2023-10-21 08:39:11
Paris (AFP) – Does the government have the means to lower prices on shelves? The doubts of manufacturers and supermarkets regarding the bill on trade negotiations highlight the difficulty of political leaders in responding to the problems of the French food chain.
Published on: 10/21/2023 – 10:39 Modified on: 10/21/2023 – 10:37
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The Minister of the Economy Bruno Le Maire has been announcing for months that he wants to “break the inflationary spiral” with the help of a law adopted by the National Assembly at the beginning of October and which will be examined by the Senate in a public session on the 26th. of the same month.
Michel-Edouard Leclerc, spokesperson for the leader in large-scale food distribution E.Leclerc, was very pessimistic this week on BFMTV: “it’s very clear, there will be no price cuts”.
The boss of Mousquetaires-Intermarché Thierry Cotillard was more optimistic with AFP on Friday, believing that price reductions were possible… But on condition that his suppliers take “their responsibilities”.
According to them, agro-industrial suppliers begin negotiations by demanding price increases, while the objective of the legislative text is to bring forward the negotiation schedule by a few weeks to quickly pass on to supermarkets the reduction in certain manufacturing costs ( packaging or energy) or agricultural raw materials.
The Minister of the Economy Bruno Le Maire leaving the Elysée, October 18, 2023 in Paris © Bertrand GUAY / AFP
Ilec, an organization which represents the voice of the largest industrialists, has already warned that the outcome of the negotiations would be “contrasted”.
Originally, other avenues than a simple change in the negotiation schedule had been mentioned by the executive, starting with the possibility of selling fuel at a loss. It was swept aside in less than a week following distributors refused to accept it.
Mission transpartisane
Proof of the inadequacy of the text, the government, through the Minister Delegate in particular for Trade Olivia Grégoire, announced that it wanted to launch a “transpartisan government mission to reflect on the reform of the overall framework for trade negotiations”.
Which makes Dominique Schelcher, CEO of Système U, say that the law “is only a step before, we hope, an in-depth reform of the French negotiation system”.
Dominique Schelcher, CEO of Système U, August 28, 2023 in Paris © ALAIN JOCARD / AFP/Archives
If this mission resulted in another piece of legislation, it would be the fifth modifying the terms of negotiations since Emmanuel Macron became president.
Shortly following he came to power, in July 2017, the General Assembly of Food (EGALIM) was launched to find a better distribution of income between players in the French food chain.
Not easy, because relationships between actors are often tense. Furthermore, under the generic label of agro-industrialists, very diverse profiles come together, from small sausage manufacturers to multinationals listed on the New York Stock Exchange, including French giants like Danone or Lactalis or powerful agricultural cooperatives like Agrial or Sodiaal.
All the players, major job providers, including in more rural regions, have effective voices. Distribution constitutes one of the important outlets for agricultural producers, making the first agricultural union, the FNSEA, sensitive and vocal on the subject.
In addition, the macroeconomic context is very different today from 2017, with the return of high inflation, particularly in food prices.
Very complex equation
Enough to complicate the equation when one of the ambitions of the political authorities was to protect the remuneration of agricultural producers, which might serve as an adjustment variable in negotiations between the economic giants of industry and distribution.
This point is now a consensus, but inflation has made customers much more sensitive to the purchase price, leading distributors to relaunch a price war to attract them.
Inflation has made customers much more sensitive to the purchase price, leading distributors to relaunch a price war to attract them © DENIS CHARLET / AFP/Archives
As a result, they tend to demand wholesale prices as low as possible from their suppliers.
Protect fragile players without allowing the most powerful to inflate their margins, avoid making French products less accessible than alternatives which would be produced abroad in a less virtuous way…
Not easy, as associations fighting once morest poverty continue to warn of their difficulties in coping with the influx of new applicants.
The only certainties: the current text appears largely insufficient and the current form of negotiations does not seem to suit many people. But a compromise that addresses all the issues will be complicated to emerge.
© 2023 AFP
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