Assessing efficiencies generated by agricultural Producer Organisations

1. On 26 June 2013 the Commission, the European Parliament and the Councilreached a political agreement on the reform of the Common Agricultural Policy(CAP). One of the key elements of the CAP reform is a significant modification ofthe application of competition rules in the agricultural sector. Pursuant to the newprovisions of the Common Market Organisation Regulation ("the CMO"), ProducerOrganisations ("POs") in the olive oil, beef and veal and arable crops sectors willbe authorised to negotiate, on behalf of their members, the contract terms –including pricing- for the sale of some or all of their production and these sales willbe exempted from the application of competition rules.2. The benefit of this derogation from standard competition rules from theapplication of competition rules will only be granted if certain conditions are met:the PO should provide for the integration of activities other than joint sales andthis integration should be likely to create efficiencies significant enough to offsetthe possible negative effects of joint selling. The creation of efficiencies is meantto ensure that activities of a PO overall contribute to the fulfilment of theobjectives of the CAP pursuant to article 39 of the Treaty on the Functioning of theEuropean Union.3. This report provides background information to help the Commission in definingand assessing the horizontal efficiencies generated by POs in the abovementionedagricultural sectors within the European Union. In particular, thisreport will help the Commission to develop a strategy to assess the efficienciescreated by associating farmers in POs and allowing them to carry out some oftheir activities jointly as compared to farmers carrying out these activitiesindividually. The report consists of a scientific literature review and case studyevidence from POs in the beef and veal sector in Poland and POs from the arablecrop sector in Romania.