EDEKA Nordbayern-Sachsen-Thüringen is terminating contracts with producers from the Bauernschätze program, some of which were still valid for the long term, without notice and at short notice , citing the economic unreasonableness of the cost-price model, according to ISN.
After EDEKA Northern Bavaria-Saxony-Thuringia terminated its contracts with pig farmers in the ” Farmers’ Treasures ” program in March/April, which were based on fixed-price models, and pressured the farms to switch prematurely to a contract with a premium-price model, the EDEKA regional company is now going a step further. It is terminating the contracts of farms remaining under the old model without notice and with extremely short notice. Understandably, the farms clung to the long-term contracts because they had made significant investments in the construction of animal-friendly barns based on these agreements.
Termination without notice due to alleged economic unreasonableness
EDEKA Northern Bavaria-Saxony-Thuringia is now terminating the contracts without notice, citing the market situation, the competitive landscape, and the economic unreasonableness of the so-called “cost price” as the reasons for exercising our right to terminate without notice. For further context: While the sales manager of a slaughterhouse is currently reporting in the Lebensmittelzeitung (a German food industry publication) that margins for meat sales in grocery stores are up to 30% higher compared to 2020, German pig farmers are currently incurring losses of around €60 for every pig they produce.
Staack: The actions of EDEKA Northern Bavaria-Saxony-Thuringia are an outrage
This approach demonstrates how shamelessly market players are currently exploiting their dominant market position at the expense of farmers! ISN Managing Director Dr. Torsten Staack makes this very clear and explains further: Just imagine: First, the trading company launches a so-called value-added program and lures farmers with long-term contracts and undoubtedly lucrative pricing models. The livestock farms then literally built on these long-term contracts and, in some cases, invested a great deal of money. Then the trading company realizes that it’s all a bit too expensive for their liking and drops the farms like a hot potato. To then cite the ‘economic unreasonableness’ of the cost-price model they themselves helped develop as a reason for termination is nothing short of a mockery. And while the trading company is merely concerned with missing its self-imposed margin targets, the affected agricultural businesses, which are already struggling to survive from an economic perspective due to the disastrous economic situation in pig farming, are being completely driven underwater!
The signal this sends to the industry is devastating: With these terminations, the trading company is undermining the trust built up in all supply contracts over the past years. These terminations are also clearly unjustified and invalid. Naturally, ISN will support the affected members through a class-action lawsuit to the very end!
Regardless of the legal dispute, ISN is curious to see how fair these trading practices will be perceived, especially in light of the consultations currently starting at the federal level on the new regulation for the common market organization, which deals precisely with the design of contracts.
