- Tuesday 09 February / 14h58 (Paris)
| Friday, May 23, 2008 | 13:08 |
Impact of rising food prices - EU 27
(Drinks Media Wire). Rising food and commodity prices have been the subject of heated political debate among the governing bodies of the European Union. This report summarizes some of the basic elements of this debate within the context of the EU Common Agricultural Policy (CAP). As the EU-27 Member States collectively help shape the CAP, and often implement it within the context of local conditions, this report should be read in conjunction with other GAIN reports from EU Member States Capitals.
Rising food and commodity prices have been the subject of heated political debate among the governing bodies of the European Union (EU). Since 1963, the EU Common Agricultural Policy (CAP) has been the foundation of the Member States (MS) food and agriculture programs. While CAP instruments are evolving though a lengthy reform process, the emphasis of the CAP is on production policy. EU MS are very active in helping to shape the CAP, and are responsible for implementation. Therefore, this report should be read in conjunction with the reporting from MS capitals.
Demand
According to the most recent EU data available, in 2006, the average EU-27 household spent 12.7 percent of its expenditures on food and non-alcoholic beverages. However, in the new EU Member States, households tend to spend proportionately more on food, with percentages varying from 15 to 30 percent. EU surveys indicate that households with lower income tend to spend a larger share of the total household budget on food.
According to the European Consumers’ Organization, households with the lowest income also have the poorest diets. In March 2008, the European Commission initiated a consultation process for an impact assessment on the future of the EU "Food Distribution to the Most Deprived Persons in the Community." This scheme, which provides surplus food stocks to charities in the Member States, was introduced in 1986-87, during an exceptionally cold winter. With the CAP reform process, many EU intervention stocks are very low, or have disappeared altogether. The EU impact assessment is expected to consider possible options for providing food to the most deprived.
Supply
Historically, EU food production has been heavily influenced by the CAP. However, through successive CAP reforms, farm support payments have become increasingly decoupled from production. As a result, production for many previously price supported commodities has declined to levels at or below self-sufficiency. This is true especially in animal production, with the exception of pork, which has always been one of the least regulated sectors. Diseases, such as avian influenza, have also had an adverse effect on animal production. For grains, repeated droughts have also had an impact on supply. With EU intervention stocks falling steadily, or completely disappearing, the EU has become a net importer for several important commodities: protein feedstuffs, vegetable oil, beef and, as of 2008, poultry. In the past year, the European Commission relaxed production restriction measures for grains (the zero set-aside) and for dairy (through a production quota expansion).
The current high price situation for grains and oilseeds is expected to accelerate the implementation of the remaining CAP reforms, especially encouraging the recently acceded Member States to modernize and increase production. Higher input costs in areas such as fertilizers, phytopharmaceuticals and energy will be a significant constraint. In the animal production sectors, with increasing feed costs, EU producers struggle to remain competitive. The EURO/USD exchange rate has also been a disadvantage, partiFood Prices
Article 121 of the EU Treaty requires reporting on the degree of EU convergence for macroeconomic indicators, such as inflation. The EU’s Harmonized Indices of Consumer Prices (HICPs) are compiled for all Member States. Over the period October 2006 to September 2007, the HICP for the EU 27 indicated a 3.3 percent increase for food, compared to a 2.2 percent increase for all items. However, looking at the period April 2007 to March 2008, the HICPs for EU-27 indicates a 6.1 percent increase for food, compared to a 3.2 percent increase for all items over the same period.
Environmental Impact
An EU policy of land set-aside was introduced in 1992, with the objective of taking more vulnerable and less productive land out of production. The EU set-aside area has had a positive effect on environmental protection, and has provided refuge for wildlife. However, with declining EU production and an increased EU demand for biofuels feedstock, the European Commission plans to eliminate land set-aside. This policy has been strongly criticized by environmental NGOs.
See the PDF file below
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Contact
| Name: Keith Williams |
| E-mail: |
| Web: http://www.usda.gov/wps/portal/usdahome |
| Company: United States Department of Agriculture (USDA) |
| Address: - |
| Country: UNITED STATES |
| Phone: +1 (202) 720-4623 |
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