An end to the free return of products in the food supply chain
Background
The AgrarOLkG, which has been in force since 9.6.2021, is intended to curb practices that take advantage of suppliers of agricultural, fishery and food products. The Act is based on EU Directive 2019/633 (UTP Directive). The ban on unfair trading practices aims to protect producers and suppliers of agricultural products and food from the market power of buyers such as, in particular, the retail groups.
Suppliers with an annual turnover of no more than €350 m are covered by this protection. The prohibition applies to buyers that have an annual turnover of at least €2 m.
Important new regulations
Particular attention should be paid to Section 12 AgrarOLkG. Previous arrangements that provided for the return of unsold agricultural, fishery and food products to the producers/suppliers against the reimbursement of the purchase price will no longer be possible.
Furthermore, payment terms later than 30 days may not be agreed for deliveries of perishable food products and, moreover, payment terms for all other agricultural and food products may be, at most, 60 days. Likewise, short-term terminations of contracts for perishable products may no longer be effectively agreed. A short-term termination will generally refer to a cancellation that occurs less than 30 days prior to a delivery.
Legal consequences
A contract that contains agreements that are not in conformity with the law will otherwise remain effective. The supplier can submit a complaint about this agreement to the Federal Agency for Agriculture and Food (Bundesanstalt für Landwirtschaft und Ernährung, BLE). This Agency can punish the violation with a fine of up to €750,000 and publish the name of the sanctioned company on the Agency’s website.
Recommendation: The new regulations have already been in force since 9.6.2021. For existing supply agreements concluded prior to 9.6.2021 the implementation deadline was 8.6.2022. If processes in the companies concerned have not yet been adjusted then urgent action will be needed. Any terms of delivery will have to be reviewed and adjusted. From now on, food retailers will have to define their requirements for perishable foods more precisely.