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A new law aims to better protect farmers from the power of food companies. The farmers’ association welcomes the new regulations, the trade association sees it as “bad news for consumers.”
In the future, farmers should be better protected against unfair trade practices. The federal cabinet approved a change in the law that aims to strengthen the market position of smaller farmers and suppliers compared to large food groups. The new rules prohibit, for example, the sudden cancellation of perishable food that has been ordered or unilateral changes in the conditions of delivery and payment. Until now, the business giants have often dictated the terms. This should come to an end, said federal agriculture minister Julia Klöckner: “This means that David is clearly gaining traction over Goliath.”
Klöckner said the law creates a visual level and strengthens regional production and competition. Small providers often had no choice but to accept unfair terms if they did not want to be “delisted.” Among other things, it should also be prohibited for perishable products to be paid for later than 30 days after delivery or for distributors to require payments from suppliers for storage of products.
Fine of up to 500,000 euros
With the change of law, an EU directive will be implemented in national legislation. In case of infractions, fines of up to 500,000 euros are expected. According to the Ministry of Agriculture, the background is a “market imbalance.” Many smaller delivery companies face highly concentrated trade: the four largest supermarket chains have a market share of more than 85 percent. This has led to discriminatory practices against producers becoming standard.
The German Farmers Association (DBV) welcomed the new regulations. “Unfair trade practices must finally come to an end,” said Farmers President Joachim Rukwied. However, the regulation remains “incomplete because it limits the scope of protection to suppliers with a maximum turnover of 350 million euros.”
Trade Association: “Bad News”
The German Retailers Association (HDE) criticized the draft, however, as “bad news for retailers and consumers in Germany”. The association warned against “excessive regulation of competition”, which could also lead to higher consumer prices. The federal government is going “with strict restrictions on negotiations between retailers and their suppliers on the wrong competitive economic path,” said HDE managing director Stefan Genth.
A good compromise for the finance minister
Federal Finance Minister Peter Altmaier described the draft as a good compromise. Fair and trustworthy contractual relationships are essential for both parties. “We have achieved this goal with this bill,” Altmaier said.
