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EuroCommerce: EU Legislation Does Nothing To Help Farmers Or Consumers

Published on Jun 20 2017 11:40 AM in Supply Chain tagged: Supply Chain / Agriculture / EuroCommerce

EuroCommerce: EU Legislation Does Nothing To Help Farmers Or Consumers

EuroCommerce Director-General Christian Verschueren has warned that the constant focus on EU legislation is addressing the wrong targets, and will do nothing to help farmers and only harm consumers.

As the European Parliament’s agriculture committee and representatives are discussing trading practices in the food supply chain, Verchueren said, “Retailers understand the difficulties many farmers face, and have acted to help farmers over crisis periods in recent years.

“We want to help further, and support many of the recommendations of the Agri-Markets Task Force to improve farmers’ competitive position over the long term in the market. We fail to understand why so much attention is focused on EU unfair trading practices legislation when this is the one thing that will do nothing to help farmers.”

He said that diverse and high-quality food is ‘Europe’s unique strength’, and this is what retailers need to attract consumers to come to their stores.

Diverting Attention

He added that calling for EU legislation diverts attention away from where policy could really help farmers flourish and ignores some basic facts about the supply chain and relations between retailers and farmers, which he listed as;

  • On average across Europe, food retailers buy less than 5% of their products direct from farmers. The bulk of farmers’ produce is sold to wholesalers, traders or processors. The practices identified by countries in the Visegrad Group affect retailers’ contracts with large suppliers, and do not have any significant relevance to farmers.
  • The price paid for a processed product by a retailer, often to a chain of multiple intermediaries, has almost no effect on what farmers get for their produce.
  • 20 Member States have legislation on UTPs. Over 80% of retailers' contracts for foods are for products supplied nationally. Even where a product is sourced cross-border, the contract will always stipulate which national jurisdiction applies. All of these national laws have provisions to protect parties against any unfair or unilateral breach of contract. This points to no cross-border issues which might otherwise create a need for EU legislation.
  • Retailers operate in a highly competitive market with average net margins of around 1% on food products, negotiating with food manufacturers with net margins of 15% or higher. By outlawing what are normal business practices between large, often multinational manufacturers and retailers, those calling for legislation will make it more difficult for retailers to get a good deal for consumers and simply put up consumer prices, with no benefit to farmers,
  • thus, EU legislation will simply add a further layer of bureaucracy to existing national laws which have not shown any positive impact on the problems facing farmers.

Market-Driven Agriculture Sector

He said that retailers need a healthy, thriving farming sector - and the successful farmers in Europe are those who have established ‘efficient producer organisations, ready to engage in a dialogue and create the conditions for aligning closely what consumer want with what farmers produce’.

Verschueren added, “We support a market-driven agriculture sector, and policies which strengthen farmers’ position in the food supply chain. If we are all serious about achieving this, it is high time that we put aside divisive polemics and commit to a dialogue which can create trust and add value for everyone in the chain.”

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Aidan O’Sullivan. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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