US embassy cable - 02ROME5601

UNCLAS SECTION 01 OF 02 ROME 005601 
 
SIPDIS 
 
STATE PASS TO USTR/AG/MSLOAN 
USDA FOR FAS FOR OA/KROBERTS 
USDA FOR FAS FOR CMP/COTSD/BLUM 
BRUSSELS PASS USEU FOR AG MIN-CNSLR 
ATHENS FOR ECON, DCM, AMB 
 
E.O. 12958: N/A 
TAGS: EAGR, EU, GR, EU, GR, IT, USTR, ITEAGR, USTR 
SUBJECT: GREECE'S DOMESTIC COTTON PROGRAMS 
AND POLICIES 
                       UNCLASSIFIED 
 
PAGE 02        ROME  05601  01 OF 02  210247Z 
 
REF: UNCLASS USDA FAS 57863 
 
1.  SUMMARY: GREEK COTTON PRODUCTION IS 
SUSTAINED BY EU PRICE SUPPORTS WHICH VARY 
ACCORDING TO OVERALL PRODUCTION TARGETS. 
BECAUSE OF OVERPRODUCTION IN THREE OF THE 
LAST FIVE YEARS, THE AVERAGE PRICE PAID FOR 
SEED COTTON HAS VARIED FROM 62.50 EUROS PER 
100 KG TO 88.0 EUROS PER 100 KG. 
 
2.  KEY SUPPORT FOR GREECE'S COTTON 
PRODUCTION IS THE EU COTTON REGIME.  EU 
REGULATIONS 1051/2001 AND 1591/2001 SET NEW 
POLICIES AND MEASURES FOR PREVENTING 
OVERPRODUCTION OF EU COTTON AND NEW 
CORESPONSIBILITY.   THE LATTER IS THE 
MECHANISM (LEVY) FOR PENALIZING COTTON 
PRODUCERS FOR EXCEEDING A TARGET.  THE 
MAXIMUM PRODUCTION LEVEL WAS SET AT 1,031,000 
MT OF RAW COTTON (SEED COTTON). WHENEVER 
PRODUCTION EXCEEDS THIS LEVEL, THE TARGET 
PRICE IS REDUCED FOR BOTH STATES, GREECE AND 
SPAIN, AS DESCRIBED IN ARTICLE 3, PARAGRAPH 1 
OF THE REGULATION NO.1051 IN CHAPTER II 
(UNDER PRICE MECHANISMS). 
 
3. IN 2001 GREEK COTTON PRODUCTION  EXCEEDED 
THE QUOTA BY ALMOST 200,000 MT (RAW COTTON 
BASIS.) CONSEQUENTLY, HIGH PENALTIES WERE 
IMPOSED BY THE EU ON FARMERS, REDUCING THEIR 
                       UNCLASSIFIED 
 
PAGE 03        ROME  05601  01 OF 02  210247Z 
TARGET PRICE BY OVER 20 PERCENT. 
 
4. IN MAY 2001 THE GOG OFFERED SUGGESTIONS TO 
COTTON FARMING GROUPS ON WAYS TO CONTINUE 
FARMING BUT TO REDUCE COTTON ACREAGE. THIS 
ADVICE WENT LARGELY UNHEEDED.  NO INCENTIVE 
OTHER THAN THE USUAL EU PAYMENT WAS OFFERED. 
THIS ACTION PROVED TO BE UNSUCCESSFUL AND 
BOTH THE GOG AND FARMERS WERE DISAPPOINTED TO 
SAY THE LEAST. HOWEVER, IN 2002 A REDUCTION 
OF COTTON ACREAGE BY 25,000 HA TOOK PLACE, 
CAUSED BY THE 'DOCKING' OF PRICES PAID OUT 
FOR THE RECORD HIGH GREEK 2001 HARVEST. THIS 
YEAR'S (2003 HARVEST) OUTPUT IS EXPECTED TO 
REACH APPROXIMATELY 1,000,000 MT (WITHIN THE 
QUOTA), COMPARED TO A 2001 CROP OF 1,350,000 
MT (RAW BASIS).  ACREAGE FOREGONE FROM COTTON 
WAS UTILIZED FOR DURUM WHEAT, CORN, ALFALFA 
AND FORAGE PLANT CROPS. 
 
5.  ALL COTTON CROP ACREAGE IN GREECE IS 
IRRIGATED. FARMERS PAY A FLAT FEE OF 120 
EUROS PER HECTARE/YEAR REGARDLESS OF HOW MUCH 
WATER THEY CONSUME.  ON-FARM USE OF FUEL ALSO 
IS SUBSIDIZED AT A DISCOUNT OF 10-15 PERCENT 
UNDER MARKET PRICES. 
 
6. A 5-YEAR (MARKETING YEAR) SERIES ON FARM 
GATE PRICES FOR RAW COTTON IN EUROS/LOO KG IS 
SHOWN BELOW. FIGURES GIVEN ARE AVERAGED, 
SINCE ACTUAL PRICES PAID VARY BY QUALITY AND 
                       UNCLASSIFIED 
 
PAGE 04        ROME  05601  01 OF 02  210247Z 
BY MONTH. 
 
CROP    AVERAGE PRICE PAID BY GINNERS TO 
-       FARMERS (EUROS) 
1997   85.69 (75.42 MINUS LEVY) 
1998   98.30 (83.63 MINUS LEVY) 
1999   71.00 (NO LEVY) 
2000   88.00 (NO LEVY) 
2001   88.10 (62.50 MINUS LEVY) 
 
7.  FOR SEVERAL YEARS THE GOG HAS 
UNSUCCESSFULLY PETITIONED BRUSSELS TO 
INCREASE THE COTTON PRODUCTION QUOTA THE GOG 
ARGUED THAT THE EU SHOULD ATTEMPT TO COVER 
"PRAGMATIC" ACREAGE PLANTED TO COTTON TO 
SUPPORT FARM INCOME. THE COMMISSION HAS 
REJECTED ALL SUCH REQUESTS. TO THE CONTRARY, 
UNDER THE COTTON REFORM OF MAY 2001 THE EU 
HAS CHANGED BASIC REGULATIONS PERTAINING TO 
COTTON CULTIVATION AND HAS IMPOSED STRICTER 
PENALTIES FOR OVERPRODUCTION. 
 
8.  THIS YEAR THE GOG HAS ABOLISHED THE 
HELLENIC COTTON BOARD (HCB), A QUASI - 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ0224 
 
PAGE 01        ROME  05601  02 OF 02  190836Z 
ACTION EUR-00 
 
INFO  LOG-00   AID-00   CEA-01   CIAE-00  COME-00  CTME-00  DODE-00 
      ITCE-00  SRPP-00  EB-00    EXME-00  E-00     UTED-00  VC-00 
      FRB-00   H-01     TEDE-00  INR-00   ITC-01   LAB-01   VCE-00 
      AC-01    NSAE-00  NSCE-00  OMB-01   OPIC-01  ACE-00   SP-00 
      SSO-00   SS-00    STR-00   TEST-00  TRSE-00  USIE-00  EPAE-00 
      ECA-00   DRL-02   G-00     SAS-00     /009W 
                  ------------------0AEE58  190837Z /38 
R 190718Z NOV 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 6971 
USDA FAS WASHDC 2430 
INFO AMEMBASSY ATHENS 
AMEMBASSY BERLIN 
AMEMBASSY BRUSSELS 
 
UNCLAS SECTION 02 OF 02 ROME 005601 
 
SIPDIS 
 
STATE PASS TO USTR/AG/MSLOAN 
USDA FOR FAS FOR OA/KROBERTS 
USDA FOR FAS FOR CMP/COTSD/BLUM 
BRUSSELS PASS USEU FOR AG MIN-CNSLR 
ATHENS FOR ECON, DCM, AMB 
 
E.O. 12958: N/A 
TAGS: EAGR, EU, USTR, GR, IT 
SUBJECT: GREECE'S DOMESTIC COTTON PROGRAMS 
AND POLICIES 
                       UNCLASSIFIED 
 
PAGE 02        ROME  05601  02 OF 02  190836Z 
 
GOVERNMENT ORGANIZATION WHICH OPERATED OUT OF 
NATIONAL BUDGET FUNDS. HCB'S RESPONSIBILITIES 
WERE: CROP QUALITY GRADING, SEED 
CERTIFICATION AND CONTROL, TECHNICAL ADVICE 
(EXTENSION SERVICES), IMPLEMENTING EU POLICY 
REGULATIONS AND PROVIDING ADVISE TO FARMERS, 
GINNERS, SPINNERS AND THE TEXTILE INDUSTRY ON 
NEW TECHNOLOGY AND INTERNATIONAL TRADE 
DEVELOPMENTS.  THESE RESPONSIBILITIES ARE 
TRANSFERRED TO THE FIELD CROPS DIVISION, 
MINISTRY OF AGRICULTURE, AS OF JUNE 2002. 
THERE IS LITTLE INDICATION THAT THE MINAG 
WILL BE ABLE TO QUICKLY FULFILL THE FUNCTIONS 
OF THE HCB. 
 
9.  FERTILIZERS, PESTICIDES AND SEED ARE NO 
LONGER SUBJECT TO PRICE SUPPORTS AND HAVE NOT 
BEEN FOR A MINIMUM OF FIVE YEARS.  SEMBLER 
 
                       UNCLASSIFIED 
 
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 2002ROME05601 - Classification: UNCLASSIFIED