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Belgian companies such as the fruit and vegetable co-operative BelOrta and retailer Carrefour Belgium took steps to improve the farmer’s position in the food chain before the European Commission proposed its unfair trading practices (UTP) legislation last month.
They say that the system they have works and, while the legislation is welcome, they fear excessive regulation.
European Commissioner for Agriculture Phil Hogan brought out the UTP proposals on 12 April this year. What is proposed can also apply across jurisdictions, so if a Spanish olive oil producer had an issue with a UK retailer selling their product then this legislation would apply once it is written in to law.
Unfair trading practices prohibited under the legislation would include:
1. Payments later than 30 days for perishable food products.
2. Short-notice cancellations of orders.
3. Unilateral and retroactive contract changes.
4. Wasted product risk transferred to supplier.
These are the minimum enforcement powers for a member state, but Ireland will have to transpose this in to its law.
The European Commission suggests that it does not need a new authority, but could be operated through our national competition authority.
“Farmers fear the financial risk associated with civil law and also retaliation from their buyer which could cause them to lose business with that buyer,” Oliver Sitar, from the European Commission’s Directorate General of Agriculture, told agri-media at a press event in Brussels. “We need a system that allows you to complain without fearing that your identity would be revealed.”
Sitar said it will need another year before member states could transpose the directive in to national law. The proposal only applies to small- to medium-sized enterprises. Sitar said co-operatives have their own power to protect producers.
In terms of consequences for a business found guilty of UTPs, the Commission suggests that the UK Grocery Code Adjudicator serves as a good model. The publication of a decision and a fine could encourage retailers to change their behaviour.
What does BelOrta do differently?
BelOrta is a co-operative with 1,275 growers that exports fruit and vegetables to 75 countries. It does not negotiate with buyers on payment terms. All produce must be paid for within 10 days and this is also guaranteed to growers.
At BelOrta’s headquarters there is a marketing platform, where buyers purchase products by pressing a button once the countdown clock hits the price they are willing to pay.
They then set the quantity and the clock is reset for the next sale 30c higher than the price just paid.
“The price is the conclusion of the transaction, not the start of discussions,” Luc Peeters, relationship manager at BelOrta said. “Uniformity is basic in this – there is no difference between buyers.”
He believes that by creating a “one-stop shop” for buyers at BelOrta it gives growers more power in the market and guaranteed sale of their produce.
Meanwhile, Carrefour Belgium says it creates additional value for farmers through its Carrefour Quality Line and its range of local products. It has 497 quality line products across the world, working with 25,000 farmers. The farmer receives more money through the scheme and Carrefour controls data from the farm to the slaughterhouse and on to the shop shelf so that it can react quicker if there is a food safety issue.
Its local producers initiative created a section of each store where products made within a 40km radius of the shop are stocked. Carrefour found that small-scale producers were wary of supplying a retailer, so the retailer created a contract that suppliers could use as a template for Carrefour to sign.
When signed, Carrefour agrees that it will not require large volumes from the supplier, it will pay for all products within 30 days and that it will accept that the production cycle could mean that at certain times they may not be able to stock a certain product.
While the retailer says sales of these products are growing, they are a small proportion of overall sales.
“In Belgium we have a voluntary platform which is monitored by our national authority. This is functioning,” the director of Carrefour’s quality and sustainability section said.
“We are afraid of strong regulations because the market needs freedom of certain actors. We do accept that there needs to be a place for someone to be able to make a complaint.”
One of the more innovative initiatives Carrefour Belgium has introduced in the last few weeks is Who’s the Boss milk. A survey of 5,300 Belgians showed that consumers were willing to pay more if the producer got a fair price, the milk is Belgian, cows are lactating for at least a third of the year, are fed non-GMO feed and with food favouring milk rich in omega 3.
In February 2018, the milk producers who joined the initiative were paid 41c/l, 9.4c above the Belgian market price (31.7c/l).
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