Rising discounter Aldi has made a number of new commitments to UK growers which could change the face of retailer and supplier relations in this country, according to farm unions.

In a reveiw of suppliers published last month by the Grocery Adjudicator's office, farmers consistently praised Aldi for sticking to the sector's code of practice in its dealings. Other major retailers did not fare so well, with 11 percent of Tesco suppliers and Six percent of farmers selling to Morrisons filing complaints against the supermarket they supply.
 
On Wednesday, Aldi became the first retailer to sign up to the NFU’s Fruit and Veg pledge – and went further than the recommendations laid out by the union. Some of its commitments include:

• It will not force suppliers to fund promotions – popular BOGOF offers are commonly funded by growers;
• It will not charge suppliers for customer complaints, missed or late deliveries – a major concern and at a large cost to the industry;
• It will pay the agreed price – there will be no back margin mechanisms such as penalties or over-riders;
• It will commit to buying seasonal British fruit and veg – Aldi is already an industry leader at 40%.

 
Commenting on the German retailer's announcement, NFU horticulture chair Guy Poskitt said, "Aldi’s response to our pledge clearly details the integrity, honesty and openness of its business, and highlights its commitment to long-term supply relationships, equitable distribution of reward along the supply chain and fair and respectful trading relationships.
 
“Aldi is looking at a wide range of ways of working with its suppliers and the NFU believes that this could see a big sea-change in the way the whole of the supply chain works. We know that there are other retailers who have best practice measures in place, but we must praise Aldi for doing so publicly and by committing to the key aims of our pledge – fair prices, long-term guarantees, seasonal British produce and above all, a healthy supply chain which is fair to the supplier and retailer.”
 
Tony Baines, managing director of buying at Aldi, also commented, “As a long-standing supporter of British farmers, Aldi is proud to back the NFU’s Fruit and Veg Pledge. True to our family values, we treat growers and packers across the UK equally and fairly. This allows us to build long-term and sustainable relationships with them, which in turn enables our customers to benefit from unbeatable prices and quality.
 
“The transparency and fairness with which we treat all our suppliers was recently recognised by the Groceries Code Adjudicator’s annual supplier survey, which named Aldi as the best performing grocery retailer for compliance.”
 
Here is a full breakdown of Aldi’s commitments:

• Promotional support that is not funded by suppliers. Aldi’s promotional deals like its award-winning ‘Super 6’ (where it offers weekly deals on six fruit and veg) are successful in drawing customers into store. The supplier is happy because they get promotional support to help with maximise use of crop flushes, but they also get regular price week-in week-out during the promotion. The customer can be happy because this is a genuine deal from Aldi, not one that is directly funded by growers;

• Policy of no charges for late or missed deliveries, or customer complaints – the level and cost of customer complaints has been a huge concern for the industry, so much so that the Groceries Code Adjudicator launched an investigation into customer complaint charges and recently produced a best practice report for the industry to adopt. Aldi does away with any concern – it doesn’t make the charges in the first place;

• Simple net cost price agreements, with no back margin mechanisms like overriders or penalty rates. If suppliers do a deal with Aldi, it honours that deal and pays the agreed price. If sales of a product are unsuccessful, Aldi does not ask the supplier for more money to share the impact of poor sales;

• A commitment to supplying seasonal British fruit and veg. In 2014, more than 40% of Aldi’s fresh produce was British – significantly more than the industry average of around 35% (2013);

• An openness to developing longer-term relationships with its suppliers;

Planning and open communication;

• A flat reporting structure, which means Aldi lean and responsive in terms of administration;

Written contractual agreements;

• The support of a wide and diverse supply base, that provides smaller growers with the opportunity to supply a major retailer.