U.K. Suppliers May Get Protection From Retailers
Retailers are obliged to convince shoppers they are getting low prices and value for their money while convincing investors they are achieving maximum profits. Along the supply chain, everyone needs to achieve the same objectives. At the end furthest from retailers, producers and farmers have the least negotiating power. This can lead to factory farms, economies of scale, efficiency savings and doing more for less (insert your own cliché) in the name of free markets.
A new Grocery Code Adjudicator may level the British playing field, ensuring supermarkets can't "scrap arrangements with suppliers at the drop of a hat," according to business minister Norman Lamb. Reports in The Grocer, www.just-food.co.uk and The Guardian expand on the development. Mr. Lamb said supermarkets' power must be balanced with responsibilities, getting the best possible deals and passing them on to consumers while behaving "fairly and lawfully."
While he and the Food & Drink Federation (FDF) cited the potential for increased innovation and investment, the British Retail Consortium (BRC) said likely additional costs could stifle such outcomes. "A lot of little pieces of red tape combine to make one big burden" that "duplicates an existing supply code of practice and writes a blank cheque on behalf of the retail sector." Andrew Opie, BRC food director, insisted the U.K. supply chain is a scene of "collaboration not conflict" and denied retailers abuse their power.
The Groceries Supply Code of Practice (GSCOP) protects small suppliers from enforcing the code and "speaking out about unfair practices" according to FDF director of communications, Terry Jones. It would be the adjudicator's responsibility to oversee GSCOP's implementation.
Back in January, The Guardian said that farmers endorsed the need for an adjudicator, "accusing big supermarkets of driving down their prices below the cost of production and they want to see an end to what they regard as unfair practices." The adjudicator could "help ensure fairness among supermarkets, suppliers and consumers, and find ways to put a brake on food price inflation." Some politicians claimed consumers would also benefit because there would be less confusion and "bumper profits" made by supermarkets would not come at the expense of the public.