UFU welcomes EU proposals on unfair trading practices

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The UFU is pleased that the European Commission (EC) has this week published a new proposal for a directive with the aim of dealing with the issue of Unfair Trading Practices (UTPs) in the food supply chain.

It ensures fairer treatment for farmers and small/medium sized food and farming businesses. The UFU have been campaigning for this in their Brussels office for a number of years.

UFU President Barclay Bell said: “UTPs are unethical business to business practices. They can have devastating effects for producers and can threaten the sustainability of the food supply chain.”

This move also lays a good foundation to ensure that there is a fair trading environment for farmers to operate in. The UFU will aim to build on this and continue to work with farming groups in Europe to take further measures as they see fit.

Mr Bell continued: “Here in the UK, the proposal shouldn’t impinge on the remit of the Grocery Code Adjudicator and will allow Christine Tacon’s good work to continue. The adjudicator plays a critical role in helping to ensure there is fairness in the supply chain. In fact, we would argue that the adjudicator’s powers should be strengthened and the remit extended to include primary producers.

“The new proposal only applies to small and medium sized businesses and some farming and processing businesses now operate on a large scale. As the paper identifies, farmers also suffer from UTPs between processors and suppliers, so it feels wrong to exclude these businesses purely based on size,” concludes Mr Bell.

The UFU will continue to monitor the situation.

Commenting at the launch of the proposals to tackle UTPs, agriculture and rural development Commissioner Phil Hogan said: “Any chain is only as strong as its weakest link. An efficient and effective food supply chain is a fair one. Today’s proposal is fundamentally about fairness – about giving voice to the voiceless - for those who, through no fault of their own, find themselves the victims of a weak bargaining position. This initiative to ban UTPs is about strengthening the position of producers and SMEs in the food supply chain. The initiative is equally about providing strong and effective enforcement. We are looking to eliminate the “fear factor” in the food supply chain, through a confidential complaints procedure.”

The UTPs to be banned are late payments for perishable food products, last minute order cancellations, unilateral or retroactive changes to contracts and forcing the supplier to pay for wasted products. Other practices will only be permitted if subject to a clear and unambiguous upfront agreement between the parties: a buyer returning unsold food products to a supplier; a buyer charging a supplier payment to secure or maintain a supply agreement on food products; a supplier paying for the promotion or the marketing of food products sold by the buyer.

The Commission’s proposal requires Member States to designate a public authority in charge of enforcing the new rules. In case of proven infringement, the responsible body will be competent to impose a proportionate and dissuasive sanction. This enforcement authority will be able to initiate investigations of its own initiative or based on a complaint. In this case, parties filing a complaint will be allowed to request confidentiality and anonymity to protect their position towards their trading partner. The Commission will set up a coordination mechanism between enforcement authorities to enable the exchange best practices.

The proposed measures are complementary to measures existing in Member States and the code of conduct of the voluntary Supply Chain Initiative. Member States can take further measures as they see fit.