29 November 2013

4 minute read

While marketing of products has been supported by the European Commission through the Common Agricultural Policy through matched funding for promotional campaigns, it has been strictly forbidden for the country of origin or private brands to be part of the marketing and advertising.

Campaigns have to be generic and can discuss the method of production.

“The European Commission supports generic promotion programmes under the information and promotion policy for agricultural products and their method of production. It excludes actions based on commercial brands and those that encourage the consumption of a product because of its specific origin,” the Commission says.

At present the annual budget provided by the European Commission for agricultural product promotion is €50 million.

However, now the European Commission has recognised that the whole of the EU is facing strong global competition in the agricultural product sector.

There are economic challenges with price volatility a slow-down in the growth of productivity and a declining share of the global agricultural sector in the food chain.

There are also environmental and climate change challenges that have to be addressed through the maintenance and promotion of sustainable agriculture and the reduction of greenhouse gases and social needs to be met in keeping the rural economy of each individual country afloat.

The major concerns arise over the competition that is coming from around the world.

The EU has reduced its spending on agricultural promotion from half of the Common Agricultural Policy budget in the 1980s to less than 0.5 per cent, which competitors are spending more and more on promotion. The US last year spent $280 million from public funds to promote agricultural exports.

At the same time European agricultural exports to the rest of the world are falling, while other agricultural exporting countries are grabbing a larger share. Brazil has seen its share rise from five per cent to 10 per cent over the last decade.

In a Commission Staff Working Document putting forward proposals to the European Parliament and the European Council for new regulation on promotional measures, the European Commission has specified the need to use the Common Agricultural Policy to develop a more targeted approach to the promotion of agricultural products.

“As an instrument of the CAP, the promotion policy for agricultural products must also pursue the objectives of ‘The CAP towards 2020’, and specifically the objective of increasing the sector’s competitiveness, both on the internal market and in third countries. This is to be achieved by:
– Developing and opening up new markets for European agricultural products on
the internal market and in third countries;
– Increasing consumer awareness of the quality of European agricultural
products;
– Improving the efficiency and effectiveness of the promotion policy,” the Commission’s working document says.

The document outlines three alternatives to the existing policy. In which it includes the ability of countries to promote products referring to the origin of the product and also to private brands as part of illustrating a generic message.

“These arise from distinctive features that emerged from the public debate and the positions taken by various stakeholders: the targeted market(s); the existence or not of a European strategy for promotion; and rules regarding the visibility of private brands and the mention of product origins,” the Commission says.

The three “scenarios” are an enhanced status quo, which is a limited adaptation of the current promotion policy; a targeted scenario that goes beyond the enhanced status quo encouraging collaboration between countries within the EU over promotion and allowing references to the origin or products and to private brands; and the third is a scenario exclusive to third countries, which allows the targeted marketing of products and mention of origin and private brands only in promotion to third countries.

The Commission says that the new proposals for marketing and promotion all fall within the World Trade Organization Agreement on Agriculture and are compatible with the WTO rules.

It adds that the different scenarios provide for a greater simplification in managing the policy and it says that the scenario that is exclusive to third countries achieves the most in this respect.

“Better management under the ‘enhanced status quo’ scenario should lead overall to a small but noticeable positive impact in all areas,” the working document says.

“At the other end of the spectrum, the ‘exclusive third countries’ scenario pursues a more forceful and commercial approach by limiting promotion measures to third country markets and making more ambitious use of private brands and origin.

“This scenario would lead to significant economic impacts, especially for SMEs allowed to mention their own brands in promotion actions. Nevertheless, it does not respond to the European consumer’s need for information.

“This absence of promotion actions on the internal market will ultimately affect the purchasing behaviour of European consumers.

“The ‘targeted’ scenario takes into account the needs of both internal and external markets.

“A global agricultural promotion strategy would be efficient and it would address both economic opportunities in third countries and information needs on the internal market.

“Generic promotion would not primarily be to the economic advantage of agri-businesses.

“However, publicity material for consumers offered by this scenario would give visibility to private brands and the origin of products so this should be partially offset.”

Chris Harris