Opinion of the Committee of the Regions on the "Commission Staff Working Paper on non-food crops in the context of Agenda 2000"
Date: 2000-04-12
Institutions: European Committee of the Regions
Subjects: EU initiative, agricultural policy, aid per hectare, bio-industry

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Official Journal of the European Communities

8.8.2000

Opinion of the Committee of the Regions on the ‘Commission Staff Working Paper on non-food
crops in the context of Agenda 2000’

(2000/C 226/06)

THE COMMITTEE OF THE REGIONS,

having regard to the Commission Staff Working Paper on non-food crops in the context of Agenda 2000
(SEC(1998) 2169);

having regard to the decision taken by its bureau on 2 June 1999, under the fifth paragraph of Article
265 of the Treaty establishing the European Community, to instruct Commission 2 for Agriculture, Rural
Development and Fisheries to prepare an opinion on the subject;

having regard to the draft opinion (CdR 286/99 rev. 2) adopted by Commission 2 on 26 November 1999
(rapporteurs: Mr Censi (Regional Councillor for the Midi-Pyrénées, Mayor of Rodez, F, EPP) and Ms Aubert
(Regional Councillor for Provence-Alpes-Côte d’Azur, F, PSE)),

adopted the following opinion at its 33rd plenary session on 12 and 13 April 2000 (session of 12 April).

1. Background

The working paper prepared by the Commission
1.1.
(Agriculture DG) at the request of the Agriculture Council of
22-26 June 1998 is well documented and interesting, since it
describes the present state of the non-food and energy crops
sectors.

The paper first carries out an inventory of EU land used for
producing crops for non-food purposes.

1.3.
Although the Commission reviews the various non-
food crops in detail, the approach adopted is ultimately very
general. However,
it is extremely difficult for example to
compare rapeseed with short-rotation poplar cultivation and
medicinal or dye plants.

Although we believe that a non-food policy is necessary, we
feel that this matter should be approached with care and
discrimination in view of the very different crops involved.

then describes agricultural policy supporting non-food

It
products in terms of market organisation and aid schemes.

2. General comments

1.2.
This paper is excellent as an inventory; but it contains
hardly any appropriate proposals — which the Council also
requested.

2.1.
Agenda 2000 is now a reality, having been ratified by
the Berlin Council of 24 and 25 March 1999, and in fact no
specific non-food policy has been adopted.

The first sentence in this working document is very explicit:
‘The CAP reform proposed by Agenda 2000 does not foresee
a “non-food policy” as such’.

2.2.
The absence of a specific policy places ‘non-food’ in
competition with food, with the recurring objective of Agenda
2000 being that the prices of European goods should be the
same as those on the world market.

To make sure the message gets through, it has been repeated
twice in the body of the text: in point 4 (‘Agenda 2000 and
non-food crops’) ‘Within Agenda 2000, there is no specific
proposal for a non-food policy as such’ and in point 6
(‘Conclusions for a debate’) ‘Within Agenda 2000, there is no
specific proposal for a non-food policy as such’.

It would have been very surprising if this working document
from the Commission (Agriculture DG) were to go against the
Agenda 2000 prepared by the same Commission directorate-
general.

This line of reasoning is not very encouraging for ‘non-food’
because prices in the oil or chemicals industries are often very
low, and lower than those in the agro-food industry.

This is because on the markets in fuels, petrochemicals or fine
chemistry, agricultural raw materials compete with products of
mineral origin, synthetic products or agricultural commodities
produced cheaply in countries where production costs are very
low or give rise to automatic compensation based on a
guaranteed fixed price.

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2.3.
This lack of a specific policy, which is referred to three
times in the text, is, however, cushioned by the statement:
‘Nevertheless, several proposals entail provisions relating to
non-food’.

There are market organisations and specific aid schemes for:

— textile linen and hemp;

— cotton;

— starch production;

— sugar for the chemical industry.

2.4.
The situation is much more critical for non-food crops
produced on set-aside land, in keeping with Regulation (EC)
No. 1251/1999 establishing a support system for producers
of certain arable crops.

Agricultural producers have seized this opportunity offered to
them, but a non-food policy cannot be developed from a
principle of non-production (set-aside).

The Commission itself recognises that ‘the sustainable develop-
ment of non-food cannot be based on a set-aside rate which
varies from year to year according to the market situation
for food commodities’. The set-aside rate proposed by the
Commission was 0 % whereas the rate fixed at the Berlin
summit (24-25 March 1999) was 10 % for the period 2000-
2006.

As part of the process of exempting biofuels from

2.5.
excise duties, things have to be resited in their context.

Land set-aside was brought in to balance the cereals market.
This led to the development of research into non-food uses of
agricultural commodities.

Among the most promising sectors identified was that of
renewable energies, particularly motor biofuels.

One can only regret this strategy that has emerged after a great
deal of Commission encouragement for non-food:

— Agricultural research programmes AIR (1990-94) and
FAIR (1994-98) with co-financing of research-develop-
ment-pilot projects concerning non-food;

— Mandate given to the CEN in 1997 on biodiesel specifi-

cations;

— Draft directive of 1992 on special tax arrangements for

biofuels;

— Industrial set-aside with the 1992 CAP reform;

— the Commission proposal of 17 November 1997 for a
directive restructuring the Community framework for the
taxation of energy products;

— Commission White Paper on renewable energy sources (1);

— campaign of 14 April 1999 for take-off of renewable
energy sources (2) which set an objective of 5 million
tonnes of biofuels for 2003 compared with the current
level of just under one million;

— and this list of Community incentives is still not exhaustive.

The feeling of regret is all the greater when the various research
that has been carried out has proved that, thanks to agricultural
or industrial technical progress, primary commodities have
been made more competitive.

Experiments concerning better crop routing, genetic improve-
ments in seeds and optimisation of processing and end
products have provided productivity gains both in terms of
cost and respect for the environment.

For example, research has made possible a gain of 0.27 FF/l
ester through reduced use of inputs or 0.10 FF/l of ester
through use of new hybrid varieties.

Considering that the price difference between biofuels and
fossil fuels is nearly 2 FF/l and that the positive externalities
associated with biofuel production (with respect to employ-
ment, the greenhouse effect and balance of trade) have been
estimated at over 1 FF/l, it is to be hoped that biofuels will
catch up within the next 10 years.

Financial investments were then made in research and pro-
cessing units for demonstration purposes.

It seems essential to pursue the non-food path when the EU
even undertook at Kyoto to cut CO2 emissions.

(1) Commission Communication ‘Energy for the future: renewable
energy sources. White Paper setting out a Community strategy
and plan of action’, COM(97) 599 final, adopted on 26.11.1997.
‘Energy for the future:
renewable sources of energy (Community Strategy and Action
Plan) — Campaign for Take-Off’.

(2) Working document (SEC(1999) 504)

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The number of research projects funded by the Commission
and the results achieved show that support by the public
authorities in this area is both profitable and necessary.

3.3.
The 1992 directive on the taxation of biofuels, which
has never been finalised, should be relaunched and there
should be EU-level tax harmonisation.

this lack of specific ‘non-food’ proposals is obvious

So,
evidence of political incoherence.

Climate policy, that is to say, efforts to significantly
2.6.
reduce greenhouse gases, especially CO2, has been identified
as a priority within the European Commission. The EU as a
Community has also signed up to the Kyoto Agreement with
an ambitious reduction target of 8 %. One of the most
important ways of achieving this target is to enforce the use of
biomass — or wood — for energy. There are basically two
options open: (1) intensifying the use of forests for energy
purposes, which would provide a source of
income for
agriculture in forested areas of the EU without the need for
support; or (2) planting and farming ‘wood for energy’ — for
example by cultivating fast-growing, short-rotation woods on
land not used for food production — which is a tried and
tested method of using non-food crops for energy. Both
options should be enshrined as part of a strategy for the use of
non-food crops.

3. The COR’s recommendations

Now that Agenda 2000 has been completed, what paths
should be explored to perpetuate a ‘non-food’ sector at EU
level?

Although not included in Agenda 2000, a proper non-
3.1.
food scheme is essential to the development of the sector. This
scheme should reflect the diversity of non-food crops and
propose appropriate solutions to promote their sustainable
in the
social, economic and environmental development
regions concerned.

3.2.
In view of the disarray of previous Community initiat-
ives, a ‘non-food’ task force should be set up at Commission
level as soon as possible, so as to have a clear view of the issue
and follow a coherent policy.

This task force should bring together all the Directorates-
(Agriculture), VII
General
(Transport), XI (Environment), XII (Research), XVI (Regional
Policy), XVII (Energy), XIX (Budget) and XXI (Taxation).

involved: DG III

(Industry), VI

With this in view, the possibility should be provided for each
Member State to fix partial or total tax exemptions on biofuels
without volume or time restrictions, as proposed in the
directive of 17 March 1997. There needs to be more develop-
ment of the non-food sector than provided for in pilot or
demonstration projects.

Still

3.4.
in the field of taxation, the EU is seeking to
introduce eco-taxes. It is important that, right from the start,
agricultural products should be exempted from such taxes on
the grounds of their environmental benefits (renewability,
favourable CO2 balance, biodegradability, lack of eco-toxicity).

In addition, as the Commission points out in its paper
3.5.
‘non-food’
(point 5 ‘Rural development and environment’),
crops must be incorporated into an overall agri-environmental
package.

When the Commission declares in its paper that the lack of a
specific European non-food policy does not rule out the
retention of certain measures to encourage such crops, then
certain remarks need to be made:

— oil-yielding crops which show a production shortfall are
not going to be encouraged by this system of aligned direct
aid. If prices on the food market remain higher than those
on the non-food market, with premiums being equal, there
is a risk of a deficit occurring in oil-yielding crops destined
for biofuel production;

— the Commission points out that cultivation of non-food
crops has developed more in areas of arable production in
north-western Europe than in the Mediterranean regions
and less-favoured regions. Aid to the tune of 63 euros per
tonne multiplied by the average regional yield in cereals is
not enough to encourage the development of new non-
food crops;

— it is not just crops intended for biomass production that
are cultivated over several years; certain industrial plants
can be harvested 3.5 to 7 years after being planted, and
proposals should be made that cover them.

In general, a new crop cannot be profitable right away

3.6.
unless it has undergone trials for several years.

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It is therefore necessary to continue funding and encouraging
research, but it would also be a good idea to think about an
aid scheme for developing non-food crops in which industry
has shown a real interest. In such cases, start-up aid over a
period of five to seven years would be a minimum.

One could also imagine aid — at different rates — assessed in
the light of the difference in price with the product to be
replaced.

3.7.
It must not be forgotten that non-food products lead
to co-products that are often protein-rich and intended as
animal feed. It should be noted that the EU imports two-thirds
of its requirements of protein-rich substances.

It is also clear that the decoupling of aid makes the Blair House
agreements obsolete, especially the provision relating to the
equivalent of one million tonnes of soya cakes.

3.8.
Introducing new crops or recultivating certain species
may generate processing activities or create jobs at local level
provided the development project uses available skills and is
adapted to local conditions.

In view of rural desertification, growing environmental prob-
lems and the difficulties that European agricultural commodi-
ties are having in finding outlets, one must not overlook non-
food products which may help resolve certain problems; one
should instead propose a framework that is adapted to their
specific profile.

3.9.
The objectives set out in the Commission White Paper
on renewable energy sources are laudable, but they cannot be
achieved unless financial provisions are adopted, which they
have not yet been. The political decision-makers, in particular
the Parliament, must earmark sufficient funds to achieve the
objectives they have set.

Brussels, 12 April 2000.

The President

of the Committee of the Regions

Jos CHABERT