A discussion on Friday 16 September between the agricultural markets task force and EU member state experts came up with ideas on how to strengthen the position of farmers in the food supply chain, even though this is a divisive issue among the member states (see EUROPE 11623 and 11627).
A summary of the discussion was published by the European Commission’s DG Agriculture on Thursday 22 September. Cees Veerman, chair of the task force which is due to submit its conclusions towards the end of the year, said that price volatility, affecting particularly the milk and dairy products sector, has to be examined together with price levels: price volatility can be attenuated by risk management instruments (futures markets, insurances, contracts) while price levels have to do more with competitiveness (at individual farmer or aggregate level) which can be improved by means of education and research, in his view.
Derogations to competition rules. The task force is looking at the prevention of unfair trading practices and at possibilities for broadening derogations from competition rules so as to enhance farmers’ position in the supply chain, Veerman said. The realisation of and support for cooperation in the milk sector, just as the support that can be provided in this area, is an essential element in task force deliberations, he said.
Member states’ reactions. The national experts underlined the need to improve how the food chain operates and to promote better integration of farmers through cooperatives or producer organisations. According to the summary of the discussion, they also suggested a dairy policy which should preserve market orientation while giving responses to increasing volatility, notably by developing risk management tools.
Public and private solutions. Most member state representatives expressed broad satisfaction on the functioning and effectiveness of the safety net in stabilising the market, although recent experiences have shown its limitations in supporting farm income. Others suggested coupling the availability of public intervention with production discipline. Exceptional measures, such as targeted aid, were praised by a number of member states.
Price volatility, speakers said, could be better tackled with risk management solutions, both of a private nature (forward contracting, long-term contracts, fixed price/margin contracts, creating reserves in profitable years and futures contracts) and public (income stabilisation tools, insurance schemes and mutual funds).
The 2012 milk package, which will be the subject of a Commission report at the end of this year, was regarded as an effective instrument to improve contractual relations but its potential is still to be fully exploited.
Transparency. Most member states felt that decoupled direct payments (where there is no connection with production) were an effective way to protect and stabilise farmers’ income. However, several member states which still use coupled aid (France, Portugal, Italy, Spain, et al) stressed their importance, notably in safeguarding milk production in most vulnerable areas.
Including a counter-cyclical component in decoupled payments was mentioned as a possible avenue for making them more effective. This is an option supported by the think tank Momagri, and France raised the possibility in a recent document on the future of the Common agricultural policy (see EUROPE 11614 and 11562).
The discussion noted that only a few member states had put price observatories in place. The Milk Market Observatory is regarded as a major improvement in terms of market transparency that could usefully be completed with information on the other steps of the milk supply chain, while any improvement should be wisely assessed so as to avoid excessive red tape. The Agriculture Council in December could debate the issue of strengthening farmers’ position on the food supply chain. (Original version in French by Lionel Changeur)