Finland has established a new food market ombudsman's role. The position, an initiative of Agriculture Minister Jari Leppä, formally came into being on 1 January. The ministry will begin advertising the new post this month with the hope of filling the position in February.
The central role of the food market ombudsman will be to oversee the functioning of the domestic produce market and to ensure that players comply with good business practices.
The ombudsman’s office will be supported with two staff members and will operate as part of the ministry’s Food Agency with an annual budget of 500,000 euros.
Leppä noted that there is a serious imbalance in the local food chain, specifically pointing to the role of large groceries.
"Stores are extremely strong players. This imbalance has resulted in unwholesome practices and we want to curb them," the minister added.
A study published in December last year indicated that retailers’ share of food prices has shrunk, while prices in the food processing industry have increased.
However Leppä said that the research does not tell the whole truth about long-term developments in the sector.
"The report was relatively narrow and does not reveal operations in the entire sector. The general trend has been for cash flows to go everywhere else but to farmers," he commented.
Large chains have upper hand, minister says
The minister said that he had been contacted on many occasions about unhealthy retailer practices. Citing a recent case that came to his attention, he claimed that producers were being held to ransom by large chains wanting to white-label products to be sold under their proprietary Pirkka (Kesko Group) and Rainbow (S-Group) brands.
"When a store wants some version of a branded product made under its own label and if the producers don’t provide them as such, then no branded product will appear on the shelves," the minster stated.
Leppä added that while this is not always the case, "there are many examples." The lobby group representing food retailers said that it is not familiar with the situation the minister described.
"We have not encountered such a phenomenon. It doesn’t sound familiar," said Finnish Grocery Trade Association (PTY) CEO Kari Luoto.
Unnecessary, if not disruptive
PTY said that the introduction of a food ombudsman will not change the industry since there is nothing wrong with current grocery practices. Rather, the group said that a new layer of oversight would be detrimental to the market.
A new food market law introduced to regulate the work of the ombudsman calls for producers to have written agreements with all food processors and retailers.
Luoto noted that producers do not want written agreements because of the red tape involved. He added that making them compulsory might jeopardise the status of small producers, although the goal is to strengthen their position.
"Recent years have seen an increase in products from very small local food producers on store shelves. We now fear that bureaucracy will further complicate this relationship," he commented.
The PTY said that the best way to resolve problems relating to grocers’ practices would be for a self-regulating industry body or board to rule on disputes. The new legislation requires the ombudsman to cooperate with the board and to request statements from it before making a decision on a case.
The ombudsman can resolve disputes by way of negotiation and may also offer recommendations if needed as well as reprimands and public warnings. Ultimately, he or she may also send cases to the Market Court for resolution.
A new provision also calls for the ombudsman to review agreements among food producers, processors and retailers, including prices and other terms and conditions agreed.
"We know producer and consumer prices, but we don’t know what happens in the chain. That’s why the discussion has been a 'he-said, she-said debate'" Leppä noted.