Why are farm-gate produce prices falling even though end-product prices paid by consumers are constant or rising? Ways to close the gap could include measures to prevent market concentration and ensure price transparency and social equality throughout the supply chain, an EU food market Ombudsman, or incentives to boost farming competitiveness, suggested MEPs and experts at an Agriculture Committee hearing yesterday, 4 May.

The hearing was held to gather input for a resolution being prepared by José Bové (Green/EFA, FR) on ways to improve the functioning of the food supply chain. MEPs will press the European Commission to respond to this resolution by proposing legislation.

Current system creates "social injustice", says Mr Bové.

The EU's top 20 food traders should be required by EU law to produce annual reports on their market shares, so as to provide data on demand, supply and price trends, says Mr Bové in his draft resolution, a reply to a Commission communication that identifies shortcomings in the food supply chain, such as unfair contractual practices.

New legislation would also be needed to prevent traders building up dominant positions in the EU food market and strengthen the bargaining power of farmers and producers, adds Mr Bovés text, which was debated by MEPs for the first time on 4 May.

Today's food supply chain creates "social injustice", with "eight million people experiencing difficulties in feeding their families", while producers have to close down their activities, he says, stressing that the EU needs to promote "a policy to guarantee fair compensation for farmers' work", and provide "affordable food to consumers".

New antitrust measures?

"We need to act to help the weakest link in the supply chain ... without undermining competition", said Luis Capoulas Santos (PES, PT), who also stressed that the current model "creates inequality". "There are no good or bad actors" in the food supply chain, replied Herbert Dorfmann (EPP, IT), adding that the main aim should be to establish fair prices for all stakeholders.

Food market concentration means "the share going to producers has continued to shrink", noted Olivier de Schutter, UN Special Rapporteur on the right to food. He also said anti-trust authorities should act to remedy matters, "although it is not so easy" for them to do so. "Existing (antitrust) legislation is enough, but it should be implemented better" said Xavier Durieu, Secretary General of Eurocommerce, which represents the retail, wholesale and international trade sectors. Mr Durieu also warned that "too much price transparency would bring too much bureaucracy" and thus slow trade.

An EU ombudsman to resolve contractual disputes?

"A EU-wide code of conduct for supermarket chains" and an EU Ombudsman to enforce it, were proposed by Cardiff University Professor Roger Clarke. George Lyon (ALDE, UK) asked Professor Clarke what sort of enforcement methods could be used to prevent unfair contractual practices between producers and the food industry. Mr Clarke proposed a "flexible approach" where, as happens in UK, the Ombudsman himself has the power to settle disputes.

EU farming competitiveness incentives

Rather than insist on correcting the functioning of the supply chain, emphasis should be put on improving farmers' competitiveness, by giving them incentives to modernise production, said Rares-Lucian Niculescu (EPP, RO).

One way to boost competitiveness is to reduce costs that are external to the supply chain and which in Italy, amount to 27 per cent of all costs involved, said Francesco Contò, Professor of Economics and Rural Development at the University of Foggia. Transport, energy supply, taxes, technological and logistical devices and even consultancy' fees could be reduced thus ensuring a greater income to producers, he suggested.

The committee vote on the draft resolution is currently scheduled for June, and the plenary one for September.