Esteemed members, ladies and gentlemen,
I'm very happy to be here with you this morning. I believe this day represents a very important step on the journey to a fairer and better functioning food supply chain in the European Union.
Today we are showing what "a Europe that protects" looks like in practice in the field of food and farming. And we are proving to our citizens that cooperation at EU level can bring clear value added to their lives.
I very deliberately wanted to come to the European Parliament to present the proposal first, because the members of this house have done so much to keep the issue on the agenda over many years.
In particular, your resolution on unfair trading practices, adopted in June 2016, highlighted in a very clear and concise way the issues at stake and the policy challenges ahead. You are the bulwark of European democracy, directly elected to represent the interests of our citizens, and you therefore have your ear to the ground in every region of the EU. And it is striking that so many of the rural areas you represent have identified this issue as a problem over so many years.
I must also acknowledge the work of the Slovakian Presidency in the second half of 2016, which managed to obtain unanimous Council Conclusions calling for action in this area as well.
On the Commission side, in 2016 we set up the Agricultural Markets Task Force to assess the role of farmers in the wider food supply chain and make recommendations on how it can be strengthened.
On the basis of these recommendations, the Commission launched an inception impact assessment and a public consultation on the improvement of the food supply chain in 2017, which in turn helped identify the specific unfair trading practices covered by the Directive.
As we know, Unfair Trading Practices are Business-to-Business practices that deviate from good commercial conduct and are contrary to good faith and fair dealing. They are usually imposed unilaterally by one trading partner on another. The food supply chain is particularly vulnerable to unfair trading practices due to large differences in bargaining power.
A recent EU-wide opinion poll published in February 2018 shows that a great majority of respondents (88%) consider that strengthening farmers' role in the food supply chain is important.
96% of the respondents to the 2017 public consultation on the modernisation of the CAP agreed with the proposition that improving farmers’ position in the value chain including addressing UTPs should be an objective of the EU’s Common Agricultural Policy.
Of course, national initiatives have helped to guide the way, in particular the Law on the Food Chain in Spain and the Groceries Code Adjudicator in the UK.
But as your resolution correctly points out, and I quote: "the current fragmented situation resulting from different national approaches to addressing UTPs in the EU is not sufficient".
The solution you proposed - framework legislation at EU level in order to tackle UTPs and to ensure that European farmers and consumers have the opportunity to benefit from fair selling and buying conditions - is now starting to become a reality.
This is the first time in history that the Commission is proposing legislation in this area.
Taking action of this kind has been mooted for many years, and now we are finally delivering.
In brief, we are proposing specific and targeted measures that will make an impact at the weakest points in the food chain.
A chain is only as strong as its weakest link – so these measures are in the interests of the food supply chain as a whole – from the farmer in the field to the consumer in the supermarket aisle.
The unfair trading practices 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 or unsold products.
Other practices will only be permitted if subject to a clear and unambiguous upfront agreement between the parties:
- a buyer returning unsold food products to a supplier;
- a buyer charging a supplier payment to secure or maintain a supply agreement on food products;
- a supplier paying for the promotion or the marketing of food products sold by the buyer.
The Commission's proposal requires Member States to designate a public authority, or watchdog, in charge of enforcing the new rules. In case of proven infringement, the responsible body will be competent to impose a proportionate and dissuasive sanction.
Crucially, this watchdog will have sharp teeth. The 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.
Of course, in our Union of equals, no member state has the monopoly on wisdom. Accordingly, the Commission will set up a coordination mechanism between enforcement authorities to enable the exchange of best practices.
Subsidiarity and proportionality are watchwords for everything we do in the European Commission.
The proposed measures are complementary to measures existing in Member States and the code of conduct of the voluntary Supply Chain Initiative. Member States can take further measures as they see fit.
The Commission's proposal will take the form of a European law (directive), is backed up by a thorough and robust impact assessment, and as of today will be submitted to the two co-legislators, the members of this house and the Council.
As this proposal is "fresh off the press", I will of course be available to return to answer any questions you may have when you have had a chance to study the proposal in greater depth, in the near future.
Strengthening the position of producers in the food supply chain is a big priority for me, and of course for you. Working together across Institutions, as citizens demand of us, we can achieve a lot.
Together, we have already made it easier for farmers to organise and bargain, through the agreement struck last December under the Omnibus. This was step one of a three step process.
Step two is today's Unfair Trading Practices proposal.
Step three comes later this year, with an initiative to improve market transparency.
In conclusion, ladies and gentlemen, a well governed, efficient and effective food supply chain must also be a fair one. Today's proposal is fundamentally about fairness – about giving voice to the voiceless - for those who, through no fault of their own, find themselves the victims of a weak bargaining position.
Targeting these UTPs sets a good foundation for any future work in this area. And of course I am relying on your support to move the process forward. Thank you.