25 May 2011

The country’s largest supermarkets could be punished if they fail to deal with farmers and suppliers fairly, with measures including fines and the taking out of compulsory Mia Culpa advertisements in newspapers, under long-awaited draft plans for the instatement of a Groceries Adjudicator.

The Groceries Adjudicator’s role would be to ensure fair practice in accordance with the Groceries Supply Code of Practice which came into operation in February 2010 and to investigate supermarkets over alleged abuses of power. The plans, published in the Government’s Groceries Code Adjudicator Bill, follow years of recommendations that such a figure be created to police the industry and arbitrate between retailers and suppliers over disputes.

The ministers involved in the Bill said an adjudicator would cost around £800,000 a year. The plans suggest the position will be funded by placing a levy on the 10 largest food retailers in the country.

The move has been universally welcomed by farming groups. The NFU today said the draft Bill’s publication represented a step towards securing a better deal for suppliers.

Peter Kendall, the union’s president, said, “The NFU has worked tirelessly for over a decade, both in public and behind the scenes, to put in place both an effective code of practice for retailers, and a proper body to police it.

“There has been cross-party consensus for some time that an Adjudicator is necessary for the effective monitoring and enforcement of the Groceries Supply Code of Practice (GSCOP). Parliament must now scrutinise the text in good time so that the formal Bill itself can be brought forward soon.”

However, the British Retail Consortium attacked the Bill, promising that an adjudicator will increase costs for consumers while achieving nothing new. British Retail Consortium Food Director Andrew Opie warned, "The supermarket adjudicator will just add costs to retailers and push up shop prices for customers.

He continued, “Food prices are already under considerable pressure from rising global commodity costs and climbing fuel and utility prices. Retailers are doing their best to cushion customers from the full impact of these increases. The extra costs of dealing with a new administrative body will make it even harder to keep price rises away from shop shelves.”

Government Ministers welcome Bill

Nevertheless, government ministers backed the draft and welcomed the assurance a retail adjudicator would bring to suppliers. Farming Minister Jim Paice commented on the consolidationg effect the Bill would have on last year’s code of practice. Paice said, “This Bill will give teeth to the code of practice, will mean that bad practice can be stamped out and that suppliers can raise legitimate disputes confidentially, and without the fear that they’ll be penalised for speaking up through lost business.”

Consumer Minister Edward Davey echoed Paice’s sentiments, “Preventing unfair practices and increasing certainty for suppliers will safeguard consumer interests, as large retailers won’t be able to take advantage of their position of power, as set out in the code.” ***