GLOBAL NEWS: FRANCE: Paris intervenes on retailer margins

Following talks with President Sarkozy, France's major food retailers, which include Carrefour, Leclerc and Auchan, have agreed to exercise margin restraint during periods of crisis in fruit and vegetable production. This means that in a time of "proven market crisis", when the price paid to producers is significantly lower to the average of previous years, retailers will not increase their gross margin on the product in question. Sarkozy has threatened retailers with a commercial tax for failing to support this initiative.
Is this a fair deal? As a retailer, what's your opinion on the treatment of this issue in France versus North America and Canada?

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FRANCE: Paris intervenes on retailer margins

By: Stuart Todd | 18 May 2010


Sarkozy called retail margin hikes "unacceptable"

France’s major food retailers - including Carrefour, Leclerc and Auchan - have agreed to exercise margin restraint during periods of crisis in fruit and vegetable production, following talks with President Sarkozy.

The agreement stipulates that that in time of “proven market crisis”, when the price paid to producers is significantly inferior to the average of previous years, retailers will not increase their gross margin on the product in question.

Sarkozy highlighted the crisis in tomato production when producer prices had fallen at a greater rate than consumer prices, meaning retailer gross margins had increased.

“This is simply not acceptable,” Sarkozy insisted yesterday.

Sarkozy had threatened retailers with an increase in a tax on commercial space in the event of them refusing to support the initiative.

Commenting on the agreement, the head of Leclerc, Michel-Edouard Leclerc, said: “My initial reaction to the way this was set up was one of irritation but I now believe this a good measure, given additional credibility by its restraining and collective aspects.”

Meanwhile, the president of French farmers federation, the FNSEA, Jean-Michel Lemétayer, said the agreement would probably benefit consumers more than producers.

“If we really want to secure farmers’ revenues, including those in the fruit and vegetables sector, commercial relations with their major customers have to be put on to a contractual footing and provision is made for this in a government bill on the future of French agricultural sector.”

SOURCE: just-food.com