Opinion of Mr advocate general Mayras

Mr President,

Members of the Court,

This reference for a preliminary ruling calls in question the validity of the co-responsibility levy on milk introduced by Council Regulation No 1079/77, detailed rules for the application of which were laid down in Commission Regulation No 1822/77.

In fact this is a test case. The interest at stake in the main action is indeed very slight, as it concerns the sum of DM 37.31 which the buying department of a dairy in Lübeck deducted by way of co-responsibility levy from the price of a delivery by the plaintiff's father of more than four tonnes of milk and which it forwarded to the Hauptzollamt (Principal Customs Office) Hamburg-Jonas.

The objection against the charging of the levy was rejected, and the plaintiff brought an action before the Finanzgericht (Finance Court) Hamburg arguing that the charging of the co-responsibility levy had no legal basis in the provisions of the Treaty establishing the European Economic Community.

Although it did not share this point of view, the Fourth Senate of the Finanzgericht, having regard in particular to the fact that the majority of some 500000 members of the Deutscher Bauernverband (German Farmers' Union) questioned the imposition of the levy at issue, took the view that it should refer the following questions to the Court for a preliminary ruling under Article 177 of the Treaty:

Consideration of these questions, in particular Question 1, requires a statement of the situation of the Community market in milk and milk products.

This situation is dominated by a structural surplus the causes of which are well-known to the Court and which has been apparent for a number of years.

On the one hand, milk production has not ceased to grow, owing chiefly to the increase in yield.

On the other hand, the consumption of milk and milk products has remained constant or has even slightly decreased.

For those reasons surplus deliveries of milk to dairies, that is to say quantities of milk which cannot be disposed of at the Community market price, increased by 4 % between 1975 and 1977.

Similarly, stocks of butter in storage rose to 260000 tonnes, whilst intervention stocks of skimmed-milk powder considerably exceeded one million tonnes.

In spite of specific measures adopted between 1973 and 1977 in order to absorb part of those surpluses and to stabilize the market, which proved to be of very limited effectiveness, the overloading of the market and the very high cost which it involved (nearly three thousand million units of account) demanded more radical measures.

Thus, after a proposal to introduce a charge on production in the milk sector had been rejected by the Council in 1974, there emerged the idea of introducing a co-responsibility levy to be borne specifically by milk producers. It was a more long-term measure than, for example, the compulsory purchase of skimmed-milk powder imposed by Regulation No 563/76 which was to be declared null and void by judgments of the Court delivered on 5 July 1977.

Council Regulation No 1079/77, adopted after the favourable opinion of the European Parliament had been obtained, finally introduced the co-responsibility levy for a period running until the end of the 1979/80 milk year, which period may be extended.

Three characteristics may be discerned in the system organized by that regulation:

In the first place, its generalized application to all milk producers in respect of all milk supplied to undertakings treating or processing that product, as well as milk sold directly in the form of other milk products.

Only three exceptions are made to that principle, and they all appear to be veryrestricted and perfectly justified.

The first concerns the production of milk in mountain and hill areas. The second exempts from the levy milk sold by one producer to another producer to the extent to which the latter markets it directly as milk for consumption and within a total limit of three tonnes per year. Finally, very small producers are also exempted in regions where the average quantity of milk delivered to processing undertakings by those producers in 1976 was less than ten kilograms per day per producer.

The second characteristic of the co-responsibility levy lies in the low level of the rate applicable. Initially confined between a minimum of 1.5 % and a maximum of 4 % of the target price, for the period from 16 September 1977 to 30 April 1978 the levy was fixed at the lowest rate. Then, by Regulation No 1001/78, the Council abolished this minimum rate and the amount of the levy was reduced to only 0.5 % of the target price.

The third important aspect of the system introduced consists not in the specific appropriation of the total yield of the levy, which would be contrary to the principle of budgetary universality, but in a programme of measures linked to the levy which the Commission is bound under Article 4 of the basic regulation to propose to the Council. This programme is worked out within the Advisory Committee on Milk and Milk Products, which has been in existence since 1964, and is also discussed within a specialized so-called Co-responsibility Group which includes representatives of producers and processors of milk.

The list of the measures so far adopted within this framework is in fact very modest. They concern:

However, the Commission states that other provisions at present being examined may be adopted at a future date.

According to the plaintiff, there is no decisive connexion between these various measures and the levy, the yield from which is not used to support the market in question and moreover, having regard to its extremely low rate (0.5 %), is utterly inadequate to remedy the difficulties of disposal and to achieve a structural balance.

In fact, he says, the levy is in the nature of a fiscal charge upon all milk producers and not an intervention measure designed to stabilize the market in question.

As a charge intended to serve the financing of the Community, the levy does not have any legal basis in Article 201 of the Treaty, the procedure laid down by which has not been observed in the present case.

Neither can it be lawfully adopted under the provisions of Article 43 which, although it entitles the Council to adopt the measures referred to in Article 40 (3), does not allow charges to be imposed upon producers in a particular agricultural sector. Finally, he submits that the co-responsibility levy is not one of the intervention measures intended to stabilize agricultural markets. Such a classification does not correspond to reality.

In my view this argument cannot be upheld.

In its written observations the Commission founds itself upon a legal basis which in my view is unchallengeable. It is Council Regulation No 878/77 on the exchange rates to be applied in agriculture. Article 1 (1) of that regulation provides that:

As I have said, the imposition of the co-responsibility levy comes within the category of instruments relating to the common agricultural policy, and must be regarded as part of the price and intervention system in the milk products sector.

Consequently, it is logical that the amount of the levy should be fixed in terms of the representative rates in each Member State. If the amount of the levy-were to be fixed on the basis of the real exchange rates, as the plaintiff in the main action maintains that it should, that would indeed lead to discrimination because producers in Member States with a strong currency would be unduly favoured in relation to those in countries with a weak currency.

The alleged inequality of treatment which has been pleaded is therefore only of a formal kind. In actual fact, only use of the green rates allows discrimination between producers to be avoided.

Therefore I am inclined to answer the second question referred by the national court in the negative.

In these circumstances, the third question appears to me to be devoid of any purpose.

It is my opinion that the Court should rule that consideration of the questions referred to it by the Finanzgericht Hamburg has disclosed no factor of such a kind as to affect the validity of either Council Regulation No 1079/77 introducing a co-responsibility levy on milk and milk products or Commission Regulation No 1822/77 laying down detailed rules for the application of the said levy.

1 Translated from the French.