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French Food law EGalim: balancing of forces between producers and large scale buyers

09 November 2018

Paying with card

Stéphanie Lahad, Paris Office, Bord Bia – Irish Food Board

On 1st November 2018 the new EGalim law, bringing new regulatory constraints in France for the Food and Drink industry but also the retail and foodservice operators, was enacted by the French government. According to the French government, this law, resulting from the Etat Généraux de l’Alimentation (France’s food and drink industry summit conference), has three objectives:

 

  • To pay a fairer price to farmers
  • To strengthen the safety, environmental and nutritional quality of products.
  • To promote a healthy, safe and sustainable diet for all.

 

Price wars between French retailers has been so tough in the past five years that manufacturers and farmers have been put under great pressure to provide the lowest prices possible. The major changes implied by this law, that should eventually enable the farmers to get a fairer price, and that will deeply affect the 2019 price negotiations between manufacturers and retailers, are as follows:

 

  • Products must be sold to retailers at a minimum of 10% above the loss selling threshold BOGOF are now legally forbidden, most aggressive promotion allowed is “Buy 2 Get 1 Offered” (the mention “free” will be banned)
  • It will be against the law to sell over 25% of yearly volume agreed with a retailer under promotion
  • Facilitate price re-negotiation in case of raw materials or energy price rise

 

However, there are already questions towards how this price increases would be recuperated and passed onto farmers. Producer organisations will be expected to supply production cost indicators which will be used as a base for negotiation. Other major changes that should be implemented include stricter controls and higher penalties when it comes to animal welfare.

 

It will also affect the institutional foodservice controlled by the state (i.e school and university canteens), by imposing 50% of local, organic or quality labelled products in those canteens from 1st January 2022.

 

Sustainability is also a big part of this new law through preventing food waste, for example offering consumers the option to get take away bags and to take home any opened bottles at restaurants, and through forbidding the use of plastic straws in foodservice by 2020.

 

The EGAlim law will be trialled for two years and may be modified.

 

For more information, please contact Stephanie.lahad@bordbia.ie