The groceries code adjudicator hopes to curb the excesses of supermarkets in their dealings with suppliers without necessarily invoking her considerable powers to mount formal investigations and impose hefty fines.
Christine Tacon told a farming conference at Thainstone Centre, Inverurie, that much could be achieved by working through the compliance officers that all the major supermarkets have now employed to deal with complaints from suppliers.
“I’ll be adopting a softly, softly approach in the first instance to give supermarkets the opportunity of addressing any breaches of the groceries supply code of practice,” Ms Tacon said at a conference, held to mark the 40th anniversary of Aberdeenshire-based animal feed company, Norvite.
“If I don’t have to carry out any investigations or fine anyone, it won’t mean that I’m not doing my job. I’m confident that the threat of investigation and a possible fine will be enough to achieve many of the changes which suppliers have been demanding to ensure a fairer balance of power in the grocery supply chain.”
But she made it clear that she would not hesitate to take the appropriate action if supermarkets failed to address any unfair practices brought to her attention.
“However, I can only take action if suppliers tell me what is going on,” she stressed. “If I don’t know about alleged abuses of the code, there’s nothing I can do about it.”
Ms Tacon acknowledged that a fear culture existed among suppliers and promised anonymity to ensure supermarkets could not subsequently penalise suppliers who lodged complaints.
The UK farmers’ unions have been calling for the appointment of a grocery ombudsman for many years and their pleas were supported by the Competition Commission following an investigation in 2008 into allegations of practices that were deemed detrimental to the consumer.
The grocery code covers the activities of the UK’s 10 biggest supermarkets with a turnover of more than £1 billion and Ms Tacon has the power – still to be ratified by Parliament following a three-month consultation period – to impose fines of up to 1% of turnover which, in the case of Tesco, could amount to £500,000.
But the adjudicator has no powers over price setting and can only intervene in direct dealings between retailer and supplier.
The code prohibits any variation to supply agreements without notice (such as demanding lump sums after a deal is agreed) and includes payment terms, limits on payments for shrinkage or wastage, no listing fees, compensation for forecasting errors, no position payments except for promotions and no over-ordering at promotional prices. Suppliers should not be expected to be the predominant funders of promotions.
Ms Tacon said the UK was fortunate to have secured a code of practice backed by legislation which was the envy of other countries which were closely monitoring the development.
“The misuse of power by major retailers is a global problem and not just a feature of the UK market,” she said. “Other countries are watching with interest to see how we handle it in the UK.”
Norvite has also announced an industry scholarship fund to enable an agricultural student to be selected each year to undertake research for the company.
The first recipient is 18-year-old Ross Learmonth of Methlick, Aberdeenshire, who was last week awarded the Royal Northern Agricultural Society’s annual student award for a farmer’s son. Ross is in his third year at SRUC Craibstone studying for a BSc in agriculture.