UTPs Directive: EU institutions reached an agreement to protect actors of the food supply chain

Press release 

Brussels, December 19th

At the end of a sixth and final trilogue procedure, the European Parliament and the Council, on December the 19th reached an agreement on the Directive to combat Unfair Trade Practices in the agri and food supply chain. This is excellent news for all producers and companies in the sector, who have been waiting for a European regulation for more than 15 years, while many self-regulatory initiatives have so far failed to put an end to unfair practices. The news is all the better as the scope and the number of practices, very limited in the original Commission proposal, were extended during the discussions.

The agreement reached today will apply to any actor involved in the food supply chain with a turnover of up to 350 million euros – seven times the threshold originally proposed by the Commission – and differentiated levels of protection are provided below this threshold. The European Parliament’s desire to expand to all companies has not been retained. The new rules will apply to retailers, food processors, wholesalers, cooperatives or producer organizations, or a single producer who engages in any of the unfair trade practices identified.

Prohibited UTPs were initially limited to perishable products only (payment after 60 days). They have been extended to cover: late payments for perishable food products (payment after 30 days), cancellations of last-minute orders, unilateral or retroactive contract amendments, forcing the supplier to pay for wasted products and refusal of written contracts. Other practices will only be permitted if they are subject to a clear and unambiguous prior agreement: a buyer returning unsold food products to a supplier, a buyer charging a supplier to secure or maintain a food supply agreement, a paying provider for a promotional, advertising or marketing campaign of a buyer.

Member States will be able to extend the scope of the Directive into national legislation, in particular by adopting a threshold of more than EUR 350 million, or take additional measures if they so wish. “This is a minimum harmonization, therefore the member states can, or should in my eyes go further to strengthen the device provided by this directive” Parliament’s rapporteur Paolo De Castro noted following the agreement. It will be up to them to designate the authorities responsible for enforcing the new rules, including ability to impose fines and initiate investigations on the basis of complaints. Confidentiality may be requested by the parties filing a complaint to address concerns about possible retaliation.

The Commission will put in place a coordination mechanism between the supervisory authorities to enable the exchange of good practice.

The agreement also includes a review clause set at 4 years, which means that the provisions of the law will have to be evaluated and possibly revised during the next parliamentary term.

It must now be formally approved by Member States in the Special Committee on Agriculture, be submitted then to the plenary and once approved by the Parliament, it will have to be endorsed by the Council and finally transposed into national legislation.

“RED2: Which opportunities for EU farmers to contribute to the energy transition”

Press release

Brussels, 22 November 2018

Now that the political compromise reached in July on the Renewable Energy Directive has just been adopted, Farm Europe’s Green Energy Platform organized today an event at the European Parliament, under the patronage of the EPP rapporteur Seán Kelly, to discuss the opportunities for EU farmers to contribute to the energy transition after RED2 adoption, and to assess the challenges ahead with the Delegated Act the European Commission will present before the 1st February 2019. 
Opening the event, MEP Seán Kelly underlined that RED is a key legislation to decarbonize our energy mix and expressed that “any legislative process at EU level takes time but the REDII really felt like a marathon”. However, “the co-legislators have been able to achieve ambitious targets and important provisions throughout the text that can help rural development to flourish and achieve our environmental ambitions”. On the differentiation between high and low iLUC risk biofuels, Mr Kelly mentioned that the co-legisators asked the European Commission to prepare a delegated act in order to have a solid and WTO compatible solution to the ban of palm that was required by the European Parliament, stressing the fact that “low iLUC biofuels should be really low”.
“The farming community is grateful to the European Parliament and in particular to the rapporteur Sean Kelly for its decisive support over the RED2 negotiations. This support played a key role in avoiding a phasing out of the sustainable biofuels that are produced by EU farmers and in building the concept of a new segmentation of conventional biofuels between those that generate high Indirect Land Use Change – like palm – and other biofuels like those produced from EU crops”, said Luc Vernet, SG of Farm Europe“Now the ball is in the court of the European Commission. If there is a consensus emerging on the high iLUC category, the delegated act must be very cautious on the low iLUC approach which should set very strong criteria, not prone to circumvention, cutting the link between biofuels and deforestation beyond any possible doubts”.
During the event farmers’ representatives from Ireland, Germany, France, Hungary and Italy presented their views on the opportunities and challenges after the RED2 adoption.
Eddie Punch, Secretary general of Irish Cattle and Sheep Farmers Association (ICSA) put the emphasis on what the real focus should be, namely on increasing the use of sustainable crop-based biofuels produced in Europe if we are serious about reducing transport emissions, hoping that the delegated act will correct the wrong approaches that were made in the past”. 
Benjamin Lammert, board member of the French Federation of Oilseed and Protein Producers (FOP) and of the Avril Group stressed that this RED2 proposal adopted by MEP’s last week is very important, especially due to the distinction among biofuels.“But there is still an important work to do on the definition of low ILUC” he commented. “This delegated act has to give a clear message, to both the industry and to the farmers”.
Stephan Arens, who is the Executive director of the German Union for the Promotion of Oil and Protein Plants (UFOP) underlined that the first EC’s proposal was basically focused on a phasing-out of first-generation biofuels. “Now, we need a clear regulation on biomass in biofuels in the delegated act” he argued. “Considering the case of the rapeseed oil, if we stop to use rapeseed for biofuel production, we will induce a huge lack of co-generated protein”.
István Borbély, a 29 years old Hungarian farmer, whose core business is arable land farming with traditional crops like corn and sugar beet then took the floor, explained that “in 2010, thanks to the RED, we begun with digitisation, irrigation and bioethanol processing. Thanks to the biofuel market arrival, the landscape changed, with continuous processing and sales opportunities, scheduled sales, and more flexibility in storage capacity and trade”.
Piero Gattoni, President of the Italian Biogas Consortium (CIB) presented the BiogasDoneRight model, that revolves around the sequential cropping capacity to produce at the same time food, feed and fuels. He explained that, according to the Italian successful example, biomethane can turn out to be a renewable energy, which is fundamental for the sustainable evolution of the European energy system and as well the transport greening process, provided that the market can reach reasonable levels of production. “This is an opportunity for farmers, rural communities and the environment” he noted. And again agriculture wants to do its part”.
 22:11 Kelly's event

Unfair trading practices: Farm Europe welcomes European Parliament’s vote

Today, the European Parliament adopted by a very large majority (428 votes in favour to 170 against and 18 abstentions) MEP Paolo De Castro’s report on the EU Directive against Unfair Trade Practices in the food supply chain. This vote makes it now possible to adopt the Directive before the end of the current term of office and therefore ahead of the next EU elections, and secures a strong legitimacy to Parliament’s members in the upcoming first trilateral talk with the Council and the Commission.

The mandate supported by the EP in the forthcoming discussions, strenghtens substantially the draft Directive proposed last April by the Commission. In particular, it aims to extend the scope of the Directive to all actors in the chain, regardless of size, in order to avoid the cascading effects of an overly restrictive approach limited to small and medium-sized enterprises. It is relevant to note that, it also includes a definition of Unfair Trade Practices, which would give the future Directive the necessary flexibility to incorporate new practices that may arise.

Furthermore, the EP proposes to extend the list of UTPs to be outlawed for example by including payments made later than 30 days for perishable agricultural and food products and later than 60 days for non-perishable products, counting from the last day of the month when the invoice was received or the agreed delivery day. In addition, a deadline for unilateral cancellation of an order concerning perishable products less than 60 days from the already agreed delivery date has been included.

All these proposals, along with additional aspects – thus concrete measures – such as for instance, (i)  the possibility to extend the definition of buyer to all types of buyers (including virtual retailers), (ii) the adoption of written contracts with the aim to better apply the Directive and give legal certainty to all operators, (iii) the harmonization among procedures of complaints in terms of necessary powers of national authorities – are needed in a view of structuring a strong and balanced food chain, able to share all the value added generated across it under fair conditions, able to reinforce the position of producers as being the most vulnerable link, and last but not least, capable of generating value up to the consumer.

Biofuels: Key lever for transport decarbonisation, according to Fuels Europe

In its 2050 vision, presented a few days ago, the fossil fuels industry highlighted an analysis showing that “biofuels” will be central in the transition towards a low carbon transport Europe with the potential to achieve equivalent GHG savings at lower costs for the citizens and for public spending. 
According to Fuels Europe’s “Vision 2050” a full electricity scenario would call for 630 billion EUR investments by 2050 in infrastructures for charging, as well as a 66 billion EUR per year loss for public budgets due to lower tax collection. Uncertainty should be added in terms of the availability of natural resources (Lithium, Cobalt & Nickel) needed to achieve such a 100% electric scenario.The study shows that a more realistic scenario – 50% electric / 50% sustainable liquid fuels – would have the same GHG savings impact with half the infrastructure cost and tax losses. Sustainable liquid fuels, including biofuels, have thus a bright future ahead to achieve a real decarbonisation of transport in Europe.
In this context, the capacity of the EU agricultural sector to provide sustainable raw materials should be mobilised. The transition towards a 100% biofuels used internal combustion engine should be encouraged via a strong mandate for both 1st and 2nd generation biofuels based on a proper assessment of the sustainability of the whole supply chain for feedstocks. 

A NEED OF BALANCED, COMMON APPROACH TACKLING UTPs

Farm Europe welcome the vote of the Agricultural Committee of the European Parliament on Unfair Trade Practices. The report drafted by Paolo de Castro is a step forward to improve the functioning of the food chain, strengthening considerably the initial proposal of the European Commission. See our full report on UTPs here.

Global Food Forum: 5 orientations for a successful transition of EU agri-food systems

The 3rd Edition of the Global Food Forum took place on the 17th and 18thof September in Pavia (Italy), gathering more than 200 political, economic and institutional decision-leaders as well as representatives of the civil society and academics. The event was an opportunity to draw orientations for the future of EU policies with having an impact on EU agri-food systems including the Common Agricultural Policy. A full report of this participatory process will be presented later this year to EU leaders around five key orientations.
THE EUROPEAN UNION AND THE WORLD
Important decisions on the future of the EU agri-food policies are being made while the European Union is in a redefinition process, generating an unprecedented level of uncertainty. The Brexit represents a major threat for the EU agricultural sector. The Forum calls EU leaders to spare no efforts in order to reach the best possible agreement limiting trade disturbance, including via an extension of the transition period as long as necessary. In the meantime, Europe needs to review its capacity to manage its own contradictions within the agricultural sector between sectors facing decreasing consumption on internal markets – in need of global perspectives – and those sectors that cannot face more competition from the global markets, – in need of protection – in particular the beef and milk sector in less competitive areas. In any case, the EU must mobilize the CAP in order to better support farmers.
BUDGETARY CHALLENGES
A secured budget is needed at EU level in order to reach EU objectives when it comes to sustainable and resilient EU food systems. For the next Multi-annual Financial Framework and the accompanying policies such as the CAP, quality should be prioritized more than the timing. The CAP should not be reformed because of budgetary constraints or only for a « national return rate » approach, but rather taking into account more ambition for the EU’s agri-food systems. Meanwhile, the future CAP should stay common and not be re-nationalized, nor should the powers of the co-legislators be voided by a power grab from the Commission.The 2019 spring elections are an important milestone for a democratic debate on future EU policies, including the CAP.
RESILIENCE: COPING WITH AN UNCERTAIN WORLD
Direct payments are important to support farmers’ income. Nevertheless, there is a wide consensus : they cannot anymore be the only way to support farmers in a highly volatile world. The current crisis reserve included in the CAP has shown its limits both in its financing mode and its triggering capacity. The EU must take the opportunity of the next reform of the CAP to design a new global approach of the toolbox to better protect its farmers. For this toolbox, all the levers should be taken into account, including investments, innovation and education as well as the new eco-schemes tabled by the European Commission that must be mobilized to tackle both economic and environmental challenges altogether. Producers and branches should be encouraged to build tools such as mutual funds and insurances to cope with medium level of volatility or climate risks. It is also necessary to reform the crisis reserve to make it more efficient and effective in cases of deep crisis with a clear capacity for the EU to take its responsibility in a case of major market or climate disturbance. This crisis reserve should be flexible and reactive in order to take the lead when risk management tools are overwhelmed. This reserve should be sheltered from the specific interests of one or another MS: it should be driven in a truly European spirit with adequate funding.
SECTORIAL STRATEGIES
The EU needs to reinvest in sectorial approaches – at EU level. It went too far in the « one-size fits all approach ». The diversity of agricultural sectors should not only be left to the Member States but also be reflected at EU level via specific tools, including when it comes to environmental requirements. A clear baseline of environmental rules must be defined at EU level together with a common set of economic levers. The EU framework should include clear orientations for the main financial levers (a minimum level of DP) and non-budgetary measures (for example protein strategy, biogas, etc.), Strong investment strategies should be set up at national or regional level in order to boost innovation. Rural Development should not be undermined to keep the capacity at national or regional level to accompany structural changes.
A FUNCTIONAL FOOD CHAIN
The Food Chain should not be a battlefield and the Commission’s proposal on Unfair Trade Practices (UTPs) is widely welcomed. Nevertheless, the initial proposal must be improved. A clear definition of the principles of UTPs should be set up at EU level in order to go beyond the need of a long list of practices, which could be bypassed.A broader approach should be promoted in the EU legislation integrating new actors with considerable market-power such as e-commerce. When it comes to the infringement procedure, a clear common approach should be designed at EU level.
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The 3rd edition of the Global Food Forum about to kick off

Opening GFF2018The third edition of the Global Food Forum (GFF2018), organised by Farm Europe in partnership with Confagricoltura, will take place on the 17&18 September. The French and the Italian Ministers for Agriculture Stephane Travert and Gian Marco Centinaio will contribute to the opening session together with Dacian Ciolos, Former Prime Minister and Commissioner for Agriculture, President of RO+, Paolo de Castro and Michel Dantin, MEPs.

The event will focus on the best levers to promote the economic and environmental performance of EU agri-food systems while designing the best policy tools to achieve a common ambition at EU level, in particular via the future Common Agricultural Policy. The GFF2018 will gather more than 200 participants from all across Europe, including more than 30 Members of the European Parliament, State Secretaries, high officials from EU institutions and national ministries together with academics, economic leaders and representatives of the Civil Society.

 

The participants will have the opportunity to actively contribute to the debate during 2 plenary sessions, 2 panel discussions and 10 workshops covering food chain, trade, energy, sectorial strategies, budget and resilience issues chaired by Members of the European Parliament, including Jean Arthuis, President of the BUDG Committee. The work of the Forum will feed a report to be presented to European decision-leaders this autumn, in the context of the thinking process on the future agricultural policy and the Spring 2019 European elections.

More details on the event and press contact :

https://www.farm-europe.eu/evenement/global-food-forum-2018-2/

info@farm-europe.eu

The EU recognises the role of EU-sourced biofuels in the future renewable energy mix, but…

Farm Europe’s Green Energy Platform welcomes the decision of the European Parliament and European Council to reject the Commission’s proposal to phase out all 1st generation biofuels. However, at the same time, the Platform regrets that the compromise still ignores the benefits of EU sourced biofuels for the EU society and for the agricultural sector as it co-generates 52% of all « Made in Europe » proteins and should be further encouraged.

The deal concluded today on the revision of the Renewable Energy Directive (RED2) secures the EU sourced biofuels production at 2020+1% levels or maximum 7% and sets the general principle of a freeze at 2019 levels of those more controversial biofuels that are linked to deforestation and peatland drainage (such as palm oil). This freeze is due to be followed by a phasing out by 2030 based on a report of the European Commission in 2023.

At this stage, it’s impossible to assess the efficiency of the deal as long as key parameters of the regulation are transferred to a delegated act to be adopted by the European Commission in February 2019 at the latest. This decision creates a high level of uncertainty on the real outcomes of today’s political agreement.

At this stage, ILUC models are generating an important scientific debate as the results vary widely by study and on time. Therefore the Platform will remain vigilant and mobilised in order to promote a fact based decision that fully respects the intentions of the co-legislators, and that does not put at risk sustainable EU sourced biofuels directly or indirectly.

EU agricultural sectors have the capacity to co-generate food and energy together, from first and second generation biofuels, which should not be seen as opposed but rather as complementary. The development of second generation should be promoted via a real development of industrial capacity, not by multipliers offering a wrong vision of the reality.

The capacity of  agriculture, in Europe, to produce green energy should be further enhanced for all EU-sourced biofuels and for biogas.

CAP reform: a renationalisation project that would cost 20% of farmers’ income

PRESS RELEASE

The European Commission has put on the table all the elements of its agricultural strategy for the period 2021-2027: the budget proposals, presented on the 2ndof May; and the proposals for reform of the Common Agricultural Policy (CAP) officially unveiled today.

Both proposals would cumulatively result in a drop in European farmers’ income between 16 and 20%. On one hand, the impact of the 12% drop in the CAP budget would lead to a fall of more than 8% on average in the Community, with particularly strong negative effects for the field crops, milk and meat sectors, according to the study presented by Farm Europe on the 2ndof May. On the other hand, according to the European Commission’s own impact assessment, the reform proposals presented on the 1stof June would lead to an additional reduction of agricultural income between 8% and 10% depending on the options chosen by the Member States in this scenario of broad renationalisation of the proposed CAP.

Such a strategy, with negative economic consequences and uncertain environmental impacts, would inevitably lead European agriculture towards a massive restructuring, causing the exit of many farmers with the abandonment of certain territories and the intensification elsewhere, as well as a race to expansion of holdings, despite the proposals for degressivity and capping. It would go against the transition of European agriculture towards more sustainable models in both economic and environmental terms. In addition, it would slow down investment capacity and generational renewal, despite the tools for young people that could not offset such a decline in income.

No guarantees for a simpler CAP, major risk of fragmentation  of the internal market

Despite the warnings, particularly of the Dorfmann report, adopted by a large majority by the European Parliament on the 30thof May, the European Commission has persisted in its desire to propose a strong renationalisation and bureaucratization of the Common Agricultural Policy, which constitute central elements of its proposal through the “New Implementation Mechanism”.

Of course, the European Commission has finally proposed a common basis for direct aid through the principle of a super-conditionality that would integrate the current 30% of green aid. But the exact modalities of this super-conditionality are largely left to the free choices of the Member States.

In fact, this proposal in no way constitutes a simplification for farmers: everything would depend on the potentially divergent implementation that would be made by the Member States, if this project was adopted as it stands.

Moreover, although seeking to put forward an environmental touch, the proposal offers absolutely no guarantee in terms of the environment, since the key parameters would be defined not at the European level, but at the level of the Member States or even by the regions. This is as well the conclusion of the Commission’s impact study.

Worryingly, such an evolution would put strong competition in the regulatory frameworks of the different Member States with, naturally, advantages in terms of competitiveness for the less-ambitious in environmental frameworks. It should be noted that the “Eco-Scheme” proposed as a “new greening” undefined at Community level is essentially an agro-environmental measure as they already exist in the context of rural development, with the difference that it would be possible for the Member States to make these supports incentive, and not only “compensatory”.

Interesting principles for some economic tools, but mainly as declaration of stance at this stage

On the economic side, the Commission poses three interesting principles: the obligation for Member States to put in place risk management measures, the establishment of operational programs to structure the sectors and the reform of the crisis reserve to make it pluriannual and therefore more efficient. However, these guidelines are at this stage declarations of intent more than real steps forward. No sufficient means are provided for these three tools: either the Member States remain free to mobilize symbolic or effective financing, or the financial proposal limits the effectiveness of the proposed approach as it is the case for operational programs.

Moreover, beyond the fact that the proposal put the internal market at risk as already raised by Farm Europe last November, the new ergonomics of the New Delivery Mechanism, adds a proposal for a shift from the CAP from a “policy” towards a “program” mainly managed technocratically, in a bilateral relationship between the national agricultural administrations and the services of the European Commission. The latter intends to obtain the power to validate all the choices of each Member State and of each region, both for the use of the first and second pillars. The European Parliament and the Council of EU Agriculture Ministers, as institutions, would be deprived of most of their prerogatives. Even the elements adopted in the basic acts of the CAP by the co-legislators would be subject to the approval of the Commission services in the context of its systematic right of scrutiny for national strategies.

 

EP Report on the future CAP: a step in the right political direction

Today, the Agricultural committee of the European Parliament adopted the report prepared by MEP Herbert Dorfmann (IT, EPP) on the future of the Common Agricultural Policy. This report is a clear call for a strong common policy framework at EU level, aiming to « secure farmers’ income and more effectively meet the expectations of society as a whole ». The committee emphasizes the needs to secure the direct relation between the EU co-legislators and the beneficiaries – the farmers – and not transferring most of the first pillar management to the Member States.

Securing the direct link between the EU and its farmers, would address to a large extent the concerns expressed by Farm Europe following the presentation, in November 2017, of the Communication on the future of the CAP and the new delivery mechanism by the European Commission.

This would be the guarantee that all farmers are treated equally on the same market, even with an appropriate level of flexibility, for example with maybe different agronomic measures in the details, but with guarantees that these measures have an equal level of ambition to a EU baseline.

European agriculture is facing common challenges that could only be tackled effectively if Europe stands together, especially when it comes to environmental issues. Excess level of subsidiarity and flexibility, the fragmentation of the policy framework, together with a reduced level of ambition when it comes to the CAP budget, are all elements that could transform the EU agricultural market into a battlefield. Such a trend, which has been rejected by the agricultural committee, would only accelerate the on-going restructuration process of EU agriculture – meaning less farmers – and raise serious question marks on the capacity to deliver when it comes to reducing the environmental footprint of EU food systems.The MEPs adopted instead a balanced approach, calling for a « reasonable level of flexibility within a strong common framework of EU rules, basic standards, intervention tools, controls and financial allocations agreed at EU level by the co-legislator to guarantee a level playing field for farmers ».

Furthermore, Farm Europe welcomes the request of the MEPs to maintain the budget allocation of the CAP in constant prices – this is key to improve and achieve an in-depth revision of the EU policy framework toward a greater resilience of EU farms and enhanced sustainability as requested by the MEPs. Farm Europe is also pleased by COMAGRI’s call for “coherence and complementarity” between the two CAP pillars (Direct payment and Rural development), with a clear baseline of environmental measures in the 1st pillar – driving a common dynamic all across Europe – and tools to foster further green initiatives in the 2nd pillar.

Additionally, to cope with market uncertainty, the risk management toolbox should become a central feature in the next CAP, as rightly underlined by the agricultural committee. Nevertheless, this should not reduce the responsibility of EU institutions when it comes to crisis management. A strong and effective set of tools at EU level should be kept and strengthen with a proper financial reserve, in order to secure and intervene in case of major crisis such as the ones faced recently by the milk sector. This financial reserve should be able to: (i) strengthen and enhance the risk management toolbox, which was modernized recently via the CAP Omnibus regulation, (ii) trigger when appropriate innovative market measures such as the reduction scheme deployed in 2016 for the milk sector. Complementarity tools for sectorial programmes should be adopted in parallel for the sectors that are in need of new dynamics or facing specific challenges. And, last but not least, the capacity of market observatories should be developed even further in order to speed up policy decisions at EU level in case of serious market disturbance.

Such a common policy framework would offer a truly European added value, and set the foundations of a farming sector that is able to deliver environmental and economic performance.