Tobacco

The common organisation of markets in tobacco stabilises prices and ensures a fair standard of living for farmers in this sector. Following the entry into force of the Mediterranean package, from 2006 this Regulation will no longer apply to the support system for this sector.

ACT

Council Regulation (EEC) No 2075/92 of 30 June 1992 on the common organisation of the market in raw tobacco [See amending acts].

SUMMARY

From 1 July 2008, products covered by this Regulation are governed by the common organisation of agricultural markets.

The Community rules introduce a common organisation of the market in raw tobacco, which makes it possible to stabilise the markets and ensure a fair standard of living for farmers by establishing a premium system, measures for production guidance and limitation, and arrangements for trade with third countries.

However, since 1 January 2006, the system of premiums and the measures designed to contain production in this Regulation have no longer been in force. Also, the “Mediterranean” package contains specific measures for this product and also for hops, cotton and olive oil.

Scope

The common organisation of the market in raw tobacco covers raw or non-manufactured tobacco and tobacco refuse falling within CN heading 2401.

Premium system

The Council fixes the uniform amount of premiums per kilogram of tobacco for each group of tobacco varieties. To receive a premium, the tobacco must meet certain quality standards, come from a production area specified for the variety concerned, and be delivered in leaf form by the producer to the premises of the first processor under a cultivation contract. The premium comprises a fixed and a variable component paid to individual producers or to groups of producers. Specific aid is granted to groups of producers.

The premium system will expire as of the end of the 2005 harvest. From 1 January 2006, for harvests from 2006 to 2009, at least 40 % of the “tobacco” component of the national ceiling will be decoupled from tobacco production. Up to 60 % of this threshold is available for aid coupled to raw tobacco production. The implementing rules have been adopted. From 2010, there will be no provision for aid coupled to raw tobacco production.

System of production limitation

The maximum guarantee threshold is set at 402 953 tonnes of raw tobacco and production is subject to a quota system. The Council allocates the quotas among Member States, which in turn allocate them to groups of producers or to individual producers. No premiums are paid in excess of the quotas allocated. However, if the quotas are exceeded, premiums are allocated to the surplus quantities, subject to a limit of 10 % of the quota allocated to the producer and provided that the surpluses are deducted from the quota for the following harvest. The Commission may authorise Member States to transfer guarantee threshold quantities from one group of varieties to another, subject to budgetary neutrality.

The production limitation system will expire as of the end of the 2005 harvest. From 1 January 2006, for harvests from 2006 to 2009, expenditure will be limited by envelopes fixed by each producer Member State.

Production orientation

The Community Tobacco Fund: this finances in particular the following:

• educational and information activities, which aim to improve public awareness of the harmful effects of tobacco consumption;
• conversion measures, which aim to help raw tobacco producers to switch production to other crops or other job-creating economic activities. Studies in this field may also receive financing.

For the 2005 harvest, the Community Tobacco Fund is financed by a 3 % deduction from the premium. For the 2006 and 2007 harvests, the deduction will amount to 4 % and 5 % respectively of aid coupled to production.

From the end of 2010, €484 million in the form of additional Community support will be available for tobacco-producing regions under rural development programmes.

Trade with third countries

The collection of any charge with an effect equivalent to a customs duty, and the application of any quantitative restriction or measure with equivalent effect are prohibited in trade with third countries.

The rates of duties under the Common Customs Tariff apply to tobacco sector products.

Protective measures may be adopted if the Community market is threatened with disturbance as a result of imports or exports.

Other provisions

Control measures. Member States are to take all necessary action to ensure and verify compliance with Community provisions concerning raw tobacco.

Comitology. There is a Tobacco Management Committee, composed of representatives of the Member States and chaired by a representative of the European Commission.

RELATED ACTS

Detailed implementing rules

Commission Regulation (EC) No 2095/2005 of 20 December 2005 laying down detailed rules for the application of Council Regulation (EEC) No 2075/92 as regards communication of information on tobacco [Official Journal L 335, 21.12.2005].

Commission Regulation No 2182/2002 of 6 December 2002 laying down detailed rules for the application of Council Regulation (EEC) No 2075/92 of 30 June 1992 with regard to the Community Tobacco Fund [Official Journal L 331, 7.12.2002].

See also

For information on the common organisation of the market in tobacco, please see the relevant legislation and the website of the Directorate-General for Agriculture.

Last updated: 11.03.2008