In the Assembly, the war between industrialists and mass distribution began again
Who will make the toast between producers and consumers? The prices of food products that will be on the shelves in 2023 are currently being negotiated between manufacturers and large retailers until March 1. These debates, usually intense, are clearly stormy this year in the midst of inflation. And this Monday, January 16, a bill examined in the Assembly comes to burn the dust. The text, presented by Macronist deputy Frédéric Descrozaille, clearly defends the agricultural industry. This has angered major retailers, who have called for public opinion to testify “The price increases by 30%” products in supermarkets.
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It is clear that Frédéric Descrozaille’s proposal intends to give more weight to producers in the annual negotiations between December 1 and March 1. According to him, the latest legislative developments – particularly through the Egalim laws – have left the agricultural industry in a fragile state, caught between increasing farmers’ incomes and the stability of large-scale distribution. “After selling their products to retail chains, every year cheaper than before, manufacturers have changed their maneuverability and France is today one of the least profitable countries in Europe. : several billion euros have escaped from the value of the chains”the deputy writes, pointing out the risks for the country’s food sovereignty in the draft law.
Price war
To fix this, Frédéric Descrozaille proposes a measure that could turn the tables. Today, if the two parties cannot agree on the terms of a new contract at the end of the negotiations, it is customary to continue deliveries, but at the price of the previous year. In this inflationary period, this means that the manufacturer can deliver his product at a price that does not take into account the increase in production costs.
According to Frédéric Descrozaille, this risk often leads manufacturers to accept unfavorable contract terms. This seems to be confirmed by the report issued by the General Inspectorate of Finance in September of last year. He noted that the profitability of the agro-food industry has decreased by -16% since 2019, when large retail sales stood at -1%. The Bercy service also estimated that the food industry’s loss of profitability had partly helped absorb the recent 1.3% inflation.
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In his text, the Renaissance MP first suggested that this would result in the tariff set by industrialists at the start of negotiations being applied if negotiations fail. Obviously, this means changing the balance of power, forcing the receiving centers to compromise.
The move sparked outrage from the retail giants, who condemned it in a joint press release. “A proposal openly supported by the biggest agribusiness interests that would allow large suppliers to unilaterally impose their own tariffs on distributors, abolishing the concept of trade negotiations”. If he denied being their spokesman, he assumed in an interview with Frédéric Descrozaille. Challenges rather than his text “Results of Ilec”, the lobby of large manufacturers such as Nestlé, Herta and Bonduelle. The lawmaker eventually changed his initial proposal, making his measure an experimental device for two years, and added that there would be a mediator’s intervention to find an agreement in the interim period of negotiations. Deputies will have to vote on this text this week.
government veto
Rarely does the government publicly guarantee that it will not defend the text from one of its supporters in the Assembly. “The intention is good, but the balance has not yet been found”, this Monday, January 16, is considered at the RMC Bruno Le Maire, whose deputy chief of staff is Morgane Weill, former director of Carrefour supermarkets. Incidentally, the measure could cause big retailers to absorb more of the price increase, reducing their margins. If it doesn’t do enough, food inflation is likely to hit consumers, which should hit 13% at the start of the year, according to INSEE. MP Descrozaille took a risk in a media interviewNew Factory. “It may not be the right time for consumers, but it’s a necessity for manufacturers”indicates that the selected one has been swiped “the extra margin should also allow workers in the food industry to get better wages”.
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Like other industries, the agri-food industry is also suffering from price hikes. A warning was already given in the report of the General Inspectorate of Finance in September of last year “The current spike in energy prices is likely to continue and may increase through 2023, prompting the agribusiness industry to increase its tariff demands in the next annual round of trade talks, in addition to unacknowledged increases in 2022.”. Along with inflation, this sector, which represents 436,600 jobs in France, is also facing labor shortages and supply problems. Some companies are warning about the risk of stopping production. The William Saurin group thus shut down 80% of its production at the beginning of January.
