Farmers and operators in the Italian agri-food chain can still hope.
Yesterday evening in Strasbourg, the symbol city of the Union just hit by a new terrorist attack, the vice-president of the Agriculture Committee of the European Parliament Paolo De Castro held his position on the directive against unfair commercial practices, in the final rush for approval. And at the end of the fifth Trilogue with the Commission and the EU Council, he returned a proposal from the Austrian rotating presidency to the sender, deeming it insufficient.
“We don't intend to sell off the agreement after more than ten years of battles – declared De Castro – The Text on the table still lacks the ambition to be able to sign a compromise. Today we took another step towards eliminating the most harmful unfair trading practices along the food supply chain. But we are not yet fully satisfied. The crux to untie remains the turnover threshold beyond which no operator would be protected anymore”.
“The Austrian presidency – added the MEP – was willing to compromise slightly more than the 50 million turnover proposed by the EU executive, beyond which no operator would be more protected. We still have January to conclude the talks and we will do our utmost to achieve the most ambitious agreement possible. Our farmers deserve one last push to ensure none of them are left behind. Talks will resume with the Romanian presidency”.
The next Trilogue has already been scheduled for Wednesday 16 January. And from there it will first of all be a question of passing a "black list" of behaviors to be prohibited by buyers - in practice, the large purchasing centers of large-scale distribution - towards farmers and businesses, private and cooperatives. Mr De Castro, can you explain what the objective of this directive is?
“First of all, protect all those companies that still today have to bear costs deriving from the 'abusive' practices practiced by large distribution chains: we are talking about delayed payments for delivered products, last-minute cancellation of supply agreements for unsold goods, double downward auctions, sales below cost and 3×2”.
Going into detail?
“The directive provides that Member States will have to prohibit, automatically, delays in payments for supplies of perishable products exceeding 30 days, unilateral and retroactive changes to supply contracts, cancellation of orders for perishable products at short notice, payments for the deterioration of products already sold and delivered to the buyer. Furthermore, if there is no agreement between the parties, the States will have to prohibit the return of unsold products, as well as payments to be able to become a supplier, for promotional and advertising expenses".
What has prevented up to now the approval of a community law in this sense?
“Unfortunately, the ultra-liberal hawks and lobbies that have been opposing the introduction of fairer and more transparent trade rules for ten years continue to row against the demands of our farmers and consumers. It is a question of defending standards of well-being, quality, the environment and animals which contribute to guaranteeing unique products all over the world”.
In Italy, in fact, it has been talked about for years. And the directive you are trying to approve meets the requests made by agricultural and cooperative organizations, but also by Italian distribution, distinct from the rest of European retail, and which has already been expressed by Federdistribuzione.
"Real. After all, only by working as a team can we overcome the last obstacles in favor of legislation that puts an end to unfair practices".
What other qualifying points does the directive include?
“Individual companies or associations will be able to report incorrect behaviour, even anonymously addressing a national guarantee authority. An Authority that within 60 days of the complaint will have to trigger the investigation. And getting to make those who go wrong pay heavy fines”.
And then what?
“The directive will apply not only to food products, but to all agricultural products, including cotton, flowers, tobacco, and to all buyers, including non-EU ones. Furthermore, the inclusion of a payment term is also envisaged for non-perishable products, such as sugar and rice, 60 days from the date of supply".
Unfortunately, five trilogues between Parliament, the Commission and the EU Council have not, so far, been enough to close the game.
“The most difficult knot to solve remains the turnover threshold of the companies that can be protected. Our goal is that the directive can be applied not only to small and medium-sized companies with a turnover of less than 50 million, as proposed by the Commission, but also to larger ones. In Italy those with 50 million and about 250 employees represent half of the total. We would like to get to protect the others as well ”.
With article 62 of decree law 1/2012, Italy had already tried to regulate relations between suppliers and large-scale distribution.
“Yes, an excellent law, but which in six years of application has identified, in my memory, only one case of unfair practice. And this is unlike France, Spain and the United Kingdom, where every year, on the basis of their national laws, dozens of unfair practices are identified, with a positive deterrent effect”.
The Unfair Practices Directive is a workhorse that you are pursuing in the European Parliament.
“An objective highlighted by a study commissioned by the Agriculture Commission of the Parliament at the University of Nantes and Bari on the competition rules for the agri-food chain in the post-2020 CAP. And the study, in practice, indicated precisely the need to extend the ban of unfair behavior towards all players in the supply chain, regardless of their size".
The Common Agricultural Policy (CAP) is worth around 53 billion euros a year, equal to 37% of the EU budget. Resources that go not only to the approximately 10 million farmers of the Union, but also indirectly to the benefit of all European citizens, an audience of 500 million people.
“The fifth major reform of the CAP, closed in 2013 and entered into force in 2015, is now expiring and a new one will have to be adopted by 2020. With fewer resources, however, because in the meantime the blanket has shrunk for everyone”.
“As part of the multiannual financial framework of the 2021-27 budget, the European Parliament has asked the Member States to increase the contribution for
compensate for, and pay for, future agricultural policies. A 'train' to which resources for the management of migratory flows, research and Erasmus programs also connect”.
But the proposal for a 0,1% increase in GDP put forward by the Commission would not be enough to compensate for the financial cuts necessary for the seven years of the new programming.
“The problem is that if the Member States are not willing to pay that 0,3% increase, cuts to the agricultural budget will be inevitable. Estimates indicate a reduction of 12-13 billion a year: in percentage terms we are talking about 5-10% less in terms of direct payments, the so-called first pillar of the CAP, and a 15-20% less for Development rural, the second pillar”.
To all this, in perspective, the damage to the Community budget caused by Brexit would be added.
“Let's not forget that Italy currently exports food and drink products to Great Britain, the fourth largest market, for around 3,5 billion euros. And our Denominations of Origin represent a third of total sales. Without an agreement with the EU, the UK will become a third country from 29 March 2019. And for the made in Italy agri-food sector, estimates indicate a loss of around 12 billion net a year”.
The Omnibus regulation, the result of the mid-term review of the 2014-20 CAP and in force since 1 January 2018, represents a fundamental step in strengthening the contractual role on the market of farmers belonging to organisations, associations and consortia.
"Not only. The EU Court of Justice, with its own decision, has followed this orientation pursued by the Parliament, sanctioning in practice that the CAP has a superior role to the competition rules. A very powerful weapon delivered to the consortia and to the whole associative system”.
De Castro, after all, is someone who looks ahead even when the goals seem far away. Twenty years ago he was already Minister of Agricultural Policies and while he was negotiating a reform of the sector that was difficult, if not hostile to Italy's interests, the then Prime Minister called him "a mastiff". The match ended with a victory for our country, reconciling the availability of limited financial resources with a harmonious growth of the agri-food sector.
