EU food business is dysfunctional
FRENCH president Nicolas Sarkozy has rightly questioned why the EU regulates money markets but not food commodities.
The food market is now so dysfunctional that the farmers who produce pig and poultry meat, which account for 78% of EU meat consumption, are heading for bankruptcy.
In Spain, the biggest farmers’ union warns that half the country’s 700,000 livestock farmers could be out of work by the end of 2011, due to the highest prices in 2½ years for the wheat needed for animal feed.
President Sarkozy has warned that the volatility of agricultural commodity prices is devastating for farmers. World grain stocks have not been so low since 1974, and a global shortage is looming.
French pig farmers took to the streets recently in Paris to protest against the rising feed costs and low pig meat prices which are crushing them. Food processors say they face the toughest price negotiations in living memory, because the commodities they process are 25% dearer, but retailers turn them away if they look for higher prices to match the dearer ingredients.
German pig meat processors have responded by using low- cost foreign workers.
This has sparked a row between French companies who say they pay about €20 an hour, and the Germans who are said to pay €7 to workers from Poland, Hungary, Romania, Bulgaria, Ukraine and Russia. France’s SNIV-SNCP trade union has complained to the European Commission.
The workers are among the many victims of governments who are happy to go along with things as they are in the food industry, so scared are they of food price inflation.
So it is left to food processors and their workers, and even more so farmers at the end of the food chain, to take most of the punishment.
Farmers across Europe are pleading for higher prices to cover their 20% to 30% increased bills for fertiliser, animal feed, and agricultural diesel.
The situation is critical for pig and poultry farmers, because they do not get direct income aid payments from the EU’s Common Agricultural Policy (CAP).
British farmers say they are losing about £20 a pig, due to soaring feed costs.
The European Commission has at last offered EU pig farmers some help, but their private storage aid scheme does no more than temporarily take some pig meat off the market.
Governments will strive to avoid food price inflation, while farmers are left to endure runaway cost inflation, well into double figures over the last 12 months. Many of them as a result rely for a living on the EU direct payments which the unfortunate pig and poultry farmers do not qualify for.
But they would all be in the same boat if some politicians had their way.
Seemingly still obsessed with French farmers taking the lion’s share of farm payments which are calculated to cost the average British family over £400 a year, the British government still calls for substantial cuts to the CAP budget.
With British farmers also fearing bankruptcy, Minister of State for Agriculture and Food Jim Paice has had to tone down the message, saying the coalition government in London will suggest “a long, long transition” from the current CAP.
Hopefully that leaves enough time for Ireland’s beef and livestock sector to achieve its targeted 20% increase in output value.
