Commerce advocates holistic view of supply chain

EuroCommerce welcomes the Commission's communication on the functioning of the food supply chain as an important step in understanding Europe's food supply and in identifying ways to improve competitiveness. However, the food chain can only be properly understood as a single entity comprising a whole set of interrelated commercial relationships. Commerce is only the last, if the most visible, link in this chain.

As a key driver in Europe's economy, commerce will do its utmost to push forward our emergence from recession through competitive pricing. To do this, commerce must be able to rely on efficient, stable and sustainable supply chains. A guarantee of the necessary tools, including basic freedom of contract and a focus on removing territorial supply restrictions, is essential.

Bargaining power is an intrinsic part of any market economy and in practice both large and small players exert market power. There is no evidence that cases of imbalance in bargaining power are a common occurrence.

Regarding the Commission's proposed price monitoring tool, EuroCommerce urges that it must operate on two main commercial realities:

• All parties must be taken into account. For example, the price of milk depends on farming, processing, transport and retail costs; price negotiations at the farm gate are a major factor in which commerce does not participate and which commerce cannot influence. Either prices at all steps should be monitored or none at all.
• Simple comparisons cannot be made: since basic foodstuffs are in general produced and consumed locally, a simple comparison of retail prices across member states will be misleading. Local prices depend on many factors including the cost levels of raw goods, salaries, transport, VAT, waste levels, fluctuations of currencies and territorial supply constraints. This final aspect prevents retailers from purchasing branded products abroad, so precluding the single market benefits consumers should expect.

"The food supply chain is a complex system and must be understood as a whole," explained Xavier Durieu, Secretary General of EuroCommerce. "The Commission should think like a jeweller trying to mend a watch: the intricate workings of each cog in relation to each other cog must be examined in situ. Nothing can be learned from removing two separate cogs, however significant, from the delicate balance of the whole."

We welcome the Commission's ambition to foster the competitiveness of the agro-food industry. However, any measure resulting from today's communication must be justified, balanced and proportionate and must take into account all the parties concerned. Any attempt to limit this exercise solely to the agro-food manufacturers would lead to unbalanced conclusions. If such a limited view is taken, commerce would again be too easy a scapegoat.

Xavier R. Durieu
Secretary General
T:+32 2 737 05 91
Delberghe@eurocommerce.be 

For more information: Q&A on food prices