C-174/88

HALL ic SONS (DAIRY FARMERS)

OPINION OF MR ADVOCATE GENERAL VAN GERVEN delivered o n 13 D e c e m b e r 1 9 8 9 *

Mr President, 'the reference quantity to be assigned to a Members of the Court, producer of milk and milk products . . . is to be calculated by reference to all the direct sales made by the producer in the relevant calendar year or else by reference only to the direct sales made by him during that period out of the milk produced by himself'.

I - 2245

OPINION OF MR V A N GERVEN —CASE C-174/88

calculated on the basis of the quantities of quantity. 4 Article 6(3) lays down that a milk or milk equivalent delivered to it by number of provisions of Regulation N o affiliated producers during a reference 857/84 which are aimed at the first category period. If deliveries exceed that reference of producers are to apply to the producers quantity, the dairy is liable to pay an referred to in Article 6 under rules to be additional levy on the excess, on the under- determined. The provisions in question are standing that the levy must be passed on Articles 3 and 4 (which permit the Member only to those producers who have increased States to adjust the individual reference their deliveries in proportion to their contri- quantities in order to take account of the bution to the excess over the dairy's special situation of certain producers) and reference quantity. Article 7 (which deals with the transfer of reference quantities in the event of the sale, lease or transfer of an undertaking by in- heritance). Finally, Article 12 of Regula- tion N o 857/84 contains a number of definitions. Article 12(h) defines the 'milk 3. T h e second category — to which orij milk equivalent sold directly to Hall & Sons (Dairy Farmers) Ltd (here- consumption' as inafter referred to as 'Hall') be- longs — consists of producers who sell milk or other dairy products direct to the consumer. That category of producers may also be liable to pay an additional levy, where the quantities sold exceed the reference quantity assigned (see Article 5c(2) of Regulation N o 804/68). Article 6 'milk or milk products processed into milk of Regulation N o 857/84 contains a equivalent, sold without going through an number of provisions for the application of undertaking treating or processing milk.' the system to that category of producers. Article 6(1) lays down the rules concerning the reference quantity to be assigned to each producer selling direct to the consumer:

Assessment 5. In the aforesaid definition of the phrase 'milk . . . sold directly to consumption', the origin of the milk sold is not expressly defined. More particularly, that definition does not expressly state that the milk sold 7. Hall's contention is essentially that, since must be produced on the milk producer's there is no express provision to the effect holding, that is to say by the cows on that that the milk sold direct to the consumer holding. Nor do the other provisions must be produced on the producer's governing the additional levy, and in holding, Article 6(1) of Regulation No particular Article 6 of Regulation No 857/84 must be interpreted as meaning that 857/84 governing the individual reference each producer must be assigned a reference quantity to be assigned, expressly state that quantity corresponding to all his direct the reference quantity is assigned to sales to the consumer, including sales of producers on the basis of their own milk quantities of milk purchased by the production. In its reference for a ruling on producer from third parties. interpretation the High Court in fact seeks to ascertain whether, when a reference quantity is assigned to a producer who sells milk direct to the consumer, it is necessary to take account only of the milk produced on that producer's own holding (as the For my part, I do not share the view that Dairy Produce Quota Tribunal for England the wording of Article 6(1) is not open to and Wales stated in the main proceedings, a any other interpretation. That provision view shared by the United Kingdom and the expressly states that it must be a producer Commission as is apparent from the obser- who sells direct to the consumer. It is vations submitted by them in these apparent from the definition of 'producer' proceedings), or whether all direct sales in Article 12(c) of Regulation No 857/84 made by the producer, including sales of read in conjunction with the definition of quantities of milk purchased by him from 'holding' in Article 12(d) that a producer is third parties, are to be taken into account a farmer who operates (milk) production (as Hall contends). units. A literal interpretation of Article 6(1), as meaning that a reference quantity is assigned on the basis of direct sales made by the producer as a producer, is in my view just as, if not more cogent than an interpre- tation according to which the reference 6. I would refer to the Report for the quantity is fixed on the basis of sales of Hearing for a more detailed account of the goods in which the producer acted not in

The corner-stone of that system is the obli- gation on the part of the Member States, in For its part the Court has described the aim assigning individual reference quantities, not of that levy in its judgment of 17 May 1988 to exceed a total quantity per Member in Case 84/87 Erpelding6 in the following State. 7 That ceiling was established by terms : increasing the reference quantity for 1981 by 1 % . 8 Although that total reference quantity is not further defined, it follows from the nature and purpose of the ' . . . the purpose of the additional levy additional levy and also from the figures set system is to re-establish, by limiting milk out in the annex to Regulation N o 857/84 production, the balance between supply and that this ceiling was established taking into demand in the milk market, which is account the total quantity of milk which characterized by structural surpluses. This was produced by the producers concerned measure, therefore, is within the ambit of together on their holdings and which was the objectives of rational development of sold by them direct to the consumer in milk production and, by contributing t o a 1981. Within the limits of that national stabilization of the income of the agri- reference quantity each producer is assigned cultural community affected, that of an individual reference quantity which in ensuring a fair standard of living for the agricultural community* (paragraph 26). 7 — Article 6(2) of Reguládon (EEC) No 857/84 and the annex thereto. 6 — Judgment of 17 May 1988 in Case 84/87 Erpclding [1988] 8 — See the fifth recital in the preamble to Regulation (EEC) ECR 2647. No 857/84.

principle also takes into account the figures 11. The interpretation suggested by Hall is, for 1981, increased by 1%.» in my view, incompatible with the purpose and structure of the system established. As Hall concedes in its submissions to the Court, the effect of the interpretation which it advocates is that a single quantity of milk produced could be taken into account twice over — or even more often in my view — for the purposes of the grant of an A further point is that the other provisions individual reference quantity. Such an inter- of Regulation No 857/84 are also conceived pretation would enable a producer to create in terms of milk production. I would recall additional reference quantities by means of that the Member Sute can adjust the indi- buying and selling operations, which in itself vidual reference quantities by taking into is already contrary to the aim of the system account the special situation of certain which is to restria production. producers. Producers who have submitted a milk production development plan thus qualify for a special or an additional reference quantity.I0 Another reference year may be taken into account for producers whose milk production during the reference year selected has been affected by excep- tional events." In order to complete the restucturing of milk production the Member States may adopt specific rules, including the grant of compensation to producers Furthermore, it is necessary to take account undertaking to discontinue milk production of the obligation on the part of the Member definitively.I2 States, in assigning individual reference quantities, not to exceed the national reference quantity. As stated earlier, that national reference quantity was established taking into account the sum of the indi- vidual reference quantities for 1981, more particularly the total quantity of milk produced on their holdings and sold by producers direct to the consumer in 1981. 10. Therefore, in the light of the wording, The counting of a quantity of milk twice the purpose and the structure of the system over, as a result of the interpretation under consideration, I have come to the advocated by Hall, would lead to a situation conclusion that Article 6(1) of Regulation in which producers who sell only their own No 857/84 must be interpreted as meaning milk production (by far the majority within that a reference quantity is to be assigned to the category of producers who sell direct to the producer on the basis of the milk or the consumer) would have to be assigned milk products sold by him direct to the lower individual reference quantities in consumer during the reference year in order for them to remain within the limits question out of the milk produced by the of the national reference quantity. Hall's cows on his own holding. interpretation would therefore favour those who act as intermediaries and place a 9 — Article 6(1) and (2) of Regulation (EEC) No 857/84. 10 — Aniela 3(1) and 4(1 Hb) of Regulation (EEC) No 857/84. typical farming activity such as cattle 11 — Article 3(3) of Regulation (EEC) No 857/84. breeding at a disadvantage. For that reason 12 — Article 4(l)(a) of Regulation (EEC) No 857/84. such an interpretation would also appear to

I - 2250