Olive oil production and soil conservation in southern Spain, in relation to EU subsidy policies

Land Use Policy 16 (1999) 259}267

Olive oil production and soil conservation in southern Spain, in relation to EU subsidy policies J. de Graa!*, L.A.A.J. Eppink Erosion and Soil & Water Conservation Group, Department of Environmental Sciences, Agricultural University, Nieuwe Kanaal 11, 6709 PA Wageningen, The Netherlands Received 19 October 1998; received in revised form 3 June 1999; accepted 28 June 1999

Abstract The European Union spent about two billion ECU per year on subsidies for the olive oil sector, of which Spain received about 35%. For the rainfed areas in southern Spain the olive oil sector is crucial, and so are these subsidies. The European Commission has formulated two options to change the subsidy system, but these do not take the production systems and environmental aspects into account. Many olive plantations are a!ected by soil erosion. This paper analyses the olive tree production systems in southern Spain, the subsidy systems and the soil erosion problems. It then raises the question whether the subsidies could not be provided in a di!erent way, in order to make olive tree cultivation more sustainable by reducing soil erosion and #ood hazard.  1999 Elsevier Science Ltd. All rights reserved. Keywords: Olive trees; Production systems; Subsidies; Soil erosion; Soil and water conservation; Southern Spain

Introduction Within the European Union (EU) special attention is given to the development of economically deprived regions. Most of these regions are located in the Mediterranean zone, and include the whole of Greece and Portugal, two-thirds of Spain and half of Italy (Fig. 1). It is interesting to note that the boundaries of these zones to a large extent coincide with the most northern limit of olive tree cultivation (EC, 1996). Aid to the olive oil sector thus bene"ts much of these economically deprived rural areas. Although closely followed by Italy, Spain is the largest olive oil producer and exporter in the world. Since the admission of Spain to the EU in 1986, farmers have been eligible to subsidies for olive oil production, which has constituted a stabilising factor in the development of the production areas. However, the European Commission (EC) felt that the subsidy system was badly in need of reform because of their budget restrictions, the new world trade rules and

* Corresponding author. Tel:#31-317-482881; fax: #31-317484759. E-mail address: [email protected] (Jan de Graa!)

alleged fraud. Two new options were formulated in 1997 (EC, 1997): the "rst a uniform system on the basis of oil production and the second based on the number of olive trees. Both options were met with much resistance among farmers and farmers' organisations, in particular in Spain. In this paper it is argued that these new policies should comply not only with economic considerations, but also with ecological conditions and in particular with regard to soil and water conservation. After a short historical review and a brief glance at the world market of olive oil, attention is paid to olive production systems, subsidies, soil erosion and certain conservation options. Thereafter the e!ects of the subsidy systems on production and on sustainable land use are considered, and this leads to a proposal for an alternative more ecological friendly subsidy system, focusing both on production and on natural resource conservation.

Historical background In around 600 BC the hills of Attica in Greece were already severely deforested, and Solon declared that the cultivation of arable crops had to be prohibited. Pisistratus introduced half a century later a premium for

0264-8377/99/$ - see front matter  1999 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 4 - 8 3 7 7 ( 9 9 ) 0 0 0 2 2 - 8

260

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

farmers who wanted to plant olive trees, since this was the only tree that could grow well on the strongly eroded soils (Ponting, 1991). The Greek established colonies in other parts of the Mediterranean basin, such as Spain and they introduced the olive trees in these areas. The Roman domination over the whole Mediterranean thereafter, strongly increased land degradation (Pounds, 1973). Apart from checking their enemies, the conquests were aimed at safeguarding the supply of agricultural produce, wood and livestock, which Italy could no longer provide. Therefore, their exploitation systems were characterised by uncontrolled deforestation, soil mining and overgrazing (Slicher van Bath, 1960). The Moors, who invaded southern Spain in the 8th century, were accomplished agriculturists, but after their fall most land was owned by the Church and by noble families living in Madrid, and their poor tenants were unable to invest in

Fig. 1. Economically deprived areas within the European Union (shaded), and the most northern limit of olive oil cultivation (thick line; EC, 1996).

the land (Grove, 1996). Over the centuries olive trees have played an important role in rural development as one of the major sources of income and employment in these relatively poor rainfed areas. Although the Spanish government in this century has made much e!ort towards reforestation and soil conservation, most agricultural land is still subject to soil erosion, not only a!ecting the land and the crops but also infrastructural works downstream.

The world market of olive oil The Mediterranean region accounts for not less than 97% of the world production and 91% of world consumption of olive oil (Table 1). The EU member states Spain, Italy, Greece, Portugal and France take care of 80% of world production. Olive oil has only a 4% share of the world vegetable oil production, which is dominated by soybean and palm oil. However, thanks to its high value per unit olive oil accounts for 19% of the value of world trade in edible vegetable oils (Luchetti, 1993). Table 1 shows the annual production, trade and consumption for major producer countries and regions in the three-year period 1989}1991. In this period Spain and Greece were net exporters, whereas, Italy was a net importer. However, because of the #uctuations in weather from year to year in the production areas, olive oil production is subject to considerable annual #uctuations (Table 2). Since olive oil is relative costly and has a speci"c taste, it cannot easily substitute for other vegetable oils, and growth in consumption will closely match population growth in traditional consumption countries. New market opportunities are limited to luxury markets in industrialised countries. Tourism in the Mediterranean areas helps to increase demand in Northern Europe. Over the period 1972}1995 per capita olive oil consumption in the whole EU remained the same, with on the one hand

Table 1 Olive oil production and consumption (in 1000 t) for selected countries and regions (average annual "gures over period 1989}1991) Countries/regions

Greece Italy Spain Portugal France North Africa Asia (Turkey/Syria) America(USA/Argent) World

Production

Export

Import

289 463 596 34 3 195 169 21

110 129 256 29 1 97 24 11

16 325 42 24 35 54 31 138

195 659 382 29 37 152 176 148

148 70 156 117 9 128 96 14

1770

657

665

1778

100

Source: MAPA (1991) and Polidori et al. (1997).

Consumption

Production as % of consumption

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

261

Table 2 Olive tree acreage, production, yields and prices in Spain (1935}1996) Year

1935 1945 1955 1965 1975 1985 1994 1995 1996

Area (1000 ha)

1877 1920 2059 2090 1949 1897 1970 1980 2000

Production (1000 t)

1559 1277 1310 1605 2187 1875 2727 1618 2856

Yield (kg/ha)

830 670 640 770 1120 980 1384 817 1428

Prices (Ptas/kg)

Production value Mill. Ptas.

Current

Constant 1970 pric

0.4 2.0 10.7 10.0 22.1 102.6 36.0 58.0 72.0

n.a. n.a. n.a. n.a. 12.5 13.9 3.1 5.6 6.7

n.a. n.a. n.a. n.a. 27.3 26.1 8.5 9.1 19.1

Notes: For olive oil production only; 1000 Ptas "6.25 ECU (Euro) "7.20 US$ (1996). Source: MAPA (1991), Guerrero (1997), FAO (1996).

a decline in Italy and Portugal, and on the other hand a sharp increase (at low consumption levels) in Ireland, Denmark, UK and the Benelux. Production and land use policies, including subsidies, should take into account that the scope for production increases is limited.

Olive oil production in Spain With about 30% of world production Spain is the largest olive oil producing country, followed by Italy (Table 1). Within Spain the autonomous region Andalusia accounts for 75% of olive oil production. As in many Mediterranean regions, olive trees constitute in southern Spain the most important crop in rainfed agriculture, representing about 20% of agricultural production value. This is equivalent to the importance of co!ee for Colombia (de Graa!, 1986). The area under olive trees has not changed much, but annual yields and production values #uctuate widely (Table 2). Olive trees are drought-resistant and because of their extensive rooting system are one of the few crops that can survive on only 200}300 mm of annual rainfall (Fresco, 1996). The trees grow slowly, maturing only after about ten years, but can easily reach 100 yr of age. Traditionally the production in southern Spain has been rather extensive, with a low density of trees/ha (100 or less) and a relatively low power and labour input/ha. Pruning is essential to shape young trees and thereafter to check every year vegetative growth and to select the bearing branches. Chemical fertilisers have nowadays largely replaced the application of manure, and this has reduced the soil organic matter content. Pest and disease control is important, in particular in zones with a reduced biodiversity. After #owering, in May/June, soil preparation (harrowing) is undertaken to reduce evaporation and weed competition. This is repeated after harvesting in

December and January to improve water in"ltration. Out of fear for weed infestation many farmers till their land quite often, applying the so-called &clean-weeding'. Harvesting, which accounts for more than 50% of labour inputs, requires a seasonal labour peak. In most Mediterranean countries teams of men and women traditionally undertook this harvesting and travelled from village to village. Mechanical harvesting devices (&vibrador') can only be used on new intensive plantations of special dwarf varieties with upright stems. Since the population in many villages in the rainfed areas is declining, the labour supply has decreased and the costs of cultivating and harvesting olive trees have increased considerably.

Production systems and production costs In Table 3 three broad categories of olive tree plantations are presented, with their typical ecological and dominant production features, based on Beaufoy (1998). The traditional plantations show the most positive ecological features, but have low yields and a high variability of yields. The &intensive' plantations have the best production characteristics. The categories do not represent homogenous groups of plantations, and the boundaries are not sharp. A well-managed, relatively young traditional plantation may have similar yields as an old semi-intensive plantation. However, the three patterns can be clearly observed in the "eld and do serve analytical purposes. In Table 4 the costs of production are shown, based on Barranco et al. (1998). They have distinguished the same three dominant production systems, but have also considered the topographic situation of the plantations. The calculation gives a cost of production/kg of olive oil (excluding processing costs) ranging from Ptas 250 for intensive plantations in the plains to over Ptas 500 for

262

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

Table 3 Ecological and production characteristics of three olive plantation systems in Spain Plantation type Characteristics

Traditional Rainfed

Semi-intensive Rainfed

Intensive (Supplem.) Irrigated

Ecological Soil erosion Bio-diversity Environmental e!ects

Usually low High Fire prevention

Often high Low Pesticide pollution

Medium (plains) Very low Pesticide pollution

Production Tree type, variety Tree density per ha Chemical inputs Weed control Terracing Grazing undergrowth Average yield Consistency of yield

Large, old Up to 100 (10;10 m) Very low Occasional harrowing Common Rare 1000 kg/ha Very low

Smaller 100}200 (8 m;8 m) High Regular harrowing Occasional Rare 2100 kg/ha Low

Dwarf varieties Over 200 (7 m;7 m) High Herbicide use Rare None 4000 kg/ha High

Estim. Share area Estim. Share product.

50% 29%

40% 48%

10% 23%

Source: adapted from Beaufoy (1998). Table 4 Annual production costs of olive production for di!erent production systems in Ptas/ha for 1994/95 Category

Trad. rainfed; Mountainous

Semi-intensive Rainfed; hilly

Semi-intensive Rainfed; plain

Intensive, with irrigation; plain

Labour Machine hire Material costs Fertilizers Phytosanit. Other cost

49,600 2,100

64,400 5,500

72,600 1,700

99,800 3,500

11,000 4,300 *

15,700 13,300 800

9,900 7,300 1,700

20,400 12,700 5,600

Annual total Annuity for establishment (5%; 50 years) Total Cost Av. yield (kg) Cost/kg olive Cost: Pts/kg oil Idem (in Euro)

67,000

99,700

93,200

142,000

19,000

31,000

29,000

38,000

86,000 900 96 531 3.32

130,700 2,300 57 316 1.98

122,200 2,400 51 283 1.77

180,000 4,000 45 250 1.56

Source: adapted from: Garcia et al. (1998); information about establishment costs derived from Guerrero (1997). Notes: Ptas 160"1 Euro (1996); 18% oil content assumed.

traditional plantations in mountainous areas. Including processing the costs will range between Ptas 320 and 600/kg oil. Since yields #uctuate widely by year, depending on weather conditions and other factors, annual production cost may range between Ptas 200 and 700/kg of olive oil. The market prices of olive oil vary considerably by quality. The lower qualities of olive oil (so-called &lampante') have in recent years been sold at about Ptas 320 (2 Euro)/kg, whereas the better qualities (&extra virgin') were sold at about Ptas 560 (3.5 Euro)/kg. The intensive and

semi-intensive plantations on the plain will generally be able to cover their cost, the semi-intensive plantations in the hills will on average break even, and the traditional plantations in mountainous areas cannot survive without subsidies.

Subsidies to olive farmers The original objectives of the common agricultural policy (CAP) were determined during the Treaty of Rome

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

in 1957. The main reason for intervention policies was to: encourage agricultural productivity to ensure farmers a satisfactory and equitable standard of living and to stabilise agricultural markets and farmers' income. The EU has used two main types of policy instruments: price support for various products and structural policies to improve infrastructure and production systems, including the development of &less-favoured agricultural areas (LFAs)'. Southern Spain bene"ts both from structural aid and from price support, in particular for olives and cereals. The European Union is striving towards common regulations in the market for oils and fats since 1966 (No. 136/66). In this framework general rules were established in 1984 for supporting producers of olive oil (EEC regulation 2261/84). Subsidies are not only provided to producers for increasing production and improving oil quality, but also indirectly to consumers through the processing facilities (MAPA, 1994), and also for storage and export. Total subsidies increased from an average of about 600 million Euro in the period 1980}1985, when Italy was the main producer within the EU, to about 2 billion Euro in the period 1991}1996, when Spain, Portugal and Greece had joined the EU (EC, 1997). Production subsidies made up 60% of total subsidies. The key elements of the current production support system are: E a minimum price for producers, maintained by a combination of import restrictions and intervention buying; E the actual production subsidy/kilo of oil produced; E a special support system for small producers (producing less than 500 kg olive oil/yr). Producers have to produce at least 100 kg olive oil/yr and have to submit every year information about their olive grove. They can also deliver their produce through producer organisations. The olives have to be processed in o$cially registered mills. For small producers the subsidy is not based directly on the amount of oil produced in a given year (as for large producers), but it is based on the average yield/tree for the district over the past four years, multiplied by the number of trees on the holding. Some 60}65% of EU producers receive their subsidy in this way (EC, 1997). The subsidies are linked to the indicative and intervention prices and increased from 107 Euro/100 kg in 1994/5 to 142 Euro/100 kg olive oil in 1997/8. In other words, the subsidies amount to about 50% of the actual sales value, which is in fact close to the production cost of rainfed plantations. The subsidy has allowed farmers to maintain and timely rejuvenate their olive trees. Because of GATT obligations, budget restrictions and alleged fraud, the European Commission has in 1997 brought up proposals to change the olive subsidy system.

263

Fig. 2. Olive plantations and soil erosion features near Alora in southern Spain.

Two broad options were presented: one is to simplify the current system by removing the small-producer mechanism, and the other is to replace it by a direct payment/tree (EC, 1997). Before the new policies will be introduced, the register of olive cultivation, already embarked upon in 1989, has to be completed in each of the "ve EU producer states: Spain, Italy, Greece, Portugal and France. Farmers in Spain are not happy about these proposed changes and it is not clear whether the new system will be able to reduce fraud. In both options the consumption aid will be abolished. The rationale behind the payment/tree option is that it would be easier to verify whether persons are indeed eligible to the subsidy and that the total annual amount of subsidies would remain rather constant. The veri"cation will be based on the interpretation of aerial photos or satellite images, probably linked to cadastral maps with information about actual land operators or tenants. It is proposed to establish a remote sensing based geoinformation system (GIS) to control tree numbers and cross check applications for aid (EC, 1997). As example, Fig. 2 shows olive plantations on an aerial photograph. Both under the old and under the newly proposed support systems little attention is paid to the diversity of production systems and to environmental considerations. However, subsidies do have repercussions for production systems and for the environment (Beaufoy, 1998). Traditional plantations on terraced slopes and with undergrowth vegetation, have low tree densities and low yields, but are benign for the environment, since they show low soil erosion rates, a high bio-diversity and low pollution rates. The current subsidy scheme has already promoted the change from traditional to semi-intensive

264

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

and intensive systems, and the payment/tree option may bring about further changes. The question is how these systems could be adapted in such a way as to contribute also to soil and water conservation. The EU has expressed its concern about the negative e!ects of agriculture on the environment only since the mid-1980s, and endorsed this in the Single European Act of 1987. At the Treaty of Maastricht it was "nally stipulated that environmental requirements had to be integrated in community policies (Brouwer and Van Berkum, 1996). This needs to be implemented among others through the agri-environmental programme, providing aid for change towards more extensive forms of production, organic farming, &set aside' (e.g. for cereals and oilseeds), etc. (EC-DG6, 1999). However, in the EU regulations, directives and documents concerning agriculture and environment no speci"c attention has been given yet to olive plantations and to soil erosion control. For wine, a comparable crop, the permanent abandonment of wine-grape areas is proposed, which has to include soil protecting measures and/or a!orestation, and it recommends reconstruction of vineyards on land sensitive to erosion or "re (EC-DG6, 1999).

Soil erosion problems in olive orchards The Mediterranean region is severely hit by water erosion. The rainfall in these areas is highly variable, with occasionally very high rainfall intensities. The Spanish Institute for Nature Conservation (ICONA) estimated that about 20% of the land faces soil erosion of more than 50 t/ha/yr (Brouwer and Van Berkum, 1996). Soil erosion studies in south-eastern Spain have shown that most land has undergone at least some degradation symptoms (Sala et al., 1991). With the practise of clean weeding under olive trees and replacement of manure by fertilisers, organic matter content is reduced and hence in"ltration capacity. This reduces production and increases rates of runo!, which after high intensity rainfall causes much rill and gully erosion and extensive #ooding downstream. Since rainfed olive plantations are often situated on soils less suitable for cropping and on the steeper slopes, erosion levels are very high. According to Pastor et al. (1997) soil erosion by water amounts in Andalusia annually to about 80 t/ha or approximately 7 mm. As a result of the water, soil and nutrient losses associated with this erosion, traditional olive plantations on the hills are badly a!ected. In some areas wind erosion is also important (Quirantes et al., 1991).

Soil and water conservation options in olive orchards It is accepted that conventional (clean) tillage increases erosion on most soils and that soil losses are cut when

tillage is reduced. In Andalusia about 10 tractor h/ha olive trees are spent on tillage, mostly using tine cultivators. Disc harrowing would be more e!ective in reducing weed growth, but this can cause severe damage of the small feeder roots, which are crucial for tapping the super"cial soil moisture after minor rainfall (Pastor and Castro, 1995). The introduction of herbicides in the 1960s has stimulated no-tillage practices, which has had good results in Andalusian olive orchards, except in cases where it led to surface sealing and deep gullies. When notillage is applied, one has to ensure through pruning that tree size remains in line with soil moisture supplies. In 1988 the agricultural extension service of the Andalusian Board (Junta de Andalucia, 1988) made recommendations about no-tillage on olive "elds. Instead of repeated mechanical clean weeding, the weeds were killed by means of herbicides in autumn. This treatment led to a 20% increase of olive production and a saving in machine costs of 5000 Ptas/ha. Apart from tillage, attention is also paid to covercrops under olives. Ruiz de Castroviejo (1969) of the Soil Conservation Service of Cordoba Province already executed several experiments in the 1960s, to investigate e!ects of subterranean clover (Trifolium subterraneum) in olive orchards on soil erosion. This clover does not compete for water with olives in the dry period, it can be intensively grazed and it therefore avoids "res. The experiments showed that: runo! and erosion was greatly reduced, more water was available, more grass was produced on the degraded soils, and the olive trees were in fact doing better than orchards without pasture. An economic analysis showed a net bene"t of 3244 Ptas/ha for treated plots against a mere 835 Ptas/ha for control plots (Ruiz de Castroviejo, 1969). Recently, attention has been paid to some other plant cover to control erosion under olive trees. For rainfed olives one has to look carefully at water balance e!ects of cover crops. In spring olives have high moisture requirements, since maximum vegetative growth occurs and #owering and fruit set take place. Thus far the best results have been obtained with barley (Hordeum vulgare), spontaneous weeds and grasses and with vetch (Vicia sativa, L.). In the very dry year 1995 vetch and barley cover resulted in a 11% respectively 6% higher soil moisture content than under minimum tillage (Pastor et al., 1997). These vegetative bands should cover about 70% of the surface. The moment of the mechanical or chemical removal of the bands is crucial. Vetch has the advantage over barley of "xing a large amount of nitrogen in the soil (about 100 kg/ha), but it consumes more water and its seeds are more expensive (Pastor and Castro, 1995; Huyssteen van et al., 1984). Besides, its residues are mineralised within 1}2 months after killing (Pastor et al., 1997). On many olive orchards in the uplands terraces were built in the past, to act as barriers reducing runo! and erosion. These terraces were well adapted to the local

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

265

Table 5 Relative importance of subsidies for di!erent production systems (/ha) Production system

Traditional rainfed

Semi-intensive rainfed

Intensive, with supplem. irrigation

Number of trees/ha Olives/tree (kg) Olives/ha (kg) Olive oil/ha (kg) Sales value (Euro/ha)

100 10 1000 180 506

150 14 2100 378 1057

200 20 4000 720 2014

EU-options Subsidies option 1 (Euro) Subsidies option 2 (Euro)

256 350

537 525

1022 700

Alternative Suggested base subsidy Production bonus (max.) Conservation bonus (on sloping land only)

200 n.a. 150

300 (50%) 84 150

400 320 n.a.

Option 1: subsidy of 142 Euro/100 kg olive oil (actual level in 1997). Option 2: subsidy of 3.5 Euro per olive tree (assumption).

situation, but proved not suitable for mechanisation. Many of these terraces are now deteriorating or are removed. The few recent terraces are made in a rough manner with bulldozers, and are often not very e!ective (Brouwer and de Jong, 1998). Instead of these rather expensive mechanical conservation measures, vegetative strips along the contour lines could be considered on steep land. Gully erosion and #ood damage could also be reduced by establishing check dams, when slopes and soil type do allow this. Special subsidies exist for a!orestation of steep mountain slopes. Unfortunately, the reforestation e!orts by the Government have in the past only barely compensated the loss of forests by "re. These various soil and water conservation measures can reduce soil erosion and contribute to more sustainable olive production, and the increased in"ltration on the upland "elds will help to diminish #ood damage downstream. The most promising measures are: minimum tillage, cover crops and vegetative strips.

The e4ects of the subsidy systems on production and on sustainable land use Since Spain joined the EU and farmers were eligible to subsidies based on olive oil production, there has been a trend towards more intensive olive plantations. When replacing on sloping land traditional with intensive plantations, soil erosion increases, unless soil and water conservation measures are undertaken or tree varieties and planting systems are applied that increase soil cover, as with &caturrazation' of co!ee in Latin America (de Graa!, 1986). Only when traditional plantations make way for more extensive agricultural production systems, e.g.

agro-forestry, pastures, &set aside', soil erosion is likely to decrease, but the production value/ha will then decline as well. Since the "rst EU option for revising the subsidy scheme envisages abolishing the special arrangement for small producers, there will be a more drastic conversion towards intensive plantations, and a large-scale abandonment of non-viable traditional plantations. Farmers will focus exclusively on increasing oil production, and erosive practices such as clean weeding will become even more the general rule. Large producers with intensive production systems will bene"t most, and the nature conservation function of small traditional plantations will not be taken into account. The second EU revision proposal, to provide a payment/tree, will have as its main e!ect a stabilisation of farm income for both small and large producers. It is also likely to lead to a further expansion of olive tree plantations to more marginally suitable zones and to an excessive number of olive trees/ha. While the latter could possibly have some positive e!ect on controlling soil erosion, the former tendency will certainly contribute to further land degradation and eventually to lower production levels. Since the subsidy does not provide any direct incentive to produce oil, small producers may in fact decide to reduce labour inputs and even to refrain from harvesting the trees. Good for nature conservation, but not for production and income. In Table 5 the likely extent of the two proposed subsidy systems is shown for the three main di!erent production systems on a ha basis. It shows clearly that the "rst option is more attractive for the modern intensive production systems and that farmers with traditional plantations would prefer the second option.

266

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

That a system based on tree numbers may be less subject to error and fraud is to be seen. When the GIS, based on satellite images, will be operational for monitoring the number of trees, farmers may well revert again to multiple stem systems: on the image one may see several crowns, belonging to one and the same tree. Since for this new veri"cation system satellite images are needed, one could wonder whether these images could not also be used for classifying production zones and type of terrain (slopes and soils). And to determine where subsidies could be linked to implementation of certain soil and water conservation measures. The images can also show the use of cover crops and vegetative strips along the contour line.

An alternative subsidy system, focussing on both production and conservation Considering that neither of the two proposed options provides an optimal solution in line with the objectives set by the EU, and that neither of these take soil and water conservation into account, an alternative subsidy system for producers is hereby proposed. This system provides "rst of all a "xed income for &olive tree plantation holders' to enable them to maintain the plantations, and subsequently adds to that incentives to improve the productivity of the plantation and to improve soil and water conservation, wherever this is needed. The basic income is important for small farmers, who are now a!ected by annually #uctuating production values (Table 2). The system could for example consist of a basic subsidy of 2 Euro/olive tree, and be complemented with two di!erent bonuses: one for production and one for soil and water conservation. For the basic subsidies an upper limit of the number of trees/ha would need to be applied, which will vary by ecological zone and between rainfed respectively irrigated systems: e.g. 150 for rainfed and 250 for irrigated systems in areas with less than 500 mm of rainfall/yr. Farmers could qualify for the production bonus, when their records (at the oil-mill) show that they have obtained a production of more than e.g. 3 kg olive oil/(registered) tree. This bonus could increase with the production above this minimum. The basic subsidy and production bonus together should be somehow in line with subsidies for oilseeds, which in turn are linked to subsidy levels for cereals (EC, 1999). For the conservation bonus, the GIS should produce a simple land evaluation system, whereby for example four land capability classes are distinguished: 1. #at or gently sloping land (5% slope or less): no bonus; 2. sloping land (slopes above 5%) with soils unsuitable for olive trees (e.g. marls): no bonus; 3. moderately sloping

land (5}15% slope) with suitable soils: bonus, when use is made of a cover crop and/or no-tillage; 4. steep sloping land (15}30%) and suitable soils: bonus when a combination of cover crops, no-tillage and barriers along the contour lines is applied. For simplicity it is assumed in Table 5 that the intensive, irrigated, plantations are situated on #at or gently sloping land, and that traditional and less productive semi-intensive plantations do not qualify (yet) for the production bonus. If it is assumed, as in Table 4, that 50% of the total olive tree area consists of traditional, 40% of semi-intensive and 10% of intensive plantations, the two EU options would cost the EU in Spain, respectively, 890 and 910 million Euro. The alternative system would cost at least 520 million Euro (basic subsidy), and at most 921 million Euro. In the latter situation all traditional and semi-intensive plantations on sloping land would apply soil conservation measures and all intensive plantations and 50% of the semi-intensive plantations would qualify for a production bonus of 0.8 Euro/kg of olive oil. In this extreme case farmers in all three categories can receive more subsidies than either of the two EU options (Table 5). For the reduction of fraud the producer-register and the GIS should be established and veri"ed by an EU commissioned organisation. By linking the number of trees with the area cultivated and by providing a production bonus on the basis of oil production/tree, there is no incentive to plant too many trees/ha or to use multiple stems. The precise measures that would qualify for the conservation bonus should be very well de"ned, and clearly visible on the satellite images. These images should have a high resolution and be of high quality, but that will also be required for the counting of tree numbers. To modify the already proposed GIS system to cater for this bonus system, the EU commissioned organisation could undertake or establish a research project of about three years that should cover all "ve producer countries.

Discussion Because of the low and unreliable rainfall in southern Spain, olive trees are one of the few suitable crops in rainfed agriculture. The pro"tability of the crop decreased because of the higher labour costs following the rural exodus in the period 1950}1980, and competition from North Africa. With the EU subsidies farmers have in the past decade been able to maintain and rejuvenate their plantations. However these subsidies brought about a trend towards more intensive plantations, with some undesirable consequences. Whereas, olive trees started to replace other economically viable crops on irrigated land in the plains, traditional and semi-intensive plantations

J. de Graaw, L.A.A.J. Eppink / Land Use Policy 16 (1999) 259}267

on hilly and mountainous terrain had di$culties to withstand this competition and were over-exploited and/or badly maintained. Soil erosion can be considerable under such circumstances. While the two new subsidy options proposed by the EU in 1997 have each their advantages and disadvantages for the di!erent type of plantations, neither of the two takes into account ecological considerations, such as conservation of soil, water and nature. This paper shows a provisional outline of an alternative subsidy system, which consists of a basic subsidy/olive tree and two bonuses, one for stimulating production and one for promoting conservation measures, where necessary. Here the focus is on soil and water conservation, but this could also be extended to other conservation aspects, such as bio-diversity. Whereas modern (semi-) intensive, large plantations will often qualify for the production bonus, the small traditional farmers on hilly or mountainous terrain can bene"t from the conservation bonus when they undertake the necessary measures. This system with a basic subsidy and a conservation bonus on hilly land, is to be preferred above aid for &set aside' and a!orestation, which is now generally advocated by EU in case of other crops. Set aside and a!orestation provide little employment and will probably lead to a further exodus from the &less favoured' rainfed areas, where olive trees could still provide a healthy oil at low cost for the environment, and o!er the population employment and an attractive landscape. It combines a direct payment with a production-based subsidy, while also o!ering incentives for soil and water conservation measures. And it could avoid that only because of the subsidies intensive olive plantations will replace other viable crops in the (irrigated) plains. This alternative is in line with the CAP reform agreed upon within Agenda 2000, whereby the focus will be on supporting people rather than products and compensate farmers not only for their production but also for their contribution to society, in particular as guardians of the countryside (EC, 1999).

Acknowledgements The authors like to thank Mr. G. Beaufoy, two anonymous reviewers and the editor for their constructive comments.

References Barranco, D., Fernandez-Escobar, R. and Rallo, L., 1998. El cultivo del olivo. Junta de Andalucia. Ediciones Mundi-Prensa, Madrid. Beaufoy, G., 1998. The reform of the CAP olive-oil regime: what are the implications for the environment? European forum on nature conservation and pastoralism. Occasional publication No 14 (En).

267

Brouwer, F.M., Van Berkum, S., 1996. In: CAP and Environment in the European Union; Analysis of the E!ects of the CAP on the Environment and Assessment of Existing Environmental Conditions in Policy. Wageningen Press, Wageningen. Brouwer, L., Jong, S. de, 1998. Zuid-Europa verschraalt. Natuur and Techniek 66 (3), 72}83. EC, 1996. Les facteurs de reH sistance a` la marginalisation dans les zones de montagne et deH favoriseH es meH diterraneH ennes communautaires. Brussels. EC, 1997. Note to the council of ministers and to the European parliament on the olive and olive oil sector (including economic, cultural and social and environmental aspects), the current common market organisation, the need for a reform and the alternatives envisaged (Options paper). Commission of the European Communities, Brussels. EC, 1999. Berlin European Council: Agenda 2000, conclusions of the Presidency. Web site: Http://europa.eu.int/comm/dg06/publi/ newsletter/10}en.htm EC-DG6, 1999. Agriculture and environment. Web site: Http://europa. eu.int/comm/dg06/envir/en FAO, 1996. FAO Production Yearbook 1996, Rome. Fresco, L.O., 1996. Agriculture in the Lower Guadalhorce Valley. Sustainable land use. Practical guide for the Alora region, Spain. Agricultural University, Wageningen. Graa!, J. de, 1986. The Economics of Co!ee. PUDOC, Wageningen Grove, A.T., 1996. The historical context: before 1850. In: Brandt, C.J., Thornes, J.B. (Eds.), Mediterranean Deserti"cation and Land Use. Wiley, Chicester, UK, pp. 13}28. Guerrero, A., 1997. Nueva Olivicultura. Ediciones Mundi-Prensa, Madrid. Huyssteen, L., van, Z.l., van, J.L., Koen, A.P., 1984. L&in#uence des techniques d'entretien de cultures de couverture sur les conditions du sol et sur le contro( le des mauvaises herbes dans un vignoble de Colombar a` Dudkshoorn. Boletin del O.I.V. 645, 849}870. Junta de Andalucia, 1988. Manejo del suelo en el olivar. Lea#et of the Consejeria de Agricultura y Pesca. Luchetti, F., 1993. The international olive oil trade. Olivae 45, 16}18. MAPA, 1991. Anuaria de estadistica Agraria. Ministerio de Agricultura, Pesca y AlimentatioH n. Secretaria General TeH cnica, Madrid. MAPA, 1994. La agricultura, la pesca y la alimentacioH n espan olas en 1994. Ministerio de Agricultura, Pesca y AlimentatioH n. Secretaria General TeH cnica, Madrid. Pastor, M., Castro, J., 1995. Soil management systems and erosion. Olivae 59, 64}74. Pastor, M., Castro, J., Humanes, M.D., Scavedra, M., 1997. La erosioH n y el olivar: cultivo con cubierta vegetal. CommunicacioH n I & D Agroclimentaria 22/97. Junta de AndalucmH a. ConsejermH a de Agricultura y Pesca. Polidori, R., Rocchi, B., Stefani, G., 1997. Reform of the CMO for olive oil: current situation and future prospects. In: Tracy, M. (Ed.), CAP Reform: The Southern Products. Agricultural Policy Studies, Belgium. Ponting, C., 1991. A green History of the World. Sinclair Stevenson, London. Pounds, N.J., 1973. A Historical Geography of Europe, 450 BC}AD1330. Cambridge University Press, Cambridge. Quirantes, J., Barahona, E., Iriarte, A., 1991. Soil degradation and erosion in South-eastern Spain. Contributions of the Zaidin experimental station C.S.I.C. (Granada, Spain). In: Sala, M., Rubio, J.L., Garcia-Ruiz, J.M. (Eds.), Soil erosion studies in Spain. Geoforma Ediciones, Logrono, pp. 211}217. Ruiz de Castroviejo Ortega, J., 1969. Ensayos realizados en la provincia de Cordoba sobre explotacion de olivares en associacion con trebol subterraneo. Agricultura. 443. Sala, M., Rubio, J.L., Garcia-Ruiz, J.M., 1991. Soil Erosion Studies in Spain. Geoforma Ediciones, Logrono. Slicher van Bath, B.H., 1960. De agrarische geschiedenis van West Europa. Aula boek No 32. Spectrum, Utrecht.