Retailers regret farmers' lobby continuing to focus on wrong issues in the food supply chain
Reacting to the debate in the European Parliament hearing on the report of the Agricultural Markets Task Force today, retailers expressed deep regret that the debate continued to focus on the misleading and mistaken belief that EU legislation on trading practices can resolve the problems of farmers in the supply chain. They repeated their strong support for helping farmers to provide competitive produce which consumers want to buy, but stressed that this was not the way to achieve this.
Retailers want and need a vibrant agriculture sector in Europe that can produce a reliable and competitive supply of food. They support many of the recommendations of the Task Force report, for instance on encouragement of producers cooperating more closely to improve their bargaining power, use of risk management tools, access to finance and contractualisation.
They however reiterated their clear conviction that EU-level legislation on trading practices will distort the supply chain, harm consumers and do nothing to help farmers.
EuroCommerce Director-General Christian Verschueren said:
“Diverse, high-quality food is Europe’s unique strength, and what retailers need to attract consumers to come to their stores. We want to work with farmers and their organisations to make it easier for farmers to supply what consumers want. We therefore regret that, once again, hard-working farmers are being given a misleading promise that their problems will be solved at a stroke by legislation on trading practices, based on arguments which those putting them forward must know are simply not true. This approach to farmers' problems diverts attention away from where policy could really help farmers flourish.”
Verschueren set out why calls for EU legislation are aimed at the wrong target:
· retailers buy very little direct from farmers: on average across Europe, food retailers buy less than 5% of their products direct from farmers. The price paid for a processed product by a retailer, often to a chain of multiple intermediaries, has almost no effect on what the farmer gets for his produce. The practices identified by the Task Force affect contracts with large suppliers with already high net margins relative to retailers, and do not have any significant relevance to farmers.
· no added value of an EU-level legislation: 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, in our view, points to the absence of any need for EU legislation.
· the Supply Chain Initiative (SCI) has encouraged dialogue and positive behaviour: the SCI cannot and does not seek to replace national legislation, but rather supplement it by applying common principles, which were agreed with and signed by farmers' representatives four years ago, and by encouraging dispute resolution in a way that facilitates the continuation of business relationships. The SCI is currently looking at ways to strengthen its independence and other aspects of its work in response to Commission recommendations.
Christian Verschueren concluded:
“Commissioner Hogan has stressed the commitment of the EU to a market-oriented CAP. He should help farmers to organise themselves, to strengthen their position in the supply chain and respond to market demand. Proposing EU-level legislation covering trading practices which relate almost exclusively to negotiations with large multinational manufacturers, does nothing to create a sustainable farming sector that everyone wants – and instead will simply pile on further costs for hard-pressed consumers.”