Comment: Unfortunate that UTP proposal and Brexit coincide

The enormity of the challenge taken on by EU agriculture and rural development commissioner Phil Hogan, to help farmers and others by ending unfair trading practices (UTPs) in the EU is becoming clear.

Comment: Unfortunate that UTP proposal and Brexit coincide

EU farmers welcomed the step forward, noting farmers get only 21% of the value of food, 28% goes to processors, 51% to retailers, writes Stephen Cadogan

The enormity of the challenge taken on by EU agriculture and rural development commissioner Phil Hogan, to help farmers and others by ending unfair trading practices (UTPs) in the EU is becoming clear.

In April, he and Jyrki Katainen, Commissioner for Jobs, Growth Investment and Competitiveness, proposed a new EU directive to ban late payments for perishable foods, last-minute order cancellations, unilateral or retroactive changes to contracts, and forcing a supplier to pay for wasted products, and to permit other UTPs only by clear, unambiguous up-front agreement between parties (such as a buyer returning unsold foods to a supplier; a buyer charging a supplier to secure or maintain a food supply agreement; or a supplier paying for food promotion or marketing by the buyer).

Mr Hogan also said: “We are looking to eliminate the fear factor in the food supply chain, through a confidential complaints procedure.”

EU farmers welcomed the “step forward”, noting farmers get only 21% of the value of food, 28% goes to processors, and 51% to retailers.

However, the proposal must go through the European Parliament and the Council of Ministers where member states are represented.

It was welcomed initially by almost all EU agriculture ministers. Today, the European Parliament is being asked to give the green light to its agriculture committee to negotiate with the Commission and Council on the legislation, or refer it back to Parliament for debate and possible amendment. Some MEPs may try to delay and weaken the legislation in debate, warned Irish MEP Mairead McGuinness, first Vice-President of the Parliament.

She believes there is consumer support for protecting producers such as farmers, but warned of the extent of lobbying against the legislation, including unjustified concerns from consumer groups that it will lead to higher consumer prices.

Consumers are not the only ones fighting against the bid to give EU farmers a better share of the consumer’s euro.

EuroCommerce, representing retail and wholesale sectors in Europe, has asked MEPs and NGOs to try to postpone votes on the new directive.

Delaying it could move it from the Austrian EU Presidency to the new Romanian EU Presidency in January.

That could be a major setback, even before the big guns are brought to bear on this bid to strengthen farmers’ power in the food supply chain.

The Irish government has welcomed the directive proposal as a first step in tackling UTPs across the EU, bringing significant progress in transparency and predictability of supply arrangements, with benefits for the consumer as well as farmer.

In negotiations, it has introduced amendments ensuring that Ireland’s unique milk cheque system is not inadvertently affected by a 30-day payment rule in the directive, and amendments to text that raised constitutional issues for Ireland in terms of, for example, the issue of fines and the burden of proof.

National competition and consumer protection bodies will also have their say.

Here, the Competition and Consumer Protection Commission view is that their dual mandate is to promote competition, and to protect the interests and welfare of consumers, and a dedicated and focused sectoral regulator should be established to carry out the work of the new directive.

The CCPC is “ concerned about the impact of the current proposals on consumers”, and says “consumers could end up paying more for food, for two reasons, first, because some grocery markets could become less competitive and, second, that the not insignificant cost of this proposed directive will inevitably be passed onto consumers”.

CCPC chairperson Isolde Goggin has also called for the Irish food industry not to be “put at a disadvantage compared to their UK counterparts which most likely will not be the subject of the proposed directive”, after Brexit.

It is indeed unfortunate that the food industry disruptions caused by Brexit and by the new directive coincide.

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