Thursday, 22 November 2012

Reining in the power of the supermarkets

On Monday, parliament debated the Bill being introduced which will establish the new Groceries Code Adjudicator to protect farmers and growers from sharp practices deployed by the big supermarkets. It is an important step forward supported by all parties and, as a member of the Environment, Food and Rural Affairs Select Committee, I spoke in the debate.

It is an area where I have some direct experience because, long before entering politics, I spent ten years in the farming industry supplying strawberries and cauliflowers to the major supermarkets. In that time I saw first-hand some of the sharp practices used and the way that supermarkets would often abuse their dominant market position to treat suppliers unfairly. They would often insist on farmers buying other goods and services such as haulage from “approved” contractors who would invariably charge more than the market rate. Growers would be required to take part in cut price promotions in store. Often the cost of perished stock on the shelves would be clawed back from the supplier, in some cases with their own retail margin taken too. And if a buyer had made a mistake and placed an order for more than they actually needed, they would find any excuse to reject a consignment, throwing the cost back on the farmer. Things haven’t got much better. Last year I met a supplier to supermarkets who said that he was now required to show them his annual accounts so that they could work out how much harder they could drive him into the ground and I still come across examples of supermarkets making unfair demands on their suppliers.

The Groceries Supply Code of Practice was introduced a couple of years ago and set out some standards on how supermarkets should behave such as paying their suppliers on time, not making retrospective changes to pricing and no longer forcing suppliers to use certain third party contractors which restricts the functioning of a fair market. The new adjudicator will help to enforce that code properly. It will allow farmers to make anonymous complaints about supermarkets and it will be able to “name and shame” those who breach the code and order changes in the way buyers manage their relationship with suppliers.

There has been much debate about whether the adjudicator should have other sanctions at its disposal, such as the ability to levy fines against persistent offenders. The government is currently saying that the adjudicator will not initially have the power to fine but that this could be added at a later date if necessary. In my view, they might as well make this sanction available from day one because if a job’s worth doing, it’s worth doing properly.

George Eustice can be contacted at george.eustice.mp@parliament.uk or 1 Trevenson Street, Camborne, Cornwall TR14 8JD or by telephone on 020 72197032.