The European Commission has published proposed changes to the Common Agricultural Policy (CAP) along with the EU Directive on unfair trading practices (UTPs).
The proposed changes to the CAP would mean that written contracts between farmers and buyers would become a general obligation; the establishment of mediation mechanisms between farmers and their buyers would become mandatory; it would be clearly defined when terms such as ‘fair,’ ‘equitable’ and ‘short supply chains’ can be used to describe the organisation of a supply chain when marketing agricultural products; and the EU would be allowed to support producer organisations that would take private initiatives to manage crises.
The changes would also, according to the EU, improve the bargaining power of producer organisations and their associations, and expand the possibility of stakeholders such as farmers to agree on sustainability initiatives.
The Commission also aims to extend enforcement of the EU Directive on UPTs, which were announced earlier this year.
EU Directive on Unfair Trading Practices
The EU directive against unfair trading practices aims to protect the bargaining power of farmers, as well as small and medium-sized suppliers, from large businesses. Practices banned by the directive include unilateral contract changes by the buyer, risk of loss and deterioration transferred to the supplier, and the refusal of a written supply agreement by the buyer, even after request from the supplier. Rules must be enforced at member state level.
The proposed changes introduce procedural rules on cross-border cooperation between businesses. Under the new proposal, national enforcement authorities will be able to, by setting up a mutual enforcement mechanism, ask and exchange information, as well as ask another enforcement authority to take measures on their behalf.
This, the EU suggests, means that enforcement authorities can work in tandem when unfair trading practices have a cross-border dimension.
“As the festive season approaches and families gather to share meals, we are reminded of the dedication of farmers who make these moments around the table possible. Fairness for farmers is a key priority. Decent income, fair prices, stronger bargaining position in the food chain, and better protections. That is why, as one of the first measures of this mandate, I am proud to announce proposals that will strengthen their competitive position,” said EU President Ursula von der Leyen in a statement.
Criticisms of the changes
The changes have come with some criticisms. For example, trade association Independent Retail Europe, has suggested it could undermine the single market.
“If the proposal is adopted without changes, it will impact strongly the legal certainty of cross-border contracts between suppliers and buyers across Europe, as it may lead some national authorities to try to enforce their national laws on contracts which are bound by the law of another Member State and on which they normally do not have jurisdiction,” Alexis Waravka, director of digital and competitiveness at Independent Retail Europe, told FoodNavigator.
This, he suggested, could lead to “unstable legal situations for supply chain operators who operate across Europe, or for the operation of buying groups across Europe.”
