Economic sciences

2. International activity

 

Master of Economics, PhD- Candidate  Natalia Lashkevich

University “G. d’Annunzio” Chieti-Pescara, Italy.

Dilemma of the Single Cereal Market

 

Summary

The one of perspective measures of the Europe 2020 strategy in 2010 is "A Single Market for 21st century Europe". The analysis of the WTO report showed the single market is not yet a reality in all areas. To achieve the EU 2020 strategy objectives it is necessary to relaunch Single Cereal Market in order to create new opportunities for the EU business operators without imposing new restrictions. However, increasing of the global trade in food contributes to food risks. That is why the Dilemma of the Single Market is to increase the international trade of food, develop the European business support and to reduce the level of food hazards and ensure the safety consumption for consumers.

 

Keywords

Market, cereal, cereal products, strategy, dilemma, Trade, food hazards, risks, food safety

 

Introduction

The trade and commercial policies occupy an essential place in international activity of the EU.  In according with the Article 131 in the Treaty, the EC common policy aims to "contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade". This objective is in line with the general aims of the Treaty "to promote, throughout the Community, a harmonious, balanced and sustainable development of economic activities, …, a high degree of competitiveness and convergence of economic performance, …, and economic and social cohesion and solidarity among Members". [1,p13] However, the creation of the single successful Europe is a long-term process.  The main steps of the European economy policy are the following:

-  The Lisbon European Council of 23 and 24 March 2000 set the objective of making the European Union the most competitive and dynamic knowledge-based economy in the world[2]

-  the Göteborg European Council of 15 and 16 June 2001 agreed the Union's Strategy for Sustainable Development to ensure that economic growth, social inclusion and environmental protection. [3,p.3], [4]

-  the Johannesburg World Summit on Sustainable Development in 2002 [3,p3]

-  Elaboration the Policy of open markets as a part of the Lisbon Strategy in 2006 [5];

-  Adoption of the European Economic recovery plan in 2008 [5];

-  Elaboration of the Europe 2020 strategy in 2010 where the one of perspective measures is "A Single Market for 21st century Europe" [6], [7], [8,p.13].

Cereal Market: trade and food safety aspects

The analysis of the WTO report showed the single market is not yet a reality in all areas. On agricultural goods, the EC offer has been, since October 2005, to increase market access and decrease domestic support, and to eliminate all trade-distorting export practices by 2013 and also called for an enhanced extension of the possibilities to protect agricultural products with a view to improving the possibilities for consumers to choose quality products.

Table 1 World coarse grain trade.

Parameter

2006/07

2007/08

2008/09

2009/10

1

2

3

4

5

World total, thousand metric tons

114.714

128.839

110.658

117.550

Production, thousand metric tons

987.268

1.079.986

1.109.679

1.105.756

Domestic consumption, thousand metric tons

1.012.320

1.056.949

1.079.053

1.101.357

Ending stock, thousand metric tons

140.704

163.741

194.367

198.766

Source of Data: [9]

The table 1 shows the world grain market is characterised of sustainable development during  2006-2010 years.  The production usually covers domestic consumption in grain.

Table 2 The EU-27 coarse grain trade

Parameter

2006/07

2007/08

2008/09

2009/10

1

2

3

4

5

TY Export, thousand metric tons

5.463

4.679

4.338

4.230

TY Import, thousand metric tons

8.738

19.892

2.996

3.090

Production, thousand metric tons

137.421

136.123

161.486

152.960

Domestic consumption, thousand metric tons

147.877

154.155

151.305

150.180

Ending stock, thousand metric tons

15.138

12.768

20.809

23.796

Source of Data: [9]

Notes: TY – trade year

The graphic of the EU grain market will allow to determine trends on this market.

Figure 1. Dynamic of the EU-27 grain trade, 2006-2009 trade years

In 2007 the production of grain in the EU was at the same level as in 2006 and consisted 136.123 thousand metric tons. The growth of the grain consumption on 6.278 thousand metric tons (154.155-147.877) increased the import on 11.154 (19.892-8.738) thousand metric tons.

In 2008 the growth of the production (on 25.363) and the decline of grain consumption (on 2.850) thousand metric tons led to the decrease of the import on 16.896 (2.996-19.892) thousand metric tons.

In 2009 trade year the grain market was characterised the more sustainable condition in the compares with the 2006-2008 trade years: despite on decline of the production on 8.526,  its level (152.960 thousand metric tons) covered the domestic consumption (150.180 thousand metric tons). As a result the level of grain import in 2009 was (3.090) the same as in 2008 trade year.

The analysis of the EU grain market allowed to establish the following index correlations:

- the excess of the consumption over the production contributes to increased imports;

- the growth of production and the decline of consumption ñïîñîáñòâóþò decrease of import.

That is why, to achieve the sustainable development of the EU grain market in the perspective period it is necessary to development strategical science researches in the agriculture area in order to find new possibilities of production growth. With this view it is necessary to analyse the EU agricultural resources.

Table 3 Organic farming data

Time

Total crop area, Ha

Share of total organic crop area out of total Utilised Agricultural Area,%

The EU-15

The EU-27

Deviation (+,-)

The EU-15

The EU-27

Deviation (+,-)

1

2

3

4

5

6

7

2006

5.733.240

6.881.674

1.148.434

4,4

3,7

-0,7

2007

5.933.271

7.265.902

1.332.631

4,6

4,0

-0,6

2008

6.327.320

7.785.291

1.457.971

5,0

4,4

-0,6

2009

6.966.403

8.600.911

1.634.508

5,3

4,7

-0,6

Source: [10]

The table 3 shows the integration of countries and implementation of elaborated CAP  allow to increase the crop area every agriculture year. So, the growth of crop is the one of factors influenced on the growth of grain production (see table2). However, the share of total organic crop area in the EU-27 has declined in comparison with the EU-15.  Thus, the effective agriculture practice and support of organic farming are the main strategic developments.

Integration processes are characterised by the following aspects: “The global trade in food is increasing in every year, contributing to the risk of spread of pathogens and contaminants across national borders.” [11] So, in frameworks of the expansion food markets the European and world community forced  with challenges to ensure food safety.

The analysis of data from RASFF report 2009 showed that during period 2004-2009 the quantity of notifications is constantly increased (see the table below).

Table 4. The information flows of the RASFF (Rapid Alert System for Food and Feed)

Time

Alert

Information

Border rejection

News

Follow-up to alert

Follow-up to information

Follow-up to border rejection

Follow-up to news

Total

1

2

3

4

5

6

7

8

9

10

2004

690

553

1338

89

1449

504

825

0

5448

2005

955

747

1453

86

2218

679

842

0

6894

2006

910

678

1274

72

2157

640

923

0

6591

2007

952

761

1211

43

2440

796

978

0

7181

2008

528

1138

1377

47

1789

1329

743

76

7027

2009

557

1191

1456

42

1775

1861

871

87

7840

%

+5.5

+4.7

+5.7

-10.6

-0.8

+40

+17.2

+14.5

+11.6

Source of Data: [12,p.56]

The table 4 reflects  market notifications inserted in the RASFF. The notifying country reports to RASFF about risks which the country has identified. And also send information about risk-product, traceability and safety measures it has taken.

In order to implement a successful controlling, all market notifications are classified as: ‘alert notification’ or ‘alert’, ‘information notification’,  ‘border rejection notification’,  ‘news notification’.  The all market notifications are identified as: an ‘original notification’ or as a ‘follow-up notification’.

In accord with table data, the total level of information flows about food risks is very high - about 7000 a year (column 10). It is necessary to admit the level of notifications about serious risks (“alert”) in 2009 in compares with 2004 is reduced (690 and 557 accordingly – column 2). But the level of border refusals is fairly high and amounts to about 1300 notifications a year (column 4). The data of the table show a high level of information notifications in 2008 and 2009 years (1138 and 1191 accordingly – column 3). These notifications point at the increasing attention of countries to the national control quality systems.

The Single Grain (Cereal) Market covers trade of grain, cereal and cereal products.

Table 5 Market of cereal products of the EU-27 in 2006-2009.

Parameter

2006

2007

2008

2009

Average data

Bakers’ wares

Export, kg

69110.900

83.004.700

79.712.900

80.850.900

78.169.850

Import, kg

75.547.200

82.637.200

78.254.700

78.801.100

78.810.050

Production, kg

1.307.478.436

1.400.000.000

1.400.000.000

1.400.000.000

1.376.869.609

Pasta and pasta products

Export, kg

24.552.900

27.425.200

27.297.900

29.219.300

27.123.825

Import, kg

95.184.300

113.712.000

119.242.600

125.330.800

113.367.425

Production, kg

917.000.000

1.052.472.480

772.606.459

706.200.000

862.069.735

Fresh bread

Export, kg

51.427.200

57.021.000

62.972.800

64.154.400

58.893.850

Import, kg

4.144.300

7.148.300

8.721.700

5.526.000

6.385.075

Production, kg

16.027.181.038

16.888.424.055

20.082.938.064

20.224.012.800

18.305.638.989

Source of Data: [13]

The analysis of table 5 showed that among export cereal products “Bakers’ wares” and “Fresh bread” have the largest shares (78 and 59 thousand tons accordingly). “Pasta and pasta products” are the main import products for the EU. Its share in the import is about 113 thousand tons. In accordance with the table, the import of  “Pasta and pasta products” has sustainable tendency to the growth.

Taking into consideration matters of food safety, it is necessary to analyse food risks on trade at the Single Cereal Market. 

Table 6. Dynamic of notifications.

Parameters

2008

2009

Deviation (+,-)

Growth rate, %

1

2

3

4

5

Total notifications of cereal and bakery products

161

212

+51

131,7

Alert notifications of cereal and bakery products

40

46

+6

115

Information notifications of cereal and bakery products

58

129

+71

222,4

Border rejection notifications of cereal and bakery products

63

37

-26

58,7

Total notifications of all products

3045

3204

-159

105,2

Source of Data: [12,p.64]

In accordance with the table 6 the subtotal of notification decreased in 2009 on 159. The positive tendency is the decline of “Border rejection” notifications of cereal and bakery products. However, the quantity of “total” and “information” notifications increased on 31,7% (131,7-100) and 122,4% (222,4-100).

Table 7. Notifications by hazard category and product category in cereals and bakery products, 2009

Hazard category

Quantity

Share, %

1

2

3

GMO/novel food

49

29.2

Allergens

24

14.2

Micotoxins

21

12.5

Composition

20

12

Foreign bodies

18

10.6

Food additives

10

6

Microbiological  contaminants

6

3.6

Industrial contaminants

6

3.6

Pathogenic micro-organism (potentially)

3

1.7

Pesticide residues

2

1.2

Heavy metals

2

1.2

Not determined/other

2

1.2

Organic aspects

2

1.2

Bad or insufficient controls

2

1.2

Biocontaminants

1

0.6

Total

168

100

Source of Data: [12,p.61]

Table 7 shows the data of food safety of cereals and bakery products. The main hazard categories are GMO/novel food/, allergens, micotoxins, composition, foreign bodies, food additives. In order to prevent these food risks of cereal and cereal products it is necessary to improve the control and monitoring along the food chain, namely such links as farming (cultivation and processing), storage and producing.

Dilemma of the Single Market: perspective approach.

The analysis of the world grain market and the European cereal market showed that the Dilemma of the Single Market is to develop the European business support and to reduce the level of food hazards and ensure safety consumption for consumers.

In order to achieve the EU 2020 strategy, the perspective measure is the relaunch of the single market. [14] The relaunch of the Single Cereal Market must open up new opportunities without imposing new restrictions,  secure the better market access for the EU business and upgrade the strategic dialogues with key  third countries in order to create well-functioning and well-connected markets with fair competitiveness for business operators.

In the area of food safety the main strategic challenges are the prevention of food risks and introduction of “a global strategic for the surveillance of foodborne diseases and for the efficient gathering”. [11] The ensuring of food safety should consider the following initiatives as:

-  Global implementation of harmonized food standards.

-  The further development of systems for surveillance for foodborne disease and food contamination, product tracing and recall and strengthened laboratory capacity.

-  The increasing of actions on food safety at the national and international levels across the full length of the food chain from farm to consumption.

-  The timely conduct of international risk assessments through a systems approach in order to tackle more efficiently and consistently food-safety issues.

Conclusions

During the past two decades, the creation of the single market and the opening of borders have been two of the main driving forces behind growth in Europe. However, the increasing of the international trade in grain, cereal and cereal products leads to the growth of food risks and hazards. To solve the Dilemma of the Single Cereal Market, it is necessary to achieve closer collaboration between the health-epidemical and economic sectors in order to ensure the global management of food safety based on science principles and system approach and taking in account that protection of food safety cannot lead to discrimination or restriction on international trade.

References:

[1] Trade Policy Review WT/TPR/S/214/Rev.1 8 June 2009 (09-2701) // WORLD TRADE ORGANIZATION

[2] Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013) ‘©European Union, http://eur-lex.europa.eu/’

[3] Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions - Towards a global partnership for sustainable development /* COM/2002/0082 final */‘© European Union, http://eur-lex.europa.eu/’

[4] PRESIDENCY CONCLUSIONS GOTEBORG EUROPEAN COUNCIL 15 AND 16 JUNE 2001 00/1/01 REV 1 1

[5] Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Mainstreaming sustainable development into EU policies : 2009 Review of the European Union Strategy for Sustainable Development /* COM/2009/0400 final */‘© European Union, http://eur-lex.europa.eu/’

[6] Commission working document - Consultation on the future "EU 2020" strategy /*COM/2009/0647 final */‘© European Union, http://eur-lex.europa.eu/’

[7] COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Annual Growth Survey: advancing the EU's comprehensive response to the crisis /* COM(2011) 11 final*/‘© European Union, http://eur-lex.europa.eu/’

[8] COMMUNICATION FROM THE COMMISSION EUROPE 2020 A strategy for smart, sustainable and inclusive growth / *COM(2010) 2020*/‘© European Union, http://eur-lex.europa.eu/’

[9] Grain: World Markets and Trade// Circular Series FG 10-10 October 2010// USDA, Foreign Agricultural Service.

[10] Eurostat – Data Explorer “Certified organic crop area” [food_in_porg1] http://appsso.eurostat.ec.europa.eu/nui

[11] Advancing food safety initiatives // the Sixty-third World Health Assembly, Having considered the report on food safety – A63/11 (A63/VR/7), 2010

[12] The Rapid Alert System for Food and Feed (RASFF) Annual Report 2009 / The Health and Consumer Directorate-General of the European Commission manages the RASFF, - Luxembourg: Publication Office of the European Union, 2010.

[13] Eurostat – Data Explorer “PRODCOM ANNUAL SOLD (NACE Rev.2.)” [DS-066341] http://appsso.eurostat.ec.europa.eu/nui

[14] COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a Single Market Act For a highly competitive social market economy 50 proposals for improving our work, business and exchanges with one another /* COM/2010/0608 f/2 */‘© European Union, http://eur-lex.europa.eu/’