REPORT on the fruit and vegetables sector since the 2007 reform
19.5.2015 - (2014/2147(INI))
Committee on Agriculture and Rural Development
Rapporteur: Nuno Melo
MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
on the fruit and vegetables sector since the 2007 reform
The European Parliament,
– having regard to the Commission report on the implementation of the provisions concerning producer organisations, operational funds and operational programmes in the fruit and vegetables sector since the 2007 reform (COM(2014)0112),
– having regard to the Council conclusions of 16 June 2014 on the aforementioned Commission report,
– having regard to Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products[1],
– having regard to its resolution of 11 March 2014 on the future of Europe’s horticulture sector – strategies for growth[2],
– having regard to the study entitled ‘The EU fruit and vegetables sector: Overview and post 2013 CAP perspective’, carried out under the auspices of the European Parliament in 2011,
– having regard to the two studies entitled ‘Towards new rules for the EU’s fruit and vegetables sector’, which were carried out by the Assemblée des Régions Européennes Légumières et Horticoles (AREFLH) and the University of Wageningen respectively for a European Parliament workshop held on 22 January 2015,
– having regard to the Commission communication on tackling unfair trading practices in the business-to-business food supply chain (COM(2014)0472),
– having regard to the study entitled ʻComparative analysis of risk management tools supported by 2014 (US) Farm Bill and the CAP 2014-2020’, which was carried out under the auspices of the European Parliament in 2014,
– having regard to Rule 52 of its Rules of Procedure,
– having regard to the report of the Committee on Agriculture and Rural Development and the opinion of the Committee on Budgetary Control (A8-0170/2015),
A. whereas since the 1990s Union policy for the fruit and vegetable sector has been centred on strengthening the role of producer organisations (POs);
B. whereas the 2007 reform aimed to strengthen the fruit and vegetable producer organisations (POs) by providing a wider range of tools to make it possible, among other measures, to prevent and manage market risks, as well as enhancing and concentrating supply, improving quality and competitiveness, adapting supply to match the market, and providing technical support for environment-friendly production;
C. whereas producer organisations are subject to a number of restrictions compared to private commercial firms, such as restrictions on the use of investments relating to the revenue structure or the need to sell;
D. whereas it is essential to support the fruit and vegetable sector throughout the entire territory of the Union, given its importance in terms of added value and employment, and given the health benefits that it presents through healthy and balanced diets;
E. whereas Union support for POs and for associations of producer organisations (APOs) is aimed at strengthening the competitiveness of the sector, supporting innovation, increasing productivity, enhancing promotion, improving the bargaining position of farmers and restoring balance in the food supply chain, whilst also integrating environmental concerns in the production and marketing of fruit and vegetables and giving due consideration to the situation of individual producers;
F. whereas incentives were created to encourage mergers between POs and between associations of producer organisations (APOs), as well as transnational cooperation, in order to develop the bargaining power of POs in the distribution chain;
G. whereas, at EU-level, the majority of fruit and vegetable producers are small or medium-sized holdings;
H. whereas, according to a 2011 study on the fruit and vegetable (F&V) regime carried out for the European Parliament, POs should be encouraged since ‘collective action at producer level and effective coordination within the chain appear to be pre-conditions for any successful strategy in coping with declining relative producer prices’;
I. whereas POs and APOs in the fruit and vegetable sector may set up an operational fund to finance operational programmes approved by the Member States;
J. whereas such funds are financed by contributions from the PO’s members or the PO itself and by EU financial assistance, and this cofinancing fosters commitment on the part of beneficiaries and helps ensure that they make good use of the assistance, as well as having a multiplier effect;
K. whereas financial support under the old common agricultural policy (CAP) for the investments of newly established F&V POs, ceased by the reform of 2013, was of crucial importance, especially in the central, eastern and southern European Member States, overseas territories and islands;
L. noting:
(a) the increase in the organisation rate, the share of the total value of EU fruit and vegetable production marketed by POs and APOs in 2010 being about 43 % (34 % in 2004);
(b) the improved attractiveness of POs, the share of total fruit and vegetable producers that are members of POs having increased from 10.4 % in 2004 to 16.5 % in 2010; and
(c) the increased attractiveness of APOs as demonstrated by the rapid rise in the number of APOs, coupled with the substantial increase in the number and share of POs that are members of APOs;
M. whereas these figures for the Union as a whole are averages reflecting highly divergent situations between Member States – or even markedly different situations within individual Member States; whereas these situations, which reflect different starting points in the drive towards setting up POs, are attributable to historical factors based on the greater or lesser degree of willingness shown by farmers in setting up POs, to the structure of agricultural holdings, to different market conditions and administrative barriers, to the inadequacy of the support currently being provided and also to the fact that in many Member States this sector is dominated by small producers;
N. whereas the public consultation on policy options and their impact assessment, carried out by the Commission between 4 June and 9 September 2012, concerning the review of the EU regime for the fruit and vegetable sector, reveals that the majority of respondents are in favour of the regime continuing, subject to some specific refinements;
O. whereas the regions in which producers have achieved the highest levels of competitiveness, profitability, internationalisation, quality, and environmental sustainability are those in which the degree of organisation of production is the highest;
P. whereas the organisation rate among producers remains low on average and considerably below the EU average in certain Member States, although this general assertion is subject to qualification depending on the degree of modernisation of the production and marketing of each area; whereas the suspension and de-recognition of POs, which causes uncertainty among producers, is a factor that contributes to the low average;
Q. whereas, although national financial aid (Regulation (EU) No 1308/2013) has been an important financial instrument in terms of concentrating supply, there is a need to enhance its effectiveness;
R. whereas the role played by POs in opening up new markets, promoting consumption or investing in innovation has a very positive impact on the F&V sector as a whole;
S. whereas, in the EU, the F&V sector accounts for 18 % of the total value of agricultural production, uses only 3 % of the cultivated land and is worth more than EUR 50 billion;
T. whereas the F&V supply chain has an estimated turnover of more than EUR 120 billion, with approximately 550 000 employees and acts as an economic multiplier at European level, stimulating both demand and the creation of added value in other economic sectors;
U. whereas the total EU agricultural area cropped with F&V fell by 6 % between 2003 and 2010, indicating that farmers have switched to other crops or, in many cases, have given up farming; whereas, according to the 2015 AREFLH study, this decline was greater in southern Europe than in northern Europe;
V. whereas the volume of fruit and vegetable production has also fallen in recent years, whilst its value has tended to remain stable in real terms, reaching EUR 48.25 billion in 2012, despite which it has not been able to offer farm gate prices in line with production costs and wages;
W. whereas the deficit in consumption represents a major problem for the fruit and vegetable sectors, with the last few years having witnessed a loss of production; recalling the data from Freshfel Europe which indicate that consumption of fresh fruit and vegetables in the EU-28 stood at 387 g a day per capita in 2012, a decrease of 8.7 % as compared with the average for the 2007-11 period; whereas this decline seems to reflect long-term trends towards greater consumption of processed foods and the impact of the economic crisis;
X. whereas there are 22 million overweight children within the European Union, while adolescents are consuming on average just 30 % to 50 % of the recommended daily allowance of fruit and vegetables;
Y. whereas the World Health Organisation (WHO) recommends a minimum daily intake of 400 g of fruit and vegetables for the prevention of chronic diseases such as heart diseases, cancer, diabetes and obesity, the latter in particular among children; whereas, to date, only four EU Member States have met this recommendation;
Z. whereas in 2012 the EU had a trade deficit in F&V, largely due to the fact that it imports significantly more fruit than it exports, because of high production costs;
AA. whereas the 2015 AREFLH study points out that the EU market is relatively open to imports, whilst European exports face considerable tariff and non-tariff barriers in trading partners, which prevents exports from diversifying; whereas, although imports from third countries compete directly with similar EU products, the same environmental, food safety and social standards are not, in some instances, applied in their cultivation;
AB. whereas market crises occur frequently in the F&V sector since even small production surpluses can cause sharp falls in producer prices; whereas F&V are mostly perishable products and must therefore be sold quickly, leaving farmers in this sector in a structurally weak bargaining position vis-à-vis major retailers and processors;
AC. whereas the crisis caused by the Russian ban has had, and will in future have, significant negative effects on the F&V sector, with producers in this sector sustaining some of the greatest losses; whereas the importance of the existence of strong POs organised in such a way as to be able to collectively deal with unexpected and adverse situations must be underlined, supported by adequate Community instruments adapted to the severity of each crisis or, if necessary, by activating the exceptional measures envisaged in Regulation 1308/2014;
AD. whereas the Commission’s report recognises that the F&V regime’s crisis prevention instruments have been little used since the 2007 reform and that they have proven insufficient to mitigate the consequences of serious crises such as that of E. coli or the current one resulting from the Russian ban; whereas, in the majority of cases, apart from withdrawals from the market, they are administratively difficult to apply due to the unclear regulations in that respect;
AE. whereas the School Fruit Scheme, under which a number of local and seasonal fruits and vegetables are used, has attracted interest and been successful;
AF. whereas the possibility of making the repayment of capital and interest on loans taken out to finance crisis prevention and management measures eligible for EU financial aid has, under the operational programmes, been an important instrument for managing market uncertainty;
AG. whereas the Commission’s report identifies complexity of rules and lack of legal certainty as weaknesses of the current F&V regime; whereas Commissioner Hogan has committed himself to improving the regime in the first year of his term, taking into account cultural differences and contrasts in market realities between different Member States and the need to boost competitiveness and the innovative strength of the sector;
AH. whereas the University of Wageningen study concludes that diverging interpretations of EU implementing legislation have created legal uncertainty for national administrations and POs, resulting in an increased administrative burden and fear of risk taking and creating disincentives for the setting up of POs;
AI. whereas clear and predictable audit procedures are essential for the functioning of the F&V regime; whereas overlap in consecutive audits should be avoided and follow-up audits should not be carried out before clearance of accounts has given a definite decision on a previous audit, in order to ensure that Member States do not have to make larger corrections than are necessary;
AJ. whereas Regulation (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products has already taken account of a number of elements featuring in the Commission communication, and whereas the rules currently in place in the European Union need to be stabilised;
AK. whereas proportionality should play an essential part in reducing legal uncertainty within the F&V regime, ensuring that a PO as a whole is not prejudiced by the infringements of single offenders;
AL. whereas POs frequently encounter difficulties in finding and training managers with the necessary skills for carrying out commercial activities in the competitive environment of the agribusiness sector; whereas the Commission’s report states that spending on training and advisory services by POs has been low;
AM. whereas the farming population in the EU-28 is ageing rapidly and whereas, on average, there is only one farmer under 35 for every nine farmers over the age of 55;
1. Welcomes the Commission’s report, which provides a balanced picture of the evolution of the F&V regime since the 2007 reform, confirms the validity of the basic organisational structure for this sector and identifies areas where progress has been achieved, such as the increased concentration of POs that is improving the sector’s positioning in the food supply chain, whilst also referring to problems that persist;
2. Is of the opinion that support must compensate for the negative consequences – from the market point of view – of the restrictions imposed on producer organisations;
3. Welcomes the measures in the EU F&V regime which are intended to increase market orientation among EU growers, encourage innovation, promote F&V, increase growers’ competitiveness and improve marketing, product quality and the environmental aspects of production, through the provision of support to POs, PO associations and the recognition of inter-branch organisations, also promoting the formation of clusters that will generate new income streams, to be channelled into new investments;
4. Welcomes the fact that the new CAP retains the F&V regime, while acknowledging that existing instruments have not always been effective, as recognised by the Commission in its public consultation document entitled ‘A Review of the EU Regime for the Fruit and Vegetables Sector’, and therefore supports the work of the Newcastle Group aimed at improving the F&V regime, which should take account of the specific nature of the legal arrangements governing cooperatives in the Member States, so as not to limit the creation of new POs, while respecting the fact that growers may opt to remain outside the PO system;
5. Calls on the Commission to intensify efforts to tackle unfair trading practices (UTPs) in the food supply chain which negatively impact producer returns, depress incomes and threaten the viability and sustainability of the sector; considers that unfair trading practices and the pressure exerted on producers, whether or not they are associated, by the large retail chains, are the main obstacle to F&V farmers earning a decent income; points out that the weakness of their position is compounded by the fact that their products are perishable; considers that the problems cited, such as the abandonment of land or the ageing of the population of active farmers, will only disappear when the profits from production are sufficient to guarantee the future of the profession and attract young labour;
6. Invites the Commission to establish clear EU rules governing the principles of good practice in the food supply chain to ensure a common interpretation of the rules as regards unfair trading practices;
7. Invites the Commission to promote measures to encourage direct marketing of PO products; believes that direct marketing is an alternative to the large retail sector and its underlying values regarding the relationship to food, agriculture and the environment; considers that direct marketing prices are kept lower than large retail sector prices precisely because of the elimination of intermediaries and of the costs linked to logistics; considers, in this connection, that a shortening of the chain guarantees farmers a fair return and makes it possible to combat unfair trading practices;
8. Notes that many Member States have introduced measures to tackle UTPs and calls for an EU-coordinated response to strengthen the functioning of the internal market for agricultural produce;
9. Stresses the importance of maintaining European quality standards for fresh fruit and vegetable products in order to guarantee consistently high quality in the supply chain for the benefit of the final consumer;
10. Urges the Commission to clarify how it intends to apply Article 209(1) of Regulation (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, so as to promote more legal certainty on how to achieve the objectives set out in Article 39 of the TFEU, in strict compliance with Article 101 of the TFEU as regards competition;
11. Notes that the degree of organisation of the sector, as measured by the share of the total value of F&V production marketed by POs, has steadily increased in recent years in the Union as a whole, but that this increase can be attributed to only some of the Member States;
12. Emphasises that, despite this increase, the degree of organisation among producers remains low on average, and considerably below the EU average in certain Member States, and that addressing this problem is crucial for the future of the F&V regime, not least by alleviating significant regional imbalances; further emphasises that this low level of organisation is not helped by the complexity of PO rules which has resulted in the suspension and de-recognition of POs in some Member States; therefore calls on the Commission to reverse this decline by simplifying the scheme’s rules to make POs more attractive to join;
13. Points to the need to improve the organisation rate in the sector, bearing in mind that it is clearly higher in regions where production and marketing are more modernised and geared to export, while it is weakest in countries that have not had an opportunity to use operational funds for many years;
14. Considers it vital to contemplate putting instruments in place for managing crises, and the successful initiatives launched by certain POs in that respect need to be clearly identifiable so that they can be replicated elsewhere whenever it is possible; to this end, calls on the Commission to facilitate the awareness and knowledge of such pioneering POs;
15. Recalls that POs are tools that are made available to producers to help them collectively organise themselves on the market so that they can safeguard their income, and that POs are particularly useful in production areas that send their produce to consumer areas, but are not greatly used by certain producers or in certain local or niche markets;
16. Stresses in this context that it is important to increase the overall level of support to POs and to provide stronger incentives both for the merging of existing POs in APOs and the creation of new ones in both a national and international context, while calling for the investment of the aid provided to set up new POs to be monitored to ensure that it is effectively invested in ways that will increase the income of the member producers;
17. Considers it regrettable that, in certain Member States, the rate of organisation into POs is extremely low and recommends that Member States prioritise insisting on the promotion of the association of producers; calls on the Commission to analyse the particularities of those Member States where producer organisation is low;
18. Calls on the Commission in this context to restore financial support for the investments of newly established F&V POs; considers that, without this support, it is extremely difficult for the established organisations to obtain the state recognition needed for their operation; considers, therefore, that support is one of the most efficient tools to develop organisations and increase the rate of organisation;
19. Invites the Commission, as part of simplification of the CAP, to further strengthen the effectiveness of producer organisations in terms of concentrating supply, particularly as regards their central marketing role in the F&V supply chain;
20. Considers it essential to provide benefits for POs that decide to take young members; stresses that POs may provide an opportunity for promoting generational renewal in the agricultural sector;
21. Calls on the Commission to ensure the rapid and harmonised implementation of the provisions relating to fruit and vegetables on the one hand, and to producer organisations and interbranch organisations on the other, as defined in Regulation (EU) No 1308/2013;
22. Reiterates its deep concern at the fact that currently only 7.5 % of EU farmers are under 35 years of age and believes that well-functioning POs attracting young people can play a part in reversing this unsustainable demographic trend;
23. Notes the need to provide incentives to raise the level of research and innovation in POs; considers that more innovation will enable POs to become more competitive and able to deal with the killer diseases that are damaging European agriculture;
24. Stresses the need to help POs increase their exports and be involved in researching new foreign markets;
25. Considers it necessary to make producer organisations more attractive by reducing red tape and improving the support given to these groups by the European Union, as well as making improvements to crisis management mechanisms;
26. Urges the Commission, in its upcoming review of implementing legislation and as part of its ‘simplification’ agenda, to increase legal certainty for national administrations, POs and APOs and to reduce the administrative burden imposed on them; stresses that this review should not change the basic architecture of the fruit and vegetables regime or be detrimental to the interests or earnings of producers in the sector;
27. Notes with concern that PO rules are open to wide interpretation by the Commission’s auditors, which leads to a high degree of uncertainty and can leave Member States at risk of disallowance and judicial review; stresses, also, that audit procedures and financial corrections must be carried out in a more timely manner and within an agreed audit time period;
28. Asks the Commission to considerably reduce the processing period during which the compliance checks are carried out;
29. Asks the Commission, also with the aim of increasing the system’s legal certainty, to rationalise the controls and focus them on monitoring the actual execution of each action or measure that is approved as part of the operational programme as well as the cost allocated to them, clearly establishing what is being controlled and who is responsible for carrying out the control;
30. Asks the Commission to apply the principle of proportionality in relation to penalties and to ensure that audits are concluded within a set time limit in order to increase legal certainty for POs and their members;
31. Points out that the conditions for applying for the assistance regime and justifying applications are excessive and imprecise, and are subject to multiple checks by a range of administrative bodies that are often neither consistent nor precise, leading certain types of partners to abandon the regime and certain POs to decide not to submit operational programmes; considers it vital in this context to clarify the European legislation on the recognition of POs in order to guarantee the legal security of the regime and prevent uncertainty among producers;
32. Urges the Commission to clarify the rules for the establishment of transnational (associations of) POs and in particular the rules regarding responsibility and liability, in order to create legal certainty for the national administrations and POs involved;
33. Calls for the duties of interbranch organisations to be broadened, especially in the generic fields of communication and information and that of educating the citizen-consumer, in particular in relation to food;
34. Emphasises the role of interbranch organisations in improving the internal dialogue within a sector;
35. Is concerned that the largest POs (about 18 % of all POs with a turnover of more than EUR 20 million) receive about 70 % of EU financial assistance;
36. Considers that reducing complexity, including in the rules for creating new POs in a national and international context, should be the first step in making them more attractive for farmers, without that signifying a devaluation of the PO structure to the detriment of their ability to act effectively in the market; requests that the Commission identify additional measures for increasing the attractiveness of POs, in particular in Member States with a low level of organisation;
37. Calls on the Commission to apply the principle of proportionality with care, by ensuring that errors made by individuals are not recovered from all members of a PO;
38. Considers that any simplification of the recognition procedure should not be to the detriment of national regulations certifying the conditions required of F&V POs, such as those applied to cooperatives;
39. Calls on the Commission in its review of the fruit and vegetables regime to reduce the administrative burden for POs by abolishing mid-term evaluations carried out by national authorities; notes that these evaluations often duplicate the questions asked of national authorities in its annual reporting and provide no obvious benefit; further calls on the Commission, as part of its aim to cut red tape, to reduce the amount of information it requests from national authorities and POs in annual reports, and to ensure that only data which is actually used by the Commission to monitor the scheme’s effectiveness is collected;
40. Urges the Commission to revisit Delegated Regulation 499/2014 of 11 March 2014, which introduced more complex checks on POs, including disproportionate penalties for failing to meet complex recognition criteria; stresses the need for proportionality in relation to penalties if we are to encourage new growers to join the scheme and prevent existing members from rethinking their participation;
41. Considers that the competitiveness of POs depends greatly on their management; urges the Commission to develop existing actions or set up new ones, including training measures and initiatives for the exchange of good practices, which can improve the management of POs and their competitive position in the food supply chain and to ensure an enhanced role for market oriented behaviour within POs; stresses that POs should be managed by people with marketing skills who are capable of dealing with crisis situations in the agricultural sector;
42. Recommends that the Commission focus on PO-integrated production and distribution models, and calls on the local and regional authorities to make available logistics and outlet support for the products of POs in the regions;
43. Calls on the Commission to take the necessary steps to enable producer organisations to fully play their part as instruments for increasing the income of producers;
44. Invites the Commission to consider extending the provisions for funding crisis prevention and management measures (eligibility of the repayment of capital and interest on loans for financial aid) and also for achieving the other objectives pursued by the operational programmes of producer organisations and their associations;
45. Urges the Commission to create actions for the transfer of administrative and structural ‘know-how’ concerning the way in which POs are organised, from Member States with a high level of POs to those with a low level of POs;
46. Observes that environment-friendly practices must be continuously and rigorously pursued and that continuing to fund such practices from one operational programme to another must therefore be encouraged, and the scope of intervention expanded to include producers whose plots of land adjoin those farmed by members of a producer organisation;
47. Considers that associations of producer organisations (AOPs) could play an important role in increasing the bargaining power of farmers, and urges the Commission to reinforce incentives for setting up APOs, at both national and European levels, strengthening their capacity to act from a legal perspective, and provide for the possibility of bringing producers who are not members of POs under their umbrella, in order to envisage a greater role for them in the future; stresses that APOs are in a position not only to bring about the effective concentration and enhancement of supply, but also to evince greater efficiency in the management of interventions because of the coordination role they are called to play on the operational level;
48. Considers that interbranch organisations need to be encouraged in order to ensure better organisation of the fruit and vegetables sector; considers that such organisations can play an important role in creating added value and sharing it between the different parts of the sector, and also as regards quality, sustainable enhancement of production, and market and crisis management;
49. Considers that associations of producer organisations (APOs) could play an important role in anticipating and managing short-term crises; stresses the benefits of being able to have producers who are not members of POs join such associations voluntarily, in order to make the collective actions of producers even more efficient;
50. Stresses the importance of ensuring that the structure and functioning of POs and APOs are based on the principles of independence and democracy, in order to enhance mutual trust among producers and combat unfair trading practices and opportunistic behaviour;
51. Is adamant that third-country production methods for exports to the EU must provide European consumers with the same guarantees in terms of health, food safety, animal welfare, sustainable development and minimum social standards as those required of EU producers; considers that this means that, in any agreements signed with third countries, the EU must abide by a criterion of genuine reciprocity as regards access to the market and compliance with the production regulations governing EU producers;
52. Emphasises the need to make it easier for producers to gain access to third-country markets; calls on the Commission to increase its efforts to support exporters of fruit and vegetables to overcome the increasing number of non-tariff barriers, such as some third-country phytosanitary standards that make export from the EU difficult, if not impossible;
53. Is of the opinion that, in order to achieve fairer competition with imports to the Community market, and with a view to reciprocity in plant health standards, the EU should strengthen the import control regime to put it on an equal footing with that applied by the large majority of its trading partners;
54. Welcomes the new horizontal regulations for promoting agricultural products adopted recently and the objective of increasing the funds allocated to finding new markets mainly in third countries, and encourages the Commission to continue working to improve the promotion instrument in the coming years;
55. Urges the Commission to intensify its efforts in trade negotiations with third countries for the removal of the tariff and plant health barriers imposed on European productions, thereby making it possible to open up new markets for Community fruit and vegetables;
56. Urges the Commission to identify the reasons for the minimal take-up of crisis prevention and management (CPM) instruments (only 16 % of POs used this resource, which represented only 2.8 % of total aid), which are only adapted to coping with minor seasonal crises, and to consider how the situation can be improved, taking into account examples of best practice and experience among existing POs;
57. Asks the Commission always to use preference for local products as the first crisis management measurement in order to promote and protect the single European market and the consumption of Europe’s own products; suggests that the Commission should be closely preoccupied with risk management tools, which are absolutely necessary for ensuring the agricultural production of POs;
58. Urges the Commission to devise a better coordinated mechanism for market withdrawals in crisis situations, in order to prevent market crises from turning into serious and lengthy disturbances resulting in significant falls in income for F&V farmers;
59. Stresses that the use of the withdrawal mechanism has proved to be limited and considers that crisis management measures should be reviewed including by: increasing the percentage of Union financial assistance, adjusting the withdrawal prices, taking into account the production costs, increasing the volumes that can be withdrawn, and improving the support, in terms of transportation and packaging, for the free distribution of fruits and vegetables with a view to providing the flexibility to adapt support to the form and severity of each crisis;
60. Asks the Commission to consider making contributions to mutual funds eligible as CPM measures in order to provide better protection for farmers in case of market crises which cause substantial drops in income, but considers that these funds must never come from the budget item allocated to agriculture and rural development by the Commission when the crisis is caused by issues unconnected with the sector, such as the Russian ban; believes that, in such cases, the Commission should look for other budget items and allocate them to mitigating the negative effects on the F&V sector;
61. Considers that producers should not have to bear the cost of crises caused by circumstances that are unconnected with the agricultural sector, such as the Russian ban on EU exports, which has seriously affected many European F&V producers and has even worsened market crisis situations such as that experienced by the stone fruits sector; asks that in such circumstances Community support measures be kept in place for as long as necessary until the normal market situation is fully re-established;
62. Emphasises that, through their operational programmes, POs can make important contributions to achieving environmental goals and improving food safety standards; welcomes the scheme’s environmental objectives but calls on the Commission to allow POs to adapt their operational programmes to suit their level of maturity as well as to target their funds on a broader range of measures aimed at increasing the sector’s overall competitiveness; stresses that a greater focus on measures aimed at innovation and added value has the most potential to improve producer incomes and thereby make POs more attractive to join;
63. Urges the Commission to reinforce the aid scheme in place for distributing fruit, vegetables and milk in schools, given the importance of promoting healthy and balanced diets from a very young age, and to bring young consumers closer to local producers;
64. Considers it crucial to improve the effectiveness of the Community regulations currently in place for protecting plants against the introduction of harmful organisms originating from outside the EU; points out that such organisms are becoming increasingly common in the EU due to rising levels of trade and are very often having a detrimental effect on the fruit and vegetables sector;
65. Considers that, as in other sectors (such as olive growing), producer organisations could be given a role in guaranteeing and coordinating the complementarity and coherence of the various EU support regimes, thus ensuring greater transparency of the system to prevent cases of double funding;
66. Urges the Commission to establish guidelines or policy rules clarifying the conditions under which POs can be temporarily granted a derogation from Article 101(1) of the TFEU on the basis of Article 222[3] which provides POs with an opportunity to take measures in order to stabilise the sector during periods of severely imbalanced markets;
67. Emphasises the importance of short supply chains and calls on the Commission and the Member States to encourage the development of local markets for the distribution of fruit and vegetables;
68. Urges the Commission to intensify research and monitoring in relation to the threat posed to fruit and vegetable production in the EU by invasive species such as spotted-winged drosophilia;
69. Deplores the following weaknesses identified in the setting-up of some national strategies: too large a number of objectives, lack of precise predefined targets for the different objectives, and in particular the very low operational effectiveness of crisis prevention and management instruments, in connection mainly with harvest insurance, promotion and communication and product withdrawal, chiefly because these must be financed to the detriment of other structural measures and aid for withdrawals is in many cases not sufficient, and also because of the considerable amount of red tape involved; deplores the fact that those instruments can cope only with individual market crises and are insufficient to manage large-scale crises such as the current one caused by the Russian embargo;
70. Sees a need to establish preventive measures to help POs understand and correctly calculate and use predefined performance indicators, and stresses that in many cases there is an excessive number of performance indicators, which makes the procedure extremely difficult for both POs and the administration; believes that in this context it would be much more useful to have fewer but more significant indicators;
71. Believes that encouraging healthier eating habits goes hand in hand with understanding more about farming and how food is produced and supports, in this context, the objective of strengthening the educational dimension of school vegetable, fruit and milk programmes and calls for the earliest possible adoption of the Regulation of the European Parliament and of the Council amending Regulation (EU) No 1308/2013 and Regulation (EU) No 1306/2013 as regards the support programme for supplying fruits and vegetables, bananas and milk in educational institutions; stresses, in this connection, the importance of POs’ participation in the school fruit scheme as a way to encourage a short supply chain and the consumption by children of local and seasonal fruit and vegetables;
72. Considers that the key to analysing the situation of the F&V production sector is the evolution of the income of the sector’s farmers and asks the Commission, therefore, to undertake a study focusing on this point in order to ascertain whether the measures adopted, such as the strengthening of POs, have really been effective;
73. Calls on the Commission to draw up an urgent youth employment plan for the agricultural sector to prevent the ageing of the profession and the consequent abandonment of land and production;
74. Instructs its President to forward this resolution to the Council and the Commission.
EXPLANATORY STATEMENT
1. The Evolution of the Fruit and Vegetables Regime and the 2007 Reform
The Common Agricultural Policy (CAP) has over the last 20 years scaled back its regulation of agricultural markets, allowing market forces to orient production. This general approach was specifically applied to the fruit and vegetables regime (hereafter ‘F&V regime’), where instruments such as export refunds or the fixing of minimum prices which processors were obliged to pay farmers for certain products were abandoned.
The Union has coupled this liberalisation process with a policy to strengthen producer organisations (POs), with the objective of empowering farmers to act to defend their interests, for instance by collectively selling their produce or in adding value to it through on-farm processing.
The CAP therefore provides financial support to POs which they use to implement ‘operational programmes’. Producer organisations use such programmes to pursue a variety of objectives, tailored to their specific situation, for instance investing in marketing campaigns or in training activities. The objectives of operational programmes are set out in broad terms in the Single CMO Regulation (Regulation 1308/2013).
The 2007 Reform of the F&V regime confirmed and extended the policy of strengthening the role of POs and associations of producer organisations (APOs). In recent years, the EU has increased its volume of funding for operational programmes. Under the Single CMO Regulation, the general rule is that the EU and producer organisations each provide 50% of the money for operational funds, as equal partners. Union financial assistance is however generally limited to 4.1% of the value of marketed production of the PO concerned.
The F&V regime also includes environmental obligations. Regulation 1308/2013 establishes that at least 10% of the budget of operational programmes must be dedicated to environmental actions. It also contains procedures for following up on policy implementation, obliging Member States (MS) to establish a “national strategy for operational programmes”, including a “national framework for environmental actions” (NEF).
It is important to bear in mind that CAP support for this sector, whilst important, remains modest - accounting for around 1.5% of the total value of EU production (according to 2012 Commission data). This figure relates to funding directly made available to POs.
2. The Commission’s March 2014 report on the F&V sector since the 2007 reform [COM(2014)112 final]
Under Article 184 of Regulation 1234/2007 the Commission was asked to draw up a report on the implementation of the new rules of the F&V regime resulting from the 2007 Reform, namely as regards POs, operational funds and operational programmes. It accordingly published its report in March 2014.
The rapporteur considers that the report, which is largely factual, draw ups a balanced picture of the situation in the F&V sector, identifying areas where progress has been made whilst also noting certain problems that persist. The data it contains are mostly from 2010 and are therefore of limited use for analysing the effects of the 2007 Reform, which was only implemented in 2008-9. The report therefore does not attempt to evaluate the reform or develop ideas for the future. Nevertheless it contains some findings worth mentioning:
• From 2004-10 there was a 6% decline in agricultural area used for F&V production in the EU;
• The share of the total value of F&V production marketed by POs, known as ‘the rate of organisation’, increased to 43% in 2010 for the EU-28 (from 31% in 2004). There are still very large differences in the rate of organisation between MS;
• Total EU financial assistance to the sector increased from around 380 million EUR a year in 2004 to 671 million EUR in 2010 (in current prices not adjusted for inflation);
• The use of crisis prevention and management (CPM) instruments was low;
• Spending on training and advisory services or for research and experimental production was even lower;
• In some MS, operational programmes achieved little in boosting the commercial value of products due to the low bargaining power of POs in the distribution chain;
• The rules in place made little contribution to achieving some environmental objectives such as landscape preservation, climate change mitigation, preserving air quality and reducing waste production.
To complete this picture, the rapporteur would make the following observations:
• The long-term decline in F&V consumption in the EU has continued in recent years and has probably been intensified by the economic crisis (the draft report provide figures);
• The EU has a trade deficit in F&V, particularly as regards fruit, and has moved to open its market in recent years.
3. The Rapporteur’s Position
The rapporteur considers that the increase in the rate of organisation in almost all EU Member States in recent years indicates that EU policy to promote the creation and development of POs has met with some success. The very large differences in the organisation rate between Member States reflect different starting positions in the drive towards the creation of POs and therefore cannot be attributed to a failure of policy.
The rapporteur believes that increasing the organisation rate across the Union should continue to be a priority for the F&V regime. Therefore incentives for creating POs and APOs, and for carrying out mergers between them, need to be strengthened. It is important to find ways of making belonging to a PO more attractive.
The Commission’s report and a University of Wageningen study presented at the European Parliament (EP) in January 2015 indicate that the current F&V regime is too complex and lacks legal certainty. That lack of legal certainty is a significant obstacle to increasing the rate of organisation since farmers creating a PO that later has its recognition reversed or questioned can theoretically be asked to pay back EU funding out of their own pockets.
The rapporteur therefore considers that reducing complexity and uncertainty should be a first step in making POs more attractive. He welcomes Commissioner Hogan’s commitment to simplifying the F&V regime.
The draft report argues that it is important to focus more attention on improving the management of POs. The rapporteur has found in direct contacts with producer organisations that many lack qualified managers with the skills and knowledge to operate in an agribusiness sector which is competitive and international. He therefore believes that more EU funding needs to be made available for improving the ‘human capital’ of POs. It goes without saying that it is up to POs themselves to decide on their own priorities and needs.
There seems to be a consensus that crisis prevention and management (CPM) instruments are not being sufficiently used. This is a worrying a situation, given that market crises are a regular feature of F&V production, since even small increases in production, due to favourable weather conditions for instance, can cause large falls in prices. Fruit and vegetables are mostly perishable products, leaving farmers in a particularly vulnerable negotiating position vis-à-vis wholesalers or retailers when market conditions are unfavourable. Since such crises are recurring, the draft report asks the Commission to consider making contributions to mutual funds eligible as CPM measures, to help farmers protect themselves against large drops in income. Crises can arise not only due to market conditions but also, less frequently perhaps, from sanitary problems (such as the 2011 E. coli crisis) and political tensions (the current Russian ban).
The rapporteur calls on the Commission to intensify its efforts to protect farmers from unfair trading practices by large retailers. There seems to be little point in investing resources in strengthening and creating POs - a slow and difficult process - if negotiating power in the food supply chain remains highly concentrated in retailers’ hands. Moreover, given that many MS are taking national measures to deal with such problems, some Union level coordination is needed to ensure the proper functioning of the internal market. In any event, this issue will be dealt with more fully by the EP in a report to be prepared by the Committee on the Internal Market and Consumer Protection (IMCO) over coming weeks.
OPINION of the Committee on Budgetary Control (11.3.2015)
for the Committee on Agriculture and Rural Development
on the fruit and vegetables sector since the 2007 reform
(2014/2147(INI))
Draftswoman: Julia Pitera
SUGGESTIONS
The Committee on Budgetary Control calls on the Committee on Agriculture and Rural Development, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:
– having regard to the report from the Commission to the European Parliament and the Council on the implementation of the provisions concerning producer organisations, operational funds and operational programmes in the fruit and vegetables sector since the 2007 reform (COM(2014)0112),
– having regard to Article 18(4) of Council Regulation No 1234/2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products[1],
A. whereas the 2007 reform aimed to strengthen the fruit and vegetable producer organisations (POs) by providing a wider range of tools to make it possible, among other measures, to prevent and manage market risks, as well as enhancing and concentrating supply, improving quality and competitiveness, adapting supply to match the market, and providing technical support for environment-friendly production;
B. whereas incentives were created to encourage mergers between POs and between associations of producer organisations (APOs), as well as transnational cooperation, in order to develop the bargaining power of POs in the distribution chain;
C. whereas POs in the fruit and vegetable sector may set up an operational fund to finance operational programmes approved by the Member States;
D. whereas those funds are financed by contributions from the PO’s members or the PO itself and by EU financial assistance, and this cofinancing fosters commitment on the part of beneficiaries and helps ensure that they make good use of the assistance, as well as having a multiplier effect;
E. whereas in certain regions transitional support may be given to encourage producers who wish to acquire the status of POs in order to form producer groups, and whereas this funding may be partially reimbursed by the EU and ceases once the producer group is recognised as a PO;
1. Points out that the public consultation on policy options and the impact assessment thereof in connection with the review of the EU regime for the fruit and vegetable sector carried out by the Commission from 4 June 2012 to 9 September 2012 revealed a majority in favour of the continuation of the regime;
2. Notes that according to the data provided by the abovementioned report:
(a) there was a slight decline in 2003-2010 in the total EU area cropped with fruit and vegetables (– 6 %) and a sharper fall in the number of holdings with fruit and vegetables (– 39 %);
(b) there was a rise in the average area cropped with fruit and vegetables per holding;
(c) there was a small fall in the volume of fruit and vegetable production in the EU, i.e. a 3 % decrease in average fruit and vegetable production in 2008-2010 as compared with 2004-2006; and
(d) in the same period the average value of fruit and vegetable production at current prices rose slightly: + 6.5 %;
3. Welcomes:
(a) the increase in the organisation rate, the share of the total value of EU fruit and vegetable production marketed by POs and APOs in 2010 being about 43 % (34 % in 2004);
(b) the improved attractiveness of POs, the share of total fruit and vegetables producers that are members of POs having increased from 10.4 % in 2004 to 16.5 % in 2010; and
(c) the increased attractiveness of APOs as demonstrated by the rapid rise in the number of APOs, coupled with the substantial increase in the number and share of POs that are members of APOs;
4. Regrets the fact that the organisation rate remains low in several Member States, with POs that are small in terms of both the number of producer members and the total value of market production, and that most producers, in particular in some southern Member States and some Member States that joined the EU in 2004 and later, are excluded from the direct benefits of the EU regime for the fruit and vegetable sector;
5. Points to the need to improve the organisation rate in the sector, bearing in mind that it is clearly higher in regions where production and marketing are more modernised and geared to export, while it is weakest in countries that have not had an opportunity to use operational funds for many years;
6. Considers it necessary, therefore, to make producer organisations more attractive by reducing red tape and improving the support given to these groups by the European Union, as well as making improvements to crisis management mechanisms;
7. Points out that the conditions for applying for the assistance regime and justifying applications are excessive and imprecise, and are subject to multiple checks by a range of administrative bodies that are often neither consistent nor precise, leading certain types of partners to abandon the regime and certain POs to decide not to submit operational programmes; considers it vital in this context to clarify the European legislation on the recognition of POs in order to guarantee the legal security of the regime and prevent uncertainty among producers;
8. Stresses that the objective of reaching an average rate of 60 % by 2013 set in the 2007 reform was excessive and arbitrary, since it took no account of a range of significant factors, such as the entry of Eastern European countries and the need to adapt the features of the system to those countries;
9. Is concerned that the largest POs (about 18 % of all POs with a turnover of more than EUR 20 million) receive about 70 % of EU financial assistance;
10. Takes the view that the 2012 evaluation reports sent by BE, CY, CZ, DK, DE, ES, FR, HU, IT, NL, AT, PT and UK demonstrate the need to improve operational programmes in order to optimise production costs, stabilise producer prices and enhance the attractiveness of POs; points out that those programmes help to achieve some environmental objectives such as landscape preservation, climate change mitigation, preserving air, water, and soil quality and reducing waste production;
11. Deplores the following weaknesses identified in the setting-up of some national strategies: too large a number of objectives, lack of precise predefined targets for the different objectives, and in particular the very low operational effectiveness of crisis prevention and management instruments, in connection mainly with harvest insurance, promotion and communication and product withdrawal, chiefly because these must be financed to the detriment of other structural measures and aid for withdrawals is in many cases not sufficient, and also because of the considerable amount of red tape involved; deplores the fact that those instruments can cope only with individual market crises and are insufficient to manage large-scale crises such as the current one caused by the Russian embargo;
12. Sees a need to establish preventive measures to help POs understand and correctly calculate and use predefined performance indicators, and stresses that in many cases there is an excessive number of performance indicators, which makes the procedure extremely difficult for both POs and the administration; believes that in this context it would be much more useful to have fewer but more significant indicators;
13. Regrets the fact that the Commission avoided reporting on the weaknesses in the control systems regarding POs and operational programmes, and emphasises that in its annual report 2013 the European Court of Auditors revealed shortcomings in granting recognition to producer groups in Poland;
14. Stresses that the Director-General of DG AGRI entered a reservation in the DG’s 2013 annual activity report as regards granting recognition to producer groups in Austria, the Netherlands, Poland and the UK; notes that it is estimated that up to 25 % of total expenditure might be at risk; considers it vital in this connection to verify whether the possible disqualification of a PO is due to incorrect recognition procedures on the part of the national authorities, which should lead to those authorities being disqualified on the grounds that they are failing to comply with the regime’s objectives, or whether it is due to a lack of clarity in the rules, in which case the rules should be clarified;
15. Points out that both the Russian embargo and the programme for emergency market measures for perishable fruit and vegetables adopted by the Commission in August and September 2014 confirm that an improvement in the crisis prevention and management instruments is absolutely necessary;
16. Asks the Commission to report on how the rule requiring that a minimum of 10 % be spent on environmental actions going beyond mandatory standards in each operational programme (or alternatively requiring that each programme include at least two such actions) has been implemented.
RESULT OF FINAL VOTE IN COMMITTEE
|
Date adopted |
24.2.2015 |
|
|
|
|
|
Result of final vote |
+: –: 0: |
25 2 0 |
|||
|
Members present for the final vote |
Nedzhmi Ali, Inés Ayala Sender, Zigmantas Balčytis, Ryszard Czarnecki, Dennis de Jong, Tamás Deutsch, Martina Dlabajová, Jens Geier, Ingeborg Gräßle, Rina Ronja Kari, Verónica Lope Fontagné, Fulvio Martusciello, Dan Nica, Gilles Pargneaux, Georgi Pirinski, Petri Sarvamaa, Bart Staes, Michael Theurer, Marco Valli, Derek Vaughan, Anders Primdahl Vistisen, Tomáš Zdechovský |
||||
|
Substitutes present for the final vote |
Karin Kadenbach, Marian-Jean Marinescu, Julia Pitera, Patricija Šulin |
||||
|
Substitutes under Rule 200(2) present for the final vote |
Judith Sargentini |
||||
- [1] OJ L 154, 17.6.2009, p. 1.
RESULT OF FINAL VOTE IN COMMITTEE
|
Date adopted |
5.5.2015 |
|
|
|
|
|
Result of final vote |
+: –: 0: |
37 0 6 |
|||
|
Members present for the final vote |
Clara Eugenia Aguilera García, Eric Andrieu, José Bové, Paul Brannen, Daniel Buda, Nicola Caputo, Matt Carthy, Viorica Dăncilă, Michel Dantin, Paolo De Castro, Albert Deß, Herbert Dorfmann, Norbert Erdős, Edouard Ferrand, Luke Ming Flanagan, Beata Gosiewska, Martin Häusling, Anja Hazekamp, Esther Herranz García, Jan Huitema, Jarosław Kalinowski, Elisabeth Köstinger, Zbigniew Kuźmiuk, Philippe Loiseau, Mairead McGuinness, Nuno Melo, Giulia Moi, Ulrike Müller, James Nicholson, Marit Paulsen, Marijana Petir, Laurenţiu Rebega, Jens Rohde, Bronis Ropė, Jordi Sebastià, Lidia Senra Rodríguez, Czesław Adam Siekierski, Marc Tarabella, Marco Zullo |
||||
|
Substitutes present for the final vote |
Bas Belder, Franc Bogovič, Jens Gieseke, Momchil Nekov, Sofia Ribeiro |
||||
|
Substitutes under Rule 200(2) present for the final vote |
Stanisław Ożóg, Marco Valli, Ángela Vallina |
||||