Brussels, 26/10/2009 (Agence Europe) - On Wednesday 28 October 2009, the European Commission will be adopting a report containing measures to improve the functioning of the food chain in Europe and eliminate some of the unfair contracts between players, which a high-ranking group of experts on the milk industry has been working on.
'The reaction of food processors and distributors to a decrease in agricultural commodity prices has been both slower and weaker than their reaction to their increase of 2007,' comments the Commission report on improvements in the food chain. 'This discrepancy has negative consequences for the food supply chain as it prevents consumers from benefitting from lower prices and curtails the recovery of agricultural commodity prices by reducing the demand for food products,' explains the Commission in its report. It adds that the discrepancy in food prices relates 'in part to structural weaknesses in the system, such as the number of intermediaries operating along the chain and the competitive structure at certain steps of the chain.' The Commission also detects what it describes as 'pervasive inequalities in the bargaining power between contracting parties contribute towards reducing both the speed and magnitude of price transmission along the chain. Such inefficiencies can exacerbate price volatility in agricultural commodity markets.'
The Commission also explains that there is strong competition in the agri-food industry and supermarkets. EU exports are losing market share in Brazil, Canada and Australia and big supermarket chains are not as high performance in the EU as in the United States.
The Commission fears that new hikes in food prices will occur as economic recovery sets in. It argues in its report that if the disfunctioning of the food chain is not rapidly corrected (lack of transparency, anti-competitive practices and unequal negotiating powers), then there is a danger of food prices paid by the consumer rising disproportionately.
The main measures recommended by the Commission are as follows: promoting sustainable, market-oriented contracts between stakeholders on the food chain, tackling unfair practices by drawing up EU rules, drafting standard contracts and developing a common EU approach within an EU network of competition authorities; drafting legislation to improve the functioning and transparent working of farm markets, along with mechanisms for monitoring, comparing and contrasting food prices; stepping up the fight against fragmentation of the Single Market by lifting territorial barriers to food supplies, speeding up the review of labelling rules and re-evaluating environmental and rules of origin legislation that can damage cross-border trade; and work to restructure and consolidate farming by encouraging the emergence of farmer organisations and the development of competitive SMEs. (L.C. trans fl)