Farm input supply chain: structure and implications European Parliament resolution of 19 January 2012 on the farm input supply chain: structure and implications (2011/2114(INI))
Date: 2012-01-19
Institutions: Committee on Agriculture and Rural Development, European Parliament
Subjects: agri-foodstuffs, agricultural production, animal nutrition, commodity price, common agricultural policy, distributive trades, energy saving, farm income, plant health product, price fluctuation, production cost, seed, supply, water management








CE2013227EN.01000301.xml










6.8.2013   


EN


Official Journal of the European Union


CE 227/3





Thursday 19 January 2012Farm input supply chain: structure and implications
P7_TA(2012)0011
European Parliament resolution of 19 January 2012 on the farm input supply chain: structure and implications (2011/2114(INI))
(2013/C 227 E/02)

The European Parliament,






—


having regard to its resolution of 23 June 2011 on the CAP towards 2020: meeting the food, natural resources and territorial challenges of the future (1),










—


having regard to its resolution of 7 September 2010 on fair revenues for farmers: A better functioning food supply chain in Europe (2),










—


having regard to its resolution of 18 January 2011 on recognition of agriculture as a strategic sector in the context of food security (3),










—


having regard to its resolution of 8 March 2011 on the EU protein deficit: what solution for a long-standing problem? (4),










—


having regard to the OECD preliminary report of May 2011 on ‘A Green Growth Strategy for Food and Agriculture’ (5),










—


having regard to Eurostat data on price indices of the means of agricultural production (input costs) and price indices of agricultural products (output prices) (6),










—


having regard to Article 349 TFEU, which establishes a specific regime for the most remote regions,










—


having regard to the 3rd SCAR Foresight Exercise of the European Commission’s Standing Committee on Agricultural Research (SCAR) on ‘Sustainable food consumption and production in a resource-constrained world’ (February 2011) (7),










—


having regard to the ‘Global Report - Agriculture at a crossroads’ by the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD),










—


having regard to the JRC report of 2008 on ‘Low input farming systems: an opportunity to develop sustainable agriculture’ (8),










—


having regard to the JRC report of 2007 on ‘Consequences, opportunities and challenges of modern biotechnology in Europe’,










—


having regard to the JRC report of 2010 on ‘Compendium of reference methods for GMO analysis’,










—


having regard to the JRC report of 2010 on ‘Impacts of the EU biofuel target on agricultural markets and land use: a comparative modelling assessment’,










—


having regard to Directive 2009/128/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for Community action to achieve the sustainable use of pesticides (9),










—


having regard to the legislative proposals of the Commission on reform of the CAP presented on 12 October 2011 (COM(2011)0625, COM(2011)0627, COM(2011)0628, COM(2011)0629, COM(2011)0630, COM(2011)0631) and the proposal for a Single CMO Regulation,










—


having regard to Rule 48 of its Rules of Procedure,










—


having regard to the report of the Committee on Agriculture and Rural Development (A7-0421/2011),










A.


whereas high volatility in agricultural commodity and farm input prices has increased insecurity in farm incomes and in long-term investments by farmers, especially for isolated regions, mountain regions, island regions and the most remote regions, for which the factors of distance and isolation entail high additional costs, impacting negatively on the incomes of those regions’ farmers;










B.


whereas total input costs for EU farmers climbed on average by almost 40 % between 2000 and 2010, while farm gate prices increased on average by less than 25 %, according to Eurostat; whereas the increase in input costs within that decade reached 60 % for energy and lubricants, almost 80 % for synthetic fertilisers and soil improvers, over 30 % for animal feed, around 36 % for machinery and other equipment, almost 30 % for seeds and planting stock and nearly 13 % for plant protection products, highlighting the need to facilitate access to cheaper inputs for farmers, particularly from the world market;










C.


whereas higher food prices do not automatically translate into higher farm incomes, mainly due to the speed at which farm input costs increase and the growing divergence between producer and consumer prices;










D.


whereas higher production costs and difficulties in passing them down the food distribution chain are liable in the short term to jeopardise certain enterprises’ survival while undermining the productive structure in certain Member States, thus worsening the trade balance in terms of imports and dependence on volatile external markets;










E.


whereas the consumer is currently also being disadvantaged in the sense that producers are unable to pass on the exponential rise in the cost of factors of production to the big retailers, who in their case pass that rise on to the consumer with their huge profit margins;










F.


whereas upward pressure on input prices is expected to rise further as a result of resource scarcity, growing demand for food in emerging economies and policies which make it harder for EU farmers to gain access to cheaper feed available on the global market;










G.


whereas food production can be regularly undermined by a range of factors including the impact of pests and diseases, availability of natural resources and natural disasters;










H.


whereas EU agriculture is currently highly dependent on input imports – mainly fossil fuels, but also animal feed and scarce soil-improving minerals such as phosphate – and is therefore vulnerable to price hikes; whereas this has raised major concerns about EU farmers’ competitiveness, especially in the livestock sector;










I.


whereas the present price volatility has a European and world dimension, and it is therefore necessary to seek a specific solution at Community level for the agri-food chain, given its strategic role in the Union, while concerted action is already required at G-20 level;










J.


whereas the EU is ever more dependent on the factors of production that are required if agriculture is to be preserved in Europe; whereas it is therefore necessary to call for rapid action to reduce that dependence, by means of investments and decisions at a purely political level, so as to ensure greater self-sufficiency in food for the EU;










K.


whereas the EU is heavily dependent on fossil fuel imports: whereas increasing resource efficiency is central to the Europe 2020 Strategy and the Commission’s Roadmap to a Resource Efficient Europe;










L.


whereas agricultural production in the EU is in the main oil-dependent and the food supply chain relies heavily on the availability and affordability of that fuel; whereas global oil production is expected to start to decline by on average 2-3 % per year;










M.


whereas increases in crude oil prices are inextricably linked with increases in agricultural input costs, resulting in higher energy, feed and fertilizer prices, which impact on global food production;










N.


whereas the manufacture of farm fertilizers is totally dependent on the ready supply of phosphate rock; whereas its commodity price increased by 800 % in 2007/2008 and its supply could peak by 2033-2035, after which it will become increasingly scarce;










O.


whereas, especially in the livestock sector, costs are also rising due to increasing phytosanitary, animal welfare, environmental protection, hygiene and food safety requirements, as a result of which the competitiveness of European producers will further decrease in comparison with those in third countries, who do not have to comply with these strict requirements;










P.


whereas the EU has set a high level of standards in food safety and human and environmental protection, which entails consequences for the time and cost of development of new practices and tools up- and downstream in the food chain;










Q.


whereas consumers, faced with a reduction in their purchasing power, are increasingly opting for products whose quality and safety standards are lower than those for products originating in the EU, and which are not traceable, especially in the case of meat;










R.


whereas on average 42 % of total water supply in Europe is used by agriculture (Greece 88 %, Spain 72 %, Portugal 59 %) and whereas costs of irrigation, channelling of water in wetland regions and drainage have increased in order to make irrigation technologies more efficient, and whereas some of the water used by agriculture returns to the natural water cycle;










S.


whereas the price of farmland and the cost of land rental directly impacts on the viability of farming and on the ability of young entrants to get established in farming;










T.


whereas the market concentration of farm input suppliers is very high, with six companies controlling nearly 75 % of the agrochemicals market and three companies controlling over 45 % of the seeds market; whereas this concentration contributes to maintaining high seed prices and has a substantial negative impact on crop diversity, and whereas the involvement of farmers in the development of price trends is limited; whereas there is high market concentration not only upstream but also in the food (retail) trade, which places farming under additional cost pressure;










U.


whereas the viability and competitiveness of small-scale production (minor crops) are disproportionately affected by legislative and structural changes in the input industries, and whereas more needs to be known about the impact of these changes;










V.


whereas increased fuel, fertilizer and feed prices represent the main increase in costs for farmers;










W.


whereas, in the light of extreme fluctuations in agricultural prices throughout the food chain and related financial speculation, market transparency upstream of the food chain is also essential to improve competition and resilience to price volatility;










X.


whereas long-term investments in more efficient input and resource management, including energy, soil and nutrients, water technology, seeds and agrochemicals, is needed to respond to the new economic and environmental challenges, including within the context of the Europe 2020 Strategy; whereas extension services and institutional improvements and innovations affecting the use of inputs, farmers’ attitudes and skills are critically important for adopting more resource-efficient, sustainable and innovative farming systems;










Y.


whereas fermentation of slurry is desirable in terms of plant cultivation and the environment, while it is also necessary to create incentives for generating energy from biomass, a measure which will, besides, contribute to sustainable farming;










Z.


whereas there is considerable potential in farming for saving energy and costs through improved energy efficiency which could be further improved through local renewable energy production that fully exploits the potential of renewables (especially wind and solar energy, biomass, biogas, biofuels, use of waste products, etc.);










AA.


whereas crop diversification and crop rotation can contribute to climate change mitigation and provide for the sustainable use of synthetic fertilisers and pesticides;










AB.


whereas production of leguminous protein crops in the EU as well as improved grass-fed production systems would reduce the EU’s protein deficit and its dependence on feed imports and could have major economic benefits for farmers, but will not be a one-size-fits-all solution to the existing multiple imbalances in the farm input supply chain and would also lead to a reduction in the production of other, more resource-efficient arable crops;










AC.


whereas farm-saved seeds can offer, in certain circumstances and for specific varieties, an alternative to commercial seeds;










AD.


whereas unsuitable storage and transport conditions cause significant quantities of agricultural commodities to be spoilt and hence disposed of, so that they are no longer available as food or feed (FAO, Global Food Losses and Food Waste, 2011);






General solutions










1.


Calls on the Commission and Member States to improve the transparency of farm input prices and guarantee that competition rules apply and be enforced throughout the upstream and downstream food market chain;












2.


Calls for greater scrutiny and better analysis, at EU and global level, of the economic fundamentals which explain rising food prices – predominantly interactions between supply and demand fluctuations, as well as increasing interactions between the price movements of energy, inputs and food commodities;












3.


Calls on the Commission to refine its analysis of the reasons behind extreme market fluctuations and seek greater clarity on the interactions between speculation and agricultural markets, as well as energy markets and food commodity prices; stresses that this should be part of the efforts to better regulate and increase transparency and the quality of information on financial markets at global and EU level, including in the upcoming review of the Markets in Financial Instruments Directive (MiFID) and the Market Abuse Directive (MAD);












4.


Calls on the Commission to encourage more efficient agronomic practices and improved, sustainable agricultural resource management, with the aim of producing stable and productive agriculture, reducing input costs and nutrient wastage and increasing innovation, resource efficiency and effectiveness and sustainability within farming systems; is convinced that this could be done within the framework of the announced European Innovation Partnership for agricultural productivity and sustainability; stresses the need for an integrated approach for farmers which brings balance in all areas of farming (production, environment, profitability, social dimension);












5.


Calls on the Commission to further support sustainable and productive agriculture, in order to meet environmental and food challenges, as well as ensuring that it remains profitable and competitive in the world market;












6.


Welcomes the European Food Prices Monitoring Tool set up by Eurostat and the setting-up of the High Level Forum for a better functioning of the food supply chain, which must include the input sector operating upstream and should deliver better transparency on input price development and contribute to improved farm gate prices; insists that regular reports on progress made and concrete proposals should be transmitted to and discussed with the European Parliament;












7.


Considers that primary producers cannot fully benefit from increased output prices as they are being ‘squeezed’ between, on the one side, low farm gate prices due to the strong positions of processors and retailers, and high input prices due to increased concentration of input companies on the other side;












8.


Calls on the Commission to better evaluate the impact of EU legislation on the sustainability and competitiveness of European agriculture; believes that, in particular, consideration should be given to the costs of complying with legislation and the impact that this has on the availability of inputs as well as on the prices of those inputs;












9.


Calls on national and European competition authorities to address the abuses of the dominant position of agribusiness traders, food retailers and input companies and to apply EU antitrust legislation, in particular in the fertilisers sector, where farmers face tremendous difficulties in forward-buying essential fertilisers; considers that European competition authorities (DG Competition, etc.) should therefore carry out a full sector inquiry to challenge all anti-competitive practices;












10.


Stresses that all action in this field requires a prior definition, which must be conceptually objective and rigorous, of abusive, unfair and anti-competitive practices, so as to enable the necessary specific forms of regulation and monitoring;












11.


Urgently calls on the Commission to undertake an in-depth study into the differences in approach between the 27 national competition authorities and policies and to encourage solutions which involve all partners in the food production chain and which prevent dominant positions of one or a mere few parts of the input or output chain, which often occur at the expense of the agricultural producer;












12.


Believes it is necessary to introduce a system for the effective control of such practices, either by administrative or by legal means, and to create a mechanism for the assessment and monitoring of Member States by the Commission, while also introducing penalties of a sufficiently deterrent and timely nature;












13.


Stresses also the need for an EU-wide system for exchanging information on good practices in nutrient, energy and natural resources and the management of other inputs in order to achieve greater effectiveness and efficiency of inputs;












14.


Calls for the new CAP to include specific support measures for better and more efficient resource management and for sustainable practices which reduce input use and costs and improve farmers’ ability to adapt to price volatility, including measures to support short input and food chains;












15.


Welcomes the Commission’s increased focus on Europe’s bioeconomy; calls for a substantial part of the next research framework programme to be earmarked for R&D in the efficient use and management of farm-inputs management and improving agronomic efficiency; stresses that the results of research must be translated into the practical enhancement of agricultural production through training and capacity-building for farmers; stresses the need for better collaboration between the public and private sectors, as well as farmers’ organisations, in this regard, thereby delivering practical applications on the ground which could improve and modernise the industry;












16.


Calls on the Commission and the Member States to look further at the role that producers’ organisations and cooperatives could play in organising collective purchases of farm inputs, with a view to strengthening farmers’ negotiating positions vis-à-vis the upstream industry;












17.


Calls on the Commission to better inform farmers and consumers about the need for more efficient management of energy, water and natural resources throughout the food chain, so as to significantly reduce waste of resources and food;












18.


Recognises that sustainable growth is one of the key priorities of the Europe 2020 Strategy and that the Union’s dependence on fossil fuels exposes it to shocks in these markets; reiterates the need to replace this dependence on finite resources with sufficiently robust alternatives, mindful of the balance between maintaining food production and promoting energy creation;






Energy










19.


Calls on the Commission and the Member States to promote investments in energy saving and renewable (wind, solar, biomass, biogas, geothermic etc.) energy production on-farm or in local partnership projects (wind, solar, biogas, geothermic etc.) promoted by local stakeholders with a special focus on using waste and by-products;












20.


Emphasises the importance of manure processing, which not only provides renewable energy but also reduces environmental pressure and is a substitute for artificial fertiliser in the form of mineral concentrates; calls on the Commission, in order for manure to be considered as an energy source, to recognise processed manure as a substitute for artificial fertiliser in the Nitrates Directive;












21.


Urges the Commission and the Member States to make sure that public support measures for biomass and agro-fuels – including biogas – do not contribute to unsustainable competition for resources between food and energy production, which must be organised sustainably;












22.


Calls on the Commission and the Member States to help generate new revenue for farmers by facilitating the integration of energy and heat produced from renewable farm sources into private and public energy systems and grids;












23.


Considers that efficient measures for on-farm and local energy saving and management should be made available throughout the EU via rural development programmes and the optional ‘greening’ measures of the future of the CAP;












24.


Calls on the Commission to analyse energy costs in the various existing farm systems and the associated input providers, processing industry and distribution systems in relation to productivity and output, taking into account energy efficiency and use of sustainable energy sources to respond to the new challenges;






Soil improvers and plant protection products










25.


Calls for efficient measures and incentives such as crop diversification, including planting of legumes and crop rotation adapted to local conditions, in the CAP reform after 2013, given the positive effect they have on climate change mitigation, soil and water quality and the ability of farmers to reduce their input costs;












26.


Calls furthermore on the Commission and Council to include investments in precision farming in an optional EU-wide list of ‘greening’ measures to be rewarded within the CAP, as these innovative practices (such as GPS-based soil monitoring) have similar positive effects on climate change mitigation, soil and water quality and farmers’ finances (with significantly reduced use of fertilisers, water, soil improvers, plant protection products and pesticides, which will reduce input costs for farmers);












27.


Stresses that EU agricultural production is dependent on the import of phosphate rock for the manufacture of fertilisers, with the majority of it mined in five countries worldwide; calls on the Commission to address this issue;












28.


Calls on the Commission and the Member States to encourage – subject to thorough investigation of their possible usage, adequate treatment of potentially harmful substances and strict controls – the recycling of nutrients (especially phosphate and nitrogen) from waste streams and, in particular, recycling waste as part of a cascade process after using it to produce thermal energy; stresses that liquid manure which meets the quality requirements imposed by law on fertilisers and is intended to be processed for that purpose is not a waste product, even if it has previously been fermented in an agricultural biogas plant;












29.


Calls on the Commission to better evaluate the impact of the loss of plant protection products on the competitiveness and sustainability of European agriculture, looking in particular at the suitability of products still available and the impact on prices with fewer competing products on the market;












30.


Calls on the Commission to consider ways of guaranteeing the future viability of minor crops and minor uses whilst ensuring complete compatibility and coherence with the common agricultural policy and involving all those associated with the food supply chain;






Animal feed










31.


Repeats its calls for the Commission to swiftly submit to Parliament and the Council a report on the possibilities and options for increasing domestic protein crop production in the EU; stresses that, while increasing domestic protein crop production will yield some benefits, it is unlikely to have a significant impact on the import of feed from outside the EU; believes therefore that other avenues will need to be explored in the short term to address the protein deficit in the EU, and points specifically to the fundamental role of soya imports; calls on the Commission to make sure that these measures do not endanger the EU’s overall objective of security of food supply in terms of productivity and output levels;












32.


Stresses again the need to introduce in the new CAP suitable measures and instruments to support those farmers cultivating protein crops, thereby potentially reducing the EU’s crop protein deficit and price volatility while also improving agricultural practices and soil fertility;






Seeds










33.


Calls on the Commission and the Member States, in the context of the forthcoming revision of Regulation (EC) No 2100/94 on Community plant variety rights, to maintain the possibility for farmers to use farm-produced and farm-processed seed as laid down in Article 14(1) and (2) of this Regulation, given the economic, cultural and environmental benefits and contribution to agro-biodiversity this practice can bring; calls in this context for a fair and balanced examination of both the plant breeding rights and the current restrictions on the use of farm-saved seed with the aim of improving and simplifying the legal framework and to ensure an adequate balance between the need for innovation and the preservation and enhancement of crop diversity as well as the improvement of the livelihoods of small- and medium-scale farmers;












34.


Notes the importance of research projects that study the breeding of plant varieties which retain their characteristics in the long term and encourages Member States and the Commission to support such projects in addition to promoting measures to encourage the cultivation of local fodder crops such as flax, triticale and spring vetch (Vicia Lathyroides), etc.;












35.


Calls on the Commission to consider setting up a European bank for seeds in order to store and preserve the genetic variety of plants, combat biodiversity loss, and link crop diversity to the cultural heritage of the Member States;












36.


Calls, in the light of the upcoming Rio+20 global conference, for a new EU initiative on the conservation, sustainable use and quality marketing of agro-biodiversity, in order to increase added value from farming;






Land prices and land rent










37.


Calls on the Commission to conduct a study into the impact that land lease and increased costs for land purchase and lease are having on farming sectors in the EU Member States;












38.


Stresses that Single Farm Payment entitlements, where based on historical values or when tradable without land, can be bought up at inflated values by investors and speculators for the purposes of an income stream as opposed to active farming; notes that the distortions created act as a substantial input cost and entrance barrier for new farmers; calls on the Commission, Parliament and the Member States and regions to ensure that CAP reform adequately addresses these problems, and that payment entitlements are available for all farmers for the purposes of active production;












39.


Calls on the Commission to draw up a report on the impact of land use for infrastructure development, housing and buffer zones on agricultural holdings’ costs;






Water










40.


Calls on the Commission to work, as part of the CAP reform and the Water Framework Directive, towards better irrigation and water drainage and storage systems for agriculture that use water more efficiently and that include improving water storage capacities in soils, water harvesting in dry areas and water drainage in moist areas, as a way of reducing the use of fresh water and also as a precaution against changes in rainfall patterns due to climate change;












41.


Calls on the Commission to work towards solutions to drainage problems which take account of factors such as heavy rainfall, low-lying areas and stagnant water;












42.


Draws in this regard the Commission’s attention to the positive effect that precision farming has on water use (through GPS-based monitoring of soil conditions and weather forecasts) and demands that investments in these and other innovative solutions which decrease the use of inputs such as water, fertilisers and plant protection products can be covered by ‘greening’ options of the future CAP;












43.


Calls on the Commission and the Member States to improve the management and reallocation of water rights and to enhance multifunctional agro-ecosystems and agro-forestry systems;












44.


Calls for greater support for training farmers in efficient water management, drainage and irrigation, including practical tools for water storage and measures to prevent nutrient losses or salinisation and paludification, as well as improved water pricing and water administration schemes at local and regional level, in order to help prevent the wastage of water and reduce input costs in the long term;the checking of water pipes should also be encouraged to ensure that water leakage does not have a significant impact on production costs and product quality;




*
*           *








45.


Instructs its President to forward this resolution to the Council and the Commission.






(1)  Texts adopted, P7_TA(2011)0297.

(2)  OJ C 308 E, 20.10.2011, p. 22.

(3)  Texts adopted, P7_TA(2011)0006.

(4)  Texts adopted, P7_TA(2011)0084.

(5)  http://www.oecd.org/dataoecd/38/10/48224529.pdf.

(6)  http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database.

(7)  http://ec.europa.eu/research/agriculture/conference/pdf/feg3-report-web-version.pdf.

(8)  http://agrienv.jrc.ec.europa.eu/publications/pdfs/LIFS_final.pdf.

(9)  OJ L 309, 24.11.2009, p. 71.