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Compromise on Carbon Fix Opposed by Greens in EU Parliament
By Ewa Krukowska June 13, 2013 The Greens group in the European Parliament said it was against a tentative carbon compromise as the restrictions agreed on by representatives of three other political parties reduce the impact of the planned market fix. Climate negotiators from the European People’s Party, the Alliance of Liberals and Democrats for Europe, and the Socialists and Democrats group struck a draft deal yesterday on the conditions of a carbon-market intervention sought by the European Commission. The proposal by the commission to temporarily curb oversupply in the world’s biggest emission-trading program and help prices rebound from record lows has divided member states, parliamentarians and industry. “We won’t be signing the compromises nor voting in favor of them,” a spokesperson for the Greens group said by e-mail today. “The compromises yesterday weaken what was an already extremely weak measure for addressing the oversupply of permits.” EU carbon permits for delivery in December fell as much as 2.2 percent after the Greens’ comments. They were down 1.1 percent at 4.45 euros a metric ton as of 1:41 p.m. on the ICE Futures Europe exchange in London. The contract reached a record low of 2.46 euros in April. While the commission seeks reaffirmation of its right to delay auctions of some carbon permits, the draft compromise would allow it to intervene on the market only if a study shows such a move has “no significant impact” on industries prone to relocating production to regions without emission limits. The EPP is concerned that a potential increase in carbon prices because of auction delays would undermine the competitiveness of EU industry. Greenhouse Gases The cost of discharging greenhouse gases in the EU cap-and-trade system slumped almost 90 percent in the past four years as an economic slowdown curbed industrial output and demand for pollution rights. That helped the glut of allowances swell to almost 2 billion metric tons last year, almost equal to annual emission caps in the EU program, according to estimates by the Brussels-based commission. The draft deal struck yesterday requires earlier return of the delayed allowances to the market and earmarking of some of the postponed permits for a fund to help innovative technologies, according to a document obtained by Bloomberg News. The restrictions go beyond a Greens-led proposal put forward last month, which sought limiting the so-called backloading to a one-time move “in exceptional circumstances.” “Once everyone grasps the entire weakening of the proposal, markets will see this will do nothing,” Bas Eickhout, a Dutch member of the Greens, said on his Twitter account today. Climate Negotiators Climate negotiators from EPP, S&D and ALDE now need to secure their groups’ approval for the draft compromise before a vote in the environment committee on June 19 in Brussels and in the EU Parliament’s plenary on July 2 in Strasbourg, France. The three parties have a majority in the assembly. The upcoming votes will mark a second approach by the Parliament to decide on the future of the emergency plan for the EU carbon market. The whole assembly on April 16 voted 334 to 315, with 63 abstentions, to reject the commission proposal and then decided to send it to the environment panel for further talks. The EPP, the biggest group in the Parliament, voted 177 to 59, with 21 abstentions, against the market fix. Austrian lawmaker Richard Seeber of EPP, who took part in the meeting of climate negotiators, said yesterday the compromise addressed some of the group’s concerns and he would recommend his colleagues back it. Eija-Riitta Korhola, a Finnish member of the EPP who oversees the carbon fix proposal in the group, said that she was “highly skeptical” about the deal. ETS Compromise “After listening to my colleagues I’ve decided not to recommend for the EPP the ETS compromise as our first priority,” Korhola said on Twitter, adding it may be a good fall-back amendment that the group could support if the attempt to reject backloading fails. The EPP is due to make a final decision on the compromise on June 18. The draft deal requires the commission to reintroduce the withdrawn permits “in a predictable and linear manner starting from the year following that during which allowances have last been withheld,” according to the draft obtained by Bloomberg News. The commission planned to set out the details of backloading in a separate regulation, to be agreed after the change to the emissions-trading law. It proposed delaying 900 million allowances in 2013-2015 and returning them to the market in 2019-2020. Carbon Technologies The compromise yesterday also urges earmarking 600 million allowances for a fund for the development of innovative carbon technologies and “demonstration projects and developments that may reduce the costs and carbon emissions of energy-intensive industries.” The compromise consists of two amendments: one to the binding part of the law the commission wants to modify and another to the recital, or a non-binding part that contains reasons for the legislative act. The latter repeats a call on the commission to create the innovation fund and a provision to cap the number of allowances to be delayed at 900 million in a one-time intervention. It also urges extension of measures against carbon leakage. A vote in favor of the proposed market fix in the Parliament on July 2 will authorize Matthias Groote, the German Socialist lawmaker in charge of the measure in the assembly, to start talks with representatives of national governments on the final wording of the legislation. The outcome of the talks will need official approval by the Parliament and EU ministers. In the second stage of the regulatory process, member states will decide on the details of backloading in a separate regulation, which will set the volume of allowances to be postponed and timeline of auction delays. To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Continue reading
Slower Global Agricultural Production In Next Decade But Prices Above Historic Average, Says FAO
Global agricultural production is expected to grow 1.5% a year on average over the coming decade, compared with annual growth of 2.1% between 2003 and 2012, according to a new report published by the OECD and FAO released this week. Limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures are the main factors behind the trend. But the report argues that farm commodity supply should keep pace with global demand. The OECD-FAO Agricultural Outlook 2013/2022 expects prices to remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for bio-fuels. The report says agriculture has been turned into an increasingly market-driven sector, as opposed to policy-driven as it was in the past, thus offering developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets. However, production shortfalls, price volatility and trade disruption remain a threat to global food security. The OECD/FAO Outlook warns: “As long as food stocks in major producing and consuming countries remain low, the risk of price volatility is amplified. A wide-spread drought such as the one experienced in 2012, on top of low food stocks, could raise world prices by 15-40%”. China, with one-fifth of the world’s population, high income growth and a rapidly expanding agri-food sector, will have a major influence on world markets, and is the special focus of the report. China is projected to remain self-sufficient in the main food crops, although output is anticipated to slow in the next decade due to land, water and rural labor constraints. Presenting the joint report in Beijing, OECD Secretary-General Angel Gurría said: “The outlook for global agriculture is relatively bright with strong demand, expanding trade and high prices. But this picture assumes continuing economic recovery. If we fail to turn the global economy around, investment and growth in agriculture will suffer and food security may be compromised”. “Governments need to create the right enabling environment for growth and trade” he added. “Agricultural reforms have played a key role in China’s remarkable progress in expanding production and improving domestic food security”. FAO Director-General José Graziano da Silva said: “High food prices are an incentive to increase production and we need to do our best to ensure that poor farmers benefit from them. Let’s not forget that 70% of the world’s food insecure population lives in rural areas of developing countries and that many of them are small-scale and subsistence farmers themselves”. He added: “China’s agricultural production has been tremendously successful. Since 1978, the volume of agricultural production has grown almost five fold and the country has made significant progress towards food security. China is on track to achieving the first millennium development goal of hunger reduction. While China’s production has expanded and food security has improved, resource and environmental issues need more attention. Growth in livestock production could also face a number of challenges. We are happy to work with China to find viable and lasting solutions.” Driven by growing populations, higher incomes, urbanization and changing diets, consumption of the main agricultural commodities will increase most rapidly in Eastern Europe and Central Asia, followed by Latin America and other Asian economies. The share of global production from developing countries will continue to increase as investment in their agricultural sectors narrows the productivity gap with advanced economies. Developing countries, for example, are expected to account for 80% of the growth in global meat production and capture much of the trade growth over the next 10 years. They will account for the majority of world exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish by 2022. To capture a share of these economic benefits, governments will need to invest in their agricultural sectors to encourage innovation, increase productivity and improve integration in global value chains, FAO and OECD stressed. Agricultural policies need to address the inherent volatility of commodity markets with improved tools for risk management while ensuring the sustainable use of land and water resources and reducing food loss and waste. China’s consumption growth is expected to outpace its production growth by some 0.3 percent per year, signaling a further but modest opening of China’s agricultural sector, the report said. China’s imports of oilseeds are expected to rise by 40 percent over the next ten years, accounting for 59% of global trade. Both the meat and dairy sectors will continue to expand which will result in higher imports of feed grains. China is expected to become the world’s leading consumer of pig-meat on a per capita basis, surpassing the European Union by 2022. China should maintain its leading role in global aquaculture at 63% of global production and remain the largest fish exporter. China is projected to remain self-sufficient in the main food crops, although output growth is anticipated to slow in the next decade. Key uncertainties around the agricultural outlook for China should be closely monitored and addressed, the report said. These include the sustainability of high levels of economic growth, increasing resource constraints on production, land degradation and water depletion, and greater production variability due to climate change. According to FAO estimates, China’s food security has improved with the number of undernourished falling by almost 100 million since 1990, despite adding an additional 200 million people to its population. Ensuring the food security of the estimated 158 million persons still undernourished remains a major challenge, the report. Continue reading
Romania Doubled Its Food Production In 2012
According to the Romanian Ministry of Agriculture and Rural Development, the deficit of Romania’s trade balance, as regards foodstuffs, stood at some 745 million Euros in 2012, almost double as compared to the previous year. Last year, Romania imported over 6 million tons of foodstuffs, reporting a 6% increase as compared to 2011. Imports exceeded 4.65 billion Euros, that is by 372 million Euros more than the previous year. Last year, exports of foodstuffs exceeded 7.9 million tons and the amount of money that was cashed in exceeded 3.9 billion Euros, the same level registered in 2011. Maize and wheat exports brought in most revenues, totalling 1.14 billion Euros. In 2012, the same foodstuffs ranked first in terms of imports, just like in the previous years, namely sugar-286 million Euros, followed closely by pork meat with 259 million Euros and maize with 191 million Euros. The European Union was Romania’s main agricultural trade partner, both in terms of distribution and purchase of foodstuffs. However, in the first part of the year, Romania’s meat exports were affected by the horsemeat scandal, mislabelled in other countries as beef. The president of the National Sanitary Veterinary and Food Safety Authority, Vladimir Manastireanuhas further details: Vladimir Manastireanu: “We managed to reject all accusations that had been levelled against Romania and Romanian producers. The accusations were brought against us initially by France, as you well know, then by Germany and later on by Greece. During all our talks held in Brussels, at the meeting of the heads of veterinary services, as well as in Dublin, during private talks with colleagues and partners in France and other member states, we reiterated the idea and wish that such situations be disclosed to the press only when we know for sure if and what state is responsible for the mislabelling. Actually, this was also the general conclusion we drew after each of the meetings. Otherwise, we find ourselves in unjust situations, when ungrounded accusations are being made, just like in our case. No one issued an official apology after Romania was cleared of all accusations, and the only effect produced by the scandal was a huge export deficit of the Romanian food industry.” According to Vladimir Manastireanu, over a very short period of time Romania has produced evidence that the country’s veterinary services are doing their job and fully observe the entire European and national legislation. At the same time, the Romanian official believes the line industry is a serious one, and that it labels correctly the meat it supplies to the European market and not only. In spite of this, beef and horsemeat exports have plummeted by more than 20% following the mislabelling scandal, as Romanian producers say. One of the largest Romanian producers and exporters of horsemeat and beef on the European market, Iulian Cazacut, has put forth a series of proposals meant to redress the situation following this scandal. These include a meat exchange, which should function under the authority of the Agriculture Ministry, and the opening of new markets, which call for greater transparency of the supply and demand prices, as well as of the meat origin. Iulian Cazacut: Iulian Cazacut: “First of all, the rules regulating the operations of a meat exchange should be set, because if they are officially established, they must be observed and the Agriculture Ministry could supervise the accuracy of the data operated by a meat exchange.” However, producers seem to foresee some new opportunities. Iulian Cazacut: Iulian Cazacut: “We want to make the best of the moment and capitalise on its positive aspects. In a first phase, we had to defend ourselves, to show the world that we did nothing wrong, but respected and observed all regulations and standards. Currently, we are interested in direct communication with each and every customer and partner. We are further investing in the development of producers’ brands, it is the centrepiece of all our strategies. We can deliver safe meat, of controlled origin, on the market. We would like to see Romanian producers receive further support in order to enjoy access to international markets.” It is also worth mentioning that the Romanian food industry is in the focus of attention of foreign investors. In October 2010, the French company Sofiproteol took over the food grade oil producer Expur Urziceni, which had been controlled by the Swiss group Alimenta. The value of the transaction stood at some 80 million Euros. Other companies active on the oil market are the American firms Bunge and Cargill. One of the best-known companies which produce and sell rice is the Italian group Riso Scotti. Foreign investors are also interested in the meat industry. In 2004 the American company Smithfield Foods purchased the former pig farm Comtim in Timisoara and intends to take the volume of investments in Romania to a total of 850 million dollars. Also, in early 2007 the German sausage producer Reinert inaugurated a meat processing unit in Feldioara, Brasov County. Other food companies active in Romania are the firm Hame from the Czech Republic, the Norwegian group Orkla and the group Nestle. Some other firms operating on the dairy market are the group La Dorna, which was taken over by the French consortium Lactalis in 2008, the French company Danone, the Dutch companies Friesland and Campina as well as Hochland from Germany. balkans Continue reading
