This article is part of our special report Economic viability in the next CAP.
EU lawmakers and farmers have welcomed the European Commission’s rules on unfair trade practices but have called for “strong” enforcement to protect the weakest parts of the food supply chain.
The European Commission presented on Thursday (12 April) its much-awaited proposals for a directive to tackle unfair trade practices in the food supply chain.
With these proposals, the executive aims to restore the imbalance in the food supply chain created by large operators against trading partners with weak bargaining power such as individual farmers.
According to Copa-Cogeca, the EU farmers’ association, farmers receive on average 21% of the share of the value of the agricultural product whilst 28% goes to processors and as much as 51% to retailers.
Already hit by market volatility, EU farmers say they need a fairer share and view the proposals as a way to bring more certainty to their fragile income.
“It is of paramount importance that we could increase income from the market to make our farming sector more economically sustainable. This is why we support the Commission initiative on UTPs too,” Copa-Cogeca Secretary-General Pekka Pesonen told EURACTIV.com.
The unfair trading practices (UTPs) to be banned are late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing the supplier to pay for wasted products.
“Retailers should have an increased responsibility and be more punctual with payments to farmers. Payment delays for small farmers can lead to bankruptcy,” Socialist MEP Daciana Sârbu warned.
According to the Commission, the new proposals aim to grant farmers and small and medium-sized businesses “greater certainty and less need to manage risks over which they have little or no control”.
At a Twitter chat organised by EURACTIV on 13 April, S&D rapporteur Paolo de Castro said: “The cloudy days of the ‘magic’ price multiplications from field to fork must come to an end.”
“After more than 10 years in a legislative labyrinth, finally Commissioner Phil Hogan has come up with a comprehensive and broadly positive proposal which aims to create a common EU legislation against UTPs in the food supply chain,” de Castro said.
The Italian MEP noted it was a crucial first step forward in preventing the no longer acceptable behaviours, which still today create inefficiencies and food waste, to the detriment of our producers and consumers.
“A better functioning and fairer food supply chain can eliminate those inefficiencies that today affect mostly its weaker actors: farmers and consumers,” he emphasised.
According to MEP Michel Dantin (EPP), processors and retailers have a collective responsibility to make sure that the food supply chain works correctly. “They need to ensure that the weakest link can have a fair price for its work to ensure its economic sustainability and its future.”
Green MEP Molly Scott-Cato noted that more of the value of the product will stay with the producer if the supply chain is shorter and controlled by the producer.
“The main problem facing farmers is that their industry and their markets are dominated by a cartel of agribusiness corporations. The Monsanto-Bayer merger has made this worse and should have been blocked,” she said.
Regarding the enforcement of the new rules, the EU member states will need to establish a public body that will impose a “proportionate and dissuasive sanction”.
“This enforcement authority will be able to initiate investigations of its own initiative or based on a complaint. In this case, parties filing a complaint will be allowed to request confidentiality and anonymity to protect their position towards their trading partner.”
MEP Sârbu regretted that the Commission did not propose a regulation but a directive, as this would have ensured better enforcement.
She also stressed that farmers’ organisations could help producers lodge complaints with the competent authorities about UTPs (unfair trade practices).
“We need strong enforcement led by an independent authority able to initiate and conduct investigations and apply deterrent sanctions in case of non-compliance. We have been advocating for this since 2007,” stressed Copa and Cogeca Chairman of the Food Chain Working Party Joe Healy.
For the European Coordination Via Campesina (ECVC), the lack of an EU-centered monitoring system of the implementation is not good news.
“It is up to member states to designate a public authority to monitor prohibited practices in each member state. However, no single European enforcement and control authority has been established. This is one of the main weaknesses of the proposal,” ECVC noted.
Commenting on the fact that it’s a directive rather than a regulation, ECVC said that member states would likely set different rules, on a common basis, but at the risk of “jeopardising the unity of the European market”.
“These regulations can differ from each other and create a wide variety of problems for intra-European trade,” ECVC said.