The European Commission needs to intensify its efforts to protect farmers from unfair trading practices by large retailers, according to a draft report to the European Parliament by the Committee on Agriculture and Rural Development rapporteur Nuno Melo.
“There seems to be little point in investing resources in strengthening and creating POs (producer organisations) – a slow and difficult process – if negotiating power in the food supply chain remains highly concentrated in retailers’ hands,” the draft report, dated January 29, says.
Because fruit and vegetables (F&V) are mostly perishable products that must be sold quickly, this leaves farmers in a structurally weak bargaining position vis-à-vis major retailers.
Need for improved crisis measures
And while market crises occur frequently in the F&V sector, since even small production surpluses can cause large falls in producer prices, “there seems to be a consensus that crisis prevention and management (CPM) instruments are not being sufficiently used.”
“This is a worrying a situation, given that market crises are a regular feature of F&V production, since even small increases in production, due to favourable weather conditions for instance, can cause large falls in prices.” The draft report therefore calls on the commission to consider making contributions to mutual funds eligible as CPM measures, to help farmers protect themselves against large drops in income.
Too much uncertainty and complexity
It also says that associations of producer organisations (AOPs) could play an important role in increasing the bargaining power of farmers and urges the commission to reinforce incentives for setting up APOs and to envisage a greater role for them in the future.
Reducing legal uncertainty and administrative burdens “should be a first step in making POs more attractive,” it says.
However, the report also stresses that the basic architecture of the EU fruit and vegetables regime should not be changed as part of the commission’s ‘simplification’ agenda and its upcoming review of the implementation of rules on producer organisations, operational funds and operational programmes in the fruit and vegetables sector since its 2007 reform.
Read the full draft report here.