Brussels, 16/07/2007 (Agence Europe) - On Monday 16 July, the European Commission adopted a proposal aiming to set the obligatory set-aside rate at zero, for the autumn 2007 and spring 2008 seedings alone. This is the Commission's response to a request put forward by several member states of the EU (Sweden, France and Germany), voiced the same day at the Agriculture Council (see above), out of concern at the high prices for certain cereals. The temporary derogation to the obligation to respect the obligatory rate of 10% for land to be left fallow will, it is hoped, allow the farmers of the European Union to produce additional quantities of cereals, in order to fulfil a growing market demand. The Commission states that this proposal is without prejudice to the discussions to take place in 2008 on the bill of health of the common agriculture policy (CAP). The Commission intends to take that opportunity to launch a debate on the question of set-aside in the cereals sector. The Commission has never hidden its preference for abolishing the obligatory set-aside rate.
On the global market, the end-of-year reserves are expected to fall to 111 million tonnes in 2007/2008, the lowest level for 28 years, and only 31 million tonnes of which are held in the five largest exporting countries. This means that prices will remain at an exceptionally high level, due both to poor harvests in the large cereal-producing countries and increasing demand, particularly for maize, for fuel bio-ethanol production. In particular, the major take-off of the bio-ethanol industry in the United States has created a snowball effect on prices for other cereals. According to Commission estimates, an obligatory set-aside rate of 0% could help to encourage European Union farmers to produce an additional quantity in the region of 10 to 17 million tonnes in 2008, which would help to ease the pressure on the market.
The proposal covers only the seedings of autumn 2007 and spring 2008 (or the 2008/2009 marketing year). A permanent modification could only happen in the framework of an analysis of the cereals policy, which is due to take place as part of the CAP bill of health. The obligatory set-aside rate was initially established every five years but, from 1999/2000, it was set permanently at 10%. In the new member states which have opted for the single area payment scheme (SAPS), farmers are exonerated from a set-aside obligation (Poland, Czech Republic, Slovakia, Hungary, Lithuania, Latvia, Estonia and Cyprus). In the European Union, the total surface area currently under obligatory set-aside stands at 3.8 million hectares. (lc)