Brussels, Belgium
September 13, 2007
The European Commission today
proposed to set at 0% the obligatory set-aside rate for autumn
2007 and spring 2008 sowings, in response to the increasingly
tight situation on the cereals market. In the EU-27, a lower
than expected harvest in 2006 (265.5 million tonnes) led to
tightening supplies at the end of marketing year 2006/2007 and
to historically high prices. Intervention stocks have shrunk
from 14 million tonnes at the beginning of 2006/2007 to around 1
million tonnes now in September, mainly composed of maize held
in Hungary. Reducing the set-aside rate from 10% to 0% is
expected to increase output by at least 10 million tonnes. The
future of the set-aside system will form part of the debate to
be kicked off by the Communication on the CAP 'Health Check' in
November. This will also address the issue of how to retain the
environmental benefits which set-aside has brought. Setting the
rate at zero does not oblige farmers to cultivate all their
land. They can continue with voluntary set-aside and apply
environmental schemes.
Mariann Fischer Boel, Commissioner for Agriculture and Rural
Development, said: "Cereals prices have hit historically high
levels as the supply situation has grown increasingly tight. A
poor 2008 harvest combined with 10% set-aside would expose the
internal market to potentially serious risks. Setting the rate
at zero should add at least 10 million tonnes to EU output and
help to ease the market situation. Looking further ahead, in the
'Health Check', I want to take a good look at whether set-aside
is still an appropriate tool. But I also want to ensure that we
retain the environmental benefits it has brought."
The cereals market is currently characterised by historically
high prices. The 2006 crop was lower than expected, at 266
million tons, due to adverse meteorological conditions.
Intervention stocks have considerably tightened during the
campaign 2006/2007, from 14 million tonnes to around 1 million
tonnes. The estimate of private stocks varies, but all analysts
agree they significantly decreased in 2006/2007.
The 2007 cereals crop is now estimated below last year's level
because of dry and unusually hot weather in April followed by
adverse summer weather in western Member States and drought and
heat-waves in the Southeast of Europe.. This outlook is likely
to lead to a further reduction in the EU of private cereal
stocks by the end of the 2007/2008 marketing year. At global
level, closing stocks in 2007/2008 are expected to fall to a
historically low level, especially in the major exporting
countries.
The current area under obligatory set-aside amounts to 3.8
million hectares in the EU. If the set-aside rate was set to 0
%, the effective return of land could be between 1.6 and 2.9
million hectares. Considering average trends, it is likely to
bring around 10 million tonnes of grains onto the market. If
farmers decide to use the maximum amount of land possible to
produce cereals at the expense of other crops especially
oilseeds, this quantity could reach 17 million tonnes.
Background
Set-aside was introduced to limit production of cereals in the
EU and applied on a voluntary basis from 1988/89. After the 1992
reform, it became obligatory i.e. producers under the general
scheme were required to set-aside a defined percentage of their
declared areas in order to be eligible to direct payments. With
the 2003 reform, they received set-aside entitlements, which
give the right to a payment if they are accompanied by eligible
land put into set-aside.
The rate of obligatory set-aside was initially decided every
year but in 1999/2000 it was set permanently at 10 % for
simplification purposes. In the new Member States that opted for
the Single Area Payment Scheme (SAPS), farmers are exempted from
the obligation of set-aside (Poland, Czech Republic, Slovak
Republic, Hungary, Lithuania, Latvia, Estonia, Cyprus, Bulgaria
and Romania).
Commissioner Fischer Boel already announced to the Council on 16
July her intention to submit the present proposal. Since then
the estimate for the EU cereals crop has been revised down and
prices have kept rising. |
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