Summary
The French government is moving ahead with a legislative initiatives designed to give farmers first say in the basis of price formation for their products, based on agreed indicators of production and marketing costs. Meanwhile private initiatives are underway to try and take the sting out of the political pressures for a more equitable distribution of value along the supply chain. Regulatory initiatives in France however are restricted to French producers and are being designed in the context of a broader agricultural sovereignty strategy. It is therefore unclear how this national French initiative will be reconciled with an EU approach which sees prohibitions on unfair trading practices being applied equally to EU and non-EU supplier.
In January 2018 President Macron of France threatened to name and shame brands that do not change their practices to ensure the right price is paid to farmers’. A bill is now before the French Cabinet aimed at addressing perceived imbalances of power in the supply chains. The aim of the Bill is to ‘provide farmers with a fair price for their produce while also ensuring French consumers have access to a healthy, sustainable and safe food supply’. This initiative follows an extensive consultation process within the food sector as part of a governmental review of the food industry (1).
According to press reports the Bill will seek to ‘strengthen the hand of French farmer’s in negotiations with food makers and retailers’ (3) by having producers propose ‘contractual terms’ with actual prices being based on ‘production and market cost indicators’. The Bill would also limit price promotions and lift the suggested retail price by 10% (1).
The Bill seeks to give content to President Macron’s earlier commitment to setting French food prices on the basis of producer’s costs, so farmers will not have to rely on subsidies in future and instead will be ‘paid a fair amount for their work’ (2). This earlier commitment came against the background of a supermarket price war which was seen as having financially impacted French farmers over the past four years.
According to press reports the initiative has been broadly supported by all parties with a compromise having been worked out which seek to reconcile competing interests while also safeguarding the interests of consumers (2).
This followed a November 2017 agreement on a so called Charter of Commitments aimed at ‘ensuring that farmers be paid a fair price for their output’. In addition to ‘French farm cooperatives, food producer groups, farm unions and industry representatives’ the main French retailers Carrefour, Casino, Auchan and Leclerc all signed up to the Charter of Commitments. This Charter of Commitments had already accepted the principle that prices should be based on market prices and production costs, with producers setting the starting point for discussions on prices (3). The bill before the French Cabinet seeks to incorporate these earlier voluntary commitments into a legally binding framework.
Meanwhile at the private sector level ‘four French food majors have joined together to develop the Ferme France initiative, which aims to support food production in the country by focusing on “social issues” in the supply chain’. The initiative focusses on ‘the distribution of value in the supply chain, animal welfare, tractability, nutrition and health’. Central to the initiative is ‘a labelling system for assessing the societal performance of agricultural products’ (4).
This private sector initiative comes against the background of intense political pressure on French retailers and food processors over the perceived imbalance of bargaining power along supply chains, with this being held to give rise to serious losses of farm income 4).
| Comment and Analysis It is unclear how the French initiative which focusses exclusively on French producers and is being implemented in the context of a broader agricultural sovereignty programme will be reconciled with a proposed EU wide regulatory approach to unfair trading practices which wants to treat EU and non-EU suppliers equally when it comes to the elimination of unfair trading practices. While the EU system is seen as setting ‘a minimum list of prohibited unfair trading practices’, the question arises: what happens when the EU regulatory framework has a broader scope than national frameworks established for dealing with UTPs? How will this tension be reconciled when the EU approach see’s national designated authorities having the powers to implement the EU regulation? It would appear as if in both France and the UK the EC’s proposals to have UTP prohibitions applied equally to EU and non-EU suppliers could face implementation challenges. Against this background it would appear vital that the issues of extending the EU’s proposed regulatory framework the prohibition of UTPs EU-3rd country supply chains should be taken up, as an integral part of the trade component of the post-Cotonou negotiations which commence in August 2018. |
Sources:
(1) Foodnavigator.com, ‘Three great battles for agricultural sovereignty Macron’s plan for French food’, 31 January 2018
https://www.foodnavigator.com/Article/2018/01/31/Three-great-battles-for-agricultural-sovereignty-Macron-s-plan-for-French-foo
(2) Foodnavigator.com, ‘French-food-prices-to-be-linked-with-production-costs’, 19 October 2017
https://www.foodnavigator.com/Article/2017/10/19/French-food-prices-to-be-linked-with-production-costs
(3) freshplaza.com, ‘French farmers, retailers and producers sign fair price agreement’, 17 November 2017
http://www.freshplaza.com/article/185048/French-farmers,-retailers-and-producers-sign-fair-price-agreement
(4) Foodnavigator.com, ‘Ferme-France-spotlights-social-values-in-food-chain’, 8 February 2018
https://www.foodnavigator.com/Article/2018/02/08/Ferme-France-spotlights-social-values-in-food-chain