Science - April 5, 2019

‘New law protects farmers against market forces’

Albert Sikkema

The European Parliament adopted a law in March which is aimed at protecting farmers and horticulturalists against unfair trade practices. Buyers will no longer be allowed to pay late for perishable goods, to cancel orders at the last minute, to change contracts unilaterally or to charge suppliers for waste. ‘A step in the right direction,’ says Michiel van Galen of Wageningen Economic Research.

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Is this law useful?

‘Certainly. Talks about unfair trade practices have been going on in the EU for 20 years and it is already illegal to break off a contract unilaterally. But this legislation gives the farmer a stronger basis for going to the Netherlands Authority for Consumers and Markets (ACM). And it gets us a bit further in the dialogue about unfair practices.’

Why does the EU opt for these four specific trade practices?

‘They looked at a long list of unfair practices which arise from the powerful position of big companies in the food supply chain, in particular. The EU is now targeting unfair practices which are demonstrable. Take late payment or last-minute cancellations: a supplier can prove these. If there are a lot of complaints about a company, the ACM can carry out inspections and if necessary impose sanctions.’

Are these the main unfair practices in agriculture and horticulture?

‘We did a survey in 2018 among 600 farmers and market gardeners. It emerged that individual farmers are not faced with unfair practices on a large scale. But their clients can encounter them. Farmers and horticulturalists mainly complain that buyers exert pressure to lower the prices and raise the requirements for products – in terms of environment, wellbeing and biodiversity – without being willing to pay any more for them. These were the most commonly expressed complaints, but it is difficult to prove abuse of power in these cases. You can see pressure to reduce prices as abuse of power, but you can also see it as good entrepreneurship. So at Wageningen Economic Research, we want to study this point in more depth. How is pressure exerted, and can the process still be described as fair negotiations?’

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