THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Article 37 thereof,Having regard to the proposal from the Commission,Having regard to the opinion of the European ParliamentOpinion delivered on 5 June 2003 (not yet published in the Official Journal).,Whereas:(1)Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organisation of the market in milk and milk productsOJ L 90, 1.4.1984, p. 10. introduced an additional levy scheme in that sector from 2 April 1984. The scheme has been extended several times, in particular by Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sectorOJ L 405, 31.12.1992, p. 1. Regulation as last amended by Regulation (EC) No 2028/2002 (OJ L 313, 16.11.2002, p. 3). and most recently, until 31 March 2008, by Council Regulation (EC) No 1256/1999 of 17 May 1999 amending Regulation (EEC) No 3950/92 establishing an additional levy in the milk and milk products sectorOJ L 160, 26.6.1999, p. 73..(2)In order both to benefit from the lessons learned and to simplify and clarify the scheme, Regulation (EEC) No 3950/92 should be repealed and the rules governing the extended scheme should be reorganised and clarified.(3)The main purpose of the scheme is to reduce the imbalance between supply and demand on the milk and milk products market and the resulting structural surpluses, thereby achieving better market equilibrium. It should therefore continue to be applied for seven further consecutive twelve-month periods starting on 1 April 2008. Those periods are to be added to the periods already provided for in Regulation (EEC) No 3950/92.(4)The method adopted in 1984, which consists of applying a levy to quantities of milk collected or sold for direct consumption above a certain guarantee threshold, should be maintained. This guarantee threshold is fixed for each Member State as a guaranteed total quantity for a reference milk-fat content.(5)The levy should be set at a dissuasive level and be payable by the Member States as soon as the national reference quantity is exceeded. The Member State should then divide the burden of payment among the producers who have contributed to the overrun. The latter must be liable vis-à-vis the Member State for payment of their contribution to the levy due for the mere fact of having overrun their available quantity.(6)Member States shall pay to the EAGGF, Guarantee Section, the levy corresponding to the overrun of their national reference amount, 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.(7)Member States should be allowed a certain amount of time to allocate the levy to be paid among producers and to pay it to the EAGGF Guarantee Section. If they are unable to meet the time limit set, it should be ensured that the amounts due are available in the EAGGF Guarantee Section, by deducting them from the monthly refunds made to Member States. This involves derogating from the procedure laid down in Article 14 of Council Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary disciplineOJ L 244, 29.9.2000, p. 27..(8)Regulation (EEC) No 3950/92 provided for a distinction between deliveries and direct sales. Experience has shown that administration should be simplified by restricting deliveries to whole milk and excluding all other milk products. Consequently, direct sales must henceforth include sales and direct transfers of milk to consumers, as well as all sales and transfers of other milk products.(9)For each individual reference quantity for deliveries there should be a matching representative fat rate established with reference to existing and modifiable rates in accordance with rules to be defined. Rules should be laid down to ensure that the difference between the weighted average of the individual representative fat contents and the relevant national reference fat content remains minimal.(10)A simplified procedure should be laid down to divide the individual reference quantities between deliveries and direct sales, with an obligation to provide the Commission with the necessary information to make that allocation and to calculate the levy. This allocation should be based on the reference quantities held by producers for the twelve-month period commencing on 1 April 2003. The sum of the quantities allocated to the producers by the Member States may not exceed the national reference quantities. The national reference quantities are to be established for the eleven periods from 1 April 2004 and to take account of the different components of the previous scheme.(11)It is necessary to determine the way the fat content of milk is to be taken into account when drawing up the definitive statement of quantities delivered. It should be stressed that under no circumstances may individual downward corrections of the fat content of delivered milk or the separation of milk into its different components result in a deduction from the levy payment of any quantity in excess of the guaranteed total quantity in a Member State. In view of the negligible quantities concerned, there is no need to take account of fat content for direct sales.(12)In order to ensure that the scheme runs effectively, the contribution to the levy due from the producers should be collected by the purchasers, who are in the best position to carry out the necessary transactions and who should therefore be given the means to ensure that they can collect this contribution. Conversely, any amount collected which exceeds the levy due by the Member State should be used to finance national restructuring programmes and/or reimbursed to certain categories of producers or those in an exceptional situation. However, where it is found that no levy is due by the Member State, any advances collected should be reimbursed.(13)Experience has shown that implementing this scheme presupposes the existence of a national reserve enabling, on the basis of objective criteria, producers to obtain extra quantities or new producers to start up, and replenished with any quantities which, for whatever reason, are not or no longer allocated individually. In order to enable the Member State to respond to specific situations, determined by objective criteria, it should be authorised to make allocations to the national reserve by across-the-board reductions in all reference quantities or by deductions from definitive transfers of these quantities.(14)In order to ensure that administration of the scheme remains sufficiently flexible, the Member States should be authorised to reallocate unused reference quantities at the end of a period, either nationally or among purchasers.(15)The under-use of reference quantities by producers can prevent milk production from developing properly. In order to avoid such problems, Member States should be able to decide that, in cases of inactivity or substantial under-use over a significant period of time, unused reference quantities are to revert to the national reserve to be re-allocated to other producers. However, provision must be made for cases where producers who are temporarily unable to produce wish to resume production.(16)The temporary transfer of parts of individual reference quantities in Member States which have authorised this has proved to enhance the effectiveness of the scheme. However, this mechanism should not be implemented where it might run counter to structural trends and adjustments, nor should any resulting administrative difficulties be underrated, nor should former producers who have given up production be allowed to keep their quota beyond the time strictly needed for it to be transferred to an active producer.(17)When the scheme was introduced in 1984, the principle was established that when a farm is sold, leased or transferred by inheritance, the corresponding reference quantity is transferred to the purchaser, tenant or heir together with the relevant land. It would not be appropriate to alter this original decision. However, national provisions to safeguard the legitimate interests of the parties should be implemented in all cases of transfer where the parties are not in agreement.(18)In order to continue the restructuring of milk production and improve the environment, some exceptions should be made to the principle that reference quantities are tied to farms, and the Member States should be authorised to keep open the option to implement national or regional restructuring programmes. Member States should also be entitled to organise the transfer of reference quantities in other ways than through individual transactions between producers.(19)In line with the various types of transfer of reference quantities and using objective criteria, Member States should be authorised to place part of the transferred quantities in the national reserve.(20)Experience with the additional levy scheme has shown that the transfer of reference quantities through legal constructions such as leases which do not necessarily lead to a permanent allocation of the reference quantities concerned to the transferee, can be an additional cost factor for milk production hampering the improvement of production structures. In order to strengthen the regulatory effect of the reference quantities on the market for milk and milk products, the Member States should be authorised to allocate reference quantities which have been transferred through leases or comparable legal means to the national reserve for re-distribution on the basis of objective criteria to active producers, in particular to those who have used them before. Member States should also have the right to organise the transfer of reference quantities by means other than by individual transactions between producers.(21)In order to avoid increasing the cost of means of production or causing unequal treatment, it should be stressed that all public financial assistance during acquisition or transfer of quotas is prohibited.(22)The main purpose of the levy provided for in this Regulation is to regularise and stabilise the market in milk products. The revenue accruing from this levy should therefore be used to finance expenditure in the milk sector.(23)The measures needed to implement this Regulation should be taken pursuant to Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the CommissionOJ L 184, 17.7.1999, p. 23.,HAS ADOPTED THIS REGULATION:

October 3, 2006	article 8.1	Completion
September 1, 2006	article 3.1	Replacement

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

Modified by

Council Regulation (EC) No 1406/2006 of 18 September 2006 amending Regulation (EC) No 1788/2003 establishing a levy in the milk and milk products sector