The fact that half of over 3,200 farmers have never heard of Unfair Trading Practices (UTP) legislation says a lot about how little farmer engagement there is with the legislation that came fully into effect on 28 April.
It will be implemented in Ireland by an Office of Fairness and Transparency, seen by many farmers as a watered down version of the Food Ombudsman referred to in the Programme for Government.
The legislation isn’t in place to establish this office yet, so there will be an interim version to ensure the UTP rules are applied.
As for the rules themselves, despite there being 10 completely prohibited or ‘black’ UTPs and six ‘grey’ practices, whose use is restricted to where they are specifically agreed in advance, there will be little impact on most farmers in everyday trading situations.
They may, however, be of more interest to smaller processors, or perhaps in the horticulture sector where farmers have direct relationships with retailers.
Rules on payment within 30 days for perishable goods and 60 days for non-perishable goods are unlikely to apply to farmers, as factories and marts have prompt paying arrangements.
Similarly, cancellation of orders for perishable goods can only happen to processors, though unilateral contract changes could happen to farmers. However, failing to pay an agreed price is rare and unlikely.
Written confirmation of deals hasn’t been common practice in farmer-to-factory transactions and payments not relating to a transaction are rare. Misuse of trade secrets and dealing with customer complaints aren’t really farmer-factory issues, though commercial retaliation has the potential to be an issue if factories decide to delist a supplier.
What are described as ‘grey’ practices are applicable where the buyer returns unsold products or where the supplier is required to make payments for promotional activity in the next stage of the supply chain.
Again, this rarely, if ever, happens in the farmer-factory trading relationship.
The missing piece
While the legislation on practices that have been banned or have controls applied to them may be worthy, it doesn’t relate enough to what really matters to farmers.
For farmers, the big issue is transparency and who gets what in the supply chain, particularly at times when market prices are poor. The absence of knowledge about product values once an animal is dropped off in the factory is a bone of contention and despite having the word ‘transparency’ in the title of the office that will enforce the legislation, there is no meaningful transparency included.
This is the part farmers really need to build confidence that the supply chain beyond the farm gate will give them a fair deal. Over the past year, the major global meat processors have been publishing record profits, but overall processing is a low-margin business where big profits are driven by huge throughput.
Published factory results combined with the US model of monitoring wholesale values and stocks give a great insight into the business in the US.
Recently, when the industry was asked to appear before the Agriculture Committee in Congress, the processing industry had robust information over decades to defend their position.
Similar detail isn’t visible in Ireland and this is where the Minister for Agriculture missed a trick, by not making comprehensive transparency part of the UTPs.
It would be easy to dismiss the UTPs and the enforcement office as being too little too late. Yet if we approach from it the angle of being better to light a candle than curse the dark, we can see that the UTP legislation puts something in place where there was nothing before.
The minister would be wrong, however, to see the process as mission accomplished – it is more a case of mission started with an awful lot more to do. If he takes this approach and moves to add the transparency, then this will be judged as the start of a journey, but if he closes the file when the office is established, then it will have been a missed opportunity.
Similarly, if the Office for Fairness and Transparency is proactive in investigating farmer concerns in the supply chain, it has the potential to build farmer confidence.
Ultimately, it should be judged on results.