The European Commission has adopted a proposal for a wide ranging reform of the flax and hemp regime. The sector has experienced a sharp subsidy-driven rise in areas sown without any comparable increase in market demand, leading to soaring Community expenditure, which rose from 74 million euro in 1995 to 158 million euro in 1999. The reform is structured around two proposals for Council Regulations. The first would include flax and hemp in the general aid scheme for arable crops, aligning the aid per hectare with aid rates for linseed. The second, in order to ensure continued production by those outlets worthy of support, would introduce supplementary assistance in the form of processing aid for straw of flax and distinguishing between high quality long fibre flax and low quality short fibre flax & hemp.

The rarely used measures for private storage and promotion would be abolished. The reform is to enter into force on 1 July 2000.

Commenting on the proposal, Franz FISCHLER, Commissioner for Agriculture, Fisheries and Rural Development, said: "The national quantities are calculated generously. We aim at reducing the prime hunting and unnecessary expenditure. The reform entails a major simplification and would clearly prevent the growing of flax and hemp for purely speculative reasons. It introduces a budget control mechanism and enhances environmental protection, given flax and hemp do not need a lot of fertilizers and pesticides. The measures will benefit the numerous small and medium-sized enterprises in the sector."

The reform

The draft Regulation is designed to maintain traditional textile outlets and support moves towards adjustment via the market in new, low-cost flax and hemp products. It also aims to stop past abuses. Under the current regime the aid per hectare for short flax fibre and hemp is extremely high in relation to production costs and the value of the product. This fact has prompted a certain amount of speculative production.

The proposal is made up of two main elements : The first would bring these two crops into the support scheme for producers of certain arable crops governed by Council Regulation (EC) No 1251/1999. It aligns the aid to growers on that provided per hectare for linseed producers, which will be progressively put to the level of the area payment for cereals in 2002/2003. Among the conditions to grant that aid it will be necessary to conclude a sale contract with authorised primary processors.

The second part of the proposal would establish up additional support arrangements for authorised processors by means of aid for processing flax and hemp straw grown for fibre. The aid for processing flax and hemp straw into fibre will be granted on the basis of the quantity of fibre produced by approved primary processors. Different amounts of aid will be granted for long flax fibre and for short flax fibre or hemp fibre. The aid for short flax fibre and hemp fibre is limited to five years, the time to give new products and their potential outlets the time to reach equilibrium. The reform is intended to cancel out subsidy-driven production and hence to bring down budgetary expenditures from 158 million euro 1999 to 80 million euro in 2001 and, due to the reduction in area payments and the abolishment of the processing aid for short fibre flax and hemp, to 50 million euro in 2005.

Transitional processing aid for short flax fibre and hemp containing not more than 5% impurities and shives