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Better regulation key to price volatility control in CAP

14/12/2016

Better regulation key to price volatility control in CAP

GUE/NGL MEPs have slammed the 'CAP tools to reduce price volatility in agricultural markets' report that was accepted by the European Parliament today.

GUE/NGL Shadow Rapporteur on the report, Irish MEP Luke 'Ming' Flanagan (Independent), explains: "The fundamental reason for the volatility in agricultural markets is the globalisation of our food supply and allowing speculation on world commodity markets to dictate prices to the detriment of primary producers."

"Using financial instruments in the Common Agricultural Policy (CAP) to manage price risks rather than reducing and addressing the causes ignores the reality," the Irish MEP continues.

"The financialisation of the food supply where you have highly organised financial institutions with access to information exerting control over fragmented producers, the level of support they get and therefore the food supply, is another step along the road of locking farmers onto a treadmill of debt and below-cost production.

"Trade agreements such as TTIP, CETA and Mercosur further increase problems by exposing farmers on both sides of the Atlantic to increased pressures that they simply cannot bear," Flanagan said.

Irish MEP Matt Carthy (Sinn Féin) also comments: "The control by corporate market forces over agricultural prices is the main source of volatility. Yet this report would see the problem being the solution."

"Mutual funds, private insurance schemes and increased competitiveness are all cited in this report as tools to stabilise farming incomes and reduce farm debt.

"Farmers who are 'price-takers' not 'price-makers' stand to be swallowed up by a system that puts private institutions in the position of dealing with the agriculture crisis," he argued.

Galician MEP, Lidia Senra, adds: "This report forgets that price volatility is actually a consequence of the CAP itself."  

"The financial instruments proposed in this report simply aim to divert some of the money that farmers earn into other sectors, such as the insurance sector. This is completely unacceptable.

Senra calls on the Commission, Council and Parliament: "If you really want to reduce volatility, you need to implement an agricultural policy that is common, public and gives priority to the internal market."

"It must have instruments that will provide a collective and responsible regulatory framework; establish minimum prices; cover the costs of production; reward the work that they do; and will give back to farmers’ organisations what they used to have in the past – a genuine negotiating role," explains the Galician MEP.   

Portuguese MEP, Miguel Viegas, also comments: "Price volatility is a complex process with many causes. We must be careful not to misdiagnose the causes or we will end up applying the wrong solutions."

"We need to look at things like price manipulation and speculation by multinational companies. We also need to look at climate change as a cause of price volatility.

"What is at stake here isn't just farmers’ incomes. It's actually the potential abandonment of the land by a large number of farmers who simply don't earn enough money. This would lead to larger and larger companies taking over and this situation cannot be rectified if it happens," Viegas concludes.

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