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.
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