MEMO/07/28

Brussels, 24 January 2007

Fruit and vegetable reform

The European Commission today adopted its proposal for a reform of the Common Market Organisation for fruit and vegetables.The proposals aim to bring the fruit and vegetable sector into line with other sectors under the Common Agricultural Policy (CAP) which have already been reformed. The proposed revision eliminates product-coupled support, including export refunds and EU-financed withdrawals (except for free distribution) and integrates the F&V sector into the Single Farm Payment Scheme, introducing specific environmental commitments that growers must meet in order to qualify for payments. The reform will meet the need to simplify and cut the administrative burden.

Why a reform?

  • To strengthen market orientation and competitiveness of the sector
  • To reduce fluctuations in farmers’ income
  • To contribute to better balance the F&V chain
  • To take more account of thediversityof the sector
  • To reinforce the capacity of producers to manage crises
  • To reduce pressure on the environment: Minimum of 20% spending on environmentalmeasures (and promotion for encouragement of consumption) in each operational programme.
  • EU co-financing rate of 60% for organic production in each operational programme
  • To encourage a greater consumption of F&V
  • To ensure coherence with WTO rules and with development and neighbourhood policies
  • To reinforce predictability and control of public expenditure
  • Elimination of export subsidies
  • To simplify management and improve control

Overview

In the years 2003-2005 world production of fruit & vegetables amounted to 1,314 Mio tonnes (EU27 108 Mio tonnes), of which fruit accounted for 440 Mio tonnes (EU27 36.3 Mio tonnes) and vegetables for 874 Mio tonnes (EU27 72 Mio tonnes). The largest producer is PR China (35%) with India (10%), EU25 (8.3%) and the USA (5%) following.

The fruit & vegetable (F&V) sector is responsible for 17% of total EU agricultural production in terms of value.

The EU25 trade balance in fruit & vegetables remains firmly negative due to high imports accounting for 16 Bio€ in 2005 compared to exports of only 5 Bio€.

Major F&V producing regions in EU27

Below map shows the Utilised Agriculture Area (in ha) for EU27 Member states for horticulture (comprising all areas for production (both outdoor and under glass) of fresh vegetables, melons, strawberries, flowers plants and mushrooms) and for specialised fruit and citrus fruit (why these products specified?). Data source is the Farm Structure Survey 2003.

EU25 total F&V production

The pie chart below shows the respective Member States' share in the total value of fresh fruit & vegetable production (at producer prices).

The EU25 total value of F&V production in 2005 is 44 967.8 Mio€, Spain and Italy contributing more than 50%, followed by France, Greece, the Netherlands, Germany and Poland.

Structural Aspects

Fruit and vegetable production is under pressure these days. High levels of concentration among retailers and discount chains have enabled them to assume a strong role in the determination of market prices. Increasing competitive pressure from third country imports is only making matters worse. The only way to solve our structural problems is to strengthen the role of our producer organisations (POs). Over 70% of POs have an operational programme, which are financed, on a 50/50 basis, by the PO and the European Union. They are the main resource for helping growers modernise and compete.

In 2004, close to34 % of total production was marketed via POs. The new CMO aims to increase significantly this percentage and boost producers' bargaining power and economies of scale. The total value of production marketed by POs varies by country, ranging from below 10% in Poland to over 80% in Belgium, Ireland and the Netherlands. Farmer membership in POs also varies, averaging about 33.7% Union-wide, well below the Commission's 60% target for 2013.

Importance of Producer organisations in the Member States

Source: PO

Number of Producer organisations

Member state / PO and APO
CY / 6
MT / 2
PL / 7
FI / 6
HU / 8
CZ / 8
DA / 5
SE / 7
AT / 5
EL / 127
PT / 60
IE / 16
DE / 37
BE / 18
NL / 14
FR / 311
UK / 75
ES / 594
IT / 222
EU25 / 1.528

The 2007 reform emphasises the need to make POs more attractive to growers, not only to concentrate supply and prevent crises but also to improve production quality and protect the environment. Further, it creates specific measures to offer extra support to organic producers, to support free distribution of products to the likes of charities and schools and to increase the consumption of fruit and vegetables, in particular for children.

This last approach comes against the background of increasing obesity, particularly among the young. The World Health Organisation recommends an average daily intake of 400 grams of fruit and vegetables. Since 1995, the available data show that the average daily intake in the EU has ranged from a little above 200g in the UKand Swedento about 500g in Greece. Specific measures, including direct financial assistance from the EU budget to encourage higher consumption, are proposed by the Commission. An approach which just has been positively underlined by the fact that an EU-financed promotion campaign recently won a WHO(World Health Organisation) Counteracting Obesity Award.

Consumption of F&V (g/day per capita).

Use of Operational Funds

In the EU25, the most important use of OP funds in the share of total funds (962 Mio€) available in 2004 is for technical measures both in marketing (312 Mio€) and production (265 Mio€). Other important categories of use are control for quality and phytosanitary measures (139 Mio€) and special environmental measures (79 Mio€):

Major EU imports

Major imports are apples (around 900,000 tonnes), oranges (around 800,000 tonnes), pears (more than 300,000 tonnes) and lemons (more than 200,000 tonnes). Since the EU exports much less fresh F&V to third countries than it imports, it carries a trade deficit of around €300 million per year (averaged over the last three years) for vegetables, and more than €8 billion for fruits (tropical fruits included).

Marketing practices have changed under the influence of the large retail chains. This is characterised by centralised supply and the use of specialised wholesalers, 'preferred suppliers' and private standards (such as EurepGap). The development of these private standards, which were just emerging when the fruit & vegetable reform of 1996 was implemented, is a good illustration of the changes that have affected the commodity chain in the course of the decade.

Marketing standards

Classifying products according to a single, internationally accepted reference facilitates trade based on fair competition and, consequently, helps improve the fruit & vegetable sector's profitability. These standards ensure that retailers know what they are buying without having to physically check the products at the time of ordering. At the same time, rules on definition, presentation and labelling prevent consumers from being misled. European marketing standards are set for the main fresh fruits & vegetables.

They establish requirements for:

  • Minimum quality – mainly external quality (appearance, defects) and, for some fruits, maturity (juice content, sugar content, firmness)
  • Classification – Extra, Class I and Class II, according to external appearance
  • Presentation and labelling – including country-of-origin labelling

These EU marketing standards are aligned with international standards, as pursued by the United Nations Economic Commission for Europe (UNECE). They apply to products marketed within the EU and to import and export. Checks on conformity are carried out by Member States; for imported products, checking operations can be performed by approved third countries.

Recognition of checks performed by third countries facilitates the work of importers and national administrations. This approach will be favoured in the future.

All data year 2005 - all sources EUROSTAT (if not otherwise indicated)

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