European Parliament calls for action to tackle unfair trading practices

More protection for farmers urged as EU resolution calls for legislation to cut down on abuse of power within the food supply chain

07/06/2016

Yesterday morning, Members of the European Parliament (MEPs) sent a clear message to the EU Commission to take immediate action and enact  EU-wide legislation that protects farmers and food suppliers who are  mistreated by supermarkets’ unfair trading practices (“UTPs”).

The resolution (approved by 600 votes to 48) calls on the Commission to establish a network of enforcement authorities to address power imbalances in the food supply chain that generate increased risk and uncertainty for suppliers and can lead to overproduction and food waste.

Europe’s food supply chain suffers from endemic and persistent problems from UTPs, with suppliers subjected to a range of issues including delayed payments, sudden and unjustified order cancellations, forced involvement in promotions and imposed charges for fictitious services.

Feedback’s research in Kenya has shown how farmers who export their produce to Europe are forced into cycles of debt when orders are cancelled at the last minute or supply agreements are changed retrospectively. Farmers are often left with no market to sell their food to meaning they are not paid and end up wasting perfectly good produce.

The resolution comes after the Commission published a disappointing report earlier this year favouring voluntary agreements to prevent UTPs over legislative measures. In its report the Commission stated that the industry-led Supply Chain Initiative (SCI) was a sufficient measure to prevent UTPs.

The European Parliament have also criticised the Commission’s preference for the SCI, with MEPs agreeing that the voluntary initiative “cannot be used as an effective tool to combat UTPs” given that it lacks financial penalties and mechanisms to allow for confidential complaints to be made by suppliers. This issue is compounded by the fact that Tesco, despite being a member of the SCI, was recently found guilty by the UK’s Groceries Code Adjudicator (GCA) of using unfair trading practices against suppliers and producers in an attempt to overstake its profit margins.

Suppliers currently operate in a ‘climate of fear’, too scared to speak out about against unfair trading practices, and require anonymous complaint systems such as the UK’s GCA in order to speak freely. However, the GCA currently only regulates the relationship between retailers and their direct suppliers, meaning that many suppliers are left without protection. The European Parliament recommend that the GCA should be used as a model enforcer against UTPs, but goes further by recognising that UTPs can occur across the supply chain irrespective of geographical location.

Voluntary initiatives such as the SCI and the Supermarkets Code of Practice that preceded the GCA are structurally unsuitable for preventing unfair trading practices. Legislation is necessary to effectively deter retailers from using these practices and to effectively change the behaviour or purchasers within these companies. There is clear public support for this, as a petition started by Feedback calling on national leaders to establish authorities to investigate supermarkets’ unfair treatment of suppliers received over one million signatures last year.

“Unfair trading practices exist because they are profitable in the short-term for retailers, yet in the long run they threaten the sustainability of our food system by placing additional pressures on increasingly squeezed suppliers,” said Edd Colbert, Campaign and Research Manager for Feedback, “the call for EU-wide protection against unfair trading practices is a significant step forward in the fight against food waste and Feedback join the European Parliament in demanding that the Commission takes action urgently”

Feedback have been working with allies in the European food movement to make sure unfair trading practices are recognised as a major contributor to food waste in the supply chain. As an organisation we have engaged with key policy makers in the Commission and Parliament to put this issue on their agenda to create a fairer food system for all. Read more about Feedback’s Stop Dumping campaign that aims to stop unfair trading practices that lead to good food being wasted here.