Sales below costs, farmers protest in France

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French farmers protest_2024

The farmers’ protest is also spreading in France, after the mobilizations in Germany, Poland and Romania (1,2). Tractors and hay bales blocked the A26 motorway and other national roads, from the Hautes-Pyrénées to Occitania, between Saturday 20 and Sunday 21 January 2024. And the meeting on Saturday evening with the prefect of Toulouse, as expected, was not enough to calm the soul.

While waiting for the meeting announced for the evening of Monday 22 January between the new prime minister Gabriel Attal, the president of FNSEA (Fédération Nationale des Syndicats d’Exploitants Agricoles) and the allied union of the Jeunes agriculteurs, we recall the clear position of the Confédération paysanne . The accounts will never be able to add up without establishing and applying the prohibition on sales below cost.

1) Farmers’ protest in France, a profound malaise

The spokesperson of the Peasant Confederation Florence Marandola, interviewed by RTL, reported precisely to ‘income crisis for farmers’, ‘prices not in line with costs’ and remuneration for work ‘clearly inadequate‘. (3)

How can we face the future? How can we guarantee the generational change on our farms?

We live a very deep malaise‘, which represents ‘the result of a series of policies and decisions’, including that of ‘handing over agriculture to free trade mechanisms that pit us against each other, even if we have different territories and ways of producing ‘.

2) Enough! to sales below cost

Confédération paysanne states that the selling price of the products must cover all production costs. In some cases, these costs have increased significantly due to rising energy and fuel prices. (4) We want to lay the foundations for a different economic system if we want farmers to stay in France and Europe, rather than relocating our food‘.

Sales below cost are the first real problem to face. For farmers and also the processing industries on which agri-food production depends, in France as in Italy and in other EU countries. The reasons are simple:

– the free market rules established in the Treaty and in the WTO agreement do not allow farmers and businesses to be protected from the increase in production costs (i.e. agricultural inputs, raw materials, energy),

– state aids can cover some costs (within certain spending and time limits), but certainly not reflect price list and tariff trends in real time, to which other business costs are added,

– the only guarantee of survival of agricultural and agri-food processing companies, regardless of the context, is the ban on buying and selling their foodstuffs at prices lower than their overall costs.

3) Sales below cost, the rules that are missing

Unfair Trading Practices Directive (EU) 2019/633 – which introducing some protections in favor of the agri-food production chain, as we have seen (5,6) – did not, however, prohibit sales below cost. Which are confirmed to threaten the survival of agricultural companies also in France, although the UTPs Directive has been implemented in Paris much better than in Rome and other capitals. (7)

3.1) France, Egalim law

Loi EGalimhas introduced specific criteria in France, not provided for by the UTPs Directive, to promote transparency and fairness in the formation of prices for agri-food commodities:

 price indicators. Interprofessional organizations should develop and update reference prices, based on production costs, price trends on the reference markets, product specifications (quality, quantity, composition, origin) and supply chain (traceability, compliance with specifications);

– evidence of agricultural prices on contracts. All sales contracts, even in the phases following the first transaction between farmers and their customers, should include the price indicators used to determine the price paid to the farmers themselves;

– transparencyon price formation. The Observatory of the formation of prizes and marges, a body established within the Ministry of Food and Consumption, should guarantee transparency on the formation of prices in the agri-food sector and monitor the correct application of the indicators. (7)

3.2) Loi EGalim, UTPs Directive, what is missing?

Transparencyit is not enough if it does not correspond to the fair remuneration of farmers and agri-food processing companies. The rules, in France and in the European Union, should therefore be reformed as follows (writer’s opinion):

– absolute and mandatory prohibition. Below-cost sales of agri-food products must be included in the ‘blacklist’ of commercial practices that are always prohibited at every stage of the supply chain, regardless of the nature of the exchanges (therefore including contributions by members of cooperatives as well as sales within organizations of producers);

– objective costs. Objective production costs must be updated in real time, with the aid of technology applied to company systems from which coherent statistical data can be extracted;

 telematic goods exchanges should provide feedback on objective cost findings and criteria for evaluating the distribution of the value chain in agri-food supply chains; (8)

 electronic invoicing. Electronic invoices should report exact transaction data (quantity and quality, composition and origin of goods, certifications) and evidence of prices compared to objective costs and commodity exchange prices;

– controls and sanctions. Systematic checks on invoices, with technological aid, inspections based on risk analysis, sanctions proportionate to the buyers’ turnover;

– transparency on the label. Consumers must be able to know the price paid to farmers and processing companies, through QR-codes placed on the label. (9)

4) Agricultural policies and free trade agreements

We have to review agricultural policy and its economic rules‘, the spokeswoman for Confédération paysanne told RTL. (3) ‘We don’t need speeches, but very concrete and courageous actions. We ask the government to send a strong signal by stopping the agreement between the EU and Mercosur and going back on the free trade agreements’, to provide ‘a form of protection for French farmers’.

The Common Agricultural Policy, it should be remembered, had to exclude ‘aid coupled’ with production – that is, direct contributions to farmers, proportionate to their actual production – as they were incompatible with the WTO agreement. In the U.S.A. however, the ‘Farm bill’ which supports the investments and income of active farmers is still in force. (10) As it could happen in the European Union, if there were the will.

It’s difficult intervene on European free trade agreements already concluded such as the one with the Mercosur countries which Emmanuel Macron himself, in 2019, had indicated as a ‘good agreement’. (11) Farmers and food manufacturers can instead claim:

– the effective application of the Deforestation Regulation (EU) No 2023/1115, to put an end to socio-environmental dumping; (12)

– the introduction of guarantees on food safety e la rintracciabilità delle merci importate dall’Ucraina; (13)

– an EU regulation in which to define the average annual requirements for agri-food commodities, on the basis of which to define tariff quotas for the free trade agreements that will follow, including the one above.

Dario Dongo

Footnotes

(1) Dario Dongo. Germany, the great farmers’ protest. Here is whyGIFT (Great Italian Food Trade). 11.1.24

(2) Dario Dongo. European farmers, the Ukrainian question in BrusselsGIFT (Great Italian Food Trade). 16.1.24

(3) Damien Reloulet. INVITÉE RTL – “Le malaise est très profond” : Laurence Marandola revient sur la détresse des agriculteurs. RTL. 21.1.24 http://tinyurl.com/3752sv8m

(4) The Antitrust in the UK also recorded the increase of up to 3,5 times in nitrogen fertilizers between 2020 and 2022. See the previous article by Dario Dongo. Greedflation and shrinkflation, survey in the UKGIFT (Great Italian Food Trade). 18.1.24

(5) Dario Dongo. Unfair commercial practices, it is directiveGIFT (Great Italian Food Trade). 20.12.18

(6) Dario Dongo. Unfair commercial practices, the EU directive 2019/633GIFT (Great Italian Food Trade). 4.5.19

(7) Dario Dongo, Giulia Orsi. Unfair commercial practices, the lesson from Paris to Coldiretti and ConfindustriaGIFT (Great Italian Food Trade). 9.5.21

(8) Dario Dongo. An electronic commodity exchange to promote transparency and fairness in the food supply chainGIFT (Great Italian Food Trade). 8.3.21

(9) Alternatively, operators can indicate on the label the minimum price recognized to farmers and food industries, as already happens on ‘C’est qui le patron?!’ products. La marque du consommateur’. See the previous article by Dario Dongo. Who is the boss, the consumer brand now in Italy. The ABCGIFT (Great Italian Food Trade). 28.12.18

(10) What is the farm bill, and how does it matter for the Federal budget? Peter G. Peterson Foundation. 17.11.23 http://tinyurl.com/4vpuh965

(11) See the last paragraph of the previous article by Dario Dongo, Giulia Torre. EU – Mercosur, toxic trade agreementGIFT (Great Italian Food Trade). 14.7.19

(12) Dario Dongo. Deforestation Regulation. Due diligence on critical raw materials beginsGIFT (Great Italian Food Trade). 29.7.23

(13) See paragraph 4.1 of the previous article cited in note 2

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Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.