A global shortage of grain has forced the European Commission to propose scrapping a rule that prevents farmers from planting crops on one tenth of their land.

Concern about tightening supplies of important food crops, such as wheat and barley, has prompted Marianne Fischer Boel, the Agriculture Commissioner, to propose ending the rule known as “set-aside” in the forthcoming planting season.

Soaring wheat prices and predictions of a weak European Union cereal harvest are causing alarm bells to ring in Brussels. Worldwide, cereal stocks are expected to fall to 111 million tonnes in 2007-08, their lowest level in 28 years. The EU’s buffer stocks have shrunk from 14 million tonnes in 2006-07 to just 2.5 million tonnes. Moreover, a series of poor harvests, a lengthy drought in Australia and competition for cereals from the biofuel industry have left the world with a sudden shortage of grain.

Ms Boel’s proposal would set at zero the rate for obligatory set-aside, allowing farmers in the EU who believe that they can profitably supply the market to sow crops. “Farmers can still set aside voluntarily a part of their arable area,” she said. The Commission reckons that zero-rating for set-aside would add between 10 million and 17 million tonnes of grain next year, easing pressure on the cereals market.

Farmers get the same payments from the Common Agricultural Policy (CAP) for arable land, whether it is farmed or not, under a reform known as the single payment scheme, which was agreed in 2003. However, the scheme prevents farmers from responding to high prices.

Pressure is growing within the Commission to abolish the obligatory set-aside programme, which stops farmers making their own planting decisions in response to demand.

Ms Fischer Boel is expected to recommend abolition of obligatory set-aside rule in a review of CAP reforms, to be published this year. Some 3.8 million hectares of EU farm-land is under obligatory set-aside. The rule was introduced in 1992 as a reform to the CAP, intended to deal with the growing cost and scandal associated with a mountain of unsold EU grain.

Farmers could claim compensation for set-aside land that had to be sown with grass. The measure has proved popular with environmentalists who attribute a recovery in bird, insect and wildflowers to compulsory set-aside.

Wheat prices in Britain have almost doubled over the past two years as a result of rising demand in Asian markets.

Guy Gagen, chief arable adviser at the National Farmers Union, said that many British farmers would be pleased by the decision to scrap set-aside in the current planting season. “About two years ago, wheat was £65 per tonne; currently, it is £117,” he said. Farmers needed to have a decision soon, he said, as autumn planting of crops begins in August. Typically, British farmers will earn about £200 per hectare under the single payment scheme whether the land is farmed or not, but land set aside yields no profit from crops.

Biofuels are creating havoc in an agricultural market where the impact of industry has in the past been minimal. The International Grains Council predicts that industrial use of grains will rise by 23 per cent to 229 million tonnes in 2007-08, with 107 million tonnes absorbed by ethanol producers.

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