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Agenda 2000
Arable Cropping Under Agenda 2000 |
Arable Cropping Under Agenda 2000
Published 1998 by Semundo Limited, Cambridge, UK
Background
This book contains the papers of a conference
concerning Agenda 2000, as it relates to EU proposals for the structural
reform of Europe to pave the way for its expansion, held in the UK in
April 1998. In the case of agriculture, the reforms also reflect the need
to meet WTO obligations. There is an urgent need for a better
understanding of the issues involved and how they will impact on our
industry. In the coming months the debate on Agenda 2000 may be expected
to intensify. These conference papers provides both background and opinion
in relation to various sectors, as indicated by the following contents
list.
Contents
Introduction
Rad Thomas, the Conference Chairman,
introduced the meeting as follows...
"As we approach the end of the 20th century and the beginning of the next millennium, agriculture in Europe stands at the cross-roads of choice. What is certain is that the regime we have worked under since 1992, will change. By the time a further reform, of European agricultural Policy takes place; the size of Europe will have increased and a further liberalisation of global trade in agricultural products will have been implemented. We need, at this crucial time, to set objectives which will satisfy the demands of European enlargement and GATT compatibility so that we, in the business, know where we are heading. Only then can we objectively consider the present reform proposals and seek to add, amend or ameliorate them and thus ensure the future of this great dynamic industry. I believe the broad outlines of the end game are already known and now is the time to consider the present reform with one eye on the future for the sake of the next generation who will follow us. I congratulate Semundo, Axient and Crops magazine for calling this conference and for securing the very high calibre speakers to impart their thoughts to us and provide a platform for debate, discussion and deliberation. Agenda 2000, once settled and implemented, will dictate what we farm, how we farm and maybe how many of us will be needed to farm. The implications of Agenda 2000 stretch far beyond the farm gate and with weighty matters at stake, I eagerly look forward to our speakers' contributions."
The presentation concerning non-food crops was as follows (reproduced with permission of the copyright holders - Semundo).
Agenda 2000: Its impact on Novel and Non-Food Crops
Andrew
Hebard, Managing Director, John K King & Sons Ltd
Broadly speaking a novel crop is one that has no recognised support mechanism and not regarded as a traditional agricultural crop. Its applications may be for food, industrial and pharmaceutical applications amongst other market sectors. A non-food crop is limited wholly to technical applications and under EU legislation can only be grown on set-aside if an area payment is to be received by the grower. Of course, there is an overlap here between non-food crops that have no alternative application, e.g. short rotation coppice or crambe (an industrial oilseed for erucic acid production) and food crops that are grown on set-aside for non-food applications, as is the case with double-low rapeseed and high oleic sunflower.
On the 17 March, the European Commission formally accepted the proposals laid down by Commissioner Fischler to reform the Common Agricultural Policy under the heading Agenda 2000. It is now down to a Council of Ministers to negotiate these proposals into a unilaterally agreeable format prior to ratification and implementation. Initial reaction from Member States is largely negative and there may need to be some change in emphasis within the reform proposals.
With regard to novel crops, the proposals have a negative impact. Although the reforms put forward a non-crop specific area payment, what in fact they mean is that all eligible crops (with the exception of pulses) will receive a similar level of aid; i.e. wheat will not receive a specific area payment in preference to oilseed rape. The term 'non-specific' relates only to crops that are currently deemed eligible under the existing AAPS system. Therefore, a new crop/novel crop, e.g. camelina sativa or crambe, will still be ineligible for area payments.
Under the current AAPS system such crops do not receive aid and are similarly penalised Therefore the reform process offered hope to widen the portfolio of crops that could be grown competitively in Europe - particularly when the words 'Non-Crop Specific Area Payments' were tabled.
Camelina sativa is a low input well adapted and economically viable oilseed crop, if allowed to compete equitably with sunflower and oilseed rape. It produces a high protein meal and a novel oil, high in Omega 3 fatty acids. It has a long history of consumption within eastern Europe since the Bronze Age, and due to its particularly high purity requires little processing after extraction.
The economic reality, however, is that with yields at approximately 2.5 to 3.0 tonnes per hectare, the crop must generate an additional £325-390 per hectare output over-and-above oilseed rape or cereals in order to offset the area payment received by the latter two and therefore compete equitably The meal quality of camelina and its market value is similar to that of linseed and therefore, the additional revenue needs to be generated on oil sales alone This equates to an approximate £300 per tonne premium on the oil (compared with a spot price of crude oilseed rape and soya oil at approximately £395 per metric tonne), and sunoil at £464.00 per metric tonne It is quite easy to see, therefore, that regardless of any superior functionality of the oil, a buyer/consumer could not justify these huge premiums. Instead they 'pay' the commodity market and alternate between sun, soya and rape oils.
The acid test of this scenario is that, if the sunflowers were a novel crop (and had only just been commercialised) they too would be classed as ineligible, would not receive aid and, therefore, would not be produced in Europe. It is believed that this constraint imposed by the EU is myopic and will inevitably lead to reduced biodiversity in European agriculture. Additionally, it will concentrate more of the plant breeding efforts into genetically transforming existing species, such as oilseed rape, to contain the fatty acid profiles that other species currently offer but which are not eligible for aid. This in itself will put increased pressures on the agricultural industry to manage crops that to all intents and purposes are indistinguishable from the non-modified form. A good example of this is double-low rapeseed, high erucic acid rapeseed and now the UK's first genetically modified rapeseed (with regard to oil profile) i.e. high lauric rapeseed. Kings are proud to be the first company in the UK to field evaluate GMO rapeseed with modified oil characteristics and feel tremendous benefits will be available to the consumer with such advances, but we are equally aware that there could be at least eight types of oilseed rape being developed (of which six are for oil characteristics) that need segregating by the very nature of their development. I'm not sure this is a practical proposition.
In summary, for novel crops a non-crop specific area payment should mean exactly what it says and, therefore, a grower should receive the projected £130 per acre (under the current exchange rate and reference yields), irrespective of the crop he grows. If this does not happen the EU will be constrained further by the spectrum of crops it can grow and the opportunities available for growers to add value to niche market and premium products.
The proposed changes to set-aside regulations will actually assist in the development of non-food crops by allowing the grower to take optional setaside (at a rate in excess of 10% of his eligible land holding). This puts the responsibility on the merchant/processor to come up with commercially attractive terms for the grower that will compete favourably with the production of food crops. This appears a reasonable proposal, however, it is feared that the European Commission is prepared to give preferential support to the production of biofuels, against other industrial chemicals This support is likely to be in the form of reducing the taxation burden on the processor, or providing subsidies relating to consumption and will therefore still leave distortions in the non-food crop sector If the economics of growing for biofuels are enhanced, it will put up the price of other non-food crops and, therefore, further restrict the area that should be one of the focal points of the reform.
It is not clear from the proposals whether or nor the cropping on set-aside will continue to have the same bureaucratic restrictions that are currently in place. It is a ridiculous burden on industry that significant block guarantees are still being held by the Intervention Board from crops harvested in 1994 through to 1997. Logic dictates that if set-aside is voluntary and the grower receives the same area payment as cereals and other oilseeds then there is no commercial gain for him (or the processor) to behave fraudulently. Therefore, this should negate the need for securities to be lodged.
Therefore, as a conclusion, the proposals seem to recognise the need to allow for the development of non-food crops - but they are still using the vehicle of set-aside as a means to achieve it. This seems illogical and unnecessary. If all crops (with the exception of proteins) received a single
'non-crop specific' area payment, it would pave the way for unilateral removal of all aid and would stimulate investment and further research into new crops. If the EC recognises the need to re-introduce set-aside for future harvests then this will not distort the economics of production because area aid will be equivalent.
Contacts
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© Copyright 2006 Policy Statements
Updated
by CPL Press:
03/07/2007
- biomatnet@biomatnet.org
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