AID SYSTEM FOR FLAX AND HEMP
(20717)
12992/99
COM(99) 576
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Draft Council Regulation amending Regulation (EC) No. 1251/99
establishing a support system for producers of certain arable crops to
include flax and hemp grown for fibre.
Draft Council Regulation on the common organisation of the market in
flax and hemp grown for fibre.
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| Legal base: |
Articles 36 and 37 EC; consultation; qualified majority
voting
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| Department: |
Agriculture, Fisheries and Food
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| Basis of consideration:
| Second SEM of 21March 2000 and Minister's letter of 23
March 2000
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| Previous Committee Report:
| HC 23-v (1999-2000), paragraph 2 (19 January 2000) and
HC 23-ix (1999-2000), paragraph 1 (16 February 2000)
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| To be discussed in Council:
| Following receipt of European Parliament Opinion
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| Committee's assessment:
| Politically important |
| Committee's decision:
| For debate in European Standing Committee A (debate took
place on 29 March 2000)
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Background
22.1 As we noted in our Reports of 19 January
and 16 February, the Commission has put forward a proposal to
reform the Community support arrangements for flax and hemp. Although
the underlying aim of the proposal — to remove anomalies
between the arrangements for these two crops and the aid available
under the Arable Area Payments Scheme (AAPS) to cereals, oilseed,
proteins and linseed, and so reduce expenditure — is sensible,
the mechanism chosen by the Commission would have at least three
unacceptable consequences for the UK. First, the alignment of
the flax and hemp arrangements with those for other arable crops
would, as it stands, require flax and hemp to be grown on eligible
land in future, thereby cutting out a significant proportion of
current production in this country. Secondly, the incorporation
of flax and hemp into the AAPS could lead to an overshoot of the
present base areas, and thus reduce arable aid payments for all
crops. Thirdly, the new aid system proposed for flax is specifically
designed to favour "traditional" short fibre production
in other Member States at the expense of the developing production
of long fibre flax for industrial purposes in countries such as
the UK. For these reasons, we recommended in our Report of 16
February that the proposal should be debated in European Standing
Committee A, once the Regulatory Impact Assessment promised by
the Government was available.
Second Supplementary Explanatory Memorandum of
21March 2000
22.2 The Minister of State (Commons) at
the Ministry of Agriculture, Fisheries and Food (The Rt. Hon.
Joyce Quin) has now provided that Regulatory Impact Assessment
under cover of her Second Supplementary Explanatory Memorandum
of 21 March 2000. This states that, for the UK flax and hemp sector,
the proposal does not contain any benefits, and that its effect
would be "entirely detrimental". So far as flax is concerned,
it points out that some 15,000 hectares was grown in the UK in
1999, of which about 95% was on land ineligible under the AAPS.
Since the growing of flax would not be profitable without aid,
this could lead to the loss of some 14,250 hectares of flax, worth
in total some £6.3 million, or about £8,050 per grower
on average. Likewise, on the basis that about 85% of the 1,500
hectares of hemp grown in 1999 was on ineligible land, the Assessment
puts the consequent loss at £459,000 overall (or about £6,200
per grower). It adds that a drastic fall in flax and hemp production
would also badly affect processors, putting seriously at risk
91 full-time and 28 seasonal jobs, and current investment totalling
some £6.8 million (as well as prospective future investment).
22.3 Other criticisms of the proposal include
the environmental implications of the loss of a renewable raw
material and its replacement by synthetic alternatives, the possibility
of those flax producers with eligible land switching to other
arable crops, and the greater administrative complexity of the
new aid arrangements. Finally, the Assessment also points out
that a proposal that hemp seed imported from Third Countries (other
than for sowing) should be denatured so that it cannot be grown
for illegal use would have an adverse effect on the small number
of companies which use the seed to produce non-prescription medicines
and cosmetics.
22.4 The Minister subsequently wrote to
us on 23 March to explain that, as it had not proved possible
for us to consider her Supplementary Explanatory Memorandum prior
to the debate in European Standing Committee A on 29 March, she
was copying her Memorandum and the Regulatory Impact Assessment
to the Standing Committee and to the Vote Office, to ensure that
Members had access to this information in time for the debate.
Conclusion
22.5 Although the information in this
Regulatory Impact Assessment deals solely with the effect of this
proposal on the flax and hemp sectors and does not address its
potential impact on aid rates for other arable crops, it amply
bears out our decision to recommend the proposal for debate. We
are glad therefore that it was considered alongside our two earlier
Reports on this subject when the debate took place in European
Standing Committee A on 29 March.
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