Roundup: European Parliament urges more action on unfair food supply practices

The European Parliament (EP) will this week put pressure on the European Commission (EC) to take action against unfair trading practices in the food sector.

During a plenary session here, members of European Parliament (MEPs) will vote Tuesday on a non-legislative resolution calling on the EC to come up with proposals for fairer relations between food producers, suppliers and distributors.

MEPs will also express concerns about overproduction and food waste caused by so-called unfair trading practices (UTPs).

The aim is to achieve what many MEPs see as a better balance between farmers, food processing companies and the big supermarket chains. Many MEPs believe farmers are disadvantaged when striking deals with food processors and retailers who have much greater market power.

Family farm incomes across the EU have fallen as much as 13 percent compared with 2013 levels, and the current crisis is even more prevalent in sectors such as dairy and pork farming.

Irish MEP Mairead McGuinness, herself an agricultural economist, said Sunday that UTPs are "an unwelcome reality" in the food supply chain.

"They damage producers and ultimately reduce consumer choice. They also impact negatively on the sustainability of our food supply chain," she stated in a briefing issued by the center-right European People's Party (EPP).

McGuinness drafted an opinion for the EP's agriculture committee on a European Commission report on UTPs in the food supply chain.

The report identified a number of ways in which farmers get a bad deal, including delayed payments, restricted access to market, unilateral or retroactive changes to contract terms, sudden and unjustified cancellation of contracts, unfair transfers of commercial risk and transfer of transport and storage costs to suppliers.

An EU-wide survey among food chain suppliers found that 96 percent of respondents said they had already been subject to at least one form of UTP. In addition, 83 percent asserted that they were subject to UTPs which increased their costs and 77 percent stated that UTPs reduced their revenues.

Some EU states have introduced national laws to give farmers a better deal but there is currently no EU-wide legislation in place. However, with cross-border trade between EU countries now accounting for 20 percent of total food and beverage production, the time is right to act at an EU level, the agriculture committee believes.

The briefing also cited research by Finnish farmer Matti Turtiainen showing that supermarkets often sell chicken or pork under their own house brands in unnamed packaging cheaper than those next to them which carry producers' names, even though both come from the same farm.

"The problem is that producers' cooperatives are forced to sell (the unbranded products) cheaper in order to get their other products on the shelves," he said. "Consumers may feel they are saving a few cents but they are actually losing the traceability of the product."

In Finland, the food retail market is effectively carved up between two big players with a combined market share of almost 80 percent. In other EU states the situation is hardly better. The three biggest retailers have at least three quarters of the food market in Sweden, 63 percent in the UK and over half in France and Germany.

In the past couple of years dairy farmers in particular have staged protests in France, Germany and the UK against the purchasing policies of supermarkets and big food processors.

"The big food corporations have become a state within a state. They operate with their production conditions, setting rules on dairy farmers that in practice overrule legislation," said German MEP Albert Dess, who is also a farmer.

"These practices, which are verging on the extortionate, must be ended," he said.

The EU has legislation in place to combat unfair business-to-consumer practices, but there are no EU rules to combat such practices in the agri-food chain, and UTPs are only partly covered by EU competition law. Endit