Brussels wants to strengthen the bargaining power of farmers

euronews (in English)

The price of the groceries we buy are the result of tough negotiations between large purchasers and farmers. But farmers very often feel taken advantage of by major retailers, claiming they are forced to undersell their products.

Transcript

00:00Shop prices for groceries emerge from tough negotiations between farmers and large buyers.

00:20Very often, farmers feel taken advantage of by the food industry and retailers, claiming

00:25they're forced to undersell their products.

00:28That's why the EU Commission has made proposals to strengthen their bargaining power.

00:33This includes the enforcement of the Unfair Trading Practices Directive, which was adopted

00:38five years ago but still not fully implemented.

00:41Among those practices are late payments, short notice cancellations of perishable products

00:47and unilateral contract changes, as well as commercial retaliation by the buyer.

00:52The initiative aims to reward hardworking farmers fairly.

00:57It was claims of unfairness which led to huge farmers' protests across Europe last year.

01:03But do day-to-day grocery shoppers think they have a fair point?

01:27Let's bring in Greg Lorry, who covers agriculture policy for Euronews.

01:45Good to see you, Greg.

01:46Good to see you, Stefano.

01:48So these imbalances between the farmers and the buyers of their products, is this a new

01:53thing?

01:54Yes, we have talked about it a lot here in Brussels and in the European institutions.

01:59You remember last year, during the first semester of 2024, farmers from all around Europe gathered

02:06for demonstrations in Brussels, but also in member states.

02:09They were complaining about the surging prices of inputs like fertilizers or products to

02:15protect their plants.

02:16So it's not new.

02:18They complain.

02:19They complain also about climate constraints.

02:23So in the first step, the Commission and the EU proposed to loosen the green condition

02:30to get CIP funding, to cut the red tape regarding funding for farmers.

02:36Another proposal by the Commission is to protect the farmers from cost fluctuations.

02:41How could that be tackled?

02:43There are different proposals.

02:44One is written contracts.

02:47The buyers will clearly outline different terms like prices, quantity, delivery timelines,

02:55in order to get a picture of the market situation.

02:59There's also this idea for member states to establish a mediation mechanism to resolve

03:07disputes between buyers and farmers.

03:10In general, the Commission wants a more equitable food policy.

03:15What are the guiding principles here?

03:18The guidelines is to bring more transparency, foster dialogue between all actors, to foster

03:26competitiveness, transparency on the whole value chain.

03:34These conclusions are the result of seven-month negotiations between several stakeholders,

03:42agricultural sector, academia, rural communities, and civil society.

03:49And these conclusions will shape the Commission's vision.

03:54OK, Greg.

03:55Thanks a lot.

03:56There are roughly 9 million farms in the EU, more than 5 million less than in 2005.

04:02Almost two-thirds of these farms were small operations with less than 5 hectares in size.

04:08EU farms used 157 million hectares of land for agricultural production in 2020, 38% of

04:16the total land area of the EU.

04:19These numbers show that the food supply chain in Europe is based on rather small enterprises

04:24on the farmer side.

04:26By contrast, there are a few large companies acting, dominating the market as buyers.

04:33So how does that imbalance shape a small farmer's life?

04:40Well, what is to be taken into account in the first place is the wide diversity and

04:47the wide complexity in the whole agri-food chain.

04:50You have very large farms that are usually very well on the market.

04:56A number of them are also export-driven.

04:59And they are usually quite profitable.

05:01On the other hand, you have a multitude of very fragmented, very small farms that are

05:06struggling and those are the ones that need most attention or most help.

05:13By nature, the farmer is weaker in this bargain power, has always been and will be.

05:21It's a little bit about the size of the company, but it's also the matter of our products that

05:27are often quite fresh and seasonal.

05:30We got the UTP directive, which we welcomed, and we also now welcome the review of that.

05:43A lot of attention has been placed on unfair trading practices legislations, but one needs

05:49to understand that those laws, they state in contracts what a farmer and a buyer can

05:58agree, and what they cannot.

06:01What we should say is that those laws are not a silver bullet.

06:05You really need to look at the whole agri-food ecosystem and strengthening the players in

06:12that ecosystem in the first place.

06:14It's not only justified, it's necessary.

06:17One way of strengthening the farmer in the food chain is by working in cooperatives or

06:23in producer organizations.

06:25We are very much looking forward to the continued work of these proposals that have come from

06:31the Commission now.

06:37Retailers in particular, they want to have their shelves full for consumers to come and

06:43visit them, and they want to have choice, and they want to have good prices.

06:47For that, you need to have well-functioning supply chains.

06:52When conflicts occur, then you have mechanisms for the state or the government to intervene,

06:59but these systems should be there and used only in the last resort, between when the

07:07conflict is too bad.

07:08I think it's important that there are some sort of ombudsman or some organization that

07:15can mediate this.

07:17We also see that different countries have adopted this legislation in different ways.

07:24That's also a problem, so I think it's important that the whole Europe takes responsibility

07:29for that.

07:33A major concern of European farmers is that their margins have been eroded by surging

07:39prices of inputs, such as fertilizers and plant protection products, that ultimately

07:46increase their production costs.

07:48Whether the latest initiative from Brussels helps them attain a stronger position within

07:53the food supply chain remains to be seen.

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