For the last 14 years farmers in the European Union have been required to not plant ten percent of their fields. It was designed to pay farmers to maintain land for environmental or other purposes rather than food production.
"It was originally introduced as a measure to control overproduction," says Michael Mann, European Commission spokesperson. "Obviously we have not overproduction anymore; we actually have a shortage of grain on the market."
Heavy rains in the north and drought in the south have estimates of this year's crop even lower than last year's poor harvest. Reserves have shrunk from 14 million tons to 1 million.
Tighter supplies, poor weather, and greater demand from emerging markets such as China have caused many EU producers and retailers to raise the price of staple foods, prompting EU Farm Commissioner Marian Fischer Boel to propose lowering set-aside rates to zero for fall and spring plantings. She says the plan could lead to the production of 17 million additional tons of cereal grains.
Grain prices in the U.S. have risen significantly because of the demand for biofuel crops. Only 1.7 percent of European land has been used for biofuels, although that is likely to change with the target of 2020 to have ten percent of energy come from biofuels.