New Normal : Sustained low agricultural prices or more volatility ?

On May 3 Farm Europe hosted a debate on how Climate Change is impacting agriculture and food systems in a world experiencing more instable and volatile markets.

The background was an event under the Heading ”Food Chain Reaction: A Global Food Security Game” which took place Washington, D.C in November 2015, and where Farm Europe also participated. The purpose was to evaluate the effect of climate change on agriculture and food security under different future scenarios and the response by Decision makers.

Food production has become very interdependent and supply side shocks due to draught, disease, severe climate events and lately climate change contribute to a high degree of volatility on output. On the demand side political instability, population growth, economic development in emerging markets and advanced economies, change in dietary habits and financial problems are key factors. The result is increased volatility with consequent effect on agricultural prices, producer’s income and consumer prices leading to political and social unrest.

To quote Joe Stone from our event 3 of May (Corporate Senior Vice president in Cargill-one of the Sponsors of the event in D.C.) : “ The exercise did not disappoint. The scenarios dramatically showed the ways in which climate change and human mobility can combine to exacerbate food insecurity and truly threaten political stability”.

Joost Korte Deputy Director General in DG AGRI also participated. One thing he said struck me. DG AGRI was concerned about the possibility that the very low markets prices for both crops and animals products we have seen for the last couple of years may be a more permanent feature. This in a way is in contrast to the assumption in the Food Chain Reaction scenario of much higher volatility and price spikes.

To my mind that begs the question: Are the low agricultural prices the “The new normal” and not increased volatility?

The question is whether the consequences of the financial crisis erupted in 2008 with the subsequent “Great Recession” has now caught up with agriculture leading to a new normal.

The prolonged recession in the EU and subsequent morose economic growth in the Eurozone, very low inflation in the US, Japan and the EU, quantitative easing (QE) by the FED, BoJ (Japan), BoE (UK) and the ECB and lately introducing negative interest rates attempting, although with meager success, to stimulate economic growth, are all factors which reflect the lack of demand or a worldwide savings glut with too little investment in spite of easy money.

Too that has been added the dramatic fall in oil prices curtailing income of oil producing countries in the Middle East, Russia and Venezuela to finance amongst others their food imports. The fall in raw material prices reflecting the slower growth in China has impacted raw material exporting developing countries like Brazil, South Africa, Chile, Peru and many others.

The financial sector involved with these countries is suffering as a consequence leading to a more restrictive lending policy by banks. The new normal in general economic terms is thus a period of low growth/stagnation, low inflation/deflationary tendencies in Japan and the Eurozone and high sovereign and private debt world wide.

Raw material prices are historically linked to the state of the economy. When prices are low that reflects low growth/ demand and vice versa. Some economists suggest that we have entered the era of “secular stagnation” i.e. permanent lower growth compared to the past. Reasons like ageing population, lower productivity growth, saturation of demand in developed countries and lack of major technological breakthroughs are advanced. That would mean that also agriculture will suffer from sustained lower (real) prices.

On the other side in favor of the increased volatility scenario is obviously climate change which already is having an impact on agriculture with the more extreme weather conditions. Demand will be supported by China and neighboring countries which continue to grow and the Chinese population will not peak before it reaches 1.4 Billion people with consequent increased demand for food as well as changes in more animal protein rich diets and demand for animal feeding stuffs. At some stage India’s population will exceed Chinas and is becoming the new powerhouse with economic growth rates exceeding China’s. Although Africa’s population is expected to show the strongest growth of all, lack of purchasing power will restraint increase in demand.

Risk of volatility must be judged in relation to the situation on supply and demand where cereals are the main factor and a proxy for protein as well. On the demand side a stable and inelastic increase is to be foreseen. Consequently it is the supply side of cereals that is the key factor in the equation.

As a rule of thumb cereal stocks should represent minimum 18 % of consumption in order to avoid prices going up. According to the latest (5/5/2016) FAO Cereal Supply and Demand Brief :“the ratio of global cereal stock-to-utilization would fall only marginally, from 24.9 percent in the current season to 23.4 percent in 2016/17” (see Annex). Present stocks are consequently abundant which explains the very low cereal prices.

Past history shows however that the equation is easily disturbed if harvest fails in one or more important parts of the world. In particular if it happens in the main cereal producing and exporting countries this can have an immediate effect on prices.

A further contribution to the discussion is provided by the “THE OECD-FAO AGRICULTURAL OUTLOOK 2015-2024 (OECD/FAO 2015) which has analyzed the evolution of prices prior to the 2007 price spike and the subsequent evolution since and into the future: They come to the following conclusion:

Even though real prices are projected to decline, this does not preclude the likelihood that prices will experience bouts of volatility, including upward price spikes, in the next ten years” (p. 49).

Further :

Indeed, the previous two marketing years were characterized by above average yields, which drove prices down to their current levels. Returning to more normal yields will decrease world supply of all major crops in the upcoming marketing seasons and as a result prices should rise” (p.50).

So there are arguments in favor of both lower long term real agricultural prices as well as risk of more volatility. It is not either/or nor mutually exclusive.

For European agriculture this is a rather worrying message given the serious income problem in particular for farmers involved in animal production.

Certainly cereals and proteins as animal feeding stuffs represent one of the most important costs of animal production. Low prices on feed grains and protein help. Equally low oil prices which is another production cost factor by direct energy use and indirectly on the cost of fertilizers. However the net result is still negative with the low market prices not providing a profit to cover not only the variable costs but also the fixed costs and remuneration to the farmer and his help.

If thus both low real prices and increased volatility is the” New Normal” the consequences could be dire.

Low prices will result in many farmers (small and older) leaving agriculture even quicker and accelerating the structural change towards fewer and larger farms with negative effect on the so-called territorial balance and disfavored areas. Permanent lower animal production might also be the consequence affecting self-sufficiency ratios and exports.

Higher price volatility affects all farmers but mostly the bigger farmers with high turnover and high levels of debt underlining the need for increased risk management tools both at farmer as well at the level of the CAP.

We need to find an appropriate policy response with as many instruments as targets.


So, what does the Paris Agreement mean for European agriculture?


The Agreement in Paris on Climate Change concluded on 12/12/2015 seeks to limit global temperature increases to less than 2 degrees, and to pursue efforts to achieve 1.5 degrees through binding commitments to cut greenhouse gas emissions.

It is up to the individual countries that ratify the Agreement to implement the commitments on a national basis. For the EU that means sticking to the commitments as presented by the EU to COP 21 in the so-called Intended Nationally Determined Contribution (INDC). This now becomes a Nationally Determined Contribution (NDC) as a result of the agreement in Paris. There the EU has committed itself to a further reduction of EU Greenhouse Gas (GHG) emissions) by at least 40% by 2030 in comparison with 1990, and by 80-95% by 2050.

Commission Communication on Paris Agreement follow-up

In its Communication of the 2/3/2016 the Commission has laid out the follow-up to Paris. Implementation by all parties to the Agreement is crucial for success.

The Communication goes through the different areas for the EU in order to implement the Agreement underlining the need to continue to take the lead and maintain momentum. The Communication stresses the significant investments, innovation, changes in practices that are necessary with the consequent fundamental changes in the EU economic model and structure. Energy production, consumption, energy efficiency and renewables are key elements in this process. In this respect the Commission stresses the importance the regular 5 year Review clauses. An idea suggested by the EU, where Contracting Parties will be subject to examination of their progress in meeting emission reduction commitments based on common accounting and transparency provisions still to be defined. It provides a dynamic mechanism to take stock and strengthen ambition over time. Starting from 2023, Parties will come together every five years in a “global stocktake” to consider progress in emissions reductions, adaptation and support provided and received in view of the long-term goals of the Agreement.

The Ministers of Environment discussed the Communication on the 4/3/2016. Some Member States thought the Communication was not ambitious enough in light of the switch to the maximum 1.5 ° increase in global temperature. Several ministers urged an earlier stock-take to be ready for a special UN report in 2018 to get on track for net zero emissions in the second half of the century.This would mean quicker emission reductions. Other Member States warned against with the present ambitions based on the Council conclusions from October 2014 as already very demanding.

In the Communication the Commission confirms that the legislative Proposals on the Emission Trading Scheme (ETS) from July 2015 will be followed up by proposals also covering agriculture.

So what does the Paris Agreement mean for European agriculture?

The Paris Agreement does not as such have specific commitments relating to agriculture. It does however refer to agriculture indirectly as stated in the Preamble: “Recognizing the fundamental priority of safeguarding food security and ending hunger, and the particular vulnerabilities of food production systems to the adverse impacts of climate change”.

How is this paragraph to be interpreted? Is agriculture to be treated lightly in relation to the reduction commitments or does this only targeting more vulnerable developing countries. For certain the farming organizations will seek to use this passage to soften the burden on agriculture.

Under EU legislation agriculture is covered by the so-called Effort Sharing Decision (ESD). Sectors under the ESD are transport, heating of buildings, non-CO2 emissions from agriculture and waste. Overall ESD emissions have to reduce emissions by 30% compared to 2005. In addition GHG emissions and carbon sequestration from Land Use, Land Use Change and Forestry (LULUCF) will be included in the CC policy for 2030.


With the Paris Agreement as a very timely background Farm Europe organized an Event on the 14/12/2015 with the Irish Minister for Agriculture Simon Coveney. The minister outlined how Irish agricultural policy already to-day is very active in undertaking mitigation and adaptation efforts in relation GHG emissions from agricultural activity and from LULUCF. The focus is to be the most Climate Smart Agriculture (CSA) as possible which in Irish terms translates into having the lowest GHG emissions per unit of production/output. Research efforts, based on a significant 4 Billion € budget, and education of farmers are undertaken with this objective in mind already delivering positive results. At the same time Ireland is undertaking major afforestation with the view to building up sequestration (sinks) of Carbon Dioxide (CO2). Up till now 10 % of agricultural land has been planted with new forest. The idea is to provide space/credits for the expected increase in the animal production with consequent GHG emissions as laid out in the Irish “Food Wise 2025” program. See the Press Release.

The Irish efforts should be seen in connection with the Conclusions in October 2014 by the European Council (EC) on the Future CC Framework up to 2030: A reduction of GHG emissions by at least 40 %, for the ESD to reduce by 30% compared to 2005 and to incorporate LULUCF. The EC has established the principle by which the richer Member State (MS) have to undertake the biggest reductions in GHG emissions. Those MS with high average GDP per inhabitant like Ireland have to reduce their emissions by up to 40 %. At the same time the EC said: “targets for the Member States with a GDP per capita above the EU average will be relatively adjusted to reflect cost-effectiveness in a fair and balanced manner”.

Agricultural GHG emissions have already fallen significantly by 24% from 1990 to 2012, but based on Business as Usual (BAU), the drop in the GHG will be modest (around only 4 %). The EC has recognized this in its conclusions : “The multiple objectives of the agriculture and land use sector, with their lower mitigation potential, should be acknowledged, as well as the need to ensure coherence between the EU’s food security and climate change objectives “.

With this somewhat ambiguous wording it is consequently not clear how agriculture and LULUCF will be handled in practice under the 2030 policy framework.

Affluent MS like Ireland, Denmark and France with high agricultural production and consequent high absolute GHG emissions will have to undertake major reduction efforts. However there may be tradeoffs with other non-agricultural sectors under the ESD and possible recognition of the beneficial effect of carbon sequestration in forests and soils in relation to agriculture. How LULUCF is to be incorporated is at this stage an open question. One thing is certain: there is no doubt that the challenge for agriculture is going to be considerable and a need for agriculture to obtain high energy efficiency and low GHG emissions per unit of production.

GHG emissions

GHG emissions from agriculture primarily in the form of nitrous oxide (N2O) and methane (CH4) amount to about 10 % whilst LULUCF primarily in the form of CO2 amount to about 14%- in total 24 % of total EU GHG emissions.

The most important GHG emissions relate to agricultural soils, wetlands, peats and forests in the form of CO2. Large quantities of CO2 are emitted by ploughing and use of fossil fuels, artificial fertilizers and pesticides. The same is true for wetlands dried and peats converted to farmland not to mention deforestation.

On the positive side agriculture sequesters CO2 in soils and in plants. Grassland is especially important storing 34 % of the global stock of carbon in terrestrial ecosystems whilst forests store 39 % (Nathaniel Page, Fundatia Adept). (According to the ELO the EU soils contains the equivalent of 275 gigatons CO2 or more than 50 times the annual EU GHG emissions).

Same thinking is behind the French government initiative of ‘4 per 1,000’.”To quote the French minister of agriculture Stéphane Le Foll “The idea is simple: to increase the amount of CO2 captured by the soil by four grams per kilo of soil. If the whole planet managed to do this, the world’s carbon dioxide emissions would be cancelled out in one year”.

There is a whole range of farming practices available, which are subject to continuous refinement and development, to make farming more Climate Smart.

With regard to soil management (examples):

  • Avoid drainage of wetlands and conversion of peatlands
  • Practice 5 year Crop rotation with reduced need for pesticides and fertilizers
  • Undertake extensification by way of reduced use of external inputs (fertilizers and pesticides)
  • Planting of legume crops fixing nitrogen and substituting imported soybeans
  • Soil/Green cover with catch crops and reduction of bare fallow
  • Reduced or zero tillage (widespread practice in Argentina)
  • Use of natural pastures for livestock rearing and less intensive grazing
  • Retaining crop residues like straw, compost on the field
  • Incorporation in the field of organic matter like animal manure and sewage sludge
  • Afforestation and reforestation

As for CH4 and N2O the following mitigation steps (examples) can be taken:

  • Genetic breeding of animals resulting in lower enteric fermentation in ruminants and lower CH4 emissions
  • More efficient use and development of feedstuffs with higher conversion rates combined with animal breeding resulting in higher or unchanged production with fewer animals.
  • Use of plant breeding with higher yields protecting against heat, drought and pests.
  • Better manure management with covered storage and more efficient spreading as natural fertilizer on the fields substituting oil based products.
  • Integrated Farming
  • Precision farming (GPS) and drones

Further on the farm measures resulting in reduced GHG emissions

  • Increased use of manure and silage as biomass for on the farm production of electricity with surplus of electricity sold to the public grid
  • Installation of windmills and solar panels
  • Higher energy efficiency in heating or cooling and machinery. Better insulation and storage
  • Speed up a move away from first generation to second generation biofuels based on using animal waste, biomass like straw and rapid growing energy rich crops like Miscanthus (switch grass) or willow and use of forestry waste and wood pellets in order to ensure sustainability and environmental integrity

In summary there are many measures that can be taken to meet the challenge. This requires however continued innovation and investments to reach the goal of sustainable intensification of agricultural production.

For agriculture and forestry the outcome of Paris COP 21 and subsequent EU legislation to be proposed before the summer break in 2016 for the ESD and LULUCF will be very important in terms of sustainability and providing food security at the same time. In this respect a very important question is the degree of flexibility in relation to GHG emissions that will be granted to agriculture given the reduced potential for climate change mitigation compared to other sectors.

The first de facto review of COP 21 country commitments is likely to be based on the 2018 UN report in 2018 to get on track for net zero emissions. It can be expected that the pressure on the EU to go beyond the at least 40% reduction commitment will be strong given that the sum of commitments agreed on in Paris will not meet the objective of limiting global temperature to + 2° with consequences also for EU agriculture.

Agriculture risks being affected by climate change and the upcoming legislative framework more than other sectors. This requires in my view a serious rethinking of our Common Agricultural Policy, where the emphasis increasingly will be on delivering Public Goods for Public money in addition to agriculture’s role of providing food security. Climate Change mitigation and adaptation will entail costs and income foregone (externalities) for farmers which will be difficult to cover by market prices. The CAP must be tailored to support the EU’s GHG emission targets and the role EU farmers play in meeting that objective.

School Schemes: the fight against obesity is a true European responsibility

As key decisions have to be taken in the coming days for the future of both the School Fruit Scheme (SFS) and the School Milk Scheme (SMS), it’s good to come back to the substance and aim of these schemes created to encourage healthy eating, specifically the consumption of fruit, vegetables and milk. These objectives are still very much relevant and needed, which makes me think that we should not only maintain but also strengthen these EU initiatives, as suggested by the Commission proposal and the report drafted by MEP Marc Tarabella in the European Parliament.

The SMS was created in 1977 and all EU Member States participate in the scheme. In 2011/2012, approximately 20.3 million children benefited from the scheme, an 18% increase from 2010/2011. The SFS was set up in 2009 and is EU-wide and voluntary. It aims to provide school children with fruit and vegetables so as to encourage good eating habits in young people. The scheme provides fruit and vegetables and requires participating Member States to set up strategies such as educational and awareness-raising initiatives. 25 Member States took part in SFS in 2013/2014.


The SFS was set up by the then Commissioner for Agriculture, Mrs. Fischer Boel, and her team for two reasons:

Firstly, the continuous decline in fruit and vegetable consumption was proving detrimental to European producers. According to Freshfel, the European organisation for fresh fruit and vegetables, consumption has dropped between 7 – 10% over several years and as such the WHO recommended daily intake of 400g is far from being reached in most Member States. One of the objectives of the Common Agricultural Policy (CAP) in article 39 (TFEU) is to stabilise the markets for agricultural products and thus this article formed the legal basis for the creation of SFS.

Secondly, the serious increase in terms of overweight and obese children in the EU needed to be addressed. In 2007 it was estimated that in the EU-25 approximately 22 million children were overweight, with 5 million of these children obese. In February 2014 DG Sanco published its report on the “EU Action Plan on Childhood obesity 2014-2020”, stating that it is estimated “that 1 in 3 children in 2010 were overweight or obese, up from 1 in 4 in 2008”. And also explaining that “If we fail to act on overweight and obesity in children and young people soon, this issue threatens to have a highly negative impact on health and quality of life and may overwhelm our healthcare systems in the near future”. Professor Kenneth Rogoff, of Harvard University, has recently added his voice to the debate about obesity. In an article in the Project Syndicate, dated 12th June 2015, he says “Given the huge impact of obesity on health care costs, life expectancy, and quality of life, it is a topic that merits urgent attention”.

SFS Action and Experience

In 2007 the negotiations on reform of the market organisation for fruits and vegetables were underway. The reform was adopted unanimously by the Agricultural Council. As part of the final compromise the Commission was invited to present a proposal on an EU school fruit scheme based on an evaluation of the costs and benefits. The Commission services carried out an impact assessment (IA), which followed comments from the Impact Assessment Board, and was then further refined and developed and subsequently given the green light. The arguments in favour were, and still are, compelling. The purpose of an effective SFS is to bring about a permanent, lifelong change in dietary habits in favour of the consumption of fruits and vegetables.

When the SFS was adopted in 2008, only a few of the more affluent Member States, such as Germany, Denmark, Belgium, Netherlands, Ireland and the UK, had national school fruit schemes in place. The national schemes varied considerably in terms of scope and measures, with little homogeneity, lack of coherence and focus. Since adoption of the SFS the experience has been quite positive. In 2013/2014 school year almost 10 million children benefited, 66,000 schools, and 67,000t of products were distributed. 25 out of 28 member states participated. The UK, Finland and Sweden do not participate. The UK has chosen not participate on the grounds that it has its own programme, costing £40 million a year. Finland would have liked to participate, agreeing with the scheme’s measure and objectives, but finds the administrative burden too high. Sweden is the only country which refuses to participate on grounds of principle i.e. not an EU justified action.

Problems with SFS

Problems have particularly surfaced with regards to the size of the EU budget, the share of EU co-financing and the eligibility of the accompanying measures (awareness measures).

In relation to the size of the EU budget, experience has shown that in times of pressure on public budgets, many schools could not afford to participate. Even with 75% EU co-financing the national contribution is too burdensome. In some cases, in order to get around the budget constraints, SFS schemes rely on parental contribution. This has the unfortunate effect of limiting the SFS to more well-off children and regions, where the prevalence of obesity is lower compared to the socially disadvantaged areas and children of the EU. The consequence has been that those children most in need of an SFS, in terms of consumption of fruit and vegetables and changes in diet, do not participate in the SFS.

In order to address this problem, the Commission proposed, as part of the CAP 2020 reform, to increase the EU budget from 90 to €150 million, to increase the co-financing rates to 75% in general and 90% for the disadvantaged areas, and to make more of the accompanying measures eligible. The accompanying measures are a central theme in the school fruit scheme. The accompanying measures are there to bridge the gap between schools, farms, the countryside, the environment, healthy lifestyle and healthy diet. It is expected that the changes will allow many more schools and school children to benefit from the SFS. The increase in budget should certainly be welcomed but, as the IA made clear, the budget should have been a minimum of €400 million annually to cover all eligible schoolchildren in the age group from 6 to 10 across the EU. The figure is, of course, even higher if you expand the age group.

The SFS fulfils the subsidiarity test of being voluntary and having a high degree of flexibility for Member States in terms of implementation. It is, however, not really proportional, given the scale of the obesity problem and the risk of the explosion of future health costs, which would warrant a much higher budget to assure full cover. Action at EU level is fully justified given the demonstrated high Member State participation in new programmes put in place, and the fact that the disappearance of the SFS would risk reverting back to the pre-SFS situation and a loss of EU solidarity. A higher budget, constant improvement and effective implementation of the SFS is needed, not abolition.


The SMS has faced different challenges than those of the SFS, having received a very negative report twice, contrary to the report on SFS. The SMS has, at times, been criticised as being a surplus measure. For example, at one stage aid was to be given exclusively to fully fat drinking milk in order to get rid of as much milkfat as possible.

One of the main problems with the SMS was the element of deadweight, with the level of aid representing a very small part of the price with consequently little, or no, additional consumption. Other problems related to the lack of accompanying measures, heavy administrative burden and questions about the health of dairy products with high fat content.

However, the scheme has been revised several times and the list of eligible products has expanded to include low-fat milk and milk products, whilst maintaining the absolute level of aid per kilo. This means that de facto the incidence of aid is proportionally higher for the low-fat products given the lower cost price. As to the issue of health, there has been a complete turnaround in the opinion amongst experts, now judging milk and milk products in a much more positive way, pointing to the beneficial aspects of dairy products with regards to calcium, proteins, minerals and vitamins, and other nutrients as part of a balanced diet. The debate about animal fats, saturated and unsaturated, has become much more nuanced with recent scientific studies showing the positive health effects compared to vegetable fats.

All these elements explain the proposal from the Commission, from 30th January 2014, to strengthen the SMS, not least with the element of obliging Member States to introduce accompanying measures, as is the case with the SFS. These changes will allow the SMS to become a much more viable and justified measure, leaving the objective of surplus disposal behind and instead becoming a true instrument to further a healthy lifestyle, a balanced diet and to fight against obesity.

The fight against obesity remains a complex problem. The SMS and the SFS certainly do not provide magical solutions in the fight against obesity, but do offer an important contribution to this fight. They should be maintained and strengthened to serve their purpose in an effective way. It is a true EU responsibility. Public support is there. 

Commission Proposal on GMOs endangers the Single Market

On the 22nd of April the Commission adopted a proposal which will allow Member States (MS) to restrict or prohibit the use of genetically modified food and feed (GMOs) on their territory. The proposal is rather extraordinary since it allows the MS to restrict or ban the use of GMO as feed or for human consumption on the basis of nonscientific reasons. The scientific assessment of the safety for the humans, animals and the environment is undertaken by the European Food Safety Authority (EFSA) before the Commission can propose an authorisation for use in the EU. Consequently MS cannot invoke scientific reasons for an eventual ban. However MS will be allowed to ban the use of GMOs on purely political or arbitrary grounds. This is the first time the Commission has made a proposal, in an area where EU harmonised legislation already exists, which goes against the principles of the single market. Only scientific based concerns or the appearance of new scientific knowledge can be invoked to restrict intra-community trade. In the famous decision by the European Court of Justice, Cassis de Dijon, the principle was laid down; that a product that was marketed legally in one MS could not be prohibited to be marketed in another MS unless there were scientific reasons like human safety that could be invoked. The whole idea of creating a single market based on the White book from 1985 and the process of harmonisation of legislation carried out in the 90s has consequently been given a serious blow. Harmonisation has provided the legal certainty for trade inside the EU as well as for imports into to the EU; this proposal allows a MS to undermine legal certainty.

Commission justification

The Commission justifies the proposal on the grounds that the MS have consistently refused to take political responsibility for authorising GMOs through the normal regulatory procedure, by either rejecting or approving new GMOs. Consequently it has been left to the Commission to systematically approve new GMOs once EFSA gave its green light, thus forcing the Commission to take responsibility for political decisions that should, under normal circumstances, have been taken by the MS. Clearly an unsatisfactory state of affairs, given the controversy surrounding GMOs. In reality this has happened with the tacit collaboration of the MS opposing GMOs sending the responsibility conveniently to the Commission to take the unpopular decision. This has led to a change in the legislation on GMOs by which MS can ban the planting of GMOs on their territory (ban on free release into the environment). To some extent such a ban could be justified if, as an example, you were concerned about a significant organic production you wanted to protect, where cross pollination with GMOs might endanger the organic status. Enforcing safety margins (distance) between organic and non-organic producers should however be sufficient to prevent this from happening in any widespread manner. This piece of legislation, although in breach of the Single Market, should not have any serious intra-community trade consequences since it only inhibits the sale and trade of GMO seeds in some MS affecting a few multinational seed companies, like Monsanto.

Consequences of the Commission proposal

However, extending a ban on GMOs to food and feed could have far-reaching consequences. The EU production of meat and milk is highly dependent on the import of protein rich ingredients like soya beans and meal from big suppliers like USA, Brazil and Argentina where there is a widespread and growing use of GMOs in the production of soya beans. The EU imports, according to FEFAC (European compound Feed Manufactures), 75 % of its needs of soya beans and soya bean meal, accounting for 30-35 Mill tons annually. It is obvious that the EU could not sustain its big and economically very important production of meat and milk if a ban on GMO feed were to be widespread. A MS with a significant animal production would have to think twice about using such a faculty, even in light of public opinion pressure, since a ban would destroy its industry. But what about the MS which have already taken national measures to restrict the use of GMOs beyond the ban on planting? If such a MS were to ban use on their territory, what would happen to animals which have been fed GMOs, to their meat, milk and milk products if somebody wanted to export to such a MS with a ban? Would the MS ban the import with the consequent breakdown in trade and the single market? The Commission says in its proposal that the measures “would have to be compatible with the rules on the internal market, and in particular with article 34 TFEU, which prohibits measures that would have an effect equivalent to a quantitative restriction on the free movement of goods. MS making use of this proposal will therefore need to justify the measures introduced on grounds in accordance with article 36 TFEU and the case law of the court of justice on overriding reasons of public interest “. Article 36 talks, amongst other things, about “public morality “. In the footnote to this sentence there is also reference to the Cassis de Dijon judgement. In the legal text there is no answer to the question of what MS can or cannot do in terms of enforcing a ban on food and feed on their territory. It only says that the MS have to submit a justification and the draft measures to the Commission where the Commission will consult the other MS and where the MS has to wait three months before putting measures in place. This leaves it completely open as to whether MS can take measures to restrict intra-community trade or not, and how such a ban on food and feed would actually be enforced on their territory without this having consequences for the single market. By hiding behind elegant references to article 34 and 36, avoidance of disguised restriction on trade, proportionality and nondiscrimination, the Commission is sending the Black Peter to the MS wanting to introduce a ban.

Risk to the Single Market

Imagine a situation where a MS introduces a ban. Would such a MS interfere with the trade in meat and milk from animals which have been fed with GMOs, and what would be the consequences for the activity of food companies and supermarkets etc.? Would a MS have to introduce controls at the border with other MS, thus reintroducing border controls or would the controls take place at the level of the individual food company? What about products brought in from another MS by a citizen or from a person living in another member state with no ban? To enforce such a ban would require a considerable dedication of resources and manpower, which does not tally with the pressure on public budgets and the need for MS to make savings on public expenditure to respect the Growth and Stability Pact. The idea seems to be preposterous and uncontrollable. If, on the other hand, the Commission is acutely aware that a ban is neither legally nor practically enforceable, does this make the proposal an empty shell for the MS wanting to introduce a ban? The Commission’s Legal Service has apparently given its approval, obtaining formal cover with reference to the mentioned articles and provisons.

Real effect of the proposal

Maybe the whole idea is just to provide a basis/counterbalance for the approval of the 19 pending GMOs, which were approved the following day, and the other 30 or more GMOs in the pipeline, subject to EFSA scrutiny, which sooner or later will appear for approval.

No wonder the proposal has been met with such an outcry both from the NGOs against GMOs, Members of The European Parliament, European and national agricultural and food industry representatives, as well as our trading partners, like the USA, which says such a ban would breach our international commitments under the WTO. Having negotiated the SPS Agreement on behalf of the Commission under the WTO in the Uruguay Round I tend to agree.

The Environment Committee (COMENV), with the support of the Agricultural Committee (COMAGRI) in the European Parliament, is considering a motion to reject the proposal and asking for the Commission to withdraw it. The Commission would not be bound by such a motion, but given the divide amongst MS on the GMO issue and the position of the EP, passage of the proposal in the near future is not very likely.

Best outcome

Maybe the best outcome is a prolonged and protracted negotiation on the proposal, allowing a growing number of GMOs to be approved, which an efficient European agriculture will increasingly need in order to stay competitive and be sustainable. GMO seeds and crops are needed to obtain effective tools to cater for the growing problems with climate change, water shortages, environmental pressure and drop in biodiversity. GMOs will allow planting more draught resistant crops, allow for a reduction and more targeted use of pesticides and fertilisers, whilst maintaining or increasing yields.