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EU proposes to release grain production amid price hikes

The European Commission proposed on Thursday for a temporary easing of EU rules requiring grain farmers to leave part of their land uncultivated amid a bad harvest and higher food prices.

“The Commission has today 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,” the European Union’s farm spokesman Michael Mann told reporters. Under EU rules agreed in the 1990s to prevent overproduction, farmers have to set aside 10 percent of their declared land as unplanted. But following a lower than expected harvest in 2006, which led to tightening supplies and historically high market prices, EU Agriculture Commissioner Mariann Fischer Boel urged in July to scrape the restriction in order to release production. “We don’t have overproduction anymore. We actually have a shortage of grain on the market,” said Mann.

The EU grain market is experiencing highest ever prices as the 2006 crop was lower than expected, at 265.5 million tons, due to adverse weather. Intervention stocks have considerably tightened from 14 million tons at the beginning of 2006-2007 market year to around 1 million tons now in September. “A poor 2008 harvest combined with 10% set-aside would expose the internal market to potentially serious risks,” Boel said. By removing the set-aside rate, the commission hoped to increase output of grain by 10 million tons to 17 million tons at most.

Mann said the removal would be on a temporary base, lasting one year initially. EU agriculture ministers will discuss whether to drop the set-aside rule permanently in November as part of a check on the bloc’s Common Agriculture Policy. Environmentalists have expressed concern over the removal since the set-aside land has served as a precious habitat for birds and other animals. (