How to improve farmers’ position in the supply chain

Published 23 November 16

European agricultural policy has shifted towards a more market-oriented approach. This has led to concerns that farmers are becoming “the main shock absorber in the supply chain” in dealing with sustained low prices or price volatility. The Agricultural Markets Task Force (the Task Force) was set up by the European Commission, in response to pressures faced by the industry due to the Russian food embargo in 2015.

In its final report, the Task Force has set out key recommendations aimed at improving farmers’ position in the supply chain. Those recommendations cover the following seven areas:

  • Increased market transparency
  • Risk management
  • Futures and other derivative instruments
  • Trading practices in agricultural markets
  • Use of contracts
  • The Common Agricultural Policy and competition law
  • Access to finance.

Central to most of the policy recommendations provided by the Task Force is increased market transparency. This is viewed to be necessary to allow producers to understand the value of their product, as well as helping farmers to better negotiate contracts, including forward contracts.

Accurate, timely and accessible market data is also a precursor to a fully functioning futures market. It can improve access to finance by enabling better business planning and appreciation of market risks by both farmers and lenders.

The full report, including detail on specific policy recommendations, can be found on the European Commission’s website.