The European Commission (EC) on May 4 announced the adoption of exceptional derogations from EU competition rules to allow certain types of cooperation in the potato sector, as well as for milk and milk products, and also live plants and flowers. This is part of a wider package to support the agri-food industry during the ongoing coronavirus (COVID-19) pandemic, reports Morgan Lewis for JdSupra.
The adopted measures enable farmers, farmers’ associations, producer organizations, and other market participants to enter into agreements and make common decisions to cope with the severe drop in demand caused by COVID-19.
The derogations are applicable for six months, starting on May 5, 2020 for the potatoes, and live plants and flowers sectors, and are applied retroactively from April 1, 2020 for the dairy sector.
During this period, the EC and the national antitrust regulators of EU member states will closely monitor consumer price movements to ensure that the adopted measures are strictly aimed at stabilising the sectors and do not give rise to anti-competitive effects.
The official EC document related to these measures for the potato sector was published online here.
In the document, the EC says while demand for fresh potatoes has, at this stage, increased, there has been a sharp drop in demand for potatoes for processing with an immediate and severe impact on the market.
The sharp drop in demand concerns in particular, but is not limited to, potatoes for processing used in frozen chips, other cut potatoes and vacuum-packed products, which are normally consumed in fast food outlets and in restaurants.
In addition, the EC document reads, there are currently large volumes of potatoes for processing in storage. It is estimated that at least 2 650 000 tonnes of potatoes for processing (value of EUR 400 million) from the 2019 campaign will still be in storage by the end of the 2020 campaign in July 2020.
The potatoes for processing that were harvested in October/November 2019 and are still in storage, will soon become unfit for any use because of the deterioration in their quality. In order to make room for the potatoes for processing from the 2020 campaign, producers will need to destroy the part of the remaining stocks that cannot be processed in time.
In order to help producers of potatoes find a balance in this period of severe market imbalance, the EC says it is appropriate to allow for agreements and decisions of farmers, farmers’ associations or associations of such associations, or recognised producer organisations, recognised producer organisations, associations of recognised producer organisations and recognised interbranch organisations concerning potatoes for processing on a temporary basis for a period of 6 months.
These measures include: (i) market withdrawals and free distribution; (ii) transformation and processing; (iii) storage; (iv) joint promotion; and (v) temporary lanning of production.