Article 5

1. The level of the equitable remuneration to be paid to the holder pursuant to Article 14 (3), fourth indent of the basic Regulation may form the object of a contract between the holder and the farmer concerned.

2. Where such contract has not been concluded or does not apply, the level of remuneration shall be sensibly lower than the amount charged for the licensed production of propagating material of the lowest category qualified for official certification, of the same variety in the same area.
If no licensed production of propagating material of the variety concerned has taken place in the area in which the holding of the farmer is located, and if there is no uniform level of the aforesaid amount throughout the Community, the level of remuneration shall be sensibly lower than the amount which is normally included, for the above purpose, in the price at which propagating material of the lowest category qualified for official certification, of that variety is sold in that area, provided that it is not higher than the aforesaid amount charged in the area in which that propagating material has been produced.

3. The level of remuneration shall be considered to be sensibly lower within the meaning of Article 14 (3), fourth indent of the basic Regulation as specified in paragraph 2 above, if it does not exceed the one necessary to establish or to stabilize, as an economic factor determining the extent to which use is made of the derogation, a reasonably balanced ratio between the use of licensed propagating material and the planting of the product of the harvest of the respective varieties covered by a Community plant variety right. Such ratio shall be considered to be reasonably balanced, if it ensures that the holder obtains, as a whole, a legitimate compensation for the total use of his variety.

4.  Where in the case of paragraph 2 the level of remuneration is the subject of agreements between organisations of holders and of farmers, with or without participation of organisations of processors, which are established in the Community at Community, national or regional level respectively, the agreed levels shall be used as guidelines for the determination of the remuneration to be paid in the area and for the species concerned, if these levels and the conditions thereof have been notified to the Commission in writing by authorised representatives of the relevant organisations and if on that basis the agreed levels and conditions thereof have been published in the ‘Official Gazette’ issued by the Community Plant Variety Office.

5.  Where in the case of paragraph 2 an agreement as referred to in paragraph 4 does not apply, the remuneration to be paid shall be 50 % of the amounts charged for the licensed production of propagating material as specified in paragraph 2.

However, if a Member State has notified the Commission before 1 January 1999 of the imminent conclusion of an agreement as referred to in paragraph 4 between the relevant organisations established at national or regional level, the remuneration to be paid in the area and for the species concerned shall be 40 % instead of 50 % as specified above, but only in respect of the use of the agricultural exemption made prior to the implementation of such agreement and not later than 1 April 1999.

6.  Where in the case of paragraph 5 the farmer has made use, in the relevant period, of the agricultural exemption at a ratio of more than 55 % of the total material of the relevant variety used for his production, the level of the remuneration to be paid in the area and for the species concerned shall be the one which would apply in respect of such a variety if it was protected in the relevant Member State under its national system of plant variety rights, if a national system exists which has established such level, and provided that that level is more than 50 % of the amounts charged for the licensed production of propagating material as specified in paragraph 2. In the absence of such level under the national scheme, the provisions of paragraph 5 shall apply irrespective of the ratio of use.

7.  By 1 January 2003 at the latest, the provisions of paragraph 5, first subparagraph, and of paragraph 6 shall be reviewed in the light of experiences gained under this Regulation and of developments of the ratio referred to in paragraph 3, with a view to their possible adaptation, by 1 July 2003, as may be necessary to establish or to stabilise the reasonably balanced ratio, stipulated in the aforesaid paragraph, in the whole or part of the Community.