Are the Common Agricultural Policy 2013 proposals an opportunity or threat for the Belgian potato sector?

The European Union Common Agricultural Policy has never been a priority for the member companies of Belgapom, the representative body of the Belgian potato trade and processing industry, because the potato sector was kept completely outside the scope of this policy.

The recent activation of the farm payment by the potato cultivation sector clearly illustrated that the latter is also part of that common agricultural policy. It was even more clearly emphasised by the linkage of mandatory crop rotation in Flanders as one of the preconditions.

This approach led to the potato sector experiencing a market-driven development around the core sectors of the fresh-produce market and processing into (mainly) deep-frozen potato products. In Belgium, both sectors evolved into competent branches. This resulted in spectacular growth of potato processing in particular – also because of the specific cultivation conditions in our country. In the last few years there has been a marked expansion in the potato crop. While the mainly family-run processing plants handled 500,000 tonnes in 1990, they passed the 3-million mark in 2010. The ever-growing world trade in potato products has even strengthened the image of Belgium as the country where chips (“French fries”) were born. It is therefore no coincidence that, after chocolates, potato products have emerged as the major export product for the Belgian agricultural sector with a turnover of 2.1 billion euros.

A recent study by the Boerenbond (Farmers Association) showed that potato growing was an excellent source of income for Belgian arable farmers in spite of the great volatility of this market, which is determined by supply and demand. Moreover, Belgian potato growers have the option of operating in a free or contractual market. So far the potato chain is the only one that elaborated a contract context in the framework of the contractual agriculture covenant.

In addition, during a recent investigation by the Flemish Government into transparency of price-setting in the agricultural sector, the Belgian potato sector appeared to have received a good rating, which emphasised the value of the special role of the intermediate trade throughout all links in the chain.

Does the Common Agricultural Policy pose a threat to this growth sectoro?

However, it is feared that the impact of the renewed European agricultural policy, recently presented by European Commissioner Ciolos, might be greater that has been the case so far.

In particular, the so-called ‘greening’ of the agricultural policy, with measures such as land set-aside, stricter obligatory rotation, etc. is a cause for concern in the sector. Potato cultivation is very successful in our regions – also because of good soil and a suitable climate. The sector is aware of this and recently implemented its own initiatives to continue to ensure sustainable potato cultivation. This requires further scientific research. Going back to the fragmented agricultural structure of the past is not an option for a sector that envisages being competitive on a world scale.

The fact that the proposals provide for additional governmental support for less competitive European cultivation areas may be a major disadvantage for the competitiveness of our Belgian potato chain.

The impact on the arable farming sector of the proposal to abolish the sugar quota from 2015 is still completely unclear. Together with the disappearance of the support for starch potato cultivation in 2012 it may lead to a major shift in the landscape of arable crops. The evolution on the world market will probably have a considerable impact in this respect. At the moment, any vision on the issue inside the European Commission is lacking.

Belgapom is pleased with the confirmation in the proposals that the potato sector will be kept out of the scope of the market organisation for fruit and vegetables. On the other hand, there is the fear that the planned support for the establishment of cultivator associations may have a harmful effect on the balance achieved within the potato chain. Obviously there is no objection to cultivators associating (which they can do even now). However, when the development in the fruit and vegetable sector is considered (the model for these proposals) it can only be concluded that the role of the intermediate trade and the SME packaging companies has been completely played out as a result of the fruit and vegetable CMO. Various supporting measures and subsidies in fact appear to be only accessible for cultivators’ associations and not for private – generally family – businesses. Belgapom counts on the potato sector being safeguarded against this potential distortion of competition within the chain.

A positive aspect in the proposals is the support for young farmers, who are the key to the future.

But the fact that these proposals take absolutely no account of the expected increasing demand for food on the world market, also as a result of the rapidly rising world population, shows a manifest lack of ambitious long-term vision.

Meanwhile, the European potato sector has developed into a major export sector and has further growth opportunities in view of the increasing consumption of potatoes and potato products on a world level. The UNO international year of the potato in 2008 resulted in important policy options in economic growth countries such as China and India, in which the potato will be accorded a central place.

Belgapom trusts that, within the totality of the necessary reforms, the discussions in the European Parliament and the European Council will also take into account the interests of the dynamic potato sector. This is not self-evident as is demonstrated by the dearth of underpinned data on the potato sector and its businesses in the nonetheless ample volume of European studies.

Source: Belgapom News