Time to build stronger links in food supply chain

Time to build stronger links in food supply chain

European Parliament vice-president Mairead McGuinness has issued a wake-up call to the European Commission to work harder at balancing power between producers and retailers and other players in the food supply chain.

Referring to the Irish beef sector, where meat plants moved unilaterally to change carcass specifications and made other demands which reduced prices to farmers, she said: “This type of moving of the goalposts in the middle of the game is unfair at the very least, and borders on the unethical.

“Factories are powerful, having the capacity to impose new rules overnight, with farmers powerless to do anything except take what they are offered. The power struggle is leading to reduced margins for farmers, impossible specification demands and poor returns for investment outlay.”

She says such practices work against the EU goal of achieving a sustainable food supply chain.

“There is a very real fear that, because of the deep distrust that has arisen from such practices, many will exit beef production, to the detriment of the economy.”

What has the European Commission done so far to tackle unfair trading practices in the food supply chain?

It initiated a Food Supply Chain Forum, bringing together all stakeholders, from farmers to retailers, to examine operation of the chain, identify problems and propose solutions. It culminated in a voluntary code of conduct. with commitments by retailers to stop engaging in so-called unfair commercial practices.

This was a first step, but it’s not enough to root out relentless and unfair practices, which harm producers and are not in the best interests of consumers, in the long term. Farmers were involved in the process right up to the end, but did not sign up to the code.

Will it be a priority for the new commission expected to take up office this summer?

It should be. I would call on all Irish MEPs to focus on this issue when vetting incoming commissioners. I also believe that the agriculture portfolio should be expanded to fully include issues around the food supply chain.

You said various member states have taken initiatives. Have these been effective, could they work in Ireland?

The UK has appointed a groceries code adjudicator, Christine Tacon, whose job it is to tackle unfair practices in the food supply chain, to protect the powerless from the undue power of the powerful.

In Hungary, there is legislation in place which regulates abuses by players with significant market power, through investigations and applying fines.

In Portugal, the government has passed legislation on supply chain relations, and Slovakia is moving away from a round-table voluntary approach on unfair trading practices to tougher enforcement.

Why did farmers stay outside the EU’s voluntary supply chain initiative to monitor and police unfair practices?

COPA-COGECA, the EU farming lobby organisation, did not sign up. Bitter experience of powerful retailers and their activities in the market has made farmers and their representatives deeply suspicious.

You referred to the lack of power of Irish beef farmers. What other EU farmer groups are most affected by imbalance of power?

All primary producers are relatively powerless in the food supply chain, other than when a product is in short supply and prices rise dramatically. Farmers are powerless to control supply, so ultimately they are price takers, not price makers, yet we rely on farmers to supply us with a plentiful supply of quality food, rarely stopping to think about how the food market works.

Are some big retailers beyond the control of the EU? Does the same apply to huge monopolies which supply farm inputs?

The fact that we have an EU commission initiative points to recognition of a very serious problem in the food supply chain. But equally on the farm input side, there is concentration of ownership and control, and therefore, the potential for market manipulation. These are issues I have raised with my colleagues in the agriculture committee. With CAP payments limited because of pressures on the EU budget, we have to have much closer examination of market prices for agriculture produce and costs of farm inputs, as these are critical to farm profitability. Legislation at EU level may be needed. The commission has indicated that it will wait to see if the voluntary code works.

Would Irish farmers be in a much worse position but for their co-ops?

Yes, co-ops are important in the agriculture sector, and help address the sense of powerlessness felt by farmers. That’s not to say that farmers are always happy with how their co-op is performing, but they do have a direct say which is not the case when there is no co-op structure.

Can producer groups strengthen the position of Irish beef farmers?

Yes, producer groups, properly structured, offer the prospect of giving beef farmers a stronger position, but control and ownership of the Irish beef sector is in private hands. There are only a handful of operators, and to address the deep anger and frustration among beef producers requires a building of trust between farmers and factories.

I’m not optimistic that this will happen anytime soon, to the detriment of all. Those who own and control our meat plants have a duty to come out in public and take a hands-on approach to build that much needed trust. It could begin by having a proper dialogue with their farmers suppliers.

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