The operation and development of the common market for agricultural products should be accompanied by the establishment of a common agricultural policy (hereinafter CAP) to include, in particular, a common organisation of agricultural markets (hereinafter CMO) which may, according to Article 34 of the Treaty, take various forms depending on the product.

• Council Regulation (EEC) No 234/68 of 27 February 1968 on the establishment of a common organisation of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage2,

• Council Regulation (EEC) No 827/68 of 28 June 1968 on the common organisation of the market in certain products listed in Annex II to the Treaty3,

• Council Regulation (EEC) No 2759/75 of 29 October 1975 on the common organisation of the market in pigmeat4,

• Council Regulation (EEC) No 2771/75 of 29 October 1975 on the common organisation of the market in eggs5,

• Council Regulation (EEC) No 2777/75 of 29 October 1975 on the common organisation of the market in poultrymeat6,

• Council Regulation (EEC) No 2075/92 of 30 June 1992 on the common organisation of the market in raw tobacco7,

• Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organisation of the market in bananas8,

• Council Regulation (EC) No 2200/96 of 28 October 1996 on the common organisation of the market in fruit and vegetables9,

• Council Regulation (EC) No 2201/96 of 28 October 1996 on the common organisation of the markets in processed fruit and vegetable products10,

• Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal11,

• Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products12,

• Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine13,

• Council Regulation (EC) No 1673/2000 of 27 July 2000 on the common organisation of the markets in flax and hemp grown for fibre14,

• Council Regulation (EC) No 2529/2001 of 19 December 2001 on the common organisation of the market in sheepmeat and goatmeat15,

• Council Regulation (EC) No 1784/2003 of 29 September 2003 on the common organisation of the market in cereals16,

• Council Regulation (EC) No 1785/2003 of 29 September 2003 on the common organisation of the market in rice17,

• Council Regulation (EC) No 1786/2003 of 29 September 2003 on the common organisation of the market in dried fodder18,

• Council Regulation (EC) No 865/2004 of 29 April 2004 on the common organisation of the market in olive oil and table olives19,

• Council Regulation (EC) No 1947/2005 of 23 November 2005 on the common organisation of the market in seeds20,

• Council Regulation (EC) No 1952/2005 of 23 November 2005 concerning the common organisation of the market in hops21,

• Council Regulation (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the sugar sector22.

• Council Regulation (EC) No 670/2003 of 8 April 2003 laying down specific measures concerning the market in ethyl alcohol of agricultural origin23,

• Council Regulation (EC) No 797/2004 of 26 April 2004 on measures improving general conditions for the production and marketing of apiculture products24,

• Council Regulation (EC) No 1544/2006 of 5 October 2006 laying down special measures to encourage silkworm rearing25.

The abovementioned Regulations (hereinafter basic regulations) are often accompanied by a collateral set of further Council regulations. Most of the basic regulations follow the same structure and have numerous provisions in common. This is the case in particular with regard to the rules on trade with third countries and the general provisions, but also, to a certain extent for the rules related to the internal market. The basic regulations often contain different solutions to identical or similar problems.

The Community has, for some time, been pursuing the aim of simplifying the regulatory environment of the CAP. Accordingly, a horizontal legal framework for all direct payments was established amalgamating an array of support systems into a single payment scheme by the adoption of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers26. This approach should also be applied to the basic regulations. In this context the rules contained therein should be amalgamated into a single legal framework and sectoral approaches be replaced by horizontal ones where this is possible.

In the light of the aforementioned considerations, the basic Regulations should be repealed and replaced by one single Regulation.

Simplification should not lead to calling into question the policy decisions that have been taken over the years in the CAP. This Regulation should, therefore, essentially be an act of technical simplification. It should not, therefore, repeal or change existing instruments unless they have become obsolete, redundant or should not, by their very nature, be dealt with at Council level, nor should it provide for new instruments or measures.

Against this background, this Regulation should not include those parts of CMOs which are subject to policy reforms. This is the case with regard to most parts of the fruit and vegetables, processed fruit and vegetables and the wine sectors. The provisions contained in the respective Regulations (EC) No 2200/96, (EC) No 2201/96 and (EC) No 1493/1999 should, therefore, be incorporated into this Regulation only to the extent that they are not themselves subject to any policy reforms. The substantive provisions of these CMOs should only be incorporated once the respective reforms have been enacted.

The CMOs for cereals, rice, sugar, dried fodder, seeds, olive oil and table olives, flax and hemp, bananas, milk and milk products, and silkworms provide for marketing years mainly adapted to the biological production cycles of each of these products. The marketing years as they have been fixed in these sectors should, therefore, be incorporated into this Regulation.

In order to stabilise the markets and to ensure a fair standard of living for the agricultural community, a differentiated system of price support for the different sectors has been developed, in parallel to the introduction of direct support schemes, taking account of the different needs in each of these sectors on the one hand and the interdependence between different sectors on the other. These measures take the form of public intervention or the payment of aid for the private storage of products of the cereals, rice, sugar, olive oil and table olives, beef and veal, milk and milk products, pigmeat and sheepmeat and goatmeat sectors. Given the objectives of the present Regulation, there is, therefore, a need to maintain price support measures where they are foreseen in the instruments as they were developed in the past, without making any substantial changes as compared to the previous legal situation.

For the sake of clarity and transparency, the provisions governing these measures should be made subject to a common structure, whilst maintaining the policy pursued in each sector. For that purpose it is appropriate to distinguish between reference prices and intervention prices.

The CMOs for cereals, beef and veal and milk and milk products contained provisions according to which the Council, acting in accordance with the procedure laid down in Article 37(2) of the Treaty, may change the price levels. Given the sensitivity of the price systems it should be made clear that the possibility under Article 37(2) to change price levels exists with regard to all sectors covered by this Regulation.

Moreover, the CMO for sugar provided for the possibility of reviewing the standard qualities of sugar, as further defined in Regulation (EC) No 318/2006, to take account, in particular, of commercial requirements and developments in technical analysis. That Regulation therefore provided for the power of the Commission to amend the relevant Annex. There is a particular need to maintain that possibility in order to enable the Commission to take swift action if necessary.

To ensure reliable information on Community market prices for sugar, the price reporting system as provided for in the CMO for sugar should be incorporated into this Regulation, on the basis of which market price levels for white sugar should be determined.

To prevent the system of intervention in respect of cereals, rice, butter and skimmed milk powder from becoming an outlet in itself the possibility to provide for the opening of public intervention only during certain periods of the year should be maintained. In respect of beef and veal products, pigmeat and butter, the opening and closing of public intervention should be dependent on market price levels during a certain period. As regards maize, rice and sugar, the limitation of the quantities up to which buying-in under public intervention can be carried out, should be maintained. With regard to butter and skimmed milk powder, the power of the Commission needs to be maintained to suspend the normal buying-in once a certain quantity is reached or to replace it by buying-in under a tender procedure.

The price level at which buying-in under public intervention should be carried out was, in the past, decreased in the CMOs for cereals, rice and beef and veal and fixed along with the introduction of direct support schemes in these sectors. Aid under those schemes on the one hand and intervention prices on the other are, therefore, closely linked. For the products of the milk and milk products sector, that price level was fixed in order to promote consumption of the products concerned and improve their competitiveness. In the rice and sugar sectors, the prices were fixed in order to contribute to stabilising the market in instances where the market price in a given marketing year falls below the reference price fixed for the following marketing year. These policy decisions of the Council still remain valid.

As in previous CMOs, this Regulation should provide for the possibility of disposal of products bought into public intervention. Such measures should be taken in a way that avoids market disturbances and that ensures equal access to the goods and equal treatment of purchasers.

Due to its intervention stocks of various agricultural products, the Community has the potential means to make a significant contribution towards the well-being of its most deprived citizens. It is in the Community interest to exploit this potential on a durable basis until the stocks have been run down to a normal level by introducing appropriate measures. In the light of these considerations, Council Regulation (EEC) No 3730/87 of 10 December 1987 laying down the general rules for the supply of food from intervention stocks to designated organisations for distribution to the most deprived persons in the Community27 has, so far, provided for the distribution of food by charitable organisations. This important social measure, which can be of considerable value to the most deprived persons, should be maintained and incorporated into the framework of this Regulation.

In order to contribute to balancing the milk market and to stabilising market prices, the CMO for milk and milk products has provided for the granting of aid for private storage in respect of cream, certain butter products and certain cheese products. Moreover, the Commission has been empowered to decide to grant aid for private storage of certain other cheese products as well as for white sugar, certain kinds of olive oil and of certain beef and veal products, skimmed milk powder, pigmeat and sheepmeat and goatmeat. Given the purpose of this Regulation, these measures should be maintained.

Council Regulation (EC) No 1183/2006 of 24 July 2006 concerning the Community scale for the classification of carcasses of adult bovine animals28, Council Regulation (EEC) No 1186/90 of 7 May 1990 extending the scope of the Community scale for the classification of carcasses of adult bovine animals29, Council Regulation (EEC) No 3220/84 of 13 November 1984 determining the Community scale for grading pig carcasses30 and Council Regulation (EEC) No 2137/92 of 23 July 1992 concerning the Community scale for the classification of carcasses of ovine animals and determining the Community standard quality of fresh or chilled sheep carcasses31 provide for Community scales for the classification of carcasses in the beef and veal, pigmeat and sheepmeat and goatmeat sectors. These schemes are essential for the purposes of price recording and for the application of the intervention arrangements in those sectors. Moreover, they pursue the objective of improving market transparency. Such carcass classification schemes should be maintained. It is therefore appropriate to incorporate their essential elements into this Regulation, whilst empowering the Commission to regulate certain issues of a rather technical character through implementing rules.

Restrictions to free circulation resulting from the application of measures intended to combat the spread of animal diseases could cause difficulties on the market in certain products in one or more Member States. Experience shows that serious market disturbances such as a significant drop in consumption or in prices may be attributed to a loss in consumer confidence due to public health or animal health risks.

The exceptional market support measures in order to remedy such situations provided for in the respective CMOs for beef and veal, milk and milk products, pigmeat, sheepmeat and goatmeat, eggs and poultrymeat should, therefore, be incorporated into this Regulation under the same conditions as they have applied so far. Such exceptional market support measures should be taken by the Commission and should be directly related to or consequent upon health and veterinary measures adopted in order to combat the spread of disease. They should be taken at the request of Member States in order to avoid serious disruption on the markets concerned.

The possibility for the Commission to adopt special intervention measures where this proves to be necessary in order to react efficiently and effectively against threats of market disturbances in the cereals sector and in order to prevent large-scale application of public intervention in certain regions of the Community in the rice sector or to make up for paddy rice shortages following natural disasters, as they have been provided for in the CMOs for cereals and rice respectively should be maintained in this Regulation.

A minimum price should be fixed for quota beet corresponding to a standard quality which should be defined, in order to ensure a fair standard of living for the Community growers of sugar beet and sugar cane.

Specific instruments are needed to ensure a fair balance of rights and obligations between sugar undertakings and sugar beet growers. Therefore, the standard provisions governing the interprofessional agreements previously contained in the CMO for sugar should be maintained.

The diversity of natural, economic and technical situations makes it difficult to provide for uniform purchase terms for sugar beet throughout the Community. Agreements within the trade already exist between associations of sugar beet growers and sugar undertakings. Therefore, framework provisions should define only the minimum guarantees required by both sugar beet growers and the sugar industry to ensure a smooth functioning of the sugar market with the possibility to derogate from some rules in the context of an agreement within the trade. More detailed terms have previously been provided in the CMO for sugar in Annex II to Regulation (EC) No 318/2006. Given the highly technical character of these terms, it is more appropriate to deal with these questions at Commission level.

The production charge provided for under the CMO for sugar to contribute to the financing of the expenditure occurring under that CMO should be incorporated in this Regulation.

To maintain the structural balance of the markets in sugar at a price level close to the reference price, the possibility for the Commission to decide to withdraw sugar from the market for as long as it takes for the market to rebalance should be maintained.

The CMOs for live plants, beef and veal, pigmeat, sheepmeat and goatmeat, eggs and poultrymeat provided for the possibility of adopting certain measures to facilitate the adjustment of supply to market requirements. Such measures may contribute to stabilising the markets and to ensuring a fair standard of living for the agricultural community concerned. Given the objectives of this Regulation, that possibility should be maintained. According to those provisions, the Council may adopt the general rules concerning such measures in accordance with the procedure laid down in Article 37 of the Treaty. The aims to be pursued by such measures are clearly circumscribed and delimit the nature of the measures that may be adopted. Therefore, the adoption of additional general rules by the Council in those sectors is not necessary and should no longer be provided for.

In the sugar and in the milk and milk products sectors the quantitative limitation of production as set out in Regulations (EC) No 318/2006 and Council Regulation (EC) No 1788/2003 of 29 September 2003 establishing a levy in the milk and milk products sector32 has been an essential market policy instrument for many years. The reasons which in the past led the Community to adopt production quota systems in both sectors remain valid.

Whereas the sugar quota system was provided for in the CMO for sugar, the corresponding system in the dairy sector has so far been regulated in a legal act separate from the CMO for milk and milk products, namely Regulation (EC) No 1788/2003. Given the crucial importance of these schemes and the objectives of this Regulation, it is appropriate to incorporate the relevant provisions for both sectors in this Regulation without making any substantial changes to the schemes and their modes of operation as compared to the previous legal situation.

The sugar quota scheme under this Regulation should therefore reflect the arrangements set out in Regulation (EC) No 318/2006 and, in particular, maintain the legal status of the quotas in so far as, according to the case-law of the Court of Justice, the system of quotas constitutes a mechanism for regulating the market in the sugar sector aiming to ensure the attainment of public interest objectives.

This Regulation should, therefore, also enable the Commission to adjust the quotas to a sustainable level after the termination, in 2010, of the restructuring fund established by Council Regulation (EC) No 320/2006 of 20 February 2006 establishing a temporary scheme for the restructuring of the sugar industry in the Community33.

In the light of the need to allow for a certain amount of national flexibility in relation to the structural adjustment of the processing industry and of beet and cane growing during the period in which the quotas are to be applied, the possibility for Member States to be allowed to alter the quotas of undertakings within certain limits whilst not restricting the operation of the restructuring fund as an instrument should be maintained.

The CMO for sugar provided that, in order to avoid that surplus sugar distorts the sugar market, the Commission should be enabled, according to certain criteria, to provide for carrying forward the surplus sugar, isoglucose or inulin syrup to be treated as quota production of the following marketing year. Moreover, if, for certain quantities, the applicable conditions are not met, it also provided for a levy on the surplus in order to avoid the accumulation of these quantities threatening the market situation. These provisions should be maintained.

The main purpose of the milk quota system of reducing the imbalance between supply and demand on the respective market and the resulting structural surpluses, thereby achieving a better market equilibrium, still prevails. The application of a levy to quantities of milk collected or sold for direct consumption above a certain guarantee threshold should, therefore, be maintained. In line with the purpose of this Regulation, there is, to a certain extent, a need in particular for terminological harmonisation between the sugar and milk-quota schemes, whilst fully preserving their legal status quo. It therefore seems appropriate to harmonise the terminology in the milk sector with that in the sugar sector. The terms ’national reference quantity’ and ’individual reference quantity’ in Regulation (EC) No 1788/2003 should, therefore, be replaced by the terms ’national quota’ and ’individual quota’ whilst retaining the legal notion that is being defined.

In substance, the milk quota scheme in this Regulation should be shaped according to Regulation (EC) No 1788/2003. In particular, the distinction between deliveries and direct sales should be maintained and the scheme should be applied on the basis of individual representative fat contents and a national reference fat content. Farmers should be authorised under certain conditions to temporarily transfer their individual quota. Moreover the principle should be maintained that when a farm is sold, leased or transferred by inheritance, the corresponding quota is transferred to the purchaser, tenant or heir together with the relevant land, while the exceptions to the principle that quotas are tied to farms in order to continue the restructuring of milk production and improve the environment should be maintained. In line with the various types of transfer of quotas and using objective criteria, the provisions authorising Member States to place part of the transferred quantities in the national reserve should also be maintained.

The surplus levy should be set at a dissuasive level and be payable by the Member States as soon as the national quota is exceeded. The Member State should then divide the burden of payment among the producers who have contributed to the overrun. Those producers should be liable vis-à-vis the Member State for payment of their contribution to the levy due by virtue of the fact of having overrun their available quantity. Member States should pay to the European Agricultural Guarantee Fund (EAGF) the levy corresponding to the overrun of their national quota, reduced by a flat-rate amount of 1 % in order to take account of cases of bankruptcy or the definitive inability of certain producers to make their contribution to the payment of the levy due.

Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy34 qualifies the proceeds flowing from the application of the additional levy in the dairy sector as ’assigned revenue’ which has to be paid to the Community budget and, in the event of reuse, has to be used exclusively to finance expenditure under the EAGF or the European Agricultural Fund for Rural Development (EAFRD). Article 22 of Regulation (EC) No 1788/2003 according to which levy proceeds are considered as intervention to stabilise agricultural markets and are to be applied to financing expenditure in the milk sector, has therefore become obsolete and should not be incorporated in this Regulation.

Various CMOs have provided for different kinds of aid schemes.

The CMOs for dried fodder and for flax and hemp provided for processing aids for these sectors as a means to govern the internal market in respect of the sectors concerned. These provisions should be maintained.

In view of the special market situation for cereals and potato starch the CMO for cereals contained provisions which allowed the granting of a production refund if that proves necessary. The production refund should be of such a nature that the basic products used by the industry concerned can be made available to it at a lower price than that resulting from the application of the common prices. The CMO for sugar established the possibility of the granting of a production refund in cases where, with regard to the manufacturing of certain industrial, chemical or pharmaceutical products the need arises to take measures aimed at making available certain sugar products. These provisions should be maintained.

To contribute to balancing the milk market and to stabilise the market prices for milk and milk products, measures are needed to increase the possibility of disposing of milk products. The CMO for milk and milk products therefore provided for the grant of aids for the marketing of certain milk products with a view to specific uses and destinations. Moreover, that CMO provided that, in order to stimulate the consumption of milk by young people, the Community should defray a part of the expenditure occasioned by granting aid for the supply of milk to pupils in schools. These provisions should be maintained.

Community finance, consisting of the percentage of direct aid that Member States are allowed to withhold in accordance with Article 110i(4) of Regulation (EC) No 1782/2003, is required to encourage approved operator organisations to draw up work programmes for the purpose of improving the production quality of olive oil and table olives. In that context, the CMO for olive oil and table olives provided for Community support to be allocated in accordance with the priorities given to the activities undertaken within the work programmes in question. These provisions should be maintained.

A Community tobacco fund financed by certain deductions from aid schemes in that sector was established under Regulation (EEC) No 2075/92 with a view to carrying out various measures in respect of that sector. The year 2007 is the last in which deductions from the aid scheme provided for in Chapter 10c of Title IV of Regulation (EC) No 1782/2003 would be made available to the Community Tobacco Fund. Whilst the financing of the fund will expire prior to the entry into force of this Regulation, Article 13 of Regulation (EEC) No 2075/92 should nevertheless be maintained to serve as a legal basis for the multiannual programmes that may be financed by the Community Tobacco Fund.

Beekeeping, being a sector of agriculture, is characterised by the diversity of production conditions and yields and the dispersion and variety of economic operators, both at the production and marketing stages. Moreover, in view of the spread of varroasis in several Member States in recent years and the problems which that disease causes for honey production, action by the Community continues to be necessary as varroasis cannot be completely eradicated and is to be treated with approved products. Given such circumstances and in order to improve the production and marketing of apiculture products in the Community, national programmes should be drawn up every three years, comprising technical assistance, control of varroasis, rationalisation of transhumance, management of the restocking of hives in the Community, and cooperation on research programmes on beekeeping and apiculture products with a view to improving the general conditions for the production and marketing of apiculture products. Those national programmes should be partly financed by the Community.

Regulation (EC) No 1544/2006 replaced all national silkworm aids by a Community aid scheme for silkworm rearing which takes the form of a fixed sum per box of silkworm eggs used.

As the policy considerations which led to the introduction of the abovementioned aid schemes for beekeeping and silkworm rearing still persist, these aid schemes should be incorporated in the framework of this Regulation.

The application of standards for the marketing of agricultural products can contribute to improving the economic conditions for the production and marketing as well as the quality of such products. The application of such standards is therefore in the interest of producers, traders and consumers. Accordingly, within the CMOs for bananas, olive oil and table olives, live plants, eggs and poultrymeat, marketing standards were put in place which relate, in particular, to quality, grading, weight, sizing, packaging, wrapping, storage, transport, presentation, origin and labelling. It is appropriate to maintain that approach under this Regulation.

Under the CMOs for olive oil and table olives and for bananas the Commission has, so far, been entrusted with the adoption of the provisions on marketing standards. Given their detailed technical character and the need to constantly improve their effectiveness and to adapt them to evolving trade practices, it is appropriate to extend this approach to the live plants sectors while specifying the criteria to be taken into account by the Commission in setting out the relevant rules. Moreover, special measures, in particular up-to-date methods of analysis and other measures to determine the characteristics of the standards concerned, may need to be adopted to avoid abuses as regards the quality and authenticity of the products presented to consumers and the important disturbances on the markets such abuses may entail.

Several legal instruments have been put in place to regulate the marketing and designation of milk, milk products and fats. They pursue the objective of improving the position of milk and milk products on the market on the one hand and ensuring a fair competition between spreadable fats of milk and non-milk origin on the other, both to the benefit of producers and consumers. The rules contained in Council Regulation (EEC) No 1898/87 of 2 July 1987 on the protection of designations used in marketing milk and milk products35 are aimed at protecting the consumer and at establishing conditions of competition between milk products and competing products in the field of product designation, labelling and advertising which avoid any distortion. Council Regulation (EC) No 2597/97 of 18 December 1997 laying down additional rules on the common organisation of the market in milk and milk products for drinking milk36 provides for rules aimed at guaranteeing a high quality of drinking milk and products which fulfil consumers' needs and wishes, thus stabilising the market concerned and providing the consumer with high quality drinking milk. Council Regulation (EC) No 2991/94 of 5 December 1994 laying down standards for spreadable fats37 sets out the marketing standards for the milk and non-milk products concerned with a clear and distinct classification accompanied by rules on designation. In line with the objectives of the present Regulation, these rules should be maintained.

Concerning the eggs and poultrymeat sectors, provisions exist in relation to marketing standards and, in certain cases, to production. These provisions are contained in Council Regulation (EC) No 1028/2006 of 19 June 2006 on marketing standards for eggs38, Council Regulation (EEC) No 1906/90 of 26 June 1990 on certain marketing standards for poultrymeat39 and Council Regulation (EEC) No 2782/75 of 29 October 1975 on the production and marketing of eggs for hatching and of farmyard poultry chicks40. The essential rules contained in those Regulations should be incorporated into this Regulation.

Regulation (EC) No 1028/2006 provides that marketing standards for eggs should, in principle, apply to all eggs of hens of the species Gallus gallus, marketed in the Community and, as a general rule, also to those intended for export to third countries. It also draws a distinction between eggs suitable and eggs not suitable for direct human consumption by the creation of two quality classes of eggs and lays down provision to ensure appropriate information to the consumer as regards quality and weight grades and the identification of the farming method used. Finally, that Regulation provides for special rules in respect of eggs imported from third countries according to which special provisions in force in certain third countries may justify derogations from the marketing standards if their equivalence to Community legislation is guaranteed.

As regards poultrymeat, Regulation (EEC) No 1906/90 determines that marketing standards should, in principle, apply to certain types of poultrymeat suitable for human consumption marketed in the Community and that poultrymeat intended for export to third countries should, however, be excluded from the application of the marketing standards. That Regulation provides for the grading of poultrymeat in two categories according to conformation and appearance and the conditions under which the meat is to be offered for sale.

According to those Regulations, Member States should be able to exempt from the application of those marketing standards eggs and poultrymeat, respectively, sold through certain forms of direct sale from the producer to the final consumer where small quantities are involved.

Regulation (EC) No 2782/75 establishes special rules concerning the marketing and transport of eggs for hatching and of farmyard poultry chicks as well as for the incubation of eggs for hatching. That Regulation provides, in particular, for the individual marking of eggs for hatching used for chick production, for the way of packing and the kind of packing material for transport. However, it excludes small sized pedigree breeding and other breeding establishments from the compulsory application of the standards laid down therein.

In line with the objectives of the present Regulation, those rules should be maintained without touching upon their substance. However, further provisions contained in those Regulations which are of technical character should be dealt with in implementing rules to be adopted by the Commission.

As it has been the case so far under the CMO for hops, a quality policy should be followed throughout the Community by implementing provisions concerning certification together with rules prohibiting, as a general rule, the marketing of products for which a certificate has not been issued, or, in the case of imported products, those which do not comply with equivalent quality characteristics.

The descriptions and definitions of olive oil and the denomination are an essential element of the market order with respect to setting quality standards and providing consumers with adequate information on the product and should be maintained in this Regulation.

One of the aforementioned aid schemes contributing to balancing the market in milk and milk products and to stabilising the market prices in that sector consists of an aid scheme, contained in Regulation (EC) No 1255/1999, for the processing of skimmed milk into casein and caseinates. Council Regulation (EEC) No 2204/90 of 24 July 1990 laying down additional general rules on the common organisation of the market in milk and milk products as regards cheese41 provided for rules concerning the use of casein and caseinates in the manufacture of cheese in order to counter adverse effects that may result from that aid scheme, taking into account the vulnerability of cheese to substitution operations with casein and caseinates, thereby intending to stabilise the market. These rules should be incorporated into this Regulation.

The processing of certain agricultural raw materials into ethyl alcohol is closely linked with the economy of those raw materials. This can contribute considerably to enhancing their value and may be of particular economic and social importance for the economy of certain regions of the Community or may be a significant source of income for the producers of the raw materials concerned. It also permits the disposal of products of unsatisfactory quality and short-term surpluses that may cause temporary problems in certain sectors.

In the hops, olive oil and table olives, tobacco and silkworm sectors the legislation focuses on various kinds of organisations in order to achieve policy aims in particular with a view to stabilising the markets in, and of improving and guaranteeing the quality of, the products concerned through joint action. The provisions which have regulated that system of organisations so far are based on organisations which are recognised by the Member States or, under certain conditions, by the Commission, in accordance with provisions to be adopted by the Commission. That system should be maintained and the provisions as they have been in place so far should be harmonised.

To support certain activities of inter-branch organisations which are of particular interest in the light of the current rules concerning the CMO for tobacco, provision should be made for the rules adopted by an inter-branch organisation for its members to be extended, subject to certain conditions, to all non-member producers and groups in one or more regions. The same should also apply in respect of other activities of inter-branch organisations which are of general economic or technical interest for the tobacco sector so as to be of benefit to all persons active in the branches in question. There should be close cooperation between the Member States and the Commission. The Commission should have permanent monitoring powers, particularly as regards the agreements and concerted practices adopted by such organisations.

In certain sectors apart from those for which current rules provide for the recognition of producer or interbranch organisations, Member States may wish to recognise such kinds of organisations based on national law as far as this is compatible with Community law. This possibility should therefore be clarified. Moreover, rules should be adopted stating that the recognition of producer and interbranch organisations in accordance with the current Regulations remains valid after the adoption of this Regulation.

A single Community market involves a trading system at the external borders of the Community. That trading system should include import duties and export refunds and should, in principle, stabilise the Community market. The trading system should be based on the undertakings accepted under the Uruguay Round of multilateral trade negotiations.

Monitoring the volume in trade in agricultural products with third countries in the CMOs for the cereals, rice, sugar, seeds, olive oil and table olives, flax and hemp, beef and veal, milk and milk products, pigmeat, sheepmeat and goatmeat, eggs, poultrymeat, live plants and agricultural ethyl alcohol sectors, has, so far, both for imports and exports been subject to either compulsory licence systems or to systems where the Commission was empowered to provide for licence requirements.

Monitoring trade flows is foremost a matter of management which should be addressed in a flexible way. Against this background and in the light of the experience gained in the CMOs where the management of licences is already conferred on the Commission, it appears appropriate to extend this approach to all sectors where import and export licences are being used. The decision on the introduction of licence requirements should be made by the Commission taking account of the need for import licences for the management of the markets concerned and, in particular, for monitoring the imports of the products in question.

For the most part, the customs duties applicable to agricultural products under the World Trade Organisation (WTO) agreements are laid down in the Common Customs Tariff. However, for some products of the cereals and rice sectors, the introduction of additional mechanisms makes it necessary to provide for the possibility to adopt derogations.

In order to prevent or counteract adverse effects on the Community market which could result from imports of certain agricultural products, imports of such products should be subject to payment of an additional duty, if certain conditions are fulfilled.

It is appropriate, under certain conditions, to confer on the Commission the power to open and administer import tariff quotas resulting from international agreements concluded in accordance with the Treaty or from other acts of the Council.

Council Regulation (EEC) No 2729/75 of 29 October 1975 on the import levies on mixtures of cereals, rice and broken rice42 aims to ensure the proper working of the duty system for imports of mixtures of cereals, rice and broken rice. These rules should be included in this Regulation.

The Community has concluded several preferential market access arrangements with third countries which allow those countries to export cane sugar to the Community under favourable conditions. The CMO for sugar provided for the evaluation of the refiners' need for sugar for refining and, under certain conditions, the reservation of import licences to specialised users of significant quantities of imported raw cane sugar, which are considered to be full-time refiners in the Community. These provisions should be maintained.

In order to prevent illicit crops from disturbing the CMO for hemp for fibre, the respective Regulation provided for checks on imports of hemp and hemp seed to ensure that such products offer certain guarantees with regard to the tetrahydrocannabinol content. In addition, imports of hemp seed intended for uses other than sowing were subject to a control system which makes provision for the authorisation of the importers concerned. These provisions should be maintained.

A quality policy is being followed throughout the Community as regards products of the hops sector. In the case of imported products, the provisions ensuring that only products complying with equivalent minimum quality characteristics are imported should be incorporated in this Regulation.

The customs duty system makes it possible to dispense with all other protective measures at the external frontiers of the Community. The internal market and duty mechanism could, in exceptional circumstances, prove to be inadequate. In such cases, in order not to leave the Community market without defence against disturbances that might ensue, the Community should be able to take all necessary measures without delay. Such measures should comply with the international commitments of the Community.

To ensure the proper functioning of the CMOs and, in particular, avoid market disturbance, the CMOs for a number of products traditionally provided for the possibility of prohibiting the use of inward and outward processing arrangements. This possibility should be maintained. Moreover, experience shows that where markets are disturbed or threatened to be disturbed by the use of these arrangements, action needs to be taken without major delays. The Commission should therefore be entrusted with the relevant powers. It is thus appropriate to enable the Commission to suspend the use of inward and outward processing arrangements in such situations.

Provisions for granting refunds on exports to third countries, based on the difference between prices within the Community and on the world market, and falling within the limits set by the Community's commitments in the WTO, should serve to safeguard the Community's participation in international trade in certain products falling within this Regulation. Subsidised exports should be subject to limits in terms of value and quantity.

Compliance with the limits in terms of value should be ensured at the time when the export refunds are fixed through the monitoring of payments under the rules relating to the EAGF. Monitoring can be facilitated by the compulsory advance fixing of export refunds, while allowing the possibility, in the case of differentiated refunds, of changing the specified destination within a geographical area to which a single export refund rate applies. In the case of a change of destination, the export refund applicable to the actual destination should be paid, with a ceiling on the amount applicable to the destination fixed in advance.

Compliance with the quantity limits should be ensured by a reliable and effective system of monitoring. To that end, the granting of export refunds should be made subject to an export licence. Export refunds should be granted up to the limits available, depending on the particular situation of each product concerned. Exceptions to that rule should be permitted only for processed products not listed in Annex I to the Treaty, to which volume limits do not apply. Provision should be made for a derogation from strict compliance with management rules where exports benefiting from export refunds are not likely to exceed the quantity laid down.

In the case of the export of live bovine animals, provision should be made whereby export refunds are granted and paid only if the provisions established in Community legislation concerning animal welfare, in particular those concerning the protection of animals during transport, are respected.

Agricultural products may in certain cases benefit from special import treatment in third countries if the products comply with certain specifications and/or price conditions. Administrative cooperation between the authorities in the importing third country and the Community is necessary to ensure the correct application of such a system. To that end the products should be accompanied by a certificate issued in the Community.

Exports of flowering bulbs to third countries are of considerable economic importance to the Community. The continuation and development of such exports may be ensured by stabilising prices in this trade. Provision should therefore be made for minimum export prices for the products in question.

In accordance with Article 36 of the Treaty the provisions of the chapter of the Treaty relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 37(2) and (3) of the Treaty and in accordance with the procedure laid down therein. In the various CMOs the provisions on state aid had been largely declared applicable. The application in particular of the Treaty rules applying to undertakings was furthermore defined in Council Regulation (EC) No 1184/2006 of 24 July 2006 applying certain rules on competition to the production of, and trade in, agricultural products43. In line with the objective of creating one comprehensive set of market policy rules it is appropriate to incorporate the provisions concerned in this Regulation.

The rules on competition relating to the agreements, decisions and practices referred to in Article 81 of the Treaty and to the abuse of dominant positions should be applied to the production of, and trade in, agricultural products, in so far as their application does not impede the functioning of national organisations of agricultural markets or jeopardise the attainment of the objectives of the CAP.

A special approach is warranted in the case of farmers' organisations the particular objective of which is the joint production or marketing of agricultural products or the use of joint facilities, unless such joint action excludes competition or jeopardises the attainment of the objectives of Article 33 of the Treaty.

In order both to avoid compromising the development of a CAP and to ensure legal certainty and non-discriminatory treatment of the undertakings concerned, the Commission should have the sole power, subject to review by the Court of Justice, to determine whether agreements, decisions and practices referred to in Article 81 of the Treaty are compatible with the objectives of the CAP.

The proper working of the single market based on common prices would be jeopardised by the granting of national aid. Therefore, the provisions of the Treaty governing State aid should, as a general rule, apply to the products covered by this Regulation. In certain situations exceptions should be allowed. Where such exceptions apply, the Commission should, however, be in a position to draw up a list of existing, new or proposed national aids, to make appropriate observations to the Member States and to propose suitable measures to them.

Since their accession, Finland and Sweden may, due to the specific economic situation of the production and marketing of reindeer and reindeer products, grant aids in that regard. Moreover, Finland may, subject to authorisation by the Commission, grant aid respectively for certain quantities of seeds and for certain quantities of cereal seed produced solely in Finland, because of its specific climatic conditions. These exceptions need to be maintained.

In Member States with a significant reduction of sugar quota, sugar beet growers will face particularly severe adaptation problems. In such cases the transitional Community aid to sugar beet growers provided for in Chapter 10f of Title IV of Regulation (EC) No 1782/2003 will not suffice to fully address the beet growers' difficulties. Therefore, Member States having reduced their quota by more than 50 % of the sugar quota fixed on 20 February 2006 in Annex III to Regulation (EC) No 318/2006 should be authorised to grant State aid to sugar beet growers during the period of application of the transitional Community aid. To ensure that Member States do not grant State aid exceeding the needs of their sugar beet growers, the determination of the total amount of the State aid concerned should continue to be made subject to Commission approval, except in the case of Italy where the maximum need for the most productive sugar beet growers to adapt to the market conditions after the reform has been estimated at EUR 11 per tonne of sugar beet produced. Moreover, due to the particular problems expected to arise in Italy, the provision for arrangements allowing sugar beet growers to benefit directly or indirectly from the State aid granted should be maintained.

In Finland sugar beet growing is subject to particular geographical and climatic conditions which will adversely affect the sector beyond the general effects of the sugar reform. For this reason the provision made in the CMO for sugar authorising that Member State, on a permanent basis, to grant its sugar beet growers an adequate amount of State aid should be maintained.

Given the particular situation in Germany, where national support is currently granted to a large number of smaller producers of alcohol under the specific conditions of the German alcohol monopoly, it is necessary to permit, during a limited period of time, the continuation of the granting of such support. It is also necessary to provide for the submission of a report by the Commission on the functioning of that derogation, at the end of that period, accompanied by any appropriate proposals.

If a Member State wishes to support, on its territory, measures promoting the consumption of milk and milk products in the Community, provision should be made for the possibility of financing such measures by a promotional levy on milk producers at national level.

In order to take account of possible developments in dried fodder production, the Commission should, before 30 September 2008, on the basis of an evaluation of the CMO for dried fodder, present a report to the Council on that sector. The report should be accompanied, if necessary, by appropriate proposals. Moreover, the Commission should report at regular intervals to the European Parliament and the Council on the aid scheme applied in respect of the apiculture sector.

Adequate information is needed about the present state of the market in hops within the Community and the prospects for its development. Provision should therefore be made for the registration of all supply contracts regarding hops produced within the Community.

It is appropriate to provide, under certain conditions and for certain products, for measures to be taken in cases where disturbances are occurring or are likely to occur due to significant changes in the internal market prices or as regards quotations or prices on the world market.

It is necessary to establish a framework of specific measures for ethyl alcohol of agricultural origin so that economic data can be collected and statistical information analysed for the purpose of monitoring the market. In so far as the market in ethyl alcohol of agricultural origin is linked to the market in ethyl alcohol in general, information also needs to be made available concerning the market in ethyl alcohol of non-agricultural origin.

Expenditure incurred by the Member States as a result of the obligations arising from the application of this Regulation should be financed by the Community in accordance with Regulation (EC) No 1290/2005.

The Commission should be authorised to adopt the necessary measures to solve specific practical problems in case of emergency.

Since the common markets in agricultural products are continuously evolving, the Member States and the Commission should keep each other informed of relevant developments.

In order to avoid abuse of any of the advantages provided for in this Regulation, such advantages should not be granted or, as the case may be, should be withdrawn, in cases where it is found that the conditions for obtaining any of those advantages have been created artificially, contrary to the objectives of this Regulation.

To guarantee compliance with the obligations laid down by this Regulation, there is a need for controls and the application of administrative measures and administrative penalties in case of non-compliance. Power should, therefore, be conferred on the Commission to adopt the corresponding rules, including those concerning the recovery of undue payments and the reporting obligations of the Member States resulting from the application of this Regulation.

The measures necessary for the implementation of this Regulation should, as a general rule, be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission44. However, in respect of certain measures under this Regulation which relate to Commission powers, require swift action or are of a purely administrative nature, the Commission should be empowered to act on its own.

Due to the incorporation into this Regulation of certain elements of the CMOs for fruit and vegetables and processed fruit and vegetable products and wine, certain amendments should be made to these CMOs.

This Regulation incorporates provisions concerning the applicability of the competition rules under the Treaty. Such provisions have, so far, been dealt with in Regulation (EC) No 1184/2006. The scope of that Regulation should be amended so that its provisions only apply to products listed in Annex I to the Treaty that are not covered by this Regulation.

• Council Regulation (EEC) No 2729/75 of 29 October 1975 on the import levies on mixtures of cereals, rice and broken rice,

• Council Regulation (EEC) No 2763/75 of 29 October 1975 laying down general rules for granting private storage aid for pigmeat45,

• Council Regulation (EEC) No 2782/75 of 29 October 1975 on the production and marketing of eggs for hatching and of farmyard poultry chicks,

• Council Regulation (EEC) No 707/76 of 25 March 1976 on the recognition of producer groups of silkworm rearers46,

• Council Regulation (EEC) No 1055/77 of 17 May 1977 on the storage and movement of products bought in by an intervention agency47,

• Council Regulation (EEC) No 2931/79 of 20 December 1979 on the granting of assistance for the exportation of agricultural products which may benefit from a special import treatment in a third country48,

• Council Regulation (EEC) No 3220/84 of 13 November 1984 determining the Community scale for grading pig carcasses,

• Council Regulation (EEC) No 1898/87 of 2 July 1987 on the protection of designations used in marketing milk and milk products,

• Council Regulation (EEC) No 3730/87 of 10 December 1987 laying down the general rules for the supply of food from intervention stocks to designated organisations for distribution to the most deprived persons in the Community,

• Council Regulation (EEC) No 386/90 of 12 February 1990 on the monitoring carried out at the time of export of agricultural products receiving refunds or other amounts49,

• Council Regulation (EEC) No 1186/90 of 7 May 1990 extending the scope of the Community scale for the classification of carcasses of adult bovine animals,

• Council Regulation (EEC) No 1906/90 of 26 June 1990 on certain marketing standards for poultrymeat,

• Council Regulation (EEC) No 2204/90 of 24 July 1990 laying down additional general rules on the common organisation of the market in milk and milk products as regards cheese,

• Council Regulation (EEC) No 2077/92 of 30 June 1992 concerning inter-branch organisations and agreements in the tobacco sector50,

• Council Regulation (EEC) No 2137/92 of 23 July 1992 concerning the Community scale for the classification of carcasses of ovine animals and determining the Community standard quality of fresh or chilled sheep carcasses,

• Council Regulation (EC) No 2991/94 of 5 December 1994 laying down standards for spreadable fats,

• Council Regulation (EC) No 2597/97 of 18 December 1997 laying down additional rules on the common organisation of the market in milk and milk products for drinking milk,

• Council Regulation (EC) No 2250/1999 of 22 October 1999 concerning the tariff quota for butter of New Zealand origin51,

• Council Regulation (EC) No 1788/2003 of 29 September 2003 establishing a levy in the milk and milk products sector,

• Council Regulation (EC) No 1028/2006 of 19 June 2006 on marketing standards for eggs,

• Council Regulation (EC) No 1183/2006 of 24 July 2006 concerning the Community scale for the classification of carcasses of adult bovine animals.

These Regulations should therefore be repealed. In the interests of legal certainty and given the number of acts to be repealed by this Regulation and the number of acts adopted pursuant to or amended by those acts, it is appropriate to clarify that repeal does not affect the validity of any legal acts adopted on the basis of the repealed act or of any amendments to other legal acts made thereby.

This Regulation should, as a general rule, start to apply on 1 January 2008. However, in order to ensure that the new provisions of this Regulation do not interfere with the ongoing 2007/2008 marketing year, a later date of application should be provided for in respect of those sectors for which marketing years are foreseen. This Regulation should therefore only apply as of the start of the 2008/2009 marketing year for the sectors concerned. As a consequence, the respective regulations governing those sectors should continue to apply until the end of the corresponding marketing year 2007/2008.

Moreover, in respect of certain other sectors for which no marketing years are foreseen, a later date of application should also be provided for in order to ensure the smooth transition from the existing CMOs to this Regulation. As a consequence, the regulations governing the existing CMOs for those sectors should continue to apply until the later date of application provided for in this Regulation.

As regards Regulation (EC) No 386/90, the competence for the adoption of the substance dealt with by that Regulation is being transferred to the Commission by this Regulation. Moreover, Regulations (EEC) No 3220/84, (EEC) No 1186/90, (EEC) No 2137/92 and (EC) No 1183/2006 are being repealed by this Regulation whilst only certain provisions of those Regulations are being incorporated into this Regulation. Further details contained in those Regulations will therefore have to be dealt with in implementing rules yet to be adopted by the Commission. Some more time should be allowed for the Commission to establish the respective rules. The mentioned Regulations should therefore continue to apply until 31 December 2008.

• Council Regulation (EEC) No 315/68 of 12 March 1968 fixing quality standards for flowering bulbs, corms and tubers52,

• Council Regulation (EEC) No 316/68 of 12 March 1968 fixing quality standards for fresh cut flowers and fresh ornamental foliage53,

• Council Regulation (EEC) No 2517/69 of 9 December 1969 laying down certain measures for reorganising Community fruit production54,

• Council Regulation (EEC) No 2728/75 of 29 October 1975 on aids for the production of and trade in potato starch and potatoes for starch manufacture55,

• Council Regulation (EEC) No 1358/80 of 5 June 1980 fixing the guide price and the intervention price for adult bovine animals for the 1980/81 marketing year and introducing a Community grading scale for carcasses of adult bovine animals56,

• Council Regulation (EEC) No 4088/87 of 21 December 1987 fixing conditions for the application of preferential customs duties on imports of certain flowers originating in Cyprus, Israel and Jordan57,

• Council Decision 74/583/EEC of 20 November 1974 on the monitoring of sugar movements58.

The transition from the arrangements provided for in the provisions and Regulations repealed by this Regulation could give rise to difficulties which are not dealt with in this Regulation. In order to deal with such difficulties, the Commission should be enabled to adopt transitional measures,