No quick and easy fix to food price issue, EU official admits

Haniotis: "The way markets work on paper and in reality are not the same." [Eduards Osis/Flickr]

This article is part of our special report Farmers under pressure.

There will be no easy solution to high food prices in Europe unless the supply chain is made transparent and farmers get organised to take a bigger slice of the market, a European Commission official has warned.

The way markets work on paper is different from reality, admitted Tasos Haniotis, a senior official at the European Commission’s agriculture directorate.

Speaking at EURACTIV earlier this week, Haniotis said that imperfections in the agri-food supply chain meant “price rises are always transferred to consumers” who end up bearing the cost.

“And when prices fall, producers suffer but the savings are not passed on to consumers,” said Haniotis, who is Director for Strategy and Policy Analysis at DG Agriculture.

Haniotis took part in a EURACTIV event on Tuesday (25 April), where agri-food stakeholders shared their views on how the post-2020 Common Agricultural Policy should look like in order to ensure farmers’ income as well as fair prices for consumers.

However, the official warned that no one should expect to see prices decrease until farmers get organised and greater transparency is instilled in the food supply chain.

“Unless farmers organise themselves better, they are not going to get a better share of the market,” he stressed, adding that consumers will also see a better price effect if they become more educated about the choices they make.

“The role of the CAP in addressing this issue is improving transparency and the better functioning of the market,” he stressed, adding that when it comes to quality, the CAP should make sure producers respect EU standards and allow consumers to make informed choices.

Regarding the next CAP, Haniotis said the core of the debate was to guarantee continued food security and turn current tensions into synergies. “There is a tension between the economy and the environment, subsidiarity and simplification, growth and jobs. They don’t always go together,” he remarked.

An imbalanced food supply chain

Angélique Delahaye, a French Les Républicains MEP from the European People’s Party (EPP) suggested four proposals that should be part of the future CAP.

Referring to her own-initiative report adopted last year, she said these included improving the food chain structure by helping farmers put their business into context, tackling unfair trading practices, reforming EU competition law and promoting coordination within the farming industry.

“As a farmer myself, I know the reality on the ground and I am convinced that farmers often suffer from a too-weak position in the food chain and should be more protected and get more benefits from the added value of their products,” Delahaye said.

For Pekka Pesonen, Secretary-General of the European farmers and agricultural cooperatives association (COPA-COGECA), farmers face increasing risks, ranging from weather events, climate change, volatile markets to even geopolitics.

“As a consequence of these risks, farmers have been facing, on the one hand, increasing levels of price volatility and on the other, reduced incomes,” he noted.

To address market volatility, Pesonen said new tools should be made available to farmers through a strong CAP with the same rules across the EU.

However, the current structure of the CAP should not be changed, Pesonen conceded. He suggested keeping the first and second pillars of the current CAP, as well as direct payments to farmers, saying that these are the best tools to help farmers manage risks and stabilise their incomes.

Spanish farmers say new CAP should provide dignity

Agri-food producers recognise the need to become competitive and sustainable. But they also need to deal with market volatility, price imbalances in the value chain, uncertainty generated by free trade agreements and Russia’s ban on EU imports. EURACTIV’s partner EFEAgro reports.

But Pesonen did stress the need to simplify the CAP, saying “its complexity stifles innovation and efficiency and is burdensome for farmers”.

“There is a clear imbalance of power in the food supply chain (that) leads frequently to unfair trading practices being applied against the weakest link of the chain—the farmers,” the head of COPA-COGECA said. “As long as unethical and unfair behaviour continues to lead to economic gains one will not have a fair, transparent and efficient food supply chain.”

As a result, COPA-COGECA supports the introduction of legislation at EU level to help reduce unfair trading practices, he emphasised.

Food quality: Europe’s strength

Christel Delberghe from EuroCommerce, an organisation representing retailers, said she understood the difficult situation farmers are faced with. However, she noted that the retail sector has taken measures to help them during the crisis, through direct financial support and promotional efforts.

“But the fact is that they buy little direct from farmers and retail prices have only a vague connection with what farmers get paid,” she said.

Citing milk as an example, she said less than 15% of production ends up on retailers’ shelves as drinking milk.

“Raising the price of drinking milk alone, therefore, has little impact on the price that milk producers actually get paid,” she pointed out.

Diplomat: Changing eating habits in new markets favour EU exports

A rising middle class in emerging markets, focused on food quality, bodes well for EU agri-exports, said Marc Vanheukelen, the European Union’s ambassador to the World Trade Organization (WTO). EURACTIV.com reports from Athens.

Quality food is Europe’s strength, Delberghe underlined, noting that the number of consumers willing to pay more for food that is organic, local or of a higher quality is growing.

“It’s Europe’s strength and is also retailers’ need to attract people to their stores,” she remarked.

EuroCommerce said it supports many of the recommendations for the future CAP, including a transparent, market-oriented agriculture policy as well as measures to strengthen farmers’ position in the food supply chain and address how market volatility affects farmers’ income.

“Retailers want a farming sector able to survive in the long term and they are ready to help by entering a positive dialogue,” Delberghe said. “Short-term populist remedies will not offer any sustainable solution.”

Educated consumers

For Geneviève Savigny, a campaigner with the European Coordination Via Campesina NGO, the notion that educated consumers can solve the food price issue is a falsehood.

“Regarding people who have low income, we tend to say that they have no education, which is not true. They know what is good for them and they just can’t afford it,” she said.

Savigny stressed that the CAP should not necessarily be export-driven and that there are now many new ways to reach consumers, such as community-supported agriculture.

“Does the CAP have to be driven by exports?” she asked. “Because in the Rome Treaty it says it is driven by the need for food security, and so we want to focus on the need of food security, stabilising markets, getting incomes for farmers while [keeping] rural areas and the countryside alive.”

Short food chains seen as answer to farmers' pay and product quality

Local markets, where farmers and producers sell directly to the consumer, have prospered across the EU in both rural and urban areas in recent years.

Savigny said Via Campesina members are all small-scale farmers who have direct contracts with consumers and do short sales or food processing on the farm as a way to get better added value.

“As a result, we actually get a better income, a better life, a better standard of living, but it comes with a lot of work. Really, it’s a very positive thing to be able to process and to sell your products directly on different, local markets,” she stressed.

Savigny underlined that consumers are ready to pay a higher price for a better quality product that is fresh and tasty, particularly when they know the producer.

“So there is also a social value, so to say, because they know you and it is a relationship of trust.” Savigny also stressed that this process leads to local economic growth as well as job creation and helps communities get organised.