Certfied seed, Farm saved seed or black seed.

- Status report EU28

Bert Scholte – Technical Director

Estonia, 26 November 2015

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GETTING TO KNOW US…

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Seminar - Estonia

26.11.2015

Agenda

1. ESA – Who we are

2. Seed production in the EU - Current situation and trends

3. Importance of innovation and plant breeding

4. EU Seed Marketing / Plant Breeders Rights - the legal framework

5. Certified Seed, FSS and black market – Farmers behavior

6. Royalty collection systems on FSS

7. Case studies: Sweden

8. Conclusions

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1. ESA – Who we are

SINGLE voice of the European seed industry

Represents the European seed industry via the European institutions and their representatives

European Commission

European Parliament

Council of Ministers

International Institutions (CPVO, ISTA, OECD, UPOV)

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1. ESA – Who we are

ESA's mission is to work for:

fair and proportionate regulation of the European seed industry

effective protection of intellectual property rights relating to plants and seeds

freedom of choice for customers (farmers, growers, industry, consumers) in supplying seeds as a result of innovative, diverse technologies and production methods

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1. ESA – Who we are

ESA Membership today

38 national seed associations (ESA Association Members)

40 direct company members (ESA Individual Members)

29 associate company members (ESA Associate Members)

ESA Association Members

ABO

ABV

AIC

AMSEM

ANSEME

APROSE

APVD

ASPM

ANOVE

ASSOSEMENTI

BDP

BSPB

CMSSA

CSA

DAPB

DHSA

DSTA

EEPES

FSTA

PdB

P.I.N.

Plantum NL

P.V.D.O

SAM

SAS

SASTAB

SAU

SEEMNLIIT

SEMZABEL

SS G.I.Z.

SSTA

Swiss Seed

TURKTED

UFS

VETOMAG

VDPUSÖ

ESA Individual Members

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ESA ASSOCIATION MEMBERS ESA INDIVIDUAL MEMBERS ESA ASSOCIATE MEMBERS

General Assembly

Board President Vice-President Treasurer Members at Large

Committee Chairs Section Chairs

CIPR CRLA

WGBR WGPH WG

Biotech

GS Board WG STAT

SCP

WG COMM

SFG SMA SOF

WGB

SPO SVO

WG FSS

WGRI

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1. ESA – Who we are

Item

Value EU seed market € 7 bn

Number of seed companies 7.200

Employment ca 52.000

Annual R&D Spending Up to 20% (of turnover)

R&D Stations 750

R&D Employees ca 12.500

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1. ESA – Who we are

SCP SFG SOF SMA SPO SVO SBE

Cereals Pulses

Fodder crops / Grasses

Oil / Fiber crops

Maize Potatoes Vegetables /

Ornamentals

Sugar beet

Associations 24 24 24 24 19 23 21

Countries 21 21 21 20 18 20 18

Members 2588 984 1107 1311 455 1211 167

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2. Seed production in the EU - Current situation and trends

Important factors Commodity price levels - low

Exchange rate $ - €

Production conditions 3rd countries

Import bans – politics

Revised Common Agricultural Policy (CAP)

Certified seed – FSS / black seed

Folkhard Isermeyer

World Acreage of Different Crops , 1971/73 – 2011/13

10/2015 Global Oilseed Production: Trends, Drivers, Competition

page 13

Pulses M

illio

n h

a

0

100

200

300

400

500

600

700

800

0

100

200

300

400

500

600

700

800

Numbers in the legend = percent change of acreage between 1971/73 and 2011/13 Source: FAOSTAT, own calculations

Grains

-15%

-25%

-52%

+53%

+21%

-32%

+1%

Sorghum

Millet

Others

Corn

Rice

Barley

Wheat

71

/73

81

/83

91

/93

01

/03

11

/13

Oil Crops

+164%

+71%

+6%

+426%

Olives

Cocos

Others

Palm Oil

176%

+24%

+285%

+223%

+1%

Sunflowers

Groundnnut

Rapeseed

Soybeans

Cotton 7

1/7

3

81

/83

91

/93

01

/03

11

/13

+30%

-2%

+32%

Beans

Peas

Others

71

/73

81

/83

91

/93

01

/03

11

/13

Roots & Tubers

-4%

+71%

+37%

Potatoes

Maniok

Others

71

/73

81

/83

91

/93

01

/03

11

/13

Sugar Crops

71

/73

81

/83

91

/93

01

/03

11

/13

Vegetable, Fruits, Nuts

+145%

+90%

+277%

Vegetable

Fruits

Nuts

71

/73

81

/83

91

/93

01

/03

11

/13

+136%

-39% Sugarbeet

Sugarcane

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Cereal production Area

(source: Coceral)

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2007 2015

EU 27 EU28

Total Cereals 55.6 million 57 million

Wheat (soft) 21.4 million 24.2 million

Barley 13.8 million 12.4 million

Rye 2.6 million 2.2 million

Oats 3.0 million 2.5 million

Triticale 2.5 million 2.7 million

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Maize production

19 million hectares in EU 28

- 9.4 million ha grain (83% feed, 15% starch, 2% semolina)

- 6 million ha silage

- 1 million ha: biogas

- 150.000 ha seed production

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Maize commodity price

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Maize seed availability EU 28 2016 (FNPSMS)

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1480

565

1300

70

375

440 210

105

130

575

150

800

35

150

125

70

330

40 25

20

Winter OSR EUROPE

TOTAL AREA PLANTINGS - Est. 15/16

50

-

15 -

20

15

PLANTINGS in ,000 ha

EU 28 - 5% 6,00 Mln ha CIS -31% 1,10 Mln ha Total -10% 7,10 Mln ha

% in comparison with Sowing Areas 14/15

UPDATE 2015-10-09 YD

Source: RAPOOL International

-

5

30

-

15

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Winter OSR EUROPE TOTAL AREA Sowings / Harvests

Winter Damage BALTICS

Winter Damage EAST

10

260

EU28 0,15 Mln ha = - 0,15 Mha

CIS 1,35 Mln ha = + 0,05 Mha

Total 1,50 Mln ha = - 0,10 Mha

UPDATE 2015-10-09 YD

Spring OSR EUROPE - PLANTINGS 2015

PLANTINGS in ,000 ha

5

3

15 + Rapa

870

45 30

50

15

120

Source: Official Stats + own estimates

5

2

5

10

3

Folkhard Isermeyer 10/2015 Global Oilseed Production: Trends, Drivers, Competition

page 21

World Prices of Plant Oil („G4“) and Crude Oil US-$/t, 1990 – 8/2015

End of year-Prices; 2015 end of August Sunflower oil: US Export Price

Soybean oil: Chicago Futures, first contract forward Palm oil: Malaysia Futures, first contract forward

Rapeseed oil: Crude, fob Rotterdam Crude Oil: Dubai fob, conversion: 7.3 bbl/mt

Source: World Bank (Pink Sheet), IMF/quandl.

Rapeseed oil

Soybean oil

Sunflower oil

Palm oil

Crude oil

US-

$/t

0

200

400

600

800

1000

1200

1400

1600

Sunflower > Rapeseed > Soybean > Palm

Crude oil = bottom line

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2. Seed production in the EU - Current situation and trends

Crop Commodity Seed area Remarks 2016 - ?

Cereals 57 million ha 320.000 ha Low prices / FSS 0 / -

Pulses 1 million ha 65.000 ha CAP +++

Maize 19 million ha 150.000 ha High stocks --

Oilseed rape 6 million ha 23.000 ha Neonics 0 / -

Sugar beet 1.5 million ha 5.500 ha Quota - 2017 0

Potato 1.6 million ha 110.000 ha Low prices / FSS 0

Fodder crops 72 millon ha 200.000 ha CAP 0 / +

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3. Importance of innovation and plant breeding

Annual R&D spending of seed industry EU Up to 20% ≥ € 1 bn

Value seed market EU € 7 bn

Farm gate value agricultural products EU > € 70 bn

Value processed agricultural products EU > € 700 bn

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3. Importance of innovation and plant breeding

Yield from 1 kg of seed at average seeding rates

Seminar Estonia

05.02.2015

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3. Importance of innovation and plant breeding

Breeding for yield increase: produce more from the same land in a sustainable manner

1940 – 1970: 50% yield increase based on genetics

1980 – : 90% yield increase based on genetics

Plant breeding is THE key technology for achieving sustainable intensification of (EU) farming!

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3. Importance of innovation and plant breeding

Breeding for resistance to biotic stresses

10.000s of resistant varieties to fungi, insects, viruses, bacteria, nematodes, etc.

disease resistance alone saves

- The environment (less spraying)

- 100 of millions of Euro/yr in crop protection products

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3. Importance of innovation and plant breeding

Breeding for resistance to abiotic stresses

• Plant Breeders focus on tolerance for:

Drought (90 million people affected/yr) Flood (106 million people affected /yr) Salt (900 million ha affected) Better nutrient uptake

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…. in a challenging environment

Plant breeding in the starting blocks World population to reach 9 to 10 billion by 2050 Food production must increase 2 to 3 times by 2050 Climate change threatens up to 20% of today’s productive land Water shortage, salination etc. may limit crop options Loss of productive land to housing etc. Societal demand to preserve currently unused land (forests) etc.

Challenges for plant breeding as key input technology

for a sustainable intensification of (European) farming

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Potential growth areas – Plant breeding

Bioenergy & Bioeconomy

nutrient and water use efficiency, bioremediation and soil improvement;

highly targeted biobased applications and to deliver specific ingredients;

Identification of new crops for the bioeconomy

Yield & resistance

remain key for all crop production, irrespective of final use(s)

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Competitiveness – Genetic gain (Yield)

80

90

100

110

120

130

140

1993

1998

2003

2008

80

90

100

110

120

130

140

1993

1998

2003

2008

rel. (93-95 = 100)

rel. (93-95 = 100)

EU 27 USA

Maize Maize

Wheat Wheat

Sugar beet

Sugar beet

Year

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Competitiveness – genetic gain (Yield)

Maize

- yield difference in tons per ha

Reasons - lack of investment - lack of access to new technologies

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3. Importance of innovation and plant breeding

- Making innovation reality

Legal frameworks

Policy Funding

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3. Importance of innovation and plant breeding

- Need for increased investments to develop

adapted varieties

Boost yields

Improved disease resistance

Improved quality traits

Different uses (bio-energy)

- Communication to farmers

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3. Importance of innovation and plant breeding

Royalty income (agricultural crops)

Certified seed

Farm saved seed – if no royalty collection

Black seed – No royalties

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4. EU Seed marketing – the legal framework

EU Seed Marketing Directives

- Marketing of Certified seed only!

Section SCP SFG SOF SMA SPO SVO SBE

Crops Cereals Pulses

Fodder crops / Grasses

Oil / Fiber crops

Maize Potatoes Vegetables / Ornamentals

Sugar beet

Council Directive

66/402 66/401 2002/57 66/402 2002/56 2002/55 2002/54

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Organic regulation and seed law, updates from Brussels

08.10.2015

News from Brussels

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EU Seed law-state of play

PRM relevant dates:

March 2014 – EP rejection of the PRM proposal

December 2014 COM announced withdrawal PRM proposal: confirmed in March 2015: http://europa.eu/rapid/press-release_IP-15-4567_en.htm

Technical adjustments needed to the current directives:

Plant pests classification – Regulated Quarantine Pest and Regulated Non-Quarantine Pests ( previous quality pests) both under Plant Health regulation

Equivalence – Extra – EU produced seeds

The Secretariat is in permanent contact with the COM:

Maintain pillars seed directives

Eventual shortcomings current legislation – Unique serial number

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EU Seed law-state of play

Commissioner Vytenis AndriukaitisHealth & Food Safety

First Vice-President Frans Timmermans Better Regulation

President Jean-Claude Juncker

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Organic farming proposal – CAs key points

CA 2 definition of organic plant breeding:

“….. It involves a holistic approach that respects natural crossing barriers and is based on fertile plants that can establish a viable relationship with the living soil…”

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Organic farming proposal – CAs key points

CA 8 exemptions of minimum requirements for heterogeneous material:

“…. For heterogeneous material made available for use in organic agriculture the directives…shall not apply”

SEED MARKETING DIRECTIVES

CA 15 organic basic seed and restrictions on techniques :

“….. the mother plant shall have been produced in accordance with this Regulation for at least one generation…. For the production of organically bred varieties, the varieties in question shall be bred and selected under organic conditions ..”

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Organic farming proposal – link with Seed law

Previous version of CAs DUS and VCU requirements not applicable for PRM made available for use in organic agriculture

Heterogeneous material

MEPs seem to support the rapporteur position, no Council amendments on marketing requirements or heterogeneous material. DG SANTE (COM) against but is DG AGRI responsible for this proposal

Possible effects:

Council supports EP position on heterogeneous material (see Council position on population, Art. 3.9a)

More pressure on the COM for a revision of the proposal

New COM proposal not positive need to give more to NGOs

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ESA lobbying activities on Organics

Alliance with farmers:

Common statement ESA and COPA –COGECA ESA_15.0471

Next steps:

MEPs, COM, and Perm. Rep. will receive ESA comments on the CAs before the vote

Trialogues – need to follow closely

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ESA lobbying activities on Organics

COM

The ESA Secretariat met with COM officials from DG Sante to warn them about EP proposals. DG AGRI was also informed about ESA position.

EP

The ESA Secretariat met with the MEPs involved or their staff members, rapporteur and shadow rapporteurs , and COMAGRI Secretariat. They received:

ESA position paper ESA_15.0049

Proposal for amendments, based on ESA position paper, ESA_15.0105.2

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4. EU Seed marketing – the legal framework

Plant Breeders Rights - UPOV 1991 Convention:

Art. 15(2): optional exception to the breeder’s right

- EU law:

Art. 14 of CPVR Regulation: ‘agricultural exemption’ Implementing rules in Regulation (EC) no. 1768/95

- National Plant Breeders Rights laws.

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4. EU Seed marketing - the legal framework

Justification of the ‘agricultural exemption’ in CPVR Reg.

Safeguarding agricultural production → still valid?

Cornerstones of the ‘agricultural exemption’

Safeguarding the legitimate interests of the breeder and the farmer

Obligation of farmers to provide information

Obligation of farmers to pay an equitable remuneration

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Discussions with farmers

CPVO WG FSS (2010) conclusions:

Legislator has to restore the balance

Information obligation

Small farmers (political concept, based on area)

Information to farmers on free varieties

R&D investment depends on effective enforcement rules and royalty collection systems

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4. FSS – the legal framework

Started in 2009 – Action Plan planned for September 2012

Delayed – cabinet did not take the commitment standstill until today

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4. FSS – the legal framework

Definition: Small farmer

According to the Implementing rules in Regulation (EC) no. 1768/95

- Cereals: 92 tons

- Potatoes: 185 tons

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4. FSS – the legal framework

Farm structure in the EU27 (Eurostat 2010)

Consequently: approx. 90% of the farmers are exempted farming approx. 20% of the total farm area!

Nr of farms (million)

Nr of farms (%)

Area (million ha)

Area ( %)

< 20 ha 10.5 million 87.5 39 22

>20 ha 1.5 million 12.5 133.5 78

Total 12 million 100 172.5 100

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4. FSS – the legal framework

Farm structure in the EU27 (Eurostat 2010)

MS Nr farmers < 5 ha 5<x<20 >20 ha

% > 20 ha

DE 371 84 120 167 45

EE 20 6 8 6 29

FR 527 130 101 296 56

IT 1680 1231 325 124 7

HU 626 560 42 24 4

PL 2391 1637 629 125 5

SE 72 11 27 34 47

UK 300 119 60 121 40

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5. Certified Seed, FSS and black market

Preliminary Results - ESA Survey 2015 – EU 28

Crop Coceral

2015 (million ha)

ESA Survey 2015 (million ha)

Coverage

Wheat -soft 24.2 18.6 77 %

-durum 2.6 1.9 73 %

Barley -winter 5.0 6.7 81 %

-spring 7.5 3.4 81 %

Rye 1.8 2.2 83 %

Oats 2.5 1.7 69 %

Triticale 2.5 2.6 104 %

Total 46 36.9 80 %

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5. Certified Seed, FSS and black market

Preliminary Results - ESA Survey 2005 (EU27) – 2015 (EU28)

Crop FSS seed

2015 (%)

Black seed 2015 (%)

Total 2015 (%)

FSS 2005 (%)

Wheat -soft 41 11 52 49

-durum 15 15 30 10

Barley -winter 34 17 51 42

-spring 34 6 40 56

Rye 36 19 55 77

Oats 36 32 68 71

Triticale 45 18 63 59

Total 37 15 52 52

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6. Royalty collection systems on FSS

Royalty collection on FSS use - Cereals

System in place

System started recently

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6. Royalty collection systems on FSS

Different approaches

Based on Single Farm Payment data: BE (potatoes), SE (*), SF

Agreements: BE, ES , UK

No agreements: CZ, DE,

Special: FR – wheat “Contribution voluntaire – obligatoire”

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6. Royalty collection systems on FSS

Different collection systems

National Seed Associations: Plantum (NL), BSPB (UK), Anove (ES), SVUF (SE)

Special companies: CZ (DRUVOD), DE (STV), HU, PL

Breeders: UK (oats , beans)

Special: FR - wheat (Cooperatives)

Involvement (indirect) National authorities: BE, ES, SE, SF

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7. Case study: The situation in Sweden

Why is it necessary to invest in variety development specifically for the Nordic

countries? Climatic changes

Geographic production limits

moves north.

… but day length unchanged…

Increased pressure from plant pathogens

Demand from the market changes – new and/or improved quality demands.

Vegetation period today

Expected consequences of increased temperature and changes in climatic

conditions Borderline for production of different crops

moves north. As a consequence plant pathogens will also have a more northerly infection range.

rust species

fusarium

….in other words… License fees and remuneration on FSS

is a low cost insurance premium to ensure plant breeding and variety development for future production

challenges

Seed price – the sum of different components

Production cost seed production

40%

Seed cleaning & processing

10% Seed

treatment & packaging

10%

Analysis & quality

control 5% Logistics etc.

20% Royalty 15%

The FSS-fee collection setup in Sweden

• An annual agreement between the farmers union, representing the growers and SVUF, representing the plant breeders and seed companies.

remuneration level in relation to the charged royalty fee on commercial seed

communication and control protocol

Remuneration level on FSS compared with the royalty fee

According to the agreement with the Farmers Union the remuneration level for FSS in Sweden is 70% of with the royalty level on certified seed

The FSS-fee collection arrangement in Sweden

• SVUF has access to address and acreage data of growers from the Single Payment Scheme register.

• Seed declaration forms and information sent to all farmers required to report their seed use.

‘small farmers’ exempt from the requirement to report and pay remuneration for farm saved seed.

Seed used in Sweden - 5 years

76% 70% 85%

70%

15% 21%

14%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Winterwheat

Spring wheatSpring barley Oat

'Brownbagging'

FSS

Cert.seed

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8. Conclusions (1)

Innovation and technology are key for agriculture

Research is fundamental –

but shouldn’t stay fundamental only…

Political role of science

Safeguard competitiveness of EU Agricultural production

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8. Conclusions (2)

Legal framework

- Plant Breeders Rights • EU: not likely to be improved

• National: Possibilities for more stringent rules

- EU Seed Marketing Legislation

• EU: Proposal Plant Reproductive Material (PRM) rejected

• Possibilities to improve individual Seed Marketing Directives

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8. Conclusions (3)

Royalty collection systems on FSS • Extensive experiences in 17 EU Member States

• Many different possibilities

Communication with farmers - Crucial

Bert Scholte ESA European Seed Association

Rue du Luxembourg 23 B 1000 Brussels

T. +32 (0)2 743 28 60

www.euroseeds.eu

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