A look at COCERAL
September 01, 1995
by Teresa Acklin
Influential European group provides link between member grain companies and E.U. agricultural policy makers.
BY DIANE MONTAGUE
The first indications that the European Union's cereal production was on the increase again began to emerge in March. Surveys showed that the areas of wheat and barley sown in 1995 were higher than in 1994, reflecting the ending of the five-year voluntary set-aside scheme and the cut in the compulsory set-aside to 12% from 15%. In late April the first yield estimates for 1995-96 production were released, also showing a likely increase and a reversal of the declining production of the past three years.
The figures, not surprisingly, were widely reported in the national and trade press. Traders took note and markets reacted. What is surprising, however, is that the figures were compiled and published not by the European Commission but by COCERAL, the organization representing the grain and feed trade of the European Union. Yet the figures were almost certainly given more credence than if they had been official estimates from the Commission compiled from information provided by member-state governments.
The value placed on these figures is an important key to the role of COCERAL in the European Union's highly complex agricultural policy. For COCERAL the Comite du Commerce des Cereales et Des Aliments du Betail de la C.E.E. is in many ways a curious organization born of the somewhat curious workings of the E.U.
Founded in 1958, COCERAL speaks for E.U. grain and feed trading companies that are involved in both domestic and international trade in grain and feed ingredients. The companies are represented in COCERAL through their national trade organizations; some countries, such as the United Kingdom, have two organizations, one dealing with domestic ex farm trade and one with international trade, while other countries combine the two trades in one organization, as in Italy. A proportion of the subscriptions to the national trade associations goes toward funding COCERAL. Representatives from European Free Trade Association countries also attend COCERAL committees.
COCERAL's main function is to act as a two-way link between the European Commission and the grain and feed trade. A small number of similar organizations represent the dairy, sugar, and fruit and vegetable industries. COCERAL was one of the first commodity groups to be formed because of its international dealings and because the grain trade plays such an important part of the Common Agricultural Policy.
It operates in four main areas internal trade within the E.U., external trade with third countries, feeds and rice. The commodities included are grain and feed materials, oilseeds and pulses.
The commodities are analyzed by working groups that each meet four or five times a year. The oilseed work is coordinated by another organization the Association of Traders in Oilseeds, Oils and Animal and Vegetable Fats (ANGO) while pulses, which include peas, beans and sweet lupins, are dealt with by a permanent working party within COCERAL. COCERAL also works with a group that represents the fertilizer trade and phytosanitary matters in the E.U.
COCERAL provides Europe's trading companies with ongoing information on the Commission's administration of the E.U.'s grain and feed policy. This information covers not only the huge web of regulations that are constantly being introduced or amended on trading, quality standards, and market support, but also the constant changes in currencies, their effects on the green rates (the rates at which E.U. support prices are converted into national price levels), export refunds and import levies.
On its side, COCERAL feeds into the Commission the trade's views on the way Commission policies and regulations affect commercial activities and any problems that arise. The aim is to try to bring about changes in the regulations to help the trade operate smoothly.
One of COCERAL's best known functions is supplying figures on crop production and usage to the Commission. This information, based on carefully collected trade estimates from each country, is crucial for the Commission in providing the basis for many of its decisions on market management.
The figures are compiled by the national organizations in each member state based on trade estimates and information from farming groups. The organizations take into account not only planting statistics but also patterns of varieties sown, the breakdown between winter and spring-sown crops and the likely effect of weather conditions on sowing patterns, potential yield and quality.
This information then is discussed at COCERAL's advisory committee meetings. These are attended by representatives from COCERAL, from the Committee of Agricultural Organizations, from the General Committee for Agricultural Cooperation and from the Commission.
COCERAL's advisory committee meetings provide the opportunity to discuss the ongoing situation in terms of production, usage, currency changes and any changes in the CAP. Through the member-state organizations, the committee includes representatives of not only traders and producers but also millers, maltsters and compound feed manufacturers.
COCERAL's advisory committees have a quite different function from the Commission's own commodity management committees, which are made up of official representatives from the Commission, member-state government departments and intervention boards. The function of the Commission's management committees is mainly to decide on ongoing Commission management actions in terms of intervention and free market tenders, export restitutions and levies.
There is a fine but important line between the official operations of the Commission and its relationship with outside traders. Apart from the official advisory committee meetings, COCERAL's other contacts with the Commission are more informal and based very much on personal relationships.
Decisions taken by the Council of Ministers or the Commission on such crucial issues as CAP policy, green currency changes or export mechanisms are not communicated directly to the trade. All decisions and regulations are published in the Commission's Official Journal, but there is a time lag between the decision-making and publication of the Journal.
However, immediacy of information is vital for traders; through unofficial contacts within the Commission or by exchanging information with national delegates or other “outsiders” such as journalists, COCERAL is able to pass on to its member organizations the latest changes as soon as they are decided.
COCERAL's secretary general, Chantal Fauth, said, “It's a question of knocking on doors and knowing a lot of people. Apart from the advisory committees, we have no direct communications from the Commission.”
Nevertheless, the unofficial sources of information form a vital part of COCERAL's service to its members. Telling members about these changes presents a huge logistical problem for a small organization. And much of the information is highly commercially sensitive, making it essential that all contact points in the member states receive the information at the same time.
This involves sending out 20 telexes simultaneously old technology still beats the fax in these circumstances so that all the national organizations receive the information within five minutes of its transmission and can then pass it on to their members.
In addition to the telex bulletins, COCERAL publishes about 250 circulars in three languages throughout the year. The latest innovation is Infoflash, which goes out on a daily basis when the E.U.'s Council of Agricultural Ministers is in session and provides a brief summary of their discussions.
Although the commodity information handled by COCERAL is used eventually for trading decisions, the organization sees its role as political rather than commercial. It has to keep a delicate balance between representing its members' commercial interests and operating as a political organization. It does not get involved in contracts or arbitration. These services are the province of the London-based Grain and Feed Trade Association, while the manufacturers' side of the feed industry is represented by FEFAC (the European Federation of Feed Manufacturers).
COCERAL's complex operation is handled by a small staff of only four people, one of whom is part time. Mrs. Fauth was appointed secretary general some 18 months ago. She had a difficult act to follow in succeeding Hellmuth Bartsch who had held the position for 19 years. For Mrs. Fauth, it was an unexpected opportunity. She joined COCERAL in 1992 as Mr. Bartsch's assistant and was both pleased and surprised to be offered the top position less than two years later.
Mrs. Fauth's previous work gave her the right background and an inside track on the workings of the European Union and the Commission. For five years prior to joining COCERAL, she worked with the Information Bureau of Bavaria, which represents the State of Bavaria in the European Union, and before that, she was with the European association representing food wholesalers. Both positions provided the opportunity to develop high-level contacts in E.U. political and administrative circles.
Working with Mrs. Fauth is Christof Buchholz, who trained as an agricultural engineer and worked for three years on a government project in Africa before joining COCERAL; and one full time and one part-time secretary.
Mrs. Fauth just had time to settle into the COCERAL job when the E.U. was enlarged from 12 to 15 countries following the accession last year of Austria, Finland and Sweden, although Austria had been an observer member of COCERAL for some time. Having just absorbed the three new member states, COCERAL is now facing the changes to world trading patterns brought about by the Uruguay Round of the General Agreement on Tariffs and Trade and the establishment of the World Trade Organization.
Despite the obvious ongoing need for an organization of this type, questions periodically are raised about COCERAL's future. At a time when the grain trade is under pressure from reduced trading volumes as a result of set-aside, all costs have to be examined not least memberships in trade associations and similar organizations.
There have been suggestions that the job could be handled by the national trade associations and representatives of member-state governments. The big trading companies, it is argued, are powerful enough to talk to the Commission directly.
These ideas are firmly rejected by leading members of the trade. COCERAL's immediate past president is Michael Banks, joint managing director of Sydney C. Banks, one of the largest independent grain traders in the United Kingdom. He says it is very important for the trade to talk to the Commission with a united voice rather than for each country to try to make individual representations to the Commission.
“I believe the Commission does listen to COCERAL,” he told World Grain. “If we want to see someone in DG VI (the agricultural directorate), on the whole we are always very welcome and the trade gets value from the meetings. I cannot see how a single national association can actually put forward a coherent policy because they would not have enough power. COCERAL staff know the right people to talk to and have very good contacts.”
Mr. Banks emphasized that COCERAL played a very important role because it represented the grain and feed trade of the European Union and was not involved with third countries.
“I accept that all associations are struggling because their members are affected from the money taken out of the business through set-aside,” he said. “But the world trade situation is becoming more complicated politically and it is even more important for traders to have strong and direct contacts with the European Commission.” It is also becoming clear that some of the newer members are more dependent on COCERAL because they need guidance in adjusting to the operations of the E.U. These views were confirmed by Bernard Valluis, director of external relations for the French-based Groupe Soufflet.
“It is very important to have a European organization to counterbalance the power of the Commission, not just to put forward the problems of national organizations but to provide a united voice for the trade in discussing with the Commission its management of the market,” Mr. Valluis said.
Of course, Mr. Valluis said, the companies involved are competing with each other, but on major policy and trade matters they share the same viewpoints.
“COCERAL is important in its interface with both the vertical and horizontal aspects of the E.U.,” he noted. “The vertical aspect is the way in which it represents not only the national trade organizations but also commercial companies. Through its committee structure it provides the route for companies to talk directly to the Commission. This means that technical questions which arise in discussions with the Commission can often be better understood by traders than by government officials or trade association staff.”
Mr. Valluis also believes that COCERAL has very good credentials with the Commission through its supplying of crop information.
The horizontal aspect arises through COCERAL's membership in the European Liaison Committee for Agricultural and Food Trades. Through this committee, COCERAL can provide help and information on E.U. regulations involving all sectors of the food industry. As the membership of the European Union increases, the situation will become even more complex.
“It will be impossible for everyone to talk to the Commission,” Mr. Valluis said. “From our point of view COCERAL works very well and is very necessary.”
Diane Montague owned and edited the U.K.'s leading agribusiness trade weekly, Agricultural Supply Industry, for 22 years. She sold ASI in 1992 and now concentrates on freelance writing and consulting.