Farm leaders have stepped up their calls for a supermarket ombudsman in recent months – in response to complaints from suppliers about unrealistic demands from retailers.
But the retailers are adamant that an ombudsman is not needed and are actively campaigning against the idea.
Farmers Weekly asked Andrew Opie, food policy director for the British Retail Consortium, to explain why. Here’s his response:
“Despite the ongoing support for UK farming and the fact that thousands of suppliers continue to grow their businesses with retailers, once again we have allegations of bullying and unbalanced relationships. These allegations are taken by some as evidence that the Government needs to create a bureaucratic empire to monitor and control the supply chain.
Even if an ombudsman was justified, and, despite exhaustive inquiries, we are yet to see the evidence, what would be its function? The majority of suppliers to supermarkets are not small farmers. They are large companies, some of them multi-nationals larger than the retailers they supply. They clearly do not need the protection of a Government quango.
If, as pressure groups suggest, the whole chain needs protection, for example to try and unpick the influence of a retailer on an individual dairy farmer, whose processor supplies a number of customers, that would require substantial resources and would add significant cost to the supply chain.
The clamour for an ombudsman ignores a number of facts. Firstly, we already have a Code of Practice, which has been reviewed, strengthened and is to be extended to cover more retailers. Secondly, retailers continue to review and improve their approach to buying, through internal training and compliance. Thirdly, a point acknowledged in the grocery investigation, robust negotiations between suppliers and retailers are a positive element of our market which benefits customers.
The focus on retailers’ supplier relationships, also conveniently ignores the huge support they give to UK farming, in stark contrast to other parts of the food sector. Retailers continue to promote and market UK food, not least the concerted support for AFS and clear labelling of UK produce. They are increasingly working with dedicated suppliers to pass back more value for their produce. They are working closely with their supply chains to meet new environmental and production demands. They are helping small and regional producers bring their food to new and larger markets.
These are demanding times and the retail market is extremely challenging, nobody knows that more than retailers. Customers demand and expect value, there will be robust negotiations with suppliers, as much as there are continuing cuts in the retailers’ own internal costs, but that does not mean a meltdown in the UK supply base
Retailers know, however, that even in these difficult economic times, consumers demand good, consistent quality produce. That can only be delivered through good, sustainable supply chains. It is not in their economic interest to have the fragile, temporary chains that are portrayed. In fact, one point that is rarely is raised is the number of long term relationships that exist with food suppliers, and the number of companies that have grown their businesses with retailers.
We have, as the Competition Commission recognised, a highly efficient food retail sector that works in the interests of consumers. The last thing we need, particularly in the current economic climate, is to affect its efficiency by imposing unjustified costs.”