CONFERENCE ON ACCESSION Brussels, 4 September 2002 TO THE EUROPEAN UNION --

CONF-H 32/02

Document provided by Hungary Subject: Additional Information Chapter 7 - Agriculture

20585/02 CONF-H 32/02 1 EN

Brussels, 31 July 2002

SUPPLEMENTARY INFORMATION

TO THE NEGOTIATING POSITION OF THE GOVERNMENT OF THE REPUBLIC OF HUNGARY

ON CHAPTER 7 AGRICULTURE

The Hungarian Government taking into account the European Union's revised common position (CONF-H 21/02) and the results of the technical consultations held with the European Commission on 26 June 2002 amends its negotiating position on Chapter 7, Agriculture (CONF-H 63/00 (as amended by document CONF-H 53/01, CONF-H 4/02 and CONF-H 17/02) and provides supplementary information to it as follows. Titles and numberings are those ofthe European Union Common Position (CONF-H 21/02):

8. State aids

The Hungarian Government maintains its request in paragraph 52 of document CONF-H 59/99.

9a. Direct payments

The Hungarian Government will formulate its position at a later stage of negotiations concerning the simplified scheme and the complementary national direct payments.

12. Determination of the base area of arable crops (Cereals, oilseeds, protein crops) under Article 2(2) and Annex II of Council Regulation (EC) NO 125111999 and of the average cereal yield provided for under Article 3(5) of Council Regulation (EC) No 12511199

The Hungarian Government maintains its position in paragraph 1 of document CONF-H 37/01. According to this position the Hungarian national base area is 3,650,652 ha. However, it does not contain the production area of rice, wild rice, flax and hemp grown for fibre. The Hungarian average cereal yield is 5.04 tonnes/ha.

The Hungarian Government reiterates its position in paragraph 3 of Part 1 of document CONF-H 63/00 concerning the national base area and average cereal yield.

20585/02 CONF-H 32/02 2 EN 13. Determination of the eligible area of durum wheat provided for under Article 5 and Annex /1 of Council Regulation (EC) No 125111999 subject to the limits fvced in Annex Ill to that Regulation (traditional areas) as well as in Annex IV of the Council Regulation (non-traditional areas)

The Hungarian Government considers that the actual production of the most recent year for which data are available should serve as basis for the determination of the eligible area. In 2000 durum wheat was produced on an area of 14,855 ha (see Annex I of document CONF-H 4/02). 11,000 ha of the above durum wheat area in the seven production zones described in document CONF-H 17/02 met the eligibility criteria of the "traditional durum wheat aid" as described in paragraph 13 of the document CONF-H 21/02.

The Hungarian Government requests that the seven durum wheat production zones as described in paragraph 13 of document CONF-H 17/02 be added to Annex 11 of Council Regulation (EC) No 1251/1999 as traditional production zones for durum wheat, the maximum guaranteed area for traditional production zones for durum wheat in Annex Ill of Council Regulation (EC) No 1251/1999 be determined at 11,000 hectares, the entire territory of Hungary outside the above traditional production zones for durum wheat be considered as well-established production zones for durum wheat, the maximum guaranteed area for well-established production zones for durum wheat in Annex IV of Council Regulation (EC) No 1251/99 be set at 3,855 hectares.

The Hungarian Government wishes to note that criteria, referred in paragraph 13 of document CONF-H 21102 are not part of Council Regulation (EC) No 125111999, and such criteria were not taken into consideration during the previous accessions either.

The glassiness criteria is mentioned in Annex I of Commission Regulation (EC) 824/2000 establishing procedures for the taking-over of cereals by intervention agencies and laying down methods of analysis for determining the quality of cereals. It states that in the case of durum wheat intervention the allowed maximum percentage of wholly or partially piebald grains (i.e. which do not meet the glassiness criteria) is 27 %. The Hungarian Government stresses that this criterion is only applied in the case of durum wheat intervention, but it is not a condition for receiving the area based durum wheat aids.

Annex I of Commission Regulation (EC) No 2104/2001 sets the mmtmum quality requirement for imported cereals. The minimum vitreous grain percentage has to be 75 %in case ofhigh quality and 62% in case of medium quality durum wheat imported into the EU. 2 % tolerance is allowed. The Hungarian Government considers that according to this Regulation every durum wheat lot which has vitreous grain percentage above 60 % is considered as durum wheat in the EU. Data provided in Annex I of document CONF-H 4/02 show that the vast majority of durum wheat produced in Hungary meets these criteria.

20585/02 CONF-H 32/02 3 EN 14. Determination of the maximum guaranteed area for grain legumes (Article 3 of Council Regulation (EC) No 1577196

Hungary takes note of and does not object to the EU position that the Community guaranteed area would be increased by 1,954 hectares.

15. Inclusion of Hungary in the list of rice producing countries of Article 6(4) of Council Regulation (EC) No 3072195 on the common organisation of the market in rice, and determination of i) national base area and ii) area payment based on national average yield

The Hungarian Government considers that the national base area and the national average yield should be based on the production of the best years of the reference period 1995/96 to 2000/01. According to this position the Hungarian Government proposes setting the base area at 4,208 hectares (data ofthe year 1995/96) and the national average yield at 3.33 tonnes (data of the year 1997/98).

17. Dried fodder (Council Regulation (EC) No 603195)

The Hungarian Institute of Agricultural Engineering, which is an associated member of the European Network for Testing of Agricultural Machines, conducted a survey in 2002 on behalf of the Ministry of Agriculture and Regional Development on the Hungarian dried fodder plants. The survey was based on the requirements of Commission Regulation (EC) No 785/95. Major findings of this survey are as follows:

In 2002 30 companies operated 36 dryers in Hungary. The majority of the dryers was of type MGF-OB. The following table summarises the technical conditions of the dryers.

Number of Nominal evaporating Nominal production capacity Type of dryer 2 equipment in use(I) capacity (kg water/h) (kg dried product lhi > MGF-OB 30 4,000 2,000 MA-60 1 5,000 2,500 MA-100 1 6,000 3,000 LKB-OB 2 3,000 1,500 TGSZ-06 2 1,000 500 (1) Results do not contain data of five dryers, which either do not operate at present or produce limited quantities for their own use, and data of further 13 dryers, which did not respond to the questionnaire of the institute. (2) Drying from 70 % to 8-9 % water content

The total nominal production capacity of the 36 dryers was 139,000 tonnes based on 2,000 annual operating hours. The average dried product output was two tonnes per hour. The actual dried fodder production was 52,760 tonnes, 46,426 tonnes, 39,132 tonnes and 55,436 tonnes in 1998, 1999, 2000 and 2001, respectively. It is estimated that the production will reach 60,500 tonnes in 2002. Annex I contains detailed data on the dryers and on their production since 1998.

20585/02 CONF-H 32/02 4 EN The survey has demonstrated that production of dried fodder has stabilised at 50-55,000 tonnes in recent years (not including the production of 4-6,000 tonnes for own use). It has to be mentioned that in 2000 the draught severely affected green and dried fodder production. The dryers utilised in average 50-60% of their capacity. More than 95% ofthe production was lucerne (alfalfa) pellet. The products were marketed either in Hungary for compound feed production (especially in rabbit feeds, which is an important and growing outlet) or abroad. Export is limited practically to the republics of the former Yugoslavia.

It is estimated that there will be an upward trend following Hungary's accession to the EU due to the growing demand for these products as result of the BSE crisis. Higher output would not cause market disturbances.

In Hungary fodder is not dried artificially in layers. The dryers in operation are rotary drum types. In practice the maximum residence time of fodder being dehydrated is in the range of 5-10 minutes, the normal drying temperature is 700-900 °C. Although the technical level of the dryers is different, production meets the requirements of the relevant EC legislation

The most commonly used MGF-OB dryers have a water evaporating capacity of 3,500-4,200 kg/h and a dried product output of 1. 75-2.1 tlh. The hourly consumption of the dryers is 360- 400 m3 of natural gas. The average temperature at the entry point is 600-900 °C, while 105- 130 °C at the exit. The dryers reduce the moisture content of the entering green crop from 70 %to 8-9%.

The survey concluded that at least 95% of the marketed dehydrated products fall into classes I-III according to the classification of the Hungarian Standard, thus also meeting the EU requirements concerning maximum moisture and crude protein content. The average quality ofthe products is as follows: moisture content: 8-12% crude protein content: 17.5-21.0% raw fibre content: 20.0-24.0% carotene content: 100 - 200 mg/kg.

Quality of the dried fodder is regularly controlled by accredited laboratories.

19. Sugar and isoglucose quota (Council Regulation (EC) No 1260/2001, Articles 10- 21)

The Hungarian Government accepts the EU proposal in paragraph 19 of document CONF-H 21/02 to set the sugar A quota at 400,454 tonnes, while it maintains its position concerning the sugar B quota, the isoglucose A quota and isoglucose B quota as set out in paragraph 21 of document CONF-H 59/99. As regards isoglucose, it notes that the introduction of the quota system should not lead to the reduction of the isoglucose production covering domestic consumption in the year before accession.

20585/02 CONF-H 32/02 5 EN 19A National Guaranteed Quantity of flax fibre (Council Regulation (EC) No 1673/2000)

The Hungarian Government considers that the production of the best year of the reference period 1997/99 should be chosen as a base of the national guaranteed quantity. According to this position the Hungarian Government requests 3,137 tonnes as national guaranteed quantity. This was the production in the year 1997.

21. Financial assistance to producer organisations (Article 14(7) of Council Regulation (EC) No 2200/96 as amended by Council Regulation (EC) No 2699/2000

The Hungarian Government maintains its request in paragraph 22 of document CONF-H 59/99. The fruit and vegetable sector is important for Hungary (12 per cent of the total agricultural production). After Hungary's accession to the EU in certain areas small producers will face severe competition in the internal market. The situation will be similar to that faced by Portugal (Council Regulation (EEC) No 746/93 of 17 March 1993). The acceleration of the setting up of producer organisations is essential for the small producers to be able to withstand competitive pressures. In addition, it will also facilitate the exercise of duties allocated by the CAP to the producer organisations.

22. Reimbursement of the national assistance granted to producer organisations (Article 15(6) of Council Regulation (EC) No 2200/96 as amended by Council Regulation (EC) No 269912000)

The request in paragraph 22 of document CONF-H 59/99 concerning the reimbursement of national assistance granted to producers organisations is not maintained.

24. National thresholds for processing aid for tomatoes (Council Regulation (EC) No 2201196 as amended by Council Regulation (EC) No 269912000)

Hungary takes note of and does not object to the EU position that the national threshold for Hungary for tomatoes should be set at 130,790 tonnes.

25. National thresholds for processing aid for peaches and pears (Council Regulation (EC) No 2201/96 as amended by Council Regulation (EC) No 2699/2000)

Hungary takes note of and accepts the EU position that the national thresholds for Hungary for peaches and pears should set at 1,616 tonnes of fresh peaches and 1,031 tonnes of fresh pears.

20585/02 CONF-H 32/02 6 EN 27. -growing areas (Annex Ill of Council Regulation (EC) No 1493/1999)

The Hungarian Government maintains its position in paragraph 27 of document CONF-H 59/99 that all wine growing areas in Hungary should be classified into one zone, namely C I a. The Hungarian Government considers that the climatic and geographic conditions and the natural sugar content of the in different wine growing areas and justify this position.

Annex 11 and Ill lists the regions, where in certain vintages in the case of certain varieties the alcoholic strength of a part of the harvested grapes was 7.7-8.0 % vol. The data show that minimum alcoholic strength of 7.7-8.0% vol. occur in Hungary in certain vintages and in the case of certain varieties. The only exception is the wine-growing region Vilhiny, due to its specific microclimate. Data on minimum alcoholic strength below 7. 7 % vol. are not available since Act CXXI of 1997 on Cultivation and Wine Management prohibits production from must having a natural sugar content less than 13 percent by weight (equivalent to 7.7% vol. natural alcoholic strength). As a consequence, in Hungary no wine is produced from grapes the natural alcoholic strength of which not reaching 7. 7% vol.

According to the Hungarian legislation in force, quality may be produced from grapes with minimum 9.1 %vol. natural alcoholic strength by volume. Under the Hungarian climatic conditions only a part of the yield reaches this leveL Consequently both table wines and quality wines are produced in every and in every wine-growing region. The share of quality wines depends on the actual weather conditions, it is higher in better years. In the last four years proportion of quality wines and superior quality wines in the total was as follows: 1998-62 %, 1999- 63 %, 2000-61 %, 2001-45 %.

Classification of the wine areas in the Great Plain in the zone "C 11" would cause great damage to the Hungarian producers. Data of Annex 11 and Ill show that in the majority of the vintages in the case of some - mainly traditional - varieties a part of the yield did not reach 8 % vol. natural alcoholic strength. The proportion in some extreme years was close to 100 %. No data about the proportion of grape musts under 8,5 % vol. alcoholic strength is available. It is assumed that in the Great Plain wine areas in the vintages with worse than average weather condition the vast majority of the musts could not fulfil the minimum alcoholic strength criteria. The Hungarian Government refers to the fact that in the EU wine areas that are classified as part of the C 11 zone have a Mediterranean climate. (The South of France, most of the wine growing regions of Italy and Spain.) However, Hungary has a continental climate.

Classification of wine areas in the South and Northeast in the zone "C I b" would also cause serious problems. Quality wines psr would meet the minimum natural alcoholic strength requirement, since the Hungarian legislation in force sets it at 9.1 % vol.. Annex 11 and Ill show that in certain vintages in the case of certain varieties the minimum natural alcoholic strength in volume did not reach 8 % vol.. In the event of the introduction of the "C I b" requirements, in some vintages large proportion of the grape must would not be suitable for table wine production.

20585/02 CONF-H 32/02 7 EN The Hungarian Government refers also to the meteorological data, provided in documents CONF-H 63/00 and CONF-H 53/01. They prove that there are no significant differences in the climate of the different wine- regions of Hungary.

Between vintage years, extreme meteorological deviation may be recorded in any -growing region. Consequently, there may be great differences in the natural sugar content of the musts in the different vintage years in every Hungarian wine-growing region.

If the Hungarian request to classify all wine growing areas into zone C I a cannot be met, the Hungarian Government requests the EU to establish a new zone for the entire territory of Hungary.

The following table summarizes EC requirements for the zones "C I a" and "C I b", as well as the proposed requirements for the new zone for Hungary and the corresponding data of the Hungarian legislation in force.

EU wine-growing zones Proposed new Hungarian zone for legislation Cl a Clb Hungary in force Minimum natural alcoholic strength by volume -table 7.5% vol 8 %vol 7.7% vol 7.7% vol wines Minimum natural alcoholic strength by volume- quality 8.5% vol 9.0 %vol 9.0 %vol 9.1 % vol wine psr Total alcoholic strength by not less than not less than 15.0% vol not limited volume - table wines 15.0% vol Total alcoholic strength by not less than not less than not less than 9.0% vol volume- quality wines psr 9.0 %vol 9.0% vol Actual alcoholic strength by not less than not less than not less than 9.0 % vol volume - table wines 9.0% vol 9.0% vol Increase in natural alcoholic strength by volume may not 2.0% vol 2.0 %vol exceed (both table wines and 2.2% vol quality wines psr) The effect of raising the total alcoholic strength by volume 12.5% vo1 12.5% vo1 12.4% vo1 does not exceed Acidification of wines may be must: 1.5 g/1 must: 1.5 g/1 must: 2.5/1 carried out only up to the limit wine: 2.5 g/1 wine: 2.5 g/1 wine: 1.5 g/1 of (*) (*) Deacidification 1 g/1 I g/1 not regulated * In years when climatic conditions have been exceptional, under the conditions in zone C 11.

20585/02 CONF-H 32/02 8 EN The Hungarian Government maintains its request for the possibility of enrichment of wine by the addition of sucrose. According to the acquis, enrichment of wine by the addition of sucrose is only allowed if it was traditionally or exceptionally practiced under the legislation in force on 8 May 1970. Data in paragraph 27 of documents CONF-H 4/02 and CONF-H 17/02 prove that since 29 November 1970 the increase in natural alcoholic strength by volume by addition of sugar has been a legally approved practice in Hungary. It was made possible in 1970, following a vintage with extremely bad weather conditions. In 1970 unusually large amount of precipitation and shortage of sunshine radiation characterized summer months. In the first week of September a drastic frost damaged approximately 50 % of the . As a result, the grapes lost their foliage before the complete maturation of berries. Law Decree 36 of 1970 of 29 November 1970 also meant a tacit recognition of the fact that addition of sucrose had been widely and unavoidably practiced in vintages with bad conditions and especially in 1970. The Hungarian Government considers that the 32 year old legally approved practice of addition of sugar to the grape musts has to be recognized by the EU.

40. Traditional designations for fruit spirit (Article 1 (4)(i) of Council Regulation (EEC) No 1576/89)

As a result of the consultations with representatives of the competent Austrian authorities and professional organisations, the Hungarian Government amends its position in paragraph 38 of document CONF-H 59/99 as follows:

The Hungarian Government requests that new provisions be included in Council Regulation (EEC) No 1576/89 authorising the use of the name "palinka" with its Hungarian spelling instead of the names "fruit spirit" or "grape marc spirit" (paragraphs 1 (4 )(i) and 1 (4)(t) of Council Regulation (EEC) 1576/89, respectively) for every kind of fruit or grape mark distillates solely produced in Hungary according to the Hungarian Food Codex Regulation No. 1-3-1576/89 (3rd edition). instead of the name "fruit spirit" (paragraph 1 (4 )(i) of Council Regulation (EEC) 1576/89) only for apricot distillates produced solely in the following counties (BundesHinder) of : Niederosterreich, Burgenland, Steiermark and Wien.

The Hungarian Government reaffirms that from 1 July 2002 the name "palinka" may exclusively be used for the designation of fruit or grape marc spirits in Hungary. The definition of "palinka" is completely in line with EC definitions described in paragraphs 1 (4)(i) and 1 (4)(t) of Council Regulation (EEC) 1576/89. The new rules are not applied in the case of spirit drinks produced, bottled and tax sealed before 1 July 2002. Existing stocks can be marketed without time limit.

The Hungarian Government informs the EU that the Hungarian legislation in force (Hungarian Food Codex Regulation No 1-3-1576/89) allows both domestic and foreign operators to use the Hungarian name "parlat" (translation of the expression "distillate") for the designation of their products marketed in Hungary.

20585/02 CONF-H 32/02 9 EN 44. National production quota for tobacco (Council Regulation (EEC) No 2075192, Article 9(2)20)

The Hungarian Government considers that the production of the best year of the reference period 1997-1999 should be chosen as the basis of the national production quota. According to this position the Hungarian Government requests the setting of the national production quota at 15,105 tonnes, which was the actual production in 1999. From this quota the share of the flue cured tobaccos (Virginia) should be 7,430 tonnes of the light air cures tobaccos (Burley) 7,675 tonnes.

45. Specific reference quantity (milk quota) (Council Regulation (EEC) No 3590/92 as amended by Council Regulation (EC) No 125611999)

Taking into consideration the results of the technical consultations with the European Commission, Hungary provides additional data for the calculation of the reference quantities of milk.

Balance sheet of raw milk sales and consumption for the period 1997-2000:

1996 2000

Source: Central Statistical Office

Definitions: Sales to buyers and processors: Domestic raw milk sale from producers to processors and/or to milk collectors (purchasers) Sales (Peasants' market, own shop): Direct raw milk sale from producers to consumers. Sales within agriculture: Sales between agricultural holdings for further utilisation and processmg. Other sales: Sales without any trade-documentation. Consumption and processing on farm: Milk and milk product utilisation on farm for animal feed purposes. Consumption from own production: Raw milk consumption by the producers and the employees of large-scale farms. Processing for human consumption and direct sales of processed milk products also included. Loss: Losses during transport and collection. Stocks: Expected closing-stocks on the last day of the given year.

20585/02 CONF-H 32/02 10 EN The "consumption form own production" is composed of the following three categories:

Raw milk consumption by producers The consumption of owners and their family members Raw milk consumption by employees of large-scale farms: provisions in kind for the employees. Processing for human consumption and direct sales of processed milk products: direct sales of cheese, clotted cream, curd cheese etc.

The following table shows the division of the "consumption from own production" in the above categories:

1997 1998 1999 2000 thousand tonnes Raw milk consumption by producers 6,6 6,5 6,6 6,4 Raw milk consumption by employees of 25,6 23,4 21,6 20,0 large-scale farms Processing for human consumption and 40,5 39,5 36,9 28,0 direct sales of processed milk products Calculated figures based on the data of the Central Statistical Office

The Hungarian Government considers that, according to the EC legislation in force, the following items and quantities should be included into the calculation of the national reference quantity for raw milk (milk quota):

EU Hungarian categories 1997 1998 1999 2000 categories thousand tonnes 1 Deliveries Sales to buyers and processors< > 1545 1684 1675 1733 Sales (Peasants' market, own Direct 146 150 148 147 sales shopp> Sales within agriculture(!) 13 15 15 16 Other sales(I) 104 86 95 98 Raw milk consumption by 25,6 23,4 21,6 20,0 employees of large-scale farms<2l Processing for human consumption and direct sales of processed milk 40,5 39,5 36,9 28,0 products<2l Subtotal direct sales 329 314 317 309 Total 1874 1998 1992 2042 Sources: (1) Central Statistical Office (2) calculated

Taking into consideration the development trends in the Hungarian dairy sector a significant reduction is forecast in direct sales, while delivered quantities will increase.

The Hungarian Government considers that the introduction of the milk quotas in Hungary should not lead to the reduction of the actual production of the year before accession. Domestic milk production limited by quotas should cover the increasing demands in the medium term and long term as well.

20585/02 CONF-H 32/02 11 EN In 2000 Hungary produced 2,139 thousand tonnes of liquid milk (see paragraph 45 of document CONF-H 17/02). The Hungarian Government considers that until 2004 the domestic milk production will increase by a yearly rate of3.5 %. Currently the per capita milk and dairy product consumption is 176 kg/year amounting to about 60% of the average of the EU member states. In the middle of the eighties the per capita consumption was more than 250 kg/year. Until 2004 a yearly GDP increase of about 4 % is forecast. It creates the necessary purchasing power for the increase of consumption. It has to be mentioned that in the period of 1996-2000 milk and dairy product consumption increased by 9 %. Taking into consideration the yearly 3.5 % increase the production subject to quota would be 2,455 thousand tonnes in 2004.

The experience of earlier accessions shows that the introduction of the milk common market organisation increases domestic consumption. The food processing companies will be interested in using dairy products instead of fat of plant origin and the role of milk replacers will decrease in animal feeding etc. The Hungarian Government considers that the introduction of the Common Market Organisation will raise the domestic consumption by further 5 %to 2,577 thousand tonnes in 2004.

The milk production quotas should also reflect this situation and, in addition, should contain a 5 % reserve, resulting in a milk quota of 2,706 thousand tonnes in 2004 for Hungary. The following table shows the forecast increase of the Hungarian milk production and the corresponding quota request:

Year 2000 2001 2002 2003 2004 Milk production 2 455(!) 2 214(!) 2 291 (I) 2,139 2 372(1) ' 2 (thousand tonnes) ' ' ' 2 577( ) ' Corresponding quota 3 2,706 (thousand tonnes) ( ) (I) Forecast data, based on a yearly growth of3.5% (2) Including 5% further increase due to the introduction of the milk common market organisation (3) Including 5 % quota reserve

50. Identification and registration of bovine animals and labelling of beef (Parliament and Council Regulation (EC) No 176012000, Commission Regulation (EC) No 182512000)

Hungary made further progress in the field of harmonisation of the cattle identification and registration system. A new ministerial decree has been drafted and will be issued until 31 December 2002. It adopts Council Directive No. 1997/12, Council Regulation No. 1760/2000 and Commission Regulations No. 494/1998, 2629/1997, 2630/1997. Upon entering into force the new regulation will ensure full compliance with the relevant acquis.

As far as the labelling is concerned, a new ministerial decree has been drafted. The draft adopts Council Regulation (EC) No. 1760/2000 and Commission Regulation No. 1825/2000. The entry into force of the new regulation is expected by the end of2002.

20585/02 CONF-H 32/02 12 EN 51. Special beefpremium (Council Regulation (EC) No 125411999)

The Hungarian Government maintains its position of paragraph 13 of document CONF-H 59/99 requesting 245,000 special beef premium rights. The Hungarian Government considers that the regional ceiling of the special beef premium has to be based on the number of bull calves born in the given year.

Presently the vast majority of male calves born in Hungary is either exported or slaughtered prior to the age of 9 months. According to the database of the Individual Cattle Identification and Registration System, the current number of male bovine animals older than 9 months is 40,81 0 while 167,827 male calves were born in 2001.

As the introduction of the beef Common Market Organisation will create considerably different market circumstances, the producers have to be provided with the possibility of choice either to export, slaughter or fatten the male animals on the farm. At present the fattening sector is very limited because of the low profitability. If a premium existed, more animals would be taken above nine months and not slaughtered at an early age.

52. Suck/er cow premium (Council Regulation (EC) No 125411999)

The Hungarian Government maintains its position of paragraph 13 of document CONF-H 59/99. The request is based on the fact that Hungary puts special emphasis on utilising more than one million ha grassland and meadow area by grazing. It contributes to the protection of the landscape and to the improvement of the environmental protection. The aims are in full compliance with the priorities of the EU on establishing multifunctional and sustainable agriculture.

53. Slaughter premium (Council Regulation (EC) No 1254/1999, Article 11 (3))

At the request of the EU Hungary provides the following data:

Balance sheet ofthe Hungarian cattle herd in the period of 1996-2000:

1996 1997 1998 1999 2000 thousand heads Stock, I January< 1J 923 907 870 875 859 1 Live-born animals< > 368 363 367 360 341 Purchased animals< 1J 140 143 120 138 129

Total cattle slaughtered in 2 199 179 165 177 176 HungaryC ) Live cattle export(3>t 99 120 90 74 123 Animals eligible for 4 298 299 255 251 299 slaughter premium( ) Source: (1) Central statistical Office, (2) calculated, (3) Kopint Datorg Rt. (4) Central Statistical Office, earlier referred as cattle for slaughter

20585/02 CONF-H 32/02 13 EN Data on live cattle export in the period 1996-2000: thousand heads Live cattle export, Animals for slaughter Animals for fattening Year eligible for slaughter over 300 kg of live under 300 kg of live weight premium wei~ht total to the EU total to the EU total to the EU 1996 99 29 56 16 43 11 1997 120 45 82 37 38 7 1998 90 31 59 25 31 6 1999 74 26 53 21 21 5 2000 123 52 85 43 38 8 Source: Kopint-Datorg Rt.

The Hungarian Government maintains its position of paragraph 54 of document CONF-H 59/99. It is based on the actual cattle herd size and on the requested special beef premium and suckler cow quotas.

56. Overall ceiling for the granting of the ewe premium (Council Regulation (EC) No 246711998, replaced by Council Regulation (EC) 252912001)

The Hungarian Government maintains its request in paragraph 15 of document CONF-H 59/99. The request is based on the fact that Hungary puts special emphasis on utilising more than one million ha grassland and meadow area by grazing. It contributes to the protection of the landscape and to the improvement of the environmental protection. The aims are in full compliance with the priorities of the EU on establishing multifunctional and sustainable agriculture.

57. Premiums for goatmeat producers (Council Regulation (EEC) No 2467198, replaced by Council Regulation (EC) 252912001)

The request in paragraph 15 of document CONF-H 59/99 concerning the ceiling of eligible animals for premiums for goatmeat producers is not maintained. Recent surveys have shown that animals reared in Hungary do not meet the eligibility criteria of the premiums.

61. Rural Development measures eligible for community support (Council Regulation (EC) No 125711999)

As regards the support of transitional LEADER+ measures, Hungary intends to implement the option of "selection of a limited number of pilot Local Action Groups and eo-financing of the implementation of the local development strategies" in the period of 2004-2006.

Since 1999 nearly 200 micro-regions have prepared their integrated rural development programmes, covering the whole territory of Hungary. Each of the programmes contains situation analysis, 7 year development strategy based on SWOT analysis, and operational programme for 3 years.

20585/02 CONF-H 32/02 14 EN The NUTS 4 level planning takes into consideration the partnership principle maintaining continuous dialog with the involved partners. The work completed served as the starting point for the civil society to organise their own ideas and to learn the principles and rules of programming. It can also be considered as the first steps towards the understanding and utilisation of the LEADER.

In 2001 the Ministry of Agriculture and Regional Development started the preparation for the LEADER+ Community initiative programme. A pilot programme has been launched for alleviating employment problems and improving life quality in accordance with the provisions of Government Decree No. 104/2001 (VI. 21.). There are four target groups for the programme: a) large families (eco-social small-scale farming model programme) b) roma society ( self-sustainability, training) c) rural youth (training, community development) d) scattered settlements, small villages (development of village managers' network)

By April 2002 all the participating Local Action Groups created their development plans regarding points a) to c) above, taking into consideration the priorities of the LEADER Programme. As regards the implementation of the approved plans the Local Action Groups will select the local ultimate beneficiaries that will realise the described projects. On the basis oftheir proposals, the interministerial committee decided to select 12 pilot areas.

Based on international experience the Local Action Groups deal only with program management in order to implement the development plan, while all the administrative tasks and the financial matters are carried out by the MARD Department of Rural Development Programmes, including the seven Regional Rural Development Offices established in 2000.

As regards other proposals of the EU position on rural development, the Hungarian Government intends to formulate its position at a later stage of the negotiations.

20585/02 CONF-H 32/02 15 EN New subject

Maximum quantity eligible for aid for certain seeds (Council Regulation (EC) No 15412002 Commission Regulation (EC) No 800/2002

Commission Regulation (EC) No 800/2002 amended the rules on the common organisation of the market in seeds, concerning the stabiliser mechanisms, with the introduction of maximum quantities on which aid may be granted, broken down by producer Member States. The Hungarian Government requests the inclusion of Hungary to the seed producer Member States and the allocation of quantities determined in line with the provisions of Council Regulation (EC) No 154/2002. Hungary requests the EU to indicate the kind of information which is needed in order to allocate the quantities.

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20585/02 CONF-H 32/02 16 EN ------ANNEXI

Data on Hungarian dried fodder plants in operation<•>

Nominal Nominal Actual production (tonnes) No Type of Installed Company Location of dryer capacity prod 3 dryer (year) 2 1998 1999 2000 2001 2002( ) (t/h) (t/yeari > 1 Adam es Tarsa Kft., Debreeen Debreeen MGF-OB 2,0 1984 4.000 - -- - 5.000 Balmazujvaros MGF-OB 2,0 1984 4.000 2 Alcsiszigeti MgRt., Szolnok Mezohek LKB-EB 1,5 1965 3.000 - - - 650 800 Szolnok TGSZ-06 0,5 - 1.000 - -- 761 900 3 Bares Somogytam6ea Mg.Sz. Als6gyorgyos-puszta MGF-OB 2,0 1972 4.000 2.400 1.510 1.500 1.800 1.500 4 Pann6nia Rt. Bonyhad MGF-OB 2,0 1971 4.000 400 500 - 350 200 5 Buesa Agrar Kft. Buesa MGF-OB 2,0 1973 4.000 522 446 1.150 1.360 1.300 6 Csabataj Mg.Sz., Bekesesaba Bekesesaba MA-60 2,5 1975 5.000 3.609 4.139 3.463 4.364 3.900 7 Cserhati Veneel, Jaszfenyszaru Jaszfenyszaru MGF-OB 2,0 1972 4.000 1.250 993 1.021 1.624 2.500 8 Del-Pest Megyei Mg.Rt., Cegled Cegled MGF-OB 2,0 1969 4.000 1.350 2.139 1.245 2.312 1.411 9 FORMULA GP, Hajduboszormeny MGF-OB 2,0 1974 4.000 4.790 4.870 4.874 4.870 6.000 Hajduboszormeny MGF-OB 2,0 1974 4.000 - -- - - 10 Foldes Rak6ezi MgTSz, Foldes Foldes MGF-OB 2,0 1975 4.000 321 400 375 512 300 11 Geresdlaki Mg.Rt., Geresdlak Geresdlak MGF-OB 2,0 1973 4.000 1.355 1.220 710 1.250 1.300 12 Gyorszentivan, Gonyli MTSz Gyor MGF-OB 2,0 1984 4.000 1.900 1.550 1.502 1.600 1.600 13 Hangas Ret Kft. Sarretudvari Sarretudvari MGF-OB 2,0 1972 4.000 1.000 800 170 - 500 14 Himeshaza, Emkes Kft. Himeshaza MGF-OB 2,0 1971 4.000 409 456 579 634 1.200 15 H6dmezogazda Rt., H6dmezovasarhely MGF-OB 2,0 1970 4.000 1.170 756 334 2.053 1.100 H6dmezovasarhely 16 HVB Hajduszovati Rt. Nagyrabe MGF-OB 2,0 1975 4.000 850 700 676 752 500 17 Jaszszentlaszl6 Mg.Sz. Jaszszentlaszl6 MGF-EB 2,0 1977 4.000 3.779 2.953 2.282 1.875 1.800 18 KAROTIN Kft., Szeged Doe MGF-OB 2,0 1974 4.000 3.629 2.934 2.377 4.237 6.000 MGF-OB 2,0 1998 4.000 - - - - - 19 KAROTIN Kft., Szeged Szeged MGF-OB 2,0 1990 4.000 7.200 5.868 3.122 6.954 6.000 MGF-OB 2,0 2001 4.000 - - - - -

20585/02 CONF-H 32/02 17 (ANNEX I) EN 20 Komye Agniripari Rt., Komye Komye LKB 1,5 1968 3.000 3463 3654 2260 3120 3039 21 Mezokovesd MgTSz Egerlovo MA-100 3,0 1976 6.000 2.465 1.982 1.197 2.753 1.800 22 Nyfrbator MgSz., Nyfrbcitor Nyirbcitor MGF-OB 2,0 1999 4.000 - 100 300 600 700 23 Sasdi Agro Rt., Sasd F elsoegerszeg MGF-OB 2,0 1975 4.000 315 422 478 997 1.000 24 Sombereki Rt. M G-OB 2,0 - 4.000 - - - - 500 25 Szentistvani Mg.Szovetkezet, Szentistvan MGF-OB 2,0 1976 4.000 1.207 1.168 1.172 2.278 2.300 Szentistvan TGSz-06 0,5 1972 1.000 - - - - - 26 Tedej Rt., Hajdunanas Tedej MGF-OB 0,5 1971 4.000 692 1.062 1.820 2.274 2.050 27 Turkeve Buzavirag Kft. Turkeve MGF-OB 2,0 1974 4.000 444 581 980 1.336 1.500 28 Vasarhelyi R6na Kft., H6dmezovasarhely MGF-OB 2,0 1974 4.000 4.545 798 1.957 - 2.000 H6dmezovasarhely 29 Veszprem Mg.Rt., Veszprem Klingos MGF-EB 2,0 1976 4.000 1.178 1.391 917 1.095 1.100 30 ZALAGRO, Zalaegerszeg Tlirje MGF-EB 2,0 1976 4.000 2.517 3.034 2.671 3.025 3.200 TOTAL - - - 139.000 52.760 46.426 39.132 55.436 60.500

(1) Data of companies, who responded the questionnaire of the Hungarian Institute of Agricultural Engineering (2) Based on 2000 operating hours/year (3) Planned total production

20585/02 CONF -H 32/02 18 (ANNEX I) EN ANNEXII

Share of the total yield with natural alcoholic strength between 7.7-8.0% vol

Yield with natural Share in the Total yield Vintage Variety alcoholic strength between total yield (tonnes) 7.7-8.0 %vol. (tonnes) (%) Lake Balaton Wine-growing regions: Badacsonyi, Balatonboghiri, Balatonmelleke, Balatonfiiredi-Csopaki, Balatonfelvideki 0 lasz rizling 1 038 896 86 1996 ZOld veltelini 4 969 700 14 Ezerftirtii 2 157 800 37 Zold veltelini, 50 15 30 1997 Chasselas 740 14 2 1998 Chasselas 604 16 3 1999 Chasselas 2 036 2 036 100 Harslevelii 49 49 100 2001 Leanyka 340 69 21 Chasselas 2 900 2 900 100 Great Plain Wine growing regions: Haj6s-Baja, Kunsagi, Csongradi Kadarka 165 26 15 1991 Ezerj6 130 41 3,1 Sarfeher 4976 32 1 Kekoport6 153 100 65 Ezet:i6 432 30 6,9 1992 Kadarka 168 58 34 Sarfeher 90 7 8 Ezerj6 321 19 5,9 Kadarka 164 114 69 1993 Chasselas 520 106 20 Sarfeher 872 102 12 Ezet:i6 144 1,2 1 Kadarka 138 111 80 1994 Chasselas 456 226 49 Sarfeher 112 682 56 Ezerj6 197 20 10 1995 Kadarka 254 69 27 Sarfeher 805 2 1 Ezerj6 140 82 58 Kadarka 181 28 15 1996 Chasselas 371 25 6 Sarfeher 879 6 1

20585/02 CONF-H 32/02 19 (ANNEX II) EN 1997 Ezerj6 134 1,6 1 Kadarka 215 52 24 Chasselas 236 123 52 1997 Kovidinka 325 41 12 Sarfeher 741 7 1 Ezerj6 152 75 49 1998 Kadarka 136 30 22 Sarfeher 408 10 2 Ezerj6 312 60 19 1999 Kadarka 134 36 26 Sarfeher 238 12 5 Ezerj6 435 141 32 Kadarka 606 370 2000 61 Sarfeher 996 263 27 Pann6nia kincse 1 300 50 4 Keko_l)_ort6 547 39 8 Zweigelt 216 189 88 MUller-Thurgau 598 230 39 Rajnai Rizling 1 278 370 28 Cserszeg_i fiiszeres 320 15 5 Kiralyleanyka 141 16 11 Ezerj6 1 072 655 61 2001 Ezerfiirtii 353 13 4 Piros szlanka 40 40 100 Sarfeher 241 203 85 Zalagyongye 854 29 4 Kadarka 1 092 626 57 Chasselas 1 662 530 31 Kovidinka 1 662 530 32 Lakhegyi mezes 555 555 100 Northern Transdanubia Wine-growing regions: Mori, Etvek-Budai, Aszar-Neszmelyi, Pannonhalma-Sokor6aljai 1992 Ezerj6 2 350 165 7 rizling 1 500 70 5 Kiralyleanyka 320 46 15 1994 ZOld veltelini 644 81 14 Ezerj6 3 220 142 5 1996 0 lasz rizling 1400 50 4 Leanyka 73 14 20 1998 0 lasz rizling 1 604 64 4

20585/02 CONF-H 32/02 20 (ANNEX H) EN Northwest Transdanubia Wine-growing region: Soproni Zold veltelini 1 460 1 460 100 Kekfrankos 1 260 864 7 1991 Korai piros veltelini 60 60 100 1998 Zold veltelini 1 260 840 66 1998 Kekfrankos 8 650 740 9 Zold veltelini 1 450 45 3 2001 Kekfrankos 9 980 22 1 Southern Transdanubia Wine-growing regions: Mecsekaljai, Szekszardi, Tolnai 2001 Chasselas 48 48 100 Northern Hungary Wine-growing regions: BUkkaljai, Matraaljai 0 lasz rizling 630 60 9.5 MUller-Thurgau 1 610 33 2 1991 Zold veltelini 480 30 6,2 Harslevelii 520 80 15 Chasselas 420 38 9 Olasz rizling 591 41 7 MUller-Thurgau 1 520 120 7,8 1992 Zold veltelini 395 25 6,3 Harslevelii 480 110 22 Chasselas 400 29 7,2 0 lasz rizling 488 38 7.7 MUller-Thurgau 1 700 93 5,4 1993 Zold veltelini 435 90 20 Harslevelii 641 70 10 Chasselas 630 53 8,4 MUller-Thurgau 1 690 50 2,9 Zold veltelini 520 41 7,8 1994 Harslevelii 12 250 150 1.2 Funnint 22 750 300 1.4 Chasselas 600 60 10 Olasz rizling 548 512 93 MUller-Thurgau 1 590 33 2 1995 Zold veltelini 495 35 7 Harslevelii 711 103 14 Chasselas 515 43 8,3 MUller-Thurgau 1 605 1996 125 7,7 Chasselas 455 26 5,7 Zold veltelini 590 14 2,3 1997 Harslevelii 782 25 3,1 Chasselas 609 59 9,6

20585/02 CONF-H 32/02 21 (ANNEX II) EN Olasz rizling 519 147 28 Muller-Thurgau 1 499 42 2,8 1998 Zold veltelini 491 6 1,2 Chasselas 454 71 15 0 lasz rizling 653 166 25 Muller-Thurgau 1 569 41 2,6 1999 Zold veltelini 533 104 19,5 Chasselas 439 20 4,5 2000 Muller-Thurgau 1 514 27 1,7 0 lasz rizling 722 157 21 Muller-Thur_gau 2 045 75 3,6 2001 ZOld veltelini 734 371 50,5 Harslevelii 855 152 17 Chasselas 611 444 72 Tokaj-hegyaljai wine-growing region Furmint 26 000 200 1 1992 Harslevelii 14 000 100 1 Furmint 31 200 1 500 5 1997 Harslevelii 16 800 750 5 Furmint 28 600 400 1.3 2001 Harslevelii 15 400 200 1.2

International names ofthe varieties:

Csaba gyongye Perle von Csaba Ezerj6 Tausendgut Harslevelii LindenbHittliger Kekfrankos Blaufrankisch Keknyelii Blausttengler Kekoport6 Kiralyleanyka Konigstochter Korai piros veltelini Friihroter Veltliner Kovidinka Steinschiller Leanyla Madchentraube 0 laszrizling W elsch-, Italian ) Rajnai Rizling Rheinriesling Zold veltelini Griiner V eltliner Zalagyongye Perle von Zala

20585/02 CONF-H 32/02 22 (ANNEX H) EN ANNEX Ill

Vintages, where a part of the yield did not reach 8.0 % vol. minimum alcoholic strength

Wine-growing Vintages where part of the yield Varieties with a yield not reaching 8.0 % region did not reach 8.0% vol. minimum vol. minimum natural alcoholic strength natural alcoholic stren2th Lake Balaton 01asz riz1ing, Keknyelii, Zold veltelini, 1992,1995,1999,2001 Badacsonyi Hirs1evelii Balatonfliredi- Olasz rizling, Muller-Thurgau, Ezerflirtii 1996,2001 Csopaki Balatonfelvideki 1992,1998,2001 Olasz rizling;, Zold veltelini Csaba gyongye, Irsai 01iver, Chasselas, Balatonboghiri 1999,2000,2001 Kekoport6, Muscat June! Balatonmelleke 1997, 1998 Zold veltelini, Chasselas Great Plain Cson2radi 1992, 1995, 1999 Kovidinka, Kadarka, Ezerj6, Sarfeher Haj6s-Bajai 2000 Pann6nia kincse 1992, 1993, 1994, 1995, 1996, 1997, Ezerj6, Sarfeher, Kadarka, Kovidinka, 1998,2000,2001 Chasselas, Kekoport6, Muller-Thurgau, Kunsagi Rajnai Rizling, Cserszegi ftiszeres, Kiralyleanyka, Ezerftirtii, Piros szlanka, Zalagyongye, Lakhegyi mezes Northern Transdanubia Aszar-Neszmelyi 1996 Zold veltelini Etyek-Budai 1998,2001 Zold veltelini, Korai piros veltelini Mori 1992, 1994 Zold veltelini, Ezerj6, Kiralyleanyka 1992,1998,2001 Olaszrizling, Furmint, Juhfark, Muller Soml6i Thurgau Pannonhalma- 1994, 1996, 1998 Olasz rizling, Leanyka Sokor6al.iai Northwest Transdanubia 1991,1998,2001 Zold veltelini, Korai piros veltelini, Soproni Kekfrankos Southern Transdanubia Mecsekal.iai 2001 Piros szlanka, Chasselas Szekszardi 1998,2000 Olasz rizling, Alicante Bouchet Tolnai 1996,1998,2001 Zold veltelini, Zweigelt, Olasz rizling N othern Re~ion 1992,1996,1999,2001 MUller-Thurgau, Muscat Ottonel, Olasz Biikkaljai rizling, Chasselas, Harslevelii 1992,1994,1998,2001 MUller-Thurgau, Muscat Ottonel, Olasz Egri rizling, Chasselas, Zold veltelini, Leanyka, Kekoport6 1994,1996,2001 Muller-Thurgau, Muscat Ottonel, Olasz Matraaljai rizling, Chasselas, Biborkadarka, Leanyka, Kekoport6 Tokaj-hegyaljaire~on Tokajhegyal.iai 1992,1994,1997,2001 Furmint, Harslevelii

20585/02 CONF-H 32/02 23 (ANNEX Ill) EN