New adjudication powers would be lengthy exercise

Minister for Small Business, Industry and Enterprise Anna Soubry.  Pic: Stefan Rousseau/PA Wire
Minister for Small Business, Industry and Enterprise Anna Soubry. Pic: Stefan Rousseau/PA Wire
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AN EXTENSION of the limited powers of an adjudicator charged with overseeing relationships between supermarkets and their suppliers would be no quick fix and could require legislation to protect farmers from unfair pricing.

Anna Soubry, Minister for Small Business, Industry and Enterprise, defended the remit of the Groceries Code Adjudicator which many farmers and MPs believe lacks teeth during a Parliamentary debate this week.

The hour-long discussion was led by York Outer’s Conservative MP Julian Sturdy, who believes the Adjudicator is under resourced, has delivered too little since being appointed two years ago and whose remit does not go far enough to protect farmers from unfair practices.

In the most serious cases of unfair practice, the adjudicator can fine large retailers up to one per cent of their annual UK turnover.

But despite overseeing an industry worth £177billion, the Adjudicator only works three days a week and has five employees, Mr Sturdy said, adding that not one investigation had been completed, nor had it made any decisions in any arbitration cases, nor imposed any enforcement measures.

Mr Sturdy said: “The impact of poor practice has been to force producers out of business, increasing our reliance on imported food. Whilst the value of British fruit and vegetable production has fallen by 14 per cent since 2010, imports from abroad have never been higher.

“A Groceries Code Adjudicator that is properly resourced, has the right powers, and is acting proactively in the market has the potential to be a powerful source of fairness in a cut-throat industry. Anything less would be a missed opportunity, and British food producers and ultimately the end consumer will be all the poorer for it.”

Defending the Adjudicator’s resources, Ms Soubry said the Adjudicator, Christine Tacon, and her team are funded by a levy on 10 designated retailers, which totals £1.1m this year and the Adjudicator has the power to levy for more.

“The adjudicator decides for herself what her resource requirements will be for each year, based on her assessment of forthcoming work. They are approved by the Department for Business, Innovation and Skills, and then the amount is levied on the retailers. She is very much in charge,” Ms Soubry, Conservative MP for Broxtowe, Nottinghamshire, said.

The code came about from the work of the Competition and Markets Authority and if there are to be changes to the code, they can only be made by the CMA, she said.

The Government could give the adjudicator additional statutory duties outside the code, she added, but that would involve amending primary legislation and it would have to be debated in Parliament.

A review of whether the GCA’s remit should be extended is due in March 2016.

After the debate, Mr Sturdy said: “Whilst I am disappointed by the Minister’s current stance on this issue, I will continue to campaign to do everything I can to make sure we stamp out unfair practices right across the supply chain, from the farm gate to the end consumer.”

EXTENDING THE GROCERIES CODE

Julian Sturdy believes there are three crucial ways in which the remit of the adjudicator could be extended to help dairy farmers and those most in need in the fresh produce sector.

Firstly, he said, the adjudicator must have the power to initiate its own investigations rather than only acting on complaints.

Secondly, the adjudicator needs to be able to examine the whole supply chain from the farm to the checkout. Currently, only direct supply contracts can be investigated.

Thirdly, the GCA should have the power to investigate and report on the balance of pricing throughout the supply chain, to ensure that all suppliers in the chain are getting a fair deal.

The National Farmers’ Union said it was generally supportive of what the Groceries Code Adjudicator had achieved to date however.

The union’s food chain adviser Christine McDowell said: “The GCA has achieved a lot in a short period – such as getting retailers to restrict forensic auditing of accounts to a maximum two-year period or enabling producers to use the code in contract negotiations, plus many more. Feedback from our members also suggests that she has had a positive impact on their businesses, often acting as a deterrent.

“There are still many challenges within the supply chain and the GCA is one way of tackling them – retailers can, for example, also sign up to our Fruit and veg pledge in the horticulture sector.

“However, it is vital that the Government fully supports the adjudicator so her regulatory powers are robust enough to have a positive effect on the entire supply chain, eradicating practices that have a detrimental impact, both short and long-term, on our industry.”