After a technical analysis of the urgent measures for the Spanish primary sector included in the Royal Decree Law approved on February 25 by the Government, the agricultural organization COAG believes that there are sections of the new Law of the Food Chain that legitimize perceiving prices below the production costs. Specifically, the organization mentions article 9 letter "j", which makes it compulsory for the contracts to state that the price agreed between the producer and their buyer covers the effective cost of production.
According to COAG, by stating in the contract that “the price agreed between the parties covers the production costs, the law will already be respected. It won't help in determining whether the relationship between price and cost is correct.”
In fact, this organization believes that the Food Information and Control Agency (AICA) would verify that the contract contains that clause “and nothing else, since it would not have the power to find out whether the costs are being covered.”
For all these reasons, COAG believes that “with this wording,” the regulations are “legitimizing the perception of prices below the production costs. In fact, the agricultural producers and livestock farmers are being asked to legitimize it with their signature in the contract and to accept the possible pressures from the buyer.”
This is one of COAG's criticisms about the new regulations, but not the only one, since it also predicts that the party with the greatest bargaining power (usually the industry and retailers) will be the one establishing the final price to be included in the contracts, as has already been the case until now."
The prohibition of carrying out promotional activities that are misleading about the price and reputation of the products is also included, but COAG believes that it is still up to the promoter "to ensure that it is not misleading." In this regard, as Efeagro has been able to verify, the Law does not state that operators must clearly indicate their prices in the advertising, posters and purchase tickets so as to prevent mistakes.
Furthermore, the agrarian organization believes that the Ministry of Agriculture, Fisheries and Food "has apparently responded to the request to ban sales at a loss throughout the chain, but it is definitely making it possible in the final link."