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Fair trade for farmers

Pete Pakarinen
03.06.2016 - 12:31
A fair food chain for all

In school yards and football fields we know what fair play means, but when it comes to business it’s not that easy anymore. How to tackle unfair trading practises (UTPs) is a burning question, especially for food producers who stumble over the feet of giants all over Europe.  

“Broadly speaking, unfair trading practices can be defined as practices that grossly deviate from good commercial conduct, are contrary to good faith and fair dealing and are unilaterally imposed by one trading partner on another," clarifies Andreas Schwab MEP, EPP Group Spokesperson on the Committee on Internal Market and Consumer Protection.

Unfair trading practices have a detrimental effect on the EU economy as a whole because they can result in firms losing their ability to invest and innovate and therefore deciding not to seek to expand their businesses Andreas Schwab

Behind the scenes big players can change and bend the rules for their own benefit. Schwab highlights that UTPs are harmful to the whole economy.

Unfair trading practices damage producers and ultimately reduce consumer choice. They also impact negatively on the sustainability of our food supply chain. Mairead McGuinness

"Unfair trading practices have a detrimental effect on the EU economy as a whole because they can result in firms, in particular SMEs, losing their ability to invest and innovate and therefore deciding not to seek to expand their businesses in the Single Market."

Unfair is the new normal

In a survey carried out in March 2011, 96 percent of respondents in the food supply chain said that they had been exposed to at least one form of unfair trading practices.

Matti Turtiainen, a farmer and agricultural journalist from East Finland, has followed developments in the food sector for a long time and also knows the producer organisations side of the story, an area in which he has also been active.

It happens that supermarkets sell chicken or pork under their own house brands in unnamed packages, cheaper than the ones beside them that carry producers’ names, and yet the two may come from the same farm. The producers’ cooperatives are forced to sell them cheaper in order to get their other products on the shelves. Matti Turtianen, Finnish agricultural journalist

“It happens that supermarkets sell chicken or pork under their own house brands in unnamed packages, cheaper than the ones beside them that carry producers’ names, and yet the two may come from the same farm. The trick is that the producers’ cooperatives are forced to sell them cheaper in order to get their other products on the shelves,” he explains.

From other countries there are stories that retailers collect payments from the producers for marketing campaigns they themselves decide or they change conditions one-sidedly during the contract period

“The consumer may feel they save some cents but they actually lose the traceability of the product,” says Turtiainen, not to mention the loss of income to the producer.

From other countries there are stories that retailers collect payments from the producers for marketing campaigns they themselves decide or they change conditions one-sidedly during the contract period. UTPs can take place as much during contract negotiations as during the contract period.

When giants rule

In Finland the food retail market is practically divided, with two big players that have a joint market share of almost 80 percent, but in other EU states the situation is hardly much better: the three biggest retailers share three quarters of the food market in Sweden, 63 percent in the UK and over half in France and Germany.

As the market concentration in the food supply chain is primarily happening at a national level, it is clearly an issue where Member States could go for more European markets with less concentration Andreas Schwab

Andreas Schwab points out that, “as the market concentration in the food supply chain is primarily happening at a national level, it is clearly an issue where Member States could go for more European markets with less concentration.”

But EU level action is also called for to level the playing field.

The big food corporations have become a state within a state; they operate with their ‘production conditions’, setting rules on dairy farmers that in practise overrule legislation Albert Dess

“Today I bought a pint of milk in Brussels at a price of 79 cents, which makes 1,59 euros for a litre,” says Albert Dess MEP, EPP Group Spokesperson on the Committee on Agriculture and a farmer by trade. “Dairies pay less than 40 cents, which means that, after the cost of transportation and processing, farmers get as little as 25 cents for milking their cows 365 days a year, morning and evening.”

Dairies pay less than 40 cents, which means that, after the cost of transportation and processing, farmers get as little as 25 cents for milking their cows 365 days a year, morning and evening Albert Dess

“The big food corporations have become a state within a state; they operate with their ‘production conditions’, setting rules on dairy farmers that in practise overrule legislation,” Dess explains. He says that “this verging on extortionate practices must be ended by the legislator.”

EU-wide legislation for more fair play in the food supply chain

Vice-President of the European Parliament, Mairead McGuinness MEP, shares this view. She drafted the opinion of the Committee on Agriculture on a report on unfair trading practices in the food supply chain.

"Unfair trading practices 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," says McGuinness.

We need a strong signal, by way of EU legislation, to address UTPs and we need it urgently, to send a message to those who engage in unfair trading practices that their actions will not be tolerated Mairead Mc Guinness

"Already, some 20 Member States have taken action to address these practices and stamp them out through a range of legislative actions. The problem is EU-wide and demands an EU response, above and beyond the voluntary actions being undertaken by those in the supply chain, in particular retailers. We need a strong signal, by way of EU legislation, to address UTPs and we need it urgently, to send a message to those who engage in unfair trading practices that their actions will not be tolerated," underlines McGuinness.

The report on unfair trading practices was adopted in the Internal Market Committee in April and is to be voted in plenary in Strasbourg next Tuesday, 7 June.

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