COMMISSION STAFF WORKING DOCUMENT Strengthening the position of farmers in the food supply chain Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1308/2013, (EU) 2021/2115 and (EU) 2021/2116 as regards the strengthening of the position of farmers in the food supply chain
Date: 2025-05-21
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: EU financing arrangements, aid to agriculture, common agricultural policy, contract, farmer, operational programme, producer organisation, supply chain, sustainable agriculture, young farmer

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 21.5.2025  SWD(2025) 260 final  COMMISSION STAFF WORKING DOCUMENT Strengthening the position of farmers in the food supply chain Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  amending Regulations (EU) No 1308/2013, (EU) 2021/2115 and (EU) 2021/2116 as       regards the strengthening of the position of farmers in the food supply chain {COM(2024) 577 final/2}  
 
 
Table of contents 

1. 
2. 

INTRODUCTION .................................................................................................................. 4 
POLITICAL AND LEGAL CONTEXT AND RECENT MARKET DEVELOPMENTS ..... 5 

3. 

4. 

2.1. 

Instruments that aim to strengthen the position of farmers in the agri-
food chain .............................................................................................. 5 
2.2.  Structure of the food chain and position of farmers ............................ 10 
2.3.  Farmers’  cooperation  in  producer  organisations  and  other  voluntary 
cooperation approaches ....................................................................... 15 
ISSUES AT STAKE, OBJECTIVES AND SELECTED MEASURES ............................... 17 

3.1.  Overview of issues at stake and the need to address them .................. 17 
3.2.  Objectives ............................................................................................ 20 
3.3.  Selected measures ................................................................................ 20 
3.3.1. A reinforced contractual framework ................................................... 24 
3.3.2. Enhanced cooperation between farmers in producer organisations and 
associations of producer organisations ................................................ 31 
3.3.3. Promotion of voluntary approaches ..................................................... 38 
LIKELY IMPACTS OF THE SELECTED MEASURES .................................................... 42 

4.1.  Economic impacts ............................................................................... 42 
4.1.1. A reinforced contractual framework ................................................... 42 
4.1.2. Enhanced cooperation between farmers in producer organisations and 
associations of producer organisations ................................................ 52 
4.1.3. Promotion of voluntary approaches ..................................................... 56 
4.2.  Social impacts and environmental impacts ......................................... 58 

ANNEX 1: OVERVIEW OF THE LEVEL OF COOPERATION OF FARMERS IN PRODUCER 
ORGANISATIONS AND OTHER ENTITIES .................................................................... 62 
ANNEX 2: SUMMARY OF STAKEHOLDER CONSULTATION ACTIVITIES ...................... 67 
ANNEX 3: WHO IS AFFECTED AND HOW? ............................................................................ 73 
PRACTICAL IMPLICATIONS OF THE INITIATIVE....................................................... 73 
1. 
SUMMARY OF COSTS AND BENEFITS ......................................................................... 74 
2. 

 
 
 
 
 
GLOSSARY 

Term or acronym 

Meaning or definition 

AFCO  

European Union Agri-Food Chain Observatory 

AGRIFISH Council  

Agriculture and Fisheries Council 

APO 

ASEDAS 

BEUC 

CAE 

CAP 

CEJA  

CMO  

COAG  

Association(s) of Producer Organisations  

Asociación de Empresas de Supermercados  

The European Consumer Organisation  

Cooperativas Agro-alimentarias de España 

Common Agricultural Policy  

European Council of Young Farmers 

Common Market Organisation  

Coordinadora  de  Organizaciones  de  Agricultores  y 
Ganaderos 

CR4 and CR5 

Concentration Ratio of the top 4 and 5 retailers or firms  

CUMAs 

ECVC  

EMB  

EU  

FEEF 

FMO  

FNAB 

Coopératives  d'Utilisation  de  Matériel  Agricole 
(France)  

European Coordination Via Campesina  

European Milk Board  

European Union  

Fédération des Entreprises et Entrepreneurs de France 

Finnish Food Market Ombudsman 

Fédération Nationale d’Agriculture Biologique  

FRESHFEL 

European Fresh Produce Association  

2 

 
 
 
FTF 

GIPT 

HHI 

HZR 

IBO 

JA 

MIV 

MS  

OPs 

PO 

R&D 

SATs 

SCAs 

SMEs 

SPR  

SWD 

TAPOs 

TFEU 

TPOs 

UNPT 

UPA 

UTP  

Fair Trade France 

Groupement  Interprofessionnel  pour  la  valorisation  de 
la Pomme de Terre 

Herfindahl-Hirschman Index 

The CAP Horizontal Regulation (EU) 2021/2116 

Interbranch Organisation  

Jeunes Agriculteurs 

Milch Industrie Verband 

Member State(s)  

Operational Programmes  

Producer Organisation  

Research and Development  

Sociedades Agrarias de Transformación (Spain)  

Sociétés  Coopératives  Agricoles 
Cooperatives, France) 

(Agricultural 

Small and Medium-sized Enterprises  

The CAP Strategic Plans Regulation (EU) 2021/2115 

Staff Working Document 

Transnational Associations of Producer Organisations 

Treaty on the Functioning of the European Union 

Transnational Producer Organisations  

Union Nationale des Producteurs de Pomme de Terre 

Unión de Pequeños Agricultores y Ganaderos  

Unfair Trading Practice(s)  

3 

 
 
 
 
1. 

INTRODUCTION 

The 2023/2024 farmer protests were centred around concerns about whether farmers were 
being  fairly  remunerated  for  their  work,  particularly  in  terms  of  price  transmission  and 
value-added  sharing  within  the  agri-food  value  chain,  due  to  their  weaker  bargaining 
position  compared  to  more  concentrated  and  powerful  buyers.  Alongside  the  targeted 
review of the common agricultural policy1 (‘CAP’), which the Commission proposed on 
15  March  2024  to  deliver  simplifications  while  maintaining  a  strong,  sustainable  and 
competitive policy for EU agriculture and food, the Commission also presented a reflection 
paper2.  This  paper  outlines  the  possibility  to  implement  several  legislative  and  non-
legislative measures to address this challenge by improving farmers’ position in the agri-
food  supply  chain  and  protecting  them  against  unfair  trading  practices.  The  proposal 
discussed in this Staff Working Document is one of the initiatives listed in the reflection 
paper.  

These ideas were subsequently presented to and discussed with the European Parliament 
Committee on Agriculture and Rural Development (‘COMAGRI’) on 19 March 20243, the 
ministers at the AGRIFISH Council meetings of 26 March4 and 29 April 20245 reflecting 
broad support from Members of the European Parliament (MEPs) and Ministers. These 
meetings were followed by a presentation at a joint meeting of the civil dialogue groups 
for agricultural markets and animal products on 17 April 2024. 

In parallel, on 25 January 2024 to provide a long-term perspective to farmers, President 
von der Leyen launched the Strategic Dialogue on the Future of Agriculture in the EU6, 
which resulted in a report delivered on 4 September 20247, in time for the new College of 
Commissioners, which took office on 1 December 2024, to prepare its priorities. 

Taking account of the reflections presented in March 2024, the reactions to them, and of 
the recommendations of the Strategic Dialogue, on 10 December 2024, the Commission 

1  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending  Regulations  (EU) 
2021/2115 and (EU) 2021/2116 as regards good agricultural and environmental condition standards, schemes 
for climate, environment and animal welfare, amendments to CAP Strategic Plans, review of CAP Strategic 
Plans  and  exemptions  from  controls  and  penalties,  COM(2024)  139  final,  15.3.2024.  Available  at: 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52024PC0139.  
2 European Commission, Commission proposes targeted review of Common Agricultural Policy to support 
EU farmers, press release, 15 March 2024, Brussels. Available at: 
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1493.  
3 Recording available at: https://multimedia.europarl.europa.eu/en/webstreaming/committee-on-agriculture-
and-rural-development_20240319-1600-COMMITTEE-AGRI (Accessed 26 March 2025).  
4    Further  information  available  at:  https://www.consilium.europa.eu/en/meetings/agrifish/2024/03/26/ 
(Accessed 26 March 2025).   
5    Further  information  available  at:  https://www.consilium.europa.eu/en/meetings/agrifish/2024/04/29/ 
(Accessed 26 March 2025).   
6  Further 
2024/european-green-deal/agriculture-and-green-deal/strategic-dialogue-future-eu-agriculture_en 
(Accessed 26 March 2025). 
7  Strategic Dialogue on the Future of EU Agriculture – Final Report. Brussels, 4 September 2024. Available 
at: 
https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/main-initiatives-strategic-
dialogue-future-eu-agriculture_en (Accessed 26 March 2025). 

information  available  at:  https://commission.europa.eu/strategy-and-policy/priorities-2019-

4 

 
 
 
proposed8  targeted  amendments  to  the  Common  Market  Organisation  (‘CMO’) 
Regulation9 and other CAP related basic acts (the CAP Strategic Plan Regulation and the 
Horizontal Regulation)10. These proposals aim to strengthen the position of farmers in the 
agri-food  supply  chain  while  preserving  the  principle  of  free  negotiation  of  parties  and 
market orientation of the current CMO Regulation.  

This  document  outlines  the  key  challenges  aimed  to  be  addressed  by  the  proposed 
measures,  the  process  and  consultations  activities  that  fed  into  the  adoption  of  the 
measures, the different measures considered and their likely impact.  

2.  POLITICAL AND LEGAL CONTEXT AND RECENT MARKET DEVELOPMENTS 

2.1. 

Instruments  that aim to  strengthen the position of farmers  in the agri-
food chain  

The  CAP  provides  measures  designed  to  strengthen  the  farmers’  position  in  the  food 
supply chain and increase their bargaining power vis-à-vis more powerful players. These 
measures are set out in the three basic acts of the CAP, the CMO Regulation, the CAP 
Strategic Plans Regulation (EU) 2021/2115 (‘SPR’) and the CAP Horizontal Regulation 
(EU) 2021/2116 (‘HZR’), as well as the Unfair Trading Practices (‘UTP’) Directive11. 

The  strengthening  of  the  farmers’  position  in  the  food  supply  chain  has  become  an 
increasingly prominent objective under the CAP in the past 25 years. The transition during 
the  1990s  from  a  price-support  system  within  the  CMOs  based  on  price  setting,  public 
intervention and export subsidies to an income-support system based on direct payments, 
allows  EU  agriculture  and  farmers  to  benefit  from  market-orientation.  The  growing 
integration  of  the  European  agri-food  sector  in  global  markets  has  created  significant 
trading opportunities, but it has also caused greater exposure to market imperfections and 
increased  price  volatility.  To  counteract  these  negative  effects,  in  2015  the  European 

8 European Commission, Commission proposes new measures to strengthen farmers' position in the agri-
food  supply  chain  and  enhance  cross-border  enforcement  against  unfair  trading  practices,  Press  release, 
IP/24/6321, Brussels, 10 December 2024. Available at: 
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_6321 (Accessed 26 March 2025). 
9    Regulation (EU)  No 1308/2013 of  the  European  Parliament  and  of  the  Council of 17 December  2013 
establishing  a  common  organisation  of  the  markets  in  agricultural  products  and  repealing  Council 
Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007, OJ L 347, 
20.12.2013, p. 671–854, ELI: http://data.europa.eu/eli/reg/2013/1308/oj.  
10  Regulation  (EU)  2021/2115  of  the  European  Parliament  and  of  the  Council  of  2  December  2021 
establishing  rules  on  support  for  strategic  plans  to  be  drawn  up  by  Member  States  under  the  common 
agricultural  policy  (CAP  Strategic  Plans)  and  financed  by  the  European  Agricultural  Guarantee  Fund 
(EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations 
(EU) No 1305/2013 and (EU) No 1307/2013, OJ L 435, 6.12.2021, p. 1 (CSP Regulation) and Regulation 
(EU)  2021/2116  of  the  European  Parliament  and  of  the  Council  of  2  December  2021  on  the  financing, 
management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/201, 
OJ L 435, 6.12.2021, p. 187-261 (Horizontal Regulation). 
11 Directive (EU) 2019/633 of the European Parliament and of the Council of 17 April 2019 on unfair trading 
practices in business-to-business relationships in the agricultural and food supply chain, OJ L 111, 25.4.2019, 
p. 59–72, ELI: http://data.europa.eu/eli/dir/2019/633/oj.  

5 

 
 
 
Commission created an expert group called the Agricultural Markets Task Force12, which 
issued recommendations13 on how to strengthen the farmers’ position in the food supply 
chain. Two of the recommendations of the Task Force correspond to the topics addressed 
by  the  proposal  at  stake,  namely  the  use  of  contracts  and  producer  cooperation.  These 
recommendations  were  partly  implemented  by  means  of  amendments  arising  from  the 
European Parliament in the process leading to adoption of Regulation (EU)2017/379314 
(“omnibus regulation”) and of Regulation (EU) 2021/211715. 

Since  2  021,  in  the  framework  of  the  farm  to  fork  strategy,  the  Commission  has  been 
organising under the auspices of the CAP Network16 (formerly the European Network for 
Rural  Development  (ENRD)  Contact  Point)  an  annual  ‘Forum  on  Best  Practices  in  the 
Agri-Food  Supply  Chain’.  This  is  one  of  the  actions  envisaged  by  the  European 
Commission to improve the farmers’ position in the supply chain and step up cooperation 
between farmers and other players in the agri-food supply chain.  

CMO Regulation 

The  CMO  Regulation  entered  into  force  in  2013,  regrouping  the  different  historical 
sectoral CMOs in place since the early 1960s, already merged in the so-called Single CMO 
in 2007, which included the 2012 “Milk package” measures, amended in 2018 (“Omnibus” 
amendment) and in 2021 (under of the CAP 2023-2027 reform)17. It establishes a common 
organisation of agricultural markets through transparent, equitable rules that ensure a level 
playing field for all economic actors involved in marketing agricultural products listed in 

12  Further  information  available  at:  https://agriculture.ec.europa.eu/common-agricultural-policy/agri-food-
supply-chain/agricultural-markets-task-force_en (Accessed: 25 March 2025).  
13 Agricultural Markets Task Force, Improving market outcomes – Enhancing the position of farmers in the 
supply  chain.  Brussels,  November  2016.  Available  at:  https://agriculture.ec.europa.eu/system/files/2020-
01/2016-11-amtf-final-report_en_0.pdf (Accessed 26 March 2025).  
14 Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017 amending 
Regulations (EU) No 1305/2013 on support for rural development by the European Agricultural Fund for 
Rural Development (EAFRD), (EU) No 1306/2013 on the financing, management and monitoring of the 
common  agricultural  policy,  (EU)  No  1307/2013  establishing  rules  for direct  payments  to  farmers  under 
support schemes within the framework of the common agricultural policy, (EU) No 1308/2013 establishing 
a common organisation of the markets in agricultural products and (EU) No 652/2014 laying down provisions 
for the management of expenditure relating to the food chain, animal health and animal welfare, and relating 
to plant health and plant reproductive material, OJ L 350, 29.12.2017, p. 15–49 (Omnibus Regulation). 
15 Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021 amending 
Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, 
(EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the 
definition, description, presentation, labelling and the protection of geographical indications of aromatised 
wine products and (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions 
of the Union, OJ L 435, 6.12.2021, p. 262–314. 
16  EU  CAP  Network  (2021–2024),  Forum  on  Best  Practices  in  the  Agri-Food  Supply  Chain,  meetings 
organised by the CAP Network in collaboration with the European Commission (DG AGRI), 2021–2024. 
Available  at:  https://eu-cap-network.ec.europa.eu/publications/farm-fork-strategy-and-cooperation-agri-
https://eu-cap-network.ec.europa.eu/publications/highlights-
food-supply-chain-highlights-report_en, 
https://eu-cap-
report-2nd-meeting-forum-best-practices-agri-food-supply-chain-highlights_en, 
network.ec.europa.eu/publications/highlights-report-3rd-farm-fork-forum-meeting_en, 
https://eu-cap-
network.ec.europa.eu/events/4th-meeting-forum-best-practices-agri-food-supply-chain_en    (Accessed  26 
March 2025). 
17 Earlier, the CMO Regulation had been significantly amended in 2012 (“Milk Package”) and  2018 (the 
‘omnibus’ process) to clarify and reinforce competition exclusionss for producer organisations. 

6 

 
 
 
Annex 1 of the Treaty. Among others, it lays down rules on contracts, cooperation, and 
exclusions  from  the  application  of  competition  rules,  allowing  farmers  to  organise 
themselves  in  producer  organisations  (‘POs’)  or  alongside  other  players  in  the  supply 
chain,  and  interbranch  organisations  (‘IBOs’).  It  also  contains  horizontal  and  sector-
specific rules on recognition of POs, as well key provisions to ensure market transparency.  

The  most  recent  amendments  to  the  CMO  Regulation,  adopted  in  December  2021, 
introduced several changes. These include: 

- 
- 

- 

- 

a new exclusion from competition rules for sustainability-enhancing agreements; 
revised  roles  and  competences  for  POs  and  IBOs,  particularly  in  the  areas  of 
sustainability, contractual framework and risk management;  
extended  concept  for  value-sharing  clauses in  contracts  that enables farmers to 
better share the value created further downstream in the supply chain; and 
improvements to geographical indications, offering producers greater flexibility 
in  managing  product  specifications,  control  schemes,  and  private  supply 
management.  

These provisions aim to help improve farmers’ bargaining power, reduce transaction costs, 
and foster collaboration  in  processing  and marketing. Market  orientation  and free price 
formation are the central principles, ensuring that prices are largely determined by supply 
and demand.  

In  addition,  the  Commission  aims  to  the  improve  market  transparency  in  secondary 
legislation18  as  well  as  through  non-legislative  initiatives.  Market  transparency  aims  to 
correct information asymmetries and enable farmers to take more informed decisions either 
through existing EU market observatories19 or through data published on the agri-food data 
portal20.  On  12  December  2024  the  Commission  adopted  a  report21  showing  how  new 
technologies could further improve market data.  

To further increase transparency, boost the bargaining position of farmers and foster trust 
among  supply  chain  actors,  a  new  observatory,  the  EU  Agri-Food  Chain  Observatory 
(‘AFCO’) was set up in April 202422. Its objectives include: (i) exchanging information to 
develop a shared understanding of the sector’s challenges; (ii) increasing transparency on 
costs  and  margins  in  the  chain;  and  (iii)  identifying  trading  practices  and  contractual 

18    See  e.g.,  Commission  Implementing  Regulation  (EU)  2019/1746  of  1  October  2019,  amending 
Implementing Regulation (EU) 2017/1185 laying down rules for the application of Regulations (EU) No 
1307/2013 and (EU) No 1308/2013 of the European Parliament and of the Council as regards notifications 
to the Commission of information and documents, C/2019/6908, OJ L 268, 22.10.2019, p. 6. Available at: 
ELI: http://data.europa.eu/eli/reg_impl/2019/1746/oj. 
19  See  for  further  details  on  the  EU  market  observatories:  https://agriculture.ec.europa.eu/data-and-
analysis/markets/overviews/market-observatories_en.  
20  See  for  further  information  and  access  to  the  data  published  on  the  agri-food  data  portal: 
https://agridata.ec.europa.eu/extensions/DataPortal/home.html.  
21 European Commission, Report from the Commission to the European Parliament and the Council: The 
use of new information and communication technologies to ensure better market transparency pursuant to 
Article  225(dc)  of  Regulation  (EU)  No  1308/2013,  COM(2024)568  final,  Brussels,  12  December  2024. 
Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52024DC0568. 
22 See for further information on the work of AFCO: https://agriculture.ec.europa.eu/common-agricultural-
policy/agri-food-supply-chain/afco_en.  

7 

 
 
 
arrangements that affect how the chain operates. In the medium term, the AFCO aims to 
develop methodologies and indicators to assess cost structures and value distribution.  

Other CAP related regulations 

The CAP continues to pursue the Treaty objectives of increasing agricultural productivity 
through  technological  progress,  ensuring  a  fair  income  for  farmers,  stabilising  markets, 
safeguarding supplies, and offering consumers reasonable prices.  

The  2021  Reform  of  the  CAP  covering  the  2023-2027  period  introduced  significant 
changes with the SPR23 and HZR24, in particular a new delivery model that shifts from a 
compliance-based approach to a performance- and results-oriented policy. Consequently, 
Member States now bear greater responsibility for designing their national strategic plans 
and must be held more accountable for achieving the agreed objectives and requirements. 
One of the CAP’s specific objectives mentioned in Article 6 of the SPR refers explicitly to 
the  need  “to  improve  the  farmers’  position  in  the  value  chain”.  To  further  strengthen 
farmers’ competitiveness, the SPR allows Member States - under certain conditions - to 
fund sectoral interventions through operational programmes in many sectors, apart from a 
few  exceptions  (e.g.  wine,  beekeeping,  tobacco  and  ethanol).  While  such  programmes 
were  previously  limited  to  the  fruit  and  vegetable  sector,  they  are  now  more  broadly 
available.  Farmers  can  benefit  by  joining  recognised  POs  and  taking  advantage  of  the 
measures these organisations implement. The EU financing available to POs is limited to 
a certain percentage (4.1% for fruit and vegetables, 6 % for other sectors) of the value of 
marketed production (VMP) by the POs. This means that the funding is proportional to the 
VMP or placed in the market collectively by POs for their members. These interventions 
and their modalities reinforce the role of POs and create a strong financial incentive for 
farmers to either join existing POs or for non-recognised POs to seek recognition.  

UTP Directive 

The  UTP  Directive  was  adopted  by  the  European  Parliament  and  the  Council  on  
17 April 2019. It is binding on all 27 Member States and establishes a minimum level of 
harmonisation  in  the  matter  by  introducing  a  list  of  prohibited  unfair  trading  practices 
(‘UTPs’) between buyers and suppliers in the agricultural and food supply chain. Under 
the  Directive,  Member  States  must  prohibit  certain  UTPs,  which  are  divided  into  two 
categories:  (i)  per  se  or  unconditional  prohibitions  (‘black  list’),  and  (ii)  conditional 
prohibitions  (‘grey  list’)  -  the  latter  being  prohibited  unless  agreed  in  clear  and 
unambiguous terms  in  the supply agreement  or in  a subsequent  agreement  between the 
supplier and the buyer. The Directive also sets out minimum rules on enforcement of these 
prohibitions and provides for cooperation between enforcement authorities. Member States 
may adopt or maintain stricter national rules that go beyond those listed in the Directive, 
provided these comply with the rules governing the functioning of the internal market. 

23 The SPR sets out the objectives, interventions, and financial arrangements under the CAP for 2023–2027. 
It also contains rules on coordination, governance, monitoring, reporting, and evaluation. 
24 The HZR provides the framework for CAP financing, management, and monitoring. It further details how 
the  European  Agricultural  Guarantee  Fund  (EAGF)  and  the  European  Agricultural  Fund  for  Rural 
Development (EAFRD) are allocated and used. 

8 

 
 
 
Member  States  were  required  to  transpose  the  Directive  into  their  national  legal 
frameworks  by  1  May  2021.  By  December  2022,  all  Member  States  had  notified  the 
Commission that the Directive had been fully transposed. Further details on transposition 
can be found in the Report on Implementing the Prohibition of Unfair Trading Practices 
to Strengthen the Position of Farmers and Operators in the Agricultural and Food Supply 
Chain25 of 23 April 2024, as well as in the accompanying SWD26. On 10 December 2024, 
the Commission presented also a proposal27 aimed at strengthening rules for cross-border 
enforcement against UTPs in the agri-food supply chain, as outlined in the UTP Directive. 
This legislative proposal is part of the response to farmers' protests, and it intends to tackle 
the challenges faced by UTP enforcement authorities when buyers and suppliers operate 
across different Member States by improving cooperation between the UTP enforcement 
authorities.  The  Commission  is  also  currently  conducting  the  first  evaluation  of  the 
Directive and must present its findings in a report by 1 November 2025.28 

Strategic Dialogue on the Future of EU Agriculture 

As announced by President von der Leyen in the State of the Union address29 in September 
2023, the Strategic Dialogue30 on the future of EU agriculture was launched in January 
2024.  It  brought  together  29  experts  from  the  agri-food  sector,  civil  society,  rural 
communities,  and  academia  to  forge  a  shared  vision  for  the  EU’s  farming  and  food 
systems.  In  its  final  report31  published  on  4  September  2024,  the  Dialogue  issued 
recommendations to the EU institutions, in particular to the European Commission, and 
the Member States. 

25  European  Commission,  Report  from  the  Commission  to  the  European  Parliament,  The  Council,  The 
European Economic and Social Committee and the Committee of the Regions: Implementing the Prohibition 
of Unfair Trading Practices to Strengthen the Position of Farmers and Operators in the Agricultural and Food 
Supply Chain – State of Play, {SWD(2024) 106 final}, European Commission, Brussels, 2024. Available at: 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2024:176:FIN (Accessed: 26 February 2025). 
26  European  Commission,  Commission  Staff  Working  Document:  Unfair  Trading  Practices  (UTP)  - 
Overview Tables on Member States’ Transposition Choices and Enforcement Activities. Accompanying the 
document Report from the Commission to the European Parliament, The Council, The European Economic 
and Social Committee and the Committee of the Regions: Implementing the Prohibition of Unfair Trading 
Practices to Strengthen the Position of Farmers and Operators in the Agricultural and Food Supply Chain – 
State  of  Play,  SWD/2024/106  final/2,  European  Commission,  Brussels,  2024.  Available  at:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2024:106:REV1 (Accessed: 26 February 2025). 
27  European  Commission,  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on 
cooperation among enforcement authorities responsible for the enforcement of Directive (EU) 2019/633 on 
unfair  trading  practices  in  business-to-business  relationships  in  the  agricultural  and  food  supply  chain, 
COM(2024)  576  final,  2024/0318(COD),  Brussels,  10  December  2024.  Available  at:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52024PC0576&qid=1740660011175. 
28 See for further information on the evaluation:  https://ec.europa.eu/info/law/better-regulation/have-your-
say/initiatives/13826-Agricultural-food-supply-chain-combating-unfair-trading-practices_en.   
29 Ursula von der Leyen, 2023 State of the Union Address, September 13, 2023, Strasbourg. Available at: 
https://ec.europa.eu/commission/presscorner/detail/en/speech_23_4426. 
30 See further information on the Strategic Dialogue:  https://commission.europa.eu/topics/agriculture-and-
rural-development/strategic-dialogue-future-eu-agriculture_en.  
31 The final report of the Strategic Dialogue on the future of EU agriculture – A shared prospect for farming 
and food in Europe, 4 September 2024. Available at: 
https://agriculture.ec.europa.eu/document/download/171329ff-0f50-4fa5-946f-
aea11032172e_en?filename=strategic-dialogue-report-2024_en.pdf (Accessed: 26 February 2025).  

9 

 
 
 
The  first  chapter  of  recommendations  of  the  Dialogue’s  report  deals  with  a  fair  and 
competitive  food  value  chain  by  strengthening  the  farmers’  position  in  this  chain. 
Recommendations in this area focus on contracts, inviting to consider data on production 
costs  and  prices  as  relevant  elements  in  contractual  negotiation,  favouring  more 
transparency  in  favour  of  farmers  and  other  weaker  operators  and  allowing  for 
renegotiations in case of an exceptional cost increase. The recommendations also highlight 
the importance of mediation mechanisms. 

The  Strategic  Dialogue  also  calls  for  POs  and  associations  of  producer  organisations 
(‘APOs’) to be strengthened (e.g., via targeted support) and for the process for recognising 
them to be simplified. The Strategic Dialogue recognises that economic, environmental, 
and  social  dimensions  of  sustainability  are  equally  important  for  European  societies  in 
general  and  the  agri-food  systems  in  particular.  It  also  recognises  that  the  CAP  should 
promote  positive  environmental  and  social  outcomes  and  support  the  diversification  of 
sustainable business models, including, for example, short supply chains. 

2.2. 

Structure of the food chain and position of farmers  

The EU’s agri-food supply chain shows different degrees of market concentration across 
its  different  segments.  In  particular,  while  agricultural  production  remains  highly 
fragmented,  the  agricultural  inputs  sector  (e.g.,  seeds,  fertilisers,  agro-chemicals,  and 
machinery) and parts of the food processing sector are highly consolidated, dominated by 
a few multinational companies with significant  market power.  In addition, international 
trading of agricultural commodities is also traditionally a concentrated segment, with few 
strong trading  companies controlling  substantial logistical  assets (e.g. for transportation 
terminals  and  storage  facilities)  at  the  main  trade  hubs.  Furthermore,  retail  also  shows 
varying degrees of concentration, ranging from high to moderate at the national level, both 
for wholesale purchasing and for retail sales. 

10 

 
 
 
 
Figure 1: Organisation of the food supply chain 

Source: CDC 

Figure  2:  Stylised  representation  of  the  EU  agri-food  supply  chain  from  farmers  to 
consumers. 

Source: DG AGRI, CAP specific objectives explained – Brief No. 3  

The structure of the agri-food supply chain 

Regarding  the  structure  of  the  agricultural  level,  most  segments  of  production  remain 
highly fragmented. In 2020, the agricultural sector employed 8.7 million people in the EU 
(4.2% of total employment), whose main occupation was in agriculture, either as employed 

11 

 
 
 
 
 
 
 
salary  workers  or  self-employed  farmers.32  In  addition,  the  sector  relied  on  a  regular 
agricultural labour force of approximately 17 million people, including not only full-time 
workers but  also  part-time and seasonal  workers  - primarily self-employed farmers and 
their family members who regularly work on the farm. In 2023, the total output of the EU's 
agricultural  industry reached  €537.1 billion, generating  €223.9 billion in added value.33 
Despite these substantial figures, the majority of the EU's 9.1 million farm holdings (i.e. 
farms) were family-run and of a small or medium size, with an average size of 17.1 hectares 
in 2020.34 Farms with an annual standard output below €100,000 represent 92% of the total 
number of agricultural holdings in 2020 (8.4 million farms)35.. In contrast, only 3.6% of 
farms exceeded 100 hectares. However, these accounted for 51.8% of the total agricultural 
land.36 Farm concentration remained low, with just 7% of farms exceeding 50 hectares and 
a  concentration  ratio  for  the  top  five  firms  (‘CR5’)  of  only  0.19%  at  the  EU  level.37 
Between  2010  and  2020,  the  number  of  farms  under  5  hectares  fell  by  2.7  million, 
contributing to an overall decline of 3 million farms (24.8%), while the number of large 
farms  continued  to  grow,  despite  the  total  agricultural  area  remaining  relatively  stable 
(down just 2.2%).38 

The food (including beverages) processing industry is a major EU manufacturing sector, 
comprising 309 045 firms, employing 4.7 million people, and generating €266 billion in 
value-added.39 Some of the food processing sectors arehighly concentrated as explained 
further below, in particular those for food preparation deriving from complex processing 
activities, with large corporations dominating key subsectors such as meat processing, seed 
processing, dairy, and beverages. While 95.8% of EU food (incl. beverages) processors are 
small  to  medium-size  enterprises  (‘SMEs’),  firms  larger  than  SMEs  generate  57.6%  of 
value-added  in  food  processing  and  68%  in  beverages.40  This  concentration  has  been 
driven by natural growth and mergers. 

32  Eurostat,  Farmers  and  the  agricultural  labour  force  –  statistics,  November  2022,  available  at: 
https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Farmers_and_the_agricultural_labour_force_-
_statistics#Agriculture_remains_a_big_employer_in_the_EU.3B_about_8.7_million_people_work_in_agri
culture (accessed 26 February 2025). 
33  Eurostat,  Performance  of  the  agricultural  sector  –  statistics,  November  2024,  available  at: 
https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Performance_of_the_agricultural_sector#SE_MAIN_TT  (accessed  26  February 
2025).   
34 Eurostat, Key Figures on the European Food Chain – 2023 Edition, 6 December 2023, p. 13, available at:  
https://doi.org/10.2785/265789 (accessed 26 February 2025). 
35 Eurostat, Farm Structure Survey 2020. 
36 Ibid, p. 13. 
37 European Commission. Commission Staff Working Document: Impact Assessment - Initiative to Improve 
the  Food  Supply  Chain  (Unfair  Trading  Practices),  SWD(2018)  92  final,  Brussels,  12  April  2018., 
Accompanying the Proposal for a Directive of the European Parliament and of the Council on Unfair Trading 
Practices in Business-to-Business Relationships in the Food Supply Chain, page 42. Available at: https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52018SC0092. 
38  Eurostat,  Key  Figures  on  the  European  Food  Chain  –  2023  Edition,  6  December  2023,  available  at:  
https://doi.org/10.2785/265789 (accessed 26 February 2025). 
39  Eurostat,  Key  Figures  on  the  European  Food  Chain  –  2024  Edition,  November  2024,  available  at:  
https://doi.org/ 10.2785/5897613 (accessed 26 March2025). 
40 Eurostat, Key Figures on the European Food Chain – 2023 Edition, 6 December 2023, p. 55, available at:  
https://doi.org/10.2785/265789 (accessed 26 February 2025). 

12 

 
 
 
Evidence of this dominance is also evident in the high concentration levels within certain 
sub-sectors and varies across the Member States. According to a JRC study41, 35% of the 
subsector - Member State pairs42 are highly concentrated, 14% moderately concentrated 
and  the  remaining  51%  unconcentrated.  Moreover,  the  product-specific  concentration 
varies. In 14 Member States, branded markets for baby food, cereals, coffee, frozen pizzas, 
ready-cooked  meals,  ice  cream,  and  yogurt  are  highly  concentrated.  However,  some 
sectors  remain  fragmented,  such  as  bread.  Among  the  Member  States,  Denmark,  the 
Netherlands, and Finland report the highest average Herfindahl Hirschman Index43 (‘HHI’) 
values  (above  2500),  while  Italy  and  Germany  remain  below  1600  across  23  product 
categories.44 

In  2020,  the  wholesale  and  retail  sector  contributed  €293  billion  in  value-added  and 
employed 8.4 million people across 1.12 million companies.45 The wholesale and retail 
concentration varies across Member States and market segments. Generally, the retail level 
exhibits often moderate levels of concentration and sometimes high concentration levels 
at national level. The concentration ration of the four largest retailers in a national market 
(‘CR 4’; calculated as a sum of the share of sales of the four largest retailers in a national 
market)46  ranged  from  31%  to  94%  in  2017.47  In  Germany,  the  four  largest  retailers 
controlled 76% of retail sales in 2023,48 while in the Netherlands, they accounted for 95.1% 
in 2021.49 In 2022, the four largest retailers in Austria collectively held a market share of 
91%.50 Conversely, at the other end of the spectrum, Bulgaria, Greece, Italy, and Romania 
had CR4 values below 40%.  

Beyond  market  concentration,  horizontal  and  vertical  integration  further  shape  the 
structure  of  the  agri-food  supply  chain.  Large  retailers  increasingly  engage  in  vertical 
integration,  acquiring  or  developing  upstream  suppliers,  including  food  processing 
facilities  and  sometimes  even  agricultural  land  or  farms,  or  expanding  private-label 
product lines. With supermarkets, hypermarkets, and discounters accounting for 71% of 

41  European  Commission,  Joint  Research  Centre  Technical  Report  -  Market  Power  in  Food  Industry  in 
Selected EU Member States, 2021, p. 15-16, available at: https://doi.org/10.2760/63613. 
42 Each subsector is present in different MS. A “pair” represents one subsector in a determined MS. 
43 Herfindahl-Hirschman Index (HHI): The HHI is a commonly used measure of market concentration and 
competition. It is calculated by summing the squares of the market shares of all firms in a given market. 
Higher HHI values indicate greater market concentration and potentially reduced competition. 
44 Ibid, p. 17.  
45 Eurocommerce, Retail & Wholesale in the agri-food value chain – key facts and figures, 2023. 
46 The CR4 ratio, calculated as a sum of the share of sales of the four largest retailers in a national market, 
provides their share of total demand at national level for the purchase of goods. It also provides a general 
indication of the average concentration at local level for final sales to end consumers, although that might 
vary significantly among various local catchment areas. 
47  European  Commission,  Joint  Research  Centre  Technical  Report  -  Market  Power  in  Food  Industry  in 
Selected EU Member States, 2021, p. 14, available at: https://doi.org/10.2760/63613. 
48 Ahrens, S., Market shares of the leading companies in the food retailer sector in Germany 2023, Statista, 
July  2024,  available  at  https://de.statista.com/statistik/daten/studie/159987/umfrage/umsatzanteile-von-
lebensmittelhaendlern/#statisticContainer (accessed 26 February 2025). 
49Distrifood, Marktaandelen 2008-2020 Nielsen, available at 
https://www.distrifood.nl/fooddata/marktaandelen (accessed 22 October 2024). 
50  Austrian  Competition  Authority.  Sector  Inquiry  Food.  Vienna,  202,  page  44.  Available  at: 
https://www.bwb.gv.at/fileadmin/user_upload/BU-LM_final_original1_inh_NEU2.pdf 
26 
February 2025).  

(accessed: 

13 

 
 
 
packaged food sales in the EU51, retailers can act as gatekeepers for consumer markets, 
applying significant influence over supply chains, pricing, and competition dynamics.52 

Farmers’ bargaining power 

Given the structure of the agri-food supply chain, farmers are frequently confronted with 
more  consolidated  and  powerful  players  in  their  commercial  negotiations.  In  these 
conditions,  they  often  find  themselves  in  a  weaker  bargaining  position  with  a  limited 
alternative  market  options  making  it  difficult  to  exert  influence  over  prices.  Studies 
mention  that  supply  chain  actors with  more  market  power are assumed to pass  through 
price  changes in  such a  way that their margins are maintained or even increased  at  the 
expense of weaker operators like farmers. Some studies explicitly test this; however, they 
only focus on one product, and without much variation in market structure it is often not 
possible to test properly.53  

The unique characteristics of agricultural production further weaken farmers' bargaining 
positions. Long production cycles, the perishability and seasonality of products, and a high 
dependency  on  climate  conditions  contribute  to  farmers’  vulnerability.  Biological 
uncertainties (e.g. animal diseases or plant pests) and inelastic demand further complicate 
the  situation.  This  vulnerability  is  further  exacerbated  by  the  need  for  long-term 
investments and the unpredictability of external factors. Seasonal production cycles and 
high perishability require many products to be sold fresh, often forcing farmers to accept 
terms  determined  by  more  powerful  market  operators.  Such  conditions  may  result  in 
situations  that  can  be  called  “hold-up  scenarios”,  where  perishability  eliminates  the 
possibility to look for alternative buyers, leaving farmers with little choice but to accept 
conditions  imposed  by  stronger  market  operators.54  In  addition,  reliance  on  weather 
conditions and biological growth cycles introduces unpredictability, complicating stable 
planning.  As  a  result,  farmers  face  specific  challenges  in  negotiations,  with  limited 
capacity  to  quickly  respond  to  changes  in  market  demands.  To  compensate  these 
challenges, some of them being inherent to the agricultural activity, reinforcing the market 
power  of  farmers  in  the  chain  is  a  way  to  allow  them  to  better  respond  to  market 
opportunities. 

51 European Commission. Commission Staff Working Document: Impact Assessment - Initiative to Improve 
the  Food  Supply  Chain  (Unfair  Trading  Practices),  SWD(2018)  92  final,  Brussels,  12  April  2018. 
Accompanying the Proposal for a Directive of the European Parliament and of the Council on Unfair Trading 
Practices  in  Business-to-Business  Relationships  in  the  Food  Supply  Chain.  Available  at:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52018SC0092. 
52 Idem.  
53 European Commission: Joint Research Centre, Galen, M., Gardebroek, C., Dries, L., Baltussen, W. et al., 
Monitoring  of  prices  and  margins  in  EU  food  supply  chains  –  Existing  and  alternative  approaches, 
Publications  Office,  2019,  https://data.europa.eu/doi/10.2760/197814;  Van  Galen,  Michiel,  and  Robert 
Hoste, Profit Analysis in Animal Product Supply Chains: Exploratory Research and Proposal for a Generic 
Approach, 1 May 2016, Available at:  https://doi.org/10.18174/382676 (accessed: 28 February 2025). 
54 Agricultural Markets Task Force, Improving Market Outcomes – Enhancing the Position of Farmers in the 
Supply Chain: Report of the Agricultural Markets Task Force, November 2016, Brussels, page 29. Available 
at: 
https://agriculture.ec.europa.eu/common-agricultural-policy/agri-food-supply-chain/agricultural-markets-
task-force_en (accessed: 28 February 2025).  

14 

 
 
 
2.3. 

Farmers’  cooperation  in  producer  organisations  and  other  voluntary 
cooperation approaches  

Farmers  may  organise  collectively  to  improve  their  bargaining  position  and  manage 
agricultural  and  economic  activities  more  efficiently.  The  degree  of  organisation  varies 
across  Member  States  and  sectors.  Cooperation  within  a  PO  may  include  production 
planning, marketing, joint purchasing of inputs, storage, transport, logistics, and quality 
control. The three main  activities carried out  by  recognised POs/APOs  consist  in  ‘joint 
contractual  negotiations’,  ‘joint  commercialisation  strategies’,  and  ‘joint  planning  of 
quantity’.55 The incentives that drive EU farmers to set up or join POs are of economic, 
technical  or  social  and  human  nature:  POs  strengthen  the  farmers’  position  in  the  food 
supply chain by ensuring, among others, higher market penetration and greater bargaining 
power vis-à-vis their business partners; POs add value to the business activities of their 
members  when 
to  production; 
instance, 
infrastructures for production, storage or processing plants; logistic services; or research 
and development activities; most POs refer to their democratic functioning, which over 
time helps consolidate and maintain trust in horizontal cooperation.  

technical  assistance 

they  provide,  for 

The benefits POs may bring to their members, translate, in essence, into greater bargaining 
power (more advantageous contractual terms) for their members and increased efficiency 
and effectiveness in agricultural productivity (through technical advice, technical know-
how, joint use of infrastructure and equipment) and marketing (through joint commercial 
strategies).  Furthermore,  POs  do  not  only  benefit  their  members,  but  also  the  local 
communities  where  POs  are  located.  POs  create  direct  employment  opportunities  for 
carrying  out  their  activities  in  processing,  advice,  marketing  etc.,  as  well  indirect 
employment opportunities in the rural areas where they operate, besides giving visibility 
to the quality of the products of the regional or of local agricultural activity. In 2018, the 
EU had over 42 000 POs, many operating as cooperatives, of which only 2 909 (7%) are 
officially  recognised.  Recognised  POs  are  concentrated  in  France,  Italy,  Spain,  and 
Germany, which account for 73% of the total. They represent more than 720 000 producers 
and  contribute  to  approximately  10%  of  the  total  value  of  EU  agricultural  production, 
mainly  in  the  fruit  and  vegetables  sector.  The  fruit  and  vegetables  sector  benefits  from 
support granted through POs via the so-called “operational programmes” since 1996. In 
addition to POs, other recognised entities of producer cooperation in the EU include 88 
APOs, 44 Transnational Producer Organisations (‘TPOs’), two Transnational Associations 
of Producer Organisations (‘TAPOs’) and 124 Interbranch Organisations (‘IBOs’)56.  

In  the  fruit  and  vegetables  sector,  1  164  POs,  including  some  transnational  ones, 
implemented CAP sectoral interventions through operational programmes (‘OPs’) across 
the EU in 2023. Spain (447), Italy (262), and France (167) had the highest number of POs 
implementing  OPs.  Additionally,  21  associations  of  producer  organisations  (APOs)  ran 
OPs,  with  Italy  (13)  and  France  (3)  leading  in  numbers.  In  2023,  first  year  of 

55  European  Commission:  Arcadia  International  E.E.I.G,  Directorate-General  for  Agriculture  and  Rural 
Development, EY, Montanari, F., Chlebicka, A. et al., Study of the best ways for producer organisations to 
be  formed,  carry  out  their  activities  and  be  supported  –  Final  report,  {OPL},  2019,  Available  at: 
https://data.europa.eu/doi/10.2762/034412. 
56  IBOs  include  besides  farmers  also  downstream  operators  at  the  processing  and  distribution  level  as 
members of the entity. 

15 

 
 
 
implementation of the SPR, only three Member States implemented OPs outside the fruit 
and vegetables sector. Italy reported 17 OPs under the 'other products' category, in line 
with SPR. Portugal implemented three OPs, also through POs - two in the cereals sector 
and one in other products. Slovakia had 11 OPs, all managed by POs, with nine in milk 
and dairy, one in pigmeat, and one in other products. As from 2024, sectoral interventions 
implemented through operational programmes in other sectors than the fruit and vegetables 
continued to develop in new Member States and sectors.  For further details, please see 
Annex 1 that provides detailed data per Member State.  

In  addition,  many  farmers  collaborate  outside  formal  POs  by  engaging  in  a  number  of 
activities, for example short food supply chains that bring producers and consumers closer 
together.57 These initiatives include direct on-farm sales, participation in farmers' markets, 
community-supported agriculture networks, and forming of local distribution networks or 
food cooperatives.58 By reducing the number of intermediaries between the farmer and the 
final consumer, these approaches allow producers to retain a higher share of the final price 
and foster mutual trust between farmers and consumers.59 

In  some  Member  States,  farmers  together  with  other  operators  have  also  initiated 
collaborative initiatives, including "fair price" labels, independently of POs and IBOs to 
ensure better incomes,60 such as for example Fairebel61 or Prix Juste Producteur62 label to 
guarantee fair prices for milk and other products, Bio Équitable63 or Agri-Éthique64.  These 
farmer-led labels enjoy strong public recognition. For example, 73% of Belgian consumers 
believe fair arrangements should also apply to European farmers.65 

7 

on 

last 

vol. 

193, 

2021. 

2021, 

updated 

October 

103226, 

Systems, 

February 

Available 

13  August 

2021.  Available 

57  Enthoven,  L.,  &  Van  den  Broeck,  G.,  "Local  Food  Systems:  Reviewing  Two  Decades  of  Research," 
at: 
Agricultural 
https://doi.org/10.1016/j.agsy.2021.103226; Strategic Guide for Short Food Supply Chains, Strength2Food, 
Horizon  2000  project.  Available  at:  https://www.strength2food.eu/wp-content/uploads/2021/04/Strategic-
Guide-Short-Food-Supply-Chains.pdf. 
58  Kjersti  Lassen,  "Motivating  to  Support  Local  Production,"  Consumption  Research  Norway  (SIFO), 
published 
at: 
https://www.oslomet.no/en/research/featured-research/motivating-to-support-local-production;  Kneafsey 
M, Venn L, Schmutz U, Balasz B, Trenchard L, Eyden-Wood T, Bos E, Sutton G, Blackett M, with Santini 
F and Gomez Y Paloma S as editors, "Short Food Supply Chains and Local Food Systems in the EU: A State 
of Play of their Socio-Economic Characteristics," Luxembourg: Publications Office of the European Union, 
2013. Available at: https://publications.jrc.ec.europa.eu/repository/handle/JRC80420.  
59 Idem; Stein, A.J., & Santini, F., "The Sustainability of 'Local' Food: A Review for Policy-Makers," Review 
of  Agricultural,  Food  and  Environmental  Studies,  vol.  103,  pp.  77–89,  2022.  Available  at: 
https://doi.org/10.1007/s41130-021-00148-w. 
60 Riera Anton and Antier Clémentine, "DiverIMPACTS: Final Report," UCLouvain. Project duration: June 
2017 
to  May  2022.  Available  at:  https://zenodo.org/record/5913250  and  https://sytra.be/wp-
content/uploads/2021/02/sytra-diverimpacts-fair-price-pa.pdf; Sirdey, Ninon, Maisonhaute, Julie, & Arnold, 
Nadine,  "Should  Fair  Trade  Be  Practiced  beyond  International  Trade?  The  Rise  of  Domestic  Fair  Trade 
Initiatives," in Commerce équitable: entre amplification et instrumentalisation, pp. 189–207. Available at: 
https://doi.org/10.3917/ried.240.0189. 
61 Idem; For further information see: https://www.fairebel.be/.  
62 For further information see: https://collegedesproducteurs.be/prix-juste-producteur/.  
63 For further information see: https://www.bio-equitable-en-france.fr/.  
64 For further information see: https://www.agriethique.fr/.  
65 Poos, Samuel, "Local Fair Trade in Belgium and Europe," 8 February 2021. Available at: https://www.tdc-
enabel.be/en/2021/02/08/fair-trade-of-belgian-products-gaining-a-foothold  (Accessed 16 March 2025). 

16 

 
 
 
3. 

ISSUES AT STAKE, OBJECTIVES AND SELECTED MEASURES 

3.1.  Overview of issues at stake and the need to address them 

During the 2023/2024 protests, EU farmers raised concerns about their weakening position 
within the agri-food supply chain, particularly in relation to price transmission and value 
added distribution in the chain. This imbalance stems from the structural characteristics of 
the sector described in Section 2.2, by which, as a result, farmers often find themselves in 
a  disadvantaged  position  when  negotiating  prices  and  contract  terms.  With  limited 
bargaining  power,  they  are  often  price  takers  rather  than  price  setters,  leaving  them 
vulnerable to market fluctuations and price transmission asymmetries, where retail prices 
tend to remain high even when farm-gate prices decline.66 

The relatively low level of horizontal cooperation among farmers only partly answers to 
such challenges. Cooperation through cooperatives (the most common form of POs) differs 
by Member State and sector. Three groups of Member States can be identified on the basis 
of  the  economic  importance  that  cooperatives  (recognised  or  not)  play  in  the  relevant 
national  context:  low,  with  less  than  20%  market  share  in  EE,  EL,  LT,  HU,  PL,  SK; 
medium from 20% to 50% market share in BE, CY, CZ, DE, ES, IT, LV, PT, and high 
with  more  than  50%  market  share  in    AT,  DK,  IE,  FR,  NL.67  Only  around  8%  of  EU 
farmers are members of a recognised PO, and these recognised POs account for just 10% 
of  the  total  value  of  marketed  agricultural  production  in  the  EU.68  The  non-recognised 
entities  do  not  benefit  from  the  legal  exemption  that  would  allow  them  to  collectively 
negotiate on behalf of their members with the same degree of legal certainty as recognised 
POs. These aspects further potentially limit access of farmers to collective negotiations to 
counterbalance the bargaining power of more concentrated buyers. 

The lack of alternative distribution channels also exacerbates farmers’ dependency on a 
limited number of buyers. Due to factors such as geographical constraints, perishability of 
agricultural products, and high market concentration in certain Member States in the retail 
and processing sectors, farmers often face restricted choices when it comes to selling their 
products. This increases their exposure to the so-called 'fear factor,' whereby the risk of 
losing a commercial transaction or facing retaliation discourages them from challenging 
unfavourable contract terms or even asking for a contract and negotiating the price. 

These  structural  challenges  collectively  contribute  to  unpredictable  farm  incomes, 
financial  instability,  and  difficulties  in  accessing  loans.  The  situation  has  been  further 
exacerbated by the compounding effects of multiple crises in recent years, which have led 
to severe disruptions in supply chains and an unprecedented rise in the cost of essential 

66  See  OECD,  15  May  2014,  Competition  issues  in  the  food  chain  industry,  p.  11-12.  Available  at: 
https://www.oecd.org/en/publications/competition-issues-in-the-food-chain-industry_09b968a9-en.html 
(Accessed on: 24 April 2025). “The concern here is that market power throughout the food supply chain may 
have contributed to this widening; this could arise from seller power at either or both the food processing or 
retailing sectors, and/or via the exercise of buyer power.” 
67  Arcadia International E.E.I.G. (2019). Study of the best ways for producer organisations to be formed, 
carry out their activities and be supported. European Commission, Directorate-General for Agriculture and 
Rural  Development.  Available  at:  https://op.europa.eu/en/publication-detail/-/publication/2c31a562-eef5-
11e9-a32c-01aa75ed71a1 (Accessed 26 March 2025). 
68 720 000 EU farmers are members of a recognised PO out of 9.1 million farm holdings.  

17 

 
 
 
agricultural  inputs,  in  particular  energy  and  fertilisers.  Market  disturbances  caused  by 
Russia’s  war  of  aggression  against  Ukraine  have  further  aggravated  these  challenges, 
disrupting trade flows and exacerbating volatility in global agricultural markets. 

Asymmetries in the price transmission from farmers to downstream players is a permanent 
phenomenon in the food chain. It has meant in the recent period (2021 - 2023) that while 
input  costs  for  farmers  have  surged,  farm-gate  prices  have  not  necessarily  adjusted 
accordingly, potentially leaving farmers unable to recover these additional costs. However, 
in the recent period, after a shock in input prices, which peaked at the end of 2022 and led 
to  high  food  inflation  rates,  the  overall  situation  is  currently  stabilising.  Although 
quantities  produced  are  not  factored  in  (with  a  decrease  of  production  due  to  adverse 
weather conditions in 2024), data shows that, since late 2023, agricultural output prices 
decreased slower than input prices, which suggests a potential positive impact on farmers’ 
incomes. Data also suggests that between 2020 and 2022 prices for downstream actors, 
namely the processing  industry and retail,  have  increased slower than  farm  gate prices. 
This indicates that for a while industry and retail have buffered the impact of food inflation 
on final consumers. Since 2023, the situation seems to have normalised to a certain extent, 
processing  industry  and  retailers  not  seeming  to  buffer  anymore  price  transmission  to 
consumers.69  Still,  agricultural  input  prices  are  30  to  50%  higher  than  in  2020,  leaving 
farmers in a vulnerable position when their output prices would decline for any reason not 
linked  to  input  costs.  In  addition,  high  food  prices  still  exert  pressure  on  consumers’ 
budgets, with 35% of consumers concerned about affording the food products they like.70 

While a harmonised framework for fair trade products exists in the South-North71 context, 
ensuring ethical sourcing and fair compensation for farmers in developing countries, no 
equivalent harmonised framework has been established within the EU72. In recent years, 
various  national  and  private  fair  pricing  schemes  have  emerged  across  Member  States, 
differing  in  scope,  methodology,  and  legal  recognition.  However,  without  EU-level 
minimum  requirements,  these  initiatives  remain  fragmented.  Consumers  also  face 
difficulties  in  assessing  the  credibility  of  different  schemes,  undermining  trust  in  fair 
pricing claims. While various fair pricing and local food initiatives have emerged, their 
lack  of  harmonisation  at  EU  level  leads  to  fragmented  approaches  and  inconsistent 
credibility.  This  fragmentation  weakens  consumer trust  in  fair remuneration  claims and 
makes it more difficult to justify price increases linked to higher sustainability standards, 
ultimately limiting the effectiveness of such schemes in supporting farmers. 

Similarly, when speaking of short supply chains or local food systems, there is a wealth of 
initiatives  that  favour  contacts  between  farmers  and  consumer  and  thus  contribute  to 

of 

2024: 

15  October 

https://ec.europa.eu/transparency/expert-groups-

69  AFCO  meeting 
register/screen/meetings/consult?lang=en&meetingId=56863&fromExpertGroups=3949.  
70  European  Commission,  2024.  Key  consumer  data.  Available  at:  https://commission.europa.eu/key-
consumer-data [Accessed 30 April 2025]. 
71  Trade  relationships  between  producers  in  the  Global  South  (e.g.  coffee  farmers  in  Ethiopia  or  cocoa 
cooperatives in Ghana) and consumers/retailers in the Global North (e.g. supermarkets or coffee shops in 
Europe).  See  for  further  details  Naylor,  L.,  “Some  are  more  fair  than  others”:  fair  trade  certification, 
development, and North–South subjects, Agriculture and Human Values, Vol. 31, 2014, pp. 273–284. First 
published online 22 December 2013. Available at: https://doi.org/10.1007/s10460-013-9476-0.  
72 Initiatives involving producers and consumers both in the Global North - for example, small-scale farmers 
or social enterprises in Europe selling directly to ethically minded consumers in their own region. 

18 

 
 
 
sustainability of the food systems, in particular from the social angle. However, there is 
also  a  certain  number  of  local  food  schemes  that  are  more  driven  by  protectionist 
arguments  (‘gastro-nationalism’)  than  by  benefits  in  terms  of  economic,  social  or 
environmental sustainability. The development of these schemes risks resulting in higher 
prices for consumers and fragmentation of the single market without public benefit in terms 
of sustainability.73 

Figure 3: Schematic overview of drivers, problems and consequences.  

Drivers 

Problems  

Consequences 

Imbalances  of  bargaining 
power 

Farmers  are  price  takers  that  are  likely  to  receive 
lower prices due to weaker bargaining power 

Concentration of 
downstream operators 
(processing and retail) 

Limited participation of 
farmers in recognised POs 

Fragmentation at farm 
level 

Farmers lack access to 
collective negotiations 

“Fear  factor”  and  high 
dependence of farmers 
on a limited number of 
buyers 

Lack of alternative 
distribution channels 
increase reliance on 
dominant buyers 

Unpredictable  income  of  farmers  leads  to  financial 
instability and difficulty to access loans 

Farmers  have  difficulty  to  assess 
fair  prices, 
production  costs  and  value  distribution  along  the 
chain 

In  hold-up 
unfavourable contract terms 

situations 

farmers  must  accept 

Price volatility due to 
external shocks 
(geopolitical situation) 
and climatic events 

Lack of harmonised fair 
pricing schemes 

Slower price transmission 
and persistent information 
asymmetries 

Excessive risks and costs are transferred to farmers as 
a weaker party and diminish farmers’ added value in 
the food supply chain 

No  common  definition  of 
“fair”  or  “equitable”  pricing 
schemes 

Consumers lack trust in fair remuneration labels and 
there are struggles to justify price increases. 

While the existing regulatory framework - including the CMO Regulation, CAP Strategic 
Plan  Regulation,  CAP  Horizontal  Regulation,  and  UTP  Directive  -  has  laid  important 
foundations, additional targeted measures are needed. Addressing these issues is therefore 
essential to building a more resilient, balanced, and sustainable agri-food supply chain in 
the EU. Without these targeted policy measures, the imbalance in bargaining power would 
persist, weakening the economic viability of the EU farming sector based on many family 
farms and hampering its positive contribution to the continuity of EU food security, to the 
livelihood of rural areas, and to environmental sustainability. 

73 EFSCM recommendations on ways to improve the diversity of sources of supply, among others between 
shorter  and  longer  food  supply  chains,  2023,  available  at  https://agriculture.ec.europa.eu/common-
agricultural-policy/agri-food-supply-chain/ensuring-global-food-supply-and-food-security_en#documents.  

19 

 
 
 
 
3.2.  Objectives 

The policy intervention aims to contribute to the CAP’s goals as a general objective by 
ensuring  a  fair  standard  of  living  for  farmers,  strengthening  their  resilience  through 
improved  market  access  and  fairer  added  value  distribution,  and  increasing  the  overall 
efficiency, fairness, and transparency of the food supply chain.  

Achieving the following specific objectives will contribute to one or several of the general 
objectives:  The  policy  intervention  aims  to  strengthen  farmers’  bargaining  power  by 
addressing imbalances in the food supply chain and improving price transmission to ensure 
farmers receive a fairer share of added value. It seeks to strenghten the role of POs and 
expand  farmers'  access  to  collective  negotiation  tools,  enabling  them  to  secure  better 
contract terms. In addition, it promotes the development of voluntary initiatives to establish 
a harmonised framework for "fair" or equivalent pricing schemes, while supporting short 
supply  chains  to  reduce  farmers’  dependence  on  dominant  buyers  and  improve  market 
access. 

Figure 4: Schematic overview of problems, specific and general objectives. 

Problems  

Specific objectives 

General objectives 

Imbalances  of  bargaining 
power 

Strengthen farmers’ bargaining position 

Contribute to the CAP goals of fair standard of 
living  for  people  engaged  in  agriculture  and 
providing for similar conditions for trade 

Strengthen  resilience  of  farmers  in  the  agri-
food supply  chain  through  improved  market 
access and fairer value distribution 

Improve functioning of the food supply chain 
and 
fairness, 
in 
transparency 

terms  of 

efficiency 

Limited  participation  of 
farmers in recognised POs 

Strengthen  the  role  of  POs  and  provide 
further incentives to farmers to join POs 

Farmers  lack  access  to 
collective negotiations 

Expand 
negotiation tools 

farmers’  access 

to  collective 

Lack of alternative 
distribution channels 
increase reliance on 
dominant buyers 

Slower price transmission 
and 
persistent 
information asymmetries 

No  common  definition  of 
“fair” 
“equitable” 
schemes 

or 

Develop a harmonised framework for short 
supply chains  

Improve  price  transmission  and  farmers’ 
added value in the food supply chain 

Develop a harmonised framework for “fair”, 
“equitable” or equivalent pricing schemes 

3.3. 

Selected measures 

The  selected  policy  measures  focus  on  targeted  interventions  that  address  some  of  the 
structural imbalances in the agri-food supply chain, in particular by granting the means to 
farmers  to  counterbalance  the  negative  effects  of  these  imbalances  in  their  commercial 

20 

 
 
 
relations with other actors in the food supply chain, while ensuring feasibility and broad 
stakeholder support. Measures that require further in-depth analysis, such as a prohibition 
to  sell  or  buy  below  production  costs  and  other  measures  interfering  with  market 
orientation,  lack  consensus  among  Member  States,  or  pose  potential  risks  to  the 
competitiveness  of  the  EU  agricultural  market  have  been  set  aside.  Instead,  the  chosen 
actions build on the existing legal framework laid down by the CMO Regulation and the 
UTP Directive and lessons learnt from the practice, increasing transparency, strengthening 
farmers' bargaining power, and improving market conditions. 

The following sections provide a detailed overview of the key challenges and the specific 
policy measures designed to address them, ensuring a balanced, fair, and sustainable agri-
food supply chain. 

21 

 
 
Figure 5: Overview of the selected measures and corresponding legal provisions 

Measures 

Article in the CMO 
Regulation, SPR and HZR  

Mandatory  written  contracts  with  exceptions  at  EU  and  MS 
level 

Reinforced contract 
framework for all 
sectors and improved 
price transmission 
within the agri-food 
supply chain 

Mandatory  objective  indicators,  indices  or  methods  of 
calculation  of  the final  price  that  reflects  changes  in  market 
conditions and elements of production costs  

Mandatory  revision  clause  can  be  triggered  by  farmers  if 
contracts last longer than 6 months  

Article 148 (Milk and milk 
products) CMO Regulation, 
Article 168 (all other 
sectors except milk and milk 
products, and sugar) CMO 
Regulation,  
Annex X (Sugar) CMO 
Regulation 

Strengthen  the  role  of 
POs and provide further 
farmers 
incentives  to 
joining  POs  as  well  as 
expand  farmers’  access 
to collective negotiation 
tools 

Optional contract registries  

Mandatory mediation mechanism provided by MS 

Clarifying that POs are formed at the initiative of farmers and 
improve  bargaining  power  of  POs  and  recognised  APOs 
through competition exclusions 

Increase  protection  of  POs  from  direct  contacts  between 
buyers and PO members.  

Simplification of recognition through one single act 

Increase in the financial allocation to sectoral interventions by 
recognised POs 

Funding possibility for crisis cooperation 

Competition  exclusion  for  voluntary  agreements  for  social 
sustainability 

Support voluntary 
initiatives  

Develop  a  harmonised  framework  for  “fair”,  “equitable”  or 
equivalent schemes and short supply chains 

Include additional objectives for POs and IBOs 

Article 152 CMO Regulation, 
Article 153 CMO Regulation, 
Article 52 SPR, 
Article 62 SPR, 
Article 88 SPR, 
Article 222 CMO Regulation,  
Article 16 HZR  

Article 210a CMO 
Regulation,  
Article 152 CMO Regulation,  
Article 157 CMO Regulation,  
New Article 88a CMO 
Regulation  

In order to further clarify the intervention logic, the table below provides a mapping of the 
proposed  measures  to  the  specific  problem  drivers  they  address  and  the  corresponding 
specific objectives they support. This mapping demonstrates the coherence between the 
identified problems, the specific objectives pursued, and the measures selected to ensure 
effective delivery of the policy goals. 

22 

 
 
 
 Figure 6: Overview of the links between the selected measures, specific objectives, and 
problem drivers in the intervention logic.  

Measure 

Problem Addressed 

Specific Objective Supported 

Mandatory written contracts 
with exceptions at EU and 
MS level 

Mandatory objective 
indicators, indices or 
methods of price calculation 

Imbalances of bargaining 
power,  

Strengthen farmers’ bargaining 
position,  

Mandatory revision clause if 
contracts longer than 6 
months triggered by farmers 

Slower price transmission 
and persistent information 
asymmetries 

Improve price transmission and 
farmers’ added value in the food 
supply chain 

Optional contract registries 

Mandatory mediation 
mechanism provided by MS 

Clarifying that POs are 
formed at the initiative of 
farmers and improve 
bargaining power of POs 
through competition 
exclusions 

Reinforce protection of POs 
from direct contacts between 
buyers and PO members 

Simplification of recognition 
through one single act 

Increase in financial 
allocation to sectoral 
interventions by recognised 
POs 

Funding possibility for crisis 
cooperation 

Competition exclusion for 
voluntary agreements for 
social sustainability 

Farmers lack access to 
collective negotiations 

Expand farmers’ access to 
collective negotiation tools 

Limited participation of 
farmers in recognised POs 

Strengthen the role of POs and 
provide further incentives to 
farmers joining POs 

Expand farmers’ access to 
collective negotiation tools 

Farmers lack access to collective 
negotiations 

23 

 
 
Develop a harmonised 
framework for “fair”, 
“equitable” or equivalent 
pricing schemes and short 
supply chains 

Include additional objectives 
for POs and IBOs 

No common definition of 
"fair" or "equitable" 
schemes; Lack of alternative 
distribution channels 
increases reliance on 
dominant buyers 

Develop a harmonised 
framework for "fair", 
"equitable" or equivalent pricing 
schemes; Develop a harmonised 
framework for short supply 
chains 

3.3.1.  A reinforced contractual framework  

One  of  the  key  levers  for  addressing  imbalances  in  bargaining  power  are  the  rules  for 
contracts by which farmers are selling their products to their buyers.  

Mandatory written contracts 

The CMO Regulation allows Member States to introduce an obligation that every delivery 
of agricultural products by producers is covered by a contract in written form since 2018 
(Articles  148  and  168  CMO  Regulation).  For  sugar,  Article  125  CMO  Regulation  and 
Annex X include already such an obligation at  EU level.  This  possibility  is  offered for 
deliveries by farmers as well as for deliveries of agricultural products by other producers. 
Member States can also decide which stages of the delivery are covered if delivery of the 
products is made through one or more intermediaries. In the Member States where such 
obligation is not implemented, producers can require that any delivery of its products to a 
processor or distributor be the subject of a written contract. Since 2019, the UTP Directive 
includes in its blacklist of unfair trading practices that are to be prohibited, the practice 
according to which the buyer refuses to confirm in writing the terms of a supply agreement 
for  which  the  supplier  has  asked  for  written  confirmation  (Article  3(1)f  of  the  UTP 
Directive). 

The  scale  of  the  problem  regarding  the  absence  of  mandatory  written  contracts  varies 
significantly across Member States and sectors. Some Member States decided to make use 
of this provision. A Commission survey revealed that, out of the 24 Member States that 
responded to  the request, only  five - France,  Italy, Lithuania, Spain,  and Poland - have 
introduced mandatory written contracts for agricultural products.74 With the transposition 
of the UTP Directive, Croatia introduced the absence of a written contract as a prohibited 
unfair trading practice.75 One factor that may contribute to the limited implementation by 

74 Agricultural Markets Task Force, Issue Paper – Contractualisation, Available at:  
https://agriculture.ec.europa.eu/document/download/ad129eb9-9c81-4dd8-937d-
7bb21d0c75fa_en?filename=amtf-paper-contractualisation-20160524_en.pdf (Accessed: 25 March 2025).  
75 European Commission, Staff Working Document – Unfair Trading Practices (UTP): Overview tables on 
Member States’ transposition choices and enforcement activities, SWD(2024) 106 final/2, Brussels, 3 June 
2024. This document corrects SWD(2024) 106 final of 23 April 2024. Accompanying the Report from the 
Commission to the European Parliament, the Council, the European Economic and Social Committee and 
the  Committee of the Regions: Implementing the prohibition of unfair trading practices to strengthen the 

24 

 
 
 
  
 
 
some Member States  is  resistance  encountered  from  certain  buyers.  In this context, the 
inclusion  of  alternative  measures  -  such  as  the  obligation  to  confirm  oral  contracts  in 
written upon request – has, in some cases, been used in national legislative processes as a 
justification for not fully establishing a clear legal safeguard that would protect farmers 
from possible disincentives or reluctance to request written confirmation.  

The uptake by Member States in the milk sector is higher, with 13 Member States currently 
requiring  compulsory  contracts  under  Article  148  of  the  CMO  Regulation,  including 
France, Italy, Spain, Lithuania, Hungary, Slovakia, Croatia, Cyprus, Portugal, Bulgaria, 
Romania, Slovenia, and Poland. This limited implementation of mandatory contracts  in 
national laws does not mean that contracts are not written by choice of operators. Many 
operators, even in Member States where there is no such obligation, in particular the bigger 
farmers, are putting the terms of their contracts on paper and do not rely exclusively on 
oral agreements. However, in a number of situations, there is no written form for the terms 
of the contracts. This has contributed to ongoing legal uncertainty for some farmers and a 
lack  of  transparency  that  written  contracts  could  provide  on  key  contractual  elements, 
including the price. In some cases, this is a traditional way to operate and can reflect long-
standing implicit arrangements, which in turn can place farmers in particular the smaller 
ones  in situations of dependency of the buyer and complete lack of transparency (that can 
be  accepted  by  some  farmers  for  different  reasons).  The  problem  is  therefore  more 
concentrated  in  certain  Member  States  and  sectors  where  written  contracts  are  not 
common, trust between producers and buyers is low, and farmers have weaker bargaining 
positions. 

Contracts can help address unfair trading practices by making ex post unilateral changes 
in  supply  arrangements  that  harm  farmers  and  their  organisations  more  difficult.  Such 
practices decrease the part of the added value generated that farmers and their organisations 
would otherwise be able to appropriate. Qualitative research76 suggests for instance that ex 
post unilateral changes to supply cause farmers and their organisations harm.77 Moreover, 
the number of unilateral changes to the agreements may increase during periods of crisis.78 

position of farmers and operators in the agricultural and food supply chain – State of play (COM(2024) 176 
final). Available at:  
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52024SC0106R(01).  
76 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, p. 16. 
77 In the case of fresh fruit and vegetables for example, it is not uncommon that following an order given, a 
producer organisation prepares a batch (with the required grading, packaging and labelling) for which the 
quantities are revised downwards by the buyer (a retailer or its buying subsidiary) after the batch has left the 
packing station (e.g. to take into account short term fluctuation of demand at retail stage, in a just-in-time 
logistic approach). This means that the supplier (i) has to find an alternative outlet (usually at lower price, 
e.g. on a wholesale market) (ii) has to usually regrade and repack the goods not at its own premises implying 
extra costs and (iii) lose freshness of the product. In such cases, risks (short term fluctuation of demand) and 
related  costs  are  entirely  passed  to  the  supplier (in  many  cases  a  farmer  or  a  producer  organisation)  and 
directly result in an income decrease.  
78 Reference JRC study,  Report from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of the Regions: Implementing the prohibition of unfair 
trading practices to strengthen the position of farmers and operators in the agricultural and food supply chain 
–  State 
https://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=COM:2024:176:FIN  

final).  Available 

(COM(2024) 

play 

176 

at: 

of 

25 

 
 
 
Although  the  UTP  Directive  prohibits  such  practices  of  unilateral  or  late  changes  of 
contractual  terms,  the  absence  of  written  contracts  makes  enforcement  difficult,  as  oral 
agreements are not easy to trace. 

Figure 7: Pricing of raw milk – experience in the Member States79 

Pricing of raw milk – experience in the Member States 

In the raw milk sector, several studies have identified weaknesses in price transmission 
linked to the prevalent retroactive pricing models, where producers only learn the price 
for their milk after processing and marketing have occurred. In Germany and other 
Member  States,  private  dairies  often  apply  comparative  pricing  models  based  on 
regional averages, which may still include delayed or opaque components. This model 
leads to  systematic delays in  price transmission and an unequal  distribution of risk 
across  the  supply  chain,  with  farmers  disproportionately  exposed  to  market 
fluctuations  without  adequate  foresight  or  bargaining  power.  This  may  erode  trust, 
discourage  forward  planning,  and  weaken  the  economic  position  of  farmers, 
particularly in volatile market environments. In France the use of the “formule A + B” 
pricing model is widespread. Contracts typically combine a fixed base price (A) with 
a variable component (B) indexed to dairy product prices or input costs.  

Although farmers have the right to request a contract with specific elements in the absence 
of  mandatory  written  agreements,  and  the  UTP  Directive  prohibits  rejecting  a  written 
confirmation as an unfair practice, many hesitate to exercise this right due to the fear factor 
linked to - the risk of losing transactions in a market dominated by a few strong buyers. 
The fear of commercial retaliations remains the principal obstacle for smaller actors of the 
chain  to  even  raise  the  fact  they  are  subject  to  unfair  practices80.  By  establishing  a 
mandatory framework for written contracts applicable to all sector of agricultural products, 
the  proposal  ensures  clear  rights  and  obligations  for  operators,  increasing  market 
transparency, and helping to better align supply with demand. This obligation applies to 
deliveries of all the agricultural products in the EU between a farmer or its association and 
any other operator within the agri-food supply chain. 

In the current CMO, there are some general exceptions even for Member States that decide 
to make the written form of contracts compulsory. For instance, a contract is not required 
where  the  products  concerned  are  delivered  by  a  member  of  a  cooperative  to  the 
cooperative of which he is a member if there are statutory rules having similar effects in 
this cooperative. This is justified by the fact that cooperatives are owned and controlled by 
their members who agree democratically on the commercial arrangements concerning the 
deliveries of their members to the cooperative. Still there should be transparency on the 
rights  and  obligations  of  the  members  of  the  cooperative,  concerning  price,  quantity, 

79 Thünen 2019, Scotland Study, pp. 54–55, Observatoire de la formation des prix et des marges des produits 
alimentaires (OFPM), . [include references in the text] 
80 
- 
- 
https://datam.jrc.ec.europa.eu/datam/mashup/FOODCHAIN_UTP_5/  

Available 

results. 

survey 

Chain 

Food 

UTP 

at  

26 

 
 
 
 
quality, terms of payments. Another existing derogation concerns first purchasers that are 
SMEs for whom the written contract is not compulsory. 

The  proposal  keeps  these  exceptions  with  some  adjustments  to  reduce  unnecessary 
administrative burdens: 

•  The  derogation  for  deliveries  to  cooperatives  is  extended  to  all  producer 

organisations. 

•  Purchases from farmers by small enterprises: No written contract is required if the 
first purchaser of the agricultural products from farmers is a micro or small-sized 
enterprise due to likely equivalent bargaining position81.. Medium enterprises with 
headcount of 50 to 250 staff members and a turn-over between €10 and €50 million 
should  be  concerned  by  the  obligation  of  written  contracts  given  their  size 
compared to that of their farmers suppliers and likely differences in their bargaining 
position.The  proposal  would  still  apply  to  medium  and  large  enterprises,  that 
although only representing 4% of the buyers in the food industry, cover 85% of the 
food industry turnover (2023). 

The proposal includes other general derogations: 

•  On-spot  deliveries:  A  written  contract  is  not  necessary  when  the  delivery  and 
payment  take  place  simultaneously.  In  this  case,  there  is  no  reason  to  require  a 
written  form  as  there  is  no  risk  of  unilateral  change  later  in  the  process  as  the 
transaction is completed at the time of the delivery. 

•  Free deliveries or disposal of products: Deliveries made for free or in the context 
of the disposal of products that are no longer fit for sale are also exempt from this 
requirement.   An obligation of written contract for such free disposal would be 
disproportionate.  

As written contracts become the norm for farmers, it is necessary to grant to the Member 
States the capacity to establish further specific exemptions from the requirement for written 
contracts or written offers adapted to their national market, including the following: 

•  Low-value  deliveries  for  which  an  obligation  of  written  format  may  seem 
disproportionate to the objective of predictability. Member States are best placed 
to set what is the threshold adapted to their national conditions, but the proposal 
proposes that such limit should not exceed €10,000.82 

•  Seasonal  or  perishable  products:  some  products  need  a  fast  process  of  decision, 
deliveries  and  movement  of  goods,  because  of  their  perishability  and  seasonal 

81  Differences  in  bargaining  power,  which  correspond  to  the  economic  dependence  of  the  farmer  on  the 
buyer,  are  likely  to  lead  for  example  to  larger  operators  imposing  unfair  trading  practices  on  smaller 
operators. See recital 9 of Directive (EU) 2019/633 of the European Parliament and of the Council of 17 
April  2019  on  unfair  trading  practices  in  business-to-business  relationships  in  the  agricultural  and  food 
supply  chain,  OJ  L  111,  25.4.2019,  p.  59. 
  Available  at:  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:32019L0633.  
82 This aligns with the  Anti-Money Laundering Regulation (AMLR) that imposes an EU-wide maximum 
limit of €10,000 for cash payments, whether in single or linked transactions. Member States may also set 
lower limits for cash payments. 

27 

 
 
 
fluctuations . Member States are best placed to identify those products for which  
written  contacts  could  impair  the  requirement  of  speed  in  certain  conditions 
needing derogation. 

•  Traditional or customary sales: in some Member States there may be systems in 
place  traditionally  that  give  the  necessary  transparency  and  predictability  to 
farmers  involved  without  an  obligation  of  written  contracts  and  Member  States 
should be able to maintain such systems in place. 

Mandatory objective indicators  

The  current  CMO  Regulation  provides,  when  the  written  form  of  contracts  is  made 
compulsory by Member States, for an obligation of contracts to contain some elements. 
This is in particular the case for the price to be paid, the quantity and quality, the timing of 
deliveries, the duration of the contract, the payment periods, the logistical arrangements 
for collecting or delivering the agricultural products, and the rules applicable in the event 
of force majeure. Concerning price, the option is given between static prices (fixed prices) 
and variable prices. When the option of variable prices is chosen, the CMO indicates that 
the  variable  price  formula  may  include  objective  indicators,  indices  and  methods  of 
calculation of the final price, that are easily accessible and comprehensible and that reflect 
changes in market conditions. 

In the absence of written contracts, or even when written contracts are in place, farmers 
may not have access to clear, unambiguous, and transparent information allowing them to 
understand  how  prices  will  be  set.  For  example  in  the  milk  sector,  prices  are  often 
determined without a formula or links to objective indicators of market prices and elements 
of  production  cost  and  are  determined  ex  post  based  on  market  sentiment  allowing  the 
more  powerful  operators  to  secure  their  profit  margin,  before  setting  the  price  for  the 
agricultural products received from farmers.83 Where contracts do not include a pricing 
formula  or  objective  indicators,  it  often  reflects  a  deliberate  preference  by  the  stronger 
party to retain flexibility. By setting prices ex post, they can first secure their own margins 
and then pass on the remaining risk to the farmer. This lack of clarity prevents farmers 
from  responding  effectively  to  market  fluctuations  or  benefiting  from  timely  price 
transmission in times of external shocks.84 As a result, they bear the financial risk without 
adequate  safeguards  and  often  with  no  means  to  adjust  their  prices  in  response  to 

83 See for example Thiele, H. D. and Tiedemann, T., Analyse und Effekte von Milchliefervertragsänderungen 
bei  Umsetzung  des  Art.  148  der  GMO  in  Deutschland,  ife  Diskussionspapier  02/2024,  ife  Institut  für 
Ernährung und Ernährungswirtschaft e.V. and Fachhochschule Kiel, September 2024, Kiel. Available at: 
https://www.fh-kiel.de/fileadmin/data/presse/fh-ife-studie_art148__okt2024.pdf.  
84 Banse, M., Knuck, J., and Weber, S. A., Stabile und hohe Milchpreise?! – Optionen für eine 
Beeinflussung der Milchpreise, Thünen Working Paper No 118, Thünen-Institut für Marktanalyse, 
Braunschweig, 2019. Available at: https://literatur.thuenen.de/digbib_extern/dn060782.pdf. See also  
German Bundestag, Supply relationships in the milk sector: current discussion points, Scientific Services, 
Document WD 5 – 3000 – 056/19, 6 June 2019. Available at: 
https://www.bundestag.de/resource/blob/650748/b83f555911aae054ee766a69f9ec50b0/WD-5-056-19-pdf-
data.pdf.  

28 

 
 
 
unexpected  increases  in  production  costs.85  Consequently,  the  absence  of  transparent 
pricing mechanisms tends to benefit the more powerful operator. 

The proposal includes some changes concerning the variable price option.  

First, it clarifies that when there is a variable price, the price formula should include clear 
and objective indicators, indices or methods of calculation of the final price, that are easily 
accessible and comprehensible. This reinforcement of the clause for variable price aims at 
giving transparency and predictability to the farmers and buyers on how the price is likely 
to evolve in case of a variable option.  

Second, in the current CMO Regulation the indicators, indices and methods of calculation 
refer to changes in market conditions, the quantities delivered, and the quality of products 
delivered. When referring to market conditions, this may be understood as only taking into 
account demand shocks, while farmers can also be affected by supply shocks (i.e. input 
costs shocks). The proposal corrects this impression by clarifying that the price formula 
should  also  take  into  account  indicators  or  price  developments  of  relevant  elements  of 
production  costs  (e.g.,  energy,  fertilisers,  seeds,  feed  etc.).  Those  elements  are  freely 
negotiated  between  the  parties  when  concluding  the  contract.  Beyond  transparency  and 
predictability, such modification aims at improving price transmission and its symmetry. 

The proposal does not mandate specific indicators, neither for market development nor for 
production costs, it is up to the parties to agree how the variable price will be established, 
and which elements of production costs and which market indicators will be considered. 
There is no change compared to the current CMO Regulation on this aspect of the price 
element in contracts. As today, Member States may continue to define relevant indicators 
based on objective criteria, such as studies on production costs and the food supply chain, 
but there is no change as to the preservation of freedom of parties to choose the indicators, 
and the way they are incorporated in the price formula which is the most appropriate for 
their agreement. 

From  this  preservation  of  the  principle  of  freedom  to  negotiate,  derives  an  important 
element  of  the  proposal:  it  does  not  aim  at  introducing  a  compulsory  indexation  to 
production costs, nor does it impose average market prices. The intention of the proposal 
is  to  ask  parties  to  take  into  account  the  developments  of  markets  (demand)  and  costs 
(supply) in the way they both agree to do. On the market development, parties may decide 
to  refer  to  international  global  price  quotations  or  to  domestic  more  precise  market 
quotations, including neighbouring countries; on costs, parties may take into account one 
or several of the main cost elements (e.g., energy, fertiliser, feed etc.) or an aggregate cost 
indicator. They remain free to determine what will be the variables of their price formula 
and what will the coefficients chosen for each of them. Such proposal has nothing to do 
with setting a minimum price or even price indexation on one or the other variable.  

85 Knuck, J., Banse, M., Freund, F., Laquai, V., Margarian, A., and Thies, A. J., Evaluation of supply 
relationships between milk-producing farms and dairies, Thünen Working Paper No 215, Johann Heinrich 
von Thünen Institute, Braunschweig, August 2023. Available at: 
https://literatur.thuenen.de/digbib_extern/dn066536.pdf. 

29 

 
 
 
It is finally important to note that these new elements to include in the contracts do not 
impede the voluntary inclusion of value sharing clauses as defined by Article 172a CMO 
Regulation, meaning clauses that will allow a revision of returns for farmers ex post due 
to the value sharing arrangements agreed, including with market bonusses and losses.  

Mandatory revision clause  

The CMO Regulation is silent concerning the duration of contracts, except that it allows 
to Member States to decide on a minimum duration of contracts. Except in these cases, 
parties are therefore free to set the duration of their contractual relation, which can even be 
with an indefinite duration (provided there are rules for termination). The proposal does 
not change these aspects. 

However, in order to enhance price transmission efficiency in longer-term contracts, the 
proposal requires that contracts exceeding six months include a mandatory revision clause, 
that  can  be  triggered  only  after  the  first  six  months  of  contracts.  Farmers,  producer 
organisations, or associations of producer organisations may request a contract revision, 
particularly in cases of substantial production cost increases or significant market changes. 
If the request is denied, farmers must have the right to terminate the contract.  

Such revision clause is important when the parties opt for a static price, as it helps ensure 
that changes in supply conditions or market developments are not left unaddressed too long 
for the weakest parties in the contractual arrangement. A six months’ time period seems 
long enough to justify a revision of a static price agreed six months ahead. In the case a 
variable price option has been chosen, the formula will normally allow the adjustment to 
new economic conditions all along the contracts. However, there can be changes in the 
most relevant variables to determine a variable price, and the revision can also be triggered 
to ask for a revision of the price formula itself.  

The proposal implies that there is an obligation to include a revision clause to be triggered 
by the farmer supplying agricultural products. This does not prevent parties from including 
revision clauses in favour of the buyers, accompanied by similar termination provisions.  

Mandatory mediation mechanism  

The  current  CMO  Regulation  offers  the  possibility  for  Member  States  to  establish  a 
mediation mechanism to cover cases in which there is no mutual agreement to conclude a 
contract. Such mediation concern cases when the contract has not been concluded. In the 
framework of the UTP Directive (Article 7), Member States are also incentivised to use 
effective and independent alternative dispute resolution mechanisms, such as mediation, 
to settle disputes on unfair trading practices once the contracts are concluded. 

Farmers are often bound by the geography of their production site and the complexity of 
transport for perishable products. Therefore, they may be in situations where they are eager 
to conclude contracts with buyers that are also interested, but do not reach an agreement. 
The  CMO  mediation  mechanism  responds  to  such  situations  where  there  is  a  genuine 
willingness  to  conclude  contracts,  but  a  lack  of  trust  prevents  their  finalisation.    To 
encourage amicable resolution of such situations, the proposal requires that each Member 
State establishes a mediation mechanism. This mediation mechanism must be available to 

30 

 
 
farmers  who  can  request  assistance  to  facilitate  mutually  agreed  solutions  between  the 
parties and help restore trust. 

While each Member State must ensure that an adequate system for mediation is accessible, 
the specific design can vary. Some Member States established standalone mediation bodies 
dedicated to agricultural contracts, others rely on pre-existing general dispute resolution 
agencies or assign this role to agricultural bodies or farmers’ associations. 

Farmers  often  attempt  direct  negotiation  with  buyers  first;  mediation  tends  to  be  a  last 
resort.  However,  where  farmers  are  more  experienced,  they  are  quicker  to  call  for 
mediation  when  contractual  disputes  arise,  helping  avoid  protracted  conflict.  Feedback 
from stakeholders who have used mediation indicates that it can prevent costly legal action 
and  preserve  relationships  between  buyers  and  producers.  Farmers  that  are  not  fully 
informed about their rights or the existence of mediation are less likely to use it. Some 
stakeholders  may  also  question  whether  the  mediators  have  sufficient  expertise  in 
agricultural markets, highlighting a need for sector-specific knowledge. 

With a wide application by Member States, the Commission will be in position to facilitate 
exchanges of best practices in this matter.  

Optional contract registries 

Additionally,  to  improve  transparency  and  enforceability,  the  proposal  provides  for  a 
possibility for Member States to establish national registers for written contracts. This is 
so far a possibility that is not mentioned by the CMO Regulation but that is applied by 
certain Member States, Spain in particular. By including this voluntary option in the CMO 
Regulation, this possibility for Member States is explicitly mentioned. Such registry can 
facilitate  the  enforcement  of  the  unfair  trading  practices.  In  the  current  experiences,  it 
remains solely used for this purpose by enforcement authorities, thus allowing confidential 
agreements  and  trade  secrets  to  be  preserved.  For  the  sugar  sector  (Article  125  CMO 
Regulation) contracts need to be already notified to the Member States. 

3.3.2.  Enhanced cooperation between farmers in producer organisations 

and associations of producer organisations 

A key instrument for strengthening the position of farmers on the food supply chain is their 
participation  in  collective organisations, such as  recognised POs and recognised APOs. 
The  CMO  Regulation  encourages  the  formation  of  these  entities,  but  their  uptake  and 
recognition remain inconsistent across Member States. The main driver for farmers joining 
forces  is  the  ‘desire  to  achieve  increased  long-term  competitiveness  and  economic 
sustainability  of the individual farm’ and the ‘benefits  deriving from joint  sales via the 
PO’.86 Indeed, there is wide range of benefits for farmers to join POs, most notably greater 
bargaining power as buyer when POs rather than individual farmers negotiate with inputs 

86  Arcadia  International  E.E.I.G.,  EY,  and  independent  experts,  Study  of  the  best  ways  for  producer 
organisations to be formed, carry out their activities and be supported, final report, Directorate-General for 
Agriculture  and  Rural  Development  (European  Commission),  May  2019,  page  80.  Available  at: 
https://op.europa.eu/en/publication-detail/-/publication/2c31a562-eef5-11e9-a32c-01aa75ed71a1/language-
en.  

31 

 
 
 
and services providers (e.g., input suppliers, customers, insurance companies, banks, etc.) 
and as sellers with higher prices for the sale of agricultural products of the members of the 
PO, but also cater for long-term supply deals, regular orders or advance payments. POs 
also bring benefits in terms of increased agricultural productivity and greater effectiveness 
in subsequent marketing. Furthermore, enhancing the legal framework for POs to engage 
in collective negotiations would allow farmers to coordinate sales, plan production, and 
share market intelligence more effectively, thereby reducing their dependence on dominant 
buyers. Beyond POs, voluntary collaboration outside formally recognised structures can 
also contribute to fairer trading conditions.  

Many farmers remain however outside these structures due to the perceived administrative 
burden  linked  with  the  recognition  of  POs,,  a  lack  of  sufficient  incentives,  or  limited 
awareness of their benefits.87 Among recognised POs, the situation varies widely across 
sectors and Member States. Some POs have succeeded in building a strong membership 
base  and  achieving  significant  bargaining  power,  particularly  in  sectors  like  fruit  and 
vegetables or milk in certain countries. These POs are better able to negotiate contracts, 
secure fairer prices, and offer support services to their members. However, many POs still 
face challenges in reaching sufficient scale. In several sectors, membership remains too 
limited to create real countervailing power against large processors and retailers. A study 
indicates  that  smaller  or  weaker  POs  often  struggle  to  influence  market  conditions 
effectively, due to fragmented membership, limited resources, or insufficient recognition 
by market actors.88 Strengthening membership and consolidating POs remains crucial to 
fully achieve the objectives set out for them under the CMO. 

Without sufficient membership, POs lack the critical mass needed to negotiate effectively 
and to counterbalance the bargaining power on behalf of their members, both with their 
input and services suppliers on the buying side and with large processors and retailers on 
the selling side. In terms of disincentives, farmers might not be joining POs mostly because 
of their unwillingness to cooperate due to the fear to lose their identity and entrepreneurial 
freedom,  a  feeling  which,  especially  in  Member  States  with  a  history  of  compulsory 
collective organisations, is often coupled with low or no trust towards such organisations. 
Moreover, the lack of information on the benefits that POs may bring, of concrete examples 
of successful POs and of political endorsement and adequate technical support by national 
authorities may play a negative role for farmers to join POs. Concerns over costs for setting 
up  POs,  for  obtaining  recognition,  and  for  complying  with  POs’  statutes  or  production 
standards set up by POs may also negatively impact the decision to join POs.  

While the selected measures introduce certain improvements, they may not – on their own 
– be sufficient to overcome the structural and behavioural barriers identified above. These 
limitations could affect the overall effectiveness of the proposed measures, particularly in 
terms of enhancing the attractiveness and uptake of the producer organisation model across 
all sectors and Member States. 

There  is  therefore  still  a  significant  proportion  of  EU  farmers  that  are  not  members  of 
recognised POs. Only around 720,000 EU farmers (around 8% of all EU farmers in 2023) 

87 Ibid, 102 ff. 
88 Ibid.  

32 

 
 
 
are members of recognised POs. Around 7% of all (A)POs are recognised, while a majority 
operate  without  formal  recognition  but  still  deliver  tangible  benefits  to  their  members. 
Improving the rules applicable to POs in the CMO Regulation aim at reducing the degree 
of disincentive for farmers to join POs.Improve bargaining power of POs and recognised 
APOs through competition exclusions  

To strengthen farmers' bargaining power, the proposal enhances cooperation within POs 
and APOs.  

Currently, recognised POs (and mutatis mutandis APOs) benefit from a specific exception 
to  Article  101  of  the  Treaty  on  anti-competitive  agreements  that  could  disrupt  free 
competition.  This  allows  them  to  plan  production,  optimise  production  costs,  place 
products on the market, and negotiate contracts on behalf of their members, for all or part 
of their production. This exemption is subject to several conditions, including:  

-  The  PO  must  genuinely  exercise  at  least  one  economic  activity  (e.g.,  planning 
production,  direct  marketing,  cost  optimisation,  R&D,  quality  product 
development, environmental management). 

-  The PO must place products of its members on the market; 
-  Members must not belong to another PO for the same products. 

Recognition is voluntary and granted upon request. In most sectors, Member States are not 
obliged  to  grant  recognition  even  if  criteria  are  met,  except  in  sectors  like  fruit  and 
vegetables,  olive  oil,  hops,  silkworm,  and  dairy,  where  Member  States  must  recognise 
eligible POs. 

As a result, many POs that meet the criteria for recognition remain unrecognised. There is 
no uniform legal form for POs in the EU. Instead, a variety of structures exist, including 
agricultural  cooperatives  (e.g.,  SCAs  in  France),  machinery  groups  (e.g.,  CUMAs), 
producer  groups,  SATs  in  Spain,  Erzeugergemeinschaften  in  Germany,  and  others.  A 
Commission-commissioned study from 2019 estimates over 21 000 cooperatives and more 
than 20 000 other types of POs operate in the EU. However, only 8% of cooperatives and 
9% of other POs are formally recognised under the CMO89. 

The 2019 study90 has identified as key reason why POs often refrain from seeking formal 
recognition as a significant barrier the perceived administrative burden associated with the 
recognition  process,  especially  for  smaller  groups  of  farmers.  Furthermore,  in  certain 
sectors  and  Member  States,  farmers  achieve  cooperative  advantages  through  informal 
structures or alternative legal forms, making the formal recognition under the CMO less 
appealing 

89  Arcadia  International  E.E.I.G.,  EY,  and  independent  experts,  Study  of  the  best  ways  for  producer 
organisations to be formed, carry out their activities and be supported, final report, Directorate-General for 
Agriculture  and  Rural  Development  (European  Commission),  May  2019,  page  80.  Available  at: 
https://op.europa.eu/en/publication-detail/-/publication/2c31a562-eef5-11e9-a32c-01aa75ed71a1/language-
en. 
90 Arcadia International et al., Study of the best ways for producer organisations to be formed, carry out their 
activities and be supported, European Commission, 2019. Available at: https://op.europa.eu/en/publication-
detail/-/publication/2c31a562-eef5-11e9-a32c-01aa75ed71a1/language-en.  

33 

 
 
 
Despite not being recognised, many of these organisations perform key functions such as 
production  planning  and  contract  negotiation.  While  some  may  benefit  from  national 
protections,  there  is  no  EU-wide  legal  status  that  affords  them  the  same  competition 
exemptions as recognised POs. 

The current proposal introduces a derogation that extends the competition exemption of 
Article 152(1a) to all POs, whether or not they are formally recognised, provided they meet 
both the general and sector-specific conditions for recognition. This approach simplifies 
the  legal  framework  and  avoids  creating  unnecessary  administrative  burdens.  It  also 
acknowledges that many POs already meet the substance of recognition criteria, even if 
not formally recognised. 

As highlighted in the same study91, the distinction between recognised and unrecognised 
entities is often not central to how supply chain’s function. Farmers typically form entities 
for practical reasons and only later decide whether to seek formal recognition. 

This proposal is a simplification that avoids duplicating national cooperative recognition 
processes  and  does  not  create  new  control  obligations.  Non-recognised  POs  already 
operate  without  formal  oversight,  and  enforcement  of  competition  law  remains  the 
responsibility of national authorities and the Commission. 

Currently, Article 152(1b) states that APOs are treated as POs for the purposes of Article 
152,  and  may  therefore  benefit  from  the  same  competition  exemptions  provided  they 
genuinely  exercise  economic  activities  and  meet  other  conditions.  The  Commission 
proposal  maintains  this  provision  with  no  limitation  concerning  the  size  of  APOs 
concerned. APOs represent a second stage of the organisation of producers. In many cases, 
POs keep a limited territorial dimension, that the organisation of a second stage allows to 
scale up and gain market power vis-à-vis buyers having a national or wider scope.  

The  proposal  adds  a  new  provision  allowing  recognised  APOs  that  do  not  genuinely 
exercise an economic activity to negotiate contracts on behalf of their members, provided 
they do not exceed 33% of national production and they are composed of member POs that 
genuinely exercise an economic activity. This mirrors the existing rule in Article 149 for 
the milk sector and creates a more flexible, harmonised framework across all sectors. Such 
a proposal aims at allowing POs to progressively organise their scaling up into entities able 
to  compete  with  large  buyers  by  accelerating.  The  benefits  from  genuine  horizonal 
cooperation are ensured at individual PO level, and the more complex organisation of a 
second degree will be favoured by the possibility to start  cooperating  on negotiation of 
contacts with buyers.   

91  Arcadia  International  E.E.I.G.,  EY,  and  independent  experts,  Study  of  the  best  ways  for  producer 
organisations to be formed, carry out their activities and be supported, final report, Directorate-General for 
Agriculture  and  Rural  Development  (European  Commission),  May  2019,  page  80.  Available  at: 
https://op.europa.eu/en/publication-detail/-/publication/2c31a562-eef5-11e9-a32c-01aa75ed71a1/language-
en. 

34 

 
 
 
Together, these changes aim to strengthen the role of collective organisations in improving 
farmers'  position  in  the  supply  chain  while  maintaining  appropriate  safeguards  against 
market distortions. 

Reinforce protection of POs from direct contacts between buyers and PO members  

One of the difficulties  of keeping  the collective  cohesion  of POs  between  farmers is  to 
preserve them from offers of buyers to buy directly at better price part of the production of 
the PO, undermining the collective strategies built by the POs. Many POs include in their 
statutes an obligation to bring to the PO a certain percentage, often quite high and close to 
the whole production, of their individual production. In the case of the fruit and vegetables 
sector, this is even the rule set by Article 160 CMO. 

Precisely  in  the  fruit  and  vegetables  sector,  since  2021,  the  CMO  includes  a  new  rule 
allowing direct contacts between buyers and individual PO members. The rationale of such 
amendment,  brought  by  the  European  Parliament,  refers  to  the  need  to  organise  the 
logistical dimension of the collection of fresh products by buyers like retailers directly at 
farm level. Such direct contacts were sometimes questioned in certain Member States as 
being  possible  at  all.  The  new  provision  in  2021  conditioned  direct  contacts  to  the 
preservation of the capacity of the PO to ensure the concentration of supply and placing of 
products  on  the  market,  meaning  that  the  essential  elements  of  the  sales  such  as  price, 
quality and volume are negotiated and determined by the PO. 

Such 2021  amendment  did  not  apply  to  the milk and milk  products  sector. The current 
proposal  corrects  this  situation  by  expanding  it  to  all  sectors,  also  clarifying  that  any 
objective of the PO shall not be impaired by buyers. 

Simplification of recognition through one single act  

Formal  recognition  of  POs  remains  necessary  to  ensure  that  these  organisations  meet 
specific standards and fulfil the objectives set out under the CMO Regulation. Recognition 
provides legal certainty, access to specific support measures (such as financial assistance 
for sectoral interventions), and ensures that POs operate transparently and effectively in 
the interests of their members. 

In the current CMO, PO may be recognised, upon request, by Member States, when they 
constituted, and controlled in a specific sector. This means that the recognition should be 
granted per sector, although the same PO can be subject to more than one recognition in 
the case it is operating in several sectors as mentioned in Article 154(1a) CMO.  

The  proposal  clarifies  that  such  recognition  can  be  granted  once  for  several  sectors, 
provided the conditions of recognition are met for each sector. This is a simplification of 
the recognition process, avoiding the current obligation to grant several recognitions in the 
corresponding cases. 

In  light  of  the  organic  farming  action  plan92,  it  is  also  proposed  to  offer  to  primary 
producers  the  possibility  to  form  a  PO  among  producers  engaging  solely  in  organic 
farming. Currently, the CMO Regulation does not specifically prevent the creation of POs 

92 COM(2021) 141 final 

35 

 
 
 
consisting solely of organic farmers. However, it does not explicitly promote or facilitate 
such  sector-specific  organisations  either.  The  existing  framework  is  generally  neutral 
regarding production methods (such as organic versus conventional farming) and focuses 
primarily  on  sectors  (like  fruit  and  vegetables,  milk,  etc.).  As  a  result,  organic  farmers 
typically join general POs alongside conventional producers, where their specific needs 
and challenges may not be fully addressed. Organic farming is particularly characterised 
by its scattered nature, with producers having access to a limited number of processors and 
retailers.  There  is  currently  little  knowledge  on  the  degree  of  concentration  in  organic 
production  and  on  whether  its  organisation  needs  particular  attention.  Such  proposal 
reflects  the  need  to  encourage  the  forming  or  joining  specific  organic  producer 
organisations  and,  where  possible,  encourage  Member  States  to  allocate  funds  for  this 
purpose, recognised by the organic farming action plan. 

Clarification that POs are controlled by farmers  

In line with the long-standing interpretation of the Commission, it should be clarified in 
the legal text that POs are constituted at the initiative of and controlled by farmers in the 
sense of primary producers (and not by producers of agricultural products that can be first-
processed products, like vegetable oils, flour, processed fruit and vegetables, dairy or meat 
products). This does not mean that operators not being farmers cannot be members of a 
PO.  Often, POs include some actors like traders or processors that are part of the collective 
approach, and they can play a beneficial role by their presence. However, the initiation and 
the control of POs should remain in  the hands of farmers, otherwise, such organisation 
would  not  meet  the  objectives  of  strengthening  their  position  in  the  food  supply  chain. 
Structures controlled by processors or traders cannot by essence reinforce the position of 
farmers, as the final decision on the remuneration of farmers would not be in their hands.     

Increase in the financial allocation to sectoral interventions by recognised POs  

To further support the formation of POs, the proposal increases the financial support that 
producer  organisations  receive  from  CAP  funding  in  other  sectors  than  fruit  and 
vegetables, through increased support to  operational  programmes.  Since 2021,  Member 
States have this possibility to dedicate up to 3% of their direct payments national envelope 
(and 2 % more if not used under coupled support income).  

The proposal includes, on the one hand, amendments allowing Member States to allocate 
up to 6% of direct payments to operational programmes, without any consequence for their 
coupled  support  income  envelope.  This  represents  a  strong  political  signal  for  Member 
States  to  support  their  POs  though  operational  programmes,  as  a  key  intervention  to 
reinforce competitiveness of EU agriculture and strengthen the position of farmers in the 
food supply chain. In addition, the enhanced EU co-financing rates, which so far have been 
available  only  to  fruit  and  vegetable  operational  programmes,  will  be  extended  to 
operational programmes in other sectors. This means that producer organisations in sectors 
such as cereals, dairy or meat will also benefit from higher EU financial support when they 
set up and implement operational programmes. 

On the other hand, the proposal includes the introduction of specific incentives, through 
increased  co-financing  rates,  granted  to  young  and  new  farmers  joining  a  recognised 
producer organisation and who undertake investments at their premises. It also includes 
specific support for countries with low PO implementation, in particular to strengthen the 

36 

 
 
role of recognised POs in the fruit and vegetable sector in Member States where the degree 
of  organisation  of  producers  is  below  10  %  for  three  consecutive  years.  The  fruit  and 
vegetable sector is specifically targeted because it has benefited from support for POs since 
1996, but in some Member States, very few farmers are members of recognised POs, and 
the  sector's  particular  risks,  such  as  seasonality  and  perishability,  indicate  that  POs  are 
especially important. 

Finally,  to  improve  the  resilience  of  POs  in  times  of  crisis,  the  proposal allows  greater 
flexibility in redirecting funds within operational programmes to address the consequences 
of  adverse  meteorological  events,  natural  disasters,  plant  diseases,  or  pest  infestations. 
Under certain conditions, the proposal establishes that Union financial assistance can be 
increased to help POs respond effectively to these challenges. 

Funding possibility for crisis cooperation 

In  normal  situations,  EU  rules  do  not  allow  farmers’  associations  and  IBOs  to  make 
agreements that could limit competition. However, during a serious crisis, Article 222 of 
the  CMO  Regulation  allows  the  Commission  to  temporarily  approve  cooperation 
agreements between farmers and their associations, recognised POs, APOs, or recognised 
IBOs  to  help  stabilise  the  market.  These  measures  taken  by  private  operators  aim  at 
addressing  severe  market  imbalances.  Normally,  competition  law  would  not  allow 
farmer’s associations and recognised IBOs to make such agreements, because they reduce 
competition.  However,  Article  222  does  not  automatically  include  any  EU  funding  to 
support these measures. 

From  an  implementation  perspective,  the  2024  Commission  report  on  the  use  of 
exceptional  measures93  states  that  these  measures  can  be  subject  to  collective  action 
challenges. Experience shows that the effectiveness of Article 222 of the CMO Regulation, 
under which agreements are not mandatory for the parties who do not wish to participate, 
may  be  hampered  by  potential  free-riding  concerns.  Granting  a  financial  support  could 
reduce such collective challenges, as was the case for example when the recognised French 
dairy  IBO  decided  to  allocate  support  from  its  own  resources  to  farmers  engaged  in 
voluntary reduction of production during the COVID-19 pandemic in the framework of  
Commission  Implementing  Regulation  (EU)  2020/59994  of  30  April  2020  authorising 
agreements  and  decisions  on  the  planning  of  production  in  the  milk  and  milk  products 
sector. 

The current proposal only provides for a possibility for the Commission to grant support 
to those measures taken by the beneficiaries. It does not change any aspect of the conditions 
in which the Commission can accept or not that farmer and their associations, recognised 
POs, APOs, or recognised IBOs adopt temporary measures by exception to competition 
rules. 

93 COM(2024) 12 final 
94  Commission  Implementing  Regulation  (EU)  2020/599  of  30  April  2020  authorising  agreements  and 
decisions on the planning of production in the milk and milk products sector pursuant to Article 222 of the 
Common Market Organisation Regulation in order to address the market disturbance caused by the COVID-
19  pandemic.  Official  Journal  of  the  European  Union,  L  140,  4.5.2020,  p.  7–9.  Available  at:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0599.  

37 

 
 
 
3.3.3.  Promotion of voluntary approaches 

To  address  the  challenges  faced  by  farmers  and  to  promote  greater  transparency  in 
commercial relations, the proposal introduces new EU-wide definitions and enhanced legal 
clarity  within  the  framework  of  the  CMO  Regulation.  These  measures  aim  to  ensure  a 
fairer  distribution  of  value  along  the  agri-food  supply  chain,  empower  producers,  and 
strengthen consumer trust. 

Competition exclusion for voluntary agreements for social sustainability 

Article  210a  CMO  Regulation  was  introduced  in  the  CMO  in  2021.  It  provides  for  an 
exclusion from the scope of application of competition rules in the production of or trade 
in  agricultural  products.  This  forms  part  of  the  overall  ambition  to  ensure  a  more 
sustainable  EU  agri-food  supply  chain.  The  exclusion  applies  to  agreements  concluded 
solely  between  agricultural  producers,  and/or  between  agricultural  producers  and  other 
actors  in  the  agri-food  supply  chain,  and  that  are  aimed  at  achieving  standards  on 
sustainability that go beyond the EU and/or national mandatory standards. The restrictions 
of competition should be indispensable to the achievement of the objective pursued: such 
condition for instance ensures that the eventual price increase agreed are strictly necessary 
for attaining the sustainability objective. Article 210a also provides for the discontinuation 
of such agreements in case this is necessary in order to prevent competition from being 
excluded.  The  objectives  of  the  agreements  concerned  may  relate  to  environmental 
objectives, including climate change mitigation and adaptation, biodiversity, water and soil 
preservation etc. as well as to some other dimensions of sustainability related to societal 
concerns such as health through the reduction of use of pesticides and microbials, animal 
welfare or food waste). Guidelines have been adopted in 202395 to help economic actors 
determine whether the  agreements they are engaging  in  are covered by such  exception. 
Actors can ask an opinion to the Commission. So far, the Commission has received one 
request for an opinion, and that opinion has not yet been issued. 

The  proposal  reinforces  the  social  or  socio-economic  dimension  of  sustainability  by 
broadening  the  scope  of  Article  210a  CMO  Regulation.  The  revised  provision  only 
expands  the  material  scope  of  the  current  provision,  without  changing  its  overall 
architecture and principles. It allows for cooperation between farmers and market operators 
in  support  of  objectives  that  go  beyond  minimum  legal  requirements  in  three  different 
areas. By enabling such initiatives, the proposal helps to create a more socially responsible 
and  sustainable  agri-food  sector,  while  keeping  in  place  the  same  safeguards  as  for  the 
previous scope in terms of indispensability, maintaining legal certainty within the internal 
market and avoiding any disproportionate risk for consumer prices and choices. 

The first new area concerned relates to small and family-run farms. These farms can be 
placed in a situation where their viability is at stake. The characteristics of family farms is 
that most of their labour costs (the costs related to family workers) are determined by the 
farmer, as an independent self-employed worker. When the returns are insufficient, family 
farms  tend  to  under-remunerate  the  family  work  (while  they  have  no  such  possibility 
concerning their hired workforce). Depending on the year, only about 26% to 38% of EU 

95 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C_202301446  

38 

 
 
 
farms  can  cover  their  implicit  costs  (such  as  family  labour,  own  capital  and  land)  and 
depreciation.96 This puts at stake their economic viability, in particular for farms relying 
predominantly on family labour. Those are defined in the proposal as farms of a standard 
output that does not exceed €100,000, which means farms below 50 ha in area and below 
1.6 annual working unit. 

Economic Size 

(SE010)  Total 
input (AWU/farm) 

labour 

(SE025) 
Total 
Utilised  Agricultural 
Area (ha/farm) 

(1) €2,000 - < €8,000  

(2) €8,000 - < €25,000  

(3) €25,000 - < €50,000  

1.02 

1.10 

1.34 

(4) €50,000 - < €100,000 EUR 

1.62 

(5) €100,000 - < €500, 000  

(6) ≥ €500 000  

Source:  FADN 2022. 

2.41 

8.26 

6.2 

14.0 

28.2 

49.2 

100.3 

256.3 

The  second  area  concerns  the  inclusion  of  young  producers,  they  are  either  farmers  or 
young  producers  of  agricultural  products.  The  challenge  of  generation  renewal  is 
illustrated by the fact that farm managers are on average becoming older, with the average 
age rising from 56 years old in 2005 to 57 in 2020. Generational renewal is an important 
issue in agriculture. The situation is worsening, with the percentage of farmers above 65 
years  old  increasing  while  the  other  groups  decrease.  It  is  especially  worrying  that  the 
percentage of young farmers is decreasing compared to 2010.  

In these two first areas, there are usually no sustainability standards at EU or national level: 
parties  to  the  agreement  would  have  to  set  a  standard  aimed  at  increasing  the  level  of 
sustainability in the scope (see point 63 of the Sustainability guidelines). 

The last area concerns the improvement of working and safety conditions in farming and 
processing. Such sustainability objective was so far explicitly mentioned by the guidelines 
abovementioned (point 48) as not covered by Article 210a, but that could be covered by 
sustainability  agreements.  In  this  area,  there  are  many  mandated  standards  concerned 
health  and  safety  at  work  or  social  protection,  that  apply  both  to  independent  farmers 
and/or  hired  staff  in  farms  and  processing  industries,  while  there  are  also  areas  where 
mandated standards are less evident, such as living and housing or transport conditions for 
seasonal or migrant workers.  

96 AFCO meeting of 13 March 2025, presentation on economic viability of EU farms. 

39 

 
 
 
 
Develop a harmonised for “fair”, “equitable” and short supply chains 

At  the  core  of  the  proposal  is  the  introduction  of  definitions  for  the  terms  “fair”  and 
“equitable” as they relate to commercial modalities (Article 88a CMO Regulation).  

There  are  several  private  voluntary  schemes  that  have  as  their  primary  objective  fair 
remuneration.  Some  of  these  schemes  have  been  designed  specifically  to  deliver  fair 
remuneration to farmers as the primary objective and these schemes are not focused on 
aspects  of  fair  trade  beyond  this.  Few  schemes  of  this  type  have  been  identified  by  an 
upcoming  study97in  Belgium,  France,  and  Germany  (at  regional  level),  but  similar 
examples exist in some other Member States. These schemes tend to be inspired by fair 
trade  type  approaches.  Some  of  them  exist  in  a  very  similar  model  in  several  Member 
States,  although  managed  and  operated  independently  in  each  Member  State.  Other 
schemes are based more explicitly on fair trade approaches to North-South trade. They are 
adapted  to  the  North-to-North.  They  may  pursue  social  objectives  such  as  improving 
working conditions on the farm and the rest of the supply chain; the primary focus is not 
necessarily specifically tailored to ensure farmer remuneration.   The objectives of these 
schemes are wider than fair remuneration schemes.  

The terms “fair” and “equitable” will be clearly defined to describe contractual practices 
that foster stability and transparency between farmers and purchasers, result in pricing that 
is considered equitable by the participating farmers and contribute to one or more of the 
United Nations Sustainable Development Goals (‘SDGs’) thus reflecting the usually wider 
scope of most of these schemes. This approach is intended to support pricing structures 
that  fairly  remunerate  farmers  for  their  work  and  align  with  the  broader  sustainability 
ambitions of the EU as well as contributing to the wider-sustainability considerations in 
the  rural  areas  covering  all  three  dimensions  of  sustainability  (economic,  social  and 
environmental). Such definition is inspired from  a national law98 in the EU that defines 
such concept, which lists conditions such as duration of the contractual link, remunerative 
price paid to producers, contribution of the buyer to collective projects, etc. At this stage, 
the proposal only proposes basic elements for the definition in an implementing act of the 
details  of  what  level  of  transparency,  stability,  remuneration  and  contribution  will  be 
needed, as well as other condition of use to be determined. The Commission proposes to 
adopt such implementing act within two years and therefore postponed he entry into force 
of such provision during the same period of time. 

The  proposal  also  defines  the  concept  of  a  “short  supply  chain”  (Article  88a  CMO 
Regulation),  referring  to  commercial  arrangements  where  there  is  either  a  direct  link 
between  farmers  and  final  consumers,  or  a  close  and  geographically  proximate 
relationship, including in cross-border settings.  

In the past, short supply chains were defined in the context of Rural development rules, 
whereby cooperation could be funded with a view to promote activities in a local context 
relating  to  the development  of short supply chains  and local  markets  (Article 35(2)e of 

97 Study on regulatory and voluntary schemes for fair agricultural remuneration, upcoming (2025) 
98 LOI n° 2014-856 du 31 juillet 2014 relative à l'économie sociale et solidaire, Article 94, JORF n°0176 
du 1 août 2014, texte n° 2.  
Available at: https://www.legifrance.gouv.fr/jorf/article_jo/JORFARTI000029313690  

40 

 
 
 
Regulation  1305/201399).  In  this  context,  short  supply  chains  were  defined  as  having 
maximum  one  intermediary  between  the  farmer  and  the  consumer100.  This  definition 
reflects that the core element of supply chains that are called to be short is the connection 
between farmers and consumers. Sustainability benefits of short supply chains are linked 
to this close connection: they are principally of an economic and social nature as shorter 
supply  chains  can  allow  farmers  to  obtain  better  margins  and  can  contribute  to  rural 
development and a sense of community.101 

The proposal builds on the previous definition, taking into account of the different context 
of the CMO compared to the Rural Development policy.  The term ‘short supply chain’ 
should be used only to designate commercial modalities where a direct connection exists 
between farmers and consumers that allows to directly exchange on the production process 
and the product, including by means of distance communication and/or via an intermediary 
who ensures such exchange at the moment of sale. Alternatively, this term may also be 
used where a close connection between farmers  and consumers within their geographic 
proximity exists, including in cross-border contexts. The proposal does not limit this to 
one  intermediary,  as  there  are  cases  where  there  could  be  chains  involving  a  farmer,  a 
processor and a retailer all situated in geographical proximity that can deliver the same 
degree of connection than chains with no more than one intermediary. This definition seeks 
to support more direct economic relationship between producers and consumers in local 
economies and improve consumer awareness regarding the origin, quality, and production 
methods of agricultural products. 

Geographical  proximity  must  be  understood  in  this  proposal  as  not  related  to  any 
administrative boundaries (national, regional or local). A short food supply chain should 
not  hamper  the  cross-border  close  connection  between  farmers  and  consumers.  On  the 
contrary,  it  can  support  such  relationships  –  for  example,  in  border  regions  where 
consumers may buy directly from nearby farmers across national borders.        

By  providing  harmonised  EU-wide  definitions  of  these  voluntary  terms,  the  proposal 
addresses the risk of misuse and  enhances transparency in  the marketplace. Consumers 
will be better able to rely on consistent, trustworthy information when choosing products, 
while  farmers  will  benefit  from  a  clearer  legal  framework  supporting  their  commercial 
claims. 

99 Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on 
support  for  rural  development  by  the  European  Agricultural  Fund  for  Rural  Development  (EAFRD)  and 
repealing  Council  Regulation  (EC)  No  1698/2005,  OJ  L  347,  20.12.2013,  p.  487–548.  Available  at: 
http://data.europa.eu/eli/reg/2013/1305/oj.  
100 “supply chains involving no more than one intermediary between farmer and consumer”, Article 11(1) of 
Delegated Regulation Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 
1305/2013 of the European Parliament and of the Council on support for rural development by the European 
Agricultural  Fund  for  Rural  Development  (EAFRD)  and  introducing  transitional  provisions,  OJ  L  227, 
31.7.2014, p. 1–17. Available at: http://data.europa.eu/eli/reg_del/2014/807/oj.  
101 The sustainability of “local” food: a review for policy-makers, Alexander J. Stein and Fabien Santini, 
Review  of  Agricultural,  Food  and  Environmental  Studies,  2021  (103)  pp77-89.  Available  at : 
https://link.springer.com/article/10.1007/s41130-021-00148-w.  

41 

 
 
 
 
 
Including additional objectives for POs and IBOs 

In parallel, the proposal strengthens the role of recognised POs by expanding the list of 
objectives they may pursue (Article 152 CMO Regulation). In future, POs will be explicitly 
empowered to undertake initiatives promoting fair trade schemes and the development of 
short supply chains. This creates opportunities for more resilient and diversified business 
models at producer level. 

4.  LIKELY IMPACTS OF THE SELECTED MEASURES 

This section focuses on the likely impacts of the selected measures set out in Section 3, 
namely  a  reinforced  framework  for  contracts  involving  farmers,  enhanced  co-operation 
between farmers in producer organisations, and  the promotion of voluntary approaches. 
Most of the expected impacts relate to economic and social considerations, though possible 
limited environmental impacts are also included. The selected measures address diverse 
aspects  of  agricultural  market  relations.  Therefore,  it  is  appropriate  to  break  down  the 
assessment of the impacts by measure type. At the same time, their complementary nature 
in strengthening farmers’ bargaining power may sometimes make it difficult to fully isolate 
the impact of each measure individually.  

It  should  be  noted  from  the  outset  that  a  precise  quantification  of  the  impacts  of  these 
measures is not feasible. Their actual impact will depend on the extent of uptake  of the 
measures and derogations by both Member States and economic operators as well as on 
the pre-existing national legislative framework and on pre-existing supply chain structures 
and different currently prevailing practices in the sectors concerned. As the proposal aligns 
existing rules and establishes the same horizontal provisions across all sectors, no sector-
specific assessment of these rules is carried out. With this said, the following sections will 
assess  the  likely  economic  advantages  and  disadvantages  stemming  from  the  selected 
measures for businesses, consumers and administrations. They will also assess the likely 
social and environmental impacts of the measures. 

4.1.  Economic impacts 

4.1.1.  A reinforced contractual framework 

The policy intervention aimed at reinforcing the contractual framework in which farmers 
operate  addresses  several  elements  of  the  contractual  relationship  between  the  parties. 
Those include the requirement to formalise contracts in writing, the requirements on the 
price setting and review mechanisms, and the introduction of mediation mechanisms in 
negotiation  processes.  While  these  measures  are  expected  to  strengthen  farmers’ 
bargaining power collectively, their multi-faceted nature also means that their impact will 
vary  depending  on  multiple  factors  -  such  as  the  degree  of  formalisation  required  at 
national  level  and  the  derogations  from  this  requirement  to  be  decided  by  the  Member 
States,  the  content  of  contract  clauses,  existing  market  and  supply  chain  structures,  the 

42 

 
 
level of collective organisation in agriculture, and the availability of information and legal 
support services, among others.102  

Requirement to formalise contracts in writing – impacts on farmers and buyers 

For  farmers, formalising contracts  in  writing is  expected to  provide several  benefits,  in 
particular an increased transparency, accountability, predictability of the terms agreed as 
well as a reduction of asymmetric price transmission along the agri-food supply chain.103 
Written contracts are expected to provide incentives to more equal risk sharing between 
farmers and buyers of agricultural products, what is expected to create efficiency gains for 
the  overall  agri-food  supply  chain.104  At  the  same  time,  written  contracts  alone  do  not 
substantially rebalance bargaining power or address underlying market imbalances, which 
are largely shaped by international market dynamics and the strong negotiating position of 
organised buyers.105 

This  reflects  the  experience  of  those  Member  States  which  have  already  made  written 
contracts compulsory under the current CMO Regulation. First, written contracts have been 

p. 

p. 

35 

99. 

2016, 

2015, 

n°15053, 

française, 

Available 

ff.  Available 

CGAAER  Rapport 

102 Trouvé, A., Dervillé, M., Gouin, D.-M., Pouch, T., Fink-Kessler, A., Kroll, J.-C., Rat-Aspert, O., Briot, 
X.,  &  Lambaré,  P.,  Étude  pour  le  Ministère  de  l’Alimentation  et  de  la  Pêche  et  France  AgriMer  sur  les 
mesures contre les déséquilibres de marché : Quelles perspectives pour l'après quotas dans le secteur laitier 
européen?, 
at: 
https://www.franceagrimer.fr/fam/layout/set/ajax/content/download/45608/434908/file/rapport_etude_dese
quilibres_de_marche.pdf.  
103 For a discussion on these aspects, see: Franscarelli, A., & Ciliberti, S., ‘Mandatory Rules In Contracts Of 
Sale Of Food And Agricultural Products In Italy: An Assessment Of Article 62 Of Law 27/2012’, EAAE 
140th  Seminar,  2014.  Available  at:  https://ageconsearch.umn.edu/record/163350/?v=pdf;  Berger,  Y., 
Marchal, Y., Champanhet, F., & Riou, Y, Rapport sur la Mise en œuvre de la contractualisation dans la filière 
at: 
laitière 
https://agriculture.gouv.fr/sites/default/files/cgaaer_15053_2015_rapport-2.pdf;  Report  of  the  Agricultural 
Markets  Task  Force,  Enhancing  the  Position  of  Farmers  in  the  Supply  Chain,  2016.  Available  at: 
https://agriculture.ec.europa.eu/common-agricultural-policy/agri-food-supply-chain/agricultural-markets-
task-force_en; , Banse, M., Knuck, J., & Weber, S. A., ‘Stabile und hohe Milchpreise?! - Optionen für eine 
Beeinflussung der Milchpreise‘, Thünen Working Paper, No. 118, 2019; Revoredo-Giha, C., Clayton, P., 
Costa-Font, M., Agra-Lorenzo, FAL., & Akaichi, F., ‘The impact of mandatory written dairy contracts in 
European countries and their potential application in Scotland’,  Social Research series, Scottish Government 
Social Research, 2019. 
104  For  a  discussion,  see  Vavra,  P.,  ‘Role,  Usage  and  Motivation  for  Contracting  in  Agriculture’,  OECD 
Food, Agriculture and Fisheries Papers, No. 16, OECD Publishing, 2009; Cesaretti, G.P., Mariani, A.C. and 
Sodano, V., Sistema agroalimentare e mercati agricoli, il Mulino, 1994;; Sodano, V., Strumenti di analisi 
per l’economia dei mercati agroalimentari, Edizioni Scientifiche Italiane, 2004.  
105 For a discussion on these aspects, see: Franscarelli, A., & Ciliberti, S., ‘Mandatory Rules In Contracts Of 
Sale Of Food And Agricultural Products In Italy: An Assessment Of Article 62 Of Law 27/2012’, EAAE 
140th  Seminar,  2014.  Available  at:  https://ageconsearch.umn.edu/record/163350/?v=pdf;  Berger,  Y., 
Marchal, Y., Champanhet, F., & Riou, Y, Rapport sur la Mise en œuvre de la contractualisation dans la filière 
at: 
laitière 
https://agriculture.gouv.fr/sites/default/files/cgaaer_15053_2015_rapport-2.pdf;  Report  of  the  Agricultural 
Markets  Task  Force,  Enhancing  the  Position  of  Farmers  in  the  Supply  Chain,  2016.  Available  at: 
https://agriculture.ec.europa.eu/common-agricultural-policy/agri-food-supply-chain/agricultural-markets-
task-force_en; , Banse, M., Knuck, J., & Weber, S. A., ‘Stabile und hohe Milchpreise?!-Optionen für eine 
Beeinflussung der Milchpreise‘, Thünen Working Paper, No. 118, 2019; Revoredo-Giha, C., Clayton, P., 
Costa-Font, M., Agra-Lorenzo, FAL., & Akaichi, F., ‘The impact of mandatory written dairy contracts in 
European countries and their potential application in Scotland’,  Social Research series, Scottish Government 
Social Research, 2019. 

française,  CGAAER  Rapport 

ff.  Available 

n°15053, 

2015, 

35 

p. 

43 

 
 
 
reported as positively contributing to the clarity and certainty that farmers can obtain on 
the terms of their agreements or the price they will receive.106 Second, written contracts 
are  considered  to  significantly  reduce  the  risk  of  harmful  unfair  trading  practices,  for 
example, where vagueness or lack of clarity in non-written agreements can be used by the 
stronger party to impose unilateral changes to agreed terms or payments.107 According to 
the  JRC  survey,  unilateral  changes  to  the  agreement  by  the  buyer  is  one  of  the  most 
frequent UTP after late payments, with 10-20% of respondents to the survey being affected 
by such practices.108 In addition, improved certainty over trading and pricing conditions is 
expected  to  help  farmers  make  longer-term  decisions  and  investments  based  on  clearer 
expectations about the future, and to access better financing opportunities.109  

Written  contracts  can  improve  farmers’  access  to  finance  -  such  as  loans  or  short-term 
credit  lines  -  as  they  provide  documented  evidence  of  income,  reduce  information 
asymmetries for banks by signalling farmers’ repayment capacity, and lower the perceived 
risk of default.110 This, in turn, can lead to reduced borrowing costs. As a result, farmers 
with written contracts are more likely to be granted loans (e.g., lower rejection rate) and to 
benefit from lower risk premiums.111 Banks increasingly value formal written agreements, 
particularly in sectors such as dairy, wine, and fruit and vegetables, as these offer more 
predictable cash flows.112 This predictability is especially important for young and new 
farmers,  as  it reduces the need for collateral  and makes finance more accessible. Many 
young  farmers  lack  land  or  equity  and  are  therefore  likely  to  benefit  particularly  from 
written  contracts  when  applying  for  credit.  Easier  access  to  finance  through  formalised 
market relationships can help lower one of the main entry barriers for young farmers by 
facilitating investment in land, buildings, or equipment. There is some practical evidence 
that  financial  institutions  offer  preferential  lending  terms  to  farmers  with  formalised 
contracts.  For  example,  some  financial  institutions  in  France  and  the  Netherlands  have 

at: 

106  Defra,  Contractual  practice  in  the  UK  dairy  sector  consultation:  Summary  of  responses,  2021,  p.  9. 
Available 
https://assets.publishing.service.gov.uk/media/606c6c0ed3bf7f401340b31d/summary-
responses-contractual-practice-uk-dairy-sector.pdf; Revoredo-Giha, C., Clayton, P., Costa-Font, M., Agra-
Lorenzo, FAL., & Akaichi, F., ‘The impact of mandatory written dairy contracts in European countries and 
their potential application in Scotland’,  Social Research series, Scottish Government Social Research, 2019, 
p. 54;  Franscarelli, A., & Ciliberti, S., ‘Mandatory Rules In Contracts Of  Sale Of Food And Agricultural 
Products In Italy: An Assessment Of Article 62 Of Law 27/2012’, EAAE 140th Seminar, 2014, p. 14; Defra, 
Impact Assessment: Implementation of the EU Dairy Package, 2013, p. 4. 
107 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, p. 84ff and 266. 
108  European  Commission,  JRC’s  Food  Chain  -  UTP  -  survey  results,  5th  wave  2024.  Available  at:  
https://datam.jrc.ec.europa.eu/datam/mashup/FOODCHAIN_UTP_5/. 
109 In this sense, see Defra, Impact Assessment: Implementation of the EU Dairy Package, 2013, p. 28; Report 
of the Agricultural Markets Task Force, Enhancing the Position of Farmers in the Supply Chain, 2016, p. 
13,  pp.  66-67.See  also  Boufounou,  Paraskevi,  et  al. 
in  Greek 
Agriculture, Sustainability, Vol. 16, no. 7, 2024, pp. 2922, Available at: https://doi.org/10.3390/su16072922. 
110 Boufounou, Paraskevi, et al. , Value-Chain Finance in Greek Agriculture, Sustainability, Vol. 16, no. 7, 
2024, pp. 2922, Available at: https://doi.org/10.3390/su16072922. 
111  Federica  Di  Marcantonio,  Pavel  Ciaian,  and  Jan  Fałkowski,  Contracting  and  Farmers’  Perception  of 
Unfair Trading Practices in the EU Dairy Sector, Journal of Agricultural Economics, vol. 71, no. 3 (2020): 
652–676, Accessible at: https://doi.org/10.1111/1477-9552.12388. 
112 Ibid; Ciliberti, S. and Frascarelli, A. (2013), Mandatory rules in contracts of sale of food and agricultural 
products 
Italy:  An  assessment  of  Article  62  of  Law  27/2012,  2013.  Available  at: 
http://ageconsearch.umn.edu/bitstream/163350/2/Ciliberti%20Frascarelli_140%20EAAE.pdf.  

,  Value-Chain  Finance 

in 

44 

 
 
 
offered interest rates on farm loans for farmers with multi-annual contracts than for those 
without.113 Formal agreements have been associated with lower interest rates, higher loan 
approval rates, reduced income volatility, and increased willingness among banks to lend 
- particularly to smaller holdings.114 Vertical coordination mechanisms, including written 
contracts, can enhance farmers’ bankability by reducing transaction risks.115  

Nonetheless, the compulsory use of written contracts raises concerns, in sectors with low 
value  transactions  regarding  compliance  costs  for  both  farmers  and  the  buyers.  Some 
stakeholders, for example processors or certain farmers, particularly those operating on a 
larger scale or affiliated with cooperatives or POs,116  fear that a one-size-fits-all obligation 
could  create  new  burdens  in  form  of  compliance  costs,  particularly  for  buyers  and 
intermediaries who rely on informal or flexible arrangements, because buyers would need 
to adapt to new requirements, including revision of templates, updating of internal systems 
and  ensuring  compliance  with  the  new  rules.117  Such  reluctance  may  also  hide  other 
considerations linked to a wish to not commit in advance to any delivery betting on better 
opportunity  sales,  or  to  considerations  related  to  grey  economy.  In  general,  small-scale 
farmers consider written contracts beneficial.  

At EU level, quantifying possible adjustment costs is more complex due to wide variation 
across Member States, supply chains and market structures. In addition, the proposal does 
not prescribe the format of the contract to keep the adjustment costs to the minimum (e.g., 
operators  can  rely  on  standard  contracts  developed  by  POs  or  IBOs  or  confirm  the 
agreement in writing via an email), leaving it to operators to choose the least burdensome 
option.  Factors  influencing  the  adjustment  costs  include  the  frequency  and  nature  of 
transactions, national contract law requirements, and the extent to which standardised tools 
-  such  as  model  contracts  developed  by  POs  or  IBOs  -  are  available  and  used.  The 
adjustment costs are also influenced by the duration and complexity of contracts, the digital 
readiness  of  operators,  and  the  availability  of  legal  or  advisory  support.  While  the 
adjustment  costs  per  contract  appear  to  be  relatively  modest  of  around  €8.25  per 
contract,118 they may still be considered overall non-negligible depending on the value of 

113 FI-Compass and EARFD, Financial needs in the agriculture and agri-food sectors in France, June 2020,  
Available at: https://www.fi-
compass.eu/sites/default/files/publications/financial_needs_agriculture_agrifood_sectors_France_0.pdf;  
FI-Compas and EARFD, Financial needs in agriculture and agri-food sectors in Netherlands, Available at:  
https://www.fi-
compass.eu/sites/default/files/publications/financial_needs_agriculture_agrifood_sectors_Netherlands.pdf.   
114   Case study no. 4, Multiannual price risk management, in study of risk management in EU Agriculture. 
Available at:  
https://op.europa.eu/fr/publication-detail/-/publication/fa39d840-af66-11e8-99ee-01aa75ed71a1/language-
fr/formatPDF/source-search. 
115 Boufounou, Paraskevi, et al. , Value-Chain Finance in Greek Agriculture, Sustainability, Vol. 16, no. 7, 
2024, pp. 2922, Available at: https://doi.org/10.3390/su16072922. 
116 For more details see Annex 2.  
117  Revoredo-Giha,  C.,  Clayton,  P.,  Costa-Font,  M.,  Agra-Lorenzo,  FAL.,  &  Akaichi,  F.,  ‘The  impact of 
mandatory written dairy contracts in European countries and their potential application in Scotland’,  Social 
Research series, Scottish Government Social Research, 2019, p. 53. 
118 For a quantification of costs, see for example Defra, Impact Assessment: Implementation of the EU Dairy 
Package, 2013, p. 23 ff.  The effort required to confirm the key elements of a contracts in writing (price, 
quantity, delivery arrangements, and other relevant terms) is estimated to take no more than 15 minutes per 

45 

 
 
 
 
the transaction, the number of the transactions, complexity of the contract, use of standard 
contracts, the duration of the contract and the frequency of contract revisions, or the size 
of the operator.  Given that the Commission’s proposal includes a threshold below which 
low-value  contracts  (less  than  €10,000)  would  be  exempted  from  the  written  form 
requirement, the proportional cost for a €10,000 contract would be just 0.0825% of the 
contract’s  value.  This  proportion  would  decrease  further  for  higher-value  transactions, 
while lower-value ones are exempted altogether.  

At the same time, written confirmation of contractual arrangements already covers the vast 
majority of transactions in the agricultural sector. This is particularly the case in Member 
States  where  written  contracts  are  mandatory  under  Articles  148  or  168  of  the  CMO 
Regulation, or because of national transposition of the UTP Directive that has classified 
the refusal to provide such confirmation as a prohibited UTP. In practice, this means that 
buyers are already required to comply with the obligation to provide written confirmation 
of an agreement. Written contracts are also standard in the sugar sector, as required under 
Article 125 of the CMO Regulation. On this basis, it can be assumed, as a conservative 
estimate, that 80% of the value of farm production is covered by written contracts. Most 
of what  is not  yet  covered by written contracts,  but  only  by oral agreements,  relates to 
practices that are covered by the exceptions proposed by the Commission (e.g., low-value 
contracts, customary sales modalities or on the spot sales). Therefore, it can be assumed, 
based on a conservative assumption, that only a quarter of the remaining oral agreements 
would not be covered by these exceptions. This means that approximately 5% of the value 
of agricultural production would be affected, i.e. €26.448 billion in 2024.119 Applied to the 
value  of  production  affected,  the  costs  of  making  written  contracts  compulsory  can  be 
estimated, with  conservative assumptions, to  €21,819,600 of  recurrent adjustment  costs 
per year.  

While  the  requirement  for  written  contracts  would  be  a  shared  responsibility  between 
buyers  and  farmers,  the  main  costs  of  setting  up  a  contract  would  fall  on  the  buyers, 
whereas farmers would continue, as they do today, to negotiate and verify the agreed terms 
and conditions.  

Overall, available survey evidence suggests that while compliance costs are not considered 
a major concern for most business stakeholders, a significant proportion do report notable 
compliance costs. In a survey carried out for the UTP Impact Assessment in 2018, 57% of 
responding  buyers  indicated  that  compliance  costs  were  either  ‘insignificant’  or  only 
‘slightly significant’. However,  43% assessed the costs as ‘high’ or ‘moderate’.120 These 

contract. The hourly tariff is set at EUR 33.00, corresponding to the One-In-One-Out tariff, including hourly 
earnings  (Eurostat,  Structure  of  earnings  survey  2022),  non-wage  labour  costs  (Eurostat,  Labour  Force 
Survey, data for Non-Wage Labour Costs) and 25% overhead costs, for ISCO 1-5 Non-manual workers; the 
use  of  ISCO  1-5  is  based  on  the  assessment  that  the  tasks  require  a  mixture  of  skills  (managers, 
professionals/lawyers, technicians and clerks). Using €33.00 per hour, this equates to €8.25 per contract. 
119 Eurostat.  
120 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, page 86.  

46 

 
 
 
costs were primarily associated with ensuring that standard contracts were not in breach of 
UTP provisions, or the training of staff involved e.g. in negotiations.121 

Mandatory elements in written contracts – impacts on farmers and buyers 

To fully realise the potential benefits of written contracts for farmers - namely improved 
transparency, greater predictability, and a clearer allocation of commercial risks - certain 
core elements must be included as mandatory. These include, among others, the method of 
price  determination  (fixed  or  formula-based  on  objective  indictors  linked  to  market 
developments  taking  into  account  the  elements  in  production  costs),  the  quality  and 
quantity  of  the  product,  delivery  schedule,  duration,  payment  terms,  logistical 
responsibilities,  and  provisions  for  force  majeure.  In  particular,  the  inclusion  of  clear 
pricing mechanisms and review clauses can play a critical role in enhancing the economic 
functioning of the food supply chain, especially in sectors such as dairy.122 

The transition towards ex-ante pricing mechanisms, where the price (or pricing formula) 
is defined in advance, could substantially improve transparency and allow farmers to better 
assess the profitability of production decisions. However, economic literature notes that in 
cases where processors are obliged to take all products supplied (milk in this case), ex-ante 
pricing may increase the commercial risk borne by processors that have been setting the 
prices  ex  post,  potentially  resulting  in  downward  pressure  on  farmgate  prices  to  hedge 
against uncertainty.123 Nevertheless, experience in other Member States, such as France 
and  Spain,  demonstrates  that  these  risks  can  be  mitigated  through  structured  pricing 
schedules,  or  combining  fixed  base  prices  with  variable  components  linked  to  market 
indices or input costs.124 This approach, in turn, shifts the risk of any potential surplus to 
producers or their organisations, while the effectiveness of combined pricing mechanisms 
is  said  to  vary  depending  on  the  reaction  of  the  supply  side  to  the  prices  set  and  the 
involvement of POs in the organisation of the supply of milk.125 

Mandatory  review  clauses  in  longer-term  contracts  provide  a  useful  mechanism  for 
adapting  to  changing  market  conditions.  They  allow  farmers  (and  buyers  when  they 
include  such  clauses  in  the  contracts)  to  reopen  negotiations  of  contracts  based  on 
triggering events - such as significant increase in input cost or significant shifts in market 

121 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, p. 57.  
122 For a discussion on contractual pricing mechanisms, see Banse, M., Knuck, J., & Weber, S. A., ‘Stabile 
und hohe Milchpreise?!-Optionen für eine Beeinflussung der Milchpreise‘, Thünen Working Paper, No. 118, 
2019; Revoredo-Giha, C., Clayton, P., Costa-Font, M., Agra-Lorenzo, FAL., & Akaichi, F., ‘The impact of 
mandatory written dairy contracts in European countries and their potential application in Scotland’,  Social 
Research  series,  Scottish  Government  Social  Research,  2019;  Lambaré,  P.,  You,  G.,  &  Dervillé,  M., 
‘Contrats laitiers : état des lieux en 2016’, Dossier Économie de l’Élevage, n°474, 2016. Study of Ecorys 
and Wageningen Economic research for the COM on risk management in agriculture: Final Report, 2017. 
123 In this sense, see Thiele, H. D., Tiedemann, T., ‘Analyse und Effekte von Milchliefervertragsänderungen 
bei  Umsetzung  des  Art.  148  der  GMO  in  Deutschland’,  ife  Diskussionspapier  02/2024,  ife  Institut  für 
Ernährung und Ernährungswirtschaft, 2024. 
124  Revoredo-Giha,  C.,  Clayton,  P.,  Costa-Font,  M.,  Agra-Lorenzo,  FAL.,  &  Akaichi,  F.,  ‘The  impact of 
mandatory written dairy contracts in European countries and their potential application in Scotland’,  Social 
Research series, Scottish Government Social Research, 2019, p. 54-57. 
125 Ibid. 56. 

47 

 
 
 
conditions  -  thereby  reducing  the  risk  that  long-term  contracting  result  in  loss-making 
locked positions and contributing to greater market stability.126 Such clauses are generally 
seen  as  positive  tools  for  preserving  contractual  fairness  and  enabling  responsive 
adjustments, without undermining the overall predictability of the contract framework. In 
addition,  the  availability  of  reliable  indicators  can  support  the  use  of  indexed  pricing 
formulas and review clauses, contributing to more stable and equitable pricing outcomes 
for farmers.127   

The use of market and cost indicators (e.g., elements of energy costs, feed costs, or market 
price  indexes)  alongside  review  clauses  in  longer-term  contracts  allows  for  more  rapid 
price adjustments and help farmers avoid systematically selling below production costs for 
prolonged  periods.  Studies  in  the  dairy  sector  suggest  that  timely  indexation  under 
compulsory written contracts might have contributed to reduce the volatility of farmgate 
prices.128  Studies  in  the  cereals  sector  suggest  similar  results  showing  that  mandatory 
contracts,  which  may  set  the  price  based  on  market  and  cost  indicators,  could  increase 
farmers’  average  income  stability.129  At  the  same  time,  if  price  formulas  based  on 
indicators become too rigid without any possibility for review in case of miss-match with 
market realities, farmers may miss opportunities to benefit from global price surges.130 For 
instance, during rapid commodity price fluctuations, time-lagged review clauses can result 
in lost income of up to 5 % per harvest cycle. Nevertheless, it has been suggested that the 
inclusion of mandatory review clauses in longer-term contracts might incentivise buyers 
to shift to shorter-term contracts to avoid renegotiation.131 In sectors without a statutory 
minimum contract duration, such a shift could expose farmers to higher price volatility.  

The  inclusion  of  mandatory  elements  in  written  contracts  is  expected  to  translate  into 
measurable economic gains for farmers. By reducing uncertainty around pricing, volumes 
and  delivery  conditions,  farmers  can  make  more  informed  investment  and  production 
decisions  that  are  expected  to  lead  to  an  improved  profitability.  In  the  absence  of 
predictable cash flows, farmers are less willing to invest in productivity-enhancing assets 
that  may  lead  to  sub-optimal  investment  decisions  in  the  long-term.132  Some  studies 

126 Briner, S. and Finger, R., The effect of price and production risks on optimal farm plans in Swiss dairy 
production considering two different milk quota systems, Journal of Dairy Science, vol. 96, no. 4, 2013, pp. 
2234–2246. Available at: https://doi.org/10.3168/jds.2012-6086.   
127 This is in line with the role of market observatories, as discussed in Report of the European Commission 
on Union Market Observatories, COM(2023) 679 final.  
128  European  Commission,  Evolution  of  compulsory  contracts,  Producer  Organisations  and  the  market 
situation for milk and milk products, SWD(2016) 367 final, 2016. Revoredo et at , page 94, which points to 
(limited) findings on price volatility 
129  Penone,  C.,  Giampietri,  E.  &  Trestini,  S.  Exploring  farmers’  intention  to  adopt  marketing  contracts: 
empirical insights using the TOE framework. Agric Econ 12, 39 (2024). https://doi.org/10.1186/s40100-024-
00333-7.  
130 European Commission,  Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the  food  supply  chain,  SWD(2018)  92  final,  2018.;  cadia  International  (2019),  Study  on  Unfair  Trading 
Practices in the Food Supply Chain, 
131  Austrian  Competition  Authority,  Sector 
https://www.bwb.gv.at/fileadmin/user_upload/BU-LM_final_original1_inh_NEU2.pdf.  
132 fi-compass, An agricultural-focused EAFRD financial instrument providing market-responsive financial 
products, European Investment Bank and European Commission, December 2018, p. 40-41. Available at: 

p. 91.  Available 

inquiry 

2022, 

food, 

at: 

48 

 
 
 
 
indicate that contracts with clear pricing formulas or fixed prices may reduce farm income 
volatility by 8% - 10%.133 This reduction in income variability is expected to translate into 
an average margin improvement of around 1% of the annual income per farm per year.134 
Based on this, it is estimated that the stabilising effect of such measures could improve 
income  by  approximately  €360  per  farm  per  year.135  Since,  as  already  stated,  the  vast 
majority  of  transactions  are  already  covered  by  written  contracts  that  may  include  the 
mandatory elements and a revision clause, and certain transactions would be exempt from 
this requirement, it is conservatively assumed that around 1 million farms (out of 9 million 
farms in the EU; approximately 11% of EU farms) would benefit from the introduction of 
the  mandatory  elements  and  revision  clause.  Taking  into  account  existing  practices  at 
Member State level and applicable derogations, this would lead to an estimated benefit of 
between €360 million across the EU.  

In addition, in sectors with a high degree of buyer concentration, clearer contractual terms 
and  access  to  mediation  mechanisms  can  help  prevent  occurrence  of  unfair  trading 
practices, such as last-minute order cancellations or unilateral price changes in the absence 
of written agreements - practices which are already prohibited under the UTP Directive, 
but often difficult to enforce in the absence of a written record. 

Mediation is intended for situations where parties are unable to reach an agreement but are 
willing  to  conclude  or  revise  a  contract.  The  introduction  or  wider  use  of  mediation 
mechanisms  in  commercial  relationships  within  the  agri-food  supply  chain  can  make  a 
significant contribution to conflict resolution, particularly in cases of unequal bargaining 
power.  Mediation  offers  a  confidential,  non-adversarial,  low-cost,  and  time-efficient 
alternative, enabling parties to ensure the continuity of their business relationship. This is 
especially relevant in the agricultural sector, where stable, long-term partnerships between 
farmers and buyers - such as processors or retailers - are often vital for business viability 
and  largely  dictated  by  the  geography  of  agricultural  production,  which  is  strongly 
territorialised.  

In fragmented supply chains, where many small farmers negotiate with a limited number 
of larger buyers, mediation can help mitigate the so-called ‘fear factor’ - the reluctance of 
farmers  to  raise  concerns  due  to  fear  of  retaliation  or  loss  of  business.  By  providing  a 
neutral  forum  without  direct  confrontation,  mediation  can  support  more  balanced 
negotiations and strengthen trust. Moreover, mediation encourages dialogue and mutual 
understanding, focusing on resolving issues rather than escalating conflicts. It  reassures 

https://www.fi-compass.eu/sites/default/files/publications/Agri-
focused%20EAFRD%20FI%20providing%20market-responsive%20financial%20products.pdf.  
133  Revoredo-Giha,  C.,  Clayton,  P.,  Costa-Font,  M.,  Agra-Lorenzo,  FAL.,  &  Akaichi,  F.,  ‘The  impact of 
mandatory written dairy contracts in European countries and their potential application in Scotland’,  Social 
Research series, Scottish Government Social Research, 2019. 
134 Briner, S. and Finger, R., The effect of price and production risks on optimal farm plans in Swiss dairy 
production considering two different milk quota systems, Journal of Dairy Science, vol. 96, no. 4, 2013, pp. 
2234–2246. Available at: https://doi.org/10.3168/jds.2012-6086.   
135 This is based on the assumption of an average annual farm income of €36,000 per farm. It is important to 
note  that  farm  income  can  significantly  vary  depending  on  the  sector,  size  of  the  farm,  organisational 
structure,  training,  age  and  sex  of  the  farm  holder  as  well  as  the  Member  State  (see  for  further  details: 
https://agridata.ec.europa.eu/extensions/FarmEconomicsOverviewReport/FarmEconomicsOverviewReport.
html). 

49 

 
 
 
farmers that their concerns will be taken seriously, and helps buyers understand the broader 
context  without  feeling  attacked.  This  can  lead  to  more  balanced  and  respectful 
relationships  over  time.  In  this  way,  mediation  reduces  the  fear  of  retaliation  and 
encourages a culture where problems can be raised and solved constructively - benefiting 
both sides in the long term. 

This has also a positive impact on the mental health of farmers, that have the possibility to 
turn to a mediation service and don’t feel to be locked in a conflictual situation without 
any  support.  Evidence  from  several  Member  States  suggests  that  mediation  can  also 
enhance resilience.136 For example, it has been used successfully not only in contractual 
disputes at the time of renewal of contracts but also in crisis contexts - such as sharp price 
declines  -  to  help  coordinate  collective  responses.  Where  mediation  mechanisms  are  in 
place (e.g., in certain EU Member States), farmers can resolve disputes more quickly and 
cheaply compared to lengthy disputes and legal proceedings. Mediation costs depend on 
the  complexity  of  the  case  and  duration  of  the  dispute  resolution,  in  typically  range 
between € 500 and €2,000 per case.137  

Also, buyers benefit from clearer contractual terms and mediation, reducing the likelihood 
of contractual disputes. This can yield savings in legal fees estimated at up to €2-€4 million 
annually at the Member State level when fewer investigations and disputes are required.138 
While  buyers  face  initial  adjustment  costs  estimated  at  around  €660  to  €1,320139  per 
company related to drafting compliant contracts, training staff and implementing internal 
monitoring systems.140 Resulting into approximately one off initial adjustment costs for 

136 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, p. 183; Austrian Competition Authority, Sector inquiry 
food, 2022, p.295 Available at:  
https://www.bwb.gv.at/fileadmin/user_upload/BU-LM_final_original1_inh_NEU2.pdf.  
137  European  Parliament,  Directorate  General  for  Internal  Policies,  Rebooting  the  Mediation  Directive: 
Assessing  the  Limited  Impact  of  Its  Implementation  and  Proposing  Measures  to  Increase  the  Number  of 
Mediations in the EU, 2014. Available at:  
https://www.europarl.europa.eu/document/activities/cont/201105/20110518ATT19592/20110518ATT1959
2EN.pdf;   European Commission (2023), Commission staff working document – Impact assessment report 
Accompanying the proposal for a Directive amending Directive 2013/11/EU on alternative dispute resolution 
for  consumer  disputes,  as  well  as  Directives  (EU)  2015/2302,  (EU)  2019/2161  and  (EU)  2020/1828, 
SWD(2023) 335 final, Brussels, 17.10.2023. Available at:   
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023SC0335.   
138  European  Parliament,  Directorate  General  for  Internal  Policies,  Rebooting  the  Mediation  Directive: 
Assessing  the  Limited  Impact  of  Its  Implementation  and  Proposing  Measures  to  Increase  the  Number  of 
Mediations in the EU, 2014. Available at:  
https://www.europarl.europa.eu/document/activities/cont/201105/20110518ATT19592/20110518ATT1959
2EN.pdf.  
139 Based on a standard cost model, initial adjustment costs for buyers are estimated as legal contract drafting 
and review: The hourly tariff is set at €33.00, corresponding to the One-In-One-Out tariff, including hourly 
earnings  (Eurostat,  Structure  of  earnings  survey  2022),  non-wage  labour  costs  (Eurostat,  Labour  Force 
Survey, data for Non-Wage Labour Costs) and 25% overhead costs, for ISCO 1-5 Non-manual workers; the 
use  of  ISCO  1-5  is  based  on  the  assessment  that  the  tasks  require  a  mixture  of  skills  (managers, 
professionals/lawyers,  technicians  and  clerks).  It  is  estimated  that  the  initial  adjustment  would  require 
between 20 to 40 hours. Using €33.00 per hour, this equates to €660 to €1,320. 
140 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, p. 183;  

50 

 
 
 
15,474 buyers of €10.2 million to €20.4 million within 18 months after entry into force of 
the proposal.141  

For larger processors and retailers operating in several EU Member States, divergence in 
Member State requirements due to derogations at Member State level can increase these 
costs. 

Impacts on consumers 

As  the  measures  primarily  concern  contracts  at  the  farm  level,  and  are  therefore  not 
expected to have a direct and immediate impact on consumer prices or product availability. 
However, any broader impact on price stability - particularly if prices become more stable 
but marginally higher - could affect consumer choice in the longer run.142 For example, 
evidence of Member States with strict UTP legislation does not suggest a link to higher 
food inflation, the implications for consumer behaviour may potentially vary depending 
on household income and purchasing power.143  

Impacts on public authorities in the Member States 

Clear,  written  contracts  can  simplify  oversight  and  investigations  into  unfair  trading 
practices.    Some  Member  States  estimate  annual  savings  of  €2  -€4 million  in  public 
enforcement  budgets  due  to  the  diminished  need  for  extensive  investigations.144  These 
estimates may vary depending on the size of the Member States and the dimension of the 
economic activity. Fewer investigations are needed, since disputes can often be settled by 
examining the contract’s terms rather than conducting interviews or audits. Enforcement 
authorities  can  devote  less  time  and  resources  per  case,  as  clear  contractual  evidence 
replaces complex investigative work. For example, in Spain, which introduced obligatory 
written food supply contracts in 2013, authorities observed that having a contract for each 
transaction,  has  improved  transparency  and  enables  quicker  detection  of  abuses.  In 
addition, for instance if a buyer fails to pay on time or tries to retroactively change terms, 
the violation is easily spotted in the written contract, avoiding a protracted investigation. 
Other enforcement authorities, such as Italy, Poland, share similar experience.  

There are no costs relating to the transposition since the Regulation is directly applicable, 
however, some Member States may consider there is a need to adjust national laws or to 
adopt derogations from mandatory contracts introduced at Member States level.  

141 According to Eurostat structural business statistics, there are 1,108 food companies that are not small or 
micro (2023), and 4,724 wholesale food companies, 8,465 retail companies non-specialised and 1,177 food 
retailers that are not small or micro (2020). This represents a total of maximum 15,474 companies that would 
have to adjust their contracts on the first year of implementation within 18 months after entry into force of 
the proposal. This results into one off initial adjustment costs of 15,474 x €660 = €10.2 million to 15,474 x 
€1,320 = €20.4 million. 
142 European Commission, Impact assessment accompanying the document Proposal for a Directive of the 
European Parliament and of the Council on unfair trading practices in business-to-business relationships in 
the food supply chain, SWD(2018) 92 final, 2018, p. 91.  
143 Ibid. 
144 Ibid. 

51 

 
 
 
Additional costs may occur, due to setting up registers (optional), training public servants, 
and setting up of mediation mechanism when none is available (which is not the case, as 
non-specialised mediation schemes are available everywhere in the Union). One-off costs 
can  range  depending  on  the  options  decided  by  the  Member  States  from  €100,000  (in 
smaller Member States) to €1 million (in larger Member States).145  

4.1.2.  Enhanced cooperation between farmers in producer organisations 

and associations of producer organisations 

Impacts on farmers 

A key impact of the proposal is the promotion of deeper farmer integration into larger POs, 
which has the potential to enhance market stability and resilience.146 Larger POs aggregate 
supply, increasing both volume and variety, which strengthens their ability to secure better 
contracts  and  expand  market  access.  Furthermore,  these  organisations  offer  essential 
support services and create added value through processing, allowing farmers to navigate 
market fluctuations more effectively. Enhanced integration is likely to lead to improved 
risk management, greater economies of scale, and more predictable income streams  for 
farmers.147 

Farmers highlight148 the positive impact on access to market channels and in increasing 
stability and security. The impact of PO activities on farm themselves is more positive on 
turnover and price achieved than on yield. The presence of specific PO actions is a strong 
determinant of farm results (e.g. PO actions related to labelling and promotion can improve 
price performance). Specifically, farms using POs as their primary source of information 
achieve higher prices. The impact of PO membership is positive on farm growth and, to a 
greater extent, to unit value of production (hectare/animal head). PO membership reduces 
the  costs  related  to  fees  and  brokers’  commissions  for  farmers.  Moreover,  farmers  are 
relieved of administrative tasks related to concluding and negotiating contracts, obtaining 
legal  advice,  and  settling  disputes.  In  addition,  joint  marketing  and  product  quality 
improvement  can  lead  to  an  increase  in  the  commercial  value  of  the  products,  while 
modernised logistics and packaging can result in cost savings.  

145 Ibid. 
146  European  Commission  (2019).  Commission  Staff  Working  Document  Accompanying  the  Report  on 
Competition Policy 2018, SWD(2019) 297 final, Brussels, 15 July 2019. 
147  Integration  into  horizontal  organizations  and  pooling  of  their  agricultural  output  enables  farmers  to 
strengthen their bargaining power vis-à-vis potential buyers and input suppliers, to reduce risks associated 
with farming activities, to gain market access to particular marketing channels, and to benefit from economies 
of scale. As members of a PO, moreover, farmers can invest collectively in assets  or services that require 
high  fixed  costs,  allowing  them,  for  instance,  to  access  new  technologies  and  to  improve  efficiency  and 
productivity, which ultimately leads to higher income”, Cseres, K. J. (2020). “Acceptable”  Cartels at the 
Crossroads of EU Competition Law and the Common Agricultural Policy: A Legal Inquiry into the Political, 
Economic, and Social Dimensions of (Strengthening Farmers’) Bargaining Power. The Antitrust Bulletin, 
65(3), 401-422. https://doi.org/10.1177/0003603X20929122.  
148  European  Commission:  Arcadia  International,  Areté,  Directorate-General  for  Agriculture  and  Rural 
Development,  ECORYS,  ERGO  and  IHS  Markit,  Establishing  an  operational  programme  –  Supporting 
producer  organisations  to  contribute  to  strengthening  farmer's  position  in  the  agri-food  supply  chain  and 
improving the economic, social and environmental sustainability of farm – Final study report, Publications 
Office of the European Union, 2023, https://data.europa.eu/doi/10.2762/599656.  

52 

 
 
 
Overall, a conservative estimate suggests cost savings of between 0.5% and 1% for farmers 
who  start  marketing  their  production  through  recognised  POs  or  APOs.149  Taking  a 
conservative estimate that the value of marketed production (VMP) from farmers newly 
engaging with recognised POs corresponds to 1% of total EU agricultural output150, this is 
equivalent to €5.36 billion of VMP newly marketed through POs. It is assumed that cost 
savings of 0.5% to 1% would translate into a corresponding increase in the VMP. This 
could  correspond  to  an  estimated  annual  benefit  of  between  €26.8  million  and  €53.6 
million. This estimate reflects reductions in transaction-related costs (e.g. administrative 
burden,  negotiation,  marketing,  and  logistical  efficiencies)  for  new  members  joining 
collective marketing structures and does not account for any increase in volume or price.  
It excludes any benefits already achieved by existing PO members through strengthened 
collective structures and does not account for price improvements or logistics-related gains 
for existing PO members. These savings may vary across the sectors and Member States 
and will depend on the operational efficiency of a given PO, the scale of the farm of the 
new member (smaller farmers will benefit more than bigger farmers due to economies of 
scale) and market situation. 

The proposal directly addresses the structural imbalance between individual farmers and 
large  retailers  or  processors.  Without  collective  negotiation  mechanisms,  farmers  often 
struggle  to  secure  fair  prices  and  contract  terms.  By  enabling  farmers  in  unrecognised 
collective entities to benefit from the same exclusions to competition law as recognised 
entities,  those  farmers  are  not  placed  at  a  disadvantage,  an  element  that  is  crucial  for 
preventing  market  distortions  and  ensuring  equitable  conditions  across  the  sector.  This 
shift is expected to create a more balanced and competitive agricultural market.151 

Research  across  France,  Germany,  Spain,  and  Poland  highlights  a  clear  correlation 
between PO membership and reduced exposure to  unfair trading  practices (UTPs). The 
study states: “PO membership reduces the likelihood of farmers reporting UTPs compared 
to non-members”. 152 By reinforcing collective bargaining mechanisms, the initiative can 

149 Ibid. European Commission: Directorate-General for Agriculture and Rural Development, ECORYS and 
IfLS, Synthesis of evaluation reports from Member States regarding their national strategies for sustainable 
2013-2018 operational programmes in the fruit and vegetables sector – Final report, Publications Office of 
the European Union, 2022, https://data.europa.eu/doi/10.2762/396335.  
150 According to Eurostat the total value of the agricultural output in the EU was EUR 536.93 billion in 2023.  
151 ”The exemption of the agricultural sector from the competition rules is often explained by reference to 
the atomistic nature of the farming industry and the inability of individual farmers to bargain on a level field, 
given  the  few  firms  that  dominate  the  processing  and  marketing  of  agricultural  produce.  Accordingly, 
competition law cannot be applied to the agricultural sector in a fair or constructive manner, hence the need 
to exempt the sector wholesale from application of these rules.”, Cseres, K. J. (2020). “Acceptable” Cartels 
at the Crossroads of EU Competition Law and the Common Agricultural Policy: A Legal Inquiry into the 
Political, Economic, and Social Dimensions of (Strengthening Farmers’) Bargaining Power. The Antitrust 
Bulletin, 65(3), 401-422. https://doi.org/10.1177/0003603X20929122 (Original work published 2020) 
152 Di Marcantonio F., Havari E., Colen L., Ciaian P., Do producer organizations improve trading practices 
and  negotiation  power  for  dairy  farms?  Evidence  from  selected  EU  countries,  (2021),  agricultural 
economics;  See  also  European  Commission:  Arcadia  International,  Areté,  Directorate-General  for 
Agriculture  and  Rural  Development,  ECORYS,  ERGO  and  IHS  Markit,  Establishing  an  operational 
programme – Supporting producer organisations to contribute to strengthening farmer's position in the agri-
food supply chain and improving the economic, social and environmental sustainability of farm – Final study 
report, 
: 
https://data.europa.eu/doi/10.2762/599656.  

Publications 

Available 

European 

Union, 

Office 

2023. 

the 

of 

at 

53 

 
 
 
lead to reduction of unfair trading practices and contribute to a more transparent and ethical 
marketplace.  

With regard to APOs, one of the key impacts of the proposal is the facilitation of broader 
market access for farmers and POs through APOs. By coordinating supply and demand, 
APOs help stabilise prices and reduce market volatility. This collective approach enables 
farmers  to  secure  more  favourable  pricing  and  enhances  overall  market  resilience, 
ultimately ensuring greater economic sustainability for members.153   

In view of the need to avoid excessive market concentration within large APOs that could 
gain  disproportionate  influence,  leading  to  reduced  competition  and  the  possibility  of 
monopolistic practices, negatively impacting consumers by driving up prices and stifling 
innovation,  the  proposal  includes  a  safeguard  limiting  market  concentration  to  33%154, 
ensuring that competition remains fair and balanced. 

In  addition,  according  to  a  study155,  54%  of  POs  (including  cooperatives)  that  are  not 
recognised  pursue  joint  contract  negotiations.  POs  may  need  to  seek  recognition, 
otherwise, they risk  acting in  violation of competition  rules. Extending  the competition 
exclusion to non-recognised POs that comply with the recognition criteria would lead to 
fewer  exchanges  with  public  authorities  and  reduce  the  risk  of  POs  being  subject  to 
investigations by competition authorities and the Commission. 

It is estimated that this may lead to cost savings in preparing the request for recognition of 
40 to 80 hours per recognition request per PO, amounting to €1,320 to €2,640. Assuming 
that this would lead to 54 to 108 (two to four avoided requests per Member State per year) 
avoided  requests  within  the  EU  per  year,  this  would  amount  for  POs  to  approximately 
€71,280 to €285,120 of cost savings per year in the EU. If 19,980 of the non-recognised 
POs that pursue join contract  negotiations may  avoid  seeking  a  recognition,  this would 
lead to cost savings amounting between €26.37 million to €52.75 million in total. 

The rules on simplification on the recognition of POs, foster better coordination between 
different agricultural sectors. This is expected to reduce inefficiencies in the supply chain, 
leading  to  more  stable  supply  levels  and  price  stability,  ultimately  benefiting  both 
producers and consumers. 

By simplifying and streamlining the recognition process for POs in multiple sectors, the 
proposal  facilitates  diversification  among  producers.  This,  in  turn,  helps  POs  and  their 
members  mitigate  risks  associated  with  price  volatility  and  supply  chain  disruptions, 
contributing to greater market resilience. 

153 Improving market access and opportunities for value addition for small-scale food producers and family 
farms, as well as ensuring properly functioning food commodity markets, are among the objectives of the 
Sustainable Development Goals, targets 2.3 and 2.4. 
154 Limiting the market concentration to 33% of the production in a Member State, (i.e., 1/3 of the market) 
allows to ensure that there are options for the buyers to purchase their products in case of disagreement or 
excessively high prices.  
155 European Commission: Directorate-General for Agriculture and Rural Development, Montanari, F.,  
Chlebicka, A., Szabo, G., Amat, L. et al., Study of the best ways for producer organisations to be  
formed, carry out their activities and be supported – Final report, {OPL}, 2019,  
https://data.europa.eu/doi/10.2762/034412.  

54 

 
 
 
The  proposal  acknowledges  that  different  agricultural  sectors  operate  under  distinct 
regulatory frameworks (e.g. dairy, meat, and cereals). As a result, compliance costs may 
increase. However, the policy only introduces the possibility for operators, with the true 
regulatory  burden  and  implications  to  be  assessed  based  on  the  actual  uptake  and 
implementation. 

Impact on consumers 

The legal proposal acknowledged the potential risk of higher consumer prices due to large 
APOs  negotiating  prices  collectively,  introducing  a  safeguard  mechanism  according  to 
which no single APO controlling more than 33% of the market can benefit from the new 
provision to prevent excessive price increases, as competition is not excluded while at least 
two thirds of the market share of any MS will continue to be in the hands of competitors. 
Conversely, the proposal also recognises the potential for economies of scale when farmers 
collaborate  through  POs  and  APOs.  By  streamlining  production  and  operational 
efficiencies,  POs  could  lower  production  costs  and/or  improve  quality  of  the  products 
marketed  by  them,  which  may  translate  into  reduced  prices  and/or  better  quality  of 
products for consumers.156 The policy framework supports this outcome while maintaining 
market fairness and competition. 

Impact on public administrations 

Member  States’  administrations  will  face  a  comparatively  lower  burden  by  extending 
competition law exclusions to non-recognised POs, rather than requiring these entities to 
undergo a formal recognition process to qualify for such benefits. According to a study157, 
54%  of  POs  (including  cooperatives)  that  are  not  recognised  pursue  joint  contract 
negotiations.  This  would  POs  organisations  (including  cooperatives)  may  need  to  seek 
recognition; otherwise, they risk acting in violation of competition rules.  

A very conservative estimate of approximately two to four requests for recognition can be 
avoided per Member State per year (equivalent to 54 to 108 recognitions per year in the 
EU).  It  is  estimated  that  this  may  lead  to  administrative  cost  savings  in  examining  the 

and  Fisheries  Papers,  No. 

151,  OECD  Publishing,  Paris.  Available 

156  Deconinck,  K.  (2021-02-17),  “Concentration  and  market  power  in  the  food  chain”,  OECD  Food, 
Agriculture 
at: 
http://dx.doi.org/10.1787/3151e4ca-en.    See  also  European  Commission:  Arcadia  International,  Areté, 
Directorate-General for Agriculture and Rural Development, ECORYS, ERGO and IHS Markit, Establishing 
an  operational  programme  –  Supporting  producer  organisations  to  contribute  to  strengthening  farmer's 
position in the agri-food supply chain and improving the economic, social and environmental sustainability 
of  farm  –  Final  study  report,  Publications  Office  of  the  European  Union,  2023.  Available  at  : 
https://data.europa.eu/doi/10.2762/599656. European Commission: Directorate-General for Agriculture and 
Rural Development, ECORYS and IfLS, Synthesis of evaluation reports from Member States regarding their 
national strategies for sustainable 2013-2018 operational programmes in the fruit and vegetables sector  – 
Final 
at: 
the 
https://data.europa.eu/doi/10.2762/396335.  
157  European Commission: Directorate-General for Agriculture and Rural Development, Montanari, F.,  
Chlebicka, A., Szabo, G., Amat, L. et al., Study of the best ways for producer organisations to be  
formed, carry out their activities and be supported – Final report, {OPL}, 2019,  
https://data.europa.eu/doi/10.2762/034412.  

Publications  Office 

European  Union, 

2022.  Available 

report, 

of 

55 

 
 
 
request of 40 to 80 hours per recognition request, amounting to €1,320 to €2,640.158 This 
amounts  to  approximately  €71,280  to  €285,120  of  cost  savings  per  year  in  the  EU  for 
public  administration.  If  19,980  of  the  non-recognised  POs  that  pursue  join  contract 
negotiations may avoid seeking a recognition, this would lead to cost savings amounting 
between €26.37 million to €52.75 million.  

Article  101  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  is  a  key 
component of the EU's ex post competition enforcement. This principle is not altered under 
the new rules proposed, and unrecognised entities will be subject to ex post controls by 
national competition authorities and the Commission in the same way as today. There is 
thus no additional administrative burden created on the unrecognised entities.  

Public administration may need to modify the recognition forms allowing POs to request 
a recognition for different sectors in one single request. The administrative effort should 
be however minimal since the criteria for the recognition have not changed and is estimated 
to be around 20 to 40 hours at most, resulting into €660 to €1,320 per MS.159 This equals 
between €17,820 to €35,640 of one-off adjustments costs for PO recognition forms for the 
EU.  

4.1.3.  Promotion of voluntary approaches 

For  farmers  already  engaged  in  existing  quality  schemes,  the  definition  of  terms  to 
designate them offers a crucial advantage, providing greater visibility and access to high-
value  markets.  In  addition,  small-scale  farmers,  cooperatives,  and  sustainable  agrifood 
enterprises will now have a clearer pathway to develop their own schemes in line with EU 
requirements, allowing them to capitalise on new branding opportunities.160 

Furthermore,  the  recognition  of  short  supply  chains  is  set  to  strengthen  the  direct  link 
between farmers and consumers. By reducing dependence on intermediaries, farmers can 
retain more value from their products, ensuring a fairer distribution of earnings within the 
supply chain. There are indications that short supply chains can result in better prices for 
producers and that farmers can appropriate more added value and thereby improve their 
income161. This shift also extends benefits to processors and retailers, who stand to gain 
from stronger partnerships with suppliers in close geographic proximity - fostering a more 
resilient and community-oriented food system. It is short supply chains that can favour the 

158 Based on a standard cost model,  administrative cost savings per  avoided request for recognition: The 
hourly tariff is set at €33.00, corresponding to the One-In-One-Out tariff, including hourly earnings (Eurostat, 
Structure of earnings survey 2022), non-wage labour costs (Eurostat, Labour Force Survey, data for Non-
Wage Labour Costs) and 25% overhead costs, for ISCO 1-5 Non-manual workers; the use of ISCO 1-5 is 
based  on  the  assessment  that  the  tasks  require  a  mixture  of  skills  (managers,  professionals/lawyers, 
technicians and clerks). It is estimated that the assessment of the recognition request would require at least 
between 40 to 80 hours. Using €33.00 per hour, this equates to €1,320 to €2,640. 
159  The  hourly  tariff  is  set  at  EUR  33.00,  corresponding  to  the  One-In-One-Out  tariff,  including  hourly 
earnings  (Eurostat,  Structure  of  earnings  survey  2022),  non-wage  labour  costs  (Eurostat,  Labour  Force 
Survey, data for Non-Wage Labour Costs) and 25% overhead costs, for ISCO 1-5 Non-manual workers; the 
use  of  ISCO  1-5  is  based  on  the  assessment  that  the  tasks  require  a  mixture  of  skills  (managers, 
professionals/lawyers, technicians and clerks). Using €33.00 per hour, this equates to  €660 to €1,320 per 
MS. 
160 Reference to positive impact of fair schemes on income of farmers involved. 
161 Stein A., Santini F., The sustainability of “local” food: a review for policy-makers, (2021) 

56 

 
 
 
interaction  and  connection  between  farmers  and  consumers  and  thereby  promote  the 
development of trust and social capital that in turn  can generate a sense of identity and 
community and contribute to social inclusion.162 

Beyond  individual  market  players,  the  proposal  enhances  legal  certainty  across  the 
industry. By establishing clear EU-wide definitions, which will be further substantiated in 
implementing  acts,    for  these  terms,  business  operators  can  navigate  compliance  with 
greater  confidence,  ensuring  accountability  and  transparency  in  their  operations.163 
Schemes  that  do  not  meet  the  minimum  requirements  established  in  the  proposal,  and 
further detailed in the implementing acts, would not be permitted to claim they are "fair", 
"equitable", or equivalent in relation to farmers or a "short supply chain". Products under 
these  schemes  could  still  be  marketed  without  such  claims,  or  the  schemes  themselves 
would need to be adapted accordingly.  

By  granting  more  visibility  to  such  schemes,  by  protecting  them  from  less  ambitious 
schemes and therefore giving more credibility, the proposal is likely to contribute to an 
increased market share for such schemes, thus contributing to higher economic benefits for 
farmers and processors. Retailers involved in such schemes on a voluntary basis will be 
able to use them as incentives for consumers to come more frequently in their outlets.    

While the proposal aims to enhance transparency, sustainability, and fairness in agrifood 
markets,  its  success  is  not  without  potential  challenges.  The  effectiveness  of  voluntary 
schemes  ultimately  depends  on  consumer  willingness  to  pay  a  premium  for  ethically 
sourced  products  that  meet  higher  standards.  In  an  inflationary  environment,  where 
purchasing power is strained, consumer demand for such products may weaken, limiting 
the overall impact of these initiatives. However, in times of crisis, such schemes may also 
attract another part of the consumers that wish to support farmers, and SMEs, in particular 
those situated in close geographic proximity.164 

Another key concern is the risk of uneven standards across different schemes. Without a 
uniform  and  ambitious  EU-wide  definition,  less  rigorous  schemes  could  undercut  more 
ambitious ones, leading to a race to the bottom. Additionally, if individual Member States 
choose  to  impose  stricter  conditions,  the  resulting  patchwork  of  regulations  may  create 

162 Kneafsey, M., Venn, L., Schmutz, U., Balázs, B., Trenchard, L., Eyden-Wood, T., Bos, E., Sutton, G., & 
Blackett,  M.  (2013).  Short  food  supply  chains  and  local  food  systems  in  the  EU  (EUR  25911  EN;  JRC 
Scientific and Policy Reports). https://doi.org/10.2791/88784.  
163 See Impact assessment accompanying the proposal for a Directive of the European Parliament and of the 
Council and amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the 
green transition through better protection against unfair practices and better information, cording to which, 
there were around 230 ecolabels active in Europe in 2020 of which 48% cover some social attributes. 901 
labelling schemes have been identified across Europe in the food area, and there have been 100 private green 
energy  labels  mapped  in  the  EU.  However,  many  labels  are  subject  to  different  levels  of  robustness, 
supervision and transparency, which may raise questions about their reliability. 
164 For instance, a 2011 paper by Hainmueller, Hiscox and Sequiera that studied consumers’ willingness to 
pay for fair trade coffee found that although consumers’ willingness to pay for fair trade products exists, this 
is lower for consumers with lower incomes. Final report by the Ipsos and London Economics Consortium - 
Consumer  market  Study  on  the  functioning  of  voluntary  food  labelling  schemes  for  consumers  in  the 
European  Union  EAHC/FWC/2012  86  04,  p.  247.  Hainmueller,  Jens,  Michael  J.  Hiscox,  and  Sandra 
Sequeira.  "Consumer  demand  for  fair  trade:  Evidence  from  a  multistore  field  experiment." Review  of 
Economics and Statistics 97, no. 2 (2015): 242-256.  

57 

 
 
 
legal uncertainty and distort fair competition between schemes operating under different 
national rules. 

The  proposal  enhances  transparency,  allowing  consumers  to  make  more  informed 
purchasing decisions based on fairness, social responsibility, and ethical considerations. 
This added clarity could strengthen consumer trust in food labels, helping individuals align 
their choices with their values.165 

Additionally, the promotion of social sustainability initiatives is expected to expand the 
range of products available, offering consumers more options that meet higher ethical and 
quality  standards.  With  clearer  distinctions  between  different  sustainability-driven 
schemes, consumers will have greater agency in supporting responsible business practices. 

However,  these  benefits  come  with  certain  risks.  In  the  absence  of  robust  certification 
mechanisms  or  effective  controls,  terms  such  as  “fair,”  “equitable,”  could  be  misused, 
leading  to  consumer  confusion.  Without  safeguards,  misleading  claims  -  sometimes 
referred to as “fair-washing” - could undermine trust in the very labels meant to provide 
transparency. That said, existing EU consumer protection laws do provide mechanisms to 
prevent  deceptive  practices  and  ensure  accountability.  The  impact  on  enforcement 
authorities is expected to be limited. There would be no need to establish new bodies, as 
any  necessary  controls  and  audits  could  be  carried  out  within  existing  frameworks  and 
structures. The enforcement authorities would, however, need to integrate these controls 
and audits into their existing control or audit strategies. Participating farmers or consumers 
would be able to lodge complaints with the relevant existing authorities if schemes were 
found not to comply with the minimum requirements. 

Concerning  the  extension  of  the  scope  of  Article  210a  to  social  sustainability,  like  for 
environmental sustainability agreements, such agreements are likely to offset the costs of 
transition  for  producers.  A  potential  drawback  is  the  possible  impact  on  pricing.  Some 
social sustainability initiatives, like environmental ones, may lead to higher costs, which 
may be passed on to consumers. The proposal is constructed that only the indispensable 
costs may be passed to ensure a higher degree of sustainability. Such agreements will need 
to be discontinued if they result in exclusion of competition or if they impair the fulfilment 
of CAP objectives laid out by Article 39 TFEU. As national competition authorities will 
continue to oversee the market to prevent anti-competitive behaviour, the proposal is not 
likely to have a significant negative effect for consumers. 

4.2. 

Social impacts and environmental impacts 

While contract measures primarily aim to improve the bargaining position of farmers vis-
à-vis other actors in the food supply chain, the use of written contracts can have indirect 
social and environmental impacts. 

By stabilising farm incomes, mandatory written contracts could enable farmers to invest 
more  in  their  communities  and  improve  working  conditions.  Research  suggests  that 

165  Stein  A.,  Santini  F.,  The  sustainability  of  “local”  food:  a  review  for  policy-makers,  (2021),The 
introduction of a scheme reflecting products’ performance with regard to different aspects of sustainability 
was presented as a solution, communicating to consumers explicitly which food products perform better on 
which sustainability criteria. 

58 

 
 
 
increase  in  income  predictability  can  lower  farmer  stress  levels  and  lead  to  improved 
mental health outcomes and overall well-being for farmers and farm workers.166 This can 
foster  better  working  conditions  and  social  cohesion  in  rural  areas.167  Greater  income 
stability and improved access to finance can reduce entry barriers for young farmers, who 
typically lack collateral or equity.168 This helps mitigate rural depopulation and supports 
the long-term viability of agriculture. 

More predictable income flows can encourage farmers to adopt environmentally friendly 
practices  (e.g.,  precision  agriculture,  organic  farming)  that  require  higher  upfront 
investment but can improve soil health and biodiversity over time.169 If rigid formulas or 
inappropriate cost indicators fail to reflect true production costs, farmers may be forced to 
cut  corners,  including  environmental  or  social  safeguards,  to  remain  competitive.170  In 
such cases, the hoped-for social and environmental benefits may fail to materialise. 

Research shows that fostering farmers’ collaboration generates besides economic benefits, 
also social and environmental benefits (based on social return on investment analyses, farm 
networks generate between €2.70 to €4.23 of benefit for each €1 invested).171 

By allowing operators to undertake initiatives supporting voluntary measures - such as the 
definition of optional reserved terms and the extension of Article 210a CMO Regulation 
to social objectives - the initiative strengthens the viability of farmers, especially small-
scale farmers. This, in turn, contributes to generational renewal in agriculture, making the 
farming  profession  more  attractive  for  younger  generations,172  helps  preserve  rural 
employment, and enhances the overall attractiveness of rural areas. 

Legal uncertainty is a concern in relation to social sustainability objectives. In the absence 
of clear EU guidelines, business operators may struggle to interpret the law and develop 
new sustainability-driven initiatives. This lack of clarity could discourage investment and 
innovation in socially responsible business practices, undermining one of the proposal’s 
key aspirations. 

From the social side, there is a considerable decrease in the number of accidents on farms 
for both recognised and non-recognised POs. There is  also an increase in environment-

166,Eurofound, 2020, p. 10 , European Agency for Safety and Health at Work, Mental health in agriculture: 
preventing  and  managing  psychosocial  risks  for  farmers  and  farm  workers,  Report,  2024,  Available  at: 
https://osha.europa.eu/sites/default/files/documents/Mental-health-agriculture_EN.pdf; 
Farmwell, 
Improving farmers’ wellbeing through social innovation – Mapping report on challenges, 2021, Available 
at: https://farmwell-h2020.eu/wp-content/uploads/2021/12/D-2.3_SYNTHESIS1.pdf.  
167 Knapp & Torm, 2019, p. 145. 
168 Ares et al., 2020, p. 48. 
169 FAO, 2019, p. 23. 
170 OECD, 2015, p. 41. 
171  FARMWELL,  Policy  case  No  2  –  Supporting  farmers’  collaborations,  2022,  page  3.  Available  at: 
https://farmwell-h2020.eu/wp-content/uploads/policycase-2.pdf.  
172 CEJA position paper “Resilience and sustainability of the agrifood supply chain”, 2021. Available at: 
https://wordpress.ceja.eu/wp-content/uploads/2021/06/Position-Paper-Resilience-and-sustainability-of-the-
agri-food-supply-chain.pdf (Accessed: 24.04.2025).   

59 

 
 
 
related investments over time in POs, with a significant number of members mentioning 
such increase as the result of PO membership.173 

Taking into account that SDGs are designed to be indivisible,174 the proposal takes action 
on the level of economic and social development by extending the objectives to be pursued 
under Article 210a, introducing in this way the necessary legal framework to address the 
social challenges in the agricultural sector, while providing legal certainty to the operators 
and the national  competition authorities themselves  with  regard to  the ”safety  zone” of 
such initiatives.175.  

Beyond  economic  stability,  these  measures  have  the  potential  to  foster  deeper  social 
connections.  The  promotion  of  short  supply  chains,  which  emphasise  direct  and  close 
relationships between farmers and consumers, can strengthen cohesion between urban and 
rural  areas176.  By  creating  a  more  localised  and  transparent  food  system,  the  proposal 
encourages solidarity and mutual support between different regions. 

Another  key  social  benefit  is  the  potential  improvement  of  labour  conditions  in  the 
agricultural sector through those voluntary approaches either for agreements within Article 
210a  CMO  Regulation  or  for  “fair”,  “equitable”  or  equivalent  schemes.  Given  that  the 
industry relies heavily on migrant workers, clearer definitions and standards for fair supply 
chains could reduce the risk of labour exploitation and support better social protections for 
farmworkers. Ensuring fairness in agricultural employment would mark an important step 
toward more equitable working conditions across the sector. 

From an environmental perspective, the proposal also aligns with broader sustainability 
goals. By requiring “fair” supply chains to actively contribute to Sustainable Development 
Goals  (SDGs),  including  environmental  protection  and  climate  change  mitigation 
measures, these initiatives can play a role in the green transition, ensuring that economic 
and social benefits are not achieved at the expense of environmental progress. 

However, challenges remain. A focus on social objectives - such as fair and local supply 
chains  -  could,  in  some cases,  divert  attention  from  stricter  environmental  standards.  If 
farmers find it easier to access premium pricing through fair trade or short supply chain 
initiatives,  they  may  have  less  incentive  to  adopt  additional,  costlier  environmental 
measures, such as organic farming practices. On the contrary, practitioners of short food 
supply chains or fair schemes including fair trade are often also involved in environmental 
sound systems177. There is a higher uptake of environmentally sound practices which is de 

173  European  Commission:  Arcadia  International,  Areté,  Directorate-General  for  Agriculture  and  Rural 
Development, ECORYS, ERGO and IHS Markit, 2023 
174 European Commission, reflection paper towards a Sustainable Europe by 2030 (March 2019), p.29 
175 SUSTAINABILITY AND COMPETITION – note by Greece to 134th OECD referred to the need of  “In 
the  face  of  a  ‘climate  emergency’  and  important  social  challenges  that  will  certainly  result  from  this 
development,  it  is  important  to  equip  all  public  policies  with  the  tools  to  accommodate  and  enhance 
sustainability initiatives from both the public and the private sector. Business as usual is no more an option 
and  the  transition  to  an  economy  that  is  environmentally  (and  socially)  sustainable  is  urgent.  Systemic 
resilience becomes a goal for public action.”, DAF/COMP/WD(2020)64, 3 November 2020, p. 14 
176 Stein A., Santini F., The sustainability of “local” food: a review for policymakers (2021) 
177 The example of FairTrade where farmers typically have conditions/additional requirements to fulfil in 
terms of sustainability criteria (environmental, social). Nonetheless, overall, farmers benefit from fair trade, 

60 

 
 
 
 
facto elements in favour of a positive environmental impact of Short Food Supply Chains 
in  the  EU178.  Balancing  these  priorities  will  be  key  to  ensuring  that  social  and 
environmental goals reinforce, rather than compete with, one another. 

as  suggested  by  the  fact  that  those  joining  fair  trade  tend  to  stay,  European  Commission,  S&P  Global 
commodity insights, Arete, Study on regulatory and voluntary schemes for fair agricultural remuneration 
(2025). 
178 Kneafsey et al, 2013, Short Food Supply Chains and Local Food Systems in the EU. A State of Play  
of their Socio-Economic Characteristics, JRC 

61 

 
 
 
 
 
 
ANNEX 1: OVERVIEW OF THE LEVEL OF COOPERATION OF 
FARMERS IN PRODUCER ORGANISATIONS AND OTHER ENTITIES 

This  Annex  provides  an  overview  of  the  level  of  cooperation  of  farmers  in  producer 
organisations  and  other  recognised  entities,  based  on  data  submitted  by Member  States 
under Article 5 of Regulation (EU) 2016/232179. The charts include only those Member 
States in which at least one producer organisation has been officially recognised, which is 
why not all 27 Member States are represented. 

The data presented in this Annex is relevant for Sections 2.3, 3.3.2 and 4.1.2 of the main 
document. 

Figure 8: Total number of recognised POs per Member State in 2023. 

179 Commission Implementing Regulation (EU) 2016/232 of 15 December 2015 laying down rules for the 
application of Regulation (EU) No 1308/2013 of the European Parliament and of the Council with regard to 
notifications to the Commission of information and documents, OJ L 44, 18.2.2016, p. 15. 

62 

 
 
 
 
  
 
 
 
Figure 9: Total number of recognised APOs, TPOs and TAPOs per Member State. 

Total EU APOs: 84 
Total EU TPOs: 44 
Total EU TAPOs: 2 

Figure 10: Total number of recognised IBOs per Member State. 

Total EU IBOs: 124 

63 

 
 
  
 
 
Figure 11: Total number of recognised entities per sector. 

Total number of recognised entities per sector

1600

1800

1600

1400

1200

1000

800

600

400

200

0

440

241 197

Total number of entities EU - 3,157

132 126 90

83

83

62

22

18

15

15

10

8

6

4

3

2

64 

 
 
 
 
 
Figure 12: Total number of producer members and non-producer members per Member State in recognised entities.  

This figure shows the number of producers of agricultural products listed in Annex I (e.g. 
farmers), as well as non-producers, who are members of recognised entities in the EU. 

Total EU producer members: 724,811 

Total EU non-producer members : 39,925 

Figure 13: Total implemented operational programmes per Member States.  

Operational  Programmes  are  a  key  form  of  sectoral  intervention  implemented  by 
recognised  producer  organisations,  mainly  in  the  fruit  and  vegetables  sector.  Under 
Regulation (EU) 2021/2115 (the Strategic Plan Regulation), Member States may include 

65 

 
 
 
 
such programmes in their CAP Strategic Plans as part of their sectoral interventions. These 
programmes  are  co-financed  by  the  EU  and  aim  to  improve  the  competitiveness, 
sustainability and resilience of producer organisations through actions such as production 
planning,  quality  improvement,  environmental  measures,  and  crisis  prevention  and 
management. 

This figure presents the number of Operational Programmes implemented in 2023 across 
EU  Member  States.  A  total  of  1,108  programmes  were  in  place,  with  the  majority 
concentrated in Spain, Italy, and France – Member States where the fruit and vegetables 
sector is particularly strong and where producer organisations play a significant role. 

66 

 
 
 
 
 
 
ANNEX 2: SUMMARY OF STAKEHOLDER CONSULTATION 
ACTIVITIES 

On 15 March 2024, the Commission presented a reflection paper outlining the possibility 
of several legislative and non-legislative measures aimed at improving farmers’ position 
in  the  agri-food  supply  chain  and  protecting  them  against  unfair  trading  practices.  The 
proposal discussed in this Staff Working Document is one of the initiatives listed in the 
reflection paper. No public consultation or targeted consultation in writing were conducted, 
but  the  spontaneous  submissions  by  stakeholders,  bilateral  meetings  with  stakeholders, 
presentations in GREX and stakeholder’s working groups are summarised hereafter.  

Summary of discussions with the Member States and European Parliament: 

The ideas outlined in the reflection paper were presented and discussed with the European 
Parliament  Committee  on  Agriculture  and  Rural  Development  (‘COMAGRI’)  on  
19 March 2024180, the ministers at the AGRIFISH Council meetings of 26 March181  and 
29  April  2024182  reflecting  broad  support  from  Members  of  the  European  Parliament 
(MEPs) and Ministers.  

On 26 March 2024, the Council stressed the importance of ensuring fair remuneration for 
farmers and of increasing transparency in the food supply chain. The Council welcomed 
the  Commission's  initiatives  in  this  regard.  Finally,  the  Council reaffirmed  its  political 
will to address the legitimate concerns voiced by farmers and it will revisit this topic at a 
future meeting. It also mandated the Special Committee on Agriculture to continue work 
on these matters. On 29 March 2024, agriculture ministers took stock of the measures taken 
and the initiatives presented so far as part of the EU’s response to farmers’ concerns. Based 
on information provided by the Commission and guidance from the European Council at 
its  meeting  of  17-18  April  2024,  ministers  also  discussed  future  measures  aimed 
strengthening the position of farmers in the food supply chain.  

Summary of meetings with stakeholder:  

The Commission held twenty-four meetings183, prior to the adoption of the CMO proposal 
between March 2024 and beginning of December 2024, with different stakeholders across 
the agri-food supply chain. Among these stakeholders were EU-level farmer associations 
(COPA-COGECA,  CEJA,  Jeunes  Agriculteurs,  European  Milk  Board  (EMB)  and 
Organizaciones  de  Agricultores  y  Ganaderos  (COAG),  UPA  (Unión  de  Pequeños 
Agricultores  y  Ganaderos)  and  the  European  Coordination  Via  Campesina  (ECVC)), 

at: 

available 

https://multimedia.europarl.europa.eu/en/webstreaming/committee-on-

180  Recording 
agriculture-and-rural-development_20240319-1600-COMMITTEE-AGRI (Accessed 26 March 2025).  
181    Further  information  available  at:  https://www.consilium.europa.eu/en/meetings/agrifish/2024/03/26/ 
(Accessed 26 March 2025).   
182    Further  information  available  at:  https://www.consilium.europa.eu/en/meetings/agrifish/2024/04/29/ 
(Accessed 26 March 2025).   
183 Those meetings have involved bilateral contacts between the Commission and the stakeholders, as well 
as  the  participation  of  the  Commission  in  working  groups  and  workshops  organised  by  respective 
organisations.  

67 

 
 
 
industry  representatives  (German  Dairy  Industry  Association,  Finnish  Food  and  Drik 
Industries’  Federation,  British  Agriculture  Bureau,  Asociación  de  Empresas  de 
Supermercados (ASEDAS), Les Mousquetaires, EuroCommerce), consumer organisations 
(BEUC,  FEEF),  labour  unions  (EFFAT),  national-level  cooperatives  and  producer 
organisations (Cooperativas Agroalimentarias de España, French Associations of Producer 
Organisations, Union nationale des producteurs de pomme de terre (UNPT), Groupement 
Interprofessionnel  pour  la  valorisation  de  la  Pomme  de  Terre  (GIPT)  and  Fédération 
Nationale  d’Agriculture  Biologique  (FNAB))  and  fair  trade  organisations  (Fair  Trade 
France  (FTF)).  There  were  also  policymakers  (Mission  of  Norway  to  the  EU),  market 
regulators (Finnish Food Market Ombudsman) and an academic professor (Philippe Baret, 
UCL Louvain). These meetings provided a comprehensive overview of the perspectives 
from the stakeholders in the sector.  

The main topics of the meetings are briefly summarised as follows: 

I.  Reinforcing the contractual framework.  

Under  the  topic  of  reinforcing  the  contractual  framework  in  the  agricultural  sector, 
stakeholders discussed the proposed measure to make contracts mandatory, the required 
elements  of  contracts,  the  establishment  of  mediation  mechanisms  for  farmers,  the 
challenges related to generational renewal and the creation of contract registries.  

On the topic of making contracts mandatory, some stakeholders, including representatives 
from Italy, France, and Spain (Unión de Pequeños Agricultores y Ganaderos) in the COPA-
COGECA Working Party on the Food Chain, expressed support for this measure. Others, 
such as an academic professor and Les Mousquetaires, argued in favour of a sector-specific 
approach, given the differences in contractual practices across sectors and products. 

The milk and dairy sector was in particular discussed, with some representatives raising 
concerns about the proposed mandatory elements of contracts. The German dairy industry 
association  (MIV)  highlighted  potential  challenges  associated  with  pricing  formulas, 
warning that the proposed amendments to Article 148 of the CMO could increase price 
volatility and lower farmers' income. 

Under  the  current  system,  German  dairies  are  required  to  accept  and  process  all  milk 
delivered by their contracted farmers, this is known as"100% Abnahmeverpflichtung" or 
“100% purchase obligation”. The price farmers receive is determined by market conditions 
only after processing and selling the milk. Consequently, there is no mechanism for volume 
adjustment or coordinated production planning at the level of producer organisations or 
cooperatives, leaving farmers as price takers and bearing financial risks at the processing 
stage. 

MIV commissioned a study from the Kiel University of Applied Sciences, which suggests 
that setting prices in advance could lead to significant price reductions, as dairies would 
likely  adopt  a  conservative  pricing  approach  to  safeguard  their  financial  stability.  The 
study  also  examined  commonly  used  pricing  formulas,  particularly  the  "net  utilisation 
model" (Netto-Verwertungs-Modell), where the price paid to dairy farmers for raw milk is 
linked to the revenue generated from processed milk products. MIV argued that this model 

68 

 
 
is widely accepted by dairy farmers and helps counterbalance the market power of the retail 
sector. 

In  the  meeting  with  the  representative  of  UK  farmers,  the  British  Agriculture  Bureau 
(BAB) also mentioned the specificities of the milk sector and explained that the UK has 
established a Dairy Code Adjudicator to enforce the new Fair Dealing Milk Regulations. 
These regulations make contracts mandatory for all sales of milk, regardless of whether 
they involve a cooperative or another buyer. The European Milk Board (EMB) mentioned 
these  regulations  to  argue  that  contracts  between  farmers  and  cooperatives  may  be  a 
solution to strengthen farmer’s position in the sector. 

Discussions at the COPA-COGECA Working Party also explored the possibility of linking 
non-static prices to production costs. Some members suggested establishing an EU-wide 
rule on production costs or a common EU approach to fair pricing, while others called for 
a standardized definition of costs and margins at the EU level.   

On the topic of establishing mediation mechanisms for farmers, the Finnish Food Market 
Ombudsman  (FMO)  supported  it  as  a  means  to  facilitate  agreements  within  the  supply 
chain, improve compliance among operators and mitigate the fear factor associated with 
enforcement. 

Strengthening  the  contractual  framework  can  also  help  to  improve  access  to  bank 
financing, a key barrier to generational renewal.  CEJA emphasized that this investment 
gap limits young farmers' ability to compete and adapt to market changes. 

Lastly, regarding the introduction of contract registries, Cooperativas Agroalimentarias de 
España (CAE) raised concerns based on its experience in Spain, while Coordinadora de 
Organizaciones  de  Agricultores  y  Ganaderos  (COAG),  in  the  context  of  a  European 
Parliament meeting on fair prices, expressed support for the measure. 

II.  Reinforced cooperation of farmers.  

Stakeholders discussed different measures to strengthen farmers' cooperation, focusing on 
the recognition of POs, the scope of competition law exclusions under Article 210 of the 
CMO and the need for increased funding under the Strategic Plans Regulation (SPR). 

On the role of producer organisations and cooperatives, the EMB argued that cooperatives 
do  not  always  effectively  represent  farmers'  interests,  as  they  are  often  too  weak  to 
negotiate fair prices with buyers and lack democratic control by their members. 

CAE  mentioned  that  it  would  be  helpful  to  clarify  the  definition  and  role  of  producer 
organisations  under  the  CMO  Regulation  and  distinguish  it  from  other  figures,  such  as 
Interbranch Organisations. In addition, the Féderation Nationale d’Agriculture Biologique 
(FNAB) called for the adapting the rules on POs and IBOs under the CMO to better support 
organic producers. 

Regarding the competition exclusions for POs and APOs, stakeholders expressed doubts 
and interest regarding the scope of agreements that could benefit from the exemption under 
Article  210  of  the  CMO.  French  APOs,  the  Dutch  Ministry  of  Agriculture,  CEJA  and 
FoodDrinkEurope,  raised  questions  about  which  agreements  could  fall  under  this 

69 

 
 
provision.  Some of the stakeholders, among them UNPT/GIPT and the Dutch Ministry of 
Agriculture,  mentioned  the  complexity  of  understanding  the  derogations  and  assessing 
their applicability, and the Finnish Food and Drink Industries called for an evaluation of 
the use of this Article. 

An additional concern for CEJA comes from past court cases, such as the French Endives 
case, which have contributed to a sense of uncertainty and fear among stakeholders. CEJA 
pointed  out  that  differing  standards  of  ‘sustainability’  across  the  food  chain  further 
complicate  cooperation.  Despite  these  concerns,  the  Finnish  Food  Market  Ombudsman 
emphasized the need to reconcile competition and agricultural policy.  

The  Commission  clarified  that  agreements  seeking  exemption  under  Article  210  of  the 
CMO  must  define  their  objective,  justify  the  necessity  of  cooperation,  and  that  the 
restrictive  measure  in  question  is  indispensable.  It  reiterated  the  importance  of  the 
indispensability  requirement  and  the  existing  regulatory  baseline,  meaning  that  the 
provision only applies to agreements that go beyond mandatory regulations.  

On the potential extension of Article 210a to include social objectives, views were divided. 
BEUC raised concerns that, without clear definitions, such an extension could lead to price 
fixing  and  greenwashing  while  failing  to  provide  tangible  benefits  to  farmers  and 
consumers.  Conversely,  EFFAT,  representing  workers  in  the  agricultural  and  food 
processing sectors, called for stronger commitments to social standards, fair wages, and 
improved working conditions. The Commission reaffirmed that the indispensability test 
would  continue  to  serve  as  a  safeguard  against  greenwashing  and  other  unintended 
consequences. 

Regarding the exclusion from competition rules in Article 222, the European Coordination 
Via Campesina (ECVC) recommended putting in place a multi-level crisis management 
system to respond at an early stage to crisis in emerging markets, including crisis caused 
by financial speculation. In their view, the system should be fully transparent and include 
assistance for voluntary volume reduction in the event of a crisis and a temporary capping 
and cessation of imports at the time of early warning of domestic overproduction. ECVC 
also  suggested  that  POs  should  be  allowed  to  propose  quantitative  controls,  including 
temporary and binding limits, and that, in addition to the EU crisis fund, the sector itself 
should contribute to all necessary expenses incurred in this regard. 

UNPT/GIPT expressed concerns about the challenges of accessing financial support under 
Article 222 of the CMO. They feared that, under Article 222, POs could be forced to enter 
into agreements allowing them to manage withdrawals from the market and storage for 
non-members, which, in CAE’s view, would be inefficient because the responsibility for 
market management should not fall only on POs.   

III. Voluntary initiatives.  

Stakeholders  discussed  voluntary  fair  trading  schemes,  their  interaction  with  national 
initiatives, and their potential role in strengthening fair practices in the agri-food sector. 
While  some  questioned  their  added  value  and  feasibility,  other  stakeholders  saw  these 
schemes as a valuable tool to strengthen farmers position. 

70 

 
 
BEUC raised concerns about the purpose and effectiveness of fair trading schemes, arguing 
that they might duplicate or interfere with existing national initiatives without providing 
clear additional benefits. Similarly, Les Mousquetaires noted the challenges of establishing 
uniform European standards for such schemes, given the diversity of the agri-food sector. 

On  the  other  hand,  Fair  Trade  France  (FTF)  explained  that  French  legislation  already 
incorporates socio-economic objectives into fair trade schemes, making them a potential 
tool for public procurement policies. This view was shared by Jeunes Agriculteurs (JA), 
who expressed interest in using public procurement to promote local products. 

The academic expert and the Fair Trade Advocacy Office emphasized that current "fair 
schemes" have developed in the absence of an overarching EU framework. They warned 
that if a framework is introduced, it should safeguard high standards and prevent that such 
schemes are taken over by organizations with lower standards. The expert also stressed the 
importance of making fair schemes attractive to consumers and ensuring that negotiations 
within the value chain reflect fair practices. 

Finally,  regarding  short  supply  chains,  the  academic  expert  suggested  using  organic 
farming  as  a  benchmark  for  comparison.  While  short  supply  chains  could  complement 
organic production, they should not replace it, as this could have unintended consequences 
for the market. 

IV. Other suggestions.  

In addition to the topics listed above, stakeholders suggested to review urgently the UTP 
Directive to include the prohibition of sale below production costs.  

Many of the stakeholders discussed with the Commission on the potential need for an EU-
wide prohibition on sales below cost. Some of them (BEUC, EFFAT, JA) supported such 
a regulation arguing that it could enhance transparency in value allocation along the supply 
chain  and  provide  greater  legitimacy  compared  to  leaving  the  definition  of  fairness  to 
private market initiatives.  

Other stakeholders, such as CEJA, CAE and Eurocommerce, did not support a strict ban 
on sale below production cost alleging potential negatives effects on small, less efficient 
farmers. In CAE’s view, supporting farmer’s incomes should focus on strengthening their 
position in the supply chain and restructuring market supply rather than imposing a ban. 

A  Spanish  association  of  distributors  and  supermarket  chains  (ASEDAS)  shared  its 
experience  with  Spain’s  ban  on  purchasing  below  production  costs.  They  highlighted 
several practical challenges, including competition law concerns, trade secret protection 
issues, and implementation difficulties at different production levels. The European Brands 
Association also raised similar concerns during a meeting at the European Parliament. The 
Spanish  association  also  noted  that  the  impact  on  consumer  prices  remains  difficult  to 
assess due to the complex market conditions in 2022 and 2023. 

The  Commission  acknowledged  the  complexity  of  the  issue  and  launched  a  study  on 
‘regulatory  and  voluntary  schemes  for  fair  agricultural  remuneration’  to  understand 
existing public and private measures at the Member State level.  

71 

 
 
Summary of the Joint meeting of the Civil Dialogue Group on Animal Production 
and Civil Dialogue Group on Agricultural Markets held on the 17 April 2024. 

The Commission organised a Civil Dialogue Group on 17 April 2024 to present a set of 
actions to address the concerns expressed by farmers regarding, among other things, their 
position in the food supply chain. A key measure announced was the targeted amendment 
to the Common Market Organisation (CMO) Regulation.  

In  the  meeting,  several  participants  (FoodDrink  Europe,  COPA,  COGECA,  ECVC, 
Independent  Retail  Europe)  welcomed  the  ideas  presented  to  improve  the  position  of 
farmers  in  the  food  supply  chain  and  raised  different  questions.  IFOAM  advocated  for 
stronger  support  in  sustainable  public  procurement  to  enhance  market  opportunities  for 
organic products.   

COPA  called  for  innovative  and  swift  modifications  to  the  CMO  Regulation  to  better 
support farmers, COGECA emphasised the role of cooperatives in strengthening farmers' 
market  position  and  asked  the  legislator's  to  not  purpose  overly  complex  measures. 
FRESHFEL asked the Commission to consider the particularities of the different sectors, 
and how important it is for them to have flexibility to implement crisis measures and deal 
with  their market  reality. COAG welcomed the  possibility to  have  mandatory contracts 
covering production costs but stressed the need for parallel action on third-country imports 
to avoid market distortions. 

The  Commission  acknowledged  the  positive  feedback,  reaffirmed  its  commitment  to 
strengthening farmers' position while maintaining market orientation, and stressed that any 
legislative  changes  would  be  targeted,  ensuring  minimal  administrative  burden  on 
stakeholders. 

72 

 
 
 
 
 
ANNEX 3: WHO IS AFFECTED AND HOW? 

1.  PRACTICAL IMPLICATIONS OF THE INITIATIVE 

The  initiative  introduces  targeted  amendments  to  the  Common  Market  Organisation 
(CMO) Regulation and other basic acts of the Common Agricultural Policy (CAP), namely 
the  CAP  Strategic  Plan  Regulation  (SPR)  and  the  Horizontal  Regulation  (HZR).  Its 
overarching objective is to strengthen the position of farmers in the agri-food supply chain 
by addressing structural imbalances in bargaining power and improving price transmission, 
while preserving the principles of contractual freedom and market orientation that underpin 
EU agricultural policy. 

The proposed amendments focus on three mutually reinforcing areas: 

-  A  reinforced  contractual  framework  for  all  sectors,  aimed  at  improving 
transparency,  predictability  and  fairness  in  commercial  relations  and  price 
formation; 

-  Enhanced  cooperation  between  farmers  through  Producer  Organisations  (POs), 
including  better  access  to  collective  bargaining  tools  and  simplification  of 
recognition procedures; 

-  Support  for  voluntary  approaches  via  a  harmonised  framework  for  “fair”, 
“equitable” or equivalent schemes, the promotion of short supply chains, and a new 
competition  exclusion  for  voluntary  agreements  pursuing  social  sustainability 
objectives (Article 210a CMO Regulation). 

While the measures are assessed individually, their complementary nature means that they 
collectively  contribute  to  improving  farmers’  overall  position  in  the  supply  chain.  In 
practice, their effects are interrelated and cannot always be clearly attributed to a single 
measure. The actual impacts will depend on national implementation choices, uptake by 
economic operators, and pre-existing regulatory and market conditions in different sectors 
and  Member  States.  The  diversity  of  supply  chain  structures  and  contractual  practices 
across  the  EU  means  that  the  scope  and  intensity  of  impact  may  vary  considerably. 
Therefore, the quantified estimations provided in this annex are based on the assumption 
that the measures are implemented in all Member States. The conservative assumptions in 
the calculations take into account that some of the measures, such as mandatory written 
contracts, are already implemented by some Member States and market participants. The 
conservative estimates already include also the possibility for derogations.     

The  measures  are  expected  to  provide  farmers  with  improved  legal  certainty,  stronger 
negotiation  leverage,  and  more  stable  income  perspectives,  without  undermining  key 
policy  objectives  such  as  market  orientation,  flexibility,  and  competitiveness.  National 
administrations  will  also  benefit  from  clearer  enforcement  frameworks,  more  effective 
oversight  tools,  and  reduced  disputes.  While  it  is  difficult  to  precisely  estimate  the 
administrative effort required to implement the new provisions - including e.g. time spent 
on adjusting contract templates, setting up optional registries, or processing PO recognition 
-  indicative  assumptions  have  been  made  to  reflect  the  likely  scale  of  the  impacts  (for 
further details see also Section 4). 

For further details on the underlying assumptions and references please see Section 4.  

73 

 
 
2.  SUMMARY OF COSTS AND BENEFITS 

I. Overview of Benefits (total for all provisions)  

Description 

Amount 

Comments 

Approximately 
€360 million per 
year 

Direct benefits 

For farmers and their 
associations - Strengthened 
bargaining power and 
resilience leading to 
increased income stability 
through reinforced 
contractual framework, 
review clauses (Section 
4.1.1) 

Farmers  and  their  associations  benefit  from  increased  transparency  and 
predictability of a reinforced contractual framework and price transmission 
mechanism,  a  stronger  role  for  (A)POs,  extended  access  to  collective 
negotiation tools, and support for voluntary initiatives. These elements are 
expected  to  lead  to  an  improvement  of  the  price  transmission,  reduce 
income  volatility  and  improve  farm  gate  prices  through  collective 
negotiations.  

By reducing uncertainty around pricing, volumes and delivery conditions, 
farmers can make more informed investment and production decisions that 
are  expected  to  lead  to  an  improved  profitability.  In  the  absence  of 
predictable cash flows, farmers are less willing to invest in productivity-
enhancing assets that may lead to sub-optimal investment decisions in the 
long-term.184  Some  studies  indicate  that  contracts  with  clear  pricing 
formulas  or  fixed  prices  may  reduce  farm  income  volatility  by  8%  - 
10%.185 This reduction in income variability is expected to translate into 
an average margin improvement of around 1% of the annual income per 
farm per year.186  

Based on this, it is estimated that the stabilising effect of such measures 
could improve income by approximately €360 per farm per year.187 Since 
vast majority of transactions is already covered by written contracts that 
may  already  include  the  mandatory  elements  and  a  revision  clause  or 
certain transactions would be exempted from this requirement, it is taken 
as a conservative assumption that around 1 million farms (out of 9 million 
farms  in  the  EU;  around  11%  of  EU  farms)  would  benefit  (taking  into 
account existing practices at MS level and derogation), this would lead to 
around €360 million in the EU.  

For farmers and their 
associations – Reduction in 
transaction costs through 

Approximately 
€26.8 million to 

A conservative estimate suggests cost savings of between 0.5% and 1% for 
farmers who start marketing their production through recognised POs or 

184 fi-compass, An agricultural-focused EAFRD financial instrument providing market-responsive financial 
products, European Investment Bank and European Commission, December 2018, p. 40-41. Available at: 
https://www.fi-compass.eu/sites/default/files/publications/Agri-
focused%20EAFRD%20FI%20providing%20market-responsive%20financial%20products.pdf.  
185  Revoredo-Giha,  C.,  Clayton,  P.,  Costa-Font,  M.,  Agra-Lorenzo,  FAL.,  &  Akaichi,  F.,  ‘The  impact of 
mandatory written dairy contracts in European countries and their potential application in Scotland’,  Social 
Research series, Scottish Government Social Research, 2019. 
186 Briner, S. and Finger, R., The effect of price and production risks on optimal farm plans in Swiss dairy 
production considering two different milk quota systems, Journal of Dairy Science, vol. 96, no. 4, 2013, pp. 
2234–2246. Available at: https://doi.org/10.3168/jds.2012-6086.   
187 Assuming an average annual farm income of €36,000 per farm. It is important to note that farm income 
can significantly vary depending on the sector, size of the farm, organisational structure, training, age and 
sex  of 
further  details: 
https://agridata.ec.europa.eu/extensions/FarmEconomicsOverviewReport/FarmEconomicsOverviewReport.
html). 

the  Member  State 

farm  holder 

as  well 

(see 

the 

for 

as 

74 

 
 
 
 
 
 
enhanced participation in 
(A)POs and collective 
negotiations (Section 4.1.2) 

€53.6 million per 
year 

APOs.188  Taking  a  conservative  estimate  that  the  value  of  marketed 
production  (VMP)  from  farmers  newly  engaging  with  recognised  POs 
corresponds to 1% of total EU agricultural output189, this is equivalent to 
€5.36 billion of VMP newly marketed through POs.  

For farmers and their 
associations (especially 
small and young farmers) – 
Improved access to finance 
(Section 4.1.1) 

€5–10 million per 
year 

It  is  assumed  that  cost  savings  of  0.5%  to  1%  would  translate  into  a 
corresponding increase in the VMP. This could correspond to an estimated 
annual benefit of between €26.8 million and €53.6 million.  

The  estimate  reflects  reductions  in  transaction-related  costs  (e.g. 
administrative burden, negotiation, marketing, and logistical efficiencies) 
for new members joining collective marketing structures and it does not 
account for an increase in volume or price.  

It excludes any benefits already achieved by existing PO members through 
strengthened  collective  structures  and  does  not  account  for  price 
improvements or logistics-related gains for existing PO members. These 
savings may vary across the sectors and Member States and will depend 
on the operational efficiency of a given PO, the scale of the farm of the 
new member (smaller farmers will benefit more than bigger farmers due 
to economies of scale) and market situation. 

The current funding gap for the EU agricultural sector is estimated at €62.3 
billion190. Strengthened and more predictable contractual relationships are 
expected to facilitate access to finance by reducing perceived credit risks 
for lenders and improved credit worthiness of farmers - particularly in the 
case of small and young farmers. Making a conservative assumption that 
the  loan rejection rate would be reduced by 5 to 15%191, the funding gap 
could decrease to between €3.12 billion and €9.35 billion, depending on 
how the provisions are implemented by Member States, the extent to which 
derogations are applied, and prevailing financial market conditions. 

Experience from France and the Netherlands shows that farmers benefiting 
from  multiannual  or  stable  contracts  often  receive  loans  at  0.5–1 
percentage point lower interest rate. Applying this to EU-27, the benefit of 
improved  contractual  stability  would  be  a  measurable  reduction  in 
financing  costs.  For  example,  if  EUR  1  billion  in  additional  loans  were 
made  accessible  under  more  favourable  conditions,  this  would  translate 
into annual interest savings of approximately €5 -10 million. At a broader 
scale  -  for  example,  if  €3  -  9  billion  of  the  funding  gap  is  closed  -  the 
estimated  annual  benefit  would  range  between  €  15  million  and  €90 
million across the EU farming sector. 

188 Ibid. European Commission: Directorate-General for Agriculture and Rural Development, ECORYS and 
IfLS, Synthesis of evaluation reports from Member States regarding their national strategies for sustainable 
2013-2018 operational programmes in the fruit and vegetables sector – Final report, Publications Office of 
the European Union, 2022, https://data.europa.eu/doi/10.2762/396335.  
189 According to Eurostat the total value of the agricultural output in the EU was €536.93 billion in 2023.  
190 European Commission and European Investment Bank,  Financing gap in the agriculture and agri-food 
sectors 
https://www.fi-
compass.eu/sites/default/files/publications/FinancingGapAgricultureAgrifood_RTW_0.pdf.  
191 Ibid. Sie also for example European Commission and European Investment Bank,  Financial needs in the 
https://www.fi-
agriculture 
compass.eu/sites/default/files/publications/financial_needs_agriculture_agrifood_sectors_France_0.pdf.   
About  57%  of  rejection  reasons  are  linked  to  banks’  risk  policies  or  perceived  viability  of  farms  due  to 
volatility of income.  

Factsheet 

agri-food 

October 

France, 

sectors 

2020, 

2023, 

EU, 

and 

the 

in 

in 

75 

 
 
 
 
 
  
 
 
Farmers 
and  buyers  – 
Reduced  compliance  risks 
and disputes (Section 4.1.1) 

€0.5–2 million per 
year 

Greater  contractual  clarity  and  transparency  as  well  as  mediation 
mechanism are expected to reduce the number of disputes between farmers 
and buyers by a conservative estimate of 1,000 cases per year. Assuming 
a cost of €500 – EUR 2,000 per case (including legal, administrative, and 
opportunity costs for both contract parties – famers and buyers), this results 
in estimated annual savings of €0.5–2 million.  

National  administrations  – 
Reduction  of  the  need  for 
complex  investigations  by 
UTP 
enforcement 
in 
authorities  –  Savings 
enforcement  costs  (Section 
4.1.1) 

€6-12 million per 
year 

Clear,  written  contracts  can  simplify  oversight  and  investigations  into 
unfair trading practices. 

Some  Member  States  estimate  annual  savings  of  €2  to  €4 million  per 
Member State in public enforcement budgets due to the diminished need 
for extensive investigations.  These estimates may vary depending on the 
size  of  the  Member  States  and  the  dimension  of  the  economic  activity. 
Fewer  investigations  are  needed,  since  disputes  can  often  be  settled  by 
examining the contract’s terms rather than conducting interviews or audits. 
Enforcement  authorities  can devote  less  time  and resources  per  case,  as 
clear contractual evidence replaces complex investigative work.  

For example, in Spain, which introduced obligatory written food supply 
contracts  in  2013,  authorities  observed  that  having  a  contract  for  each 
transaction, has improved transparency and enables quicker detection of 
abuses. In addition, for instance if a buyer fails to pay on time or tries to 
retroactively  change  terms,  the  violation  is  easily  spotted  in  the  written 
contract, avoiding a protracted investigation. 

Taking a very conservative assumption that such reductions in costs for 
investigations would occur only on an annual basis in 3 MS per year.  This 
would lead to cost savings in enforcement of around €6 to €12 million per 
year in the EU.  

Benefits for national  
administrations  and  POs  – 
reduction  
in  enforcement  costs  and 
administrative simplification 
recognition  and 
of  PO 
collective 
negotiations 
(Section 4.1.2) 

€0.14 million to 
€0.57 million per 
year 

According to a study192, 54% of POs (including cooperatives) that are not 
recognised pursue joint contract negotiations. This would mean that POs 
(including cooperatives) may need to seek recognition; otherwise, they risk 
acting in violation of competition rules.  

Benefits  national  administrations:  A  very  conservative  estimate  of 
approximately  two  to  four  requests  for  recognition  can  be  avoided  per 
Member State per year (equivalent to 54 to 108 recognitions per year in 
the EU). It is estimated that this may lead to administrative cost savings in 
examining the request of 40 to 80 hours per recognition request, amounting 
to  €1,320  to  €2,640.193  This  amounts  to  approximately  €71,280  to 
€285,120 of cost savings per year in the EU for public administration. If 
19,980 of the non-recognised POs that pursue join contract negotiations 

192  European Commission: Directorate-General for Agriculture and Rural Development, Montanari, F.,  
Chlebicka, A., Szabo, G., Amat, L. et al., Study of the best ways for producer organisations to be  
formed, carry out their activities and be supported – Final report, {OPL}, 2019,  
https://data.europa.eu/doi/10.2762/034412  
193 Based on a standard cost model,  administrative cost savings per avoided request for recognition: The 
hourly tariff is set at €33.00, corresponding to the One-In-One-Out tariff, including hourly earnings (Eurostat, 
Structure of earnings survey 2022), non-wage labour costs (Eurostat, Labour Force Survey, data for Non-
Wage Labour Costs) and 25% overhead costs, for ISCO 1-5 Non-manual workers; the use of ISCO 1-5 is 
based  on  the  assessment  that  the  tasks  require  a  mixture  of  skills  (managers,  professionals/lawyers, 
technicians and clerks). It is estimated that the assessment of the recognition request would require at least 
between 40 to 80 hours. Using €33.00 per hour, this equates to €1,320 to €2,640. 

76 

 
 
 
 
 
 
 
 
 
may  avoid  seeking  a  recognition,  this  would  lead  to  cost  savings 
amounting between €26.37 million to €52.75 million.  

Cost savings for POs: Likewise, it is estimated that this may lead to cost 
savings  in  preparing  the  request  for  recognition  of  40  to  80  hours  per 
recognition request per PO, amounting to €1,320 to €2,640. Assuming that 
this would lead to 54 to 108 (two to four avoided requests per Member 
State per year) avoided requests within the EU per year, this would amount 
for POs to approximately €71,280 to €285,120 of cost savings per year in 
the EU.  

These  savings  relate  to  reduced  processing  time,  fewer  document 
exchanges,  simplified  audits,  and  lower  legal/consultancy  costs  for 
applicants. Benefits apply primarily to new and non-recognised POs. 

Indirect benefits 

Benefits 
for  buyers  of 
agricultural  products  and 
consumers  –  enhanced  food 
security  thanks  to  improved 
resilience of agri-food chain  

Benefits for farmers - 
positive impact on mental  
well-being 

quantifiable 

Not 
(positive) 

Reduction of inefficiencies in the agri-food supply chain  

quantifiable 

Not 
(positive) 

Reduction of uncertainty and hassle with a positive impact on farmers’  
well-being by reducing stress factors. 

For the agricultural sector  – 
Support 
generational 
renewal 

to 

quantifiable 

Not 
(positive) 

Benefits  for  consumers  – 
more stable consumer prices  

quantifiable 

Not 
(positive) 

More  competitive  and  predictable  market  conditions  that  make  farming 
more attractive as a career, facilitate intergenerational farm transfers, and 
encourage young entrepreneurs to invest in innovative  business models, 
while  facilitating  the  access  to  finance.  Over  time,  this  contributes  to 
generational renewal and the long-term viability of the sector. 

Efficiency  gains  in  the  agri-food  supply  chain,  arising  from  reduced 
transaction  costs,  improved  coordination,  and  lower  compliance  and 
dispute resolution costs, are expected to contribute to greater price stability 
over  time.  These  structural  improvements  —  supported  by  reinforced 
contracts,  stronger  producer  organisations,  and 
increased  market 
transparency  —  help  create  a  more  competitive  and  predictable  market 
environment. This may lead to more stable consumer prices, particularly 
in sectors previously affected by high coordination failures or dominant 
intermediaries. 

77 

 
 
 
 
 
 
 
 
II. Overview of costs 

Citizens/ 
Consumers 

Businesses 

Administrations 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

One-
off 

Direct adjustment 
costs 

n.a. 

n.a. 

Reinforced   
contractual 
framework 
(Section 
4.1.1) 

Strengthened 
role  of  POs 
(Section 
4.1.2) 

Direct administrative 
costs 

n.a. 

n.a. 

Direct regulatory 
fees and charges 

n.a. 

n.a. 

Direct enforcement 
costs 

n.a. 

n.a. 

Indirect costs 

0 

0 

Direct adjustment 
costs 

n.a. 

n.a. 

Direct administrative 
costs 

n.a. 

n.a. 

Direct regulatory 
fees and charges 

n.a. 

n.a. 

Direct enforcement 
costs 

n.a. 

n.a. 

Indirect costs 

0 

0 

Direct adjustment 
costs 

n.a. 

n.a. 

Direct administrative 
costs 

n.a. 

n.a. 

Direct regulatory 
fees and charges 

n.a. 

n.a. 

Voluntary 
approaches 
(Section 
4.1.3) 

€10.2 million to € 
20.4 million194 in 
total 
€660 to €1,320 per 
company 

€ 21.82 million 
per year 

€ 8.25 per 
contract 

€2.2 million 
to €22 
million195 

€ 0.1-1 
million per 
MS196 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

€17,820 
€35,640 
total197 

to 
in 

€660 
to€1,320 
per MS 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

194 See underlying assumptions and references to data used in Section 4.1.1. 
195  Taking  a  very  conservative  estimate  that  22  MS  would  need  to  adjust  their  legal  system  regarding 
contracts, set up mediation service and possibly would decide to set up the optional contract register.  
196 These costs represent the costs necessary for setting up a mediation mechanism. 
197 These costs are related to the need to adjust notification forms for PO recognition, see Section 4.1.2. 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 

Direct enforcement 
costs 

n.a. 

n.a. 

Indirect costs 

0 

0 

0 

0 

0 

0 

Non-
quantifiable 
depending  on 
the number of 
complaints 
and  potential 
infringements 

0 

0 

(1)  Estimates (gross values) to be provided with respect to the baseline; (2) costs are provided for each 
identifiable action/obligation of the  preferred option otherwise  for all  retained options when no 
preferred  option  is  specified;  (3)  If  relevant  and  available,  please  present  information  on  costs 
according  to  the  standard  typology  of  costs  (adjustment  costs,  administrative  costs,  regulatory 
charges, enforcement costs, indirect costs;).  

III. Application of the ‘one in, one out’ approach  

One-off 

Recurrent 

Total 

[M€] 

(annualised total net present 
value over the relevant period) 

(nominal values per year) 

Businesses 

New administrative 
burdens (INs) 

0 

0 

Removed administrative 
burdens (OUTs) 

€-0.07 million - €-0.29 million 

0 

Net administrative 
burdens* 

Adjustment costs** 

Citizens 

€-0.07 million - €-0.29 million 

0 

€10.2 million to  
€ 20.4 million 

€ 21.82 million 

New administrative 
burdens (INs) 

Removed administrative 
burdens (OUTs) 

Net administrative 
burdens* 

Adjustment costs** 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

Total administrative 
burdens*** 

€-0.07 million - €-0.29 million 

0 

€-0.07 million -  
€-0.29 million 

€-0.07 million -  
€-0.29 million 

n.a. 

n.a. 

n.a. 

n.a. 

0 

€-0.07 million -  
€-0.29 million 

(*) Net administrative burdens = INs – OUTs;  
(**) Adjustment costs falling under the scope of the OIOO approach are the same as reported in Table 2 above. 
Non-annualised values;  
(***) Total administrative burdens = Net administrative burdens for businesses + net administrative burdens for 
citizens. 

79