Egalim Law 2: agribusiness SMEs want higher purchase prices

While a new law governing commercial relations between distributors of agrifood products and their suppliers (EGAlim 2 law) is being prepared, the Fédération des Entreprises et Entrepreneurs de France (FEEF) is calling for an increase in purchase prices, arguing that consumers would be very little affected.

Food prices rising by 1% would only lead to a loss of purchasing power of 0.07%

An increase in the selling prices charged by producers of agrifood products would only marginally impact consumers, argues the Federation of Enterprises and Entrepreneurs of France (FEEF). According to a study he commissioned from the Asterès cabinet, a 1% increase in the price of processed food products in France would lead to a drop in household purchasing power of only 0.07%. In the case of a 5% rise in prices, the drop in purchasing power would be 0.37%. And if food prices increased by 10%, the drop in purchasing power would be 0.7%.

These figures were obtained from INSEE data making it possible to know the share of the “Food products and non-alcoholic beverages” category in total household consumption expenditure. A percentage increase in the price of food products was then applied to obtain the additional amount in euros spent by households (assuming that their consumption does not vary following a price increase).

Even the most modest consumers would be little affected by an increase in food prices

In the event of a rise in food prices, the poorest would nevertheless be penalized more than the better-off. A 1% increase in the price of food products would cut 0.1% of purchasing power in the poorest household quintile but only 0.05% in the wealthiest household quintile. This is easily explained: the poorest spend a larger portion of their income on food than wealthy households. According to INSEE, food represents 16.3% of the consumption of the poorest household quintile, against 11.7% for the wealthiest quintile.

According to the FEEF, the impact on consumers would be all the more limited since an increase in the prices of French agri-food SMEs does not mean an automatic increase in consumer selling prices insofar as the brands, in competition with each other others, will not necessarily choose to pass the entire increase in purchase prices on to consumers. The federation therefore pleads for an increase in purchase prices from agribusiness SMEs.