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Europe Tackles Creaky Food Supply Chain

The European Commission has come forward with a list of measures designed to improve Europe's creaking food chain, fuelled by fears that the region is heading for rising food prices as the economy slowly recovers.

And while many European consumers already baulk at prices for some food products charged by supermarkets, huge numbers of farmers are struggling to simply cover their costs.

Dairy farmers in particular have taken to the streets in recent months, angry that current milk prices do not cover their production inputs.

To tackle the apparent contradiction, the college of 27 commissioners adopted a communication on Wednesday (28 October), outlining a list of steps to increase the transparency and improve the functioning of Europe's food chain.

"Together with national authorities, we will redouble our efforts to ensure that the supply chain works effectively from farm to fork," said the EU's agriculture commissioner, Mariann Fischer Boel, in a statement.

Among other problems, the EU executive's communication points to the large variation in bargaining power between the different actors in the food chain as a chief reason for ongoing tensions and price distortions.

Improving contractual relations between actors with the help of member state authorities is therefore essential says the document.

To improve transparency in the system, the commission has published a food price-monitoring tool and is calling on member states to a set up a web-based service to enable consumers to compare the price of food in different shops.

"It is very important for the actors of the food supply chain, consumers and policy makers to increase the transparency of prices along the supply chain," the EU's economy commissioner, Joaquin Almunia, said in a statement.

The commission paper also proposes a list of measures to tackle the negative effect on prices caused by speculators in the agricultural commodities market.

They included the need for greater reporting requirements and the possible imposition of position limits to restrict volatility and speculation.

Wednesday's initiative comes on the back of fears that rising consumer food prices, and the corresponding drop in citizens' purchasing power, could slow Europe's rate of economic recovery.

On average, European households spend 16 percent of their budget on food, making it one of the biggest expenditures.

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