“European horse-trading makes food more expensive and endangers spending power”

“The European Parliament wants to regulate practically the entire European food supply chain, despite warnings from the European consumers’ association (BEUC) and the European competition services against harmful consequences for consumer spending power, who’ll spend more money on the same groceries.” This said the CBL, the Dutch umbrella organisation of supermarkets and food service companies, on the eve of an important decision in Brussels on the regulation of the food supply chain.

“The European Parliament (EP) insists farmers and manufacturers who earn more than one billion euro in turnover annually should be protected against large buyers (manufacturers and retailers) under new EU trade practice legislation for the food supply chain. The Dutch government on the other hand, takes the position that only small and mid-sized farmers and producers with a maximum turnover of 50 million euro per year require protection under the legislation. This is conform the original proposal of the European Commission, which the CBL backs as well. Some member countries would nevertheless be willing to compromise to reach an agreement. On Wednesday, the EP, Commission and member countries meet for the fifth time in Strasbourg to reach a compromise.

The European consumers’ umbrella, BEUC, of which the Dutch CB (consumers’ ‘league’) is part as well, is “very worried” about the EP’s effort and fears more expensive food. The consumers’ umbrella sees no justification at all why the Parliament wants to expand the reach of the original legislative proposal of the European Commission from small and medium-sized farmers and producers to large agricultural cooperatives and large manufacturers. The BEUC says that instead of protecting SMEs and farmers, Parliament is creating a situation in which large producers can put pressure on owners in the entire supply chain for their own economical interest.

According to Paolo de Castro, vice-chairman of the agricultural commission of the EP and the parliament’s representative in the compromise negotiations with the member countries, the EP wants to grant protection to companies with an annual turnover of up to 1.25 billion euro under the legislation. As a result, practically the entire European food supply chain would become regulated. Only a small percentage of producers realises more than 1.25 billion euro in turnover, including Nestlé, Coca-Cola and Unilever.

The European competitive services shares the worries of the BEUC. The expansion of the reach of the legislation from SMEs to large manufacturers “reduces the pressure large buyers can put on large manufacturers to decrease their margins, and can implicate a significant market disruption because of the broad impact on the market and, in the end, consumer prices,” according to the European competitive services.

Moreover, the European competition services predict that when large manufacturers can insist on higher prices, they won’t share this with farmers and market gardeners and SME suppliers, but they’ll pocket it all themselves.

The CBL mentions over-regulating of the food distribution supply chain will affect consumers with less to spend in particular. “They spend most of their income on groceries, relatively speaking. As a result, they’ll feel the price hikes most. This is the group that currently opposes the high prices of livelihood such as energy costs, rents, cost of care and food prices in some EU member countries, including the Netherlands. Nibud recently concluded that of eight million households in the Netherlands, 2.6 million have more difficulty making ends meet,” says Marc Jansen, manager of the CBL.

The CBL calls on EU member countries, and particularly Dutch vice-premier Carola Schouten, to keep their foot down and limit the reach of the legislation to SMEs and farmers. “The SME concept is based on well-embedded principles of EU law. Stretching the current SME definition to 1.25 billion euro turnover as is desired by the European Parliament, is completely arbitrary and would make food needlessly expensive,” says Jansen of the CBL. “It’s irresponsible horse-trading to draw up European legislation for the food distribution supply chain this way, which will affect millions of transactions in thousands of different scenarios every day, without seriously considering the impact and unintentional consequences. Consumers will foot the bill of the European Parliament’s mania for organisation.”

Source: CBL


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