EUMED AGPOL WP 3 To describe and quantify

EU-MED AGPOL WP 3: To describe and quantify the EU protection systems for fruits, vegetables, and olive oil… Sophie Drogué UMR Economie Publique INRA-INAPG Istambul 9 -12 may 2005

Aim of the work l l Describe and quantify the current protection of olive oil in the European Union. Collect information on Producer Support Equivalent (PSE) and Aggregate Measure of Support (AMS); indicators of domestic support provided by the EU to this commodity production.

The Common Market Organisation (CMO) for olive oil l The CMO for olive oil is a mix of : – – Direct aid (producer aid) Price support (intervention price) Export subsidy (export refunds) Tariff protection

Direct Support l l « Production aid shall be granted for olive oil. Such aid shall be intended to contribute towards establishing a fair income for producers. The aid shall be granted to olive growers on the basis of the quantity of olive oil they actually produce. Without prejudice to the different reductions provided for in the Community rules, the aid shall be paid in full to the olive growers. For the 1998/99 to 2000/01 marketing years, the unit amount of the production aid provided for shall be ECU 132, 25/100 kg… » Source: Regulation # 136/66/CEE Art. 5

Market Support l l « Whereas the system of public buying-in constitutes a production incentive which is liable to destabilise the market; whereas buying-in must therefore be discontinued and the references to the intervention price must be deleted or replaced; » But…

Market Support (contd. ) l l « In the event of serious disturbance of the market in certain regions of the Community, in order to regularise the market, a decision may be taken to authorise bodies offering sufficient guarantees, and approved by the Member States, to conclude contracts for the storage of olive oil that they market… The measures referred to in the first paragraph may be implemented inter alia when the average price recorded on the market during a representative period is less than 95% of the intervention price applicable during the 1997/98 marketing year. » Source: Regulation # 136/66/CEE Art. 12 a

Export subsidy l « To the extent necessary to enable the olive oil and colza and rape seed harvested inthe Community to be exported on the basis of quotations or prices for those products on the world market and within the limits resulting from agreements concluded in accordance with Article 228 of the Treaty, the difference between those quotations or prices and prices in the Community may be covered by export refunds. » Source: Regulation # 136/66/CEE Art. 12 a

Protection at the border l l « Save as otherwise provided for in this Regulation, the rates of duty in the Common Customs Tariff shall apply to the products… » « in order to prevent or counteract adverse effects on the market in the Community which may result from imports of certain products, imports of one or more of such products at the rate of duty laid down in Article 10 shall be subject to payment of an additional import duty… » Source: Regulation # 136/66/CEE Art. 2 a and 2 b

The current protection l 5 tariff lines (NC 8) concerning olive oil products (and correspondance with marketing designation): – – – 15091010: virgin lampant olive oil 15091090: extra virgin olive oil, ordinary virgin olive oil 15099000: refined olive oil 15100010: crude olive-pomace oil 15100090: refined olive-pomace oil, olive-pomace oil.

The current protection (contd. ) l 5 specific (in €/100 kg) tariffs for which we have computed the ad-valorem equivalents: – – – 15091010: 122. 6 64% 15091090: 124. 5 59% 15099000: 134. 6 68% 15100010: 110. 2 9% (problem in the data ? ) 15100090: 160. 3 7% (problem in the data ? )

Collect info on PSE and AMS l l PSE = Market Price Support (MPS) + Payments based on output + Payments based on area planted + Payments based on historical entitlements + Payments based on input use + Payments based on input constraints + Payments based on overall farming income + Miscellaneous payments MPS = indicator of the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers arising from policy measures that create a gap between domestic market prices and border prices of a specific agricultural commodity at the farm-gate level.

Collect info on PSE and AMS l l The OECD has not computed the PSE fort olive oil. It does exist studies whose authors have computed the PSE for olive oil (Perugini 2001, Rapana 2003, Nucifora et al. 1997, 2001)

Collect info on PSE and AMS PSE Estimates Perugini Rapana Nucifora et al. 1989 1774. 29 1792 2300 1990 2124. 85 1541 2377 1991 2857. 05 3550 2643 1992 3121. 16 3386 2527 1993 3326. 38 3666 3254 1994 3458. 59 3560 2603 1995 1925. 87 2027 1568 1996 2819. 79 2334 2796 1997 3427. 09 3222 3288 1998 3525. 68 2757 3163 1999 3158. 97 2691 2000 2041 2001 1977

Collect info on PSE and AMS l The AMS is an indicator of the amount of domestic support for agriculture. As used in the Uruguay Round Agreement on Agriculture, the AMS refers to a measure of the gap between domestic and world prices multiplied by the quantity supported, plus any other commodity-specific transfers. Internal or domestic support reduction commitments in the Uruguay Round Agreement on Agriculture are expressed in terms of reductions in a total AMS covering all trade-distorting internal support measures for agriculture

Collect info on PSE and AMS l l The AMS for olive oil is the difference between the Applied administered price and the External reference price times the Eligible production notified to the WTO. The AMS notified for olive oil by the EU (in Mo €) 1995 -2002: 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 1380. 3 1872. 5 2267. 6 1798. 3 2070. 4 2675. 7