the order of magnitude of some 1. 000 million Ecu per year at thebeginni ng.

The system as it is presented here, clearly constitutes a " lastresort" social aid scheme; in this context, it is questionable whetherthe comparable income as defined in the framework of the agri culturalstructures policy would be a valid point of comparison, taking accountof its different economic signification in the different MemberStates.

Opt i on D : A Buy i ng out app roach

40. The basic idea of this option is that an aid should only begranted if in return, a farmer is prepared to abandon his " right toproduce agri cultural products on his land and thus make acontribution to the reduction of overall agricuLtural production. Thi.would be .a form of set-aside" of agricultural land. In the strictestversion of this option the land made available could be bought orrented on a long term bases for non agri cultural uses, e.g. thecreation of ecological refuges and reserves, leisure parks,afforestat i on.

41. In the logic of this option, every farmer could participate insuch a scheme although it may be expected that mainly farmers withmarginal land or poor production structures would be interested. Theaid would be fixed in proportion to the volume of productionabandoned.

42. In a less strict version of this option, the income aid coulda l so be granted if the fa rmer abandons the ri ght to produces surplusproducts (or other highly supported agri cultural products) and changeshis production to alternative (Less supported) products for whichmarket outlets exist, but which offer in the short run less favourableincome possibi l ities; in this case the aid wouLd have to degressive.

62.

43. In all case.s the fixing of the amount of aid to be gra.nted wouldbe a cruci.al question. If the farmer has to abandon his right toproduce, the aid would at least have to compensate fully for hisagri cul tural income losses, and probably it would even have to behigher in order to constitute a real incentive. If such is the case,the amounts in questions could become relatively large. Per personconcerned they would probably be higher than for the other optionswhich do not require the (full Or partial) abandon of the right toproduce (except in the case of pre-pension).

PERSPECTIVES FOR THE COMMON AGRICULTURAL POLICY

- STATISTICAL ANNEX -

Table 1 A

Table 1 B

Table 1 C

Table 1 D

Table 1 E

Table 1 F

Table 1 G

Table 1 H

Tab le 2

Table 3

Table 4 A

Table 4 B

Table 5

Tab le 6

Table 7

Table 8

Table 9

Table 10

Table 11

Table 12

Table 13

LIST OF TABLES

Agriculture in the economy - contribution to grossdomestic product and employment

Agriculture in the economy - investment and trade

Trends in Community trade with third countries

EC exports of agricultural products in quantities

EC exports of agricultural product according to maincountriesCommunity s agricultural and food imports by type ofcharge applied and by origin of the products

EAGGF Expendi ture

National public expenditure in favour of agriculture

Agricultural holdings in the Community (selectedsummary characteri.sti cs)

Size structure of agricultural holdings

Farms and farm labour force 1979/80- farms with and without regularly hired workers

Farm and farm labour force 1979/80- fami ly workers and regular non-fami ly workers

The "Agricultural population- selected characteristics of the farm labour force

1979/80

Persons in employment by sector of a~tivity and sex,1983

Changes in emp loyment leve ls 1973 and 1960-1983

Holders according to the proportion of normal workingtime worked on the farm (wi th and wi thout outsidegainful activity)Average increase of common prices in national currenciesin real terms

Income indicators for agriculture and the overalleconomy (ave rage 1980-1983)

Gross value added per annual work unit in agricultureon ECU and on PPS basis (average 1980-1983)

Community regions : Basic indicators of agriculture (I)Community regions : Basic indicators of agriculture (II)

Figures

Figure 1

Figure 2

Figure 3

Figure 4

Maps

Map 1

Map 2

Map 3

Map 4

Average size of farm in hectares and of hectares pertractor

popu lat i on

and in the

Age structure of the active agricultural

Evolution of real incomes in agriculturegeneral economy

Distribution of agricultural incomes in the professionalholdings

Regional income disparities in agriculture

Regional with a low level of GDP and a high proportionof agricultural employment

Regional unemployment rates

Evolution of population of active age 1980-1990

Table 1 A - Agriculture in the economy - Contribution to the Gross Domestic Product and Employment

Indi

cat

orI IRL

EUR 10

% part of agriculture in GDP (1

) :

. 1973

18.

19.

. ave rage 19

80-1

983

. %

10.

16.

Average annual growth rate (2) 1970-1982

1 . 9

. Agricultural GVA (3

). Industrial GVA (3

)-0

.1

. 7

. Tota l GVA (= G

DP)

(3)

Implicit price deflator

Evolution 1970-1982 (4

)22

0. Agricultural GVA (3

)In

dex

136

249

476

129

162

158

321

239

620

360

520

. Industrial GVA (3

)19

70=

100

163

287

511

161

165

143

439

262

487

260

430

650

. Tota l GVA (= G

DP)

(3)

181

313

552

234

214

132

443

295

544

290

527

630

% part of agriculture in employment

. main occupation

: -

1973

10.

17.

24.

33.

- 0 1980-1983

23.

29.

h8.

25.

. Annual Work Units:

0 1980-1983

23.

22.

GDP per person employed

1 .000 Ecu

22.

21.

14.

26.

21.

19.

16.

13.

19.

19.

Agricultural GVA per AWU

000 Ecu

11.2

10.

22.

16.

10.

14.

14.

10.

(a)

. EU

R 7

= D

, F, I, NL, 8, UK, DK in Ecu

(b) 1975

(c) 1977

(1) Gross domesti c product at factor cost

(2) National money, constant prices 1975

(3) Gross value added at market prices

(4) National money

Sour

ce: EUROSTAT

Table 1 B -Agriculture in the ~conomy - Investment and Trade

Indi

cat

orU

nit

IRL

EU

R

part

agri

cultu

rei n

gros

sfi

xed

capi

tal

form

atio

n19

7313

.19

80-1

983

Inve

stm

ent

rate

(1)

agnc

ultu

re19

7324

.17

.16

.23

.17

.29

.28

.24

.30

.20

.19

8031

.21

.22

.32

.21

.33

.26

.30

.30

.24

.19

8325

.21

.21

.22

.17

.23

.22

.

tota

leconomy: -

1973

17.

17.

15.

17.

17.

19.

15.

19.

15.

16.

1980

17.

16.

14.

15.

16.

18.

15.

23.

14.

16.

1983

15.

12.

13.

15.

13.

Cov

erag

eim

port

sex

port

s(a

gric

ultu

ral

prod

ucts

)19

7721

.45

.19

.46

.20

.26

.11

0.91

.33

.

1983

32.

87.

30.

66.

36.

41.

273.

133.

114.

53.

Tra

deba

lanc

e19

80-1

983

~foo

dpr

oduc

tS(1

983)

Ecu

-1.

+1.

-0.

-1.

-1.

-1.

+0.

+1.

+0.

+1.

regu

late

dag

ricu

ltura

lpr

oduc

tsE

cu-4

.+

1.-1

.-1

.-1

.1-5

.+

CJ.

3+

0.+

3.-1

1.

(1) Gross fixed capital formation per unit of gross value added, current prices and exchange rates

Sour

ce: EUROSTAT

Table 1C - Trends in Community trade with third countries

1973(1 )

All productsImports (Mrd ECU)

(index)84, 47 100

80,64 100

83 100

Exports (Mrd ECU)(index)(Mrd ECU)(i ndex)

Balance (defi tit)

1981 1982 . 1983

(2) (2) (2)

303,80 I 321,47 328,49 I360 381 389

266, 66 I 286,48 303, 03 I331 355 376

14 I 34, 99 I 25, 46 I970 913 665

of which

Agricultural and food products

Imports (Mrd ECU) 24, 72 47,60 I 50, 36 (i ndex) 100 185 197 209

Exports (Mrd ECU) 26,05 I 25, 58 I 26, 77 I(index) 100 352 346 361

Balance (deficit) (Mrd ECU) 16, 18, 67 I 02 I 23, 59 I(index) 100 115 132 141

(Mrd ECU) 13, 58 I 25, 01 I 25, 75 (index) 100 178 188 194

(Mrd ECU) 18, 46 22 I 17, 71 I(index) 100 377 351 361

(Mrd ECU) 12 I 79 04 I(indE:x) 100

of which

Products under a common market organi sationImports

Exports

Balance (defi cit)

For compari son

Index of consumerpr ices in the EEC EUR-10 100

Index of unitary valuesfor total exports (in ECU) EUR-10 100

Index of unitary valuesfor total exports (in$ US) World 100

( 1 ) : EUR-9(2) : EUR-10

242 292269

230 251 261

255 234245

CC

T

CH

AP.

Table 1 D - EC EXPORTS OF AGRICULTURAL PRODUCTS IN QUANTITIES (t

ons)

PRO

DU

ITS

1974

1983

1983 : 1974

live animals

Mea

t + o

Ha

lsFi

sh, crust., mollusc.

Dai

ry

prod

uce, eggs

Other animal~prQd.

Veg

etab

Le

Frui

tsC

erea

lsProd. of the milling

indo

Oi l

seed

, oleag. fruit

Fats

:f-.

oi

Prep

. mea

t + f

i sh

Suga

rs +

con

fect

ion.

P~ep

. of

cere

a Pr

ep. o

f ve

geta

ble

+ f

ruit

MisceLl~ edible prep.

Residues from the food

indo

42.7

4135

2.21

022

5.69

61

.801

.58

311

4.18

607

7 . 3

2580

4.05

380

3.88

501

2.19

642

6.93

784

9.84

326

1.53

362

0.69

819

3.44

730

7.87

821

9.26

972

9.07

7

221.

319.

017.

766

723.

459

245.

262

157.

236

302.

007

933. 111

16.4

51.3

4752

7.79

835

7.22

230

2.90

825

2.74

883

4.26

144

1.52

767

2.57

437

9.12

004

6.93

3

517,

288,

320,

124

137,

120,

116,

283,

150, 83,

153, 96,

298,

228,

218,

172,

234,

Sour

ce: EUROSTAT - SIENA

EU

RO

ST

A T

(*) 1974 = CEE 9

I 1983 = CEE 10

Tab

le 1 E - EC EXPORTS OF AGRICULTURAL PRODUCTS ACCORDING TO MAIN DESTINATIONS IN 1976 AND 1983 IN VALUE

(000 ECU)

1976

1983

Tot

a l

expo

rts

Tot

a l

expo

rts

agri

cultu

ral

prod

ucts

891.

.327

100

agri

cultu

ral

prod

ucts

25.6

15.6

2910

0

whi

ch

whi

ch

Uni

ted

Stat

es1.

22.8

081l

.,U

nite

dSt

ates

722.

676

1/.

Swi tzer land

82:'.

365

USS

R1.

800.

537

Swed

en50

S 1.

96Sw

itzer

land

59J.

8S0

Aus

tria

391

.750

Saoudi a

Arabi a

26/..

007

Japa

n33

0.90

9A

lger

ia9S

S .8

06

Nig

eria

301.

1,95

Egy

pt85

5.52

8

Can

ada

290.

373

J aj

Jan

826.

2l.2

'

USS

R23

2.1.

15Sw

eden

80J,

. 08

1

Saoudi a

Arabi a

221,

.768

Aus

t ri a

790.

31,8

No

rway

209.

084

Nig

eria

772. SOO

.. . C

EE

from

.1976 to1980 -

Greece included since

1981

SOU

RC

E: EUROSTAT - SIENA

(VIPOl-80)

TABLE 1 F COMMUNITY' S AGRICULTURAL AND FOOD IMPORTS BY TYPE OF CHARGE APPLIEDAND BY ORIGIN OF THE PRODUCTS

('1 of total)

Type of charge Levy ( 1) : Positive(2)

ZeroDuty (3)

Total: Origin

: ~~--------~------------------- : ------ ~--- : ------------ : --~--------- : -~~~-------~- :

: Category I (industrialized: countries)

: Category III (State-trading: countries

12. 34. 53. 100

34. 56. 10095. 100

69. 25. 100

17. 25. 56. 100

: Category II (developing: countries): of which : ACP

Medi terraneancountries

------------ : ------------: ------~-----: ---------

~--- tAll origins 11.3 33. 54. 100

Source : Eurostat - 1982 figures, processed by the Statistical Office and theDirectorate-General for Agriculture of the Commission of the EuropeanCommunities.

(1) Cases in which the levy is the only instrument applicable to imports. Thiscolumn includes tapioca (consolidated levy at 6'1) and beef meat imported underspecial duty regime (no levy).

(2) Imports subject to a customs duty or a combination of customs duty and levy orcountervailing charge.

(3) No duty charges.ACP African, Caribbean and Pacific States. Mediterranean countries : Algeria,

Morocco, Tunisia, Egypt, Syria, Jordan, Lebanon, Malta, Cyprus and Israel.

TabLe 1 G

EAGGF EXPENDITURE

million ECU

LU

XIR

LE

EC

1975

649,

: 1 219,

961

543,

187

631,

246,

318,

: 4 764.

1976

929,

: 1 453,

: 1 091,

771,

348,

511,

234.

438,

: 5 787,

1977

: 1 315,

: 1 631.

: 1 000.

907,

435.

10.

416.

602,

639,

: 6 958,

1978

: 2 441,

: 1 511

: 1 195,

: 1 111.

574

25,

: 1 193,

358.

583,

: 8 995.

1979

: 2 464

: 2 380, 5

: 1 694.

: 1 402

769,

13,

992,

484

, 264

4 . 3

:10 847,

1980

. : 2

596

,: 2 963,

: 1 930,

: 1 569.

596.

991,

609.

640,

:11 909,

Source: EAGGF annual reports. (guarantee and guidance sections

TABLE 1 H - NATIONAL PUBLIC EXPENDITURE IN FAVOUR OF AGRICULTURE

mill

ions

EC

U

LU

XIR

LE

EC

1975

589,

241,

595,

200,

101,

14,

493,

176,

134,

546,

1976

513,

770,

810,

236,

115,

21,

206,

215.

115

8,04

7.

1977

568,

950,

942,

258,

144,

28,

931,

239,

2.

177,

241,

1978

670,

239,

067,

288,

197.

16,

685,

297.

224

687,

1979

670,

515,

164

307,

236,

18,

855,

281,

2.77 , 2.

326,

1980

636,

731,

882,

330,

229,

s.

075,

360,

273,

520,

. .

1) Research figures

are

included, but not social security expenses for farmers - These were of the order of

17 Mrd ECU in 1980 i.e. 143 % of EAGGF expenditure or 175 % of national expenditure in favour of agriculture

2) Luxembourg not i n

ckud

ed

a. = not avai la

ble

TabLe 2

Agricultural Holdings in the Community (selected summar ch

arac

teri

stic

S)

IRl

EO

R 9

EO

R

TO

T A

LN

UM

BE

RH

OL

DIN

GS

('000

)85

012

552B

3214

911

526

922

412

358

2199

968

20

OF WHICH:

IN lESS FAVOURED AREAS

231

419

1274

134

2140

454

2594

IN OTHER

AR

EA

S61

983

615

5814

910

020

712

336

8154

542

26

HOLDINGS WITH(l

AWU LABOUR

INPU

T(

1 00

0)36

438

920

3830

1272

837

40

OF WHICH:

lESS FAVOURED AREAS

109

126

937

1234

324

1558

OT

HE

RA

RE

AS

255

263

1101

1778

404

2182

HOLDINGS WITH NO FUll

TI

ME

lAB

OU

R

(' 00

0)43

450

624

5136

9381

945

13

WH

ICH

:LESS FAVOURED AREAS

133

176

1121

1519

364

1883

IN OTHER AREAS

301

330

1330

2174

455

2630

UTILIZED AGRICULTURAL AREA

(369

2)(8

9695

)

( '0

00)

1221

229

277

1585

820

3714

2113

017

098

5049

2920

8600

3

OF WHICH:

IN LESS FAVOURED AREAS

2989

1026

580

3028

613

071

1824

2831

246

(168

0)(3

2926

)

IN OTHER AREAS

9223

1901

278

2820

3711

3599

8126

2129

2054

757

(201

2)(5

6769

)

AREA UNDER CEREALS

('000 HA)I

5223

9654

5177

238

395

3871

414

1850

2686

315

7428

437

OF WHICH:

IN lESS FAVOURED AREAS

980

2244

1879

257

5491

667

6158

IN OTHER

AR

EA

S42

4474

1032

9823

835

436

1436

418

5021

372

907

2227

9

NU

MB

ER

DAIRY COWS

( '0

00 H

EA

D)

I54

2972

7025

7723

6997

732

8816

1510

7124

665

257

2492

2

OF WHICH:

IN lESS FAVOURED AREAS

1619

1929

920

205

451

608

5800

5898

IN OTHER

AR

EA

S38

1053

4116

5723

6977

328

3710

0710

7118

865

159

1902

4

AW

UA

nnua

lW

ork

Uni

tSo

urce

EU

RO

STA

T

Table 3 - Information on the size structure of agricultural hodings

IRL

EUR-l0

Holdings with 1 ha of agricultural area and more

;.......

Small ~joldings

" "

Large Hwith 1 - 10 ha with 50 0of agricultur~l area of agriculrepres~nt repr

. . . . . ... - - - . - - . - . . - - - - . - - - - - . - . . - - .

Dtdingsr more hatura l areaesent

- -- - - - .. - - . . - - -

of the agri area

. - -. . - . - . - .. -.. - - - - - - -' -'- -. - - - -

l.2-

- - - - ---. - - . . - -----.-

r---f ~he holdi~gs ?f t~e a~r ar~a

~!_

~~e h?l~~ng~

50 13 37 15 13 66 0

.--..---- ------------. ..-----. . . --

- 64

- - . -

- - . I - - - - - - 15. - - - - -- I . - . .- - - 6

77 (a)

- - -... - - -.. ....----,---------

(a) Holdings with less than 1 ha included.

----. -.. . - .. - - -. - . - . . . .. - . - .. - . . - . . .

ear

98398398098398398:~983980983981

980.

972

--..

Figure

Average size of farm In hectares (1980)

8.4

Number of hectaresper tractor

. ~

tAl

, .. '\. '

L15.3 .

, "

393

46.

A. Farms with and without regularly hired wofkers a)

pOTAl FARKS

fURIO I

I 6821 :100 ~

IFARKS WlTHRfGOLARL Y HIRED

I WORKERS1000 I 111 3 I 80 I 16 I 16 I 345 I 346

5 I 9 I 2 I . 9 I 3 I 30 I 13 I 3 I

B. Fami ly workers and regular non-fami ly workers

ITOIAL RtGULAR NON-fAMILY I I .Ie.HIREO) wuRKERS ' 000 I 101 I 212 I 124 I 35 " 8 I 0, 2 I 255 I 27 I 26 I 788'

% I 51 8\ 21 121 41 2 1 351 61 111 L-L-J. L-I I J

112962 :

..

. a) Main occupation- in agriculture and others Source : . EUROSTAT

Tab

le 5

.. T

he "

Agr

icljl

turC

1_L

Popu

latio

n" : Selected Characteristics of the farm labour force

1979

/80

IRL

EU

R 9

EU

R 1

0

TOTAL FARM LABOUR FORCE

('000 PERSONS)(l)

1983

2659

5301

302

186

723

469

234

1186

9OF WHICH: IN LESS FAVOURED AREAS

533

884

2373

145

273

4244

: IN OTHER AREAS

1451

1775

2928

302

162

579

195

234

7626

TOTAL FAMILY LABOUR FORCE

( '0

00 P

ER

SON

S)IB

8224

4751

7726

717

846

844

220

811

081

1881

1296

2

OF WHICH: IN LESS FAVOURED AREAS

521

849

2334

114

265

4120

864

4984

: IN OTHER AREAS

1360

1599

2843

267

156

354

176

208

6961

1017

7978

TOTAL FARM LABOUR FORCE

(, 000 At/O)

1051

1847

2158

242

124

583

310

172

6496

OF WHICH: IN LESS FAVOURED AREAS

259

584

906

111

171

2055

: IN OTHER AREAS

792

1264

1252

242

109

472

139

172

4442

TOTAL FAMILY LABOUR FORCE

( '0

00 A

WU

)95

215

8617

9520

411

733

221

514

554

15OF WHICH: IN LESS FAVOURED AREAS

249

538

777

159

1828

: IN OTHER AREAS

702

1049

1018

204

103

250

116

145

3587

(1) Non- family non-regular labour excluded.

a) Main occupation in agriculture and others

Sour

ce: EUROSTAT

Table 6 - Persons in employment (a) by sector of activity and sex, 1983

1RL

EU

R

AG

RIC

UL

JUR

ET

OT

AL

1490

1790

2466

273

115

5B7

196

177

1051

B15

2

MA

LE

746

114e

1591

220

467

169

134

595

5150

FEM

AL

E74

464

9B

7512

045

630

02

IND

UST

RY

TO

TA

L10

6B5

70B

974

1214

2311

44B

299

342

664

951

3B05

4

MA

LE

8168

5351

5674

1223

930

6439

278

499

754

2935

6

FEM

AL

E25

1817

3B17

38. 199

214

1860

64

165

197

8698

SER

VIC

ES

TO

TA

L13

772

1241

510

705

3219

2158

1422

858

015

4715

0660

219

MA

LE

7013

6129

6735

1845

1233

6753

32B

679

1013

3177

9

FEM

AL

E67

5862

8639

7013

7392

474

7525

286

849

328

440

(a)

Mai

noc

cupa

t i o

nth

ese

ctor

Sour

ceL

abou

rFo

rce

Samp le

Surv

ey19

83,

EU

RO

STA

T

A6RICUL TURE

1973

- 1

9B3

(tO

OO

l . I

55

3

I -

1950 - 1983 ('000) I - 2210

I -

I - 1735

I -

I - 1059

I -

TOTAL EMPLOYREIT

1973 - 19B3 ('000)

1960 - 1983 ('000)

Tab

leC

hang

esemp loyment

leve ls

(a)

1973

and

1960

-198

3

IRl

EU

RE

SPPO

R

609

946

100

123

2490

1138

- 313(2)

- 38

2497

- 4068

215

194

14.

506

201

154

1010

2(1)

24(2

)- 66

+ 1501

306

147

1265

342

783

1975

(3)

- 252 (2)

+ 1889

301

910

+ 26.

380

+ 491

- 4761(1)

15(3

)6(

2)+ 20

Sour

ce: EUROSTAT

(a) Main occupation in the sector

(1) EUR 9

(2) 1974 - 1983

(3) Civi l em

ploy

men

t

..70

C!5-69

tSO-64.

55-59

!50-540

6-4940-44

SS-'E19

aD-a4.

25-29

20-24.

Figure 2

ACTIVE AGRICULTURAL POPULATION (1)

1983 Provisional figures

Total active population(8., 144 Mia)

Age

3:X) 4t,;O C!CX) E!CX) 1XO 't2Q)

(1) Main occupation in farming.

..70

C!5-69

6O-M

55-59

!50-540

4o5-4,g

40-44

SS-'E19

aD-a4.

25-29

20-24

EUR 10;n 1. 000

Holders (4,009 ~iD)(= 49 %)

Age

1:0 3:X) 300 4CO 500 1500 700

Table 8 - Holders according to the proportion of normalworking time worked on the farm

(with and without outside gainful activity?:

1979/80

. . . - - - - - ... ......., - . . .

Total number Proportion normal \~orking timeholders the farm

.... - -"'" -..' ...

100 100

.. .... -. - - - - - - - . . ..' '-

B..

.. -

1 .000

. - ..

828 100 41,

1 . 210 100

760 100

145 100

114 100 25,

100

237 100

IRL 214 100

120 100 12,

- - .. . - -.. - - - . -

EUR-9 635 100

??. - ~, . - ~~.. ~!!- - _. ... . - . -...

EUR-.1O

with outside ga i nful activitywit bout outside gainful activity

'---- ..~

Source : EUROSTAT

(VIP

OI

-83)

Table 9 - Average increase of common prices in national currencies in re~l terms

- -

- -

- --

- -

- -~

~ -

-- -

--

-- -

- -

-~ ---- -- -- -- --- --

----

- -

- -

----

- ~

---

--~

--

----

~---- -----

J_-

---

-- ---------- ---

---

---

total increase

----

----

: - -

- -

--

- -

--~-

-- -

----

- -

-- --

----

--: -

---

-- :

----

--: -

~-

-~-:

-~-- --: ------: --~---: ------: ------: --~---: ------: ------: ------: ------: -------: ---~-

--: -

----

--: -

-~--

--:

:73/

74 :7

4/75

:75/

76 :7

6/77

:77/

78 :7

8/79

:79/

80 :8

0/S

1 :8

1/82

:82/

83 :8

3/84

:84/

85 :8

5/86

:77

/78

80/8

183

/84

85/8

685

/86

: (2)

: (3

) :7

2/73

: 71

178

: 80/81 : 83/84 :

7217

3

(4)

: ---

----

----

----

-~-

----

----

----

----

--:

Ger

man

y F

,: - 0

8:+

8:+

3:+

4: -

6:-

3:-

3 ,8

:~8:

+5:

+9:

-2:

-5:

-9:

+1:

-8:

+2:

-4:

-

Fran

ce. - 2,

4:+

3: -

9:+

6:-

3:+

5:-

0: -

4:+

1:+

3: -

5:-

1: -

1:-

2, 7

:~0:

+9:

-1:

-11

,

Ital

y:+

7,7:

+12

,1:-

3:+

9:-

5:-

8:+

7:- 12,

8:+

9:-

6:-

2:-

9: -

1:+ 18,8:~ 12,9:

-9:

-8:- 14,

0 :

Netherl ands

: - 6,

7:+

9: -

5:-

7: -

6:-

1:-

5:-

2:+

5:+

6:+

0:-

8:-

0:-

6:~

5:+

2:-

8: - 13,

7 :

Bel

gium

: - 1,

2:+

1: -

8: -

3: -

2:-

1:-

7:+

8:+ 10,

4:+

0:+

4:-

4:-

8:-

3:-

3:+ 17,

5 :-

1 :+

Lux

embo

urg

- 3,

5: -

7:+ 10,

2:-

1:+

0:-

9:-

1:-

4:+

6:+

5:-

2:-

8:-

~:+

-2:- 11,0 :+ 10,0

:-3:

-

United Kingdom (1)

:+9,

7:+

168:

+4:

-3:

+2:

+4:

-0:- 12.

5:-

2:+

4:-

5:-

6: -

9:+ 43,0:- 12

...~:-

4:-

3:+ 13,

5 :

Irel

and

(1)

- 2,4:+ 23,

5:+

8:+ 17,

5:-

8:+

7:-

8:-

6:-

0:-

1:-

3:-

2: -

9:+ 38,5:- 17,

0: -

Den

mar

k (1

): - 2,

7:+

7: -

7:+

9:+

0:-

6:+

5:-

0:+

4: -

6:-

2:-

1: -

7:+

9:-

4:-

6:- 10,

4 :

Gre

ece

(1)

8:-

3:~

9:~

0:-

...

. .":

..

. .

: --

-~--

----

----

----

---

-~--------: ------

: ---

---:

---

---: ------:------:------: ~-----: ------: ------: ------: --

----

: ---

---:

---

---:

---

-~--

:---

~---: ------~: --~-

---:

----

- --

- -

- -

- --

~- --

----

---

-- -

-- -

- --

- -

- -

- --- -

- -~

- -

- -

----

~-- --- ---

---

--~---- -----------

----

--~-

----

----

----

----

----

----

----

~- -

----

----

---

----

----

----

----

---

Ave

rage

(5)

: + 0,

5:+

5: -

4:+

8:-

7:-

4:-

7:- 6.

2:+

4:-

4:-

, ,

7:-

0:-

7:+

8,7

:-2 :+

3 :- 6,6:

-5

:

E~t

1.~~

Average of the increases in prices weighted by the value of corresponding final agricultural

prod

uctio

n,

Tar

get p

rice

or e

quiv

alen

t, Prices in ECU converted into national currencies at green rates existing at the end of each marketing year

(except 1985/86: green rates resulting from the price decisions).

GDP deflator for the Civi1 year (e.g, for marketing year 1913/74 inflation ra

tepf

1973 etc.

Increase in nominal terms deflated by the inflation rate.

Ave

rage

i nc

reas

eCorrmon pri ce

Conrnon prices in na

ti"na

l cur

renc

ies

Inflation rate

Increase in real terms

Foot

...

(1) Including incidence on prices resulting from Community m

embe

rshi

p,

(2) Not including for Germany and the Netherlands the drop in prices deriving from the dismantling of the positive MCAs which took place 1st January

~J85

(Ger

man

y: -

2% for cereals and milk, -

1% for other products;. Netherlands:

1%

for cerealS,

6%

for

milk

, -0,

8% for other products). the loss of

income occurring b~ing compensated by national measures, with the financial particiPation of the Community.

(3) Including a drop in price for cereals and rape~seed of 1,

8%.

(4) For Greece

1983

/84

'. 19

81/8

2(5) Average obrained by weighting of national averages ac

col "

ing to the share of each Member St~te in the value of Community final ~9ricultural production

subject to common prices.

Table 10 - Income indicators for agriculture and the overall. econom

(average 1980-1933) .

. -. .. - ... .. - - - -..

IRL EUR

- .

Ag ri co l ture- GVA per holding- GVA per person

employed

61 7 2 \36,4\18, 3119 1\32 1120 715 3111

5\18, 6\11 6\13 9\ 5 91'3 9\ 5

- GVA per Annual~Iork Unit 0 \16 81,0 6114 81 5 5\14 , '1'0

Overa II Economy- GDP per person

employed .

. ..--

I??~ ~1!~,?l??! ?12!!~,1!9 21!~! ~.I~3 ~11?, ?19 4119

GVA ~ Gross Value AddedGDP = Gross DomE:st ic Product

- -. ...... .. -..---.--.-.---...... -.. - -. - - . - - - .. .. -.-...---

Source : EUROSTAT

Table 11- Gross val e. added (1) er annual work unit in agricu ltureon ECU. and on PPS. basis : Average- 1980-1983

Gross value IRL EUR 10

added per AHU

. . . .

on ECU bas i s-=1-:oocfTEU- Index EUR 10

= 100 108 102 212 162 "102 1ff3 136 100

.. . .. . .. . - . - -. - - - -

on PPS basis':-1. 000 PPS- Index EUR 10

= 1 104 187 158 101. 133 114 100

. - - - - - - - - . - - . -. - . - -. . .. . - -. ... . - ----

(1) At factor cost.

- -- . . - - . - . - - . - -. - -. - - - . -... - - - . . - . .. .. - . - . - - . -. - - - . . .. - -. . - - - - . . .. . . . . . . -. - .. - - - ... - . - - -. -- ' -. .... -

PPS : Purchasing Power Standards Source : EUROSTAT

Fi glAre 3

EVOLUTION OF REAL INCOMES IN THE GENERAL ECONOMY AND IN AGRICULTURE

130

120

(Average 1971 - 19-' - 19r1 = 100)130 110

120

110110

100 100

hlANCE

r'- ...

"" ........

7475767178790081 828384

130

120

74757671787900 8182 8384

130

120

100 .

7475767178790081 826384

140

110

100

7475767178798081 626364

130UNITED KINGOO.

110

100

BELGlQUE/ BELGm

7475 76 71 78 79 80 81 82 6364

140

120

100

74757671 787900 B1 626364

140

120120

100

7475767178 79 00 81' 62 63 64

General economy-tt Agricul ture

120

100

7475 76 7178 79 00 81 828384

110

110

100

74757671787900 81 B2 6384

120

100

Hilt IU

80 - t-J-I7.J 't:;, 76 71 JB79 eo 81 B2 83(YJ

AGRICULTURE = net va~ue added at factor cost per work unitGENERAL ECONOMY = net domestic product at factor cost per

person in employement. in real terms.

110

100

74757677 787fJ0081 B2 B3B4

Fi g

ure

4DISTRIBUTION OF AGRICULTURAL INCOMES (1) IN THE PROFESSIONAL HOLDINGS

I D

EU

TSC

HL

AN

D

0 ~

8 12 16 20 2~ 28 32 36 40

Inco

me/

AW

U (

'O

DD

EC

U)

!SS

LGIQ

UE

/8E

LGIE

!

0 ~

8 12 16 20 24 28 32 36 40

Inco

me/

AW

U (

1000 ECU)

60 %

I D

AN

MA

RK

50.

. ,---.---r---.-,--,

..-)o

0 ,

12 1

6 20

2~

28 ~2 36 ~o

Inco

me/

AW

U (

' U

UU

EC

U)

% of the total number of work units in each class of income

I FR

AN

CE

!

30- ~o

~ '

.0

0 4

8 12 16 20 24 28 32 36 40

IncO

me/

AW

U (

' U

UU

EC

U)

I L

UX

EM

BO

UR

G

IIT

AL

IA!

60 %0

4 12 16 20 24 28 32 36 40

Inco

meA

WU

(1000 ECU)

I U

NIT

ED

,(IN

GD

OM

I

0 4 8 12 16 20 24 28 32 36 40

Inco

me/

AW

U (

' 000

EC

U)

60 X

I N

ED

cRL

AN

D I

0 4 8 12 16 20 24 28 32 36 40

Inco

me/

AW

U (

'000 ECU)

I IR

EL

AN

D I

~o.

20' 0

4 8 12 16 20 24 28

3l

36 :0

Inco

me/

AW

U (

'O

DD

EC

U)

70 %

I H

EL

LA

S I

0 4

12 16 20 24 28 32 36 40

Inco

mel

AWU (' 000 ~CU)

I cU

R 1

0 I

0 4

8 12 16 20 24 28 32 36 ~O

Inco

me/

AW

U (

I D

OC

EC

U)

(1)

Net Value Added of the holding per annual work unit.

Sour

ce: F

ADN, accountancy results 1982/83 weighted on the basis of the structural survey 1975

50-

~c.

3C-

r-tw

;.0 ~ 8 12 16 20 24 28 32 36 I,Q

Inco

me/

AW

U (

' 000 ECU)

Tab le 1;2 C.....it1 re9i.", Oui. i.diu'... .F . '9ri..a... (1983)

-----"

I T,..l : GOP,... ,f I GVA,.p. .f ' 1"P.".I" .h,t. "....y '9ri"n... L,b"r f,r..

Rogi... rot., Occ.piod i, '9rl"lt... "",.Ioyed

1000 I Ird ECU 11000 ECU/h,b I Ird ECU I ~ GOP I 1000 I 1000 I I 1000 I A I.I loR DiUTSC.LAlD I 61'26 13t ~ 12.0 11.10 1, 21736 IA.. 5. laRA 6,8 I

ISC"IE$'!S, 'OIStElH 261\ 21,1 10,A 1,01 3, 1207 70 S, 89 1,3 I

I",".RG,"RE",.OERLIH I 4I0~ 69,6 16,6 0,15 0, 1902 16 0, 163 " 6 I

IHEC"SAC'SEH I 123" 7A,6 10,3 2," 3, 3209 220 6, 260 ".1 I

IKeRDRhElH.'ESIFAll' I 169~9 199.7 11,8 1,97 1, HA9 196 2, 591 8 3 I

IHESStH 55"1 12,9 13.0 065 0, 2553 97 3, ItS S 7 I

"'imAKO-PfAlZ 3621 38,9 10,7 0,81 2, 1615 90 5,6. 105 6,5 I

jetOiO.VOERm'OiRG I 92~9 1\5,2 12,5 1,66 I, A398 235 196 A A IIB"E'~ I 10925 12A,7 I1,A 3,OA 2, 5282 51A 9,1 297 6 I

ISAAR~"O 1057 1\,1 11,1 0,06 -D, A20 6 ..1. AO 9,5 ,

IrUeCE I 5.AAt 58A,A 10,7 20,75 3, 23198 1705 7, 1130 7 5 I

\ILE DE f.UCE I 10096 153,A -15,2 0,65 O, 5035 25 D, 2"A 5,6 I

ICHA..'GME-AROEHH I m9 IA A 10,7 1,51 10, 555 36 6, A4 7," I~:~"OIE I7A6 17,2 9,9 1,09 6, 709 58 8, 80 a,s I

IHAUIE-HORUH01Z I 1655 19,6 11,7 O,5A 2, 877 28 A, 85 9,6 IIcum 2212 22,9 10,1 1,49 8, 972 80 8, 62 6,A !

10'.SSE-HORHA,0IZ I 13S5 12,3 9,1 0,02 8, 818 112 18, A9 7,9 !!OOURGOG'Z I 1597 15,2 9,5 0,93 6. 623 71 11 , 48 1,7 I

IHORO-PAS-OE..f:ALAIS I 3931 37,2 9,5 0,80 2, 1548 71 4, 143 9,3 I

ILORSAI'! 23A2 23,3 9,9 0,43 1, 895 38 A, 71 7,9 I

IALSACE 1559 18 0 11,6 O,A3 2, 709 22 3, 40 5,6 I!HARC'E-CORTE 1082 11,2 10,A 0,28 2, 46A A6 9, 31 6,1 I

IpAYS CE LA 10lRE 2941 27,7 9,4 \,80 8, 125\ I5A \2, 102 8,2 I

18aEIAGKE 2712 23,7 8,7 1,60 1, 1148 198 17, 88 7,7 1IronOU-CS'REHTES I 1572 13,3 8,5 1,09 8, 591 7A 12. 55 9,3 I!A~UWI~E 266A 25,S 9,6 1,33 5, 106A 153 14, 92 6,6 I'OrOI-prelAEES 2316 19,9 8,6 1,33 ' 934 15A .16, 71 7,6 I

IUROUSI' 739 6,3 1,5 0,36 ' 266 Al '15, 17 6,4 I

iRHORE-ALPES 5038 53,A \0,6 1,22 2, 2232 120 5, I3A 8,0 I

I AO'rAGOf 1333 11,9 1,9 0,56 .A, 578 B6 -16. AI 7,IlARG~IOOC-'OOSSllLQ' I 1935 \5,9 8,2 1,30 8, 751 75 10, 7A 9,6 I

IpROnACI-AlPES-IOt! o'l2uR- eo~I AI91 A2,l \0,0 \,1" 2, 1578 SA 3, 159 !O.

Im.L1A I 56836 397,0 7,0 22,\5 5, 225AO 2A66 10, 1930 8.$ IIpn'O'TE 4479 38 3 8,6 1,46 3, 1975 172 8, ItA 7 1 iIv,.ltE O'AOSTA 113 1,1 10,0 0,03 2, A9 A 9, 2 1,$ IIllCaRIA \"07 15,7 6,7 O,A5 2, 596 50 8, 35 5,9 I

IlO'OAROIA 8922 8\,A B,I 1,93 2, 3793 131 3, 220 5,8 j

Itltatt'O- 'LTO AOIGE 077 8,1 7,7 O,AI 6, 366 AA 11, 17 A, I I!VlhUO 4304 31,7 7,3 1,87 5, 1819 180 9, 13A l A ,

If'IUU- nUlIA GI""A 1236 9,8 7,9 0,32 3, A89 3A 1, 33 7,7 t!IH1IU-RORAG.. 3910 3A,8 0,8 2,96 8, 1752 208 11, 116 6,7 IIlaSenA 3592 27,9 76 1,05 3, 1416 95 6, 124 e, l Ile"'IA 812 5,6 8,9 0,35 8, 326 30 9, 27 e,4 I

iRARCAE !A20 10,0 7,\ 0,83 6, 629 69 14, 37 6,0 IIIAlIO 9030 36,0 7.2 1,33 3, 1969 103 5, 155 7,6 1IC"PA'IA 5508 26,3 A, 91 2043 326 16, 266 \3,. I..RUZll 1226 7,0 5,1 0,57 8. A99 93 18, 38 7,7 I!HOcISE 330 1,7 5,0 0,15 9, 120 3A 28, 12 \0,0 t'POGII' 3901 19,1 4,9 2,2A 11, 1428 312 21, 152 10.6 I18'SIlIQU 613 3,0 A,B 0,27 8, 231 80 20, 27 11,8 IIc."," I' 2018 8,9 A,3 1,05 11, 720 138 19, 95 13,ISJCll1l. A9S0 23,9 l,8 2 51 10, 1677 297 17, 198 11,6 1

f"ROEO.~ 1606 6.0 5.0 0,00 7, 56A 68 12,0 -

~_.

WOi~IIRO lOSS !l8,S 10,3 6,20 A, 56\8 265 4 7 .6;7 lI.I ._19~!'! u:r-BElGlf 9856 90.1 9,1 2,00 2, 3867 112 2, ISO tt,

LUrEMOlCG (G"""D~eHt) -I 366 3,6 9,8 0,09 2, 150 7 4,6 5 L 1

. 10Rmo (lOOOES , 56177 511,A 9,1 8,38 1, 26293 5A8 2, 2861 10,9 II-ORI, ' 3110 25,8 8 3 0,10 \, 1A03 17 1, 200 14,1 I

IrO"SHIH Ale HUXoERSID, I 49h 396 7,9 0 79 2, 22i5 46 2, 267 11,luSI 'iDIAKOS 3055 31,2 8.1 0,74 2, 182" 48 2, 115 9,IE'ZI""lk 19\) 15,2 7,9 0,61 5, 915 46 5, 74 8,I$O"T" €IS! I \1018 \69.3 9,9 1.29 0, 6265 94 1, 661 6,IsOOTH"SI 1I01 3S,5 8,\ 1,07 3, 2016 87 4 111 t,"rs! klOU'DS 518\ 39,1 7,5 0,65 1, 2A23 40 1 329 13,1.0Rl. '151 . I 6136 53,S 8,3 0,39 0, 2956 35 1, AOO 13,I"us 2609 22,4 6,0 0,62 2, !l8, A3 3, 158 \3,~"I"D 5110 1I,6 6,6 1,20 2, 2305 57 2, 3\0 \3.j"'T"I", 1"1"0 IS09 10.5 6.7 O,ll 3, 616 36 5,

,__.~--

A'U 3506 70.2 5," 1.79 8, 1312

,_.

' 169(280) 1~ 4(21.Q) I" lA.

I~~'~511\ 63.t 11,A 2,55 ~, 260~ ISS 5. 2&0

!,-

I::;~CE 9050 . II,B 4 0 5,A2 13, 3807 102A 26, 3)2 8.~'J

:::;:~:

319" 11,1 3,6 2,14 "2I, 2965 440 1A,~R"1! . . 5eOD 21,B A,3 2,t3 9, 565 A61 -, 81,I " ,ISlA.

IDS I' 052 2, - 3 2. 0,56 . ~a, 270 122 A3,

. ---.--...-----

--1..-

-----,---'-----~' .,..---..-... ---"--.---..---

Sourrp : F!JRO!':TIIT

1 An..,1 wonunits

1051.52.

171.131.73.88.

188.352,

18\727,57,55,39.98.93.73,62.\6,35,3',

166.171.103.157.15\.53.

1\0.79.

1048\.

1000

2m.IS0,

\3.1'2.52.

186,\3.

194.129.\2.78.

131.2\1,80.26.

190,\4.95,

204,12.

242,

123,

5.2.28.\2,\5,\8,79.

\5.28,54,72.57.

310,

171.

8'309.255,1'5,

I .I Honbor ofI ho141n9'

Uti Ii". I Gro" ..100 I Gro.. "I..I 09rico1toul I 04'0. per I "40' per

t or.. (UAA) I annoo1 vork I bo141n9

onit I

-~ l'n.oo1 "rk ! CU",: UU

'" :

! onits ,or I ho10in9 ! ..".1 II bo1din9 I I .ork I

I oni' !h""", bo"""---"1

12 I21 I

18 I13 tII t9 I9 t10 I1\

8 I8 i

1\ \

1 Gr,.. .0100I ad40d ,I b"hre

(OU)

loDe

849.35.

129.107.68.

152.274.

1255.11,35,27,28,85,64,46.38,33,27,

110,118,69,97,

104.36,

110,56,83,56,

2832,193,

50,142.50.

217,58.

165,129,

80.197,257105,42,

329,75,

180,385,108.

122121101

27501671

797760

15323496

19278601

15021361

824251613761799

8961125

337691

24191861182915792\71920

171515971058623123

158581224

1141151

407906268

12721008

563

7295262G3

1498639753

17221453

148 2037

r------I Gro" ..100I oddod of. R09ions I A9rl..1 toreI (at factor

c",,1Mrd ICU'

18R OEOIStHl"O 1 9, 962

!5CHlE5WIG-HOLSIElN I 0, 895

1""SURG,6REMEN.SERllN I 0, 1'7

IWOE'SACHSE' I 2. 000

l'Ona'HUH. wESlfALl' I 1. 660IHESSU I 0, 600

jRHU4lAOO.PfAl2 I 0, 100

18,"Eh. 'CERfm8ERG I 1, 33618AYU' I 2,573

SA1RLAND

lfR'~CE I IS, 600

IILE 01 fRANCE I 0,559

IC...PACNE-AROEMME I 1, 259IplCIROIE I 0,888

i"AUIE.RO"ANOIE I 0,425ICrulRE I 1, 283

ICASSE.NORMUOTE I 0,895

ICO~,"OGkE I O,C52

INORo.-PAS-OE~.AlUS I 0, 623IloR~uNE I 0,443IAtSACE I 0, 363

IfRANCHE.COHIE I 0,260

IPA~SOElAlOIRE 1 \33

18RElACK( I 1.235

IpOIIOU.CHAREUES I 0, 681IADUIIIIXE I 0.881

IUOI-P~RENEES I 0,913luKCosl' I 0.283

IRHIM-""S I 1, 033

IAUVERC" I 0, '89

l"kCOWOC.ReIJSSillON I I,OR1

IPROVEXCE.AlPES~COTE O'AI'IR 1 0. 865

CORSE 065

11!I.lU (1982) 1 18, 291IplUORTE I 1, 1l0

IVIll! O'AOST/. I 0, 019IUGGRU t 0. 3)2

IlC'SARll1l I 1, 624

IIH.mO.ALTO AUlGI I 0 34SIvmlo I 1,625

If.IUU.VEREllA GIUl EA I 0, 266

IE'IlI/.SO",'" I 2,411II0SCAhA I 0, 832IlI,eRiA I 0,290"'RCHE I 0, \98IlAlI0 I 1.054ICANPmA I 1, 588IACRa7!l t 0,516I'OUSE I 0. 123IpUGUA I 2,09&laASIltCAU I o, 3i2ICA"SREA I 0, 189I5!CIltA I 1, 98'

P"'Of"'A\10

1'IOERIA.O

000

8HGIOUI-6fU1E ~_!,~11

~UXURGU~G (C",,:o.-IIIICHE)

\--2016

IOUIED 'IK;O~R I S, 907I'ORIH I 0. 318

I~OR"HIRE .sO HUN31RSIOE I 0. 613

IEISI 'IDlA'~S I O,lEAST HGUA I 0, 108

IsOOTIl E/.:;r I 1, 150IsoulII VfSI 1 0.895I.ESI 'W,ANOS I O, SlOIRO"1H'E51 1 301l"U5 I 0, 465. ISCOILIRO I 0. 922'001"' 5' 1" "0 311

i.!J1~.1.213

11.tIlE~~5:;EEcE (19231 I 4"'. CRHCE 2 019jsOU," "lICE I 1 :27.

tEE1E'lSlI"O~ I 0. '1'

."---.. ----- --------

1...-----. _n______--.--

.__.-~-

1IS, g21

\30

268,12,

19,

36,21,

31,31,'0.

17098103710871224979

16"1796

959450

1\5654511015

213, 50'9

112, 2,70

9584S7

190,

34"g4'13451;54

17,21,11,12,

10,

20,22.16.10,13,

11,10,

10,

10,1~,

11.

12.

11,

16,

14,

11,11,14,1\,

10,11.10,

12,

11.

11,25.44,15.IS,

13,-\9.

3',31,15,19.10,18.16,13,13,10,13.10,

13,15,

- 2.

810610

49307309907507908707'0120

570930810ISO520500510470700390

1080380590660370560370310800310

10301390530

11,

1150920200

29101410860

1790990

1900830680880

12502180

980470

1\00490

10501150

320

1960

1270

560

\00310560540720700500560170330170310

260

650

123014001350

1;7(;

26,

15,

14.

25,25,33,34,'8,41.23,25,21,15,29.

15.

21;

eJ.

175

--2'._ 1)".

..--------.----.-----.--.

Source: EUROSTAT

M ~.

,..".

.... " -

..I;'f

/',.' .

. "

......

., ...

.(

' 4'

, ,

~' .t '

" .

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to .

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: ::1

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.

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ome

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AW

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0( . 60

6Oi8

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i109

110 i 149

=- 6150

Information judged insufficiently representative

.. ,-

- . -..

...

(1) Farms

net

value added / annue~,

":.o

~~_

lt --

---.

.. .._

--

~-~~

-_...

SO

UR

CE

FA

DN

198

2/83

res

ults

wei

ghte

d on

the

basi

s of

the

1975

str

uctu

ral s

urve

y

..; "I:

1:1

MAP 2

Regions with a low level of GDP and ahigh proportion of agricuLtural employment

GDP/inhab.~ 70

70 -: 100

others

Share of agr . eupl. :;.. 100

. ~

tOO 0II1J

fUR 10 = 100

(:,~~

fS3

---~ -.-

Source : The regions of Europe, periodic report on the socio-economicsituation and trends in the regions of the Community.

MAP 3

Regional.unemployment rates, 1983

fUR (9), = 10, 9 X

Sma tIer t;:n ~ ,

:::

,... 10, 9 - 11.

Greater than 1/.,.fl5

= 3,

...-()

ft E1

-==::- -:':::': --- =:-::_ .:: :.:;;=--;:-::;=-. - -

..1;-

-"'----~-" '--- -----~-------'- ._.__.

GreeceData notava i lZlble

...

t:?

' ;'.

. . 11 ,

(t" .

" . .

Note: Eurostat estimations based on the sample survey of the labour forcein 1981 and registered unemployment up to Apri l 1983.

Source : See Map 2.

MAP It

:v01ution 01 population of active age 1980-1990

Tot;l ch2r:Y': ln % o~ the population of 15 to 59 years in absence Qf migration

EUR 10 == 3,6 %

G- r:J\

~.

Greater than ::J.CL:-

?, 1,

::-

Less than -0,

Standard :: 4,deviation

,tfJ

---- ------

Sour~ : Netherlands Economic I rJ..st5tlltc .WEn

.. ~~~

Map 2. .