Retailers improve but farmers and growers still feeling squeeze

Supermarket treatment of direct suppliers appears to be improving, but pain is still being passed down to farmers and growers.

About 70% of suppliers surveyed in a YouGov survey commissioned by the groceries code adjudicator said they had experienced possible breaches of the groceries code over the past year.

Suppliers rated Tesco, Morrisons and Iceland the worst for code compliance and Aldi the best.

See also: Supermarket suppliers rate Aldi best on fair dealings

However, this figure was down from 79% last year and on nearly every type of code breach suppliers said there had been some level of improvement and that retailers were more open to a collaborative approach.

Fear of supermarket retribution, however, was still a big obstacle to suppliers raising an issue with the GCA, although 47% said they would now consider doing so compared with 38% last year.

The survey received 1,145 responses this year, compared with 574 last year.

Farmers still being squeezed

Professionals working with suppliers say farmers are still being squeezed and there is little way for producers, often as indirect suppliers not covered by the GCA’s remit, to swing the balance of power.

Tom Lander, supply chain adviser at the NFU, said farmers had little control over supply chain negotiations and had to rely on direct suppliers such as packers and processors to negotiate good terms with retailers.

The result of those negotiations, such as agreement of lower prices, was causing downward pressure on farmers.

However, he said that growers in the horticulture sector, which were mostly direct suppliers, had seen some improvement over the year and that Aldi continued to come out “with flying colours” over the way it treated its suppliers.

David Sables, of Sentinel Management Consultants, helps suppliers improve their negotiation skills. He said that while progress was being made, retailers were squeezing the whole industry and that “brutal negotiation” on price was taking place. 

“Something needs to happen to help growers and farmers,” he said, “because those in the middle, the direct suppliers, are passing the pain down the line.”

Duncan, Swift, head of the food advisory team at accountant Moore Stephens, questioned why the GCA’s survey had not asked indirect suppliers – such as farmers – if they had experienced knock-on effects of code breaches between direct suppliers and retailers.

He said the “elephant in the room” was payment terms being lengthened more and more.

Farmers Weekly has previously reported on how this was, in turn, causing indirect suppliers to extend their payment terms to their own suppliers.

Farmers who were indirect suppliers could still raise issues where they suspected a code breach between a direct supplier and retailer, said the groceries code adjudicator Christine Tacon. 

While progress was being made, she said real cultural change in retail might not happen until a new generation of buyers came through the ranks.