Fairer food supply chain: Agriculture MEPs clamp down on unfair trading

Phil Hogan Romania 2018

Visit of Phil Hogan, Member of the EC in charge of Agriculture and Rural Development, in Bucharest. © European Union , 2018 / Source: EC – Audiovisual Service.

This article is brought to you in association with the European Parliament.

New draft rules to better protect farmers against buyers’ unfair trading practices were approved by the Agriculture Committee on Monday.

MEPs broadened the scope of the draft law to:

  • include all actors in the food supply chain, and not only small and medium-sized producers and big buyers,
  • cover trade of agricultural products and ancillary services, on top of foodstuffs.

The proposed blacklist of unfair trading practices (UTPs), as amended by MEPs, includes:

  • payments made later than 30 days for perishable agricultural and food products and (added by MEPs) later than 60 days for non-perishable products, counting from the last day of the month when the invoice was received or the agreed delivery day,
  • unilateral cancellation of an order of perishable products less than 60 days from the agreed delivery date (Commission proposed no clear deadline).

MEPs also agreed that also the following practices should be outlawed:

  • when a buyer refuses to sign a written contract with the supplier, who would now have a newly established right to request it, or to provide the latter with sufficiently detailed supply terms;
  • when a buyer shares or misuses confidential information, relating to the supply agreement.

No sales below cost, unless agreed in advance

Terms of a supply agreement must never result from the supplier’s economic dependence on the buyer, MEPs say. They also insist that unless pre-agreed, the buyer should not sell products below the purchase price and then ask the supplier to bridge the gap.

Clear complaints procedure

To make life easier for food producers, MEPs propose to allow them to lodge complaints where they are established, even if UTPs occurred elsewhere in the EU. National enforcement authorities would be handling complaints and, following an investigation, imposing sanctions.

Quote

“In this battle of David versus Goliath, we are arming the weakest in the food supply chain to ensure fairness, healthier food and social rights. Small producers, workers, consumers, all of us, will soon stop suffering the consequences of unfair trade practices imposed by big players in the food supply chain”, said rapporteur Paolo De Castro (S&D, IT).

Next steps

The text approved in the Agriculture Committee by 38 votes in favour to four votes against, with two abstentions, will now be submitted to the plenary to seek MEPs’ green light for negotiations with EU ministers.

Background

Parliament called in 2016 for EU action to do away with unfair trading practices. The Agriculture Committee demanded an EU law against UTPs also in its 2017 position on the so-called Omnibus proposal. MEPs also discussed the matter with several EU agriculture ministers and agreed with them that an EU law was necessary.

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