Proposal for a Council Regulation amending Regulation (EC) No 1673/2000 on the common organisation of the markets in flax and hemp grown for fibre
Date: 2003-11-21
Institutions: European Commission
Subjects: aid to agriculture, common organisation of markets, derogation from EU law, flax, hemp, regulation of agricultural production

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.11.2003
COM(2003) 701 final

2003/0275 (CNS)

REPORT FROM THE COMMISSION TO THE COUNCIL

on production trends in the various Member States and the impact of the reform
of the common organisation of the market in flax and hemp grown for fibre
on the outlets and economic viability of the sector

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1673/2000 on the common organisation of the markets
in flax and hemp grown for fibre

(presented by the Commission)

REPORT FROM THE COMMISSION TO THE COUNCIL

on production trends in the various Member States and the impact of the reform
of the common organisation of the market in flax and hemp grown for fibre
on the outlets and economic viability of the sector

1.

INTRODUCTION

This report and the legislative proposals that accompany it are presented in accordance with
Article 15(1)  of  Council  Regulation  (CE)  No 1673/2000  of  27 July  2000  on  the  common
organisation of the markets in flax and hemp grown for fibre1, which lays down that:

“Not  later  than  31 December  2003,  the  Commission  shall  submit  a  report  to  the  European
Parliament and the Council, if necessary accompanied by proposals, on production trends in
the various Member States and the impact  of  the reform  of the common  organisation  of the
market on the outlets and economic viability of the sector. It shall also examine the maximum
content of impurities and shives applicable to short flax fibre and hemp fibre.

Should  the  need  arise,  the  report  shall  serve  as  a  basis  for  a  re-apportionment  of,  and
possible increase in, the national guaranteed quantities. In particular, the Commission shall
take account of the level of production, processing capacity and outlets on the market.”

Article 15 also provides for a second report, to be submitted in 2005, on the operation of the
system  of  processing  aid  for  flax  and  hemp  grown  for  fibre  introduced  by  Regulation  (EC)
No 1673/2000.

2.

THE REFORM ADOPTED IN 2000

In July 2000, the Council adopted a two-part reform of the flax and hemp sector. Firstly, the
two  products  were  incorporated  into  the  general  support  arrangements  applicable  to  the
producers of certain arable crops. Secondly, processing aid was granted to authorised primary
processors obtaining fibres from flax and hemp straw.

For  long  flax  fibre,  aid  of  EUR 160  per  tonne  of  fibres  will  be  granted  until  the
2005/06 marketing  year,  the  amount  then  being  increased  to  EUR 200  per  tonne  from
2006/07. A smaller amount of EUR 90 per tonne will be paid until 2005/06 for short flax fibre
and hemp fibre containing not more than 7.5% impurities and shives, that limit having been
chosen so as not to encourage the production of fibre aimed at low-value outlets. The Member
State  may,  however,  derogate  from  that  limit,  increasing  it  to  15%  for  short  flax  fibre  and
25%  for  hemp  fibre  during  the  2001/02  to  2003/04 marketing  years  in  order  to  allow  the
processing industry to adjust to the new requirements.

1

OJ L 193, 29.7.2000, p.16.

2

                                                
This  processing  aid  is  subject  to  a  stabiliser  mechanism  consisting  of  two  maximum
guaranteed quantities, one for long flax fibre and the other for short flax fibre and hemp fibre,
allocated  among  the  Member  States  in  the  form  of  national  guaranteed  quantities  (NGQs),
each Member State having the possibility of making transfers between its two NGQs using a
coefficient of equivalence intended to ensure the budgetary neutrality of the operation.

Additional  aid  is  also  granted  up  to  the  2005/06  marketing  year  to  authorised  primary
processors  flax  covering  areas  located  in  certain  traditional  production  areas  for  long  fibre.
This aid varies between EUR 50 per hectare and EUR 120 per hectare, according to the area.

3.

INFORMATION AVAILABLE

In order to allow the smooth operation of the aid scheme, while taking account of the special
characteristics  of  the  sector,  the  Commission  fixed  the  period  during  which  straw  can  be
processed  at  22  months.  Consequently,  when  this  report  was  written,  the  Commission  had
only provisional data on the first  two  years  of  application  of  the  new  arrangements,  i.e.  the
2001/02  and  2002/03 marketing  years  and  initial  forecasts  for  2003/04.  It  should  also  be
stressed  that  production  during  the  2001/02 marketing  year  was  seriously  affected  by  very
unfavourable  weather  and  cannot  therefore  be  considered  as  being  representative  of
production trends.

The information available does not therefore allow for a detailed analysis of production levels
after the reform and of whether or not the NGQs have been set at the correct level. However,
certain  conclusions  can  be  drawn  on  the  basis  of  the  provisional  data  available  and
information gathered from operators.

Firstly,  the  interest  in  traditional  production  of  long  flax  fibre  has  continued  and  even
increased. The average area sown to flax in the  three countries mainly  producing long  fibre
has  increased  from  around  65 000 hectares  before  the  reform  to  an  average  of  around
90 000 hectares. The long fibre market has been profitable for several years and seems to be
much  less  subject  to  cyclical  recessions.  Downstream,  the  reduction  in  the  total  production
costs  of  the  end  product  due  to  the  major  development  of  the  spinning  sector  in  China,  a
country to which European fibres are increasingly exported, has enabled flax to break into the
market for middle-of-the-range clothing where the demand is more stable than the top-of-the-
range market to which flax was previously restricted.

With regard to the production of short flax and hemp fibres, the situation is radically different
to that before the reform: sowing with the sole  aim of receiving a Community premium has
disappeared. The total area in the Community used solely for the production of short flax fibre
is  no  more  than  5 000 hectare.  As  for  hemp,  the  area  appears  to  have  stabilised  at  around
15 000 hectares in the Community as a whole.

The sector has seen important developments as regards the diversification of outlets. The use
of short flax fibre and hemp fibre in insulating materials, which showed signs of a promising
future  a  few  years  ago,  seems  to  be  gradually  finding  a  market  niche.  The  manufacture  of
composite materials from these fibres has now become a reality, still on a small scale but with
interesting  prospects:  today,  several  very  popular  models  of  car  include  parts  such  as  door
panels or rear shelves manufactured from composite materials that contain flax or hemp fibre.
Pallets,  packaging  materials  and  technical  components  are  also  markets  that  the  sector  is
currently trying to break into by exploiting the technical and environmental qualities of short
flax  fibre  and  hemp  fibre.  There  has  also  been  progress  with  the  use  of  shives  and  dust

3

produced during fibre production, such as in the production of furniture panels, mulch, animal
litter and horticultural products.

However, the principal outlets, in terms of quantity, for both short flax fibre and hemp fibre
have  not  changed:  the  paper  industry,  particularly  for  the  production  of  fine  and  technical
papers and for strengthening recycled paper, and the textile industry, where mainly short flax
fibre is used, mixed with other fibres. It should be stressed that most short flax fibre and hemp
fibre intended for these outlets has, after primary processing, more than 7.5% impurities, even
though  manufacturing  processes  sometimes  require  more  effective  cleaning  at  a  later  stage.
These fibres are therefore eligible for aid under the derogation referred to above, which most
of  the  producer  Member  States  have  decided  to  apply.  It  is  clear  that,  at  this  stage,  the
continued  activity  of  the  primary  processors  producing  these  fibres  would  be  compromised
were processing aid not granted for fibres containing more than 7.5% impurities.

4.

OPERATION OF THE ARRANGEMENTS

From their entry into force, the new support arrangements for flax and hemp grown for fibre
have had  clear positive  effects on the sector.  Inclusion  in  the  arrangements  for  arable  crops
has  brought  simplification  for  farmers  and  put  the  two  crops  on  an  equal  footing  with
competing crops. The new system of processing aid has allowed the maintenance or even an
increase in production as a profitable economic  activity  and  encouraged the whole sector to
endeavour  to  fully  exploit  the  products  and  by-products  obtained,  with  positive  results  in
terms of performance and competitiveness. For the future, the system of aid for producers has
been  incorporated  into  the  system  of  single  payments  adopted  under  the  reform  of  the
common agricultural policy of June 2003.

At this stage, and in view of the lack of final data on production and of the rather short period
that has elapsed since the new system of aid entered into force, it would seem sensible not to
amend  the  system  of  processing  aid  before  a  more  complete  analysis  can  be  carried  out  in
2005. That therefore means that the possibility for Member States to derogate from the 7.5%
limit on impurities and shives laid down until the 2003/04 marketing year should be extended
to 2005/06.

5.

SUMMARY AND CONCLUSIONS

This report has been drawn up in response to the Council’s request for an examination of the
development  of  the  production  of  flax  and  hemp  for  fibre  after  the  reform  of  the  common
organisation of the sector, which entered into force on 1 July 2001.

The data currently available  do not allow for a  detailed  analysis of production trends in  the
Member States or of whether or not the NGQs have been set at the correct level. However, on
the  basis  of  the  information  gathered,  it  can  be  concluded  that  the  arrangements  have  had
clear positive effects on the sector.

Under  these  circumstances,  no  amendments  should  be  made  to  the  existing  system  of  aid
before  the  more  complete  analysis  to  be  carried  out  for  the  report  planned  for  2005  is
available.  That  therefore  means  that  the  possibility  for  Member  States  to  derogate  from  the
7.5%  limit  on  impurities  and  shives  laid  down  until  the  2003/04 marketing  year  should  be
extended to 2005/06.

4

Member State

B

DK

D

E

F

I

NL

A

P

FIN

S

UK

Total

ANNEX

16 887

19

Area 2001/02 (ha)

– flax

– hemp

Area 2002/03 (ha)

– flax

– hemp

Fibre produced in 2001/02
(provisional)
– long flax
– short flax
– hemp

Estimated fibre
production in 2002/03

– long flax
– short flax
– hemp

NGQ 2002/03 (1)

– long flax
– short flax and hemp
Limit on impurities and
shives (derog. 2002/03)

– short flax
– hemp

0

15 316

0

8 269
1 984
0

18 400
10 350
0

18 505
0

15 %

297

1 901

299

2 035

76
0
0

457

789

55

694

68 117

7 010

68 434

7 730

0
81
1

35 118
23 853
8 224

109
167
2 608

0
13
1 146

100 000
61 500
15 400

7

0

0

0
0
0

0
0
0

0
0

600
12 140

50
20 000

76 835
15 071

0

155

6

239

0
0
0

0
8
150

0
180

4 428

969

4 053

2 106

2 429
0
0

4 222
2 438
4 085

4 800
5 550

132

848

171

310

0
0
0

103
171
349

0

0

0

0

0
0
0

0
0
0

365

113

192

33

5
26
0

0
270
49

0

0

0

0

0
0
0

0
0
0

4 860

3 303

177

1 409

95 562

15 095

88 703

14 555

0
32
822

45 896
25 974
9 046

0
95
1 160

122 834
75 013
24 947

150
2 500

50
1 750

200
2 250

50
2 250

50
12 100

101 290
73 791

15 %
25 %

15 %
25 %

15 %
25 %

15 %
25 %

15 %
25 %

10 %
10 %

15 %
25 %

(1) Where appropriate, after transfers in accordance with Article 3(5) of Regulation (EC) No 1673/2000.

5

EXPLANATORY MEMORANDUM

Article 15(1) of Council Regulation (CE) No 1673/2000 of 27 July 2000 on the common organisation
of the markets in flax and hemp grown for fibre lays down that:

"Not later than 31 December 2003, the Commission shall submit a report to the European Parliament
and the Council, if necessary accompanied by proposals, on production trends in the various Member
States  and  the  impact  of  the  reform  of  the  common  organisation  of  the  market  on  the  outlets  and
economic viability of the sector. It shall also examine the maximum content of impurities and shives
applicable to short flax fibre and hemp fibre.

Should  the  need  arise,  the  report  shall  serve  as  a  basis  for  a  re-apportionment  of,  and  possible
increase in, the national guaranteed  quantities.  In particular,  the  Commission  shall take  account of
the level of production, processing capacity and outlets on the market."

Article 15 also provides for a second report, to be submitted in 2005, on the operation of the system of
processing aid for flax and hemp grown for fibre introduced by Regulation (EC) No 1673/2000.

The data currently available do not allow for a detailed analysis of production trends in the Member
States or of whether or not the NGQs have been set at the correct level. However, on the basis of the
information gathered, it can be concluded that the arrangements have had clear positive effects on the
sector.

Under these circumstances, no amendments should be made to the existing mode of operation of the
system of aid before the more complete analysis to be carried out for the report planned for 2005 is
available.

However,  the  second  subparagraph  of  Article 2(3)(b)  of  Regulation  (EC)  No 1673/2000  lays  down
that  the  Member  States  may,  until  the  2003/04 marketing  year,  derogate  from  the  limit  of  7.5%
impurities  and  shives  and  grant  aid  for  short  flax  fibre  and  hemp  fibre  containing  a  percentage  of
impurities and shives of less than 15% and 25% respectively. Regulation (EC) No 1673/2000 should
therefore  be  amended  to  extend  the  possibility  of  making  a  derogation  for  two  years,  to  the
2005/06 marketing  year,  which  should  consolidate 
is
experiencing.

the  positive  development 

the  sector 

As regards the countries that will accede to the European Union on 1 May 2004, six of them produce
long flax and short flax fibre and three produce hemp fibre. The extension of the derogation from the
7.5% limit  being  proposed  for  two  marketing  years  will  give  the  new  Member  States  the  same
opportunity as the existing Member States to adjust to the important changes the sector is undergoing.

6

2003/0275 (CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC) No 1673/2000 on the common organisation of the markets
in flax and hemp grown for fibre

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular the third
subparagraph of Article 37(2) thereof,

Having regard to the proposal from the Commission2,

Having regard to the opinion of the European Parliament3,

Having regard to the opinion of the European Economic and Social Committee4,

Having regard to the opinion of the Committee of the Regions5,

Whereas:

(1)

(2)

(EC)
The  second  subparagraph  of  Article 2(3)(b)  of  Council  Regulation 
No 1673/20006 lays down that the Member States may derogate from the limit of 7.5%
impurities  and  shives  and  grant  processing  aid  for  short  flax  fibre  containing  a
percentage  of  impurities  and  shives  of  between  7.5%  and  15%  and  for  hemp  fibre
containing a percentage of impurities and shives of between 7.5% and 25%. However,
advantage may be taken of this possibility only until the 2003/04 marketing year.

At  the  present  time,  the  percentage  of  impurities  and  shives  in  most  short  flax  fibre
and hemp fibre obtained during primary processing exceeds the limit of 7.5%. In order
to  consolidate  the  positive  development  the  sector  is  experiencing  and  to  allow  for
further improvements in competitiveness, the possibility of Member States to derogate
from that limit should be extended for two marketing years.

(3)

Regulation (EC) No 1673/2000 should be amended accordingly,

2

3

4

5

6

OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
OJ C …, …, p. …
OJ  L  193,  29.7.2000,  p.16.  Regulation  amended  by  Commission  Regulation  (EC)  No 651/2002
(OJ L 101, 17.4.2002, p. 3).

7

                                                
HAS ADOPTED THIS REGULATION:

Article 1

In the second subparagraph of Article 2(3)(b) of Regulation (EC) No 1673/2000, “2001/2002
to 2003/2004” is replaced by “2001/02 to 2005/06”.

This  Regulation  shall  enter  into  force  on  the  day  following  its  publication  in  the  Official
Journal of the European Union.

Article 2

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, on

For the Council
The President

8

FINANCIAL STATEMENT

1.

2.

3.

4.

BUDGET HEADING:
B1-140

APPROPRIATIONS:
€26 million

TITLE:
Council Regulation amending Regulation (EC) No 1673/2000 on the common organisation of the
markets in flax and hemp grown for fibre.

LEGAL BASIS:
Article 37 of the Treaty

AIMS:
To extend by two years the possibility of derogating from the limit laid down for the authorised
percentages of impurities.

5.

FINANCIAL IMPLICATIONS

5.0

5.1

CHARGED TO THE EC BUDGET

NATIONAL AUTHORITIES
OTHER

EXPENDITURE
-
(REFUNDS/INTERVENTIONS)
-
-
REVENUE
-
(LEVIES/CUSTOMS DUTIES)
NATIONAL
-

OWN RESOURCES OF THE EC

5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE

5.2 METHOD OF CALCULATION:

-

12 MONTH
PERIOD

(EUR million)
-

CURRENT
FINANCIAL
YEAR 2003
(EUR million)
-

FOLLOWING
FINANCIAL
YEAR 2004
(EUR million)
-

-

-

-

2005
-
-

2006
-
-

2007
-
-

2008
-
-

6.0

6.1

CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN
THE RELEVANT CHAPTER OF THE CURRENT BUDGET?

CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS
OF THE CURRENT BUDGET?

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY?

6.3 WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS?

YES / NO

YES / NO

YES / NO

YES / NO

OBSERVATIONS:

9