The European Commission has put forward proposals for a fundamental reform of the common market organisations (CMO) for olive oil.

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The Commission said the reform is expected to bring better market orientation, environmental benefits, enhanced competitiveness and more stable income for farmers, due to the higher transfer efficiency of decoupled payments.

The reform proposal for olive oil foresees the conversion of the existing production-linked direct payments in the olive oil sector into direct income support, through the creation of new entitlements to the single farm payment for farmers, in addition to those arising from the June 2003 CAP Reform.

To prevent a possible disruption to olive tree maintenance, which in turn could lead to degradation of land cover and landscape or negative social impacts, Member States would retain the rest of the production-linked payments, which could be granted to producers as an additional olive grove payment, calculated on a per hectare or per tree basis, to ensure the permanence of olive trees in marginal areas or low-output olive groves.

The Commission has also proposed that the current private storage measures for olive oil should be kept intact, as a safety net mechanism, but that the refunds relating both to export and to manufacture of certain preserved food should be repealed.

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With this proposal the Commission said it had met its obligation to present in 2003 a proposal to the council, which will decide on the common organisation of the market in oils and fats. The new CMO will replace the current aid scheme as from 1 November 2004.