A farmer keeping ewes on his holding may qualify, on application for a premium for maintaining ewes (ewe premium).

The ewe premium and the goat premium shall be granted in the form of an annual payment per eligible animal per calendar year and per farmer within the limits of individual ceilings. The minimum number of animals in respect of which an application for a premium is lodged shall be determined by the Member State. This minimum shall not be less than 10 or greater than 50.

Per ewe, the amount of the premium shall be EUR 21. However for farmers marketing sheep's milk or products based on sheep's milk the premium per ewe shall be EUR 16,8.

Per she-goat the amount of the premium shall be EUR 16,8.

A supplementary premium shall be paid to farmers in areas where sheep and goat production constitutes a traditional activity or contributes significantly to the rural economy. Member States shall define these areas. In any event the supplementary premium shall only be granted to a farmer whose holding has at least 50 % of its area used for agriculture situated in less-favoured areas defined pursuant to Regulation (EC) No 1257/1999.

The amount of the supplementary premium shall be set at EUR 7 per ewe and per she-goat. The supplementary premium shall be granted under the same conditions as those laid down for the grant of the ewe and goat premium.

Premiums shall be paid to recipient farmers on the basis of the number of ewes and/or she-goats kept on their holding over a minimum period to be determined in accordance with the procedure referred to in Article 144(2).

Once a Regulation providing for new rules on the identification and registration of sheep and goats becomes applicable, to qualify for the premium an animal shall be identified and registered in accordance with these rules.

On 1 January 2005 the individual ceiling per farmer referred to in Article 113(3), shall be equal to the number of premium rights which he held on 31 December 2004 in accordance with the relevant Community rules.

Member States shall take the necessary measures to ensure that the sum of premium rights on their territory does not exceed the national ceilings set out in paragraph 4 and that the national reserves referred to in Article 118 may be maintained.

Except in cases where Article 143b is applied, the new Member States shall allocate individual ceilings to producers and shall set up the national reserves from the overall number of rights to the premium reserved for each of these new Member States as set out in paragraph 4, no later than one year after the date of accession.

After the end of the period of application of the single area payment scheme according to Article 143b and where Article 67 is applied, the allocation of the individual ceilings to producers and the setting up of the national reserve referred to in the second subparagraph shall take place no later than the end of the first year of the application of the single payment scheme.

Premium rights, which have been withdrawn pursuant to the measure taken pursuant to paragraph 2 shall be abolished.

The following ceilings shall apply:

When a farmer sells or otherwise transfers his holding, he may transfer all his premium rights to the person who takes over his holding.

A farmer may also transfer, in whole or in part, his rights to other farmers without transferring his holding.

In the case of a transfer of rights without transfer of the holding, a part of the premium rights transferred, not exceeding 15 %, shall be surrendered, without compensation to the national reserve of the Member State where his holding is situated for redistribution free of charge.

Member States may acquire premium rights from farmers who agree, on a voluntary basis, to surrender their rights, in whole or in part. In this case payments for the acquisition of such rights may be made to such farmers either from national budgets or as provided for under Article 119(2), fifth indent.

By way of derogation from paragraph 1 and in duly justified circumstances, Member States may provide that in the case of a sale or other transfer of the holding, the transfer of rights is carried out by the intermediary of the national reserve.

Member States may take the necessary measures to avoid premium rights being moved away from sensitive zones or regions where sheep production is especially important for the local economy.

Member States may authorise, before a date that they shall determine, temporary transfers of that part of the premium rights, which are not intended to be used by the farmer who holds them.

Each Member State shall maintain a national reserve of premium rights.

Any premium rights withdrawn pursuant to Article 117(2) or other Community provisions shall be added to the national reserve.

Member States may allocate premium rights to farmers, within the limits of their national reserves. When making the allocation they shall give precedence in particular to newcomers, young farmers or other priority farmers.

In case of application of Article 71, Member States shall, on a yearly basis, make additional payments totalling the global amounts set out in paragraph 3 of this Article.

Member States may decide to supplement the global amounts set out in paragraph 3 of this Article by reducing the amounts of the payments referred to in Article 113. The reduction in the amounts, which may be applied on a regional basis, shall not exceed one euro.

The payments shall be made, on a yearly basis, according to objective criteria including, in particular, the relevant production structures and conditions, and in such a way as to ensure equal treatment between producers and to avoid market and competition distortions. Moreover, such payments shall not be linked to fluctuations of market prices. They may be made on a regional basis.

Payments may include, in particular, the following:

• payments to farmers engaged in specific types of production, in particular related to quality, which are important for the local economy or the protection of the environment;

• an increase in the premium set out in Article 113. The additional amounts may be subject to the application of stocking density requirements, to be determined by the Member State according to local conditions;

• support for restructuring of farmers' holdings or the development of producers' organisations;

• area payments to farmers, to be granted per hectare of forage area, which is available to a farmer during the calendar year concerned and in respect of which no payments are claimed for the same year under the support system for farmers producing certain arable crops, under the aid system for dried fodder and under Community aid schemes for other permanent or horticultural crops;

• payments to farmers who surrender their rights on a voluntary basis pursuant to Article 117(2);

• support for the improvement and rationalisation of processing and marketing of sheep and goatmeat.

The following global amounts shall apply:

In the new Member States, the global amounts shall be applied in accordance with the schedule of increments as set out in Article 143a.