The government has chosen not to extend the remit of the Groceries Code Adjudicator (GCA), drawing strong criticism from farmer organisations who called for this in response to a public consultation.
They and other suppliers in the chain wanted the code extended to include indirect suppliers as well as processors, food manufacturing plants and food service companies.
Many also wanted the Groceries Supply Code of Practice (GSCOP) turnover threshold to be reduced to £500m, bringing in more smaller retailers, alongside codes governing areas such as deductions in meat-processing plants.
Instead, the government has come up with a £10m fund to promote farmer collaboration, with the aim of improving producers’ ability to influence contracts. This is part of a package of measures which the Tenant Farmers Association labelled “second best” and which the CLA said was significantly overshadowed by the failure to extend the remit of the GCA.
The package also includes:
- Compulsory milk contracts between producers and purchasers with clear terms, including the price for the delivery of milk, the timing of deliveries, the duration of the contract, details of payment procedures, and arrangements for collecting and delivering raw milk
- A requirement that slaughterhouses use a standard grid for the classification of sheep carcasses to help ensure farmers are paid per carcass in a more transparent manner
- A commitment to work with industry to explore improving transparency and access to prices along the supply chain, to help farmers and small producers see if they are getting a fair deal for their produce
- Asking the Competition and Markets Authority to look into whether more grocery retailers could come under the remit of the GCA
- Highlighting to farmers and small producers how the recently appointed small business commissioner could help them tackle late payments.
“The government had an opportunity to ensure proper regulation throughout the supply chain and has simply dropped the ball,” said TFA chief executive George Dunn.
“The GCA has been doing some great work in tackling unfair practices in the way retailers treat their direct suppliers but there is no protection for indirect suppliers, including farmers, from poor treatment in the supply chain.
“It is in all of our interests to ensure that we have a fair, sustainable and ethical groceries supply chain and this cannot be left to the vagaries of the marketplace,” said Mr Dunn.
“The TFA sees this list of offerings as second best in comparison to the comprehensive regulatory framework that could have been achieved through extending the remit of the GCA. However, we will work with government to ensure that these are implemented in as robust a way as possible,” said Mr Dunn.
At the CLA, senior rural business and economics adviser Charles Trotman said the failure to extend the remit of the GCA to include relationships of primary producers with processers or manufacturers meant that farmers, who did not have contracts directly with the largest supermarkets, would continue to suffer from the imposition of unfavourable contract terms, delays in payments, and unreasonable notice of price reductions.
‘Government must reconsider’
“The government must urgently reconsider and ensure the GCA can hold all those across the supply chain to account for substandard practices,” said Dr Trotman.
The announcement on Friday (16 February) is the second and concluding part of the GCA review. The first part concluded in July 2017 that the supermarket watchdog was making significant progress tackling unfair trading in the grocery supply chain, but that more must be done to tackle the “climate of fear” that stops suppliers speaking out.
It also said the GCA had led to a positive “cultural shift” among supermarkets in the way they treat their suppliers.
What is the Groceries Code adjudicator?
The Groceries Code Adjudicator was set up with cross-party support to ensure that UK supermarkets purchase fairly.
This followed a 2008 Competition Commission report which said that “excessive risk and unexpected costs” were being transferred by supermarkets on to their supply chains.