Consumers and the agro-food sector (Czech Republic)
Consumers and the agro-food sector: A commentary
Group discussion on "Consumers and the agro-food sector"
by Tomas Doucha
This paper discusses the attitudes of Czech consumers toward Czech agro-food products and the role of the government in the agro-food sector during: a) the period before reform, ending in 1989; b) the reform period, 1989-1995; and c) the future. The study examines food safety and food security in agro-food production; as well as, the public goods produced by agriculture and the compensation agro-food producers receive or should receive from the society for those goods. Each area is analysed through the interaction of the three market partners: a) consumers with their beliefs and expectations; b) producers and their responses to market conditions and consumers' demand; and c) the government which is responsible for creating basic market incentives and regulations.
Food safety, food security and public goods
Food safety is a complex expression of certain components of food quality that are related to consumer health, particularly hygienic standards and nutritional value that directly affect consumers' health (or malnutrition). In the broadest definition, food safety encompasses methods of production, storage, sale and use of a given product.
Food security can be defined as the ability of a society over time to provide a constant and sufficient quantity of food products at adequate prices to satisfy needs of all social groups. In a narrower sense, food security can mean the ability of a country to provide food for its population even under the most adverse world market developments. In this connection we can speak about a 'food security threshold.' This threshold can be defined as a quantity of scarce and long-term durable resources that must be used permanently and/or preserved by the state in order to ensure a constant share of domestic demand will be met with domestic supply.
Public goods, much more than food safety or food security, have an important characteristic related to the concept of externalities and their possible internalisation. Both producers and more generally rural people (the 'producers of villages and rural traditions') are at the same time consumers of these public goods.
It should be pointed out that in the Czech Republic, research and studies regarding the consumers' behaviour and the food market are at the earliest stage of development. Due to the lack of reliable data this analysis is primarily based on personal experience and opinions supported by some special surveys and the limited statistics available.
Consumers and food safety
Under the socialist system the distribution of consumer goods, including food-stuffs, was mediated through the market. In spite of many market distortions consumers were able to decide on which goods to spend their money, and when and where to purchase them. Because of a combination of market imperfections, e.g., limited competition of food supplies from imports, insufficient public information regarding food quality and safety, pressure exerted through normal channels, i.e., consumer pressure, or competition between producers and retailers, did not force food security issues onto the 'daily policy agenda.' As contacts with developed countries gradually expanded, information about different aspects of food safety started to penetrate Czech society. The state was forced, though with delay, to introduce food safety legislation and to establish institutions to implement it. It should be noted that many of the new standards were at a much higher level than those applied in Western countries. Even though the processing and marketing sector in state monopolies found many loopholes to bypass the regulations, a vast majority of consumers believed that the state provided adequate citizen protections that certain foods were healthful.
During the reform period the perception of food safety was influenced by several specific factors. At the beginning of the reform period, the Czech population continued to rely completely on the state for food safety assurances. According to various surveys, consumers' general satisfaction with the quality of food products was increasing.
In the first phase of the reform, a great number of consumers purchased foreign products because of the products' attractive appearance and the quality of the food packaging. The issue of food safety was marginal. Behind these preferences was a naive belief that food products imported from developed countries were automatically top quality and thus healthy. This perception disappeared after two or three years as the Czechs found the quality of foreign products varied significantly.
The more radical phase of the economic reform caused a shift in the public perception of local food products. Since these reforms brought a dramatic drop in real income and an increase in income disparities for the majority of consumers, the price of food became the most important criterion for consumers purchasing food products. Gradually, along with food prices, the quality of domestic raw materials also became a significant criterion. The new rich strata of Czech society, however, which had gained wealth quickly and easily, continued to purchase luxury foreign food products without considering food safety.
During the early years of reform when the quality of food generally deteriorated, the Czech consumer reacted with greater passivity. Many consumers continued to rely on state institutions and the information provided by the official mass media and several special private periodicals. For example, even after the state food standards and norms were abolished in 1995, many food processors continue to label their products as being in accord with state standards with the expectation that these labelled foods would gain the consumers confidence. Their expectations appeared to be correct. As consumers continued to purchased these labelled products, they demonstrated their 'hidden' need for and confidence in the state certification. Because of these and other conditions accompanying reform, consumers were not able to establish associations to lobby or pressure effectively the government, Parliament, producers and distributors about agro-food issues of concern to them.
Nutritionally speaking, the consumers preferred attractively presented food products more than healthful products. The latest surveys, however, show a positive shift toward a more health-conscience diet with growing consumption of fruit and vegetables and declining consumption of animal fats.
Considering the continuing high share of the household budget currently devoted to food, it is not reasonable to expect that an average Czech consumer would be willing to pay more for a higher level of food safety. As Czech society establishes a middle class, the previously passive attitudes of Czech consumers toward food safety and good nutrition, are likely to be replaced with more proactive attitudes. A society with a real middle class, with higher income and educational potential, is more likely to give a high priority to food safety and to demand such assurances from government. Given these changing conditions it is reasonable to expect that in the near future, the demands of the Czech consumers for food safety will gradually increase and will approach Western standards. At the same time, the Czech consumers are likely to become more sensitive to farming and processing methods, especially the use of pesticides and additives. In these areas they are likely to press for stronger state regulations concerning production methods and marketing practices.
The development of food safety - responses of producers and distributors
State monitoring and control institutions have obtained data that show food quality according to hygienic and technical standards has deteriorated significantly during the reform period, especially between 1989 and 1993. For example, in the marketing of food, foods marked to sell by a certain date that ensure freshness had been sold after that date. In the food processing industry hygienic standards were disregarded while technological methods of ensuring hygienic processing were not followed. This situation is obviously the result of the property restitution and privatisation process which facilitated the start-up of a large number of new private producers and retailers.
The low efficiency of sanctions imposed by the state only facilitates this disregard for the standards. The situation is particularly critical with the small-scale producers such as bakers, confectioners, meat processors, delicatessens and restaurants. The quality of agricultural products, particularly potatoes, has also deteriorated, especially because of the high use of nitrates. However, a considerably higher level of nitrates and other contaminants has been recorded in imported products such as tropical fruits, coffee and tea.
The decreased use of contaminants in the food chain recorded during the reform period could be explained largely by the scarce financial resources of farm producers. The use of variable inputs such as fertilisers and pesticides dropped by 70 percent in comparison with the use of inputs during the period before reform. Nevertheless, the quality of surface water continued to deteriorate mainly because of the contamination caused by livestock sheds and by unsuitable storage of fuel on farms.
The main factors influencing further deterioration of the Czech agricultural and food industry products are: a) domestic and foreign competition; and, to some extent, b) the high demands coming from Western tourists. Some of the largest food enterprises are foreign-owned and apply their own quality management systems. However, the number of such enterprises is still very small.
The role of the state in providing food safety
Food safety was one of the priority goals of state policy even during the period before reform. The centrally controlled economy introduced a very intricate system of obligatory technical standards aimed at safeguarding both product quality and food safety. However, one of the main characteristics of the system prior to the reform period was the extreme reluctance of the state to inform consumers when there were lapses in food safety in the food chain.
At the beginning of the reform period, food safety continued to be an important state goal but the instruments and methods used to achieve it were those of the old regime. The improvement of food quality became one of the main long-term goals of agricultural policy, supported by legislative, institutional and other measures. The present legislation is a chaotic mixture of the laws in place prior to the reform period and laws enacted during reform including:
· The Consumers Law (1992).
· The People's Health Protection Law (1966).
· The Certification Law (1968).
· The Technical Standards Law (1992).
· The Veterinary Law (1987).
In 1995, obligatory technical standards were abolished, except for standards related to some fruits, vegetables and a few other products. The government now is proposing new revisions to the Food Law.
The food safety legislation and controls are implemented through various institutions such as the Ministry of Agriculture, the Ministry of Industry and Trade and the Ministry of Health. For example, until 1993, in many localities there were frequent cases of cattle contamination with polychlorbiphenyls (PCB) and the state compensated farmers for the liquidation of contaminated farms, herds and animals. The specific measures that guarantee support to farmers in the case of emergencies such as animal/plant health catastrophes are considered part of agricultural policy.
Although, as a whole, the present control of the food safety can be considered satisfactory, there are still some obstacles that decrease the efficiency of state control, e.g., overlapping jurisdictions of various state institutions and the inadequate technical equipment. Nevertheless, the state has an optimistic outlook regarding food safety.
In the near future the state will be confronted with new tasks and will have to find rapid solutions to many serious problems. The predicted growth of demand, both domestic and foreign, will require the state to find quick solutions especially to satisfy the demands of the EU consumers in -compliance with the White Book1. If the Czech Republic wants to join the EU single market, these demands represent a serious challenge for the Czech agro-food sector. The White Book demands will not be met without further modifications in Czech legislation, as well as substantial improvements in the state administration and private investments in new agricultural and food industry technologies.
1 The White Book is a list of the EU legislation linked with food safety and environmental demands on the agro-food sector from the side of consumers, as a part of acquis communautaire. It was published by the EU and distributed to the associated countries in 1995.
The state reaction to the new challenges and problems is expressed in the recently prepared Food Law2, presented by the government in 1995, but not yet accepted by the Parliament. Until 1995, food-stuffs were regulated under a system of obligatory certifications and some specific technical standards. The new system, expected to be enforced by the new Food Law, includes:
2 The Food Law was accepted by the Parliament in 1997.
· The abolition of the obligatory certification for foods, with the exception of foods destined to certain groups of citizens (children, diabetics, etc.).· The abolition of all obligatory technical standards.
· The creation of new standards worked out in conjunction with the relevant companies.
· The obligatory implementation of the Hazard Analysis of Critical Control Points (HACCP) systems in processing firms.
· The obligatory labelling providing information on food composition (including additives) and the possibility of International Standard Organization (ISO) certification, obtainable through authorised private certification firms.
If Czech consumers, public administrators and entrepreneurs are prepared to accept the transfer of food safety responsibilities to market actors who act as self-regulators while severely limiting the role of the state, there is a rather serious problem. Considering the consumers' weak position, inadequate technological discipline and the morals and ethics of the new Czech entrepreneurs, this shift represents a high risk for consumers.
Understanding the development of food security
During the period preceding reform state policy was oriented toward a policy of full self-sufficiency and cheap food. The prices of food were fully controlled by the state and were highly subsidised by the negative turnover tax. The consequences for the consumers were, on the one hand, the feeling that there was total food security, and on the other hand, the reality that food was wasted.
With the beginning of the reform period in 1990, the food price subsidies were abolished. In 1991, price liberalisation resulted in rapid price increases thus causing consumption shock, which consequently brought a rapid and substantial decline in food consumption. Food consumption levels gradually recovered after 1992 due to a gradual growth in real income.
In the period before reform, major income differentials within the population were almost unknown. Now that a small portion of the population has become rich, there is an increase in the demand for high quality foods and for foods with higher value added.
Food security is linked also to affordable food prices for all consumers. Until 1994, the development of food prices showed a smaller increase than prices for other goods and services. An average consumer was not concerned about food prices at all, not even after the price increases in 1991. However, since 1995, the relationships have been changing, and food prices have become an inflation factor. On average, household expenditures on food (including beverages) have reached nearly one-third of total household expenditures. The level of food prices has become a very sensitive political problem. In the near future the households of young families and pensioners, whose food expenditures presently amount to 40-50 percent of their total expenditures, may become extremely anxious about food security.
Meanwhile, consumers still have not formed consumers' associations. Their interests are protected indirectly by the trade unions, e.g., the commodity boards and the 'tripartite' system linking the government, entrepreneurs and employees.
The Czech Republic has sufficient agricultural capacity to meet fully the domestic demand for food products. If food security is the ability of the state to provide a sufficient amount of food even under extremely unfavourable external conditions, the Czech Republic appears to satisfy the standard in the long-term. Furthermore, the public perception is that there is no real problem in this area.
Nevertheless, there are a few factors that can influence food security. There is the ageing of the Czech population (A growing proportion of the population is retired) and the further increase in the inequalities of income distribution within the Czech society.
The role of the state in the provision of food security
The state so far has not been forced to pay significant attention to food security issues, even though past agricultural programmes have cited food security as a political goal ("sufficient supply of foods at adequate prices").
In the period before reform, the state used centrally-controlled instruments to assure food security. Also, during the reform period the state intervened to address temporary food security problems. For example, after the price liberalisation in 1991, the state, on a temporary basis, set the maximum upper price level for staple foods in the retail market. Export limits were established in 1995 and 1996, after the severe increase of cereal prices on the world market. The state created physical food reserves for food security. The State Market Regulation Fund is designed to stabilise agricultural markets, although its function in this regard is rather problematic.
For several reasons, the state has, in general, formulated agricultural policy more to the benefit of producers, thus damaging taxpayers and consumers. The main instruments used to protect the producer have been exchange rates and customs tariffs. Domestic agricultural prices have been higher than world prices; thus, through agricultural policy the consumer has financed the producer. Since this expenditure has not been directly visible, it has not attracted much public attention.
Consumers of public goods - urban and rural population
In the period before reform, the urban population put a great deal of effort into obtaining a place in a rural area for relaxation, building cottages or purchasing and restoring rural holdings. About one-third of the urban population spent its free time in the country. In this way the urban population significantly participated in the maintenance of rural villages.
During the reform period, in spite of a considerable decline in real income, town people did not stop spending their free time in rural areas. On the contrary, increasing numbers of the urban public used their rural assets and small plots of land to provide agricultural self-sufficiency. During the reform, however, citizens have been preoccupied by property and ownership problems.
In spite of the direct links of urban people (i.e., three-quarters of the Czech population) with rural areas, the interest of an average citizen in the quality of the environment is to a considerable extent influenced by the prevailing state ideology. This ideology is expressed in slogans like "First economy and later ecology," or "Problems of the environment will be solved through privatisation and through the free market." Under such circumstances, the interests of future consumers are better protected by various opposition political parties (rather left-oriented) and environmental movements.
At present, there are several environmental movements and associations in the Czech Republic that have a small number of members, mostly young and more highly educated citizens. Nevertheless, the movements are well organised and their actions are visible. They are interested in the key environmental problems such as bio-diversity, animal welfare and the links between farming and nature and landscape protection, particularly in protected areas and national parks.
The government has considered some of the environmental movements' activities extremist, and the leading political parties have publicly discredited these movements by labelling them the supporters of the unfettered free market ideology or identifying them with the old structures that existed prior to reforms.
Therefore, the Czech 'green' parties at present have no political weight.
There is an unbalanced representative system in the present Czech Republic, based on the central 'Prague representation' and on the communal representative bodies. A go-between link - a regional representation - is missing. This represents a real block and concentration of interests and financial sources planned for environmental projects on the intermediate level. Nevertheless, the activity of communities on the micro-level is increasing.
In spite of all these shortcomings, the society is becoming more aware of the importance of agriculture and its non-productive functions, especially in the maintenance of landscape. This new role of agriculture also has been underlined in the Agricultural Law, which is under debate in the Parliament at present.
Production of public goods in agriculture
The agricultural policy prior to the reform period was characterised by its total indifference towards the environment and rural landscape. As a consequence of the full self-sufficiency policy, Czech agriculture used highly intensive production methods, and thereby, contributed heavily to the general deterioration of natural resources. The large-scale crop fanning of the state farms depreciated the landscape in many regions.
The attitude of the Czech farmers toward environment did not change substantially during the reform period. Their reduced use of fertilisers and pesticides only occurred because of economic reasons. More than three-quarters of agricultural land is presently still in the hands of extremely large farms: cooperatives, companies and big private farmers with 'industrial' methods of farming. The EU concept of family farming is not economically significant in the Czech Republic.
Currently, agriculture's contribution to the public good is perverse. It is the outcome of: a) the farmers' low 'willingness-to-produce'; b) a research community that is unprepared to promote a new orientation toward agriculture; and c) the obstacles created for land ownership.
During this transformation process farms are using up to 100 percent rented land (70 percent on average). With regards to the externalities, the past situation during which agriculture produced more negative than positive externalities, has at present remained unchanged. The negative externalities are also the outcome of insufficient interest on the part of the farmers and the rural population to protect the common Czech property from the negative effects of their activities.
The role of the state in providing public good from agriculture
During the reform period, the state focused on implementing new environmental legislation, including environmental protection for the air, land, nature and protected landscape areas such as national parks. Almost 13 percent of the state's acreage and about one-fifth of agricultural land is located in protected areas. However, in 1992 the state stopped compensating farmers in protected areas because within these areas farming activities are legally regulated.
The government and the Parliament have been discussing methods and levels of privatisation of natural resources as a part of national welfare. The discussions resulted in either a compromise solution or a postponement of the solution until some future time, especially in the case of water.
The interest of the state in the non-production functions of agriculture has grown since 1993 when the first serious consequences of applied liberal policy became apparent, for instance, the consequences of the abandonment of land and agriculture in several less favourable regions. Led by an interest to improve the farmers' income position in these regions, the state officially introduced direct supports for the maintenance of landscape. The increasing risk of landscape destruction and rural area devastation has forced the Ministry of Agriculture to pressure the government to solve the complex problems of future agricultural and rural development (see the Agricultural Law of 19963). The possible entry of the Czech Republic into the EU in the next five to ten years, has caused political institutions and professionals to look for a suitable vision of agricultural development that also considers the new role of agriculture.
3 The Agricultural Law has two versions' the governmental version, prepared by the Ministry of Agriculture, and the parliamentary version, prepared by the Czech Social Democratic Party. In both versions, the law aims to acknowledge the significance of agriculture to environment, landscape and rural development, to establish a legal background for payments to farmers in less favourable areas and for a higher level of protection of agriculture.
by Rolf Moehler
First of all, I would like to say how interesting I found the paper prepared by Tomas Doucha, which gives an excellent overview of the behaviour of the Czech consumers to goods produced by the Czech agro-food sector and the role of the government in these relations. From my perspective the most fascinating aspect is food safety; therefore, I would like to focus on that subject. But I shall discuss food quality, too. Food security and agriculture as a provider of public goods have been discussed already and I can not add very much at this moment.
First, I would like to give an overview of the situation in the European Community (EC), mainly from a legal point of view. Then I shall go through a number of recent events in order to try to explain the European Union (EU) consumers' attitude towards food safety and food quality.
Food safety and food quality
We have to distinguish between food safety and food quality, although there may be some overlap between the issues. Food safety means that a product is safe for the consumer or the animal, i.e., health risks are absent or negligible on the basis of available scientific data. Food quality goes beyond food safety. It means that a product which is safe for the consumer has additional qualities, e.g., its appearance has been improved and/or its nutritional effects provide an added value.
The distinction between food safety and food quality is important, not the least from a regulatory point of view. The regulations adopted either by the Community or by member states are more extensive for food safety than for food quality. In the first 10 to 15 years of the Community, there was a tendency to cover almost everything by Community legislation, but in the end it was discovered to be neither feasible nor possible. Therefore, about 10 years ago, in 1985, a principle was established that a product which is legally produced and marketed in one member state can be marketed freely within the Community unless there are imperative requirements like health risks which allow another member state to block the marketing of the product concerned. This approach has worked well.
Food safety and food quality
Despite the importance of this principle, it does not make Community legislation redundant. In the area of food safety Community legislation mainly covers the following areas: veterinary requirements and control, hygiene, feed and food additives, feed and food contaminants and residues, composition and the life-time of products, objects coming in contact with food and methods of production and storage (e.g., deep freeze, biotechnology). The Community legal system in this area, as in other fields, is a combination of Community and member states legislation. Sometimes Community legislation covers practically the whole subject, while at other times, the Community provides the basic rules which are implemented by member states' legislation. Administration and control are member states' responsibilities. Community legislation is very detailed in veterinary matters, on feed additives, contaminants and residues. On the composition of products, however, the Community only requires that all the ingredients, in particular additives, are indicated.
In the area of food quality Community legal standards only exist for fruit and vegetables, eggs and poultry. For the rest standard setting is left to operators who are encouraged to set standards. There are, however, exceptions. Community law regulates biological agriculture and the use of geographical indications or designations of origin. It will soon also cover genetically modified food. For biological agriculture the Community has laid down the requirements which must be met by a plant product in order to be marketed as biological, organic or natural.
Similar rules for livestock products are under preparation. Member states apply these rules and they authorise the use of die label 'organic' food or 'biological' food, etc., which is recognised on Community level. The use of geographical indications or designations of origin can be authorised by the European Commission if the criteria spelt out by Community legislation are met, e.g., registration of the denomination. For genetically modified products the main issue is to what extent labelling should be required. I shall come back to this question later.
Some consumer beliefs and values in the European Community
In general, the consumer in the European Community is rather demanding. Food safety is a basic requirement. The consumer reacts strongly to any real or perceived health hazard, as his reactions have shown in the past. But, the consumer not only wants healthy food which looks fresh and good, he also expects that food has maximum nutritional value and has a favourable impact on his life expectancy. Public authorities, whether at the Community or member state level are expected to guarantee food safety. On the other hand, the strong competition which exists in the food sector ensures that producers have a strong interest not only to produce safe but also high quality food responding to the expectations of the consumers. The consumer in the European Community may not be as trusting as the Czech consumer, but nevertheless there is a basic trust in the system as it stands - partly because there is no alternative. There are now some initiatives by consumer organizations who do their own tests, but that is rather sporadic. Normally the consumer trusts the authorities and also has confidence in the producers because of their strong interest to produce food appreciated by the consumer; otherwise, the producers would be out of the market.
Animal disease
Now, I would like to go through a few events in order to illustrate further the situation. I start with the veterinary field. Broadly speaking, the situation is satisfactory, but we had a few events in the last few years which were worrying but eventually were brought under control. The most recent scare is Bovine Spongiform Encephalopathy (BSE) and it gives reason for serious concern.
A few years ago, in 1993, there was a foot-and-mouth disease outbreak in southern Italy. The European Commission not only put part of Italy under quarantine but banned all imports from Central and Eastern European countries as the source of the infection was suspected in this area. It is understandable that these measures were conceived as a sort of import protection by the countries affected. As an explanation it would be too simplistic. There was a deep concern that all the efforts in the European Community over the years to ban vaccination and to become free from foot-and-mouth disease would be lost.
The second event which may be mentioned in this context is classical swine fever which broke out first in The Netherlands, then, in 1990, we had an epidemic in Belgium. Then there was a big swine fever outbreak in Germany, in Lower Saxony in 1994. An enormous number of pigs had to be slaughtered. In the beginning, the German authorities were not always happy with the decisions taken by the European Commission. But in the end, they realised that there was no other way to cope with the situation. Despite these cases it is fair to say the veterinary situation is satisfactory. This would be the perception of the consumer, too, were there not BSE.
BSE appeared in the United Kingdom in the mid-1980s. It spread rapidly. Resembling scrapie in sheep the risk of transmission to humans appeared to be non-existent or remote, as scrapie was known not to be transmissible to humans. It was like a bomb-shell when, in March 1996, the Advisory Committee on BSE in the United Kingdom reported to the British government that they had detected a new strain of the Creutzfeld-Jacob-disease, and that they had no other explanation for it than transmission of BSE to humans. That of course, lead to a very strong reaction. The European Commission placed an export ban on the UK. Beef consumption dropped by 10 to 15 percent in the Community as a whole, in some member states much more. The drop in beef consumption in Germany, Italy and France was particularly great. In France and Italy it was mainly triggered by press reports that bone- and meat-meal had been imported from the United Kingdom (UK) at a time when its use was prohibited there already.
How this problem will be solved remains to be seen. Of course, from hindsight we all know better, but one has to assess the decisions taken in the past on the basis of data and scientific advice available at the time and not on our knowledge of today. If you do this, you cannot put much blame on the European Commission for the way it dealt with the problem.
The refusal of the consumer to eat beef expresses his feeling that he has seen something happen which should not have happened. But it goes further than that. It is also a crisis of science, or at least a crisis of the perception of science by the public. Science is often presented as infallible, and ministers make no exceptions, but risk is not absent from science. Science is not an irrefutable store of knowledge, science is first of all a methodology. Through the progress of science, something which was considered safe 10 years ago, may not be considered safe today. The public in the EC has had great difficulty adjusting to shifts in the beliefs of the scientific community. Of course, we have no alternative but to rely on scientists, even when we have doubts about the reliability of their advice. This poses a problem for the consumer who feels confused and mislead.
The BSE case has not undermined the principle mentioned earlier that a product legally produced and marketed in one member state can be marketed throughout the Community. BSE presents a potential health hazard. This is a clear case for an exception, accepted under Community rules.
Growth promoters and genetic modification
The BSE case also has to be seen against the background of other events. The first is the ban on the use of hormones as growth promoters, which has been in effect for ten years. The hormone ban was introduced by the Community under very strong public pressure, particularly coming from the European Parliament. Most scientists, however, agree that there is no health risk involved in using these hormones. They have been used in the US for some time, and no harmful effects have been reported. Some of the hormones that had been banned are naturally occurring hormones. But the hormone ban reflects concern not only that food should be safe and without health hazards, but also that it should be natural. It should be biologically normal - produced in the way nature produces food. To lift the hormone ban would require a change in attitude, and there is no prospect for such a change. In December 1995, the European Commission organised a scientific conference in Brussels which discussed the problem of growth promoters in animals. The scientists concluded that there was no indication of a heath hazard in the use of hormones. But it seems impossible, unthinkable even, to lift the ban, for political reasons. Because there is very strong pressure from consumers and the European farmers, who want to be seen as producing in conformity with nature. I do not think the Commission will be in a position to propose a change to the Council of Ministers (Council), especially after the BSE crisis.
Another significant issue is BST. BST, developed by Monsanto, increases the yield of milk in cows. To my knowledge the scientific world is in agreement: there is no health hazard. There may be an animal welfare problem involving the cows, but there is no hazard for the human being drinking milk that is produced using BST. The Council, however, have decided to impose a moratorium for the admission of BST in the EU until the end of 1999, in spite the fact that it is used in the US. Again, the perception exists that milk should be produced in a natural way.
My last case is genetically modified organisms. The reticence of the West European consumer towards hormones or BST is also reflected in his attitude towards genetically modified organisms, although they are in current use, without the consumer knowing.
Within the Community there is a procedure to ensure the admission of only genetically modified organisms that cannot harm the environment. The final decision has to be taken by the European Commission after having obtained the opinion of a committee in which the member states are represented. One case to be decided (at the time of this seminar) is that of genetically modified maize. The Commission were in favour of authorising its use; however, there was no majority within the committee in favour of authorisation. Therefore, the matter was sent to the Council and rejected by the Council. The issue was referred back to the different scientific bodies to address concerns related to its building a resistance against antibiotics.4
4 The Commission authorised the use of the genetically modified maize in question in December 1996 after having obtained favourable scientific advice.
Apart from the environmental aspect, is the question of labelling organisms that are genetically modified. Right now there is a struggle between the Council and the European Parliament on the extent of food labelling. There is agreement in principle on the need for labelling. The debate is about the extent of labelling necessary. For example, if you have a genetically modified tomato and you use it to produce ketchup, is it necessary to label the ketchup? The Council of Ministers say, "No," the European Parliament says, "Yes." In fact, according to the Parliament, MacDonald's would have to label the ketchup on its hamburgers as made from modified tomatoes.
The Parliament's position reflects a particular feeling of many West European consumers,5 which seems to be absent in the US, or at least not as strongly felt as it is in Europe. I do not know about the reaction of consumers in Central and Eastern Europe. The feeling concerns, but goes beyond, food safety. At issue is a particular food quality: organic or natural food. It is not a very clear concept, because all food is modified in some way. Man has modified nature as long as he has been in existence. But nevertheless, there is a very strong perception that nature is something which has to be protected, a public good that public authorities, either the Community or member states, must ensure. I think this is the most striking factor we have seen in this debate and it is linked to labelling.
5 In January 1997, an agreement was reached between the Council and Parliament on the so-called Novel Food Regulation. Labelling is required if the genetically modified organism leads to a 'new' product because of its composition, nutritional value or use. Ketchup is unlikely to need labelling.
The regulation on labelling provides the consumer with the information as to whether a product includes genetically modified organisms or not. It gives the assurance that a product which is not labelled otherwise, is 'natural' in the traditional way. The belief that you need this information is very strong, and I do not see its waning or diminishing in the foreseeable future. An event like BSE, which is assumed to have been transmitted by feeding bone- and meat-meal to bovines, which they do not eat when left to themselves, has the indirect effect of strengthening the feeling that manipulation of nature is wrong, in fact dangerous.
I think these are the main points I wanted to make in this context. Let me say a few words on food security. As I said the first day we met, food security is not an issue anymore, but it was a matter of great concern after the war. Of course, there are still people who cannot afford to pay their food bills, but this is not an agricultural problem.
I will close with an anecdote on this particular point. When I was a student in Bonn in 1951 (a long time ago!) there was a big debate in Germany because the bread price had gone up and the German government at the time prescribed that there should be a cheaper bread. They did not stop the increase in the price of bread. They did not want to go back to price controls. But there was a regulation saying that bakeries had to sell a cheaper bread, "Konsum-Brot." It was a horrible bread because bakeries wanted to sell their more expensive bread. I remember it because I could not afford the other bread, I had to eat this cheap bread, and I still remember it vividly. Of course, today the price of bread is no longer a subject for debate. The discussion now is on the quality of bread, of its nutritional value, what particular bread we get from a given region, and so on.
The discussion was rather limited and focused on two points. First, the question was raised as to whether the accession of the CEE countries into the EU was likely to result in new sets of coalitions around issues of food safety and quality standards, and if so, whether this was likely to change the decisions. It was asserted that at present the proposals that call for the strictest standards and those most commonly adopted come from Germany and the UK. It was expected that this pattern would not be likely to change with accession of new countries, in that just as other present EU countries do not want to be seen as less strict about food safety and health issues than Germany or the UK, neither will any of the CEE countries. Thus, the strict standard levels will be maintained.
There is no doubt that the driving force for strict food safety and food quality standards is coming from the West. The Eastern European countries that want to trade with the EU understand that if a standard is set in the EU and it becomes a rule, it will be applied absolutely 100 percent to products from the East. In fact, producers in the CEE countries are convinced that the EU control is even stricter for them than for products produced in the EU itself. The CEE countries have to be aware of what is going on in the EU, they have to harmonise their regulations with those of the EU, whether or not they agree. They have no opportunity to influence the decisions of the EU in this regard.
The domestic markets, on the other hand, are a different matter. As the transition progressed, consumption became much more segmented than at any time in the previous 20-30 years. Now there is a quality conscious consumer who is very concerned with the quality and safety of the food consumed. On the other end of the spectrum is a growing group of consumers who, because of low incomes, actively look for lower quality food or are willing to trade the risk of contamination for low prices. A relatively large segment of food consumption has shifted to a secondary or unofficial market, including some farmers markets, where there are significant concerns over food safety. Accession will mean having to conform to EU standards in the domestic markets whether or not those standards are truly accepted.
The second point was an agreement that with regard to a whole host of food safety and health related issues in the EU there is a crisis of science. Even though, for example, scientists have so far found no ill effects or danger in beef growth hormones or BST, the EU consumer, with memories of previous disasters, has decided otherwise. In the case of the mad cow disease (BSE) it was more a failure of the politicians than of science, but with the same result - a distrustful public not knowing what to believe about anything that science has to offer.
The situation in Eastern Europe appears mixed. In Hungary the consumer generally feels safe with products that have been labelled properly and have gone through the regular processing and retailing channels. In Poland, on the other hand, science has in the past provided the public and society with conflicting opinions depending on what outcomes were desired by the authorities. For example, when foreign exchange was scarce, coffee was bad for health, in the decades when butter was in short supply it was bad for human health. Now that it is in surplus it is good, especially for growing children. Consumers are disoriented; they do not know whom to believe, with whom to agree or who provides true opinions.
