Stephen Cadogan: Protectionism next threat for EU food and farm sector

In no area of life or business does the EU intervene more than in food and agriculture.
Stephen Cadogan: Protectionism next threat for EU food and farm sector

And some would no doubt say, the sector has all the signs of it.

This week’s €500m crisis support package for EU farmers was an expensive acknowledgement that the sector is in a mess, despite the huge attention paid to it in Brussels, and huge expenditure.

Low dairy and pigmeat prices made the €500m intervention necessary.

Even European Commission President Jean-Claude Juncker has acknowledged that the food and agriculture sector is in a mess, declaring “there is something wrong in a market when the price of a litre of milk is less than the price of a litre of water”.

He has called on European and national competition authorities to take a close look into the structure of the market, and particularly at the retail side of the market.

Unfortunately, that will take years, in the usual bureaucratic EU fashion. The slowness of EU action is summed up by Agriculture Commissioner Phil Hogan’s admission that increasing dairy intervention market support — which 10 member states sought — would take 18 months to get through the Council of Ministers and the European Parliament.

While Brussels dithers, the food and agriculture deteriorates. It is being overtaken by a new fast-developing markets threat, which became clear during recent farmer demonstrations. Forced to defend their struggling farmers, governments across the EU are helping to promote home-produced foods.

This threatens the free movement of goods through the EU, which food exporting countries like Ireland depend on.

The trend is most evident across France, Germany and Spain. When French livestock and dairy farmers started blocking food imports from Germany and Spain, Spanish farmers warned they could retaliate with a boycott of French food products.

Many French livestock farmers say they are close to bankruptcy, and they blame foreign competition, along with food processors and retailers squeezing their profit margins.

The European Commission called on France to ensure goods could flow freely through Europe, and French Farm Minister Stephane Le Foll said blocking goods transportation throughout Europe did not reflect the French government position.

But farmers have backing from on high, with French President François Hollande giving his personal support to a new food label intended to encourage French consumers to buy local products. Hollande said he will ensure it is used in public sector canteens.

The German dairy federation has complained to the EU about the “eat French” campaign, protesting that it contravenes EU rules, and is effectively a boycott of German goods, calling into question basic EY principles.

With more than half of their food products exported, mostly within the EU, Dutch food manufacturers have also warned against farmer crisis nationalism.

Ireland’s position is even more vulnerable, with up to 90% of food produce exported, mostly to the UK, where protectionism is also rearing its head, and gaining momentum from the new EU country-of-origin labelling rules, which require pre-packed and non-processed sheepmeat, pigmeat, goatmeat and poultry packaging of fresh and frozen meat in foodservice outlets to state the country or countries where animals were reared and slaughtered. This labelling already applies for beef.

British farmers are looking forward to increased sales, by replacing imports from Ireland and other EU countries. They look forward to longer-term contracts without supermarkets abandoning them for cheaper imports.

Buying British already enables UK pig farmers to get prices about 20% higher than Irish prices, and they predict a surge in food service enquiries for British pork, when the UK adopts the EU country of origin labelling.

The National Pig Association said many foodservice companies had been surprised that some of the pork they had been selling was imported from another EU country.

Farmers in Wales also expect better sales when origin information is displayed on fresh and processed meats.

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