October 10, 2017 / 4:20 PM / 13 days ago

Macron delays decision on French retail price increases

* President Macron has promised to boost farmers’ income

* Conclusion of Food Convention talks expected in December

* Concerns raised over price proposals pushed by retailers

PARIS, Oct 10 (Reuters) - French President Emmanuel Macron has delayed until year-end a proposal by retailers to raise regulated minimum prices as he seeks guarantees it will meet his promise to boost farm income while minimising retail inflation, his office said on Tuesday.

Macron is due to give a summary of the first achievements of his so-called Food Convention on Wednesday at the Rungis food market near Paris, looking to appease farmers who had complained of their squeezed margins.

The Food Convention has involved months of meetings with farmers and other producers, unions and retailers, among others.

A majority of French retailers have called for an increase to the minimum prices they can charge on certain products, arguing that the improved margins would benefit those lower down the supply chain.

Privately-held retailer Leclerc, meanwhile, opposed the move and said it could lift consumer prices by up to 15 percent. Other retailers countered by saying it would hit only a limited number of products.

“These measures have a proven inflationary impact. The question is how do we guarantee that (the increases) work their way back to producers,” a French presidency official said.

Barclays has said that a 15 percent increase in thresholds that prevent retailers from selling certain goods below cost price would increase the price of about 5,000 products.

It would mainly benefit Carrefour while limiting the competitive advantage of the market’s dominant player Leclerc, which is famous for its aggressive discounting, the bank said.

CONSUMER REACTION

Four consumer groups sent an open letter to Macron on Tuesday calling for him to refrain from lifting minimum prices to allow assessment of the impact on inflation and how price increases could be split in the food chain.

More than two thirds of French people would accept higher food prices provided that the extra cost is passed on to farmers, an Ifop poll for environment group WWF showed on Tuesday.

A third of French farmers earned less than 350 euros ($412) a month last year, the Agricultural Mutual Assistance Association (MSA) said. The figure is less than a third of France’s minimum net wage.

Macron will ask Food Convention participants to come back with detailed proposals on food pricing, the presidency official said.

The president will announce on Wednesday that farmers, other food producers and retailers have agreed on a new type of index-linked contract incorporating the entire supply chain from farmers to retailers, the official said.

The continuing Food Convention, the conclusions of which are expected in December, also includes talks on subjects from food quality to fight waste, sustainable production and export strategy. ($1 = 0.8500 euros) (Reporting by Sybille de La Hamaide; Additional reporting by Marine Pennetier; Editing by David Goodman)

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