Small Scale – Big Impact:

How can trade and innovation policy boost SME growth in Europe’s food and drink industry?

Thank you Frances and thanks also to Edwin for his introductory remarks.

Good morning ladies and gentlemen.

I'm very pleased to be here in the EESC with you this morning as part of European SME Week. My thanks to Food Drink Europe for the invitation, and particular thanks to Mella, Evelyne and Conor for working with my team in preparation for today.

We're getting towards the end of 2016, which has been a year full of surprises and political volatility. Thankfully, from the business perspective, there are a number of stabilising factors which remain firmly in place. Let me remind you of just a few:

SMEs remain the lifeblood of our economy, representing 99% of all businesses in the EU. In the past five years, they have created 85% of new jobs and provided two-thirds of total private sector employment.

Our single European market remains our greatest strength, providing entrepreneurs with massive opportunities both at home and abroad.

And while you may say I am biased, I firmly believe that our food and drink SMEs epitomise so much of what is great about European business.

I am pleased to see examples of European success stories here with us today, including the Glenisk organic dairy company from the country I know best. These are smart, ambitious and innovative companies who want to bring their products to the world.

We can say with confidence that in Europe we have a strong and competitive food industry, which is the basis for many high quality jobs and growth – often in rural areas where they are strongly needed.

We estimate that the food chain employs more than 44 million people across Europe – that is an impressive number and the food and drink sector represents an important share of this figure.

The single market ensures that 500 million consumers have access to high-quality, safe, traceable and affordable products. And I must remind you that our shared Common Agricultural Policy is the foundation stone for this success story.

Thanks to the CAP, our farmers and food producers are subject to some of the most stringent health and safety rules anywhere in the world.

While this certainly places high demands on our agri-food SMEs, it also guarantees that they have an extremely marketable product.

And the good news is that demand is growing for these products both at home and abroad.

Today's consumers are more informed and more demanding than any previous generation. They demand quality, they demand traceability, they increasingly demand sustainability, and they are willing to pay a premium for it. Maintaining a well-functioning and supple single market is the key to making this happen.

This is a point we need to make again and again, particularly in the current political climate. We must not heed any impulses to restore counterproductive national protectionist measures. The single market benefits us all.

The single market means that a shopper in a small town in Ireland can buy Greek olive oil, Italian cheese or even French edible insect products, all under the same roof. Or a shopper in Cyprus can buy Irish organic yoghurt and Belgian gin.

You might ask yourself: what is the common thread between all these different products? The answer is: quality.

European agri-food SMEs have understood that adding value through quality and innovation is their best bet for continued success in the 21st century.And the CAP, working in sync with other EU strategies, is helping them in a variety of ways.

When it comes to innovation, we are putting our money where our mouth is.Under Horizon 2020 there has been a doubling of the budget for food, agriculture, forestry, marine and bio-based industry research.

There is a far stronger emphasis on demand driven research and innovation, involving not only researchers but also other players such as farmers and agri-food SMEs.

Under Horizon 2020, around 500 million Euro have been dedicated to multi-actor projects in the agri-food domain;

Our dedicated SME instrument helps high-potential operators to develop innovative ideas for products, services or processes that are ready to face global market competition.

This new scheme has opened a new highway to innovation for food SMEs, with 236 million Euro being granted in food-related projects so far.

On the CAP side, knowledge and innovation was put forward as the first, cross-cutting priority under rural development policy.

To speed up innovation on the ground we established the European Innovation Partnership "Agricultural Productivity and Sustainability" which bridges the gap between research and innovation/practice.

More than 3000 innovation projects are envisaged to be funded under the Rural Development Programmes in the 2014-2020 period. These innovative co-operation projects involve farmers and foresters together with other food chain operators, advisors and researchers.

Emerging EIP innovation projects are tackling issues not only related to agriculture but to the food chain as a whole. An example is the ENU-WHEAT project that gathers all wheat value chain players to develop a sustainable and environmentally friendly wheat value chain.

Many innovative solutions are emerging across the agri-food sector, stimulated by both new technologies and new collaborations between different actors.

And we don't have to go far to witness these innovative developments. The FOODMET initiative in Anderlecht for example will soon open the largest rooftop aquaponic farm in the EU, next to an already up and running food hall on the ground floor.

The Brussels GOOD FOOD strategy for promoting sustainable and healthy diets is another example of an innovative initiative taking place in the neighbourhoods.

Innovation leads to even greater levels of quality, which is our key selling point abroad.

And success abroad means success at home: estimates show that every €1 Billion of exports generates 14,000 jobs for our people. Given that EU agri-food exports increased by 5.7 per cent in 2015, we can say with confidence that we are keeping jobs in rural areas.

Since being appointed commissioner, I have tried to be a global missionary for European agri-food products.

We believe this will decisively assist producers and associations in this region and throughout the EU to find new markets for their products.

Secondly, in 2016 I'm undertaking a Diplomatic Offensive to intensify and create new trade relationships with third countries. I have visited Mexico, Colombia, Japan, China, Hong Kong, Vietnam and Indonesia – each time bringing a delegation of EU agri-businesses with me.

I believe these trade missions go a long way towards finding new openings for our exporters. Conscientious consumers throughout the world recognise the quality and value of our European food traditions and the fact that they form such an integral part of our identities.

And the number of conscientious consumers around the globe is growing exponentially.

It is estimated that 150 million people will enter the global middle class every year until 2030. This massive growth in disposable income will result in significant changes to dietary patterns, as families demand better quality and more nutritious food on their tables.

1 in 7 jobs in the EU depends on exports. Exports create opportunities for everyone, skilled and less skilled workers alike. And those are all good jobs!

They pay on average better than other jobs in the rest of the economy. EU exports support a significant share of jobs in almost all countries across the EU.

More than 16% of Europeans in export-related jobs live in a different EU country from that in which the final product or service is exported.

As I mentioned earlier, this is the clear benefit of the EU single market. And EU exports support 19 million jobs outside the EU. So what's good for Europe is also good for our partners.

The improvement in trading conditions provided by FTAs an dother partnerships with our global partners benefit SMEs more than large companies, relatively speaking.

Many trade barriers - particularly Non-Tariff Barriers - represent a fixed cost and weigh more heavily on those that export smaller amounts.

In conclusion, ladies and gentlemen, I think the title of Food Drink Europe's initiative sums it up well: "small scale, big impact".

Our food and drink SMEs are already doing so much for our economy and our society. But I am convinced they can do even more, and I pledge to work with you to broaden their spectrum of opportunity both at home and abroad in the coming years.

Thank you.