How farmers can get stronger
In certain circumstances, for the first time, the EU will allow agricultural producer groups implement measures which restrict competition, such as market withdrawal, during periods of market crisis.
It shows how seriously the EU takes issues of market power, and the limited bargaining strength of farmers compared to others in the food chain. With new Irish consumer protection and competition laws also on the way, farmers can look forward to the possibility of a stronger place in the market.
There are a good few conditions attached to the new CAP flexibility, so it probably won’t be widely used.
Previously, according to CAP expert Alan Matthews, the European Commission and member states could finance the withdrawal of surpluses during a period of market disruption, until the market settled down.
Now, producer groups and inter-branch organisations can do this without falling foul of competition rules.
It can only happen in times of severe market imbalance, where the Commission has already adopted measures to deal with a general market disturbance, or products have been bought into public intervention, or aids for private storage have been introduced.
And the Commission has to adopt an implementing act lifting normal competition rules for up to six months (renewable for one further period of six months).
Market actions by producer groups cannot be such as to undermine the proper functioning of the EU internal market, and must strictly aim to stabilise the sector concerned.
However, they can take the form of market withdrawal or free distribution of produce; transformation and processing of produce; storage by private operators; joint promotion measures; agreements on quality requirements; joint purchasing of inputs necessary to combat the spread of pests and diseases in animals and plants or to address the effects of natural disasters; or temporary planning of production taking into account the specific nature of the production cycle.
Still not permitted for agricultural producer groups are collective bargaining or price-fixing activities.
According to Alan Matthews, the new rules seem to have been inspired by the examples of the 2009 Irish pork dioxin crisis and the 2011 e-coli crisis, both of which resulted in a sudden loss of consumer confidence following contamination of the food supply chain.
He says the possibility for producer organisations themselves to be able to restrict sales and to undertake market withdrawals could be significant, as there will be only limited funding in the new market crisis reserve (for which an annual 1% deduction from single farm payments will be made).
It’s also significant because producer organisations, associations and inter-branch organisation can now be recognised for all agricultural sectors — not just in fruit and vegetable production, where they have become very important in countries such as France, Italy and Spain.
