European officials have agreed on new rules to protect agri-food companies and farmers in the supply chain from what it deems to be unfair trading practices.

The agreement follows talks between the EU, the European Commission and the European Parliament, and will put in place 16 measures within the food-supply chain banning unfair practises imposed “unilaterally” by one trading partner on another. 

All farmers within the trading bloc will be protected along with a “very large majority” of EU agri-food companies. The text of the agreement will now be put to a vote, and once approved member states will be obliged to accommodate the legislation into their national laws and will be able to impose sanctions on those that flout the rules.

The ruling applies to anyone involved in the food-supply chain with a turnover of EUR350m (US$398.9m), while different levels of protection will be provided to those below that threshold, designated as small- and medium-sized enterprises (SMEs). 

Retailers, food processors, wholesalers, cooperatives, producer organisations, or individual producers will be covered, with the ban encompassing late payments for perishable food products; last minute order cancellations; unilateral or retroactive changes to contracts; forcing the supplier to pay for wasted products; and refusing written contracts.

The Commission emphasised the measures would not lead to higher prices for consumers.

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By GlobalData

Phil Hogan, the EU Commissioner for Agriculture and Rural Development, welcomed the speedy agreement reached since the EU Commission first submitted the proposals in April. He said participants in the EU food-supply chain “will now be protected against all bigger operators acting unfairly and outside the rules”.   

Also, trading practices falling outside of the new measures will only be permitted if they are part of a “clear and unambiguous” agreement such as “a buyer returning unsold food products to a supplier; a buyer charging a supplier payment to secure or maintain a supply agreement on food products; and a supplier paying for a buyer’s promotion, advertising or marketing campaign”.

There is also an element of flexibility, with EU member states able to increase the EUR350m threshold or take further measures if they so wish. A four-year review clause also has been put in place.