EXPLANATORY MEMORANDUM

1.CONTEXT OF THE DELEGATED ACT

Regulation (EU) No 1308/2013 of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products lays down rules regarding the producer organisations in the fruit and vegetables sector. That Regulation also empowers the Commission to adopt certain delegated and implementing acts.

Based on such an empowerment, the Commission has adopted, inter alia, Commission Delegated Regulation (EU) 2017/891. Considering the experience stemming from the implementation of operational programmes by recognised producer organisations, an update of certain aspects of Commission Delegated Regulation (EU) 2017/891 is needed with the view to facilitating the running of those operational programmes.

2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE DELEGATED ACT

Consultations, involving experts from all the 27 Member States, have been carried out within the Expert Group for Agricultural Markets established under Regulation (EU) No 1308/2013, in particular during the meetings of 7 July and 22 September 2020. These meetings allowed for a presentation of the Commission's ideas on the scope of the delegated act and on the necessary modifications of Commission Delegated Regulation (EU) 2017/891, as well as an exchange of views with the experts. The delegated act was then refined taking into account the observations and comments of the experts.

3.LEGAL ELEMENTS OF THE DELEGATED ACT

This delegated act amends Commission Delegated Regulation (EU) 2017/891 as regards:

–flexibility in terms of outsourcing activities;

–the “value of marketed production” calculation method for mushrooms intended for processing in order to reflect the reality of the production;

–extension of the scope for the use of standard flat rates or lump sums;

–the maximum amount of support for market withdrawals for processing;

–market withdrawals: simplification of the support method calculation and setting of a maximum threshold for market withdrawal amounts for free distribution;

–insurance indemnification in the calculation of the value of marketed production; and

–harvest insurance and coaching simplification.

COMMISSION DELEGATED REGULATION (EU) …/...

of XXX

amending Delegated Regulation (EU) 2017/891 as regards the activities and operational programmes of producer organisations in the fruit and vegetables sector

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 1 , and in particular Article 37(a))(ii) and (vi), (c)(i) and (ii) and (d), Article 173(1)(f), Article 223(2)(a) and Article 231(1) thereof,

Whereas:

(1)Title II of Commission Delegated Regulation (EU) 2017/891 2 lays down rules on the activities and operational programmes of producer organisations in the fruit and vegetables sector.

(2)Member States may permit producer organisations to outsource certain activities. In some Member States, producer organisations are large companies, which are often holding multiple levels of subsidiaries. The provisions on outsourcing should therefore be reformulated to cover situations where the activities are outsourced to entities closely related to the producer.

(3)In recent years, the production of mushrooms is not limited to the genus Agaricus variety anymore. Producer organisations specialised in the production of mushrooms produce other varieties of cultivated mushrooms such as Pleurotus, Shiitaké and Agrocybe, which reflect the market need and consumer expectations. Therefore, the scope of the provisions on the basis for calculation of the value of marketed production of mushrooms intended for processing should be extended in order to cover more cultivated mushrooms varieties.

(4)The insurance indemnification received in certain cases of a reduction in production may be included in the calculation of the value of marketed production. It is appropriate to clarify when it has to be included, namely in the calculation of the value of marketed production of the 12-month reference period in which it is actually paid.

(5)Expenditure under operational programmes eligible for aid is to be restricted to the actual costs incurred. However, for the purpose of the clearance of expenditure of actions and measures under operational programmes, the use by Member States of flat rates, scales of unit costs or lump sums should be aligned with the rules on rural development programmes.

(6)Chapter III of Title II of Delegated Regulation (EU) 2017/891 contains rules on crisis prevention and management measures, including, inter alia, market withdrawals. In its Special Report No 23/2019 “Farmers' income stabilisation: comprehensive set of tools, but low uptake of instruments and overcompensation need to be tackled” of 5 December 2019 3 , the European Court of Auditors raised concerns as regards some aspects of the fruit and vegetables withdrawal scheme, in particular for processed products made from withdrawn produce which could lead to an overcompensation. The European Court of Auditors recommends to set “top-ups” for withdrawals for free distribution of processed fruit and vegetables with the view to avoiding any possible effect of overcompensation. For that reason, the provisions on support for market withdrawals for free distribution of processed fruit and vegetables should make clear that payments made to processors are to compensate only for processing costs and should exclude overcompensation.

(7)Rules on support for market withdrawals relating to the application of the 5% limit of the volume of marketed production should be clarified.

(8)Taking into account that it is important to streamline, simplify and better coordinate existing instruments and complement them with new actions where necessary, the provisions on the implementation of harvest insurance actions should be aligned with the rules on rural development programmes.

(9)With a view to increasing the attractiveness of the coaching measure as a crisis prevention and management measure, the eligibility conditions relating to the coaching recipient should be softened.

(10)Producer organisations are obliged to evaluate the implementation of their operation programmes. As Article 24 of Commission Implementing Regulation (EU) 2017/892 4 has been replaced, the reference to that Article should be deleted in the rules on the evaluation report in Delegated Regulation (EU) 2017/891.

(11)Some transitional provisions are obsolete and should therefore be removed.

(12)According to Article 55 of Delegated Regulation (EU) 2017/891, Member States must notify to the Commission weighted average recorded producer prices of fruit and vegetables corresponding to the types and varieties of products, sizes and presentations as specified in Annex VI to the Regulation. In order to accurately reflect the market situation, details on the “type/variety”, “presentation/size” and “representative markets” relating to tomatoes and apples as specified in Annex VI to Delegated Regulation (EU) 2017/891 should be updated. Furthermore, in order to align as much as possible the price notification system provided for in Delegated Regulation (EU) 2017/891 with the provisions laid down in Delegated Regulation (EU) 2017/1185 5 , the list of the products for which Member States must notify weekly prices to the Commission services should be reduced from 32 to 16 products. This limited list of 16 products would be identical to the list of products set up in Annex IV to Delegated Regulation (EU) 2017/891. Finally, “United Kingdom” should be removed from the list of “representative markets”.

(13)Delegated Regulation (EU) 2017/891 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Amendments to Delegated Regulation (EU) 2017/891

Delegated Regulation (EU) 2017/891 is amended as follows:

(1)Article 13 is amended as follows:

(a)in paragraph 1, the following subparagraph is added:

‘For the purposes of Article 155 of Regulation (EU) No 1308/2013, the term “subsidiary” includes any entity in a chain of subsidiaries. However, Member States may exclude the outsourcing of activities to an entity within a chain of subsidiaries.’;

(b)paragraph 2 is replaced by the following:

‘2.    A producer organisation outsourcing an activity shall enter into a written commercial arrangement by way of a contract, agreement or protocol with another entity, including one or several of its members or a subsidiary or an entity within a chain of subsidiaries, for the purpose of carrying out of the activity concerned. The producer organisation shall remain responsible for ensuring the carrying out of the outsourced activity and overall management control and supervision of the commercial arrangement for the carrying out of the activity.

However, the activity shall be considered as carried out by the producer organisation if it is carried out by an association of producer organisations or a cooperative whose members are themselves cooperatives where the producer organisation is a member thereof or by a subsidiary or an entity within a chain of subsidiaries, complying with the 90% requirement referred to in Article 22(8).’;

(2)Article 22 is amended as follows:

(a)    in paragraph 2, point (f) is replaced by the following:

‘(f)    70% for canned mushrooms of the genus Agaricus bisporus and other cultivated mushrooms preserved in brine;’;

(b)    paragraph 10 is replaced by the following:

‘10.    Where a reduction in production occurs due to a natural disaster, climatic event, animal or plant diseases or pest infestations, any insurance indemnification received in respect of harvest insurance actions covered by Section 7 of Chapter III, or equivalent actions managed by the producer organisation or its producer members, due to those causes may be included in the value of marketed production of the 12-month reference period in which it is actually paid.’;

(3)in Article 31, paragraph 2 is replaced by the following:

‘2.    Expenditure under operational programmes eligible for aid shall be restricted to the actual costs incurred.

However, Member States may fix standard flat rates, scales of unit costs or lump sums, except for expenditure linked to crisis prevention and management measures.

In addition, Member States may decide to use differentiated standard flat rates, scales of unit costs or lump sums to take into account regional or local specificities.’;

(4)Article 45 is amended as follows:

(a)in paragraph 1, the following subparagraph is added:

‘The sum of costs of transport, sorting and packaging of products withdrawn for free distribution for processing referred to in Articles 16 and 17 of Implementing Regulation (EU) 2017/892 and in Annexes IV and V to that Regulation, added to the maximum amount of support for market withdrawals referred to in this paragraph and in paragraph 2 of this Article, shall not exceed the average ‘ex-producer organisation’ or ‘ex-processor’ market price of the processed product concerned in the previous last three years.’;

(b)paragraph 2 is replaced by the following:

‘2.    The share of market withdrawals of any given product of any given producer organisation undertaken in a given year shall not exceed:

(a)10% of the average volume of marketed production by that producer organisation during the three previous years; and

(b)in total 15 when adding the share calculated in accordance with point (a) and the shares of the market withdrawals of the two previous years calculated on the basis of the respective volume of marketed production by that producer organisation during those two previous years.

If the information on the volume of marketed production of any or all of the previous years is not available, the volume of marketed production for which the producer organisation was recognised shall be used.

However, amounts of withdrawals which are disposed of in one of the ways referred to in Article 34(4) of Regulation (EU) No 1308/2013 or any other way approved by Member States under Article 46(2) of this Regulation shall not be taken into account in that proportion.’;

(5)in Article 51, paragraph 2 is replaced by the following:

‘2.    Member States may grant additional national financing to support harvest insurance actions which are benefiting from the operational fund. However, total public support for harvest insurance shall not exceed 80% of the cost of the insurance premiums paid for by producers for insurance against losses.’;

(6)in Article 51a, paragraph 3 is replaced by the following:

‘3.    The coaching recipient shall be a recognised producer organisations, a producer group or the individual producers, non-members of a producer organisation or their associations.’;

(7)in Article 57(3), the first subparagraph is replaced by the following:

‘Evaluation shall take the form of a report in the last but one year of the implementation of the operational programme.’;

(8)in Article 80, paragraphs 2 and 3 are deleted;

(9)Annexes II, III and VI are amended in accordance with the Annex to this Regulation.

Article 2

Entry into force

This Regulation shall enter into force the seventh day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,