Common organisation of agricultural markets

The European Union establishes common rules for agricultural markets. In particular, these rules concern public intervention in the markets, quota and aid schemes, marketing and production standards, and trade with third countries.

ACT

Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) [See amending acts].

SUMMARY

The common organisation of agricultural markets refers to the legal framework established at European level for certain agricultural sectors. The agricultural sectors concerned are listed in Annexes I and II to the Regulation.

The European Union (EU) therefore provides common rules for managing agricultural markets, standards for marketing agricultural products and for importing and exporting them to/from the European Union.

INTERNAL MARKET

Market intervention

In order to ensure stability in the markets and a satisfactory standard of living for the agricultural community, a system of price support has been developed in parallel to the introduction of direct support schemes.

The price support system takes account of the needs of each agricultural sector and their interdependence. The measures take the form of:

• public intervention in the markets for agricultural products;
• the payment of aid for the private storage of cereals, rice, sugar, olive oil and table olives, beef and veal, milk and milk products, pigmeat, sheepmeat and goatmeat.

Special intervention measures

The EU may take exceptional measures in order to support markets in crisis. For example, these measures may be necessary in the case of the spread of animal diseases or natural disasters which have repercussions for agricultural markets.

Quota schemes

National production quotas are fixed for sugar and milk. Member States then distribute these between the producing undertakings. This Regulation particularly specifies the methods of transfer for quotas between several undertakings and management of surplus production. This includes producer assessments by Member States.

Aid schemes

Aid is also provided for the following sectors:

• sugar (production refund measures);
• milk and milk products, olive oil and table olives, fruits and vegetables, and apiculture products;
• programmes promoting the consumption of fruit and milk in schools;
• wine and hops sectors;
• silkworm rearing.

MARKETING AND PRODUCTION

The Commission may impose marketing standards for certain agricultural products. For example, these standards may relate to the quality of the products, their labelling, storage or even their transport.

This Regulation imposes additional rules for the production and marketing of products which have a protection label in the wine sector. These labels are the recognised designations of origin, geographical indications and the term ‘traditional’. The Regulation describes the application process for producers wishing to obtain one of these labels.

Producer and interbranch organisations

This Regulation sets the rules concerning the recognition and operation of producer and interbranch organisations.

In particular, producer organisations must develop a joint programme of production and be able to adapt to demand.

Interbranch organisations do not only consist of producers. They may include representatives from the economic sectors connected with the production, trade or processing of agricultural products. In particular, interbranch organisations aim to optimise the product production and processing costs.

TRADE WITH THIRD COUNTRIES

In principle, the levying of any charge having equivalent effect to a customs duty and the application of any quantitative restriction or measure having equivalent effect are prohibited in trade with third countries.

Imports

The Commission can require the presentation of import licences for products from certain sectors: cereals, rice, sugar, seed, olive oil and table olives, flax and hemp, bananas, wine, live plants, beef and veal, pigmeat, sheepmeat and goatmeat, poultry, milk and milk products, eggs and agricultural ethyl alcohol.

The import duties in the Common Customs Tariff apply to these products, although specific provisions are provided for some of them. In certain cases, these import duties may be suspended or additional duties may be applied.

These particular provisions apply specifically to imports of mixtures of cereals, rice or cereals and rice. The import duty depends on the composition of the mixture. In addition, preferential arrangements are established for sugar and specific import conditions are set for hemp and hops.

Furthermore, the Commission may provide import tariff quotas, specifically limits on the volume of goods which may be imported with a reduced customs duty. The tariff quotas are managed by the Commission and administered so as to avoid any discrimination.

Exports

The Commission may require the presentation of export licences for products in the sectors pertaining to cereals, rice, sugar, olive oil and table olives, fresh and processed fruits and vegetables, wine, beef and veal, pigmeat, sheepmeat and goatmeat, poultry, milk and milk products, eggs and agricultural ethyl alcohol.

The export of certain products may be supported by export refunds which cover the difference between global and EU market prices. These may be differentiated according to the destination and are fixed periodically by the Commission, taking account of developments in the Union’s markets and global market developments. Specific provisions govern export refunds for malt in storage, cereals and beef and veal.

Management of export quotas in the milk and milk products sector and special import treatment by third countries are also regulated.

Competition

European competition law is applicable. There are however exceptions provided for by Article 176 of the Regulation for which the Commission allows agreements and concerted practices. The Regulation also provides for this type of exception in the fruit and vegetable and tobacco sectors.

Furthermore, the European system of State aid applies, in principle, to the agricultural sectors. However, the Regulation provides specific provisions for State aid in the milk and wine sectors.

Committee procedure

The Commission is assisted by the Management Committee for the Common Organisation of Agricultural Markets.

Context

Before this Regulation was adopted, each agricultural sector had its own common market organisation. At European level there was a multitude of organisations of agricultural markets. This legal framework simplifies and unifies the different regulations which existed previously.

Last updated: 04.03.2011