Strengthening farmers’ position requires real solutions, not economic assumptions

Europe’s farmers face genuine challenges. Climate change, rising input costs, volatile markets and increasing compliance requirements continue to put pressure on farm incomes. The President of the Commission has, in her speech on the State of the European Union 2026, given farmers recognition. However, this must translate into measures that genuinely strengthen the resilience of both farmers and the rest of the chain.

Helping farmers secure a fair standard of living and ensuring supplies reach consumers at reasonable prices are objectives of the Common Agricultural Policy. A lot has been done already in terms of revisions of the Common Market Organisation, and what remains promised is the revision of the Unfair Trading Practices (UTP) Directive. If this is the answer to farmers demands, policymakers must ensure that any new rules are based on evidence rather than assumptions.

One argument for extending regulation to larger manufacturers further along the food supply chain is the “cascade effect”: the claim that restricting commercial practices between retailers, wholesalers, manufacturers and processors would ultimately benefit farmers and small processors upstream.

Evidence for this theory remains weak, while regulating on that basis carries significant risks.

The cascade effect remains unproven

When proposing the UTP Directive, the Commission in its impact assessment could not establish a clear or systematic link between regulating commercial practices and raising farmers’ incomes. The Commission’s Joint Research Centre found that evidence on the effects of UTPs on farmers was largely anecdotal and difficult to isolate from the many other factors affecting farm viability.

More recent analysis has become even more sceptical.

In 2025, the German Monopolkommission concluded that the assumed cascade effect had not been demonstrated across supply chains. Strengthening bargaining positions downstream may merely shift margins between manufacturers and retailers, without benefiting farmers or consumers. It found little support in either data or economic theory for the claim that farmers gain when processors or manufacturers secure better terms from retailers.

The Chief Economist of DG Competition made the same point during the first UTP proposal: better terms for a manufacturer do not automatically reach farmers, because manufacturers have neither an obligation nor necessarily an incentive to pass on the gains.

In short, regulating commercial practices downstream does not automatically translate into higher farm incomes.

The real risk: creating costs without creating benefits

If the cascade effect cannot be demonstrated, policymakers must ask a simple question: who ultimately bears the cost of additional regulation?

Retailers and wholesalers operate on thin margins while absorbing substantial labour, logistics, energy, digitalisation and compliance costs. Further restrictions on legitimate commercial practices would add administrative burdens, reduce flexibility and complicate cross-border operations.

These costs affect investment, innovation and job creation. Restrictions may also fragment the Single Market by allowing large manufacturers to maintain territorial supply constraints that prevent retailers from sourcing freely across the EU. This can hinder market entry, weaken competition and limit retailers’ ability to meet consumer demand.

Most importantly, consumers would feel the impact.

Higher regulatory costs reduce supply-chain efficiency, leading to higher prices, less choice and less flexibility. With many European households sensitive to food prices and the cost of living, policymakers should avoid measures that could undermine affordability, particularly for lower-income consumers who rely on promotions and competitive pricing.

National experience offers a warning

A majority of Member States have introduced stricter rules on food pricing, margins, commercial relationships or market operations. But the evidence shows no clear benefit for farmers. Instead, these measures have often increased complexity, compliance costs and legal uncertainty without addressing the underlying pressures on agricultural producers.

Competition authorities and public bodies across Member States have also found that recent food-price increases were driven mainly by rising costs, not excessive retailer profits; retail margins were often under pressure rather than expanding.

A better path forward already exists

Rather than extending regulation based on an unproven theory, policymakers should focus on reforms that directly strengthen farmers’ market position.

Recent Common Market Organisation reforms already offer tools to improve contracts, strengthen producer organisations and help farmers negotiate more effectively. These measures should be allowed to work before further regulation is added.

The Commission’s reporting on competition in agriculture likewise shows how producer organisations and associations can strengthen farmers’ bargaining power. Greater cooperation gives farmers scale, better market intelligence, lower transaction costs and improves their negotiating position.

This approach tackles the challenge directly rather than hoping that benefits will somehow trickle through multiple stages of the chain.

Collaboration delivers more than confrontation

European agriculture will be more competitive when the food chain works together. Retailers, wholesalers, processors and farmers share an interest in resilient supply chains, sustainable production, innovation and consumer trust. Long-term partnerships can support farm investment, improve sustainability, reduce waste and respond to changing demand.

Europe will not strengthen agriculture by setting parts of the food chain against one another or regulating relationships with little direct connection to farm incomes. Farmers deserve evidence-based solutions. Relying on an unproven cascade effect risks creating more complex regulation, weaker competition and higher consumer prices, with little benefit for farmers.