Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation amending Regulation (EC) No 1251/99 establishing a support system for producers of certain arable crops to include flax and hemp grown for fibre', and the 'Proposal for a Council Regulation on the common organisation of the market in flax and hemp grown for fibre'
Date: 2000-03-29
Institutions: European Economic and Social Committee
Subjects: aid per hectare, environmental protection, flax, hemp, producer organisation, textile fibre

18.5.2000

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Official Journal of the European Communities

C 140/3

Opinion of the Economic and Social Committee on

— the ‘Proposal for a Council Regulation amending Regulation (EC) No 1251/99 establishing a
support system for producers of certain arable crops to include flax and hemp grown for
fibre’, and

— the ‘Proposal for a Council Regulation on the common organisation of the market in flax and

hemp grown for fibre’

(2000/C 140/02)

On 15 November 1999 the Council, acting in pursuance of Articles 37 and 262 of the EC Treaty, asked
the Economic and Social Committee for an opinion on the above-mentioned proposals.

The Section for Agriculture, Rural Development and the Environment, which was instructed to prepare
the Committee’s work on this matter, adopted its opinion on 14 March 2000. The rapporteur was
Mr Kienle.

The Committee adopted the following opinion set out below at its 371st plenary session, held on 29 and
30 March 2000 (meeting of 29 March) with 74 votes in favour and one abstention.

1.

Introduction

1.1. Many medieval paintings depict Adam and Eve, follow-
ing their expulsion from Paradise, engaged in laborious work
to provide themselves with the essentials of life, namely food
and clothing. As the old rhyme goes: ‘When Adam delved and
Eve span ...’. Flax and hemp, grown for their fibres and oil, are
amongst the oldest crops known to man. The Latin name, too,
(Linum usitatissimum) underlines how tremendously useful
and highly valuable this plant is. Hemp and flax were cultivated
in virtually all areas of Europe to provide the raw materials for
textiles and rope; they played a key role in peoples’ lives and
agriculture, craft industries and trade. It was only when cheap
cotton came to be imported from overseas and later when
man-made fibres became widely available that there was a
dramatic decline in flax-growing and the manufacture of linen.
This traditional crop has completely disappeared from many
regions.

1.2.
The cultivation of flax and hemp is now experiencing
a renaissance. The main reasons are: the demand for high
quality natural flax and hemp fibres for use in textiles; the
environmental value of these plants when used in crop-
rotation and, above all, their use in the production of new,
renewable materials.

The common organisation of the market in flax and
1.3.
introduced in 1970, reflected the way in which
hemp,
these two crops were cultivated at the time, particularly the
traditional production of fibre flax in Belgium, France and the
Netherlands. The cultivation of flax and hemp has in the
meantime also been developed in other EU Member States.
Many initiatives have been launched to find new outlets for all
these fibres. Not least because of the considerable amount of
ground which needed to be made up, the necessary research
and development was promoted with the aid of substantial
funding from the European Community and the Member
States. Promising new product lines have successfully been
developed, such as fibrous composites for vehicles and insulat-
ing materials used in the building industry. Those new product
lines provide an environmentally-friendly alternative to prod-
ucts based on mineral fibres; the low level of toxicity and the
fact that the products can be disposed of in a manner which is
not damaging to the environment are valuable features.

1.4.
The production and processing of flax and hemp has
however retained one essential characteristic, namely the need
for primary processors to be situated near to fibre-plant
growers, in view of the high transport costs relative to the
value of flax and hemp straw. In this relationship of mutual
dependence it is however the primary producers who have to
bear the higher investment risk and therefore bear the greater
responsibility as regards maintaining jobs.

According to EC statistics, the approximate area sown
1.5.
to flax up to the 1994 harvest year was 90 000 ha; the area
under hemp was 8 000 ha. Since 1994 there has been an
explosive increase in the area sown to flax, bringing the present
total area to some 212 000 ha. The area under hemp has also
increased during this period and now stands at 30 000 ha.
This has led to an increase in budgetary expenditure on the
common organisation of the market in flax and hemp from
EUR 74 million in 1995 to EUR 158,6 million in 1999,
despite the fact that the level of aid has been reduced over the
same period by 7,5 % in the case of flax and 14,4 % in the case
of hemp.

1.6.
In 1996 the European Commission put forward a
proposal for reforming the organisation of the market in flax
and hemp with a view to stabilising expenditure under the EU
budget on this sector. This proposal was rejected by the
Member States.

The market organisation arrangements, which have
1.7.
since been fine tuned, essentially comprise flat-rate aid per
hectare of fibre flax, differentiated according to six homo-
geneous production areas, and flat-rate aid per hectare of
hemp.

2. Reform measures proposed by the European Com-

mission

2.1.
The measures now proposed by the European Com-
mission for reforming the common organisation of the market
in flax and hemp are designed to achieve the following
objectives:

— to reduce budgetary expenditure on this sector to EUR
51 million, with effect from the marketing year 2005/2006
(in comparison to the cost to the budget of EUR 158,6 m
in 1999);

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— to combat the misuse of the previous arrangements;

— to establish market equilibrium;

— to simplify administrative procedures;

— to implement the reform measures by as early as the

2000/2001 marketing year.

The proposal makes provision for a number of major

2.2.
changes to the existing market-organisation scheme, namely:

— the inclusion of fibre flax and hemp under the support
system for producers of certain arable crops set out in
Regulation (EC) No 1251/1999;

— reducing the area payments for fibre flax and hemp in
three stages, in line with the area payments made for
linseed, to bring them down to the level set for cereals by
the 2002/2003 marketing year;

— retention of the obligation to conclude contracts with
authorised processors. To qualify as authorised processors,
processors have to undertake not to supply enterprises
which produce or sell hemp-based foodstuffs;

— introduction of an authorisation procedure in respect of
hemp cultivation which has to be adhered to as a condition
of receiving the area payment; retention of on-the-spot
checks on the THC content of hemp grown by producers.
Abolition of the minimum yields to be obtained as a
condition for receiving full support payments.

— obligation to denature imported hemp seeds not intended

for sowing, so they can no longer germinate.

2.3.
It is proposed to introduce additional processing aid,
which would be payable only in respect of the national
guaranteed quantities. A differentiated level of aid will be
payable in respect of long-fibre flax; the aid will be progress-
ively increased from EUR 60/tonne in the marketing year
2001/2002 to EUR 200/tonne for the 2005/2006 marketing
year.

2.4.
In the case of short-fibre flax and hemp fibre, uniform
processing aid at a level of EUR 40/tonne will be payable from
the 2000/2001 marketing year to the 2004/2005 marketing
year. This aid will be abolished after the later marketing year.
The aid is to be paid to authorised primary processors.

The Commission makes the following proposals with

2.5.
regard to the stabiliser mechanism:

2.5.1.
Inclusion of areas under flax and hemp in the base
areas; Member States would be obliged to lay down maximum
areas of hemp cultivation in respect of each of the production
regions.

2.5.2.
Introduction of maximum guaranteed quantities for
(a) long flax fibre and (b) short flax fibre and hemp fibre with
regard to the granting of processing aid. These maximum
guaranteed quantities are to be allocated between the Member
States on the basis of historical cultivation areas. For those

Member States having no historical cultivation areas provision
is made for a maximum guaranteed quantity of 50 tonnes. The
total maximum guaranteed quantity for the EU is to be
75 500 tonnes per marketing year for long flax fibre and
119 250 tonnes per marketing year for short flax fibre and
hemp fibre.

2.5.3.
have a maximum shive content of 5 %.

To qualify for processing aid short flax fibre has to

2.6.
The proposed reform measures are to come into effect
in the 2000/2001 marketing year; transitional measures may
be adopted where required.

3. General observations

3.1.
The Committee recognises the need to stabilise expen-
diture on the organisation of the market in flax and hemp and
to put an end to the misuse of premiums (‘bounty-hunting’).
This is essential, both from the standpoint of the taxpayer and
in view of the effect on those producers and processors who
have properly adhered to the political goal of the existing
market regulations. It is vital to ensure that the flax and hemp
sector as a whole does not have to bear the burden of blame
and the stigma of criminality. This demand is made all the
more pressing by the fact that the misuse in question would
undoubtedly have been brought to an end if the Commission
and the Member States had imposed a strict obligation for
crops to be grown to contract, from the outset, and had carried
out rigorous checks.

The Committee also supports the Commission’s goal
3.2.
of establishing market equilibrium. Market-orientated develop-
ment provides the basis for sustainable market access, thereby
ensuring outlets for flax and hemp. The funding provided by
the Commission and the Member States for R and D work on
innovation and new product lines, particularly as regards non-
textile uses of short fibres, form part of the drive to achieve
this goal. A large number of highly promising new areas of
application have already been found. It is thus all the more
important not to jeopardise this positive trend, but rather to
continue and strengthen it.

3.3.
The development of marketing outlets is however still
at the initial stage; on-going support is required. The proposal
to cut area payments and discontinue processing aid for short
flax fibre and hemp fibre does, however, place a question mark
over this support. The Member States must not,
in the
Committee’s view, interpret the reform measures as a signal
for them to withdraw their support for R and D. Such action
would in many cases place primary processing enterprises
under a direct threat of bankruptcy, particularly those which
have recently been established and those still at the planning
or authorisation stage.

3.4.
The cultivation of flax and hemp for use in textile and
non-textile applications is a classic, positive example of
multi-functional agriculture and an integrated, inter-sectoral
approach to rural development. The interdependence between
suppliers of straw and primary producers also determines the
scope for processing and marketing flax and hemp.

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3.5.
The Committee endorses the Commission’s proposal
that flax and hemp cultivation be brought within the scope of
the general support system for agricultural crops set out in
Council Regulation (EC) No 1251/1999 and that processing
aid be introduced, subject to quantity restrictions. If area
payments are made irrespective of yield, this would undoubt-
edly fuel the kind of subsidy-driven production which has
already been developed. The Committee does, however, pro-
posed that consideration be given to calculating the area
payments, where appropriate, on the basis of the maize yield
in the case of regions having very low grain yields; the use of
grassland locations susceptible to ploughing should also not
be ruled out. The Committee also supports the view that flax
and hemp should only be grown in suitable locations.

3.6.
The Committee is, however, opposed to the proposed
introduction of national guaranteed quantities, which in no
way match capacities. The maximum quantity of 50 tonnes per
year allocated to some Member States would be tantamount to
excluding them from growing hemp or flax. In pursuance of
the goals of reforming the CAP and promoting rural develop-
ment we should be seeking to develop the cultivation of these
crops, taking account of marketing opportunities at regional
level.

The Committee highlights the consequences for the
3.7.
production and processing of short flax fibre and hemp fibre
if primary processing aid is paid for a period of only five years
and at a totally inadequate level of EUR 40 per tonne, which
would take away any prospects which this new process crop
might have. The Committee fears that these proposals would
lead to plant-closures and the loss of many jobs in agriculture
and the processing industry.

The Commission’s proposal that processing aid be
3.8.
payable only in respect of fibres having a maximum shive

Brussels, 29 March 2000.

content of 5 % is both inappropriate and impractical. Insofar
as this is even technically feasible, existing processing plants
would have to be retrofitted or they would be excluded from
receipt of aid on technical grounds.

4. Conclusions

4.1.
In the Committee’s view the proposed reforms should
not be adopted as their introduction would pose a threat to
the very existence of the whole flax and hemp sector in the
EU, thereby once again jeopardising the dynamic establishment
of an environmentally-friendly form of arable farming and
promising marketing outlets which are as yet at an early stage
of development.

The Committee criticises the fact that the Commission
4.2.
has failed to set out — or has set out in only a wholly
unsatisfactory manner — the economic consequences for
producers and primary processors, the impact on employment
and the effects as regards changes in commodity flows. It may
be assumed, for example, that hemp fibre imported for further
processing will fail to match EU environmental standards. The
European Institutions should insist that a report be drawn up
providing a detailed analysis of the impact on jobs and
environmental protection, thereby enabling a proper dialogue
to take place with the industry and the regions concerned.

4.3.
In the Committee’s view there can be absolutely no
question that, under these circumstances, the reform measures
can be implemented with effect from the 2000/2001 market-
ing year, particularly in view of
that planning
arrangements have already to a large extent been finalised
between producers and processors and bearing in mind that
the necessary implementing regulations in respect of the
Commission’s proposals are not yet available even in draft
form.

the fact

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI