Brian Gardner's Blog

A majority of the European Union’s agriculture ministers is clearly determined on modification of the Union’s basic market legislation in what is likely to be a vain attempt to bolster farm incomes. This is the major conclusion to be drawn from a paper from the Spanish Presidency issued in the wake of last week’s farm Council.

Significantly, the paper was not supported by a hard core of countries who support the open market principles enshrined not only in both the Rome Treaty and the Single Market agreement, but also in the more recent single Common Market Organisation (CMO) for the agricultural sector. What the largely French inspired Presidency paper recommends is the suspension of the rules laid down in these agreements so as to allow certainly oligopolistic, if not monopolistic, producer organisations to be established to combat what is seen as the overweening power of dairy companies, grain traders, and supermarkets.

Were the European Commission and trade ministers to go along with this malarky, then individual member states would have the “possibility to amend where necessary, both competition rules and the provisions of the single CMO”. This, it is claimed, would foster a “harmonious relationship” between competition policy and the CAP. As Danish farm minister Henrik Hoegh pointed out it would have exactly the opposite effect. Not only would such action gum up the working of the market, but also allow large food marketing organisations to work against the interests of consumers.

Producer organisations with a dominant share of markets not only harm consumers, but too often are not in the long term interests of producers themselves. The late lamented – by some – UK Marketing Board was a good case in point. Fortunately, while DG Agri may still harbour large remnants of its traditional knee-jerk protectionist philosophy, DG Competition has other views. It has warned that producer organisation concentration may only take place up to less than market dominant ceilings and that such organisations may not indulge in the setting of floor prices.

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