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Parliamentary perspectives on the EU fruit and vegetable regime

15 November 2013

A European Parliament (EP) Agriculture and Rural Development Committee draft report on the future of Europe’s horticulture sector has highlighted the challenges facing EU producers. The fruit and vegetable sector accounts for 18% of the total value of agricultural production in the EU, from 3% of the cultivated land.

The report notes that “the number of smaller and less specialised producers is falling, as competition from imports and other growers [requires] the industry to adapt and to use the latest machinery and production methods.” It further notes the trend towards “more integrated supply chain relationships within the fresh produce sector”. It maintains that “supply chain relationships… have become increasingly complex, with sales being controlled by fewer and fewer retailers.”

This is creating a situation where EU growers are facing “diminishing profitability and escalating farm-gate costs”, with producers in some member states “losing considerable market share to imports from competing countries within the EU and globally”.

The report argues that “lack of trust and confidence within supply chains is arguably the most significant factor impacting on the fresh produce sector…, resulting in low levels of investment within the growing base.” It argues that “codes of conduct agreed by all actors in the supply chain backed by a legislative framework overseen by a national adjudicator in each member state can give producers the confidence they need to invest” by improving the functioning of supply chains.

It is maintained in the report that “strengthening the position of growers through increased collaboration, better internal organisation and a more professional approach to management will help ensure that growers receive sufficient returns when negotiating contractual arrangements with major purchasers and retailers.”

While the EU fruit and vegetable regime “has helped growers become more market orientated, encouraged innovation and increased growers’ competitiveness through the provision of support to producer organisations”, the report notes that less than 50% of EU fruit and vegetable producers are members of such organisations.

The report notes the challenges arising from reduction in both the number of plant protection products and research and development (R&D) for new products, and expresses concern that manufacturers may not be developing “new products for the EU market” but may be choosing instead “to focus on other markets with lower regulatory costs”. Against this background, the report calls for “more sector-led research, and for retailers, as direct beneficiaries of new product R&D, to reinvest a proportion of their profits from the fresh produce category back into the sector”. The report further implicitly calls for clarification of EU policies on GMOs. The accompanying motion for resolution further calls for:

  • steps to be taken to “make it easier for [EU] producers to gain access to third-country markets”;
  • action to curb “unfair trading practices… across the EU which undermine horticultural businesses and diminish growers’ confidence to invest in the future”.

Editorial comment

Greater concentration of power along fruit and vegetable supply chains is a growing concern in the EU. This is giving rise to the increased use of policy measures designed to strengthen the functioning of fruit and vegetable supply chains.

This concern led to commitments in the June 2013 EU political agreement on CAP reform to increase support to producer organisations and to introduce additional measures to strengthen the position of producer organisations in the supply chain (see Agritrade article ‘ Political agreement reached on CAP reform’, 11 August 2013).

These commitments are now being supplemented by calls for codes of conduct on business practices to be mutually agreed by stakeholders and for concrete steps to be taken to curb “unfair business practices”.

Many of the issues faced in the EU in relation to strengthening the functioning of fruit and vegetable supply chains also arise along ACP–EU fruit and vegetable supply chains. Here, the issue relates not only to the distribution of costs and benefits from traditional trading activities, but also, increasingly, to the distribution of the costs and benefits of new market requirements, such as sustainability certification.

There would appear to be a need for similar codes of conduct, jointly agreed by stakeholders, to regulate relationships along ACP–EU fruit and vegetable supply chains. Indeed, there would appear to be benefits to be gained from ACP–EU policy collaboration on avoiding possible unfair trading practices along ACP–EU fruit and vegetable supply chains. 


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