The Problems of the Identical Product Name on the EU Common Agrarian Market

Abstract

The paper deals with the current problem of agrarian sector with influence mainly to food producers. It deals with their impact on changes of agricultural producer’s position in a framework of food production systems. Concretely paper deals with the problems of risk related to milk products pricing distortion due to possibility of substitution milk fat behalf vegetable fat. Together with formation of such a risk, food producers are dealing with the other problem, which is using of the similar product name on the common market of EU. Problem is currently related to using the term “spread butter“, which is denoted as deceive because of harming a butter producers. There is an argument that by the influence of currently used term might be those two products consider as a perfect substitutes, between which arise an elicitation of the cross substitution effect. On the European enlarged market of the food could to several situations occur, particularly if there is an offer of the products of the similar, or even the same product name. This is very often visible on the EU common market, this naturally cause problems especially if the composition of the product and the production technology are completely different. The solution of this problem is linked to the question of the economical substitution, which is usually related to completely different products. This brings about damage to food producers on the first side, and also a deception of consumer on the second side. The example of such as situation is currently visible on the European dairy market, concretely in the case of dairy products. In this article will be explained the situation linked to problem of the Czech producers of “Spread butter”, which is a traditional Czech product and the producers of the “Traditional butter”.European Commission ruled in producers of “Traditional Favour” favour, which means that it will be no longer possible to sell products, with lower than 39% of milk fat, under the product name “butter”. From the economic theory is well known [3] GRAVELLE, that substitution effect describes the effects of changes in relative prices on consumption. According to the substitution effect, an increase in price of one good causes a buyer to buy more of the other good, since the first good has become relatively expensive, and vice versa. The buyer substitutes consumption of the second good for consumption of the first. Therefore even a small price change could cause a significant change of the optimal combination in the terms of the quantity of the both commodities (in our case spread butter and traditional butter.