On October 10, 2024, two former deputies, Anne-Laure Babault and Alexis Izard, officially submitted a report (commissioned by the former Prime Minister, Gabriel Attal) last February concerning the so-called “EGALIM” scheme.
Once again, this report aims to propose new solutions to achieve a better balance in relations between farmers, manufacturers and distributors.
The Egalim framework preserved
As a reminder, the Egalim scheme provides a framework for relations between suppliers and distributors, particularly with regard to the legal and financial conditions of their relationships.
In brief, the current legal framework is as follows:
– Obligation for players to enter into a contract by February 28 of each year at the latest, and to transcribe their agreements in a written annual agreement;
– General terms and conditions of sale must be regulated, in particular by specifying the proportion of agricultural raw materials in prices, as well as price revision mechanisms.
However, these measures are cumbersome and particularly complex to implement in practice.
Over the past few months, the two deputies have taken pains to gather the grievances of the various players involved: professionals, representatives of the agricultural sector, the food industry, supermarkets and the catering trade.
The report is based on a simple observation: the diagnosis that led to this regulation is widely shared by industry players. However, the criticisms focus mainly on its implementation, and it does not appear that there are any plans to call into question all 3 previous laws making up the current EGALIM framework.
It also highlights the competitiveness challenge facing French agriculture, in a context where foreign trade in agricultural and agri-food products has deteriorated over the last ten years.
It is deemed essential to maintain and reinforce measures ensuring a fair sharing of value throughout the economic chain, in order to protect and improve producers’ remuneration. Nevertheless, MEPs believe that any solution that could adversely affect the price competitiveness of French agriculture and the agrifood industry should be avoided.
27 new proposals
In all, 27 new proposals have been put forward by the two MPs, who agree that upstream negotiations should be strengthened, downstream negotiations simplified, and the balance of power between players further rebalanced.
The report highlights several areas for improvement to strengthen the French agricultural and agri-food sector. It stresses the need to consolidate producer organizations in order to rebalance the balance of power between supply and demand. The cooperative model, the main lever of economic power for farmers, needs to be more transparent, particularly with regard to the prices paid to cooperators.
It is also recommended that the formation of agricultural commodity prices be better supervised, by strengthening the role of inter-professional indicators. However, these efforts will be in vain without greater development of contractualization in all sectors, requiring simplification of contracts, greater responsibility on the part of buyers, and proactive support from the State.
To ensure that prices are set correctly, the report stresses the importance of sequencing negotiations correctly, ensuring that producers (upstream) precede buyers (downstream), and recommends setting deadlines for the signing of contracts. Commodity price protection needs to be simplified and made more transparent, particularly with regard to the origin of French products.
Finally, national and European initiatives are deemed essential to combat abuses by the service centers of major retailers, in order to avoid the risk of weakening suppliers.
Measures affecting downstream negotiations
Although the MEPs have expressed the wish not to revolutionize the legislative framework, several proposals, notably concerning downstream negotiations, deserve to be potentially anticipated by the players concerned.
One proposal (Proposition 13 bis) calls for the introduction of a flexible deadline for the signing of agreements, which would have to take place no later than three months after the transmission of the general sales conditions (GSC) by the supplier, who would be free to choose the date of dispatch, provided that he has already concluded his supply contracts for agricultural raw materials.
The mission recognizes the attachment of some players to a fixed cut-off date, although this is partly based on psychological considerations. Therefore, while recommending further debate, it considers it preferable not to decide for the time being between maintaining a fixed cut-off date or adopting a moving cut-off date.
In addition, it is proposed to delete the provisions on automatic price revision in the French Commercial Code and the French Rural and Maritime Fishing Code (Proposition 21).
Price renegotiation clauses would become optional, unless they are included in the supplier’s GSC of Sale, in which case they would become mandatory, their content remaining subject to free negotiation between the parties (Proposal 22).
In addition, the observation period for indicators should not exceed that set out in the supplier’s GCS.
Finally, it is suggested that comparative advertising on food products be prohibited (Proposal 24).
However, it is not possible to deduce from this that these proposals will be enshrined in law… A matter to be followed, then, as always in this field!