Government rejects proposals to hold links in the food supply chain to account for substandard practices: it should reconsider

In May, the Farmers Guardian reported that representatives from the NFU, CLA and Tenant Farmers’ Association (TFA) gave evidence to the EFRA Select Committee on the Government’s farming policy consultation paper. 

The government is facing strong criticism from farmer organisations 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.

After ministers rejected industry demands for the Groceries Code Adjudicator’s remit to be extended, farming interests are calling for imbalances in the supply chain to be addressed.

“The government must hold all those across the supply chain to account for substandard practices,” said Dr Charles Trotman (left), a senior CLA adviser. “The failure 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.

Farmers Weekly quoted the president of the CLA, Tim Breitmeyer (right), who emphasised that farmers should get a fairer share of the food pound as the UK moves towards a new farm support system based on public goods:

“Only a small amount of money needs to come back through the food chain to make farmers a lot more profitable”. I give you the example of a loaf of bread. One penny coming back to the farm gate from the price on the shelf at the moment would be the equivalent of £100 a hectare, which is 50% of the basic payment system.”

Mr Breitmeyer also raised concerns about the Food and Drink Sector Council, recently set up by Government to create a more ‘productive and sustainable’ industry. He feared that  agricultural concerns will not get much of a hearing  and so will not deliver the extra value back to the farm gate.

Rod MacBean, a Shropshire dairy farmer set up a petition for a fair price for milk at the farmgate some time ago.

He points out that agriculture supports thousands of jobs in the rural communities across the UK, stating that for every dairy farmer and employee there are over 35 people employed in the service industries that support them, not to mention banking, insurance etc. the usual service industries we all use, adding that the knock on effect to other agricultural sectors will also have major impacts on our economy, environment and the whole infrastructure of the UK countryside.

He foresees that if the fair farmgate price does not materialise, farmers will have little option but to turn from food production and utilise land for renewable energy production, yielding more profitable and secure long-term income. There would then be increasing reliance on food imports of varying quality which would become progressively more expensive.

 

 

 

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Will Parliament confirm the powers of the Groceries Code Adjudicator this month?

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The Groceries Code Adjudicator (GCA) was established by Act of Parliament in June. The appointed Groceries Code Adjudicator, Christine Tacon, can now receive confidential complaints and evidence about how large supermarket retailers are treating their direct suppliers.

The code covers the activities of the 10 biggest supermarkets with a turnover of more than £1bn and – if ratified – the adjudicator will have the power to impose fines of millions of pounds..

Under the Groceries Code:

• .“retrospective payments” were banned;
• retailers now have to compensate suppliers for forecasting errors;
• they cannot de-list suppliers without good reason,
• and they have to give reasonable notice..

“If you’re a beef farmer, reasonable notice could be three years; if you grow tomatoes it could be 18 months – but not two weeks, which is what is happening now,” said Mrs Tacon, and:

The code prohibits any variation to supply agreements without notice, including demanding lump sums after a deal is agreed, plus:

• payment terms,
• limits on payments for shrinkage or wastage,
• no listing fees, compensation for forecasting errors,
• no position payments except for promotions
• and no over-ordering at promotional prices.

Suppliers should not be expected to be the predominant funders of promotions..

No conflict of interest

Christine Tacon says that she will continue to hold her non-executive roles with farming-related companies because none of them is a direct supplier to retailers. The code only applies to direct suppliers..

When will her ‘full powers’ to act on ‘unsavoury activities’ be granted?

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At the end of November, Ms Tacon told Lincolnshire brassica grower and NFU horticulture and potatoes board chairman Sarah Dawson that in her short time as adjudicator she has already uncovered a number of unsavoury activities still going on in the supply chain. She told Cornish farmers that a large number of complaints, so far, had involved payment deductions on invoices for spurious reasons – and sometimes supplier farmers had taken years to recover the cash that was owed them..

Business Sense offers the graphic seen above and answers: “Guidance outlining the maximum fines that the Adjudicator will be able to impose will be published six months after the bill comes into effect”..

Mrs.Tacon acknowledged that a fear culture existed among suppliers and promised anonymity to ensure supermarkets could not subsequently penalise suppliers who lodged complaints:

“The misuse of power by major retailers is a global problem and not just a feature of the UK market. Other countries are watching with interest to see how we handle it in the UK.”.

Initial tactic?

“I’ll be adopting a softly, softly approach . . . to give supermarkets the opportunity of addressing any breaches of the groceries supply code of practice.”

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The Groceries Code Adjudicator: presentation – only works if you have PowerPoint software: “A 12-slide presentation that gives the history and explains the powers, remit and functions of the new Groceries Code Adjudicator (GCA)”.

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Fair Deal Award presented to MP Andrew George at the Annual Conference of the Family Farmers’ Association

 

A Fair Deal award was presented to Andrew George MP during the FFA’s annual October conference organised by livestock farmer Pippa Woods.

On the Westminster committee room Cornish farmer, Fair Deal Council member and video-maker Michael Hart, presented the granite based award made by Sculpture Designer, a co-operative of lead crystal craftsmen formed when Tyrone Crystal went out of business. Click on picture to get a clearer image.

For years Mr George has been the national chairman of the Grocery Market Action Group (GMAG) which successfully led the campaign to create a watchdog to protect smaller farmers and growers from the unethical practices of supermarket buyers. He brought GMAG together several years ago and it includes representatives from the National Farmers’ Union, the British Independent Fruit Growers Association, Friends of the Earth, ActionAid, Traidcraft, the Association of Convenience Stores, the British Brands Group and many others.

 

Addressing the House on this subject in 2008

Mr George said, “It’s a great honour to accept this award, but I do so on behalf of many other people who have worked so hard to advance the campaign to make sure that farmers and growers are treated fairly by powerful supermarket buyers.”

Mr George also urged the Prime Minister, Rt. Hon David Cameron MP, to ensure that there was no delay in the Bill’s implementation during Prime Minister’s Questions on Wednesday.

Three days ago it was reported that the Bill to set up a Groceries Code Adjudicator with the role of enforcing the Groceries Code and encouraging compliance with it,  had its second reading debate on 19 November 2012 and that, after the Public Bill Committee has scrutinised it line by line, its report to the House is expected by 18 December 2012.

 

To read more about Fair Deal Awards go to the Localise West Midlands website.

 

To read the Bill, download pdf from link on http://services.parliament.uk/bills/2012-13/groceriescodeadjudicator.html

 

 

 

 

 

 

Supermarket adjudicator bill ‘rests’ with Norman Lamb, the Business Minister

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Last year NFU president Peter Kendall concluded:“It is hard not to detect the dead hand of the retailers at play behind the government’s reticence to establish an effective regime to police the groceries code.”The Fresh Produce Journal reports that West Midlands growers visited the House of Commons this week. The group of 50 included representatives from the National Farmers Union, Wychavon Council and Worcester University. They met MPs from the region and talked to DEFRA secretary of state Caroline Spelman.

Defra minister Jim Paice pledged to support the supermarket adjudicator bill, though added: “As for the groceries adjudicator it’s not my job, it falls with the department of business but as you know there is absolute commitment from government and we will be introducing one as soon as possible.”

The only references found to Mr Lamb’s activities in the matter online were the following exchanges recorded in Hansard on 28^th February 2012:

Alex Cunningham, MP for Stockton North asked how many meetings he has held with (a) the six largest supermarkets, (b) farmers’ representatives and (c) consumer groups on the introduction of a Groceries Code Adjudicator. 

Norman Lamb replied, “The Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable), has not met any of these groups to discuss the Groceries Code Adjudicator. I am responsible for the Groceries Code Adjudicator and I plan to meet representatives of both retailers and suppliers in the coming months.”

Alex Cunningham then asked the Secretary of State for Business, Innovation and Skills what assessment he has made of (a) levels of bankruptcy of British dairy farmers and (b) the market power of the six largest supermarkets.

Norman Lamb replied: “The Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable), has not made any assessment of these issues. The Competition Commission’s study of the groceries market, which published its final report in April 2008, considered the market positions of both dairy farmers and large supermarkets. Following this review a Groceries Supply Code of Practice was introduced, and the Government now intends to establish a Groceries Code Adjudicator to ensure adherence to the Code.”

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Has Norman Lamb met representatives of retailers and suppliers since February?