EU retailers warn of market fragmentation amid calls to tackle food chain imbalances

4 months ago 16

*This article is part of a series of interviews on the expectations of all segments of the food supply chain regarding the EU’s agrifood policy for the next mandate.

The EU should avoid “counterproductive” measures when tackling farmers’ position in the supply chain and instead remove barriers to investment, Christel Delberghe, director general of retailers’ association EuroCommerce, told Euractiv.

As pressure mounts to adopt measures to strengthen the bargaining power of farmers in the food chain, retailers and wholesalers are warning about the impact of some national laws on the supply chain, saying more should be done to overcome market fragmentation.

For Delberghe, the best way to support farmers in the coming legislative term is to improve the competitiveness of the agrifood sector and encourage investors to bet on sustainable solutions and products.

“The key barrier to investment [is] single market fragmentation,” she said, pointing to the lack of an EU-wide definition of sustainability and the need to harmonise nutrition labelling.

According to draft documents seen by Euractiv, the political groups that make up the new majority coalition in the European Parliament – the European People’s Party (EPP), the Socialists and Democrats (S&D), and Renew Europe – are calling for new rules for the supply chain, to ensure farmers can retain a greater share of the value.

The Commission already announced in March that it would propose changes to the EU’s Common Agricultural Policy regulation on contracts and collective bargaining for farmers, and put forward a proposal to ensure cross-border enforcement of the 2019 Unfair Trading Practices (UTPs) directive, which prohibits certain abusive behaviour by large buyers against farmers.

Both proposals are expected after the summer, EU sources told Euractiv.

The UTPs directive, in particular, identified a list of banned practices at the EU level, leaving room for member states to adopt stricter rules.

The upcoming changes would target multinational food and retail companies that seek to bypass national legislation in some member states by moving their purchasing centres to other EU countries.

The directive requires EU countries to designate a national authority to implement the rules. The Commission will propose solutions to strengthen cooperation between these authorities.

However, Eurocommerce warned that stricter cross-border enforcement, as in France, could be used as a tool for protectionism.

“It is fine to have a mechanism for enforcement authorities to exchange information, (…) but it should never be used to impose the extraterritorial application of national law,” said Delberghe.

The French Egalim law requires all products sold in France to comply with national legislation, even if the products are sourced from European purchasing centres in Spain, the Netherlands, or Belgium.

Delberghe said this was a breach of EU law and called on the Commission to step in and ensure that parties can choose which country in the single market they source their products from.

“Contract law provisions (…) leave the choice of the jurisdiction and the applicable law to the parties,” she added.

After the expected proposal, in 2025, the EU executive will carry out an in-depth evaluation of how member states have implemented the UTPs directive and propose legislative changes if necessary.

According to Delberghe, the retail industry is keen to know the results, as some national laws are “counterproductive” and even “protectionist”.

Eyes on France and Spain

It is not only France’s Egalim that worries EuroCommerce, which filed an official complaint against Paris last December. Developments in Spain also raise eyebrows.

In May, the Spanish national parliament agreed to revise the food chain law to strengthen a clause that bans “sales at loss”, to prohibit paying farmers below the production cost.

Delberghe regretted the move, saying that determining the production costs is a major difficulty, even for farmers themselves. “How do you allocate the cost of your tractor [and the] equipment that you’re using for different crops?” she asked.

This view is at odds with that of COPA president Christiane Lambert, who cited Spain and France in an interview with Euractiv as “good examples” in implementing the UTPs directive.

Focus on labelling

Delberghe wants the fight against climate change to be a top priority during the next mandate and said the lack of clarity on health and sustainability criteria was deterring much-needed investment in the agri-food sector.

“A very clear example is Nutriscore,” she said.

The adoption at the EU level of the colour-coded labelling system, ranking foods according to their nutritional value, is recommended and supported by some countries but opposed by others.

EuroCommerce is also calling for the revival of the proposal for a law on sustainable food systems, which aimed to mainstream sustainability into all food-related policies at both national and EU level but was not tabled by the current Commission.

“We need to have an alignment on what are the key criteria and definitions of sustainability,” said Delberghe.

For Delberghe, the way forward to increase the share of value for farmers in the food chain is to improve sustainability and nutrition labelling so that consumers can support food producers through their purchasing decisions.