REPORT on the proposal for a Council regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards the support scheme for cotton

22.4.2008 - (COM(2007)0701 – C6‑0447/2007 – 2007/0242(CNS)) - *

Committee on Agriculture and Rural Development
Rapporteur: Ioannis Gklavakis

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a Council regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards the support scheme for cotton

(COM(2007)0701 – C6‑0447/2007 – 2007/0242(CNS))

(Consultation procedure)

The European Parliament,

–   having regard to the Commission proposal to the Council (COM(2007)0701),

–   having regard to Article 37(2), third subparagraph of the EC Treaty, pursuant to which the Council consulted Parliament (C6‑0447/2007),

–   having regard to Rule 51 of its Rules of Procedure,

–   having regard to the report of the Committee on Agriculture and Rural Development (A6‑0166/2008),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4.  Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5.  Instructs its President to forward its position to the Council and Commission.

Amendment  1 Proposal for a regulation – amending act Recital 2
Text proposed by the Commission	Amendment
(2) By judgement of the Court of Justice of the European Communities of 7 September 2006 in case C‑310/04 Chapter 10a of Title IV of Regulation (EC) No 1782/2003 was annulled for breach of the principle of proportionality, in particular with reference to the circumstance that "the Council, the author of Regulation (EC) No 864/2004, [had] not shown before the Court that in adopting the new cotton support scheme established by that regulation it actually exercised its discretion, involving the taking into consideration of all the relevant factors and circumstances of the case, including all the labour costs linked to cotton growing and the viability of the ginning undertakings, which it was necessary to take into account for assessing the profitability of that crop" and that the Court had not been enabled "to ascertain whether the Community legislature [had been] able, without exceeding the bounds of the broad discretion it enjoys in the matter, to reach the conclusion that fixing the amount of the specific aid for cotton at 35% of the total existing aid under the previous support scheme would suffice to guarantee the objective set out in recital 5 in the preamble to Regulation (EC) No 864/2004", namely to ensure the profitability and hence the continuation of that crop, an objective reflecting that laid down in paragraph 2 of Protocol No 4. The Court also ordered that the effects of the annulment be suspended until the adoption, within a reasonable time, of a new regulation.	(2) By judgement of the Court of Justice of the European Communities of 7 September 2006 in case C‑310/04 Chapter 10a of Title IV of Regulation (EC) No 1782/2003 was annulled for breach of the principle of proportionality, in particular with reference to the circumstance that "the Council, the author of Regulation (EC) No 864/2004, [had] not shown before the Court that in adopting the new cotton support scheme established by that regulation it actually exercised its discretion, involving the taking into consideration of all the relevant factors and circumstances of the case, including all the labour costs linked to cotton growing and the viability of the ginning undertakings, which it was necessary to take into account for assessing the profitability of that crop" and that the Court had not been enabled "to ascertain whether the Community legislature [had been] able, without exceeding the bounds of the broad discretion it enjoys in the matter, to reach the conclusion that fixing the amount of the specific aid for cotton at 35% of the total existing aid under the previous support scheme would suffice to guarantee the objective set out in recital 5 in the preamble to Regulation (EC) No 864/2004", namely to ensure that the amount of the specific aid for cotton is calculated in such a way as to create economic conditions which will enable cotton-growing to continue in the regions suited to that crop and prevent the replacement of cotton by other crops.
Justification
En el punto 100 de la Sentencia C-310/04 se recoge el literal propuesto, y expresa el término exacto de la concreción del objetivo del Protocolo. Es un hecho que el régimen en vigor ha provocado en España un descenso del 30% de la superficie sembrada de algodón, y que por tanto se ha producido la sustitución del algodón por otros cultivos al dejar de ser rentable la siembra con el importe de la ayuda especifica fijada en el 35%. Por tanto, los instrumentos propuestos (65% de ayuda desacoplada y 35% acoplada) no garantizan que se evite su sustitución por otros cultivos, que es el objetivo de este régimen de ayudas No se trata, de mantener cualquier nivel de ayuda especifica, sino aquel que permita mantener la superficie en cultivo.
Amendment    2 Proposal for a regulation – amending act Recital 3
Text proposed by the Commission	Amendment
(3) A new scheme of specific payment for cotton needs to be adopted in conformity with the Court's judgement in case C‑310/04.	(3) A new scheme of specific payment for cotton needs to be adopted in conformity with the Court's judgement in case C‑310/04 – a scheme which, pursuant to the description given in the Court’s judgment and to the objective formulated in recital 5 of Regulation No 864/2004, should lead to profitability which will enable cotton-growing to continue on a sustainable basis.
Justification
Emphasis is once more placed on the need for the new proposal for a Regulation to ensure that cotton-growing is viable and sustainable.
Amendment  3 Proposal for a regulation – amending act Recital 3a (new)
Text proposed by the Commission	Amendment
	(3a) Cotton is grown mainly in regions whose gross domestic product is amongst the lowest in the Union and whose economy is closely linked to agriculture. In such regions, cotton-growing and the related ginning industry are prime sources of income and employment, accounting in certain cases for over 80% of activity in the area in which they are established. Furthermore, soil conditions in certain areas are such that, from an agronomic point of view, no alternative crop can be established in the short term.
Amendment    4 Proposal for a regulation – amending act Recital 3b (new)
Text proposed by the Commission	Amendment
	(3b) The current cotton-aid scheme is highly specific in nature. Its roots lie in the Accession Treaties relating to Greece, Spain and Portugal and one of its objectives is to support cotton production in certain Community regions which are now dependent on that crop, to provide the producers concerned with a fair income and to stabilise the market.
Amendment  5 Proposal for a regulation – amending act Recital 4
Text proposed by the Commission	Amendment
(4) The new scheme should meet the objectives, set out in paragraph 2 of Protocol No 4 on cotton annexed to the Act of Accession of Greece (‘Protocol 4’), to support the production of cotton in regions of the Community where it is important for the agricultural economy, to permit the producers concerned to earn a fair income, and to stabilise the market by structural improvements at the level of supply and marketing.	The new scheme should meet the objectives, set out in paragraph 2 of Protocol No 4 on cotton annexed to the Act of Accession of Greece (‘Protocol 4’), to support the production of cotton in regions of the Community where it is important for the agricultural economy and the social structure, to provide the producers concerned with a fair income, and to stabilise the market by structural improvements at the level of supply and marketing.
Justification
Además de los aspectos económicos que son de gran importancia, el algodón es en muchos casos un cultivo muy extendido en ciertas zonas rurales en las que tiene una notable relevancia para el mantenimiento del tejido social de la zona. Por lo que el abandono del cultivo en dichas zonas, así como la imposibilidad de introducir otro cultivo en la rotación, podría causar una desintegración de la estructura social de dichas zonas. Se justifica además en que los términos propuestos en la enmienda son los términos exactos que figuran en el Protocolo y se considera que los propuestos por la Comisión minusvaloran las verdaderas intenciones del Protocolo. No es lo mismo apoyar que sostener.
Amendment  6 Proposal for a regulation – amending act Recital 5
Text proposed by the Commission	Amendment
(5) All the relevant factors and circumstances pertaining to the specific situation of the cotton sector, including all the elements necessary to assess the profitability of that crop, should be taken into consideration. To this end, an evaluation and consultation process was launched: two studies were carried out on the socio-economic and on the environmental impact on the cotton sector in the Community of the future cotton support scheme and specific seminars and an internet consultation were organised with stakeholders.	(5) All the relevant factors and circumstances pertaining to the specific situation of the cotton sector, including all the elements necessary to assess the profitability of that crop, should be taken into consideration. Cotton is grown in regions which still quality as convergence-objective regions for the 2007-2013 period and which have an essentially agricultural economy with few alternative crops. Furthermore, cotton-growing and the associated agri-industry are a major source of employment and wealth in those areas. Hence an evaluation and consultation process was launched: two studies were carried out on the socio-economic and on the environmental impact on the cotton sector in the Community of the future cotton support scheme and specific seminars and an internet consultation were organised with stakeholders.
Amendment  7 Proposal for a regulation – amending act Recital 6
Text proposed by the Commission	Amendment
(6) The de-coupling of direct producer support and the introduction of the single payment scheme are essential elements in the process of reforming the common agricultural policy (CAP) aimed at moving away from a policy of price and production support to a policy of farmer income support. Regulation (EC) No 1782/2003 introduced those elements for several agricultural products.	(6) Regulation (EC) No 1782/2003 introduced the de-coupling of direct producer support and a single-payment scheme for several agricultural products.
Justification
Este fue el texto que se propuso en el informe del PE en la reforma de 2003. La propuesta de la Comisión considera la disociación de las ayudas como un elemento fundamental del proceso de reforma de la PAC, pero ello no puede suponer la desaparición de un cultivo como el algodón, tan importante para la economía de las zonas productoras. Es cierto que la disociación se ha establecido en muchos sectores, pero también lo es que en otros muchos no se ha hecho y además no tenían un protocolo específico de ayuda. El caso más reciente es el lino y el cáñamo en el que para asegurar su aprovechamiento como fibra textil, se mantiene la ayuda acoplada a la producción y una ayuda especifica a la industria para la transformación. Este régimen que debía haberse reformado en 2003 esta siendo prorrogado desde entonces y la última vez ha sido hace dos semanas, para 2009.
Amendment  8 Proposal for a regulation – amending act Recital 8
Text proposed by the Commission	Amendment
(8) A complete integration in the single payment scheme of the support scheme in the cotton sector is likely to bring a significant risk of production disruption to the cotton producer regions of the Community. Part of the support should therefore continue to be linked to the cultivation of cotton through a crop-specific payment per eligible hectare. Its amount should be calculated in such a way so as to achieve the objectives set out in paragraph 2 of Protocol 4 while also bring the cotton scheme into the mainstream of the CAP reform process and simplification. To that end, in the light of the evaluation carried out, it is justified that the total available aid per hectare per Member State is set at 35% of the national share of the aid that went indirectly to the producers. Such a rate allows the cotton sector to move towards long-term viability, promotes the sustainable development of the cotton-producing regions and ensures a fair income to farmers.	(8) A complete integration in the single payment scheme of the support scheme in the cotton sector is likely to bring a significant risk of production disruption to the cotton producer regions of the Community. Part of the support should therefore continue to be linked to the cultivation of cotton through a crop-specific payment per eligible hectare. Its amount should be calculated in such a way so as to achieve the objectives set out in paragraph 2 of Protocol 4 while also bring the cotton scheme into the mainstream of the CAP reform process and simplification. To that end, in the light of the evaluation carried out, it is justified that the total available aid per hectare per Member State is set in line with the Member State’s wishes and at no lower than 35% of the national share of the aid that went indirectly to the producers, in line with subsidiarity. Such a rate allows the cotton sector to move towards long-term viability, promotes the sustainable development of the cotton-producing regions and ensures a fair income to farmers.
Justification
Where Member States consider that the viability of their ginning plants depends on the amount of coupled support, they should be able to choose to receive a different percentage of this aid, which must not, however, be lower than 35%.
Amendment  9 Proposal for a regulation – amending act Recital 9
Text proposed by the Commission	Amendment
(9) The remaining 65% of the national share of the aid that went indirectly to the producers should be available for the single payment scheme.	(9) The remaining percentage of the national share of the aid that went indirectly to the producers (which would be between 20% and 65%) should be available for the single payment scheme.
Justification
If the Member States take the view that the sector's viability depends upon the percentage of de-coupled aid, they should be able to select some other percentage different from the single payment, which may not exceed 65% or be less than 20%.
Amendment  10 Proposal for a regulation – amending act Recital 10
Text proposed by the Commission	Amendment
(10) For environmental reasons, a base area per Member State should be established in order to limit the areas sown under cotton. In addition, the eligible areas should be restricted to those authorised by the Member States.	(10) A base cultivation area per Member State should be established, with priority to be given to traditional growing areas in order to ensure that cotton-growing continues in areas in which cotton production is of particular importance to the agricultural economy. In addition, the eligible areas should be restricted to those authorised by the Member States.
Justification
Environmental protection should not be cited as an argument for reducing the area used for growing cotton, since much cotton-growing now proceeds on the basis of systems (such as integrated production) which are environmentally sound. There are in any case other significant reasons (budgetary ones, for example) for restricting the size of growing areas.
Amendment  11 Proposal for a regulation – amending act Recital 10 a (new)
Text proposed by the Commission	Amendment
	(10a) The extent and, therefore, the amount of coupled aid granted to farmers should be adjusted on the basis of information about the current situation, while maintaining the sector’s financial neutrality.
Justification
It is a good idea to make adjustments based on information about the current situation in the sector, so as not to disadvantage farmers and to avoid any loss of income by the cotton-growing sector.
Amendment  12 Proposal for a regulation – amending act Recital 10 b (new)
Text proposed by the Commission	Amendment
	(10b) Since there are few possible substitutes for cotton-growing, aid schemes must be introduced which will ensure that cotton-growing is profitable and that it continues in the Union's producer regions. For this reason the Member States should be able to increase non-decoupled aid in cases where the area under cultivation is smaller than the base production areas (although such action must be financially neutral and a ceiling must be established for the amount of aid paid to farmers).
Amendment  13 Proposal for a regulation – amending act Recital 11
Text proposed by the Commission	Amendment
(11) In order to meet the needs of the ginning industry eligibility for the aid should be related to a minimum quality of cotton actually harvested.	(11) In accordance with the subsidiarity principle the Member States should set the level of coupled aid between the above-mentioned limits and they should also establish the minimum quality of cotton actually harvested, so that farmers can avail themselves of that aid.
Justification
In order to ensure that cotton-growing continues and that the ginning industry is supplied with high-quality cotton, the Member States must be allowed to set the level of coupled aid and also stipulate the quality criteria which farmers must satisfy in order to secure access to the aid. If the Member States do not have such an option, the obligation to harvest cotton plantations will simply make farms less profitable.
Amendment  14 Proposal for a regulation – amending act Recital 11a (new)
Text proposed by the Commission	Amendment
	(11a) In view of the downward trend in the Member States' cotton production, the ginning industry has entered a restructuring process which should be accompanied by appropriate support measures designed to ensure that units which are forced to redirect their production activity experience a smooth transition. For this reason a restructuring fund, financed out of the budget for the COM in cotton could be set up.
Amendment  15 Proposal for a regulation – amending act Recital 12 a (new)
Text proposed by the Commission	Amendment
	(12a) Being able to adopt support measures that will boost competitiveness is becoming important. Those measures should be defined and financed by the Community. It is up to the Member States to choose those measures they consider effective and well-suited to the nature of their respective regions and to incorporate them into their national support programmes.
Justification
The creation of a ‘national envelope’, which will comprise a series of measures from which the Member States will be able to choose those they consider the most useful, following the model of the COM in wine and the COM in fruit and vegetables, appears necessary if we are to strengthen the competitiveness of Community cotton production.
Amendment  16 Proposal for a regulation – amending act Recital 12 b (new)
Text proposed by the Commission	Amendment
	(12b) National support programmes should be financed mainly from funds transferred pursuant to Article 69 of Regulation (EC) No 1782/2003 and from non-absorbed funds originally earmarked as non-decoupled aid.
Justification
Pursuant to Article 69, funding can already be provided for certain measures designed to improve quality and modernise production, hence that Article could be used in order to cover the national programmes proposed by the rapporteur.
Amendment  17 Proposal for a regulation – amending act Recital 12 c (new)
Text proposed by the Commission	Amendment
	(12c) The financing of national support programmes should be provided by means of a percentage of coupled support and by appropriations that, owing to the reduction in the area of land used for growing to less than the size of the base area, are not used as coupled support, so as to preserve the sector’s financial neutrality.
Justification
The financing of the ‘national envelope’ should not place a burden on the Community budget but should result from savings made in the sector.
Amendment  18 Proposal for a regulation – amending act Recital 12 d (new)
Text proposed by the Commission	Amendment
	(12d) The measures that may come under the national support programmes should include those aimed at restructuring varieties, modernising production in order to boost the competitiveness of the cotton sector, supporting environmentally friendly growing methods, promoting research focused on the creation of improved-quality varieties, along with promotion measures and measures designed to modernise ginning plants.
Justification
The list of measures that can be financed by the 'national envelope' should include measures to strength the viability and competitiveness of Community cotton production.
Amendment  19 Proposal for a regulation – amending act Recital 12 e (new)
Text proposed by the Commission	Amendment
	(12e) In order to encourage the production of high-quality cotton, a quality premium should be established under the national support programmes. That premium should be linked to the financing of the measure aimed at improving the quality of cotton and be granted to farmers who develop a product of exceptional quality, in line with criteria laid down by the Member State in question, in order to improve production as regards quality and to boost the competitiveness of Community cotton.
Justification
Support for high-quality cotton production could be financed by a ‘national envelope’ that takes account of and rewards farmers’ efforts.
Amendment  20 Proposal for a regulation – amending act Recital 12 f (new)
Text proposed by the Commission	Amendment
	(12f) On the basis of Regulation (EC) No 864/2004, which is being repealed, it has been proposed that the sum of EUR 22 000 000 (representing 2.74% of the aid) be transferred to the second pillar and be focused on the restructuring of cotton-producing regions. In order to make the best use of the appropriations for the sector, it would be advisable for that amount to be transferred to the first pillar and to be incorporated into the financing of the national support programmes.
Justification
The sum of EUR 22 million comes from the first pillar and should remain under this pillar so that this funding can be put to the best use through the national support programmes.
Amendment  21 Proposal for a regulation – amending act Recital 13 a (new)
Text proposed by the Commission	Amendment
	(13a) The provisions concerning cotton should remain in force until 2013.
Justification
The new support scheme for cotton should not be subject to another revision by 2010 as provided for under Article 155(a) of Regulation (EC) No 1782/2003. Community cotton farmers should be able to benefit from a stable regulatory framework in order to be able to plan their activities.
Amendment  22 Proposal for a regulation – amending act Recital 13 b (new)
Text proposed by the Commission Amendment   (13b) In the period since the reform of the cotton sector which was approved in 2004 and nullified by the European Court of Justice (Decision C-310/04) has been in force, production has decreased considerably and all of the parties involved have consequently suffered economic loss – a loss which should be duly assessed in order to enable compensation for the losses incurred to be granted.
Amendment 23 Proposal for a regulation – amending act Recital 13 c (new)
Text proposed by the Commission	Amendment
	(13c) In order to facilitate the transition from the previously established cotton-aid scheme to the scheme established under this Regulation, action will have to be taken in order to restructure the ginning sector.
Justification
Even though there has been an improvement in the coupled-aid coefficients, it is clear that there will be no return to the production levels achieved prior to the reform which came into force in 2006. The Commission's acknowledgement of the damage caused to the industry and the need for ginning capacity to be tailored to the new situation make it necessary – and rightly so – for specific industry-restructuring measures to be adopted, just as similar arrangements have been made in (amongst others) the sugar and fisheries sectors.
Amendment  24 Proposal for a regulation – amending act Article 1 Regulation (EC) No. 1782/2003 Article 110a – paragraph. 1a (new)
Text proposed by the Commission Amendment   A percentage of the aid may be used for measures which promote the sustainability of the sector based on specialised programmes under national schemes submitted by the producer Member States and approved by the management committee procedure. Such programmes may include crisis prevention and management policies as well as measures to enhance the sustainability of the sector which are not covered by rural development.
Justification
The provisions of protocol 4 of the Act of Accession of Greece to the EU justifies taking special measures in the cotton sector to promote sustainable production in view of the importance of the sector for some regions of the EU.
Amendment  25 Proposal for a regulation – amending act Article 1 Regulation (EC) 1782/2003 Article 110b (paragraph 2a new)
Text proposed by the Commission Amendment   2a. Producer Member States may lay down additional terms and conditions relating to the sowing, growing, harvesting and delivery of cotton to ginning industries with a view to enabling cotton-growing to continue in production areas and to prevent it from being replaced by other crops.
Justification
This wording serves to introduce the necessary condition for applying subsidiarity in whatever Member State requires it.
Amendment 26 Proposal for a regulation – amending act Article 1 Regulation (EC) 1782/2003 Article 110c – paragraph 1 – indent 2
Text proposed by the Commission Amendment – Greece: 370 000 ha, – Greece: 270 000 ha,
Justification
On account of the future reduction in cotton-growing in Greece, the base area under cultivation must be set at 270 000 hectares and the amount of the aid must be adjusted accordingly.
Amendment 27 Proposal for a regulation – amending act Article 1 Regulation (EC) 1782/2003 Article 110c – paragraph 2 – indent 2
Text proposed by the Commission Amendment – Greece: EUR 594 for 300 000 hectares and EUR 342.85 for the remaining 70 000 hectares, – Greece: EUR 750 upwards,
Justification
On account of the future reduction in cotton-growing in Greece, the base area under cultivation must be set at 270 000 hectares and the amount of the aid must be adjusted accordingly.
Amendment  28 Proposal for a regulation – amending act Article 1 Regulation (EC) No 1782/2003 Article 110 c – paragraph 3
Text proposed by the Commission Amendment 3. If the eligible area of cotton in a given Member State and in a given year exceeds the base area laid down in paragraph 1, the aid referred to in paragraph 2 for that Member State shall be reduced proportionately to the overrun of the base area. However, for Greece the proportionate reduction shall be applied in respect of the amount of the aid fixed for the part of the national base area composed of the 70 000 hectares in order to respect the global amount of EUR 202,2 million. 3. If the eligible area of cotton in a given Member State and in a given year exceeds the base area laid down in paragraph 1, the aid referred to in paragraph 2 for that Member State shall be reduced proportionately to the overrun of the base area.
Justification
Given that in the case of Greece a single amount per hectare will apply to the whole of the base area, the second paragraph appears unnecessary.
Amendment 29 Proposal for a regulation – amending act Article 1 Regulation (EC) 1782/2003 Article 110c – paragraph 3 a (new)
Text proposed by the Commission Amendment   3a. Where the admissible cotton area in a given Member State is smaller than the base area established in subparagraph 1, the aid referred to in subparagraph 2 for that Member State shall be increased in proportion to the base area which has not been covered, up to a ceiling established by means of the procedure laid down in Article 144. Any saving brought about by a fall in production shall be allocated to the national support programmes.
Justification
The revision of the scheme applicable to the cotton sector would serve to improve Community producers' profitability within the limits laid down in accordance with the principle of budget neutrality. For this purpose, it is proposed that the coupled aid should be increased if the guaranteed area is not reached. The amount of aid would, however, be limited by the Management Committee, although any savings stemming from a reduction in the size of the planted area should be reinvested in the COM in cotton.
Amendment  30 Proposal for a regulation – amending act Article 1 Regulation (EC) No. 1782/2003 Article 110d – paragraph 1, indent 5 a (new)
Text proposed by the Commission Amendment   – adopting market-crisis management measures.
Amendment  31 Proposal for a regulation – amending act Article 1 Regulation (EC) No 1782/2003 Article 110(ea) (new) – Paragraph 1 (new)
Text proposed by the Commission Amendment   Article 110(ea)   National support programmes   1. National support programmes shall be established for the purpose of improving competitiveness. The Community shall determine and shall finance the eligible actions. The Member States shall select whatever package of measures they consider effective and which are best suited to their regional particularities. That package could include a restructuring fund for the ginning industry.
Amendment  32 Proposal for a regulation – amending act Article 1 Regulation (EC) No 1782/2003 Article 110 e a (new) – paragraph 2 (new)
Text proposed by the Commission Amendment   2. The national support programmes shall be financed by means of a minimum basic rate of 1% of the overall amount of coupled support. Appropriations unused under coupled support because of the reduction in growing areas to less than the size of the base area of each Member State shall be added to this amount.
Justification
The national envelope will be financed by retaining a percentage of the coupled support and by appropriations unused under coupled support because of the ongoing reduction in each Member State of the area of land used for cotton-growing to less than the size of the base area.
Amendment  33 Proposal for a regulation – amending act Article 1 Regulation (EC) No 1782/2003 Article 110 e a (new) – paragraph 3 (new)
Text proposed by the Commission Amendment   3. The national support programmes shall include the sum earmarked for the restructuring of cotton-producing regions, which comes to EUR 22 000 000 (i.e. 2.74% of aid) and which had been transferred to the second pillar.
Justification
The sum of EUR 22 million comes from the first pillar and should remain under this pillar so that this funding can be put to the best use through the national support programmes. On the basis of Regulation (EC) No 864/2004, which is being repealed, it had been proposed to transfer this amount to the second pillar.
Amendment  34 Proposal for a regulation – amending act Article 1 Regulation (EC) No 1782/2003 Article 110 e a (new) – paragraph 4 (new)
Text proposed by the Commission Amendment   4. At the Member States’ discretion, measures may be financed under the national support programmes that aim to offset the effects of a possible fall in production and to restructure varieties, along with measures to modernise production in order to improve the competitiveness of the product. Support shall be granted for environmentally friendly growing methods in order to ensure a more rational use of water resources and to minimise the use of plant-health products, research aimed at creating improved-quality varieties shall be encouraged and restructuring and the modernisation of ginning plants shall be promoted. Member States may grant a quality premium to farmers who develop a product of exceptional quality, on the basis of specific criteria laid down by the Member States.
Justification
The list of measures eligible for funding under the ‘national envelope’ should include measures to strengthen the viability and competitiveness of Community cotton production. In particular, the production of high-quality cotton could benefit from funding that would reward farmers’ efforts, placing emphasis on the environmental aspect of cotton-growing.
Amendment  35 Proposal for a regulation – amending act Article 1 Regulation (EC) No. 1782/2003 Article 110e a (new) – paragraph 5 (new)
Text proposed by the Commission Amendment   5. Policies may be funded under the national support programmes to forecast, mitigate and combat the effects of climate change on cotton-producing regions.
Amendment  36 Proposal for a regulation – amending act Article 1, point 1 a (new) Regulation (EC) No 1782/2003 Article 143 d
Text proposed by the Commission Amendment   (1a) Article 143(d) is deleted.
Justification
The sum of EUR 22 million, which corresponds to 2.74% of support, comes from the first pillar and should remain under this pillar so that this funding can be put to the best use through the national support programmes.
Amendment  37 Proposal for a regulation – amending act Article 1, point 1 a (new) Regulation (EC) No 1782/2003 Article 155 – point a
Text proposed by the Commission Amendment   Article 155(a) is replaced by the following text: ‘By 31 December 2009 at the latest the Commission shall submit a report to the Council on the implementation of this Regulation with regard to [...], olive oil, table olives and olive groves, tobacco and hops, accompanied, if necessary, by appropriate proposals. The provisions of this Regulation applicable to cotton will remain in force until 2013.’
Justification
The new support scheme for cotton should not be subject to another revision by 2010, as provided for under Article 155(a) of Regulation (EC) No 1782/2003. Community cotton farmers should be able to benefit from a stable regulatory framework in order to be able to plan their activities.

EXPLANATORY STATEMENT

The Community support scheme for cotton

The cotton sector is of great socio-economic importance to certain regions of the EU, particularly in Greece and Spain. Although farms growing cotton cover a small area (4.5 ha in Greece and 11 ha in Spain), cotton still accounts for 9% and 1.3% respectively of overall agricultural production in Greece and Spain (2005 data). Producers’ income, which current data shows to be at a satisfactory level, ensures the survival of a good number of small and medium-sized farms (79 700 in Greece and 9 500 in Spain) and of a number of ginning plants (73 in Greece and 29 in Spain).

The Community support scheme for cotton was set up in 1981 by Protocol No 4 to the Act of Accession of Greece to the EEC, then extended in 1986 when Spain and Portugal joined the Community. Its aim was to ‘support the production of cotton in regions of the Community where it is important for the agricultural economy, permit the producers concerned to earn a fair income and stabilise the market by structural improvements at the level of supply and marketing’.

Under the original scheme, a deficiency payment was granted to processors, who paid a minimum price to cotton farmers. The amount this payment came to was dependent on the world market price of cotton.

The reform of the common agricultural policy, which began in 2003, was based on the principle of supporting farmers’ incomes through aid and measures that are decoupled from production (Regulation (EC) 1782/2003) in order to boost the competitiveness of Community production while keeping agricultural income stable. In order to bring the cotton sector in line with the other common organisations of the market, it was decided that, from 2006, a new scheme should operate, which would include income support decoupled from production along with specific area-based support, both of which would be paid directly to farmers.

Spain referred the matter to the European Court of Justice on the grounds that no impact assessment had been carried out prior to the reform and neither the direct labour costs nor the reform’s consequences for the ginning industry had been taken into consideration. In its judgment in Case C-310/04, the Court found in Spain’s favour and annulled the new support scheme for cotton.

The Commission proposal

The main components of the Commission proposal are as follows:

-  Keeping 65% of resources earmarked for the single payment scheme and 35% for coupled support, as provided for in the initial 2004 reform;

-  Keeping the maximum area at 450 597 ha, – 370 000 ha in Greece, 70 000 ha in Spain, 360 ha in Portugal and 10 237 in Bulgaria, following the recent enlargement of the EU.

-  The continued requirement for producers to meet cross-compliance criteria, which is a prerequisite for claiming coupled support, with a view to encouraging more environmentally friendly cotton production;

-  The requirement for farmers to harvest the cotton produced, which will have to meet certain minimum quality standards, if they wish to receive coupled support;

-  Proposed strengthening of inter-branch organisations so that they can contribute more effectively to supporting the sector. Farmers who belong to these organisations will receive additional support of EUR 3 a hectare (instead of the EUR 10 proposed under the previous reform);

-  The earmarking of the remaining EUR 7 a hectare, an overall sum of EUR 3 million, for promotion and information measures;

-  Financial transfer of EUR 22 million a year for restructuring in cotton-growing regions;

-  The creation of a ‘label of origin’ to promote EU cotton;

-  Finally, a commitment from the Commission to look at the possibility of extending the scope of Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin to cover cotton and of including cotton products on the list of products eligible for information and promotion actions.

The proposal is financially neutral and obeys the subsidiarity principle in that it leaves the Member States to decide on the approval of areas for cotton production, the choice of varieties, the approval of inter-branch organisations, the distribution of payment rights and the definition of environmental rules.

Assessment of the Commission proposal

Although the Court of Justice annulled the reform of the cotton scheme (Decision C‑310/04), the Commission’s new proposal is practically identical to the previous one. It appears, therefore, that the Commission is content with merely a formal procedure for the drawing-up of impact assessments, without considering, as it should have done, the serious repercussions the adoption of the new scheme will have. It is hardly surprising, moreover, that barely a year after the implementation of the reform of the COM in cotton, production in this sector has registered a 20% fall in Greece and a more than 50% fall in Spain. The number of farms has dropped by 11% in Greece and 25% in Spain. As regards the ginning plants, many of them have faced the possibility of having to close their doors, as it is no longer viable for them to operate. The above tends to the conclusion that the reservations voiced at the time of the 2004 reform about the effectiveness of the new regulation have proven, much sooner than anticipated, to be well-founded.

After examining the proposal, we are of the opinion that the granting of coupled support only when the product is harvested is a step in the right direction, as is the creation of a quality mark to promote Community cotton.

Your rapporteur would also like to stress that the Commission should act promptly on its commitment to look at the possibility of including cotton among the products that fall within the scope of Regulation (EC) No 510/2006, on the protection of geographical indications and designations of origin, and on the list of products eligible for information and promotion actions.

Rapporteur’s proposals

The rapporteur believes that the decision of the Court of Justice provides an opportunity to make suitable adjustments to the proposal, where possible, to benefit Community cotton production.

The following, therefore, is specifically proposed:

–  maintaining the financial neutrality of the proposal with regard to coupled support, which means the decommitment of EUR 202.2 million for Greece and EUR 72.73 million for Spain. Given the likely reduction in the size of land used for cotton growing, the base area could be reduced from 370 000 ha to 270 000 ha for Greece, with the amount of coupled support at EUR 750 a hectare. In Spain, the base area could also be reduced accordingly (from 70 000 ha to 50 000 ha), which would mean coupled support of EUR 1 450 a hectare;

–  offering Member States the freedom, on the basis of the subsidiarity principle and where they deem it necessary for the viability of their ginning plants, to opt for a higher percentage of coupled support, the amount of which may not, however, be lower than 35%;

–  creating a ‘national envelope’ for overcoming the cotton sector’s problems, which will be financed by means of a minimum (basic) rate of 1% of the total coupled support for cotton in each of the Member States, through a proportional adjustment of the amount of aid per hectare. The measures financed by this national allocation could, at the Member States’ discretion, include measures to offset the effects of a possible drop in production, to promote the restructuring of varieties and modernise the sector in order to boost the competitiveness of production, to support environmentally friendly growing methods in order to ensure a more rational use of water resources and to minimise the use of plant-health products, to encourage research in order to develop improved-quality varieties and to support the restructuring and modernisation of ginning plants etc.;

–  the transfer, in view of the fact that the serious difficulties the sector faces (essentially in terms of competitiveness) could result in a reduction in the growing areas beyond the limits set by the individual Member States, of unused coupled support to the national envelope in order to tackle the aforementioned problems;

–  including in the national envelope funding of EUR 22 million (which corresponds to 2.74% of support) for the restructuring of cotton-growing regions, which should not have been transferred to the second pillar;

–  allocating part of the national envelope, on the basis of precise criteria, to farmers developing a high-quality product as a quality premium in order to boost the competitiveness of Community cotton;

–  for the Council decisions relating to the COM in cotton to remain in force until 2013, not 2010 as stated under Regulation No 1782/2003.

Conclusions

Safeguarding a prosperous sector of Community agriculture such as cotton production is crucial and we must not ignore:

a) the economic impact of abandoning the production of cotton, which is a traditional activity in countries in which cotton is grown; in some regions of these countries, cotton-growing is the sole source of income;

b) the environmental aspect of the problem, as cotton-growing also plays a part in preserving landscapes and preventing soil erosion through the set-aside policy;

c) social factors linked to the desertification of countryside, the non-viability of ginning plants and the consequent rise in unemployment.

By nullifying the reform of the COM in cotton in 2004, the Court of Justice provided us with the opportunity for a timely re-examination of the scheme and to adopt the rules needed to ensure the sustainable development of the cotton sector. It is vital for Community cotton production to remain prosperous and to safeguard the 79 700 farms in Greece and the 9 500 in Spain, ensuring satisfactory production levels that allow for the continued viability of the ginning industry, which accounts for 3 200 jobs in Greece and 920 in Spain. It should also be borne in mind that cotton is a product of which there is a shortage in the EU and which places no burden on the Community budget in the form of spending on withdrawals or export subsidies.

PROCEDURE

Title	Support schemes for farmers (support for cotton)
References	COM(2007)0701 – C6-0447/2007 – 2007/0242(CNS)
Date of consulting Parliament	3.12.2007
Committee responsible        Date announced in plenary	AGRI 10.12.2007
Committee(s) asked for opinion(s)        Date announced in plenary	BUDG 10.12.2007
Not delivering opinions        Date of decision	BUDG 18.12.2007
Rapporteur(s)        Date appointed	Ioannis Gklavakis 21.11.2007
Discussed in committee	29.1.2008		1.4.2008		17.4.2008
Date adopted	17.4.2008
Result of final vote	+: –: 0:	28 6 0
Members present for the final vote	Vincenzo Aita, Peter Baco, Sergio Berlato, Bernadette Bourzai, Luis Manuel Capoulas Santos, Giuseppe Castiglione, Albert Deß, Carmen Fraga Estévez, Ioannis Gklavakis, Friedrich-Wilhelm Graefe zu Baringdorf, Esther Herranz García, Lily Jacobs, Heinz Kindermann, Vincenzo Lavarra, Stéphane Le Foll, Diamanto Manolakou, Rosa Miguélez Ramos, Neil Parish, Vincent Peillon, María Isabel Salinas García, Willem Schuth, Czesław Adam Siekierski, Petya Stavreva, Witold Tomczak, Andrzej Tomasz Zapałowski
Substitute(s) present for the final vote	Pilar Ayuso, Alessandro Battilocchio, Alejandro Cercas, Wiesław Stefan Kuc, Hans-Peter Mayer, Zdzisław Zbigniew Podkański, Kyösti Virrankoski
Substitute(s) under Rule 178(2) present for the final vote	Francisca Pleguezuelos Aguilar, Luis Yañez-Barnuevo García
Date tabled	22.4.2008