On Tuesday, MEPs urged the European Commission to put forward proposals against unfair trading practices in the food supply chain, in order to ensure fair earnings for farmers and a wide choice for consumers.

In voting on Tuesday, the Parliament agreed to a resolution on fair and transparent trade relations between food producers, suppliers and distributors. The ongoing price crisis affecting several agricultural sectors has led to demonstrations across Europe in recent months and farmers’ relationships with processors and retailers have come under increasing scrutiny as a result.

MEPs called for income and power imbalances in the food supply chain to be tackled “as a matter of urgency” to improve farmers’ bargaining power. They said selling below the cost of production, and the serious misuse of dairy products, fruit and vegetables as “loss leaders” by large-scale retailers, threaten the long-term sustainability of EU production. The resolution also posits that fairer trading would help prevent overproduction and tackle food waste.

Polish MEP Edward Czesak, who was acting as the parliament’s rapporteur on the issue commented, ”The initiatives taken so far have not been effective... 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. All players in the food supply chain should enjoy the same rights.”

Given the disadvantage farmers find themselves at when dealing with more powerful players like supermarkets, parliamentarians said voluntary and self-regulatory schemes have only shown "limited results”. They linked this to a lack of effective enforcement of codes, under-representation for farmers in these schemes, conflicts of interest and dispute settlement mechanisms that don’t take into account the ‘fear factor’ that larger players can wield over small or medium sized businesses, like farming operations.

Historically, these schemes haven’t applied to the whole supply chain; in the UK, the groceries adjudicator deals only with direct suppliers to the country’s ten largest retailers, though there have been calls for the office’s remit to be expanded.

MEPs voted to support a legislative framework at the EU level in order to tackle unfair trading practices. They recommended that the Supply Chain Initiative and other national and EU voluntary systems should be promoted "as an addition to effective and robust enforcement mechanisms at member state level, ensuring that complaints can be lodged anonymously and establishing dissuasive penalties, together with EU-level coordination".

Spanish farm unions have made much of the cross-border reach of Europe’s largest retailers, which they blame for the immiseration of farmers across Europe. Spain’s unions have appealed to France’s farmers, trying to find common ground after French farmers have seized foreign produce from supermarkets and trucks in protests against low prices in a string of actions going back several months.  

On Tuesday, the NFU welcomed the resolution, and said it had lobbied MEPs ahead of the vote, drawing attention to the effects unfair trading practices have on farmers. The union also backed the view that the UK’s Groceries Supply Chain Code of Practice (GSCOP) is “a possible model to follow at EU level.”
 
NFU President Meurig Raymond commented, “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.  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.
 
“We are glad that the report also recognises the limitations of the voluntary EU Supply Chain Initiative including the lack of an option to lodge confidential complaints, no penalties for non-compliance and the fact that the effectiveness of the dispute resolution options have not been tested.”