10 July 1995

Doc. 7349

1403-19/6/95-2-E

REPORT

on the importance of the wool industry

for rural areas in difficulty

(Rapporteur: Mr LANNER,

Austria, Group of the European People's Party)

Summary

      Sheep farming and wool processing used to be central elements in the economy of many rural areas in difficulty. The current wool crisis is seriously affecting both sheep farmers, who are losing an addition to their already modest income, and the woollen industry which, following closure of nearly all the small local firms, is now losing its major plants as well. Only a fraction of the wool processed in Europe is of European origin. In general, however, it tends to be the small firms which process locally produced wool. Wool suffers from the fact that it is not recognised as an agricultural product by the European Union, and so receives no assistance.

      This report suggests that tax benefits, structural aid and other advantages should be accorded to the wool sector in the regions concerned, in particular for the start-up of new projects. Such support should be an integral part of regional development programmes. It should also help with the upgrading of technology, marketing and sales of regional quality products and the training of personnel involved throughout the production line.

      A European inter-professional committee for wool could be set up to co-ordinate and launch new initiatives.

I. Draft resolution

1.       The Assembly is aware of the need to maintain activity in rural areas in difficulty.

2.       The Assembly regrets that most measures envisaged at present do not take sufficient account of the natural resources and traditional activities of these regions which could, if given appropriate support, contribute significantly to their development. One such activity area is the production and processing of wool and the development, production and sale of wool products.

3.       Consequently, the Assembly calls on member governments, governments of countries having special guest delegations with the Assembly and the European Union:

      a.       to review their regional development policies with regard to wool production and processing in areas with few other economic alternatives with a view to facilitating the continuation and possible strengthening of the industry;

      b.       to introduce tax advantages, special labelling and other product promotion incentives including appropriate extension services, training, technological and product development support to increase the competitiveness of the industry;

      c.       to reward new quality product developments and help publicise successful and creative market launches.

II. Explanatory memorandum

by Mr LANNER

1. Introduction

      The organisation ATELIER (Association Textile Européenne, de Liaison, d'Innovation, d'Echange et de Recherche) has drawn the attention of several members of the Assembly to the difficulties facing many rural regions where the production and processing of wool are important for the economy. This led Mr Scheer and others to table a motion for a resolution on the importance of the wool industry for rural areas in difficulty asking, among other things, that a Europe-wide study of the industry, from sheep farming to processing and marketing, be carried out in co-operation with professional associations and organisations already working in this field. ATELIER organised a conference responding to this proposal from 3 to 5 December 1994 with the theme "The wool industry — a motor for rural development". Your rapporteur is of the opinion that the findings of this conference gives good illustrations of the problems encountered. The summary report of the conference has therefore been used in drawing up this explanatory memorandum.

2. The wool industry and European rural regions

      Of all our natural commodities, there is one that has played a very important role in Europe throughout history: wool.

      In Spain, for example, the seasonal migration of flocks along the "cañadas" was the best way of exploiting the country's natural resources, and the wool produced was a major export commodity for a long time. The keeping of sheep provided an indispensable supplement to incomes in many difficult regions and also a means of regularly maintaining the countryside.

      For some regions, such as Mazamet in France or Bradford in Great Britain, the wool processing industry was the mainstay of economic activity. All over Europe, small spinning mills at the edge of rivers or streams processed wool locally from the sheep flocks around them.

      Wool processing has paved the way for a great many technological advances and one could say that it has been a "driving force in civilisation", through achievements ranging from genetic improvements in livestock to process mechanisation.

      The shift of wool production, dating from last century, and of processing plants, very recently, from Europe to the southern hemisphere has caused an unprecedented crisis in this sector. Since Europe's great diversity of sheep breeds produce relatively low quantities of fibres of identical quality, they are ill-suited to a bulk wool industry designed to process large batches of homogeneous fleece.

      The "division of labour" and the increase in living standards in Europe has steered sheep farming towards milk and meat production, with wool becoming an undesirable by-product.

      In Australia, wool accounts for 84% of sheep farmers' income, whereas in Europe the figure lies between 1% and 2%. Wool prices are virtually dictated from Melbourne and, however much care European breeders take to supply a quality product, they sometimes see prices fluctuate four-fold in a few months. It is all the more discouraging in that, as in the period 1990-94, the price of shearing is considerably more than the value of the wool yielded. As a matter of fact, in a number of countries sheep farmers receive an identical price irrespective of the quality of the wool.

      And yet Europe's potential earnings from wool are currently valued at 1,6 thousand million French francs.

      It will only be possible, though, to tap this potential by setting up a specific European organisation, which would cover the entire production chain and exploit the diversity of available materials to create original products. The cost price of wool, which accounts for just 5% of the price of a pullover for example, could then be less dependent on world prices.

      The jobs created would help to establish or maintain rural communities and to develop other economic activities and communal life.

3. Some major problems facing the European wool industry

      Unlike all other textile fibres and animal products, wool is not recognised as an agricultural product under the Treaty of Rome. It cannot benefit therefore from any of the agricultural subsidies granted within the European Union. (Although tobacco growers receive considerable amounts in subsidies.)

      Except in certain countries such as Great Britain, which has established a system for collecting and classifying wool so that batches can be grouped for deals with industrial concerns, and Switzerland and Norway, where there are state-run systems to support wool production in the interests of independence, breeders are to all intents and purposes on their own when negotiating with traders and obliged to accept the conditions offered. In France, the system of wool co-operatives set up in the sixties has virtually disappeared and the situation is the same in Spain and Italy.

      In eastern Europe, wool was a product of prime importance. Collective flocks were properly maintained by well-trained shepherds and veterinary surgeons. Research centres helped to genetically improve sheep through selective breeding. High-level experts sorted and classified the wool. State collecting agencies paid high and stable prices for wool and meat. A small number of centralised processing plants handled enormous quantities of raw materials. The great weakness of this system was the compartmentalisation of sectors and skills. Each link in the chain depended on the others. Once the chain was broken, everything collapsed. In four years, the number of sheep in Slovakia and Hungary fell by half, and the drop was even more drastic in former East Germany. There are no more buyers for the wool, which is being stockpiled. No one knows what to do, as smaller processing units have never existed.

      Crossbreeding to improve certain aspects of the animals' meat is resulting in genetic deterioration. Purebred races, the fruit of hundreds or even thousands of years of painstaking selection, have disappeared or will do so.

      The technical know-how acquired over centuries of wool processing is also under threat, as is an entire cultural and artistic tradition.

      Dire ecological consequences have become apparent in entire regions or areas where animals no longer graze: landslides, avalanches, the rapid spread of forest fires.

      Some enthusiasts do take initiatives but these are scattered efforts and virtually never receive governmental or European backing.

4. New opportunities for wool

      Natural fibres, such as wool, have been "rediscovered" by the fashion industry in recent years in many European countries. Regional quality products have often benefited from this fashion trend. Another example from your rapporteur's country is also significant: a company has recently launched a special "wool mat" as an insulation material for the construction industry. This example is a perfect illustration of successful innovation and market introduction: a young farmer with 1,7 ha. of land in Villgratental, Tyrol, Mr Josef Schell, launched the product in July 1994. (Villgratental, where he is now Mayor, is a community with some 800 inhabitants, situated at 1 430 metres above sea-level.) The sales of the wool mats in 1994 already passed 3 000 m² — the equivalent of the insulation needed for six one-family houses. The price of wool doubled and no subsidies were needed. A chemical treatment with a natural mineral product gave the mats excellent fire-resistant properties as well as protection against attacks by mice, moths and other wool enemies. The heat insulation properties were outstanding. The product could have stayed in Villgratental, in Tyrol, as a locally-available building material, which has often been the case with other quality products from rural areas. But this time the success continued. The company in Tyrol made an agreement with one of Austria's biggest retail enterprises for building materials with headquarters in Vienna, which permitted a nationwide market coverage. In parallel, a deal was signed with a co-operative of sheep farmers in another part of Austria for the furnishing of the raw material, wool. Your rapporteur believes it is important to publicise such stories with a view to stimulating innovation in rural areas, and stressing the importance of bringing quality products to the market. There are certainly many other examples in Europe deserving a reward for their contribution to rural development. Wool, and other natural fibres, could find new areas of uses in many sectors, including the automobile and chemical industries.

      The emphasis of support to the wool industry should therefore not be on subsidies, which often choke creativity, but on the promotion of new initiatives. Product development and start-up assistance for marketing and sales must be an integral part of such support schemes. These should preferably be part of regional development programmes rather than specific aid to the wool industry.

5. The findings of the European conference organised by ATELIER

Proposals for giving a new impetus to the European wool industry:

1.       Breeding: aid for maintaining and establishing purebred flocks in abandoned areas, using extensive breeding systems and hardy breeds suited to the environment.

Indispensable requirements:

      —ac       cess to land (fallow land, commons, high mountain pastures, woodland undergrowth) facilitated by contractual agreements between breeders and owners guaranteeing breeders' itineraries (for example, agreements granting grazing rights for a number of years);—

      —re       vival of common grazing land and rights of way (seasonal migration on foot);—

      —ma       intenance or creation of local infrastructures to exploit meat (abattoirs, carving facilities), using regional labels and short distribution circuits.2.

2.       Selection: improving wool quality and quantity. It is vital that selection bodies (Flock-Book, UPRA) redefine and reintroduce "wool criteria" in genetic selection criteria so that wool-improving breeding stock may be identified. Premiums would provide an incentive to produce and disseminate approved breeding stock.

      Every country in Europe has its own breeds of sheep. This genetic heritage, from which the wool stock of the major southern hemisphere producers originates, must be preserved in the interest of biodiversity.

3.       Shearing: this phase of the wool chain is of key importance for the conditioning and presentation of the fleeces. Good shearing respects the animal and optimises fleeces for the later stages. Shearing is an itinerant and seasonal profession which requires great experience. In Europe, the relatively small size of flocks and the heterogeneous nature of fleeces would justify the training of teams who would travel to farms to shear and classify fleeces according to standardised qualities for processing. This would simplify later classification in collection centres. National courses in sheep-shearing must be set up in countries where no such courses exist, together with travelling proficiency courses for shearers and instructors throughout Europe.

4.       Wool collection: here, it is a question of taking measures to sort out the chaos which dominates wool marketing in most European countries, in both east and west.

      —qu       ality grading for European wools and standardisation of classification methods in order to establish quality-related price scales;—

      —se       tting up of regional collection centres responsible for quality control and for storing wool in homogeneous batches and authorised to certify the product's origin and quality to buyers;—

      —se       tting up of a European school for wool experts, who would be assigned to the official collection centres.Th

      The British Wool Marketing Board could serve as a model for collection centres in other European countries.

5.       Other fine-haired animal species (angora and cashmere goats, angora rabbits, alpacas, etc.).

      The farming of fine-haired animals also seems to be a promising strategy in line with the changing socio-economic conditions in Europe's outlying regions. There is a huge market for high-quality textile fibres in Europe. Raising these species requires little investment and can help preserve the environment, particularly in Mediterranean areas. A scientific research network was established by the European Commission in 1993 to help develop this sector.

6.       Design and installation of new processing plants to gain maximum benefit from local production and create jobs in places of production:

      —us       e of available energy sources, particularly hydraulic (via turbines);—

      —de       velopment of equipment for processing small batches of wool or rare materials. Adaptation of traditional techniques through research and the application of advanced technology;—

      —gi       ving priority to environment-friendly techniques: recovery and treatment of waste water, use of biodegradable solvents (soaps, lubricants, etc.), recovery of by-products (lanolin, etc.);—

      —ru       nning businesses in a way that promotes job satisfaction: delegation of responsibilities, teamwork, encouragement to innovate. Creation of part-time or seasonal jobs as a complement to other activities in agriculture and elsewhere. Jobs for women compatible with family life (flexible work-time, etc.);—

      —tr       aining: multidisciplinary training is vital. Specific training modules could be organised in different European countries to broaden the horizons of participants, particularly the younger ones. Theoretical courses could alternate with practical (on-the-job) training;—

      —cr       eativity: the diversity of materials used opens the way for the creation of high added-value products and a very wide range of goods. Mechanisation and advanced technology will nevertheless make it possible to produce them at affordable prices.7.

7.       Marketing and promotion:

      There is a great demand among European consumers for high-quality, original products at present.

      Yet the textile industry of the European Union, which numbers 350 million consumers, is in severe decline. It is forecast that, by 2001, only 30% of the clothes bought in the European Union will be made there and that 1,5 million jobs will be lost as a result.

      Creating a "European wools" label and promoting products on the basis of product originality, the conservation of a genetic heritage and job creation in rural areas could appeal to consumers. The improvement of town/country relations through short distribution circuits (selling direct from the factory, fairs, markets, etc.) would break down the barrier of anonymity between consumers and producers. Visits to farms and processing plants for children and young people in particular would help the two sides get to know each other.

8.       Interprofessional relations: it is vital to control the entire production chain.

      Proper co-ordination between the different levels (farming, industry, craftwork and research) must be established through a European interprofessional committee for wool, which would both co-ordinate and launch initiatives. It would provide a means of exchanging experience and running pilot schemes in various fields. Co-operation with central and east European countries would be particularly desirable in the area of training.

9.       Identity and cultural heritage:

      From neolithic times, man took a specific interest in the coat of the mouflon, with a view to dressing more comfortably, and then, over the centuries, actively developed the characteristics of sheep's wool. It was mankind that created sheep. Several thousand years later, wool is still an essential commodity with multiple uses but its history is not well known to the public.

      The "cultural routes" scheme, a Council of Europe initiative, now includes "textile and silk routes". ATELIER has become involved where wool is concerned, fully concurring with the values on which these routes are based: "working on the memory is a way of shaping the future (...) Perhaps, on the way, the routes will bring to light this European 'being' whose outline is still so uncertain".

6. Conclusions

      It is completely in line with the work of the Committee on Agriculture and Rural Development on a charter for European rural areas that it gives its political support to initiatives to preserve and improve the competitiveness of the wool industry in rural areas which must make optimal use of all their natural resources to assure their economic survival. Production and processing of wool and the marketing of the resulting regional quality products should be subject to tax advantages and other stimulation measures. Assistance should also be given to extension services and by means of training as well as technological and product development support to improve the competitiveness of the industry. The industry itself could well seek to create a European structure, on its own or within the framework of an existing organisation, to promote its products.

      In particular, the following measures should be envisaged:

      —ai       d for maintaining and establishing purebred flocks in abandoned areas;—

      —in       troduction of wool criteria in genetic selection and premiums which would be an incentive for the dissemination of approved breeding stock;—

      —se       tting up of national courses in sheep-shearing and travelling proficiency courses for shearers and instructors throughout Europe;—

      —qu       ality grading for European wools and standardisation of classification methods in order to establish quality-related price-scales;—

      —se       tting up of regional collection centres responsible for quality control and for storing wool in homogeneous batches and authorised to certify the product's origin and quality to buyers;—

      —in       co-ordination with the various European programmes (such as LEADER, etc.), support for the installation of new processing plants, which:-i

      -       innovate and develop equipment suitable for small batches;

      -       give priority to environment-friendly techniques and promote job        satisfaction;

      -       emphasise multidisciplinary training;

      —cr       eation and promotion among consumers of a "European wools" label, with emphasis on its role to support traditional skills and act as a driving force for rural development;—

      —se       tting up of a European interprofessional committee for wool, to encourage co-ordination and launch initiatives.Fi

      Finally, the question could be posed as to why wool was not included in the list of agricultural products defined in Annex II to the Treaty of Rome.

      Reporting committee: Committee on Agriculture and Rural Development.

      Budgetary implications for the Assembly: none.

      Reference to committee: Doc. 7130 and Reference No. 1967 of 5 September 1994.

      Draft resolution adopted by the committee on 12 May 1995 with 15 votes for and 1 vote against.

      Members of the committee: MM. Scheer (Chairman), van der Linden, Szakál (Vice-Chairmen), Mrs Andnor, Mrs Anttila, MM. Bernardini, Bianchi, Bonnici, Caballero, Černý (Alternate: Hurta), Couveinhes, Crowley, (Alternate: Gregory), Figel, Fronzuti, Gunnarsson, Hoejland, Holte, Hornung, Sir Ralph Howell (Alternate: Mr Alexander), MM. Iuliano (Alternate: Leonte), Jeambrun, Kairys, Kiratlioǧlu, Kotsonis, Lanner, Lord Mackie of Benshie, Mr Mändmets, Mrs Melandri (Alternate: Mr Guidi), MM. Metelko, Michels, Mrs Moser, MM. Rippinger, Rodrigues, Roger, Seiler, Sinka, Smolarek (Alternate: Adamiak), Thompson (Alternate: Cummings), Weyts

      N.B.       The names of those members present at the meeting are printed in italics.

      Secretary to the committee: Mr Lervik.