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Europe to protect small producers from large supermarkets

The war between agricultural producers and large distribution chains will have a mediator in Europe. This October, the Parliament plans to approve a regulation to monitor and prevent bad practices in agricultural trade after years of claims by producers.

The main objective of the agreement, proposed by the Greens, and accepted by the Commissioner of Agriculture, is to put an end to sales at a loss. Apart from the impact of storms, this is the main problem for Valencian growers: not knowing when they'll be paid or how much they will get for their productions. In Spain, selling at a loss is illegal, as established by the Food Chain Law and the Retail Trade Law. The State has a specific agency to control agricultural practices: the Information and Food Control Agency (AICA). In 2017, it carried out 223 inspections of companies in Valencian territory, with more than half (65%) belonging to the fruit and vegetable sector. It resulted in 85 penalties for abusive practices.

However, in Europe, selling at a loss has not yet been prohibited, nor is there a common regulatory framework. The large distributors use tricks and legal gaps to de facto set prices and use perishable products to attract customers. In other words, they offer the consumer a remarkable discount in fruits and vegetables in order to get them to do their groceries there. The spokesperson of the UniĆ³ de Llauradors, Joanma Mesado, critisizes that this practice is carried out at the expense of the margins for the producers, not the supermarkets. "The supermarket sets a price for the consumer, which naturally falls for other links in the chain, so the producer, who is the last link, is the one getting the least," explains Mesado.

According to the spokesperson, the producers have little influence in the negotiations. Based on the calculations of the Confederation of Agricultural Cooperatives (COPA-Cocega), growers receive only 23% of the added value of agricultural products, while the share of distributors is 53%. Furthermore, the income of agricultural producers only reaches 46.5% of the average income of other economic sectors.

In 2013, there were more than 12 million producers in EU territory, according to the Commission, while there are barely a dozen supermarket groups. More than half of the Spanish market is in the hands of Carrefour (together with Dia), Mercadona, Lidl, Eroski and the Auchan group. In Europe, Tesco and Marks & Spencer are among the most dominant ones. In Spain, the ones aforementioned control 59.4% of the market, according to Kantar Worldpanel.

Producers are increasingly exposed to market fluctuations and price volatility. In recent years, according to the Commission, the energy bill of farms has increased by 223%, and the price of fertilizers by 163%. Agricultural prices have increased an average of 50%, according to 2013 data.

In these circumstances, the producers are not optimistic about their prospects. "Growers will never have that bargaining power. It is not a free market; they (the large supermarkets) have all the bargaining power, and there is no transparency (in the price chain)," says Mesado. "We only ask for them not to abuse their position of dominance. Large distribution chains have great capacity to lobby," he said.

Valencian producers have been denouncing this problem in Europe since 2002. The European Commission started looking into it in 2008, and since then, several agricultural forums have been created, some recommendations to avoid unfair practices have been published, and reports have been made on the subject. All this served to conclude, in 2016, that there has been a considerable development of policies against bad practices, and that "a regulatory approach at European level won't add value," according to a 2016 report of the Ministry for the Environment.

So far, the European Union had left the regulation of unfair practices in the hands of each Member State, urging them to sign voluntary agreements for good practices, without a common framework. The issue will change next year if the decree on bad practices is approved. This would protect producers from having to sell at a loss and suffering delays in the payments.

The Commissioner for Agriculture, Phil Hogan, promised to carry out a directive at the proposal of the EFA - Greens group (The Greens - European Alliance) that will materialize in the coming weeks, following the amendments of the MEPs.

MEPs are expected to vote on the report in October, once the period for amendments is over. With the directive approved, talks between the Commission, the Council of Ministers and Parliament would start for its implementation in each Member State. Valencian growers are celebrating this with caution, saying that "it is a good starting point."

 

Source: eldiario.es

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