Following the unveiling of the European Green Deal in December, its food policy component – the farm
to fork strategy, is now being rolled out. Eucolait supports the shift towards increasingly sustainable
food systems and is convinced that trade has a key role to play in this regard. While the connection
between trade and prosperity is well-known and established, the link between trade and sustainability
is less obvious. There is certainly a lot to be done when it comes to transport emissions, as already
outlined in the Green Deal communication but the positive contributions of (dairy) trade should not
be neglected. Trade is crucial for ensuring food security by reallocating products from surplus to deficit
regions, since not all areas can enjoy 100% self-sufficiency. The importance of trade for food security
will grow further as a result of the negative impacts of climate change which will not be evenly spread
across the planet. It is not viable or efficient to produce all kinds of agricultural products in all parts of
the world. From food security and environmental perspectives, it makes more sense to trade than
trying to achieve self-sufficiency in milk everywhere.
The EU is world’s largest exporter and importer of agri-food products and we believe it should remain
that way. Europe has to be open for business with the rest of the world, especially in the current
climate. Open and rule-based trade will be essential for achieving a sustainable food future. When
working towards the established sustainability targets, incentives should be prioritised over regulation.
The strategy should be as market driven as possible to encourage European businesses to invest in
new technologies.
With the present paper, we wish to highlight the positive contribution of trade to and comment on
some of the components of the farm to fork strategy which has the ambition to design a sustainable
food system.
Food security
International trade in agricultural goods contributes to a better availability of food across the globe,
which is essential for responding to the growing demand, driven by an increasing world population and
a larger share of people joining the middle class. The nutritional quality of dairy products is top of class
but they cannot be produced across the world in sufficient quantities. In many parts of the world, the
per capita consumption of dairy products amounts to only a fraction of the European average. Milk
powders, which have a long shelf life and do not require cold storage, are ideal sources of protein in
densely populated regions with a climate not well suited for milk production. It is hard to see how 10
billion people could be fed in 2050 without further increases in productivity and in global trade of
agricultural products.
Trade and environment
Moving product from places with a comparative advantage in milk production (in terms of natural
conditions and economies of scale) to other regions where milk production is less advantageous makes
economic and environmental sense. Trade is therefore crucial for lowering the worldwide carbon foot
print of a certain sector on a global scale. The GHG emissions of the EU dairy sector are very low in
comparison to milk production in other regions due to its efficiency.
Sustainability requirements on imports
With more being asked from European producers in terms of environmental sustainability, the desire
to export our policies and requirements to third countries becomes tempting so as to avoid carbon
leakage and to ensure a level playing field. Any measures targeting third country products, such as the
carbon border adjustment tax, will however have to be designed with the utmost care and in
compliance with international trade rules. We are particularly concerned by the following sentence in
the Farm to Fork part of the Green Deal communication: “Imported food that does not comply with
relevant EU environmental standards is not allowed on EU markets”. This approach does not seem
WTO-proof at all and would certainly trigger a wave of retaliation from our trading partners who would
likely view such policies as ecological protectionism. Any environmental demands will therefore have
to be workable and proportionate. In recent years, we have seen a proliferation of trade wars and it
seems urgent to reverse this trend, without abandoning EU values of course. As a general principle,
we would favour incentives, such as sustainability labelling schemes, over import restrictions or taxes.
Food waste
Food losses occur throughout the whole food chain and are not always under direct control of the
actors involved. Food losses are often caused by inadequate technology, lack of knowledge and skills,
bad logistics, inefficient markets or inadequate administrative procedures. Traders help addressing all
these issues by making supply chains more efficient. In the dairy sector, they ensure that all dairy
ingredients find a home by connecting supply to demand and by temporary storage of surplus
production.
Supply chain relationships
Trade has an important role in the supply chain by providing a variety of services to business partners
such as market and technical expertise, risk management, tailor-made products as well as financial and
logistical services. Trade limits market inefficiencies by connecting sellers and buyers.
The market orientation of the EU dairy supply chain and a functioning single market are key for
allowing the dairy sector to flourish. We reiterate that the dairy supply chain is extremely complex due
to the large number of products and outlets (retail, food service, food industry, export) which all
influence the milk price. Further interference in the supply chain dynamics is likely to impose additional
burden on operators without bringing value added. Most unfair commercial practices have been
addressed with the adoption of the UTP directive and there are numerous provisions concerning the
relationship between producers and dairy processors in the common market organisation regulation.
Eucolait is therefore not in favour of additional regulatory initiatives to manage the relations between
the various links in the supply chain. The freedom of contract needs to prevail.
Market stability – balancing trade
The smaller the market, the bigger the impact of external shocks. The EU single market is much more
resistant to adverse supply or demand shocks, such as droughts, animal diseases or trade embargoes
than an individual Member State would be. Trade takes care of temporary surpluses or shortages,
thereby reducing vulnerability and contributing to a more stable and resistant market place. In the
same manner, trade can contribute to more stable markets globally when barriers and trade distorting
support are reduced.
Food information
Another aspect highlighted in the Green Deal communication and the Farm to Fork roadmap is the
empowerment of the consumer. We agree that the consumer as the last link in the food supply chain
should indeed be provided with adequate information on the nutritional properties or environmental
footprint of the product that they purchase.
We however reject the connection between sustainable food consumption and the proposal of
extending mandatory country of origin labelling to milk and milk products. The attempt to give
preference to products from one’s own country has little to do with sustainability and it is obvious that
tailored, voluntary solutions can more adequately respond to consumer demands than a one-size-fitsall mandatory origin labelling scheme. The proliferation of legislation on indicating the origin of milk
in several Member States with the blessing of the Commission is regrettable and in violation of the
food information regulation and the free movement of goods principle. Mandatory country of origin
labelling is a hallmark of food nationalism and has no place in a European Union that wants to uphold
the integrity of its single market. It is inherently anti-trade and certainly should not be presented as a
means of achieving a higher good, i.e. empowering consumers to make sustainable food choices.
If origin information is nevertheless made compulsory, it should be done on an EU/non-EU basis to
take into account of our common market, regulations and production standards.
Marketing standards
Schemes which highlight the sustainability aspects of a product, such as the environmental footprint,
animal welfare or the fairness of the milk price should not be mixed with the basic compositional
requirements of a product, such as protein and fat content. The goal of marketing standards is
primarily to ensure that all products fulfil certain minimum criteria, thereby guaranteeing a level
playing field. The carbon footprint of skimmed milk powder can vary a lot but itshould always be called
skimmed milk powder. Other, supplementary information may clarify the performance of the product
according to various sustainability criteria.
Conclusion
Eucolait welcomes many of the initial ideas outline in the Green Deal communication and the Farm to
Fork roadmap. At the same time, we stress the crucial role of trade in the strategy and warn against
any measures based on protectionist premises. Europe should lead the way towards more sustainable
food systems but this has to be combined with openness towards the rest of the world.
Download the full PDF here.