WRITTEN QUESTION P-2183/98

by Sirkka-Liisa Anttila (ELDR) to the Commission

(7 July 1998)

Subject: Protection of the conditions for oilseed production in Finland in connection with the Agenda 2000 reforms

In Finland 95 % of oilseed crops are spring-sown, i.e. oilseed rape which requires only a short growing season. It was only in the 1970s, when reliable spring-sown varieties came on the market, that oilseed production began to take off rapidly. The areas of rapeseed cultivation were at their greatest extent at the end of the 1980s and in 1995, the first year of EU membership, when the total area exceeded 85 000 ha. With EU membership, Finland's oilseed production too had to comply with the quotas laid down in the Blair House agreement. At the higher levels of CAP subsidies, Finland is permitted to have only 63 000 ha under oilseed.

The Blair House agreement meant a reduction in oilseed growers' production opportunities in Finland and clearly weakened the economic competitiveness of this sector in relation to the alternatives. In connection with EU membership Finland was authorised for a transitional period to pay a top-up price to farmers producing bread cereals and malting barley which compete with oilseed rape in this area. On arable farms in southern Finland (an A-subsidy area) rapeseed became less profitable for this reason and the areas in production in this principal growing region plummeted. In the area eligible for LFA subsidies production has risen, but the total area has clearly fallen during the period since EU accession to below our national quota, standing at 60 200 ha in 1997. The reduction in rapeseed production is depriving the two oil-crushing cooperatives operating in Finland of their source of raw materials, to the extent that they are having to import, which in turn reduces the profitability of processing. Finnish production is still burdened with high production costs and the need for drying of the crop after threshing.

The Agenda 2000 reforms would, if implemented, certainly mean the beginning of the end for oilseed production at least in Finland. If doing away with the quotas in the Blair House agreement means going without the higher-rate CAP subsidies, the price is too high for Finland to pay.

What measures does the Commission propose to take to protect the conditions for oilseed production in Finland in connection with the Agenda 2000 reforms?

Answer given by Mr Fischler on behalf of the Commission

(5 August 1998)

The Blair House agreement imposes restrictions on the area sown with oilseeds in the Community. A standstill of the policy for arable crops would not guarantee a stable production of oilseeds. As the Commission has demonstrated in its long-term study of prospects, continuation of the present policy would lead to unacceptably high levels of intervention stocks for cereals which could only be avoided by an ever increasing set-aside rate. The Blair House agreement further requires that each percentage rate above 10 % involves a corresponding reduction of the maximum guaranteed area for oilseeds.

Under the current scheme for arable crops, oilseeds production cannot reach its full potential because of the Blair House restrictions. The reference for an evaluation of the proposals should therefore be the potential area which is much higher than the guaranteed area of maximum 4 933 800 hectares in the Blair House agreement, given the current high world prices for vegetable oils. This is confirmed by the overshoot of the maximum guaranteed area despite the reduction of compensatory payments in the past, the high prices for cereals and different national measures that have been taken in order to respect the Blair House restrictions (Germany, Spain and France).

Furthermore, a comparison of the situation before and after Agenda 2000(1) should be made by reference to the real compensations paid to producers. Since the reform of 1992, there has always been a reduction of the provisional compensation varying from 4 to 14.45 % at the European level.

One should also bear in mind that oilseeds are part of a good crop rotation guaranteeing higher cereal yields in the following years, and that oilseeds allow farmers to organize and distribute their work better.

Therefore, the Commission does not share the view that the Agenda 2000 proposals will lead to a significant reduction in oilseed production in general. The Commission is however, aware that problems may arise in some specific local situations. Any difficulties that might arise should be examined on a case by case basis with a view to a specific solution depending on the nature of the problem.

(1) COM(97) 2000 final.