Today, the European Parliament considers a topic that has elicited impassioned debates in recent months: farmers’ revenues and the supply chain. The commerce sector calls for the rejection of the report as it lacks neutrality, long-term vision and above all overlooks consumers’ interests.

The report on the food supply chain by MEP José Bové, which is up for vote in plenary, was prompted by the sharp rise in agricultural commodity prices in 2007-2008. Both farmers and consumers were badly affected and the resulting report strongly criticises the functioning of the food supply chain and its pricing mechanisms.

FUNDAMENTAL MISCONCEPTIONS

The Bové report is undoubtedly well-intentioned and contains a number of useful proposals, but it is fundamentally flawed by its one-sided stance. Its very argument is based on a number of misconceptions about the food supply chain in general – and, in particular, about the role of retail. If Parliament adopts this report as it stands, it will be failing in its aim to deliver a better deal for farmers and risks simply increasing prices for consumers.

STRENGTHENING FARMERS’ POSITION

The commerce sector shares present concerns over unstable and in some cases low income for farmers. However, we do not believe this is due to alleged malfunctions of the food supply chain. Rather, it has been caused by significant fluctuations in commodity prices in recent years – a view confirmed by many scientists and experts.

Farmers, more than any other actors in the food supply chain, should be able to depend on a stable and adequate income, in the framework of an open market economy. This, we believe, would be best achieved, as Mr Bové suggests, through restructuring of the agricultural sector, fostering the development of cooperatives and producer organisations, and through any other measure that will boost innovation and competitiveness in the sector.

PRIVATE LABEL PRODUCTS

The report associates private label products – retailer branded products - with ‘misuse’. As retailers, we are grieved to see such a claim, for which there is simply no evidence. Own brands offer consumers a wider range of goods of high quality at reasonable prices. They help small suppliers break into national and international markets with innovative and sustainable local food products. Moreover, consumers like own brands – a fact that seems to have escaped Mr Bové.

COMPLEX SUPPLY CHAIN

Our main problem with this report is that it fails to understand how the supply chain works. Although acknowledging the complexity of the supply chain and the diversity of actors involved, the report assumes there are close links between farmers and retailers. This fundamental error leads to the suggestion that retailers are responsible for the difficulties that farmers confront. This is an easy shortcut, which does not reflect reality. In fact, retail is only the last link in a long supply chain. Only in a few cases do retailers buy directly from farmers.

INCREASED BUREAUCRACY

In addition, the Bové report makes numerous unrealistic proposals likely to increase bureaucracy and paperwork and lead to higher prices for consumers. The European food price monitoring tool, for example, is not useful. Prices in member states depend on a number of factors, which vary from country to country, eg taxes, labour costs, transport and territorial supply constraints imposed by manufacturers.

Mandatory reporting on market shares by traders, processors, wholesalers and retailers - another proposal in the report - is not only absurd but will be impossible to implement. It will not provide any meaningful information or added value, either for farmers or for consumers.

FAIR COMPETITION

A further problem this report finds is that of anti-competitive behaviour or abuse of dominant market position by actors in the food supply chain. We fully agree that action should be taken against anti-competitive behaviour through consistent enforcement of competition rules but would point out that several investigations at national level show that the current competition law framework is sufficient to tackle any such abuse. The key is effective enforcement of competition rules to create a fair, competitive market for the provision of the goods and services consumers want.

OUTLOOK

The debate will not stop with the Parliament’s vote. The Commission has recently set up a new High Level Forum on the functioning of the food supply chain. It is also preparing the post-2013 Common Agricultural Policy, which will have a major impact on the situation of farmers. We fully support Agriculture Commissioner Dacian Ciolos when he says that the new CAP will have to promote not only “competitive” but also “ever more sustainable agriculture”.

Commerce is the last and most visible link in a very complex supply chain, which delivers daily fresh, high quality and affordable foodstuffs to European consumers. We can only do our job well with the help of a sustainable and competitive agricultural sector.

Commerce therefore calls for a balanced approach, which can provide a stronger position for farmers in a restructured agricultural sector, free from speculation. The winners will be both farmers and consumers.

(*)  Xavier Durieu is secretary-general of EuroCommerce  - www.eurocommerce.be