In its Communication ‘For a European Industrial Renaissance’ (COM (2014) 14 Final) of 22 January 2014, the European Commission sets the ambitious objective of increasing the GDP contribution of EU industry from its current level of 15.1% to 20% by 2020. This paper outlines how the EU starch industry can contribute to this objective and how EU decision makers can help maximise that contribution.
What is starch and why is it important to Europe?
The EU starch industry extracts starch and starch co-products from EU cereal grains and potatoes and processes them into a vast range of ingredients for the EU food, feed and non-food industries. (Also see the uses of starch)
Starch is the most important carbohydrate in the human diet. For food applications, which represent 60% of starch applications in the EU, the starch industry develops nature-based ingredients which enhance a food’s texture, flavor and nutritional values.
In non-food applications, starch based ingredients are widely used in the fermentation, chemical, cosmetics, textile, paper, plastics, pharmaceutical and detergent industries. Because starch is renewable and biodegradable it is a perfect raw material to act as a substitute for fossil-fuel components in numerous chemical applications.
Starch fiber and protein rich co-products (e.g. wheat proteins, corn gluten feed, potato pulp, potato protein) provide specific functionality to a wide range of compound animal feed, as well as food applications.
In 2013 the EU starch industry:
[list icon="ioa-front-icon right-2icon-" color="#80afca" data="transformed 22 million tonnes of EU agricultural materials (mainly maize, wheat and starch potatoes) into 10 million tonnes of starch and starch derivatives and 5 million tonnes of starch co-products.;generated a turnover of 8.8 billion Euros.;directly employed 15,600 people and generated up to 100,000 more directly linked indirect jobs, mainly in agriculture;invested 440 million Euros, of which over 180 million Euros in research and development" /]
The Commission’s Communication
Starch Europe welcomes the Commission’s Communication ‘For a European Industrial Renaissance’. We believe the EU starch industry is uniquely positioned to contribute to the EU Industrial Renaissance targets. Two recent EU policy developments form an essential part of the basis for this optimism:
The end of the EU sugar regime in 2017;
Under the current EU CAP regime, production of the starch based sugar, isoglucose, is limited to 4% of the total EU Sugar production quota. With the end of the sugar regime in 2017, the EU starch industry estimates that EU production of isoglucose could increase from its current level of 700,000 tonnes to at least 2 million tonnes over time. This will benefit not only EU starch producers but also customers, final consumers and EU cereal farmers.[divider type="default" vspace="10px" hspace="0%" /]
The EU’s bio-economy strategy adopted in 2012;
The EU starch industry is one of the pioneers of the bio-based economy. Even before petrochemicals became widely used, the EU textile and paper industries were amongst the first users of starch products as an industrial level ingredient. Since then, starch has been competing to replace fossil-fuel based ingredients in many other non-food applications for decades. Starch Europe is an active supporter of the EU bio-economy strategy and strongly welcomed the creation of the new EU Public-Private Partnership for the bio-based industries (BIC) in 2013 as an important step in its implementation.
Starch Europe’s request from EU decision makers
In order to increase Starch Europe’s contribution to the Industrial Renaissance and explore its opportunities we seek a partnership with EU decision makers on the following policy dossiers:
A level playing field between EU sugar and isoglucose producers at the end of the EU sugar regime in 2017;
Starch Europe strongly welcomes the EU decision to abolish the EU production quotas for sugar and isoglucose producers in 2017. The decision offers opportunities for investment and further development for both industries, and their suppliers and customers. For the implementation of this decision EU lawmakers must ensure that EU sugar and isoglucose producers enter into this new free market system on equal terms, whilst recognising the differences between the two products and the differences in their historical development to date (Also read our position on the sugar regime)[divider type="default" vspace="10px" hspace="0%" /]
Implementation of the EU bio-economy strategy and the lead market initiative which preceded it, must continue;
the adoption of the EU Public-Private Partnership for the bio-industries in 2013 was an important step in the implementation of the EU’s bio-economy strategy. We encourage policy makers to implement a number of other initiatives if the EU’s bio-economy strategy is to become reality (e.g. to promote the production of renewable raw materials for all industrial uses, to design a communication strategy involving all partners in the value chain, to establish clear EU-wide standards for bio-based products, and to introduce other demand-driven measures such as Green Public Procurement, tax breaks, certification and labelling tools – See our position on bio-economy. Without such initiatives, the development of and investment in bio-based products, including those based on starch ingredients, will continue to occur in those international markets which are more supportive of their development than the EU.[divider type="default" vspace="10px" hspace="0%" /]
Fair competition amongst potato starch producers;
EU coupled support to starch potato farmers ended in 2012 and production quotas were phased out shortly thereafter. This has created a challenging new market environment for the EU potato starch industry. Member States are now permitted to recouple support to EU potato starch farmers; some will and some will not. Whilst recoupled support to potato starch farmers may in certain cases be justified for objective reasons, it must not create distortion of competition in the new free market environment (also see our direct payments position).[divider type="default" vspace="10px" hspace="0%" /]
Higher production costs, including those resulting from compliance with EU legislation, must be reduced or at least acknowledged;
the main input costs of starch production are the cost of agricultural raw materials and the cost of energy (energy represents approximately 15% of the total starch production cost and the starch industry has been identified as an energy intensive industry at risk of carbon leakage under the EU Emission Trading Scheme). Both costs tend to be higher in the EU than elsewhere in the world. Whilst the causes of these higher costs are partly economic, they are also linked to EU policy decisions and consumer attitudes (no use of GM agricultural raw materials, higher compliance costs in order to meet EU rules on e.g. mycotoxin levels, pesticide residue levels, REACH, the EU Emission Trading Scheme. These EU policy decisions may have been well intentioned but the cost they incur to EU starch producers, compared to their international competitors must be recognised. This also applies to the cost of compliance with new food/feed law initiatives currently under discussion. For example, if country of origin labelling were to be required for the agricultural raw materials from which starch is made, this could increase starch production costs for the EU starch industry by up to 30% (Also see our food&feed / environment issues).[divider type="default" vspace="10px" hspace="0%" /]
In the absence of an international level playing field, import duties for starch products must be maintained;
the result of the EU’s past policy on 1,2,3 and 4 above is that international competitors in the starch industry continue to benefit from greater economies of scale, lower production costs and lower regulatory compliance costs than EU producers. Until such time as these differences are eliminated, import duties on starch products must be maintained if the EU starch industry is to remain/develop (our international trade issues). The Commission Communication on an Industrial Renaissance specifically states that ‘it will consider measures to enable industry to have access at global market prices to key inputs such as bio-ethanol or starch for bio-based industrial activities emerging from traditional sectors such as chemicals, paper and other forest-based industries’. The purpose of an EU industrial renaissance is surely not to benefit only some EU industries at the expense of other EU industries (starch and bio-ethanol) and EU farmers.[divider type="default" vspace="10px" hspace="0%" /]
EU and Member State health/nutrition policy must be based on robust science;
carbohydrates, of which starch is the most common in the human diet, form the main basis of the human being’s required energy intake. The most important fuel for the human brain is glucose, the main source of which is starch. That said, excessive intake of carbohydrates, like sucrose, glucose fructose syrups and starch, if not combined with sufficient physical activity, may lead to health problems, notably obesity. Starch Europe fully recognizes the need for humans to maintain a healthy lifestyle and is fully supportive of all initiatives to promote it. Recent developments at international and national policy level have however sought to suggest that carbohydrates, and notably sugars, intake is the primary cause of obesity and that reducing consumption thereof will, of itself, solve the problem. Starch Europe hopes that EU decision makers will continue to ensure that EU health/nutrition policy is based on robust scientific evidence (our health/nutrition issues).