Will Europe reform the value chain in the food industry?

Wheat harvest before sunset near Branderslev. Lolland island, Denmark. [Lars Plougmann/Flickr]

Trade relations in the agricultural sector remain a source of tensions between large retailers and farmers, while a legislative proposal is expected at the European level. EURACTIV.fr reports.

Little progress has been made in rebalancing trade relations between farmers and large retailers, despite a draft law introduced by the French government in early February.

The European Commission will also address this issue and is working on a new regulation against unfair business practices, which will be presented in spring 2018.

By 2016, the Commission took action by setting up the “Agricultural Markets Task Force” made up of 12 experts. They released their final report in November 2016, advocating harmonised European legislation to tackle such practices, from which farmers suffer given their limited bargaining power, particularly with large retail outfits.

The Commission will take the recommendations of the task force to formulate its own proposals in the spring.

Among the recommendations, the experts suggest limiting payment periods to 30 days to avoid current delays, and to set the terms of the trade exchange (volumes, prices) by prohibiting any unilateral change without the farmer’s agreement.

EU farmers demand action on unfair trading practices

Europe’s agri-cooperatives called on the Commission on Tuesday (22 August) to increase transparency in the food supply chain and enact EU legislation to protect food producers from the unfair trading practices of their economically stronger partners.

Groundless accusations

While these recommendations were well received by member states, they were criticised by large retailers.

In letters addressed to the Commission and carried by the website retaildetail.be, several of the large retailers argued that “the claim that supermarkets abuse their power is incorrect. The accusations of unfair trade practices are anecdotal and lack factual evidence”.

Retailers are concerned about the implementation of new regulatory requirements, in addition to the ones already existing at national level in 20 member states.

They also stress the existence of effective informal tools in the area, such as the Supply Chain Initiative, launched in 2013 by food industry players who voluntarily commit to respecting principles of good business practices.

Ineffective enforcement

According to Paolo Gouveia, director of general affairs at Copa-Cogeca (the EU food producers association), these arguments remain insufficient, the real issue being the effective implementation of legislations and not their existence.

“Several countries, such as Portugal, have legislation against unfair trading practices but their enforcement is ineffective. The same is true of European legislation on late payment. Provisions have been adopted but such practices still exist.”

A European supervisory authority

Gouveia, therefore, calls for the implementation of binding European legislation. This legislation should be based on “a system of penalties and joint verifications through an independent authority at the European level.”

On the other hand, the group of experts advocate in their report the implementation of such authorities at the national level of each member state.

For Gouveia, a European authority would hold the advantage of “also monitoring agricultural trade between buyers and sellers located in different European countries”.