Commissioner Hogan discusses the "deep and profound" agricultural crisis in Parliament

Written by Sophie Bolla on 9 March 2016 in EU Monitoring
EU Monitoring

On Monday evening, the Agriculture & Rural Development Commissioner addressed the AGRI Committee on the current situation on the agricultural markets.

Czesław Adam Siekierski (EPP, PL), chair, explained that there is a very broad subject at hand today. The debate concerns a very topical situation in agricultural markets. He welcomed Commissioner Hogan saying that he was very happy to have him here to discuss these very important issues. He also welcomes the chair of the BUDG Committee who was present in the room. He then explained that he went to the Salon de l’Agriculture in Paris last Thursday and he was surprised to hear so many complaints from French farmers who expressed dissatisfaction with current situation. 

Phil Hogan, Commissioner for Agriculture and Rural Development was happy to have the opportunity to engage with the AGRI Committee with regards to the ongoing crisis in agricultural markets. It is a long lasting and profound crisis.

He said that the accepted the depth of the crisis, shared concerns of farmers, and never questioned the seriousness of the situation, he said, as shown by the range of measures that the Commission has introduced over the past 18 months. Therefore, the Commission working together with the Council and parliament will take more steps to alleviate the situation and the pressure on farmers within the parameters he has set up. He added there is a market imbalance particularly in the pig meat sector. There are of course pressure in other markets such as for fruits and vegetables in Southern Europe.

He does not think there is any use or purpose for him to be engaging in a lengthy analysis of the market but despite the efforts of the EU, the market is still in a very difficult place for many commodities and has recovered as quickly as we thought or would have liked. He added that the agri-food sector is not immune to macroeconomic development. Demand is weak which is having a negative knock-down effect: oil prices are down to 30$ a barrel which is down 70%. This has a negative effect on EU trading powers. He also mentioned the slowing down of Chinese growth. He then said that the EU continues to experience the impact of the Russian ban which has closed down EU products from what was a very important market, particularly for certain Member States.

To access his full speech, please click here.   

Albert Dess (EPP, DE) thanked the Commissioner for coming to this meeting. He agreed with the Commissioner on his analysis of the crisis. However, when it comes to the milk crisis, his personal view is that the current intervention price is flawed. It does not manage to react to the market well and he would be in favour of abandoning the intervention price and he would like to see an ad hoc system introduced so that on a case by case basis we can see what amount is taken at what price. If you pay 29 cents to a dairy farm than they would see how it operates. On butterfat, he said support is needed for that. When the butter price was at 4 euros then the fat was brought in from third countries but EU farmers need to start producing butter fat again rather than importing it.

Talking about the Juncker Plan, he asked if we could use some of it for private storage which capital is needed for. He then said that processing companies need to be looked at.

When it comes to customs duty, he stated that the EU needs to talk to the Americans. EU farmers would like to export and it would be nice if Americans do not tax it too much. It is important to act quickly because the Russians are not being boycotted by the Americans. They expect us to boycott Russia, he said, adding that he expects the Commission to have some discussions with the Americans. He wrote the letter to the American Minister about this.

Paolo de Castro (S&D, IT) said it was a delight to have the Commissioner here and for him to recognise the agricultural sector is in a period of crisis. The Commissioner had already spoken about this and the Parliament already voiced its concern about the dramatic situation in some markets. The situation is unprecedented, he pointed out. 

Clearly, if the EU wants to respond to the volatility in the market, it has got to open up the discussion about the management of risks. Reforms are needed when the midterm review is looked at, he said. There are instruments in the CAP but there are not sufficient. Producers are not able to handle the market. He noted that during the negotiations on the 2013 CAP, the Commission and the Council did not take on board the position of the Parliament on this. Mr. Dantin and other worked on this idea of risk management in order to be able to face a situation of price volatility.

He explained that milk prices have never been so low but they are compared with consumer prices, they have not fallen at all. There is something not working in the chain and that is something of concern to everybody. He hoped to see some initiatives from the Commission on this as well. Specific concrete proposals are needed on the table.

James Nicholson (ECR, UK) said that the Commission has now received the comments from the Member States on the proposals that will be looked at next week. He asked Commissioner Hogan if he is encouraged by the response of Member States and if Mr. Hogan can find some wisdom in the comments that he has not found yet.

He then referred to the private storage aid because he thinks this is very important. The ceiling will be reached by April, he said before asking if there were any plans to expand that because he thinks that if the EU goas to a tendering system that will lead to a race to the bottom.

He disagreed with the Commissioner on the idea of intervention mechanism but that is a longstanding disagreement. When do farmers can hopefully increase of inputs? Talking about fertilizers, he said that when the oil price went to the roof farmers were told that oil was a major component of fertilizers and the price had to go up. Now, he read that a spokesperson from the fertilizer industry said that the price of fertilizer is down to supply and demand. There is something wrong here, he said.

On pig meat, he said he is very angry because they tried to get a debate during plenary and it was decided to put it at 3pm on Thursday when the Commissioner will not be here and most of the MEPs will not be here. Pig farmers all around Europe are in a very serious situation and he is not happy with the decision.

He then said that a bank in his constituency sent a letter to farmers who are in real extreme difficulty. This is not people crying wolf, this is now people and their families in serious danger of losing everything they have. 

Jan Huitema (ALDE, NL) said that the call of some Member States to subsidise the reduction of production is a huge step back in time and will not result in a future-proof agricultural sector. Therefore, he said that he was glad the European Commission is continuing their market oriented approach and does not provide more financial support on top of the 1 billion euros already mobilised by the Commission since the start of 2015. The only solution is to make the EU agricultural sector more competitive on the world market. This can be done by better regulation and simplification of the CAP. Other legislations should also be more goal-oriented. Let room for entrepreneurship and innovation to become more competitive. Better regulation can save cost for example the cost of fertiliser by suing more animal manure. He added that Member States should look at their own national legislation as well. They do not come to Brussels with constructive plans but only want to have more money, he argued.

New markets also need to be found and this can be done through the finalisation of free trade agreement. He also called for the strengthening of the farmers’ position in the food supply chain. He is very interested in the outcome of the task force for agricultural markets as well as in the role of EIB. He added that it is important to organise the sector better with producers’ organisations or cooperatives. Producers should be able to sell more directly their products to their consumers without the retail catching some of their margins. Farmers are entrepreneurs and we should give them tools to become more competitive, he concluded. 

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Sophie is a consultant at Dods EU Monitoring

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