In the recent wave of government will to redesign the commercial regulatory structure of France, one point especially roused concern among French wholesalers.
Called the PAV - or price after sale - this system replaced the traditional commission-based sales in the trade. At the time, it appeared commission-based sales were out of fashion because of the difficulty of integrating them in IT systems.
Under the new system, the supplier entrusts its produce into the wholesaler’s care, whose task it is to sell it at the best price. After the sale, the wholesaler announces the price to be invoiced to the supplier.
The system can be used in two different ways - on a continuous basis, in order to value the goods across the season, or on a spot basis, during a crisis or when producers cannot find buyers.
The decision raised some conflict, with producers sceptical of their chances of receiving the best price, and wholesalers unsure of the merits of helping producers find an outlet for surplus produce. The topic has been at the centre of sometimes fiery discussions between the wholesale trade and the rest of the industry.
Now, the minister has decided to review the system to give him a simpler regulatory framework. The next few weeks are crucial for the industry. To clarify the situation, a point-by-point paper on the PAV system has been compiled, including definition, contract, invoicing, traceability, taxes et al.
One word makes a regular appearance: trust. Because this system is based on the ability of two different parties to agree on one price it requires them to trust each other.
The danger of course is that imprecise rules are open to excessive demands and abuse. And even if the system is defined accurately, implementation is likely to be an even harder task.
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