On 14 December 2009, the EU farmers’ and agri-cooperatives’ organisation COPA-COGECA warned of the danger of severe price instability on EU cereals markets. There have been dramatic declines in EU cereals prices since January 2008, with, for example, wheat prices having declined as much as 54%. The Chair of COPA-COGECA’s Cereals Working Group, Paul Temple, warned that the area under cereals could decline by 5%, with production being even more severely affected as farmers cut back on the use of pesticides and fertiliser in the face of a profitability squeeze. A dramatic decline in production could then lead to ‘a sharp hike in cereal prices’ to the detriment of both EU livestock producers and consumers. He called for effective measures to improve the functioning of the food chain, so as to provide farmers with an economic return. Specifically he called for ‘investment in facilities, research and development and people’ in order to maintain cereals production across the EU.
COPA-COGECA, press release (point of access), listed as 16 December 2009
http://www.copa-cogeca.be/Main.aspx?page=Archive&lang=en
The objective of ‘maintain[ing] cereals production across the EU’ is to a certain extent in contradiction with one of the underlying objectives of the CAP reform process, which aims to shift patterns of agricultural production in the EU to exploit the best agronomic conditions for the competitive production of specific crops in specific areas of the EU. While Agriculture Commissioner Fischer Boel has spoken about the EU policy concern to ensure that periodic crises do not undermine the EU production base, she nevertheless has always nuanced her statements with reference to broader concerns about competitiveness and ‘market signals’. This means that in the current situation, the EC is unlikely to intervene to prevent the inevitable shake-out of producers in areas less suited to competitive cereals production. Thus, while the EC is seeking to insulate EU farmers from the worst effects of periodic crisis, it remains committed towards more market-oriented agricultural production systems. This highlights the need to balance ‘protectionism’ and reform. This is a balance which the ACP will also need to strike when using trade-policy tools to support food-and-agricultural sector development in an era of trade liberalisation.