Ministry of Food, Agriculture and Fisheries Jr. no. 4255/85761   Copenhagen, January 2005 Danish note concerning innovation and development related to the proposal for a new rural development regulation 2007-2013. I. Background The conclusions of the Lisbon European Council set the target of making EU the most competitive knowledge-based economic area. In the coming years, the European food and agriculture sector will face increasing liberalisation of world trade, as well as globalisation. This will increase international pressure on the competitiveness of the sector unless EU common policies provide opportunities for improved competitiveness in the long run. The Commission has made strengthening European research, innovation and development a major objective in the future financial framework of the Union. However, to date few initiatives have been developed for implementing innovation into the agricultural and food sector. In that context it is DK’s opinion, that the scope for a new Council Regulation 2007 - 2013 on rural development, should be more targeted at innovation. Innovation is an important precondition for the ongoing development of the food- and agricultural sector in the future. Therefore, it is crucial to ensure that the future regulation includes relevant measures to support the development of products, production processes and markets that would not have been developed otherwise. Innovation implies that basic research findings and new knowledge can be transformed and applied by the companies of the agricultural and food sector within a relatively short time scale. Therefore, it is important to stimulate such transfer of knowledge between research institutions, test facilities and companies in the future. Rural development policy could be an important instrument to facilitate this knowledge transfer. There is a need to define what is meant by innovation in this context and what could be supported under a new article concerning innovation. This note focus on which activities are foreseen, which costs are eligible for support and which actors are involved. Finally examples of innovative projects are described together with three case stories exemplifying completed innovative projects. Annex I includes the Danish proposal for an amendment to the Rural Development Regulation.   II. Innovative activities Several forces drive innovative activities. One example is the enterprises use of results from research activities to develop new products or new and more sustainable production methods etc. Another driving force is the price of the product, where enterprises obtain premium prices by increasing value-added or reduce the prices of their goods by reducing the production costs. The definition of innovation in the Commission Green Paper on Innovation is: The renewal and enlargement of the range of products and services and the associated markets The establishment of new methods of production, supply and distribution;

The introduction of changes in management, work organisation, and the working conditions and skills of the workforce The above principles are of a general nature. They are however of particular importance for improving environmental, consumer health and animal welfare aspects of agricultural production. Furthermore, the transfer of the knowledge gained from research into new equipment, production processes, modes of cooperation and products with a view to improving the competitiveness of the food and agricultural sector in Europe forms a particular problem that needs to be addressed. III. Promoting innovative activities. With the objective to improve living conditions in rural districts and in accordance with the Lisbon- strategy it is proposed that innovative activities should be eligible for support in the new rural development regulation. This would indeed be in accordance with the general objectives of the common agricultural policy. In this connection it is stressed that supporting innovation and development as an instrument of the rural development regulation should not include funding the costs of usual commercial activities. Exclusively the part of the costs related to the above mentioned principles that are not covered by normal commercial activities should be eligible for support. IV. Eligible operators Cooperation and partnership between several operators related to the sector would be a typical feature of an innovative project. The following operators could be involved: Farmers Processing enterprises Related enterprises Conditions should be set within the article on who is eligible for support, and who is eligible to participate. It’s decisive to include related enterprises involved with activities other than food- processing, whenever such activities are of importance to the agricultural sector. Agricultural institutions and Research institutions could also be involved in the projects in so far as they are contributing to the innovative process. V. Examples of innovative projects Examples of projects eligible for support: Reduction of smell from liquid manure or from piggeries/stables Further development of research findings to make the existing solutions more reliable and profitable for the farmers is needed. Focus should be on application orientated development. That demands technical, biological and agronomical knowledge from several operators to be developed into practical and commercial applicable solutions. Use of new knowledge of importance to the primary sector for example in relation to reduction of the use of antibiotics in connection with mastitis Promoting food safety via documentation, traceability and early warning systems In the combat of BSE, Salmonella etc., there is a need to develop and test different instruments

to reduce/eliminate infection sources, which could be applied by farmers, the food stuff business and the processing industry. Hygiene Optimising cleaning and disinfection of food processing equipment Nutrition Consumers and the food industry have increased focus on high quality food with flavour and lowcontent of fat and sugar .T  here is a need to develop new approaches to production and processing combining research findings with practical experiences. VI. Illustrative case stories The three case stories are examples of completed innovative projects. Project title: “Poultry - Detection, Project Guidance and Control of  Camphylobacter Background Camphylobactor constitute a serious health risk for man and an economic burden for the food industry – especially for the producers of poultry. A retail chain (company), a poultry slaughterhouse and a research institution joined forces in a project to prevent camphylobactor in the future. They are determined to develop fast, efficient and safe methods to detect camphylobactor from stable to table in the poultry production. Objective On the basis of real time PCR (Polymerase Chain Reaction), the project partners aimed at the development of a fast and cheaper method, which could detect camphylobactor when testing the poultry and their faeces. The method would reduce the time spend on analysis from 3-5 days to a couple of hours (real time). At the same time the price would be reduced considerably. The method is oriented towards control of finished goods. The short time spend on analysis will make it possible to dismiss or retain polluted goods and thereby prevent  them ending up in the shops. Results of the project The equipment for analysis has been launched in full scale in the poultry slaughterhouse. The testing of the method have shown good results. In the nearest future the slaughterhouse will therefore implement the new method to control the production. The last phase of the project is expected to be completed by the end of May 2005. In addition, it should be mentioned that the method has been published in several international and national periodicals. Project title: “Combating pesticides – thermal precision weeding”   Background Today, several robot technologies to weed between rows of plants exist. The use of robot technology is meant to reduce the use of pesticides. None of the existing robots are able to weed between individual plants in a row.   Objective To overcome the limitations of existing robots a Danish enterprise initiated a project to develop, build and test a weed robot. A series of small burners are controlled by cameras, which makes it possible to weed between the individual plants in a row (ex. beets).

The robot is able to distinct between the plant and the weed due to the cameras. The distinction is based on three things; the difference in the shape of the form, the structure of the plant, and information on the expected distance between the plants.   Results of the project The first version of the robot is developed to recognise beets and is now being tested in fields with beets. The following step will be the development of software targeting many different types of crops. Especially carrot and onion growers would prosper greatly from such a tool. The weed robot has proven to be a good alternative to the use of pesticides and the market prospects are global. Project title: ”Snack carrots” Background The lack of exercise and an unhealthy diet are some of the main reasons for the increased overweight and obese in the European population. Therefore, it is in the interest of society to promote healthy snacks that can compete with snacks containing high levels of fat, salt or sugar. Inspired by the US a Danish supplier of convenience products wanted to produce delicate and crispy snack carrots that could be eaten directly from the packaging. The current available sorts were not suitable for the purpose.   Objective A collaboration between the Danish Agricultural Council’s Project Service and the supplier of convenience products was established. The project explored the cultivation of long, thin American carrot sorts under Danish climate conditions. Both organic and conventional cultivation methods were tested. Furthermore, new machinery for cleaning and rasping the carrots had to be developed. Result Today, the snack carrots are available everywhere in Danish retail shops. The supplier produce 400 tons/year and the success of the product has entailed new jobs in the rural district. The machinery was developed specifically to match the shape of the carrots that had the sweetest taste. Currently the producer is trying to obtain a HACCP certification to extend the market potential to neighbouring countries, who have shown great interest in the snack carrots. The three case stories described below are examples of innovative projects. Inclusion of a economic support mechanism to support projects of this kind within the rural development policy is essential for development and competitiveness of the agriculture- and food sector, rural development and employment.

ANNEX I Danish Text proposal on innovation under new regulation on rural development (submitted to all member states at the working group meeting 23. September 2004) New recitals A new recital 3a is added to the proposal: “In the coming years, the European food and agriculture sector will face increasing liberalisation of world trade, as well as globalisation . This will increase international pressure on the competitiveness of the sector, unless EU common policies provide opportunities for improved competitiveness. This is in line with the Lisbon Strategy to make Europe the most competitive area in the world.”      A new recital no 25a is added to the proposal: “Increased competitiveness in the food and agriculture sector in rural areas is closely connected to seeing production in the context of new global market demands and consumer priorities. For example, of major importance are food safety, documentation of production processes (“traceability”), animal welfare, new product development, environment and working environment. In order to meet these challenges, there is a need to develop innovative solutions which can be implemented throughout the entire production chain. Innovative efforts must develop usable instruments for the food and agricultural sector which can be applied within a relatively short time scale. Such efforts will require the development of partnerships with organisations and businesses that have the necessary knowledge and potential to carry through an innovative process related to the food and agriculture sector.” Amendment to Article no 4 In Art. 4 (a) “development” is added. New wording: ”improving the competitiveness of agriculture and forestry by means of support for development and restructuring”   Amendment to Article no 19 A new indent (ca) is added to Article no 19: “measures undertaken by operators, organisations or enterprises aimed at innovation and development related to the food and agriculture sector and which help to meet the objectives of the common agricultural policy.” A new Article no 31a A new Article no 31a is added to the proposal: “Subsection 3a Conditions for measure aimed at development and innovation 1.    Support provided for in Article 19 (ca), shall be granted for projects which: a)    concern the development of high quality products by developing new products, processes and technologies, or

b)   concern environmental aspects, food safety, animal welfare or working environment in the food and agricultural sector, or c)    concern the development of documentation systems and traceability d)   are related to products covered by Annex I to the Treaty, excluding  fishery products, and e)    respect the relevant Community standards. 2.    Support provided for in Article 19 ca. shall not be granted to projects connected with  research activities.”