Unfair trade practices in the Food Supply Chain

The Food Supply Chain (FSC) brings together a group of stakeholders - mainly farmers, food manufacturers and distributors - whose successive activities enable the production, processing and distribution of food products to consumers, the ultimate stakeholders located at the downstream end of the FSC and linked to it by a Business to Consumers (BtoC) contract. Other economic operators, brokers, transporters, restaurateurs and public authorities also belong to the FSC. All these stakeholders are bound by successive sales contracts, forming a chain of Business to Business (BtoB) contracts which legally arm the FSC, and which are subject to eminently singular constraints. The common denominator of these sales contracts, the agricultural/food product, is indeed a commodity as perishable as it is vital, and subject to strong and unpredictable price variations. In these times of anthropogenic climate disruption, agricultural and food supplies, which are normally subject to natural hazards that are by nature unpredictable, tend to be increasingly destabilized. Droughts, fires and floods can drastically reduce this supply, creating major social tensions, which may intensify in the future. Conversely, too much agricultural/food supply can reduce farm incomes, putting farmers in a delicate position. The FSC brings together different, even opposing, interests.

The economic environment in which the FSC operates is also characterized by a major structural imbalance between the stakeholders who meet at the various contractual points of contact that make it up, making it conducive to the risks of hold-ups and information asymmetry between them. The resulting contractual imbalance and insecurity complicates the transmission of prices from one contract to another, from upstream agriculture to downstream food production. Value-draining bottlenecks appear for certain stakeholders, threatening the investment that can be injected into the FSC, and thus food security. The deterioration in net margins means that production costs can no longer be covered, if at all. The strength of a chain is measured by that of its most fragile link, which is the most likely to break down in the face of external constraints. Price pressures, in particular, can lead stakeholders to adopt behaviors that tend to move away from the collective interest of the FSC, despite their interdependence.

Commercial practices between FSC stakeholders regularly reach the tipping point between fair trade practices and Unfair Trade Practices (UTP), the latter being practices between companies that deviate from good commercial conduct and are contrary to the principles of good faith and fair dealing. In this context, the contract is a potential site for the crystallization of manifestations of significant imbalance between...