Verbatim report of proceedings

Monday, 23 March 2009 - Strasbourg

21. Food prices in Europe (short presentation)

  President. – The next item is the report (A6-0094/2009) by Mrs Batzeli, on behalf of the Committee on Agriculture and Rural Development, on the Food prices in Europe (2008/2175(INI)).

  Katerina Batzeli, rapporteur. − (EL) Mr President, I should like to start by thanking the shadow rapporteurs in the Committee on Agriculture and Rural Development and the four jointly competent committees of the European Commission with which we collaborated in depth in order to produce this report.

Commissioner, I should like to start by asking a very simple question: when consumers go to supermarkets to buy milk or yoghurt, why do they buy it? For the milk and the yoghurt or for the bottle and the tub? I put this question to you because the perception and attitude have been skilfully conveyed to consumers that they are buying a foodstuff where the industry that processes it, markets it and transports it is now more important than the agricultural product, the raw material itself. About 15 years ago, agricultural produce accounted for approximately 50% of the final value of the product; today it does not exceed 20%.

Farmers, both arable and livestock, are now ‘anonymous' persons for consumers. Their bargaining power, on the question not only of the final price but also of the preservation of the qualitative and nutritional elements in the final product, lags behind the role which they should have.

We are not attempting to draw dividing lines, to classify the productive sectors in the supply chain, the farmers, manufacturers, wholesalers and retailers as ‘the good’, ‘the bad’ and ‘the ugly’, because I do not believe that we are living in a ‘Wild West’ society and economy; I believe that we are living in an economy based on the regulations of the internal market of the European Union, a market which provides opportunity for growth and competitiveness when it operates transparently, but which ousts or eliminates producers and economic activities when unfair and opaque functions penetrate it.

The question we therefore have to deal with here today and in the future has two aspects:

- firstly that of a rapprochement between consumers and producers through a quality policy in the food sector and by strengthening and jointly formulating ways of giving consumers more direct accessibility to productive agricultural areas and agricultural producers;

- secondly that of safeguarding – and I do not mean determining – the income of producers and consumers through a transparent pricing policy which will include mandatory arrangements for controlling and supervising intermediate productive sectors along the entire supply chain.

Obviously here we mainly mean the small and medium-sized enterprises at local and national level, as well as the large parent and subsidiary companies based in Europe and the workers, which must operate on the terms of a transparent internal market and not on the terms of economic offshoots such as cartels and oligopolies.

Today, therefore, where (among other things):

- real producer prices are falling dangerously;

- consumer prices are nearly five to ten times farm gate prices and, despite the reduction in inflation, consumer prices remain very high;

- the degree of concentration in the retail trade and in other processing companies has quadrupled over the last five years and the concentration will increase as a result of the economic crisis and the bankruptcy of small- and medium-sized and local enterprises, a state of affairs that will make negotiations between producers, companies and consumers ever more difficult;

- the malfunctions in the supply chain and its practices are evidently putting terms of healthy competition at risk,

it is absolutely vital for there to be a coordinated European plan and integrated interventions in the food sector, from the farm to the fork. It would not be an exaggeration if the Commission's next intervention after the regulation and supervision of the financial system were to be in the food sector which, moreover, is also directly linked to the speculative moves of the said sector.

Citizens have the impression that it is the supply chains, the manufacturing industry and the retail trade which regulate the housewife's shopping basket and not the income policy of the state and of the European Union.

I therefore believe that, in voting for the report by the Committee on Agriculture and waiting for the final proposals of the European Union on this matter, we shall address the perennial problems of the operation of the food market, which in turn must also operate impartially for the benefit of European citizens, European farmers and developing countries and create a sense of security in the laws of the market and the institutions.

  Louis Michel, Member of the Commission. – (FR) First of all, I would like to thank Mrs Batzeli and the members of the Committee on Agriculture and Rural Development, who drew up this report. We are discussing it at a time of major difficulties, at a crucial time for the European Union food supply chain.

As you all know, the recession has led to a sudden slowdown in activity in most economic sectors in the European Union. The agricultural sector has seen a real collapse in market prices, something which puts a serious question mark over farm incomes. The situation is particularly serious in sectors of high added value, such as meat and dairy products.

In this context, it is essential for the food supply chain to work effectively if we wish to mitigate the effects of the crisis on farm incomes and ensure that consumers enjoy food products at more modest prices. That is why the food supply chain and the issue of food prices remain at the forefront of the Commission’s concerns.

In addition, analysis of the structural factors leads us to fear a further escalation of prices of agricultural raw materials in the medium and long term. By improving the operation of the food supply chain, it ought to be possible in future to avoid such high rises in food prices and to curb the instability of consumer prices. I share most of the concerns raised in the report in relation to the need to improve the overall operation of the food supply chain. In particular, there is a need for increased transparency all along the chain, in order to offer consumers better information and to improve the way added value is shared out along the chain.

Since last year, the Commission has introduced a series of initiatives aimed at improving the operation of the food supply chain. As a result, the High Level Group on the Competitiveness of the Agro-Food Industry has just drawn up a set of strategic recommendations. In addition, a Green Paper on Agricultural Product Quality was presented last year.

In the communication on food prices adopted in December, the Commission also proposed, in the form of a road map, several solutions for improving the operation of the food supply chain in Europe. It is absolutely essential to make progress in the implementation of this road map. In particular we must make progress in the introduction of a permanent European Observatory on the food supply chain and food prices. By supplying reliable information on prices from one end of the chain to the other, we will be able to help combat the lack of transparency, whilst improving our understanding of how the chain operates.

We must also make progress in analysing how added value is shared out along the chain. I attach particular importance to this issue. As is recognised in the communication on food prices, imbalances between the negotiating power of agricultural producers and the rest of the chain are having a serious effect on producer margins in the agricultural sector. It goes without saying that an effort to bring clarity and understanding to the question of how added value is shared out would be a first step towards restoring the balance of negotiating power all along the chain. In this regard, it should be stressed that the competitiveness of the European Union’s food chain cannot be built to the detriment of some of its component parts. It is essential for food producers and retailers in the agro-food sector to be able to continue to rely on a sustainable, competitive agricultural production platform within the European Union.

I am convinced that once it has been fully implemented, the road map proposed by the Commission will allow us to answer most of the questions and concerns raised in Mrs Batzeli’s report.

  President. – The presentation is closed.

The vote will take place on Thursday, 26 March 2009.

Written Statements (Rule 142)

  Roselyne Lefrançois (PSE), in writing. – (FR) The report on which we must reach a decision on Thursday attempts to respond in practical terms to the difficulties of millions of our citizens who are suffering increased food prices.

In a context of decreased purchasing power in Europe, it was important that Parliament reach a decision on a problem for which the solutions are, nevertheless, known. In fact, the difference in prices between the beginning and the end of the food supply chain can be as high as a one to five ratio and, even if the liberals still refuse to admit it, the problems of the market need tackling to ensure reasonable prices for consumers and decent revenues for farmers. I myself have proposed that the importance of market-regulation instruments – more necessary than ever in the face of the crisis that we are going through – be reaffirmed in the text.

However, to ensure that ‘accessible price’ does not become another way of saying ‘poor-quality product’, I have also asked for the notion of incentives for organic sectors to be inserted into the report. It is desirable for consumers to be able to access quality products at reasonable prices, and this thanks to an ambitious policy of financial incentives aimed at this type of agricultural production.

  Maria Petre (PPE-DE), in writing. – (RO) Food prices have seen a very sharp rise recently. There are two reasons for this: firstly, the global agricultural and food product crisis and secondly, market concentration, which has increased from 21.7% in 1990 to over 70% at the moment.

The prices paid by consumers are on average five times higher than those paid to producers. Supermarket chains very often impose unfair conditions and make it difficult for farmers and small suppliers to access the market.

I support the European Commission’s idea of creating a European market monitoring system. I also support the idea of a European competition network.

The funds from the Rural Development Programme should provide larger allocations in favour of producers.

The idea of revamping the ‘local products’ concept and more effective support for traditional food markets are solutions which I strongly support.

  Theodor Dumitru Stolojan (PPE-DE), in writing. – (RO) I welcome the Batzeli report which highlights the large discrepancies between the prices of food products in supermarkets and the prices paid to producers. This is, unfortunately, the reality too in countries with a standard of living far below the European average, like Romania.

If we reject any proposal for price controls, we cannot then fail to notice that the supermarkets’ negotiating power is excessive in relation to the producers. This is also an area where we can take more firm action as part of the policy for protecting competition and consumers.