Start of main content

The Food Chain Act poses implementation difficulties in the fruit and vegetable sector

| News | Agrifood

Proexport, Fepex and Andersen address the complications that legislative change brings for sellers and buyers

The regulation of commercial contracts between buyers and sellers in the food chain poses serious implementation complications, according to the modifications proposed in the last reform of the Food Chain Act. With the aim of finding out the concerns of the sector and resolving the legal doubts of sellers and buyers, the webinar "Reform of the Food Chain Act in fruit and vegetable contracts" was held, organised by PROEXPORT and FEPEX, with the participation of Andersen law firm.  

During their participation, the partners of Andersen, José Miguel Soriano and Ignacio Aparicio and Teresa Rodríguez de las Heras, of counsel to the firm, reminded those present that the legislative sanctions contemplated include fines of between 3,000 and 3 million euros for extremely serious cases and "represent a reputational damage to the company fined", as serious or very serious infringements will be made public.

The firm's Of Counsel highlighted the field of fruit and vegetable auctions as the one that raises the most legal questions when it comes to applying the new regulations. Among the implications it will have for markets, Rodríguez de las Heras warns that the effective price of the contracts is not clear "what the role of the auctioneer is in the food chain, nor if he is obliged to comply with these new obligations and what consequences there are for not complying with the effective price for the auctions". 

Teresa Rodríguez de las Heras considers that "if it is used to buy from the seller and resell through an auction model, the auctioneer remains an operator in the chain and must comply with the legislative obligations regarding the effective price".

However, this "is not the only possible model, since the auctioneer could be a mere service provider who helps the seller to facilitate the sale in an auction environment and, in this case, would be left as a third party who would not intervene as an operator in the chain and would not be subject to the obligations provided for in this Act".

In this sense, Andersen partner Ignacio Aparicio, indicated that "this law had a very laudable aim to reduce situations of imbalance in the chain's commercial relations and to avoid situations of abuse in commercial contracts, but in practice it may have generated the opposite effect in the case of those small producers who are not going to be able to compete with the same effective cost of production in the area of global competition in the food chain".

The Director of FEPEX, José María Pozancos, explained that Royal Decree Law 5/2020, of 25th February, modifies Law 12/2013 on measures to improve the functioning of the food chain and introduces a qualitative leap in its content with the obligations to "introduce into contracts the effective cost of production and that the price agreed between the primary producer and its first buyer covers this cost". 

According to these obligations, Pozancos warned that "intervention in the free market is considered, since the effective cost of production is transferred to the entire value chain". In this respect, the Director of Proexport, Fernando P. Gómez, pointed out the difficulties that the fruit and vegetable sector has in implementing these regulations. The ban on "sales at a loss" in situations of price crises also hinders the operation of the fruit and vegetable sector, since it may prevent the agricultural producer from selling the product in such circumstances, and thus render it worthless, explained Fernando P. Gómez.

You can see the full article in

End of main content