EU Advisory Group for Fruit & Vegetables adopts resolution & calls upon Commission to act_10.06.10

RESOLUTION OF THE ADVISORY GROUP ON FRUIT AND VEGETABLES

“PRESENT AND FUTURE SITUATION IN THE FRUIT AND VEGETABLE SECTOR”

This draft resolution presents the common views expressed at the Advisory Group meeting on 12th March 2010, addressing the current and future situation in the sector. It does not aim to express the detailed position of each of the member organisations of the Advisory Group.
The resolution is signed by the President, Mr Calgani (CELCAA/Freshfel) and both Vice-Presidents, Mr Diez Del Rio (CIAA/Profel) and Ms Roncolini (Copa-Cogeca). A meeting will then be requested with Commissioner Cioloş in order to give him the resolution.

1. Introduction

• The severity of the situation prompted the exceptional format of the Advisory Group meeting held on 12th March to evaluate the current situation of the sector.
• The fruit and vegetable sector has its own specific characteristics; the perishable nature of its products and a volatile market. The sector is vulnerable to extreme weather and the market can be destabilised with only a small variation in volume. However, the current situation cannot be explained by normal crop and market fluctuation alone.
• The sector’s role in the EU economy is very large in terms of employment (production, processing, trade, etc.), rural development and the environment. However, despite this large impact, the sector only has a small share of the CAP budget.
• Operators are exposed to increased production costs. EU growers and processors face increased competition from 3rd countries which frequently have lower production costs. Moreover, as a result of the financial and economic crisis, the export conditions have been complicated, mainly due to lack of an efficient export tool box.
• In recent years, both prices and income in the sector have been in crisis, with falling profitability due to farmers selling at prices below the cost of production.
• Due to the fragmentation of production and trade operators there is an imbalance in the fruit & vegetables supply chain, with a bargaining power in favour of the organised retail distribution which is highly concentrated. The crisis is affecting all operators, and further exacerbated the tense relationship in the fruit & vegetable supply chain.
• Changing retail patterns (the role of discounters in many MS) and changing lifestyles have an impact on fruit and vegetable consumption. Consumption is stagnating and remains below the recommended WHO level of minimum 400 gr/day in most MS despite repeated calls by public authorities and the scientific community to increase fruit and vegetable consumption.

2.Towards strong EU-based production and industry

• EU support for producer organisations (operational program and funds) in the fruit and vegetable sector under pillar 1 must be maintained.
• Current prevention and crisis market management tools need to be urgently reviewed in order to cope with normal market fluctuations. It is also necessary to increase the volume of withdrawals up to 10% as well as withdrawal compensation. It is also necessary to create a tool available to ALL growers in order to address more serious market crises.
• The processing sector is facing a challenging time, with none of the infrastructure operating at full capacity and several factories closing down. The EU processing industry is also losing ground on export markets and international competition is growing rapidly. The EU should use its trade defence mechanisms to guarantee fair competition on EU markets, maintaining a balanced approach at WTO level.

3.    Towards a strong EU trade sector  

• Domestic and export markets must be diversified, i.e. by exploring new market outlets for fruit and vegetables.
• A toolbox of measures in an EU export strategy must be developed to stimulate and diversify exports in order to decrease dependency on the EU and Russian market.  A scheme to facilitate greater EU coordination in bilateral and multilateral negotiations (duty and SPS), and international standards on SPS issues must be established. Tools to improve competitiveness (compensate the strength of the euro, export credits, etc.) must be introduced and promotion instruments must be strengthened. In exchange, there should be a greater level of reciprocity and the EU should find innovative ways to help the EU fruit & vegetable sector to export.
• Europe is the largest importer of fruit and vegetables in the world. More efforts should be made to avoid trade flow distortions, i.e. by harmonising controls at EU borders.
• On the domestic market, food services should be developed as they represent a promising market for fruit and vegetables. One should, however, also be investing in innovation and considering making changes to public tender rules.

4.    Towards a greater efficiency and transparency of the fruit and vegetable supply chain

• Within a globalised market, new relationships should be forged between partners in the fruit and vegetable sector. The current debate on the better functioning on the food supply chain is therefore highly relevant for this sector.
• A possible revision of competition law should be considered to strengthen suppliers’ bargaining power in their relations and negotiations with retailers.
• The role played by inter-branch organisations should be re-evaluated in order to address supply chain issues.
• The EU should consider a number of other areas for action such as EU marketing standards as well as environmental and social standards.

5.    Towards increased consumption and promotion

•  Measures to stimulate consumption are much needed given the current trends and levels of consumption. Therefore, generic promotion schemes on the internal market, as well as promotion by producer organisations, must be improved and expanded.
• The European School Fruit Scheme should be improved and strengthened in order to educate the youngest. Action should be considered to help the most deprived, who have very low consumption levels, as long as this does not affect normal market conditions.
• Other instruments must be considered to stimulate consumption in areas such as public health and education. The sector is subject to NGO campaigns, which could affect consumption, and consumers continue to view fruit and vegetables as healthy but expensive. Public authorities should take the lead in awareness campaigns focusing on the positive effects of eating fruit and vegetables.

6.    Conclusions

• The solution to the crisis should be balanced, collective, all-encompassing and should not come at the expense of one particular link in the supply chain.
• The current situation requires a strong pillar 1 to remain part of the CAP post-2013 in order to support the fruit and vegetable sector. Otherwise, the security of supply could be at risk in the EU and this would undermine more than 40 years of the CAP ensuring stable supply and fair prices for consumers.
• The sector is a major contributor to the EU’s agricultural output, to employment in rural areas and to environmental services. Despite making a 17% contribution to the value of the EU’s agricultural output, the sector only represents 3.1% of the CAP budget.
• There are very strong and scientifically sustained calls to increase fruit and vegetable consumption as a way to improve public health and to reduce health care costs in the long term. Against this background an ambitious EU strategy supporting both the sector and consumption should urgently be adopted.

                            Brussels, 4th June 2010