----

Opinion of the European Economic and Social Committee on The large retail sector — trends and impacts on farmers and consumers

(2005/C 255/08)

On 1 July 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on The large retail sector — trends and impacts on farmers and consumers.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 17 March 2005. The rapporteur was Mr Allen.

At its 416th plenary session on 6 and 7 April 2005 (meeting of 7 April 2005), the European Economic and Social Committee adopted the following opinion by 115 votes to 71 with 10 abstentions.

1.   Introduction

2.   Retail food prices and the internal market

3.   Large Multiple Retailers' price policy

4.   Supermarket workforce

5.   Multiple Retailer concentration

6.   Farm-gate prices and consumer prices

7.   Terms for supermarket suppliers

8.   Consumer issues

9.   Farmer issues

10.   Other issues

While prices are a very important element in the retail food sector, other issues need to be taken into account:

11.   Conclusions

Brussels, 7 April 2005.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

----

(1)  Pan-European brands are defined as brands which can be found in four of the big five countries plus in five other countries; Generic brands are brands which do not fulfil this criterion. The analysis presented here refers to VAT free Euro prices only.

(2)O.J. C 95 of 30.3.98, p. 36

----

APPENDIX

to the opinion of the European Economic and Social Committee

The following amendments, which received at least one quarter of the votes cast, were defeated in the course of the plenary session debates:

Point 3.1

Amend as follows:

‘During the last five years, the major food retailers have been advertising along the lines “every day low prices” — “more for your money” — “good food costs less” — “helping you spend less every day”. It is constantly being claimed that Large Multiple Retailers are the consumers' champion in driving down unjustly high prices. This is clearly because consumers attach a great deal of importance to price. In theory, this should be good news for consumers especially in the short term but the long-term consequences need to be taken into account. Reasonable prices must be paid to farmers to guarantee a constant supply of good quality food which is produced under good environmental conditions. All involved in processing and distribution must also get a reasonable profit.’

Reason

This statement of a general nature does not say what a reasonable price is. The text does not define the concept, it does not analyse the components of farming profits, it does not study the effects that subsidies for land cultivation have on farmers' incomes or justify the need to protect farmers who are less competitive than others (in other words, should all farmers be guaranteed big profits to the detriment of the consumer?).

Result of voting

For: 38

Against: 75

Abstentions:17.

Point 4.5

Delete

While food prices have been reduced through competitive pricing, increased efficiency in purchasing, administration, storage procedures, marketing and good quality foodstuffs, nevertheless, the reality is that cheap food tends to mean cheap labour and we need to start thinking a lot more about this as we encourage supermarkets to vie with each other over price wars. Prof. Tim Lang, Thames Valley University.

Reason

It is not clear to the reader what this means. Does it mean, for example, that we shall not buy Polish apples because they are less expensive than those grown in Latvia or in Finland?

Result of voting

For: 56

Against: 92

Abstentions: 12.

Point 4.6

Delete

In addition, when we import from third world countries we should not ignore the labour conditions applying.

Reason

It is not clear to the reader what this sentence means. Does it mean we have to take account of the minimum wages that have been set in Third World countries? Who will decide — and how — that a product bought in this or that country has been made by workers earning a ‘satisfactory’ salary? Is it really thought that European consumers should guarantee the workers of the Third World acceptable incomes?

Result of voting

For: 49

Against: 104

Abstentions: 7.

Point 7.1

Delete the final sentence.

In their determination to provide low prices to the consumer, the Multiples put enormous pressure on suppliers to reduce prices. This is especially true in the food sector. They constantly hold a threat of product delisting as a weapon to get even better terms from the supplier. In addition, many of the very big Multiples change their buyers frequently from one section to another so as to prevent the development of personal relationships between buyers and suppliers. The role of the buyer is to keep on trying to get cheaper and cheaper food from the supplier. They can make or break a company by delisting products and switching to another company, especially in the case where the supplier has put in major capital investment to supply a particular line to one Large Multiple. Frequently suppliers, especially small suppliers, do not have the financial resources to comply with the demands of the Multiples. What chance has a farmer to achieve reasonable prices when the Large Multiples have such buying power?

Reason

This statement of a general nature does not say what a ‘reasonable price’ for a farmer would be, nor how to determine it. One might equally well ask farmers to guarantee reasonable prices to consumers. Farming in the EU operates with a system of subsidies. We cannot in addition introduce fixed selling prices for farm produce (who would set them, and how?) or we shall no longer be able to speak of a free market.

Result of voting

For: 42

Against: 114

Abstentions: 7.

Point 8.2

Amend to read as follows:

‘Consumers should engage in dialogue with the primary producers and suppliers of food products so that they get a more balanced view of the policies being pursued at retail level. Consumers should be helped to better understand the range of products offered by primary producers of food products and to obtain more objective information on quality differences between them.’

Reason

At the moment consumers only have limited means of obtaining information on differences in quality between food products. Their choice is to a large extent determined by advertisements, which limits their desire to purchase quality foods supplied mainly by small and medium-sized producers which are not backed by the same amount of advertising.

Result of voting

For: 43

Against: 112

Abstentions: 14.

----