On 19 February 2025, the European Commission released the Vision for Agriculture and Food, a roadmap for the EU agri-food sector until 2040, outlining further measures to rebalance power across the supply chain. As part of this effort, the Commission plans to revise the Unfair Trading Practices Directive to further strengthen farmer’s protection. This move could have important implications for food manufacturers and retailers, as well as primary producers, all of whom will need to adapt to an evolving regulatory environment.
Key Developments in Unfair Trading Practices regulation
Unfair Trading Practices (UTPs) have long been a pressing issue in the European food supply chain, disproportionately affecting farmers and small suppliers. In 2016, the European Commission evaluated UTPs highlighting their negative impact on farmers. The report found that existing EU legislation was inadequate and inconsistently enforced across Member States, calling for stronger regulatory action.
In response, the EU introduced a Directive on Unfair Trading Practices (UTP) in 2019, which aimed to curb abuses by large buyers and protect farmers and small suppliers. Key provisions included prohibiting specific UTPs (e.g. late payments and unilateral contract changes), establishing mechanisms for reporting complaints, allowing national authorities to impose sanctions on offenders and encouraging voluntary codes of conduct to enhance transparency. While the UTP Directive marked a significant step in tackling these challenges, farmers have remained the weakest link in the chain.
New response by EU Commission
Despite these efforts, challenges remained. Market fragmentation persisted, with discrepancies in national rules hindering fair competition across the UE. Farmer protests took place in several EU Member States, urging the EU to update its UTP framework to provide stronger protections against financial losses and promote a more equitable food system.
In response, 2024 saw the new EU Commission introduce a series of measures designed to “strengthen farmers’ position in the agri-food supply chain”. The Commission proposed a new Regulation on cross-border enforcement against unfair trading practices in December 2024. This proposal aims to curb abusive practices by dominant buyers, such as delayed payments or abrupt order cancellations. National enforcement agencies will be granted new powers to investigate cross-border cases and take action against large multinational corporations. To close enforcement gaps, the Regulation introduces clear procedural rules, strengthens collaboration between enforcement authorities across Member States through a mutual assistance mechanism, and provides measures to prevent regulatory arbitrage, where companies relocate to avoid stricter UTP laws.
Additionally, the European Commission’s recently published long-term Vision for Agriculture and Food outlines plans to revise the UTP Directive with the goal of ensuring that farmers are no longer systematically compelled to sell their products below production costs. The review will be based on the evaluation of the current rules, as well as of the national regulations on UTPs.
What are the implications for the entire Agri-Food supply chain?
Stricter UTP enforcement will not only impact farmers but will also reshape the operational landscape for food manufacturers and retailers. Stricter rules could lead to higher operational costs or increased consumer prices. Here are some critical areas of concern:
- Supplier contract negotiation and financial impact: Higher procurement costs due to minimum pricing rules, stricter payment terms, and reduced flexibility in contract negotiations could affect profit margins and cash flow management.
- Regulatory & compliance challenges: Stronger enforcement powers, increased transparency requirements, and stricter oversight of cross-border trade will raise legal and compliance risks for businesses.
- Operational adjustments: Retailers and manufacturers will need to adapt supply chain strategies, rethink pricing and promotions, and ensure stable sourcing under new contract obligations to avoid supply disruptions.
- Enforcement, penalties and sustainability of supplier relationships: Fines could increase due to stronger regulatory oversight and ensuring fairer conditions for farmers and small suppliers will contribute to a long-resilience of the agri-food chain avoiding reputational risks for businesses found in violation with the UTP rules.
What’s next for businesses?
Understanding these regulatory changes is crucial for food manufacturers and retailers, as compliance obligations and supply chain negotiations may soon evolve. For food manufacturers, retailers, and producers, preparing for these changes is essential and they could:
- Advocate for clear, consistent UTP enforcement across the EU, monitor national legislations to anticipate upcoming changes and engage with policymakers and industry groups to stay informed on changes.
- Proactively implement fair trading practices, by reviewing supplier agreements to ensure alignment with UTP rules and implementing long-term contracts with farmers.
- Strengthen compliance mechanisms to mitigate enforcement risks and financial penalties.
As the European Commission will have to navigate the delicate balance between the interests of all supply chain actors, farmers, food manufacturers and retailers must prepare for potential operational and financial impacts. Opportunities will arise for stakeholders to contribute to shaping the new framework, building a more transparent supply chain that will benefit the entire sector by fostering long-term sustainability and collaboration.
Juliette Olivier, Public Affairs Consultant