On Tuesday 25 July, the European Commission set out the options under consideration for improving the functioning of the food supply chain (see EUROPE 11813).
The objectives of the potential legislative initiative that the Commission is due to take in March 2018 at the earliest to improve the operation of the food chain are tackling unfair trading practices, market transparency and improving producer cooperation.
The Commission has published the various options for the impact assessment that it has to carry out before realising the initiative. The Directorate General for Agriculture is responsible for this issue, in association with the DGs Competition and Internal Market. Interested parties will have until 22 August to respond to this document which will be followed, in a few months’ time, by a public consultation.
Unfair trading practices. The document sets out four options on dealing with unfair trading practices: 1) maintaining the status quo, that is, in essence, allowing the member states to put in place a requirement for written contracts between producers and processors, as per the regulation on the CMO (common organisation of the market); 2) EU-wide “non-legislative guidelines and recommendations” on how to tackle unfair practices; 3) framework legislation to protect weaker operators in the food supply chain including farmers, with the perishability of products being one criterion to take into account; 4) “minimum” framework legislation for the whole food supply chain, covering “common general criteria” for what is to be considered a UTP in the food supply chain while giving member states the leeway to address national differences by means of a compulsory code of conduct.
Cooperation and competition: the example of sugar. The Commission states that, in its view, at this stage, “a broad review of the effectiveness and clarity of producer cooperation rules under EU agricultural and competition law as suggested by the AMTF (agricultural markets task force) should be undertaken in the context of the ongoing discussions concerning the CAP (common agricultural policy) after 2020 and not as part of this initiative”. It sets out two options: 1) maintaining current practice; 2) “allowing farmers to collectively agree, on a voluntary basis, on value sharing mechanisms with a downstream operator” in all agricultural sectors, along similar lines to those in the sugar sector (Article 125 on the CMO regulation).
Market transparency: gaps to be filled. On market transparency, two options are proposed: 1) maintaining the status quo, that is, information gathering and dissemination by the Commission through European observatories and online scoreboards; 2) collection of data on key products at more levels of the food supply chain, for example, data on the prices at which processors sell certain key products or product groups. The Commission document acknowledges the lack of information on prices applied at the downstream stages of the supply chain, in particular, at the processing stage
Positive impact. The Commission lists the probable economic and social impacts in the event of new initiatives: - helping to strengthen the economic position of farmers and SME processors in the food supply chain in the EU (which should help make them more resilient to difficult market conditions); - helping to combat unfair trading practices; - putting the food supply chain on a fairer, sounder and more transparent footing; - helping increase disposable farm income and investment possibilities in line with CAP objectives; - making the sector more resilient to price volatility; - facilitating business activities in the EU single market; - helping to distribute the added value generated by the supply chain more fairly. The Commission acknowledges that the new measures could involve additional costs for member states and operators. (Original version in French by Lionel Changeur)