TRAINING SESSION II EU Market Intervention Technical Assistance for Development of a Strategy for Alignment with Common Market Organisation (CMO) Requirements TR2014/AG/10-A1-01/001 This Project is co-financed by the European Union and the Republic of Turkey TRAINING SESSION II EU Market Intervention Ankara, 14 May, 2018

Buying-in with fixed price JAN FEB MAR APR MAY JUN JUL AUG SEP OKT NOV DEC wheat rice butter SMP beef and weal

Buying-in with fixed price ARDA (Agricultural and Rural Development Agency) publishes Notice on its website (containing all documents). Offers start to arrive to ARDA County Offices – no specific legislation is needed. ARDA registers the offers – date of submission is the date of arrival (altered from the common rule in Hungary – which is the date of postage). Offers are definitive – no change allowed (altered from the Hungarian law). ARDA informs offerer within three working days if the offer is not admissible.

Buying-in with fixed price ARDA sends the amounts offered during the preceding week to Brussels each Wednesday at 12:00 (Brussels time). When the amount bought-in approaches the limit of fixed price intervention (wheat: 3 million tons, butter: 50 thousand tons, SMP: 109 thousand tons) in the EU, the communication changes to a daily frequency. In this period ARDA sends the amounts offered during the preceding day to Brussels each day at 14:00 (Brussels time).

Buying-in with fixed price The communications does not contain names, addresses, VAT or registration numbers. If – on a certain day – the limit of fixed price intervention exceeded, the Commission closes the fixed price intervention. In this case the Commission sets a reduction coefficient which applies to offers made on the day when the limit was exceeded. This way the limit is respected.

Buying-in with fixed price No need for legislation to set the reduction coefficient or to close the fixed price intervention – Commission acts on its own. Commission shall decide within 5 working days following the Member State notifications on offers if there was a weekly communication in place, and within 2 working days following the Member State notifications on offers if there was a daily communication in place.

Buying-in with fixed price When a reduction coefficient is applied to an offer, the offerer has the right to withdraw the offer within 5 working days following the entry into force of the Commission decision. This is the only case when withdrawal of an offer is possible.

Buying-in with fixed price (summary) Offers arrive to ARDA county offices Administrative check NOT OK Offer rejected, offerer informed in 3 working days* OK Offer are sent to Brussels Fixed price int. limit is reached? YES Offer rejected* NO * - release of the security Offer accepted SAMPLING AND DELIVERY PHASE

Buying-in with tendering procedure Why we use it? limited availability trying to ensure equality Why it is problematic? complicated financial liquidity is needed

Buying-in with tendering procedure The Committee for the Common Organization of Agricultural Markets delivers a positive opinion on a Commission proposal to open the intervention (except in the case when the fixed price intervention switches automatically to tendering procedure), The Commission Implementing Regulation appears in the Official Journal and enters into force, ARDA publishes its Notice on its website (containing all documents needed to place an offer)

Commission regulation on buying-in contains: - the products covered by the tender with their CN codes, - the period covered by the tender, - each deadlines when offers can be submitted to the Member States intervention agencies (in case of public holiday – the preceding working day is the deadline), - the indication if the tender is restricted to some regions of the EU, - usually an Annex contains all the coordinances of Member States intervention agencies.

Buying-in with tendering procedure Offers must be sent to ARDA Central Office. ARDA registers the offers – date of submission is the date of arrival (here we had to alter from the common rule in Hungary – which is the date of postage). Offers are definitive – no change allowed (here also we had to alter from the Hungarian law). ARDA informs offerer within three working days if the offer is not admissible.

Buying-in with tendering procedure Tenders must contain the proposed price in EUR/t rounded to no more than two decimal places, exclusive of VAT. Proposed price cannot be higher than the fixed intervention price. ARDA sends the amounts offered during the preceding week to Brussels by the deadline set in the Commission Implementing Regulation (usually Thursday at 12:00, Brussels time).

Buying-in with tendering procedure (1) The communications shall not contain names, addresses, VAT or registration numbers. The decision on the tenders is made on Thursday afternoon in Brussels. The Commission makes a proposal to the Committee for the Common Organization of Agricultural Markets on the price limit until which tenders are acceptable, the Committee gives an opinion on the proposal.

Buying-in with tendering procedure (2) The proposal takes into account the actual market prices (communicated by Member States authorities), the structure of the offers and supply/demand situation. The decision on the tenders appears as a Commission Decision in the Official Journal and enters into force immediately. ARDA has three working days to notify the winning offerers following the entry into force of the Commission Decision.

Buying-in with tendering (summary) Offers arrive to ARDA central office Administrative check NOT OK Offer rejected, offerer informed in 3 WD * OK Offer are sent to Brussels Decision on max. acceptable price NOT OK Offer rejected * OK * - release of the security Offer accepted SAMPLING AND DELIVERY PHASE

Securities Why we use it? to prevent theft to ensure the seriousness Why it is problematic? - excludes poorer MS bidders

Securities Offer or tender is only eligible if the offerer/tenderer places a security of: (a) for cereals: EUR 20/tonne; (b) for rice: EUR 30/tonne; (c) for beef: EUR 300/tonne; (d) for butter: EUR 50/tonne; (e) for skimmed milk powder: EUR 50/tonne at the bank account of ARDA.

Securities Main requirements in order to be able to claim back the security: - maintenance of the offer or tender, - delivery of the products to the storage place designated by the intervention agencies within the time limit laid down in the delivery order, - compliance with quality requirements, - the presence of the products in the storage place indicated at the time the offer or tender was submitted.

Securities ARDA releases the security if: - the products indicated in the offer/tender are delivered to the designated warehouse (5% less quantity is still accepted) according to the delivery schedule and the quality meets the intervention requirements, or - the offer/tender has been rejected due to a Commission Decision. ARDA releases the security on the day on which one of the above conditions are met.

Minimum quantities and quality Quantity: Art. 2 and 7 of Commission Reg. 2016/1240/EU (IMP) Regulation 140/2009 (X.29.) of the Hungarian Ministry of Rural Development Quality: quality requirements are set in the Annexes of Commission Reg. 2016/1238/EU (DEL)

Minimum quantities and quality The minimum quantity of products offered or tendered for buying- in shall be: (a) for common wheat, barley and maize: 160 tonnes; (120 tonnes) (b) for durum wheat: 20 tonnes; (c) for rice: 40 tonnes; (d) for beef: 20 tonnes; (e) for butter: 30 tonnes; (f) for skimmed milk powder: 30 tonnes.

Offer Form (1) Offer forms contain: (i) for rice, an indication of the type and variety; (ii) except for beef, the place where the product is held at the time of the offer or tender; (iii) for cereals and rice, the storage place for which the offer or tender is made; (iv) for cereals and rice, the year of harvest and the area or areas of production in the Union;

Offer Form (2) (v) for butter and skimmed milk powder, the date of production; (vi) for butter and skimmed milk powder, the name and approval number of the approved undertaking in which it was produced; - a technical drawing representing the warehouse containing the goods at the time the offer is made (national rule) - a map where the storage place at the time of offer and the intervention warehouse indicated on the Offer Form can be identified (national rule)

Offer Form (3) ARDA is entitled to reject the offer if: a) the goods described by the Offer Form are not present at the location indicated on the technical drawing, or b) the amount registered during the preliminary on-the-spot check does not meet the minimum quantity requirements set by the EU legislation, or c) the quality of the goods does not meet the minimum quality requirements set by the EU legislation, or d) the offered goods are not stored separately from other batches.

Delivery rules When an offer/tender is accepted ARDA issues a „Delivery Order”, which contains: - the quantity to be delivered; - the final date for delivery of the products; - the storage place to which the products shall be delivered; - the price at which the offer or tender is accepted.

Delivery rules The „Delivery Order” can be amended once by the written authorization of ARDA. Deliveries made in non-agreed moments will be rejected by ARDA if the warehouse is not capable to receive the goods or if no presence of ARDA controller is possible. Delivery to the storage place shall occur not later than 65 days after the deadline for submitting the offer (fixed price int.) or the decision on the tender (tendering procedure).

Transport costs Art. 19 of Commission Reg. 2016/1240/EU (IMP) General rule: transport costs to the storage place indicated by the offerer or tenderer, shall be borne by the offerer or tenderer.

Transport costs Exception for cereals and rice: operator pays up until 50 km. Once this distance has been exceeded, the transport costs shall be borne by the intervention agency. EU reimburses intervention agency 0,05 EUR/t/km. Cost of unloading and storing in is paid by ARDA (reimbursed by EU), except for beef where unloading is paid by the operator.

Take-over (steps) 1. Receiving an offer. 2. Verifying the offer. 3. Preliminary on-the-spot control. 4. Preparing the delivery schedule. 5. Delivery, sampling and storing-in (conditional takeover) 6. Laboratory control. 7. Definitive takeover. 6. Calculating the price paid to offerer.

Take-over After sampling and the laboratory checks, a „Take-over record” is issued, which contains: (a) the quantities delivered and, for rice, the variety; (b) the characteristics of the products as resulting from the analyses in so far as this is relevant for the calculation of the price; (c) if applicable, the quantities that have not been taken over. In this case, the operator shall be notified accordingly. The takeover record shall be dated and sent to the operator and to the storekeeper.

In-situ take-over In case of in-situ take-over a reduction shall be made to the buying-in price to be paid. This reduction shall consist of: the theoretical transport cost between the actual place of takeover and the nearest intervention warehouse. The transport cost borne by the offerer shall not exceed the 50 km limit. For the calculation Hungary uses 15 HUF/km/t flat rate cost element when calculating transport costs, distances are determined by using the „TIR” program.

Payment Payments for the quantities stated in the takeover record shall be made no later than the 65th day following the date of delivery, unless an administrative inquiry is under way. Operator uses sample invoice prepared by ARDA. The payment by ARDA may take place on the fifth working day following the reception of the invoice from the offerer.

Intervention take-over (summary) OFFER/TENDER IS ACCEPTED Intervention take-over (summary) Delivery order issued, delivery performed by offerer Sampling, quick quality/quantity check at storing in (conditional take-over) NOT OK Offer/tender rejected Quality is OK based on the laboratory test Definiteve take-over * * - release of the security Payment

Storage Art. 3 of Commission Reg. 2016/1240/EU (IMP) - minimum storage capacity: (a) cereals: 10 000 tonnes from the 2018/19 period, 15 000 tonnes from the 2019/20 period; (b) rice: 7 500 tonnes from the public intervention period 2017/18, 10 000 tonnes from the 2018/19 period; (c) butter and skimmed milk powder: 800 tonnes from the 2018 period. For cereals Member States below a production of 20 million tons/year may use the 10 000 tons limit after 2019/20.

Minimum storage capacity (summary)

Storage 2004-2005: We had to place 8 million tons of intervention stock. Huge investments during 2005-2008.

Storage National intervention agency buys up the products. It is the owner bearing all risks related to preserving quality and quantity. Annexes of Regulation 140/2009 (X.29.) of the Hungarian Ministry of Rural Development contain detailed rules on intervention warehouses used by ARDA. Regulation 140/2009 (X.29.) and the sample storage contract is important.

Storage site requirements (ministerial regulation No 140/2009) Requirements for intervention storage sites: Annex 4 - minimum 10000 tons of storage capacity on the site, security (fences, gate-keeper), accessability (concrete/asphalt road), protection from weather events (rain draining, sewers), computerized stock system, grain measuring and moving equipments (scale, quick quality check, sampling, conveyor-belts)

Storage block requirements (ministerial regulation No 140/2009) Requirements for intervention storage blocks: Annex 4. certificate from a structural engineer doors/windows must have locks and electricity shall be cut rapidly, storage block must be clearly identified on the site map, - security (all lots must be accessable, thermometers, insulation, receiving gorge protected from rain/snow).

This publication has been produced with the financial assistance of the European Union The contents of this publication is the sole responsibility of NIRAS IC Sp. z o.o. and can in no way be taken to reflect the views of the European Union