October 25, 2001

EU Likely Remains in Compliance With Oilseed Production Limits

Summary

It is likely that the European Union did not exceed Blair House Agreement limits for the production of oilseeds in 2001/02; just as the EU did not exceed those limits in 2000/01. Agenda 2000 changes to the EU’s Common Agricultural Policy are reducing oilseed support levels thus reducing incentives to plant oilseeds.

Blair House Agreement 2001/02 Limits 

The European Commission normally produces data related to compliance with the Blair House Agreement early in the next calendar year following the harvest of an oilseed crop. Consequently, final data will likely not be available for the 2001/02 crop until sometime after January 1.  Nonetheless, it appears that the European Union will not exceed its adjusted Maximum Guaranteed Area and 1 Million Ton Limits with the 2001/02 oilseed crop.

October USDA estimates for rapeseed, sunflower and soybean area total 5.44 million hectares (see graph and Table 1,) up slightly from last year, but down from 5.89 million hectares in 1998, the last year the European Union exceeded the adjusted Maximum Guaranteed Area (MGA) limit. COCERAL, the oilseed crushers representative organization to the European Commission, estimates area of non-food oilseeds at 770,000 hectares.  This suggests that EU oilseed area for food use was in the neighborhood of 4.67 million hectares (5.44 - 0.77 = 4.67), less than the adjusted MGA limit of 4.94 million hectares.  If this is true, the EU will not be required to reduce compensatory payments to oilseed producers for the 2001/02 crop as would be required if the limit were exceeded.

It is also likely that the EU will not exceed the 1 million ton limit proscribed in the Blair House Agreement. To abide by this limit, the European Union must not produce more than 1 million metric tons of oilseeds for industrial uses, expressed on a soybean meal equivalent basis (SBME), from set-aside area.  The European Union approached this limit in 1999/2000, producing an estimated 957,000 tons of SBME without exceeding it, but in 2001/02 industrial oilseeds area will be about 20 percent lower than in 1999/2000 suggesting the limit will not be exceeded.

Limits for 2000/01

For 2000/01, the European Union was 518,000 hectares below the adjusted MGA Blair House limit according to data released by the European Commission. Table 2 shows the amount of adjusted MGA for each country and their respective oilseed area. The countries of Italy, France, and Luxembourg were over their individual adjusted MGA’s, but Denmark, Spain, Germany, and other EU countries were sufficiently below their adjusted MGA’s to compensate.

For more information, contact Paul Provance 
with the Production Estimates and Crop Assessment Division at (202) 720-0881 or e-mail  Provance@fas.usda.gov.

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