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DOCUMENTS "COM"
COM(77)363
Vol.1977/0120

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)363 final
Brussels .27July1977
REPORT ONSTARCH PRODUCTS INTHECOMMUNITY ANDTHESTARCH PRODUCTION REFUND
COM(77)363final

ReportonStarchProductsintheCommunity andtheStarchProduction Refund •
StarchProductsintheCommunity andStarchProduction Refund"
AnnexA-iTheStarchIndustry
-abriefdescription
AnnexB-Quantities onwhichtheproduction refundwaspaid
1975/76 –■
AnnexC-TableI-Development ofSupplyPrices,Starch
Production Refunds,ThresholdPricesand
WorldMarketPricesformaize-1967/68
-1976/77
TableII-Development ofSupplyPrices,Starch
Production Refunds,ThresholdPricesand
WorldMarketPricesforwheat-1967/68
-1976/77
/TableIII-Development ofSupplyPrices,Starch
Production Refunds,ThresholdPricesand
WorldMarketPricesforbrokenrice-
1967/68-1976/77page1-1$
page10-25
page2k
page2î>
page2b
page27
AnnexD-FEOGAGuaranteeSection ^
Expenditure intheCerealsaodRiceSectors
• »'
AnnexE-PotatoStarchProductionpage23
pageZ9

V1-8-1
STARCHPRODUCTSINTHECOMMUNITY ANDTHESTARCHPRODUCTION REFUND
PART I
TheCommunitystarchindustryhasbenefitted fromaidsince1962
1)whenasystemofproductionrefundwas"introduced .Thissystem
replacedthespecialnationalaidsavailableinmostofthedifferent
MemberStatesbeforetheestablishment ofthecommonorganisation of
themarketforcereals.
«
Therefundsweredesignedtoallowthestarchindustrytomaintain
competitive pricesinthefaceofstrongcompetition whichstillexistsfrom
syntheticproductsbyenablingittopurchaseitsbasicrawmaterialsatprices
lowerthanthosewhichresultedfromtheapplication ofanimportlevy
regime(inotherwords,belowthresholdpricesandaroundworldprices),
toensureafairstandardoflivingtothestarchpotatogrower,andat
thesametime,toensureabalancebetweenthedifferentstarchsectors"
particularly betweenmaizeandpotatostarch.
Until1967,thegrantingofrefundswasoptionalbut,asfromAugustof
thatyear,refundswereputonamorepermanentbasisbymakingthem
obligatory.Theyweremadeavailable onmaize,wheatorbrokenrice
forthe^manufacture ofstarch,onmaizeusedforthemanufacture of
groatsandmealintendedforbrewingandonwheatormaizeintendedfor
themanufactureof'quellmehl'for.humanconsumption^**
Theratesofproductionrefundavailablewereestablished asbeingequal
tothedifference betweenafixedsupplypriceandtheappropriate
thresholdpric'eforthecerealinquestion.Therefundonpotatostarch
*•«
wa9fixedatthesamerateasthatonmaizestarch(i.e.theratefor
maizemultiplied by1.61).From1967to1974thesupplypriceremained
absolutelystable(formaizeahdwheatat68ua/tonandforbrokenrice
at83ua/tonl.Thus,withregularincreasesinthresholdprices,the
refundsavailableincreasedbythesapeamount.Between1967and1974
therateofrefundonmaize,'themostcommonlyemployedrawmaterial,
almostdoubledfrom20,38ua/tonto39,45ua/ton.Potatostarchenjoyed
1)CouncilRegulation (EEC)N°55,OJN°54,2.7.1962,p.1583
2)CouncilRegulation (EEC)N°120/67,OJN°117,19.6.1967,p.2269.

thesamerateofincreasewhilsttherefundonwheatrosefrom36.38to55.50ua/ton
overthesameperiod.Forthereasonssetoutinparagraph27thestarchindustrythus
benefittedfromtheconsiderable anduniqueadvantageamongstprocessingindustries
intheCommunityofhavingfixedsupplypricesforitsrawmaterials
.irrespective ofmovesininstitutional ormarketprices,exceptwhenthe.
latterwereatveryhighlevels. .-,
Forexample,in1972/73theworldmarket-price formaizestartedtomove
abovethefixedsupplypriceof68ua/tonandbyJuly1973wasalmost30
ua/tonhigher,butstillbelowtheCommunitythreshold.Maizestarch
producersthereforeenjoyedtheadditionalprivilegeofhavingaccessto
suppliesatpriceswhichwerenotonlylowerthanthethresholdbutalso
considerably lowerthanthoseontheworldmarket.Evenwhenworldmarket
pricesroseabovethethresholdastheydidoveraconsiderable period'
in1973/74andformostof1974/75,thestarchindustrywasabletosupply
itselfatpriceswellbelowtheselevelsalthoughthesewereinexcessoftheCommunity
supplyprice.
Onaccession,thestarchindustriesinthenewMemberStatesbecameentitled
totherefundbutgenerallyatlowerratesbecausetheapplicationofaccession
compensatory amountstothebasicrawmaterialsused(e.g.maize,wheat)
madethemavailableatpriceslowerthanthoseapplyinginthe"Six".
InAugust1974,againstabackgroundofrisingpricesontheworldand
Communitymarkets,supplypriceswereraisedfrom68ua/tonformaize
andwheajfto82ua/tonandfrom83ua/tonto102ua/tonforbrokenrice
Thisautomatically resultedinafallintheproductionrefundonmaize
to24,60ua/ton,butnevertheless thesupplypriceremainedwellbelow
theworldprice.Atthesametime,refundswereintroducedformaizegroats
usedforthemanufactureofglucosebydirecthydrolysisandwereabolished
for*quellmehl't^.Ithadbecomeclear^hatincertainMemberStatesalarge
part"ofthe'quellmehl' producedwasbeingusedforaniffialfeedpurposes,
contrarytotheintentionsoftheCouncilandwascompetingunfairlywith
non-subsidised feedgrains.,
Followinganallroundincreaseininstitutional pricesinOctober1974,
thesupplypriceformaizeandwheatwasraisedto87,45^ua/tonandfor
brokenriceto109,07ua/ton^soastomaintaintheleveloftheproduction
refundatthenewrateeffectivefromAugust1974(e.g.24,60ua/tonformaize).
Thehighlevelofworldpricespersistedduringtheautumnof1974-in
Octobertheworldmarketpriceformaizewas20ua/tonabovetheCommunity's
3)CouncilRégulation (EEC)N°1132/74,OJN°L128,10.5.1974,p.24
4)'CouncilRegulat'ion (EEC)N°1125/74,OJN°.L128,'1'0»5.1974,p.
5)CouncilRégulation(EEC)N°2518/74,0JNflL270,5.10.1974,p.1

.threshold priceand45ua/tonabovethefixedsupplyprice._It was'concluded
^thatrefundsattheratethenobtaining,bearinginmindtheconsequent
heavychargeonFEOGAfunds,werenolongereconomically justified .The
decision wastakentoreducerefundsinlinewiththeprovisions ofCouncil
Regulation 1132/74whichallowedformodifications inrefunds whenworld
pricesshowappreciable andpersistent variations .Thereduction ofabout
50%intherefundwasachieved byraisingthesupplypricefthatformaize
andwheatwasraisedfrom87,45ua/tonftJ103,10ua/ton)andtookeffect
from1April1975^5.
10.InFebruary 1975,withtheobjective ofreducing FEOGAexpenditure still
further,theCommission hadalreadyproposedthatasfromthebeginning of
thenextcropyear(1975/1976)aidshouldbefurtherreducedandthat
,thesystemofsupplypricesshouldbeabandoned andreplaced byaflat
raterefundsystem.Asaresult,from1August1975,theCouncilfixed
auniformrefundof10ua/tonformaize16,30ua/tonforwhf»atand
12,30ua/tonforbrokenrice''5.Atthesametime,refundsweretotally
•.suppressed formaizegroatsandbrokenriceintendedforbrewing.Itwas
•fe.ltthatitwasnotoneofthepurposes ofFEOGAthatitsfundsshould
bespenttosubsidise rawmaterials usedinproducts whichcould,ata
.*laterstage,becomesubjecttotaxation byMemberStatestothebenefit
oftheirnational exchequers .Inaddition,refundsforcerealsandpotato
starchwereonceagainmadeoptional'ratherthanobligatory sinceitno
8)longerseemedadvisable toautomatically grantarefundinallcircumstances .
* *-9... –'-.•
11#However,thesubstantial reductions whichhadbeenmadetotherefund
••%"
coupledwithincreases inthethreshold price,whilstjustified inthe
contextofrisingpricesontheworldmarket,hadraisedtheindustry's
effective supplypriceformaize,forexample,from68ua/tonin1973/74
#toanaverageof121ua/tonin1975/76.'Thissubstantial increaseinthe
supplypriceoveraperiodoftwoyears ,tookplaceagains*ageneralback­
groundofeconomic recession withconsequent slackening indemandfromthe
starchindustry'smajorcustomers (e.g.thepaper,textileand
confectionery industries )andagainstrapidescalation Inthepriceoffuelsetc.
--- -| '
6)CouncilRégulation (EEC)N°3113/74;0JN°L332,12.12.1974 ,p.1
7)CouncilRégulation (EEC)N°1955/75,0JN°L200,31.7.1975,p.1
8)CouncilRégulation (EEC)N°665/75,OJN°L72,20.3.1975,p.14

'rapidescalation inthepriceoffuelsetc.Thiscombination of
circumstances ledtoafallinproduction .Forexample,theamount
ofmaizehandledin1975was3,2milliontonscomparedwith3,7million-
tonsin1974-adropof14%.Anumberoffirms,particularly inthe
potatostarchsectorfoundthemselves infinancialdifficulties' .These
difficulties were,insomecases,nartly"mitigated bythesalesopportunities
presented forglucosebyhighsugarpricesandfurthermore ,somesubstantial
newinvestments weremadeinthemaizeandwheatstarchsectors.
In1976/77,therefore,theproduction refunds wereraisedintheshort
«
termfrom10to14ua/tonformaize,from16,30to20ua/tonforwheat
9)andfrom12,30to17,20ua/tonforbrokenrice,butatthe-sametime
theCouncilwerealsoinvitedtoconsiderthedesirability ofgradually
suppressing allproduction refundsoveraperiodoftwoyearscommencing
witha50%reduction asfrom1August1977.Thisinvitation totheCouncil
wasalongthesamelinesastheParliament 'sviewthatitwasbothpossible
anddesirable toprovideforaprogressive suppression ofstarchproduction
refunds.ThisviewformedpartofitsOpinionontheCommission 'sprice
proposals for1976/77(12February,1976).
TheCouncildidnotreachaconclusion on'thequestionofgradualsuppression
atitssessionof19-20July1976butinconsidering afreshwhethersuch
suppression wouldbeintheCommunity'sbestoverallInterests,thefactors
setoutinthePartIIshouldbeborneinmind.
-%
• . .
<'4
a
*4·
ψ
9)CouncilRégulation (EEC)N°1862/76,0JN°L206,p.3

* ^* '
PARTII
'• ... «
• *•
14.FEOGAExpenditure \
Since1970,expenditure inthe*starchproduction refundsectorhasbeen
asfollows :
mio.u.a.
_1970i12Z1–i 1973i1974:1975;1976:1977
:86:94:127:181:190:89:47:62
Inotherwords,sinceproduction refundswereintroduced intheearly
1960'sover1,000mio.u.a.hasbeenspent.Bycomparison ,totalexpenditure
inthecerealsandricesectorsoverthelastfiveyearshasbeenasfollows:
FEOGAGuarantee Section.AnnualExpenditure .
mio.u.a.
•Cereals
Sector
A
Rice
Sector
(amoredetailed breakdown oftheaboveexpenditure isshowninAnnexD).
»» •*
'Itshouldbenotedthattheincreased expenditure onproduction refundsin
"1973and1974wasnotentirelyattributable totheratesofrefundavailable
butalsotoaccession ofthethreenewMemberStates.•
• •
15.It'^hbuldalsobeexplained thatifproduction refundsweretobetotally
suppressed,itisunlikelythattherewouldbeafinalnetsavingtoFEOGA
oftheamounts nowspentonthisaid.Expenditute onexportrefundsfor
starchproducts wouldbeincreased sincetheexportrefundatpresent
*available takesaccountoftheproduction refund.So,ofcourse,would
• • fleviesonimportedstarchandstarchproducts butbecauseofthelevel
ofprotection againstthirdcountrysupplies,importsOftheseproducts
isrelatively small.(Ontheotherhand,importsofsomeoftheby-products
ofstarchmanufacture ,e.g.maize-oil andmaizeglutenfeedenterthe
Community eitherfreeoflevyoratverylowrates-seeparagraph 19).
Furthermore *itispossiblethatstarchmanufacturers mighttrytobuildup
$
th^irexportmarketsascompetition ontheinternal marketintensified .
Exportsofstarchandstarchproductscurrehtly runatabout200000tons
perannum.

Nevertheless /suppression wouldundoubtedly resultinar»
•""overallsaving.
•» •
»
16.However,inconsidering therealoverallnetcostoftheproduction
-»·*refundsystemtotheCommunity'sbudgetitisinstructive toalsotak£"
accountoftheincomederivedfromleviesonrawmaterials importedfor
processing .Whilsttheincomefromleviesonwheat,brokenriceor'
potatoes usedforstarchproduction isnegligible ,thatderivedfrom
imported maizeisconsiderable .Onaverage,outofthetotalannual
usageofaround3mio.t.ofmaizeforstarch,2mio.t«areimported
fromthirdcountries .Thus,overthe-lastfiveyears-basedonthe
«averagelevyforeachmarketing year,itisestimated thatimportsof
maizeforstarchproduction produced amountsintheregionofthpse
*
shownbelowintheformoflevyrevenue.
ImportLevyReceipts onMaizeImported forStarchManufacture
AverageImport ••Estimated Levy
LevyonMaize Revenueon2.3mio.t.
ua/t Maize
.mio.u.a.
'1972/73 30,86 71
•1973/74 .• 3,15 "* 7
•\'1974/7?- 12/82 -29
1975/76 28,53 65
.1976/77 47,15* 108
Averageimportlevy,August1976tofpril1977inclusive.
17.Itiscleartliatintheperiod1972/73to1974/75withyearlyaverage
«*•production refundsonmaizeof35,23ua/t,36,33ua/tand23,51ua/t,
•theSystemrepresented aconsiderable netchargeontheCommunity's
budget.In1975/76,onthedtherhand,withareduction inthe
production refundonmaize,forexample,to10ua/t,thesystemstarted
tomake.anetcontribution toCommunity fundsevenwith^thecostsof
production refundsonwheat,*potatoes andbrokenricetakeninto
Consideration .Inpractice,however,levyincomeisnotdivisible and
itisnotpossibletodivertlevyreceiptstoindividual sectors.•
18.EffectonSizeofIndustry andNumbersemployed •
Itwillbeseenfromthetablebelowthatwhilstprocessing inthemaize
starchindustry,!thelargestprocessors inthestarchsector,increased
duringtheperiodofstablesupplypricesfFom1967to1974,production

.feltsignificantly inthemoredifficultconditionsobtainingIn1974/75
•and1975/76Ce.g.generaleconomerecession,increasedfuelprices
-•.reducedproductionrefunds).Processinginthestarchindustryother
sectors(wheat,riceandpotato)followedasimilarpattern.Itisof''!...course,difficulttoascribethisgeneralfallinoutputorits-
^Consequences toanyspecificfactor.Nevertheless,thewholeindustry"directlyemploysaworkforceofbetween25and30000th»„„s "
■intha uuu„tnough thoseemployednthepotatostarchsectorarelarqelvcasualann«■», • ~., • argeiycasual,-andthepossibleeffecton
...!"P°ye"'0n ta«.t.dandonthegrowersofstarch
productionrTfundca^oVbeVverlooked inthe^eraIIVnterests"oSfUfhIerSn$Jnï!!î,?^.?tle"
=====:=============:===:== =:==:====;_=== '- wio.t.maizeprocessed
0=1970/71:1971/72:1972/73:1973/74:1975/76^976/77°
:1.45:1.78:1.57:1.70:1.88:2.53:3^26:ΓβΓΓΪδ*··
nPotatostarchproductionfiguresaregivenseparatelyinAnnexE.
Consumer Effect
Thereisnodoubtthatsuppressionofproductionrefundswouldnothelp"
MemberStatesgovernmentstorestraininflationary pressuresoverawide
•orthe°f'nIldUCtS""the°fS°Mproductsthefinancialimpact
„•°Ih^pr1"t0th?of.thefinishedoroduct,_iftherefund
wetbeaboUsh^uouid^snau^^ ■ .
Vproportionof(th«finalcostwhichtherefundrepresents.- -.
20.-ImportedRawMaterialsused ■'' •''.!/ '_
-:tisestimatedthatabout70S!of,<*.lFE0GAexpenditureoi,productibn-i
4#■»j:•^•.• « *•-^ vviiMiiui IICY
intoIaVn-ma,Ze'and*mUaUyimp°niab0Ut15 processed
rerepresents 1«ofthistotal.AUwsthatfofthetotatfeftn((\
xpeniture_isonimportedmaizeandmustrepresent,semeadvantagetotheU.S.'
maizefarmer.Thebalanceof-expenditureisonCommunitygrownwheat
•mai2epotatoesandonijrokenrice..^ '*
–/'
"comPetitionfromThirdCountryImports ;
Uhilstitisthecasethattheindustryisadequatelyprotectedfromstarch
andglucoseimportsfromthirdcountriesbyimportleviesmadeup1of'a
variableelementandafixedelement,thelastmentionedofwhieh-applies
whateverthestateoftheworldmarket,thesameisnottrueofarange
of'Starchbasedindustrialproducts(forexample*ex;EFI(,39,06s. Irr.T,r-,~ ., ,

-otherhighpolymers whichcoversstarchestersandethers,29,16AV- 4
gluconic acidsandgluconates ).Suchproducts arenotsubjecttothe
-levyarrangements ofthecerealsregimebuttorelatively lowadvalorem­
"customduties.Sincemanyoftheseindustrial products arederivedfrom
starchmadefrommaize,arawmaterial,whichisfrequently available,.
•tothirdcountryprocessors atprices50ua/tormorebelowthoseobtaining
intheCommunity,theycouldpresent athreattoCommunity products.
Ontheotherhand,inmostoftheseproductsthecostoftherawmaterial
usuallyrepresents arelatively smallproportion oftotalproduction costs.
However,theindustry alsofindsitselflargelyunprotected againstimports
fromthirdcountries ofstarchindustrybyproducts whichrepresent about30%of•
totalrawmaterial (e.g.maizeglutenfeed,oilcake,maizeoil),wherethecostof
therawmaterialisofgreatersignificance .Aswasexplained inthepreviouspara­
graph,maizeisnormallyavailableto thirdcountrystarchproducers atmuchlower
pricesthanthosepaidbyCommunity manufacturers .Itisthushardlysurprising that
importsofmaizeglutenfeed,forexample,(CCTheading No23.03AID,oneofthe
industry'smostimportant by-products ,andwhichunderGATT,entersfree
ofbothdutyandlevy,hadrisenfrom734000tonsin1972to1.32mio.tons
in1976.AnnualCommunity production isabout600000tonsbutfallingdue
todeclining starchmanufacture .Importsofoilcake<CCTheadingN°23.04B),
anotherby-product ,alsoenterfreeofdutyandlevyandimportsofmaize
oil(CCTheading N°15.07DII)aresubjectonlytoadutyof10%,With
noproduction refundor.withamuchreducedone,Community starchproducers
couldfinditincreasingly difficult toresistcompetition onthesetwo
fronts.'
Furthermore ,ifnochangesweremadetothepresentlevyregimetherecould
alsobeanincreasing possibility-ofstarchand/orstarchderivatives (e.g,glucos «
beingimportedfromACP/PT0Mcountries/withrelatively /modestimportlevies,
• »
as.andustrialisationinthesecountries develops.Whilstimportsofstarch
fromthirdcountries,otherthanACP/PT0M,aresubjecttosubstantial fixed
elements (maizestarch:17.00ua/t;glucose:80.00ua/tor55„00ua/t),imports
9
fromACP/PT0Mcountries bearnofixedelementwhatsoever,butonlyavariable
element.Itislikelythatstarchmitiersinthesecountries willbeableto
paylocaiproducersofmaizepricesmuchlowerthanwoul'dbeacceptable in
EuropeorevenintheU.S.A.Itisnotwithoutsignificance inthisregard
thatreportshavebeenreceivedofanAmerican maizestarchplantbeingset
upintheCameroons .

-9- •
-24.Itshouldalsobenotedinthecontextofcompetition fromdeveloping
* • »'
countries thatmaniocrootwhichisarichsourceofstarchandwhich
caneasilybesubstituted forpotatoes inthepotatostarchprocessis
subjectonlytoverylowimportlevies(thismaynotexceedamaximum"
Τ·
of6%advaloremfixedinGATT).Community importsofmanioc .root
havedoubledin3yearsandin1976reached 3mio.tons.Theuseofmanioc
forstarchcouldthuspossibly becomemoreattractive inasituation
withoutrefunds.Movesinthisdirection havealreadytakenplace
butthesecanlargelybeattributed totwodrygrowingseasonsfor
potatoes andtheresultant supplydifficulties forpotatostarch
manufacturers ,butnevertheless ,manioccouldbeanalternative starch
source.
25.Production ofHighFructose GlucoseSyrup(Isoglucose ).--
Oneofthereasonsfortl^eappearance ofIsoglucose ontheCommunitysweetener
markethasbeentheeconomicdifficulties recently experienced bythestarch
industry.Thesedifficulties described elsewhere (economicrecession,
severalandsubstantial cutsintheproduction refundandincreased ■
competition fromsynthetics )haveledthestarchindustrytointensify
>,itsresearch programmes andtoexplorealternative outletsforitssurplus
.production capacity.
*Community production of.thisstarchbasedsweetener atpresentrunsatabout
«,
•*70000t*(perannum)fromatotalproduction capacityofabout150000tons.
TheCouncildecidedatitsJuly1976sessiontoabolishproduction refunds
.onproducts usedforisoglucose asfrom1August1977andfurtherrestrictive
.measures wereagreedbytheCouncilatitsApril1977session.If
production refundsweretobereducedaod/orsuppressed onstarchgenerally ,.
thiswould,of'course,havetheeffecto.frestricting the-competitive .
•••possibilities ofisoglucose further.
26.Competition fromSynthetic Products ■
Oneoftheprimereasonsforintroducing production refundsandwhichremains
.unchanged wastoeniablenaturalstarch'products tocompetewithsynthetic
productsbymakingthebasicrawmaterialsavailableatSomething' ,like
-•m
worldprices.
ί4.γ

?7.„.Itisestimated thatabout50%ofthewholeindustry'soutputfindsits
;*v,outlets .inthetechnical andindustrial sectors(elg.adhesives,resins
'•etc.).;Inthepotatostarchsectorparticularly andforwheatstarch/
thispercentage ismuchhigher.Anditisinthisparticular areaof
»*••
.^application thatthestarchindustry,asawhole,facesstronger „
competition ;Whilstitisthecase,aswasmentioned inparagraph 4,
■thatthestarchindustryistheonlyCommunity cerealprocessing industry -
:V:-ytohaveenjoyedthebenefitofastablesupplyprice,itis,atthesame
time,theonlyonewhichhastocompetedirectlywithanindustryoutside
■y/.theagricultural sectorandthusnotsubjecttotheeffectsofmarket
arrangements . . *
:Thepriceswhichthestarchindustry paysforitsrawmaterials directlyor
indirectly resultfromtheapplication ofthreshold prices,importleviesetc..
W;whereasthepetro-chemica Iindustryisnotsubjecttotheserestraints and
'■1\-"-Tf-■■m . 'isfreetobuyitsrawmaterials atworldmarketprices.. -y-
OAsaresultofchangesinCommunity marketarrangements ,themaizestarch
/'^industry forexample,hasseenitssupplypricesalmostdoubleintwoyears
C-(seeAnnexC,TableI)andthewholeindustry,inanefforttoretainits
industrial outlets,hasnotpassedonthesesubstantial increases ./.Onthe
•»;N '' Totherhand,thelargeincreases incrudeoilpricesinrecentyears'have.
•clearlyraisedtheinputcostsforthesynthetics fmdustry and,asaresult,•
.''■itscompetitive potential hasbeenrestricted .Thus,theconditions which
'obtainedintheearlyandmid-1960'swithoilpricesatafraction oftheir •
£•?presentlevel,andwhichwasoneof.themainreasonsfortheintroduction of
(theproduction refundsystem,donotapplytothesameextent.-•.Nevertheless ,
,–£hepricespaidbythesynthetics industry remainthdseoftheworldmarket
.>vand*thepossibility ofbeingabletofollowaflexibjtpseltingprice'poticy .
$-(;,shas^enabledittotakeadvantageofthestarchindustryposition.-•furthermore ,
jVin.considering whetherand,ifso,towhatextent,ceirealandpotato -starch^s^"
*^;'shouldbeassistedtoresistthecompetition ofthepetro-chemical industry,";
-ivtheproblemofdecliningoilresources andtheneedforfuelconservation
'■••X. ;* S», ...^shouldalsobekeptinmind. . r*
AsfarasCompetition foroutletsinthehumangndanimalfoodsectoris
concerned,' thesamesituation does'notapplysincejnost/-1fnotall,competing
productsare?,tomoreorlessthesameextent,equaltyaffected bymarket •
> i «
-regimesfortherawmaterials inquestion. >.-

MaizeStarch/PotatoStarchBalance andreturnstoPotatoGrowers
Anotherimportant soughtaftereffectofthepresentstarchproduction refund
systemisthepreservation ofthebalancebetweenmaizeandpotatostarchand
vtheguarantee ofareasonable standardoflivingforthestarchpotatogrower.
Thisbalanceisatpresentmaintained byfixingaminimumprice(derivedfrom
themaizethreshold price)whichthepotatostarchproducer mustpaytothe
potatogrowerinordertoqualifyfortheproduction refund.Withoutsuch
aconstraint ,thepotatostarchindustry wouldbefreetonegotiate itsown
pricelevel,unlikethemaizestarchindustry,whichwouldstillbesubject ,
totheconsequences ofthreshold prices,etc.Afreemarketsituation "for
starchpotatoes couldalsoariseiftherefundbecamesosmallinrelation
toforegoitandnegotiate apricebelowtheminimum.However,theabsence
ofaproduction refund-orasufficiently attractive one-neednot
necessarily meanthataminimumpriceoritsequivalent wouldnolongerbe
observed .Equallyeffective methodsofenforcing observation oftheminimum
couldbeintroduced withoutgreatdifficulty .Inanyevent,inasituation
withoutrefunds,themaizesupplypricetothestarchindustry wouldclearly
riseandtheprocessor wouldattempttorecoupthisincrease fromthemarket
.byraisingsellingpricesofthefinishedproduct,subjecttopriceregulations
.andmarketconditions .Anincrease inthesellingpriceofmaizestarchpro­
ductswouldenablethepotatostarchproducer toraisehissellingpricesof
'competing *products insympathy' sothattheincomeofthepotatostarchindustry
andasaresultthatofthepotatogrowers-couldalsobeincreased .
However,thiswouldbeeasiertoachieveinoutlets wherepotatostarchor
derivatives wereincompetition witmaizeorothercerealstarches (i.e.in,
thehumanfoodsector)thaninsituations wherethemaincompetition came
.frompetro-chemi'cal /synthetics .Itises'timatedthatabout80%ofthe
potatostarchindustry'soutputgoestothetechnical ^sector,sothatit
isparticularly vulnerable inthisrespect.Thepossibilities ofextending
itsactivities inthehumanfood'sectorhave,ofcourse,tosomeextent,
beenrestricted bytherecentmeasures takenonisoglucose .
Inconsidering thequestion ofmaintaining abalancebetweenpotatostarch
andmaizestarchandwithchemicalsynthetics ,sightshouldnotbelostof
theotherunfavourable factorsaffecting thepotatosector.Unlikethemaize
starch(andwheatandricestarch)industry ,whichhastheadvantage of
flexibility andisfreetopurchaseitsrawmaterialatanytimethroughout
theyear,thepotatostarchindustry whichprocesses foronly3monthsofthe
year,normallyentehsintocontracts withgrowersbeforeprocessing hasstarted

Torthewholeofitsseasonssupply.Thisrestrictedprocessing seasonmeans
thatitsfixedcostsareconcentrated overamuchshorterperiodthanisthe
caseforcerealstarches.Theprocessingplantsarefrequently ownedbyfar­
mersco-operatives andtheirgeneralcapitalsituationislessfavourable
thanelsewhere.Moreover,becauseitisentirelydependentonCommunity,
■sourcesforitsrawmaterialitismoreseriouslyaffectedbyharvestfluctu­
ations.Thiswasparticularly noticeableintheautumnof1976-when,follow­
ingthepoorpotatocrop,broughtaboutbyexceptionally dryweather,the
industryfounditselfunabletoobtainsufficient suppliesandwasthusforced
tooperatewellbelowcapacity.Theindustryisalsoburdenedwiththeheavy
costsofanit-pollutionsafeguards andisalsomorevulnerabletomarket
fluctuations thanthewheatormaizestarchindustries whereinspiteofcom­
petitionatworldmarketpricestherangeofvaluableby-products helpsto
playastabilizing role.Finally,itshouldberecognizedthattheindustry
performsausefulbufferfunctionontheCommunity'spotatomarket,absorbing
surplussupplieswhenpotatoesareplentiful andrestricting processing and
thusboostingsuppliesofpotatoesforconsumption intimesofshortage.
Whenconsidering theincomeofthestarchpotatogrower,itshouldalsobe-borne
inmindthatsincetheearly1960'swhentherefundsystemwasintroduced,the
areasowntopotatoesasawholewithintheCommunityhasgraduallydeclined.
By1974,forexample,thetotalareasownwasonly50%ofthatin1961/65.
Whilstincreasedyieldhasgonesomewaytocounteractthistrend,potatopro-•
ductionhasalsofallen.byabout25%overthesameperiod.Thisfallinproduc­
tionhas^putthepotatogrowerinastrongerpositionasaseller.Currentcon­
ditionshavealsomeantthatamoveintopotatoesforhumanconsumption has
becomeamoreattractivealternative' .Butinasituationwhereconsumption
potatoesbecamehighlyattractive,ttherecouldbeadangerthattheacreagesown
tostarchpotatoescoulddeclinetothe.extentthattheindustrywasmoreor
lesspermanently unabletofindtheneces'saryquantitiesofpotatoesonthe
i(*
Communitymarket.
<
Suppression ofProduction RefundsforMaizeGroatsandBrokenRiceforBrewing
AswasexplainedearlierUin paragraph 8),refundsonmaizegroatsandbroken
'riceintendedforbrewingwereabolishedfromthestartofthe1975/76market­
« · Γ ·
ingyear.However,asmaizestarchcanbesubstitutedformaizegroatsinthe
brewingprocesswithonlyminortechnicalmodification andasrefundscontinued
tobepaidonmaizestarch-regardlessofitsenduse-anumberof.brewers
whohadpreviously usedgroatscouldfinditadvantageous tomoveovertostarch
inspiteofinferiorhandlingcharacteristics andthetechnicalmodifications
necessaryinthebrewery.Notwithstanding CommissionproposalstotheCouncil,
theseaidshaveno'tbeenreintroduced .TheEuropeanParLian^ent hasalsotwice

-13-
declinedtoacceptproposalsfor_their^reintroduction.^AtJthe sametime,it
♦-flas..notPr°vedpossibletointroduceaneffectivecontrol_s/.stem_which.
-wasnotprohibitively costlytopreventstarchusedinbrewingfrom .
benefitting fromtherefund.
Somedistortion,therefore,couldcontinuetoapplybetweenthe'products in
question.
34.RelativeCompetivity ofGlucoseandLiquidSugar.
Inmostareasglucosesyrup,astarchderivedproduct,andliquidsugarderived
frombeetorcanearenotindirectcompetition onewiththeother.Astradiw
«tionalglucoseisalesspowerfulsweetenerthanliquidsugar,thetwoproducts
tendtocomplement oneanotherratherthancompete.However,inasituation "
withoutrefundsitispossiblethatinsomeofitsapplications glucosesyrup
couldlosegroundtoliquidsugar.Thiswillnotbethecaseinallapplications
sinceglucosesyruppossesses anumberoftechnicaladvantagesintonfectionery,
jamsetc.Nevertheless ,insituations wheresuchtechnicaladvantageisonly
slight,purchasingdecisionsbyusersmaytendtobemoreheavilyinfluenced
bypricefactors.Itmaywellbethatmixturesofthetwoproductsandof
isoglucosewillbeincreasingly used.
35.•Competitive CostsofRawMaterials used
»
ASisexplainedmorefullyinthedescriptive Annex,theraaisestarch
industryisbyfarthelargestoneinreceiptoftheproductionaid.
Maizeisthustherawmaterialmostlyused.Itspreponderance canbelargely
■attributedtothreemainfactors.First,itsrelativecheapness,generally
speaking,comparedwithwheat,second-andthisislinkedtoth^firstfactor-
itsstarchyield;1tonofmaizenormally ^producesabout620kgofstarch,
whereas,theSamequantityofwheatwillproduceonly450kgofstarchandthird,
thewiderrangeandvalueofitsby-products .j
»
36.IncomparingthecostsofthetwocerealsusedinCommunitystarchproduction,
ithastobekeptinmindthatwhilstthemaizestarchindustryimportstwo-thirds
its'supplies andisthuslargelysubjecttothedirecteffectsofthe
thresholdprice,thewheatstarchindustrysuppliesitselfentirelyonthe
internalmarketatpriceswhicharegenerallybelowthethreshold.Ifitis
assumedthatforthepresentmarketingyear1976/1977wheatprifcesonthe
internalmafketwillbeonaverageabout10ua/tbelowthethresholdprice,
thecomparitive supplypricesofthetwoproductsmaybeestimatedasfollows:
1îM;.î S».

14
Estimated Average SupplyPriceforMaizeandWheat1976/77
'Average Threshold /MarketPrice
».Production Refund
^Estimated AverageSupplyPriceMaize
143ua/t
14ua/tWheat
147*ua/t
20ua/t.
129ua/t 127ua/t
*AverageThreshold Pricereduceduy10ua/t.
Thus,evenduringaperiodofrelatively highpricesontheCommunity's
internal wheatmarket,thereislittledifference betweentheaverage
wheatsupplypriceandthatformaize.Thisequality ofsupplypriceswas
theposition whenproduction refundswereintroduced inthe1960's.
Anydifference thereisgives,ifanything,aslightadvantage towheat.
Itcouldbearguedthatthewheatstarchindustry needssomething better
thanaveragewheatino^rdertoobtainwheatglutenandsopayssomething
overaverageprices.Thismaywellbesobutatthesametimethereduction
of10ua/tmadeinthethreshold pricetoarriveatanestimated internal
marketpriceisprobably understated .Thereis,ofcourse,astherealways
hasbeen,adifference betweenthecostsofthequantities ofeachproduct
requiredfor1tonofstarch,sinceaswasexplained earlier,morewheat
.thanmaizeisrequiredtoproduce 1tonofstarch.Thevalueofwheatglutenas
•aproductofthewheatstarchproduction equationcannotbeignored.
,37iWhether-the advantage ofoneproductvisavistheotherwouldchangein
asituation withoutrefundswilldependtoalargeextentondecisions taken
inthefutureontheistitutional pricesforbothproducts andwhethersuch
decisions altertherelativities betweenthoseproducts..
Itwillalsodependontheextenttowhichthewheatstarchmanufacturers ,:
areabletoU9elowerproteinwheatfor»starch production .Inanyevent,
anychangesmadewouldneedtobesuchthattheindigenous productwasnot
disadvantaged .Therecouldpossiblybeacasefor^encouraging theuseof
wheatforstarchsince,innormalmarketconditions,production refunds
couldrepresent acheapermethodofdisposing ofCommunity wheatthan
*exportrefunds.Further,theproduction ofglutenasp^rtofthewheat
starchmanufacturing process -enablesCommunity millerstouselessNorth
American Strongwheatintheirbreadmakinggrist.However,bearinginmind
theworkforce andcapitalemploy.ed carewouldalsohavetobetaken,soas
notundulydisadvantage theestablished production ofstarchfrommaize.
WhilstitisthecasethattheCommunity isdeficient inmaize,andasa
resulttheStarchindustrynormally needstoimport2to21/2milliontons
eachyear^ddropinmaizeimportsforstarchmanufafc^uta!' w<Juldnotnecessarily

-15
„.-resultinanetgaintotheCommunity'soverallbatancesheet.
,"■"Indrawingupsuchanoverallbalance,accountwouldneedtobetakenof
*-
.theby-products ofstarchproduction (eg.maizeoil,maizegluten,oil
cake)allofwhichwouldneedtobeimported/largelyfreeoflevy,inoneform
oranotheriftherewereadeclineintheamountofmaizeprocessed into-starch.
38.Effects onCommonAgriculture Policy
Finally,itisnecessary toconsiderthequestion ofproduction refundsin
thecontextoftheCommonAgriculture Policyasawholeandnotmerelyfrom
thenarrower perspectives ofthestarchsector. .
«
Oneofthefirstimpressions toemergefromsuchanoverallviewisthe
industry'smuchstrongeraffinity withthemanufacturing andprocessing
industries thanwiththeagricultural sectoringeneral *Thetechnical ,
sophistication ofthestarchindustry,andparticularly thatofmaize .
Starchmanufacture ,whichismorestonglydeveloped thanofothercereal
processors suchasflourmillersandmsltsters andevenofsugarrefining,
r.isastrongfactorinthisrespect.
•Futhermore,unliketheindustries mentioned above,thestarchindustry
*withtheexception ofpotatostarch,isnotthesoleormajoroutletfor
1theCommunity'sgrowersoftherawmaterials concerned *Forexample,out
.4'ofatotalCommunity wheatcropofaround35mio.t.only160000t
(-0,5%isprocessed intostarch).
■ • .
Alarqerproportion oftheindigenous maizecropisusedbutonlyabout7%,orabout
1mio.tons.Nevertheless ,thestarchindi+stryrepresents afairlyvaluableoutlet .
formaizegrowersinSouthWestFrance.'However,astheCommunity is
deficient inmaize,andnormally importsabout50Xofitsrequirements ,
anymaizenottakenupforstarchwouldreadilyfine!anoutletelsewhere .
Itisthusprobably thecasethatifstarchproduction weretodecline,in
theeventoftherebeingnoorsubstantially reducedrefunds,theeffecton
Community agriculture -apartpossibly frompotatogrowers-wouldbebarely
discernible .ThesamewouldnotbethecaseifCommunity maltsters,for
example,weretotakeuplessbarley,inthecaseofstarchpotatogrowers,
asisexplained inparagraph 29,.theabsenceofarefundneednotnecessarily
runcountertothegrowers®interests sincethelattercould..

benefitfromthepotatostarchpricemovingupinsympathy withmaize
starchbutprobably onlyinnontechnical areas.,
Itisalsothecasethatgrowerscould,inmostareas6fproduction ,move
intopotatoes forhumanconsumption orintoothercrops.However >ifthis
movebecametoopronounced therewouldbeadangerofthecomplete disappea-
raneeofstarchpotatoes .Itwouldbeinthestarchmanufacturers interest
toensureasfaraspossiblethatthisdidnotoccur.Although onceagain
theirabilitytodothiswouldbelimitedbythepresence ofsynthetic
substitutes .Itwouldthusappeartobethecasethatwhilstthestarch
production refundsystem'scontribution towardstheaimsofArticle 39
oftheTreatyissomewhatlimitedifrthemaize,wheat(andindeed„
brokenrice)sectorsitmakesasignificant contribution inthepotatosector.
Apartfrompotatostarch,itwouldthusseemtobethecasethatsuchproblems
asmayoccurthrough areduction orsuppression intheproduction refundare
perhapsmorebywayofbeingindustrial and/orsocialratherthanagricultural
Nevertheless ,thiswouldnotmaketheproblems anylessseriousanddoesnot
absolvetheCommunity fromseekingsolutions .

PARTIII
CONCLUSIONS
Itisapparentthatdevelopments overrecentyearshavecreatedasituation
wheresomeofthemainreasonsfortheintroduction ofproduction refunds
nolongerapplytothesameextent.Itisalsothecasethatpaymentof"the
refunds-substantially onaimported rawmaterial-constitutes aheavy
chargeonFEOGAfundsandthatParliament hastakentheviewthatsuch
paymentshouldbediscontinued wheremarketconditions permit.Furthermore ,
itisdoubtful whethersuppression oftherefundwouldhaveasignificant
inflationary effectonretailfoodpricesinMemberStatesandfinallythe_
production refundsystemdoesnot,exceptperhapsinthecaseofpotato
starch,makeaverysignificant contribution tooutLets .for
community production .Therewouldthusseemtobeanumber
offactorsleadingtotheconclusion thatthelongtermpreservation of
thesysteminitspresentformisnolongereconomically justified .
Ontheotherhand,duepartlytotheexistence ofthesystemandtheexpecta­
tionthatproduction refundswouldcontinuetobeavailable,substantial
Capitalhasbeeninvestedinan.industry whichnowdirectly employsa'
workforce ofabout30000andabout20000potatofarmerslooktothepotatostarch
industryfor anoutletfortheircrop.Furthermore ,thestarchindustryisthemain
processing industrysubjecttocommonmarketarrangements andwhich,at
thesametime,hastocompetewithanindustryoutside .theagricultural
sectorandthusfreetobuyitsrawmaterials atworldprices.
Ontheotherhand,italsocompetes inthehumanandanimalfoodsectors
withotheragricultural processing industries mostofwhichar^intheirturn,
«alsosubjecttotheeffectsofcommonmarketarrangements .Thus,whilst
thesuppression oftherefundwouldprobably notprevent ,theindustry from
maintaining itsposition inthehumanandanimalfoodsectors-indeedthere
isnoevidencetoshowthatthesubstantial cutsin1therefundalready
madehavecausedanyexcessive 'difficulties inthisrespect (exceptinthecase
ofincreased importsofproductssubjecteithertolowornillevies).The
samewouldnotbethecaseasregards .non-food (ie.technical )outlets.
Iftheindustry weretoloosethesemarkets,whichithasinanumberof
casesretaineduntilnowagainststrongcompetition frompetro-chemical
synthetics onlybyabsorbing the.recentincreases insupplyprices,'employment
(inthestarchindustry andinagriculture )andinvestment woul<jbeputat
seriousriskandasituation mightarisewhereonlythelargecompanies
frequentlyorganisedonaninternational basiswereabletosurvive.

\-18-
Furthermore ,evenifitwerefeasibletoincreasesellingpricesinthis'
sectoritwouldprobablydiscourage theestablishment ortheexpansion of
userindustries intheCommunity sincetheywouldfinditincreasingly '.■
difficult tocompetewithsimilarindustries basedinthirdcountries .
Itisalsoprobablethat,withdeclining outletsandsupport,theindustry
wouldbeobligedtodrastically cutbackitsresearch programmes sothat
opportunities fortechnical innovation andprogress wouldbelostto
countries outsidetheCommunity .Thus,whilsttherewouldnotseemto
beaneconomic casefortotallymaintaining thesysteminitspresent
form,therearestrongarguments forenablingthetechnical products of..
thestarchindustrytocompetewithtrfroseofthepetro-chemical industry.
Todosocouldcontribute towardstheconservation ofworldoilsupplies
ar\cKtendtobenefittheindigenous ratherthantheimported rawmaterialalso
•Itwouldjmakesignificant savingsforFEOGA.(about30mio.u.a.atcurrent
rates).
41.Topayarefundortogivesupportinsomeotherway,on.aselective basis
couldclearlycausesomeadministrative problems attheoutsetbutthese
neednotperhapsbeascomplicated asmightappearsinceitisunderstood
thatasimilardistinction isalready madeincertain memberstatesfor
'TVApurposes andofcourse,onaminorscale,adistinction isalready
madebetweenstarchintendedforisoglucose production andotherstarches.
'Itisproposedtherefore tomaintainproduction refimdsforstarchused
fornonfoodapplications andtosuppressaidonstarchusedinthehuman
andanimalfoodsectors.
• -' -;^
'42.However,itshouldbeborneinmindtfi^tasdirectr.esultofCommunity
legislation ,andnotthroughanychangesinmarketconditions,thestarch :
industry hasseenthepricesofitsbasicrawmatesrials increasesine?
1974byalmost90%inthecaseofmaizeandbyjustover100%inthe
caseofwheat.Theseincreases havecomeaboutthroughbothhigherthreshold
«pricesand,atthesametime,lowerproduction refunds.Itis
impossible foranyindustrytopassonand/orabsorbincreases ofthis
magnitude initsinputcostsoversuchashortspaceoftime.(Inaddition
insomeMemberStatesnationalpricecontrollegislation hasmadeit
extremelydifficult forindustrytopassonthesesupplementary charges
totheconsumer).Consequently ,totalandsuddensuppression oftheseaids
inthefoodsectorwouldbeasdifficult tojustifyCas longtermpreservation )
andthereislit'tledoubtthatsomedamagecouldbecaused ,,tothefirms
» t*
concerned .

M»JQ
Furthermore,investment andotherfinancialandmanagementdecisionshaveto
betakenaconsiderable periodinadvance.Itwouldalsobedifficultto-
introduceaselectivesystemas-proposedtogetherwiththenecessaryadmini­
strativecontrolsbythestartofthenextcropyearon1August1977.
Inthesecircumstances ,therefore,whilst'itisproposedthatarefundshould
bemaintainedforindustrialstarchataleveltobedecidedinduecourse,
itisproposedthataidshouldbephasedoutgraduallyoveraperiodofthree
yearsstartingasfromAugust1978along^thefollowinglinesfornonindustrial
applications : «
1977/78:Statusquo
1978/79:75%ofratefor1977/78
1979/80:50%ofratefor1977/7fi
1980/81:25%ofratefor1977/78
1981/82:0%
However,theCommissionwillkeepunderclosesurveillance thesituationin'the
industryconcernedandby31December1979willsubmitareporttotheCouncil
.ontheconsequences ofthisphasingoutandanyproblemswhichmayarise;in
*helightofthatreporttheCommissionwill,ifnecessary,submitfurther
proposals. .~;\v ••

-20-
ANNEXA
I*mThe^ojmmunitj£Jt^rch_Indust rj£
.• •
1.InthecontextofthisreporttheCommunity starchindustryistakento
.meanmanufacturers inthenineMemberStatesofthefollowing ;
MaizeStarch
WheatStarch
ceStarch * .
PotatoStarch
Together,theseindustries produceabout3mio.tonsofstarchayear
whichrepresents about20%oftotalworldstarchproduction .
«
2.Production refundsareonlyavailable forthemanufacture oftheabove
mentioned starches butstarchcan,ofcourse,beobtained fromamuchwider
rangeofproducts.Itisapolysaccharide presentinmostplantsbutparti­
cularlyincereals andtubers.Itisalsopresent,forexample,inpeas
andbeansandispresenteveninwood.However,themajorsourcebothin
theCommunity andovertheworkdgenerally,ismaize.Inadditiontothe-
Community MaizeisalsothemajorsourceintheUSA,JapanandCanada,for
example.WheattakesfirstplaceinAustralia andNewZealand andmanioc
rootinThailand .
'3.Thevitaldetermining factorsinthechoiceofrawmaterial arefirst,its
,avaflabil+tyandpriceandsecond,andequallyimportant/thevalueof
theby-products obtainable . ...
' . 's'"
4.Maizeholdsaconsiderable advantage inthislatterrespectwithawide
rangeofvaluableby-products including maizeoil,maizeglutenandmaize
glutenfeed*).'Wheatstarchproduction,'ontheotherhand,givesriseto-
onlyoneby-product ofimportance -wheatgluten-butfrequently this
particular by-product iqofgreatermarketvaluethan'thestarchitself.
Theby-products resulting fromthemanufacture ofriceandpotatostarch
havearelatively lowvalue.
5.Theprocesses bywhichstarchfsobtainedinthedifferent sectorsvary
considerably ,butallhavethesameobjective-toseparatethestarch
fromtheotherconstituents presentintherawmaterial.Thedifferences
inprocessing tendtoarise,first,fromthevariations intheproportion
ofstarchcontained ineachrawmaterial and,second,fromtheeasewith
*)Onaverage^1toAofmaizeshouldproduceabout ,«■/.■*.», ;
621kgstarch,27kgmaizeoil,200kgmaizeglutenfeed,40kg
oilcake,50kgmaizegluten,22kgotherproducts and40kg
production loss/moisture.

6.MaîzeStarch
TheMaizeStarchIndustryisveryconcentrated ,production beingLimited
-toabout15to20plantsinsixoftheMemberStates,
■Intermsof-volume
andvalueofgoodsproduced (starchandstarchbasedproducts )itconstitutes
.byfarthemostimportant sectionoftheCommunity starchindustry asa
whole. *
7.Themanufacturing processinvolved inextracting maizestarchisrelatively
lengthyandinvolves severalstagesstarting withasoakingorsteeping ofthe
grainforaboutAOhoursinwateracidulated withsulphurdioxideinorder
tosoftenthegrain.By-products areseparated atsubsequent stagesinthe
processuntilastarchslurryisobtained whichiseitherdriedtoproduce
drystarchortransferred directtotheappropriate plantfortheproduction
Ofglucoseormodifiedstarch.
8£Whilstitistheprocessing ofmaizeintostarchwhichcreatestheentitlement
totherefund,inmanycasesproduction processes gobeyondthisstage.
Themaizestarchindustry produces awiderangeofproducts andby-products
'including glucose,isoglucose ,dextrose,glues,dressings andglazings for
'paperandtextiles,glutenandmaizeoil.Theindustry'soutletsthuscover
awiderangeofusers:paperindustry,pharmaceuticals ,brewing,foundries,
plastixs,textiles,prepared foods(jamsandpreserves,soups,babyfoods
etc),confectionery ,softdrinks,biscuits andanimalfeedingstuff s.It
isestimated tahtthemaizestarchindustry'stotaloutput1sdivided:,
60%foodpurposes
40%nonfood
Inthisestimation thetermfooddoesrtotincludepharmaceuticals oranimal
fefed.Inaddition,anumberoffirmsintheindustryalsomakearangeof
starchbasedfinishedgroceryproducts. '.
9
.**~1
y.WheatStarch
*ComparedwiththeCommunity'smaize$tarchindustry,th/fwheat.starch
sectorisrelatively small,-producing onlyabout100000tonsofstarch
ayearfromabout200000tonsofwheat.Therearewheatstarchplants
Inall<heMemberStatesexcept .DenmarkandLuxembourg .. .'

10.Theprocessbywhichstarchisobtained fromwheatdiffersconsiderably
"fromthatforstarchfrommaize.Asitistheendosperm whichisthemost
important partofthewheatgraininthecontextofstarchextraction,
*andsinceflourmillingseparates theendosperm fromtheouterhusk.anB germ--
v'wheatstarchmanufacturers tendtoprefertousewheatflourratherthan
thegrain.However,sinceflourisaprocessed productwiththebransetc.
alreadyseparated,theonlyby-product normally obtained fromwheatstarch
manufacture (processed fromflour)iswheatgluten?Wheatglutencanbe
producedinvitalordevitalised form.Theformerisprepared fromwheat
flourofbreadmaking qualitybyadrying ,processandiscommonly addedto""
«
lowproteinflourtoimproveitsbakingcharacteristics .Itisalsoused
inbreakfast cereals,pastaandpetfoods andcanoftenbesoldatprices
inexcessofthoseobtainable forthestarchitself.Itsuseintexturised
vegetable proteinisincreasing strongly.
Theactualprocessforobtaining starchnormallystartswiththeflour ,
beingmixedwithwatertoformadough.Afterresting,separation ofthe
starchiseffected bywashinginanextractor .Atthesamestagethegluten "
isalsoseparated .Boththestarchandtheglutenarethendriedseparately .
11."Wheatstarchanditsderivatives areusedlikemaizestarchinawiderange
4ofOutlets *•bothfoodandindustrial butprimarily thelatter.^
I1*• Mr12.PotatoStarch
TheCommunity potatostarchindustryisevenmoreconcentrated thanthat
• »
•ofmaizestarchbutwithanappreciably smallertotaloutput-about0.5to
•0.9miotonsofstarchfromabout3to5miotonsofCommunity grownpotatoes
comparedwithamaizestarchoutputofafbout2mio.tons..Itisproducedin
»
only^4MemberStates:theNetherlands (about65%ofCommunityproduction )
France,GermanyandDenmark.Plantsarefrequently runonacooperative basis.
v
13.Aidswereavailabletopotatostarchmanufacturers and/ortostarchpotato
^growersbeforetheintroduction ofthe-CAP.Oneoftheprimereasonsfor
thiswastheneedtoensureareasonabCe -standardoflivingforpotatogrowers
incertainareas.Thiswasparticularly thecaseintheNetherlands wherethe
SoilinlargeareasofNorthEastHollandissuchthatthereisonlyareduced
possibility ofgrowingcropsotherthanstarchpotatoes.-.Thereareabout20000
starchpotatogrowersintheCommunity .

-23-
14.Theproduction refundispaidtothestarchmanufacturer ,andunlike
theotherstarches therefundispaidonthestarchandnotontheraw
material,onlyifaminimumpricehasbeenpaidtothegrower.- •.
Thetotalreturnperhectaretothegrower,whichincludesthe-production'
refund,can,inregionswherealternative cropsarefeasible,affectthe
r-relative acreages sowntopotatoes (forstarchandhumanconsumption ),
sugarbeetorcereals.
\.
15.Theprocess bywhichstarchisobtained frompotatoesisrelatively
simplewhencompared withthatformaizeorevenwheatstarch.After
washing,thepotatoes arereducedto-«slurrybyadisintegrator .The
slurryismixedwithwaterandsubequently passedthroughscreensand
separators afterwhichthestarchisdried.Theby-product oftheprocess
hasarelatively lowvalueandisusedmainlyascattlefeedproteinor
asfertiliser .Theprocessitselfcallsforverylargequantities ofwater
andthuspresents seriousproblems regarding effluent.
16.Potatostarchfindsitsoutletsalmostentirely intheindustrial field.*
17.RiceStarch
Thisisbyfarthesmallestofthesectorsproducing onlyabout7000
tonsofstarchfromsomething over10000tonsofbrokenriceinonly
fouroftheMemberStates(Belgium,Italy,GermanyandtheNetherlands ).
.'-Itisusedexlcusively inthehumanfoodsector(laraelyinbabyfood).
• ,' * ••»
4 ·"' '·''
• » .A

AUflEXB
■'*-StarchProduction Refunds1975A976-Quantities onwhichrefund_was_paid
'000i
HatesofRefundi1975/1976.
Kaize»•' 10ua/1
Wheat! 16.30ua/t
PotatoStarch»16.10ua/t(KaizeRefundx1.6l)
BrokenRicel 12.30ua/t.

-25-
ANNEX
TABLEI
Development ofSupplyPrices,StarchProduction Refunds.ThresholdPricesandWorldMarketPricesforMAIZE(1967/68-1976/77)
u'a/t
SupplyPrice .WorldPrice ThresholdPriceRefund"
1967/68
;1968/69
1969/70
1970/71
1971/72
19*2/73
1973/74
1974/75
1975/76
1976/77IJuly67
1August63
1August69■
August70
August71
August72
January73
June73
August73
January74
June74
August74
Ootober74
January75
Aptil75
JuAo75
August75
January76
June76
August76
January77
June7768,00
63,00
'63,00
68,00
68,00.
66,00
68,00
*63,00
68,00
68,00
'.68,00
82,00
87,45
'67,45
103,10
103,10
113,40*
120,40*
127,40«
■121,10*
128,20*
135,30"

-26-
TABLEII
Development ofSupplyPrices,StarchProduction Refunds fThreshold
PricesandWorldMarketPricesforYJKEAT(1967/66–1976/77)
SupplyPrice WorldPrice Threshold Priceua/t
Production Refund
X–elcr\\tJtc<
. ■»l

TABLEIII
Development ofSupplyPrices,StarchProduction Refunds,Threshold
PricesandWorldMarketPricesforBROKENRICB(1967/68-1976/77)

-n-
AFNEXD■•«
,'..*■!••»*
*•\i
Λ ·»
RIcea7E0GAfGuarantee -Seotion
-Expenditure intheCerealsandRiceSectors
mio.u.l
1973 1974 1975 1976 .1977
•• '.t
\

asruxxe
PotatoStarohProduction intheCommunity 1967–1976
Qm•OOOtons
Itwillbeseenthatafterincreasing stronglyintheearly70*s#in197"
Comamnity production fell"backtothelevelobtaining in1967*Thisoovers
videvariations indifferent MemberStates*IntheNetherlands ,forexample
production rosefromabout350.000tonsin1967about640*000tonsin
1972andhassincefallentoabout360*000tons*InPranoe,ontheother
hand*production in1976wasonlyabout60%ofthe19&7figure*