Memorandum submitted by Directorate General
for Agriculture and Rural Development, European Commission (SFS
78)
The questions raised by the Committee address
food security in the UK context. Given the importance of the relationship
between the Common Agricultural Policy (CAP) and food security,
the Commission has been invited to make a written contribution
and will make reference solely to the EU dimension.
EXECUTIVE SUMMARY
The European Food Industry is an important sector
that accounts for about 6% of EU value added and 12% of EU employment.
Although weak in economies of scale and labour productivity, it
is strong in attracting sufficient capital and labour and is open
to the world market (exports and imports are growing) and to competition
(large number of enterprises).
From the late 1980s, rethinking of the CAP and the
successive reforms over the period 1992 to 2008 mean
that EU agricultural production can now respond to market signals
in an increasingly open trade environment. This means EU agriculture
is now better placed than ever over the last 20 years to
participate in a re-balancing of the global supply and demand
for food. Furthermore, given the depth and diversity of food culture
and openness to innovation of the EU food industry as a whole,
it is well placed for contributing to the global challenge of
increasing food production by 50% in 2050. Improvements in productivity,
in economies of scale and in the policy framework will, however,
be needed to secure the achievement of this goal.
Production of raw materials by EU farmers will
be eased thanks to an increased market orientation combined with
adequate safety nets, which follows the consistent path of CAP
reforms and adjustments initiated in 1993 and updated as
recently as with the Health Check of the CAP. As food production
is increasingly integrated with services, the liberalisation of
the market for agriculture products and services, in the EU and
worldwide, is also important. Increasing the production potential
in developing countries is also essential.
Food safety supplemented by broader issues,
ranging from health consequences of food to environmental consequences
of food production are likely to condition consumption patterns
in the future, depending on the divergent approaches to food across
EU. The Commission is committed to enforce consumer protection
rules enhancing the relevant legislation.
The European Commission has proposed in December
2008 a roadmap to improve the functioning of the food supply
chain through, among other initiatives, the enforcement of competition
and consumer protection rules in the food supply markets at European
and National level; the review of problematic regulations; and
the provision of better information to consumers, public authorities
and market operators. The role of the future CAP will be to guarantee
food production that is respectful to EU citizens' demands and
is balanced across the territory of the EU.
In governance terms, the Commission launched
a comprehensive strategy on Better Regulation, in order to improve
co-ordination across policy areas, work more closely with Member
States and reinforce the dialogue with stakeholders as well as
promoting measures for simplification and reducing of administrative
burdens, which are a necessary part of achieving long-term competitiveness.
Regarding the monitoring of the food supply
chain and food prices, the EU believes that such action is required
at the international level. In the meantime, however, monitoring
will be done by the Commission, making use of information collected
from EC delegations. Collaboration with other international bodies
and particularly with FAO is foreseen.
1. How robust is the current EU food system?
What are its main strengths and weaknesses?
THE EU FOOD
SYSTEM
The European Food Industry is an important sector
spanning a range of economic activities. It produces a diversity
of products from agricultural commodities to quality products.
This range of products is produced by a limited number of world
leading companies together with a large number of relatively unknown
small and medium-sized enterprises—both of which exist side
by side within the EU.
Figures made available from a major report on the
EU food industry,[1]
based on data up to 2005 and therefore with limited integration
of new Member States into EU-27, the sectors making up the EU
food supply chain—agriculture, food processing and the food
distribution sectors—jointly account for approximately 6%
of EU value added and 12% of EU employment. The food and beverages
industry makes up 1.7% of EU value added, while the wholesale
and retail sectors (including non-food products) account for 3.8%
and 4.5% respectively. The size of these two sectors is typically
larger in new Member States.
The European food and beverage industry employs around
4.5 million persons, accounting for 2.3 % of total EU
employment in 2005. The European distribution sectors (including
non-food items) employ over 26 million persons or 13% of
total EU employment, with the wholesale trade sector accounting
for 4.4% and the retail sector representing 8.5% of total employment.
More than a third of them (3% of all employees) are active in
food retail. The share of employment in the food and beverage
industry and in wholesale trade is higher in the new Member States
than in the EU15.
The economic importance of the food supply chain
can also be gauged by the share of its final products—food
and beverages—in household expenditure, on average 16%.
This share falls as per capita GDP rises and vice versa. Consequently,
the share of food expenditure is higher in the new Member States,
where in many cases it exceeds 20%.
As a means of benchmarking EU labour productivity
growth in the three sectors of the food supply chain, the average
annual growth rate was estimated over the period 1995-2005 and
found to be lower in the EU than in the US in all these three
sectors. The EU-US gap is significant in the case of the food-processing
(2.1%) and retail sectors (3.5%), but relatively narrow in wholesale
trading (0.3%). In terms of the internal competitiveness of the
EU food industry, such differences could indicate that there may
be room for further improvement in food supply chain efficiency.
The report also points to the productivity gap
with the US in the retail sector,[2]
which is attributed to a lower use of information and communication
technologies (ICT) in the EU. The remaining segmentation of the
European Single Market, illustrated by the diverging price levels
and price developments across countries, may also contribute to
the lower EU productivity performance. Other causes may be found
in differences in the intensity of competition, the regulatory
framework and labour market policies, as indicated in analysis
of the possible causes of malfunctioning on EU product markets.[3]
Labour productivity growth in the three sectors considered here
has generally been higher in the new Member States, most likely
reflecting catch-up effects from lower initial productivity levels.
WEAKNESSES AND
STRENGTHS
The overall findings of the report are that
the European food industry is weak in economies of scale and in
labour productivity. However, it is strong in attracting sufficient
capital and labour, is open to the world market (exports and imports
grew simultaneously) and is open to competition (large number
of enterprises). Furthermore, the cultural differences between
EU regions and specialised SMEs enable it to exploit "economies
of scope". New technologies (micro-machine processing and
e-Business standards) and consumer preferences for differentiated
and healthy products enhance these opportunities.
The influence of EU population growth on the future
of the EU food industry was also assessed in the report. The conclusion
was drawn that, with low population growth in the EU, the demand
curve is shifting upwards more slowly than in other countries.
However, the report pointed to the key EU success factors as low
cost leadership to gain export share, the chance to provide differentiated
products and being an innovator in exploiting new technology.
Governments can enhance competitiveness by harmonising the legislation
internally and globally by supporting ICT supply management systems
and by supporting the implementation of quality standards of worldwide
acceptance.
2. How well placed is the EU to make the most
of its opportunities in responding to the challenge of increasing
global food production by 50% by 2030 and doubling it by
2050, while ensuring that such production is sustainable?
The challenges of meeting world food demand
by 2050 are significant and should not be underestimated.
They relate to factors that affect the supply of food, the demand
of food and to a series of uncertainties that are external to
agriculture, from climate change to potential impacts from micro-economic
shocks or policy changes.
However, these challenges are not unique. What
is required for world food production to double by 2050 (from
2005) is essentially a growth rate that is similar to the one
achieved during the last 45 years. This requirement is an
average one, and averages tend to masque significant differences
in the various components. One the demand side it is clear that
challenges from population growth are much slower today than the
ones the world faced when production doubled from 1960-2005. GDP
growth is expected to remain strong in the longer term, despite
the significant slowdown we are facing currently with the world
economic recession. Large emerging economies, which by 2050 will
most likely not be emerging anymore, would certainly shift their
pattern of food demands, already their level of GDP indicates
that additions in their incomes shift away from food towards other
commodities. In summary the two basic components of demand growth
are not the ones that present the major challenges.
The major challenges and uncertainties are mainly
linked with supply factors. With respect to area, unlike what
is commonly believed, both the World Bank and FAO indicate the
existence of additional research that is available and could be
brought into production with a combination of adequate prices
and public/private investment. With a respect to yield growth
there are some challenges in certain crops, but there are also
positive developments and a rather mixed picture at the regional
level. Again prices and investment could help mitigate in the
longer term and short term shocks.
However, the real challenges for meeting food
production requirements are mainly related to factors outside
agriculture. Two areas stand out with respect to uncertainties
they induce for food production. The first area relates to the
macro-economic environment; income fluctuation, exchange rate
variability, credits availability, the overall trade environment
are factors that have always played a significant role in agricultural
supply and demand response, and will continue to do so in the
future. Probably the most important new element in this link in
agriculture to macro-economy is the link between agriculture and
energy, in addition to the already present and growing problem
of competition for production factors (water, land and—in
developed countries—labour) with other economic sectors.
The second area relates to the very complex
link between agriculture and environment which will be affected
by climate change. Agriculture has a characteristic of being a
sector that contributes both positively and negatively to the
environment. Enhancing the positive environmental externalities
stemming from agriculture and minimising the negative ones is
becoming a challenge that has taken new dimensions with climate
change. How to best contribute to that will clearly be linked
to the policy responses that will be given to climate change mitigation
and adaptation.
3. In particular, what are the challenges
the EU faces in relation to the following aspects of the supply
side of the food system:
Any future response from EU agriculture to the
challenge of sustainable production will rely on a sustainable
resource base for its achievement. However, the resource base,
in this context, does not solely consist of environmental resources—principally
soil, water and farm practices—but also human capital (ie
manpower, level of training and knowledge base as research), access
to global resources through the medium of trade and investment
in terms of farm infrastructure.
Successive reforms of the CAP have strengthened the
link between EU agriculture and environmental sustainability through
the targeted agri-environmental measures in rural development
policy and through cross-compliance with EU environmental legislation
under the direct payment regime. The specific measures for soil,
water, marine environment and how to encourage ecologically sound
ways of farming and managing the land are presented below.
Human capital objectives are embedded in rural
development policy in the form of training, broader support to
rural communities and investment in research and development.
The specific measures for the science base and for vocational
training are presented below.
SOIL QUALITY
Healthy soils are a prerequisite for sustainable
agricultural production. Different EU policies (e.g. water, waste,
chemicals, industrial pollution prevention, nature protection,
pesticides, agriculture) contribute to soil protection. Owing
to differing aims and scopes of action these policies and in order
to ensure an adequate level of protection for all soil in Europe,
the Commission adopted a Soil Thematic Strategy [COM(2006) 231]
and a proposal for a Soil Framework Directive [COM(2006) 232]
in 2006, currently under consideration by the other EU Institutions.
WATER AVAILABILITY
Water availability and quality are critical
elements for the future development of EU and world agriculture.
While Europe may be considered as having adequate water resources,
water scarcity is increasingly frequent in the EU. Long-term imbalances
resulting from excess water demand are emerging and further deterioration
of the water situation in Europe will occur if temperatures keep
rising.
In 2006 and 2007 the Commission made an
assessment of water scarcity and droughts in the EU [SEC(2007)
996], followed by an initial set of policy options to increase
water efficiency and savings in a Communication [COM(2007) 414 final]
in 2007. A follow up report [COM(2008) 875 final] in 2008 summarised
progress made on the policy options identified and was accompanied
by a work programme, to be part of the 2012 review of the
strategy for water scarcity and droughts.
THE MARINE
ENVIRONMENT
The EU's Marine Strategy Framework Directive
2008/56/EC of June 2008 aims to achieve good environmental
status of the EU's marine waters by 2021 and protect the
resource base for marine-related economic and social activities.
The Directive constitutes the environmental component of the EU's
future maritime policy. Its goal is in line with the objectives
of the 2000 Water Framework Directive 2000, which requires
surface freshwater and ground water bodies to be ecologically
sound by 2015 in time for a review in 2020.
THE SCIENCE
BASE
In the current knowledge-based approach to economic
development, espoused by the Lisbon Strategy, the future of EU
agriculture cannot be contemplated without reference to agricultural
research policy. A indication of this link was given in December
2008 the Commission adopted the Communication "Towards
a coherent strategy for a European Agricultural Research Agenda"
[COM(2008) 862 final], which is currently before the other
EU Institutions.
The Communication highlights the sources of the key
challenges facing EU agriculture: sustainable agricultural practices
and production processes responding to consumer concerns; issues
related to the need for stable food security and safety systems,
environmental and socio-economic challenges, diversification,
landscape management and biodiversity; and the demands arising
from CAP reform, WTO commitments, the Kyoto protocol and the Convention
on Biological Diversity.
The Communication identifies the need for coordinated
long-term programming based on a coherent strategy. It describes
the role of Standing Committee of Agricultural Research (SCAR)
in such work and relates this to the new EU initiative for Joint
Programming of research, in which "food and agriculture"
has been identified as one of the main issues facing society today.
Attention is given to SCAR's Second Foresight
Study, which frames the future of EU agriculture in terms of "crises"
(i.e. oil/energy, food, finance, economy), environmental challenges
(i.e. climate change, water scarcity, soil erosion, resource depletion)
and considers the concepts of "turbulence", "vulnerability"
and threatened security, in particular food.
The foresight study argues that there is broad
consensus on these issues but points to major disagreements on
how to address solutions through trade, new technologies, innovation,
energy strategies and agro-food paradigms. Four main themes were
developed: green chemistry (biofuels, biomass, energy); environment
(climate change, diseases, biodiversity, ecological services);
food security (rural areas, structures, competitiveness, urban-rural
pattern); and Agricultural Knowledge Systems. The report also
identifies two key priority areas for the European Agricultural
Research Agenda: climate change and energy and the strengthening
of the production and sharing of agricultural knowledge in Europe.
THE PROVISION
OF TRAINING
The future Rural Development policy focuses
on three key areas: i) the agrifood economy, ii) the environment
and iii) the broader rural economy and population. Policies in
the first area should contribute to a strong and dynamic European
agrifood sector by focusing on the priorities of knowledge transfer
and innovation in the food chain and priority sectors for investment
in physical and human capital. Member States should focus support
on key actions such as training and information actions aiming
at fostering dynamic entrepreneurship. With recent reforms having
created a market oriented environment for European farming, this
brings new opportunities for farm businesses, which will depend
on the development of strategic and organisational skills.
TRADE BARRIERS
The EU is committed to continuing to promote
an open trade policy and working towards a conclusion of the DDA.[4]
There are significant potential gains for developing countries
from the DDA in terms of new market opportunities, which would
help generate export income, stimulate agricultural production
and facilitate access to foodstuffs. The EU has already autonomously
granted duty and quota free access to least developed countries,
an approach now extended to the ACP countries in the framework
of the Economic Partnership Agreements (EPAs). The issue of the
negative impact of export restrictions should be raised at relevant
forthcoming meetings of the WTO and in other relevant international
fora.
THE WAY
IN WHICH
LAND IS
FARMED AND
MANAGED
The CAP deals both with the integration of environmental
considerations into CAP rules and with the development of agricultural
practices preserving the environment and safeguarding the countryside.
With the introduction of decoupling of payments from
production many of the incentives to intensive production that
have carried increased environmental risk have been eliminated.
Beneficiaries of direct payments are obliged to maintain all agricultural
land in good agricultural and environmental condition and to comply
with statutory EU standards in the field of environment, food
safety, and animal health and welfare at farm level (cross-compliance).
The European Commission is committed to simplify cross-compliance,
withdrawing standards that are not relevant or linked to farmer
responsibility. New requirements will be added to retain the environmental
benefits of set-aside and improve water management. To help farmers
to comply with cross-compliance, the 2003 CAP reform introduced
the possibility for Member States to rely on a Farm Advisory System
(FAS).
Agri-environmental measures within Rural Development
Policy support specifically designed farming practices. Farmers
commit themselves, for a five-year minimum period, to adopt environmentally-friendly
farming techniques that go beyond usual good agricultural practice.
In return they receive payments that compensate for additional
costs and loss of income resulting from altered farming practices.
These instruments have been strengthened in the context of the
Health Check assigning further resources to Pillar II for the
programming period 2007-13.
4. What trends are likely to emerge on the
demand side of the food system in the EU, in terms of consumer
taste and habits, and what will be their main effect? What use
could be made of local food networks?
Given the size and stability of the EU population
and that food has become a smaller part of the expenditure of
households, no major change in demand patterns are foreseen at
European level in the short to medium future.
The effects of the current economic crisis will affect
demand in the short and medium term but in the longer-term the
EU food demand should restore, driven by strong consumption and
production of value-added products in the EU-12.
According to the most recent EU agricultural
market outlook for 2008-15, demand of higher value-added sectors
(the livestock and dairy sectors) will be directly affected by
the economic crisis, while the arable crop sector will be indirectly
affected through feed demand.
Medium term prospects remain positive for total
meat consumption, as per capita consumption is expected to increase.
Pig meat would remain the most preferred meat (with a 50% share
in per capita consumption), while poultry would increase its share
at the expense of beef[5]
and sheep meat. Demand for bulk dairy products is foreseen to
remain limited in the long-period facing strong competition from
lower cost exporters.
Domestic use of cereals in the EU is projected
to increase in the long-term thanks to the growth in the emerging
bioethanol and biomass industry following the initiatives taken
by Member States in the framework of the biofuel directive, the
biomass action plan and the renewable energy directive. As regards
the oilseed sector, a increasing demand for biodiesel together
with a projected stable oilseed production would imply that the
EU will continue to remain large net importer of oilseeds in the
medium term. However, these projections are subject to a number
of uncertainties, which on the demand side are related to the
overall macroeconomic environment.
Perception of price, quality, availability and
convenience remain central to consumer food choices, although
they depend on personal, local and national food cultures, perceptions
of pleasure or risk, concerns about health and level of trust
in suppliers and products. There is high sensitivity among European
consumers towards GMOs and, less significantly, hormone-treated
beef. Food safety, prominent from 1980s to 1990s, has been supplemented
by broader issues, ranging from health consequences of food to
environmental consequences of food production. These trends are
likely to condition consumption patterns in the future, depending
on the divergent approaches to food across EU. At the same time
prices will continue having a role in shaping consumption.
The Commission is committed to enforce consumer
protection rules enhancing the relevant legislation. Transparency
allows better price comparisons for consumers (e.g. Unit Pricing
Directive[6]),
and can facilitate consumer choice. Misleading commercial practices,
which distort consumers' behaviour and actions in a way that turns
out detrimental to them (e.g. provision of false information or
omission of relevant information) are proscribed by the Unfair
Commercial Practices Directive.[7]
As regards to what could be done for local food
networks, the Commission is already promoting local productions
through the EU labelling schemes PDO (Protected Denomination of
Origin) and PGI (Protected Geographical Indication). The PDO logo
in particular guarantees that all production steps have been undertaken
in the designated area. A green paper on agricultural product
quality has been presented last year.[8]
Other initiatives related to the question of
locally produced food and food products have been launched recently:
— The proposal to review Directive 2000-13 on
labelling[9]
opening the debate on whether there should be an indication of
the origin of raw materials.
— The proposal to apply the Ecolabel to
processed food, fisheries and aquaculture products.[10]
5. What role should DG AGRI play both in ensuring
that the strengths of the eu food system are maintained and in
addressing the weaknesses that have been identified? What leadership
and assistance should DG AGRI provide to the food industry?
The European Commission has taken a series of
initiatives since 2008 aimed at improving the functioning
of the food supply chain.
A High Level Group on Competitiveness of the Agri-food
industry has been set up in June 2008 with the mandate to
propose a set of policy recommendations for the short and long-term
public policy and regulatory framework. The services of DG AGRI,
ENTR, and SANCO have been actively involved into the work of the
High Level Group on Competitiveness of the Agri-food industry,
which brings together key stakeholders in the food industry (Ministers
for industry and/or Agriculture, President or CEO of representatives
food companies, associations of stakeholders of the food chain,
e.g. Farmers, industry, retailers, consumers).
In the Communication on Food Prices adopted
last December,[11]
the Commission has proposed a roadmap to improve the functioning
of the food supply chain, consisting of four main components:
(1) Promote the competitiveness of the food supply
chain.
(2) Ensure a vigorous and coherent enforcement
of competition and consumer protection rules in the food supply
markets at European and National level.
(3) Review at national and/or EU level, as appropriate,
potentially problematic regulations for the functioning of the
food supply chain.
(4) Provide better information to consumers,
public authorities and market operators through a permanent European
monitoring of food prices and the supply chain.
The Commission will implement in 2009 the
roadmap proposed through a joint Task Force involving relevant
Directorate Generals (including DG AGRI). This work will feed
into a wider analysis of the retail sector in Europe currently
conducted by the Commission (the Market Monitoring of the Retail
Sector) which should proceed with a review of regulations such
as rules on sales below costs, on commercial practices between
retailers and suppliers or on opening hours. The final reports
for both undertakings are expected end of 2009.
This exercise will allow the Commission to deepen
its analysis in order to assess the necessity of reforms of national
regulations, if it is established that they restrict business's
ability to compete on prices, and to identify potential practices
distorting the relationships between suppliers and retailers.[12]
In addition, the Commission will continue to ensure, in close
cooperation with National Competition Authorities, that all actors
involved in the food supply chain will operate in strict compliance
with competition rules.
Moving ahead in implementing this roadmap will
allow to address the lack of transparency providing quality price
information, and improve the knowledge of the functioning of the
food supply chain. Moreover, it is of particular importance to
look further into the distribution of value added across the food
supply chain. The asymmetry of bargaining power between agricultural
producers and the rest of the supply chain has kept producers
margins in the agriculture sector under strong pressure. More
clarity on the distribution of value added would be a first step
in the direction of rebalancing the bargaining power along the
supply chain.
With regard specifically to the future of the
CAP, its shape is still to be defined and is linked to the discussion
on the EU budget as from 2013 and to WTO negotiations.
The role of the future CAP will be to guarantee
food production that is respectful to EU's citizen's demands and
is balanced across the territory of the EU. The reform path of
the CAP has been already putting greater emphasis on competitiveness,
market orientation and production standards, and the balance between
the three main policy instruments (i.e. market support as a safety
net; farm income support through decoupled payments; adaptation
and public goods provision through rural development). In relation
to the physical production of food there are four main issues
for discussion in the future:
(1) The need to find a balance between competitiveness
and social expectation in relation to the high demand for health
and environmental standards.
(2) The need to adapt the current support (i.e.
individual farmer support, fixed in time) to the volatility of
markets and the increase of public health and climate-related
risk.
(3) Innovation as one of the aspects of the CAP
of tomorrow.
(4) An efficient CAP which will take into account
the diversity of the system of production in the EU and their
needs.
6. How well does DG AGRI engage with other
relevant departments across the European Commission, and with
European and international bodies, on food policy and the regulatory
framework for the food supply chain? Is there a coherent cross-Institutional
food strategy?
The way in which the EU regulates, in particular
how the Commission organizes its internal consultations and engages
with other EU institutions, international bodies and stakeholders,
has considerable impact on whether objectives regarding economic
development, environmental protection and improvement of social
standards are met efficiently. In 2001, the Commission launched
a comprehensive strategy on Better Regulation,[13]
based on the three key action lines:
— Promoting measures for simplification,
reduction of administrative burdens and impact assessment, which
is a major instrument for structuring and supporting the development
of EU policies and all actors in analysis of the implications
of policy options across the EU.
— Working more closely with Member States to
ensure that better regulation principles are applied consistently
throughout the EU by all regulators.
— Reinforcing the constructive dialogue
between stakeholders and all regulators at the EU and national
levels.
The most complete illustration of this stronger
cross-institutional approach in relation to the CAP is the impact
assessment accompanying the recent Health Check of the 2003 CAP
reform [COM(2008) 1885], which aimed to introduce adjustments
that simplify and increase the effectiveness of the policy, allowing
it to respond to present market opportunities and face new challenges.
In this context, the preparatory work of the
impact assessment on the Health Check has been carried out by
an Inter-Service Steering Group (ISG) led by DG AGRI and with
active participation of 15 Commission Directorates. A public
consultation lasted from 20 November 2007 until the
15 January 2008, and involved a considerable number of contributions
mainly originated from national and international NGO's. Two external
seminars were organized with the participation of stakeholders
(farmers, traders, industry, workers, consumers, environmentalists).
The seminars were followed by an intense debate between the stakeholders
and the Commission's representatives. The Health Check issues
were also discussed with stakeholders within DG AGRI Advisory
Committees (e.g. environment, beef meat, cereals etc.). To reinforce
the participation of the public, an electronic mailbox was created
to receive not only the contributions of the stakeholders but
also the personal positions of the EU citizens, along with a webpage
on the EUROPA site.
In addition to the above, Commission's representatives
participated in meetings held within other EU Institutions where
the HC was the topic of the discussions, such as in the European
Parliament (COMAGRI, ENVI), the Committee of the Regions and the
European Economic and Social Committee.
The High Level Group on Competitiveness of the
Agri-food industry has presented recommendations in the area of
"Regulatory environment" (food, law, environment policy,
customs). In brief, they suggest: continued support for a more
market oriented CAP and an EU-policy framework that facilitates
sufficient supply of competitively priced raw materials as a way
to limit price volatility with the view to achieve sustainable
growth of the sector; want an environmental and sustainable industrial
policy designed to minimize costs and maximize opportunities for
the European agro-food industry; ask for the promotion of energy
efficiency for the European agro-food industry.
7. What criteria should DG AGRI use to monitor
how well the EU is doing in responding to the challenge of doubling
global food production by 2050 while ensuring that such production
is sustainable?
DG AGRI prepares a long-term agriculture outlook,
updated twice a year, covering prospects for agricultural markets
and income in the European Union. This outlook, together with
other existing monitoring instruments in other international organizations
have allowed DG AGRI to analyse future developments in EU and
world markets, in close co-operation with International Institutions
monitoring such developments, especially the OECD and the FAO.
This co-operation allows the Commission and DG AGRI to have immediate
and full access to all information related to emerging trends,
to identify potential changes in the production capacity of the
EU and its ability to respond to food challenges, and to propose
the necessary policy responses that mitigate potential problems.
(The changes introduced in set-aside and in dairy quotas during
the spike in commodity prices in 2009 are an example of the
impact of this monitoring on policy decisions).
Furthermore, as part of the Commission's commitment
to provide better information to consumers, public authorities
and market operators on food prices and the supply chain, DG Agriculture
has now set up a monthly update on EU and world agricultural commodity
and food prices, which can be consulted on the "Agriculture
and Rural Development" page of the Europa website.
In the context of the follow-up of the Communication
on Food Prices, the Commission intends to carry out further investigation
of the functioning of the food chain. Yet, given the scarce availability
of data and the high degree of diversity of the food supply chain
between Member States, it is not possible at this stage to conduct
a full-fledged study for a wide range of food products and for
all Member States.
This is why the Commission will attempt to address
this issue by assessing the current state of knowledge, research
and analysis about the distribution of the value added across
the food supply chain for a few key food products (e.g. milk,
a meat product and bread) and for some Member States. Such a work
could at one and the same time underscore the usefulness of a
permanent monitoring tool and the need for a coherent enforcement
of competition rules.
In the long-term the criteria to be used for
monitoring how well the EU is responding to the challenge of doubling
global food production in 2050 is already defined in the
Treaty establishing the European Community, namely that Common
Agricultural policy shall respond to the following objectives:
(a) To increase agricultural productivity by
promoting technical progress and by ensuring the rational development
of agricultural production and the optimum utilisation of the
factors of production, in particular labour.
(b) To ensure a fair standard of living for the
agricultural community, in particular by increasing the individual
earnings of persons engaged in agriculture.
(c) To stabilise markets.
(d) To assure the availability of supplies.
(e) To ensure that supplies reach consumers at
reasonable prices.
March 2009
1 See "Competitiveness of the European Food Industry.
An economic and legal assessment", 2007, (ENTR/05/75). Back
2
It should be noted that these indicators apply to the retail and
wholesale sectors as a whole, and may not fully reflect developments
in the distribution of food. Back
3
See European Economy, Economic Paper no 271 at
http://ec.europa.eu/economy_finance/publications/publication_summary13085_en.htm Back
4
See the European Commission Communication "Tackling the challenge
of rising food prices Directions for EU action" COM(2008)
32. Back
5
An unchanged red meat demand in EU is also forecasted for the
long-term (2050) in the Interim Report for the STOA Conference
"Food for Through: Implications of global trends in eating
habits" in the European Parliament, by Agra CEAS consulting,
2009. Back
6
Directive 1998/6/EC. Back
7
Directive 2005/29/EC. Back
8
Green Paper on agricultural product quality: product standards,
farming requirements and quality schemes (COM(2008)641 final) Back
9
Proposal for a Regulation of the European Parliament and of the
Council on the provision of food information to consumers (COM(2008)40 final). Back
10
Proposal for a Regulation of the European Parliament and of the
Council on a Community Ecolabel scheme (COM(2008)0401 final) Back
11
Communication from the commission "Food prices in Europe"
COM(2008)821 Back
12
The Commission will present the results of this exercise, which
is a priority in the Commission's Work Programme for 2009, in
November 2009. Back
13
In the context of the White paper on European governance [COM(2001)428] Back
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