Food supply chain: from Brussels more power to farmers

Food supply chain: from Brussels more power to farmers

May 09, 2018

Food supply chain: from Brussels more power to farmers

A proposal from the European Commission plans to give more contractual power to farmers and small and medium enterprises, often the victim of unfair commercial practices that make their survival impossible.

Voluntary codes of conduct are no longer sufficient, and it is urgent to regulate unfair commercial practices, that is all those business practices that stray from good behavior, good faith and fairness, often to the disadvantage of just one party. The food supply chain is especially exposed to unfair practices because of the huge gaps in contractual power between the parties. Examples of such practices are late payments (especially towards producers of raw materials, i.e. Farmers), canceling orders with little notice, unilateral or retroactive changes to contracts, or asking suppliers to pay for any waste. In November 2016, it became clear that new rules were needed at EU level, and the European Commission set up a task force for the agricultural markets (AMTF): one of its recommendations was to issue new regulations on unfair practices. However, expectations were not really fulfilled, and the Commission announced new measures to improve the functioning of the supply chain and help farmers strengthen their position on the market. 

The European Commission calls for a stop to unfair commercial practices

there is wide consensus on the fact that unfair practices negatively affect the efficiency and fairness of the food industry. The initial impact assessment and public consultation on how to improve the food supply chain launched by the Commission in 2017, 96 per cent of respondents agreed with the proposal to include among the objectives of the Common Agricultural Policy the improvement of the farmers' position in the value chain, also by combating unfair commercial practices. In a EU-wide opinion poll of February 2018, 88 percent of participants stated that it is important to strengthen the role of farmers within the food supply chain. 

The Commission has now formally acted to ban unfair practices, thus providing greater certainty for farmers and small and medium sized businesses, who can better manage those risks over which they have little or no control. 


Competing on a level playing field

Jyrki Katainen, Vice-President and Commissioner for Employment, Growth, Investments and Competitiveness, stated: "By setting minimum standards and reinforcing the enforcement, the proposal should ensure that these operators are able to compete on fair terms, thereby contributing to the overall efficiency of the chain. This is a clear statement for more fair business conduct". 

Phil Hogan, Commissioner for Agriculture and Rural Development, added: "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. Today's initiative to ban unfair trading practices is about strengthening the position of producers and SMEs in the food supply chain.  The initiative is equally about providing strong and effective enforcement.he initiative also guarantees solid and effective implementation of the rules. We are looking to eliminate the "fear factor" in the food supply chain, through a confidential complaints procedure, that is the possibility of anonymously blowing the whistle on anyone who behaves unfairly". 


Sanctions are imposed for non-compliance: each Member State will appoint a public body for the respect of the new rules, with the powers to investigate, upon request or on its own initiative, impose sanctions and publish its decisions. The Commission informs that it will shortly look at the issue of price and market transparency, in order to continue to improve the working of the food supply chain.

Find out more about Food and sustainability

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