Brussels Insight: EU set to legislate on unfair trade

The Agricultural Markets Task Force (AMTF), set up by Hogan in January, will present its report on unfair competition in the supply chain on Monday. Hogan is then due to present the AMTF’s recommendations to the Council of Ministers meeting in Brussels on Tuesday.

The task force, made up of 12 EU experts, is expected to recommend far-reaching legislation by the EU to address the issue of practices and transparency beyond the farm gate. The group includes Northern Ireland's David Dobbin, recently retired chief executive of Dale Farm.

It is expected that it will recommend banning practices such as payment delays of over 30 days, unilateral and back-dated changes to contracts as well as last-minute order cancellations for perishable goods. Suitable penalties and EU legislation to provide guidance on how these penalties should be calculated is also likely to be suggested.

The UK Grocery Code Adjudicator in the UK, who spoke at the European Parliament in September, will have influenced this thinking. However, it is suggested that the AMTF will go further and recommend that complaints are not confined to those from processor suppliers to supermarkets; producer groups or co-ops will also be able to make complaints.

Transparency

Another area expected to be tackled robustly in the report surrounds market transparency. It is thought that there will be a recommendation for mandatory price reporting at the processing stage.

This could be a variation of the US cut-out model for beef, which represents the value of a carcase based on the value of individual cuts, but detail will have to be worked out. Mandatory price reporting already applies across the EU on prices paid for cattle.

It is thought that the report will also encourage the development of futures markets, again something that is well established in the US, and allow producer organisations to jointly plan sales in production. Given the warning the beef forum received on negotiating prices, it will be particularly interesting to see the detail of any proposals from the task force in this area.

Policy change

If the expected report is accepted, it will represent a policy change at EU level on unfair competition policy. Up until now there has been a preference for voluntary arrangements or legislation at a national level, as in the UK. However, the campaign for legislation has developed over the course of this year, with the European Parliament voting by a massive majority in June to legislate.

While the Council of Ministers will get a presentation on Tuesday, Hogan and chair, former Dutch Agriculture Minister Cees Veerman, will present to MEPs in early January.

This report will please farm organisations, with IFA representatives in Brussels telling the Irish Farmers Journal that the reason the association was sceptical about the task force was because it believed nothing less than legislation was sufficient.

If the expected recommendations of this report are implemented, it will be a game-changer in how business is conducted on agricultural produce once it leaves the farm gate. At this point, there is an excellent price reporting system on a standardised EU basis.

However, once it goes into large, often private, processing companies and then into even larger retailers, there is no public knowledge on what is being earned where, other than regular sweeping statements about agrifood being a low-margin business.

However, these recommendations will not address the biggest problem facing farmers in many commodities, namely prices and farm incomes. The information will be a useful business tool, but it will not drive price.

In the beef sector, for example, the US has one of the clearest systems in the world, with USDA publishing daily prices of beef cuts and stocks being held. However, the US farmgate price is currently 30c/kg below the EU average.

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