Visegrad +4 push for extension of unfair trade practices to large suppliers

The European Commission insists that its proposal will restore some balance in the food chain, as the weakest part of it, the farmers, will be fully protected and empowered. [Shutterstock]

The Visegrad Four, as well as Bulgaria, Romania, Croatia and Slovenia, have warned about “disproportions” in the food supply chain if large suppliers are not covered by the European Commission’s proposal on unfair trade practices (UTPs).

According to a document seen by EURACTIV.com, these countries in principle agree with the Commission’s proposal to fix the imbalances in the food supply chain. However, they find it problematic that the proposed legislation does not cover large suppliers. Visegrad includes Poland, Czech Republic, Slovakia and Hungary.

The document, signed by the agriculture ministers of Visegrad +4, noted that the countries expressed their disagreement with the Commission proposal, as the directive “only offers limited protection to agri-food suppliers, meaning farmers and SMEs, against buyers, who are mostly large companies.

“This leads to further disproportions within the food supply chain,” they warned.

All agricultural producers, regardless of their size or what legal entity they have, should be prioritised in the legislation, they pointed out.

The European Commission presented last April its much-awaited proposals for a directive to tackle UTPs in the food supply chain. EU farmers say they 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.

With these proposals, the executive aims to restore the imbalances in the food supply chain created by large operators against trading partners with weak bargaining power, such as individual farmers.

However, large multinational companies are not included in the legislation and the industry says this is discriminatory.

“Unfair is unfair – whatever the size of businesses. All actors in the food supply chain should be protected from unfair trading practices. Buying alliances dwarf even the largest manufacturing companies and substantially increase retail buying power,” Mella Frewen, FoodDrinkEurope’s director general, told EURACTIV.

“UTPs anywhere across the chain will inevitably have an impact on all operators,” Frewen added.

The European Commission insists that its proposal will restore some balance in the food chain, as the weakest part of it, the farmers, will be fully protected and empowered.

Debate on the scope of unfair trade practices heats up in EU Parliament

The final scope of the European Commission’s proposals on unfair trade practices (UTPs) in the EU food supply chain has divided stakeholders, as it has not been decided yet if large companies should also be included in the legislation, in addition to small and medium firms.

EURACTIV was informed that except Visegrad +4, Greece, France, Spain and other countries are also pushing for an extension of the legislation’s scope.

On the other hand, Germany, the Netherlands, Denmark, the UK, Ireland, Finland, Sweden and Cyprus back the Commission’s proposal.

Countries like Belgium, Luxembourg or Malta are neutral, urging for a “compromising” solution. The Austrian Presidency, for its part, is putting pressure on member states to finalise the negotiations as soon as possible, EURACTIV has learnt.

In the meantime, EU retailers have reacted negatively to the push for an extension of the scope to include large suppliers.

EuroCommerce, the European association of retailers and wholesalers, backs the “balance” that the EU executive achieved through its proposal.

EU retailers said in a statement that there are “major concerns” over the legality and the unintended consequences of extending the scope.

“The Commission proposal is aimed at supporting farmers and small manufacturers: their own impact assessment presented strong evidence that further skewing the balance of power to massively profitable multinationals would put up prices and harm the consumer, with no evidence that any of the extra money earned by these industrial giants would be fed back to farmers,” said Christian Verschueren, EuroCommerce Director-General.

EU farmers expectedly do not agree with retailers.

“The retailers themselves have admitted the existence of unfair trading practices. Therefore, it is our stand that all business no matter their size must be protected against such practices. As we said in our PR ‘unfair is unfair’,” EU farmers’ association Pekka Pesonen told EURACTIV.

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