The new Grocery Suppliers Code of Practice just introduced by the Competition Commission has only gone part of the way towards breaking the arm-lock supermarkets have over their suppliers, a Welsh farmers’ leader said on Friday (5 February).
Farmers’ Union of Wales president Gareth Vaughan welcomed the code which was introduced yesterday. “It should provide retailers with clear guidelines for dealing fairly with suppliers.
“But it also serves to strengthen the union’s demands for the Government to take further prompt action and appoint an independent ombudsman with real teeth to make sure the supermarkets adhere to the guidelines.
“It is only then that we can be confident that their arm-lock has been broken once and for all. It’s almost nine years since Tony Blair told farmers the supermarkets had an arm-lock on us and promised it was something ‘we have got to sit down with them and work out’.
“However, recently reported actions of some supermarkets that have made the most unreasonable demands for retrospective payments and changes to trading terms illustrate that we still have some way to go to solve this big issue.”
Meanwhile, the FUW is strongly supporting Ynys Môn’s (Anglesey) Labour MP Albert Owen’s Private Member’s Bill, to be debated in the Commons on 5 March, which will provide the perfect opportunity to appoint a Supermarket Ombudsman, said Mr Vaughan.
“Mr Owen’s Grocery Market Ombudsman Bill will enable the Government to implement the Competition Commission’s recommendation for the creation of a new independent arbiter with the power to settle disputes between major retailers and their suppliers.
“The Bill has received wide cross-party support and was sponsored by MPs from Labour, Conservatives, Liberal Democrats, Plaid Cymru and the SDLP. It has also been warmly welcomed by the FUW and a number of significant charities, consumer organisations and business groups.”
Nearly six years ago the FUW joined 16 other farming, consumer, development and environmental organisations to form the Breaking the Armlock Alliance and demand stricter controls over the major supermarkets’ trading practices, particularly to stop them passing on unreasonable costs and demands to farmers and growers in the UK and overseas.
The alliance – which also includes ActionAid, Banana Link, British Independent Fruit Growers Association, farm, Farmers for Action, Farmers’ Link, Friends of the Earth, Grassroots Action on Food and Farming, International Institute for Environment and Development, National Federation of Women’s Institutes, National Sheep Association, New Economics Foundation, Pesticide Action Network UK, Soil Association, Small and Family Farms Alliance and WyeCycle – launched its campaign at a parliamentary briefing hosted by Andrew George MP on the 16 March 2004.
“But as far back as back as 2000, a Competition Commission report acknowledged the biggest supermarkets were bullying their suppliers and since then mergers and buy-outs have tipped the power balance even further in favour of the retail giants,” said Mr Vaughan.
In May 2006, following public pressure, the Office of Fair Trading referred the UK grocery retail market for a fresh market investigation by the Competition Commission which completed its inquiry and published its final report in April 2008.
It found supermarkets guilty of transferring unnecessary risks and excessive costs onto their suppliers. In its proposed remedies the commission recommended a new Grocery Supply Code of Practice (GSCOP) – to replace the previously discredited Supermarket Code of Practice – and the establishment of an ombudsman to police the new code.
Mr Vaughan said: “Our experience has shown that it is the supplier who has to bear much of the costs when supermarkets decide to launch price wars. Consumers are no doubt happy to see prices fall, and I am sure that most believe that it is the supermarkets that take a cut in their own profits on individual items to try and win a greater market share.
“But I don’t think they would be so happy if they realised that it is the farmers and suppliers further down the chain that have their profit margins squeezed to allow the supermarkets to make even bigger profits, threatening future food security issues.”
