Commission Adopts a Report and Proposals on the Use of Agricultural Commodities in the Non-Food Sector

DN: P/89/80 Date: 06/12/1989

The Commission today adopted Commissioner Mac Sharry's report and proposal to the Council on the non-food use of agricultural raw materials. In a comment, Mr Mac Sharry said that the Commission wished to encourage greater uptake of Community agricultural production for non-food use. Such uptake is at present very small - estimated at some 2 % of EC farm output. Mr Mac Sharry said that the Commission commitment to non-food use was already reflected in various policies (R&D, market measures, etc.). The present initiative was designed to increase and give a better focus to Commission action to promote non-food use in line with the current CAP objectives. The Commission report on the non-food sector carried out in compliance with the Council's 1988 requests contains the following proposals:
- the setting up of a special committee to ensure greater EC co-ordination and co-operation to develop initiatives in the non-food area
- the development of a multi-annual programme of agro-industrial demonstration projects
- the enlargement of the set-aside scheme to allow a part of the land set-aside to be used for the production of cereals for non-food purposes. A subsidy will be paid to a farmer who puts at least 30 % of his holding into set-aside of which 50 % can be planted with cereals for non-food use. The premium is set at 70 % of the set-aside premium.

(1) COM(89) 597 THE REPORT
The report found that the structural imbalance between supply and demand for agricultural products and the resulting intense competition on the Community and world markets, justify an important effort. Community action in the non-food area must be consistent with the new policy framework for agriculture and with broader Community policy objectives. The report acknowledges that potential scope for non-food uses depends critically upon the technical feasibility of the process involved and the competition affecting the choice of raw materials used by the processors. The Community's commitment to non food
production from agricultural raw materials is already important and reflected in a wide variety of policies.

- Research and development
        Community's multiannual framework programme for technological research and development.
- Demonstration projects
        Financed by the guidance section of the EAGGF
        Community's Energy demonstration programme
- Structural assistance
        In rural areas (objective 1 and 5B)
        Forestry action programme
- Market measures
        Within the Common Market organizations (starches, cotton, casein, linen and flax, sugar).

It is nevertheless, according to the report, evident that the current policies are somewhat independant of one another. It has become necessary to reinforce the Community's role and achieve a more effective concentration of efforts.

PROPOSALS
1. Coordination and cooperation
The Commission will propose the creation of a committee which will follow and, if necessary, monitor all relevant activity in
the non-food area within the Community and outside and assist the Commission in developing further new initiatives in this
area.

2. Demonstration projects
There is relatively little activity in demonstration projects other than for renewable energy. Therefore, the report found that it would be appropriate to develop a multi-annual programme in that field. It is envisaged that these projects, cofinanced by industry, will cover the production and processing for non-food purposes of a wide variety of products such as : castor, rape, high oleic acid sunflower varieties, flax and hemp, kenaf, fibre sorghum, elephant grass (Miscanthus), bitter lupin, etc. These projects will place increased emphasis on the link between Research and Application. In addition, demonstration projects which utilise raw materials currently in intervention will have the possibility of gaining access to intervention stocks, where available, at advantageous prices.

3. Participation of farmers
The farmer will be encouraged to participate more actively in the development of non-food use outlets for his raw material. In order to stimulate the farmer to actively participate in finding new oulets, the Commission is making a proposal to subsidize the production of cereals for which he finds, by means of a delivery contract with the relevant industry, a non-food outlet. The subsidy is such that the costs for the industry of the raw materials will be comparable to world market prices. In return for receiving the subsidy, a farmer should :
- Put at least 30 % of his holding into set-aside of which 50 % can be planted with cereals destined for non-food use. The premium is set at 70 % of the set-aside premium. In this way, the set-aside scheme as such become more attractive and will contribute to reduce overall production. Currently, the scheme is limited to cereals for different reasons :
- cereals are well represented all over the Community,
- their price compared to other products is closer to the world market price,
- cereals do not benefit from deficiency payments such as oil seeds,
- in addition, the major potential non-food markets for cereals are already quite well known, ranging from automotive fuels to biodegradable plastics.
It is of course understood and by all means inherent in the Council's request made in "88 that the proposed scheme should not lead to increased production. It is therefore logical that the cereals produced under this scheme are counted within the Maximum Guaranteed Quantity (QMG). The Commission would point out that at present non-food use of cereals in the form of starches are also counted within the QMG, while a major part of cereal by-products go to the feed industry (also included in the MQG).