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Report on improving functioning of food supply chain released

11 March 2013

On 5 December 2012, the High Level Forum for a Better Functioning Food Supply Chain delivered its report, after 2 years of deliberations. The EC press release accompanying the release of the report maintained that “around 80% of the initiatives contained in the Forum's Roadmap have been satisfactorily implemented.” However, no consensus has yet emerged on “the best way to implement the principles of good practice” put forward in 2011 “to improve business-to-business relationships”. The EC committed itself to assessing “all possible options for tackling unfair trading practices in the food chain, including legislation”. To this end, the EC is committed to launching an impact assessment on this issue.

The three European Commissioners responsible for the High Level Forum expressed regret that “no agreement has yet been reached on business-to-business unfair trading practices”, but believed that an agreement would eventually be reached. The three Commissioners maintained that the work of the High Level Forum shows “how bringing together all sectors working around the food chain can produce results show the direct for future policy in this area”.

The High Level Forum involved all private sector stakeholders and national authorities, and called for its own mandate to be extended beyond 2012, in view of the value of “continuous consultations and exchanges of views”. It was argued that the mandate should include:

  • providing advice to the EC on follow-up actions, including legislative proposals;
  • developing “a common vision of more a sustainable, innovative, inclusive and resource-efficient food supply chain”;
  • improving the functioning of the European Food Prices Monitoring Tool.

The European farmers’ organisation Copa-Cogeca, responding to the release of the report,  called on the EC “to take clear steps towards introducing legislation at EU level to help tackle unfair and abusive practices in the EU food chain”. Copa-Cogeca believes “a voluntary approach should be accompanied by a legal framework”, with “voluntary codes backed by legislation that defines unfair and abusive practices”.

These developments need to be seen against the background of calls from a UK coalition of dairy producers and farmers for milk buyers to “implement the Dairy Industry Code of Best Practice on Contractual Relationships in milk supply contracts without delay, or face the consequences”. David Handley, Chair of Farmers for Action, said, “despite all of our efforts, farm gate milk prices for deliveries in January are typically only 1ppl [pence per litre] to 2ppl higher than in April 2012, … however, costs of production have risen by 3ppl to 4ppl.” He maintained that “farmers need to see improving dairy market conditions translated into farm gate milk price rises.”

Mansel Raymond, Chair of the NFU dairy board, argued that no buyers were exempt from the provisions of the Code of Best Practice and that it was “the responsibility of every milk buyer to ensure the voluntary approach to improving milk contracts succeeds”. 

Editorial comment

In a context of rising input costs and rising but volatile agricultural commodity prices, ending “unfair and abusive practices” in food supply chains is seen by EU farmers’ organisations as a critical part of the CAP reform process. The current lack of compliance by some UK milk buyers with the UK dairy industry voluntary Code of Best Practice is illustrative of why farmers are insisting on a strong EU-wide legislative framework that defines and penalises what they see as unacceptable business practices.

The relevance to ACP farmers of EU farmers’ efforts in this area lies in the scope for extending the proposed legislative framework to address unfair and abusive practices in international food supply chains.

The adoption of such an approach would appear to be relevant to major areas of ACP–EU agricultural trade, from traditional exports such as bananas and sugar, to non-traditional exports such as fruit and vegetables. This is particularly relevant where increasingly strict product standards are being applied, with little attention being paid to the distribution of the costs and benefits associated with such standards along the supply chain (see Agritrade article ‘ Opportunities and challenges arising from increased eco-labelling’, forthcoming). In trade with the ACP, it has become the standard business practice that these costs are covered by ACP producers. This has in some cases led smallholder producers to stop producing traditional export products and focus instead on emerging national and regional market opportunities. 


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