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SPEECH/07/31












Mariann Fischer Boel

Member of the European Commission responsible for Agriculture and Rural Development




Time to shape up: a new deal for fruit and vegetables in the EU






















Meeting with Agricultural Committee at the European Parliament
Brussels, 24 January 2007

Chairman, Honourable Members, ladies and gentlemen,

Since this is my first meeting with you in 2007, let me begin by wishing you a happy new year! It's nice to be back to talk to you, and I'm very much looking forward to our discussions in the months ahead.

Reform has been right at the top of our agenda. To complete the reforms which we began in 2003 and 2004, we have already concluded packages for sugar and bananas.

And this morning, the process has taken another step forwards - as the Commission College has approved the proposal for a reform of the European Union's fruit and vegetable sector.

Wine will follow in a few months. That should neatly tie off the reforms begun in 2003 and 2004, giving us a clear starting-point from which to launch important discussions in the CAP Health Check and the budget review in the coming years.

But today is all about fruits and vegetables. So now, I would like to explain the principles behind the proposal and highlight the main points of substance.

A sector under pressure

What do I see when I look at our fruit and vegetable sector?

First, I see a sector of which I feel proud. Fruit and vegetables are valuable products. They are fundamental to healthy living. And in the European Union we have many successful producers and exporters – who account for 17 per cent of the value of our agricultural output.

But I also see a sector which is feeling the heat.

It's no secret that the retail sector, now highly concentrated, has an astonishing power to set prices. Many agricultural sectors have to cope with this problem. But the supermarkets seem to have the fruit and vegetable sector in a particularly strong arm-lock

It is through Producer Organisations that individual producers can stand up to the retail giants. In some parts of the European Union, this is what happens. But not in all. Whereas some Member States market more than 80 per cent of their production through Producer Organisations, in one country the level is even below 10 per cent.

There are far too many producers who go it alone – and find that they are no match for the retailers.

If we take this fact and add to it the pressure from imports, it's not surprising that many operators in the sector are still strongly attached to processing aids and export refunds.

However, these supports don't solve the underlying problems. They do nothing to make the sector more competitive. And there is still regularly talk of one "crisis" after another – most recently, with regard to apples and soft red fruits, for example.

More generally, we have to see the fruit and vegetable sector in the context of the CAP as a whole. Most of the CAP has now been through reforms which make it friendlier to competitive farming, to animal welfare, to food safety and to the environment.

The fruit and vegetable sector cannot afford to be the dunce of the class. It can benefit from many of the reforms which we have applied to the rest of the CAP – though with adjustments here and there.

Finally, we are confronted with a strange kind of market failure. There is plentiful production in the European Union. And there is plentiful need for the product. But many people simply don't buy and eat as much fruit and vegetables as they need – as their waistlines and medical bills bear witness.

The objectives of the reform proposal

Faced with this situation, my central aims with this reform plan are as follows:

  • I want to help make the sector more competitive and market-oriented, for the sake of sustainable production.
  • I want to help reduce the income problems caused by crises.
  • I want to encourage people in the European Union to eat more fruit and vegetables.
  • I want to help extend the sector's efforts at caring for the environment.
  • And I want to simplify policy where possible.

All this – in a way that is consistent with the reformed CAP, with our WTO commitments, and with budgetary limits.

So, what's in the proposal?

Strengthening Producer Organisations

The cornerstone of our strategy is the role of the Producer Organisations. Where membership rates have been high, this has greatly strengthened the hand of producers. So we should not abandon the concept of the Producer Organisation, but make membership more attractive for farmers, and reinforce what these groups can do.

As you know, Producer Organisations carry out their activities through operational funds. The European Union currently co-finances these funds to a level of 50 per cent.

To encourage greater membership, we propose that the level of co-financing should rise to 60 per cent in a number of specific cases.

We should do this, for instance, in areas where our fruit and vegetables sector is particularly fragmented. This is the case in the Outermost Regions. It's also true in many of the New Member States: here, we must make a particular effort to address structural problems – as was made clear in our report of last year on red fruit.

Crisis management

A very important change suggested for the scope of activity of Producer Organisations relates to crisis management.

I am well aware that the fruit and vegetable sector has some individual points. It is very vulnerable to unpredictable weather – especially in some parts of the European Union.

This means that, even if the sector becomes as efficient and competitive as is reasonably possible, crises will come. We should look this fact in the face – and give people the means of responding.

The Parliament and the Council have asked the Commission to analyse possible roles for crisis management tools in the CAP as a whole. We undertook to consider the issue case by case. The fruit and vegetable industry is the first sector where we are applying this new principle by making practical proposals.

Under these proposals, Producer Organisations would be able to include a range of crisis management measures in their operational programmes.

Among others, these would include: withdrawals; green harvesting and non-harvesting; training; communication and promotion in times of crisis; harvest insurance; and help with the costs of setting up mutual funds.

I think it's the right approach to put crisis management tools in the hands of the Producer Organisations. It makes membership of these bodies more attractive. And it allows producers to tailor solutions to the particular difficulties that they face.

Single Payment Scheme

Honourable Members, what I have outlined so far is essentially improvements to the existing Common Market Organisation (CMO) for fruit and vegetables.

But I would also like to make a more fundamental change.

As you know very well, most sectors covered by the CAP have now been brought into the Single Payment Scheme (SPS).

It's time that the fruit and vegetable sector followed that movement. We propose that the current European Union support for processed fruit and vegetables should be "decoupled" and therefore transferred to the SPS.

This is not only about making the support payments compatible with the WTO's "Green Box" of least-trade-distorting support – though of course doing so gives us an advantage in trade talks.

Nor is it only about being consistent across the CAP – though of course a more consistent policy is usually a more simple policy, with all the benefits that this brings.

This is about giving to fruit and vegetable production the benefits which the SPS has brought to other sectors.

Farmers who work within the SPS have the power of choice. They are free to follow market signals, without worrying that this will cut their income from the CAP. This is essential for competitive farming.

Integrating fruit and vegetable production fully into the SPS would also make all producers subject to cross-compliance. So in order to receive their payment they would have to respect high standards of environmental care and public health.

I shall say more about the environment in a moment. But first let me clarify a few points.

Of course, parts of the fruit and vegetable sector are already covered by the SPS. But this relationship is complex. It varies according to the various models of the SPS put in place by Member States.

Our proposal would change the rules so that all farmland under fruit and vegetables – including permanent crops and table potatoes – would be "eligible hectares", in all SPS models. This would cut through some very troublesome red tape in the current system.

With regard to another aspect of applying the SPS to fruit and vegetables, we want to leave considerable freedom of judgement to Member States.

They would decide how to allocate SPS entitlements to fruit and vegetable producers, on the basis of objective and non-discriminatory criteria.

This flexible approach would allow us to bring the sector into the SPS without creating serious disruptions or imbalances.

The environment

A moment ago, I promised to say more about the environment, so let me come back to that now.

We should be clear that the fruit and vegetable sector is no stranger to high environmental standards. The relevant CMO was the first one to include payments for environmental services. It also made these a compulsory element of Producer Organisations' operational programmes.

We are now building on this by bringing the full principles of cross-compliance to the fruit and vegetable sector.

We also propose that Producer Organisations should have to devote at least 20 per cent of the spending in their operational programmes to environmental measures.

Additionally, Producer Organisations which included organic farming in their operational programmes would receive a higher rate of European Union co-financing – 60 per cent instead of 50 per cent.

Public concern about the environment is moving higher and higher up the agenda. With our proposals we have once again made it clear that farming is part of the solution, not part of the problem.

Consumption and promotion

Honourable Members, many of the elements of the Commission's proposal are about producers. But of course, this is only one half of the picture. The other half is consumers – especially our consumers.

This Commission takes public health very seriously indeed.

One of the building blocks of health is an adequate consumption of fruit and vegetables. Most of us know this; but theory and practice don't always quite match.

The World Health Organisation recommends that we should consume on average 400 grams of fruit and vegetables per day. Greece and Italy are the star performers here: they are the only Member States to hit that target. The rest are lagging behind – some, a long way behind. The worst average figure is about 200 grams.

We are not going to stand back and let this problem persist – or get worse.

Within our proposal, Producer Organisations would have to take action to promote the benefits of fruit and vegetables among young consumers.

Furthermore, the European Union would cover all the costs of market withdrawals to be distributed free in schools, holiday camps, public institutions and so forth. We are providing a total budget of 48 mio. € over a six-year period for this purpose

We would also offer co-financing of 60 per cent rather than 50 per cent to promotion programmes directed at children. There would be a separate budget for these campaigns of 36 mio. € over a six-year period.

Will these proposals mean that more of our young people take home gold medals from the 2012 Olympic Games? I can't guarantee it. But perhaps more of them will at least manage to get over the high-jump bar at school without embarrassment.

External trade

Finally, a few words about external trade.

We have made our proposal at a time when the WTO Doha Round is still in progress. This is such a fundamental variable in our analysis that at this stage we are suggesting only one change to the trade aspects of our fruit and vegetable regime.

But that change is a powerful symbol: we want to end export refunds for fruit and vegetables.

The practical impact should be limited, as the role played by refunds has fallen over the years.

Nevertheless, it reminds the world that we are serious about reforming export subsidies across the board – as we have indicated so clearly in the Doha Round.

Conclusion

Honourable Members, this concludes my outline of our proposals for the future of the fruit and vegetable regime.

We have skilled producers and marketers. Where there are difficulties, we can face these down - if we make the right tools available.

And those tools can also help us turn around some worrying trends in public diet.

Our proposals should also help our fruit and vegetable sector to be a strong, lean competitor – not the child who struggles at the back of the pack.

Thank you for listening, and I look forward to your reactions. As we have established a tradition, I would be happy to accept an invitation to come back to your Committee in February for a more detailed discussion

Thank you.


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