The European Commission has announced new regulations to ban unfair trade practices which damage farmers in the food supply chain.
There are a number of unfair trade practices which damage farmers and SMEs throughout the food supply chain, by making them responsible for risks over which they have no control. These will offer recourse to farmers and other stakeholders who lack bargaining power in the supply chain when they are treated unfairly by partners.
Several of what the commission views as unfair trade practices which damage farmers and SMEs will be banned outright, while others will be restricted under the EU’s new regulations. These include:
- Late payments for perishable food products;
- Last minute order cancellations;
- Forcing suppliers to pay for wasted products; and
- Retroactive changes to contracts.
In addition to these measures, which seek to outright ban these unfair trade practices, there will also be some practices which will be allowed only when they are subject to a prior binding agreement between the parties involved.
These practices will include instances in which buyers might:
- Return unsold food products to suppliers;
- Charge suppliers to secure or maintain supply agreements on food products; or
- Charge suppliers for the promotion or marketing of the products they are selling.
Alongside this, the European Commission has recommended that member states designate public authorities which will take responsibility for enforcing the new rules.
What has the European Commission said?
European Commission Vice-President Jyrki Katainen presented the commission’s new approach as an effort to level the playing field for all stakeholders in the food supply chain. He explained: “There are imbalances of bargaining power in the food supply chain and with this proposal the commission is tackling the unfair trading practices head-on.”
Discussing the commission’s motivation for the new regulations, he added: “We act because unfair business conduct undermines the economic viability of operators in the chain. By setting minimum standards and reinforcing the enforcement, the proposal should ensure that these operators are able to compete on fair terms, thereby contributing to the overall efficiency of the chain. This is a clear statement for more fair business conduct.”
