Bid to share out benefits of CAP reform

Date: 22/10/1998

By Myles Neligan

CONSUMER Affairs Commissioner Emma Bonino is considering taking action to ensure that any cuts in guaranteed farm product prices agreed at the end of the current negotiations on reforming the Common Agricultural Policy are passed on to consumers in the form of cheaper food.

The move has been welcomed by EU consumers' organisations, who argue that the CAP's price support system inflates retail food prices and imposes an extra tax burden on consumers.

Bonino's staff have asked the EU Consumer Advisory Committee, which is made up of national and Union consumer groups, to draw up a report on the relationship between the price paid to farmers for agricultural products and the average prices charged for food by major European retail outlets.

This report, which is due to be unveiled at a European Commission-sponsored consumer affairs conference in Brussels on 11 November, is expected to highlight major price differentials, reinforcing the case for action to prevent food retailers from reaping all the benefits of lower farm product prices.

A previous survey prepared by independent economic experts at the request of Farm Commissioner Franz Fischler estimated that if the Commission's CAP reform proposals were implemented in full, the annual food bill for EU households should fall by an average of 1.9%.

Commission officials are awaiting the conclusions of the advisory committee's study before deciding how to proceed, but stress that a decision on whether to propose concrete measures is some way off.

"We hope to at least have a firm opinion from European consumers," said a senior Bonino aide. "If there is a genuine fall in agricultural support prices, then clearly the consumer should benefit. But the food industry is complex. If price cuts are not passed on, it will be difficult to establish that this is because of obstacles in the food processing and distribution chain."

Bonino's staff argue that it would not be appropriate to take definite steps until after the CAP overhaul, which is due to be agreed by March next year, has been fully implemented and its effect on retail prices has been monitored. They also point out that since EU farm expenditure is projected to rise in the immediate aftermath of CAP reform because of increased direct aid to compensate farmers for whatever price cuts are agreed, any gains to consumers in the form of lower food prices will initially be offset by the cost of that aid to Union taxpayers.

EU consumers' groups have nonetheless taken heart from the Commission's interest in the issue and its request for a study.

"We believe that consumers and taxpayers get very bad value from the CAP and would favour price reductions through whatever means necessary," said a spokeswoman for the European consumers' organisation BEUC.

Consumer Affairs Commissioner Bonino wants to ensure that CAP reform leads to cheaper food.