Brussels, Jan 23 - Europe's farm chief will unveil plans this week to shake up the EU's fruit and vegetable sector, proposing to revise many of the subsidies paid to an industry accounting for nearly a fifth of the bloc's agricultural output.
EU subsidies for processing fruit and vegetables, as well as export subsidies, would be dramatically altered, according to a draft reform proposal authored by EU Agriculture Commissioner Mariann Fischer Boel and due to be published on Wednesday.
If EU farm ministers agree, the plan would decouple subsidies for producing and processing fruit and vegetables: EU jargon for breaking the link between how much a farmer produces and the amount of subsidy that he receives from Brussels.
In future, that cash would be calculated by area based on payments made during a historical reference period for each fruit and vegetable product.
These payments would be incorporated into the EU's single farm payment scheme, the streamlined farm subsidy system agreed as part of the EU's mammoth agriculture reform in 2003.
Then, EU agriculture ministers also set down the principle that to receive decoupled payments, farmers also had to adhere to a set of EU laws to preserve and enhance the environment.
For fruit and vegetables, farmers who get these new-style production payments would have to spend at least 20 percent of them on projects to enhance or preserve the environment.
The EU is a major player in world horticulture, with wide variations in the types of products grown -- from the cabbages and turnips of northern Europe to the citrus fruits of Greece. The plan would also extend the regime to include culinary herbs.
Its subsidy regime covers dozens of products including nuts, fruits like melons, grapes, pineapples and quinces, and vegetables such as onions, mushrooms, radishes and cucumbers.
RETAIL POWER
Fischer Boel's aim is also to dilute the increasing concentration of large EU food retailers, the document showed.
Major retail chains accounted for between 70 and 90 percent of all food retailers in Britain, France, Germany, the Netherlands and Nordic countries and these chains were raising their market share in some of the EU's newer states, it said.
"During the last 10 years, the fruit and vegetables sector has been faced both with strong pressure from the highly concentrated retail and discounts chains that play a major role in the setting of the market price and with the harsh competition of third country products," it said.
At present, annual subsidies for the sector amount to about 1.5 billion euros ($1.94 billion), of which about two-thirds goes on production and processing subsidies. Under the plan, there would be no increase to the sector's overall budget.
However, export subsidies would be scrapped. The EU now spends slightly less than 9 percent of the value of fruit and vegetable products on subsidising their export.
"Their (export subsidies) economic impact has considerably decreased," the draft plan said. "It has therefore been considered that better use can be made of the funds allocated to this instrument and it is proposed to abolish export refunds."
The sector accounts for 17 percent of the EU-25's total agricultural production although in some EU countries, fruit and vegetables account for more than a quarter of farm output.
For Greece and Spain, the sector represents at least 30 percent of agricultural production. In Italy, Malta and Portugal it represents at least 25 percent.
PERISHABLE PRODUCE
The plan has several ideas for streamlining producer organisations (POs), the cornerstone of EU policy and recipient of subsidies to fund marketing on behalf of smaller farmers.
One of the main changes is to alter the way POs receive EU cash to withdraw perishable produce from the market if it is not selling well. Most withdrawals now qualify for 100 percent financing from Brussels, but that will be cut to 50 percent.
But if those products are earmarked for free distribution, the EU will continue to pay all the cost, as part of the Commission's drive to promote healthy eating. More cash would be channelled into promoting consumption fruit and vegetables.