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Cotton

Extensive changes have been made to the aid arrangements for cotton, with part of the Community support paid to ginners (65%) being converted into a single farm payment. In order to safeguard production in certain areas, area aid will continue to make up 35% of total aid. The new arrangements will apply from 1 January 2006. Cotton is not covered by any of the common market organisations (CMOs).

ACT

Council Regulation (EC) No 864/2004 of 29 April 2004 amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, and adapting it by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the European Union.

SUMMARY

Decoupling

Extensive changes have been made to the aid arrangements for cotton, with a partial move to a system of single farm payments. The move is only partial in that 35% of aid will continue to be provided in the form of an area payment (direct aid), with the remaining 65% being provided as a single farm payment.

There has been only a partial move to the new aid arrangements so as to protect certain areas in which production would cease if the new arrangements were fully applied.

Under the previous arrangements, growers did not benefit from direct aid for cotton but rather from indirect aid paid to ginners. The total aid available per hectare in each Member State is fixed at 35% of the national allocation that producers received indirectly.

Direct aid

As in the case of other direct aid to producers, farmers must fulfil certain obligations: cross-compliance, modulation and financial discipline.

National base area

Maximum area (total)
440 000 ha
GreeceSpainPortugal
National base area370 000 ha70 000 ha360 ha
Aid in euros per eligible hectare300 000 ha > 594/ha
70 000 ha > 342.85/ha
1 039/ha556/ha

Additional support: restructuring

Reforming this sector requires financial assistance of EUR 22 million for adjustments. This expenditure will be entered in the 2007 budget.

This assistance, for restructuring programmes in production regions, will be financed by the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section as part of rural development policy.

Background

The reform of agricultural aid for cotton, tobacco, hops and olive oil and table olives was negotiated together and included in the same Regulation in what was know as the "Mediterranean package".

All these products were subsequently included (April 2004) in the comprehensive reform of the common agricultural policy (CAP) of June 2003, with the approval of the move from direct aid (aid paid by hectare, unit of output or livestock unit) to a system of single farm payments.

Cotton, tobacco, yeast, olive oil and table oils are grown in certain regions whose development is lagging behind. The reform aims to safeguard production in those regions by according priority to farmers' incomes rather than to providing aid for production. Coupled aid is to be provided for tobacco and cotton to permit adjustment to the new arrangements. Coupled aid may be paid for hops to take account of particular market situations or structural situations within a region.

The current reform affecting "Mediterranean products" is based on the Commission communication to the Council and to the European Parliament "Accomplishing a sustainable agricultural model for Europe through the reformed CAP - the tobacco, olive oil, cotton and sugar sectors ".

The current forms of aid for cotton will be abolished from 1 January 2006.

REFERENCES

ActEntry into force - Date of expiryDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC) No 864/20041.5.20041.1.2006 (regarding cotton)OJ L 161 of 30.4.2004
 
Last updated: 05.02.2008

See also

For further details, please consult the legislation on aid for cotton.

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