Beef and Veal

Characteristics of the sector and presentation of market measures

Europe is responsible for 12% of world beef production, 8 million tons that represent 19% of the total meat production of the European Union. Since 2002, the EU is no longer selfsufficient.

In spite of the two BSE crises1, European consumption did not drop between 1994 and 2005.

The market measures concerning the Common Market Organisation for beef and veal, gradually set up since 1964, consist of the following measures:

The public intervention purchase consists of buying meat by national intervention organisations, in order to remove meat surpluses from the market and therefore, by rationing supply, and thus maintain prices.

Export refunds

These two measures represent most of CMO expenditure until 1993.

Customs duties "ad valorem" and fixed or variable levies,

Tariff Quotas

The exceptional BSE measures set up in 1996 constitute a large part of the expenses devoted to the market measures since then.

Private Storage Aid

"Related" measures were also integrated into the analysis: The classification and observation system for carcass prices, the traceability of living animals and meat products, the campaigns of promotion and information, and the health and animal welfare measures;

The EAGGF-Guarantee beef budget amounted to €8 billion in 2005, i.e. 20% of the total expenditure. Market measures represented only 5% of expenditure in 2005 vs. 83% in 1989 (€2 billion), most of the expenditure consisting of direct aid. France, the United Kingdom, Germany, Ireland and Spain are the main producers and beneficiaries.

Objectives and scope of the evaluation

The evaluation focuses on the measurement of the effects of market measures on the market balance, the stability of prices and the internal and external competitiveness of European beef. It tries to analyse the consequences on producer income and on their behaviour and identifies the other effects of the measures. It then analyses the relevance of the objective of market stabilisation and approaches the efficacy of the measures. The evaluation covers the period 1990 to today and consecutively the EU 12, 15 then 25.

Evolution of context and measures over the period

Four periods were identified to evaluate the reforms. Between 1990-1992, priority was still given to supporting agricultural production via price support. This period was dominated by the German reunification, which entailed a temporary surplus of supply related to the massive slaughter of cull cow, and overuse of the intervention mechanism.

The 1993-1999 period was characterised by the 1992 reform: coupled direct aid replaced price-support income, consistent with the signing of the GATT (WTO) agreements, which restricted the use of two market measures: Export refunds and border protection. In 1996, the first BSE crisis justified the implementation of exceptional measures and the reactivation of public intervention purchase.

2000-2004 corresponds to a transition period marking the end of the system of price support with a drastic drop in the intervention price, reduced to a safety net in 2002. The Agenda 2000 outlines the next reform. The BSE crisis in 2001 led to the application of new exceptional measures.

The last period, 2005-2006, was marked by the decoupling of ...