Lib Dems Lead Debate on Fairness in the Agricultural Supply Chain

The debate focused on the relationship between farmers and producers and supermarkets/retailers, examining claims of unfair and bullying behaviour by supermarkets and whether the Groceries Code Adjudicator (GCA) and the Groceries Supply Code of Practice (GSCOP) (the regulatory bodies responsible for policing the relationship), are well enough resourced to tackle unfairness in the supply chain.

The GCA currently relies on a small team of six temporary staff seconded from other Ministerial departments to carry out its role.

Some of the main complaints submitted to the GCA by farmers and producers include: delayed payments, no compensation for forecasting errors, de-listing and variations in the orders placed and orders eventually accepted.

During the debate, David Chadwick acknowledged the important role the GCA has played in reducing incidents of supermarkets mistreating farmers in the last 10 years, but pointed to evidence that progress has stalled and that parts of the agricultural supply chain are being left out of the scope of important regulations.   

Currently food processors, packagers and distributors (who often act as a middleman between farmers and supermarkets) are not covered by the GCA and the groceries code.

David Chadwick also highlighted how many farmers had struggled to negotiate price cost increases (PCI) in the wake of increased costs caused by energy & fertiliser inflation, despite record-breaking profits by supermarkets and supermarkets using inflation as a justification for raising prices for customers.

A recent survey on behalf of Riverford found that 45% of farms feared going out of business with 75 per cent of those asked saying treatment by supermarket buyers was one of their top concerns.

Research from Sustain has found that only 5 per cent of farmers want to sell to supermarkets due to having little say over prices and not enough connection to shoppers.

Chadwick also drew attention to the fact that a staggering 67% of farmers have reported fearing being de-listed should they speak out about unfair practices by supermarkets, meaning there is almost certainly an underreporting of incidents to the GCA which undermines its effectiveness.

Drawing on an example of a local producer in his constituency, who doesn’t want to be named due to fears of reprisal by supermarkets, Chadwick described how a local farmer lost out after a major supermarket dropped both the price and the number of deer it was originally planning to buy  – after the farmer had spent years rearing the animals for the supermarkets.

Closing the debate, David Chadwick called for a number of measures to be taken to improve the effectiveness of the GCA and improve the fairness in the relationship between farmers and supermarkets.

These included: increasing the visibility and awareness of the GCA among farmers and producers, ensuring farmers are aware of the confidentiality of reports so are not afraid of being delisted by supermarkets, reducing the GCA’s reliance on seconded staff by allocating its own permanent team, giving the GCA powers to launch their own independent investigations without a referral by farmers, expanding the remit of the GCA and the Code to cover packagers, processors, distributors and manufacturers and examining lowering the £1 billion annual turnover threshold for retailers to be covered by the GCA.

David Chadwick MP said: “All too often local farmers are involved in a David vs Goliath-like battle with supermarkets to secure fair treatment.

“The Groceries Code Adjudicator has made good progress over the last decade in helping to address this imbalanced relationship, but progress has stalled and as food shopping and procurement patterns change it is right that regulation is updated to ensure fairness is at the centre of British supply chains.

“Our farmers are under unbelievable pressure right now, in Wales farming incomes have fallen substantially in the last year. The Government must act to secure the future of the family farm, both food security and the rural economy are reliant on a fresh approach from Ministers.”