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The Need For A Better Functioning Food Supply Chain

19 January 2010

IRELAND - The EC Commission's very timely communication on a better functioning food supply chain in Europe has been welcomed by the Minister for Agriculture, Fisheries and Food, Brendan Smith.

Speaking at the Council of Agriculture Minister's meeting in Brussels the Minister said: "It is important that markets function well and that unfair practices are prevented. It goes without saying, of course, that there must be fair play in trading conditions - including at retail level - and that action by the EU to ensure that this is the case, is appropriate in the Single Market".

He said that in this respect the Irish Government is committed to implement a national Code of Practice for doing business in the Grocery Goods sector in order to develop a fair trading relationship between retailers and their suppliers. A public consultation in relation to the introduction of the Code of Practice has now taken place. The next step is to take on board a number of the observations received and to draft, initially on a voluntary basis, a code of practice and subsequently this code will be put on a statutory footing.

The Minister said "I believe that while competition is vital, it cannot act as a sole mechanism to maintain efficient markets. The careful and sensitive use of market management measures can help to maintain balance on the market when appropriate and the use of such mechanisms can assist in the provision of fair returns to producers. The new CAP must also address increased market volatility and the need for effective mechanisms to manage this".

He also called for greater price transparency leading to a better functioning food supply chain in Europe. He noted that fluctuating currency conversion rates can complicate the picture, and this should be taken into account in whatever systems are put in place at EU level.

Minister Smith concluded by saying: "There is also a need to look critically at EU competition law (or its interpretation) in so far as it can serve to militate against consolidation at producer level to achieve the scale necessary for optimum efficiency and international competitiveness. There is a need also to audit unfair contractual practices with a view to ensuring compliance with competition law".

He said he was very pleased that the Spanish Presidency had committed itself to progressing the whole issue of improving the functioning of the food chain. Recent experience, as highlighted in the analysis already done by the Commission, clearly show there is a need for considerable improvement so that all players, including producers and consumers, receive fair treatment.

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