Communication from the Commission to the Council and the European Parliament - Options to promote the cultivation of plant proteins in the EU
Date: 2001-03-16
Institutions: European Commission
Subjects: EU Member State, crop production, fodder, oleaginous plant, set-aside, vegetable protein

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 16.3.2001
COM(2001) 148 final/2

ANNULE ET REMPLACE
LE COM (2001) 148 final
Concerne les 11 langues

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Introduction

In its special session of 4 December 2000, addressing the latest developments regarding BSE,
the Council called on the Commission to analyse in greater detail the supply and demand for
protein-rich plants and to draw its consequences for the policy currently being pursued in this
sector and for set-aside. In its session of 26 February 2001, the Council asked to provide such
an analysis for its session in March.

This communication concentrates on a limited number of key options that are repeatedly put
forward  in  the  political  debate  to  promote  the  cultivation  of  plant  proteins  in  the  EU.  The
options  are  examined  against  the  background  of  the  analysis  carried  out  in  the  working
document of the Commission’s services on “Supply and demand of protein rich crops in the
EU following the BSE crisis”.

All calculations and estimates have been made in a medium term perspective and refer to the
latest medium term forecasts of the Commission services.

(cid:20)(cid:17)

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A key element in the Agenda 2000 decisions was the alignment of the oilseed aid to
that of cereals as of 1 July 2002, i.e. 63 …(cid:18)W(cid:17)(cid:3)7KH(cid:3)DLG(cid:3)ZLOO(cid:3)WKHUHE\(cid:3)LQ(cid:3)WKH(cid:3)IXWXUH(cid:3)EH(cid:3)IL[HG
and no longer subject to any reduction as under the Blair House commitments in case
the  total  area  of  some  4.93  Mio  ha  is  exceeded.  Any  change  in  the  Agenda  2000
decisions which might have some short term benefits should be seen in the context of
the disadvantages this would have in the long run.

Having said so, a possible solution to increase plant protein production in the short
and medium run (next 2-5 years), would be to maintain the crop specific RLOVHHGV aid
scheme  and  to  fix  the  aid  at  a  level  sufficiently  attractive  to  increase  the  area
cultivated  with  oilseeds.  However,  this  solution  would  be  relatively  costly  and,  of
course,  the  oilseeds  area  would  be  limited  by  the  Blair  House  agreement  to  some
4,93  Mio  ha,  i.e.  some  375 000  ha  more  than  expected  according  to  the  latest
medium term forecasts by The Commission services. In addition, this solution would
de facto dismantle  a key element of  the Agenda 2000 reform towards more market
orientation. The Blair  House  limit  could rapidly become a limiting factor if market
prices for oilseeds increase, in the long run, following demand increases.

According to simulations by the Commission services against the background of the
latest medium term forecasts, an oilseeds specific aid of about 75 …(cid:18)W(cid:3)FRXOG(cid:3)SRVVLEO\
have the effect, in the short to medium term, to bring the area cultivated with oilseeds
(for  food  purposes)  in  the  EU  back  to  the  level  of  the  Blair  House  limit,  if  the
possibility  to  apply  a  crop  specific  yield  for  oilseeds  would  be  maintained  and  if
price developments  for  cereals and  oilseeds do not deviate  significantly  from  those
assumed  in  the  medium  term  forecasts.  The  additional  cost  (expenditure)  of
introducing such an aid would amount to some 474 Mio …(cid:3)SHU(cid:3)\HDU(cid:17)(cid:3)7KLV(cid:3)DPRXQW(cid:3)KDV
been  estimated  assuming  a  full  implementation  of  the  Agenda  2000  reform,  i.e.
against a non-crop specific arable aid of 63 …(cid:18)W(cid:17)(cid:3),W(cid:3)GRHV(cid:3)QRW(cid:3)WDNH(cid:3)LQWR(cid:3)DFFRXQW(cid:3)FKDQJHV
in expenditure for (cereal) intervention and refunds. These changes, however, would
appear to be minor.

Production of oilseeds on the 375 000 additional hectares would correspond to some
370 000  t  of  soya  meal  equivalent  (as  compared  to  additional  needs  of  some

2

1-1.5 Mio  t).  If  one  relates  the  additional  expenditure  to  the  additional  quantities
produced  in  terms of soya meal  equivalent,  the  opportunity  cost  would  be  of  some
1.270 …(cid:3)SHU(cid:3)DGGLWLRQDO(cid:3)WRQ(cid:3)RI(cid:3)VR\D(cid:3)PHDO(cid:3)HTXLYDOHQW(cid:17)(cid:3)7KLV(cid:3)ILJXUH(cid:3)FRPSDUHV(cid:3)WR(cid:3)DQ(cid:3)LPSRUW
price of some 220-230 …(cid:18)W(cid:3)RI(cid:3)LPSRUWHG(cid:3)VR\D(cid:3)PHDO(cid:17)

By far the biggest part of the additional expenditure would benefit the 4.56 Mio ha
which would also be sown under  Agenda 2000 conditions with a non crop-specific
aid of  63  …(cid:18)W(cid:17)(cid:3)7KHUHIRUH(cid:15)(cid:3)WKHRUHWLFDOO\(cid:15)(cid:3)D(cid:3) PRUH(cid:3)HIILFLHQW(cid:3) RSWLRQ(cid:3) PLJKW(cid:3)EH(cid:3)WR(cid:3) OLPLW(cid:3) WKH
additional  oilseed  payment  only  to  additional  oilseed  area.  However,  defining  and
implementing  a  concept  of  “additional  area”  could  raise  a  number  of  serious
political, legal and administrative problems.

(cid:21)(cid:17)

3URWHLQ(cid:3)FURSV

3URWHLQ(cid:3)FURSV (peas, beans, sweet lupins) are generally sown in spring. They receive
a  crop  specific  aid  which  has  been  reduced  as  a  consequence  of  the  Agenda  2000
reform, but could be increased again by 6 …(cid:18)W(cid:3)WR(cid:3)(cid:26)(cid:27)(cid:15)(cid:23)(cid:28)(cid:3)…(cid:18)W(cid:17)(cid:3)$Q\(cid:3)LQFUHDVH(cid:3)EH\RQG(cid:3)WKLV
figure could remove this aid from the protection afforded by the peace clause.

According  to  simulations  carried  out  by  The  Commission  services  against  the
background  of  the  latest  medium  term  market  forecasts,  the  effect  of  such  an  aid
increase  on  production  would  appear  to  be  quite  limited,  about  10 000-20 000  ha.
Even an increase to 100 …(cid:18)W(cid:15)(cid:3)DV(cid:3)UHTXHVWHG(cid:3)E\(cid:3)VRPH(cid:3)SURIHVVLRQDO(cid:3)RUJDQLVDWLRQV(cid:15)(cid:3)ZRXOG
only add some 30 000 to 50 000 ha, according to the simulations. The smallness of
the increase is explained mainly by (expected) favourable cereal price developments
and thereby the attractiveness to grow cereals. It should be noted, however, that the
model forecasts a protein crop area which, after full implementation of Agenda 2000
(and without any additional aid), would be with some 1.3 Mio ha, about 200 000 ha
above today’s level. The additional expenditure would amount to some 47 Mio …(cid:3)LQ
the case of an increase of the aid by 6 …(cid:18)W(cid:3)DQG(cid:3)WR(cid:3)PRUH(cid:3)WKDQ(cid:3)(cid:21)(cid:21)(cid:19)(cid:3)0LR(cid:3)…(cid:3)LQ(cid:3)WKH(cid:3)FDVH(cid:3)RI
an increase by 27,5 …(cid:18)W(cid:3)WR(cid:3)UHDFK(cid:3)DQ(cid:3)DLG(cid:3)OHYHO(cid:3)RI(cid:3)(cid:20)(cid:19)(cid:19)(cid:3)…(cid:18)W(cid:17)

If 20 000 additional hectares would be put into production with a 6 …(cid:18)W(cid:3)LQFUHDVH(cid:3)RI(cid:3)WKH
aid,  the  additional  production  would  correspond  to  some  50 000  t  of  soya  meal
equivalent.  The  total  price  to  be  paid  in  terms  of  additional  support  expenditure
would be about 990 …(cid:3)IRU(cid:3)HDFK(cid:3)DGGLWLRQDO(cid:3)WRQ(cid:3)RI(cid:3)VR\D(cid:3)PHDO(cid:3)HTXLYDOHQW(cid:17)

With  an  additional  aid  of  27.5  …(cid:18)W(cid:3) DQG(cid:3) (cid:24)(cid:19) 000  additional  hectares  the  additional
production would correspond to  some 120 000 t  of  soya meal equivalent. The  total
price to be paid in terms of additional support  expenditure would  be about  1.840 …
for each additional ton.

The main disadvantage of an increase in the aid for protein crops, is its very limited
efficiency  (relatively  high  cost,  very  modest  increase  in  protein  supply).  It  has,
however,  to  be  noted  that  this  low  efficiency  has  been  calculated  on  the  basis  of
model results. The modelling conditions for protein crops in the model used by The
Commission services are more limiting than for other arable crops.

If one assumes, for the purpose of illustration, that an increase in the protein crop aid
to 100 …(cid:18)W(cid:3)ZRXOG(cid:3)OHDG(cid:3)WR(cid:3)WKH(cid:3)FXOWLYDWLRQ(cid:3)RI(cid:3)DQ(cid:3)DGGLWLRQDO(cid:3)DUHD(cid:3)RI(cid:3)(cid:20)(cid:24)(cid:19) 000 ha, i.e. three
to five times the outcome of the model simulation, the overall result compared to the

3

Agenda  2000  baseline  would  improve,  but  the  final  conclusions  would  remain
basically the same:

– 

– 

– 

increase of production in soya meal equivalents: + 360 000 t,

additional cost: 242 Mio …(cid:15)

opportunity  cost  per  tonne  of  additional  soya  meal  equivalent:  675  …(cid:3) (cid:11)WR(cid:3) EH
compared to 220-230 …(cid:18)W(cid:3)IRU(cid:3)LPSRUWHG(cid:3)VR\D(cid:3)PHDO(cid:12)(cid:17)

As in the case of oilseeds, most of the additional aid would benefit the area, which
would also be sown under Agenda 2000 conditions. In other words: it would give an
additional  economic  advantage  to  protein  crop  producers  for  what  they  already
produce.

Protein  crop  growing  is  most  likely  to  lead  to  increased  nitrate  leaching  from
agricultural  fields  with  consequent  water  pollution  unless  particular  environmental
precautions  are  taken.  This  would  represent  another  obstacle  for  promoting  these
kind of crops.

(cid:22)(cid:17)

3URWHLQ(cid:3)ULFK(cid:3)FURSV(cid:3)RQ(cid:3)VHW(cid:16)DVLGH(cid:3)ODQG

The option of  authorising  the  growing of protein crops  or  other  protein rich  fodder
crops  on  VHW(cid:16)DVLGH  land  looks  attractive  at  first  glance  as  there  would  be  no  direct
budget  cost  and  could  nevertheless  present  a  strong  incentive  to  produce  more
protein rich plants. However, this solution, too, raises a number of questions.

There are, first of all, two questions of principle:

– 

– 

(Compulsory)  set  aside  was  introduced  as  a  market  regulation  instrument
(market  regulation  through  production  limitation,  mainly  for  cereals).  It  was
meant to be reduced if the market suffered from scarce supplies. Dedicating the
set-aside  area  to  other  crops  reduces  the  flexibility  needed  for  using  it  for
market regulation. Some experts expect the wheat market to boom again in the
years to come so that this flexibility might be needed.

Set  aside  is  a  provision  of  the  EU’s  arable  regime,  which  plays  an  important
role  in  its  production  limiting  effects.  By  growing  a  crop  on  set-aside  land
which  competes  on  the  market  with  cereals  and  oilseeds  the  EU  would
somewhat diminish its effectiveness in this regard. This would not be a step to
be taken lightly in view of the importance the EU attaches to the Blue Box as a
contribution to the process of agricultural reform. A basic requirement of Blue
Box payments is that they are given under production limiting programmes.

Apart from these questions of principle, other arguments deserve consideration:

– 

If  the  cultivation  of  protein  crops,  which  already  get  the  arable  crop  aid  plus
9,5 …(cid:18)W(cid:3)(cid:11)SHDV(cid:15)(cid:3)EHDQV(cid:15)(cid:3)VZHHW(cid:3)OXSLQV(cid:12)(cid:15)(cid:3)ZRXOG(cid:3)EH(cid:3)DOORZHG(cid:3)RQ(cid:3)VHW(cid:16)DVLGH(cid:3)ODQG(cid:15)(cid:3)WKHUH(cid:3)LV
a risk that farmers will reduce the normal production of these crops (and grow
instead more profitable cereals) and replace it by production on set-aside land
(in  order  to  continue  to  have  the  agronomic  benefits  of  these  crops  in  crop
rotation).

4

– 

– 

If the EU would allow the cultivation of those protein rich fodder crops on set-
aside land which is also eligible for the per tonne dried fodder aid, there would
be  a  risk  that  producers  benefit  from  both  aids.  Of  course,  this  could  be
excluded in the legal texts.

If  the  cultivation  of  protein  rich  fodder  crops  would  be  allowed  on  both
compulsory and voluntary set-aside land (or only on voluntary set-aside land),
the large margin farmers have to enter into voluntary set aside would lead to a
de facto introduction of these crops into the arable crop regime.

Taking account of these different arguments the Commission has so far proposed – to
foster organic production - to authorise the cultivation of nitrogen fixing fodder crops
like  clover  grass on  set-aside  land  for  organic farmers  only  who  depend  more  than
other  on  well  studied  crop  rotations  and  have,  in  many  cases,  mixed  farms  so  that
they can benefit directly from the fodder crops for on-farm use.

(cid:23)(cid:17)

’ULHG(cid:3)IRGGHU

’ULHG(cid:3)IRGGHU is mainly fed to ruminants for which animal meal is already forbidden
since a number of  years. Nevertheless, some argue that if ruminants consume more
dried fodder, they are likely to consume less other proteins, which are then available
for other animals. There are also discussions about the environmental friendliness of
dried fodder production. In the Southern Member States, the areas are often irrigated
and in all Member States the process of dehydration needs energy (usually fuel), with
the exception of sun dried fodder the production of which is, however, declining.

A relatively  simple option would  be to  increase the maximum  guaranteed  quantity,
for example, by 10% or some 440 000 t and to decrease the aid slightly, for example
by 5%. This would lead to additional costs of some 13,7 Mio …(cid:17)

An  additional  quantity  of  440 000  t  of  dried  fodder,  if  really  produced,  would
correspond to some 150 000 t of soya meal equivalent. The total price to be paid in
terms of additional support expenditure would be about 93 …(cid:3)IRU(cid:3)HDFK(cid:3)DGGLWLRQDO(cid:3)WRQ
of soya meal equivalent. However, one has to be aware that dried fodder production
is  currently  overshooting  the  maximum  guaranteed  quantity  by  about  200 000  t  in
1999/2000 and an estimated 600 000 t in 2000/01. It is therefore not certain that an
increase in the maximum guaranteed quantity will really lead to the same increase in
production. It could in fact be used simply to cover the already exceeding quantities.

Concluding remarks

1. 

As the use of animal meals for ruminants is already forbidden for a number of years
in  the  EU,  the  ban  decided  by  the  Council  in  December  affects  mainly  pig  and
poultry meat production.

Moreover,  following the  BSE  crisis,  the  demand  for  and  the  production  of  pig  and
poultry meat are expected to increase. This will increase the need of feed proteins in
these two sectors, in addition to the need to replace about 2 Mio t of animal meals.

2. 

There  is  no  major  problem  to  replace  protein  from  animal  meals  by  protein  from
plants. The best source of plant protein in this respect is soya meal.

5

However, under current price relationships between cereals and soya meal (as well as
other  oil  meals),  the  feed  industry  and  the  farmers  will  not  react  by  simply  using
more soya meal. Their response will be threefold:

– 

– 

– 

The  feeding  of  protein-rich  ingredients  will  be  reduced  to  the  minimum  zoo-
technical requirements. This is expected to lead to a slight overall reduction of
the use of crude protein in animal feed  as compared to  1998 and 1999,  when
soya meal prices were extremely low.

The uptake of cereals in animal feed will increase. Of course, cereals provide
mainly energy and less protein. But with an average protein content of 10-12%,
an  expected  additional  uptake  of  5  Mio  t  in  2001  (calendar  year)  would  also
provide some 0.5-0.6 Mio t of crude protein.

Any  remaining  deficit  will  be  mainly  covered  through  additional  imports  of
soya meal. Taking into account the slight reduction of crude protein use and the
additional  protein  provided  through  cereals,  the  additional  quantities  of  soya
meal needed would appear to remain quite limited (1-1.5 Mio t).

3. 

4. 

There  is  no  problem  of  availability  of  soya  meal  on  the  world  market.  On  the
contrary,  the  additional  quantities  needed  can  easily  be  imported.  They  would  add
some 5% to existing imports.

The  options  presented  in  this  communication  would  lead  to  an  increase  in
domestically  produced  plant  proteins.  However,  each  of  them  would  satisfy  the
additional needs only to a limited extent, and in some cases only in an indirect way,
as they would be mainly targeted at ruminants and not at pigs and poultry. Some of
the  options  would  lead  to  additional  expenditure  and  the  opportunity  costs  per
additional  ton  of  soya  meal  equivalent  would  appear  to  be  relatively  high.  In  all
cases, careful attention has to be paid to possible WTO implications.

6

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(1) With an oilseed-specific aid, the maximum oilseed area corresponds to the Blair House limit, thus not all of protein shortage can be covered.
(2) Additional budgetary cost compared to Agenda 2000, taking into account shifts in area between oilseeds/protein crops and cereals (by

2005/06) but not changes in market expenditure for cereals.

7