Supermarkets react to European farmer welfare proposal

Some supermarkets are not happy about the European Commission’s intention to give farmers higher prices. Dutch, German and Austrian distributors warn this will lead to higher prices for the consumers.

“Put the consumer first, not the farmers”

European Commissioner for Agriculture and Rural Development, Phil Hogan, wants to present a proposal to combat unfair trade practices in April. He would like farmers to get better conditions, which he thinks is currently impossible because supermarkets have too much power. The proposal wants, among other things, to rein in late payments and unilateral revisions.

Several supermarket group organizations have responded in letters to the European Commission that the “statement that supermarkets abuse their power is factually incorrect”. “Accusations about unfair trade practices are anecdotal and lack factual proof. Food retailers have very few contractual relations with farmers”, Dutch newspaper Financieele Dagblad quotes from the retailers’ letters.

According to the supermarket chains, Hogan’s proposal will only result in higher administrative costs, which will eventually create higher consumer prices. That is why they ask to “put the consumer first and help farmers to do the same”.

European legislation unnecessary and useless?

European retail organization EuroCommerce is also opposed to Hogan’s proposal and says his foundation for the plan is doubtful. According to the organization, the polls used for the proposal do not reflect facts but perceptions. “They do not provide a robust proof for the impact of these alleged unfair trade practices”, EuroCommerce said.

German retail organization HDE points to the existence of the Supply Chain Initiative (SCI), a voluntary code of conduct for an honest way of business that allows people to file complaints. However, farmers seldomly file complaints there. According to the letters, retailers do not feel the need for European legislation, considering 22 of the 28 member states already have their own policies.

Hogan’s proposal would not lead to better prices for farmers, EuroCommerce said, but it would lead to higher margins for both the brand and food manufacturers. These are the companies that negotiate with the supermarkets and are often the link between retailer and farmer. There is a similar discussion going on in France because of a government proposal to force supermarkets to maintain a 10 % margin and to limit their ability to do razor-sharp price discounts.