Opinion of the European Economic and Social Committee on the "Proposal for a Council Regulation on the common organisation of the market in dried fodder for the marketing years 2004/2005 to 2007/2008"

(COM(2003) 23 final - 2003/0010 (CNS))

(2003/C 208/11)

On 10 February 2003 the Council decided to consult the European Economic and Social Committee, under Article 37 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Agriculture, Rural Development and the Environment was responsible for preparing the Committee's work on the subject on 25 April 2003. The rapporteur was Mr Wilms.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and Social Committee adopted the following opinion by 102 votes, with 18 abstentions.

1. Summary of the Commission proposal

1.1. The Commission proposal provides for the complete phasing out of support for dried fodder production and the budget for the COM in dried fodder over the four-year period from 2004. The Commission proposes an initial budget cut of 55 % rising to 100 % in 2009, together with the inclusion of dried fodder in the single payment system, entailing the abolition of support measures for the sector. Aid to the industry would be progressively reduced from EUR 33/t in the 2004/2005 marketing year to EUR 0/t in 2007/2008, and would be granted without distinction between artificially and naturally dried product. Half of the present budget would be divided between farmers as part of the new single farm payment.

2. General comments

2.1. The EESC welcomes the fact that the Commission is addressing the common organisation of the market in dried fodder: "since the last two Common Agricultural Policy (CAP) reforms and the World Trade Organisation (WTO) agreements, the European Union's degree of self-sufficiency in plant proteins has again fallen, last year [2001] sinking to below 25 %. This constantly deteriorating situation does raise the question of Europe's dependence on imports, entailing risks for European livestock farmers' supplies of plant proteins"(1).

2.2. In its opinion of January 2002, the EESC referred to the importance of plant proteins in animal feed and noted that a gap had opened up between the European Union's requirements in plant proteins and its production potential(2). In its work on plant proteins, the Committee also emphasised that despite the foreseeable increase in demand within the EU, acreage is currently falling and therefore dependence on imports is increasing(3).

2.3. Current regulations for dried fodder aid(4) under the COM for producer countries, together with a series of favourable weather and soil conditions, have enabled an economy based on alfalfa to develop, whose main players (farmers and industries) are located in rural areas and which provides more than 15000 jobs across the EU. It also enables a high-quality vegetable protein to be obtained, helping to offset the EU's huge shortfall in such substances. The climate in some areas of southern Europe has made possible major energy savings per unit of product due to the relatively low humidity levels of field fodder following harvesting, thanks to techniques such as pre-drying. These savings are additional to those produced by alfalfa as a permanent crop requiring little tillage or nitrogen-based fertilisers. It is important to point out that thanks to countries such as Spain, the Community's maximum guaranteed area has been covered, ensuring continuity. That said, suitable reforms should be undertaken in order to harness the potential energy savings brought about by natural conditions in southern Europe, without thereby having to jeopardise the beneficial effects of this type of farming.

2.4. In order to harness the EU's full production potential and make best use of the budget earmarked for the sector, the policy of joint responsibility in calculating excess of maximum guaranteed quantities should continue. Member States which exceed their individual national quantities should only be penalised when the Community's overall maximum guaranteed quantity is exceeded.

3. Possible consequences of changes to the organisation of the dried fodder market

3.1. Energy consumption in production

3.1.1. From an ecological standpoint, reducing the two aid rates based on the drying process to a single rate is clearly a positive measure. When fodder is machine-dried, 40 % of total production costs are heat energy costs. Only 8 % of drying plants in the EU use sustainable fuels, while 92 % are powered by fossil fuels. Our health is affected by classic smog symptoms due to the emission of air pollutants, although this effect is mitigated in rural areas by the lower concentration of pollutants. Moreover, these emissions contribute to the greenhouse effect, which causes climate change. Fodder processing aid should therefore be refocused in order to boost energy savings and promote the replacement of fossil fuels with renewable energy sources, as is already occurring to a significant extent with artificial evaporation. The odour emissions given off by fodder dehydration also cause problems. Moreover, in some Member States the use of irrigation in dried fodder production is both ecologically and economically problematic.

3.2. Employment consequences

3.2.1. Throughout Europe, approximately 15000 people are employed full-time in drying plants and related upstream and downstream industries. The number employed in the actual drying plants must therefore be lower. Processors usually sign contracts with producers, thereby providing a guarantee for both production and processing.

3.2.2. European dried fodder producers fear that the 350 or so production plants will have to cease their operations if they no longer receive enough raw materials under the new regulations. In future it will principally be the contract negotiations which determine whether processing plants are able to operate at full capacity and thus pay a competitive price for raw materials. Entrepreneurs need to be supported in developing the skills required to adapt their business to changing conditions(5).

3.3. Ecological consequences

3.3.1. Farmers must be able to earn a reasonable income from the cultivation of plants for dried fodder production. This is the only way to safeguard the positive ecological effects of fodder crop cultivation. Year round crop cover prevents soil erosion, and in many regions of Europe means that farming can continue in disadvantaged areas on market terms, which strengthens the social situation of small farms. In its opinion on plant proteins the Committee clearly indicated that cultivation of fodder plants was of great importance for protecting soil structure and for the sustainable development of farming(6). The cultivation of fodder plants plays an important role in environmental protection and the balance of activities in rural areas(7). It must continue to fulfil these functions in the future.

3.4. The world market

3.4.1. The world market will remain available for trade in plant protein crops. The Committee has previously explained that the objective need not be to cover total demand by production within the Community(8). It should be pointed out that imported soya beans account for some 70 % of the plant protein crops used for animal feed in the EU. However, Community production should be the mainstay of dried fodder production; as things stand at present, however, this can be achieved only if a system of financial aid is provided. There are more questions marks over high ratios of imported dried fodder and the presence of genetically modified organisms than, for instance, locally produced dried fodder.

4. Dried fodder production in the Community: towards sustainable production

4.1. In the financial year 2001/2002, 4800000 tonnes of dried fodder were produced(9); the entire fodder sector in the EU produced 200000000 tonnes. Production quantities in individual States vary greatly according to climate(10).

4.2. Artificial drying of green fodder in particular has been criticised in the past(11). The EU should oblige the Member States to introduce official animal feed checks which would improve the effectiveness of the control measures and allow stricter implementing measures. Assistance and cooperation between administrations should be made compulsory. In addition, financing arrangements must be introduced for measures to improve animal fodder safety, with the frequency of the checks being determined by the risk. The level of risk involved in dried fodder production is high due to the numerous abuses possible in the thermal process. After all, animal feed safety is synonymous with food safety.

4.3. In future, the Community should only support production methods that are committed to social, economic and ecologic sustainability. Dried fodder producers should therefore review the energy efficiency and safety of their facilities.

4.4. In the last 20 years, producers of machine-dried fodder have been able to reduce their energy input by 50 %(12). This process must continue in order to guarantee sustainable dried fodder production.

5. Measures to implement sustainable dried fodder production: EESC demands

5.1. The current cost structure of drying plants depends on substantial Community support for production (see point 1). The Committee welcomes the new balance in the aid proposed for the sector as it accommodates both producers and processors.

5.2. Production plants for machine-dried fodder must be able to maintain production. Similarly, Community plant protein crop cultivation must be safeguarded. This will ensure the relative independence of European farming from world market production.

5.3. Farms can only safeguard production if drying plants guarantee to take what they produce. This is the only way European farming can make sustainable use of the important ecological effects of plant protein cultivation.

5.4. In order to receive further aid, processors must review the energy efficiency of their facilities and install energy saving technology; reduced energy costs should create competitive plants. The consequences this will have on the environment and on employment are clear.

5.5. The installation of environmentally-friendly heating and processing technology in drying plants will create and maintain jobs, both directly and in related sectors. In this respect the processors should be reminded of their social responsibility, which is particularly relevant when they are making their own economic decisions.

5.6. The EU should make Member States' approval for drying plants' applications for aid dependent upon, amongst other things, job security and ecological criteria.

5.7. The EESC suggests the establishment of an aid regime for drying plants that rewards low energy consumption. This means that processors would only be eligible for aid when energy use in production is as low as technically possible. The Committee therefore urges the Commission to grant enterprises a transition phase, within which they can modify their technology. Processors could use their innovative potential to cut the use of fossil fuels. Such a transition phase could be based on the initially planned phase of degressive aid until 2008. Enterprises are, however, only likely to consider making such modifications if they can assume that an aid system geared to promoting environmentally sustainable practices will continue to exist for a relatively long period of time. If the aid system lasts only four years, most enterprises will cease production, rather than modify their production.

5.8. Older plants that operate on high energy input should no longer receive aid after the transition phase. There should be no aid for environmentally damaging technologies after the transition phase.

5.9. The aid regime should particularly benefit those processors that forgo the use of fossil fuels in favour of renewable energy sources. Aid should also take account of mixed energy usage (e.g. 2/3 natural gas and 1/3 wind power) and reward the renewable energy portion with a higher processing payment.

5.10. In order to support such sustainable methods of dried fodder production, the planned degressive reduction of support payments to zero should be replaced by support arrangements which reward low energy consumption.

5.11. The recommended regime would not ensure that the dried fodder sector remains a structural factor in rural areas, because the possible savings generated by removing aid for both artificially and naturally dried fodder would not be enough to offset the loss of income to the industry while maintaining profitable prices for farmers. The COM reform provides an opportunity to improve the Community's supply of vegetable protein, environmental balance and the balance between the players in the sector, while establishing a sustainable legislative framework. This demands an effort on the part of all concerned, which must be rewarded and encouraged by Common Agricultural Policy instruments. All those concerned would be obliged to cooperate to ensure that the EU has a sustainable supply of plant protein. The recommendation is not far-reaching enough since it does away with the main instrument available to the present COM instead of adjusting it to the objectives set. However, considering the many problems of dried fodder production, the tasks and social objectives it is required to fulfil, it must be shown that tried-and-tested methods have a viable future and are part of the future of European agriculture.

5.12. It should be borne in mind that grazing and direct consumption of fodder by livestock are optimal systems from the point of view of energy balance, animal welfare and food security and autonomy. The Committee therefore suggests that measures be considered to encourage these methods and safeguard their different forms. The cultivation of grassland, particularly in association with livestock grazing, should remain an integral part of sustainable milk and meat production. The disadvantage suffered by grassland in previous aid policies has, in combination with the common market organisation in dried fodder, contributed to its steady decline. The Common Agricultural Policy should encourage the economically and ecologically profitable use of land and prevent the decline in fodder legumes, by ensuring that full use is made of the benefits they provide. However, drying of fodder crops is a traditional system used to preserve one season's surpluses for the next, and is ideally suited to the agricultural and climatic conditions of certain European regions. Artificial drying now enables maximum use to be made of the agricultural and nutritional advantages of alfalfa as a protein and fibre input for livestock. Dried fodder production will continue to be essential, irrespective of the type of livestock rearing involved, insofar as holdings cannot achieve self-sufficiency in such production. Furthermore the main dried fodder producing countries are located in southern Europe and could therefore not develop their milk production on grasslands (due to climatic restrictions). Due to the different climatic conditions, a balance is required between dried fodder production in northern and southern Europe.

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger Briesch

(1) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(2) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(3) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(4) 38,64 EUR/t for sun-dried fodder; 68,83 EUR/t for dehydrated fodder.

(5) Green Paper Entrepreneurship in Europe, COM(2003) 27 final, p. 23.

(6) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(7) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(8) EESC opinion on New impetus for a plan for plant protein crops in the Community, OJ C 80, 3.4.2002, pp. 26-34.

(9) CIDE, Dossier d'information, Les enjeux de la luzerne face à la réforme de la PAC, S. 13.

(10) MGQ Austria: 4000 t; MGQ France: 1,6 t.

(11) In Germany (Bundesland Thüringen) a drying plant produced and sold 250 t fodder contaminated with dioxins. This was due to a technical fault and came to light during official fodder checks - see report by the Ministry for Consumer Protection, Food and Agriculture dated 19.2.2003.

(12) CIDE, Dossier d'information, Les enjeux de la luzerne face à la réforme de la PAC, S. 13.