Evidence from farmers should be enough to trigger an investigation into supermarket buying practices, says an influential group of MPs.

Draft legislation to set up an adjudicator for disputes between suppliers and retailers should also be amended so fines are an available penalty from the outset, said the Commons Business, Innovation and Skills Committee.

Indirect suppliers, such as farmers and trade associations – as well as whistleblowers – should be able to provide the evidence that would spark an investigation, said a committee report on Thursday (28 July).

Committee chairman Adrian Bailey said MPs had heard evidence of some improvement in compliance with the Groceries Code, but there was evidence too of continuing difficulties, and of reluctance by suppliers to invoke their rights.

“The adjudicator will provide protection for suppliers in the form of a cloak of anonymity and will have its own powers to investigate alleged bad practice. We agree that those powers are needed so that suppliers will feel more secure in coming forward.

Mr Bailey said the committee did not believe the adjudicator needed powers to investigate proactively, without any supporting complaint. But the Bill should be widened so additional sources could submit evidence of code breaches.

“We were convinced that trade associations can act as a useful source of evidence and provide helpful additional anonymity for suppliers. By the same token, there is a case for allowing whistle-blowers who are employees or ex-employees of a retailer to supply evidence of breaches.

“We also heard strong arguments that indirect suppliers to large retailers – such as farmers – should be given a voice, and we therefore agree with the government that they should be able to draw attention to potential code breaches.”

But the committee disagreed with the government on the introduction of fines. Fines should be an available penalty from the start, so the adjudicator’s performance could be judged on the basis of a full package of remedies.

“It is now already three years since the Competition Commission’s recommendation for an adjudicator,” said Mr Bailey. “The government should move ahead with legislation as soon as possible.”