EUROPEAN AGRICULTURE OF THE FUTURE: THE ROLE OF PLANT PROTECTION PRODUCTS (PPPs)

1. Press Conference Brussels, October 9th 2008 Stefano Baldi Researcher “Agriculture and Food Unit” Nomisma EUROPEAN AGRICULTURE OF THE FUTURE:THE ROLE OFPLANT PROTECTION PRODUCTS (PPPs)

2. The evolution of the PPP regulation framework: effects on PPP availability Already, 91/414/EEC has been reducing the number of PPPs included in the positive list (20% of 1,061 active substances (ASs) evaluated were approved, while 64% were excluded and 16% are still pending)* • Proposal for New Regulation replacing Dir. 91/414/EEC • The proposal contains some conditions (cut-off criteria, comparative assessment, data protection) which could substantially reduce PPP availability • According to the Pesticides Safety Directorate (UK) impact assessment, the reduction in available active substances (cut-off criteria + candidates for substitution) could be: • 31% based on the Commission Proposal • 82% based on the European Parliament Proposal * Source: EU-DG Health and consumer protection (Update 11/08/2008) PRESS CONFERENCE 09/10/20082

3. The impacts of the new regulation:case studies Reduced availability of PPPs in EU-27 could generate impacts over long term (2020) New regulation effects + availability of new PPPs due to R&D activity of PPP Industry yield reduction Static evaluation PRESS CONFERENCE 09/10/20083

4. The impacts of the new regulation:European production trends Present situation Present situation (2006) New regulation 293 Mil t. 179 Mil hlt. 64 Mil t. 135 Mil t. Taking into account general economic trends, the impact of the changing regulation framework could contribute to production drops of between 30-25% in wheat and cereals, with an even higher negative impact on potatoes (50%), and around a 7% reduction in wine output PRESS CONFERENCE 09/10/20084

5. The impacts of the new regulation:European self-sufficiency trends Present situation Present situation (2006) New regulation 119% 102% 105% 104% Taking into account general economic trends, the impact of the changing regulation framework could contribute to a loss of self-sufficiency, generating a dependence on foreign suppliers in all case studies PRESS CONFERENCE 09/10/20085

6. Reduction of EU-27 agricultural self-sufficiency: impacts on the European economic system Reduced self-sufficiency in agriculture generates negative effects on the Agri-food sector and the overall economic system Increasing deficit in agricultural trade balance (+20% 1999/2006) • Guarantees of food safety and quality • High integration between agriculture and food industry: • Production model respects high hygienic, safety and quality standards; • Typical products • Traceability Safeguarding of European model Preservation of income and employment in agri-food and related sectors (retail trade, services, transport, energy, machinery). Multifunctionality of agriculture in rural areas Loss of Competitiveness Food safety and quality as main success factor of European food products in internal and extra–EU markets PRESS CONFERENCE 09/10/20086

7. In this context,the European Agri-food sector could face ... Rising commodity and food prices Jeopardises the availability of safe, high quality, locally produced food Loss of international competitiveness Reduced world export share Inability to take advantage of new market opportunities PRESS CONFERENCE 09/10/20087

8. Thank you for your attentionStefano BaldiResearcher at Nomisma“Agriculture and Food Unit”

9. Empirical approach How much do PPPs affect crop yield? Organic production is an agricultural system which uses the lowest quantity of PPPs (some “natural” PPPs permitted). Nomisma assumes that crop yields without using PPPs will be the same as those registered in organic agriculture (conservative approach) What is the impact of the changing regulatory framework on crop yields? For each crop, a reduced availability of PPPs results in a yield drop to a level between current yield and organic yield. The study provided estimates of yields within this range over the medium term (Dir. 91/414 impact) and over the long term (New regulation replacing Dir. 91/414). The evaluation takes into account the effects of ongoing innovation in the R&D activities of the PPP Industry How this phenomenon impacts on general crop trends? The impact assessment over the medium-long term also needed to take into account general trends for the main variables (yield, cultivated area, production, domestic use, import-export). Thus a dynamic evaluation (scenario analysis) was conducted by Nomisma for each crop, thus allowing analysis of the effects of individual PPPs on yields within a general dynamic context Impacts of the new regulation framework:the methodology High variability of EU-27 agriculture

10. World economic trendscould exacerbate these developments • Increasing world demand for commodities and food • High growth in emerging economies (positive demographic and income trends) generates rising demand for food and, increasingly, for healthy and quality food • Increasing non-food use of agricultural raw materials (biofuels) • Growing competition • Progressive trade liberalisation (WTO) • New global players in food production and trade (lower labour cost and consequently lower prices than in Europe) Possible market shocks in the future

11. Main PPP links to the agri-food sectorand the overall economic system Technological inputs Fertilisers, Seeds, Plant Protection Products, Veterinary products, Machinery, etc. Agri- food sector Global challenges Market liberalisation and competition, demographic changes, attention to health and food quality, environment, bioenergy Related sectors Retail trade, services to companies, financial activities, transport, energy, chemicals, machinery Agriculture Availability of Raw Materials (guarantees of safety and quality) Food Industry Processed food (guarantees of safety and quality) EU market High requirements for food safety and quality (requested by citizens & consumer policy) Extra-EU market Growing demands for food safety and quality (mature markets and emerging economies)