Commission Staff Working Document - Outcomes of the High-Level Group onthe Competitiveness of the Agro-Food Industry Proposals to increase the efficiency and competitiveness of the EU food supply chain - Accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A better functioning food supply chain in Europe {COM(2009) 591 final}
Date: 2009-10-28
Institutions: European Commission
Subjects: agri-foodstuffs, competition, consumer price, food price, foodstuff, impact study, price fluctuation, price of agricultural produce, restriction on competition, supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2009 
SEC(2009) 1448 

COMMISSION STAFF WORKING DOCUMENT 

Outcomes of the High-Level Group  
on the Competitiveness of the Agro-Food Industry 
Proposals to increase the efficiency  
and competitiveness of the EU food supply chain 

Accompanying document to the 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

A better functioning food supply chain in Europe 

{COM(2009) 591 final} 

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TABLE OF CONTENTS 

Introduction .................................................................................................................. 3 

A strong sector facing structural changes and a lowering competitiveness................. 3 

Basic facts and figures on the food processing industry .............................................. 3 

A lowering competitiveness......................................................................................... 4 

The impact of the financial crisis ................................................................................. 4 

Challenges ahead for the food industry........................................................................ 4 

Methodology followed to identify ways of improvements .......................................... 5 

The High Level Group on the Competitiveness of the Agro-Food Industry ............... 5 

Complementary studies................................................................................................ 5 

Analytical Results ........................................................................................................ 6 

Regulatory burden........................................................................................................ 6 

Access to raw materials................................................................................................ 6 

Innovation .................................................................................................................... 7 

Internal market for food ............................................................................................... 8 

Relationships within the food supply chain ................................................................. 8 

Trade with third countries ............................................................................................ 9 

On-going analytical work and timetable ...................................................................... 9 

Recommendations issued by the High Level Group.................................................... 9 

Ensure a holistic approach for the European food industry ....................................... 10 

Agricultural and environmental policy ...................................................................... 10 

The Internal Market for Food..................................................................................... 10 

The Operation of the Food Chain............................................................................... 10 

Research and Innovation ............................................................................................ 11 

Trade and Exports ...................................................................................................... 11 

Conclusion.................................................................................................................. 11 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

5.5. 

5.6. 

6. 

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COMMISSION STAFF WORKING DOCUMENT 

Outcomes of the High-Level Group on the Competitiveness of the Agro-Food Industry: 
proposals to increase the efficiency and competitiveness of the EU food supply chain 

1. 

INTRODUCTION 
In its Communication on "Food prices in Europe"1, the Commission highlighted that 
"the  food  supply  chain  connects  three  economically  important  sectors:  the 
agricultural  sector,  the  food  processing  industry  and  the  distribution  sectors.  These 
sectors account for 6% of EU value added and 12% of EU employment. As the food 
processing  industry  and  the  distribution  sectors  have  many  interactions  with  other 
sectors,  market  malfunctioning  along  the  food  supply  chain  can  have  significant 
repercussions. The slow productivity growth in these sectors in comparison with the 
US  indicates  that  there  is  room  for  efficiency  improvements.  A  proactive 
competitiveness  policy,  such  as  […]  discussed  by  the  High  Level  Group  on  the 
Competitiveness  of  the  Agro-Food  Industry2,  […]  could  contribute  to  such 
improvements." 

As  a  follow-up  to  this  Communication,  the  purpose  of  this  paper  is  to  present  the 
main outcomes of the High Level Group on the Competitiveness of the Agro-Food 
Industry (HLG). 

2. 

A  STRONG  SECTOR  FACING  STRUCTURAL  CHANGES  AND  A  LOWERING 
COMPETITIVENESS 

2.1. 

Basic facts and figures on the food processing industry 

According  to  Eurostat  Structural  Business  Statistics,  the  food  processing  industry 
currently  represents  2%  of  Europe's  gross  domestic  product  and  13.5%  of  total 
employment in the EU’s manufacturing sector. It contributes an annual production of 
more  than  €870  billion  to  the  EU  ec onomy.  The  food  industry  consists  of 
approximately 310.000 enterprises, some of which are global leaders. In value-added 
terms,  the  food  industry  is  the  second  largest  sector  in  the  manufacturing  industry, 
after the basic metals and fabricated metal products. 

The  completion  of  the  Internal  Market has  brought  huge  opportunities  for  the  food 
supply  chain.  Since  its  creation,  it  has  enabled  the  food  industry  to  develop 
considerably by providing access to 500 million consumers who enjoy a wide range 
of safe products at affordable prices originating in all Member States. It continues to 
play a fundamental role in satisfying the needs of consumers. 

Furthermore, harmonised EU food legislation continues to contribute to food safety, 
consumer confidence, free circulation of goods and indeed to the competitiveness of 
the food industry across the European Union. 

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Commission Communication on "Food prices in Europe"{COM(2008) 821 final} 

Commission  Decision  n° 2008/359/EC  of  28  April  2008  setting  up  the  High  Level  Group  on  the 
Competitiveness of the Agro-Food Industry 

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2.2. 

A lowering competitiveness 

However, at this point in time, the entire European food supply chain has entered a 
period of structural adjustment. According to the results of a study published by the 
European  Commission  in  20073,  the  competitiveness  of  the  EU  food  industry  is 
weaker than that of other sectors and other competing countries. Although the agro-
food  industry  remains  a  significant  contributor  to  employment  and  value-added 
growth  among  EU  manufacturing  industries,  labour  productivity  and  the  level  of 
investment in research and development is significantly lower in the food sector. At 
world  level,  EU  food  products  are  losing  market  share  to  Brazil,  Canada  and 
Australia. Furthermore, growth in value-added and labour productivity within the EU 
food industry is outpaced by that of the United States. 

The main weaknesses of the European food industry as pointed out in this study are a 
low level of labour productivity and limited economies of scale and scope leading to 
lower  value  added  growth.  The  low  level  of  labour  productivity  reflects  an 
underlying  problem  of  insufficient  investment  in  research  and  innovation,  which 
poses a particular challenge for the sector. 

There  are  trends  towards  concentration  in  both  the  food  manufacturing  and  retail 
sectors. According to the results of the 2007 study on the competitiveness of the food 
industry (see footnote 3), consolidation in the retail sector is outpacing that of food 
processors.  This  evolution  has  an  impact  on  the  relationships  between  the  different 
players. 

Consumer preferences are also changing as a result of income developments as well 
as shifts in population structures and lifestyles. Customer concerns about prices, food 
safety and health have also imposed stringent, though understandable, requirements 
on companies operating in the sector. 

In the global context, the liberalisation of trade, as well as the growing prosperity of 
a  number  of  emerging  economies,  has  provided  new  market  opportunities.  On  the 
other  hand,  the  rapid  fluctuations  in  the  price  of  raw  materials  create  significant 
trading  uncertainties  for  many  food  and  drink  companies,  in  particular  Small  and 
Medium-sized  Enterprises  (SMEs),  which  account  for  99%  of  the  food  processing 
companies. 

2.3. 

The impact of the financial crisis 

In addition, the global financial crisis hit Europe in 2008 and the credit squeeze, the 
fall  in  house  prices  and  tumbling  stock  markets  produced  a  slump  in  consumer 
confidence,  consumption  and  investment.  Even  if  the  food  industry  was  not  as 
severely  impacted  by  the  crisis  as  other  industries  such  as  the  automotive  and 
financial services industries, it has not escaped the shock. According to Eurostat data, 
the turnover of the food and beverages manufacturing industry has decreased by 4% 
between early 2008 and the second quarter of 2009.  

2.4. 

Challenges ahead for the food industry 

High safety and quality standards, as well as structural changes and the recent crisis, 
have placed the European food industry in a fundamentally different “playing field” 

3 

WIJNANDS J. H. M., VAN DER MEULEN B. M. J. and POPPE K. J., 2007. Competitiveness of the 
European Food Industry. An economic and legal assessment, European Commission. Brussels, 320 pp. 
(http://ec.europa.eu/enterprise/sectors/food/files/competitiveness_study_en.pdf) 

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than the one it faced a decade ago. In this context, the achievement of the EU internal 
market and the evolution of EU food legislation are relevant. 

European policies also have to acknowledge that the food industry evolves in a wider 
context in which a changing market situation, driven by exciting new technological 
developments in areas such as Information and Communication Technologies (ICT), 
biotechnologies and nanotechnologies, presents new challenges and opportunities. 

In  addition,  increased  international  trade  in  food  and  beverages,  and  cross-border 
mobility of investment have resulted in significant changes to traditional markets and 
trading patterns. It has become clear that an essential prerequisite for future growth 
and  competitiveness  in  the  European  food  industry  is  the  preparedness  of  the 
authorities  and  industry  to  address  the  impact  of  globalisation  and  to  face  these 
challenges  and  take  advantage  of  the  opportunities  offered  by  globalisation. 
European policies and regulations, in relation to the food supply chain, should ensure 
that the European agro-food industry can operate effectively within a global network 
of commodities, distribution channels and mobile investment. 

3. 

3.1. 

METHODOLOGY FOLLOWED TO IDENTIFY WAYS OF IMPROVEMENTS 

The High Level Group on the Competitiveness of the Agro-Food Industry 

The  High  Level  Group  on  the  Competitiveness  of  the  Agro-Food  Industry  (HLG) 
was  set  up  in  2008  with  a  mandate  to  identify  the  factors  that  influence  the 
competitive  position  of  the  European  food  industry  and  to  formulate  a  set  of 
recommendations for EU policy makers. It combined high level representatives from 
both the European Commission and the Member States together with representatives 
of industry, civil society and trade associations. 

The  creation  of  the  HLG  symbolised  the  European  Commission’s  commitment  to 
setting  out  a  “forward  looking”  approach  for  the  industry  while  addressing  the 
challenges  and  opportunities  that  it  currently  faces.  The  aim  of  the  HLG  was  to 
promote  the  competitive  position  of  this  key  EU  industry  in  global  markets  whilst 
ensuring that its recommendations are in line with the Lisbon strategy in facilitating 
job creation and securing sustainable economic growth. 

The HLG Members sought to establish an integrated, holistic approach to their task 
that  would  encompass  all  relevant  existing  policy  areas  having  an  impact  on  either 
the supply or demand side of the industry, from farm to fork, taking into account the 
vision of the respective HLG members for the future of the sector. In the course of 
their work, they examined ways to reduce costs, where possible, and to enhance the 
growth and efficiency of the whole food supply chain, from the primary sector to the 
retail sector, whilst securing sustainable, safe, nutritious, high-quality and diversified 
food products at affordable prices for the consumer. 

3.2. 

Complementary studies 

In  addition  to  the  major  study  published  in  2007  on  the  competitiveness  of  the 
European  food  industry  (see  footnote  3),  the  Commission  has  also  ordered  an 
assessment of the impact of Community legislation on the competitiveness of the EU 

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food industry, focussed on case studies in the dairy sector4. One of the objectives of 
the study was to assess the impact of an EU origin marking scheme. 

Following the debates within the HLG, additional studies are being launched, which 
are expected to deliver their conclusions by mid-2010. A first study will assess the 
legal  and  economic  aspects  of  the  private  labels  (retailers  own  brands)  and  their 
impact  on  the  functioning  of  the  food  supply  chain.  A  particular  attention  will  be 
paid to the positive and negative impacts of the private labels on the competitiveness 
of the SMEs. The study will include an impact assessment of several proposed policy 
options in this field. A second study will be focussed on a micro-economic approach 
of  the  relationships  between  producers,  processors  and  distributors.  Based  on  a 
detailed  analysis  of  the  costs  and  on  a  qualitative  approach  of  the  strategies  of  the 
operators,  the  study  is  aimed  at  better  understanding  the  relationships  between  the 
actors  and  thus  identifying  potential  issues  which  can  have  an  impact  on  the 
competitiveness of the food industry without falling under competition law. 

4. 

ANALYTICAL RESULTS 

The  works  of  the  High  Level  Group  and  complementary  studies  have  led  to  the 
following analytical results and findings5. 

4.1. 

Regulatory burden 

The European food industry accepts the relatively high regulatory burden related to 
the  European  legal  framework,  which  promotes  food  safety,  quality  and  the  free 
circulation of goods under fair and transparent conditions. Demands from clients also 
drive  food  safety  and  quality  systems.  Therefore,  the  industry  does  not  advocate  a 
policy  that  would  reduce  regulation  at  the  expense  of  food  safety  and  quality. 
Furthermore, it is considered that integration of food safety and quality requirements 
can alleviate compliance costs. 

However,  in  some  aspects  of  Community  law,  administrative  burdens  are  less 
accepted  by  the  industry.  The  industry  would  welcome  improvements  in  stability, 
clarity and accessibility of both legislation and authorities. Authorisation procedures 
for  certain  additives  and  technologies,  health  claims,  labelling  provisions  and  food 
information  are  identified  as  sometimes  being  unnecessarily  burdensome.  For  the 
industry,  there  is  also  an  evident  necessity  that  the  EU  legal  framework  remains 
enforceable, proportionate and is implemented in a harmonised way throughout the 
EU. 

4.2. 

Access to raw materials 

Access to raw materials at competitive prices is vital for the European food industry 
in  order  to  remain  competitive  and  to  provide  foodstuffs  at  affordable  prices  to 
consumers. Agricultural price developments in the past three years trigger increased 
uncertainty  on  the  future  state  of  the  global  markets  and  indicate  that  price 
fluctuations are likely to occur more frequently in the future. 

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POPPE K. J. et al., 2008. Food legislation and competitiveness in the EU food industry. Case studies in 
the dairy industry. European Commission, Brussels, 135 pp. 
(http://ec.europa.eu/enterprise/sectors/food/files/competitiveness/food_legislation_dairy_sector_en.pdf) 
Only  key  findings  are  mentioned  here.  For  more  information,  see  the  complete  report  available  on: 
http://ec.europa.eu/enterprise/sectors/food/competitiveness/high-level-group/documentation/ 

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From the food industry point of view, it would be of crucial importance to find a way 
to  facilitate  sufficient  supply  of  competitively-priced  raw  materials,  as  a  mean  to 
limit price volatility and achieve sustainable growth for the sector. 

Certain aspects arising from the structure of EC agricultural production and from the 
EU  regulatory  framework,  such  as  the  different  timelines  for  the  approval  of 
genetically  modified  crops  for  food  and  feed  between  the  EU  and  trading  partners, 
restrain access to raw materials for the food industry. On the one hand, these aspects 
are usually related to health and safety concerns which are of paramount importance 
for European consumers. On the other hand, the difference of approach between the 
EU  and  third  countries  lead  to  asynchronous  authorisations  which  have  negative 
consequences  on  the  competitiveness  of  the  EU  food  industry.  The  availability  of 
pesticides  for  the  treatment  of  certain  crops  of  fruits  and  vegetables  in  the 
Community,  leading  to  risks  to  their  continued  cultivation  in  the  EU,  is  another 
important concern. 

As regards animal feedstuff, some stakeholders claim that the current "feed ban" on 
products  of  ruminant  origin  lowers  the  competitiveness  of  their  businesses  as  it 
results in higher management and raw material costs, as well as in challenges related 
to  the  quality  of  the  meat  products.  Therefore,  they  support  the  view  that  the  EU 
legislation  needs  to  be  reviewed  and  developed  further  where  necessary.  This  is  in 
line  with  the  roadmap  of  the  Commission  on  Bovine  Spongiform  Encephalopathy 
(BSE) and the opinion of the European Economic and Social Committee that propose 
a review of the current ban. 

In  any  case,  authorisation  procedures  should  be  based  on  sound  scientific  opinion 
and should aim at protecting the health or safety of the European consumer. 

4.3. 

Innovation 

Innovation  is  one  of  the  major  drivers  and  indicators  of  the  competitiveness  of  the 
food  industry.  Research  and  Development  is  driven  by  new  challenges,  such  as 
globalisation,  environmental  sustainability,  public  health  and  consumer  demand  for 
high quality, healthy, convenient and sustainable food. For instance, eco-innovation 
is essential in order to meet the growing demand for environment-friendly products. 
Eco-innovation  encompasses  all  the  elements  of  food  supply  chain:  it  can  concern 
raw  materials,  packaging,  logistics,  industrial  processes,  transport,  distribution,  etc. 
Therefore, this field of innovation is of utmost importance for the sector as a whole. 

The  EU  legal  framework  has  indirect  impacts  on  innovation.  On  the  one  hand, 
process  innovations  are  stimulated  by  food  law,  in  the  sense  that  new  systems  and 
procedures have to be installed in order to comply with standards. 

But on the other hand, product innovations (e.g. the development of new ingredients) 
require  pre-market  approval  which  often  entails  lengthy  procedures.  Pre-market 
approvals are a core requirement of the EU regulatory framework, reflecting a strong 
consumer  insistence  that  safety  should  be  scientifically  proven.  Time-to-market  of 
new  products  is  relatively  long,  compared  to  the  USA  where  different  procedures 
apply, notably the "GRAS" principle (generally regarded as safe). As a consequence, 
costs are relatively high and have a negative impact on the capacity of companies to 
invest in product innovation. This is particularly relevant for SMEs. The regulatory 
framework  in  relation  to  these  procedures  has  recently  undergone  a  major  reform 
transparency  and  predictability  but  without 
which  will 
weakening the commitment to high levels of safety. 

improve  efficiency, 

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4.4. 

Internal market for food 

The  efficient  functioning  of  the  internal  market  is  of  key  importance  for  the 
competitiveness of the food industry. Divergent interpretation and implementation of 
EC law impedes the competition within the internal market, leading to a sub-optimal 
allocation  of  resources  and  an  increase  in  administrative  burdens.  As  regards  food 
safety,  for  example,  business  operators  should  develop,  implement  and  maintain 
management  systems  in  order  to  achieve  the  objectives  and  meet  the  requirements 
laid  down  in  feed  and  food  law.  These  systems  may  take  account  of  international 
standards such as ISO 22000. However, management systems voluntarily developed 
on the basis of this standard are not recognised by all Member States, which in some 
cases may create additional administrative costs. 

Another  example  would  be  the  origin  marking  schemes.  On  the  one  hand,  it  is 
essential  that  consumers  have  access  to  clear  information  which  allows  the 
identification  of  cultural  or  traditional  specificities  of  a  product.  But,  on  the  other 
hand,  labelling  schemes  should  not  restrict  the  free  circulation  of  goods  in  the 
internal market. 

4.5. 

Relationships within the food supply chain 

The  food  chain  is  composed  of  a  wide  diversity  of  enterprises  that  operate  in 
different  markets  selling  products  to  the  various  purchasers.  Several  forms  of 
interactions  between  supply  and  demand  occur  at  each  level  of  the  chain.  In  the 
agricultural sector, in the processing industry and in the distribution sector, small and 
big players are present, each having a different level of bargaining power. In some 
cases, lack of transparency and asymmetries of information (e.g. between small and 
bigger  processors)  regarding  price  formation  mechanisms  may  have  negative 
consequences on the competitiveness of some players. 

Small  and  medium-sized  enterprises  (SMEs)  represent  99%  of  the  food  and  drink 
companies  and  provide  63%  of  the  employment  of  the  food  and  beverages  sector. 
Although  they  respond  to  the  diversified  demand  that  arises  from  the  cultural 
differences  among  the  EU,  they  may  suffer  from  a  lack  of  economies  of  scale.  In 
comparison,  the  very  limited  number  of  large  companies  generates  52.9%  of  the 
value  added  of  the  sector  and  has  a  significantly  higher  level  of  apparent  labour 
productivity.  Consolidation  and  more  vertical  integration  may  be  seen  as  a  way  to 
increase the efficiency of the food SMEs and to reduce the asymmetry of bargaining 
power  between  processors  and  distributors.  But  it  may  also  reduce  competition  on 
price-related  criteria  between  processors  and  possibly  lead  to  a  lessening  of 
competitive  interactions  between  the  remaining  market  players.  Public  authorities 
have  their  role  in  making  sure  that  the  on-going  consolidation  process  does  not 
worsen  upstream  and  downstream  competition  conditions  at  the  local  level,  to  the 
detriment of businesses and consumers. 

The market share of private labels (retailer's own brand) has been growing at a quick 
pace. According to retailer panels, private labels now exceed 30% of the food market 
in several Member States. Private labels reflect a new form of relationships between 
processors, retailers and consumers. They often allow SMEs to access large markets. 
Compared  to  A-brands,  marketing  costs  are  relatively  low  for  private  labels. 
Therefore,  consumer  prices  are  generally  lower.  They  are  also  more  reactive: 
changes  in  the  price  of  raw  agricultural  materials  have  usually  more  impact  on  the 
price  of  private  labels  than  on  the  price  of  A-brand  products.  Private  labels  often 
imply that that the consumer has no information concerning the processor. From the 

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processors' point of view, this absence of visibility may be seen as an opportunity in 
some  cases,  especially  for  non-differentiated  products.  On  the  contrary,  for 
differentiated  products,  processors  may  be  disadvantaged  by  this  lack  of  visibility. 
Through  private  labels,  retailers  have  become  direct  competitors  to  their  suppliers. 
This has a significant impact on the structure of the food chain, which deserves to be 
followed up. 

4.6. 

Trade with third countries 

The  unprecedented  pace  of  globalisation  has  brought  a  huge  amount  of  new 
opportunities  regarding  markets and investment  possibilities. Progressively  opening 
trade  can  lead  to  significant  increases  in  growth  and  productivity  for  the  sector.  In 
addition,  as  the  EU  market  is  mature,  the  growth  in  domestic  production  is  lower 
than in the past and therefore the development of European food companies becomes 
more and more dependant on the external dimension and access to foreign markets 
both  for  exporting  and  importing  goods.  To  this  end,  EU  trade  and  commercial 
policy  is  vital  to  achieve  sustainable  development  and  operate  under  fair  trade 
conditions. 

Currently, trade statistics indicate that the European food industry is maintaining its 
export performance and is a major player on world food markets. However, its share 
appears  to  be  decreasing  overall  in  the  long-run,  to  the  benefit  of  emerging 
economies, thus challenging the industry's global competitive position. 

EU  exporters  face  a  number  of  barriers  such  as  tariff  and  non-tariff  barriers, 
diverging regulations, administrative procedures, etc. The increase in counterfeiting 
in third countries carries another significant threat for the EU food industry. 

4.7. 

On-going analytical work and timetable 

As  mentioned  in  paragraph  2.2,  two  complementary  studies  are  being  launched 
(effect  of  private  labels  on  the  SMEs  and  structure  of  costs  within  the  food  supply 
chain). Final reports should not be expected before mid 2010. 

5. 

RECOMMENDATIONS ISSUED BY THE HIGH LEVEL GROUP 

On March 17, 2009, the HLG issued a report and a set of 30 recommendations for 
actions. This was followed by the adoption, on July 6, 2009, of a Roadmap of Key 
Initiatives  with  a 
the 
list  of  concrete  actions  aimed  at 
recommendations6. 

implementing 

The group's recommendations cover 5 major areas of interest: 

–  Agricultural and Environmental Policy 

–  The Internal Market for Food 

–  The Operation of the Food Chain 

–  Research and Innovation 

–  Trade and Exports. 

The  nature  of  the  recommendations  reflects  the  composition  and  working 
methodology of the group. They constitute a first step towards an in-depth look into 

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how the food supply chain operates and into the role the framework conditions in the 
EU are playing in shaping this industry. 

The  recommendations  are  consistent  with  ensuring  the  enforcement  of  the  better 
regulation  principle;  the  need  for  fair  participation  in  world  markets;  social  and 
economic  cohesion  concerns;  and  the  need  for  technology  transfer  to  stimulate 
innovation.  Small  and  medium  sized  enterprises  were  placed  at  the  heart  of  the 
discussions at all stages of the deliberation process. 

The recommendations of the HLG are addressed to Stakeholders and Member States, 
as well as to the European Institutions in general and the European Commission in 
particular. 

Out of the recommendations of the HLG and of the related studies, the following axis 
of  work  could  be  put  forward  in  the  coming  reflections  on  actions  be  to  taken  at 
Community level. 

5.1. 

Ensure a holistic approach for the European food industry 

Adopting  an  integrated  and  holistic  approach  with  respect  to  European  Union  and 
National  policies  would  ensure  that  the  specificities  of  the  food  chain  from  the 
supply  and  demand  side  are  duly  taken  into  account,  thus  enhancing  the  overall 
sustainable  competitiveness  of  the  food  industry,  from  farm  to  fork,  whilst 
maintaining  high  food  safety  standards.  This  approach  would  ensure  coherence 
among  the  different  policy  objectives  and  consistency  of  agreed  measures  in  the 
design of the industrial policy in the food sector. 

5.2. 

Agricultural and environmental policy 

–  Continued  support  for  an  ambitious  development  of  the  Common  Agricultural 
Policy  which  enables  farmers  to  better  respond  to  market  signals,  while 
addressing production and market risks, and the availability of sufficient supply of 
raw materials at competitive prices. 

–  Design  an  environmental  and  sustainable  industrial  policy,  and  promote  energy 

efficiency for the European agro-food industry. 

5.3. 

The Internal Market for Food 

–  Effective implementation of the regulatory framework on products authorisation. 

–  Ensure  that  impact  assessments  of  new  food  legislation  fully  take  into 

consideration the impacts on the food processing SMEs. 

–  Ensure  harmonised  implementation  and  enforcement  of  EU  laws  by  Member 

States. 

5.4. 

The Operation of the Food Chain 

–  Promote  the  adoption  of  a  European-wide  code  of  conduct  concerning  the 
contractual  relationships  between  processors  and  distributors  and  promote  more 
transparency in the price formation along the food supply chain, in order to reduce 
the  asymmetries  of  information  among  the  players.  Means  to  reach  these 
objectives  would  be  discussed  within  the  European  forum  that  the  HLG 
recommended to put in place. 

–  Launch  a  debate  on  private  labels  and  consider  scenarios  which  would  enhance 

the visibility of the processors. 

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–  Pay a specific attention to SMEs and cooperatives by enhancing and publicising 
the  existing  tools  (access  to  finance,  innovation  platforms…)  as  well  as  by 
developing new forms of support to small businesses, e.g. for exports (see 4.2.6). 
Better regulation should also remain an important axis of industrial policy, with a 
view to reduce burdensome procedures. 

–  Consider the relevance of promoting increased economies of scale and scope e.g. 
by financing consolidation in sub-sectors and regions where the atomisation of the 
processors creates non-competitive situations. 

5.5. 

Research and Innovation 

–  Further develop support to research and innovation in the food sector on strategic 
issues  (biotechnologies,  nanotechnologies,  environment-friendly  technologies, 
packaging…),  through  technological  and  innovation  platforms  and  regional 
competitiveness clusters. 

5.6. 

Trade and Exports 

–  Set up an EU economic intelligence network in order to support European SMEs 

exporting to third countries. 

–  Aim  at  concluding  a  balanced  WTO  agreement  and/or  bilateral  free  trade 
agreements allowing a better access of European processed agricultural products 
to other markets. 

–  In order to enhance the respect of international property rights by third countries, 
the  Commission  may  explore  the  feasibility  of  setting  up  a  market  surveillance 
mechanism of counterfeiting. 

–  Promote the uptake of international standards. 

6. 

CONCLUSION 

The HLG issued a comprehensive set of recommendations addressed to political and 
economical actors in order to improve the efficiency of the EU food supply chain. 

In  the  communication  to  which  this  working  document  is  attached,  the  European 
Commission fully takes these recommendations into account. 

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ANNEX: MEMBERSHIP OF THE HIGH LEVEL GROUP ON THE COMPETITIVENESS 
OF THE AGRO-FOOD INDUSTRY 

European 
Commission 

Member 
States 

Industry 

Associations 

Member  with 
"observer" 
status 

Günter VERHEUGEN (Chairman) 
Marian FISCHER-BOEL 
Meglena KUNEVA 
Androulla VASSILIOU 

Vice-President, Enterprise and Industry 
Commissioner, Agriculture and Rural development 
Commissioner, Consumer Protection 
Commissioner, Health 

Valery MITKOV TZVETANOV 
Eva KJER HANSEN 
Bruno LEMAIRE (replacing Michel 
BARNIER) 
Ilse AIGNER 

Claudio SCAJOLA 
Marek SAWICKI 
Elena ESPINOSA MANGANA 

Jim FITZPATRICK MP 
(replacing Jane KENNEDY) 

Francesco PIZZAGALLI 
Chris van STEENBERGEN 
Philippe-Loïc JACOB 
Antonio HERNANDEZ CALLEJAS 
Ev Eder WIDMANN 
Paolo BRUNI 
Eckhard CORDES 
Laurent FREIXE 
Pierre COPPERE 
Theo SPETTMANN 
Jesper MØLLER 
Doug BAILLIE 
Pekka LAAKSONEN 

Jean MARTIN 
Monique GOYENS 
Pekka PESSONEN 
Harald WIEDENHOFER 
Monika KOSINSKA 
Eric BASCLE 

Rolf ERIKSSON 

Minister of Agriculture and Food (BG) 
Minister of Food, Agriculture and Fisheries (DK) 
Minister of Food, Agriculture and Fisheries (FR) 

Federal minister of Food, Agriculture and Consumer 
Protection (DE) 
Minister of Economic Development (IT) 
Minister of Agriculture and rural development (PL) 
Minister of Environment, Rural and Marine Affairs 
(ES) 
Minister for Farming and the Environment (UK) 

President, ASS.I.CA 
President Europe, Cadbury 
Corporate Secretary, Groupe Danone 
President, Ebro Puleva 
CEO, Eder & Heylands 
President, FEDAGRI Confcooperative 
CEO, METRO 
Executive Vice-President, Nestlé 
President, Director-General Pernod 
CEO, Südzucker 
CEO, Toms Confectionery Group 
President Western Europe, Unilever 
President and CEO, Valio 

President, CIAA 
Director General, BEUC 
Secretary General, COPA-COGECA 
Secretary General, EFFAT 
Secretary General, EPHA 
Member of the board, Carrefour, representing ERRT 

State Secretary, Ministry of Agriculture (SE) 

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