The danger is that supermarkets will increasingly claw back profits from further down the supply chain through unfair contract terms, depriving many farmers of the revenue they need to run their business.
The long term impact of such unfair practices, as we have seen with the hard-pressed dairy industry, is that the smallest and most vulnerable farmers are driven out of business.
This is not only bad news for our rural communities, but it is also bad news for the entire country as we produce less and less of our own food.
Sadly, it is not only the dairy farmers who are suffering. A recent report from the National Farmers Union tells us that fruit and vegetable growers up and down the country are facing a trading environment which they describe as a “battlefield”.
The value of British fruit and vegetable production has fallen by 14 per cent since 2010, and we are now more reliant on food from abroad than ever before.
Imports of overseas fruit and vegetables have increased by more than 650,000 tonnes in the past four years alone. Any further decline in British food production could have serious consequences for our farming sector and the nation’s food security as a whole.
Sadly, it is becoming increasingly clear that the body set up to make sure that the supermarkets treat their suppliers fairly is not up to the task. The Groceries Code Adjudicator was established over two years ago to enforce the Groceries Supply Code of Practice. However, in that time, it still hasn’t completed a single investigation. Nor has it decided any arbitration cases and nor has it imposed any enforcement measures.
The reasons why are not surprising. The Adjudicator was established to oversee a sector that is worth around £180bn. The British food and groceries industry employs almost four million people — one in every seven jobs in the entire country. It is also our largest manufacturing sector and is even bigger than our car and aerospace industries combined.
It is surprising then that in light of the sheer scale of the industry, the Adjudicator only works three days a week and has a staff of just five. It is also disappointing that the Adjudicator was only given the power to fine supermarkets up to one per cent of their profits after its first investigation had already begun.
The power to fine is not retrospective, so the best the Adjudicator can do is name and shame the supermarket, which is simply not enough.
In order to be taken seriously, the Adjudicator needs teeth to send a strong message.
The greatest problem, however, is the Adjudicator’s extremely restricted remit as it can only help direct suppliers to supermarkets.
As the vast majority of farmers sell their dairy and fresh produce indirectly to the supermarkets through a processor, they are not getting the protection they need from unfair commercial practices.
In January, the Prime Minister promised that the Government would look at ways in which the Adjudicator’s remit could be extended to help the dairy farming industry.
Sadly, nine months later, the Adjudicator’s powers remain the same and the plight of our dairy farmers continues.
It is also disturbing that from the Adjudicator’s own research, the majority of suppliers would not ask for help even if they had been treated unfairly by a supermarket.
This is not because farmers don’t need the help. They do.
It is because most suppliers do not have confidence in the Adjudicator to keep their details confidential, despite being legally bound to do so.
Even more worrying is that 68 per cent of all suppliers fear retribution from the supermarket should they be identified.
If this really is the case, it is clear that something has gone badly wrong. Urgent action is needed to protect our food producers to make sure that the supermarkets can never abuse their dominant market position to get an unfair advantage.
Let me be clear. I am not anti-supermarket, far from it. I know our large retailers often provide a very good deal to consumers. In my constituency around York, many supermarkets help out with community projects, playing an important role in both the local economy and wider society.
However, I am pro-fairness as well and I believe we need an Adjudicator that is up to the task of making sure that everyone in the supply chain gets a fair deal, from the farm-gate to the supermarket check-out.
The Government is due to review the role of the Groceries Code Adjudicator in March next year. With the right resources, powers and remit, the Adjudicator has the potential to be a powerful source of fairness in a cut-throat industry. Anything less would be a missed opportunity and British farmers and ultimately the consumer will be all the poorer for it.
Julian Sturdy is the Conservative MP for York Outer.