Source: EURLEX
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2 1 5 9 0 C^fficial]ournal of the European Communities ^ o C 1 2 ^ 7

totheOOp^^ono^the^conom^candSoc^Go^m^tee

The following members,present or represenred,vored^orrhe Opinion

Mr^Mrs^Miss Amaro, Arets, Bazianas, Benro Goncalves, Berger, Berns, Berron, Black, Bleser, Boddy,
Boisseree,Bordes^ages,Bos,Broicher,VascoGal,Garroll,Gavazzun,GeDalloHerrero,Ghrisne,GolomDo,
Gortois, van Oam,Oassis, von derOecken,OellaGroce,OeTavernier,nodd,nonck,nos Santos, Orilleaud,
van ^ekert,^lstner,^tty,^ulen,^lum,^orgasiGaDrera,^randi, freeman, Gayetot,Geuemch,Giacomelh,
Gomez Marnnez, Haas, Hagen, Hancock, Horsken, Hourhuys, Hovgaard lakoDsen, Jenkins, Xazazis,
Xirch^eld,Xitsios,deXnegt, Xroger,LakaMarnn,LandaDurudeSilva,Lappas,Larsen,Laur,Mveran4
Lusrenhouwer,Maddocks,Margot,Marvier,MayayoBello,Mercier,Meyer-Horn,Morales,Morselh, Mutter,
Mumz Guardado, Murphy, ^ielsenB,e^ietsen^,e^ierhaus,^ieuwenhmze,^oordwal, pardon, Petersen,
^etropoulos,^otyzos,^roumens,e^uevedo^o,^afropoutos,^amaekers,SannllanGaheza,Schmirz,Schme
ders,Schoepges, Schweitzer, Silva,SmithLl,Speirs,Staedetm,StraussTukker,Valle^oGatderon,Vanden
Broucke,Vassitaras,VetascoMance^o,Vercettmo,Vlassopoulos,w^aldack,^ick,Zufiaur^arvaiza

The ^otlowmgmemhers,present or represenred,voted against the Opinion

MrBMrs^Miss ^pancio Bravo, ^spmalt,Bagtiano,Gorett^yora,Oroutm,^res4 Gardner, Germozz4 Green,
Xaaos,MachadovonTschusLMametn,^eroOaSilva,de^ormann,^anero^lorez,^ellenerG,^ellener
^,^errin^ettener,Schade^outsen,Srone^ugh,Tamhn,Telles,TesoroOhver,TermesGarrero,^hirworth

The following memhers,presenr or represented, ahstamed

Mr^Mrs^Miss ^rena,Beate,Beltram4Gamphett,Geyrac,Goltas,^lvesGonde,Goyle,necaillon,Orago,
^tather,Garcia Morales, Xenna, Low,Moretand, Pearson,^angom-Machiavelh,^iDiere,^oDinson,^olao
Goncalves, ^Oosemgrave,T^ier,Vidal,Wagner

Opinion on u^creas^ng the use of agricultural and forestry resources in the nonfood industrial
and energy sectors^ prospects opened up hy research and technologtcal innovation

(90^C12^1^

COn 2^ Aprdl9^^the Economic and ^ocialCommittee, acting under the fourthparagraph
of Article 20 of its Rules of procedure, decided to draw up an Opinion on increasing the use
of agricultural and forestry resources in the nonfood industrial and energy sectors^ prospects
opened up by research and technological innovation.

The subcommittee on Research and Technology^Agncultural and forestry Resources,
which was responsible for preparing the Committees work on the matter, adopted its
Opinion on 2^Eebruary 1990.1he Rapporteur was AirlOeTavernier, the CoRapporteur
was Air Boddy.

At its 275th plenary session (meeting of 29 Aiarch 1990) the Committee adopted the following
Opinion by an overwhelming ma^onty,with one dissenting vote.

PREAMBLE

In February 1 9 ^ the European Council ask^ed the Com
mission to explore allthe possibilities for intensifying
thenonfood utih^ationof agricultural raw materials
and to present proposals on this subject.

^ i t h this COpimon the Economic and social Committee
aims to help pinpoint potential uses After analysing
the current situation, it goes o n t o e^plorerealpossi
bihties and the requirements to be met for this purpose

No C 124/48 Official Journal of the European Communities 21. 5. 90

To this end the Committee organized (on 19 January
and 26-27 June 1989) hearings to consult the groups
directly concerned (particularly industry, agriculture
and forestry) and employers' and workers' representatives.

The first part of the Opinion contains a number of
general comments on the reasons for stepping up the
use of agricultural and forestry resources for non-food
and energy purposes and outlines the broad prospects.
The second part reviews certain specific sectors: starch
and sugar, oils and fats, biofuels and forestry products.
Lastly, the Committee puts forward a set of recommendations regarding the prospects opened up by research
and technological innovation.

PART ONE: GENERAL REMARKS

1. Reasons justifying greater use of agricultural raw
materials and forestry resources for non-food and

energy purposes

1.1. Firstly, the Committy observes concern and
determination to tackle and alleviate the side-effects of

the recent common agricultural policy (CAP) reform,
which was primarily concerned with ending surpluses
and/or cutting budget costs. In addition to the application of a restrictive pricing policy (particularly for
cereals) this reform imposed production ceilings ('stabilizers') and set in motion a land set-aside programme.

1.1.1. The Commission took the view that studies

into surplus production capacity pointed to the need,
in the Community of the Twelve, to take 11 million to
13 million hectares arable land out of production, i.e.
roughly 10 % of the Community farming area, in order
to restore the balance between supply and demand.

1.1.2. The social, regional, ecological and cultural
implications for certain categories of farmers, and for
the rural environment as a whole, will not be discussed
in this Opinion. Here the Committee would refer to
the Opinion on the future of rural society, adopted on
27 September 1989 ( [1] ), and to the measures advocated
therein.

1.1.3. In the Committee's view, the CAP reform
should open up new prospects for Community agriculture. Forestry, biomass, certain crops such as flax,
hemp, cotton, ornamental plants, aromatic and medicinal plants and other 'alternative' crops will perhaps

(!) OJ No C 298, 27. 11. 1989, p. 32.

be able to play a more important role in European
agriculture and expand outlets.

1.1.4. The introduction of 'alternative' crops will,
however, have to be preceded by a major research and
development (R&D) drive, particularly as regards crop
selection and conditions of cultivation.

1.1.5. In addition to the general CAP reform, the
new (1986) starch and sugar regime adopted by the
Council on 25 March 1986 enables European non-food
industries to make use of these agricultural materials
at more competitive prices ( [2] ).

1.2. Secondly, the Committee notes the need for
stategical diversification and more rational deployment
of the raw materials available in the Community.

1.2.1. Some raw materials (e.g. certain substances of
fossil origin) are exhaustible in the medium term. Policies are therefore implemented to save these products
and deploy them more efficiently and to promote the
use of renewable raw materials.

1.2.2. In the energy sector, this trend also reflects the
Community's determination to diversify and increase
the reliability of its supply sources.

1.3. Though caution is desirable in such matters,
account must be taken, alongside economic and social
considerations, of the environmental protection aspects
which are increasingly playing a key role in the agricultural and industrial development process. This environmental concern relates both to general issues—protection of the ozone layer, reduction of C 0 2 in the atmosphere, etc.—and to problems connected with more
specific or regional phenomena, such as air and water
pollution, acid rain, soil erosion, desertification, protection of certain natural landscapes, etc.

1.3.1. Article 130R of the Treaty thus lays down
that environmental protection requirements are to be a
component of the Community's other policies.

1.3.2. Here increased production and use of renewable vegetable raw materials ( [3] ) for industrial and
energy purposes can be considered conducive to a more
environment-friendly industrial development process
while preserving farming activity, which is seen as a
key prerequisite for a balanced environment, in many
areas of the Community.

1.3.3. However, the Committee would warn against
intensified use of farming techniques inflicting damage

( [2] ) OJ No L 94, 9. 4. 1986.
( [3] ) The concept of 'renewable vegetable raw materials'
encompasses a wide variety of uses of organic materials from
agricultural and forestry plants to the production of algae.

21. 5. 90 Official Journal of the European Communities No C 124/49

on the countryside and thereby endangering the agricultural fabric and harming the environment.

2. Overall prospects

2.1. The Committee has sought to identify the most
promising lines of approach with the 2000-2010 timescale in mind as regards the use of agricultural and
forestry resources in the non-food industrial and energy
sectors, paying particular attention to research and
technological development (R&TD) requirements, in
keeping with its stated aim.

2.2. This Opinion is based on the following assumptions regarding price levels:

— moderate upward trend in the price of oil expressed
in ECU,

— upward trend in the cost of energy from the European coal and nuclear sectors (safety aspects, cost
of decommissioning old installations, environment
protection),

— downward trend in the real prices of cereals and
sugar in the Community.

2.3. The Committee acknowledges that a substantial
R&D drive has already been made, particularly at
Community level, with a view to eventually diversifying
the deployment of agricultural and forestry resources.
This drive will undoubtedly be stepped up.

2.4. A number of Community programmes are under
way, some of them dating back many years. Their
overall results merit attention and new projects are
awaited. The most important of these programmes
are BRIDGE _(_ _[l]_ _),_ ECLAIR ( [2] ), agricultural research ( [3] ),
JOULE ( [4] ), the energy demonstration project programme ( [5] ) and THERMIE ( [6] ).

2.5. Despite the impossibility of carrying out an
exhaustive review of all European research bodies active
in the development of non-food industrial and energy
uses of agricultural and forestry products, the Committee observes that this rapid increase in both Community
and national projects is not guided by a proper strategy,
which is conspicuous by its absence. Nor are there
carefully defined aims to determine research priorities
and financing.

2.6. The research carried out therefore seems too

fragmented to constitute a 'key core' in different fields
and insufficiently geared to industrial or commercial
application.

(!) OJ No L 360, 9. 12. 1989, p. 32.
( [2] ) OJN0L6O, 3.3.1989, p. 48.
( [3] ) OJ No C 164, 13. 6. 1989 (not yet adopted).
( [4] ) O J N o L 9 8, 11. 4. 1989, p. 13.
( [5] ) OJ No L 350, 26. 12. 1985, p. 25.
( [6] ) OJ No C 101, 22. 4. 1989 (not yet adopted).

2.7. The Committee has repeatedly expressed concern over the lack of coordination and concentration

to be observed between related Community research
activities, as well as between closely linked Community
and national research programmes, and over the waste
of effort, duplication, and in some cases inefficient use
of funds, which is likely to result.

2.8. The ESC Opinion on the ECLAIR programme ( [7] )
therefore drew attention to the lack of liaison between

related programmes and the lack of coordination, and
stressed the genuine risk of uncontrolled proliferation of
red tape and expenditure.

2.9. As is evident from an examination of certain

specific sectors, the growing integration of agricultural
and industrial research is a positive development, which
is already encouraged in connection with Community
research programmes but should receive a further
boost. The complexity of the research, the large amount
of know-how to be brought together and the high costs
are all good arguments.

2.10. However, R&TD, especially in biotechnologies, is currently concentrated in the hands of a few large
industrial concerns. In any event farmers and their
organizations (especially farming cooperatives) will
have to participate in the research and renewal effort
in the sectors concerned so as to avoid undue dependence on other sectors. Here the Committee considers

that research centres in the Members States can play a
key role in this broader participation process.

2.11. A concurrent drive to exploit research findings
and disseminate them to the agricultural sector and end
users is of key importance.

2.12. With specific reference to agricultural research
(for example, the selection of new plant varieties), it is
worth remembering that it is difficult—indeed often
impossible—to meet simultaneously the requirements
of the food industry (which is still agriculture's largest
industrial consumer by far) and the requirements of the
non-food industries (including energy).

2.13. In view of increased research into energy raw
materials of agricultural origin and the petroleum sector
—e.g. the oxygenate compounds for adding to unlead

( [7] ) OJ No C 134, 24. 5. 1988, p. 15.

No C 124/50 Official Journal of the European Communities 21. 5. 90

ed petrol: ETBE versus MTBE( [1] ); research on nonpolluting or biodegradable products derived from both
fossil and agricultural raw materials—it is desirable
that the sector concerned, particularly agricultural and
petrochemicals, should be able to act in concert in order
to identify better the present state of affairs, the needs,
the possibilities on both sides, the interactions and the
possible areas of collaboration. This would lead to
better coordination of the research and investement

policies of the agricultural and industrial sectors. A
certain division of labour between the various sectors

concerned could also be achieved on the basis of socio
economic, environmental and regional considerations.
Althought of a subsidiary nature, the role of the Community in such initiatives could be very important.

2.14. Much more than the industrial or the energy
sector, agricultural and forestry in the Community is
fragmented and scattered over millions of holdings
often situated in regions whose socio-economic development is causing major problems. In order to be able
to meet the requirements of the industries that use
agricultural raw materials for non-food purposes, this
fragmention will have to be offset by means of coorperation agreements—particularly mutual and cooperative intiatives—or by means of appropriate short,
medium-or long-term contracts between agricultural
and industrial enterprises. This is the only way of
achieving, on competitive terms, the critical volume of
raw material necessary for large-scale processing and
securing steady supplies for industrial users. Here Community research programmes concerned, like contractual arrangements, can also act as a potential catalyst
cooperation and coordination between the relevant
agri-forestry, industrial and energy sectors.

2.15. The Community's agricultural, social and
regional policies, particularly in the overall framework
of the future policy for renewing rural regions, can be
another important corrective.

2.16. If such correctives are lacking, many disadvantaged agricultural regions will from the outset be losers
in the technological and economic competition that is
going to take place between the economically strong
agricultural regions (Community or other) and the processing industry. This would be contrary to Article
130A of the Treaty which states that «in order to
promote its overall harmonious development, the Community shall develop and pursue its actions leading to

(') ETBE: ethyl tertiary butyl ether of agricultural or synthetic
origin. MTBE: petroleum-based methyl tertiary butyl ether.

the strengthening of its economic and social cohesion »
—and that «in particular the Community shall aim at
reducing disparities between the various regions and
the backwardness of the least-favoured regions ».

2.17. The Committee would also draw attention to

the fact that a number of the technogical and economic
parameters are determined not so much by the European context as by the world market. The multinationals in the energy sphere will undoubtedly have a global
approach: availability and prices of the agricultural raw
materials, short, medium and long-term comparative
advantage. It is up to firms in the Member States and
to the national and Community authorities to find or
create their own opportunities and strong points. The
aid and encouragement of an appropriate policy on the
part of the Community will also be needed.

2.18. The world context places constraints on Community agriculture and industry that must be taken
into account in any policy devised to encourage the
production of agricultural and forestry raw materials
for industrial and energy purposes.

2.19. Certain international agreements—in particular those concluded under the aegis of the General
Agreement on Tariffs and Trade (GATT), with European Free Trade Association (EFTA) and in the context
of the Lome Convention—lay down preferential
arrangements providing for zero duty on a number of
Community imports (e.g. oilseeds, manioc and wood).
These imported raw materials can also be used in
industry and the energy sector, thus competing with
Community products used for the same purposes.

2.20. Such competition is nothing new and already
presents Community agriculture with a serious problem
because of the increased use of cereal substitutes (e.g.
manioc). However, it could be further exacerbated by
new by-products of the chemical and energy sectors.
Failing a revision of these agreements—for instance,
if the Commission proposal for adjusting the balance
between GATT agriculture support and protection
measures were to be accepted—any study of the
matter at issue wil have to take heed of the above

considerations.

2.21. The Committee would also stress that the rapid
succession of political, social and economic upheavals
in the Eastern European countries, including the Soviet
Union, could in the medium term have a significant
impact on both Community agriculture and industry.

21. 5. 90 Official Journal of the European Communities No C 124/51

The Committee welcomes the European Communities'
readiness to make its knowhow and financial resources

available to assist these countries in transforming their
economies. Here it expects the Community also to
frame proposals taking account of the scope R&TD
provides, or will provide, for channelling Eastern
Europe's agricultural and industrial capacity into both
traditional food production and industrial and energy
outlets for agricultural products.

2.22. Taxation is another factor which must be

considered if the processing sectors are to be offered
equitable arrangements vis-a-vis imported products or
if an attempt is to be made to promote the use of certain
raw materials considered to be preeferable (e.g. on
ecological grounds) to others. It will also be advisable
to provide tax incentives for certain R&D investements,
particularly in the energy sphere.

2.23. The two hearnings organized by the Committee particularly showed that extensive pratical possibilities already exist for future use of agricultural and
forestry resources for industrial and energy purposes.
This is confirmed in the Opinion's review of certain
specific sectors. However, it is clear that only a dynamic
policy for exploiting these opportunities to the full
and creating new openings will help to determine the
volume of demand and the potential production of
renewable raw materials.

2.24. As is obvious from the above, such a policy
cannot be framed and implemented in isolation, regardless of the aims pursued in the context of other Community policies: agriculture, food, industry, social,
regional, environment and energy. Ongoing and planned R&TD activites concerning industrial and energy
uses of agricultural and forestry raw materials must
therefore form part and parcel of an effective strategy,
to be defined without delay, which would specify the
role to be played by the Community and the Member
States respectively.

PART TWO: REVIEW OF CERTAIN SPECIFIC SEC
TORS

1. Starch and sugar sectors

1.1. In 1989 some 1,9 million tons of starch will be
used for the manufacture of non-food industrial end

products. In terms of raw materials, this starch was
produced from 1,6 million tons, of maize, 0,5 million
tons of wheat and 3,2 million tons of potatoes. In recent
years the tonnage of starch—to which that of sugar has
also to be added—used for non-food purposes has
increased markedly. This growth is largely due to the
rules introduced by the Community since March 1986
reducing the difference between EC and world prices
in the starch and sugar sectors.

1.2. Though the quantities involved are quite small
compared with total production of the agricultural
products concerned, such measures have helped make
Community industrial users and agricultural producers
more competitive both with comparable non-EEC users
and users of imported petrochemical or vegetable raw
materials, such as manioc.

1.3. To encourage increased use of starch and sugar
for the future, industrial users and farmers must have
guarantees of the continuity and reliability of this new
regulatory framework and its practical provisions, fostering a lasting climate of confidence.

1.4. For this, due account must be taken of the
demands of both the CAP and of the user chemical

sectors. The latter's requirements are a) the availability
of vegetable raw materials at prices which stand comparison with those paid by similar industries in nonEC countries and b) regular supplies. To this end,
regular consultations could be very useful between the
chemical industry and the agricultural sector, involving
both trade organizations and the EC consultative committees. The EC Commission must step up its efforts
to coordinate or reconcile the actions of the various

economic—agricultural, industrial—policy-makers.

1.5. For ecological reasons two areas of particular
interest to the starch and sugar sectors will see major
technological innovations in the near future: a) plastic
materials, particularly materials for plastic bags, which
will have to be made biodegradable (or at any rate
more biodegradable) and b) detergents, where phosphates will have to be phased out. With this in mind,
the Committee stresses that one of the key priorities of
the Community decision-making bodies must be to
devise a sound framework of laws, regulations and tax
measures whose future development can be reliably

No C 124/52 Official Journal of the European Communities 21. 5. 90

forecast. Entrepreneurs will then be in a position to
plan ahead especially as regards medium- and longterm R & D .

1.6. But additional R & D is no less urgent. It is a
fact that the EC is already involved in a multitude of
R & D programmes in many areas. This increased
involvement on the Community's part means that much
more needs to be done right now in the way of coordination and continual updating. In the near future more
research should be concentrated on improving the
response of technology to environment protection
imperatives. An increases use of certain vegetable raw
materials would seem to fit in with this new approach.

2. Oils and fats sector

2.1. The Community uses some 2,7 million tons
of oils and fats for non-food and 10,7 million tons for
food (human and animal purposes). Of this 2,7 million
tons about 40% is imported from non-member
countries, and of this 0,8 million tons is of vegetable
origin and 0,4 million tons of animal origin. The Community supplies 1,5 million tons, of which 1 million
tons is of animal origin and 0,5 million tons of vegetable
origin. It should be noted that EC imports of oils and
fats for technical or industrial purposes other than
food manufacture are liberalized and subject to zero or
reduced (5 %) duty.

2.2. In the oils and fats processing industry there is
sharp competition between the derivatives of petroleum
and of agricultural oils and fats. The trend in environmental protection legislation is likely to favour the use
of vegetable raw materials for industrial purposes, given
among other things their specific natural biodegradability and surfactant properties.

2.3. If the Community oils and fats processing industry is to obtain more of its agricultural raw materials
on the Internal Market, it would like to see an increase
in a) the cultivation of improved traditional oleaginous
plants, e.g. colza with a high erucic content, sunflower
with a high oleic acid content, castor and flax, and
b) the cultivation of new oleaginous plants, such as
euphorbia lathyris and cuphea. Genetic research and
research into adaptation to growing conditions (soil
and climate) is being carried out under the aegis of both
the Member States and the Community. This scientific
work must be continued and more encouragement given
to farmers so that the processing industry can meet
more of its raw material needs on the Internal Market.

2.4. Certain new plants or varieties seem particularly
suited to the growing conditions (soil and climate)

of the southern Community countries, which would
increase the agricultural and economic potential of
these regions.

3. Bio-energy

3.1. In recent decades there has been a considerable

increase in research, development and demonstration
(R&DD) programmes concerning renewable energy
sources, including a number of agricultural and forestry
products. This expansion of activity has been encouraged by an unsettled oil market, combined with the
desire to reconcile energy production, marketing and
consumption with ecological considerations. Similar
trends can be observed elsewhere in the world (e.g. the
United States, whose recently announced 'clean air plan'
regards bioethanol as a major source of alternative
energy).

3.2. R&DD activities must be pursued and encouraged (e.g. in the field of genetic improvements, more
environment-friendly agri-systems and biofuel production methods) but regional, national and Community authorities in Europe still need to revise some
of their energy priorities and place greater emphasis on
ecological rather than economic dictates. Here some
fiscal policy adjustments will undoubtedly be necessary.

_33._ Closer cooperation between the oil and agricultural sectors on production and marketing could be of
significant assistance in solving a number of technical
and economic problems.

3.4. This section will look at several aspects primarily connected with agricultural products. The following
section will deal with forestry products.

3.4.1. _Biofuels_

3.4.1.1. Since the start of the oil crisis, in 1974,
extensive R&DD programmes have been undertaken
all over the world to develop the use of bioethanol as
a substitute or additive to mineral fuel.

3.4.1.2. In Europe bioethanol is produced mainly
from cereals and sugar beet. These agricultural products
have proved preferable to other vegetables (potatoes,
chicory, sugar sorghum, topinamour) on account of
their high yield as well as on CAP grounds.

3.4.1.3. Financial estimates show, however, that the
rate of return from production of bioethanol as a substitute for mineral fuel would be far too low at current

21. 5. 90 Official Journal of the European Communities No C 124/53

oil price levels and would not even be viable if world
oil prices doubled compared with 1989. However, the
financial prospects are brighter when bioethanol is used
as an oxygenized compound added to fuel to improve
the octane rating or as an energy additive (up to 5%)
in mineral fuel. Here ETBE ether produced from bioethanol and isobutylene meets the required technical
conditions.

3.4.1.4. Isobutylene is also used as a raw material in
producing another petroleum-based oxygenized compound, viz MTBE ether, a viable competitor to ETBE.

3.4.1.5. Though there is consensus on the need to
pursue and step up research, it is clear that views differ
widely as to the feasibility of a significant reduction in
the production costs of bioethanol so as to make it
ultimately a viable alternative to mineral fuels, or just
as an additive.

3.4.1.6. In any event, the Committee would point
out that the Community grants export subsidies to
unload the cereals and sugar markets and simultaneously assists farmland set-aside schemes. A fiscal
or some other incentive for the use of bioethanol, up
to a 5 % limit, in premium and regular grade petrol
would therefore not seem an unreasonable solution.

The United States already grants such aid and in France
bioethanol is taxed at the same rate as diesel oil.

3.4.1.7. Any tax exemption should not be restricted
to bioethanol added to mineral fuel but cover ETBE

used to improve the octane rating. With this in mind,
the Commitee suggests that the scope of the Council
Directive of 5 December 1985, as amended by the
Council Directive of 29 July 1987, on crude oil saving
through the use of substitute fuel components in petrol,
in particular Article 1, be re-examined in a more positive
and encouraging light _(_ _[l]_ _)._

3.4.1.8. In view of the _de facto_ links between the oil
and agricultural sectors in producing a fuel that meets
the required technical, economic and environmental
conditions, closer cooperation would seem desirable. It
would then be easier to form production units capable
of producing either ETBE or MTBE, depending on
which seems preferable on grounds of price and
immediate availability of raw materials.

(') OJ No L 334, 12. 12. 1985, p. 20 and OJ No L 238,
21. 8. 1987, p. 40.

3.4.2. _Oils used as fuels_

3.4.2.1. For the past few years a colza oilseed-based
fuel has emerged as a substitute for diesel fuel. So
far such work has remained at the theoretical and

experimental stage in Europe, largely because vegetable
oil-based fuel is considerably more expensive than
diesel. Insufficient R & TD and standardization work

are other causes.

3.4.2.2. Perhaps adequate fiscal or regional incentives could be offered to enable interested industrial

firms and agricultural holdings to try out this technology on a regional scale or at any rate to explore the
practical possibilities through an extended network of
demonstration activities.

3.4.2.3. In addition to the potential regional and
intersectoral benefits, this aid policy would facilitate
productive interchange with other parts of the world
(USSR, USA, Asia) where application of this technology
seems to have reached a more advanced stage.

4. Forestry-timber sector

4.1. There are approximtely _55_ million hectares of
forest in the Community, i.e. a quarter of the total
Community area. Roughly 40 million hectares are actually under development. 60 % of forests are in private
ownership and 40% are publicly owned (mainly by
state, regional or municipal bodies).

4.2. Most privately-owned forest areas are fairly
small—there are estimated to be 6 million private
forest-owners—which is a potential brake on both
forestry research and rational deployment of forest

resources.

4.3. Total EEC timber production (workable sawlogs, industrial roundwoods and firewood) is estimated
at 120 million m [3] . Industrial roundwoods account for
roughly half of timber production but under 10% of
total timber sale value, thereby underlining the key
importance of sawlog production for optimization of
Community forests.

4.4. Forestry is estimated to provide jobs for 2 million persons a year. Timber processing employs between
4 million and 6 million persons a year. Though the
wood trituration industry is a heavy industry, over 80 %
of forestry and sawlog production firms are small and
medium-sized businesses.

No C 124/54 Official Journal of the European Communities 21. 5. 90

4.5. Timber consumption in the Community is estimated at 240 million nr, half of which is supplied from
non-Community sources. Imports include quality wood
but largley consist of industrial round woods or products derived from them, such as cellulose for the chemical and paper industries.

4.6. The Community is therefore highly dependent
on non-Community sources for its short, medium and
long-term needs. This situation could well worsen as
timber and timber product consumption is expected to
increase by 75 million m [3] by the year 2000, while annual
Community timber production will rise by only 30
million m [3] . In financial terms, this deficit can be estimated at between 15 000 million and 20 000 million

ECU _per annum._

4.7. Consequently there are good grounds for boosting the Community's forestry potential and sharpening
the competitive edge of the forestry-timber sector. This
boost must not, however, be indiscriminate but be
tailored to specific demand for certain woods.

4.8. On 29 May 1989 i [1] ) the Council approved a
forestry action programme 1989-1992 focussing on four
key areas:

— protection of Community forests,

— development of forests in connection with the development of rural and less-favoured areas,

— processing and marketing of forestry products,

— farmland afforestation subsidies to offer a viable

alternative to the production of farm surpluses.

4.9. This programme encompasses a wide range of
measures to assist forestry and the wood processing
industry, viz:

— farmland afforestation subsidies,

— more exploitation of forests in rural areas,

— programme to promote the cork sector,

— extension of aid for the processing and marketing
of forestry products,

— more effective protection of forests against air pollution and fire,

— creation of a European forestry information and
communication system,

— setting-up of a Standing forestry Committee.

(') _O]_ No L 165, 15. 6. 1989.

4.10. This Community programme, to back up
national and regional forestry programmes, is a major
step in the right direction. However, the Committee
would stress that it should focus not so much on the

conversion of arable land as on an afforestation policy
for wasteland.

4.11. There are a number of interesting developments in Community timber consumption. Consumption of short-fibre wood (hardwood) for the manufacture of pulp for paper used commercially (e.g. for
data processing) is rising at around 6 % a year, largely
necessitating the use of eucalyptus, a tree particularly
suited to tropical and sub-tropical regions (e.g. the
Mediterranean countries).

4.12. On tropical regions, and bearing in mind the
increasing demand in Europe for tropical hardwoods,
it should be noted that many countries supplying the
Community are experiencing serious problems (inefficient plantations, inadequate transport infrastructure
and insufficient processing capacity). In addition, a
number of agri-forestry or local procedures could well
result in the desertification of large areas of droughtaffected Africa. This prompted the Community to provide for desertification control measures in its action

programme for the preservation and rational utilization
of natural resources.

4.13. Though the economic role of the forestry-timber sector and its contribution in preserving rural jobs
cannot be underestimated, there are other factors that
make forests particularly important in today's world,
viz. their social, environmental and tourism implications.

4.14. On environment conservation, forests do not
merely protect water, soil, and wildlife systems but also
generate renewable raw materials (in particular energy).

4.15. Though the price/cost ratio for lignocellulosebased energy production is, at the moment, less advantageous than for fossil fuels, we must nor forget that
considerable attention is currently being focussed on
air pollution problems and increased C 0 2 levels in
the atmosphere. Clearly wood-based energy, suitably
utilized, is an clean fuel and its C 0 2 discharges, in a
closed circuit, do not aggravate the greenhouse effect.

21. 5. 90 Official Journal of the European Communities No C 124/55

4.16. Concurrently, bearing in mind the ecological
properties of wood as an energy source, the emergence
of a political drive can be discerned among many
regional and local authorities to develop their forestry
resources in such a way as to restore the ecological
balance. This trend should be encouraged by the Community authorities.

4.17. The THERMIE programme, which will ge
tunder way during 1990, lays less stress on technological
innovation than on the publicizing of results already
obtained, especially in the less-favoured areas of the
Community. Consequently, it should be possible to test
the technical and economic feasibility of the complete
cycle (forestry raw materials—processing—energy
production) on a number of sites.

4.18. At a time when the conversion of farmland is

raising tangible problems, the THERMIE programme
should assist too in the co-financing of demonstration
projects involving fast rotation species.

4.19. There is immense scope for R&D in the forestry sector. But these opportunities have to date not
been fully exploited. Here two obstacles have largely
been responsible:

— the long life cycle of trees, which has discouraged
genetic research,

— the tendency to keep agricultural and sylvicultural
research separate from research into aspects more
directly linked with industrial technologies.

4.20. To achieve more effective use of lignocellulose
for industrial or energy purposes, basic research must
lead to a) more detailed general knowledge about lignocellulose structures and the related genetic aspects and
b) the discovery of new ways of isolating and separating
carbohydrates from cellulose.

4.21. Developments in modern biotechnology (such
as cloning) should also make it possible to shorten the
vegetative propagation process.

4.22. The African, Caribbean and Pacific (ACP)
countries constitute a high proportion of the poorest
less developed countries (LDC) which are major timber
producers. Because of a lack of fund and qualified
researchers they lag far behind in forestry research.
Scientific cooperation with these countries must be
stepped up. In addition, top priority must be given to
research into combatting desertification. [See

the Commission memorandum on desertification

(COM(86) 16 final)].

4.23. Lastly, forestry-timber research should have
broader horizons and extend to cork production, which
is of particular importance to two Member States—
Spain and Portugal—which account for 80 % of world
cork production.

4.24. To rejuvenate cork oak plantations and cork
production, genetic improvements, new farming
methods and further work on new uses are necessary.

4.25. Here attention is drawn to the R&D activities

already undertaken in connection with programmes
in the materials sector (raw materials and advances
materials) (1982-1985 and 1986-1989) (*) ( [2] ), in particular under the renewable raw materials—sylviculture
and wood products sub-programme and those planned
under the R&TD programme in the field of raw materials and recycling (1990-1992) adopted by the Council
on 20 November 1989 ( [3] ).

4.26. Lastly, some Member States have launched
programmes to inform the farmers and forest-owners
concerned. Special schemes are also planned for small
owners. These programmes are expensive and should
receive not just encouragement but practical support in
the shape of appropriate measures.

PART THREE: RECOMMANDATIONS

1. In the first two parts of this Opinion the Committee had no intention of studying in depth all potential
uses of agricultural and forestry resources for industrial
or energy purposes but merely of exploring the lines of
approach that seem most promising in the 2000-2010
timescale. This third part contains a number of recommendations on the requirements to be met and
means of ensuring the continuous ans increasing use of
such resources for purposes other than food, as part of
a comprehensive, coherent strategy. The Committee
urges that suh a strategy be framed without delay in
consultation with all interested Community groups.

2. In the Committee's view, increased deployment of
agricultural and forestry resources for purposes other
than food is one way in which the Community can
safeguard the future of agriculture, and rural society in
general, as it is currently in the throes of radical

( [J] ) OJ No L 174, 21. 6. 1982, p. 23.
( [2] ) OJ No L 159, 14. 6. 1986, p. 36.
( [3] ) OJ No L 359, 8. 12. 1989, p. 16.

No C 124/56 Official Journal of the European Communities 21. 5. 90

upheaval. The potential economic, social, regional and
environmental benefits to be reaped by the Community
are a further argument. The Committee therefore calls
for a sustained R&DD drive and a dynamic technological innovation policy. Nor can the overall cost/benefit
ratio be conceived purely in terms of the anticipated
eventual profitability of investment, even if positive
financial results should be one consideration. In particular, account should be taken of the anticipated social
benefits.

3. The Committee would point out in particular
that:

— certain technological innovations, notably application of biotechnologies, open up new prospects
through the development of agricultural and forestry products tailored to certain food-industrial
and energy uses, thereby providing one possible
answer _to_ land set-aside problems and the agricultural and rural desertificaion process liable to result
within the Community. However, the Committee
would point to the need to avoid intensified farming
techniques inflicting damage on the countryside,
and thereby endangering the agricultural fabric and
harming the environment,

— agricultural raw materials usable by non-food
industries and the energy sector are both biodegradable and renewable (hence satisfying environment
protection criteria) and therefore preferable to some
raw materials (especially fossil-based) or petrochemical-based synthetic raw materials. The greenhouse effect and the volume of non-degradable
waste would be diminished significantly,

— the use of local agricultural and forestry products
will assist in securing safe and diversified energy
supplies for the Community.

4. The Committee therefore feels that opportunities
for increasing the scope for industrial and energy uses
of agricultural ans forestry products must be seized,
here R&TD plays a key role which is bound to increase
in the future. However, suitable measures are vital to
boost impact and facilitate speedy application of results,
while taking account of experience in other parts of the
world.

5. Better organized and targeted Community research

5.1. The data collected while this Opinion was in
preparation and the review of specific sectors (see part
two) have highlighted the decisive role of R&TD in
securing and expanding non-food outlets.

5.2. Concentration of Community action on key areas, a more integrated approach and closer coordination
with national activities are, however, a perequisite in
view of the cost and complexity of research and the
wide range of knowhow required.

5.3. One major advance in this direction is the forthcoming presentation, in connection with the implementation of the framework programme for Community
activities in the field of R&TD (1990-1994), of a specific
research programme in the agricultural and agri-industrial sector grouping research activities concerning the
use of agricultural and forestry resources for industrial
and energy purposes.

5.4. The Committee would recommend that research

activities proposed as part of this programme be underpinned by sectoral surveys of basic knowhow and tailored to clearcut aims and set deadlines, in close liaison
with all partners in the same sector.

_5.5._ However, this programme cannot compensate
for the absence of a strategy. The Committee strongly
recommends the framing of a strategy integrating
R&D work on the use of agricultural and forestry
resources for non-food industrial and energy purpose
into all relevant Community policies (agricultural
industry, social, regional, trade, environment and
energy) over the next 10 to 15 years. This strategy must
generate a policy identifying, on the basis of established
criteria, priority activities and the respective roles of
the Community and the Member States. The required
funding must also be estimated.

5.6. In addition, the Community has a key part to
play in adopting suitable measures to foster active participation by agri-forestry groups (including many small
firms) in the relevant research activities, and closer
cooperation between agri-forestry, and industrial firms
and research centres.

5.7. Efforts must also be stepped up to disseminate
and make optimum use of research findings, particu

21. _5. 90_ Official Journal of the European Communities No C 124/57

larly in the agricultural sector, so as to involve this
sector closely in the technological innovation process
which will play a part in shaping its future.

6. Development of sectoral pertnerships and framing
of programming instruments

6.1. The hearings organized by the Committee have
highlighted some cases of cooperation, particularly
between certain chemical industries and agricultural
sectors for the purpose of pinpointing new outlets. Such
cooperation must be consolidated and expanded as part
of an effective agri-industrial policy tailored to preestablished joint aims.

6.2. Here the adoption of new starch and sugar
regime in 1986 (see above) is an example of the type of
measure to be adopted under this policy so as to increase
outlets for industrial use of agricultural and forestry
products. The regime adopted, as already mentioned,
has helped to sharpen the competitiveness of Community industrial users of starch and sugar, besides
boosting investment.

_6.3._ This regime was largely due to the joint efforts
of the industrial ans agricultural sectors concerned.
Continuation and consolidation of such cooperation is
clearly essential to convince industrial users of the
continuity and reliability of this new regulatory framework and to foster the creation of a lasting climate of
confidence.

6.4. In the Committee's view, such cooperation
should not be an isolated example but a key factor in
developing all non-food industrial and energy outlets
for agricultural and forestry products. It therefore recommends closer partnership in all sectors concerned so
that greater account can be taken of the requirements
and constraints of each partner.

_6.5._ Here the Community can provide vital impetus
and provide a framework for regular consultations
between industry and agri-forestry groups.

7. A specific aid policy to encourage R&DD activities
relating to agricultural and forestry production for
non-food industrial and energy purposes

7.1. The Committee would stress that R&DD activities relating to agricultural and forestry production for

non-food industrial and energy purposes may eventually provide (possibly long-term) solutions for Community agriculture. These activities must therefore be
significantly stepped up.

7.2. Here provision must also be made for new contractual and other instruments to set in motion targeted
experimental schemes which will serve as a practical
guide for farmers, processing businesses and industrial
consumers. For instance, considerable benefits could be
reaped from large-scale demonstration projects, spanning a minimum 5-10 year period, designed to ensure
the continuous production of agricultural raw materials
and develop specific processing techniques and practical
industrial uses. Throughout these experimental
schemes, it will be necessary to offset any additional
costs involved as compared with rival traditional prod
ucts.

7.3. The Committee also feels that the scale of finan
cial and other efforts required must not be assessed
solely in terms of the profits to be expected in the fairly
long-term future. The cost/profit assessment must also
take account of the predicted social, regional, environmental and other benefits.

7.4. Here the Committee recommends that account
be taken not only of Community research funding
but also of the structural funds: European Regional
Development Fund (ERDF), European Agricultural
Guidance and Guarantee Fund (EAGGF) (guidance section) and Social Fund.

7.5. The Committee also recommends increased

funding for R&DD activities in the forestry and timber
sector, which it has found to offer an extensive range
of opportunities for industrial and energy uses.

7.6. The ultimate aim of the Committee's call for

effective instruments and adequate funding for R&DD
activities relating to the use of agricultural and forestry
products for non-food industrial and energy purposes
is the production of agricultural products which will
enhance the long-term social and economic prospects
of rural society in the Community. The objectives of
the CAP reform (which aims primarily to eliminate
surpluses and/or reduce their cost to the budget) should
not, however, be called into question.

No C 124/58 Official Journal of the European Communities 21. 5. 90

7.7. Lastly, the Committee would stress that the
required action in the field being studied also presupposes that more careful attention is given to coordi

Done at Brussels, _19_ March 1990.

nation among related R&DD activities, as well as
between closly interlinked Community and national
research programmes.

_The_ _Chairman_

_of the Economic and Social_ _Committee_

Alberto MASPRONE

Opinion on the EC's economic relations with the countries of Eastern Europe

(90/C 124/14)

On 1 February 1990 the Economic and Social Committee, acting under the fourth paragraph
of Article 20 of its Rules of Procedure, decided to draw up an Opinion on the EC's economic
relations with the countries of Eastern Europe.

The Section for External Relations, Trade and Development Policy, which was responsible
for preparing the Committee's work on the subject, adopted its Opinion on 16 March 1990.
The Rapporteur was Mr Briganti.

At its 275th plenary session (meeting of 29 March 1990), the Economic and Social Committee
adopted the following Opinion with no dissenting votes and seven abstentions.

INTRODUCTION

The present Opinion sets out to provide a general
response to economic and institutional developments
in the various countries of Eastern Europe. The importance of these developments is incalculable, both for the
countries involved and for the rest of the world, and
they are still in rapid evolution. The process began in
Hungary and Poland, and gradually spread to Czechoslovakia, the Soviet Union, the GDR, Bulgaria and
Romania. Nor should we forget Yugoslavia, where
political, ideological and economic reform had already
been under way for some time.

The Opinion will be followed by a general information
report and a series of detailed papers on the individual
countries of Eastern Europe.

In the interests of clarity, it should be noted that the
term « Eastern Europe » covers an extremely large and
complex geo-political area.

To asses accurately the economic, social and political
situation of these countries, a distinction should be

drawn between the countries of Central and Northern

Europe (the GDR, Hungary, Czechoslovakia and
Poland), the Balkans (Yugoslavia, Romania and Bulgaria), and the Soviet Union which forms a case apart,
straddling Europe and Asia, and embracing a host of
different races, languages and religions.

The present Opinion has three main objectives:

1) To assess the present economic and social situation
in Eastern Europe, while taking account of the
rapid pace of change and the different situations in
individual countries.

2) To assess the steps already taken by the EC a) as
an emergency response and b) to put relations with
Eastern Europe on a new footing.

3) To draw up recommendations on the policies to
adopt towards Eastern Europe in both the short and
medium term.