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Many arrangements within production chains regarding sustainable agriculture are allowed

Recent rules for the agricultural sector allow farmers, processors, wholesalers, and supermarkets to make more arrangements regarding the production and sale of sustainable products. Collaborations between farmers as well as collaborations within the ‘farm-to-fork’ chain with regard to sustainability are boosts for the necessary changes in the agricultural sector. The Netherlands Authority for Consumers and Markets (ACM) has compiled an overview of all the different types of opportunities available to the agricultural sector in its ‘Guidelines regarding collaborations between farmers’.

Martijn Snoep, Chairman of the Board of ACM, explains: “Sometimes I see a certain degree of restraint when, for example, supermarkets make arrangements that can help bring about the changes that are necessary for making the agricultural sector sustainable. Collaborations within the chain as well as collaborations between farmers that are aimed at making that sustainable transition possible are, in most cases, not at odds with the competition rules.”

Farmers and growers are allowed to work together in many different ways without violating the competition rules. In that way, they are also able to strengthen their bargaining positions vis-à-vis processors, wholesalers, and supermarkets. In Europe, there are many important exceptions to the competition rules for the agricultural sector, which means that more collaborations can be forged compared with other sectors, especially with regard to sustainability.

Sustainability and collaborations

Farmers or market participants within the supply chain that plan to collaborate in order to realize sustainability objectives must demonstrate that their arrangements are required for realizing those sustainability objectives. Another important requirement is that the collaborations result in higher sustainability standards than those prescribed by law, for example, with regard to the environment or animal welfare. The arrangements may also result in common selling prices or production or can also be production-related arrangements. These types of arrangements can be made with farmers in the entire ‘farm-to-fork’ chain. In that way, farmers can be rewarded for their sustainable production.

European rules for collaborations in the agricultural sector

European rules make it possible that, even without sustainability objectives, farmers are able to work closely together in areas such as production and sale of agricultural products. They can do so, for example, in a production organization. That means that farmers that make the same product join forces for the production and sale of that product. Producer organizations already exist: in the horticultural sector, for example, there are around a dozen producer organizations. Other agricultural sectors, too, can use this type of collaboration.

Another type of collaboration is through an interbranch organization. In such organizations, market participants in a supply chain (from producer to retailer) are allowed to work together. This may lead, for example, to an efficient production chain or to certain benefits as market knowledge is shared with each other. In the Netherlands, there are various interbranch organizations for the agricultural sector.

ACM and the agricultural sector

ACM keeps a close watch on agricultural markets. Over the past few years, ACM has looked into the markets for various agricultural products in its ‘Agro-Nutri Monitor’. The latest monitor will be published in October. In addition, ACM provides information about the opportunities regarding collaborations for strengthening the bargaining positions of farmers. ACM enforces compliance with the Act on unfair commercial practices in the agricultural and food supply chains (In Dutch: Wet oneerlijke handelspraktijken landbouw- en voedselvoorzieningsketen).

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