Simplification and farmers place in the value chain

11 April 2024

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By Kate Adams - Senior European Policy Advisor 

As part of the EU’s Simplification Package – proposed in February 2024 in attempt to reduce the administrative burden on farmers – the Commission also aims to improve the position of farmers in the food chain. This mainly focussed on protecting them against unfair trading practises (UTPs). The actions may also include improving market transparency, revising trading practises in the value chain (the UTP Directive) and amending the Common Organisation of Markets (CMO) regulation.

What is the EU's Unfair Trading Practises Directive?

The EU Directive on UTPs (Directive 2019/633) aims to protect farmers and small/mid-range agri-food companies by providing mandatory rules that outlaw certain UTPs. Member States were required to transpose the Directive into national law by 1 May 2021.

The Directive outlines 16 UTPs distinguishing between black (prohibited) and grey (allowed if the supplier and buyer agree beforehand). Black actions include short notice cancellations and commercial retaliation by the buyer. Grey actions include return of unsold products and payment of the supplier for marketing. Below the cost of production selling is not listed as a UTP.

The Commission is currently reviewing implementation of the Directive. Whilst the legislation is positive in principal, many primary producers are scared of retaliation, and awareness in the farming industry is low. 

What is included in the simplification package?

Under the simplification package, the Commission is considering several short, medium and long-term actions to strengthen the position of farmers in the food supply chain. These were outlined in a Commission ‘non-paper’ in March. 

Immediate actions are non-legislative measures and include:

  • Increasing the knowledge base on legal and economic issues that impact the operation of the chain.
  • Creation of an observatory of production costs, margins and commercial practices.
  • Adoption of a report on the updated status of the implementation of the Directive on unfair commercial practices by Member States.

Short term actions will include legislative proposals and include:

  • Specific amendments to the Regulation on the common organization of markets (CMO) to strengthen rules on contracts, producer organizations and cooperation between farmers.
  • Incentive framework for the development of fair-trade regimes and short supply chains, with the aim of improving farmers' remuneration, and provide the conditions for the expansion of sustainability agreements to include social sustainability.
  • Introduce new rules on the cross-border application of unfair trade practices. This would enhance the cooperation of enforcement authorities.

Medium and long term actions will also include legislative proposals:

  • The Commission will carry out a comprehensive evaluation of the Directive on unfair commercial practices in the food supply chain. A legislative proposal may follow.
  • Accompanying measures are also proposed in the areas of public procurement and to ensure better application of existing rules on agricultural products imported or produced in the Union for plants, food and feed.

 

 

What are the timescales?

Discussions are ongoing between the Council and European Parliament, with discussions by Agriculture Ministries taking place in March. Work is continuing on the non-legislative aspects, but with the EU elections set to take place in June, legislative proposals will be postponed until after the summer.

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