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1. One function of the Intergovernmental Group on Citrus Fruit is to monitor global policy developments affecting international trade in citrus fruit. This document attempts to summarise some of the main changes in citrus policy since the Group last met in April 1996. Members are requested to comment, update, and/or expand the information presented. The information contained in this document reflects that available to the Secretariat up to 30 June 1998.
2. The more significant policy developments affecting the world citrus economy since the Group’s Eleventh Session are related to the European Community (Section II), particularly its reform of the Common Market Organisation (CMO) for fruits and vegetables, and thus their prominence in this document. Policy developments in other countries are also summarised (Section III).
3. On 1 January 1997, Regulation 1035/72, which embodied the main elements of the CMO for the fruits and vegetable sector in the EC, was replaced by Regulation 2200/96. Additional implementation rules for the new CMO have been laid down, inter alia, for the functioning of producer organisations [ Regulation 411/97, OJ L 62.] and operational funds [ Regulation 412/97, OJ L 62. Further explained under II A c).] .
4. The reform of the fruit and vegetable sector is part of the more global reform of the EC Common Agricultural Policy (CAP). The main aim of the reform "is to enable the sector to become more competitive and better structured, capable of responding swiftly to market trends and situations, and to ensure that the level of Community expenditure from which it benefits does more to encourage long-term development rather than the disposal of structural surpluses." [ Bulletin EC 7/8-1996.] .
5. Under the previous regime a large part of the EC budget for fresh fruit and vegetables was allocated to intervention measures (300 million ECU) and to export refunds (200 million ECU). With this reform the EC is partially shifting its policy from market intervention measures to supporting producers through producer organisations and their recognised operational programmes.
6. Under Regulation 2200/96, and taking into account the implementation of the Uruguay Round Agreement (URA), intervention support will decrease to around 100 million ECU, export refunds will be financed up to approximately 80 million ECU, while a new item relating to operational funds will receive at least 300 Million ECU.
7. The four main elements of the CMO for fruits and vegetables are: (a) quality classification of products; (b) intervention arrangements; (c) producer organisations; and (d) trade with third countries. The main features of these elements are discussed in some detail in the following paragraphs.
8. Although the process of harmonization of citrus standards by the EC, in accordance with those of the United Nations Economic Commission for Europe (UN/ECE) has not yet begun, once these quality standards are established, they will be known as "marketing standards", rather than quality standards. This shift to UN/ECE standards is dictated by the view that EC quality standards should be more flexible and less detailed.
9. Domestic intervention before the reform was largely based on the buying-in of excess production and the compensation for voluntary withdrawals by producer organisations. Guaranteed threshold prices existed for both fresh and processed fruit and vegetables, and aid was made available to assist in their disposal and processing. Producer organizations were allowed to fix a withdrawal price below which they would not offer their produce for sale. The EC then provided compensation to the producer groups at the withdrawal price.
10. The withdrawal of products from the market by producer groups has been maintained in the new CMO. However, the concept of the withdrawal price, both in the sense of threshold to trigger withdrawals, and in the sense of providing a desirable minimum income for growers, was eliminated [ Similarly, basic prices and buying-in prices have no role in the new intervention system and, thus, no longer exist.] . Since 1 January 1997, instead of there being a withdrawal price, the EC Commission has established the withdrawal compensation levels shown in Table 1.
11. Under the new CMO, the decision rests with the producer organization as to whether or not the produce is to be withdrawn, and the organization also determines the appropriate period and quantity of product to be withdrawn. [ Products withdrawn from the market shall be, inter alia , distributed free of charge to charitable organizations, penal institutions, hospitals, old people’s homes, etc. They may also be used for non-food purposes such as animal feed, or diverted to the processing industry, provided that this does not distort competition for the industries concerned.] The members of the organization receive the EC withdrawal compensation for the quantity withdrawn, and in addition, the producer organization may provide a supplement to the EC withdrawal compensation (up to an established limit).
12. In the case of widespread structural imbalances and the possibility of large volumes to be put up for intervention, a threshold can be established before the marketing year. However, this might lead to lower intervention compensation in the subsequent marketing years.
13. As mentioned above, internal market regulations supporting the fresh fruit and vegetable sector under the previous CMO included compensation for the withdrawal of fresh produce from the market. The system was operated by the intervention agencies in Member States through the action of registered producer organizations.
14. The encouragement and development of producer organizations (including those specific for citrus fruit) remains a central feature in the new CMO. The new regulation aims at reinforcing producer organizations or giving incentives for the creation of new ones, by, inter alia, providing them with financial assistance.
15. The basic objectives of the producer organizations, within the scope of the CMO, should be to: a) ensure that production is planned and adjusted to demand, particularly in terms of quality and quantity; b) promote the "...concentration of supply..." and the marketing of the produce of members; c) reduce production costs and stabilise producer prices; and d) promote the use of appropriate cultivation practices and production techniques, and environmentally sound waste-management practices.
16. In order to be eligible for EC financial assistance, producer organizations need to be recognised by Member States of the EC, which shall check at regular intervals to ascertain that the organizations meet the recognition criteria laid down by the new CMO. According to the reform of the CMO, these criteria include the establishment of an internal operational fund maintained by financial contributions levied on members. EC financial assistance to the producer organisations will match the contributions of members to the operational fund, but is generally limited to 50 percent of the actual expenditures of the operational fund.
17. Operational funds may be used, inter alia, to: a) finance market withdrawals (although limits are set on the proportion of the operational fund which may be used for this purpose); and b) finance operational programmes submitted to, and approved by, the competent national authority (see paragraphs 19 and 20).
18. The financing of the withdrawals by producer organizations may be used either as a supplement to Community withdrawal compensation, or to allow withdrawals for products not included among those for which EC compensation is provided. EC Member States may set a maximum level for the producer organization’s withdrawal compensation or supplement. However, the amount of the producer organization supplement added to the amount of the EC withdrawal compensation may not exceed the maximum level of withdrawal prices applying in the 1995/96 marketing year. The proportion of an operational fund which may be used to finance withdrawals may not exceed 60 percent in the first year; a limit which decreases every year until it reaches 30 percent in the sixth year, remaining constant thereafter.
19. To qualify for EC financial assistance, an operational programme has to, inter alia, pursue the following objectives: a)the improvement of product quality; b) the enhancement of the product’s commercial value; c) the promotion of the product at the consumer level; d) the creation of an organic product line; e) the promotion of methods of production respecting the environment; and f) the development of environmentally sound techniques.
20. Operational programmes cannot cover: (a) administrative or operational charges; (b) expenditures for fruit and vegetables produced by organisation members outside the EC; (c) the supplement of member income or prices; or (d) brand advertising. Programmes should also exclude operations that could lead to distortion of competition in other areas of business undertaken by the producer organisation (i.e. cross subsidisation).
21. The provisions of the new regulation dealing with trade with third countries are basically unchanged from those laid down in the previous CMO. Recent changes in the rules concerning trade (mainly the entry price system) were largely the result of the implementation of the URA, which was discussed in detail at the Eleventh Session of the Group [ CCP: CI 96/7 and CCP: CI 96/CRS.9.] .
22. In brief, URA trade commitments included the transformation of trade barriers into a tariff equivalent, to be reduced by at least 15 percent on each single product (and an average 36 percent for agricultural products overall) over the implementation period, as well as reduction in export subsidies.
23. In the case of citrus fruit (excluding grapefruit and limes for which there was no minimum import price), the EC modified its minimum import (or "reference") price system to make it compatible with the URA. According to the modified ("entry price") system, if the actual entry price of a particular consignment is below a specified minimum, a countervailing charge is levied.
24. Countervailing charges under the new system are applied in various steps. If the import price moves between 92-100 percent of the entry price, an amount of duty is charged equal to the difference between the import price and the minimum entry price. If the import price falls below the 92 percent level, the maximum countervailing charge, or Maximum Tariff Equivalent (MTE), is levied. The MTE is also specified in the tariff schedules and, in accordance to the URA, is to be reduced over the transition period (1995-2000). Furthermore, the minimum entry price will be reduced by the same amount (in ECU) by which the MTE is reduced [ Table 5 shows EC (Most Favored Nation), base period and URA bound, tariffs, MTEs and entry prices for Citrus.] .
25. The URA Special Safeguard clause is applicable if either the volume of imports from third countries exceeds a trigger level or if import prices fall below a trigger level. The corresponding additional duty would be maintained only until the end of the year in question and may not exceed one third of the customs duty normally applied.
26. In the case of exports, the export refund system remains operational (and applicable, inter alia, to exports of oranges and lemons), although bound by the URA commitments on the level of the subsidies and volumes of subsidised exports. According to the URA, expenditures on export subsidies for all products are to be reduced by 36 percent on average, and the volume of subsidised exports has to be reduced by 21 percent, over the implementation period.
27. EC Regulation 2202/96 established an new aid scheme for producer organisations which deliver certain citrus fruits [ Namely lemons, grapefruit, oranges, mandarins and clementines processed into juice, and clementines and satsumas processed into segments.] for processing. Such measures are intended to stabilise agricultural markets and were applicable as of the 1997/98 marketing year.
28. This new scheme is based on contracts between the recognised producer organisations under Regulation 2200/96 and processors. The aid under this scheme is granted to the producer organisation, as opposed to compensation paid to processors under the previous scheme. The amount of the aid is shown in Table 2.
29. The Regulation also sets threshold levels, over which the aid fixed for any marketing year shall be reduced by 1 percent for every 1 percent of quantities above the threshold level. The threshold levels are: a) 444 000 tonnes for lemons; b) 6 000 tonnes for grapefruit; c) 1 189 000 tonnes for oranges; and d) 320 000 tonnes for mandarines, clementines and satsumas (taken together).
30. Trade with third countries is generally regulated by a system of ad valorem Common Custom Tariffs, which apply to imports from third countries, and a minimum import price system (see paragraphs 23 and 24) aimed at protecting EC producers during their main marketing period (Table 3). This system also includes the levying of specific duties on oranges, clementines and some other mandarines and lemons.
31. The commercial relationship between the EC and third countries of the Mediterranean region is governed by preferential (association, co-operation, etc.) agreements. Trade in citrus fruit constitutes an important element within the framework of some of these Euro-Mediterranean Agreements. The following paragraphs summarise the main changes regarding citrus taking place within these agreements since 1996.
32. Agreements have been reached on the application of preferential entry prices for limited volumes of orange imports into the EC originating in Morocco (300 000 tonnes), Cyprus (48 200 tonnes), Egypt (8 000 tonnes) and Israel (200 000 tonnes).
33. Orange imports within the above quotas are free of specific duties if the preferential entry prices are respected. The agreed preferential entry prices for oranges are:
1996/97; 273 ECU/tonne
1997/98; 271 ECU/tonne
1998/99; 268 ECU/tonne
1999/00; 266 ECU/tonne
2000/01 and thereafter; 264 ECU tonne.
34. Morocco benefits from a similar concession for a limited volume of clementines (110 000 tonnes), if the following preferential entry prices are respected:
1997/98; 493 ECU/tonne
1998/99; 490 ECU/tonne
1999/00; 487 ECU/tonne
2000/01 and thereafter; 484 ECU tonne.
35. In addition to the above, changes relating to the concessions on ad valorem tariffs for Israel and Tunisia are summarised in Table 4.
36. A bilateral agreement reached between the EC and Argentina in 1996 [ Council Decision 96/611/EC (OJ L 271), 24 October 1996. ] , allows for, inter alia, the levying of the MTE for lemons up to a level of 84 percent (as opposed to 92 percent [ See paragraphs 23 and 24 and Table 3.] ) of the entry price. This concession incorporates four additional steps (10, 12, 14 and 16 percent), for the period between 1 May and 31 July [ As well as three additional steps (10, 12, and 14 percent) for the period between 1 and 15 August.] , before the MTE is levied. Consequently, if the price of a particular lot is up to 10, 12, 14 or 16 percent lower than the entry price level, the specific duty shall be 10, 12, 14 or 16 percent, as appropriate, of the agreed entry price. If the entry price of a particular lot is less than 84 percent of the agreed entry price, the MTE shall apply. This concession is applicable to all third countries exporting lemons during the same period.
37. Commission Directive 98/2 of 8 January 1998 which came into force on 1 May 1998 provided new requirements for citrus imports from third countries, in regards to citrus canker (Xanthomonas campestris), brown rot (Cercospora angolensis) and black spot (Guiniardia citricarpa). Commission Decision 98/83 of the same date provided a list of third countries or regions which have been recognised as free of citrus canker, black, spot or brown rot. Free areas are exempted from the above-mentioned requirements, while others will have to follow reinforced procedures and treatment at the production level and in packing houses. (A list of free areas is annexed).
38. Since the coming into force of the single EC market, the free circulation of EC produced citrus was granted through the EC Phytosanitary Directive 77/93. Also, according to this Directive imports of citrus originating in third countries were allowed to circulate freely in the EC, with the exception of Greece, Italy and Corsica which the Directive recognised as "protected zones", due to phytosanitary reasons. Imports of citrus originating in third countries (with the exception of grapefruit) were not allowed in these protected zones.
39. Subsequently in 1996, according to Commission Directive 96/15 the phytosanitary risks which formed the basis for the above decision no longer existed, and thus, as of 1 April 1996 Italy, Greece and Corsica ceased to be recognised as "protected zones". Italy and Greece have yet to implement this Directive by passage of national legislation which would permit imports of citrus from third countries.
40. Since the "Master" contract between orange growers and processors was ruled invalid in 1996 and no longer viable as a basis to determine producer prices, growers have to negotiate the prices they receive for their product directly with processors. In the past, the "Master" contract guaranteed growers a certain price depending on the length of the contract. Although the contract provided a secure form of forward pricing, growers were not satisfied with some of its elements [ An indicative series of grower prices for oranges can be found indocument CCP: CI 98/CRS.1. ] .
41. In 1997, the value added tax (ICMS [ "Imposto sobre Circulacao de Mercadorias e Servicios".] ) was eliminated for exports of raw materials and semi-manufactured products. At the time of elimination, the ICMS represented approximately US $100 per tonne on exports of Frozen Concentrated Orange Juice.
42. In October 1996, Colombia removed the requirement that fruits and vegetables (including citrus fruit) originating from California and Florida (United States) be fumigated with methyl bromide before export. This requirement had been established in response to concerns over oriental fruit fly detections in California and the issue of the Caribbean fruit fly in Florida.
43. In April 1995, the United States requested consultations under the World Trade Organization’s (WTO) dispute settlement procedures after citrus exporters in the United States complained that grapefruit and orange shipments had been detained at the port for up to three weeks, causing substantial levels of decay. After two rounds of talks, the Republic of Korea revised the inspection procedures to allow fresh fruit and vegetables to clear customs within five working days.
44. In December 1996, the Republic of Korea announced the implementation of specific changes to its import clearance procedures. The Plant Protection Act, which revised the National Plant Quarantine Service testing procedures became effective in December 1996. A government gazette notice published in December 1996 revised the Ministry of Health and Welfare guidelines on sampling and testing procedures.
45. Recent incentives provided by the Government of Morocco to renew and plant new citrus orchards (34 000 ha) during the period of 1998-2005, include support of around 3 000 dirhams (US $318/ha) in the form of citrus seedlings.
46. Poland reduced the value added tax it applied to the sale of certain fruits, including, inter alia, citrus fruit, from its previous rate of 22 percent to 7 percent. The new rate was applied as of 1 January 1998.
47. Until October 1996, Outspan International, which operated within the framework of the statutory citrus scheme under the supervision of the Citrus Board, was the sole export marketing agency for the South African citrus industry. The enactment of the New Agricultural Products Marketing Act No. 46 of 1996 has phased out the statutory controls accorded to certain agricultural products, and as a result Outspan is no longer the exclusive citrus export marketing agency.
Table 1 - European Community withdrawal compensation for citrus fruit
| Marketing years | 1997/1998 | 1998/1999 | 1999/2000 | 2000/2001 | 2001/2002 | As from 2002 |
| (ECU/100 kg) | ||||||
| Oranges | 14.33 | 14.26 | 14.20 | 14.13 | 14.07 | 14.00 |
| Mandarines | 16.15 | 15.52 | 14.89 | 14.26 | 13.63 | 13.00 |
| Clementines | 12.74 | 12.79 | 12.84 | 12.90 | 12.95 | 13.00 |
| Satsumas | 10.49 | 10.99 | 11.49 | 12.00 | 12.50 | 13.00 |
| Lemons | 13.37 | 13.30 | 13.22 | 13.15 | 13.07 | 13.00 |
Table 2 - European Community aid for citrus fruit delivered for processing
| 1997/98
marketing year |
1998/99
marketing year |
1999/2000
marketing year |
2000/01
marketing year |
2001/02
marketing year |
2002/03 and subsequent marketing years | |
| (ECU/100 kg net) | ||||||
| A | For contracts covering one marketing year | |||||
| Lemons | 9.36 | 9.31 | 9.25 | 9.21 | 9.15 | 9.10 |
| Grapefruit | 9.36 | 9.31 | 9.25 | 9.21 | 9.15 | 9.10 |
| Oranges | 10.03 | 9.98 | 9.94 | 9.89 | 9.85 | 9.80 |
| Mandarines | 11.31 | 10.86 | 10.42 | 9.98 | 9.54 | 9.10 |
| Clementines | 8.90 | 8.95 | 8.99 | 9.03 | 9.07 | 9.10 |
| Satsumas | 7.34 | 7.69 | 8.04 | 8.40 | 8.75 | 9.10 |
| B | For contracts covering more than one marketing year | |||||
| Lemons | 10.76 | 10.70 | 10.64 | 10.59 | 10.52 | 10.47 |
| Grapefruit | 10.76 | 10.71 | 10.64 | 10.59 | 10.52 | 10.47 |
| Oranges | 11.54 | 11.48 | 11.43 | 11.37 | 11.33 | 11.27 |
| Mandarines | 13.00 | 12.49 | 11.99 | 11.48 | 10.97 | 10.47 |
| Clementines | 10.26 | 10.30 | 10.34 | 10.38 | 10.42 | 10.47 |
| Satsumas | 8.44 | 8.85 | 9.25 | 9.66 | 10.06 | 10.47 |
| C | For quantities delivered by non-member individual producers1 | |||||
| Lemons | 8.42 | 8.38 | 8.33 | 8.28 | 8.23 | 8.19 |
| Grapefruit | 8.42 | 8.38 | 8.33 | 8.28 | 8.23 | 8.19 |
| Oranges | 9.03 | 8.98 | 8.95 | 8.90 | 8.86 | 8.82 |
| Mandarines | 10.17 | 9.78 | 9.38 | 8.98 | 8.59 | 8.19 |
| Clementines | 8.03 | 8.06 | 8.09 | 8.13 | 8.16 | 8.19 |
| Satsumas | 6.60 | 6.92 | 7.24 | 7.56 | 7.88 | 8.19 |
1 For quantities delivered by individual producers who are not members of any producer organizations but who undertake to market through them their entire output of citrus for processing, and who pat a subscription to cover the additional management costs borne by the organization.
Table 3 - European Community Most-Favoured-Nation Tariffs, Maximum Tariff Equivalents (MTE) and
entry prices: post-Uruguay Round commitments for oranges, mandarines, lemons, limes and grapefruit
| Base period rates | Bound rates year 2000 | ||||||
| Ad valorem
percentage |
MTE
Ecu/tonne |
Entry price
Ecu/tonne |
Ad valorem
percentage |
MTE
Ecu/tonne |
Entry price
Ecu/tonne |
% change
entry price |
|
| Product description
Citrus fruit, fresh |
|||||||
| Sweet oranges | |||||||
| From 1-30 April | 13.0 | 89 | 372 | 10.4 | 71 | 354 | -4.8 |
| From 1-15 May | 6.0 | 89 | 372 | 4.8 | 71 | 354 | -4.8 |
| From 16-31 May | 4.0 | 89 | 372 | 3.2 | 71 | 354 | -4.8 |
| From 1 June to 15 Oct. | 4.0 | 3.2 | |||||
| From 16 Oct. to 30 Nov. | 20.0 | 16.0 | |
||||
| From 1 Dec. To 31 March | 20.0 | 89 | 372 | 16.0 | 71 | 354 | -4.8 |
| Others | |||||||
| From 1 April to 15 Oct. | 15.0 | |
12.0 | ||||
| From 16 Oct. To 31 March | 20.0 | 16.0 | |||||
| Mandarines | |||||||
| From 1 march to 31 Oct. | 20.0 | 16.0 | |||||
| From 1 Nov. to end Feb. | |||||||
| Clementines | 20.0 | 132 | 675 | 16.0 | 106 | 649 | -3.8 |
| Others | 20.0 | 132 | 312 | 16.0 | 106 | 286 | -8.3 |
| Lemons | |||||||
| From June to October | 8.0 | 320 | 622 | 6.4 | 256 | 558 | -9.7 |
| Limes | 16.0 | 12.8 | |||||
| Grapefruit | |||||||
| From 1 Nov to 30 April | 3.0 | 1.5 | |||||
| From 1 May to 21 Oct. | 3.0 | |
2.4 | ||||
Table 4 - Ad valorem tariff concessions for EC imports of citrus fruit originating
from some Mediterranean countries for 1998/99
| Oranges | `
Mandarines |
Lemons | Limes | |
| Israel | 200 000 tonnes at 0%
- from 1 July to 30 June |
21 000 tonnes per year
at 0% 14 000 tonnes at 0% - from 15 March to 30 September |
7 700 tonnes
at 0% |
1 000 tonnes
at 0% |
| Tunisia | 33 242 tonnes at 0%
- from 1 March to 31 December 1998 34 182 tonnes at 0% - from 1 January to 31 December 1999 35 123 tonnes at 0% - from 1 January to 31 December 2000 and thereafter |
Argentina: Catamara, Jujuy, Salta and Tucumán Australia: New South Wales, Queensland, South Australia and Victoria Brazil: São Paulo (with the exception of Presidente Prudente) United States: Arizona, California, Florida (with the exception of Dade and Manatee countries) Guam, Hawaii, Louisiana, Northern Mariana Islands, Puerto Rico, American Samoa, Texas and the United States Virgin Islands. Uruguay: All areas with the exception of the Department of Salto, Rivera and Paysandu - North of river Chapicuy. All citrus growing third countries in North, Central and South America, the Caribbean, Asia (with the exception of Yemen), Europe and Oceania. All citrus-growing third countries in Africa with the exception of Angola, Cameroon, Central African Republic, Democratic Republic of Congo, Gabon, Guinea, Kenya, Mozambique, Nigeria, Uganda, Zambia and Zimbabwe. All citrus-growing third countries in North, Central and South America, the Caribbean and Europe. All citrus-growing third countries in Asia, with the exception of Bhutan, China, Indonesia, Philippines and Taiwan (Province of China). All citrus-growing third countries in Africa, with the exception of South Africa, Kenya, Mozambique, Zambia and Zimbabwe. South Africa: Western Cape. Australia: South Australia, Western Australia and Northern Territory. China: All areas with the exception of Sichuan, Yunuan, Guangdong, Fujian and Zhejiang. |