News section
home news forum careers events suppliers solutions markets resources directories advertise contacts search site plan
 
.
Prospects for the EU grain and oilseeds sectors

.

Brussels, Belgium
May 4, 2007

Mariann Fischer Boel
Member of the European Commission responsible for agriculture and rural development
Prospects for the EU grain and oilseeds sectors
Conference by COCERAL European Grain and Oilseed Convention
Brussels, 4th May 2007


Ladies and gentlemen,

Many thanks for your kind invitation to join you today.

When I accept an invitation to speak at a conference, I find it very reassuring if I know that there's plenty of relevant subject-matter and that I won't just be "talking out the time".

I think you will agree that, in this sense, I don't need to worry today. I could easily fill a twenty-minute speech simply by reading recent media reports. I would have found plenty of material about biofuel controversy in the US, riots in Mexico over maize shortages, anxieties about genetically modified crops ...The list is long.

Certainly, there's a lot going on that's relevant to the grain and oilseeds sectors; and certainly, this is a busy time for me. I'm busy planning for the medium and long term of the CAP; and inevitably, I'm also busy responding to unforeseen problems and challenges as they arise.

First, then, a few words about general planning.

I'm sure you're aware that the CAP is due for review in an exercise which I refer to under the title "one vision, two steps".

Step one will be the so-called "CAP Health Check", which relates to the CAP between now and 2013. It will assess whether the reformed CAP is working as it should, and will make adjustments where necessary – to make it more effective, and also simpler where possible.

Step two will be a look ahead to the CAP of after 2013, within a general review of the overall European budget.

On a number of occasions, I have already set out many of the ideas that we will probably consider in this two-step exercise, so I shan't repeat them all today. Let me instead focus on one or two points of particular relevance to the cereals and oilseeds sectors.

Essentially, I believe that the key principles of the reforms of 2003 and later years are valid, and that we will embrace those principles more fully in the years ahead, not retreat from them.

The system of decoupled support for farmers is a good system. It encourages responsiveness to the market and it is generally more acceptable to the public than payments linked to production. Therefore, I think that exceptions to the principle of full decoupling – for cereals, fore example – have a limited lifespan.

Our emphasis on decoupled payments and market-based production decisions has implications for set-aside. I think this policy has had its day. It made sense in the era when production-linked payments were the norm; that era has now gone, and with it has gone the logical justification for set-aside. If we abolished it, we could lift a heavy administrative burden from the farm sector.

We also need to take a look at cereals intervention. After 2013, the continued existence of market tools like this one is open to question – especially if we abolish export refunds, as we have conditionally agreed to do in the WTO Doha Round. And before 2013 – so, within the Health Check – we should decide whether we need to make adjustments to the intervention system.

I should emphasise that we would be looking at cereals intervention as a whole: we need to take a global view.

Nevertheless, as you know, I have recently argued strongly in favour of taking action early on with regard to one particular cereal: maize.

I have proposed a special approach towards maize because maize has given us special problems. 31 per cent of Hungarian maize production went into intervention in 2004/2005. In 2005/06, the figure was 36 per cent. These are enormous proportions.

Recently, a firmer world market has eased the situation, but there is no guarantee whatsoever that this will continue.

The Commission sees a structural problem in Hungary and other land-locked Member States of the European Union. We think intervention is being viewed as a viable and reliable market outlet. This is contrary to the intended purpose of intervention – which is to act as a safety net in exceptional circumstances.

I have argued that maize intervention can no longer fulfil that intended purpose, and that the time has therefore come to abolish it. However, others have taken a different view.

I am open to all reasonable suggestions with regard to this issue. The German presidency of the European Union has proposed a compromise, and I hope that this will help us find a satisfactory solution very soon.

At this point, I would simply emphasise that we cannot bury our heads in the sand and wait for this problem to go away. It will not go away: we must act, sooner rather than later.

*****

As I said a moment ago, amid all our planning, we also have to respond to developing problems. One such problem at the moment is the growing number genetically modified organisms (GMOs) which are approved by some of our trade partners but not by us.

I would like to assure you that this problem has appeared clearly on my radar. I know that maize feed product shipments have declined over the last few months because of the difficulty of keeping out GMOs which are authorised elsewhere but not in the European Union. And I know that the issue of contamination has been mentioned with regard to a recent maize gluten feed shipment.

Apart from the dangers of unwanted contamination itself, of course we must consider what would happen if we had to block imports altogether from given origins, to avoid such contamination.

Thankfully, the potential problem in the case of maize feed products is not particularly large, since our imports of these products are low. On the other hand, we import much larger volumes of soyabeans and soyabean meal, and it would be difficult to replace these with other protein-rich feed.

We hope to avoid having to block soya imports from our main suppliers – the US, Argentina and Brazil. And whereas this could be difficult in the case of the US, Argentina and Brazil ought to work with us actively on this issue, given that we take a high proportion of their soyabean exports (more than 40 per cent of Argentina's, and more than 50 per cent of Brazil's).

Nevertheless, we can't rely on hope alone.

The best solution is not yet clear. Many of our trade partners have a different perspective on GMO regulation from ours. What I can tell you is that we have had a serious discussion within the Commission, and we are looking hard for a way through.

One part of the problem seems to be that, when the European Union considers authorising a new GMO, the approval process takes a considerable time. We are examining why this is, and whether we can speed it up without compromising on the risk assessment.

At the same time, the Commission is continuing its work on the co-existence of GM and non-GM crops.

What do I have to report? Mainly that Member States are making considerable progress. 15 Member States have already notified their draft national co-existence rules to the Commission, and we expect more notifications soon.

When we look at the different measures proposed, it seems clear that we did the right thing in leaving key decisions on co-existence rules up to Member States initially. There are very different conditions in the various agricultural landscapes, and these require very individual measures. So the variety in the measures proposed comes as no surprise.

Nevertheless, there is also a common rationale to be applied everywhere. So we have to work thoroughly on our common understanding of the science involved before we can develop guidelines for crop-specific co-existence measures at a technical level, as the Council has asked us to do.

We are currently setting up a European Co-existence Bureau, which will carry out this technical work in partnership with national experts and interested parties. The work is planned to start in the second half of this year, and will look first at maize.

The Council has also asked the Commission to consider whether we could take steps to harmonise co-existence legislation. With regard to this question, the jury is still out. The basis for a decision will be a Commission report, due in 2008, on the experiences so far with regulatory regimes and the practical aspects of GM crop cultivation.

*****

Ladies and gentlemen,

Shortly after coming to the podium this morning, I included biofuels in my list of hot topics in the media, and I certainly don't intend to leave the podium again without saying a little more about this subject.

Things have really got moving in the last few months. National politicians at the highest level have sat up and taken notice of the issues of climate change and energy security. And in response to the Commission's proposals, in March this year they set out key compulsory targets for renewable energy and for biofuels, as you know.

So we have now moved to a new phase. Now, we have to deliver.

There is a heated debate about whether we can deliver on the 10 per cent target for biofuels, without putting a huge strain on our food markets. Let me be clear: I do believe that we can. This decision of 10 per cent was not a leap in the dark.

Analysis by the Commission indicates that, with this target, prices for agricultural raw materials in the European Union would increase by between 3 and 6 per cent for cereals, and between 5 and 18 per cent for the major oilseeds.

As you know, prices for those raw products influence food prices only to a very limited extent.

The cost of cereals makes up only around 1 to 5 per cent of the consumer price of bread, which means that bread prices would increase by less than 1 per cent – a hardly perceptible rise.

With regard to oilseed-based products: the increase in vegetable oil prices would be greater. However, food-manufacturers using vegetable oils can partly replace rapeseed oil with soyabean or sunflower oil. Moreover, the higher the level of processing in foods, the lower the share of the cost of vegetable oils in the consumer price. Therefore, in highly processed foods (for example, prepared meals, chocolate bars etc.), consumer prices would remain stable.

Our estimates also indicate that, under current agricultural and trade policies, a proportion of our biofuel supply (between 10 and 30 per cent) would be imported in 2020.

The level of imports depends essentially on the competitiveness of European production of feedstock. We could boost this competitiveness by abolishing set-aside and modifying the cereals intervention system. There will also be a big lift for feedstock competitiveness if second-generation biofuels, based on feedstocks such as straw, become more cost-effective by 2015, as many experts predict.

Developments such as these, along with increases in arable productivity, would still leave us needing imports by 2020 – we must not forget this. But they would ensure that the level of imports required to hit the 10-per-cent target would not overstretch the sustainable production potential in our main supplier countries.

Overall, then, we think that the target of 10 per cent will not create unmanageable tensions in markets, or put resources under excessive strain.

Of course, we want to do everything possible to guarantee in practice – not just in theory – that the biofuel used in Europe will not have undesirable environmental consequences in terms of net greenhouse gas emissions and loss of biodiversity. We are currently defining a mechanism to ensure this.

This mechanism must work and it must be fair. It must not load extra burdens onto European farmers, who already meet strict environmental standards. It must also be compatible with WTO rules and existing EU rules; and it must fall into line with our efforts to simplify our policies.

Last month, the Commission launched a public consultation about how to achieve these aims, and I look forward to hearing the findings in due course.

Ladies and gentlemen,

I said at the beginning of my comments that I've been busy, and I hope I've convinced you of this in the last few minutes. I've had to compress some very complex subjects, each of which could have taken up a whole speech for itself.

But I hope I've shown that, with regard to the many issues which confront the grain and oilseeds sectors, I am listening to what you have to say. Certainly, I have read with interest the paper, drafted by the organisers of this conference, on forthcoming European policy developments. I think we have a lot of common ground to work with.

I hope I have also shown that I’m responding to problems when they arise, and planning as far as possible for a sustainable and prosperous future. You can be assured that I will continue to do so.

Thank you for listening.

 

 

 

 

The news item on this page is copyright by the organization where it originated - Fair use notice

Other news from this source


Copyright © SeedQuest - All rights reserved