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16.1.

2001 EN Official Journal of the European Communities C 14/151

Opinion of the Economic and Social Committee on:
— the ‘Proposal for a Council Regulation on the common organisation of the market in rice’,
and
— the ‘Proposal for a Council Regulation amending Regulation (EC) No 1251/1999 establishing
a support system for producers of certain arable crops, in order to include rice’

(2001/C 14/27)

On 19 June 2000, the Council decided to consult the Economic and Social Committee, under Articles 36
and 37 of the Treaty establishing the European Community, on the above-mentioned proposals.

The Section for Agriculture, Rural Development and the Environment, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 6 October 2000. The rapporteur
was Mrs Santiago.

At its 376th meeting on 19 October 2000, the Economic and Social Committee adopted the following
opinion by 42 votes to 12 with 8 abstentions.

1. Introduction 2. General comments

1.1. There is a major imbalance in the European rice market
according to the Commission, as set out in its proposed 2.1. Rice crops are irrigated by flooding, requiring an
regulation on this sector. It attributes the causes of this abundance of water; the water plays a key thermo-regulatory
imbalance to increases in imports and production and the role in the development of the plant which has to remain
limitation of subsidised exports under the GATT agreement. submerged throughout its growing cycle. It is best for just a
The Commission also notes that a solution to this problem shallow layer of water to cover the plant so that sunlight can
must be found quickly by revising the common market get through, and for the layer to be as even as possible. This
organisation for rice and at the same time reducing production. entails controlling water levels to within a millimetre, achieved
using precise laser-aided levelling techniques before the seeds
are sown. Regulating water levels within the paddies is vital
for good plant growth and pest control; this involves good
1.2. Thus the Commission is proposing to: networks of irrigation canals, drainage ditches, bunds (earthen
levees) between paddies, and dikes (tracks) for access to these
paddies.
— integrate rice into the arable crop system;

— abolish the intervention mechanism and the intervention 2.1.1. The rice paddies are levelled off at zero depth point
price for rice; so that as little water is lost as possible. Redeploying the land
for other crops involves building up the land surface to create
— resume, if possible, the system of fixed import tariffs a gentle slope or ridges and furrows so as to ensure a certain
granted under the Uruguay Round; amount of surface drainage. Such conversion work, which is
always costly because of the amount of earth which needs to
be moved, is only an option in areas which are not traditional
— compensate producers for the drop in prices with an rice-growing areas.
increased area payment of 63 EUR/t instead of the current
52,65 EUR/t;
2.1.2. Most of the traditional rice-growing areas are either
— establish a set-aside scheme identical to that for cereals; to be found in shallow marshland with insufficient internal
and surface drainage or in alluvial zones on the banks of rivers
— make the use of certified seed mandatory. where the soil is made up of marine sediment and where the
groundwater has a high salinity level. The soil saturation
problems associated with marshland and salinity in the
groundwater means that no crops other than rice can be
1.3. The Commission intends to use these measures to re- grown. Moreover, flooding is vital to prevent groundwater
establish a balance in the market, make Europe competitive on levels rising, thus preventing sodium from being adsorbed into
the world market and plug the financial gap caused by the the molecular structure of the clay, which would lead to its
significant build-up of rice intervention stocks over the last disagglomeration, i.e. the soil would lose its texture and
few years. integrity, making it unsuitable for any type of crop.
C 14/152 EN Official Journal of the European Communities 16.1.2001

2.1.3. The Commission’s concern about an increase in the 2.5.1. Northern Member States mainly consume the Indica
area used for rice production is unwarranted, since the very subspecies (long grain) imported from third countries and also
conditions required for this kind of crop practically limit in recent years produced within the EU. Its production rose
the surface area thus employed, as does the specialised from 27 000 tonnes in 1988/1989 to 120 000 tonnes in
mechanisation, as in many regions this cannot easily be 1999/2000, representing about 55 % of Community con-
transferred to other crops. sumption of this type of rice (2).

2.5.2. As a foodstuff, rice is very healthy, being a source of
2.2. Rice cultivation plays a key role in preserving the complex carbohydrates: starch, to be more precise. It is also
environment of the areas where rice is produced. This type of rich in protein and is considered to be the cereal with the
farming is suited to very specific soil and climatic conditions, highest quality protein, containing eight essential amino acids.
providing a perfect image of harmony with nature and Rice contains practically no fat, cholesterol or gluten.
environmental values. The rich rice-paddy ecosystem is of
undeniable value in terms of both landscape and wildlife,
creating a suitable habitat for aquatic birdlife. Rice paddies 2.5.3. The key difference between the different types of rice
constitute specific ecosystems which no other type of crop consumed within the EU — Indica and Japonica — relates to
creates. Flooding with fresh water allows small species to the type of starch they contain. In Indica rice, the starch
develop, including the freshwater crayfish, attracting a wealth is made up of amylose, a polysaccharide in which the
of wildlife, in particular migratory birds such as ducks, swans, macromolecules exhibit a linear structure; this means that it
storks and snipes. does not easily retain water. This type of rice is easy to cook:
its grains do not normally stick together, but it does not easily
absorb the taste of the food with which it is being cooked.
Japonica rice is essentially made up of amylopectin, a polysac-
2.3. Although rice cultivation is nowadays almost fully charide in which the macromolecules have a branched struc-
mechanised, it is more labour-intensive per hectare than other ture; it is susceptible to excess absorption of water, but does
types of cereal because of the specialisation involved and the absorb well the taste of the food with which it is being cooked.
work entailed in moving water around the paddies. Its forms of preparation are more sophisticated, allowing a
considerable variety of dishes which are more in keeping with
the Mediterranean diet. This type of rice requires more
sophisticated forms of preparation, allowing a considerable
2.4. Rice cultivation is of key importance in some areas of variety of dishes, where the rice is cooked together with meat,
southern Europe in terms of population and land-use planning fish, vegetables or shellfish or sometimes a mixture of these
and the social balance of rural areas. In one Communication (1), ingredients. There is a great variety, all of which are delicious,
the Commission states that ‘in Italy and in France 33,8 % and nutritionally balanced, healthy and perfectly suited to present-
47,8 % [...] of farmers possess more than 30 hectares of rice day consumer quality and safety requirements.
land. In Spain, Portugal and Greece only 6,9 %, 9,9 % and 1 %
of farmers have respectively more than 30 hectares. In these
Member States, rice cultivation is small scale with around 77 % 2.6. Until 1996 the rice market in the Community was
to 85 % of the farmers having less than ten hectares. Rice stable, without any need for recourse to intervention and with
farmers tend to be very specialised, since about 65 % of rice market prices which were very close to intervention prices.
growers have more than 50 % of their land in rice cultivation.
These growers account for more than 78 % of the total rice
area. This means that a significant number of small rice 2.6.1. The surplus in Japonica rice was exported to third
growers depend almost exclusively on rice for their agricultural countries, under a system of export refunds. Indica rice, mainly
incomes’. imported into northern Member States, was subject to variable
import duties calculated on the basis of the value of the rice in
the husk.
2.4.1. More recent data (from Eurostat 1997) show that for
example, in Greece and Portugal more than 50 % of farms
comprise less than 5 hectares and in Spain more than 50 % of 2.7. The 1993/1994 Uruguay Round negotiations had the
farms comprise less than 10 hectares. effect of penalising the sector, not so much because of
concessions to the inevitable pressures for liberalisation, but
because of the way that the EU agreed to set up its barriers.

2.5. Community rice production is mainly of the Japonica
subspecies (medium grain), mostly consumed in the Member 2.8. The variable levies were converted into fixed tariffs and
States of southern Europe, which are also the producer were to be reduced by 36 % overall by the year 2000. European
countries: Spain, Italy, France, Greece and Portugal. farmers have been given area aid which has only partly
compensated them for the drop in market prices.

(1) COM(95) 331 final, p. 10. (2) COM(2000) 278 final.
16.1.2001 EN Official Journal of the European Communities C 14/153

2.8.1. In the GATT negotiations, the negotiators’ indiffer- hitherto not been seen in the sector, making a revision of the
ence vis-à-vis rice had serious consequences, since they placed CMO in rice inevitable. It is quite fair to affirm that only
rice alongside the other cereals for the purposes of customs Europe has lost out and only non-European exporters have
tariffs, forgetting that rice, unlike other cereals, undergoes emerged better off.
prior industrial processing, namely husking and milling.

2.8.2. This oversight in negotiations was immediately used 2.10. It is important to highlight that although European
by the United States, who called for the introduction of a rice production is insignificant on a worldwide scale (0,4 % of
special import clause, headnote 7, which consists of a pricing total world rice production), the European market is much
system calculated in such a way that the price of imported sought-after by international producers.
rice, after payment of duties, would never be higher than a
given percentage over the intervention price of Community
rice. This means: 2.11. On the other hand the United States, which is
essentially an exporting country, has been implementing a
— for Japonica rice: 188 % of the intervention price for policy of subsidising production to compensate producers for
paddy rice; the fall in world market prices, and this has led to an expansion
in rice-producing areas and productivity.

— for Indica rice: 180 % of the intervention price for paddy
rice,
2.12. The United States plays a predominant role in setting
prices and influencing their trends. Rice is one of the products
— irrespective of the price/quality of the rice concerned. traded on the Chicago commodities exchange and inter-
national price fluctuations in rice are subject to heavy specu-
lation which may bear absolutely no relation to the rice
2.8.3. This agreement subsequently entailed a special abate- situation in Europe.
ment being granted for basmati rice, the price of which was
on average 250 EUR/t higher than the world market reference
prices. This rice is currently entering the Community at zero 2.13. The modest profile of rice compared to other cereals
duty or virtually zero duty, and of course imports increased means that it is frequently used as a pawn in international
from 40 000 tonnes in 1994/1995 to 100 000 tonnes in trade negotiations in order to achieve agreements which are
1998/1999. more advantageous for cereals — which are politically and
socially more important in the European Union.

2.8.4. Also to be noted is the fact that rice imported under
preferential conditions — 160 000 tonnes of husked rice from
ACP and OCT countries at reduced duties for ACP countries
and zero duties for OCT countries.
3. Specific comments

2.8.5. With the accession of the new Member States, new
tariff rate quotas had to be opened for 63 000 tonnes per 3.1. The particular nature of the rice market was recognised
annum of milled rice at zero duty and 20 000 tonnes per by Community legislators as early as the 1960s when the
annum of husked rice at a duty of 88 EUR/t. common market organisations were set up and it was for this
reason that in 1967 a regulation was passed establishing the
single market in rice. It is clear that the creation of a common
2.8.6. In summary, under the preferential conditions market organisation (CMO) in rice, as distinct from a CMO in
200 000 tonnes of rice, i.e. 40 % of all current imports, are cereals, matched the need to take into account the specific
imported at zero or much reduced duty. The remaining 60 % features of the rice sector, both in terms of cultivation practices
pay only around 200 EUR/t, instead of the 264 EUR/t initially and production and consumption. These specific features still
agreed upon, and if Basmati rice and ACP and OCT imports remain and there is no sense in trying to ignore them.
are included in the calculation, the average duty applying at
the moment falls to 110 EUR/t.
3.2. Both the CMOs comply with the same basic principles
which should not be forgotten (intervention price, external
2.9. This situation, together with the reduction of refunds trade regime, single market and freedom of transaction,
on exports, limiting exports of Japonica rice, threw the Community preference and the pursuit of an adequate standard
Community rice market out of balance, pushing up imports of living for producers). The incorporation of rice into
sharply and pushing down internal prices below the inter- the ‘arable crops’ system would logically presuppose that
vention price. It was therefore a logical consequence to make intervention will be maintained and not abolished as the
use of intervention, and this reached proportions which had Commission is proposing.
C 14/154 EN Official Journal of the European Communities 16.1.2001

3.3. Rice is not a crop which can be compared to other 3.7. It should be pointed out that the special treatment
cereals, since although productivity may be greater, production given to maize, as an irrigated crop, should also a fortiori, be
costs are substantially higher. Integrating it into the general given to rice, since its production costs are higher, and the
scheme for arable crops, particularly given the discriminatory social, environmental and land conservation role it plays is
way in which it is treated, is turning out to be extremely both important and irreplaceable.
disadvantageous for this sector.

3.8. Rice is treated like any other arable crop, with manda-
3.4. Abolition of the intervention mechanism (which has tory set-aside. The Commission did not take account of the
been maintained for other cereals) makes farmers totally difficulties involved in reconciling rice cultivation techniques
dependent on the prices and criteria set by the industry, not with the withdrawal of land from use (maintaining the water
least because the intervention price has always functioned as flow and the costs involved, organising the way that the land
an indicator for the market price. In its earlier Communi- plots are grouped together, etc.). In addition, compensation
cation (1), the Commission itself recognised that ‘although allocated for set-aside under the current proposal, which is the
intervention is hardly used it plays a significant role in same as for other cereals, does not even cover the costs of
determining market prices’. This role in regulating market either the water or the earth removal between fields necessary
prices has not changed and the use of intervention over the for implementing the set-aside.
last few years is the result of a badly negotiated trade policy
inappropriate for producers, the costs of which they will now
unjustly have to bear.
3.9. The mandatory requirement to use certified seed
involves an unnecessary increase in costs, the sole beneficiaries
of which will be the seed suppliers. Farmers always use some
certified seed and some seed which they themselves have
3.5. Withdrawal of intervention will, according to the produced and selected. The amount of seed to be used in each
Commission, trigger a 10 % to 11 % fall in production prices. growing season varies, since the density of sowing depends on
However a market study (2) carried out by experts in this area the temperature at the start of, and during, the seed planting.
foresees a 25 % to 30 % collapse in Community rice prices.
Thus the EUR 10,35 per hectare increase in area aid proposed
by the Commission corresponds to around 12 % compen-
sation. This contrasts with the 50 % compensation given for 3.10. The idea of private storage aid representing an
the price falls under Agenda 2000 for the other cereals. alternative to abolishing the intervention regime is quite
unrealistic, besides which this is a vague and very general non-
obligatory provision which could come under the title on
General Provisions, but never under the title on the Internal
3.6. As regards the aid to be allocated to rice production, Market, as is the case for the other CMOs. Moreover, the
which is the same as that provided for in Agenda 2000 for Commission does not provide for any budget for private
other cereal crops, the Commission proposal is not clear as to storage in the financial statement.
the productivity to be attributed to rice, since 1(5) of the new
proposal (amending Article 4(2)) clearly states that where
maize is treated separately, as occurs in rice-producing Member
States, ‘the “maize” yield shall be used for maize, and the
“cereals other than maize” yield shall be used for cereals,
oilseeds, rice, linseed and flax and hemp grown for fibre’ (3). 4. Conclusions

3.6.1. However, Commission representatives have given 4.1. The Committee agrees with the Commission that the
assurances that the Commission’s intention is not this but is rice market is out of balance and that intervention stocks entail
rather to maintain rice-growing productivity levels and areas excessive costs; it does not, however, consider that the
in each country. It is therefore proving vital to provide proposed measures will re-establish a balance in the market
preliminary clarification of how this document is to be read, but believes they will rather make rice production in the
since the document does not correctly reflect the Commission’s European Union impracticable.
position.

4.2. The whole thinking behind the proposal depends on
the success of trade negotiations of which the results are
(1) COM(95) 331 final. uncertain. The Commission is going ahead with proposed
(2) Briefing note ‘EU rice policy reform proposals: budgetary and amendments which are extremely detrimental to the sector,
policy implications’ by Graham Brookes — 29.8.2000 (only in without any guarantee that the prerequisites on which the
English). whole logic behind the proposed measures is based, will
(3) Regulation (EC) No 1251/99. actually materialise.
16.1.2001 EN Official Journal of the European Communities C 14/155

4.3. The Committee does not agree with the withdrawal of to restore customs duties in their proper form, analyse the
intervention and wonders whether the Commission is market and only then, if necessary, contemplate a balanced
intending to try this measure out on a less vociferous sector and fair reform in the sector.
and then, having established the precedent, extend the measure
to the other cereal sectors. 4.6. The Committee suggests that the Commission look
into the possibility of direct aid to producers more closely,
taking into consideration the social and environmental aspects
4.4. The Committee urges the Commission to clarify and characteristic of rice farming in the EU.
quantify what it means by private storage aid in case there
should be a crisis in the sector. This provision is optional and 4.7. The Committee draws the Commission’s attention to
extremely vague and no budget has been provided for it in the the important, irreplaceable role that rice plays in preserving
proposal’s financial statement. the ecosystems of wetlands and nature parks in southern
Europe, in land use and in preserving the flora and fauna
specific to paddy fields.
4.5. The Committee would point out that even if the
negotiations with the rice-exporting countries turn out to be 4.8. The Commission cannot change the basic principles
successful, these only cover 60 % of current imports. The governing all the CMOs without creating considerable
remainder is subject to pre-set quotas with zero or almost zero inequality between producers. Budget constraints must not
duty; for this reason the Committee questions whether it is affect only a few parties, since all parties contribute to
opportune to carry out such drastic and disadvantageous maintaining the fabric of rural society and each one constitutes
reform before the WTO negotiations. It would be more logical an integral part of the European agricultural model.

Brussels, 19 October 2000.

The President
of the Economic and Social Committee
Göke FRERICHS
C 14/156 EN Official Journal of the European Communities 16.1.2001

APPENDIX

to the Opinion of the Economic and Social Committee

Proposed amendments rejected

In the discussions, the following proposals for amendments were rejected; at least one quarter of the votes cast were
in favour of the proposed amendments.

Point 4.2

New second sentence:

‘The Committee recognises the serious consequences for developing countries, particularly relating to the crucial
Indian and Pakistani basmati trade. Increased barriers against them in the context of discussions for a new WTO
Agriculture Agreement are difficult to justify.’

Result of the vote

For: 20, against: 33, abstentions: 5.

Point 4.5

Delete last sentence.

Reason

It proposes significant increases in duties and prices to the consumer.

A potential trade dispute could instead be avoided by reforming the rice market through reducing the intervention
price by around 25 % (and tightening intervention criteria). This will bring down the price so that surplus japonica
can be exported without the need for export refunds. By keeping intervention, and the safety net for farmers, the
proposal is WTO consistent and does not require the offering of compensation to third countries.

Result of the vote

For: 19, against: 41, abstentions: 2.