Opinion of the European Economic and Social Committee on The large retail sector — trends and impacts on farmers and consumers
Date: 2005-04-07
Institutions: European Economic and Social Committee
Subjects: consumer price, economic analysis, farmers' income, food price, retail price, supermarket, trading margin

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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 consu-
mers.

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

1.1
European retailers reacting to the social and economic
changes during the last 20 years, in particular the changes in
consumer needs, created the system of Large Multiple Retailers.
The basic idea was to make the shopping trip more convenient
for the consumer by putting a wide range of food items and
other goods for sale under the one roof. In marketing terms,
the Large Multiple Retailers aim to attract more and more
consumers by means of attractive presentation of merchandise
seen the most
at competitive prices. Food retailing has
profound changes, by its sheer size and importance,
these
developments have had the greatest impact on consumers. In
the UK 80 % of
food products are purchased from Large
Multiple Retailers. This is among the highest in the EU. Super-
stores and Hypermarkets can offer consumers as many as
20,000 product lines.

1.2
Over the years, Large Multiple Retailers have brought
significant benefits to shoppers in terms of range of products
and competitive prices. In particular Large Multiple Retailers
have provided consumers with a large range and variety of
food products under one roof, combined with free and ample
parking facilities. They are both child- and disabled person-
friendly. Some are providing banking and refreshment services
as well as recycling facilities. Many have online shopping facil-
ities and provide a delivery service in the local area. The ability
to do the weekly household shopping in one location at
competitive prices makes supermarkets attractive to consumers
and explains the growth in the Large Multiples' share of the
total grocery market.

1.3
In the majority of new Member States the Large Multiple
Retailers have a smaller market share than in the EU 15 but
their market share is increasing rapidly.

The Large Multiple Retailers operate under varying business
structures:

— hypermarkets:

large retail stores up to 10,000 square
meters of sales space and selling significant amounts of
non-food products and mainly self-service;

— supermarkets: self-service food stores with up to 3,500
square meters of sales space with sales of non-food items
making up less than 25 % of sales;

— discounters: basic self-service food stores that concentrate
on a limited range of products with a high turnover rate —
low prices are the main attraction. There is significant
growth in this sector.

However,

the market share of

1.4
large retailers varies
considerably from one Member State to the next. In Hungary,
the top three retailers account for 29 % of the grocery market.
In the UK; the top three retailers control 60 % of the grocery
market while in Ireland the top three retailers control 66 % of
the grocery market. The figures for the top three retailers' share
of the grocery market in the following Member States is as
follows: Poland 14.2 %, Czech Republic 25.4 %, Slovakia
42.6 %, Slovenia 77.3 %. The trend can be observed that over
the last ten years, the retail food market is being dominated by
a smaller number of very large retailers. On average, food sales
account for 70 % of the grocery market. (Source GfK Consumer
Scan/Household Panel).

2. Retail food prices and the internal market

2.1
DG Internal Market, using data collected by AC Nielsen,
took a basket of Pan-European (1) branded items available in EU
14 in the period September 2002–October 2003 and
compared prices. The following price index shows that prices
varied considerably throughout
the EU 14. Using the EU
median = 100, the following are the lowest and the highest
prices across the named Member States:

(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.

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Product

Kerrygold Butter

Red Bull

Fanta

Evian

Twix

Haagen Dazs

Nescafe instant coffee

Country

Ireland

Austria

Spain

France

Belgium

Italy

Greece

Kelloggs' Cornflakes

United Kingdom

Uncle Ben's Rice

Barilla Dry Pasta

Finland

Italy

Lowest

Country

Highest

90

79

70

62

74

60

64

75

81

55

Germany

Finland

Finland

Finland

Denmark

Greece

Austria

France

United Kingdom

Ireland

150

134

148

204

131

117

137

144

161

114

Pan-European branded goods such as those above have a large degree of consumer recognition

2.2
throughout the EU.

Difference in prices are greater for generic branded and white label products. Here again, there is no
obvious pattern to differences in prices between Member States:

Product

Country

Lowest

Rice

Flour

Ground Coffee

Instant Coffee

UHT Half Fat

Dry soups

Frozen Fish

Ice Cream

Sparkling Mineral Water

Baby Food

Tinned Pineapple

Sugar

Portugal

Portugal

Finland

Belgium

Germany

Spain

Finland

Finland

Italy

Spain

Netherlands

Portugal

45

45

71

40

71

43

65

40

47

66

53

93

Country

Sweden

Sweden

Ireland

Ireland

Finland

Belgium

France

United Kingdom

Finland

Italy

Finland

Sweden

Highest

182

182

298

127

140

256

118

214

168

173

181

286

2.3 While these price variations in branded and non-branded goods give us a snapshot of the situation
today, the frequent monitoring of prices should also help to determine whether prices for these goods are
converging over time, as one would expect a fully functioning Internal Market. DG Internal Market takes
the view that in an efficiently functioning internal market the price differences should not be as great as
shown. In a similar survey in the USA the price differences were found to be less than in EU 14.

2.4
There are a number of reasons for price variations — different operating costs such as labour costs,
transport costs, waste-management costs, size of store and volume of turnover, local taxes and the level of
price competition both on the buying side and the selling side. Different preferences and tastes amongst
consumers, which are largely determined by cultural habits, can also play an important role. In addition
local market conditions, such as population density, the climate and the state of the supply chain, must
also be taken into account.

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3. Large Multiple Retailers' price policy

of women in part-time work and their concentration in low-
status jobs.

It

3.1
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’.
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
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 guar-
antee a constant supply of good quality food which is produced
under good environmental conditions. All involved in proces-
sing and distribution must also get a reasonable profit.

importance to price.

3.2
The UK supermarket ASDA (owned by US giant Wal-
Mart) has made price-cutting a philanthropic mission by
declaring ‘our purpose is to make goods and services more
affordable for everyone’. The new philosophy seems to be to
spend as little as possible on food. In many cases the Multiple
Retailers in their advertising would like to make us think that
the most important thing about food is the price of food. The
percentage of household income spent on food continues to
decline throughout Europe (see Appendix 1).

they have

Traditionally, the Multiple Retailers have carried out the
3.3
most aggressive price promotions on basic products that act as
‘Traffic Generators’ because
to be purchased
frequently while hiking up margins on other items which
consumers are not as aware of. In some Member States these
‘Traffic Generators’ are frequently sold below cost. Below-cost
selling of food is banned in some Member States e.g. Belgium,
France, Ireland, Italy, Luxembourg, Portugal, as well as in Spain
and Greece under special circumstances.

4.2
Large Multiple Retailers employ people in a wide range
of jobs but checkout operators and those who stack the shelves
often represent the bottom end of the pay-scale and, depending
on the employment situation in the Member State, pay-rates
can be at the minimum rate or just above.

4.3
Flexible working hours can be beneficial to students and
part-time workers, temporary workers and those who have
family responsibilities or other employment. It is most impor-
tant that no discrimination against part-time workers should
apply.

4.4
European Multiples need to develop in the direction of
quality consumer services produced by competent personnel
working under secure and good employment conditions. The
continuous concentration of the Large Multiple Retail sector is
leading to new competitive strategies (e.g. price wars), severe
pressure to control costs including labour costs, deregulation of
opening hours and more late hours and weekend work.

4.5 While food prices have been reduced through competi-
tive 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.

In addition, when we import from third-world countries

4.6
we should not ignore the labour conditions applying.

Below-cost selling and aggressive pricing ultimately can

3.4
lead to anti-competitive practices.

5. Multiple Retailer concentration

4. Supermarket workforce

4.1
The growing Large Multiple Retail sector has created
jobs, many low-paid (often part-time)
many thousands of
throughout the EU. In a recent study published on the website
of the European Foundation for the Improvement of Living and
Working conditions (Industrial Relations
in the Retail Sector,
October 2004, Comparative Study), it is stated that around 60 %
of retail workers are women, and there is also a high propor-
tion of young and poorly qualified workers. Pay is relatively
low and there are high levels of part-time work and weekend
working. The industry is undergoing major structural change,
with processes of concentration and diversification, and pres-
sure for
the restructuring, deregulation and reduction of
employment. Another characteristic trait is usually the large
pay gap between women and men, due to the high proportion

5.1
Concentration in food retailing has increased sharply
throughout Europe. Between 1993 and 2002, the market share
of the top five food retailers has increased on average by
21.7 % reaching an average of 69.2 % in the EU 15. In 2002 it
ranged from 37 % in Italy, 52.7 % in Greece to 94.7 % in
Sweden (Source-London Economics report 2003 to UK Depart-
ment of Environment).

In some Member States both the buying and the selling
5.2
side of the market tend to be equally concentrated. In other
Member States buyer groups representing (technically) indepen-
dent retailers (e.g. voluntary chains) so therefore at national
level the buyer-side of the market is more concentrated than
the seller-side.

are

Hypermarkets

expanding services

5.3
and product
mixes, while Discounters will continue to expand especially in
the food sector and while concentrating on low prices and they
may move to offer some higher quality products at the lowest
possible prices.

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5.4
The recent trend in the Fruit and Vegetable sector has
been away from a commodity marketing approach. Multiples
want to concentrate their purchases with a small number of
large preferred suppliers that can partner them on a year-round
basis. The ESC stated in a previous Opinion (2) that: The wide
selection of fresh fruit and vegetables on offer is seen as a particular
advantage of hypermarkets. Weekly markets, on the other hand, are
praised for their better quality, fresh goods, wide choice, reliability and
human contact.

5.5
The Multiples have encouraged consolidation in the area
of product suppliers and especially food-product suppliers. One
of the areas where this has happened is in the case of bread
supplies. In Ireland and the UK, especially, price competition in
bread sales has resulted in the closure of a vast number of
bakeries and the market is now dominated by a few very large
bakeries. It has enabled the supermarkets to provide low-cost
bread to the consumer with reduced nutritional value. Bread
with greater nutritional value is still available, but at a higher
price.

5.6 Many supermarkets have
also introduced in-store
bakeries. Frozen dough products prepared in a factory are
bought in and finished in the store.

6. Farm-gate prices and consumer prices

6.1
London Economics in its 2003 report stated that in
2001 no Member State appears to have systematically the
highest farm gate-retail price spread. In general the price spread
falls in the range of one to five times the farm-gate price. In
the case of bread whose main ingredient is wheat the farm-gate
retail spread can be as high as 30 times the farm-gate price
reflecting the large share of non-farm costs in producing bread.

6.2
In 2001 the farm-gate retail spread for Lamb prices
increased in the UK and Ireland and declined in France and
Germany. In the case of Fruit and Vegetables the farm-gate
retail spread shows either no significant
trend or a small
decrease. Wholesale fruit and vegetable markets have been in
decline for some time, while the spot market remained impor-
tant for fresh produce sometimes resulting in large price fluc-
tuations due to weather and the supply situation. Large
multiple buyers are moving to seasonal or annual contracts
from a small number of suppliers to bring stability to the fresh
produce sector and reduce costs. This will stabilise the farm
gate-retail price spread. When price wars arise it may mean
primary producers taking lower margins and being subject to
increased costs.

6.3
If the buying power of the Large Multiples leads to
reduced prices to their suppliers and if these reduced prices are
passed on to the consumer then the % margin going to the
farmer may not necessarily fall but the actual farm-gate price
will be lower and thus the farmer may have little or no profit.

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

6.4
In a survey carried out by the National Farmers Union
in the UK in 2002 a basket of food which included beef, eggs,
milk, bread, tomatoes and apples cost an average of EUR 55 at
a supermarket, the farmer received about EUR 16 which is less
than 1/3 of its retail value. In the case of individual
items
farmers got 26 % of the final retail price of beef, 8 % in the
case of bread and 14 % in the case of bacon.

6.5
The producer price index (in real terms) for all agri-
cultural products fell in the EU 15 by 27 % over the period
1990-2002. In nominal terms farm output prices remained
broadly stable over the same period. The sharp difference in
the trend of farm-gate prices and consumer food prices has
attracted considerable attention but no general consensus as to
the reasons underlying the divergence in price trends. (London
Economics report 2003).

6.6
Large retailers are offering a growing number of fair
trade products, and this is to be welcomed. In an article in the
Wall Street Journal on 8 June 2004 by Steve Steckton and Erin
White they write the following in reference to supermarket
selling of Fair Trade Products: Sainsburys (British Supermarket)
has sold Fair Trade Bananas as more than quadruple the price
of conventional bananas — and more than 16 times what
growers receive. Tesco recently tacked on $3.46 per pound for
Fair Trade Coffee while the grower gets about 44c above the
world market place. ‘Supermarkets are taking advantage of the
label to make more profit because they know that consumers
are willing to pay a bit more because it is fair trade,’ says Emily
Dardaine, fruit-product manager at Fair-trade labelling organisa-
tion international, or FLO, a Germany-based federation of Fair-
trade groups.

7. Terms for supermarket suppliers

7.1
The divergent degree and nature of the market concen-
tration in the various EU Member States is a factor that must
be taken into account when examining Large Retailers' prac-
tices towards suppliers. As indicated above, since consumers
attach great importance to price and given that consumers'
demand also influences the offer, there is considerable pressure
on retailers to lower prices. In their determination to provide
low prices to the consumer, the Multiples put pressure on
suppliers to reduce prices. This is true in the food sector and
primarily in markets where the concentration is very high.
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, espe-
cially in the case where the supplier has put in major capital

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investment to supply a particular line to one Large Multiple.
Frequently suppliers, especially small suppliers, do not have the
financial resources to comply the demands of the Multiples.
What chance has a farmer to achieve reasonable prices in
markets where the Large Multiples have such buying power?

Apart from the ability to extract discounts on transac-
7.2
tions from suppliers, buyer power may manifest itself in the
contractual obligations which retailers may place on suppliers,
such as
retroactive
discounts on goods already sold, unjustified high contribution
to retailer promotion expenses and an insistence on exclusive
supply.

slotting allowances,

charges,

listing

Food suppliers to large Multiple Retailers are frequently
7.3
put under severe financial pressure because of long delays in
receiving payment — sometimes as long as 120 days (180 days
in rare cases) after delivery of food products. In contrast the
consumer pays for the product immediately on purchase. Long
delays in payment makes a major contribution to the Multiple
Retailers' profits as suppliers are providing interest-free loans.

Sometimes Multiple Retailers force their suppliers to
7.4
supply food below cost for a period in order to maintain their
listing on the supermarket shelf. This can lead to severe finan-
cial losses for suppliers and farmers.

7.4.1
The introduction of the on-line auction system has
also strengthened the position of the large Multiples in sourcing
cheap product for own-label brands. Under this system, the
large Multiples look for tenders to supply products (mainly
own/private label) via the Internet. Suppliers compete with one
another to supply at the lowest price.

any supplier. This insight is further enhanced by the access that
the retailer has on a weekly basis to the customer.

(private

7.9 While Multiples promote own-label
label)
products, consumer demand means that well-known branded
products also have to be on the shelf. However, the Multiples
wish to reduce the number of their branded product suppliers
and have introduced a system of Category Management. Cate-
gory management is the means used by the multiples to reduce
the number of individual suppliers that they buy from and
consequently reduce their costs and improve margins. In each
category of product lines one leading supplier is selected by the
multiple to source and supply all product lines required in that
category. A company with a leading brand is usually selected
to supply a range of other related products in order to retain
its product listing. For example, a company supplying branded
cheddar cheese could be asked to supply all other cheeses
required by the Multiple which it would have to source from
supplier
suppliers. This
other
system favours
entry possibilities
companies,
small
restricting
thus
It may also reduce consumer
suppliers and local suppliers.
choice.

the biggest

for

7.10 Many SME food companies are extremely vulnerable
especially if they are largely dependent on one of the Large
Multiples. Multiples can demand a cut of 2 % per annum for
the following three years. Failure to achieve such targets means
the business goes to another supplier. To stay in business the
SME must cut costs and margins — reduced prices to farmers,
less employees and reduced quality of product
the
consumer.

for

8. Consumer issues

The emergence of own-brand (private) labels is acceler-
7.5
ating among all the major Multiples. This latter trend is most
obvious in Ireland and Britain and also in developing markets.
‘The high growth rate of private labels in the developing
markets are directly related to the expansion of Global retailers
beyond their traditional geographic borders’ says Jane Perrin,
ACNielsen. As the quality level of some own-brands has
increased, retailers have, at little promotional cost, been able to
boost profit levels.

8.1
Consumers will continue to demand from supermarkets
competitive prices, a constant supply of good-quality safe food,
good-quality service and a pleasant shopping environment.

8.2
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.

The own-label system means more power to the Super-

7.6
market in its relationship with its suppliers.

Consumers should also be made aware when suppliers

8.3
are funding special discounts or low price offers.

7.7
In an environment where winning retail concepts can be
quickly copied, the retailers' own label (private label) strategies
have taken on an increased importance in helping to differ-
entiate each of them from their competitors.

7.8
This shift in power from supplier to retailer extends way
beyond the advantages accruing to the ownership of the shelf-
space and the benefits of own-label (Private label). With the
help of store loyalty cards, retailers today have greater insight
into the consumer's identity, profile and spending patterns than

8.4
Consumers need to be provided with better education
on all aspects of the food market and the long term conse-
quences of
their demands. Large out-of-town superstores
promoting low food prices are often of little value to low
income families when they are unable to get suitable transport
to the store to purchase low priced food products.

8.5
Issues such as obesity and sustainable consumption are
essential matters for consumers. Retailers need to adopt policy
positions on these matters.

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9. Farmer issues

9.1
Due to the reform of the CAP (decoupling) farmers' deci-
sions on what to produce will be influenced more by the
signals coming from the retail sector in terms of price and
demand. The support system that was part of the CAP will no
longer provide the same floor price for farm produce. This will
mean that the Multiples will be much more significant price-
makers in the food chain than previously. A greater level of
food imports into the Community will also tend to drive farm-
gate prices downwards when world prices are low. The end
result will probably be a much greater fluctuation of food
prices in line with supply and demand.

9.2
If over a period farmers are subject to falling incomes
and increasing costs, more farmers will go out of business.
Such a development could lead to reduced food production in
Europe which would hinder the development of a multi-func-
tional agriculture in the EU. It would also hinder the objective
of maintaining and developing a living countryside. In order to
prevent this, farmers must also adopt new approaches with
regard to growing methods and the products they invest in. An
alternative could be to find new niche markets, e.g. investing in
more high-quality products, entirely new products, new forms
of distribution and cooperation (e.g. cooperative purchasing,
farm shops in towns), eco-tourism, etc., in order to shore up
their position.

Comparisons of the difference between farm-gate prices
9.3
and retail prices are difficult to make in the overall EU market
because it is impossible to find out the costs and margins going
to the processing sector and the retail sector. However, it is
clearly obvious that if the Large Multiples engage in below-cost
selling for farm products, then the farmer as the last person on
the line will get a reduced price because the processor and the
supermarket will continue to take a margin in order to stay in
business.

10. Other issues

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

a) Large Multiples are trusted to provide safe food.

b) Large Multiples are in regular contact with customers as

they come to do the weekly shopping.

c) Loyalty cards provide a detailed profile of the customers'
shopping habits, thereby providing the Large Multiples with

Brussels, 7 April 2005.

an important customer database and a major source of
market intelligence.

d) They establish customer needs through market research.

e) They influence shopping behaviour through price promo-
tions, discounts, customer service, store layout and design.
In this context, the Large Multiples possess the ability to
influence the direction of the marketplace.

11. Conclusions

11.1
Greater information and transparency is needed on the
pricing structure and profit margins as between retailers,
suppliers (food processors) and primary producers.

11.2 Member States need to ensure that adequate competi-
tion exists in the regions within Member States, and to foster
cooperation between small agricultural producers, processors
and retailers, so that they can continue to compete with large
producers, processors
Furthermore,
Member States and the EU institutions must ensure the exis-
tence of various forms of commerce and avoid a total liberalisa-
tion of the market that would lead to further concentration on
the market.

and retail networks.

11.3
DG Internal Market needs to continually investigate
and evaluate consumer prices throughout the EU to ensure that
adequate competition is evident throughout the Community.

11.4
One area of competition law that should be looked at
is the definition of Public interest. It should not be confined to
prices and market forces only.

The buying power of the Large Multiples in the food
11.5
market must continue to be a matter of concern for the compe-
tition authorities.

11.6
There is a possibility that in the future food retailing
would be in the hands of a very small number of players,
which could lead to less consumer choice and higher prices.
The Commission and Member State Governments need to be
aware of such a possibility.

The EU must ensure that it maintains the production
11.7
of sufficient food to feed its own citizens. We must not become
dependent on non-EU food supplies.

11.8
Detailed research and analysis into price transmission
and the margins applying between the farm gate and the
consumer who buys food from the Large Multiple Retailer.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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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 consu-
mers 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 envir-
onmental 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, administra-
tion, 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?

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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 Multi-
ples. 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.