Two open government consultations offer the opportunity to argue for greater fairness in supermarket supply chains. Tom Wills explains how Traidcraft are responding, and how other organisations can contribute.
The Groceries Code Adjudicator (GCA) is a regulator that supports fair dealing between the 10 big UK supermarkets and their direct suppliers. It was established in 2013 by a Parliamentary Act that included a provision for the role to be reviewed after three years.
Those three years have passed, and the government is now gathering evidence with a view to answering two questions.
- Is the Groceries Code Adjudicator doing what it was set up to do?
- Is there a case for extending the remit of the Groceries Code Adjudicator?
Traidcraft wants every farmer, worker, and business which is selling into the UK market to actually benefit from their work. Therefore we support the GCA, which has improved how supermarkets purchase from their suppliers. We also want to see the GCA’s remit extended to help support fairer trading practices along the whole supply chain.
The evidence that we will submit to the government will be along the following lines.
The GCA has brought about significant improvements for lots of suppliers, and needs to be retained
One reason for the current review, to use the government’s own language, is to assess “whether to close down the Groceries Code Adjudicator”.
This would be a terrible move. Since 2013, the GCA has done a lot to change the ways that supermarkets deal with their suppliers.
- Between 2014 and 2016, suppliers experiencing issues of unfair dealing dropped from 79% to 62%
- The GCA investigation into Tesco, published in January 2016, found the supermarket guilty of having delayed significant payments to their suppliers for up to 24 months. One of the consequences of this investigation was that Tesco reorganised and retrained their buying team to ensure that they followed better purchasing practices. Recent survey evidence shows that Tesco is one of two retailers to have substantially improved their practices in the past year.
- Morrisons were found to have been requiring their suppliers to pay the supermarket unexplained ‘lump sums’. The GCA intervened, and within a fortnight Morrison’s had contacted suppliers and offered to return the money.
Conversations with governments and campaigning groups all around Europe have highlighted that the GCA is widely regarded as an effective regulator and an example to be followed.
The GCA needs to be empowered to support fairer purchasing in other parts of supermarket supply chains
At the moment the GCA is able to act on unfair practices between supermarkets and their direct suppliers. However, getting food onto supermarket shelves is a complex business, and indirect suppliers such as farmers, exporters and processors all play a significant role.
As it stands, the GCA is unable to prevent direct suppliers to supermarkets from passing costs and risks onto other parts of the supply chain. Since the GCA can’t stop these practices, indirect suppliers are left vulnerable to late payments, last minute changes of orders and requests for one-off ‘lump sum donations’: all practices that retailers are now banned from doing.
This gap in regulation means that costs and risks are being shouldered by the weakest part of the supply chain – usually a farmer or small processor unable to reject unfair terms of trade.
Businesses being forced at short notice to bear unreasonable costs leads to unnecessary bankruptcies, and potentially a noncompetitive groceries sector dominated by big businesses that aren’t incentivised to innovate. The knock-on effect is that UK customers will end up with lower-quality groceries at a worse price.
What can you do?
The government’s evidence-gathering process runs until January 10th 2017. If you have insights into the GCA’s performance to date, and want to let the government know that this valuable regulator shouldn’t be shut down, please respond to this consultation document.
If you can see the benefit of fairer trading practices in the whole supply chain it is vital that you gather and submit evidence into Part 2 of the consultation, here. If insufficient evidence is submitted, the possibility for extending the remit of the GCA may close.
The government is interested in all relevant evidence, so please feel free to respond regardless of whether you fit into one of the categories of ‘retailer’, ‘supplier’ and ‘trade association’. If you are concerned with ensuring that evidence you give is kept confidential do contact BEIS, or Traidcraft, since we are aware that this is an important concern.
Tom Wills is a Policy Officer at Traidcraft. It you want to discuss your submission to the government’s consultation, please email email@example.com.