Government turns a blind eye to abusive trading practices in supermarket supply chains

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A simple step from the government – extending the powers of the Groceries Code Adjudicator – could ease pressure on thousands of food businesses, whether they are a dairy farm in the West Country or an exporter of vegetables in East Africa.

The UK's food sector is a source of pride for the government, and barely a week passes when ministers don't refer to our 'distinctive, quality produce'. In that case, ministers should be falling over themselves to support competitive and sustainable agricultural supply chains. However today marks 12 months since the government finished taking evidence on the question of whether the Groceries Code Adjudicator – the regulator that prevents supermarkets from bullying their direct suppliers – should be extended to cover the majority of food producers. Although Defra and BEIS received evidence from a wide range of organisations and sectors arguing for such a move, we are still waiting for a government response. The decision now lies with the newly-appointed minister at BEIS, Andrew Griffiths

Traidcraft Exchange is strongly in favour of extending the Groceries Code Adjudicator’s remit. We have been working with a range of other organisations from the Tenant Farmers' Association to Oxfam, to food waste campaigners Feedback to argue this case and stop the abusive trading practices which continue to undermine the supply chains selling into our large supermarkets.

Traidcraft supporters campaigned for the GCA to be set up in 2013

Traidcraft supporters campaigned for the GCA to be set up in 2013

The argument is a relatively simple one. The Groceries Code Adjudicator (GCA) has now been in place for four years, in which time it has worked with the UK’s biggest supermarkets to prevent unfair and illegal trading practices such as last-minute changes to invoices, cancellation of orders and requests that suppliers pay listing fees. For example, the GCA castigated Tesco for regularly failing to pay suppliers on time, and stood up for suppliers being asked to pay upfront fees for shelf positioning by Asda. These practices meant that suppliers dealing with supermarkets were regularly taking on unexpected costs and risks – making it difficult for small suppliers to compete and leading to a range of grim consequences including business closures, excessive food waste and unexpected overtime for workers.

Those businesses selling food directly to supermarkets are now protected from such practices by the GCA. However, the majority of those that produce our food don’t sell it directly to supermarkets but sell to a manufacturer, packer, brand or importer. Therefore, most farmers and small food business, both in the UK and abroad, remain vulnerable to unfair trading practices that, without regulation, will lead to an uncompetitive and unsustainable groceries sector.

Traidcraft Exchange made a submission to the government’s Call for Evidence (which you can read here) arguing for the remit of the GCA to be extended so that it is able to provide support to businesses wherever they are in a supermarket’s supply chain.

An entire year later, we have heard nothing from the government. When questioned about their response to the Call for Evidence, ministers have promised that something is in the pipeline and that it should be expected soon. ‘In the autumn’ has become ‘early next year’ and ‘in due course’. The incoming minister Andrew Griffiths will want to get up to speed with this issue quickly, and there are two places that he could look:

·         The recommendation made by the Competition Commission in 2008 that if unfair trading practices continued, the government ‘should consider the introduction of appropriate measures, including the extension of … the role of the Ombudsman [GCA]’.

·         This briefing document, put together by Traidcraft and others, looking at how a GCA with an extended remit might work in practice

While the government prevaricates, food producers are left in the lurch, deal with persistent excessive and inappropriate risks that comes with selling to big brands and retailers as well as the various new stresses that Brexit is placing on food production and trade.

A simple step from the government – extending the powers of this efficient, low-cost regulator – could ease pressure on thousands of food businesses, whether they are a dairy farm in the West Country or an exporter of vegetables in East Africa.

Tom Wills is Policy Officer at Traidcraft Exchange. He can be contacted at tom.wills@traidcraft.org