The Government has rejected calls to extend the remit of the Groceries Code Adjudicator (GCA) beyond the top 10 supermarkets.
A number of organisations, including the National Pig Association, called for grocery watchdog’s remit to be extended to cover processors and manufacturers in response to a formal consultation on the GCA’s remit.
Announcing its response to the consultation process, the Government said there was not sufficient evidence extending the remit. It said: “On the basis of submissions to the Call for Evidence, we believe that any formal extension of the GCA’s remit would not be appropriate at this time.
“Although there are clearly a number of concerns relating to the experience of some farmers and growers in the supply chain, there is no clear evidence of systematic widespread market failures.
“However, there is significant potential to explore more targeted and proportionate approaches to enable primary producers to survive and thrive. These should go beyond existing reliance on voluntary codes of practice and encourage greater transparency and fairness.”
The Government acknowledged that a number of submissions highlighted the ‘unfair pressures placed on primary producers’, for example, through unfavourable contract terms, delays in payments, and short notice of price reductions and specifications. This led to calls to extend the GCA’s remit to regulate contractual relationships between primary producers and processors or manufacturers and bringing smaller retailers and the food service sector within its remit.
But most large retailers ‘highlighted problems with extending the GCA’s remit and argued against any further intervention’, warning that this could dilute its effectiveness by adding further responsibilities. There were concerns about funding and how any extended role for the GCA could be delivered in practice.
The Government has also announced a ‘collaboration fund’ of up to £10 million as part of a package of measures it said would to help farmers and small producers compete and thrive alongside larger businesses in the food supply chain.
The fund will be designed in consultation with the farming industry and will work by bringing together those interested in co-operation. These groups will be supported by the funding to formally establish, develop or expand, so that farmers and growers can take advantage of new market opportunities to help their businesses thrive.
The move was also announced today in the Government response to the consultation on the remit of the Groceries Code Adjudicator, along with a range of other measures which will come into force to help protect the rights of farmers and small producers, including:
- Introducing compulsory milk contracts between producers and purchasers to help protect dairy farmers by setting out clear terms, including the price for the delivery of milk, the timing of deliveries, the duration of the contract, details of payment procedures, and arrangements for collecting and delivering raw milk
- A requirement that slaughterhouses use a standard grid for the classification of sheep carcasses to help ensure farmers are paid per carcass in a more transparent manner, providing more certainty for farmers in the price they will get for their animals
- A commitment to work with industry to explore improving transparency and access to prices along the supply chain, to help farmers and small producers see if they are getting a fair deal for their produce
- An assessment from the Competition and Markets Authority into whether more grocery retailers could come under the remit of the GCA
- Tackling late payments by highlighting to farmers and small producers the role of the Small Business Commissioner
Farming Minister George Eustice said: “This package of measures is designed to improve transparency and integrity within the food supply chain and to support collaborative business models where producers can come together to strengthen their position or work jointly on specific areas of work.”
Business Minister Andrew Griffiths said: “The measures will be designed with the farming industry and apply to farmers and smaller producers in England and are expected to be brought in later this year. The collaboration fund will open for applications later this year.”
Tenant Farmers Association chief executive George Dunn said: “The Government had an opportunity to ensure proper regulation throughout the supply chain and has simply dropped the ball. The GCA has been doing some great work in tackling unfair practices in the way retailers treat their direct suppliers but there is no protection for indirect suppliers, including farmers, from poor treatment in the supply chain”.
“It is in all of our interests to ensure that we have a fair, sustainable and ethical groceries supply chain and this cannot be left to the vagaries of the marketplace.”
Country Land and Business Association senior rural business and economics adviser Dr Charles Trotman said: “The failure to extend the remit of the Groceries Code Adjudicator to include relationships of primary producers with processers or manufacturers means farmers, who do not have contracts directly with the largest supermarkets, will continue to suffer from the imposition of unfavourable contract terms, delays in payments, and unreasonable notice of price reductions.
“The Government must urgently reconsider and ensure the GCA can hold all those across the supply chain to account for substandard practices.”
NFU president Meurig Raymond said: “The evidence within the GCA’s consultation shows that we have an imbalance of power within our UK supply chains. But the measures that have been announced to address this do not go far enough and it’s an opportunity missed. This, for us, is the beginning of a journey to improve the supply chain for our members.