The large, German cooperative grocers Rewe and Edeka are claiming that amendments to a new EU directive designed to protect farmers would undermine their business models. Both Edeka and Rewe worry that the new EU rules, that would ban the cooperation between retailers and wholesalers, the bedrock of their business model, could spell their demise.
The EU aims to pass the Unfair Trading Practices directive next year to better protect farmers’ interests. If the rules are implemented in the amended form approved by the EU Parliament’s agriculture committee, they would “destroy functioning cooperative structures in the grocery supply chain,” said Edeka CEO Markus Mosa.
Rewe and Edeka are cooperatives of independent supermarkets. The directive, in its current amended form, would ban joint purchasing by wholesalers and retailers, a practice that allows small grocery traders to compete with the big retail chains.
The directive also would give multinational corporations like Nestlé or Unilever the same rights as farmers in their dealings with retailers. “The market is being made to make way for regulation to the detriment of retailers and consumers,” said head of Rewe, Lionel Souque.
The directive, proposed by EU Agriculture Commissioner Phil Hogan, is aimed at shielding farms from the might of big grocery chains. Its measures include banning the unilateral cancellation of an order of perishable products less than 60 days from the agreed delivery date. The EU estimates that farmers suffer losses of some €11 billion ($12.7 billion) every year because retail chains change contracts after they’ve been agreed upon or cancel orders at short notice.
“In this David against Goliath fight, we are arming the weakest in the grocery supply chain,” Italian MEP Paolo de Castro declared grandly.
Source: global.handelsblatt.com