The reform of the food chain law enters into force
On Wednesday 15 December, Law 16/2021, of 14 December, which amends Law 12/2013, of 2 August, on measures to improve the functioning of the food supply chain, was published in the Official State Gazette. With this new regulation, Directive 633/2019 on unfair commercial practices in the food supply chain is transposed into Spanish law.
This amendment comes into force just one day after its publication, i.e. on Thursday 16 December 2021. With this regulatory amendment, producers will see their negotiating position strengthened and will be able to obtain better remuneration for their work.
The aim of this reform is to achieve fairer prices for all operators, in particular producers. So much so that the regulation prohibits the destruction of value in the chain. In other words, each operator in the food chain must pay the operator immediately upstream a price equal to or higher than the assumed cost of production. This means assuming that production costs are the basis on which contracts are negotiated in this area.
Likewise, this legislative reform establishes the obligation to formalise the contract in writing in all commercial operations, except those with a price of less than 1,000 euros and operations with cash payment. Also exempt will be those transactions in the first sale of products from the fishing and aquaculture sector, carried out at auctions or by means of a low auction, and the substitution of the contract for the invoice and the documentation provided for in the fishing regulations will be considered valid.
Likewise, new elements of the contract are introduced, such as the incorporation of the indication of the categories and references contracted; the reference to the determination of the contract price; or the indication of the dispute resolution mechanism. Finally, it should be noted that contractual clauses that do not comply with the provisions of this new Law, in relation to the determination of the price, will be null and void.
In addition, the amendments to this Law refer to promotional activities that may mislead the consumer. More specifically, information on the price and image of products may not be detrimental to the perception of the quality or value of agricultural or food products.
Similarly, the new regulation increases the list of unfair commercial practices by including new infringements. In particular, “selling at a loss” is prohibited, meaning that distributors cannot offer food products to the public at a lower price than the price paid for their acquisition.
In order to ensure compliance with these regulations, this regulation gives greater powers to the Food Information and Control Agency (A.I.C.A.), which is the highest national authority. This is without prejudice to the power of the Autonomous Communities to designate authorities in their territories. However, the A.I.C.A. is the contact point for cooperation between the Autonomous Community authorities and the European Commission.
The scope of application of this law covers the activities carried out by the different operators involved in the production, processing and distribution of agricultural products. Another of the modifications is the inclusion of hotel and catering companies and accommodation service companies, provided that they have a turnover of more than 10 million euros or 50 million euros, respectively.
In addition, this reform incorporates a larger number of non-food agricultural products, such as raw flax, natural cork, hemp, live plants, raw tobacco and floriculture products. The creation of a digital register of food contracts by the Ministry of Agriculture, Fisheries and Food is also important.
Lastly, thanks to this law, the Food Chain Observatory will extend its functions, and will have to draw up reports on price formation; update price indices and food production costs; and promote research and innovation in the agri-food sector.