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September 3, 2003
continued from
page 4
The
political framework directly influences our business. In June
2003, the European Union adopted a reform of the Common
Agricultural Policy that will "decouple" subsidies from
production volume. The reform aims to create more demand driven
markets. Effects on our European business are difficult to
project, but we do not anticipate dramatic changes in the short
term. Surely geographical shifts will occur.
In the future the eastern European accession countries will play
a much greater role, since agriculture already accounts for a
greater proportion of their average GDP (Gross Domestic Product)
than in the current EU member states. For the Crop Protection
business we foresee an upside there in the medium term due to
improved agricultural productivity. We as Bayer CropScience will
utilize our market position in the eastern European countries to
strongly participate in this growth.
Bayer
CropScience supports demand driven markets as they are more
sustainable in the long run and will ensure economic stability.
However, a main goal of any agricultural policy must be to
support and further promote rural infrastructure and
development. This will provide long term benefits to rural
communities and a sustainable farm income.
In this context we trust that governments will be able to close
the gap between developed and developing countries in the
upcoming WTO trade negotiations on agriculture in Cancun,
Mexico. We have customers all over the world and we understand
the "squaring of the circle" it takes to find consensus.
Let me
briefly come back to a R&D related issue, the introduction of
new products. Product registration and commercialization are
subject to an ever increasing degree of complexity. The simple
relationship – Crop Protection manufacturer, regulatory
authority and farmers - belongs to the past. Today, more players
are involved in decision making and this strongly influences our
business.
The Crop Science industry is currently and will remain one of
the most regulated industries in the world. Bayer CropScience
invests about Euro 700 million per year in R&D for innovative
products and improved agricultural technologies. Decisions are
based on science, but we have to strike the right balance
between our targets of profitability to justify the investment
and fulfilling social and environmental responsibilities. This
balance is threatened as interest groups tend to focus on single
objectives.
One result is that today more and more so called "secondary
regulations" are imposed on our industry. The influence of
pressure groups on the food industry, for example, has prompted
a number of food producers to set their own quality standards.
Over 1,000 such restrictions already exist in Europe alone, with
a strong tendency to increase. The danger here is that sound
regulations with high safety margins are undermined as a result
of individual political agendas. The additional benefits to the
consumers in terms of food safety are questionable.
There is a clear necessity for all stakeholders to return to
their responsibilities. We cannot afford to waste resources by
allowing ideology and politics to play a dominant role. We have
to focus our efforts and energy on the key issues that will
drive progress and innovation. Science based registration
procedures and a predictable planning environment for new
products are prerequisites so that market and consumer needs can
be met. We are convinced that all stakeholders will have to
co-operate closely in this process to find mutually beneficial
and acceptable solutions. We are ready to actively contribute in
order to live up to our part of the commitment, in pursuit of
the United Nation's ultimate objective: Providing food security
for all in a sustainable way.
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