November 26, 2007

EU's revamped agriculture policy to focus on livestock industry

The European Union has launched its next re-think of the Common Agriculture Policy, and the region's livestock industry is already looking-and finding-areas of concern.

The new policy includes "CAP Health Check," which will focus on simplifying farm payments under the Single Payment Scheme and further decoupling in the livestock sector.

According to Frans van Dongen, international director of the Dutch Product Boards for Livestock, Meat and Eggs, though there are no direct premiums for pigs or poultry, some indirect premiums are still tied to land ownership for arable crops-for those producers who make their own feed. Under the Health Check, those premiums may be reduced or eliminated, but most countries have already chosen to decouple those during the first part of the CAP reform.

June Pearson, Head of Policy for the Grain and Feed Trade Association, said one likely aspect to appear in the proposals is the initiative to abolish set-aside for arable crops considering a tight demand supply on world markets, high prices and new demand linked to the energy sector. Mobilising all EU agricultural land would result to additional 10 to 17 million tonnes of cereals which is good news for pork and poultry producers.

On cereals intervention, it is expected that the Commission will gradually phase out the intervention system as considering the last campaign with short supplies, intervention has become obsolete, van Dongen said.

For the pork and poultry industries, one of the biggest knock-on effects from the Health Check will be from the new focus on biofuels. The EU's desire to increase biofuels use to 10 percent by 2020 would likely put pressure on cereal producers to increase production, especially with the elimination of set-aside likely to come out of the Health Check.

According to Alexander Doring, secretary general of the European Association of Animal Feed Compounders (FEFAC), focus has moved away from the livestock sector as a main customer for cereals towards energy markets and biofuels, emerging as a new competitor for the same resource. He urges a to have a debate on how to maintain a balance as food and feed should come first as cereal supplies are strategic for the EU.

Initial ideas from the European Commission on how the CAP could be improved were launched Nov. 20 with legislative proposals expected in May. Between now and the end of 2008, Brussels will be alive with trying to find a compromise among all agriculture sectors while working towards tightening the CAP after the 2003 reform.