Select Committee on European Scrutiny Second Report


COM(01) 247

Draft Council Regulation on the common organisation of the market in sheepmeat and goatmeat.

Legal base:Articles 36 and 37 EC; consultation; qualified majority voting
Department: Environment, Food and Rural Affairs
Basis of consideration: SEM of 8 October 2001
Previous Committee Report: HC 152-i (2001-02), paragraph 12 (18 July 2001)
To be discussed in Council: After receipt of European Parliament opinion
Committee's assessment: Politically important
Committee's decision: Cleared


31.1 Unlike many other commodities under the Common Agricultural Policy (CAP), the market regime for sheepmeat and goatmeat does not include any provision for public buying (intervention) of surplus produce, its main instrument of support being the annual ewe premium. This is payable to producers rearing at least 10 ewes, and is based on the difference between the Community's basic price (set each year by the Council) and the average market price, with an individual's eligibility being limited to the number of animals for which they received premium in 1991. In addition, producers in less favoured areas (LFAs), where about 80% of eligible animals are located, may receive a supplementary payment (the "Rural World Premium"). This particular regime is also unusual in that the UK is a major beneficiary, accounting for about one-third of Community production, followed by Spain (22%) and France (13%).

31.2 This sector did not feature in the Agenda 2000 reforms of the CAP, but, as a result of a separate review of the effect of the market organisation on farmers' incomes, production and the environment, the Commission proposed in May 2001 a number of changes, which it says will lead to greater stability for both producers and the Community budget, to a simplification in the administration of the regime, and to a greater adaptation to the objectives of the World Trade Organisation (WTO). The main features of the proposal are as follows:

  • the current deficiency payment basis for calculating the ewe premium would be replaced by a flat-rate payment;

  • the system of individual producer quotas would continue, and would not be replaced by regional ceilings: however, the sum of individual limits per Member State would be published in the relevant Regulation;

  • unless they fatten lambs as "heavy carcases", producers who market milk or milk products at present receive a lower premium than those producing meat: in line with the change proposed for the annual premium, the level of premium for such producers would in future also be on a flat-rate basis, and the lower rate applying to all producers marketing milk or milk products, including those fattening lambs; and

  • at present, the Rural World Premium payable in the LFAs is also differentiated as between producers of meat and milk or milk products: it is proposed that there should in future be a single rate.

31.3 In his Explanatory Memorandum of 20 June 2001, the Parliamentary Under-Secretary of State at the Department for the Environment, Food and Rural Affairs (Lord Whitty) said that, although the Government's attitude to this proposal had not been fully determined, there were no elements which could be considered particularly difficult for the UK. In particular, he welcomed the introduction of a flat-rate payment, and the protection of a supplementary payment to producers in the LFAs; and, although only about 6000 ewes out of the 19 million in the UK were the subject of a claim for milk production, he believed it was appropriate to maintain the present differential between such animals and those produced for their meat. He also drew attention to the WTO implications and to the reduction in the administrative burden highlighted by the Commission.

31.4 In our Report of 18 July 2001, we noted that the changes proposed appeared on the face of it to have some merit, but that it was clear this regime is of considerable importance to producers in the less favoured areas, not least in the UK. Consequently, before finally taking a view on these proposals, we said that we would like to know whether the consultation exercise which the Government had launched revealed any particular concerns not already identified.

Supplementary Explanatory Memorandum of 8 October 2001

31.5 In his Supplementary Explanatory Memorandum of 8 October 2001, the Minister says that producers' representatives have in general responded favourably to the overall simplification aims of the proposal. The only point of concern has been the level of proposed premium, where it has been argued that the basis chosen by the Commission (average premium payments from 1993 to 2000) did not take inflation into account.

31.6 The Minister also says that, since he submitted his original Explanatory Memorandum, the proposal has been discussed in the Council, where the UK has argued for flexibility in order to respond better to environmental problems and to enable the industry in this country to adapt to the foot-and-mouth outbreak. In particular, it has sought changes to the ewe premium quotas to make it possible to encourage producers to keep fewer sheep.


31.7 We are grateful to the Minister for this further information, in the light of which we are now clearing the document.

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