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      AGRICULTURE IN 1984
       Implementation of measures to rationalize the CAP
        The Commission has published its annual report on the
      situation of agriculture.
        In 1984 the Community began implementing the detailed
      proposals for rationalization of the common agricultural
      policy which it had submitted in 1983.  This was the
      culmination of several years of work by the Commission to
      adapt the policy to changed economic conditions.
        The main points of the reform of the CAP, as reflected in
      the agricultural price decisions for 1984/85 adopted on 31
      March 1984, are:
      - A realistic policy with regard to prices,
      - restoration of the single market by dismantling the
      monetary compensatory amounts and the introduction of a new
      system under which no new positive monetary compensatory
      amounts can be created,
      - milk quotas,
      - confirmation and extension to new products of the
      principle of guarantee thresholds,
      - realization of certain aids or premiums,
      - compliance with the principle of Community preference.
      (1) This Report, published in conjunction with the
      eighteenth General Report on the Activities of the European
      Communities (1984), may be obtained from the Office for
      Official Publications of the European Communities, priced
      IRL 15.30 UK  12.80 or the equyivalent in other Community
      currencies.
      In a single volume of about 440 pages, including 270 pages
      of tables, it gives a burd's eye view of all the major
      aspects of Community work in the field of the common
      agricultural policy in 1984, and detailed statistics, many
      unpublished elsewhere, on developments on the markets for
      agricultural products, agricultural structures, and the
      agricultural economy of the Community. Readers will find
      detailed information on the agricultural economy of the
      Community.  Readers will find detailed information on the
      agricultural markets in "The situation of the agricultural
      markets, 1984 report" (COM(84) 767) available in the near
      future from Commission offices.
                     
                            - 2 -
  Later in the year, the Council approved a number of  provisions put
forward by the Commission with a view to a  renewal of the Community policy
on agriculturel structures.  Also, in a Resolution, it undertook to complete
harmonization of national agricultural legislation, in  particular with
regard to animal and plant health, this  being indispensable to the
completion of the common  agricultural policy.
  The rationalization programme has got under way, and must  now be pressed
forward.  For some essential aspects, such as  the reform of the wine market
organization, or the newx  policy on structures, proposals are now beforoe
the Council.
. Record figures for production in 1984 - income risin
  In 1984, there was an exceptional increase in Community  production, and
for some products output reached new  records.
  Crop production rose very steeply, well beyond previous  highest figures;
grain productrion was nearly 150 million  tonnes.  The year-to-year
increases were 13% fort sugarbeet,  19% for potatoes, 22% for cereals asa
whole, 34% for  oilseeds and as much as 59% for durul wheat.  This was
largely due to improved yields; the weather was generally  ideal for thenew
high-yield varieties.
  With regard to livestock production, the picture was more  varied.  Output
of beef/veal, which was in the upswing part  of the cycle, was further
increased by slaughterings due to  the introduction of the milk quotas,so
that the overall  increase was about 5%; the new sysstem of control of milk
production led to a slight reduction in deliveries, of about  2% as compared
with 1983, and it looks as if deliveries will  be adjusted to the quotasin
1985.  Output of pigmeat,  poultrymeat and eggs was much the same as in
1983.
  Farmgate prices increased rather less than the prices  farmers had topay
for their inputs.  However, the effect of  the increase in output was that
agricultural incomes in the  Community showed an improvement.  Tentative
calculations by  EUROSTAT - released too late for publication in the report
-  show that the increases in real terms ranged from - 7% (in  Belgium)to
+20% (in Denmark).
              SECTORIAL INCOME INDEX, 1984 (1)
            Real change as compared with 1983 (%)
 :  D  :  F  :  I  :  NL  :  B  :  L  :  UK  :  IRL  :  DK  :  GR : EUR10
--------------------------------------------------------------------------
:+4.9 :+1.6 :-0.8 : +7.6 :-7.0 :-1.3 : +9.7 : +6.4  :+20.2 :+11.4: +3.8
--------------------------------------------------------------------------
(1) Net value added at factor cost per work unit.
Source:  EUROSTAT
         
                                  - 3 -
      OTHER MATERIAL IN THE REPORT
         The structure of the report was changed as compared with
      the 1983 report to bring together chapters dealing with
      similar subjects.  Each chapter emphasizes one or more
      subjects of major importance in 1984, including:  - the
      rationalization of the CAP,
      - the current agricultural situation,
      - the negotiations for the accession of Spain and Portugal,
      - the detailed measureds proposed by the Commission for the
      renewal of  the Community policy on agricultural
      structures,
      - problems encountered in the financing of the common
        agricultural policy.
        The 1984 Report includes, in addition, three summary
      articles on topical problems connected with the common
      agricultural policy.  These are summarized below.
      . Income disparities in agriculture in the Community
        This study, carried out on the basis of data mustered by
      the Community Farm Accountancy Data Network (FADN), analyses
      agricultural income differences as between Member State
      regions and more limited groups, defined by size or
      specialization (type of production).
         Greece is the Community country in which average farm
      incomes are lowest, and the Netherlands is the country in
      which they are the highest: the incomes being five tiles as
      high in the latter as in the former.  Differences are also
      discernible in terms of specialization: farms mainly growing
      field crops, fruit, vegetavles and flowers, and off-land
      livestock farming generally generate above average incomes,
      while beef/veal or sheepmeat farming and farms not
      specializing to any substandial extent, generally have
      below-average incomes.  In terms of size, the relativities
      are unmistakable: thez greater the economic potential of a
      farm, the higher its income per annual work unit.  As
      between regions, income disparities are particularly wide
      and average incomes in the poorest region (Basilicata, in
      Italy) are only one eighth of those generated in the
      richest region (Netherlands).
        In fact, however, these averages mask a very wide variety
      of situations; even within limited groups of farms, incomes
      vary widely.  There are poor farmers in rich regions and
      rich ones in poor regions; the same observation is valid
      with regard to types of farming.  A fundamental feature of
      Community agriculture is that it is highly diversified.
                     
                                   - 4
         In recent years, income disparities have persisted but
      generally not grown wider, and there has been very little
      change in the "prevailing order" among groups of farms.  On
      the other hand, it would seem that in the Member States and
      in the regions, the range between the extremes has grown
      wider.  One theory is that Community agriculture is tending
      to differentiate into two groups: traditional-type farmers
      on the one hand and fully-fledged farm business managers,
      deploying the best machinery and equipment and trained to      put it to best use, on the other hand.
      . The outlook for supply and demand of agricultural products
      in the Community until 1990.
         The Commission has a long-term supply and demand
      forecasting model for agricultural products in the Community
      which it has used for some years to guide policy relating to
      the markets.  On the basis of figures from the model, the
      article reviews, product by product, the outlook for
      production and consumption in 1990; it allows for measures      adopted in 1984 to rationalize certain market organizations,
      and in particular the introduction of milk quotas.
        A number of markets should, overal, be in equilibrium:
      pigmeat, poultrymeat, eggs, and potatoes; sheepmeat is a
      product of which there is a deficit in the Community, but
      the degree of self-sufficiency will improve.
                            Assuming the present trends persist
      and that the relevant  market organizations are not changed,
      it may be forecast  that supply will move well ahead of
      Community demand for  milk (despite the quotas), sugar,
      cereals, wine and/veal.   Accordingly, disposal of
      production will depend on the scope  for exports on the
      world market, of which the Community  plans to retain a fair
      share.
      . Agriculture and other food imports into the Community
        In 1983, the Community imported agricultural and other
      food products worth about 50 000 million ECU.  It is by far
      the leading world importer.  Its imports are concentrated on
      a few very specific produ t groups: raw materials for
      processing, tropical products, and catttle feed.  If only
      temperate agricultural products are considered, which the
      Community can produce itself, the products for cattle feed
      are the main items; they account for the equivalent of 9.9
      million hectares of production, i.e. 10% of the utilized
      agricultural area of the Community.
                     
                                  - 5 -
        Imports are very diversified: in 1983, more than 70
      countries sold to the Community agricultural and other food
      products worth more than 100 million ECU.  The United States
      is still the Community's leading supplier, but the most
      noteworthy development in the last ten years is the
      gradually predominant role being assumed by the developing
      countries.  The Community, in accordance with the
      recommendations made by international organizations,
      concedes favourable terms of access to its market for these
      countries - 95% of the ACP agricultural exports to the
      Community come in dudty-free and is now their leading
      customer.
        The Community's arrangements for imports of agricultural
      and other food products are criticized by some for being too
      protectionist and by others for not being protectionist
      enough.  The facts is that agricultural and other food
      imports, including those of agricultural products coming
      under EEC market organizations, are increasing in line with
      all Community imports, no more and no less; the more
      favourable terms of access to the Community market granted
      to certain industrialized countries are consistently offset
      by equivalent concessions granted to the Community.  The
      Community arrangements form a balances ensemble which has
      enabled the Community to improve its degree of  selv-
      sufficiency in food while remaining a good customer for
      other countries, especially the developing countries.
                                 *******

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