Food supply chains differ in size and number of operators but are rarely to the advantage of the farmers. Their negotiating power is usually weaker than bigger elements of the chain, such as retailers, and this can result in the value throughout the supply chain not being adequately distributed.

What is being done at EU level?

With about 11 million farms and 44 million people employed in the EU food supply chain, ensuring that the chain remains balanced and fair for everyone is of great importance at European level. In January 2016, Commissioner Phil Hogan launched the Agricultural Markets Task Force with a view to looking into ways of strengthening the position of farmers in the wider food chain. This group of experts from across the food supply chain met regularly, concluding with a report in November 2016. The report focused on three areas for legislative measures: producer cooperation, unfair trading practices and market transparency. 

Regarding unfair trading practices (UTPs), a new legislative proposal was presented by the European Commission on 12 April 2018. Its aim is to ban the most damaging UTPs such as late payments and last minute order cancellations for perishable food products. Other practices will only be permitted if agreed to by both parties, for example the return of unsold food products to a supplier.

The new rules mean that for the first time a minimum standard of protection against these UTPs will be set in each member state. In addition, the proposal includes the designation of a national authority to enforce the rules for each member state, crucial when tackling the ‘fear factor' sometimes imposed on small suppliers by buyers threatening them to freeze them out of future commercial relationships.

As for producer cooperation, producer organisations - or their associations - have been shown to contribute significantly to strengthening the position of farmers in the food supply chain. Farmers are therefore encouraged to form recognised producer organisations, helping them with optimising costs and improving the marketing of products for example [CJ1] . The so-called Omnibus regulation, which entered into force on 1 January 2018 has extended prerogatives of these types of organisations to all sectors in agriculture.

The third recommendation from the AMTF - increasing market transparency - is also being addressed. The Commission has developed a variety of market observatories, for milk, meat, sugar and crops, that give far greater transparency to the development of the markets and help farmers to plan more effectively.

Innovation in the food supply chain

Nonetheless, innovation in the EU food supply chain needs to also happen at a local level. The agricultural European Innovative Partnership (EIP-AGRI) is helping farmers and producers innovate in the food supply chain through operational groups (local projects which test, refine and develop innovative solutions for problems faced by farmers) and focus groups (groups of selected experts which focus on a specific subject to share knowledge and experience, and explore innovative solutions to problems or opportunities).

One such group focused on ‘Innovative short food supply chains', looking at ways to stimulate the growth of short food supply chains in Europe to increase farm income. Its final report highlighted the great potential of collaborative food supply chains.  These chains are created when more than one farmer, food producer, organisation or individual decide to work together, gaining mutual benefits such as improving the product range, sharing resources amongst producers and processors, and reducing competition between small producers. In addition, four major challenges were identified: setting up and getting support, product development, access to markets and consumers, and infrastructure and logistics.

Meanwhile, the SYAM operational group is exploring intermediary supply chains - those chains which involve too much volume to be considered ‘short' but which are working with strong branding based on provenance. It has supported the ‘Saveurs Iseroises' breeders' project, working with producers, artisan butchers and two supermarkets to develop a sustainable partnership. Linked by a local supply contract to supply superior quality meat, all the actors involved have confidence in the sustainability of the partnership. The process and prices are fully transparent, as it is understood that each operator of the supply chain adds value. A written technical specification to ensure quality has also been agreed on by all partners, guaranteeing a superior product to consumers.

Co-financed by EU funds, a Slovenian farmers' cooperative has also innovated to better respond to consumer needs as well as promoting agribusiness. Thanks to a first transport vehicle, Jarina farmers' cooperative started with delivering locally grown food to one school and one kindergarten. Since then the number of farmers involved in the cooperative, clients and sales volume has significantly increased. This has allowed them to buy a second vehicle, now delivering to around 80 nurseries, schools and retirement homes in central Slovenia. In addition to this, they have organised grouped deliveries of fruit and vegetable boxes at customers' workplaces. To do this, they developed a ‘webgarden' – an online ordering system, where a number of customers choose their fruit and vegetables boxes and get delivered at the end of the day at their organisation.

The Copenhagen city government has also innovated in bringing local and organic food closer to urban consumers. They are responsible for food procurement for public kitchens, including those of hospitals, schools and homes for the elderly. Their goal is to improve the supply of seasonal, fresh, high quality ingredients into the public food systems. To do this, a whole process was put in place starting with asking the kitchens their specific needs. They then get in touch with potential suppliers to see what can be provided. A tender needs to be written by the supplier. The city offers advice on how to fill them as well as a common template to simplify the process as much as possible and ensure good contracts.

What's next?

Putting in place the European directive proposed on the 12 April to fight unfair trading practices should improve the position of farmers and set a baseline for all EU member states. Additional reflections to further promote producer organisations are also needed, having shown their efficiency in empowering farmers and producers. Nonetheless, local projects should continue to explore ways for fairer food supply chains, supported by EU funds such as the European Agricultural Funds for Rural Development or Horizon2020.

More information

Unfair trading practices in the food chain
EIP Workshop ‘Innovation in the supply chain: creating value together'
EIP Workshop ‘Cities and Food – Connecting Consumers and Producers'
Communication on the future of food and farming