France calls for stronger farmer protections in supply chain negotiations
French President Emmanuel Macron has called for greater protections for food producers through a ‘European Egalim’ law, a reference to French legislation that regulates trade negotiations with supermarkets and manufacturers.
The protection of farmers’ incomes has been a major demand of the farmers’ protests that have dominated European political agendas and news cycles in recent weeks.
In 2019, the EU adopted a directive to set minimum standards of harmonisation in food producers’ protections – however, the directive has notably looser requirements than those laid out in the French Egalim laws.
The EU rules indicate a black list of 10 banned practices (for example, payments later than 30 days for perishable agricultural and food products, unilateral contract changes by the buyer), banned at the EU level to balance the contractual power between small (often, the farmers) and large operators (the buyers).
The French law goes beyond that, requiring the operators to take into account the increase in farmers’ production costs (raw materials, energy, etc) during trade negotiations.
“In the context of a single market, with a single currency and a common agricultural policy, I don’t see how we can put in place French regulations that don’t exist anywhere else,” Philippe Goetzmann, a specialist in the agri-food industry and head of the Philippe Goetzmann consultancy, told Euractiv.
“European regulation can be a solution. To do this, France needs to increase its credibility and assert its position. Because other, more competitive countries probably don’t want it,” stressed Goetzmann.
Last week, French Prime Minister Gabriel Attal announced tighter controls on negotiations involving French raw materials that do not comply with the Egalim law. For EU or non-EU products sold in France, the legislation does not apply.
“It’s legal, but there has to be equal treatment,” European Internal Market Commissioner Thierry Breton said on Monday (5 February), adding that he would “fight” for stronger common rules.
European purchasing centres
An open issue with the EU approach is that distributors and manufacturers can relocate purchasing centres, choosing the national legislation that is most favourable to them.
Dominique Schelcher, CEO of retailer cooperative Système U, told French radio RMC that negotiations with French milk giant Lactalis were tending to take place outside France, “at European level”.
One of the best-known European buying groups is Eurelec, based in Brussels and the result of an alliance between the French group E.Leclerc and Germany’s Rewe.
For its part, France’s Système U has joined forces with Germany’s Edeka and the Netherlands’ Picnic in the Everest alliance. Carrefour has also launched its own centre in Madrid, Eureca, and will be negotiating for six of the group’s countries (France, Spain, Italy, Belgium, Romania and Poland).
In 2022, the Paris Court of Appeal fined Eurelec €6.34 million for non-compliance with the French ‘Egalim’ law.
However, the European Court of Justice ruled in favour of Eurelec, deeming the French courts to be not competent in this case, and giving precedence to European trade and free market law.
The UTP Directive
The European directive on unfair trade practices (UTP) in the agricultural and food supply chain, was adopted in 2019. Its complete transposition in the national legislation of 27 member states arrived in December 2022.
The text calls on EU countries to protect small suppliers – those with less than €360 million turnover – from unfair practices, such as late payments and last-minute cancellations of orders for perishable food products, unilateral or retroactive changes to contracts or refusal to commit to written contracts.
The Joint Research Center of the European Commission is carrying out annual surveys to assess the effectiveness of measures taken by member states in the context of this Directive.
Since the beginning of the farmers’ protests, national authorities in Germany and France have highlighted the issue of the contractual unbalances between farmers and the food industry and supermarkets.
In Germany, Economy Minister Robert Habeck said that he wants the Monopolies Commission “to examine the structures of the market”.
Germany’s Habeck wants market power of food industry scrutinised
As nationwide farmers’ protests continue, the German government wants to have the market power of supermarkets and the food industry scrutinised, blaming their price-setting power for the poor economic situation of many farms.
“Are the market conditions fair for everyone, particularly for farmers in this case?” Habeck asked.
“If it turns out that they can be made fairer, that would also be a contribution to the debate to then ensure in the laws or regulations, or at the European level, that farmers can also pass on their production costs as prices on the market in a more self-determined way,” he added.
In Spain, the Food Chain Act, which aims to define fairer, more balanced and more transparent commercial relations, contains the obligation of written contracts, and requires each level to sell at a price higher than the assumed cost of production. The same applies in the Netherlands and Italy.
At the time of publication, there has been no reaction from the Commission or member states to Macron’s proposal of a European ‘Egalim’ law – with only Breton having said he was “totally in favour” of the idea.
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