Documents considered by the Committee on 10 September 2014 - European Scrutiny Committee Contents


1 Organic food production

Committee's assessment Politically important
Committee's decisionNot cleared from scrutiny; for debate in European Committee A

Document details(a) Draft Regulation on organic production (35917), 7956/14, COM(14) 180

(b) Commission Communication on organic production (35919), 8194/14, COM(14) 179

Legal baseArticles 42 and 43(2) TFEU; co-decision; QMV
DepartmentEnvironment, Food and Rural Affairs

Summary and Committee's conclusions

1.1 The requirements which agricultural products and foodstuffs must meet in order to be regarded as organic are set out in Council Regulation (EC) No. 834/2007, but the Commission put forward earlier this year a draft Regulation, aimed at taking organic production back to its core principles. In particular it proposed to remove the exemptions and derogations provided for in Council Regulation (EC) No. 834/2007, to require organic holdings to be managed entirely as such, and for any agricultural ingredients to be exclusively organic. As the new Regulation was not due to come into effect until at least 1 July 2017, the Commission also produced an Action Plan intended to encourage a smooth transition.

1.2 When we first considered these proposals on 30 April 2014, it seemed on the evidence available then that, although they raised a number of issues, these might not be sufficiently important to warrant further consideration by the House. We nevertheless decided to hold the documents under scrutiny, pending further information from the discussions which the Government intended to have with the industry and others. It is now clear from these that there are in fact a number of significant concerns, leading the Government to describe the proposals as "largely negative" for both UK producers and consumers. In view of this, we are recommending the documents for debate in European Committee A.

Full details of the documents: Draft Regulation on organic production and the labelling of organic products, amending Regulation (EU) No.XXX/XXX [Official Controls Regulation] and repealing Council Regulation (EC) No. 834/2007: (35917), 7956/14, COM(14) 180; Commission Communication: Action Plan for the future of organic production in the European Union: (35919), 8194/14, COM(14) 179.

Background

1.3 The requirements which agricultural products and foodstuffs must meet in order to be regarded as organic are set out in Council Regulation No. 834/2007, but, as we noted in our Report of 30 April 2014, the Commission has put forward the draft Regulation (document (a)), which it says would take organic production back to its core principles by:

  • removing (except in "catastrophic circumstances") the exemptions and derogations provided for in Council Regulation No. 834/2007;
  • requiring organic agricultural holdings to be managed entirely as such, and any agricultural ingredients to be exclusively organic;
  • removing the option of exempting certain types of retailer;
  • reinforcing a risk-based approach to official controls by removing the current requirement for mandatory annual verification of compliance for all operators, and providing instead that those with a low risk profile should be subject to less stringent provisions than higher risk operators;
  • increasing transparency regarding fees for controls;
  • introducing a system of group certification for small-scale farmers;
  • introducing enhanced traceability and fraud prevention;
  • harmonising the action needed when non-authorised products or substances are detected;
  • setting out the action to be taken throughout the EU on the same broad levels of non-compliance; and
  • adapting the trade regime, in particular by replacing the present system of unilateral equivalency by equivalence agreement with third countries.

1.4 As these proposals are not due to come into effect until at least 1 July 2017, the draft Regulation was accompanied by an Action Plan (document (b)), which would encourage a smooth shift to the new framework, and focus on three priorities — increasing the competitiveness of organic producers, and addressing technical gaps in organic production; consolidating and increasing consumer confidence in the European scheme, as well as trust in imported organic products; and reinforcing the scheme's external dimension.

1.5 The Government told us that the proposal introduced some positive changes, including the risk-based approach to controls; the action to be taken across the EU in the event of non-compliance; and the introduction of reciprocal equivalence agreements with third countries, which should encourage the export of EU organic produce. On the other hand, it said that the proposal could make organic production stricter, and risk disrupting the sector; that the removal of certain derogations could be costly; that the removal of a number of other exceptions, such as the ability to use non-organic stock, could also have serious implications where organic stock is not currently available; that the requirement for holdings to be exclusively organic could stifle entry, and be likely to have a disproportionate impact on the UK; and that removing the exemption for certain types of retail operation from organic certification requirements could hamper their ability to compete, and result in unnecessary administrative burdens without any gain for consumers.

1.6 The Government also drew attention to the Commission's impact analysis, which suggested that the overall economic, social and environmental impacts over the period 2016-25 were expected to be positive, and it commented that stricter rules and the removal of exceptions could increase producer costs and reduce the number and area of organic farms. Likewise, although the Commission had suggested that the environmental impact was expected to be positive, the Government observed that this could be offset if the total organic area was reduced, and, whilst a focus on mutual recognition agreements with third countries could reduce barriers for exporters, stricter import rules could restrain imports, and result in reduced competition.

1.7 We commented that, although these documents were detailed and somewhat technical, they were nevertheless likely to be of wider interest, and that we were therefore drawing them to the attention of the House. We also thought that it would be appropriate to hold them under scrutiny, pending information from the Government on the outcome of the further discussions it planned to have with industry and others, and of the likely costs and benefits within the UK.

The Minister's letter of 20 August 2014

1.8 In his letter of 20 August 2014, the Parliamentary Under-Secretary of State at the Department for Environment, Food and Rural Affairs (George Eustice) says his department has held four consultation workshops in which the issues raised largely reflected what had been said in the Government's Explanatory Memorandum, and included some "significant" concerns. He also says that a number of other Member States have taken a similar view to the UK, with many questioning the need for such a dramatic change to the Regulation, and there also being dissatisfaction with the lack of quantitative and monetary assessments in the Commission's Impact Assessment (and of evidence to back up the proposals). However, he adds that, despite this, most Member States agree that the proposal can be developed constructively to create something workable.

1.9 On the other hand, the Minister draws attention to a number of concerns raised by the Devolved Administrations, and says that, as regards the likely costs and benefits within the UK as a whole, the reduced flexibility and more stringent regulation implied by the proposal may increase costs to producers; that consumers may not be willing to pay more for organic goods; and that, in the short term at least, UK organic production may shrink. He summarises the situation by saying that:

·  the proposal is "largely negative" for the UK organic sector and consumers, and that, although it is not possible at this early stage to provide monetary estimates, discussions with stakeholders support the Government's initial assessment that the proposal would likely increase costs to producers and, in certain circumstances, may lead to some leaving the market.

·  although there are potential benefits to consumers, these rely on a "questionable" assumption that the proposal reduces the risk of eroding future consumer confidence in organic production, and could be achieved with fewer associated costs;

·  although replacing unilateral agreement with mutual equivalence agreements will benefit UK producers through increased access to certain Third Country markets, consumers may be disadvantaged by a resulting reduction in the variety of goods available and a reduction of competition in the market;

·  organic operators are expected to face large compliance costs due to the tightening of the rules and reduced flexibility — for example, the requirement for holdings to be exclusively organic (which would also prevent control bodies from inspecting any non-organic areas as these would be registered as separate holdings, thereby increasing the risk of fraud and of eroding consumer confidence);

·  other new provisions expected to increase the cost of organic production include the removal of exemptions, such as allowing non-organic ingredients in feed and requiring feed to be from the holding or 'region', requiring certain operators to implement an Environmental Management System to improve environmental performance; and the removal of organic status because of the presence of non-authorised substances in products;

·  a longer term risk arises from the proposal that organic livestock should be born and raised on organic holdings, since access to the most appropriate genotypes is important for healthy and efficient livestock, and a prohibition on the buying-in of non-organic breeding stock may compromise the welfare and efficiency of organic livestock systems, unless there is access to improved genetic material through artificial insemination or embryo transfer for home bred replacements.

·  although the proposals are intended to meet consumer expectations, it is unclear whether the potential price increases have been accounted for in consumer surveys, and nor is it apparent that consumer's expectations align with the principles of organic production, which may as a consequence result in a reduced consumer demand.

1.10 The Minister says that a policy debate on organic farming took place in the Agriculture and Fisheries Council on 10 July 2014, and that Italian Presidency has indicated that some degree of priority will be given to the proposals, with three more Working Parties scheduled before the end of the year, by which time European Parliament and Council positions are expected.

Previous Committee Reports

Forty-seventh Report HC 83-xlii (2013-14), chapter 4 (30 April 2014).





 
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