Farmers vs supermarkets: 4 takeaways on key EU report

Agricultural Markets Task force will make explosive claim that EU-wide legislation is needed.

An explosive report commissioned by Brussels has raised the prospect of EU-wide legislation on the often bitter relations between farmers and supermarkets.

Click Here: cheap sydney roosters jersey

The Agricultural Markets Task Force was established by the European Commission to analyze how to strengthen farmers’ precarious position in the supply chain. Its recommendations, to be presented on Monday, will back calls for legislation — a move dreaded by big retailers.

Farmers say practices such as delaying payments or suddenly canceling contracts are rife. Blaming supermarkets especially, they argue that they don’t have the muscle to stand up to large multinationals without intervention from Brussels.

The issue of balancing power between farmers and the businesses they sell to has been on the agenda for years. But the crises in European farming over the past two years — particularly in the dairy sector — have seen many thousands of farms fail and injected new urgency into calls to shore up those on the brink of collapse.

The task force makes a host of recommendations — ranging from deeper futures’ markets for agricultural products and more explicit leeway for farm co-operatives to control pricing — but it is the recommendations on how farmers interact with big supermarkets such as Carrefour, and processors such as Lactalis, that are set to dominate the political agenda.

The report calls for rules outlawing late payments, last-minute changes to contracts, requests for upfront payments to secure contracts and more.

Here are some takeaways:

1. Supermarkets are losing the argument

Retailers’ responses to the farmers’ arguments are failing to resonate. Brussels supermarket lobbies have acknowledged that unfair trading practices exist but they have uniformly opposed European legislation. They point to existing national legislation in 20 EU countries and vastly differing national markets as reasons against common European rules.

Supermarket groups also often argue that farmers’ focus on large retailers is misplaced since they mostly buy from food processors — businesses in the middle of the supply chain.

“Regulating trading practices at EU level is mere gesture politics and will do nothing to help farmers,” said Christian Verschueren, director general of the retail lobby EuroCommerce. “The task force has succumbed to political pressure and included demands for EU legislative action on practices which have not been identified as problematic in Commission reports on the food supply chain over the past eight years.”

2. Supermarket watchdogs

Britain has a so-called Groceries Code Adjudicator, which has the authority to investigate and levy fines totaling 1 percent of turnover from supermarkets with a turnover of over £1 billion a year if they delay payments or break other rules.

The current Adjudicator, Christine Tacon, told POLITICO in September that once the government awarded her sanctioning powers, the mere threat of using them was an effective deterrent.

Expect similar offices to roll out across the bloc should the Commission legislate. The task force report calls for national enforcement bodies in order to uphold potential EU legislation. “Sanctions for non-compliance should be possible and should have dissuasive character,” the report says.

3. Spotlight on processors

Despite the well-publicized disputes between farmers and processors over the past year — such as French dairy farmers’ campaign against dairy processor Lactalis’ low prices in the fall — these food business have mostly eluded the spotlight in Brussels. That might not last long.

The report suggests adopting a mandatory price reporting system similar to the one in the U.S., where processors of a certain size are required to report the price of each sale. “One manifest current shortcoming is information on prices obtained by processors,” the task force says in its report, pointing out that price transparency would allow for better understanding of the supply-chain dynamics and help guard against abuses.

4. Commission to face increased political pressure

The Commission was already under considerable pressure to introduce EU farmer-supermarket legislation. It will now come under more.

Six hundred European lawmakers to 48 voted in favor of adopting EU-wide legislation in June. The Slovak government is also pushing the Council of the European Union to adopt a resolution on unfair trading practices before the end of the year. The momentum is with legislation.

However, the Commission has never explicitly said it was in favor of EU-wide legislation. Its own study, released in January, on the Supply Chain Initiative — a voluntary supply-chain dispute resolution mechanism — suggested the relationship between farmers and supermarkets is better regulated at national level.

Still, politicians who favor legislation and farmers’ groups can now use the report’s recommendations as a weapon against naysayers. The big question is what the Commission will do now: It has repeatedly said it will await the report before considering the issue further.

“I think the Commission cannot ignore Parliament’s view that this problem needs a response, nor should it ignore the report from the task force,” said European People’s Party MEP Mairead McGuinness, one of the key supporters of legislation in the Parliament.

“The issue is firmly on the political agenda now and we must seize the opportunity to fix the problems,” she added.