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Market organisations

The common organisation of agricultural markets means EU legislation for the main agricultural products to adjust and rationalise the markets and avoid and contain market disturbance. The Basic Regulation of the European Parliament and of the Council on the organisation of the markets in agricultural products No 1308/2013 applies to the management of agricultural markets, marketing of agricultural products and common rules for third country imports and exports.

In Finland provisions on the implementation of the regulation and the distribution of labour for these tasks have been laid down by the Market Organisations Act (999/2012). Further provisions on the implementation may be issued by government and ministry decrees.

The main responsibility for the implementation of the organisations rests with the Finnish Agency for Rural Affairs. Certain tasks, especially those related to control, have also been assigned to other public authorities, such as the Finnish Food Safety Authority and Customs.

Market interventions

Besides direct payments, the means to reach the objectives of the common agricultural policy, i.e. market stability and fair standard of living for the agricultural populations, include market measures, public interventions, and aid for private storage.

Price support under the common market organisation may be implemented through public intervention purchases of cereals, rice, olive oil and table olives, beef and veal and milk and milk products and aid for the private storage of pigmeat, sheepmeat and goatmeat and milk products. The purpose of intervention purchases and aid for private storage is to prevent a fall in the market prices below the institutional, i.e. the so-called intervention prices.

The EU may also take exceptional measures to interfere with the markets to avoid and address market crises that may be due to various causes. Such measures may be needed, for example, to alleviate exceptional circumstances on the internal or export markets, combat animal diseases, or reduce or prevent damages to agriculture caused by natural disasters such as flooding or storms.

Production guidance

The long-term objective for agricultural policy is to make the markets increasingly market-driven. Quota systems will soon be a thing of the past. The milk quota system applied for a long time ended in March 2015 and sugar quotas will be retained until the end of the marketing year 2017. Wine production is regulated by restricting the grapevine planting area.

Payment schemes

In the common organisation of the markets rules are set out for various aid schemes. In the sugar sector aid may be granted for using sugar for certain purposes. The regulation allows for the payment of specific support for sugar beets in Finland and authorises Finland and Sweden to grant national payments to reindeer meat production. To improve conditions for the production and marketing of apiculture products the Member States together with the sector may draw up national programmes, with the EU contributing half of their financing.

To promote healthy eating habits among children and the young and the consumption of fruit and vegetables and milk products, aid may be granted for their use at schools and educational establishments. This also supports the implementation of the long-term objectives of the common agricultural policy concerning stability of the markets and access to food. So far the aid scheme concerning fruit and vegetables for schoolchildren has not been implemented in Finland.

Marketing standards

The common organisation of the market establishes standards for the marketing of several agricultural products concerning, for example, the quality of the products and their packaging, labelling, storage and transportation.

Standards concerning the marketing of agricultural products aim to improve the economic conditions for marketing and product quality. This is why compliance with these standards is in the interest of the producers, traders and consumers alike.

The best known marketing standards are those relating to the production method and labelling of eggs. The production and labelling requirements concerning eggs from enriched cage or free-range systems derive from the common organisation of the market. Similarly, the rules that lactose-free milk-based products cannot be called milk and prohibition to use the name ‘voimariini’ with the Finnish word ‘voi’, i.e. butter, for a butter-vegetable oil mix are based on the marketing standards included in the organisation of the market.

The classification of carcasses is not directly related to marketing, but the regulation establishes the Union scales for the classification, identification and presentation of carcasses for the beef, veal, pigmeat, sheepmeat and goatmeat sectors. This allows to record and follow the prices and apply intervention arrangements in these sectors on an equal standing. Common classification facilitates trading between the producers, slaughterhouses and meat processors.

Cooperation between producers

To improve the position of the producers, the common organisation of the market sets out the rules for the recognition and activity of producer organisations and interbranch organisations. The activity of producer organisations in the fruit and vegetable sectors is supported by the EU funds as well. Under the auspices of producer organisations cooperation between producers is allowed more broadly than normally seen under the competition legislation. The organisation of the market also sets out certain other derogations from the competition legislation with regard to cooperation between producers.

Interbranch organisations are as a rule composed of operators other than producers. They may be comprised of representatives of economic activities involved in the production, trade or processing of agricultural products. Among the key objectives of interbranch organisations is to optimise the production and processing costs of the products.

Trade with third countries

The common organisation of the market lays down the rules for trade in agricultural products with third countries as well. For several products the Commission requires an authorisation procedure in order to enable the monitoring of the third country trade and, where necessary, take action in case of disturbances. For imports the Commission may require an import certificate with an export certificate from the country of origin attached to it, and an export certificate for exports from the EU.

Import duties pursuant to the Common Customs Tariff apply to most agricultural products imported to the EU, but there are also specific rules for some products. Import duties may be suspended in certain cases, while for some products additional duties under the WTO Agreement apply.

The Commission may establish import tariff quotas, i.e. restrict the amounts of products imported with a reduced import duty. In most cases the tariff quotas are based on international agreements between the EU and third countries.

To improve the market situation of certain products the Commission may support their exports by export refunds that bridge the difference between the world market and EU prices. Export refunds may vary according to the country of destination. The Commission may introduce export refunds and specify their amounts on a regular basis, taking account of the trends on the Union and world markets.

In the recent reforms of the agricultural support payments the internal market of the EU has become increasingly market driven, which also means that the need for export refunds has decreased quite rapidly. The use of export refunds is also restricted by international trade agreements.

 

 

Further information

Pekka Sandholm, neuvotteleva virkamies 
MMM, Ruokaosasto, Markkinayksikkö 0295162416