REPORT OF THE MEETING OF THE ADVISORY GROUP ON STARCH 15 OCTOBER 2013

Transcription

1 REPORT OF THE MEETING OF THE ADVISORY GROUP ON STARCH 15 OCTOBER 2013 As no Chairperson or Vice- Chairpersons had a valid mandate, the Commission chaired the first two agenda points. Daniela Terrile is the Commission s official in charge of organising the Advisory Group on Starch; she replaces Isabelle Raynaud. 1. Approval of the agenda and the minutes of the previous meeting Copa-Cogeca asked to add an item about the Single Common Market Organisation (CMO): is potato eligible to articles of that new Regulation? The Commission immediately replied that a written confirmation will follow to Copa-Cogeca in the near future. The minutes of the previous meeting were approved. A request was made to produce the minutes of the next meetings in English, which was immediately granted. 2. Election of the Chairperson and vice-chairmen The Commission (i.e. the Commissioner and DG Agriculture s Director General) has received two applications for the position of Chairperson of this Advisory Group: Mr. Pascal FOY on behalf of the producers and Ms Kathy FORTMANN on behalf of the industry. The Commission accepted both applications, in line with Decision 2004/391. Considering that Mr. Pascal FOY had removed his application in support of that of Ms FORTMANN, the Commission proceeded with the election, counting the votes of the experts present in the room. Ms Kathy FORTMANN was elected Chairperson of the group for a two-year mandate in a first ballot (8/12). The Chairperson is responsible for preparing a strategic agenda covering the work of the group for the next two years, in cooperation with all partners, and for drafting the minutes within a month, which is then distributed to all for comments within 15 working days. Mr. Gerben MEURSING was appointed as Vice-President by show of hands (9/12) in a first ballot for a first two-year mandate. The application of Mr. FOY as Vice-President is perfectly acceptable. The Commission advised Copa-Cogeca to put it forward after the meeting, to enable Mr. FOY to be elected during next year s meeting. 1 Measures against market disturbance. 2 Measures concerning animal diseases and loss of consumer confidence due to public, animal or plant health risks.

2 3. Situation and market outlook for cereals and starch Because the potato starch regime ended in 2012, the Commission will not present any data on the potato starch market itself. However the Commission presented a market data analysis for cereals (see attachment 2). - Wheat: global surplus, for the first time in years, the world production overtakes world consumption. That is the result of a export campaign in the EU (+11 mio tonnes), and good crop in the Black Sea area (+24 mio tonnes) - Maize: check slides for numbers on stock (+200 mio tonnes). Again, the situation evolved from a world deficit to a world surplus. For 2013/2014, the US will have a very good crop reaching 350 mio tonnes compared with 270 mio tonnes in Once converted in /t, US and EU maize prices converge a great deal. Industry (Jacques) raised two questions with regard to the new Single CMO Regulation: a) With regard to future temporary market management measures, could the Commission envisage to propose a reduced or zero levy for isoglucose? Does the Commission feel confident that it has the appropriate legal basis to propose such measures? The Commission recognized the lack of interest in the isoglucose exceptional measures last year, whilst, with a levy of /tonne, there was interest in the sugar reclassification of out-of-quota sugar into quota sugar for the EU market. Two reasons could explain this situation: either the production process of the European starch industry is too complex to allow extra production of isoglucose on the spot, or the prices of raw materials have risen so high that the levy was deterring. It will be interesting to observe further developments now that cereal prices have decreased. The Commission is looking at this item, but emphasized that there was no guarantee to present a solution. The Commission added that it is comfortable with the legal basis that the Single CMO Regulation provides for proposing such exceptional measures for the reclassification of outof-quota isoglucose and sugar, combined with imports of raw sugar. b) What will happen to out-of-quota sugar and isoglucose at the end of the sugar regime? The Commission replied that out-of-quota sugar as from 1 October 2017 can be released on the EU market or for exports: no special measure is needed for that. Today s regulation allows isoglucose producers to carry forward 100% of their quota volume. The interpretation of the flexibility back in 2007 worked fine in an quota environment. The Commission therefore is investigating how to allow a fair treatment to isoglucose and will let industry know sooner rather than later. The fact that isoglucose producers will soon be planning their production was clearly understood. Industry (Hutsebaut) pointed out that they are looking for legal certainty rather soon. This needs to be clarified in writing. Producers (COPA) raised an issue of procedure, asking why the Commission accepts to devote a large part of each meeting to discuss isoglucose whereas there is an Advisory Group on Sugar.

3 Industry (Hutsebaut, Fortescue) highlighted that the European starch industry produces many different starch products and sweeteners from various agricultural raw materials. Isoglucose is starch product, and has its place in this group. The provisions of the recently-agreed Single CMO Regulation strongly impact the competitiveness of the European starch industry and must be discussed in the Advisory Group devoted to Starch, amongst the greater number of representatives of the Austrian, Belgian, Danish, Dutch, German, Finnish, French and Slovakian companies, compared with the Advisory Group on Sugar where AAF only has one seat. AAF therefore appreciates that DG Agriculture speaks to the greater number of experts who have travelled a long way to be present in the room. With regard to the CAP reform s Direct Payment Regulation, Industry (A. Bonde) asked whether the Commission shared the starch industry s concern about the fair competition of voluntary recoupling of starch potatoes. If so, whether the Commission has the tools to monitor the conditions of fair competition, and how the Commission consider implementing these provisions. The Commission replied positively, sharing the concerns of the industry in maintaining equal conditions between the Member States. Originally, the Commission intended to allow support only on animal products but the possibility for recoupling is an explicit wish of the Council and European Parliament. The Commission confirmed that the new system of voluntary recoupling to sectors will be implemented as from 1 January 2015, whilst the current system of article 68 of the Health Check will be implemented in Producers (Bakker) pointed out that this provision could have a major distortive impact especially in Germany, where producers already are short of 15 /tonne compared with other Member States due to the flat rate system. Many producers in Germany are leaving the starch potato sector to growing other potatoes because the money is not there. Industry (Bonde) added that potato starch since decoupling suffers from a disadvantage of 88 /tonne of starch compared to other starches and therefore the Commission is requested to observe the development in the starch market. The Commission acknowledged the issue of different types of payments in the starch potato sector in the various Member States. Initially, the Commission proposed a flat rate in all Member States, but the political deal deviated from that. However, as time progresses, the other Member States will have to move to a flat rate too. Producers (Hoekman) asked the Commission when it will act, and in case of clear distortion of competition, what tools are available to address the issue. Traders (Meursing) asked whether there was a consensus within the group and what the Commission could advise before such distortive developments take place. The Commission advised the group to try and reach a common position on this issue of voluntary recoupling and emphasized that in reality the budget is limited and the competition fierce between the eligible sectors. The Commission stated that they could intervene in case of distortion of competition, via DG Competition.

4 Producers (Mascré) pointed out that on the one hand, the Commission promotes the diversity of crops, but on the other hand, it is disadvantaging some sectors. France is losing starch potato farmers. 4. Information from DG AGRI on AMIS The Commission (Willems) gave an update on AMIS the Agricultural Market Information System, launched by G20 leaders in June The objective is to collect data on maize, rice, soybean, and wheat, as well as set up a forum for a Rapid Response, that could take coordinated policy actions in times of crisis. Managed by the FAO Secretariat in Rome, the fourth session took place on 1-2 October All G20 members have committed to providing data, as well as non-g20 members that have an impact on trade in these commodities: Egypt, Kazakhstan, Philippines, Thailand, Ukraine and Vietnam. The amount of data has improved greatly recently, with all countries but Kazakhstan providing data. The main concern remains the level of stocks in exporting countries. This year, wheat production is close to record levels with recovery stocks of about 5 million tons. The bulletin is available on to everyone free of charge. Please download it and send your comments to C5 Unit of DG Agriculture, who will then relay them to the FAO Secretariat. The main message is to increase transparency on these main commodities data worldwide. 5. Rural development: funding opportunities and research programs for Rural Development in the field of innovation and applications of starch This item was cancelled by the Commission. 6. Information by the EC for future legislation on fertilizers This item was covered by a written contribution of Mr. Liégeois of DG Enterprise. 7. Information concerning the EC communication on the sustainable use of phosphorus: The Commission presented it Consultative Communication on the sustainable use of Phosphorus (please see and the Commission s PPT presentation as attachment 3) and its next steps: the deadline to answer the consultation is 1 December 2013 and the result will shape the future work of the Commission. This item was raised because of its relevance to phosphate fertilization in agriculture Industry (Vermeulen) Will the commission link the results of the public consultation with the IED (Industrial Emissions Directive) and BREF or will the Commission propose a specific legislation? The Commission answered that DG ENV will take full account of inputs from stakeholders in the framework of the consultative communication. The communication was not designed with any specific legislative proposal in mind and it would be the work of the coming months to shape the

5 further steps on this subject, including how to best integrate the topic of sustainable use of phosphorus within existing instruments and streams of work. 8. Trade issues: Anti-dumping measures imposed by China? The Commission gave an update on the situation of exports of EU potato starch into China: MFN duty of 25%. Two investigations with MOFCOM that resulted in an additional anti-dumping duty of 35% (February 2007) plus a countervailing duty of 12.4% (August 2011). Industry (Bonde) pointed out that the Chinese authorities MOFCOM basically decide whatever they want, regardless of the European starch industry s submissions. It does not seem justified that they extended the anti-dumping duties on exports of potato starch from the EU based on these facts and figures. The Commission highlighted both dimensions of the anti-dumping case: on the one hand, what is legally feasible (some weaknesses point to a challenge of the case) and on the other hand, what is politically feasible (the state of the EU relationship with China following the recent anti-subsidy case on wine). Industry (Jacques) thanked the Commission for their detailed explanations and continuous support in both cases against exports of EU potato starch. Today in China, the cumulative duties charged on exports of EU potato starch amount to 72.5%, a clear obstacle to the Chinese market. Despite all arguments provided to the Chinese authorities on the absence of causal link and the end of the potato starch regime, China imposed anti-subsidy duties on EU potato starch until Now that the EU has a new CAP, how can we avoid an extension of these anti-subsidy duties on exports of EU potato starch into China? The Commission answered that there is a possibility that industry asks an interim review on ADs that will address both the level of the duties and the assessment of the injury and the causal link. However, it is unlikely to improve the situation unless the market situation changes in China and they need the products. With regard to the countervailing duties due to end in 2016, the possibility for review is very risky. Indeed, the parties will have to prove that no new programme replace the attacked subsidies (art 68 of Health Check of the CAP). That would potentially jeopardise the 20 other sectors eligible to voluntary direct recoupling (articles of Direct Payment Regulation to be implemented as from 2015), making them countervailable not only by China, but also by other countries, thereby jeopardising the whole new CAP. 9. AAF - European starch industry's position on the on-going negotiations for free trade agreement The European starch industry presented its priorities in the various bilateral negotiations on-going between the EU and third countries. The case was clearly made. The main concerns were: - EU/US TTP: economies of scale and lower energy costs put US starch producers at a very significant competitive advantage compared to the EU - EU/Thailand : Thailand is the world s biggest producer of tapioca starch, and the world s biggest exporter. Please see presentation. Producers (Hoekman) announced that CESPU fully shares the AAF s concerns on free trade agreements, notably with the US and Thailand.

6 Industry (Vermeulen) pointed out that downstream users disagree with AAF, but would nonetheless explore the possibility of a win-win solution: the fermentation industry uses much more glucose and starch than sugar. Today, chemicals can be imported duty-free into the EU. For this reason, in order to remain competitive, the raw materials need to be supplied at world market price conditions. N/A. 10. Miscellaneous Disclaimer "The opinions expressed in this report represent the point of view of the meeting participants from agriculturally related NGOs at community level. These opinions cannot, under any circumstances, be attributed to the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of the here above information."