EC COMMISSION DEFENDS FARM PROGRAM The European Community's (EC) executive Commission defended attacks on major elements of its ambitious program to rid the EC of its controversial farm surpluses, after strong attacks from northern states. Britain and West Germany, backed by the Netherlands and Denmark, opposed a proposed tax on edible oils and fats which has already sparked strong protest from exporters to the EC led by the U.S. and from EC consumer groups, diplomats said. But EC Agriculture Commissioner Frans Andriessen told journalists he had warned ministers that failure to agree the tax, proposed last month as part of the Commission's annual farm price package, would leave a large hole in the group's budget. He added that he hoped states had not yet made their mind up for good. "I hope the debate is still open, if not there will be a formidable hole in the budget," he said. The shortfall could reach two billion dollars in 1988 and would be only slightly less this year, he said. Foreign ministers were taking a first look at the tax ahead of farm ministers in a move described by diplomats as unprecedented and welcomed by Andriessen as a sign ministers recognised the importance of reforming the EC's farm policy. The proposed tax is designed to provide the EC with extra cash to finance community oilseed crops at their current levels and to brake a dramatic decrease in olive oil consumption by making it more competitive with other oils. Andriessen noted the EC has over two mln olive oil producers, mostly small farmers, who could be helped by the tax. "What we are suggesting is reasonable, it should be better understood not just outside the community but at home," he said. Britain, normally a keen advocate of radical changes in the EC's costly farm subsidies system, warned the proposal to impose the tax on both domestic and imported oils and fats could seriously damage the EC's trade relations with other countries. Britain also warned that the tax could hit developing countries already receiving aid from the EC, they said. The Commission also defended proposals to dismantle Monetary Compensatory Amounts (MCA) -- a system of cross border subsidies and taxes to level out foreign exchange fluctuations for farm exports -- against harsh West German criticism. In a letter this weekend from Chancellor Helmut Kohl to EC executive Commission President, Jacques Delors, Kohl made clear such a dismantling would mainly hit West German farmers. Diplomats said West Germany again repeated its criticism at the talks here but Andriessen told journalists that Germany had been alone in its opposition. The question was a key aspect of the Commission's farm price proposals, he added. Ministers also agreed a 3.5 billion dlrs scheme to rid the EC of its butter mountain, despite Spanish and Portuguese opposition. The scheme will pay for the disposal of one mln tonnes of unwanted butter, by selling it at knock-down prices, turning it into animal feed or exporting it at subsidised prices. National capitals are due to be reimbursed later out of savings from another plan to curb milk production. Diplomats said Spain and Portugal have been angered by the scheme, which they feel forces them to pay for massive surpluses built up before they joined the community last year, but the two countries did not block today's vote.