Retailers and wholesalers press for evidence-based policymaking on trading practices. In its contribution to the Commission consultation on the food supply chain, EuroCommerce has pressed the Commission to deliver evidence-based policy measures and sought to explain how the retail business model actually works. We raised concerns that the consultation took a simplistic approach which allowed respondents no scope to properly reflect the reality of the market and diversity of supply chain relations. EuroCommerce has asked the Commission instead to launch a wide stakeholder dialogue to agree on the issues and solutions which can make a real difference to farmers.
Christian Verschueren, EuroCommerce Director-General, underlined the need for the Commission to show concrete evidence of any need for EU legislation:
“Retailers and wholesalers want a constructive dialogue with farmers on how we can cooperate to ensure that farmers know what consumers are buying and maximise their value-added from what they produce. We understand the challenges facing agriculture and are keen to contribute positively to finding sustainable and effective solutions to help farmers become competitive and improve their revenues in an open market economy. Regulating trading practices which largely do not affect farmers will not help them become more competitive or improve their income.”
In practice, retailers deal very little with farmers direct, but where they do, they treat their SME and farmer suppliers in a completely different way from large multinational operators. Smaller suppliers enable retailers to differentiate and respond to specific local consumer demand, whereas large suppliers provide “must-stock” products and compete mainly on price.
We are concerned at a regrettably simplistic consultation, with no consideration or understanding of the variety of relationships in the food supply chain or the role of certain practices in an overall business relationship. In most cases, the arrangements listed are negotiated fairly and openly as part of an overall supplier agreement. Our contribution explains how these work. Regulating practices, without consideration of whom they are with, will make it more difficult for all the parties involved to adapt to changing consumer demand and reduce negotiations to discussing prices. This may skew relationships to the benefit of large manufacturers, who already make substantial profits.
EuroCommerce is also concerned that the consultation will only reflect stakeholder perceptions, and give no picture of the real impact or prevalence of the practices listed. A number of these practices are already dealt with under EU law or national law. Some are also covered by the Supply Chain Initiative. They are therefore able to be addressed without further EU legislation.