Documents considered by the Committee on 12 October 2011 - European Scrutiny Committee Contents


5 Common organisation of fishery markets

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12516/11

+ ADDs 1-2

COM(11) 416

Draft Regulation on the Common Organisation of the Markets in Fishery and Aquaculture Products

Legal baseArticles 42 and 43(2) TFEU; co-decision; QMV
Document originated13 July 2011
Deposited in Parliament18 July 2011
DepartmentEnvironment, Food & Rural Affairs
Basis of considerationEM of 16 August 2011
Previous Committee ReportNone
To be discussed in CouncilSee below
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information awaited

Background

5.1 A common market organisation for fisheries and aquaculture products has been in place since 1970, and is one of the pillars of the Common Fisheries Policy (CFP). Its provisions are currently set out in Council Regulation (EC) No 104/2000, and include common marketing standards; labelling provisions; conditions relating to the recognition and operation of producer organisations, particularly as regards the production and supply of their members' products, and the rules governing membership (and their applicability to non-members); the setting by the Council of EU guide prices, and of withdrawal prices which determine whether surplus produce from the market by a producer organisation may receive financial compensation from the EU; and trade with third countries (including provision for the partial or total autonomous suspension of tariff duties on a range of raw materials intended for processing).

The current document

5.2 The Commission says that the reform of the CFP provides a good opportunity to review these provisions, and that it has since 2008 by carrying out an extensive evaluation and consultation. The results of these are now contained in the current document, in which the Commission says that five main problem areas have been identified, namely:

  • that the common market organisation did not contribute sufficiently to sustainable production, with there being until recently very limited market premiums for sustainable practices, and no market sanctions for potential or real unsustainable practices: as a result, the current policy has not sufficiently provided the right policy signals;
  • that the market position within the EU has worsened, with producers facing limited or decreased production opportunities, in addition to which the production side is fragmented due to the number of species, landing and selling sites, whereas the demand side is strongly concentrated: also, EU production lacks competitiveness in an increasingly globalised market;
  • that fishing, more than any other sector, is characterised by uncertainty as to the volume and quality of supply, and that it has not been possible to anticipate or manage market fluctuations: as a result, there has been a high volatility of first sale prices;
  • that, although increasing consumption within the EU offers tangible economic opportunities for producers, the market potential is largely untapped, with limited information being provided to consumers to enable them to make an informed and responsible choice;
  • that implementation of the common market organisation has been held down by a cumbersome, overly complex framework.

5.3 The Commission has therefore proposed the following measures:

Increasing incentives to support sustainable production

The Commission highlights the crucial role of producer organisations in the day to day management of resource and market issues, and says that their role, responsibility and mandate need to be reviewed in line with the objectives of the CFP reform in order to direct production activities towards sustainability, with other operators upstream in the sector also being targeted.

Improving the market position of EU production

The Commission says that addressing market imperfections, high information and transaction costs, as well as organisational matters, requires a focus of production activities (notably grouping supply and better marketing at first-hand sale), increased competitiveness of EU production (in terms of quality, innovation and added value), and reinforcing the bargaining power of producers.

Improving the connection between EU production and structural market changes

The Commission says that this requires the development of market knowledge and analysis on the demand side and on competing supplies, and that this should be facilitated by increasing transparency along the marketing chain. It adds that the volatility of first-hand sale prices can be reduced by improving the conditions for the placing on the market of products from producer organisations, and by ensuring that production is planned and adjusted to demand in terms of quality, quantity and presentation.

Enhancing the market potential of EU products

The Commission says that the functioning of the internal fisheries market is sub-optimal, due in particular to information failure, and that the comparative advantages of EU production (such as freshness, local nature and variety) could be better exploited with more differentiation and merchandising. It also suggests that more precise and reliable information would reinforce consumer confidence in the products concerned.

Better governance

The Commission says that the existing provisions and instruments should be reviewed and clarified so as to reduce the administrative burden and simplify the legal framework.

5.4 These principles are reflected in this draft Regulation, which would repeal and replace Council Regulation (EC) No 104/2000. In doing so, it would reproduce some of the main elements, such as those relating to the recognition and role of producer organisations, the application of marketing standards, and the provision of consumer information. However, it would make a number of significant changes, notably:

  • the objectives of producer organisations would include a specific reference to the promotion of viable fishing activities in compliance with EU policy on fisheries conservation and environmental legislation, and to the handling of unwanted catches;
  • the EU would no longer set guide and withdrawal prices, and publicly funded intervention would cease, with a producer organisation being allowed instead to finance, without public support, the public storage of fishery products if these do not meet a "trigger" price, proposed by that organisation and approved by the Member State concerned;
  • the inclusion of a chapter specifying the extent to which EU competition law would apply to the activities of producer organisations.

The Government's view

5.5 In his Explanatory Memorandum of 16 August 2011, the Parliamentary Under-Secretary for Natural Environment and Fisheries at the Department for Environment, Food & Rural Affairs (Mr Richard Benyon) says that, in general, the UK supports:

  • a review of marketing standards to promote modern market practices so that they are clear, transparent, easy to follow and flexible, to allow industry the greater freedom to self-regulate;
  • aligning minimum marketing size provisions with minimum landing size provisions (where both exist);
  • clear labelling requirements so that consumers are fully aware of what they are buying and where it originates (although the risk of duplicate labelling initiatives must be avoided);
  • the removal of intervention measures, as the level of withdrawals in the UK shows they are an unnecessary safety net that is burdensome, stifles innovation and promotes less than optimal alignment of supply and demand;
  • strengthening the current responsibilities of producer organisations, in particular marketing requirements, while recognising their members' appetite for this service, potential resource implications and the need for flexibility.

5.6 He says that an Impact Assessment will be provided, but in the meantime comments that the proposals seem to be broadly in line with the UK's objectives for reform, adding that the requirements for producer organisations appear to have been strengthened, but that clarification is needed on their marketing requirements, and on the proposed harmonisation of marketing and landing sizes. He also points out that, under proposals relating to market stabilisation (intervention), there is a provision for private storage aid, which is not currently used in the UK, and that the Government will therefore be seeking its removal. Finally, with regard to consumer information (labelling), he says that the proposals include both mandatory and voluntary provisions over which the UK has some reservations, mainly about ensuring these are aligned with the provisions set out in food information legislation.

Conclusion

5.7 Although this document forms part of the wider set of proposals put forward by the Commission recently in relation to the future of the Common Fisheries Policy, the area it deals with is comparatively uncontroversial. Having said that, we note that the Government will be providing an Impact Assessment, and we think it would be sensible to await that before taking a definitive decision on the handling of the document.

5.8 We would, however be grateful if the Government could at the same time clarify one point. As we have noted, Council Regulation (EC) No 104/2000 includes a chapter dealing with trade with third countries, but, so far as we can see, the proposal does not contain any corresponding provision, and the Minister's Explanatory Memorandum appears to be silent on this point. We would therefore be glad if he could explain what arrangements will apply to imports of fisheries products in future.





 
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