Norman Lamb MP writes… Fairness: from the farm to the shopping trolley

The Groceries Code Adjudicator Bill was announced in the Queen’s Speech on Wednesday. This is an issue which the Liberal Democrats in general, and Andrew George in particular, have campaigned on for many years. I can remember meeting with farmers shortly after I was first elected back in 2001, and hearing from them the difficulties they faced as suppliers for the biggest supermarkets. A commitment to introduce “a powerful independent regulator of Britain’s food market” featured in our last manifesto (in fact, Labour and the Conservative manifestos both included a similar pledge).
 
Following the Competition Commission’s report in 2008, which highlighted the danger of supermarkets abusing their power by transferring “excessive risk and unexpected costs” to farmers, growers and suppliers, the last Labour government did introduce a statutory Groceries Code of Practice. However, laws aren’t much use without the police and courts to pull up those that break them, and with no body charged with enforcing the Code there was nothing to stop retailers simply ignoring it if they wanted to.
 
That is why I am delighted that this Government is introducing the Groceries Code Adjudicator Bill, which was published last Friday. This will create an independent ombudsman to ensure that the Code is respected – and to sanction supermarkets if they break it. Those sanctions include naming and shaming offenders, and if that doesn’t prove effective then ministers can give the Adjudicator the power to levy fines.
 
The Adjudicator will also be able to hear complaints in complete confidence not only from suppliers but also from third party organisations such as the National Farmers Union or War on Want, for example. This means that suppliers don’t have to fear being singled out by supermarkets for putting their head above the parapet.
 
Supermarkets contribute a great deal to our economy, and bring huge benefits for customers. However, their sheer size and dominance should not be licence to treat suppliers unreasonably.

* Norman Lamb MP is Liberal Democrat Minister of State at the Department of Health

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4 Comments

  • John Carlisle 15th May '12 - 11:31am

    Norman Lamb has hit the nail on the head. They must take responsibility for the whole system they operate in. They also need to be transparent on their pricing and margins. However, unless there are more employee-owned retailers, especially cooperatives, it will be difficult for them to have a genuine moral consciousness.

  • Richard Dean 16th May '12 - 12:01pm

    Funnily enough, I suspect this might be welcome news for supermarkets as well as suppliers, but the way it seem to be presented is very one-sided.

    Supermarkets have no interest in destroying their own suppliers, because by doing so they destroy themselves. But they may also have an imperfect understanding of the realities of suppliers’ businesses – they perhaps cannot distinguish between a supplier complaining in order to increase profit on one hand, and a supplier facing bankruptcy on the other. Maybe opposites also apply. If a supplier destroys a supermarket the alternative is a less efficient distribution system some of whose costs are likely to be borne by the supplier.

    The argument about jobs seems to bring a nationalism into the picture which is perhaps not too relevant. A job here and an unemployed person in Sri Lanka makes the same number of jobs and unemployed people as a job in Sri Lanka and an unemployed person here. We can all benefit from trade.

    To be fair, supermarkets also need to be able to complain about suppliers – who may in some cases be larger than the supermarkets and so have more market power. And every one needs the freedom to go bust – that possibility is one motive for continuous improvement. A new, fair system would potentially allow competition and normal commercial negotiations to occur, benefiting everyone including customers, and avoiding undesirable extreme consequences.

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