By­pass­ing the ‘mid­dle­men’ is still a dis­tant dream

Irish Independent - Farming - - FINANCE FARMING - THIA HEN­NESSY

AGRI­CUL­TURE Com­mis­sioner Phil Ho­gan re­cently launched an EU-wide pub­lic con­sul­ta­tion on how to make the EU food sup­ply chain fairer.

This is the lat­est in a series of ac­tiv­i­ties co-or­di­nated by the Com­mis­sion to ex­plore the shar­ing of value along the food sup­ply chain and to im­prove the po­si­tion of farm­ers.

So what ex­actly can the Com­mis­sion do to im­prove the plight of farm­ers strug- gling with a mar­ket price close to or be­low the cost of pro­duc­tion?

The per­cent­age of the fi­nal re­tail price of food stuffs that farm­ers re­ceive has long been hotly de­bated.

Anec­do­tal ev­i­dence sug­gests that the grow­ing power of gi­ant re­tail­ers and food com­pa­nies al­lows them to cap­ture the lion share of prof­its and squeeze the farm­ers’ mar­gins.

How­ever, such anec­dotes can­not and should not be used to in­flu­ence pol­icy or law in this do­main and in­stead real ev­i­dence-based re­search is needed, but this is eas­ier said than done.

The Euro­pean Com­mis­sion has at­tempted to an­a­lyse in this area by us­ing var­i­ous data sources to ex­am­ine the shar­ing of value along the food sup­ply chain across agri­cul­ture, the food pro­cess­ing sec­tor, food whole­sale and re­tail for food prod­ucts in gen­eral.

This showed that the value added by agri­cul­ture in the food sup­ply chain dropped from 31pc in 1995 to 24pc in 2005 and 21pc in 2011. Food re­tail and whole­sale com­bined in­creased its share from 38pc to 51pc over the same pe­riod.

Taken at face value these fig­ures seem stark and point to the di­min­ish­ing power of farm­ers. Ex­perts in the area, how­ever, crit­i­cised the study for the data and meth­ods used.

Even set­ting aside is­sues with the method­ol­ogy, it must also be ac­knowl­edged that the types of food be­ing con­sumed have changed over this pe­riod.

De­mand for pro­cessed foods has in­creased and as such you would ex­pect that the value gen­er­ated by the pro­cess­ing sec­tor would have grown.

Agri­cul­tural pol­icy has also been trans­formed over the pe­riod with less sup­port flow­ing to the farmer in the form of price sub­si­dies and more in the form of di­rect pay­ments which was not re­flected in this anal­y­sis but which would change the re­sult.

A more straight­for­ward anal­y­sis would be to take a typ­i­cal prod­uct, such as steak, and fol­low it back­wards along the sup­ply chain from the su­per­mar­ket to the farmer to see what fi­nal share of the price per kilo­gram is de­liv­ered to the farmer.

Price data

Re­searchers in UCC were com­mis­sioned by the Depart­ment of Agri­cul­ture to con­duct such an anal­y­sis but con­cluded that for many food prod­ucts in Ire­land, the dif­fi­cul­ties in se­cur­ing price in­for­ma­tion were “in­sur­mount­able”.

The lack of re­li­able price data for com­pa­ra­ble prod­ucts at dif­fer­ent parts to the sup­ply chain from the farmer to the re­tailer made it im­pos­si­ble to de­ter­mine where value was be­ing added and cap­tured.

With­out such hard ev­i­dence it is not pos­si­ble to prove sci­en­tif­i­cally the power of the var­i­ous play­ers and in­deed will be dif­fi­cult for the EU Com­mis­sion to en­sure greater trans­parency.

One ex­cep­tion in the Ir­ish con­text is the liq­uid milk mar­ket, which is rel­a­tively easy to an­a­lyse given the low level of pro­cess­ing, the rel­a­tively short sup­ply chain (with liq­uid milk be­ing mostly pro­duced in Ire­land and con­sumed lo­cally) and the pub­licly avail­able data on both the re­tail and farm-gate price of milk.

The Na­tional Milk Agency pub­lishes an­nual re­tailer and

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.