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Has the Egalim law improved the lot of farmers?


Enacted on November 1, 2018, the Egalim law was intended to improve the income of farmers, by injecting more ethics into trade negotiations between on the one hand the great distr

Illustration, cabbage from a fruit and vegetable section in a large area. - POUZET / SIPA

  • This year again, the Salon de l'Agriculture coincides with the end of the annual commercial negotiations between distributors and food manufacturers , who fix the contracts - and therefore the prices - between the two parties for the coming year.
  • These negotiations have been closely monitored since November 1, 2018, and the promulgation of the Egalim law. It aims to ensure a decent income for farmers, by injecting more ethics into these annual discussions.
  • But does it work? The Egalim law resulted in slight inflation in the shelves in 2019, thus creating additional value. "700 million euros", estimates the FNSEA, which wonders precisely where the money went.

What announcements will come out of the Agricultural Show, which opens this Saturday? As much as the words of Emmanuel Macron, who will go there for the opening, the announcements that could make the large distribution and the food industries will be, this year again, closely scrutinized.

With an implicit question: spirit of the Egalim law, are you there? Coming from the States General of Food and promulgated on November 1, 2018, this law aims to establish fairer remuneration for farmers, in particular by infusing more ethics into the annual commercial negotiations between distributors and manufacturers. These talks determine the terms of contracts between the two parties for the coming year. “Farmers are few around the table, begins Patrick Benezit, deputy secretary of the FNSEA, the first agricultural union. But we are concerned first and foremost, since the price that industrialists who process our products will get will then depend on our remuneration. "

"Put an end to certain retail practices"

Industrials and large retailers must complete their negotiations by March 1, the closing day of the Agricultural Show. Last year, Lidl chose this agricultural high mass to announce with great fanfare the agreement made with the Sodiaal dairy cooperative, raising the price of milk paid to producers *. This partnership punctuated a long list of agreements announced in previous weeks between manufacturers and distributors, confirming the same increase in the price of milk.

What will it be this year? Before talking about “negotiations”, Patrick Benezit dwells on another aspect of the Egalim law: “that of putting an end to certain practices of mass distribution which led, every year, to ever lower prices for consumers, but unsustainable for producers. In the past, very often, large retailers made little margin on flagship brands, such as Coca-Cola, which then served as premium products, recalls the farmer. It caught up by making a larger margin on agricultural products, in particular by seeking to buy them at the lowest price. We have less pressure now. ” The threshold for resale at a loss has been raised to 10%. In other words, "a distributor is obliged to sell at least 10% more expensive a product that he bought", explains Richard Panquiault, director general of the Institute of connections and studies of consumer industries (Ilec), association which brings together 80 companies manufacturing consumer products. In addition, a distributor can no longer promote more than 25% of the stock of a product he has bought from a manufacturer, and the discount cannot exceed 34% of the initial price.

Ministry of Agriculture infographic. - / The Minister of Agriculture

Slight inflation on the shelves

Result: trade negotiations are now taking place in a more peaceful environment, note both Jacques Creyssel, director general of the Federation of Commerce and Distribution (FCD), as Richard Panquiault, industrial side. "Especially since the State put the package, at the end of the year, on administrative controls and sanctions, to ensure the proper application of these new rules," we add to the FNSEA.

Another impact already noted from the Egalim law: a slight increase in prices on the shelves, "far from the soaring prices that Edouard Leclerc feared", tackle Patrick Benezit. "In its 2019 balance sheet published on Monday, the research company IRI mentions inflation of 0.9% on mass consumer products [food, hygiene, beauty and maintenance] and fresh self-service products, details Richard Panquiault. Inflation on food products is more like 1.2%. "

This slight increase comes after nearly five years of continuous drop in prices on the shelves, "a European phenomenon and not only French," says Jacques Creyssel. The director general of the FCD sees this as good news, "this inflation being the consequence of an increase in the prices paid to manufacturers in 2019, especially on milk and pork. "

Dairy products, the tree that hides the forest

The speech is different on the side of the agricultural unions. "We estimate that this 0.9% inflation made it possible to generate 700 million euros of additional value in 2019," says Patrick Benezit. We want to see the color. "We have to ask the manufacturers," answers Jacques Creyssel, who represents the distributors. "A little easy," retorts him on the side of industrialists. Richard Panquiault also has another question in mind: “The major part of the 700 million euros mentioned by the FNSEA was generated by the supervision of promotions and the raising of the resale threshold at a loss… What did the large distribution of this money? "

Dairy products would then be the tree that hides the forest, because in other agricultural sectors, the purchase prices from manufacturers would have generally fallen. "In its assessment drawn up in April 2019, the observatory of trade negotiations noted a decrease of 0.4% in the purchase price of food products sold under the national brand [see box] for the year 2019," recalls the senator ( The Republicans) Daniel Gremillet, chairman of the Senate's Egalim law monitoring committee.

In turn, farmers have seen their incomes fall. This is the case of Alexandre Armel, breeder in the Allier and responsible for the meat section at the Rural Coordination, another agricultural union. "In 2019, I was paid around 3.60 euros per kilo of carcass, against 3.85 euros in 2018," he says. My production cost is 4.62 euros. Drought may partly explain this drop in prices **. But Alexandre Armiel especially deplores contracts signed between distributors and industrialists still as far from the production costs of farmers.

An Egalim law to improve?

However, this is the will displayed by the government with this Egalim law: the reversal of the construction of the price, starting no longer from that of the market, but much more from the production costs of farmers. “It is on this point that the dairy industry [from farmers to distributors, including industrialists] has been ahead of others in the past three years, judge Richard Panquiault. It can already rely on more robust indicators in the construction of prices. But this inter-branch organization is also better structured and works with greater transparency, in particular on the issue of redistribution of value to farmers. "

Other sectors to take the seed? This is what makes these last fifteen days of trade negotiations - and therefore the Agricultural Show - interesting. "The dairy industry should confirm the upturns in prices seen last year, anticipates Richard Panquiault. We expect the same development in other sectors. "

Alexandre Armiel recalls that there is an urgent need to revalue the prices paid to farmers. "The future Common Agricultural Policy (CAP), which is to enter into force around 2022, provides for a reduction in direct aid allocated to farmers".

Without waiting for 2022, the Egalim law monitoring group in the Senate, chaired by Daniel Gremillet, calls, in a bill tabled in mid-January, to correct the Egalim law on the points where it is already contraindicated productive. "This is the case with the supervision of promotions, which has weakened small agricultural sectors," regrets the Senator from the Vosges. Especially SMEs specializing in seasonal products, such as foie gras. On these commodities, the proportion of sales via promotions could be greater than 60% before the law. Drastically changing their sales model so quickly is not possible. Daniel Gremillet recommends that the framework does not apply to these seasonal products and that exemptions are possible, in other sectors, for SMEs in difficulty.


Trade negotiations: Will farmers be rolled in the flour despite the Food Law?


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Should distributor brands be included in the Egalim law?

"There is a misunderstanding around the Egalim law", points Danielle Gremillet. While he believes there is some good in this law, he also does not want to suggest that it alone will solve the problems of farm income. "The Egalim law only applies to part of a farmer's income," he says. Those related to the sale of its products in large retailers in France, since this law does not apply in neighboring countries. But even in France, the scope is limited. The Egalim law only relates to processed agrifood products. In other words, a can of green beans, but not apples sold at the market. Above all, brands created and owned by retailers, such as “Marque Repère” for Leclerc, escape the Egalim law. "The hole in the racket is important since these distributor brands (MDD) are an important distribution channel for agrifood products", confirms Patrick Benezit, deputy secretary of the FNSEA.

This is another flaw noted by Daniel Gremillet: “Escaping from the Egalim law, the price of private label products fell on the shelves in 2019, so that they gained market share for the first time since 2012 , according to the Nielsen Institute. " The risk ? That the price war, which was once waged on national brands, is now moving on private labels. Hence the need to include these private labels in the Egalim law. "The question arises," says Daniel Gremillet. Patrick Benezit, at FNSEA, and Richard Panquiault, at Ilec, are in favor. On the distributors side, Jacques Creyssel opposes it: "These are products produced on demand which are subject to calls for tenders and not to annual negotiations".

  • earnings
  • farmers
  • Economy
  • Agriculture
  • Food
  • Large distribution

Source: 20minf

Business 2020-04-09T12:30:30.751Z
business 2020/04/09    

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