Agricultural and Food Supply Chain Act 2023 Commences

We reported on the Agricultural and Food Supply Chain Act 2023 in October 2023. The Act has since been commenced, and the new Regulator, An Rialálaí Agraibhia, has begun work. New Regulations on unfair trading in agri-food supply have also commenced. Our Food, Agriculture & Beverage team discusses these updates.

Described as a “major landmark in the history of Ireland’s agri-food sector” by the Minister for Agriculture, Food and the Marine, the establishment of the new regulator aims to improve fairness and transparency in the agri-food supply chain in Ireland.

The EU, in 2019, adopted a Directive on unfair trading practices in business-to-business relationships in the agricultural food and supply chain. This was known as the UTP Directive. This Directive aims to counter the imbalance of power affecting contractual relationships between small- and medium-sized food producers and larger wholesalers and retailers. The UTP was implemented in Ireland using secondary legislation in 2021. The Agricultural and Food Supply Chain Act 2023 (the 2023 Act) was enacted last year to give it further effect.

The 2023 Act, and the Agricultural and Food supply (Unfair Trading) Regulations 2023 (the Regulations) were commenced on 13 December 2023. We consider the key features of the 2023 Act, the Regulations and the regulator, An Rialálaí Agrabhia.

The Regulator begins work

The 2023 Act established a new regulator, An Rialálaí Agrabhia, to promote fairness and transparency in the agricultural and food supply chain. The new regulator will have particular regard to the needs of the farming, fishing, and small food business sectors. The regulator is also tasked with publishing analysis of information about price and market data, as well as providing reports on complaints and investigations, and decisions on unfair trading practices.

The regulator has been designated as the enforcement authority under the 2023 Act which gives wide-ranging powers to enforce the Regulations. The regulator may carry out inspections of buyers and enter premises where there are reasonable grounds for believing that there are records or anything used in connection with agricultural and food products. The regulator can also examine records and take copies both on its own initiative and on foot of complaints.

The regulator succeeds the Unfair Trading Practices Enforcement Authority set up in 2021, which has now been disbanded and all its powers transferred to the regulator.

Annual reporting for large buyers

Compliance reporting buyers, being agri-food buyers whose annual turnover exceeds €50 million, are required under the 2023 Act to appoint a liaison and submit an annual compliance report to the regulator by 31 March each year detailing compliance with the Regulations. Buyers who exceed the turnover threshold must submit their first report to the regulator by 31 March 2025, to cover the calendar year from 1 January 2024.

What are the Unfair Trading Practices?

The Regulations provide legal protection to suppliers of agri-food products with a smaller turnover than their buyer at any stage in the supply chain, where the buyer has an annual turnover of over €2 million, against 16 specific unfair trading practices. The Regulations cover a very extensive range of agri-food products including, for example, live animals, live plants, vegetables, fruit, fish, meat, prepared meals, and processed dairy.

The Regulations specify 10 unfair trading practices which are prohibited in all circumstances:

• Paying later than 30 days for perishable agricultural and food products
• Paying later than 60 days for other agricultural and food products
• Short-notice cancellations of perishable agricultural and food products
• Unilateral contract changes by the buyer
• Payment not related to a specific transaction
• Risk of loss and deterioration transferred to the supplier
• Refusal of written confirmation of a supply agreement by the buyer, despite request of the supplier
• Misuse of trade secrets by the buyer
• Commercial retaliation by the buyer
• Transferring the costs of examining customer complaints to the supplier

Six “conditional” unfair trading practices are listed which suppliers are protected against unless there is an agreement between them and their buyer in advance:

• Buyer returning unsold products to the supplier without paying for those unsold products or for disposal of those products or both
• Payment by the supplier for stocking, display or listing of products or of making such products available on the market
• Requiring the supplier to bear all or part of the cost of any discounts on products sold by the buyer as part of a promotion
• Payment by the supplier for advertising
• Payment by the supplier for marketing
• Payment by the supplier for staff for fitting-out premises used for the sale of the supplier’s products

Suppliers who suspect an unfair trading practice can make a confidential complaint to the regulator. Buyers must monitor and evaluate the adequacy and effectiveness of their policies and procedures, systems, internal control mechanisms and arrangements relating to unfair trading practices annually. Where issues arise, they must take appropriate measures to address any deficiencies.

Conclusion

With the commencement of the 2023 Act and the Regulations, buyers should urgently review their purchase arrangements to ensure they are not engaging in any of the prohibited UTPs. If necessary, agreements should be amended as relevant. Suppliers can confidentially report if they are subject to or adversely affected by any UTPs.

Keep an eye on developments from the regulator as new powers are exercised. Further, compliance reporting buyers should immediately implement steps to comply with their reporting obligations for 2024. While the Regulator has not yet given guidance on compliance reporting, the Regulations themselves provide an overview of what is to be included. This should be carefully reviewed for the compliance obligations.

People also ask

For more information on the impact of the new regulations, contact a member of our Food, Agriculture & Beverage sector team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.