Caobisco calls for extended buffer stocks to combat supply fluctuations

Speaking in the wake of a Caobisco conference, The challenges of future commodity sourcing, ​a Caobisco spokeswomen told BakeryAndSnacks.com:

“We request that market instruments are used only as safety nets, to avoid excessive volatility. To this end, mechanisms based on market signals should be in place to avoid abuse for political reasons.” ​

Seasonal supply must match demand​

She said that buffer stocks, such as Private Storage Aid (PSA), were needed to cope with the seasonality of supply and demand, and as a price discovery tool.

“Data on volumes in private storage should be published without delays. Private storage facilities must be made accessible and must be manageable by the end-user industry as well, so as to secure supply for the low season,”​ she said.

She gave the example of milk production during winter, which is not the high season for milk but coincides with high seasonal demand for winter.

“Private storage of skimmed milk powder and butter oil must be supported, the latter presenting a considerable cost saving compared to butter as no frozen storage is needed and shelf life is prolonged,”​ she said.

She added that PSA should be introduced for wheat to counter extreme volatility on the world cereals market.

Supply chain consultation​

When asked why the trade group had gathered together sugar producers, food manufacturers and European Commission representatives on Tuesday to discuss commodity sourcing, Sabine Nafziger, Caobisco secretary-general, said: “The main issue was to explain that we take a supply chain approach.​The supply chain needs to talk amongst themselves that is the way forward.” ​

She added that it was within Caobisco members’ interests to ensure the welfare of farmers while making the market more competitive for food manufacturers.

“If we work as a supply chain and provide solutions rather than criticisms there is a chance for improving agriculture and food security,” ​she said.

Nafziger said there was “a sense of urgency” to​ have a conclusion on CAP by the end of 2013 because otherwise it would mean high commodity prices.

“We would go for reform as soon as possible,”​ she said

The European Commission released its proposals for CAP reforms on 12 October 2011.

It is now up to the European Parliament and the Council to approve the regulations, which is expected by the end of 2013. If all goes to plan, the CAP reforms would take effect on the 1 January 2014.