16 October 1999

Intervention:

Its costly and complex but it works

Following the Crops campaign for a better intervention deal for UK farmers, Jonathan Hough takes a look at the situation in France.

THE intervention system in France has no comparison anywhere else in Europe, and it is one that will surely make you feel a little better about the UK.

The French agriculture system depends on an extremely high level of bureaucracy, the roots of which are to be found in a law passed in 1936 effectively putting in place a system to control the agricultural market place.

Of the many clauses of this law that still exists today, the one of interest to us, is the creation of an organisation currently know as ONIC (Organisation Nationale Interprofessionnelle de Céréales). It is based in Paris and controlled by a board of 47 elected seats, of which farmers have the voting majority and the presidency. The other seats are held by merchants, end users – either exporters or industrialists, bakers and maltsters, consumers and finally representatives of the minister of agriculture and the minister of finance. Under the control of Paris lies 17 regions, each with their own committee of 16 seats in their turn made up of range of representatives from the factions mentioned above.

The raison dêtre of ONIC was, among other things, to fix the price of cereals until the start of the EEC in 1967, and to guarantee that farmers would always be paid by an accredited merchant. This led the government to a policy of marketing designed to protect all parties. And so with the help of ONIC they succeeded in inventing a system that could only exist in France, or perhaps one of the ex-eastern bloc countries.

So was born the status of Organisme Stockeur, which gave the holder the sole right to purchase cereals from a farmer. ONIC was the only organisation with the right to award the status, and an individual or company wishing to be authorised had to meet the following requirements – a minimum of 5,000t of storage capacity, a weighbridge, efficient cleaning system, high capacity ventilation and a rapid intake and loading-out capacity. And last but not least, a good administrative system capable of coping with a monthly mountain of paperwork.

So how does this affect a farmer wishing to put his grain into intervention? Well, without putting too fine a point on it, he cant, unless he has the famous OS certification. As you are probably aware the vast majority of French farmers cultivate less than 100ha and have no need of 5,000t of storage capacity that would enable them to become Organisme Stockeurs. This is one of the reasons why they created the co-operative system, although I should add that co-ops existed before intervention was invented.

With the poor farmer out of the loop, the trade is clear to deal with intervention – a situation that the co-ops, among others, exploit to the full, and not always to the advantage of their members or clients.

The basic process for putting grain into intervention is of course laid down by Brussels, with certain criteria left up to member states, such as minimum lot size, which in France is 500t.

In order to get a lot into intervention an OS accredited merchant enters stage 1 and submits a proposal to ONIC defining the quantity, the variety, the address of the store and a plan of the silo, along with basic quality analysis. For stage 2, ONIC personnel inspect the lot on site, measure it and take an initial sample. This sample is analysed, often by ONIC themselves, and if it meets requirements and provisional acceptance is given. Onto Stage 3 and ONIC again visits the store to take a second sample. In order to do this the grain must be physically moved within the store, and the samples are taken during the transfer.

The second analysis is often done by an independent laboratory, accredited by the ministry of agriculture, of which there are at least 20. The analytic parameters are those set by Brussels and therefore identical to the UK right down to the zeleny and machineability test. The cost of the analysis is met by the merchant and stands at around FF1,200 (£120).

The last stage is the final acceptance of the lot and its transfer to an accredited intervention store. At this point things become complicated, because neither ONIC nor the government owns any physical storage. So the lot could remain at the merchant or co-op, but even if this is the case, the seller is obliged to pay a transport fee.

The fee is calculated on the distance between the silo and an "intervention centre"; this exists in every major city so the transport bill is never excessive.

So our 500t is now the property of the EU, but still at the merchants silo. As soon as the contract is signed, ONIC start paying for the storage at FF0.23/t/day (2.3p/t/day) or FF7/t/month. If the merchant is unable to store the lot, ONIC will move the grain, at their expense, to another accredited store.

A major problem reared its head in 1997, concerning the capacity of intervention storage – there was not nearly enough! As if to rub salt in the wound, the health and safety organisation closed a number of unsafe stores. In order to remedy the situation ONIC put forward a project to the government (Plan Silo) which had the aim of increasing the intervention storage capacity by 5m tonnes.

The idea was to encourage merchants and co-ops to build stores, with the incentive of well remunerated storage contracts. The plan was well accepted and 2.7m tonnes of extra space was constructed between 1998 and 1999. Participating merchants are offered a three-year contract with ONIC with a payment of FF0.28/t/day with a guarantee of 480 days a year of use, even if the store is not full. If the store is empty the payment drops to FF0.20/t/day. Over the 480-day period, payment drops to FF0.20/t/day only for real stocks, and then to zero francs if the store is empty.

Despite the complexity of the system here, it does work smoothly and efficiently. One can only imagine the cost to Brussels and the French taxpayer. Those who profit without a doubt are the merchants and the co-ops. The farmer is, once again, left on the sidelines.