European Parliament Demands Action On Farm Inputs

19 January 2012
Alyn Smith MEP, Scottish member of the European Parliament's Agriculture and Rural Development Committee, has welcomed the support by MEPs of his colleague Jose Bove's report on farm input costs.
The report was debated in the Parliament this morning, and successfully adopted in today's voting session. It contained startling evidence of the scale of the problems faced by farmers regarding key input costs: costs have risen by 60% between 2000 and 2010 for energy, by 80% for synthetic fertilisers, 30% for animal feed, 36% for machinery and 30% for seeds. At the same time, farm gate prices have increased by only 25%.  

During the committee stage, an amendment lodged by Alyn was adopted which sought to raise awareness of the problems faced by new entrants: speculation based on Single Farm Payment entitlements based on historical values and transferable without reference to land can price them beyond the means of new entrants, thus acting in effect as a input costs for new farmers.

Speaking from Strasbourg, Alyn said:
 
"This was an excellent report by my colleague José Bové and the support of the whole Parliament will no doubt send a strong message to the Commission that our farmers want to see action, and soon, against the challenges posed by the gap between farm input costs and farm gate prices.

"The idea that the free market is working for our farmers is downright crazy and DEFRA absolutely must acknowledge that, especially before they proceed full steam ahead to bargain away direct payments and income support as CAP negotiations progress. Those who say that Scotland's farmers are better represented as part of the UK should consider this point long and hard. Just because commodity prices are rising does not mean that farm gate prices are rising, and even where they are it is often only with a reduced margin thanks to higher input costs for feed and energy.

"There needs to be a thorough investigation into concentration of production for inputs and the existence of monopoly power: four companies worldwide account for between 75-90% of global grain trade, seven companies control all fertiliser supply, five companies share 68% of the global agrochemical market, and three companies control almost 50% of the proprietary seeds market. This wouldn't be accepted for a second by the Commission if it were farmers uniting to force higher-than-market prices, so it is high time for an end to these double standards."

Alyn's speech in plenary is reproduced below:

Alyn Smith, on behalf of the SNP Group. – Madam President, I will be no exception in congratulating my colleague José Bové for this very timely and very powerful report. It pulls together a number of the interlocking and mutually reinforcing factors which are impacting on our food supply chain and making the lives of European and global farmers more difficult. Indeed, there are times when the economics of farming are not so much a science as more of a voodoo cult. It is amazing that anybody is actually in farming at all and that we have any food to eat.

The fact is that the increased concentration of market power downstream of farming, in processing industries, trade companies and supermarkets, and upstream of farming, in terms of increasing costs for fertilisers, energy, feed, seed, water, loans and land rent, is undermining the proper functioning of the food supply chain in Europe. Farmers are facing a squeeze between rising costs for input and low farm-gate prices.

For those colleagues – usually those not present in these debates – who have suggested that the free market is working, I have some statistics from the Scottish Agricultural College report on power in agriculture – actual statistics on market concentration – showing that four companies worldwide account for 75-90%, by some measures, of global grain trade, seven companies control all fertiliser supply, five companies share 68% of the global agrochemical market, and three companies control almost 50% of the proprietary seeds market. If you add to that the supermarkets’ and processors’ power, it really is surprising that our farmers are in business at all. So to those who would say that the free market in agriculture is working – well, prima facie, no it is not.

We saw what happened – as other colleagues have mentioned – with the breakdown of the interbank lending market earlier in this economic crisis. It is the poorest who are hit hardest, and our citizens are very much in the frame for this. So I was delighted, Commissioner, to hear your fulsome presentation this morning, and I hope you will gather from this debate that this House is looking for more action from the Commission, not less. We are your ally in this and, if anything, we want to see more urgent activity from the Commission on the many issues raised in this report.

We want to see further action because this is not going to go away or get better. Quite the reverse – the market is concentrating further day by day in a world where we are increasingly seeing instability in energy prices, global instability and its political knock-on effects, and climate change making parts of the world wetter, parts of the world drier, and all of the world more climatically unstable. We are not going to see our food supply chain getting calmer.

We need to act on this urgently. CAP reform has never been more urgent and this report deserves to be absolutely fundamental in all our minds as we take forward the CAP reform project with you Commissioner. We look forward to that effort.