Selling fruit and vegetables as loss leaders at retail level and other unfair trading practices (UTPs) threaten the long-term sustainability of EU production, MEPs have said.
Growers and suppliers need better bargaining power, they said, while income and power imbalance in the food supply chain must be tackled as a “matter of urgency”. They described the low prices of produce and dairy that are below the cost of production as a “serious misuse of basic agricultural foods”.
The resolution to improve measures to prevent UTPs was made this week during a European Parliament session, and approved by 600 votes to 48, with 24 abstentions.
UTPs faced by suppliers include being forced to sell at a loss when price negotiations with a stronger party put them at a disadvantage, such as having to bear the cost of supermarket markdowns and reductions, MEPs said.
And better regulation of supplier relations is needed to overcome the “fear factor”, as self-regulatory schemes have so far shown limited results. They called for framework legislation at EU level to tackle UTPs and ensure that European farmers and consumers benefit from fair selling and buying conditions.
NFU president Meurig Raymond said: “I am pleased that MEPs have supported the call for stronger action to tackle unfairness in the food supply chain. This report is promising, but we will continue to reiterate that without an effective EU legislative frame work to oversee unfair trading practices, the ‘fear factor’ will remain in commercial relationships.
“With GSCoP working well in the UK we believe an extension of this at an EU level, as the report recommends, would be a very good thing.
Parliament spokesperson Edward Czesak said: "The initiatives taken so far have not been effective. That's why we give more suggestions. More work should be done to improve relations between suppliers and supermarkets and hypermarkets, especially when it comes to minimising the so-called fear factor.
“We also call on the European Commission to do more when it comes to new tools that should help us to counteract unfair trading practices.”
Raymond added: “The government must push the European Commission to introduce an EU-wide approach so that British farmers and food processors can be safe from exploitation in the supply chain. It is essential that UK farmers enjoy the same protections when they trade at home, as when they trade abroad."
UTPs consist of 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 EU already has legislation to combat unfair business-to-consumer commercial practices, but there are no EU rules to combat unfair practices between different operators in the agri-food chain, and UTPs are only partly covered by competition law.