EC launches consultation on future of fruit and vegetable regime
02 July 2012
On 4 June 2012, the EC opened a public consultation with sector stakeholders on the future of the fruit and vegetable regime. The consultation period is open until 9 September 2012, and inputs will be fed into the preparation of a report, scheduled for May 2013, on the performance of the regime since the 2007 reforms (which entered into full effect in 2009), and into possible further changes from 2014. This forms part of the necessary sector reviews which will inform the broader process of CAP reform.
The EC maintains that no major changes to the fruit and vegetable regime are foreseen, as the 2007 reforms already set in place crisis prevention and management tools, decoupled processing aids and eliminated export refunds, and sought to strengthen producer organisations (POs).
The consultation paper posted by the Commission to stimulate inputs does, however, recognise some significant shortcomings in the reforms to date. It notes the limited coverage of POs: in some new member states a meagre 0.2–0.3% of producers are organised in POs, and in no member states are more than half of all producers organised in POs. As a consequence, most EU fruit and vegetable producers do not benefit from the current regime, since implementation of support measures is currently exclusively through POs.
The paper also notes ‘the persisting imbalance of bargaining power that fruit and vegetable producers have vis-à-vis the distribution sector’, and ‘recurrent market crises’, citing ‘limited use of crisis prevention and management tools’ – in the ‘crisis year’ of 2009, only 3.1% of operational programme expenditures were used on crisis measures, compared to a permitted ceiling of up to 33%).
The paper observes that ‘as a result of the globalization of the markets, the EU fruit and vegetable sector faces increasing and more intense competition from products from third countries.’
Stakeholders’ inputs are sought on a number of major issues, including how to:
- strengthen competitiveness and enhance productivity while managing the environmental consequences of fruit and vegetable production;
- close the widening gap between trends in input costs (rising) and producer prices;
- promote consumption and development of new fruit and vegetable products to reverse the decline in per capita consumption which is under way;
- improve the resilience of the sector to market disruptions;
- improve the functioning of fruit and vegetable supply chains to increase ‘the share of value added for producers’, including by ‘improving the bargaining power of producers’;
- simplify the regime and enhance budgetary disciplines;
- identify challenges not so far addressed by the EC within the fruit and vegetable sector;
- identify the likely impact of the different measures advanced under the various options for reform set out in the consultation document.
The consultation document sets out 4 options for the future of the fruit and vegetable regime:
Option 1: The status quo.
Option 2: Creating new instruments to reinforce POs, improve crisis management and stimulate competitiveness of individual producers. This could involve: further strengthening POs; supporting new forms of cooperation; encouraging more cooperation between POs and individual producers; directly supporting individual producers to improve productivity and competitiveness.
Option 3: Transferring certain support measures to the rural development instrument, since currently investment support measures are split between fruit and vegetable regime programmes and rural development programmes.
Option 4: Transferring all fruit and vegetable support measures to the EU rural development programme pillar.
Specific measures envisaged include:
- the extension of entitlements to decoupled direct aid payments to all fruit and vegetable producers, not just those previously receiving processing aids, with a consequent extension of cross-compliance requirements to all producers;
- the establishment of an overall budgetary ceiling for expenditures through POs, not just ceilings for individual POs.
A link to the questionnaire through which stakeholders can make inputs to the consultation process can be found below.
Editorial comment
A number of the issues raised in the background document prepared for the public consultation process potentially carry implications for ACP fruit and vegetable producers, given the importance of the EU market for ACP horticultural exporters. These issues relate to:
1. The extension of direct aid payments to all EU fruit and vegetable producers. This could change the relative competitive position of EU and ACP producers of the products affected, with EU producers willing to supply higher volumes at lower prices than would be the case in the absence of such direct aid payments.
2. The potential lessons and benefits to be drawn by ACP horticultural exporters from any new EC initiatives aimed at strengthening the functioning of supply chains, in the context of the major imbalances in power relationships that exist along ACP–EU fruit and vegetable supply chains. Specific initiatives to strengthen the position of primary producers of horticultural products adopted in the EU could well equally be applicable in an ACP context.
3. The possible knock-on effects of the deployment of EU crisis prevention and management tools on ACP exporters and even – depending on the nature of the tools deployed and products market affected by their deployment – on ACP domestic and regional markets. In the dairy sector, where similar safety-net policy measures were implemented in 2009, such measures gave rise first to a stockpiling of skimmed-milk powder, and subsequently to a large-scale expansion of exports to ACP markets. The deployment of crisis prevention and management tools can thus carry trade implications which impact on markets served by ACP producers.
4. The application of ‘greening’ measures and environment-related standards to the production and distribution of fruit and vegetables. With growing debate in the EU on the carbon footprint of products sourced from different countries and grown under different production conditions, the debate on ‘greening’ could strengthen trends towards carbon footprint certification as a prerequisite for accessing certain market components (e.g. certain supermarkets).
In view of the potential implications of the measures outlined, ACP fruit and vegetable exporters associations may wish to make their own inputs to the EC consultation process to ensure that the interests of ACP suppliers are fully reflected in the EC’s deliberations, as it moves towards the preparation of its sector report scheduled for May 2013.
