Brussels, May 25 - Food retailers in Europe have largely failed to pass on market price reductions to consumers, keeping their margins high and causing many farmers to abandon agriculture because of poor incomes, Poland said on Monday.
In a note to EU farm ministers meeting in Brussels, Poland complained of increasing disparity between producer and consumer food prices, as well of "supermarket clout" forcing suppliers to cut their prices, reducing farmers' incomes.
"The observed decline in the prices of agricultural products, which is not offset by the reduction of production costs, leads to the deterioration of farmers' financial situation," said the note, obtained by Reuters.
"It should be emphasised that despite a decline in prices in the agricultural sector, the prices paid by consumers are still high or are not reduced. Many farmers give up agricultural production, as it is not sufficiently profitable," it said.
Consumers, as well as farmers and producers, were hit badly by the price gap -- above all in the EU's newer member countries, where food purchases accounted for a significant portion of total expenditure in low-income households, the statement said.
In Poland, it noted, spending on food amounted to 26 percent of total household expenditure, almost twice as high as the EU average. At a time of financial strain when many households had to cut spending, unjustified hikes in retail margins were socially harmful as they limited food consumption.
Food suppliers were under great pressure to cut prices they charged to supermarket chains because of concentrated retail power and price wars between retailers, particularly in the old EU-15 member countries, the Polish paper said.
"Small companies striving to survive on the market must cut their costs and margins drastically. This results in eliminating small businesses and producers from the market in the medium and in the long run, thus breaching fair competition," it said.
Late last year, EU regulators pledged to crack down on anti-competitive practices in the food retail sector to smooth out wrinkles in the supply chain. They warned of a risk that food retail consolidation might be against consumer interests.
EU Agriculture Commissioner Mariann Fischer Boel has also complained that retailers made consumers pay dearly for staple foods like bread and milk when world grain and dairy prices were high but were slow to pass on savings when markets retreated.