September 14, 2007

EU to relax grain regulations to curb high prices

The European Commission (EC) on Thursday (September 13) has agreed to drop regulations obliging grain farmers not to plant all of their land for a year to ease spiralling prices for cereals like wheat.

According to the Commission's spokesman Michael Mann, the EC has cut the rate of compulsory set-aside to zero percent for grain planted either now, in the autumn or next spring, in other words for next year's harvest.

Since 1992, European farmers are obliged to leave 10 percent of their land unplanted in an effort to control overproduction. Brussels estimates that dropping the rule could see 1.6 to 2.9 million hectares of extra land seeded.

As grain shortage is prominent globally, the decision to resume planting is believed to add as much as 17 million tonnes of European grain production next year to ease market situations, Mann said.

EU farm ministers are expected to endorse the decision late this month.

As part of a check on the EU's Common Agriculture Policy -- which allocates subsidies and sets the rules for the farm industry -- ministers will also debate in November whether the set-aside rule should be permanently dropped.