Opinion of the Economic and Social Committee on the 'Role of middlemen - from production to consumption - in the setting of food prices'
Date: 1998-01-28
Institutions: European Economic and Social Committee
Subjects: common organisation of markets, foodstuff, fresh product, price formation, trading margin

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Opinion of the Economic and Social Committee on the ‘Role of middlemen — from
production to consumption — in the setting of food prices’

(98/C 95/10)

On 20 March 1997 the Economic and Social Committee, acting under the third paragraph of
Rule 23 of its rules of procedure, decided to draw up an opinion on the ‘Role of middlemen
— from production to consumption — in the setting of food prices’.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the subject, adopted its opinion on 4 December 1997. The rapporteur was Mr Kienle.

At its 351st plenary session (meeting of 28 January 1998) the Economic and Social Committee
adopted the following opinion by 75 votes to one with three abstentions.

1.

Introduction

1.1.
The share of individual market participants in
the final price of goods, and the question of trade
margins, have always been the subject of lively debate.
The discussion is often conducted with particular passion
in the food sector. For example, in its Opinion on the
1997/1998 farm price proposals the Economic and Social
Committee called for the effects on both farmers’
incomes and consumer prices to be investigated. The
opinion sets out to help make a complex market process
comprehensible, to dispel unfounded prejudices, to
highlight distortions, but above all to promote a con-
structive dialogue between producers, processors, trade
and consumers.

1.1.1. Over the last few years agricultural producer
prices in the EU have tended to put downward pressure
on food prices. The proportion of consumer spending
on food relating to agricultural producer prices has
declined markedly. At the same time the proportion of
spending relating to the selling, transport, processing
and packing of foodstuffs has risen. The final consumer
has benefited from productivity gains at the producer
stage and tough competition in selling. This is graphically
illustrated by the fact that in no EU Member State does
the average four-person household spend more than
20 % of its income on food. Moreover, the work involved
for consumers in preparing meals has been significantly
reduced (convenience). The products thus have a higher
service content.

radical change and is subject to sharp demand and price
fluctuations. This is less true of processed fruit and
vegetable products (juices, preserves, deep-frozen prod-
ucts), and so these products will not be discussed in
detail here.

1.2.2. Opportunities for stabilizing prices via market
regulations are limited in the case of perishable products.
Indeed the proportion of EAGGF expenditure going on
the common market organization for fruit and vegetables
(cf. ESC opinion of 19 March 1996) is, at 5 %, much lower
than these products’ share of total final agricultural
production (ca. 16 %). And with the implementation of
the reform of the common market organization for
fruit and vegetables the intervention instrument, which
applies only to some types of fruit and vegetables, will
diminish further in importance.

1.2.3.
Fresh products like fruit and vegetables are
generally ready for consumption and require no further
processing. Producers and many consumers do not
therefore understand why there should be such a large
difference between producer and consumer prices.

1.3.
Agriculture competes with other sectors of the
economy for consumers’ purchasing power. High mar-
gins thus weaken the sector’s competitive position.
Where trade margins contain fixed components, fluctu-
ations in supply and demand weigh more heavily on the
producer price than on the consumer price. In other
words, the producer’s price risk increases.

1.2.
Agriculture has traditionally been dominated by
small production units which on their own have little or
no influence on the pricing of their products. But prices
determine revenue and thus farmers’ incomes.

1.2.1.
Because of the complexity of the subject the
opinion concentrates on fresh farm products, particu-
larly fruit and vegetables. A study of trade margins is
particularly revealing in the case of fresh fruit and
vegetables, as the market for these products is undergoing

In the case of fresh products like fruit and
1.4.
vegetables short-term changes in trade margins are of
great importance. If a supply-induced fall in producer
prices is not matched by a reduction in consumer prices,
the necessary stimulation of consumption will not occur,
and surplus production will remain unharvested or will
have to be destroyed. A serious problem of this kind
occurred in the first half of 1997. EU apple stocks could
not be cleared sufficiently quickly, as drastic price
reductions at producer level were not passed on, or not
sufficiently, to the consumer by the retail trade.

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1.4.1.
If sharp rises in producer prices resulting from
supply shortages are cushioned at consumer price level
by reduced trade margins, the market balance will also
be upset. Goods will sell out and some consumers will
go home empty-handed. If prices are deprived of their
role as a market balancing mechanism in times of
shortage, other distribution mechanisms (e.g. personal
contacts, market power) will come into play.

involves a quality function. In European food retailing
there is a rising demand for larger consignments and
homogeneous quality. As individual producers are usu-
ally unable to offer sufficiently large quantities, supply
of comparable quality from several producers has to be
combined, usually on the basis of measurable quality
characteristics. Packing thus has quantitative as well as
qualitative aspects.

1.5.
Distributors have a considerable influence not
only on price formation but also on the composition of
supply. Concentration in European food retailing and
in purchasing by firms accentuates the danger of
distribution becoming a ‘filter’. Anyone who is not an
accredited supplier to the leading food retailers will
have to be content with a small niche market. For many
producers supplying the major food retailers is a matter
of survival.

2. The functions of distribution

2.1.
Distributors play a major part in ensuring that
the economy is supplied as efficiently as possible. A
distinction is usually made between the following
functions:

2.1.3.
The communication function of distributors is
often referred to, i.e. the mediation of market knowledge
between producers and the demand side. If market
signals are lost in the ‘filter’ of the distributive trades, it
becomes more difficult to balance supply and demand,
resulting in misallocation and economic waste.

2.2.
The distribution functions need not be carried
out by wholesalers or retailers. Many of the above tasks
are also carried out by producer associations, and in
some cases by individual producers. In the long term,
services will be provided by the market participant
who can offer them at the lowest price. Government
regulation (e.g. tax laws, EU common market organ-
izations) have a major influence on these costs.

— geographical function (e.g. bringing together trading

3. The development of sales outlets for fresh fruit and

partners, transport of goods);

vegetables

— timing function (e.g. bridging the timing gap between

production and consumption);

— quantity function (e.g. combining or dividing up

quantities of goods);

— quality function (e.g. sorting, blending, establish-

ment of product ranges);

— advertising and publicity function (e.g. advertising

the product).

2.1.1.
The geographical function often includes the
transport of goods. In the fruit and vegetables sector
many specialized wholesalers have concentrated on
bridging geographical distance, including transport, in
producer areas (distribution). The free and unfettered
movement of goods is therefore of great importance to
the Community market in fruit and vegetables. In order
to balance supply and demand in terms of timing
distributors maintain warehouses. In the case of fruit
and vegetables storage time is usually limited; in extreme
cases (asparagus, soft fruits) it is only a few days.
Consignments of various products have to be assembled
or divided up, depending on the requirements of the
next link in the distribution chain. Assembling suitable
ranges of products is an important geographical function
of wholesale distribution. At consumer level this function
is performed by the food retailers.

Reparcelling goods may also involve combining
2.1.2.
small quantities. This quantity function usually also

3.1. Retail level

3.1.1.
The dominant trend in food retailing in the EU
is one of concentration. Thus between 1970 and 1990
the number of food retailing outlets in the Community
of twelve fell by more than a quarter to 490 000. In 1995
there were 540 000 food retailing outlets registered in
the Community of fifteen. This figure is forecast to fall
to 400 000 by 2005. Aggregate turnover has however
risen steadily. In some areas of the Community this
process of concentration is assuming threatening dimen-
sions. Thus, the British government has complained that
some rural areas — and also some inner city areas —
have become ‘food deserts’, where suppliers of fresh
food are not everywhere guaranteed to all sections of
the community.

3.1.2. Within the EU there is a clear north-south
divide. Whilst in 1995 the five biggest Scandinavian
retailers accounted for well over 70 % of the sector’s
overall turnover, the corresponding figures for Italy and
Greece were around a third, or less. In Central and
Western Europe the proportion varies between 50 and
70 %.

3.1.3.
The process of concentration can also be
observed within firms. Whilst firms’ purchasing of dry
foodstuffs has for some time been centralized nationally,
purchasing of fresh fruit and vegetables was until

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recently done mainly on a regional basis. This too
is increasingly done nationally. In many cases only
supplementary purchases to cover short-term needs are
still handled regionally. The number of decision-makers
has thus been considerably reduced.

3.1.4.
The trends observed in European food retailing
as a whole generally also apply to fresh products like
fruit and vegetables. In Germany in 1994, the five
leading distributors accounted for 72 % of household
consumption of fresh vegetables. In 1996, according to
data from the household panel of the society for
consumption and market and sales research (GFK) 80 %
of fruit and vegetables for home consumption were
bought at supermarkets, hypermarkets or discount
stores. The corresponding figure for the Netherlands is
63 %, France 56 % and Spain 35 %. In 1995 in Northern
Italy, supermarkets and discount stores accounted for
55 % of sales; the corresponding figure for Southern
Italy was only 20 %. The big food retailers’ share of
sales of fruit and vegetables for home consumption has
increased in all the Member States: in France it increased
from 41 % to 56 % between 1987 and 1995; in the
Netherlands from 50 % to 63 % between 1990 and 1995;
and in Spain from 22 % to 35 % between 1989 and 1995.
This is clear from the results of the various European
household panels.

3.1.5.
Traditional smaller retailers and specialist
shops have lost ground throughout Europe, as have
weekly markets in some countries. In Italy and Spain
specialist shops and small food retailers still account for
more than 30 % of sales of fresh fruit and vegetables. In
the Benelux countries and the United Kingdom too,
specialist greengrocers still play a major part in the
retailing of fruit and vegetables, with a market share
well in excess of 10 %. In Germany the small green-
grocer’s shop has virtually disappeared.

3.1.6.
In Germany weekly markets are still an
important sales outlet, with between 12 and 15 % of
sales. In Germany markets have maintained their share
of sales over the last decade. In France weekly markets’
share of sales fell from 24,6 % in 1988 to 21,7 % in 1995.
But here too there is recent evidence of stabilization. In
Southern Europe markets account for about 25 % of
sales.

3.1.7.
In recent years consumers have shown greater
interest in direct purchasing from the producer (from
field or farm, or in some cases from farm shops). Direct
purchasing may account for a significant proportion
of sales of some products such as strawberries and
asparagus. Direct sales probably account for between
2 and 7 % of the total; in Austria the proportion is even
higher. The proportion of direct sales of organic fruit and
vegetables, for which demand is growing, is traditionally
very high; half of production is probably sold direct to
the consumer.

3.1.8.
There are many reasons for increasing concen-
tration in food retailing and the growing share of
supermarkets, hypermarkets and discounters in sales
of fruit and vegetables. The advantageous conditions
offered by these retailers are often quoted as a reason

for this continuing trend. Another important reason for
the rise of large-scale retailing is the tendency to
shop for fresh products less frequently. Job and other
commitments mean that many consumers are no longer
willing to shop for fresh products daily, in addition to
the weekly or twice weekly trip to the supermarket.

3.1.9.
Interestingly, consumer polls paint a different
picture of purchasing habits. In general, consumers
considerably overestimate the importance of weekly
markets. A high proportion of consumers claim that
they prefer to do their food shopping at the market.
Other food outlets are regarded far less favourably. But
the preferences expressed are clearly not reflected
in actual shopping behaviour. Most consumers are
unwilling to invest the necessary time in doing their
shopping at the market. This is clear from studies carried
out in France (Ctifl, 1996) and Germany (CMA, 1997).

3.1.10.
The advantages ascribed to supermarkets and
hypermarkets are, unsurprisingly, the time saving (ability
to combine food shopping with other purchases), the
ability to select one’s own purchases, and lower prices.
The wide selection of fresh fruit and vegetables on offer
is seen as a particular advantage of hypermarkets.
Weekly markets, on the other hand, are praised for their
better quality, fresh goods, wide choice, reliability and
human contact. The consumer claims to prefer the
weekly market, but actually, for the sake of convenience,
goes to the supermarket or discount store.

3.1.11.
The above findings apply exclusively to home
consumption. Non-domestic (large-scale) consumption
accounts for a smaller proportion of sales of fresh fruit
and vegetables than of other foodstuffs, although this
market segment is growing rapidly in importance.

3.2. The early links in the distribution chain

3.2.1.
The changes in food retailing are a main cause
of adjustments in the upstream activities. There has also
been enormous structural change in the wholesaling of
fruit and vegetables. Suppliers to the major retailers
must be able to offer larger quantities. Many medium-
sized fruit and vegetable wholesalers have lost traditional
customers — the regional purchasing centres — mainly
as a result of the centralization of purchasing by firms.
Also, many large European retailers attempt to buy as
directly as possible from the producer. Wholesalers will
in future be needed only as suppliers of logistic services
or as an emergency source of supply. The smaller
wholesalers specialize in supplying either major con-
sumers (restaurants, canteens) or the ever shrinking
specialized retailer and weekly market sector.

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3.2.2. Wholesale markets have lost ground in recent
years. The big chains are hardly represented there any
more as permanent customers. In Great Britain the
wholesale market is even used by chains to dispose of
surpluses. This accentuates price fluctuations on the
wholesale markets. In Germany only about 30 % of
fresh fruit and vegetables by volume passes through the
wholesale markets. In France, and particularly in the
Southern European countries, the percentage is markedly
higher. In 1996, according to Mercasa data, wholesale
markets in Spain accounted for 60 % of national fruit
and vegetable sales.

3.2.3. Within the European Union there are differ-
ences in the distribution of trade functions. Thus, in
southern Europe channels of distribution are often very
long and complex; in Great Britain on the other hand
they are very short. In all countries the trend is
towards shorter channels of distribution. Operators not
providing any real service are eliminated from the sales
chain. Unnecessary activities, such as the repacking of
goods, are avoided as producers or producer associations
supply the goods in the desired packaging.

3.2.4.
The structure of producer organizations and
associations has also changed. The size and average
turnover of producer associations has increased. This
concentration process is not however to be compared
with that in the retail trade. The Netherlands’ association
of producer organizations (Verenigde Tuinbouwveilin-
gen Nederland — VTN) is to some extent an exception
(1996). The main function of producer organizations is
to combine supply into sufficiently large lots. The retail
trade often wants quantities sufficient for nationwide
sales. Most producer organizations cannot achieve this
scale however.

3.2.5.
There also are producer organizations which
are not in direct contact with the major retailers. The
retailers are then supplied by specialized wholesalers,
who sometimes supply the same customers. In this way
the real objective of combining supply is only partly
achieved.

3.2.6.
The strengthening of producer organizations
has for some time been a main objective of the common
market organization for fruit and vegetables. By making
resources available to the operating funds the EAGGF
also supports efforts by recognized producer organ-
izations to supply the retail trade directly. The pro-
portion of production marketed by producer organ-
izations has so far increased only in some countries. In
Great Britain, the Netherlands, Denmark and Belgium
it has actually fallen.
In Germany the proportion
has probably remained stable. Only in Denmark, the
Netherlands and Belgium does the producer organ-
izations’ share of fruit and vegetable sales exceed 50 %.
According to the Commission report on the situation of
agriculture in the European Union in 1995, the marketing

share is particularly low with respect to vegetables,
usually below 20 %.

3.2.7.
The distributive trades are in some cases
critical of the financial support which the new market
organization provides for producer organizations. The
fear is that these subsidies could enable producer
organizations to offer services more cheaply than the
distributive trades.

4. The influence of distributors on the supply of fruit

and vegetables

4.1. The product range

4.1.1.
All participants in the marketing chain —
producer, distributor and consumer — influence the
composition of supply. The influence of distributors is
often viewed more critically than that of the other
participants. Consumers accuse distributors of favouring
certain products which are not what the consumer
wants. A classic example of this was Dutch tomatoes
sold on the German market in the 1980s, where the
wholesalers’ preferences in terms of origin clearly
differed from those of consumers. This also showed
however that in the long run clear consumer preferences
cannot be ignored.

4.1.2.
The dangers of consumers’ wishes being
ignored over an extended period is much greater if there
is only a limited number of alternative sales outlets.
This affects countries with a high level of concentration
in food retailing, where purchasing by firms is mainly
centralized and where specialized retailers, markets and
small independent shops have a negligible market share.

4.1.3.
There are many examples of the influence of
retailing on trends in the consumption of individual
types of fruit and vegetables. Discount stores carry only
a very limited range of fresh products. The rise in
German consumption of bananas after 1983 and radishes
towards the end of the 1980s can for example be
attributed to the adoption of these products into the
discount stores’ range. In Great Britain the English
Mushroom Board ascribes the rise in consumption of
fresh mushrooms to the pricing and advertising strategy
of the major retailing multiples. On the other hand,
consumption of products which are difficult to sell in
supermarkets (e.g. cherries, soft fruits) is stagnating.

4.1.4.
Increasingly national purchasing by food
retailers also threatens the survival of regional product
ranges. If the production of a particular area is not
enough to supply a national purchasing programme, the
product will be obtained from another, distant producer
area.

Firms wishing to become accredited suppliers
4.1.5.
to the retail trade must sometimes invest heavily.

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Moreover, fees of various kinds are often levied in the
form of discounts or contributions to advertising costs.
These practices are more pronounced in Germany than
in other Member States; there is also evidence that they
occur in France. In Britain on the other hand, rigorous
quality and hygiene requirements and conditions, set by
retailers and varying from firm to firm have to be met
before a supplier is accepted.

As it is the declared objective of the retailing
4.1.6.
majors to have only a few suppliers, producers are
obliged to work with accredited suppliers. Such suppliers
may be producer organizations, wholesalers or even
major individual producers. The latter case is common
in Great Britain.

4.2. Pricing

4.2.1.
This study cannot carry out a comprehensive
survey of trade margins for fresh fruit and vegetables in
the individual EU Member States. The following data
are largely based on studies carried out in France,
Germany and Great Britain. The comments refer to the
total margin (the difference between producer and
consumer prices), as in most cases it is not possible to
break this down into wholesale and retail margins. It
may be assumed however that the retail margin is by far
in
the more significant component. (For example,
Germany the wholesale margin accounts for only 20 %
of the total margin; in France the corresponding figure
for vegetables is between 20 and 35 %). The margin is
calculated as a mark-up in both percentage and absolute
terms.

4.1.7. On the subject of quality: the taste of many
types of fruit and vegetable is satisfactory only if they
are harvested when ripe. Most consumers do not
recognize this quality characteristic. Ripe products have
to be handled carefully and sold rapidly. This means
higher logistical costs for producers and distributors.
Unless such goods command a higher price there is no
incentive to offer them for sale. The dilemma is clear:
consumers are willing to pay more only if better quality
is guaranteed; and suppliers are willing to supply the
desired quality only if they are properly rewarded.
Italian peach producers drew attention to this dilemma.
The same applies to consumers’ wish for environment-
friendly production.

4.2.2.
The different sources and variable quality of
the data make it very difficult to draw a comparison
between the various EU Member States. Systematic
differences can, however, be detected. It can thus be
assumed that in countries where discount stores have a
large market share (e.g. Germany) margins tend to be
lower.

4.2.3.
In general terms, it can be said that margins
rise with the intensity of product handling and with the
degree of attention to quality (e.g. the major retailing
multiples in Great Britain, which are often regarded as
exemplary in this respect).

4.1.8.
In the case of other foodstuffs this situation
has led to the development of labels. And labels are
gaining in importance in relation to fruit and vegetables
too. In Great Britain in particular fresh fruit and
vegetables are often sold labelled, with detailed pro-
duction guidelines. Over the last two years almost all
Germany’s major food retailers have introduced their
own labels. Producers view this development with
mixed feelings, as these labels compete with efforts
by individual producers or producers’ associations to
differentiate their own products. Government can help
here by introducing quality guarantee certificates.

4.1.9.
But recently British supermarkets seem to have
changed their thinking and no longer to be insisting on
the anonymity of products. On the contrary, the aim is
now to improve the image of the product by revealing
the name of the producer. ‘Very few producers would
put their name on a bad product’, said a representative
of one chain which sells onions from named producers.
Market research from other countries points in the same
direction. In 1996 59 % of consumers interviewed said
that they would have bought more fresh fruit and
vegetables if they had known the name of the producer.
In 1989 this was true of only 46 % of respondents.

4.2.4.
For high-value products (asparagus, straw-
berries etc.) relatively low percentage mark-ups of 50 to
70 % are the rule. In absolute terms, however, the
mark-up is greater than for lower-value goods. These
products usually have a short shelf life. This entails high
distribution costs.

4.2.5. Margins on low-value products (apples, cab-
bages etc.) are often well above 100 %, and in the case
of particularly cheap products (carrots, onions etc.) well
above 200 %. The absolute margins are however lower
than on higher-value products. This group of products
usually has a relatively long shelf life.

4.2.6.
This means that the producer’s share of the
consumer price is high in the case of high-value products
(e.g. 60 % for asparagus in Germany) and low in the
case of low-value products (just 20 % for white cabbage
in Germany).

4.2.7. Margins on the same product may vary from
one Member State to another where the popularity of
the product varies greatly. Thus the total margin on
chicory is lower in France than in Germany, as sales of
chicory in France are at least ten times those in Germany.

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4.2.8. Over the longer term the producer’s share of
the consumer price has fallen markedly. Whilst at the
beginning of the 1950s the producer’s share of the
consumer price of white cabbage was still above 50 %,
by the 1970s it had fallen to 33 %. It has since fallen
further to 18 %.

4.3.2.
The degree of price fluctuation at auctions
differs, depending on whether the product can be stored
to some extent or is highly perishable. In the case of
perishable products price fluctuations usually result
from changing availability, whilst in the case of more
durable products speculation plays a greater part.

4.2.9.
Short-term margin trends are particularly sig-
nificant for fresh products with large price fluctuations.

In general terms, auctions require greater flexi-
4.3.3.
bility of the retail trade. It is difficult to enter into
long-term fixed price agreements for products, the
availability of which varies greatly.

4.2.10.
For some products the price of which fluctu-
ates greatly, e.g. cauliflower and asparagus, there is a
close correlation between producer and consumer prices.
Other products do not exhibit this relationship however.

4.3.4.
Firm price agreements with supermarket chains
lead to reduced market transparency, as individual
customers are granted different prices and conditions
on the basis of their market strength.

4.2.11.
Unfavourable weather conditions or natural
disasters may cause prices to rise to such an extent that
the absolute trade margin actually has to be reduced.
This occurred in the case of leeks during the cold snap
in Northern Europe at Christmas 1996.

4.2.12. On the other hand, the state of stocks may
cause a significant widening of trade margins. European
stocks of apples were unexpectedly high in January
1997. Attempts were therefore made to boost sales by
cutting producer prices. This merely resulted in a price
war, however, and did nothing to boost demand.
Although local producer prices had fallen sharply since
the middle of January, retail prices did not move.

4.2.13.
In the case of products, like apples, which are
relatively resistant to consumer price changes, consumer
demand cannot thus in the short term react to changed
supply conditions. The result is increased price pressure
upstream, and higher margins, and thus profits, for the
retailers. The retail trade’s resistance to price cuts and
the pressure exerted by it on producers have increased
in recent years and are likely to increase further.

4.2.14.
It appears that frequent fluctuations in the
price of fruit and vegetables at auction are becoming an
increasing irritant to the buyers of the major retailers.
Large retailers are therefore tending to enter into
longer-term price agreements. In some cases they insist
on seasonal average prices, based on production costs
plus a ‘normal’ mark-up (‘cost price plus’).

4.3. The demands of food retailers in setting prices

4.3.1.
Leading retailers demand ever greater price
stability and certainty from their suppliers. Auction
systems are subject to critical scrutiny, and weekly or
longer-term price agreements, or even seasonal average
prices, are gaining in importance.

4.3.5.
It may be assumed that the distributive trades
are normally better informed of the market situation than
producers and their associations. Market information
(harvest forecasts, stocks, demand trends etc.) is thus
very important to producers in enabling them to conduct
successful sales negotiations. The organization and
financing of market information systems for producers
differ greatly from one Member State to another. Thus,
in France information of this kind is collated and
disseminated by a department of the agriculture ministry.
In Germany producers have to finance the system
themselves. In some Member States there are no market
intelligence organizations.

5. Outlook and conclusions

The Committee,

5.1.
like the Commission in its
Green Paper on Commerce, realistically believes that an
irreversible concentration is taking place in European
food retailing. It is to be expected that European food
retailing will become even more concentrated and that
price agreements will become still more prevalent.
Supermarkets, hypermarkets and discount stores will
continue to increase their share of sales of fresh fruit
and vegetables in all European countries, although the
pace of change will differ from one Member State to
another.

The Committee considers that policy measures
5.2.
are needed to contain the process of concentration
in the retail trade within reasonable bounds. The
producers’ position vis-à-vis the major retailing organ-
izations must also be further strengthened, for example
by helping them to help themselves. Only in this way
can manifest market failure and socially undesirable
developments and abuses, such as extremely long pay-
ment deadlines or ‘listing fees’, be prevented, and can it
be ensured that all kinds of retail outlet continue to
offer consumers a broad range of fruit and vegetables.

5.3.
The Committee is concerned that major retailers
are not adjusting the prices of perishable products like
fruit and vegetables, or not adjusting them quickly

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enough, to changing supply and demand conditions.
This may result in unsaleable stock or severe loss of
income for producers.

5.4.
The Committee points out that there is a danger
that increasing concentration of purchasing within the
leading distributive organizations will diminish the
range of fruit and vegetables available and lead to
regional specialities disappearing from shelves, to the
detriment of local producers and consumers. This would
give a further impetus to the standardization of products
on the basis of their external appearance, and shelf life,
at the expense of their organoleptic qualities. Specialist
outlets and weekly markets can be expected to offer
regional ranges increasingly alongside their international
products, but the sale of regional products should not
be restricted to these outlets. It is unacceptable that
products should be withheld from the consumer because
quantities sufficient for a national programme cannot
be assembled or because of ‘listing fees’.

The EU market organizations have for some
5.5.
time, rightly in the Committee’s view, required national
origin to be clearly indicated; this requirement should
be retained without qualification. Information should
also be provided on the time of harvesting. It is however
not certain that these rules are being properly enforced
by means of checks and sanctions The fact that this
desirable labelling is not required for many other
foodstuffs may play a part here. The Commission’s
initiatives on protected labels of origin and geographical
denominations are to be welcomed. However, it is
striking that these programmes have been slow to get
off the ground and that labels of origin and local
denominations are insufficiently well known. In some
Member States these Community protection systems
have so far been a failure.

5.6.
The Committee is concerned that there could be
a loss of market transparency, particularly in the case
of fresh products like fruit and vegetables. This would
weaken the position of producers. In this field the
Commission has so far undertaken only to collect

Brussels, 28 January 1998.

information needed for the management of the market.
The possibility of making market information available
to market participants should also be looked at, for
example in the increasingly important area of organic
products; attention should be paid here to balanced cost
allocation.

The Committee acknowledges that with the
5.7.
reform of the market organization for fruit and veg-
etables steps have been taken towards strengthening the
position of producers and their organizations. In view
of the concentration of demand, combining supply via
producer organizations is more urgent than ever. The
operational funds and programmes should be used to
boost the competitiveness of producer organizations
and thus of their products.

The Committee points out that margins will in
5.8.
future depend to a very great extent on product
quality and on the quality programmes operated by
producers/traders. Food labelling and the novel food
regulation (1), as well as quality standards for fruit and
vegetables are particularly important here. A universal
approach to quality maintenance needs to be developed,
particularly within the distribution organizations. Only
in this way can it be ensured that ‘higher’ quality reaches
the consumer and is appropriately rewarded.

5.9.
Finally, the Committee urges that consumers
be made more aware of their — considerable —
opportunities for influencing supply and prices. Prefer-
ences expressed only in non-binding polls have absolutely
no effect on the market and may actually be counter-
productive. But consumers can exercise effective influ-
ence through their buying behaviour and choice of
outlet. Consumers should also be informed as to
production methods and the quality and health charac-
teristics of products. Young consumers are a particularly
important target group here. Increased initial and further
training of sales staff and improved information, for
example on regional products and food quality, are of
course in the interests of both producers and consumers.

(1) Regulation (EC) No 258/97 of 27 January 1997.

The President

of the Economic and Social Committee

Tom JENKINS