Examples of unfair trading practices highlighted in a detailed resolution adopted at the European Parliament yesterday (June 7) include delaying payments, restricting access to the market, unilateral or retroactive changes to contract terms, sudden and unjustified cancellation of contracts, unfair transfers of commercial risk and transferring transport and storage costs to suppliers.
The resolution highlighted concerns about “the extremely critical situation faced by farmers and agricultural cooperatives, especially in the dairy, pig meat, beef, fruit and vegetables, and cereals sectors.” The parliament wants to ensure what it regards as fair and transparent trade relations among food producers, suppliers and distributors, and prevent overproduction and food waste, said a parliament communiqué.
It noted farmers and small and medium businesses are particularly vulnerable to unfair trading practices as “they are sometimes forced to sell at a loss when price negotiations with a stronger party put them at a disadvantage”, for instance by making them bear the cost of supermarket markdowns and reductions. This can also limit consumers’ choice, and limit access to new goods.
Members of the European Parliament (MEPs) added that current voluntary and self-regulatory schemes designed to tackle this problem have lacked enforcement, under-represented livestock producers and farmers, had conflicts of interest between the parties, with dispute settlement mechanisms that fail to reflect the supplier “fear factor” and the fact they do not apply to the whole supply chain.
“The initiatives taken so far have not been effective,” said centre-right Polish MEP Edward Czesak, who coordinated the drafting of the resolution. “All players in the food supply chain should enjoy the same rights”, he added.
Likewise, Pekka Pesonen, secretary general of EU food producers association Copa-Cogeca said, “This report recognises the weaknesses and shortcomings of the ‘voluntary supply chain initiative.’ Voluntary initiatives are not sufficient to curb UTPs [unfair trading practices].”
Such systems should supplement compulsory enforcement mechanisms at member state level, ensuring that complaints can be lodged anonymously and establishing dissuasive penalties, said MEPs in the resolution.
Pesonen added: “We have long been calling for this. It is unacceptable that farmers from across Europe are being squeezed further and further by processors and retailers. The price the farmer gets often does not even cover his production costs. Below-cost selling must stop.”
The resolution was passed by 600 votes to 48, with 24 abstentions.