Memorandum submitted by the Consumers'
1. Consumers' Association (CA), publisher
of Which?, Health Which? and other consumer magazines and
information, is the largest independent consumer organisation
in Europe. Food issues are one of our main campaigning areas and
we regularly produce information on food issues within our publications.
At European level, we are members of Bureau Européen des
Unions de Consommateurs (BEUC), the European Consumer Organisation.
At international level we are members of Consumers International
through which we have representation at Codex Alimentarius.
2. Our memorandum sets out our concerns
with the current approach to agriculture, based on subsidisation
of production, and the problems that this has created. We will
be examining these issues in more detail in a forthcoming policy
report which will be sent to the Committee when it becomes available.
3. The current UK and EU approach to agriculture
is unsustainableit works against the interests of consumers,
has also failed to help many farmers, and has failed to give sufficient
acknowledgement to considerations such as food safety, quality
and environmental protection. The problems have been highlighted
by the Bovine Spongiform Encephalopathy (BSE) and foot and mouth
disease (FMD) crises in particular. The prospects for agricultural
production subsidies and quotas need to be seen in this context.
4. A new approach and emphasis are needed.
The proposed review of certain aspects of the EU's Common Agricultural
Policy (CAP) next year and the new round of trade discussions
provide an opportunity to re-shape food and farming policy. A
policy is needed that is focused on the needs of consumers, the
countryside, sustainable agriculture, rural communities and the
5. The establishment of the Department of
Environment, Food and Rural Affairs, together with the Food Standards
Agency should provide the opportunity for a different emphasis
within the UK. However, any reform has to be seen in the context
of the CAP. To date this has been mainly producer-focused and
has failed to sufficiently recognise consumers changing attitudes
and demands. Consumers expect to be able to have access to food
that is safe, nutritious, of good quality and affordable and to
be able to make healthy lifestyle and informed food choices. The
CAP has worked against these objectives.
6. Although the original aims of the CAP
to ensure sufficient and continuing supplies of produce, reasonable
prices, an efficient and productive agriculture industry and a
fair standard of living for the agricultural community are still
laudable, they fail to recognise changing expectations. Policies
under the CAP have been largely discredited and inadequate recognition
has been given to broader issues such as the CAP's influence on
intensive farming practices and its failure to give sufficient
acknowledgement to food safety, quality and environmental protection
7. The main criticisms of the CAP are that
keeps EU food prices higher than
prevailing prices elsewhere, and particularly hits low-income
families that spend a high proportion of their income on food;
is a substantial misallocation of
is inefficient and poor value for
taxpayers, with a significant level of fraud;
fails in many cases to provide adequate
is anti-competitive and distorts
is actually in some sectors (notably
sugar and dairy) a barrier to a single market;
hampers EU enlargement;
is an obstacle to world trade liberalisation;
damages producers in less-developed
countries by limiting their exports to us and by dumping surplus
EU produce in their markets;
encourages intensification and takes
only limited account of sustainability and environmental objectives;
fails to tackle issues of food quality
or to reflect animal welfare, health, diet or ethical considerations.
8. The policies of the CAP are complex and
opaque. It seeks to support farmers by keeping food prices higher
than they would be otherwise. Despite attempts at reform, this
is still the essence of the CAP. Put simply, the EU fixes minimum
prices for many farm products from within the EU. These prices
are guaranteed. This is ensured, for example by buying and storing
surplus foods (intervention) to stop prices falling. Cheaper imports
from outside the EU are made less competitive by the imposition
of import taxes that bring them up to EU prices. Exports by EU
producers to countries outside the EU require large subsidies
(export restitution or refunds) to make up the difference between
the EU price and their price. This means that EU prices are generally
higher than those on world markets.
9. Guaranteed minimum prices (support prices)
are set by the EU's Agriculture Council. The mechanisms which
Import quotas and taxesAlongside
the minimum price guarantee, the EU operates a system of Community
preference in agricultural products. Import quotas limit how much
non-EU countries can export to the Union. If prices on world markets
are below those prevailing in the EU, imports are taxed to ensure
that they cannot undercut EU-produced foodstuffs. If world prices
are higher than EU ones, imports are subsidised, but this very
rarely happens as world prices are usually well below EU levels.
produced in the EU are sold outside it. Because world prices for
nearly all products are usually considerably lower than EU ones,
food can only be exported if the EU pays a subsidy to reduce the
price of its produce. The EU much prefers to subsidise exports
than to dispose of the surpluses within the EU; subsidised EU
consumption could simply mean that home demand for the produce
at the full price would fall, creating yet more surpluses.
InterventionIf the price on
the EU open market falls below the guaranteed minimum price, farmers
and traders have the option to sell to EU agencies which take
the produce off the market, usually by putting it into store.
This is called intervention buying. The hope is to raise the market
price to at least the agreed minimum. If this happens, the stored
produce is gradually put back on the market for resale. If, however,
the market price remains at or below the guaranteed minimum, then
the produce has to be sold at a loss or remains in store.
Stock disposalIn addition,
surpluses may be disposed of within the EU, for animal feedstuff
production, or for the production of certain foods such as biscuits
and ice cream. There are also occasional distribution schemes
involving charities, hospitals and schools.
Removal from the marketIn
the past, removal meant official destruction of fruit and vegetables.
Criticism of this policy resulted in a shift by the Commission.
The EU now provides financial support to farmer co-operatives,
which may restrict the supply of produce to the market in order
to keep prices up. The former destruction policy has in effect
been privatised. The EU Consumer Committee has criticised
this use of public subsidies to create local monopolies.
ProcessingIn other cases the
EU insists that agricultural products are made into industrial
products. Wine, for example, may be converted into industrial
10. Initially, the CAP at least appeared
to be serving farming interests. However, the boom fuelled by
CAP support mechanisms and distortions produced by its agricultural
monetary system ended in the early 1990s. This was largely due
to the re-alignment of Sterling with other European currencies,
combined with the BSE epidemic and more recently the foot and
mouth disease outbreak. This has resulted in an income and confidence
crisis which has been mainly concentrated among the smaller and
more marginal farmers. The proportion of the EU's workforce employed
in agriculture has fallen from more than 21 per cent to less than
6 per cent while production levels have generally risen as a result
of increased use of inputs including advances in technology, increased
use of intensive farming methods, greater reliance on chemicals
such as pesticides and veterinary medicines and greater reliance
on machinery. The broader consequence of this focus on quantity
over qualify have not been effectively dealt with under the CAP.
11. We pay for the CAP both as consumers
and taxpayersso in effect pay twice for our food. The CAP
takes up around half of the total EU budgetin 1999 CAP
expenditure was around £27 billion. It has been estimated
that in terms of higher food prices and taxation, the CAP costs
an average family of four in the European Union around £16
per week. The current annual cost to UK taxpayers is around £5
billionthe equivalent of 2p on the standard rate of income
tax. Food is still more expensive in the 15 countries of the EU
than almost anywhere else in the world, but consumer choice is
limited by import barriers and more than
5 billion has to be spent each year on dumping surplus
dairy products, meat and grains on world markets. As low income
families spend a higher than average proportion of their income
on food, the CAP hits them the hardest.
12. We also pay for the negative impacts
that result from the CAPthe detrimental effect it has on
the environment for example and the cost of cleaning this up.
As the CAP also fails to recognise issues of food safety and has
no recognition of our nutritional needs within its objectives,
the long-term health costs also need to be considered. These are
very difficult to quantify, but one estimate has put the external
costs of UK agriculture for 1996 at £2,343 million.
Impact on farm incomes
13. The CAP has also failed in its objective
of ensuring a fair standard of living for the agricultural community.
As a consequence of reliance on support prices, in the main, rich
farmers have gained most from the CAP. This is because support
prices are paid to all producers regardless of need or efficiency.
Therefore larger, more efficient, lower-cost producers get considerable
amounts of support: around 70 per cent of EU farm support goes
to 30 per cent of farmers.
14. Certain groups of farmers have actually
been adversely affected by the CAP. Pig, poultry and egg producers,
for example, have suffered the consequences of artificially high
cereal prices, as have those who farm less intensively. A lot
of CAP spending also goes on subsidising and storing unwanted
food and there have been serious problems with fraud and error
when calculating payments due to their complexity. As price support
is fixed in euros, UK farmers have been particularly vulnerable
to exchange rate movements. CAP subsidies have also led to the
collapse of prices in some sectors through boosting production
as has been seen with sheep, where demand has not correspondingly
15. One of the concerns is therefore that
while we pay through the nose for the CAP, it offers consumers
no benefits and actually produces more of the food we don't want
and fails to recognise our changing food demands. The table below
gives an indication of how our tastes have changed over the years.
CONSUMPTION OF HOUSEHOLD FOODS 1942 TO 2000
(GRAMS PER WEEK PER PERSON UNLESS STATED)
|Milk and cream (ml)||2,137
|Meat and meat products||746
|Fish and fish products||187
|Source: National Food Survey, MAFF
16. Around one in three people will develop cancer at
some time in their life and death rates from coronary heart disease
in the UK are among the highest in the world. Official recommendations
have identified changes which could help to bring down these rates.
In the case of cancers, this includes an increase in fruit and
vegetable consumption, ensuring that consumption of red and processed
meat doesn't rise overall among the population, an increase in
fibre from a variety of food sources and a balanced diet rich
in cereals, fruit and vegetables. In the case of coronary heart
disease, measures include: reduced fat intake (particularly saturated
fat), reduced salt intake, increased carbohydrate intake and consumption
of at least five portions of fruit and vegetables a day. Given
the influence that the CAP has on food production, it is disappointing
that nutrition considerations have largely been ignored.
17. While the CAP could be regarded as having a positive
influence on healthy diets to the extent that it raises the price
of dairy produce, sugar and red meat, which some might regard
as desirable for health reasons, it also raises the price of bread,
fruit, vegetables and olive oil (through higher cereal prices
and import taxes) poultry meat. It also subsidises the consumption
of surplus EU butter by selling it to cake and biscuit manufacturers.
18. Under Article 152 of the EU Treaty, there is a requirement
that "a high level of human health protection shall be ensured
in the definition and implementation of all Community policies
and activities", but there is no evidence that health is
taken into account in the CAP at all.
Animal health and food safety
19. While it is not possible to make a direct link between
the CAP and food safety, it is clear that CAP has encouraged intensive
farming practices and that these have in turn contributed towards
food safety problems as demonstrated by BSE and FMD for example.
As Jacques Santer, when Commission President in a speech to the
European Parliament in 1997 stated: "Can we really go on
claiming that BSE is an accident of nature? Is it not actually
the consequence of a model of agricultural production, which pushes
productivity at whatever cost?" The increased use of pesticides
and veterinary medicines have also caused safety concerns for
consumersboth of which are key elements of intensive farming
methods. A CA survey in August 2001
asked about consumers concerns with modern farming practices.
The aspects which more than eight out of ten claimed were of concern
to them were: the use of drugs on animals, food safety problems
caused by modern methods of food production, animal welfare and
20. High support prices have encouraged agricultural
production, and therefore intensive farming practices. Although
some attempts have been made at integrating environmental goals
within the CAP, they have had little effect. Some of these initiatives
have suffered from inadequate resourcing, others such as the introduction
of set-aside were designed to limit production. But although set-aside
encourages farmers not to produce on part of their land, they
can still receive a subsidy which may encourage them to produce
more intensively on other land. Set-aside land may also be of
poor quality and of little environmental interest. The effect
of environmental measures has therefore been marginal. In its
last audit, the European Environment Agency stated that: "agriculture
remains a major source of pressure on the environment. It is becoming
even more intensive and specialised". It also argues that
farming "is the sector where the need to balance the dimensions
of sustainable development is most evident".
Impact on developing countries
21. The operation of the CAP also has wide-reaching implications
for many countries outside the EU. Many countries face tariff
barriers, such as quotas, against their produce. Subsidised EU
exports can also have a damaging effect. Hardest hit have been
those countries whose economies depend heavily on trade in one
or two agricultural products, and therefore mainly developing
countries. Some major sugar-producing countries have, for example,
suffered greatly as a result of the vast expansion of EU sugar
dumping, taking as much as one quarter of the world market. Although
it has been claimed that surpluses help to alleviate world food
shortages, European dumping and protectionism actually deter production
in the areas where hunger exists. Beef, for example, has been
sold in sub-Saharan Africa at one-third of the price of locally
produced beef, thus destroying the market for local farmers.
22. Reforms in 1992 and 1999 have failed to improve the
economic, social or financial efficiency of the CAP and the cost
is now over a third more in 2001 than it was in 1992, when the
most significant attempt at reform took place. There has been
some moderation in the inflationary effect of EU farm support
mechanisms for some foods, but high prices are maintained by excessive
import charges and quotas (for sugar, butter, bananas, bread wheat,
beef and fruit and vegetables) and by the continued dependence
on the intervention system, for dairy products and beef.
23. The MacSharry reforms in 1992 were aimed at switching
expenditure away from maintaining market prices towards direct
payments to farmers. This should have resulted in lower prices
for food producers and consumers, lower internal and export-subsidy
budget costs, and a reduction in trade-distorting influences.
Schemes were also introduced offering payments for non-production
objectives, such as environmental objectives. But these measures
did not apply across all CAP areas including the dairy sector,
and the sugar regime. Direct payments were introduced in the livestock
sector limiting the amount of EU subsidy based on herd and flock
numbers, but they were accompanied by only minor adjustment of
price support and market intervention and export subsidies still
continued. The main emphasis was on the cereal sector: the target
market price level was cut by almost a third between 1993-97 and
producers were compensated for this potential loss of income through
direct payments, provided that they agreed to set-aside an agreed
percentage of arable land.
24. The reforms had a very limited effect. Set-aside
only reduced production for a year for example and by 1996 the
wheat area was back to its 1991 level. Production actually increased
and at the same time, expenditure from the new subsidies increased
the cost of the CAPbut this was mainly going on direct
subsidies rather than export subsidies and market intervention.
25. The Agenda 2000 proposals promised a more radical
approach, however they served largely only to create a number
of concepts that continue to be used to defend the status quo.
These include the idea that there is a uniquely European model
of agriculture, that agriculture is "multifunctional"
and that maintaining the European model and its multifunctionality
requires the kind of measures included in the CAPsubsidies
and agriculture protection.
26. Our concern is that while there is no doubt that
agriculture is multifunctionaland can affect the surrounding
environment, landscape and rural economythe EU's assumption
is that these non-production aspects can only be achieved through
support for agricultural production. This ignores the detrimental
effects that the intensive model of farming that the CAP encourages
has on the environment, and the fact that agriculture is not the
primary source of income and employment in many rural areas. We
consider that it is more efficient and effective to provide these
rural benefits through specific policies rather than through subsidising
27. The outcome of the Agenda 2000 proposals was largely
a modest adjustment of the 1992 reforms in order to meet the increasing
pressure of trade commitments under the Uruguay Round Agreement
on Agriculture. These attempts at reform therefore did nothing
to reduce wholesale food prices, mainly because they didn't succeed
in reducing import charges or other barriers to food imports by
any significant amount, and the maintenance of intervention buying
and export subsidisation for major animal product foods. As a
result the burden on taxpayers has actually increased with a shift
towards direct compensation payments without any offsetting gains
in terms of tackling the strain which modern agriculture imposes
on the environment. The shift has also failed to help incomes
and employment in rural areas, and has left the larger farmers
as the major beneficiaries under the CAP. Given these failures,
far more radical change is necessary.
A NEW ROUND
28. The EU is particularly badly placed as it goes into
the new round of trade negotiations. Although most developed countries
subsidise and protect their agriculture, they don't do it as much
as the EU. While many countries are scaling down their subsidies,
the EU is seeking to defend its system on the grounds of subsidising
the "multifunctional" aspects of agriculture.
29. In the new trade round, the Cairns Group of major
exporting countries (including the US, Australia, New Zealand,
Brazil and Argentina) will be looking to reduce subsidies and
open up import access. There is also likely to be pressure to
redefine the categories of domestic support so that further limitations
of subsidies can be agreed.
30. In this context, the Agenda 2000 proposals will appear
particularly weak due to: a lack of intention to reduce the size
or influence of direct production-linked subsidies to farmers,
and instead to increase them; too small a level of price adjustment
to remove the need for export subsidisation at least until 2005;
and the failure to reduce domestic support prices.
31. The Committee is considering the prospects for production
subsidies and quotas, against the backdrop of world trade liberalisation
and the mid-term review of the Agenda 2000 reform of the CAP and
the opportunities and difficulties faced by agriculture as a result
of possible reductions in production subsidies. Consumers' Association
is strongly of the view that the type of changes that are needed
cannot be achieved by tinkering with the CAP: major reforms are
32. The long-term costs of intensive practices need to
be considered in terms of their environmental and public health
consequences, not merely in terms of short-term economic benefits
through increased outputs. These problems can only be addressed
through greater focus on the end user and on the broader implications
of food and farming practices. Nutrition policy for example has
to be integral to decisions about food and farming, taking into
account the role that diet can play in preventing premature death.
Consumers need to be given more information about what they are
eating and how it is produced, but also need to be involved in
discussions about the type of sustainable agriculture and food
production systems that are needed.
33. The starting point for reform has to be to ask what
sort of food consumers want and how this demand can be met. Some
of our key survey results are summarised below. These show that
taste, quality and safety are consumers' main priorities when
buying food and eating out.
|Important factors when buying food:
| ||% stating that
|Importance of factors when eating out:
| ||% stating that
34. CA considers that food and farming policy should
be radically reformed. The CAP in its present form should be abolished.
It should be replaced with a market-oriented policy in which farmers
are free to produce the foods that consumers actually want. The
provision of high quality, nutritious, safe food should be the
priority for policy making, with a shift towards a broader consumer-focused
food policy instead of a producer-driven agricultural policy.
Price support, direct and indirect agricultural production subsidies,
quotas, export subsidies and set-aside should be abolished and
replaced with green measures designed to encourage environmentally
friendly agricultural practices, and non-agricultural policies
designed to maintain rural communities and promote tourism. CA
recognises that transition will be difficult and would support
measures such as bonds to assist those who wish to leave farming
to do so.
35. The EU's role should include ensuring food safety,
the provision of appropriate consumer information and the promotion
of a competitive single market in both food and primary agricultural
produce which can deliver the range and quality of products, value
and choice which consumers demand. An essential aspect of this
shift towards a consumer-focused food policy should be a European
Food Authority with a broad remit including nutrition issues,
adequate resources and sufficient powers to enable it to influence
36. The EU should adopt a negotiating mandate for the
trade negotiations that is directed towards securing an effective
agreement on the dismantling of domestic support of agricultural
production. This should specify phased annual reductions of existing
level of support in the developed countries, with specific annual
reductions of support on every major agricultural commodity.
37. The rapid phasing out of export subsidies and credits,
and the rapid scaling down of import tariffs should be agreed
within the framework of current WTO negotiations, so as to allow
the entry of a wider range of foods from third countries.
38. More specific measures, including interim arrangements,
that we considered are required to bring this about, including
interim arrangements will be described in our forthcoming policy
4 December 2001
EU Consumer Committee (a consultative committee of the Commission):
Opinion on the CAP, 8 December 1998. Back
1,002 adults aged 15+ were interviewed in-home between 10-16
August 2001. Back
Environmental signals 2001, European Environment Agency. Back