Division 5.1 The CMO for raw tobacco

The CMO in the raw tobacco^f1 sector provides for (i) a production quota system and (ii) support of producers’ income through a premium system for the production of raw tobacco.

Premium is only granted in respect of tobacco produced within the quota (with certain adjustments). Since 1998, the payment of part of the Community premium (so-called variable part) has been linked to the quality of the tobacco produced which is reflected in the price. The payment of the variable part of the premium is entrusted to the producers’ groups.

The CMO requires each producer or producers’ group and each first processor to enter into so-called ‘cultivation contracts’ at the start of each year's campaign (around March-May, when tobacco seedlings are transplanted) where they agree on ‘contract prices’ for each quality grade for each individual variety. At this stage, prices are often expressed as minimum prices or a price range. To note, however, that the final price (or ‘delivery price’) can only be determined when the harvest takes place (i.e. between October and January) and can vary significantly from the ‘cultivation contract price’, depending on quality, quantities and further bargaining.

Community law favours the creation of inter-branch organisations within which producers and processors should co-operate for the efficient operation of the market. Prices and quota fixing are however expressly forbidden. None of the associations involved in this case is an inter-branch organisation within the meaning of Community law.