EU:n kesannointivelvoitteen väliaikainen alentaminen markkinointivuonna 1996/97 : tausta ja seuraukset Suomen näkökulmasta

The article describes the evolution and future of the set-aside system of the European Union. The focus is on Finland s integration to the system. The future developments are evaluated from Finland s point of view. To be eligible for the compensatory payments introduced as part of the CAP reform for arable crops, producers must set aside a portion of their arable land with a view to achieving a better balance between production and domestic and international demand. The set-aside rate was fixed at 15% for the rotational set-aside and 20% (18% in the UK and Denmark) for other forms of set-aside. The set-aside requirements do not appeal small producers producing less than 92 tons cereals a year. Because of bad harvests in certain areas of the world combined with effective production control measures, for the marketing year 1995/96, the set-aside rate was cut to 12% (15% and 17%). During the year 1995, the intervention stocks of cereals continuously decreased and world market prices increased. Consequently, the EU decided to cut the set-aside rate to 10% for the 1996/97 marketing year. As usual, the reduction only applies for the 1996/97 marketing year. For the year 1997/98, the portion will automatically revert to 15% (and 18% and 20%). The cut of set-aside rate serve the interest of major cereals- producing countries. Finland is obliged to pay her share of the costs without getting any advantage. Finland s interest would probably be to increase the set-aside rate. This is because, within a certain range, (a) the change of the obligatory set-aside rate barely affects the set-aside area in Finland; (b) the change of the obligatory set-aside rate barely affects the cereals production in Finland; and (c) the change of the cereals-production area barely affects the farm income in Finland. The discussion concerning the future development of the EU set-aside system should include the following themes: (a) is the current cereals shortage a temporal or continuous phenomenon; (b) as a high set-aside rate helps to keep cereal prices up, farmers would gain in the form of high producer prices and the tax payers would gain in the form of low export subsidies (or high export taxes); (c) because the increase of set-aside rate is more difficult than the cut, the cuts should be postpo ned if possible; (b) an alternative way to increase production is to rise the farm-by-farm ceiling of 92 tons (that makes the set-aside obligatory), rather than to cut the set-aside rate; and (e) for environmental reasons, the set-aside area shou ld be covered with plants.

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MTT Taloustutkimus (MTTL)

The temporal cut of the EU set-aside requirements for the 1996/97 marketing year: consequences for Finland