A strong majority of stakeholders support European Union (EU) action to tackle unfair trading practices in the food chain, according to a public consultation.
Some 90% of respondents agreed or partially agreed that unfair trading practices (UTPs) exist, citing for example payment periods longer than 30 days for agri-food products and unilateral and retroactive changes to contracts.
- 94% of respondents agreed or partially agreed that UTPs have negative effects for farmers.
- 95% of respondents agreed or partially agreed that action should be taken to address UTPs.
- 87% of respondents believed this action should be taken by the European Union.
Other common practices include last-minute order cancellations for perishable products, requests for up-front payments to secure or retain contracts or additional payment to have products displayed favourably on shelves. Most respondents said they considered these practices occurred regularly or very regularly, and most agreed that farmers were the most likely to be impacted by them.
A majority of respondents also agreed that action needed to be taken to tackle unfair trading practices, and that the EU level was the most appropriate to do so, through legislation. Most believed EU action would result in better enforcement of rules on unfair trading practices, as well as bringing more legal certainty for businesses and ensuring a level playing field in the internal market.
Speaking at the High Level Forum on the Food Supply Chain in Brussels on 6 December 2017, EU Agriculture Commissioner Phil Hogan stressed the importance of a fair and well-functioning supply chain to allow farmers to make the most of the EU single market.
Farmers take home an increasingly diminishing share of the added value that is generated in the EU food chain. To address this issue, the Commission will in 2018 propose measures to improve the functioning of the food supply chain by strengthen their position in the market place and helping to protect them from future shocks.
The public consultation, which ran from August to November, gathered evidence and opinions from a wide range of interested stakeholders, including farmers and their organisations, businesses downstream from farming, member states’ public authorities, EU institutions, and consumers and their organisations. The aim was to gather information on three key issues relating to farmers’ position in the supply chain: unfair trading practices, market transparency and producer cooperation.
The 1500+ responses to the consultation will feed into an impact assessment that will explore how to improve the fluidity and efficient functioning of the food supply chain and address market failures or shortcomings that lead to unfair trading practices, and its effect on the internal market. Further work on market transparency is expected later in 2018.
Based on the results of the current impact assessment, the European Commission expects to make legislative proposals on tackling unfair trading practices in the first half of 2018.
The consultation and impact assessment come as a direct result of the findings of the Agricultural Markets Task Force (AMTF), an independent high-level expert group set up in 2016 by the Commission to investigate where the governance of food supply chain could be improved.
Unfair trading practices were one of the key elements identified by the AMTF where EU-level action could help; there are already rules – both voluntary and mandatory – concerning such practices in around 20 different member states. The impact assessment will look at whether and how EU legislation could complement and reinforce these national rules.
Various measures to strengthen the bargaining power of farmers are already in place as part of the common market organisation (CMO) regulation, the common rules that cover EU agricultural markets.
Updates to these rules recently agreed as part of the wide-ranging Omnibus proposal will ease the competition restrictions on producer organisations and associations of such organisations with regard to sales and production planning activities. The changes will also enshrine in law the right of farmers to ask for a written contract (unless trading with an SME), bringing greater transparency and enforceable rights to farmers when dealing with their partners throughout the supply chain. These new rules will enter into force on 1 January 2018.
6 December 2017