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Friday 2 December 2016

EU to put late payments to farmers in the firing line

Sarah Collins

Published 16/11/2016 | 06:30

Photo credit: Julien Behal/PA Wire
Photo credit: Julien Behal/PA Wire

The EU is being urged to outlaw late payments for farmers, channel more subsidies into offsetting market risks and introduce mandatory price reporting in the food supply chain.

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The report by the bloc's agricultural markets task force - which the EU is not obliged to act on - also suggests obligatory written contracts between farmers and their larger customers, the increased use of futures contracts and better access to finance, especially for small and young farmers.

"Price volatility constitutes the 'New Normal'," says the draft report, seen by the Farming Independent. "While business risk is inherent in all economic activity, agriculture is particularly fraught with uncertainty."

The report, which will be presented to EU agriculture ministers at a meeting on Tuesday, says the Common Agricultural Policy post-2020 should have a "broader" focus on the environment and healthy food, and calls for subsidies to be channelled into "a genuine and predictable safety net for farmers to apply in times of market imbalance".

It could cause a headache for the European Commission, which although not obliged to follow its recommendations, will be under pressure from governments and farming groups to act.

But farm subsidies are already under pressure following the Brexit vote and resources being diverted to cope with the refugee crisis.

And the European Commission has expressed little desire to legislate on unfair trading practices, an issue that has also divided governments.

The report suggests banning payment delays of over 30 days, arbitrary changes to contracts, last-minute order cancellations and the passing on of marketing or unsold product costs to farmers.

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Retailers who break the rules should be prosecuted and ultimately sanctioned, the report says.

"There is no silver bullet that will lead to instantly higher prices, perfect price transmission and a more balanced distribution of added value along the chain," the report says. But sensible framework legislation can help the cause of incrementally strengthening the position of farmers and SME processors."

On access to finance, Glanbia's fixed milk price scheme and milk flex fund are singled out as good examples, with the report calling on the European Investment Bank to promote similar schemes across Europe.

The report echoes the position taken by MEPs in the European Parliament's agriculture committee, who last week voted for better contract terms for farmers, EU-subsidised mutual funds to guarantee farm incomes and special price observatories for different sectors.

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