Recentreform of the Common Agricultural Policy (CAP) reduces support prices forselected commodities and introduces direct payments to producers based on croparea. Single Farm Payments (SFP)that will not require production will replace current direct payments at thediscretion of member states. Producer payments in the 10 new-member states will be phased in over a10-year period. These reforms movefrom a price support policy to an income support policy through decoupledpayments and farmers have more choices in their production decisions.
Underthe Renewable Fuels Directive of 2003, member states would establish a minimumlevel of biofuels as a proportion of fuels sold from 2005, starting with 2% andreaching 5.75% of fuels sold in 2010. About 80% of biofuel production in the E.U. is biodiesel, which isproduced primarily from rapeseed. Fuel ethanol is mainly produced from cereals and sugarbeets.
Grains (Wheat, Corn and Sorghum)
á The TRQ in-quota tariff rate is as low as 0 for some product lines and as much as 123.2%.
á The rice subsidized export limit is set at 133,400 MT (3 million cwt).
á A rapidly growing biodiesel industry is increasing demand for all vegetable oils in the EU-25.
á Oilseeds are imported duty free into the E.U.
á Soybean producers must set aside land at the same rate as other arable crops.
á CAP reform of 2003 introduced Carbon Credits which grant a payment of 45 euros/ha (about $24/ac) to growers of energy crops, including crops grown for the production of biodiesel and ethanol. Efforts are being made to increase this support to 90 euros/ha ($47/ac).
á The E.U. asserts that concessions it made to the U.S. under the Blair House Agreement to limit oilseed production are no longer valid. This is due to the equalization of compensatory payments for oilseeds and cereals, removing crop specific payments to oilseed producers.
á Reforms in the sugar sector follow that of other arable crops: decoupled payments and transition price support.
á A production quota system remains in place, but a quota buyback scheme has been introduced whereby growers staying in sugar beet production pay a levy which is used to compensate processors leaving the sector. Overall, the production quota is set to decrease by 25-30%.
á The sugar intervention subsidy is 631.9 euros/MT ($0.37/lb) but is set to reduce to 404.4 euros/MT ($0.24/lb) over the next 4 years.
á The sugar TRQ in-quota tariff rate is as low as 0% for some product lines and as much as 143.6%.
á The sugar subsidized export limit is 1,273,500 MT (1.4 million short tons).