Saturday, February 27, 2016

What the LME, this law causes the ire of farmers? –

During his visit to the salon of Agriculture Saturday, February 27, the President of the Republic has expressed his desire to revise the law to modernize the economy or LME, passed in 2008 under President Nicolas Sarkozy and oversees negotiations between retailers and suppliers “There are pressures to be exerted here in France on retail, said Hollande. a law was passed a few years ago. It needs to be reviewed. ”

Adopted in August 2008, at the beginning of the quinquennium of Nicolas Sarkozy, the LME establishes freedom of price negotiation between the central purchasing of supermarkets and their suppliers. The idea underlying the time being to increase the purchasing power of consumers, fostering rate reductions.

The LME, with its liberal orientation, ending the Galland law which governed relations between manufacturers and retailers since 1996, which forbade merchants to sell products below the price at which they had bought. In fact, the time of the Galland law, distributors circumventing the ban by charging back margins, ie required their suppliers of deferred rebates.

price race ever lower

If the LME and the Chatel law in 2008 have severely limited the use of these back margins, farmers complain that the current system of having too deregulated distributors / tariff negotiations and especially not to take into account the interests of producers, who are not part of the negotiations, held mainly between retail chains and food manufacturers.

farmers n ‘ so have repeatedly denounced a “race to ever lower prices” and call the authorities to rebalance the relations in their favor. Especially since farmers face a rise in their costs due to the then high grain prices which increase significantly the cost of feeding their livestock.

They seek to pass on to industrial and mass distribution rising production costs. But they refuse to take into account the increases in the name of preserving the purchasing power of consumers.

Adjustments in 2013/2014

Adjustments to the LME were taken two years to balance the power relations in trade negotiations between the upstream dies and distributors. Are then included in contracts negotiated between producers, processors and retailers, of “renegotiation clauses” that integrate the evolution of production costs, highly dependent on fluctuations in the commodities market.

To promote loyalty and transparency, counterparties related to a price reduction should be formalized in the annual agreement fixing the outcome of commercial negotiations, to be verifiable. But the players in the agricultural sector in crisis repeat that the device is not respected by the retail chains which retain the advantage in this balance of power.

New review planned before summer

While the annual price negotiations between buyers of supermarkets and their suppliers are completed in two days, President Francois Hollande said Saturday at the agricultural Fair that the LME should “be reviewed” and the need to put pressure on the supermarkets to it avoids stress by the price war difficulties of farmers.

the Agriculture Minister Stephane Le Foll said to share the need to “indicate in these tripartite negotiations that producers should also be involved.”

(with AFP)


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