New tools and sanctions help producers against buyers

By: STA Date: 2024. 05. 03. 09:30

Late payments to farmers by purchasers of more than 30 days will become punishable thanks to the package of producer protection laws adopted by the Parliament, announced Zsolt Feldman, the state secretary responsible for agriculture and rural development. By creating new opportunities, the regulation improves the vulnerable position of producers vis-à-vis buyers and provides them with stronger protection through legal means. Most of the new rules will enter into force on January 1, 2025 in order to ensure the necessary preparation time.

(Photo: Pixabay)

Zsolt Feldman pointed out that it is typical worldwide that producers in the food production chain bear higher risks and benefit from the results to a lesser extent. The reason for this is that producers usually have less bargaining power and ability to assert their interests than the processors or traders who are above them in the chain. In order to share risks and results more proportionately, it is necessary to support producers with rules, so that buyers and processors cannot transfer all the risks to producers. In addition, purchasing processes must become more transparent and predictable for producers, he added. According to the state secretary, the Hungarian government is striving to make progress not only in the support policy, but also in the operation of the domestic product paths in relation to agriculture. Therefore, it continuously develops the domestic regulatory system, which lays the foundation for the protection of domestic producers against buyers, the improvement of their situation by legal means, and the strengthening of their integration. This is also served by the amendment of the law on product markets that has just been adopted, which contains many tangible regulatory elements that strengthen the protection of producers. These include the mandatory application of risk-sharing provisions in contracts in the fruit and vegetable and pork and poultry sectors, the more effective sanctioning of late payments of more than 30 days from January 1, 2025, and the introduction of a ban on purchasing activity in certain cases. The goal here is that the producer does not bear the entire risk of the operation of the product line alone. It is an important goal that contracts in the future clearly contain these risks and the proportions of the burden. The fact that the sectoral advocacy organizations can introduce model contracts in order to spread good practices widely also serves to improve the protection of producers, he emphasized.

He explained that this amendment to the law also covers the creation of the category and rules of the voluntarily applicable producer contract for vertical collaborations

This new type of contract provides a framework for cooperation between producers, which not only makes the situation of producers more predictable, but also contributes to the security of supply of raw materials for processors, and also reduces the risk of market overproduction. Based on the regulations for producer cooperation, the price must be determined in such a way that it ensures transparency and predictability for the entire duration of the contract – explained Zsolt Feldman. The Ministry of Agriculture wishes to ensure that these rules are quickly and successfully integrated into Hungarian agricultural practice and create more transparent and predictable conditions throughout the country.