The European Commission will tackle unfair trading practices in an attempt to give farmers and SMEs more assurances, but trade federation EuroCommerce is unconvinced: “the farmer will not earn a penny more because of this.”
“Unequal negotiation position”
Smaller companies in the food supply market are “vulnerable to unfair trade practices” executed by their partners in the supply chain, according to the European Commission. They often have a weaker negotiating position, and cope with a lack of alternatives to sell their products. In the long run, this may impact their economic viability.
“The ban on unfair trade practices has to strengthen the position of manufacturers and SMEs in the food supply chain”, European Commissioner for Agriculture, Phil Hogan, said.
“If we set minimum levels and strengthen their enforcement, this proposal will make sure that everyone can participate in the market based on fair conditions. This will contribute to the overall efficiency of the entire chain”, Jyrki Katainen (responsible for competitiveness) said.
A whole range of illegal practices
Once the European Commission’s proposal is accepted, the following practices will be explicitely illegal: late payment for perishable food, last-minute order cancellation, unilateral or retrospective contract changes or forcing suppliers to pay for disposed products.
Other practices will be allowed only when both parties struck a clear and unambiguous arrangement beforehand: sending back unsold stock to the supplier, getting suppliers to pay to get or keep a contract, getting suppliers to pay for the promotion and delivery of goods that are subsequently sold and more.
The Boerenbond (Farmers’ Union) in Belgium said this was a “modest, but symbolically important step”. EuroCommerce, which represents retailers and wholesalers at a European level, says that “legislation is not the answer”. The organization remains unconvinced about the European initiatieve nor the plan’s necessity.
“The Commission has not demonstrated beyond doubt that there is a structural problem or that we need EU legislation to fix that problem”, EuroCommerce director-general Christian Verschueren, told the Financial Times.
According to director Political Affairs and Trade, Neil McMillan, “EU legislation will not help farmers to earn a single penny more from their hard labour unless store prices also risk of going up. A better organization, better risk management and a better dialogue between every involved party should tackle the farmers’ problems more. Our industry wants to play an active part in helping farmers that grow products consumers are willing to pay for.”