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Drive to the uplands of Scotland in a few years and you could be in
for a shock. If current research proceeds according to plan, you could find
yourself face to face with a llama. What will these natives of South America
be doing in Scotland? Answer: producing wool that is 10 times better than
that from sheep. ‘Llamas have warmer, finer, longer fibres,’ explains John
Stoddard, director of research and development at the Agricultural and Food
Research Council’s Institute of Grassland and Environmental Research in
Silsoe, Bedfordshire.

The aim of the study is to find ways of integrating llama-like animals
into Scottish sheep flocks so that farmers can profit from the valuable
alpaca wool produced by camelids – the llamas and their relatives. And as
llamas cost about 10,000 Pounds each, Stoddart says they are also examining
ways of breeding them by using embryo technology.

The programme at the institute is one of several under way in Europe
that could give hope to thousands of farmers who, unless they can diversify
and find alternatives to producing food on their land, may face bankruptcy.
For soon they may lose the generous subsidies from the European Community
which ensure that their produce brings in money even if it is surplus to
European demand.

The system of subsidies is set to meet its nemesis as the four-year-long
talks on the General Agreement on Tariffs and Trade (GATT) founder. The
agreement, due to be settled by the end of this week, is an attempt to set
the rules for world trade. But deep rifts have emerged between the EC and
a group of nations headed by the US which seeks abolition of the Community’s
subsidies.

Ian Gardiner, the National Farming Union’s specialist on non-food uses
of agricultural produce, explains that the system of subsidies was introduced
with good intentions after the Second World War when food was scarce. Now,
the trend has reversed and European farmers produce more food than the continent’s
230 million inhabitants can swallow. EC infighting has led to a bizarre
system in which the Community buys produce from farmers when the price falls
below a predetermined level. Brussels then sells off this so-called ‘intervention
stock’ cheaply to Third World countries.

The Council of European Agriculture Ministers, however, saw the writing
on the wall before GATT brought the issue to a head. In February 1988, the
ministers asked the European Commission, the ‘civil service’ of the EC,
to investigate the possibilities for redeploying agricultural land for uses
other than food production.

The Commission issued its proposals in January this year, and subcommittee
D of the House of Lords Select Committee on the European Communities is
midway through an inquiry on the Brussels document. The concept of diversification,
though, takes on a new importance with the questioning of subsidies in the
GATT negotiations.

The Commission’s document points out that, as things stand, food production
still dominates agriculture in Europe. ‘Not counting forests, non-food use
employs less than 1 per cent of the land area of Europe,’ it says. Set against
this is the fear that up to 16 million hectares of farmland – 12.5 per cent
of the total – could be producing surplus food by the year 2000.

The document notes the farmers’ lack of initiative in diversifying,
and to redress this has inserted an amendment to existing regulations. The
amendment applies to farmers who participate in the Community’s ‘set-aside’
scheme, a programme which provides financial incentives to encourage farmers
to ‘cease production’ on part of their land, achieving the common goal of
reducing output and returning intensively cultivated land to nature. Under
the amendment, farmers who qualify for aid by setting aside the requisite
30 per cent of the arable land, would have the option of planting cereals
‘for non-food uses’ on up to half of it, and receive ‘a certain premium’
for the privilege.

Britain’s government is in agreement with the NFU in opposing the amendment,
though for different reasons. The government claims that such an initiative
does not make economic sense, while the NFU says the scheme is too restrictive.
Gardiner points out that the proposal stipulates that farmers cannot grow
the same crop on set-aside and conventional land. ‘We would like to grow
what we like. It’s not really set-aside, it’s developing a new use of land,’
says Gardiner.

As far as diversification is concerned, interest has focused on alternative
outlets for cereals for the simple reason that cereal production is the
most widespread agricultural activity in Europe. The Commission is well
aware of this and says in its proposed amendment to the set-aside provisions:
‘It is important to explore the non-food potential of the cereals sector.
It is the sector of primordial importance in the crop rotaitions used throughout
the Community.’

On the research side, there is plenty of effort to ease the transition
from growing cereals and other produce for food to growing them for something
else. However, it will take some years to sweep away the technical barriers
to producing many of the most lucrative non-food products. This may not
be soon enough to prevent widespread bankruptcy among Europe’s farmers.

The five main options for switching from food production are to divert
effort into generating energy, fibre, oils, starch, and valuable products
such as pharmaceuticals.

On the energy front, the British government is sceptical. In its evidence
to the House of Lords subcommittee, the Ministry of Agriculture, Fisheries
and Food said: ‘Investment in bioethanol manufacture (production of ethanol
from maize, sugar beet or other cereals for blending into petrol) would
be a misallocation of resources unless there were considerable reductions
in material costs or oil prices rose to between $55 and $65 (27 Pounds and
32 Pounds) per barrell.’

MAFF is not alone in this view. The Energy Technology Support Unit of
the Department of Energy calculated three years ago that bioethanol derived
from wheat would cost three times what it is worth as an ingredient of fuel
(see This Week, 19 November 1987). This scepticism is shared by representatives
of the Agricultural and Food Research Council. Brian Legg, of the AFRC’s
institute of Engineering Research in Silsoe, Bedfordshire, told the Lords
subcommittee: ‘I have seen no evidence that bioethanol (from starch) is
ever going to be economic.’

Bioethanol’s biggest success story has been in Brazil. But with crops
of sugar cane and cassava, Brazil has extremely good substrates for impure
production of bioethanol. France and Germany are committed to producing
bioethanol from cereals. Both countries provide a subsidy to encourage farmers
to make bioethanol from sugar beet. This reflects the situation in the US,
where the government provides tax concessions for producers of petrol containing
ethanol made from maize.

The AFRC’s evidence to the Lords subcommittee supported the generation
of energy from one source of biomass – coppice trees. By genetically refining
trees to grow faster, species such as willow and poplar could be cut back
every two to four years. Farmers could then sell off the wood to be burnt
to generate energy or sell the coppice wood to paper producers for pulping.

The council sees coppicing as part of schemes that exploit every shred
of a crop, from the stem and seed to the leaves and roots. ‘We should seek
ways to use every part of a crop; for example, in wheat, grain has the value
as food, while leaves have value as animal feed. Straw can be pulped to
produce high-quality paper,’ said Legg.

There is vast scope in the EC for making paper from the region’s own
products. Britain alone imports 600 million Pounds worth of wood pulp every
year, according to Legg. There is huge potential for upgrading straw into
paper, pulp and other valuable materials in what he describes as ‘rural
refineries’, which divide crops so that each part of the plant is used.

In Europe, Denmark leads the way in this respect with a modest programme
to make the most of materials from local farms in ‘the harvesting approach
of the future’. However, he adds, the costs to the taxpayer are high; the
marterials produced would not be economical unless the price of oil was
more than 45 Pounds per barrel.

In the field of fibre production, farmers could switch to imported breeds
of herbivores, such as the llama, for use in textiles. Yet another option
is to grow flax – a crop that yields oil (linseed) as well as fibre. The
snag at present is the antiquity of the retting procedure, the means of
extracting the fibre from the plant stem. MAFF is sponsoring research to
improve this.

Oils present a profitable departure from food production. With crops
such as rape, flax and sunflowers, farmers could be producing oils invaluable
to the chemical industry in the manufacture of detergents, adhesives, agrochemicals,
lubricants and plasticisers. There is considerable scope in Britain for
increasing linseed production, while Italy might contemplate wider planting
of bitter lupin, an oil-rich species suited to the Mediterranean countries
of the EC.

The opportunities, though, depend crucially on advances in genetic engineering.
As the AFRC pointed out in evidence to the subcommittee: ‘Essentially, (genetically)
engineered new crops will act as cheap, solar-powered, non-poluting chemical
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Richard Flavell, the director of the AFRC’s John Innes Institute in
Norwich, Norfolk, told the Lords subcommittee that the greatest promise
– in terms of upgrading the output of crops through genetic manipulation
– lay with oilseed rape and sunflower. ‘Already, we can insert genes into
oilseed rape. It won’t be very long (15 to 20 years) before specific changes
are made to provide high value oils in oilseed rape. And sunflower oil (produced
widely in France) is not far behind he said.’

The EC could establish its own supply of starch for manufacturing products
ranging from foods and animal feeds to paper, textiles, adhesives and chemicals.
Most of the 2.5 million tonnes the Community uses annually is taken from
imported maize, wheat and potatoes; homegrown sources are more expensive.
However, the Community recently started providing a subsidy for companies
in the EC – such as the chemical and biotechnology industries – which use
starch from crops grown within member states. Under this policy, industrial
use of EC starch has increased from 89,000 tonnes in 1985/86 to 186,000
tonnes in 1988/89.

But perhaps some of the most profitable areas involve fine chemicals
– compounds that are valuable as medicines or in industry. Animals might
become a reliable and lucrative source of drugs, both for medical and veterinary
treatment. For example, scientists at the AFRC’s Institute of Animal Physiology
and Genetics Research in Babraham, Cambridge, have inserted genes into sheep
which lead to the secretion in milk of factor IX, a blood-clotting agent.
Other transgenic animals might secrete agents such as monoclonal antibodies,
natural chemicals with potential for fighting diseases such as cancer and
arthritis. Plants, too, might become the drugs factories of the future.

The farmers’ fate depends on the success of research programmes and
the collective will of European governments to persuade farmers to switch
from growing food to more adventurous uses of their land.