Farmers should work together

Tuesday, 29 January 2013

The European Competition Network (‘ECN’) recently stated in a resolution that competition rules should continue to apply to the food sector. According to the ECN farmers should be encouraged to work together and form co-operatives to counter the power of large buyers, rather than escape from antitrust enforcement. 

In may 2012 the ECN published a report concerning competition law enforcement and market monitoring activities in the food sector. The ECN consists of the European Commission and the European competition authorities. The ECN comes in the report to the conclusion that European competition authorities have actively applied competition law in the food sector and that competition rules have benefited farmers. The report shows also that the food sector has been a priority for European competition authorities over the last few years.

The food sector still has priority within the ECN. The ECN stated in a joint statement that it faced the problems of small and medium sized enterprises (including farmers) which do not have negotiating power in negotiations with large buyers. An answer to these problems may lie in adaptation and consolidation of the agricultural sector. Through creation of cooperatives an other forms of cooperation among producers, farmers can become more competitive by reducing costs. By means of cooperation farmers are able to reinforce their bargaining position.

According to the ECN the answer to the abovementioned problem should not lie in large-scale exclusion of applying competition rules. Such exclusion would slow down the adaptation of the sector which is facing competition from producers outside Europe. In October 2011 the European Commission made a proposal for a revised Regulation of the single Common Market Organisation to promote an efficient adaptation of the agricultural sector.

The ECN supports the principles of this proposal. Farmers should be encouraged to form entities and organisations to create efficiencies in order to respond to the market. European competition authorities could support such consolidations. European competition authorities can also give further guidance on how competition rules apply to the agricultural sector.