As I indicated in my reply to the Deputy on 27 January, I am pleased that the Spanish Presidency is committed to progressing the issue of improving the functioning of the food chain. There is a need for considerable improvement so that all players, including producers and consumers, receive fair treatment.
The Council of Ministers has held an initial exchange of views on a communication from the Commission entitled A Better Functioning Food Supply in Europe. The discussion focused on questions from the Spanish Presidency dealing with transparency and balance along the food chain, self-regulation, food price monitoring, territorial supply constraints and future initiatives at EU level.
In regard to market transparency, the main concern was the need to achieve a greater balance along the chain between producers, processors and retailers. Colleagues proposed greater monitoring of prices and the establishment of codes of good practice. I took the opportunity to inform my ministerial colleagues of the steps being taken by the Irish Government to implement a national code of practice for doing business in the grocery goods sector with a view to ensuring a fair trading relationship between retailers and their suppliers. As we are operating within the Single Market, measures of this kind need to be taken at Community level to provide an effective and sustainable food supply chain.
Views differ among member states as to the extent to which new EU regulatory frameworks are required. Some consider that contractual relations and other arrangements to regulate the supply chain are a matter for private operators while others favour a regulatory framework or guidelines at EU level. My own view, which I conveyed, is that we need to monitor and audit unfair contractual practices at EU level with a view to ensuring compliance with competition law. There is also a need to look critically at EU competition law in so far as it can militate against consolidation at producer level and make it difficult to achieve the scale necessary for trade competitiveness.
Suggestions were also made to improve the food supply chain by increasing research and development, providing new economic incentives and investment opportunities, reviewing the operation of state aids and strengthening the operation of producer groups. I emphasised the need for careful and sensitive use of market management measures. When applied in a timely and proportionate way, they can and do help to maintain balance in the market and assist in the provision of fair returns to producers. We saw this last year in the milk sector. The new CAP must address the difficulties for the agrifood sector arising from increased market volatility and provide effective mechanisms to manage this.
Additional information not given on the floor of the House.
The Presidency is currently preparing draft conclusions for Council centring on five key ideas. These are improving the structure and consolidation of the agrifood industry in order to help to achieve the scale necessary for greater bargaining power when dealing with large retailers; increasing transparency along the food chain to make it easier to track price levels and developments and to press stakeholders to speed up price transmission and contribute to distribution of added value along the food supply chain; and combating unfair trading practices. The Commission proposes to assess these practices in the Internal Market and propose any necessary Community measures to address such practices.
The Commission proposes to work together with the food supply chain stakeholders to prepare sets of standard contracts. Adoption of codes of good commercial practices is also envisaged.
The Commission proposes to work with the European Competition Network to develop a common approach to competition issues of relevance for the functioning of the food supply chain. The Council is reflecting on the interplay between the existing competition and CAP rules.
In addition, together with the European Parliament, the Council is currently working on a Commission proposal for recasting Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions. In Ireland we have already taken action to ensure earlier payment by the public sector.
The draft conclusions are particularly helpful regarding the need to audit unfair contractual practices and to look again at how EU competition law is interpreted. At present it can discourage consolidation at producer level. The Presidency has tabled the conclusions for Council at its March session.