Supply contracts
picture alliance / REUTERS | ERIC GAILLARD 
From 1 January 2022, multi-annual contracts will be compulsory for a large proportion of beef producers in France.
PARIS The new legal regulations are to be applied first to cattle marketing. Multi-year contracts with price corridors will become compulsory.
In France, the latest annual supply negotiations between the agri-food industry and food retailers are taking place under new auspices. The government has made good on its announcements and issued the first regulations implementing the second law to strengthen producers just in time for the start of last week. Accordingly, from January 1, 2022, multi-year contracts will be compulsory for a large proportion of beef producers, keepers of castrated pigs and goat milk producers. From 1 July next year, young cattle will also be included, followed by sheep's milk from October. All other sectors will have to switch to multi-annual supply contracts from 1 January 2023 at the latest, unless an exemption is provided for.
A comparable regulation has already been in place for milk since 2011. For the purchase and sale of beef, the parties involved must agree on a lower and upper limit from the turn of the year, between which the price can fluctuate. For this measure, which is intended as an experiment, the relevant industry association is to draw up a standard contract.
In principle, there are now also provisions to prevent the producer price from being used as an adjustment variable in later stages of the value chain; however, due to "production and market specificities", numerous exceptions have also been introduced here, for example for fresh fruit and vegetables as well as cereals and oilseeds. The threshold below which small farmers and processors are to be exempted from the obligation to conclude multiannual contracts still needs to be worked out. A turnover-based approach is being discussed; in the dairy sector this threshold is 700,000 euros. The French Farmers' Federation (FNSEA) demanded the immediate implementation of the new regulations and referred to the continuing increase in production costs. Existing contracts would also have to be reviewed and renegotiation clauses activated to pass on the increase with immediate effect. Under no circumstances should this wait until the end of supply negotiations in March, he said. The association appealed to the government to lobby in Brussels for the abolition of import duties on liquid nitrogen fertilizers.
However, it is already foreseeable that even the new regulations will not fully satisfy the agricultural profession. The smaller agricultural association Coordination Rurale (CR) criticised that the potato interprofession (CNIPT) had decided not to apply several innovations and, among other things, to dispense with the automatic consideration of production costs. This is attributed to the distribution of power within the interprofession. As the producers are in the minority, the traders have been able to assert themselves in order to benefit from the exemptions at the expense of the farmers, it is said.
A comparable regulation has already been in place for milk since 2011. For the purchase and sale of beef, the parties involved must agree on a lower and upper limit from the turn of the year, between which the price can fluctuate. For this measure, which is intended as an experiment, the relevant industry association is to draw up a standard contract.
In principle, there are now also provisions to prevent the producer price from being used as an adjustment variable in later stages of the value chain; however, due to "production and market specificities", numerous exceptions have also been introduced here, for example for fresh fruit and vegetables as well as cereals and oilseeds. The threshold below which small farmers and processors are to be exempted from the obligation to conclude multiannual contracts still needs to be worked out. A turnover-based approach is being discussed; in the dairy sector this threshold is 700,000 euros.
Farmers' association demands immediate implementation
However, it is already foreseeable that even the new regulations will not fully satisfy the agricultural profession. The smaller agricultural association Coordination Rurale (CR) criticised that the potato interprofession (CNIPT) had decided not to apply several innovations and, among other things, to dispense with the automatic consideration of production costs. This is attributed to the distribution of power within the interprofession. As the producers are in the minority, the traders have been able to assert themselves in order to benefit from the exemptions at the expense of the farmers, it is said.
Source: fleischwirtschaft.de, AgE
