Brussels, 04/01/2007 (Agence Europe) - On 20 December, the European Commission adopted a proposal to extend for two more marketing years (2007/08 and 2008/09) the current potato starch production quotas. Potato starch is a direct competitor of cereal starch (mainly from maize and wheat). The Commission says that some changes will be necessary because of surplus on the EU market and tight competition on the starch market but wants to keep things unchanged for the moment because the changes to be made to the industry will be discussed during the review of the Common Agricultural Policy in 2008-2009.
The potato starch production quotas have already been prolonged several times since they were established in 1995, most recently in 2005 (until the 2006/2007 marketing year, see EUROPE 8958 and 8843).
The Commission says it is necessary to extend the potato starch production quotas until 2009 to allow time to assess the impact on the potato starch market of changes to the EU sugar system. The reduction in sugar prices should increase competition with artificial sweeteners made from cereal starch and sugar produced outside the quota, and this could have a domino effect on the starch market in general, increasing pressure on the potato starch market.
To take account of enlargement, the EU's quota increased by 11% in 2005, from 1.762 million tonnes in the EU15 to 1.949 million tonnes in the EU25. The quota is divided up among Member States. The planned quotas for marketing years 2007/08 and 2008/09 remain the same: Germany (656,298 tonnes), the Netherlands (507,403 tonnes), France (265,354 tonnes), Denmark (168,215 tonnes), Poland(144,985 tonnes), Sweden (62,066 tonnes), Finland (53,178 tonnes), Austria (47,691 tonnes), the Czech Republic (33,660 tonnes), Latvia (5,778 tonnes), Spain (1,943 tonnes), Lithuania (1,211 tonnes), Slovakia (729 tonnes) and Estonia (250 tonnes).
In line with the reform of the Common Agricultural Policy (CAP) in June 2003, 40% of the current payment in this potato starch sector is paid in the form of a single farm aid ('decoupled' from production) with the remaining 60% being kept as aid for farmers producing potatoes for the manufacture of potato starch.
In a report published alongside the draft legislation, the European Commission points out that in the 2004/2005 marketing year, potato starch aid stood at EUR 110.54 a tonne. In 2005/06, the 'coupled' production aid will decide on each Member State's decision regarding the single farm payment. Austria, Denmark, Germany and Sweden introduced the single farm payment scheme (and decoupling) in 2005 and the coupled proportion of potato starch aid was therefore reduced to EUR 66.32 per tonne from 2005 onwards. The other EU15 Member States which produce potato starch (Finland, France, the Netherlands and Spain) introduced the single farm payment scheme in 2006. For the 2006/2007 marketing year, all EU15 potato starch producing countries will have introduced the single farm payment scheme, with coupled potato aid of EUR 66.32/tonne.
All six new Member States which were granted potato starch quotas during the accession negotiations are currently applying the Single Area Payment Scheme (SAPS). In addition, the six countries have the possibility, subject to authorisation by the Commission, of granting Complementary National Direct Payments (CNDPs) from their national budget (with a possibility of co-funding from EU rural development funds). In 2004, 2005 and 2006, only the Czech Republic, Latvia and Poland requested authorisation for CNDPs for potato starch.
The report points out that potato starch production is restricted by the quota system so the proportion of potato starch in the overall production of starch is falling. It currently accounts for around 20 % of starch production. (lc)