The Commission confirms a rescue operation for palm oil biofuels

Despite the agreement reached on the Renewable Energy Directive last year and the concerns expressed on the draft submitted for consultation a month ago, the European Commission confirmed its intention to rescue palm oil in EU biofuels, in breach with the decision of the colegislators and with the will of the European citizen expressed strongly including via the #NotInMyTank website by almost 65.000 people.

The delegated act tabled today would allow large quantities of palm to be excluded from the freeze at 2019 level and phasing out from 2023 decided by the co-legislators that now have a very short period of time to object and request a new text, in line with the RED2 deal.

The text proposed by the Commission recognises that expansion of palm production is bad for the environment but, immediately after, offers a wide open door for the same palm to still be used in EU biofuels.

The low iLUC definition  does not take into account the overall objective of the regulation which is to cut the link between the EU framework for biofuels and global deforestation.

On the contrary, the text is a collection of loopholes, in particular an exemption for small plantations whose number is growing at a steady pace, and are controlled by big operators for palm crushing, certification and export even when independent. It is estimated that by 2030 small holders will manage 60% of the palm oil plantation area and will double their production capacity (1).

This means that under such a scenario proposed by the European Commission, in the coming years, EU imports of palm oil for biofuels would continue to expand. According to business estimates, small holders represent already now more than 6 million tonnes of palm oil, meaning more than twice the volume imported in Europe to produce biofuels.

Stefan Schreiber, President of Farm Europe’s Green Energy Platform said : « The European Commission decided, despite the consultation process, to circumvent the mandate given by the co-legislators in order not to disturb its trade conversation with Indonesia and Malaysia. This puts at risk the capacity of the EU to fully mobilise sustainable biofuels in order to decarbonise transport and achieve its climate objectives. This strategy undermines the credibility of the RED2 and should not be accepted by the European Parliament and Council ».
(1) https://www.iopri.org/wp-content/uploads/2017/10/WPLACE-17-1.1.-OIL-PALM-SMALLHOLDER-Bungaran-Saragih.pdf

Farm Europe welcomes the adoption of a European framework to combat UTPs in the food supply chain

By a very large majority the European Parliament has adopted the Unfair Trading Practices Directive within the agri-food supply chain. Farm Europe commends the work done during this term by the European Commission and the European Parliament, in particular at the instigation of Paolo De Castro and Mairead McGuinness, who played a key role in raising the level of ambition of the initial text. This directive will be the main step forward for the agricultural and agri-food sector during this term of office – alongside the Omnibus which has made it possible to update the CAP.

The Directive will apply to anyone involved in the food supply chain with a turnover of up to 350 million euros and differentiated levels of protection provided below this threshold. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations or a single producer who engages in any of the identified unfair trading practices.

Prohibited UTPs – initially limited only to perishable products (payment after 60 days) – have been extended to cover: late payments for perishable food products (payment after 30 days); cancellations of last minute orders; unilateral or retroactive contract amendments; forcing the supplier to pay for wasted products and refusing written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier; a buyer charging a supplier to guarantee or maintain a food supply agreement; a paying provider for a promotional, advertising or marketing campaign of a buyer.

Member States will be able to extend the scope of the Directive into national law, in particular by adopting a threshold of more than EUR 350 million or take additional measures if they wish so. It will be up to them to designate the authorities responsible for enforcing the new rules, including their ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.

The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.

The agreement also includes a review clause set at 4 years. The provisions of the legislative text will therefore have to be assessed and possibly revised during the next term of Parliament.

Farm Europe welcomes the decision of Comagri Members to take sufficient time

Farm Europe welcomes the decision of Comagri Members to take sufficient time to improve the CAP reform proposals.

Yesterday, the MEPs in charge of the CAP reform within the AGRI committee of the European Parliament decided that the debate on the reform of the CAP will not go beyond Comagri’s position during the current legislature.

Farm Europe fully understand this decision considering the challenges raised by the Commission’s proposals, in particular with the new delivery model, which has to be improved in order to present a real simplification for the beneficiaries and guarantee a level playing field all across Europe.

The reports of the rapporteurs are offering a good basis to improve the Commission’s proposal but the Horizontal Regulation, which is the cornerstone of the proposal, still calls for major improvements.

The decision of the MEPs on the timing will allow a smooth process in order to shape an efficient and ambitious CAP. All the input of the current rapporteurs will be key to feed the position of the future Parliament and of the future Commission.

At this stage, the Commission proposal puts the “C“  -the “Commonness” – of the CAP at risk with 3 layers of controls and clearance of accounts as:

– Compliance would remain as burdensome for farmers and Members States (or even worse as MSs would need to define their own national horizontal framework);

– For the annual performance and multi-annual performance: two layers of checks, reports and possible clearances, which would not provide any concrete picture of the real performance of the policy as the indicators would not provide sound information but only count the administrative statistics without any feedback on the real impact of the measures. This skewed presentation could cost the credibility of the CAP when intermediate assessments are released, as no real indicators would provide data on the environmental and economic performance of the CAP.

The solution to remedy these faulty provisions could be:

– to include the simplification provision that the Commission should only control the Member States’ certification bodies and not double check in payment agencies or in farms – and keep a clear EU compliance ;

– to abolish the annual performance indicator (output indicators) which has no meaning other than an additional administrative burden for the Member States and for the Commission and replace it by a transfer of certified statistics from the Member States to the Commission ;

– to put a multi-annual performance framework on the basis of a limited number of impact indicators and require, between now and the progress of the discussions, the Commission to come up with proposals for tangible impact indicators as well as feasible proposals on how to follow them.

In the meantime, a real push for a digitalisation of EU farming should be launched in order not only to improve the competitiveness and reduce the environmental footprint of food production but also to shape meaningful indicators in order to strenghten and deliver a performance-based CAP.

And clarity should be given on the technical measures to allow a smooth transtion between the current CAP and the next one which will need more time to enter into force.

Options to avoid a brutal crisis in the event of a no-deal Brexit

As the Brexit date of 29thMarch is fast approaching without a clear prospect of an orderly exit deal, the worst case scenario of a no-deal Brexit is becoming ever more likely.

Although an agreement is still possible and highly desirable, the political stalemate around the apparently intractable issue of the “backstop”, to guarantee that no hard border comes back to the island of Ireland, increases the probability of a no-deal.

We have said it time and time again, a no-deal means disaster for the UK and for the EU agri-food sector as well. We have consistently warned our Members and readers that a no-deal hard Brexit was a distinct possibility to reckon with.

Reverting on the 30thMarch to applying the WTO tariffs to the trade between the EU27 and the UK would disrupt the current trade flows on a number of key sectors and send shock-waves across the farming communities and the food sector in the EU.

High tariff barriers would be put in place along new burdensome procedures at the borders, which would worsen the impact on trade.

The brutal disruption of trade flows would also affect other economic sectors, as the integration of production systems in many industrial areas, including in pharmaceuticals, is high across the Channel.

The EU and the UK face shortages of key products, including food, medicines and industrial goods.

Rather than contemplating with horror what would happen, we have better work-out what options remain open in the event a no-deal hard Brexit becomes the new reality.

The first option is to reduce key tariffs to zero to keep the trade flowing. This could be done by temporarily suspending existing tariffs for all WTO members, including of course the UK.

This is however not an option that would preserve our agri-food sector from a brutal crisis. To keep trade flows from the UK open, we would sacrifice our sector to imports from other origins without any reciprocity. This would just replace a big problem by an even bigger one.

There is however another option, that would maintain the status-quo with the UK for a period of time long enough to enable new mutually beneficial relations to be agreed.

The disruption of trade flows would put at risk the availability of food, medicines and other products essential to the economy and for the well-being of the citizens. It would beyond reasonable doubt create a situation of emergency that should be avoided at any cost. It would challenge for a period of time the security of the countries affected.

Under WTO rules it is possible to evoke GATT Art XXI, which allows a country to “…taking any action which it considers necessary for the protection of its essential security interests” “… taken in time of waror other emergency in international relations”.

Art XXI could therefore be used for a limited period of time to keep existing trade flows till an agreement is found on the future EU-UK relationship. It would not reduce or impair the existing terms of trade with all the other members of WTO. It would not raise tariff protections, it would not impose bans on trade with other countries. It would only, for a limited period of time, maintain the existing terms of trade between the EU and the UK.

During this period of time the EU and the UK would keep its customs union untouched, which means by the way that the UK could not have the freedom to apply trade deals with other countries.

Recently Art XXI has been evoked by the US to protect its steel and aluminum industries, by the UAE to block trade with Qatar, and Qatar with the UAE. These situations hardly match the real emergency the EU and the UK would face in the event of a no-deal hard Brexit.

In the past, Art XXI was also evoked by the US on imposing a secondary embargo on Cuba, and an embargo on Nicaragua. The EU has used it during the Falkland war to impose an embargo on Argentina.

In addition to evoking Art XXI, both the EU and the UK should agree on a standstill that would keep all the existing regulations, standards, and other procedures under the Single Market, till an agreement on the future relationship is found.

The stakes are too high to accept failure for lack of action, where previously lack of political agreement brought the UK and the EU to the brink of disaster, in particular in the agri-food sector.

Whilst we have strongly supported the Withdrawal and Transitional Agreements, and we would have hoped for its approval by the UK Parliament, we cannot resign ourselves to accepting a brutal crisis in the event of a no-deal when there are good options available to stave it off, and create the time and the space for a better outcome.

UTPs Directive: EU institutions reached an agreement to protect actors of the food supply chain

Press release 

Brussels, December 19th

At the end of a sixth and final trilogue procedure, the European Parliament and the Council, on December the 19th reached an agreement on the Directive to combat Unfair Trade Practices in the agri and food supply chain. This is excellent news for all producers and companies in the sector, who have been waiting for a European regulation for more than 15 years, while many self-regulatory initiatives have so far failed to put an end to unfair practices. The news is all the better as the scope and the number of practices, very limited in the original Commission proposal, were extended during the discussions.

The agreement reached today will apply to any actor involved in the food supply chain with a turnover of up to 350 million euros – seven times the threshold originally proposed by the Commission – and differentiated levels of protection are provided below this threshold. The European Parliament’s desire to expand to all companies has not been retained. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations, or a single producer who engages in any of the unfair trade practices identified.

Prohibited UTPs were initially limited to perishable products only (payment after 60 days). They have been extended to cover: late payments for perishable food products (payment after 30 days), cancellations of last-minute orders, unilateral or retroactive contract amendments, forcing the supplier to pay for wasted products and refusal of written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier, a buyer charging a supplier to secure or maintain a food supply agreement, a paying provider for a promotional, advertising or marketing campaign of a buyer.

Member States will be able to extend the scope of the Directive into national legislation, in particular by adopting a threshold of more than EUR 350 million, or take additional measures if they so wish. “This is a minimum harmonization, therefore the member states can, or should in my eyes go further to strengthen the device provided by this directive” Parliament’s rapporteur Paolo De Castro noted following the agreement. It will be up to them to designate the authorities responsible for enforcing the new rules, including ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.

The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.

The agreement also includes a review clause set at 4 years, which means that the provisions of the law will have to be evaluated and possibly revised during the next parliamentary term.

It must now be formally approved by Member States in the Special Committee on Agriculture, be submitted then to the plenary and once approved by the Parliament, it will have to be endorsed by the Council and finally transposed into national legislation.

“RED2: Which opportunities for EU farmers to contribute to the energy transition”

Press release

Brussels, 22 November 2018

Now that the political compromise reached in July on the Renewable Energy Directive has just been adopted, Farm Europe’s Green Energy Platform organized today an event at the European Parliament, under the patronage of the EPP rapporteur Seán Kelly, to discuss the opportunities for EU farmers to contribute to the energy transition after RED2 adoption, and to assess the challenges ahead with the Delegated Act the European Commission will present before the 1st February 2019. 
Opening the event, MEP Seán Kelly underlined that RED is a key legislation to decarbonize our energy mix and expressed that “any legislative process at EU level takes time but the REDII really felt like a marathon”. However, “the co-legislators have been able to achieve ambitious targets and important provisions throughout the text that can help rural development to flourish and achieve our environmental ambitions”. On the differentiation between high and low iLUC risk biofuels, Mr Kelly mentioned that the co-legisators asked the European Commission to prepare a delegated act in order to have a solid and WTO compatible solution to the ban of palm that was required by the European Parliament, stressing the fact that “low iLUC biofuels should be really low”.
“The farming community is grateful to the European Parliament and in particular to the rapporteur Sean Kelly for its decisive support over the RED2 negotiations. This support played a key role in avoiding a phasing out of the sustainable biofuels that are produced by EU farmers and in building the concept of a new segmentation of conventional biofuels between those that generate high Indirect Land Use Change – like palm – and other biofuels like those produced from EU crops”, said Luc Vernet, SG of Farm Europe“Now the ball is in the court of the European Commission. If there is a consensus emerging on the high iLUC category, the delegated act must be very cautious on the low iLUC approach which should set very strong criteria, not prone to circumvention, cutting the link between biofuels and deforestation beyond any possible doubts”.
During the event farmers’ representatives from Ireland, Germany, France, Hungary and Italy presented their views on the opportunities and challenges after the RED2 adoption.
Eddie Punch, Secretary general of Irish Cattle and Sheep Farmers Association (ICSA) put the emphasis on what the real focus should be, namely on increasing the use of sustainable crop-based biofuels produced in Europe if we are serious about reducing transport emissions, hoping that the delegated act will correct the wrong approaches that were made in the past”. 
Benjamin Lammert, board member of the French Federation of Oilseed and Protein Producers (FOP) and of the Avril Group stressed that this RED2 proposal adopted by MEP’s last week is very important, especially due to the distinction among biofuels.“But there is still an important work to do on the definition of low ILUC” he commented. “This delegated act has to give a clear message, to both the industry and to the farmers”.
Stephan Arens, who is the Executive director of the German Union for the Promotion of Oil and Protein Plants (UFOP) underlined that the first EC’s proposal was basically focused on a phasing-out of first-generation biofuels. “Now, we need a clear regulation on biomass in biofuels in the delegated act” he argued. “Considering the case of the rapeseed oil, if we stop to use rapeseed for biofuel production, we will induce a huge lack of co-generated protein”.
István Borbély, a 29 years old Hungarian farmer, whose core business is arable land farming with traditional crops like corn and sugar beet then took the floor, explained that “in 2010, thanks to the RED, we begun with digitisation, irrigation and bioethanol processing. Thanks to the biofuel market arrival, the landscape changed, with continuous processing and sales opportunities, scheduled sales, and more flexibility in storage capacity and trade”.
Piero Gattoni, President of the Italian Biogas Consortium (CIB) presented the BiogasDoneRight model, that revolves around the sequential cropping capacity to produce at the same time food, feed and fuels. He explained that, according to the Italian successful example, biomethane can turn out to be a renewable energy, which is fundamental for the sustainable evolution of the European energy system and as well the transport greening process, provided that the market can reach reasonable levels of production. “This is an opportunity for farmers, rural communities and the environment” he noted. And again agriculture wants to do its part”.
 22:11 Kelly's event

Unfair trading practices: Farm Europe welcomes European Parliament’s vote

Today, the European Parliament adopted by a very large majority (428 votes in favour to 170 against and 18 abstentions) MEP Paolo De Castro’s report on the EU Directive against Unfair Trade Practices in the food supply chain. This vote makes it now possible to adopt the Directive before the end of the current term of office and therefore ahead of the next EU elections, and secures a strong legitimacy to Parliament’s members in the upcoming first trilateral talk with the Council and the Commission.

The mandate supported by the EP in the forthcoming discussions, strenghtens substantially the draft Directive proposed last April by the Commission. In particular, it aims to extend the scope of the Directive to all actors in the chain, regardless of size, in order to avoid the cascading effects of an overly restrictive approach limited to small and medium-sized enterprises. It is relevant to note that, it also includes a definition of Unfair Trade Practices, which would give the future Directive the necessary flexibility to incorporate new practices that may arise.

Furthermore, the EP proposes to extend the list of UTPs to be outlawed for example by including payments made later than 30 days for perishable agricultural and food products and later than 60 days for non-perishable products, counting from the last day of the month when the invoice was received or the agreed delivery day. In addition, a deadline for unilateral cancellation of an order concerning perishable products less than 60 days from the already agreed delivery date has been included.

All these proposals, along with additional aspects – thus concrete measures – such as for instance, (i)  the possibility to extend the definition of buyer to all types of buyers (including virtual retailers), (ii) the adoption of written contracts with the aim to better apply the Directive and give legal certainty to all operators, (iii) the harmonization among procedures of complaints in terms of necessary powers of national authorities – are needed in a view of structuring a strong and balanced food chain, able to share all the value added generated across it under fair conditions, able to reinforce the position of producers as being the most vulnerable link, and last but not least, capable of generating value up to the consumer.

Biofuels: Key lever for transport decarbonisation, according to Fuels Europe

In its 2050 vision, presented a few days ago, the fossil fuels industry highlighted an analysis showing that “biofuels” will be central in the transition towards a low carbon transport Europe with the potential to achieve equivalent GHG savings at lower costs for the citizens and for public spending. 
According to Fuels Europe’s “Vision 2050” a full electricity scenario would call for 630 billion EUR investments by 2050 in infrastructures for charging, as well as a 66 billion EUR per year loss for public budgets due to lower tax collection. Uncertainty should be added in terms of the availability of natural resources (Lithium, Cobalt & Nickel) needed to achieve such a 100% electric scenario.The study shows that a more realistic scenario – 50% electric / 50% sustainable liquid fuels – would have the same GHG savings impact with half the infrastructure cost and tax losses. Sustainable liquid fuels, including biofuels, have thus a bright future ahead to achieve a real decarbonisation of transport in Europe.
In this context, the capacity of the EU agricultural sector to provide sustainable raw materials should be mobilised. The transition towards a 100% biofuels used internal combustion engine should be encouraged via a strong mandate for both 1st and 2nd generation biofuels based on a proper assessment of the sustainability of the whole supply chain for feedstocks. 

A NEED OF BALANCED, COMMON APPROACH TACKLING UTPs

Farm Europe welcome the vote of the Agricultural Committee of the European Parliament on Unfair Trade Practices. The report drafted by Paolo de Castro is a step forward to improve the functioning of the food chain, strengthening considerably the initial proposal of the European Commission. See our full report on UTPs here.

Global Food Forum: 5 orientations for a successful transition of EU agri-food systems

The 3rd Edition of the Global Food Forum took place on the 17th and 18thof September in Pavia (Italy), gathering more than 200 political, economic and institutional decision-leaders as well as representatives of the civil society and academics. The event was an opportunity to draw orientations for the future of EU policies with having an impact on EU agri-food systems including the Common Agricultural Policy. A full report of this participatory process will be presented later this year to EU leaders around five key orientations.
THE EUROPEAN UNION AND THE WORLD
Important decisions on the future of the EU agri-food policies are being made while the European Union is in a redefinition process, generating an unprecedented level of uncertainty. The Brexit represents a major threat for the EU agricultural sector. The Forum calls EU leaders to spare no efforts in order to reach the best possible agreement limiting trade disturbance, including via an extension of the transition period as long as necessary. In the meantime, Europe needs to review its capacity to manage its own contradictions within the agricultural sector between sectors facing decreasing consumption on internal markets – in need of global perspectives – and those sectors that cannot face more competition from the global markets, – in need of protection – in particular the beef and milk sector in less competitive areas. In any case, the EU must mobilize the CAP in order to better support farmers.
BUDGETARY CHALLENGES
A secured budget is needed at EU level in order to reach EU objectives when it comes to sustainable and resilient EU food systems. For the next Multi-annual Financial Framework and the accompanying policies such as the CAP, quality should be prioritized more than the timing. The CAP should not be reformed because of budgetary constraints or only for a « national return rate » approach, but rather taking into account more ambition for the EU’s agri-food systems. Meanwhile, the future CAP should stay common and not be re-nationalized, nor should the powers of the co-legislators be voided by a power grab from the Commission.The 2019 spring elections are an important milestone for a democratic debate on future EU policies, including the CAP.
RESILIENCE: COPING WITH AN UNCERTAIN WORLD
Direct payments are important to support farmers’ income. Nevertheless, there is a wide consensus : they cannot anymore be the only way to support farmers in a highly volatile world. The current crisis reserve included in the CAP has shown its limits both in its financing mode and its triggering capacity. The EU must take the opportunity of the next reform of the CAP to design a new global approach of the toolbox to better protect its farmers. For this toolbox, all the levers should be taken into account, including investments, innovation and education as well as the new eco-schemes tabled by the European Commission that must be mobilized to tackle both economic and environmental challenges altogether. Producers and branches should be encouraged to build tools such as mutual funds and insurances to cope with medium level of volatility or climate risks. It is also necessary to reform the crisis reserve to make it more efficient and effective in cases of deep crisis with a clear capacity for the EU to take its responsibility in a case of major market or climate disturbance. This crisis reserve should be flexible and reactive in order to take the lead when risk management tools are overwhelmed. This reserve should be sheltered from the specific interests of one or another MS: it should be driven in a truly European spirit with adequate funding.
SECTORIAL STRATEGIES
The EU needs to reinvest in sectorial approaches – at EU level. It went too far in the « one-size fits all approach ». The diversity of agricultural sectors should not only be left to the Member States but also be reflected at EU level via specific tools, including when it comes to environmental requirements. A clear baseline of environmental rules must be defined at EU level together with a common set of economic levers. The EU framework should include clear orientations for the main financial levers (a minimum level of DP) and non-budgetary measures (for example protein strategy, biogas, etc.), Strong investment strategies should be set up at national or regional level in order to boost innovation. Rural Development should not be undermined to keep the capacity at national or regional level to accompany structural changes.
A FUNCTIONAL FOOD CHAIN
The Food Chain should not be a battlefield and the Commission’s proposal on Unfair Trade Practices (UTPs) is widely welcomed. Nevertheless, the initial proposal must be improved. A clear definition of the principles of UTPs should be set up at EU level in order to go beyond the need of a long list of practices, which could be bypassed.A broader approach should be promoted in the EU legislation integrating new actors with considerable market-power such as e-commerce. When it comes to the infringement procedure, a clear common approach should be designed at EU level.
FOLLOW US :
Twitter: @FarmEurope
 
CONTACT US :
info@farm-europe.eu