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IP/03/1314

Brussels, 30 september 2003

Agricultural reform continued: Commission proposes sustainable model for Europe's hopssector

Today the European Commission has put forward its proposals for a fundamental reform of the common market organisation (CMO) for hops. This is in line with the reform of the Common Agricultural Policy (CAP) decided by the Council in June 2003. For hops, the Commission proposes to de-link the totality or at least a significant part of the current hops subsidies from production and transfer it to the de-coupled single farm payment, the key feature of the new, reformed CAP. According to the proposal, Member States could opt for total or partial de-coupling; for the latter they have the option of maintaining a coupled aid up to a maximum of 25% of the production aid in order to enable them to cater for particular production conditions or specific features of a more regional character. This payment as well as other direct payments will be linked to the respect of environmental and food safety standards through “cross-compliance”. The Commission plans to table the legal text for the hops before the end of the year.

“We aim for a simple and flexible system. This will lead to a market-oriented, sustainable hops production in the EU, Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries said.

The Commission's reform proposal for hops is based on the assessment report on the sector requested by the Council before 31 December 2003. From this analysis it is obvious that the future system must meet three crucial requirements, i.e., maintain the viability of production, ensure economic conditions favourable to production and accommodate the market trend. Concerning the first requirement, the main elements of the existing hops CMO, which are the product certification provisions and the central role of the producer groups, will continue to apply as they proved to be very efficient. Integrating the hop production aid into the single payment system best fulfils the second and third requirements.

As far as the growers are concerned this system is simple, flexible and sustainable, and equally provides for the stability of present returns by means of an aid equivalent to the present aid and a more efficient and direct transfer of the support. Moreover it offers alternatives for producers in the case of short-term and structural market crises as the grower will be able to halt production temporarily or to quit production and use the land for other types of production.

To encourage growers to organise, Member States could decide to make part or all of the coupled aid conditional on membership of a producer group.

The Commission report on the evolution of the hop sector will be available on the internet at:

http://ec.europa.eu/agriculture/publi/reports/hops/index_en.htm

Background

    How does the hops common market organisation (CMO) work?

The hops common market organisation was established in 1971 and reformed most recently in 1997. The essential elements of the basic regulation are rules for the marketing of hops using a certification procedure and a forward contract system, rules for the recognition and promotion of producer groups and rules for trade with third countries.

Support is granted to producers of Community-grown hops. Producer groups can decide whether to pay the full amount or part of the support to their members in proportion to the area cultivated: up till 20% of the support can be used for conversion to other hop varieties or other measures of common interest.

Special temporary measures are in place to provide a support for areas temporarily resting or grubbed up.

Expenditure for hops is stable at 12.5 million EUR for the harvests 2000, 2001 and 2002, of which 10 million EUR for Germany.

    EU situation of the sector

Hops are cultivated on around 22 000 hectares (approximately one third of the world's hop-growing area) in eight EU Member States (Belgium, Germany, Spain, France, Ireland, Austria, Portugal and the United Kingdom). Germany accounts for 80% of the Community's area under hops.

In all Member States, hop growing is in decline. Producers are growing varieties with an ever higher alpha-acid content (the bitter constituent of hops that gives beer its bitter taste) and increasingly higher yields, which implies that smaller areas are needed to produce the same quantity.

In recent years, the EU area under hops fell at a rate of about 3.5% per year. The number of holdings growing hops has dropped by some 6% per year, but the area per holding has increased (+ 4% per year). The Union's hop cones production has only slightly decreased (-0.8% per year) in the past few years (some 38 000 tonnes in 2002).

The aromatic varieties, giving lower yields and more difficult to grow, have traditionally commanded higher prices than the bitter. But the gaps between the two types is tending to narrow since demand for the aromatics is dropping and the new super alpha varieties have a higher alpha acid yield and hence a higher market value.

The contract market is declining because users are finding increasingly abundant supplies on the free market at lower prices than the contract prices. The contract as a marketing tool continues however to be valued by growers mainly because the contract prices are stable over longer periods.

    Trade and situation in the world

The European Union is the leading world producer of hop cones with 40% of the production. In second place is the United States with 27% of the production. China is in third place, at present accounting for 14% of the world production.

Although the world beer production is rising (by about 1.9% per year) world alpha acid needs are falling (-0.66%) as a result of technological progress and the shift in consumer tastes to less bitter beers.

The EU is the major exporter of hops (some 22 000 cone equivalent tonnes(1) exported in 2002). Its imports have decreased and have levelled out at around 11 500 cone equivalent tonnes. The positive balance shows at present a surplus of about 10 000 cone equivalent tonnes. The EU is traditionally a net exporter of hops on the world market and is a major centre of the world trade in hops.

    Statistics

Statistical and other information on the hop sector is available on the internet at:

http://ec.europa.eu/agriculture/markets/hops/index_en.htm

(1)Hop pellets and hop extracts are converted into their equivalent in hop cones in order to enable comparison.


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