OPP Meeting Summary: EP AGRI Committee – Unfair trading practices in business-to-business relationships in the food supply chain (12 April 2018)

A summary of the Committee’s exchange of views with Commissioner Hogan is available.

EP AGRI Committee Meeting – 12 April 2018
Presentation by Commissioner Phil Hogan, responsible for agriculture and rural development, of the Proposal for a Directive on unfair trading practices in business-to-business relationships in the food supply chain

Committee Chair Czesław Adam Siekierski (EPP, PL) opened the debate with the following remarks:

  • Mairead McGuinness (EPP, IE) had been the  AGRI Rapporteur on the previous INI report on unfair trading practices;
  • the Committee had called for legislative solutions in their opinion. On 7th June 2016, the resolution had been voted on in Plenary. The EP had urged the Commission to come forward with proposals against unfair trading practices;
  • the Agricultural market Taskforce in its report in November 2017, also suggested the Commission introduce EU framework legislation.

Commissioner Hogan presented the proposal to the Committee. The full speech is available here. Key points included:

  • the unfair trading practices to be banned were:
    • late payments for perishable food products;
    • last-minute order cancellations;
    • unilateral or retroactive changes to contracts and;
    • forcing the supplier to pay for wasted or unsold products.
  • other practices would only be permitted if subject to a clear and unambiguous upfront agreement between the parties:
    • a buyer returning unsold food products to a supplier;
    • a buyer charging a supplier payment to secure or maintain a supply agreement on food products;
    • a supplier paying for the promotion or the marketing of food products sold by the buyer.
  • the Commission’s proposal required Member States (MS) to designate a public authority, or watchdog, in charge of enforcing the new rules. In case of proven infringement, the responsible body would be competent to impose a proportionate and dissuasive sanction;
  • the Commission would also set up a coordination mechanism between enforcement authorities to enable the exchange of best practices;
  • the proposed measures were complementary to measures existing in MS and the code of conduct of the voluntary Supply Chain Initiative. MS could take further measures as they saw fit;
  • the agreement struck last December under the Omnibus made it easier for farmers to organise and bargain.  This was step one of a three-step process. Step two was today’s Unfair Trading Practices proposal. Step three would come later this year, with an initiative to improve market transparency.

Martin Häusling (Greens/EFA, DE)

  • he noted the length of time the proposal had taken;
  • he highlighted the imbalance between small players and big companies. In Germany there were 3 large companies that “called the shots” and this was almost a cartel;
  • he wanted to speak candidly and whilst he welcomed what the Commissioner had said he did not believe it was tantamount to a “major breakthrough“;
  • he called for them to take the proposal further. Monopolies decided what went on shop shelves, payments had been a major issue, but he wondered to what extent authorities could intervene and affect change in the market;
  • he hoped more of the Mairead McGuinness (EPP, IE) report would be taken into consideration as he did not believe the core problem had been addressed: namely the issue if imbalance caused by monopolies and he questioned why the Commission had not tackled this issue. He called on Commissioner Hogan to involve the Competition Commissioner.

José Bové (Greens/EFA, FR) 

  • they needed to address the imbalance between large and small companies;
  • he raised concerns about large producers in some Member States (MS) not having to show their accounts and he called for greater transparency within the sector and cautioned against companies who hid behind national legislation in order not to display the true accounting picture. Understanding the true costs would be critical to the start of any negotiations on the subject.

Maria Heubuch (Greens/EFA, DE) 

  • she highlighted dairy cooperatives in Germany that dealt fairly with their producers although they had market power;
  • whilst the Commission had proposed a list of UTPs she was certain lawyers representing companies would be looking to see how they could circumvent such a list. She questioned whether the list would be definitive or would the legislation be worded in an open way in order to include future UTPs that came to light. She was in favour of this approach to prevent farmers being cheated;
  • she questioned whether there had been a plan to reform competition law as she believed it was crucial to tackle the causes of UTPs.

Commissioner Hogan made the following remarks in reply:

  • he joked that usually he would be concerned if the Green Party were in agreement with him in relation to a proposal but he believed that the concerns that they had raised had been dealt with in the Commission proposal. All actors from farmers to retailers would be included in the scope of the proposal;
  • in response to the point made by Maria Heubuch (Greens/EFA, DE) about the list of UTPs, he said that he had made a proposal, and after that it would be up to the co-legislators. He noted that a 3 year period had been built into the proposal to tackle any adaptations that may be required;
  • the proposal was aiming to tackle the core issue of farmers being in difficulty;
  • the Lactalis issue could be dealt with by national legislation but it would also be tackled by the transparency initiative that would be forthcoming later in the year.

Albert Deß (EPP, DE)

  • it had been a good proposal but they would need to build upon it and improve it;
  • he drew comparisons with roaming and was grateful for the proposal as he believed it could have a similar impact;
  • he had spoken to people in the sector who were fearful of being blackmailed by the big players. Something needed to be done in order to create balance;
  • he acknowledged the difficulties for Commissioner Hogan as he understood that the competition Commissioner was “less than enthusiastic” but his group would be working on the file with the view of securing sign off by the end of the Parliamentary term.

Eric Andrieu (S&D, FR)

  • he had briefly looked at the text and felt it was a good initiative but believed they could go further. The food supply chain issue was a major issue but they needed to go further;
  • the proposal was looking at implementation and enforcement of contracts but they needed to tackle the root causes of these imbalances;
  • the economic leadership of distributors had not been addressed and they need to provide more information to consumers;
  • net neutrality was an area that needed to be tackled in the food industry.

Anthea McIntyre (ECR, UK)

  • she believed it was supermarkets who took the “lions share of the profit” at the expense of farmers;
  • she highlighted the practice of supermarkets charging farmers for items such as packaging and pallets and noted that these charges were often excessive. She also highlighted a bizarre practice of farmers being charged by supermarkets to reply to consumers letters with no distinction being made as to whether the product was being praised or criticised;
  • the AGRI Committee should be the lead committee.

Ulrike Müller (ALDE, DE)

  • she believed a Directive was the correct approach from the Commission;
  • she welcomed tackling cartels at European level as in Germany the focus was placed on consumers rather than producers;
  • she acknowledged the issues around competition law but believed  that there was scope to make improvements for producers.

Luke Ming Flanagan (GUE/NGL, IE)

  • late payments were designed to crush farmers and put them in their place. Currently there was a David v Goliath situation and he hoped that they could “equal things up a little bit“;
  • he questioned the Commission’s thinking by opting for a Directive rather than a Regulation.

John Stuart Agnew (EFDD, UK)

  • he was concerned that the EU Directive may harm the UK and its Grocery Adjudicator system during a Brexit transition period;
  • he questioned how supermarkets would be punished and if this would be via the ECJ;
  • he raised concerns that consumers may be “ripped off“.

Philippe Loiseau (ENR, FR)

  • he believed there was hypocrisy at play and wondered whether Mercosur negotiations would be halted due to UTPs.

Commissioner Hogan made the following remarks in reply:

  • he acknowledged the difficulties in getting agreement for the proposal but noted it had been backed by all Commissioners;
  • all relationships between farmers, SMEs and large distributors had been covered in the proposal;
  • the Commission had specifically looked at the UK and Spain for best practice when drawing up the proposal;
  • he viewed the proposal as complimentary as to what was happening already in the Member States (MS). A Directive provided the best balance as this would reflect that some MS had already gone further than other MS;
  • they needed to communicate the omnibus better;
  • regarding fines and enforcement the legislation would be useless without enforcement by the MS. the Commission would be keeping a keen eye on MS in this regard. Implementation and best practice would need to be shared;
  • he did not foresee a negative impact on consumers but more a level playing pitch of producers.

Paolo De Castro (S&D, IT)

  • the proposal was a good starting point and he agreed the AGRI Committee should lead on the file. The Commission’s legal underpinning should help ensure AGRI win that battle;
  • they would be able to build on the good work already done by Mairead McGuinness (EPP, IE);
  • there were around 20 national pieces of legislation and he believed the Spanish and English legislation could be helpful;
  • he agreed with the Commission proposal regarding minimum standards that MS would have to observe.

Mairead McGuinness (EPP, IE)

  • this was a good first step and the EP would work hard to deliver;
  • the Commission was “lifting the lid on the stories behind the food supply chain” and was focussing on those that did not have power or choice as producers. This lid needed to be lifted as the story was not a good one;
  • she highlighted a story from the Irish press regarding the number of deaths in farming per year due to accidents and the mental health pressures farmers faced;
  • the food chain needed to be fair to everyone including farmers and at present this was not the case.

Elsi Katainen (ALDE, FI)

  • she agreed more balance in the food supply chain was needed;
  • she cautioned against a one size fits all approach;
  • she agreed it would be key to improving transparency.

Nicola Caputo (S&D, IT)

  • the proposal strengthened the farmers’ position in the food supply chain;
  • MS would need to identify the correct agencies to implement the rules;
  • in Italy only 15% of total revenues went to farmers meaning that there was clearly an imbalance, he was pleased the proposal sought to address this;
  • he called for greater transparency and information sharing;
  • professional organisations needed to be strengthened to allow primary producers to put forward companies without undue delays.

Clara Eugenia Aguilera García (S&D, ES)

  • the Commission had previously failed to deliver on this topic. A Directive would be essential and she passed on her sincere congratulations;
  • regarding SMEs she questioned the Commission as to why this was such a focus in the proposal;
  • regarding big distributors the prices that they imposed were an issue, the example of Lactalis had previously been mentioned. It was time to act and help farmers as big industry exerted a lot of pressure.

Esther Herranz García (EPP, ES)

  • as colleagues had previously stated, she felt that congratulations were in order as the Committee had been calling for this for over a decade;
  • the Committee could improve the proposal. Big undertakings could engage in UTPs;
  • in Spanish law written contracts were mandatory. This was an area that could be worked on;
  • she had hoped for a regulation rather than a Directive.

Herbert Dorfmann (EPP, IT)

  • the 30 day payment deadline had been introduced in Italy and it had had a very positive effect. Such measures worked if they were enforced;
  • he raised concerns that the supermarket sector was creating rules that they could impose on suppliers and acting as deficit legislators.

Annie Schreijer-Pierik (EPP, NL)

  • she raised concerns that the Directive couldn’t tackle the problem of payments in relation to banks and supermarkets.

Daniel Buda (EPP, RO)

  • he highlighted the serious problem in Romania of the price of milk during the summer which had to be sold by farmers at below cost price.

Matt Carthy (GUE/NGL, IE)

  • he raised concerns that there was no protection of farmers that ensured they received, at a minimum, the cost of production for their produce;
  • he believed the proposal needed to be strengthened in relation to farmers rights as they were negotiating with some of the worlds biggest companies.

Angelo Ciocca (ENF, IT)

  • he called for immediate answers and felt that given the length of time allocated to the Directive it would prove to have taken too long.

Sofia Ribeiro (EPP, PT)

  • the farmers were the weakest link in the distribution chain in term of the protection they received. This was a social measure as well as an agricultural measure;
  • she welcomed anonymous reporting where there was wrongdoing;
  • she questioned how sanctioning authorities would work in practice.

Marc Tarabella (S&D, BE)

  • he questioned why farmers were the only independent producers that would sell at a loss. This should be at the heart of the system and farmers should not have to do this;
  • he raised concern over price fluctuation and believed this could be tackled via the CAP also.

Marijana Petir (EPP, HR)

  • she raised concern that the 30 day payment term was not being respected and noted that she had encountered stories of delays of up to 6 months;
  • she highlighted the issue of products being sent back to farmers with no place to store the product.

Tom Vandenkendelaere (EPP, BE)

  • he questioned the effectiveness of the proposal in regard to those before farmers in the supply chain – such as fertilisers.

Commissioner Hogan made the following remarks in reply:

  • the Commission had aimed to produce a proposal that provided a better balance for farmers in the supply chain;
  • he welcomed the strong support from the AGRI Committee;
  • UTPs had been on the agenda for 19 years and he acknowledged that some issues were not covered such as suppliers of fertilisers. Agricultural and food products were the legal basis – some issues would be for DG GROW;
  • he hoped today’s announcement would “bring farmers in from the cold“;
  • there would be legislation but MS could go further;
  • he reiterated that the co-legislators could improve the proposal;
  • he agreed there was a lot of pressure on those in the agricultural sector including regarding mental health issues;
  • he was aware of the concentration in the market in Finland. 85% concentration level was not good for the consumer but that was an issue for the MS;
  • regarding small businesses, they had been the focus as they were often those passing on the UTPs to the farmers;
  • enforcement would be critical. They would work with the EP and MS and he believed this was where a Directive would help them;
  • a late payment prohibition had been included in the proposal;
  • he hoped they would be able to do more regarding risk management in the CAP proposal;
  • younger farmers should receive special attention and they needed to get more young people into farming.

Source: One Policy Place

The simultaneous interpretation of debates provided by the EU institutions serves only to facilitate communication amongst the participants in the meeting. It does not constitute an authentic record of proceedings. One Policy Place uses these translations so this text is only a guide and should not be relied on as an official account of the meeting. Only the original speech or the revised written translation of that speech is authentic.

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