The draft proposed directive on Unfair Trading Practices in business-to-business relations in the food supply chain is making its way through the European Council and Parliament and has been significantly amended.
The initiative seeks to regulate relations between a SME supplier and a non-SME buyer through prohibiting certain unfair trading practices, which include payment delays of more than 30 days for perishable food products, short notice cancellation of contracts, unilateral changes to supply contacts and placing wasted product risk on the supplier.
ICOS has consulted on and worked together with the Council and Parliament to address the particular challenge of the 30 day payment deadline for dairy cooperatives and welcomes the inclusion of a number of amendments in both institutions. This difficultly is a result of the market orientated price setting structures in place in the sector whereby the board of a cooperative sets the milk price in the middle of the month for the preceding month’s supply, as well as the fact that in the dairy sector there is no invoice provided by the supplier, rather a receipt docket provided by the cooperative recording volumes, % fats, % protein, etc.
We urge an agreement to be reached which include these practical amendments which will enable existing payment policies to continue. Additionally, we urge policy makers to ensure the overall effectiveness of the directive, through the inclusion of all businesses within its scope. Unfair trading practices are unfair and damaging to all suppliers, no matter the size of their business. If a practice is recognised within the directive as being unfair and contrary to good commercial conduct, it should be prohibited in all cases.
By Alison Graham
European Affairs Executive
3 Apr 2020