This report examines the effectiveness of the management and control of the support for olive oil (production aid, consumption aid and export refunds) until 1998. It also examines the control measures introduced by the Member States for the period from 1996 to 1998. This is the third time that the Court has examined the olive oil support scheme. The report will be published in the 27 July issue of the official journal (OJ C 215).The support scheme for olive oil was adopted in 1966, at a time when Italy was the main producer Member State. The situation changed totally with the accession of Greece, Spain and Portugal. However, the system was not adapted to face these new challenges. The need for widespread reform was recognised, but, since there was a lack of the reliable data necessary for a reform, a decision was taken in 1998 to improve some aspects of the system and to apply them for a transitional period from 1998 to 2001. The Commission has undertaken to make proposals during the year 2000 so that there can be widespread reform following the transitional period.Production aid.Aid for olive oil production, which is granted to 2.2 million olive growers, is the most important measure under this scheme, which accounts for annual expenditure of the order of Euro 2,000 million annually. The audit revealed that after thirty years of operation, and despite several changes to the Community rules, an adequately efficient and reliable system for the management and control of the scheme has still not been achieved.The objective of production aid, in terms of income for the producers, has never been defined in such a way as to make it possible to quantify to what degree it has been achieved. Moreover, the two institutional prices were established without taking into account any method of calculation based on cost and revenue indicators. Furthermore, they were kept stable for more than ten years and the representative market price did not follow the evolution of the actual market prices. As for the market balance; the increase in the number of trees; the relatively slow rise in consumption in comparison with production; the limitations imposed by the World Trade Organisation (WTO) on subsidised exports and the increase in stocks in the last two years indicate a risk of surpluses.Control mechanism.With regard to the control mechanism, the Court found that yields, which are an important control instrument, cannot be used in an effective way because...

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