An EU Label for Local Farming?

A specific labelling scheme at EU level would help develop direct sales from local farmers, according to a report presented by the European Commission on 6 December 2013.

The report required by the current legislation on quality schemes for agricultural products and foodstuffs (Regulation (EU) No 1151/2012) sets out the case for a local farming and direct sales labelling scheme with the aim of starting a debate among institutions and stakeholders.

The Report also responds to the resolution of 7 September 2010 of the European Parliament on fair revenues for farmers, calling the Commission to propose the adoption of instruments supporting farmer-managed food supply chains, short supply chains and farmers’ markets in order to enable farmers to obtain a fairer share of the final sale price.

The Report defines local farming as the production of agricultural products and foodstuffs with the aim of selling them in an area reasonably close to the farm of production. The Report points out the main features of local farming, short food supply chains and sales without intermediaries in the EU and explores the possibilities of adopting a labelling scheme for these local food systems.

The Report is accompanied by a Staff Working Document that examines the challenges faced by small-scale producers and short food supply chains in more detail and presents the existing support tools.

Findings on Local Farming

Socio-economic importance of local food systems

Increasing concerns about food safety and environmental impact of food consumption have led more and more consumers to buy locally produced food as directly from the farmer as possible. Despite having always existed, local farming has thus gained importance from a socio-economic point of view for both consumers and producers, according to the Report.

The Report points out that on average 15% of farms sell more than 50 % of their production directly to the consumer, although significant differences between Member States exist. The differences mainly reside in the structures of the farms at national and regional level, but also in distribution channels and cultural differences. The economic importance of the development of direct sales concerns not only local producers, notably small-scale farms, but also post-primary production activities, such as processing, distribution and retail. This multiplication effect on local communities can generate growth and employment opportunities, notes the Commission.

Reduced environmental impact

According to the Report, the food sector has a significant impact on climate change as it accounts for around 30% of overall energy consumption. The environmental consequences of food supply chain are considered in terms of emissions and waste.

With regard to emissions, different studies quoted in the Report show in general terms that switching to local food systems results in lower emissions, due to shorter food supply chains. However, a study on the carbon footprint of a consumer who buys products at a farm shop interestingly reports that if the distance to be covered is longer than 7.4 km, carbon emissions are higher than in the conventional food supply chain.

Concerning the role of local food systems in reducing food waste, the Report notes that, despite the importance attached to this criterion by consumers who buy local, the potential impact of short food supply chain should not be over-estimated. This is mainly due to the fact that these kinds of food systems currently account for a relatively small share in the production, processing and distribution of food.

Challenges and existing solutions

The Report and the Staff Working Document underline that the development of short food supply chains face several challenges. While the Report focuses on exploring the case for the introduction of a labelling scheme for local farming, the Staff Working Document identifies these challenges and suggests how to address them by using the existing support tools at EU level. In particular:

Knowledge, training and skills: engaging in a new activity such as selling directly to the consumer implies specific knowledge and expertise (e.g. marketing, distribution, consumer relations). Therefore training is necessary for farmers who want to start direct sales of their products. On this issue, the EU rural development policy already offers measures which can help to establish and foster short supply chains, for example through support for training in order to develop specialised skills;

Structural and logistical issues: direct sales need adequate facilities which require investment in buildings. Moreover, transport infrastructure to cover distance between farms and consumers needs to be improved as well as common processing facilities;

Administrative burden: compliance with administrative rules, namely food hygiene legislation, is one of the main difficulties for the development of direct sales by farmers, in terms of documentation and costs incurred through compliance. However, the Commission is planning a review of the EU hygiene law (expected during the second quarter of 2014), which will consider the implementation obstacles, if any, of the specific provisions related to short food supply. The Staff Working Document also suggests Member States take a more proactive role and adapt legislation where possible to the benefit of small farmers engaged in direct sales;

Competition with major market players: the volume and range of products offered by individual local farmers is relatively small and usually seasonal in comparison to larger scale operators. In order to facilitate access to the market for smaller farmers, the Staff Working Document suggests making the products more visible by indicating appropriate information, to improve communication and promotion activities and ensure proper labelling;

Access to public procurement: farmers who wish to start selling their products directly face difficulties in participating in public food procurement by local authorities, for example for schools or hospitals which require them to provide a stable quantity of food over a determined period of time. The solution could reside in more organisation and cooperation between local farmers, such as via farmers' associations and producer groups, in order to be able to bid in a public procurement tender, according to the Staff Working Document;

Low level of development of producer groups and association systems; on this point the Staff Working Document envisages fostering cooperation and exchange of experience in this area through the National Rural Networks (NRNs), coordinated at European level by the European Network for Rural Development (ENRD);

Information and promotion activities: there is insufficient visibility and knowledge of locally produced products, as well as lack of information on how to access them. In the Commission’s view, as a well-established network already active in the field of short food supply chains and local agriculture, the ENRD could be called to organise further activities for better promoting and integrating short food supply chains and local food production systems.

Policy options for the development of local farming

While the Staff Working Document concludes that a framework for supporting local farmers is provided by a number of existing EU level instruments, the Report focuses on the possibility creating a labelling scheme for local farming and direct sales.

The Report finds that there are currently various schemes across the EU, mainly characterized by sales in the proximity of the production site (both on-farm sales, such as farm shop, and off-farm sales, such as farmers’ markets or delivery schemes). However, these schemes differ greatly in terms of development and support tools. In particular, despite the existence of many different options for supporting local farming highlighted in the Staff Working Document, these are applied inconsistently in the Member States, resulting in an asymmetrical development of local food systems.

According to the Report, a labelling scheme could be a helpful additional tool for protecting locally produced food from imitations and for informing consumers about them. On the basis of the opinion given by a group of experts created by the Commission, the Report states that the creation of a labelling scheme should meet specific requirements to be beneficial, namely it should:

1) Be optional for producers;

2) Be simple and easy to handle by producers, meaning that it should avoid excessively long and expensive procedures for obtaining certification and accreditation;

3) Provide for clear criteria for the eligibility of products under the scheme; and

4) Be linked to other measures supporting local farmers in finding alternative sales channels; these measures are available in the framework of rural development policy (e.g. information support, investments in assets, farm and business development, cooperation among supply chain actors, quality schemes).

In addition, given that direct sales already involve a close relation between producers and consumers, the Report finally suggests that restricting a labelling scheme to direct sales would only have limited impact. Labelling is in fact needed where more intermediaries intervene in the food supply chain, to compensate for the lack of direct information between producers and consumers.

The Commission believes one option for the creation of a labelling scheme could be to reserve an optional quality term. The impact assessment on the agricultural product quality policy concluded that the use of optional quality terms is an effective tool for farmers to not only communicate the added value of their products but also to ensure that consumers are properly informed about the origin of their purchase and the features of the supply chain. The Report specifies that for legal reasons an optional quality term would not entail a logo but only words.

According to the Commission this alternative would be beneficial for a number of reasons:

1) It is considered a light instrument with relatively low administrative, control and budgetary burdens;

2) It can provide protection against misuse, fraud and misleading practices; and

3) It could be linked to other EU support mechanisms, in particular in the framework of rural development policy.
A debate on local farming and direct sales

With the package presented on 6 December, the Commission invites not only the European Parliament and the Council but also Member States and regions to reflect on the appropriateness of existing policy to provide the necessary flexibility for local farming and direct sales. The Annex to the Report proposes some elements for the orientation of the debate in this respect:

1) The Commission would like to know if the existing tools for supporting local farming are still appropriate, since they seem to be implemented inconsistently across the EU;

2) As hygiene or public procurement rules have been identified by stakeholders as obstacles to the development of local farming, the Commission asks for the Parliament’s opinion on this issue and whether a clarification of the current rules is needed, as far as local farmers are concerned;

3) Considering that labelling schemes already exist at national level, the Commission wonders if a specific EU scheme could provide value added for farmers and at the same time provide consumers with information, and if such a scheme should be identified by a logo;

4) Finally, the Commission would like to know from the different actors how to develop an EU scheme that is easy to handle for farmers, while providing sufficient guarantees for consumers.

Next Steps

The Report has been transmitted to the European Parliament and the Council for examination. Either or both of these institutions may decide to formally respond to its finding.