Trading practices (UTPs) - Christmas rush for a deal no longer about protecting farmers

19 December 2018
by eub2 -- last modified 19 December 2018

Retailers and wholesalers expressed dismay at the Agriculture Council decision yesterday to create a completely new class of mid-range company at an arbitrary figure of some 300 million euros, to be covered by the UTP directive.

Speaking this morning Christian Verschueren said:

"We are told that in order to protect family farms, the Council is proposing to extend the scope of this directive to cover mid-sized food manufacturers. The figures being discussed no longer bear any relationship with the interests of farmers. How many family farms have a turnover of 300 million euros? This is a power grab to regulate transactions involving already very profitable manufacturers, with not even a cursory effort to judge its legality or its impact on the rest of the economy, not least consumers."

Negotiators are meeting tomorrow in a desperate rush to get a deal before Christmas. The discussion has left behind the purpose of the directive, which was to benefit farmers. The creation of a category of company above an SME has major implications beyond the farming sector, yet there has been no assessment of this as the Inter-Institutional Agreement on better regulation requires. This scramble to find a compromise also forgets that the directive already provides for a minimum standard at EU level, leaving it to Member States to go beyond if they wish. Abandoning that approach to set an arbitrary figure for all Member States ignores the basic principle of subsidiarity. This is important, as 300 million euros means regulating purchases from almost all companies selling food products in smaller Member States.

The rush to do a deal should also not be used as an excuse to ban even more practices driven by the demands of multinational brands. These have no relevance to farmers, and neither their workability nor their impact on the market have been assessed.

Combined with proposals to impose heavy regulation on SME buyers, this adds up to a discriminatory skewing of the market in favour of manufacturers, who already enjoy much higher margins than retailers, and is thus a further breach of basic EU principles of equality before the law. More importantly, these changes bring no benefit to farmers, where regulating a highly processed product will have no feedthrough to the prices farmers are paid.

Verschueren added:

"The negotiations are no longer about farmers, and instead about strengthening the position of manufacturers who have no obligation to pass on any of the benefit to farmers. Indeed, the directive would cover, for example a chocolate bar with almost no ingredients sourced in the EU, yet we are told that this will help European farmers. The directive as amended is discriminatory, bad law, goes far beyond its legal base, and, as such, is legally challengeable."

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