Fruit and vegetables: Major retail outlets in France to reduce their margins
The agreement has largely satisfied farmers and distributors alike
On Monday, 17 May, major retail outlets in France pledged to reduce their margins on fruit and vegetables, according to a plan promoted by Nicolas Sarkozy to avoid repeated crises in the sector. Through this agreement, Nicolas Sarkozy seeks to provide French producers with more visibility on prices, assuring them that their income will be more secure. The main aim of this plan remains the regulation of fruit and vegetable prices, boosting consumer demand over the long term, in order to avoid situations of crisis.
The head of state personally oversaw the signing of this agreement by the heads of the seven major retail outlets in France, led by Carrefour, Leclerc, Auchan and Casino. Last April, they were warned about a possible additional tax on commercial premises unless they moderated their margins.
The signing of this agreement was completed the day before the Senate began to examine a new law on the modernisation of agriculture (LMA). The primary aim of this law is to encourage farmers and their retail and industrial customers to formalise their trade relations with a contract.
After an average fall in farmers’ revenues of 34% in 2009, the aim of the plan signed by the large retail companies is to bring down the prices of vegetables and fruit without harming the farmers. Specifically, the agreement stipulates that in times of “proven market crisis”, when the price paid to producers is “significantly lower” than the average price in previous years, retailers undertake not to increase their gross margin on the product in question. "When there is a crisis, there must be agreement on margin restraint, so that producers see their price increase without the consumer being penalised,” Nicolas Sarkozy declared after a meeting at the Elysee Palace with representatives of the seven major retail groups and farmers (Source: Le Figaro).
Ms. Angélique Delahaye, president of Légumes de France (a branch of FNSEA, the main French farmers' federation), congratulated the President of the Republic on supervising a new modus operandi for retailers and producers. Representing the retailers, Mr. Serge Papin, president of the Système U group, also told la Tribune that “this meeting kicks off a new way of working. It is useful and symbolic.” Arnaud Mulliez, president of Auchan France, expressed his delight at the decisions taken to help French agriculture.
S&G Brassicas Today - June 2010
