The Future of CAP: The Challenge for Food Quality and Safety

1. The Future of CAP: The Challenge for Food Quality and Safety

2. At the Beginning • Aspects of Food Quality • Consumer-orientated Approach on Food Quality • Evaluation of Mid Term Review-proposals for food Quality(Confrontation with the Consumer-orientated Approach) • Scope within the WTO regime • Additional comment

3. Aspects of Food Quality according to the European Commission • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Absolute, non-negotiable requirements • Food safety • Compliance with legal standards for the environment and animal welfare • Aspects that are subject to rules on labelling • nutritional value • Optional aspects with subjective components and dependence on consumer preferences • flavour, • smell • appearance • Added values • produced in a particular region or • produced by a traditional method • produced with special attention to the environment and animal welfare

4. Mouth and Foot Disease Nitrofen Hormone Residues BSE Acrylamid Antibiotics Residues Food safety is an absolute, non negotiable must • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Consumers are concerned about food safety • People have an unpleasant feeling especially with processed food Food safety is an absolute, non negotiable must for consumers

5. “Added Values” and the Market • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • As quality production requires additional cost, the willingness to pay has to exceed those additional costs • To establish an equilibrium between supply and demand for quality products, the market is the adequate mean • Promoting quality production disturbs the regulatory principles of the market • Reaction to the (absence of) willingness to pay higher priceres for higher costs Supply and demand for quality food can be balanced by the market

6. Asymmetric Information as a Problem of Quality Food Markets • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Obeying process standards normally is not inherent in the product • “Produced “according to certain standards” can hardly be controlled (credence goods) • Asymmetric information can lead to a collapse of the market and an inefficient supply for consumers • Solving the problem of asymmetric information can lead to a larger market share of quality products • Reliable public institutions have the chance to solve the problem of asymmetric information Public control and labelling of process standards can ease the problem of asymmetric information

7. Demands on Information Policy • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Reducing the effects of asymmetric information • Identify consumers’ needs for additional information • Establishing labels with “eye catcher” qualities Information policy should be based on consumers’ needs

8. Overview over Measures Concerning Food Quality • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Direct payments/ compulsory requirement forCross compliance receiving complete direct payments • Farm audit mandatory for farms receiving more than 5.000 € direct payment • Accompanying measures deliberately, additional payments for paying attention to higher standards • Modulation taking money from the fist pillar and shifting to pillar 2 Food quality is to be promoted by many instruments

9. Objectives of Measures • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Objectives of the measures • income • competition • environment • food quality Objectives are not clearly defined and not consistent

10. Direct payments continue to play an central role in ensuring a fair standard of living and stability of income for the agricultural community • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Higher standards and farm audit lead to an increase of production costs • With obligatory higher standards there will be no adequate increase in prices • Compared to a situation without higher standards, cross compliance will accelerate structural development Obligatory higher standards for product quality result in lower income for the agricultural sector if higher costs are not compensated

11. Different Aspects of Justifying the Subsidiesfor Meeting higher Standards • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment Paying special attention to environment and animal welfare External effects impact on others not exclusive no market Added value no impact on others exclusive market Subsidies can be economically efficient ?

12. Argumentation for Promoting Food Quality in the MTR • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Some products have an added value because • produced in a particular region • produced by a traditional method • production methods pay special attention to the environment and animal welfare • Increasing weight of “added value” for quality perception • Gap between preferences for quality and behaviour in the marketplace • Promotion so that production meets consumer wishes in terms of quality The arguments are not sufficient for promoting food quality as they do not consider the willingness to pay

13. New accompanying Measures • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Encouraging farmers to participate in quality assurance and certification schemes • Support for producer groups for the promotion activities of agricultural products designated under quality assurance and certification schemes • Temporary and degressive aid for implementing standards that will become part of good farming practice or required minimum standards • Support for farm audits • Animal welfare payments

14. Scope for Food Quality Policy within the WTO with Respect to Imports • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Reference just to product-related attributes • measures of protection cannot be justified with process-quality that has no physical reflection • No arbitrary protection no (discriminatory treatments of imports) • national measures have to be based on international standards • Reference within the WTO-framework: • Agreement on Technical Barriers on Trade (TBT) • Agreement on Sanitary and Phytosanitary Measures (SPS) • Accepted international standards: • Technical standards: International Standard Organisation • Food related Standards: • Food Safety: Codex Alimentarius • Animal Health World Organisation for Animal Health • Plant Health International Plant Protection Convention Permitted trade restrictions are limited and refer to product-related standards

15. Scope for Food Quality Policy within the WTO with Respect to Imports • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Higher national standards have to be scientifically justified • Higher national standards can be enforced by accepting compensation measures • There is scope for the interpretation of the WTO-rules • Higher standards can hardly be achieved by multilateral agreements There is a challenge achieve a scope for higher levels of protection within the international framework

16. Possible Consequences of high Internal Standards due the WTO Framework Compliance with legally established standards for the environment and animal welfare an absolute, non-negotiable must • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment • Tariffs are an advantage compared to external suppliers • As to laying hens the new standards could lead to severe decrease of production within the EU • Advantage: tariffs lower freight cost • Disadvantage: higher prices for coarse grain higher standards • The protection by tariffs does not apply to the minimum market access Due to WTO rules higher standards can lead to a loss of market share and a decrease of production

17. Product prices, Income and Subsidies in Organic and Conventional Farms Income Subsidies Income Subsidies Conventional farms Organic farms A shift to higher quality production, particular where this requires specialised expertise, also offers benefits to farmers in terms of income and work quality • Definition of Food Quality • Consumer-orientated Approach • Evaluation of Proposals • Scope within the WTO • Additional Comment The promotion of quality production must not inevitable lead to higher income

18. Summary • Consumer-orientated Approach on Food Quality Risk policy should be adjusted to consumers’ skills • Evaluation of Mid Term Review-proposals for food Quality(Confrontation with the Consumer-orientated Approach) With regard to food quality the promoting measures should only refer the reduction of asymmetric information As to promoting food quality the new accompanying measures are a step into the wrong direction • Scope within the WTO regime The WTO framework makes it difficult to achieve higherEU standards • Additional comment The development of the organic sector points at several problems that arise with promoting food quality