A politician is always in their element when they are addressing a home crowd with a message they know will go down well. This was certainly the case for the EU farm commissioner, Phil Hogan, who was in Dublin to help the Irish Farmers Association celebrate its 60th anniversary. As a politician well used to the cut and thrust of Irish politics, Mr Hogan knew what his audience wanted to hear. A key theme for his speech was the need for farmers to be treated more fairly by bigger players up and down the food supply chain.
Topically, with oil prices plunging, he first turned his attention to the input end of the supply chain rather than retailers. He questioned why, when energy costs are falling, fertiliser manufacturers are suggesting that prices could rise this year. That is a good point, since in the past we have always been told prices reflect high oil and gas prices and to a lesser degree supply and demand.
Mr Hogan has asked the EU competition commissioner, Margrethe Vestager, to investigate whether fertiliser markets are operating in a way that meets competition rules. This is a sensitive issue with the European Commission, when power is concentrated in the hands of a limited number of global suppliers.
On that question Mr Hogan seems to have already made up his mind, telling farmers that while the focus has been on retailers’ margins he is equally concerned about inputs. He said there was evidence of “margins being extracted” beyond what could be justified, suggesting the lack of response to a dramatic drop in energy prices was evidence of his concerns.
Looking backwards along the supply chain is an interesting change of direction for a commissioner, but it reflects his concerns about power and fairness for farmers, who at the end of the day are the least powerful in the chain. Ironically the traditional focus is on retailers and their margins, but things are now so bad for the big UK retailers that you almost have to feel sorry for them. There will be a price to be paid, however, for their drive to become even more competitive against the discounters. Retailers may partly fund the cost of price cutting, but ultimately the bill, or at least part of the bill, will come back to suppliers, who in turn will pass that on to farmers.
To date the focus has been on a voluntary supply chain initiative, but COPA, as the main farm lobby organisation, has refused to sign up to this, because it believes it lacks the teeth needed to make a difference. Mr Hogan said he wanted to see the farming sector strengthened – and hinted that he could consider legislation if others could persuade him the voluntary initiative is not working. There will be no shortage of farm organisations ready to take up that challenge, although moving beyond the voluntary initiative would put him on a collision course with some powerful food and retailers’ organisations. It would also be resisted by some Member States, including the UK, which is against regulation that would prevent the market operating to the benefit of consumers.
There can be no question that in highlighting perceptions about unfairness Mr Hogan was saying the things his audience wanted to hear. This has long been a vexed issue for the Irish Farmers Association and others, and Mr Hogan seems to be serious in suggesting he would consider legislation.
The big test now will be whether his commitment travels with him back to Brussels. But he has moved the issue up the agenda, farmers like it and farm lobby organisations will make sure it stays there.