Price fixing under the CAP — proposition and decision

Price fixing under the CAP - proposition and decision The example review

of the 1978/79

price

Simon Harris and Alan Swinbank

The

authors

annual the

analyze

farm European

munity

(EC)

complexity

of their and

results)

flexibility and

the

countries degree

of

internal

prices,

of

annual

practicality

Harris

for

is

setting

Group

up

50

Mark

Agricultural

Lane, London

Both

EC3R

is a Lecturer

Economics

of Reading,

Whiteknights

Economist

Ltd, Berisford

UK. Alan Swinbank

University UK.

They

high

S. & W. Berisford

House,

EC’s

Policy.

policies.

Simon

in

a

stated

the

of a ‘common

sessions

workable

7QJ.

the of

in setting

marathon

with

to

individual

allowed

the

negotiations

objectives

when

the

in the

and

the

the feasibility

policy’, are

involved

Agricultural

discuss

Com-

to show

prices, of

Common

of

Economic in order

relationship (and

1978179

negotiations

of issues

setting

goals

the

price

at

the

4 Earley Gate,

Rd. Reading are Specialist

RG6 2AR, Advisers

to

the House of Lords Select

Committee

on European

and former

civil servants: Ministrv of Swinbank Commission.

256

Legislation,

Mr Harris with the UK Aariculture with-

The agricultural decisions of the European Economic Community,’ as one of the world’s largest food producers and traders, have a significance which is felt far beyond Community frontiers. Decisions are made via the Common Agricultural Policy (CAP), which provides for the income support of Community farmers, and for the guarantee of food supply to Community consumers, through a set of policy measures which cover nearly all non-tropical foodstuffs. Policies generally work towards the achievement of their objectives through effects on the distribution and utilization of resources on the one hand and on the level and distribution of factor incomes on the other. In the case of the CAP, the main mechanism for achieving the desired effects is that of price. It is the annual farm price negotiations which embody the key price decisions necessary to implement the CAP. Despite their central importance, the significance of the annual price decisions and the negotiations leading to them are curiously unstudied. It was felt that an examination of how the EC sets its prices would be useful to show the complexity of the issues involved and the interplay between the Commission of the European Communities and the Council of Ministers in the price fixing process. The 1978/79 farm price negotiations are taken in this article as illustration.

the

and

Dr

European

The CAP in outline In order to examine the 1978/79 price negotiations, a brief summary of some of the CAP’s main features2 will be of help to those unfamiliar with them. To support the incomes of Community farmers, internal market prices are generally kept higher than world levels. To achieve this two main policy mechanisms are employed. To prevent internal market values from dropping too far below the desired price

0306-9

192/78/040256-l

6 $02.00

0 1978

IPC Business Press

Pricejxing

’ Generally known as the European Community and abbreviated to EC in this article. ’ No full and current account of the CAP exists. Of earlier writings, the best are J. Marsh and C. Ritson, Agricultural Policy and the Common Market, Chatham London, 1971; and House/PEP, Organisation for Economic Co-operation and Development (OECD), Agricultural Policy of the European Economic Community, OECD, Paris, 1974. 3 For a technical description of the working of the Community’s green money system, see R.W. Irving and H.A. Fearn, and the Common Green Money Agricultural Policy, Centre for European Agricultural Studies, Wye, UK, 1975. The policy implications have recently been explored in A. Swinbank, The British Interest and the Green Pound, Centre for Agricultural Strategy, Reading, 1978: and in the House of Lords Select Committee on the European Communities, Green Money, 18th Report, Session 1976-77, HL 89, London, 1977. The implications for the setting of common prices are analyzed in T. Josling and S. Harris, ‘Europe’s green money’, The Three Banks Review, No 109, London, 1976: and T. Heidhues et al, Common Prices and Europe’s Farm Policy, Trade Policy Research Centre. London, 1978. 4Statement of Mr G. Rippon, Chancellor of the Duchy of Lancaster, recorded in ‘Declaration on the system for fixing Community farm prices’ in the documents concerning the accession of Denmark, Ireland and the UK to the European Communities. See Official Journal of the European Communities, special edition of 27 March 1972. The gradual shift in the UK position from the first negotiations for entry in 1962 is described in S. Young, Terms of Entry, Heinemann, London, 1973, pp 77-79. 5 ‘Declaration on the system for fixing Community farm prices’, Ibid.

FOOD

POLICY

November

1978

under the CAP -proposition

and decision

levels (known as target prices), a mechanism of support buying is available for many commodities. This is an open-ended purchase commitment whereby at the set ‘floor prices’ (known as intervention prices), the authorities are obliged to accept all offers for sale of the designated commodities. To prevent cheaper supplies from third countries from depressing internal EC market prices, minimum entry prices (known as thresholdprices) are also set and enforced through a variety of import levies and charges. Various subsidies also exist to encourage the use of EC produced commodities on the domestic market. Common levels for these institutional support prices, set in terms of units of account (ua), are fixed in the annual farm price negotiations. However the ua is not a currency which can be used as a means of payment, but is rather an accounting device. Consequently common prices in ua have to be expressed in national currencies before they can be applied within each member state. Special agricultural conversion rates (the so-called ‘green’ rates) are used, based on values of the national currencies at certain times in the past. As the green rates vary to differing extents from the currencies’ market exchange values, there are not ‘common’ price levels for agricultural commodities in the EC. Instead, there is a series of national markets with a system of monetary compensatory amounts (MCAs), paid during the trading process, in order to maintain the level of the intervention prices as expressed in national currencies.3 Over the past few years, the annual farm price reviews have been as much concerned with movements in national price levels following changes in the ‘green’ rates, as with changes in common prices set in units of account.

Annual farm price review During the entry negotiations of 1962, and again in 1967, it had been British policy to seek an assurance that an annual EC review of farm prices, modelled on the ‘Annual Review and Determination of Guarantees’ held in the UK, would be instituted. Each spring in the UK, the Government, with the farmers’ unions, examines data on price and income movements in the agricultural sector. It was feared that in an EC context the right of the farmers’ representatives to be consulted would be lost. To some extent the British fears were justified for - by 1970 - although an annual review was conducted within the Community, the degree of consultation held with COPA (Comite des Organisations Professionelles Agricoles) and other organizations was less than existed in the UK. The UK’s negotiating demands were eventually dropped as it was accepted that the existing review had ‘the intention to have effective and meaningful contacts in particular with producer organisations operating at a Community level’.4 The Community’s representative had pointed out that ‘before, during and after the drawing up by the Commission of the price proposals, contacts take place with the professional agricultural organisations organised at a Community level’, and that contacts were also maintained ‘with industrial, commercial and trade union circles and with consumers’.5 The legal provisions regarding the fixing of ‘green’ rates, and improvements and extensions of CAP regulations, are similar to those for CAP prices: the Commission of the European Communities has

257

PricejTxing under the CAP-proposition

and decision

the sole right to make proposals, and the Council of Ministers to legislate. The Commission often finds it expedient to package many of the changes together with the price proposals. Compromises can more readily be reached if member states are faced with a whole range of policy decisions covering the farm sector, but at the same time the ‘balanced deal’ becomes harder to assemble, the wider the range of Variables involved. Similarly, the Council often finds it convenient to defer, until the price review, decisions on agricultural proposals tabled during the year. Before the Council can reach decisions on farm prices it must seek the opinion of the European Parliament, and it often consults the Economic and Social Committee as well.6

Political and economic background

6The various EC institutions, and their powers, are reviewed in E. Noel. Working The Together: Institutions of the European Commu~jt~, Office of official publications of the European Communities, Luxembourg, 1977. 7The Commission’s price proposals are contained in 4 volumes, while separate volumes cover the phasing out of MCAs, Mediterranean agriculture and the dairy sector. These are listed in the Appendix, together with the House of Lords Scrutiny Committee Reports on them, where the major implications of the proposals are discussed. The decisions of the Council are reported in their press release on the 516th meeting of the Council, from the General Secretariat of the Council of the EC, 12 May 1978. *Furthermore, it was not until a week later, after discussions in Rome, that the Italian government lifted its ‘reserve’ and the package could be implemented. 9 In the case of sheepmeat, this was in part because of the delay insisted upon by the French go+ernment in the publication of the Commission’s proposals for sheepmeat, in order that they would not be released until the second round of the French elections on 21 March. However, it was always likely that the extent of the disagreement between the UK and France over the shape of a new regime would have delayed decisions in any case beyond the time scale of the price fixing. ‘*The increasing tensions in world agricultural trade as a result of the clash between the Community and traditional been a exporters has agricultural dominant feature of the Multilateral Jrade Negotiations. For a discussion of the Community’s stance, see Simon Harris, EEC Trade Relations with the USA in Centre for Agricu{tura~ Products, European Agricultural Studies, Wye. UK. 1977; and of the general agricultural issues involved, see T. Josling, Agriculture in the Tokyo Round Negotiations, Trade Policy Research Centre, London, 1977.

258

Every annual farm price review takes place against. a particular political and economic background which influences the outcome of the negotiations. In March 1978 France held a general election; consequently serious political negotiations on the 19’?8/79 prices package could only begin in April after the elections were over and a new Government was installed, willing to take decisions. It was the delay imposed by the need to wait for a new French Government which particularly prolonged these price negotiations, for the Commission had submitted the main part of its 1978/79 price proposals on 11 December 1977.’ It was not, however, until 12 May 1978, after a final 5-day negotiating ‘marathon’, and 5 months after the proposals were originally made, that agreement was reached by the Council of Agriculture Ministers on prices for the 1978/79 marketing years.8 January 1978 marked the end of the five-year transition period for Danish, Irish and UK agriculture on their accession to the EC. During the transition a number of problems had been left unresolved. One problem in particular, concerning the future of the UK’s milk marketing boards, became an integral part of the 1978/79 price review. Other problems such as the need to introduce Community support regimes for the ‘missing commodities’ - sheepmeat, potatoes and ethyl alcohol - were mentioned in the Commission’s price proposal documents, but never became part of the negotiations as such.9 Throughout 1977 the Community had become more preoccupied with the prospects of a further enlargement, to take in Greece, Spain and Portugal. Part of the price being demanded by France and Italy for enlargement was some shift of the CAP balance towards the Mediterranean; the Commission therefore had to include a substantial number of measures favouring Mediterranean agriculture (see below) in the prices package. The Ministers were also faced with the perennial problems involved in attempting to reconcile the income demands of the farm population with the evidence of structural surpluses for many agricultural products, and with the aspirations of exporting countries throughout the world.‘O Finally, there were the persistent problems arising from the green currency system and the Commission’s continuing desire to achieve some agreement on a timetable for the elimination of MCAs and a return to harmonized prices throughout the Community.

FOOD

POLICY

November

1978

Price$xing

(A) The Commission’s

original proposals

Price proposala % change +2.0 +2.0 +2.0 +2.0 +2.0 +2.0 +2.0

Germany BeneluxC Denmark Ireland France Italy UK

a

In terms of units of account.

b

In national

(B) The situation

facing

Ministers,

the

d 1978-79 only, excluding the effect of the additional devaluation forpigmeat. Source: Amplification of tables given in House of Lords Select Committee on the European Community, 14th Report, Session 1977-78, ffC Farm Prices, 7978-79, (HL 97). The ‘combined effect’ is the result of multiplying indices derived from the other two columns. The tables exclude the effect of the reduction in the milk co-responsibility levy (probably worth an additional 0.26% on the overall price rise in ua see Ref 13 for explanation of the levy): nor do they take account of the differing product balance among member states which would affect the national ua rises, but not the overall Community average.

Denmark France Italy UK

Germany Benelux Denmark Ireland Franced Italy UK

Commission’s

” The countries with an ‘appreciated’ currency in relation to their green rate are Germany and the Benelux (Belgium. Netherlands and Luxembourg) countries: those with a ‘depreciated’ currency are France, Italy, the UK and Ireland. The green rate of the Danish krone is kept in line with the market exchange rate. 12See House of Lords Select Committee on the European Community. Supplement to the 14th Report (ffC Farm Prices 7978-79, Session 1977-78. HL 97), o 2.

POLICY

November

1978

Price proposala % change +2.0 +2.0 +2.0 +2.0

(Cl The results of the Council’s

Green currency proposalb % change -1.14 -0.20 -

rate

+0.29 t1.92 +2.04 +3.25

Combined % change +0.84 +1.80 +2.00 +2.30 +3.Q6 +4.08 +6.32

effectb

Combined 56 change +7.37 +5.89 +8.54 +10.27

effectb

Combined % change +I.79 +2.10 +7.47 i.8.61 +9.95 +14.39 +I 0.38

effectb

May 1978

currencies.

C The Benelux countries are Belgium, Netherlands and Luxembourg.

FOOD

under the HAP- proposition and decision

Green currency rate changes since last Reviewb % change +5.26 +3.81 +6.41 +8.11

price decisions

Price decisiona % change +2. I +2.1 +2.1 +2.1 +2.1 +2.1 +2.1

All green currency rate changes since last Reviewb % change -0.30 +5.26 +6.38 +7.69 +12.04 +8.11

overall strategy

The Commission had two general objectives for its 1978179 price proposals: first, to limit the Community’s production of surpluses by applying ‘a prudent price policy’ which involved limiting the rise in common prices to 2% in terms of units of account; second, to phase out MCAs over a seven-year period by closing the gaps between green and market exchange values. The combined consequences of these two propositions for support prices in member states are summarized in Table 1A, using Commission estimates based on the monetary situation as at 25 November 1977. The effects for nominal support prices in national currencies, had the Commission’s proposals been adopted, would have been a rise of only 0.84% in Germany compared to 5.32% in the UK (with a community average of some 3%). The increases in national currencies differ; they are lowest in countries with appreciating currencies, and reflect differences in inflation rates and the linked behaviour of exchange rates. I’ According to the UK Ministry of Agriculture, the effect of the initial proposals would have been a drop of nearly 5% in the real value of support prices.‘* However, this figure does not take into account the final accession step in aligning support prices in the UK, Ireland and Denmark with those in the original Community (in unit of account terms) which occurred on 1 January 1978; nor do they include the effect of the devaluation of the green Danish krone in September 1977 - following a realignment of

259

PriceJixing under the CAP

-propositionand decision Scandinavian currencies - which had increased Danish support prices by 5.26%

Effect of national currency actions The situation that faced Ministers at their final negotiating session in May 1978 differed significantly from that when the proposals were originally submitted by the Commission, for in the interval the Council had agreed to further devaluations for the green currencies of three member states. These differences are summarized in Table IB. France had quickly secured a small devafuation of the green franc which was implemented on 1 February 1978; later, in the closing days of the election campaign, further action was deemed necessary. The prospect of a socialist victory led to a fall in the franc on international currency markets, and hence to an increase in the MCA (which is levied as a charge on French exports). So as to neutralize this change in the MCA, two steps were taken: a temporary change in the method of MCA calculation, and a further devaluation of the green franc. The devaluation of the green pound provides one of the most bizarre interludes of the whole review. UK farmers were convinced that the Labour Government’s policy towards the green pound had favoured consumers at the farmers’ expense, as farmers had long campaigned for a devaluation without success. In January 1978 the Government, however, partially acceded to this campaign by formally requesting the Commission to submit a proposal for a 5% devaluation of the green pound, which the Commission promptly approved. However, the Conservative and Liberal parties in the House of Commons then combined to demand a 7.5% devaluation and although the Minister, John Silkin, argued in favour of the 5% in the Commons’ debate, the Government lost the vote. Bowing to the will of the House, it then sought 7.5% in Brussels. On the surface this demand for a higher devaluation seemed in conformity with the Council’s and Commission’s repeated appeals. IIowever the response was frosty: in the Council Germany and the Benelux nations said they would vote against the 7.5%, and the Commission refused to alter its proposal from the original 5%. It is possible that the Commission had come to realize that devaluing the green pound (thus raising the UK farm and foad prices) could only help raise the average level of farm and food prices in the EC as a whole, and so exacerbate the problem of trying to match supply to demand. If soI the declared policy of the Commission (as evidenced by its proposals to harmonize CAP prices over a seven year period) differed from its real policy. Certainly the Ministers of the other member states were fearful of the domestic repercussions of such a move. The German Minister, for example, would have had to explain to his constituents that the anticipated rise in mark prices, consequent upon the price review, was 0.84% whereas the sterling price might rise by over 10% (although, in real terms, the difference would be much smaller than a simple comparison of nominal prices suggests). Perhaps most important of all, the Ministers in the strong currency countries (Benelux and Germany) feared that if the UK farmers obtained a large price increase in advance of the review, then the UK Minister could comfortably resist all attempts to increase common prices by more than the Commission’s proposals. 260

Price fking under the CAP -proposition and decision a In the October of 1974 price rise was agreed.

a secondary

b Excluding reduction in milk coresponsibility I&y. Source: UK Ministry of Agriculture. Figures from House of Lords Select Committee on the European Community 14th Report, Session 1977-78, EEC Farm Prices 1978-79 (HL 97). p 5.

Table 2. Comparison between Commission price proposals and Council price decisions (average % increase in support prices for all CAP commodities in ua). 1974/75a Commission’s proposed average price rise 7.2 & 4.0

l975/76

1976177

1977178

1978179b

9.0

7.5

3.0

2.0

Council’s average price decision

9.6

7.7

3.5

2.1

8.8 & 5.0

After an acrimonious debate, it was decided that a 7.5% devaluation of the green pound should take place in the context of the price review and that, in the interim, a 5% devaluation would be made for pigmeat and beef. At the same time Italy quietly secured a 6% devaluation, resulting in institutional price changes of 6.4 1%. Comparison of Table 1B with 1A shows that the Commission’s prudent price policy had been seriously eroded before the Ministers sat down to their final negotiation. In Italy and the UK the expected price change had doubled: indeed the Commission’s proposed price change had already occurred. In France the expected change was nearly 50% higher than the original proposal, and a French request for yet another devaluation of the green franc was pending. The countries with depreciated currencies had succeeded in circumventing the rigours of the price fixing process, and had se&red price rises for their farmers in excess of the Commission’s proposals. The problem the Commission faced was that with the current value of the unit of account these depreciated currency countries could, and did, seek further price rises through the simple expedient of a devaluation of their green rates. In contrast, the price rises in the appreciated currency countries were limited to the extent of the rise in units of account, and were further constrained by any revaluation of their green rates.

Overall outcome

13The levy, fixed at 1.5% of the milk target price, was installed in September 1977. It was to be paid by milk producers. However, the Council of Ministers decided during the 1978/79 price review that the levy should be reduced to 0.5% of the target price.

FOOD

POLICY

November

1978

The eventual outcome of the price negotiations was to raise the level of price increases even further, as shown in Table 1C. In Germany, the negotiated outcome was twice as high as the original Commission proposal, and in Ireland it was nearly four times as high. In France and Italy further devaluations had been agreed, in addition to those enacted before the May Council. All this was despite the fact that the average ‘common’ price rise, expressed in units of account, was kept to 2.1% - the lowest it has been in recent years (see Table 2). The most logical interpretation of this seeming paradox is that member states had been able to guard their national interests to such an extent (either by green rate changes, or by alterations in the Commission’s proposals on specific commodities) that they were able to accept a minimal increase in the level of common prices in unit of account terms. Further, assuming that all the benefit of the reduction in the dairy co-responsibility levy13 were to be retained by milk producers, then the effect of the reduction would be to add a further 0.26% to the average price increase of 2.1% In real terms, the effect of the Council price decisions and the national green rate changes seems to have been to prevent a 3% fall in support levels (Table 3). Effectively the thrust of the Commission’s prudent price policy had been blunted. The real value of agricultural

261

Pricefixing

under the CAP-proposition

and decision Table 3.

Index of

CAP support 1973174

prices in real termsa (I 972/73

1974175

1975176

1976177

= 100).

1977176

197%/79b

A Excluding accession steps

97.2

Including accession steps

98.8

B

99.4

101.9

103.0

101.2

97.5

100.6

102.3

106.2

107.7

107.7

104.6

106.9

a Based on guide or target prices of wheat, barley, milk, beef, pigmeat and sugar in national currencies, weighted by output and deflated by Gross Domestic Product (GDP) deflator. b Estimated. Column A represents the situation allowing for the Commission’s original price proposals, the January 1976 agreements for devaluations of the green lira (6%). green pound (7.5%). and green franc (2.5%) and the Commission’s original green currency rate proposals for other currencies. Column B represents the situation after the Council’s final agreement. Both assume that the GDP deflator for the Community in 1978/79 would be some 8 to 9% higher than in 1977/78. Sources: UK Ministry of Agriculture. Figures from House of Lords Select Committee on the European Community, 14th Report, Session 1977-78, EEC Farm Prices 7978-79, (HL 97). p 13: and The Economist, 20 May 1978, p 69. l4 See note b in Table 3. l5 Exactly the same difficulty used to be found with the UK’s annual review of farm support prices before accession to the EC. An agreement would be reached as to the maximum extra amount the Treasury would accept in million pounds sterling. Then came the problem of allocating this sum among commodities so that those for which the government felt production was adequate were not encouraged, and Yet the entire sum was allocated. ” For beef, the Commission’s proposals were for a rise of 1.25% in support prices which, although moderate, seemed perverse in comparison with the Commission’s dairy proposal of 2.0%. The aim for several Years had been to encourage a switch from milk to other products (including beef) as a means of the milk surplus. Yet for reducing i 978179 the Commission’s own proposals would have reinforced the attractiveness of milk production in relation to beef. This in part may have arisen because of the results of the Commission’s own analysis of the beef situation which suggested that periods of overproduction were tending to increase as supply was rising faster than demand. The Council doubled the price rise for beef to 2.5% early in the negotiations. There seems to have been no specific logic behind this decision except perhaps that of adjusting beef in relation to milk. However, the Commission’s proposals for more flexible use of intervention buying were agreed. The price triggers as to should be made when intervention available were related to market prices for specific meat cuts rather than to averages for livestock. This was a useful change which should help to reduce unnecessary intervention, but which at the same time may obscure the Commission’s earlier proposals to increase the use of variable premia to support beef farmers, and thus reduce the significance of intervention.

262

support prices would be maintained at a time when surpluses of agricultural products were a major problem, and when other sectors of the economy (eg shipbuilding and steel manufacture) were having to contract because of lack of markets. The results in real terms for individual countries varied as might be expected, depending on relative rates of inflation and the extent of the green rate changes. But averaged throughout the Community, Ministers concurred in a farm price agreement giving an overall nominal price rise for CAP commodities expressed in national currencies of some 8%.i4

Allocation

of the overall price rise between commodities

It is not often recognized that one of the most difficult aspects of any review of agricultural support prices is the allocation of the overall price increase (whether as a percentage rise in support prices, or the division of an increased budget subvention) among commodities.15 It is the nexus between the overall price increase and the treatment of individual commodities which leads, year after year, to the seeming paradox of the Community giving price increases to sectors which are already oversupplied. Furthermore, in the 1978/79 price negotiations there was an increased realization by the appreciating currency countries that the only way they could aid their agricultural sectors was by increasing the average of the ‘common’ price rise. The result was that the appreciating currency countries, in particular, tended to argue that price rises were necessary in some commodity sectors in order to raise the overall average level of increases in farm prices. Attempts to raise the overall average were seen most clearly in the beef sector16 where the Council doubled the Commission’s original price proposal, and in the dairy sector with a reduction in the coresponsibility levy. The increase in the beef price and the reduction in the milk levy were understood as a means of raising the overall level of increase (in ua terms), rather than as having any particular sectoral justification. It is largely for this reason that it is not possible to see in the final price decisions the distinction between surplus and nonsurplus products which the Commission drew so strongly in its price proposal documents. For example, milk and sugar - both products in

FOOD

POLICY

November

1978

Pricefixing under the CA P-proposition and decision

substantial surplus - received price increases close to the overall average. It is difficult to claim that any clear discouragement to production can be seen in these decisions.

Treatment of some major CAP commodities Milk

” The Economisr, 20 May 1978, p 90. Other production and consumption estimates quoted are taken from Volume 1 of the Commission’s proposals (op cit. Ref 7). unless otherwise stated. ” COM (77) 725.

FOOD

POLICY

November

1978

The decisions made in the dairy sector were a particular example of decisions taken to raise the effective level of prices. Both the butter and skim milk powder intervention prices were increased (+ 2.1% and + 1.8% respectively were adopted, as against the original proposal of + 1.9% and + 1.6%) while the milk co-responsibility levy, paid by was lowered from 1.5% to 0.5% (the Commission producers, proposal was to maintain it at 1.5%). The reduction in the levy was a major element in the compromise package, particularly for Belgium. Yet the structural surplus in the dairy sector was estimated by the Commission to amount to 17% of production.” Production has been on a long term growth path of 1.7% a year while consumption has been falling. The milk price decisions were a disaster for the Commission. Because of the dairy sector’s significance in farm output (particularly for small farmers), its massive structural surplus, and heavy budget cost, the EC’s pricing policy for milk is seen as central to the CAP. By a combination of green currency changes, larger rises in the dairy product support prices than proposed, and a complete reversal on the controversial co-responsibility levy, the Commission’s pricing policy was overturned. The co-responsibility levy had been introduced despite fierce opposition from many member states and at a horrific cost in man-hours: it was now virtually given away without any offsetting concessions obtained. Farmers could not help but understand it as a reduction in the political pressure to control milk production. In addition, the aim of the Commission’s proposal to raise the levels of aid granted on skim milk powder (SMP) used for animal feed was not achieved; this was meant to have formed part of a trade-off in return for the withdrawal of intervention support for SMP during winter months. The higher rates of aid for SMP were adopted, but the proposal to withdraw intervention was suspended pending a further review of the dairy sector. Even if the Commission were to secure the withdrawal of intervention, as a result of the review, it could well be at the cost of entirely scrapping the co-responsibility levy. The suspicion must be that the UK’s negotiating efforts in the dairy sector were concerned with ensuring the maintenance of its milk marketing boards, the future of which the UK claimed was under threat. There was an incompatibility between Community legislation on competition policy and the way in which the UK’s five milk marketing boards operated; a situation which had been recognized at the time of Britain’s accession. In its proposals, I8 the Commission backed the continuance of the boards, subject to certain safeguards. The proposals were not linked to the price package, however the Council of Ministers forged such a link itself. Hence the future of the boards rested on the outcome of bargaining within the Council where it formed a major element in the package for the UK. The eventual result was a Council decision,

263

Pricefixing under the CA P-proposition

and decision

similar boards.

19The ACP states are the African, Caribbean and Pacific states which are signatories, along with member states of the EC, of the Lome Convention. For an analysis of the Convention’s sugar provisions, see S. Harris and G.B. Hagelberg, ‘Effects of the Lome Convention on the world’s cane-sugar producers’, 001 Review, No 2, Overseas Development Institute, London, 1975. ‘O The full CAP price guarantee applies to the basic production quota allowed each country (set by the Council), a lower price applies to quantities of sugar produced between the basic and maximum quotas, and the world market price applies to any quantities produced over the maximum quota. The level of 1.16% seems to have been picked by the Commission as the minimum common rise in ua terms which would avoid a drop in German support prices were the Commission’s green currency proposals to be adopted. *’ Pigmeat as a proportion of the value of total agricultural production was 13.6% in 1976: European Commission, The Agricultural Situation in the Community, 1977 Report, Brussels, 1978, Table l/4.1

264

to the

Commission’s

original

proposal,

maintaining

the

Sugar As with dairy products, sugar is also in chronic surplus. The Commission estimated that production had been rising at 2.6% a year since the beginning of the 196Os, while Community consumption had been dropping since 1974. The Commission stated that it saw ‘no reasons why sugar production should decline’ in the period to 1985. For 1977/78 Community production exceeded consumption by about 20%; in addition, there is a commitment to import a quantity from the ACP statesi equivalent to about 14% of consumption. The Commission, worried by the cost of disposing of surplus sugar on world markets and concerned for the implications an unrestrained export sales programme would have for the 1978 International Sugar Agreement, proposed a common price rise of 1.16% and a reduction in the level of maximum production quotas from 135% to 120% of basic quotas.*’ The Council, however, balked at the severity of the supply restraint implied in the proposals, and eventually agreed to raise common prices in ua terms by 2% and to cut the production quotas to 127.5% of basic quotas. This particular reduction seems to have been dictated by those countries that had filled their 1977/78 quotas (France, Germany and Denmark), and demanded that the production cutback for any factory should not amount to more than 5% of its actual 1977/78 quota production. In addition, the Italians were allowed to increase the national adaptation aids they pay their beet farmers, although the Community’s regulation covering sugar states that the aids should be reduced for 1978/79. All in all, the Council displayed a certain insouciance in its sugar decisions despite the scale of the Community’s sugar surplus and the threat this surplus represented to the 1978 International Sugar Agreement which aimed at raising world sugar prices. The Italian decision seems particularly regrettable as it demonstrates once again the reluctance of member states to accept the logic inherent in the concept of the Common Market, of allowing specialization of production to occur in the areas best suited, and shows their desire to protect existing production wherever located. Pigmeat For little apparent reason, the Commission’s original proposal for pigmeat suggested - at 3% - a higher than average price rise. It is possible that the Commission proposed a higher rise for pigmeat as a means of getting the average price rise for all commodities to the level it wanted - if some commodities were to get less than the average, then others had to get more. In this sense pigmeat was a good choice as Community support measures are not very effective (in practice intervention does not apply) and hence the budgetary costs involved would be small, while a relatively large rise for pigmeat would have a significant effect on the average for all commodities because of the importance of pig production in the Community.*l It seems that, almost inadvertently, the price increase for pigmeat was reduced to 2.0% during the negotiations and this level was maintained by the Council - possibly because the Council concentrated instead on the alleged distortions to intra-Community trade caused by MCAs. Here

FOOD

POLICY

November

1978

Pricejxing

under the CAP-proposition

and decision

the Council’s decisions were ingenious, involving a manipulation of green rates. Pigmeat producers throughout the EC had been under price pressure for some time. In France and the UK complaints had centred on the way in which MCAs were calculated, with many producers believing that the MCA overcompensated for the price difference between countries. In particular, it was felt that if the MCA were based on a standardized cereal ration (as is the case for poultry and eggs) as opposed to the basic (support) price, then the MCA would be considerably less and producers in the low priced member states would benefit. The Council decided that a partial step should be taken in reducing the MCA, but not to the extent, or in the manner, advocated by France and the UK. By basing the calculation on a smaller percentage of the basic price for pigmeat, the MCAs would be reduced by about 8%. In addition, the Commission agreed to undertake yet another review of the situation. France obtained further concessions through a manipulation of the green rate system. Two devaluations of the green franc were agreed: the first voted for the 1978-79 marketing year and the second for 1979-80. But this second devaluation - involving an additional price rise of 3.7% - was applied immediately to pigmeat, and thus changed the cereals/pigmeat price ratio in favour of French pigmeat producers. For some contorted reason the green rate changes for all countries were then brought forward by five days for pigmeat products.22

22This was not the first time that the green rate system had been used to change the price ratios between products; UK milk producers had had to wait a year for the 1977-78 green pound changes to be effected in their sector. These two incidents demonstrate the ease with which the concept of ‘common’ CAP prices can be moulded to suit the individual interest of member states. Depending upon one’s point of view this shows either the ‘strength’ of the CAP (ie adaptability) or its ‘weakness’ (ie no common prices). *3The Community has gradually altered support prices for common wheat, barley, and, in particular, maize, so as to introduce a common level of support for feed grains; with a separate higher level for wheat and rye of bread-making quality. This structure of support prices is known as the ‘silo’ or ‘cathedral’ system. 24 COM (77) 526.

FOOD

POLICY

November

1978

Cereals For cereals the Commission’s proposals seem to have been more concerned with completing the three year programme of technical changes to the hierarchy23 of support prices for the various cereals, than with giving any particular stimulus to Community cereal production. This is not surprising in view of the trends in the Community’s cereal situation. Total production has risen at a rate of 1% annually since 1968, while human consumption has been steady, and usage for animal feed has dropped since 1973/74 (in part due to the increasing use of cereal substitutes). The Commission’s proposals were for a rise of 1.26% in the support price for feed grains, and for a rise of 3.10% for breadmaking wheat. The Council accepted unchanged the Commission’s proposals for feed wheat, but covertly increased the effective support price for bread-making wheat by altering the quality definition to which the support applied. Whereas the Commission’s proposed rise applied to wheat of average bread-making quality, with a reduction of 4% for wheat which only satisfied the minimum requirements for bread-making, the Council altered the support price definitions so that it applied to all wheat meeting the minimum requirements.

Mediterranean proposals The negotiation of the 1978/79 CAP price package was complicated by the inclusion in it of a major set of Mediterranean proposals.24 Logically, these proposals should have been considered separately as they had very little to do with the annual fixing of support prices; they were rather concerned with the need to help the Mediterranean

265

Pricefixing

under the CAP-proposition

and decision

agricultural areas of the Community on a long term basis. That they were included reflects the ‘linkage’ made by Italy, in particular, that increases in support prices for northern products were to be traded against a better deal for the south. The proposals also represented part of the price asked by Italy and France for their agreement to a further EC enlargement to take in Greece, Spain and Portugal. The proposals consisted of measures to change the operation of CAP support regimes for olive oil, fresh and processed fruit and vegetables, peas and field beans; and a set of structural measures designed to improve the situation in the Mezzogiorno (Italy) and Languedoc-Rouissillon (France). Two desirable policy innovations for support measures were adopted. In the case of olive oil the Council accepted the Commission’s view that the way to limit the creation of further unmarketable surpluses was to lower the price to consumers, so that it became more competitive with alternative imported oils and fats. The Commission in the past has been unsuccessful in its various proposals to increase the duties on imports so as to raise their landed prices. Consequently a variable marketing aid was introduced to be paid to Community olive oil crushers based on the difference between the price (specified by the Community) which refiners paid to Community growers and average market prices for competing oils. Similarly, for processed fruit and vegetables, the Council agreed that a production aid should be payable to processors of tomatoes, peaches, apricots and prunes to encourage the use of Community produce while keeping it competitive with third country imports. Undoubtedly the alternative would have been the introduction of minimum import prices for third country products which would have reduced consumption, and might have proved more disruptive for trade. The Commission did, however, propose changes for fresh fruit and vegetables which would have significantly increased the import charges levied on third country imports. These proposals were not accepted by the Council. On farm structure the Commission’s proposals dealt with the of irrigation facilities, the improvement of rural extension infrastructures and the conversion of vineyards. The Council agreed to these measures, but only after further aids had also been agreed for the rural areas of Ireland. Decisions on the Commission’s afforestation proposals and the introduction of an agricultural extension service in Italy were postponed. The likely consequence of these measures giving a greater degree of support to Mediterranean products is an increased production of at least some commodities which are already in structural surplus (olive oil), or in seasonal surplus (many fruits). But the Council agreed the measures as part of a political effort to improve the north-south balance of the CAP.

Impact on the budget The overall impact of the Council’s actions can be seen in the Community budget. Had the Commission’s original proposals been accepted, then the effect would have been a marginal reduction of CAP spending. The actual result is estimated, by the Commission, to raise spending by 763 million European units of account in a full year

266

FOOD

POLICY

November

1978

Pricefi-uing under the CA P-proposition

and decision

support spending of about 9%. Allowing for spending on improvements in agricultural structure, which will not impinge upon the budget until 1979 onwards, it seems that the overall fraction of the Community budget taken by the CAP will increase to about three-quarters.25 In terms of the Community’s efforts to decrease the proportion of the budget devoted to the CAP, the result is disappointing. Mr Christopher Tugendhat, EC Budget Commissioner, recently revealed that the expected increase in overall budget expenditure would soon be limited unless alternative sources of finance could be agreed.26 As long as agricultural spending remains at high levels, other policy initiatives and developments are in danger of being crowded out. - equivalent to an increase in agricultural

Role of the annual review *‘Authors’ estimate from Commission documents. *6 Speech to the European Parliament, as reported in the Financial Times, 4 July 1978. *’ The implications of this trend appear to be two fold. First, the CAP’s operation is made less flexible, and hence more extent that policy difficult, to the decisions are delayed. Second, the likelihood of getting ‘good’ decisions is reduced as policy decisions become part of the overall price bargaining and hence subject to arbitrary and ill considered changes, as the need to construct an acceptable package to ensure agreement becomes paramount. It is not evident, for example, that an annual round of price negotiations is the best place for deciding on changes in methods of commodity support (as for beef and olive oil in the 1978/79 round) or for introducing major new policies (such as the Mediterranean these reasons, the package). For Commission’s task of managing the CAP would seem to be made more difficult. Nevertheless, the trend could be helpful if it made the process of decision taking easier. Whether this is so, is not clear. On the one hand, a major policy decision may not be possible, if one member state refuses to agree on the grounds that the proposed change does not suit it, but that it could accept the change provided agreement is possible on another issue of greater national importance. Member states create links between topics which only a balanced package can satisfy. To this extent, keeping issues for the annual price negotiations may help the decision taking process. On the other hand, putting issues into a package can delay decision making if member states are prepared to be obstinate over small items and thus hold up the whole package. It is undoubtedly this latter technique which leads to the CAP being full of special exemptions or aids for some member states.

FOOD

POLICY

November

1978

An annual review of agricultural prices permits a regular examination of the state of the Community’s agricultural industry and gives member states an opportunity to voice their preoccupations. Most policy decisions cannot sensibly be divorced from price: new beef or olive oil regimes, for example, could well be settled during the rest of the year, but the most critical aspect of the new regimes would relate to producer and consumer prices. The annual package of proposals ensures that some, if not all, member states emerge from the annual marathon with their national interest in at least one sphere secured. Finally, an annual review, within which the divergent national interests can find expression, helps ensure the survival of the CAP. There is a range of arguments against the annual review which are, in a sense, the antithesis of those for it. Price decisions, according to this mode of thought, should be adopted on their own merit and not because one member state would be willing to acquiesce to a particular trading or marketing scheme if the price is agreeable. The EC is viewed by many as not just an economic union - let alone a CAP - and consequently in every decision making round a ‘balanced’ outcome is not necessarily to be sought. There is a possibility that the annual review might become so overburdened that no decisions at all emerge, which would signal the end of the CAP. Finally there is an efficiency argument: some believe it more efficient in terms of time and effort to settle all the year’s outstanding points in one negotiating session, whereas others believe that fatigue and overwork result in many decisions which are di~cult to comprehend, or which would not have been agreed to under normal circumstances, Increasingly, there is a trend to delay agricultural decisions so that they can be taken as part of the annual review. This leads to what would seem to be a heavily overloaded agenda for the prices package, and also to unnecessary delay in decisions at other times of year. However, this trend to increase the number of issues in the prices package may be a reflection of the need felt by member states to have enough topics for them all to be able to obtain satisfaction on at least one item of importance. Given that substantial increases in support prices are becoming less likely as surpluses rise and rates of inflation fall, the need to include other issuks may reflect member states’ recognition that they cannot all obtain satisfaction from price decisions alone.27

267

Pricejxing

under the CAP-proposition

and decision

Timing One of the consequences of holding a marathon review is that the decisions can only be settled after the expected political events in the national calendars have been resolved. As mentioned above, 1978 saw a French general election and consequently - because of French sensitivity - serious negotiation was delayed until late April. Meanwhile farmers had taken their investment decisions with respect to the 1978 harvest, before the support prices they were to receive became known. Two consequences result from such a situation: first there is a general presumption that, on grounds of fairness, decisions that would act against the interests of farm groups cannot be taken as farmers cannot reasonably take cognizance of such decisions in their investment behaviour. Second, even if adverse price decisions are taken it is recognized these can only affect output some twelve months or more later. It is perhaps unreasonable to expect the Council and Commission to bring forward their decisions - if only for the fact that once every four years a new Commission takes office in January - but an element of forward planning would be sensible. Instead of simply announcing prices for the imminent marketing year the Council could also determine margins within which prices the following year would be fixed.28 Advance warning of possible price falls would then be given and the farming community would be able to take these constraints into consideration in its future production plans. However, the major drawback to the introduction of a system of forward planning for CAP pricing is the inescapable fact that prices are not decided for the EC as a whole but for seven regional price zones. With differing rates of inflation in the member states, and varying fortunes in exchange rate performance, different money price changes are necessary to cover the increasing costs of farmers. The Commission’s attempts to encompass these divergent movements in a single figure - the so-called ‘objective method’ calculations - cannot cope.29 The Council has discovered that the only way to attempt to match national cost increases is to use to the full the flexibility given individual member states by the green money system. 28This procedure was followed in the UK where the agricultural support legislation provided that ‘no reduction in the price for a guaranteed particular commodity following an Annual Review may exceed 4 per cent, with the further limitation in the case of livestock and livestock products that the reductions over a period of three years may not exceed 9 per cent in total’. House of Commons,. Report from the Select Committee on Agriculture, Session 196869. HC 137, London, 1969, p 206. 29The ‘objective method’ is a series of calculations which purport to show the rise Community farmers need in the average level of support prices, on the basis of an evaluation of the devetopment of costs over a three years’ period and a comparison with movements in nonagricultural earnings. 3o Mr Roy Jenkins, in a speech given at the opening of the Royal Agricultural Show, Stoneleigh, UK, 3 July 1978.

268

National price decisions in a common context The outcome of the development has been the evolution of the annual price negotiations as a means for taking national price decisions in a common context. The President of the Commission has characterized the situation: ‘When national prices in francs, lira and pounds are affected more by green devaluations and revaluations than by the common prices, there is a process of re-nation~isation of the CAP’.30 The development creates important tensions. First, there is the contradiction between operating what is ostensibly a ‘common policy’ and the reality of member states’ regaining control over their national food and agriculture sectors through their ability, to a large extent, to set prices in their national currencies. Currently the CAP involves a set of common policy mechanisms for agricultural support, together with common funding through the Community budget, but with national support prices diverging by up to 40%; these differences are maintained by the elaborate system of MCAs.

FOOD

POLICY

November

1978

Pricejxing

under the CAP-proposition

and decision

The Commission’s view has always been that the increased significance of MCAs and the divergences between green rates of exchange and market values threaten the CAP’s structure and distort the unity of agricultural markets. When viewed against the divergences in the behaviour of member state economies and the consequent movements in exchange rates during the 197Os, however, an alternative view seems equally tenable. That is, without the green money system the CAP would not have survived the economic shocks to which it was subjected in this period. Implicitly, member states appear to support this second view as they have continued to refuse to accept Commission plans for eliminating MCAs and national price differences. The ‘re-nationalization’ of prices creates a second set of tensions between member states with appreciating and depreciating currencies, as its extent has been distinctly asymmetrical. Because of the way the green money system operates it is the countries with depreciating currencies which have most flexibility in national pricing as there tends to be a larger gap between their market rates of exchange and their green conversion rates. In the 1978/79 price negotiations the depreciators were coptent to rely for the greater part of their farm price increases on adjustments to their green conversion rates. But the appreciators were forced to argue for price increases on specific commodities, or for a higher general rise in units of account. An overview of the operation of the system for setting CAP prices as operated in the second half of the 1970s would suggest that it better suits the depreciating currency countries than the appreciators. In political terms, Ministers from the depreciators have a much easier task to ‘sell’ the results of a price package to their domestic pressure groups because of the greater flexibility in the levels at which they can set their internal prices. Ministers from the appreciators, however, have to justify much smaller rises (in nominal terms); a difficult task when success or failure tends to be judged on nominal price comparisons, even though in real terms the relative picture between countries may be completely different.3’

Can surpluses be controlled?

3’ This problem tends to be greater in the Benelux countries and Denmark because of the combination of substantial rates of inflation and relatively strong currencies. 3*According to the objective method calculations, the average rise in support prices (in ua terms) needed in 1978/9 was 4.2%. In previous years, the objective method calculations had indicated that the following rises in support prices were needed (with the actual Commission price in parentheses): 1974/75: proposals 7.2% (7.2% and 4%); 1975176: 4.2% (9.0%); 1976/77: 4.6% (7.5%): and 1977/78: 0.1% (3%). See House of Lords Select Committee on the European Community. 14th Report, Session 197778, EEC Farm Prices 7978-79 (HL 97). P 5.

FOOD

POLICY

November

1978

In its price proposals the Commission was dedicated to the application of a ‘prudent price policy’ which would reduce the rate of agricultural surplus creation in the Community. It is instructive to consider its degree of success as a pointer to the degree of difficulty of controlling surpluses. In terms of what the Commission set out to achieve there were failures - particularly in the milk sector, and in the control of the rate of change in green rates. But overall the Commission was able to effect the lowest average unit of account price rise since UK accession and one which paid little regard to the results of its own ‘objective method’ calculations.32 But to focus on the increases in unit of account prices is quite misleading, for they do not represent the increases in farm price support actually given in national currencies; in other words, they do not tell us what is actually going on ‘on the ground’ as a result of the CAP. As we have seen, the 1978 price review led, through a combination of common price increases and green rate changes, to an average farm price support increase of the order of 8%, at a time of

269

Pricefixing under the CAP-proposition

and decision

average Community inflation of some 8 to 9%. There is no significant reduction in real terms here (nor does the outcome compare favourably with the 1977 price review which led to an average increase in farm support prices of the order of 6% at a time of average inflation of 9.5%). The Commission’s difficulties are two fold. First, it labours under the political constraint set by the Council that there should be no reduction in prices in national currencies when green rate changes are taken into account. Second, there is the constraint imposed by the green money system, one of whose current features is that the unit of account used to express common prices for agricultural purposes is denominated as an average of the ‘joint float’ currencies (the German mark, Danish kroner, Belgian franc and Dutch guilder). As these currencies float upwards pulled by the mark, so all the CAP’s prices are effectively raised. Consequently the depreciating currency countries have to harmonize their national prices upwards by devaluations of their green rates. This second problem will only be reduced in scale when a basket of EC currencies is used as a denominator for the unit of account, rather than the ‘joint float’ currencies. The end result appears to be that the Community operates a price fixing system where there can be no reduction in nominal prices in national currencies, not even in Germany. In addition, a margin has to be added to allow something for Germany by way of a price increase. Finally, all the weak currency countries have to harmonize their prices upwards towards German levels, while at the same time the Community effectively refuses to adjust the German level to allow for the change in the value of the mark. With a system like this, how can the Commission ever successfully apply a ‘prudent’ price - especially since when the Commission’s proposals ‘bite’ for specific commodities, the Council then proceeds to emasculate them (as with milk in the 1978/79 price review)?33

Conclusions

33The

the between dichotomy Commission’s analysis of the need for long term price moderation and whether the Council of Ministers would accept it was raised by Graham Avery in his comment, ‘Prospects for the CAP’, Food Policy, Vol3, No 1, 1978, p 2.

270

The present mechanism for setting CAP prices has held together despite the economic shocks of the mid 1970s. Nevertheless the mechanism is experiencing increasing difficulty in coping with the extent of the resulting pressures and needs substantial modification. A mechanism which relies upon the exhaustion of the main negotiators to produce agreement is inherently suspect. This is particularly so when unrelated matters are included in the price package in order to secure agreement on them as well. The agenda becomes over long and it is difficult to give any one proposal the attention it deserves. The need for reform - covering timing, content and methods of work - is intensified by the prospect of further enlargement of the Community to 12 countries, when reaching agreement will be even more difficult. The Community’s major failure relates to its unwillingness to control surpluses in general, and the problems of surplus creation in the dairy and sugar sectors in particular. The Commission has made various proposals, but so far the Council has been unwilling to accept the political implications of adopting them. As has been indicated above, the superimposition on common price rises (in ua) of green rate adjustments that are heavily biased in an upwards direction (thus leading to large increases in farm price support in national currencies)

FOOD

POLICY

November

1978

Pricefiving under the CAP-proposition

and decision

means that the implementation of any consistent policy to control surpluses is difficult. The Council is unwilling to accept any proposal to phase out MCAs, in particular while agreement is lacking on the level of common prices which would then be achieved. In these circumstances, the Commission may have to accept that the existing green money system cannot be altered until wider progress on economic union overtakes it, and concentrate its efforts instead on controlling surpluses. A useful measure could be the introduction of a budgetary limit on total agricultural spending, to be set each year by Community Ministers of Finance, .as a means of applying discipline to the annual decisions on agricultural support prices. Alternatively, joint Agriculture and Finance Councils could be created for the annual determination of prices. Such innovations could possibly be introduced as part of an overall review of the Community’s price setting mechanisms aimed at making decision taking less cumbersome and more flexible.

Appendix Working Commission

Documents of

the

from

the

European

Communities

COM (77) 482: Proposal for a Council Regulation (EEC) relating to the fixing of representative conversion rates in agriculture (Council reference R/2601/77). COM (77) 525 and COM (78) 80: Commission proposals on the fixing of prices for certain agricultural products and on certain related measures, Vols I, II and III (Council reference R/3200/77). COM (77) 526: Guidelines concerning the development of the Mediterranean regions of the Community, together with certain measures relating to agriculture, Vols I and II (Council reference R/3 197177). COM (77) 639: Financial consequences of the agricultural price proposals and related measures for 1978179 (Council reference R/3295/77).

FOOD

POLICY

November

1978

COM (77) 674: Financial consequences of the proposals for measures to assist Mediterranean agriculture (Council reference R/3270/77). COM (77) 725: Proposals for Council Regulations in the milk sector (Council reference R/27/78). Reports

from

Lords Select Session

the

UK

Committee

House

of

on the EC,

1977-78

14th Report: EEC Farm Prices, 1978. 79 (HL 97) and supplement containing minutes of evidence (corresponding to COM (77) 482, COM (77) 525, COM (78) 80 and COM (77) 639). 15th Report: Milk (HL 98) and supplement containing minutes of evidence (corresponding to COM (77) 725). 17th Report: Enlargement of the Community (HL 102), and 33rd Report: Mediterranean Agriculture (HL 189) (corresponding to COM (77) 526, and COM (77) 674).

271