Howell, Paul

Archive of European Integration

2 April 1984 
English Edition 
European Communities 
EUROPEAN PARLIAMENT 
Working Documents 
1984-1985 
DOCUMENT 1-60/84 
Report 
drawn up on behalf of the Committee on Agriculture 
on the calculation of refunds for malt in line 
with real market conditions 
Rapporteur: Mr Paul HOWELL 
PE 83.218/fin. 
Or. En. 

At its sitting of 14 June 1982, the European Parliament referred the 
motion for a resolution tabled by Mr BOCKLET snd others on the calculation 
of refunds for malt in line with real market conditions (Doe. 1-289/82) 
pursuant to Rule 47 of the Rules of Procedure to the Committee on Agriculture 
as the committee responsible and to the Committee on Budgets for an opinion. 
At its meeting of 1 October 1982, the Committee on Agriculture decided 
to draw up a report and appointeq Mr HOWELL rapporteur. 
The committee considered the draft report at its meetings of 
21 February 1984 and 20 March 1984. At the last meeting it adopted the 
motion for a resolution as a whole by 13 votes to 2 with i abstentions. 
The following took part in the vote: Mr Curry, chairman; Mr Delatte, 
vice-chairman; Mr Hard (acting rapporteur); Mr Barbagli (deputizing for 
Mr Diana), Mr Bocklet, Mr Fernandez Cdepu~izjng f~r·~r Papapietro), 
Mr Gatto, Mr Helms, Mrs Herklotz, Mr Hutton (deputizing for Mr Simmonds), 
Mr Jurgens, Mr Keating <deputizing for Mr Eyraud), Mr Maffre-Bauge, 
Mr Marck, Mr Martin (deputizing for Mr Pranchere>, Mr Mertens, Mr B. Nielsen, 
Mrs Pery (deputizing for Mr Sutra>, Mr Thareau and Mr Vitale. 
The present report was tabled on 23 March 1984. 
The Committee on Budgets is not delivering an opinion. 
The deadline for tne tabli~g of amendments to this report appears 
in the draft agenda for the part-session at which it will be debated. 
- 3 - PE 83.218/fin 
~~g~ 
A MOTION FOR A RESOLUTION................................... 5 
B EXPLANATORY STATEMENT..................................... 6 
Annex: Motion for a resolution by Mr BOCKLET and others 
pursuant to Rule 47 of the Rules of Procedure on 
the calculation of refunds for malt in Line with 
real market conditions (Doe. 1-289/82).................. 10 
- 4 - PE 83.218 /fin. 
The Committee on Agriculture hereby submits to the European Parliament the 
following motion for a resolution together with explanatory statement : 
A 
MOTION FOR A RESOLUTION 
on the calculation of refunds for malt in line with real market conditions 
- having regard to the motion for a resolution tabled by Mr BOCKLET and others 
pursuant to Rule 47 of the Rules of Procedure on the calculation of refunds 
for malt in line with real market conditions (Doe. 1-289/82>, 
- having regard to the report of the Committee on Agriculture <Doe. 1-60/84), 
A. whereas the export refund for malt is based on the levy on barley, 
B. whereas the difference between the threshold price and the intervention 
price for barley has been increased, thus changing the function of the 
levy on barley, 
1. Notes that the change in the function of the barley levy, on which the 
export refund for malt is based, has led to excessive and arbitrary 
variations in refunds for malt; 
2. Fears that the present system may result in substantial expenditure from 
the EAGGF and lead to conflicts with other exporting countries in GATT; 
3. Points out that variations in malt refunds by means of subjective corrective 
factors may lead to distortions in the market and'the possibility of market 
manipulation; 
4. Considers that a more appropriate solution would consist of modifying the 
system used for calculation of export refunds for malt rather than introducing 
increasingly subjective and only partially effective corrective factors; 
5. Calls on the Commission, in consequence, to introduce a new system for 
calculating the export refunds for malt based on the difference between the 
EEC price for barley and the world market price; 
6. Instructs its President to forward this resolution to the Council and 
Commission. 
-5- PE 83.218/fin. 
B 
~~e~~~~IQ~!-~I~I~~~~l 
1. The EEC malting industry produces approximately Sm tonnes of malt, 
employs several thousand people and utilises about 800 mECU of private 
capital. The EEC exports approximately 1.4m tonnes of malt per annum, 
<the total world market is 2.4 - 2.6m tonnes.> The industry is thus 
a very important one, and the maintenance of the Community's position 
in the export markets is of vital interest. The purpose of the present 
report is to look at some of the methods and problems facing the industry, 
in the light of the resolution by Mr BOCKLET and others <Doe. 1-289/82) 
in order to see whether current Community procedures can be improved for 
the malting industry. Such a review is necessary because in the past 
few years, the Community's exports have been endangered by the policies of 
its two main competitive supply areas, Canada and Australia. Australian 
exports have increased dramatically, thus making the marketing of EEC hlalt 
abroad more difficult. For this reason, the report will go further than 
merely an examination of the method of calculation of refunds for malt, 
and examine some of the wider issues involved. 
2. Refunds are granted for malt exports in order to bridge the gap between 
the price of raw material supplied from the Community market and the price 
on the world market of the Community's competitors. Export refunds for 
malt therefore have been based on differences between EEC and world barley 
prices. 
3. It is important to be clear that there are different qualities of 
barley •. All Community intervention prices, levies, etc. are fixed for the 
cheapest barley, suitable for starch and animal feed. Higher quality barleys 
aresix-row barley, two-row winter barley and two-row spring barley. It is 
from these three latter types that malt may be produced, and each quality 
commands a premium over the lower grade. 
4. The EEC refunds have been based on the barley import levies for feed 
grain, i.e. the lowest grade of barley. There has not been a transparent 
calculation system, based on a fixed formula, but rather a refund based on 
the import levy with a series of arbitrary correctives arrived at by 
negotiation between the EEC and other exporters. This system worked fairly 
-6- PE 83.218/fin. 
well, providing that the premium for malting quality barley remained fairly 
close to the feed barley price in the Community. At a certain period 
dramatic premiums for matting barley arose, leading to fairly large fluctuations 
in the amount of restitutions that were required. These large restitutions 
were necessary if the Community was to remain competitive on the world market; 
i.e. the malsters needed a reduction in the price of matting barley. 
5. Problems arose.when a barley surplus situation ar.ose in the EEC. 
The purpose of the barley levy was then simply to prohibit the import of barley 
from third countries. Thus up to 1975, the reduction in the form of 
restitution was only derived from the barley levy which was reasonable as 
long as the levy was merely used to bring up the prices of large quantities 
of third country import barley to the price level of the Community. When 
the function of the levy changed, due to the overall barley surplus in the 
Community, the malt restitution became too high and the Commission therefore 
introduced more and more corrective factors in calculating the malt restitution. 
These corrective factors were in fact subjective and to some extent arbitrary, 
which was deemed necessary because of the way the world market was influenced 
not only by 'natural' causes, such as the quantity of barley produced, but 
also by policies adopted by major export1ng nations in order to augment their 
share of the market. For example, in Australia barley is sold to Federal 
State Barley Boards and in Canada it is sold to the Canadian Wheat Board 
and quite clearly these organisations are in a position to adjust prices in 
a way favourable to themselves. 
6. The present Community system is therefore designed not only to provide 
adequate and proper restitutions to the matting industry in the Community 
but has to take account of export policies in other countries. It is, in 
summary, not a transparent system and it is one which is not based on an 
automatic formula because such a formula would provide other exporting 
nations with pre-warning of Community malt prices, of which they would be able 
to take advantage. 
7. Some sections of the matting industry in the Community believe that a 
clearer, more transparent, automatic system would be an improvement. various 
formulae have been suggested,. which show that if they had applied over the 
last few years, the total amount of Community restitutions would have been 
lower, which means that Community costs would have been restrained. These 
arguments are always attractive, particularly in a time when the Community's 
agricultural policies are under attack for overspendinq, but they neglect 
one quintessential factor: malt has to be sold in competitive conditions 
-7- PE 83.218 /fin. 
in third countries, and in order to achieve those sales, restitutions have 
to be set accordingly. Stated baldly, lower restitutions may have reduced 
costs to the Community, but left the Community with unsold malt. 
8. Until the last few years, there has been a plentiful supply of spring 
barley within the Community. However, EEC export prices for growers have 
stimulated growth of volume cereals such as winter wheat and winter barley 
so that there has been a reduction in malting quality barley and a corres-
ponding increase in the premium for this material. In 1984, and in the fore-
seeable future, the EEC malt industry will need to import 750,000 to 1,000,000 
tonnes of matting barley per annum. Thus it would appear that a priority 
should be given to encourage the production of matting quality barley so 
that the Community has increased supplies of suitable raw material within 
the Community, thus saving on import costs. 
9. While it is true that the present system for malt refunds is subjective 
and to some extent arbitrary, it has been shown that this is at least in 
part necessitated by the trading conditions which exist. The problem with 
the present refund system is not that it is wrongly designed, but that it 
is not really adequate to enable European exporters to compete. For example 
the Australian and Canadian Wheat and Barley Boards can be selective in 
their offer of barley to satisfy certain market conditions. This flexibility 
does not exist within the Community. Furthe~ refunds in the Community are 
guaranteed on a block basis and do not take into account the different distances 
which exist between certain markets. For example, the same restitution is 
offered for exports to Switzerland as exports to Japan. A refinement 
of the present system is required rather than a fundamental chang~ 
10. As has been stated, incentives for growing spring malting barley in 
the Community should be increased in order to ensure suitable supplies of 
the necessary raw material. 
11. There is some evidence of dumping or quasi-dumping from certain other 
trading groups in third countries. Action at GATT level, together with the 
necessary political and economic moves are necessary to attempt to counter 
these. 
-8- PE 83.218 /fin. 
I 
12. The ••lting industry is one which has not grown up to dispose of 
artificial surpluses created by C~unity policies, but one which has 
existed for •any years, employs Many thousands of people and provides 
substantial incoMe for Member States. It exists in a very competitive 
world Market, and deserves political and economic support in order to 
ensure its continuance and prosperity. 
-9- PE 83.218/fin. 
MOTION FOR A RESOLUTION (DOCUMENT 1-289/82) 
tabled by Mr BOCKLET, Mr FROH, Mr DELATTE, Mr CURRY, Mr ALBER, 
Mr LOCKER, Mr I. FRIEDRICH, Mr IRMER and Mr MERTENS 
PURSUANT TO Rule 47 of the Rules of Procedure 
ANNEX 
on the calculation of refunds for malt in line with real market conditions. 
A. whereas the guarantee price for cereals is generally considerably higher 
than the price on the world market, 
B. whereas a refund to cover the difference between the Community price for 
barley and the price on the world market is a prerequisite for the export 
of processed agricultural products such as malt, 
C. whereas the levy on barley is no longer an appropriate means of regulating 
the malt export market, 
D. whereas the Commission's criteria for fixing the amount of the refund for 
malt are therefore largely subjective, 
E. concerned that loss of confidence in the fixing of the malt refund will 
lead to large-scale contractual agreements within a short space of time, 
F. concerned that as a result, and because refunds are fixed according to 
subjective criteria bearing little relation to the market, inordinately 
large refunds will be paid, 
G. concerned that this will impair relations within GATT, 
H. whereas an improved system of refunds would mean that considerable budgetary 
resources could be saved every year, 
1. Calls for a new system for the calculation of refunds for malt which is 
no longer tied to the levy on barley; 
2. Demands that the malt refund be calculated according to the objective 
criterion of the difference between the EEC price for barley and prices 
on the world market; 
3. Demands that, in the interests of restoring confidence, the refund for 
malt calculated in this way should not be altered or suspended without 
very good reason; 
4. Instructs its President to forward this resolution to the Council and 
the Commission. 
- 10 - PE 83.218/fin/Ann. 
• 


Report drawn up behalf of the Committee on Agriculture on the calculation of refunds for malt in line with real market conditions. Working Documents 1984-85, Document 1-60/84, 2 April 1984.

2 April 1984 English Edition European Communities EUROPEAN PARLIAMENT Working Documents 1984-1985 DOCUMENT 1-60/84 Report drawn up on behalf of the Committee on Agriculture on the calculation of refunds for malt in line with real market conditions Rapporteur: Mr Paul HOWELL PE 83.218/fin. Or. En. At its sitting of 14 June 1982, the European Parliament referred the motion for a resolution tabled by Mr BOCKLET snd others on the calculation of refunds for malt in line with real market conditions (Doe. 1-289/82) pursuant to Rule 47 of the Rules of Procedure to the Committee on Agriculture as the committee responsible and to the Committee on Budgets for an opinion. At its meeting of 1 October 1982, the Committee on Agriculture decided to draw up a report and appointeq Mr HOWELL rapporteur. The committee considered the draft report at its meetings of 21 February 1984 and 20 March 1984. At the last meeting it adopted the motion for a resolution as a whole by 13 votes to 2 with i abstentions. The following took part in the vote: Mr Curry, chairman; Mr Delatte, vice-chairman; Mr Hard (acting rapporteur); Mr Barbagli (deputizing for Mr Diana), Mr Bocklet, Mr Fernandez Cdepu~izjng f~r·~r Papapietro), Mr Gatto, Mr Helms, Mrs Herklotz, Mr Hutton (deputizing for Mr Simmonds), Mr Jurgens, Mr Keating <deputizing for Mr Eyraud), Mr Maffre-Bauge, Mr Marck, Mr Martin (deputizing for Mr Pranchere>, Mr Mertens, Mr B. Nielsen, Mrs Pery (deputizing for Mr Sutra>, Mr Thareau and Mr Vitale. The present report was tabled on 23 March 1984. The Committee on Budgets is not delivering an opinion. The deadline for tne tabli~g of amendments to this report appears in the draft agenda for the part-session at which it will be debated. - 3 - PE 83.218/fin ~~g~ A MOTION FOR A RESOLUTION................................... 5 B EXPLANATORY STATEMENT..................................... 6 Annex: Motion for a resolution by Mr BOCKLET and others pursuant to Rule 47 of the Rules of Procedure on the calculation of refunds for malt in Line with real market conditions (Doe. 1-289/82).................. 10 - 4 - PE 83.218 /fin. The Committee on Agriculture hereby submits to the European Parliament the following motion for a resolution together with explanatory statement : A MOTION FOR A RESOLUTION on the calculation of refunds for malt in line with real market conditions - having regard to the motion for a resolution tabled by Mr BOCKLET and others pursuant to Rule 47 of the Rules of Procedure on the calculation of refunds for malt in line with real market conditions (Doe. 1-289/82>, - having regard to the report of the Committee on Agriculture <Doe. 1-60/84), A. whereas the export refund for malt is based on the levy on barley, B. whereas the difference between the threshold price and the intervention price for barley has been increased, thus changing the function of the levy on barley, 1. Notes that the change in the function of the barley levy, on which the export refund for malt is based, has led to excessive and arbitrary variations in refunds for malt; 2. Fears that the present system may result in substantial expenditure from the EAGGF and lead to conflicts with other exporting countries in GATT; 3. Points out that variations in malt refunds by means of subjective corrective factors may lead to distortions in the market and'the possibility of market manipulation; 4. Considers that a more appropriate solution would consist of modifying the system used for calculation of export refunds for malt rather than introducing increasingly subjective and only partially effective corrective factors; 5. Calls on the Commission, in consequence, to introduce a new system for calculating the export refunds for malt based on the difference between the EEC price for barley and the world market price; 6. Instructs its President to forward this resolution to the Council and Commission. -5- PE 83.218/fin. B ~~e~~~~IQ~!-~I~I~~~~l 1. The EEC malting industry produces approximately Sm tonnes of malt, employs several thousand people and utilises about 800 mECU of private capital. The EEC exports approximately 1.4m tonnes of malt per annum, <the total world market is 2.4 - 2.6m tonnes.> The industry is thus a very important one, and the maintenance of the Community's position in the export markets is of vital interest. The purpose of the present report is to look at some of the methods and problems facing the industry, in the light of the resolution by Mr BOCKLET and others <Doe. 1-289/82) in order to see whether current Community procedures can be improved for the malting industry. Such a review is necessary because in the past few years, the Community's exports have been endangered by the policies of its two main competitive supply areas, Canada and Australia. Australian exports have increased dramatically, thus making the marketing of EEC hlalt abroad more difficult. For this reason, the report will go further than merely an examination of the method of calculation of refunds for malt, and examine some of the wider issues involved. 2. Refunds are granted for malt exports in order to bridge the gap between the price of raw material supplied from the Community market and the price on the world market of the Community's competitors. Export refunds for malt therefore have been based on differences between EEC and world barley prices. 3. It is important to be clear that there are different qualities of barley •. All Community intervention prices, levies, etc. are fixed for the cheapest barley, suitable for starch and animal feed. Higher quality barleys aresix-row barley, two-row winter barley and two-row spring barley. It is from these three latter types that malt may be produced, and each quality commands a premium over the lower grade. 4. The EEC refunds have been based on the barley import levies for feed grain, i.e. the lowest grade of barley. There has not been a transparent calculation system, based on a fixed formula, but rather a refund based on the import levy with a series of arbitrary correctives arrived at by negotiation between the EEC and other exporters. This system worked fairly -6- PE 83.218/fin. well, providing that the premium for malting quality barley remained fairly close to the feed barley price in the Community. At a certain period dramatic premiums for matting barley arose, leading to fairly large fluctuations in the amount of restitutions that were required. These large restitutions were necessary if the Community was to remain competitive on the world market; i.e. the malsters needed a reduction in the price of matting barley. 5. Problems arose.when a barley surplus situation ar.ose in the EEC. The purpose of the barley levy was then simply to prohibit the import of barley from third countries. Thus up to 1975, the reduction in the form of restitution was only derived from the barley levy which was reasonable as long as the levy was merely used to bring up the prices of large quantities of third country import barley to the price level of the Community. When the function of the levy changed, due to the overall barley surplus in the Community, the malt restitution became too high and the Commission therefore introduced more and more corrective factors in calculating the malt restitution. These corrective factors were in fact subjective and to some extent arbitrary, which was deemed necessary because of the way the world market was influenced not only by 'natural' causes, such as the quantity of barley produced, but also by policies adopted by major export1ng nations in order to augment their share of the market. For example, in Australia barley is sold to Federal State Barley Boards and in Canada it is sold to the Canadian Wheat Board and quite clearly these organisations are in a position to adjust prices in a way favourable to themselves. 6. The present Community system is therefore designed not only to provide adequate and proper restitutions to the matting industry in the Community but has to take account of export policies in other countries. It is, in summary, not a transparent system and it is one which is not based on an automatic formula because such a formula would provide other exporting nations with pre-warning of Community malt prices, of which they would be able to take advantage. 7. Some sections of the matting industry in the Community believe that a clearer, more transparent, automatic system would be an improvement. various formulae have been suggested,. which show that if they had applied over the last few years, the total amount of Community restitutions would have been lower, which means that Community costs would have been restrained. These arguments are always attractive, particularly in a time when the Community's agricultural policies are under attack for overspendinq, but they neglect one quintessential factor: malt has to be sold in competitive conditions -7- PE 83.218 /fin. in third countries, and in order to achieve those sales, restitutions have to be set accordingly. Stated baldly, lower restitutions may have reduced costs to the Community, but left the Community with unsold malt. 8. Until the last few years, there has been a plentiful supply of spring barley within the Community. However, EEC export prices for growers have stimulated growth of volume cereals such as winter wheat and winter barley so that there has been a reduction in malting quality barley and a corres-ponding increase in the premium for this material. In 1984, and in the fore-seeable future, the EEC malt industry will need to import 750,000 to 1,000,000 tonnes of matting barley per annum. Thus it would appear that a priority should be given to encourage the production of matting quality barley so that the Community has increased supplies of suitable raw material within the Community, thus saving on import costs. 9. While it is true that the present system for malt refunds is subjective and to some extent arbitrary, it has been shown that this is at least in part necessitated by the trading conditions which exist. The problem with the present refund system is not that it is wrongly designed, but that it is not really adequate to enable European exporters to compete. For example the Australian and Canadian Wheat and Barley Boards can be selective in their offer of barley to satisfy certain market conditions. This flexibility does not exist within the Community. Furthe~ refunds in the Community are guaranteed on a block basis and do not take into account the different distances which exist between certain markets. For example, the same restitution is offered for exports to Switzerland as exports to Japan. A refinement of the present system is required rather than a fundamental chang~ 10. As has been stated, incentives for growing spring malting barley in the Community should be increased in order to ensure suitable supplies of the necessary raw material. 11. There is some evidence of dumping or quasi-dumping from certain other trading groups in third countries. Action at GATT level, together with the necessary political and economic moves are necessary to attempt to counter these. -8- PE 83.218 /fin. I 12. The ••lting industry is one which has not grown up to dispose of artificial surpluses created by C~unity policies, but one which has existed for •any years, employs Many thousands of people and provides substantial incoMe for Member States. It exists in a very competitive world Market, and deserves political and economic support in order to ensure its continuance and prosperity. -9- PE 83.218/fin. MOTION FOR A RESOLUTION (DOCUMENT 1-289/82) tabled by Mr BOCKLET, Mr FROH, Mr DELATTE, Mr CURRY, Mr ALBER, Mr LOCKER, Mr I. FRIEDRICH, Mr IRMER and Mr MERTENS PURSUANT TO Rule 47 of the Rules of Procedure ANNEX on the calculation of refunds for malt in line with real market conditions. A. whereas the guarantee price for cereals is generally considerably higher than the price on the world market, B. whereas a refund to cover the difference between the Community price for barley and the price on the world market is a prerequisite for the export of processed agricultural products such as malt, C. whereas the levy on barley is no longer an appropriate means of regulating the malt export market, D. whereas the Commission's criteria for fixing the amount of the refund for malt are therefore largely subjective, E. concerned that loss of confidence in the fixing of the malt refund will lead to large-scale contractual agreements within a short space of time, F. concerned that as a result, and because refunds are fixed according to subjective criteria bearing little relation to the market, inordinately large refunds will be paid, G. concerned that this will impair relations within GATT, H. whereas an improved system of refunds would mean that considerable budgetary resources could be saved every year, 1. Calls for a new system for the calculation of refunds for malt which is no longer tied to the levy on barley; 2. Demands that the malt refund be calculated according to the objective criterion of the difference between the EEC price for barley and prices on the world market; 3. Demands that, in the interests of restoring confidence, the refund for malt calculated in this way should not be altered or suspended without very good reason; 4. Instructs its President to forward this resolution to the Council and the Commission. - 10 - PE 83.218/fin/Ann. • 

Report drawn up behalf of the Committee on Agriculture on the calculation of refunds for malt in line with real market conditions. Working Documents 1984-85, Document 1-60/84, 2 April 1984.

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