March 27 - Correcting the market inequalities, and improving direct relations between consumers and producers, in order to guarantee reasonable prices for the former and profits for the latter, are the principle objectives of a report adopted by the European Parliament on the difference in price between production and consumption in the food chain.
The report was adopted with 390 votes in favour, 112 against and 71 abstentions.
Europe and the rest of the world have recently experienced high food price volatility, which has caused "significant prices rises"; to the extent that in Europe, consumer prices are now on average up to five times more than the farm gate price. MEPs are calling on the Commission to launch a report, "as soon as possible" to investigate the "margin share in the production and distribution chains."
For the rapporteur, Katerina Batzeli (PES, EL) "this price gap is a major problem which is causing concern for the two extremities of the food chain. Produces and consumers are suffering from the effects of the drive for profits, which is at the origin of the failing food market. It is time to put in place a long-term plan and to adopt interventions at a European level so as to face the financial crisis, which is weighing heavily on households and farmers."
Market dominance and anti-competitive practices
According to MEPs, the price transmission mechanism and the gap between consumer and producer prices increase in concentration across the food supply chain. They are particularly concerned by the increase in market share of a number of processors and manufacturers, who are abusing their dominant position to force down "prices paid to suppliers to unsustainable levels."
The report notes that a survey by the Commission on Food Prices in Europe "fails to include the abuse of the dominant position observed at the retail stage", and MEPs are particularly concerned by anti-competitive practices which include the selling of goods below cost. In the long-run, pricing below cost benefits neither the consumers nor the food market as a whole, and consequently, MEPs are calling for European-level action to be taken.
European monitoring
The report endorses the Commission's proposal to establish an "efficient European market monitoring system", which will allow price trends and input costs to be monitored across the whole food supply chain. This should allow a more transparent system and will allow for a cross-border comparison system on similar products.
MEPs believe that this measure should be supported by an investigation and evaluation by competition authorities at national and European level to "ensure that competition rules are respected", and that decreases in price should be passed on to consumers. Similarly, they are calling for any price increases to be passed on to producers much more quickly than is happening at present.
European database and international observation, coordination at national level
MEPs are also calling on the Commission to establish a Europe-wide database, easily accessible to European citizens, which will give greater transparency regarding the cost structure of product prices. This should be carried out in cooperation with the Food and Agriculture Organisation, who can in turn, monitor this data at an international level.
As retail trade is primarily influenced by national, legal, economic and political considerations, it would be useful to "conduct a greater exchange of information" and possibly to investigate any anti-competitive policies utilised by companies who work at European level.
Enforcing the power of producer organisations and the idea of local produce
The report believes that in order to shift the balance of power within the food chain, producers' organisations should be encouraged, as this would help to increase farmers' negotiating powers. In turn, this would help to shorten the marketing channels to consumers and would give "greater added value to their products."
In addition, the concept of local foods has been emphasised. Local retailed shops help to "bridge the gap between producers and consumers" and can improve the quality of life in local areas, as they provide jobs and important social links. Local foods are also beneficial to consumers as they can be informed about the health benefits of certain foods, whilst also building links with local producers.