Tuesday

7th Jul 2020

EU watchdogs to protect farmers

  • Because farmers' products are perishable, farmers need extra protection against unfair trading practices, the European Commission will argue (Photo: Masahiro Ihara)

The European Commission is due to propose that every EU member state set up a national watchdog that can protect farmers against unfair trading practices like last-minute order cancellations or late payments.

Agriculture commissioner Phil Hogan is scheduled to unveil the legislative proposal on Thursday (12 April), a leaked draft version of which was seen by this website.

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  • EU agriculture commissioner Phil Hogan: 'open markets and free trade exposes a sector which was previously protected to greater risks and challenges' (Photo: European Commission)

The draft said that farmers need additional protection because their products by nature can quickly lose their value in case of a sudden disruption in the supply chain.

"While business risk is inherent in all economic activity, agricultural production is particularly fraught with uncertainty due to its reliance on biological processes, since agricultural products are to a greater or lesser extent perishable and seasonable, and its exposure to weather conditions," said the bill.

During the first decades of the EU's common agricultural policy (CAP), which was established in the 1960s, farmers knew how much to produce.

But the commission noted in the draft that agriculture has become "distinctly more market-oriented", requiring protection for farmers against unfair trading practices.

"The European Commission strongly supports continued market orientation in the sector, for the benefit of farmers, agri-businesses and the European consumer in general," Hogan said last December in a speech.

"But we also acknowledge that open markets and free trade exposes a sector which was previously protected to greater risks and challenges," the Irish commissioner added.

The bill aims to make it illegal for a company, like a retailer, to cancel orders of perishable food products "at such short notice that a supplier cannot reasonably be expected to find an alternative commercial outlet for these products".

It also said that retailers buying from farmers should pay invoices within thirty calendar days after receipt.

That is a tighter requirement than the already existing general obligation for businesses under the late payment directive, which requires payments within sixty days - and 30 days for public authorities.

Another banned practice will be: "a buyer changing unilaterally and retroactively the terms of the supply agreement concerning the frequency, timing or volume of the supply or delivery, the quality standards or the prices of the food products".

The draft directive would require each EU member state to set up an enforcement authority at national level, where farmers could report unfair practices anonymously - in the hope that they would overcome fears of retaliation by the buyer.

The enforcement authority would need to be given the power to investigate cases and hand out "effective, proportionate, and dissuasive" fines.

Minimum standard

The draft text stressed that a majority of member states already had - diverging - rules on unfair trading practices.

"A minimum Union standard of protection against unfair trading practices should help reduce those practices and contribute to ensuring a fair standard of living for the agricultural community," it noted.

The draft directive needs to be approved by the European Parliament and the Council of the EU – where national governments meet - before it can become law.

During that legislative process, these two EU institutions can still amend the directive.

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