Opinion of the Economic and Social Committee on "New impetus for a plan for plant protein crops in the Community"

(2002/C 80/06)

On 12 July 2001, the Economic and Social Committee, acting under Rule 23(2) of its Rules of Procedure, decided to draw up an opinion to the opinion on "Arable crops", on "New impetus for a plan for plant protein crops in the Community".

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 December 2001. The rapporteur was Mr Sabin.

At its 387th plenary session held on 16 and 17 January 2002 (meeting of 16 January), the Economic and Social Committee adopted the following opinion by 95 votes with three abstentions.

Following the opinion on the cultivation of legumes on set-aside land, the ESC decided to take a more in-depth look at the European Union's supply of plant proteins for the livestock farming sector. This additional opinion looks into the various options for providing new impetus for a plan for plant protein crops in the Community. Since the European Parliament's Committee on Agriculture expressed an interest in the ESC's views on the matter, the rapporteurs from the two institutions worked together. The outcome was a public hearing held by the Committee on 4 December 2001. (For further information, please visit the ESC website: www.esc.eu.int)

1. Introduction

1.1. The background to developments in the oilseed and protein crop sector in international relations holds many lessons for the future.

- In the course of the 1962 "Dillon Round", European negotiators did not deem the oilseed and protein crop sector to be of strategic importance. Eight years later, soya was dominating world trade as the only source of plant protein for animal feed.

- While the increase in world trade was to secure cheaper supplies for the European Union, a major gap opened up between supply and demand in 1973, triggering a sharp rise in world prices. The United States then imposed an embargo on soya sales, causing a major upset in Europe.

- Wiser for this experience, the European Union demonstrated from 1973 onwards that it could step up its degree of self-sufficiency by consolidating the common organisation of the market for oilseeds and creating the conditions needed for boosting protein crop production.

- The "Blair House" agreement, following the United States' attacks (GATT panels) on the "oilseed" regulation, led to restrictions on European production. Although heavily criticised, this agreement did have the virtue of not jeopardising the existing acreage under these crops in Europe. Nevertheless, eight years later the Common Agricultural Policy reform again led to a decline in this sector.

1.2. A wide gap has again opened up between the European Union's requirements in plant protein and its production potential. Moreover, how the oilseed and protein crop sector develops now concerns more than just agricultural issues. This sector is tied up in several key issues for society.

1.3. Consumers' perception of food safety has become a predominant issue. The new integrated Community food safety policy calls for a high degree of safety in each link of the food chain. The use of plant protein in cattle feed is a matter which must be examined with the above in mind.

1.4. The conclusions of the Gothenburg summit held on 15 and 16 June 2001 allowed a European strategy for sustainable development to be adopted; the conclusions stated that the Common Agricultural Policy ought to aim, inter alia, to contribute to sustainable development by providing more incentives for the production of renewable raw materials. More specifically, to combat climate change and comply with Kyoto protocol commitments, steps are needed to encourage people to use carbon from renewable rather than from fossil sources.

1.5. Lastly, the conclusions of the Berlin summit in March 1999 and the Nice summit in December 2000 called on the Commission to keep a close watch on developments in the oilseed sector in Europe and, if necessary, to look into possible options for promoting plant protein crops. This was discussed in Commission Communication(1).

1.5.1. The Committee notes that 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 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.

1.6. The Committee attaches particular importance to the future of oilseed and protein crop production in Europe. The objective of this opinion is to propose the main lines for a Community plant protein plan which takes account of the four major issues facing the European Union.

2. First issue: European plant proteins - an asset for food safety

2.1. The Commission has adopted a White Paper on food safety which thoroughly reviews current European Union policy on foodstuff and animal feed safety. The Economic and Social Committee discussed this White Paper in an opinion(2) adopted by a large majority in May 2000.

2.2. The recent BSE (bovine spongiform encephalitis) animal health crisis highlighted the need for extreme care when setting up systems for recycling raw materials. This led to a ban on the use of meatmeal in animal feed.

2.3. Although in 1999 5 % of protein-rich substances produced were not of plant origin, this health crisis led to a crisis of consumer confidence in the beef market, which had repercussions on the cattle feed market since the latter had to make more extensive use of plant proteins.

2.3.1. The Commission therefore proposed encouraging the cultivation of fodder legumes on set-aside land as from the 2001-2002 season using biological production procedures. However, these can only be used in fodder for ruminants.

2.3.1.1. The Committee indicated in its opinion on this proposal(3) that although the text was a step in the right direction it would be unable to match the scale of consumer expectations on health safety for animal feed and did not offer any solutions for the white meat sector.

2.4. The protein element of animal feed now comes from plant substances and very small quantities of fish meal. So as to establish that these practices are safe for human health, arrangements for managing any health risk arising from the use of oilseed and protein plant oilcake should be examined.

Such risks might relate to:

- the possible presence of contaminants; and

- effects caused by the presence of GMOs (genetically modified organisms).

2.5. As regards the presence of contaminants, there is full European legislation on monitoring undesirable substances in animal feed (Directive 2001/46/EC) This text pays particular attention to shortcomings in the manufacturing processes, as any possible presence of contaminants would be the result of manufacturing problems. Moreover, the marketing of mixed feed for animals (79/373/EEC) is also currently under review(4). This should make it easier to identify the raw materials used in plant oilcake.

2.6. As far as the presence of GMOs is concerned, there is currently a ban in the European Union on the use of new GMOs in human foodstuffs and animal feed. Nevertheless, comprehensive Community legislation for managing this health risk has now reached the last stage of the legislative process. Directive 2001/18/EC provides Community bodies and Member States with procedures for monitoring the possible long-term effects of GMOs on the environment.

2.7. On 25 July 2001, the Commission submitted a draft regulation on genetically modified food and feed(5). Without anticipating the Committee's opinion on this proposal, it would note here that the draft regulation is based on the fundamental principles set out in the White Paper on food safety:

- a single risk assessment process for environmental risks and risks to human and animal health;

- a single risk management process, involving the Commission and the Member States;

- better information for the consumer by means of suitable labelling.

2.8. As regards the presence of GMOs in imported raw materials, the European Union approved the Cartagena protocol on bio-safety. This protocol only governs trade between countries in modified living organisms. It is for this reason that the Committee would stress that the European Union cannot allow this inconsistency to continue for long: it is importing raw materials containing some quantity of GMOs but is banning the use of GMOs in crops within the EU.

2.8.1. Nevertheless, the problem of GMOs in oilseed cake has to be seen in perspective, as it should be pointed out that even if the DNA is present at the end of the manufacturing process, it is destroyed in the cooking process which immediately follows grain crushing and oil extraction. The oil, for its part, does not contain any DNA from GMOs. After a period of more than six years during which oilseed cake has been consumed, no incident of any type has been reported. One must nevertheless maintain a watchful eye. Lastly it should be pointed out that initiatives have been taken to develop GMO-free production sectors which guarantee traceability and for which the associated costs are higher. These sectors may grow if consumers agree to pay the higher prices.

3. Second issue: security of protein supplies for animal feed

A. The situation worldwide

3.1 The European Union imported 34.3 million tonnes of oilseed cake during the 1999/2000 marketing year, 26.3 million tonnes of which was soya cake. The EU is the foremost importer on the world market, importing 40 % of the market supply.

3.2. The relationship between supply and demand is at times under stress; as a consequence the risk remains that supplies might run short.

3.3. In the 15 years between 1985 and 2000, world production in protein-rich substances increased by 60 %. At the same time, world trade in these products increased, amounting to 53 % of world production, as compared to 14 % for cereals.

3.3.1. World trade in oilseeds is now almost the same in value as trade in cereals, with a turnover of around 55 billion dollars per annum(6). Supply of this commodity is concentrated - geographically speaking - in three countries, namely the United States, Brazil and Argentina, which between them make up 80 % of world production.

3.4. The effects of this geographical concentration of supply have been accompanied by a fall in the number of economic operators in the market. In the United States, which puts out 45 % of world production, fewer than five industrial groups alone account for 90 % of crushing capacity. There have been similar developments in the seed sector.

3.5. Soya has rapidly become the main resource of protein-rich substances. The relative share of protein-rich substances other than soya in world trade is steadily shrinking. It dropped from 27 % in 1985 to 22 % in 2000.

3.6. World demand has rapidly diversified and is growing by 4 % to 5 % per annum. Demand is very dynamic compared to the world cereal market which has been stagnating since the 1980s. Until the mid-80s, the European Union accounted for more than 64 % of all imports. Nowadays it imports less than 40 % as new buyers have emerged, including China whose imports today account for more than 10 % of trade in this sector. The United States and Brazil have also boosted their white meat production sectors and consequently use a greater proportion of their own production.

3.7. In addition it should be noted that meeting human protein consumption requirements in the emerging countries initially entails using plant protein (consumed as such). As soon as they have the means to do so, people in these countries gradually increase their consumption of protein from white or red meat. However, since between two and three units of plant protein (from protein-rich substances) are needed to make one unit of animal protein (in the form of white meat)(7), it is clear that economic development entails increased and more rapid consumption of plant proteins. Therefore the economic emergence of countries - especially those in Asia - can again trigger an imbalance between supply and demand on the world market, as happened in 1973. Such is the case with China which is regularly increasing its imports of soya oilcake.

3.8. The Committee notes that the situation at the end of the 1973 embargo caused Europe to take measures to limit its dependence so as to minimise economic and food supply risks. This situation which considerably improved subsequently, thanks to the policy implemented at that time, is again deteriorating because of the decisions taken as a result of Agenda 2000. In fact, the major cut-backs in aid are discouraging farmers from cultivating oilseed and protein crops. This is leading to a situation where the European Union is becoming increasingly vulnerable. The Committee therefore remains sceptical about the idea that there would be only benefits and no risks for economic operators in obtaining nearly all their supplies of protein-rich plant substances on the international market.

3.9. The concentration of supply in certain countries necessarily entails a climatic risk; if this risk should materialise, it could be long-lasting and cause farmers in these countries to alter their output (by reducing the acreage used for such crops). This climatic risk, although a very real one (this was the basis for the 1973 embargo decision), has never been taken into account by the Commission either in its policies or in its decisions. In addition it should be noted that in value terms, purchases of plant protein from third countries constitute a major item of the Community's trade deficit.

B. European plant protein requirements in relation to developments in meat consumption

3.10. Another effect of European consumers' crisis of confidence has been to speed up the partial shift away from red meat consumption to white meat; this was already a long-term trend.

3.10.1. The European Commission's Agriculture Directorate-General published a forward study in July 2001(8) on the European agricultural market situation. This indicates that pork and poultry production will undergo sharp increases:

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3.11. These animal production sectors are major consumers of protein-rich and energy-providing substances. Nevertheless, the European Commission has based its CAP reform on the level of cereal competitiveness in relation to substitutable imported products, in order to anticipate changes in the demand for cattle feed.

3.11.1. The Commission working document on supply and demand in protein-rich plants in the EU(9) specifies that demand per fodder unit should increase by 2.5 million tonnes for the 2000/2001 marketing year, due to the cumulative effect of withdrawing meatmeal from use and the shift in consumption towards white meat. As a result of this increase, an extra 4 million tonnes of cereals are likely to be used in fodder, and an extra 1 to 1.5 million tonnes of soya cake will be needed. In the long term, internal demand(10) for animal feed would focus mainly on cereals and to a greater extent on wheat (up 17 % between 2001 and 2008).

3.12. The Committee refutes the argument that the effects of white meat consumption and the abolition of meatmeal will have a greater impact on the demand for cereals (energy requirements) and to a lesser extent on protein-rich substances. With the limitations of animal husbandry techniques, and unless there are any major technological advances, the knock-on effect on the demand for cereals will be similar to the effect on the demand for substances rich in plant protein.

C. Foreseeable changes in acreage under oilseed and protein crops post-Agenda 2000

3.13. This foreseeable increase in the demand for substances rich in plant protein contrasts with the Commission's forecasts(11) which predict a fall in the acreage under oilseed (4,8 million hectares in 2002 falling to 4.6 million hectares in 2008). As a result, any increase in production volume would only be associated with an increase in plant productivity.

3.13.1. In economic terms, if the acreage under oilseed in the European Union is kept at the same level for the 2000-2001 season (5260000 hectares, as estimated by COPA/COGECA - Committee of Agricultural Organisations in the European Union/General Committee for Agricultural Cooperation), it would not be possible to regain the level reached before implementation of Agenda 2000. It emerges from analysis of this point that the shrinking acreage under oilseed and protein crops is a general phenomenon throughout the European Union except in the new German Länder (federal states), which cut back their production potential when they joined. This restriction no longer applied as from the 2000/2001 season. Apart from localised increases in acreage under oilseed and protein crops, the general trend has been downward: in France -7,5 %; in Italy -1,5 % and in Spain 0 %.

3.14. The Committee would underline that the prospects for acreage under these crops for the 2001-2008 period within the European Union remain 0,4 million hectares below the production potential authorised under the Blair House agreements. This contrasts with the expected increases in demand for substances rich in plant protein. It also reinforces the idea that the upward trend in the meat production sector will be weakened by a fall in the EU's degree of self-sufficiency in plant proteins as part of Agenda 2000. The European Union is thus in a unique situation because it is implementing a set-aside system for crops for which it is experiencing a serious shortfall. The move to abolish "specific aid" for oilseed as a result of Agenda 2000 should have enabled the European Union to regain its leeway in international negotiations and render the Blair House agreements null and void.

4. Third issue: Will integrating the CEEC into the EU change the situation?

4.1. If the situation of the applicant countries is brought into the equation, will this change the analysis? Insofar as the negotiations should be concluded by 2003, one can reasonably expect that most of the applicant countries will have joined the European Union by 2008.

4.2. The degree of self-sufficiency of the applicant countries is higher than that of the European Union, since it was around 80 % in 2000. However, these countries still export their oilseed because their crushing machinery is obsolete. They therefore import soya cake in large quantities for their livestock sector. With the application of Agenda 2000, it is expected that their oilseed exports will remain stable.

4.3. Although the accession of the applicant countries would raise the EU's self-sufficiency in plant proteins to nearly 28 %, the Commission(12) is forecasting a fall in their production levels and a shift towards cereal production from 2008 onwards.

4.4. It is important to offer those applicant countries with a large farming sector the option of increasing their production of oilseed and protein crops for their own market and also for the European market, which would provide them with an unlimited outlet. If this approach is not taken, there is a real risk of a further increase in cereal production. As a result, either outlets will have to be found on the already saturated world market, or a higher set-aside rate implemented. Therefore, incentives to produce oilseed and protein crops could provide the beginnings of a common policy in these countries which have genuine production potential (rape seed and pulses in the north and sunflower seed and soya in the south). At the same time, Europe's position in plant proteins could be improved and the applicant countries could be offered a genuine development and market opportunity. Here too, the European Union should be careful at the next WTO negotiations to ensure that the EU applicant countries benefit from extensive production potential. This also entails a review of the references based on previous years which are unfavourable to them.

5. Fourth issue: aspects to build into a strategy for sustainable development

A. Effects of support for oil-bearing and protein-bearing plants

5.1. Maintaining oilseed and protein crop production potential also affects environmental issues and the balance of economic activities in the EU. Implementing Agenda 2000 led to an increase in the acreage under cereals due to direct aid for arable crops being aligned on cereal aid. Indeed the abolition of specific aid to oilseeds, the sharp drop in aid to protein crops and the lack of any safety net in the event of a drop in prices all make these crops less attractive and more risky as a source of income. If this situation should continue it will provide an incentive to single crop farming.

5.2. From an agricultural viewpoint, oil-bearing and protein-bearing crops are most valuable for maintaining soil structure. In so doing they the limit susceptibility to surface sealing (a factor which accelerates soil erosion). It is for this reason that these crops are usually used as "break crops".

5.3. These crops overall require fewer inputs. As far as fertilising is concerned there is virtually no need for mineral nitrogen to be used. Therefore incorporating these plants into crop rotation cycles brings down the overall quantity of nitrogen needed. Smaller amounts of plant health products are needed than for other crops.

5.4. Some protein crops (high protein spring peas) stay in the soil for less time than others. As a consequence there might be concern about increased soil susceptibility to leaching after harvests. In practice this is not a concern because in most cases cereal crops are sown in early autumn after the pea harvest. Therefore in the very rare cases where the next crop is only sown in the following spring, an interseason crop must be planted to secure soil cover, enriching it with organic substances.

5.5. The Committee notes that from an environmental viewpoint, the 1999 CAP reform encouraged the development of single crop farming practices, which runs counter to sustainable development. Steps should be taken to provide incentives to secure a better balance between oil-bearing and protein crops and cereals or maize, thus maintaining a balanced system of crop rotation which ensures environmentally friendly cropping practices.

B. The non-food productive sector: an asset for the environment and expanding market

5.6. Oil-bearing plant production gives rise to two co-products, namely vegetable oil and oilcake (used in animal feed). Nevertheless the market in vegetable oil as a foodstuff is not expanding as the protein crop market is. There would therefore be considerable economic value in developing the non-food sector by growing crops on land which has been set aside. In the year 2000, 836000 hectares in Europe were given over to crops grown for non-food purposes.

5.7. Developments in lipochemistry have meant that several biodegradable products have been created (surfactants, lubricants, solvents and chemical intermediates). Industrial demand in the detergents sector is currently very strong. The bio-lubricant market is still emerging. Bio-lubricants seem to have promising prospects for 4-stroke engines. The Committee stresses that all these products fit into the European strategy for sustainable development. Promoting the prospects for these products and demonstrating their capabilities should help speed up the development of this productive sector.

5.8. The second outlet for vegetable oils in the non-food sector is in the production of methyl ester, bio-diesel or diester. These products could meet two major requirements at European level. First of all they could help reduce the European Union's energy dependence on oil products. Recent increases in oil prices have demonstrated how vulnerable the European economy is to changes in the supply costs for this energy source. Thus, developing biofuel in general could represent one solution for making the EU less vulnerable.

5.9 These products can also help to combat the greenhouse effect. The eco-balance of diester indicates that one hectare of oil-bearing plants used for this purpose will mean that 2,71 tonnes less CO2(13) is produced (this calculation does not take the use of co-products into account). Moreover the total energy produced by methyl ester and its co-products is 2,65 times greater than the energy used in its production.

5.10 Hitherto progress in the non-food side of oilseed production has occurred where there has been exceptional authorisation for production on set-aside land. The Committee regrets that the EU rules governing this production sector are inadequate. Indeed the administrative monitoring system deters farmers wishing to plant crops on set-aside land for non-food purposes. Since these prospects (lipochemistry and biofuel) are of considerable importance for the whole Community, the Commission must change tack and steadfastly propose a suitable regulatory and fiscal framework for these product outlets which have proved their worth despite the regulatory handicaps.

6. Options for a plan for protein crops at Community level

A. Background

6.1. Following the conclusions of the Nice summit, which called on the European Commission to look into possible steps to boost the cultivation of oilseeds and protein crops, the Commission published a communication in March 2001 setting out possible options for promoting the cultivation of plant proteins in the EU. The various opportunities under discussion are as follows:

- specific aid of EUR 12 per tonne for oilseed production would mean a budget cost of EUR 474 million;

- increasing specific aid by EUR 6 per tonne for the production of protein crops would mean an additional budget cost of EUR 47 million; and

- increasing the maximum guaranteed quantity for dried fodder by 10 % would entail a budget cost of EUR 13,7 million.

6.1.1. In its conclusions the Commission underlined that the budgetary outlay which could be agreed on would still not secure an outlet for production of these crops, since their opportunity cost on the world market was lower than that of soya meal (soya cake).

6.2. First of all the Committee would point out the limitations of the Commission's analysis. The opportunity costs of the production of crops with a high economic value, over and above their protein value, have been overestimated. In fact oilseed also yields oil (40 % for rape seed and sunflower seed). This must be taken into account when calculating the opportunity costs. The effect of this would be to cut the costs set out in the Commission document by at least a half.

6.2.1. Forward studies based on world prices are always subject to debate. This market is highly variable and during this last summer, for example, depending on the period chosen, the Commission's conclusions could have looked markedly different.

6.2.2. The Commission has not looked into the possibility of producing protein-rich oilcake through the production of biofuel. Co-products of this sector are used in animal feed. In promoting this production sector, oilcake production has to be analysed differently because it is part of an overall calculation which takes account of a whole series of elements.

6.2.3. Lastly, the Commission has neither assessed nor taken into account the risk that it is imposing on the European livestock sector by increasing its dependence on imported plant protein and subjecting it to world market price volatility. The historical background to this market shows that in addition to the major upset in 1973, the cost of proteins has remained extremely high over several periods.

6.3. The Commission's budgetary analysis should therefore be seen in the light of the above criticisms. Moreover the Committee cannot agree with the Commission's conclusions when the only criterion it bases its guidelines on is the opportunity cost. This approach runs counter to the fundamental principles underlying the Common Agricultural Policy and does not correspond to the principles advocated for future WTO negotiations (on taking social and environmental costs into account).

6.4. For this reason, the Committee proposes that the Community plan for giving a new boost to protein-rich crops must take into account the shortcomings introduced by the implementation of Agenda 2000 as regards three major aspects: encouraging good farming practice, securing a reasonable budgetary cost and upholding international agreements. The aim of this plan is to maintain and develop a diversity of plant protein crops. Such diversity matches the options available to European agriculture which has a rich variety of agro-climatic conditions. It is also in line with the needs of the European livestock sector and favours the development of short production chains and the complete traceability of foodstuffs.

6.4.1. Such a plan for giving a new boost to plant protein crops in the Community will necessarily involve additional budgetary resources. Nevertheless the Committee deems it preferential to support these sectors for which there are potential outlets on the European market and which therefore offer greater economic prospects than would be achieved by developing those sectors which target only the world market, with all the disadvantages that this option would entail.

B. Developing protein crops

6.5. Agenda 2000 provides for specific support for protein crops in addition to uniform aid, but overall aid for production of these crops is falling sharply and this has led to a lack of interest in producing these crops. Thus, total acreage under crops in the year 2000 was 11 % lower than in 1990. Production too has fallen by 25 % over 10 years. It therefore seems vital that this production potential, which did have outlets before the CAP reform, should be regained at European level.

6.6. Insofar as the Blair House agreements do not affect these crops, the Committee would stress that maintaining an aid differential of the order of EUR 20/T would provide a new incentive to farmers to grow these crops. Specific aid for protein crops could be increased by EUR 11/T. This aid could also be based on the agricultural value of these plants in the crop rotation cycle; it could be incorporated into the second pillar of the CAP.

6.7. From a budgetary viewpoint, the two Commission options represent additional costs of between EUR 47 million for raising aid by EUR /T and EUR 220 million for raising aid by EUR 27,5/T. The Committee's proposal would therefore entail additional costs of around EUR 100 million for additional acreage of around 150000 hectares.

6.8. The Committee would stress that lupinus luteus variety should receive the same support as lupinus alba and anhustifola. This plant is well adapted to the Mediterranean climate because it is resistant to drought and fungal diseases. It also has a key role to play in improving soil structure. It can likewise play an important part in preventing forest fires and is good for extensive livestock farming.

6.9. The Committee would point out that in its opinion on organic fodder legumes produced on set-aside land(14), it deplored the narrow scope of the Commission's proposal. It proposes that these crops be authorised for all farms without any restriction being placed on the production methods used, given their capacity to adapt to dry climates and their value for the environment.

C. Developing the non-food production sectors

6.10. Diversity in the supply of protein-rich substances can also be assured by the diverse origins of oilcake (oilseed) and spent grain (ethanol production). The market in fatty substances of plant origin is closely linked to developments in the palm oil market. The development of non-food outlets therefore seems to be the only conceivable option. This approach would mean an increase in co-products which can be used in animal feed. Consequently an increase in the use of biofuel would help counter the greenhouse effect and reduce the European Union's dependence on imported plant proteins (such a contribution to cutting back CO2 will have to be calculated and its value highlighted).

6.11. At present, developments in the use of diester are mainly determined by the tax situation of biofuel. For this reason either the tax status of biofuel ought to be consolidated at Community level or there ought to be a minimum incorporation level applied for fuel. The rules governing these sectors also ought to be reviewed to provide farmers with incentives to grow these crops, rather than deterrents, as is currently the case.

D. Maintaining competitiveness over soya cake

6.12. Although Agenda 2000 means that this sector will no longer be subject to the Blair House agreement constraints as from the 2002/2003 marketing year, the implementation of the Agenda entailed cut-backs in support for oilseed crops. Furthermore, the Committee underlines the effects aggravated by the dropping of regionalisation measures for support for oilseed crop production which some Member States had adopted. This changed the balance of farming activities between various regions.

6.13. Moreover, this sector is also facing external competition due to the increases in American support for its own oilseed sector. American producers are receiving aid per hectare and a minimum guaranteed price because aid is coupled to world prices in the form of a marketing loan (differential between a minimum price and the world market price). The major disadvantage of the aid scheme set up in the United States is that it distorts the equilibrium on the world market (the US produces 45 % of the world's oilseed output). It should also be pointed out that in the United States soya yield is far lower than maize yield and as a consequence soya prices should be 2 to 2.5 times the price of maize. If soya prices are twice that of maize, then maize production will rise to the detriment of soya. If the ratio is 2.5, soya production will grow to the detriment of maize. The United States, having deemed the soya market to be more profitable, is carrying out a policy which encourages the development of soya production. At the same time the European Union, in applying Agenda 2000, is doing the exact opposite.

6.14. As long as this system continues as it is, the European Union will be forced to adopt a system which could take one of two forms:

- It could set up a safety net, which already exists in the cereals sector but not in the oilseed sector. (This could be based on the arrangements in the United States, namely additional aid per tonne when prices are low and no aid when prices are high. One objection raised will be that this proposal runs counter to the Marrakesh agreements, but the system applied in the United States also does. This matter must be clarified at the next WTO negotiations.)

- It could look into an income guarantee system which is one solution being studied in many non-Member States and could be tried out in the European Union in the oilseed and protein crop sector.

E. Making use of the second pillar of the CAP

6.15. The second pillar of the Common Agricultural Policy could be used to encourage farmers to practise balanced crop rotation, where a certain percentage of acreage would be earmarked for them to grow oilseed and protein crops. This incentive, which could be called "rotational aid" would therefore have the advantage of not raising any particular problems with WTO rules. The advantage of this option is that it encourages good crop farming practices while increasing the acreage under oilseed and protein crops. This option is currently being studied by the Commission; it assumes a contractual undertaking by producers but the hope is that the administrative constraints that might be necessary would not act as a deterrent. This suggestion does not represent a specific solution to the issue of EU supplies of plant protein but it would help indirectly by making these crops more attractive in the rotational cycle.

6.16. Research into oilseed and protein plants is recent, be it research into the creation of new varieties, farming practices or their use in animal feed. In the Union's research programmes priority ought to be given to helping this sector.

7. Conclusions

7.1. Until the mid 1970s the European Union's food supply dependence on vegetable oil steered the Common Agricultural Policy towards boosting the oilseed sector; requirements in protein-rich substances for cattle feed were not deemed to be a strategic factor at that time. Since then the importance attached to the oilseed and protein crop sector in the Community has given way to an emphasis on food safety, steps to combat the greenhouse effect and consideration of environmental interests in farming activities.

7.2. Moreover, the increase in meat consumption in Europe has highlighted the EU's deficit in plant proteins. The degree of self-sufficiency has again fallen since 1992. This being the case, the Committee stresses the weaknesses of a Community strategy essentially based on obtaining supplies on the world market. In fact the supply and demand situation is becoming more and more skewed towards the main producer countries: soya production is becoming geographically and economically concentrated with all the climate risks that this entails, soya is predominant in world trade and new countries are emerging which are major soya consumers.

7.3. The Committee would point out, in connection with enlargement, that the applicant countries also have a shortfall of plant proteins. The Committee therefore recommends that the Commission pay special attention to developing these countries' production of plant proteins, which would first and foremost be of benefit to their own markets but would also benefit the European market, which would provide them with an unlimited outlet. This could constitute one of the first building blocks for the implementation of a common policy in these countries.

7.4. Nevertheless, developing the oilseed sector in the applicant countries must not be allowed to conceal the increased vulnerability of the white meat sector in Europe, caused by a steady fall in the degree of self-sufficiency since 1992. The Committee therefore recommends that the European Commission set up a "plant protein" plan at Community level, as part of the mid-term review of the Common Agricultural Policy. This would comprise the following elements:

- measures to promote protein crops: efforts should be made to re-establish fair incomes from these crops so as to halt their decline and boost their development;

- measures to encourage the development of non-food sectors(15): steps to develop the non-food uses of oilseeds target several objectives:

- contributing to compliance with the Kyoto agreements;

- developing new, more environmentally-friendly products;

- producing plant proteins by means of oilcakes which are co-products of oil;

- steps to set up a safety net to help oilseed and protein crop producers: the lack of any arrangements for providing producers with a minimum of security is a key factor in farmers' reluctance to produce these crops. This market is highly volatile and is also distorted by the main world producer country, where farmers are protected from major price fluctuations. The proposed solutions warrant more in-depth study in order to ensure they are compatible with international agreements.

- efforts to make use of the second pillar of the CAP:

- imbalances between plant crops have worsened with Agenda 2000 (no safety net for oilseed and protein crops). These have led to single crop farming with cereals or maize. It is proposed that this trend be corrected by means of measures which encourage proper crop rotation. It is likewise proposed that lupinus luteus be designated a protein-producing plant because of its valuable drought resistant properties in Mediterranean areas, and that the measure authorising the planting of small-seed leguminous vegetable crops on set-aside land be extended without restrictions on production methods;

- steps should be taken to put in place a specific research programme: these crops are relatively "recent". They merit specific research efforts.

7.5. This package of measures proposed by the Economic and Social Committee may not appear to be highly ambitious. The aim is not to produce all of the EU's domestic requirements within the Union - even in an enlarged Union - far from that. There will still be a major market available to the United States and Mercosur. Faced with a multi-faceted problem (food safety and security of food supply, the need to find a response to food and non-food requirements and the need to promote sustainable agriculture), the objective is to learn the lessons of the recent past and then provide European farmers with new prospects, producing the crops that the Union needs and doing so by taking on board good practices while earning a fair income at the same time.

7.6. When Agenda 2000 was concluded, it was decided to review the oilseed and protein crop issue during the medium term review of the CAP. That moment is now nearly upon us and it is an opportunity for the responsible EU bodies to send out a signal of hope. The Committee would nevertheless stress the urgent problem of the forthcoming harvest, and asks that the specific aid system governing the 2001/2002 marketing year be retained on a transitional basis pending the introduction of new measures for the sector.

Brussels, 16 January 2002.

The President

of the Economic and Social Committee

Göke Frerichs

(1) COM(2001) 148 final./2.

(2) OJ C 204, 18.7.2000, p. 21.

(3) OJ C 193, 10.7.2001, p. 42.

(4) OJ C 140, 18.5.2000, p. 12.

(5) COM(2001) 425 final.

(6) This is an estimate calculated on the basis of world trade in oilseeds for the 1999/2000 season and the average market price of the different substances.

(7) This ratio is the one used for poultry meat, pork and eggs with feed from protein-rich substances. The ratio is higher for ruminants in so far as their feed comes from grasslands and fodder which have a much lower concentration of proteins.

(8) European Commission, 2001, Prospects for agricultural markets 2001-2008, Brussels.

(9) SEC(2001) 431.

(10) European Commission, 2001, Prospects for agricultural markets 2001-2008, Brussels.

(11) European Commission, 2001, Prospects for agricultural markets 2001-2008, Brussels.

(12) European Commission, 2001, Prospects for agricultural markets 2001-2008, Brussels.

(13) Source: PROLEGA, study done by Ecobilan between 1991 and 1993.

(14) Committee opinion on the proposal for a Council Regulation amending Regulation (EC) No. 1251/1999 establishing a support system for producers of certain arable crops (COM(2001) 87 final - 2001/0043 CNS), - 2001043 CNS of 25.4.2001 published in OJ C 193, 10.7.2001, pp. 42-44.

(15) The European rules on the drawing board will introduce either tax concessions or mandatory incorporation.