8 Common organisation of the market in
hops
| (24993)
13111/03
COM(03) 571
| Commission Report on the evolution of the hops sector.
|
| Legal base | — |
| Document originated | 30 September 2003
|
| Deposited in Parliament | 31 October 2003
|
| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 12 November 2003
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| Previous Committee Report | None, but see footnotes
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
|
| Committee's decision | Cleared, but relevant to any debate on reform of the CAP
|
Background
8.1 The basic arrangements for hops under the Common Agricultural
Policy (CAP) include provision for a production aid of €480
per hectare designed to enable producers to receive a fair income,
and they have since 1998 been extended to included Special Temporary
Measures allowing the voluntary resting and/or grubbing up of
land used to produce hops. Under the main enabling Regulation[10],
the Commission was required to produce by the end of 2003 a report
to the Council on the sector, together with any proposals for
the future. It has now done so in this report, which it says
has been produced slightly earlier in order to tie in with the
current round of CAP reforms on cotton, olive oil, tobacco and
sugar[11].
The current document
8.2 In its report, the Commission notes:
- that the Community is the world's
leading producer of hops, accounting for over 40% of total output
(a figure which it says will rise to over 50% following enlargement),
and is a net exporter;
- that, within the present Community, Germany accounts
for 84% of production, with the UK the next highest Member State
(at 6%);
- that, due principally to a move towards more
lightly hopped beers, the area under cultivation nevertheless
fell by about 17% between the periods 1995-97 and 2000-02, with
production being in decline in all Member States except France,
and the most marked decline (around 43%) having taken place in
the UK;
- that, despite this fall, budgetary expenditure
on the hops regime has been more or less stable since 1997, at
around €12.5-13 million;
- that the majority of hops are sold under contracts
concluded in advance (generally for three to five years), but
that the proportion sold in this way is declining as brewers are
finding increased supplies on the free market at lower prices.
8.3 In assessing the overall situation under the
regime, the Commission notes that production aid has allowed hops
to be grown at a reasonable level of profitability, given both
the structural and managerial investment required, and has in
the process contributed to the survival of a crop which is a distinctive
feature of the landscape of certain regions, and helps to maintain
a thriving local economy. It also suggests that the aid has been
set at a level which supports producers without making them dependent
on it, and that the special temporary measures taken in 1998 have
helped to cope with the volatility of market demand and to provide
ongoing structural adjustment to market requirements.
8.4 As to future requirements, it says that, having
regard to the dominant needs of the brewing industry, any support
system must meet three crucial requirements — the maintenance
of the viability of production (in terms of its quality and volume)
through a system of production certification and the activities
of producer groups; safeguarding the stability of producer returns,
thus ensuring economic conditions favourable to production; and
enabling producers to respond to short-term and structural market
crises, by being able both to halt production temporarily and
to quit it altogether to use the land for other types of production.
It therefore proposes that these various components should be
integrated into a simple flexible and sustainable system, and
in particular that aid to hop producers should from 2005 be decoupled
and integrated into the single payment system introduced as part
of the recent CAP reforms. However, it says that Member States
should have the option of maintaining up to a maximum of 25% of
the aid as coupled, in order to enable them to cater for particular
production concerns.
8.5 In the meantime, the Commission has already proposed
that, as a transitional measure, the existing arrangements for
production and the special temporary measures should be extended
for a further year to include the 2004 harvest[12].
The Government's view
8.6 In his Explanatory Memorandum of 12 November
2003, the Parliamentary Under-Secretary of State (Farming, Food
and Sustainable Energy) at the Department for Environment, Food
and Rural Affairs (Lord Whitty) says that there has been a continuing
decline in the areas under hops, both in the Community and worldwide,
but that, with restructuring having enabled the industry to adapt
progressively to market demands, there is now evidence to suggest
that, after several years of poor returns, the market is showing
some signs of upturn. He adds that the Government is in the process
of consulting about the report and its conclusions, but that previous
informal contact suggests that the industry will welcome the report
and would support the Commission's intentions for 2004 and decoupling
thereafter.
Conclusion
8.7 Since this document deals with a commodity
for which the UK is — unusually — the Member State
with the second highest level of production (albeit small compared
with Germany), we think it right to draw it to the attention of
the House. Having said that, the analysis in the report is essentially
factual, and its recommendations are consistent with the reforms
which have already taken place in a number of important commodity
areas, or which have recently been proposed for cotton, olive
oil and tobacco. For that reason, we do not think the document
raises any novel or contentious issues requiring further consideration,
and we are therefore clearing it. However, it would be relevant
to any wider debate that may be recommended on the reform of the
CAP.
10 Council Regulation (EEC) No. 1696/71.OJ No. L.175,
4.8.71, p.1. Back
11
(24905) 12965/03; see HC 63-xxxv (2002-03), paragraph 2 (29 October
2003). Back
12
(24907) 12975/03 and (24912) 12964/03; see HC 63-xxxiii (2002-03),
paragraph 45 (15 October 2003). Back
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