Faced with rising prices on the shelves, Michel-Edouard Leclerc proposes to remove the 10% mandatory margin on food products pto restore purchasing power to the French, he said. Since the Egalim 1 law of 2018, stores, distributors such as Lidl, Leclerc, Auchan must sell food products with at least 10% margin. In other words, when a brand buys a product from the producer for one euro, it is obliged to resell it for at least 1.10 euro.
Originally, this system was set up to avoid the frantic race for low prices, but also to guarantee a minimum profit to supermarkets so that in return, they buy more expensive agricultural products. And that they therefore keep a minimum of income for the operators. It is this obligation of a 10% margin that Michel-Edouard Leclerc is asking the government to abolish so that stores can, by domino effect, lower prices on the shelves. This law was passed in 2018 in a context where there was no inflation, today we are at more than 4.5%.
Can the government follow his request? It seems difficult because it would mean selling off the income of the peasants. And at the origin of this law, there is the FNSEA, the most powerful union of farmers. But for its part, the Confédération paysanne is more mixed, it says that this 10% margin has not really increased income. In fact, behind the prices, there is a war of lobbies, where everyone is defending their margins.
The government has asked all the players in the sector to meet. He wants manufacturers and distributors to share the new price increases. As a result, they meet every week at the moment to try to come to an agreement.
There is an emergency, food prices are soaring because of the Covid or the war in Ukraine which is shaking up imports: +13% on pasta, +7% on oil, +7% on flour, + 4.5% on coffee. This is why Michel-Edouard Leclerc’s request risks hitting the mark. Even if for the moment, Leclerc is somewhat the only distributor in this position. But it puts a real pressure on the food industry and on the government.