Commissioner predicts farm prices will recover, but below peak levels

FARM prices will recover and fluctuate around levels below recent peaks, but higher than in recent years, European agriculture and rural development commissioner Mariann Fischer Boel has predicted.

She pointed out, however, that even at their peaks, in real terms many prices were not high by long-term historical standards.

Ms Fischer Boel, speaking in Brussels, said a distinction needs to be made between agricultural prices and food prices.

The shelf price of certain foodstuffs is influenced much less by changes in farm gate prices than by the cost of energy and labour.

This is usually true of a loaf of bread, for example — because the agricultural ingredients typically make up about 5% of the cost.

For other foodstuffs the relationship is closer. But food prices don’t move on exactly the same line as agricultural prices.

For example, as farm gate prices have fallen, food prices have followed them downwards more quickly in the eurozone than in many of the new EU member states.

“And I can tell you when farm prices went up — the muesli that I eat for my breakfast certainly got more expensive. Did it get cheaper when farm prices came down? My purse says no,” she said

“There’s not much that the Common Agricultural Policy (CAP) can do about issues like this one, which are really issues of competition,” she said.

Regarding farm prices, she said: “We don’t want knee-jerk reactions to trends which may or may not last.

“We want logical, steady policy that will stand up whether there’s rain, wind or sunshine in terms of market prices. This is what we’re building. We’re not returning to the days of heavy market management and price support, though some are calling for it.”