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Food Chain Proposal Offers A Starting Point For Discussion

30 October 2009

UK - A new European Commission report on the operation of the grocery supply chain reinforces the need for a supermarket ombudsman and standard contracts.

The report that was released earlier this week identifies three cross-cutting priorities for action to improve supply chain operations. These are:

  • The promotion of sustainable and market-based relationships between stakeholders in the food supply chain;
  • increasing transparency along the chain to encourage competition and improve its resilience to price volatility;
  • fostering the integration and competitiveness of the European food supply chain across Member States.

EU food chain proposals are a good starting point for discussions, but the diversity of the bloc’s food industry must be taken into account, Dairy UK said in response to proposals from the European Commission on improving the food chain.

Dairy UK Director General Jim Begg said: “It is right that the Commission is thinking about how well the food chain works, improving transparency and managing price volatility. Seesawing prices are dangerous and disruptive for consumers, processors and farmers. "

He said that derivatives and futures contracts may well have a role to play in this, even in the dairy industry. And comparing best practice on contracts could yield some useful results. The Commission is right to make this a voluntary exercise, because contracts belong firmly in the commercial domain.

“There is always room for improvement, but it is clear that the UK is more advanced than many European neighbours when it comes to milk contracts," said Mr Begg. "The diversity and complexity of UK supply arrangements, particularly in retailers’ segregated milk chains, have given British farmers some protection from the recent collapse in commodity prices. "

In making its proposals, Mr Begg said that the Commission is clearly working on behalf of consumers to find general solutions across all food sectors for all member states. Dairy UK will scrutinise the proposals closely and feed into the debate as it unfolds, especially in the High Level Group.

NFU Deputy President Meurig Raymond said: “This report echoes comments made by both the NFU and the Competition Commission about the problems in the supply chain and some of the actions that need to be taken to solve them."

Mr Raymond said: “The recognition of the need to draw up Community measures seeking to ban unfair contractual practices within the internal market and facilitating enforcement against such practices is especially welcome and, in addition, the report also makes other suggestions regarding exchanging information on best contractual practice, setting up awareness campaigns, and the use of voluntary standard contracts."

“This report reinforces the fact that there is no excuse for the government not to implement the Competition Commission’s findings, particularly regarding establishing an ombudsman. Experience has shown that for measures like these to give real value and benefit to consumers and farmers there needs to be an independent ombudsman overseeing them.”

 

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