Orders on farmers ‘ income: we expect higher prices in the supermarket ?

Illustration of a fruit and vegetable section in a supermarket. — ALLILI MOURAD/SIPA

The improvement in the income of farmers will be it to the detriment of consumers ? For several weeks, these fears have interfered in the work of the first phase of
The states general of the food : after the outcry caused by the distributor, Michel-Edouard Leclerc, accusing the parties to prepare for a massive increase “of 5% to 15%” of the price paid by the consumer in the retail industry in general “,
four consumer associations have expressed on Tuesday their concerns in an ” open Letter to the president of the Republic “.

Raising the threshold of resale at a loss : an open letter to @EmmanuelMacron with @clcvorg @FamillesRurales and @unaf_fr https://t.co/0KxCVnN2a8 pic.twitter.com/4Em3KHT3Cf

— UFC-que choisir (@UFCquechoisir) October 10, 2017

In their sights : the project led by the Federation of trade and distribution and large industrial companies to meet a 15% “threshold of resale at a loss” (SRP) [the minimum price below which distributors do not have the right to sell]. According to their projections, ” this proposal would result in 2018 by a price increase of 2.4 %, or € 1.4 billion for thousands of products from leading brands that are used today for products that appeal to large surfaces and, therefore, are regularly sold at a low margin “.

The threshold of resale at a loss in issues

This scenario alarmist will take place ?Wednesday, Emmanuel Macron has not retained the most radical proposals : the head of State announced that the orders issued in the 1st half will consist of base contracts between farmers and their customers (retailers, manufacturers) on the cost proposed by the farmer as well as raising the threshold of resale at a loss (PRS) for food products.

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In return, the players were asked to commit to reflect “the spirit of the law to come” as soon as the trade negotiations, which shall begin on the 1st of November and have been invited to be concluded by the end of the year plans of the sectors. The recovery of the PRS will depend on and of each sub-sector and should only relate to food products.

Enough to reassure opponents of the measure ? Not sure. If Michel Edouard Leclerc stated that it was “relieved” on Wednesday, many questions remain unresolved : “In announcing that he was in favour of raising the threshold of resale at a loss only on the food products and depending on the subjects, Macron has had to disappoint a lot of shareholders of our competitors or multinational companies. We will see in a few months what is the perimeter of what he calls “food products” and how it is calculated (what percentage of milk in the Actimel or in the Ricoré ?), but it all comes back to bases of discussion much more healthy. “, has he said Wednesday on its blog.

A gift hidden for the large distribution ?

On the side of the consumer associations, on the other hand, the concern remained update on Thursday : “The President has succumbed to the sirens of the wide distribution and large industrial, curiously relayed by the FNSEA, and announced that he was favourable to an increase in the threshold of resale at a loss. It is, however, limited to food products. It has, therefore, taken into account our warning on the price increase that consumers would suffer without any link with the agricultural world, such as the one on the price of the diapers, laundry, soft drinks etc “, note by the president of the UFC-That-Select Alain Bazot, in a post published Thursday on the website of the association.

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“We clearly can not speak of relief, because the limitation of the increase in the threshold of resale at a loss is for food products is a micro-concession, of which we don’t even know how she is able to be implemented in the framework of the various channels,” adds Mathieu Escot, the head of the service of studies of the UFC-que choisir, ” The executive says it wants to break the price war and that this money will go in the pocket of the farmers but this line of reasoning does not hold : it allows distributors to resell more expensive but there is no requirement to buy more expensive providers. It is a shot of it as make believe that the construction of agricultural product prices from the cost price of producers -a measure that we support – and the increase of the threshold of resale at a loss is related to it “.

According to calculations of the association, the increase in the RPS of 15 % (the proportion referred to during the States general of the supply) only on the food products would result, and finally, by a puncture from 1.1 to 1.2 billion of euro on the purchasing power of consumers, compared to 1.4 billion in its initial estimate. “The veil of public authorities on the impact of this measure has not been lifted, and we expressly request that it be studied before any decision “, concludes the president of the UFC-que choisir.