In a mid-March interview for the newspaper “Le Parisien”, Michel Edouard Leclerc suggested that we should “remove the VAT on quality merchandise, such as organic products, to make them more accessible to more modestly affluent customers. I propose zero VAT on organic products, which are inevitably more expensive. They should not be reserved for the rich.” A proposal that sparked a strong reaction from the government and professionals in the sector.
“Organic products are only overpriced when wrapped in plastic”
According to Jean-Luc Charbonneau, director of Biogaronne, “removing the VAT on organic products is intended to make consumers believe that organic products are just as cheap as conventional ones. This is false. In my opinion, conventional products sold to the consumers are not expensive enough. If all the pollution costs of conventional production were taken into account, conventional products would be more expensive than organic ones. There is such a proliferation of conventional products that prices are lowered, just like transportation costs, but producers are not getting paid properly. This is one of the reasons why many producers convert to organic farming. Organic products are not expensive, but they are more lucrative for the producer. They are only overpriced when wrapped in plastic or if transportation costs are high. Besides, we must not forget the production costs. Organic farming is very labor intensive, at least for organic fruits and vegetables. I cannot speak for dry, processed or ultra-fresh products….”
Removing VAT not a priority
“Let’s say that it is not the first thing we would do to make organic products accessible,” says Stéphanie Pageot of the National Federation of Organic Agriculture (FNAB). “We believe that we should first multiply the offer, which means developing organic farming globally in France but also for all productions on all territories of the country, in order to make it local and fair. And once this has been developed, if we want to encourage removing the VAT - which could be interesting to recognize the positive impact of organic products on the protection of public goods such as water, soil and biodiversity - we would then insist on the commitment from manufacturers to be transparent about prices and margins. Because if we reduce VAT without a commitment to show how prices are established, we cannot know if consumers will benefit. This can only be accomplished on the basis of transparency and fair trade.”
“Again, we request that government does things differently”
“I doubt that this is a good idea,” comments Christophe Piquet of the company Vivy Fruits. “If they first reduced their own costs, organic products would be more accessible. Again, we are requesting something from the government that could be done differently. Because in my opinion, the margins for organic products must be a lot larger than for conventional products.”
“A fiscal and social heresy”
The Minister of Agriculture, Didier Guillaume, did not mince his words about the retailer’s proposal. “It is a fiscal heresy and a social heresy. I am strongly opposed to 0% VAT on organic products,” he declared to farmers of the National Federation of Agricultural Holders' Unions (FNSEA). “Who can believe that 0% VAT will be good for the producers? No one. It will benefit the retailer. It is not to make the farmers richer, only the retailers, so it is not the issue.”
“We cannot expect to eat healthier and always cheaper”
As for the FNSEA president, Christiane Lambert clearly expressed her disapproval. “We all know where the money is going to go. Objectively, there is a lot of aid for organic conversion, although often delayed, there are aids to maintain tax credits, and now we must also pay the consumer to eat organic products? Come on! Greener means more expensive. The French want local products. Eating has a price. We cannot expect to eat healthier and always cheaper.”
A mixed reaction from the Minister of Ecological Transition
On CNews, François de Rugy declared: “I am not certain that M. Leclerc is the best person to talk about prices in stores, because he tends to crush the producers. But what I hope for is support for everything that is good for the ecology, the climate and the environment. Sometimes public aid is needed to start up a sector. And I also wish for lower taxes and a possibility to modulate taxation.”