Written evidence submitted by the Food
Ethics Council
1. The Food Ethics Council (FEC) is a charity
that provides independent advice on the ethics of food and farming.
Our aim is to create a food system that is fair and healthy for
people and the environment. In pursuit of this aim we:
research and
analyse ethical issues;
mediate between
stakeholders;
develop tools
for ethical decision making; and
act as honest
brokers in policy and public debate.
2. The 14 members of the FEC are all leaders
in their relevant fields, and appointed as individuals. They bring
a range of expertise to our work, from academic research through
to practical knowledge of farming, business and policy.
SUMMARY
3. On the basis of recent and current work-especially
our Food and Fairness Inquiry—the FEC believes that:
establishing
an effective Groceries Code Adjudicator (GCA) will be an important
step towards addressing the unfairness experienced by farmers
and other suppliers;
the GCA should
be able to initiate investigations on the basis of credible evidence
that the Groceries Supply Code of Practice (GSCOP) has been breached,
irrespective of the source of the evidence;
the GCA should
from its inception have the power to impose proportionate financial
penalties; and
in effectively
discharging its core role of protecting the consumer interest,
the GCA can also contribute to addressing adverse employment conditions
in the food sector, and to promoting environmental sustainability.
THE NEED
FOR A
GROCERIES CODE
ADJUDICATOR
4. In July last year the FEC published "Food
Justice", the report of our Food and Fairness Inquiry,
which was a year-long investigation into social justice in food
and farming. The inquiry was undertaken by a committee comprising
leading food industry figures such as the Chief Executive of the
Food and Drink Federation, and senior officials from the British
Retail Consortium and the National Farmers' Union, together with
representatives from civil society, the public sector and academia.
One of the report's main themes was the extent to which corporate
consolidation has contributed to the severe and varied social
injustice that characterises much of today's food sector.
5. The inquiry received substantial evidence
of the adverse consequences of retailer concentration for farmers
and other suppliers—including reduced margins, additional
costs, unreliability of contracts, and the transfer of risk. Many
of these experiences fall within the provisions of the GSCOP,
so the effective enforcement of the GSCOP—which is the role
of the GCA—will be an important step towards addressing
this facet of unfairness in the food sector, and thereby safeguarding
the interests of consumers.
PROVISIONS RELATING
TO INVESTIGATION
6. One of the main concerns that stakeholders
from business and civil society have expressed in response to
the Government's proposals is that the approach to protecting
suppliers' anonymity is inadequate. It is suggested that because
many suppliers are in effect wholly dependent upon their relationships
with the retailers that they supply, they will be reluctant to
take complaints to the GCA unless they are confident that the
retailer will not be able to deduce the identity of the complainant.
Our experience in conducting the Food and Fairness Inquiry confirmed
just how far-reaching this anxiety on the part of suppliers can
be: one supplier explained that he could not even submit anonymised
evidence to our inquiry committee, because of the perceived risk
of jeopardising his relationship with his retail partner. If a
supplier feels unable to submit evidence to a body that has no
intention of pursuing the matter with the retailer (or in any
other way), it is not hard to imagine how much more anxious they
will feel about the prospect of triggering an investigation into
the retailer concerned.
7. Confidence of anonymity on the part of suppliers
is of course essential if the GCA is to function effectively.
We therefore believe that the criterion for determining whether
an investigation can be initiated should be the credibility
of the evidence presented to the GCA, rather than its source.
Removing the restriction on appropriate sources in this way would
go a long way towards addressing the concerns about supplier anonymity.
PROVISIONS RELATING
TO ENFORCEMENT
8. Another widely-shared concern is that, contrary
to the government's assessment, the threat of adverse publicity
will not prove an adequate deterrent against unfair practices
by retailers. While the FEC does not have the same kind of direct
experience to bring to bear on this issue, we do find the arguments
in favour of the proportionate use of financial penalties persuasive.
There has been media coverage of unfair practices by large retailers
in the past, and yet the problems persist. Also, financial penalties
are a routine element in the enforcement of statutory regulations,
and there does not appear to be any compelling argument as to
why there should be an exception in this case. On these grounds,
we believe that the power to impose financial penalties should
be available to the GCA immediately, rather than held in reserve
as a "residual power".
WIDER CONSIDERATIONS
9. We recognise that the Committee's primary
interest will be in the effectiveness of the GCA in discharging
the function identified by the Competition Commission—protecting
the interests of consumers by ensuring that retailers do not transfer
excessive risk or unexpected costs to their suppliers. However,
elements of our recent and current work suggest that an effective
GCA will also bring wider benefits to consumers and the wider
public. In addition to the difficulties experienced by suppliers,
our Food and Fairness Inquiry also considered evidence of how
retailers' demands for flexibility contributed to the increasing
casualisation and insecurity of food sector employment. Price
and standards pressures, coupled with flexible arrangements like
"just-in-time" delivery, short lead times and last-minute
changes to orders have pushed many producers to transfer risk
onto their workers—in the form of higher performance standards
and less favourable contractual arrangements. The combined effect
is to worsen the employment conditions of the most vulnerable
food sector workers, and to exacerbate the labour shortages that
afflict much of the sector by making it unattractive to job seekers.
An effective GCA could therefore play an important role in addressing
these wider employment-related issues, which represent real threats
to the sustainability of our food sector and so to the interests
of consumers as well as producers and workers.
10. The FEC's current work on sustainable livestock
suggests that the GCA could also make a valuable contribution
towards promoting environmental sustainability. A key element
of the Government's approach is to ensure that natural resources
are correctly valued, so that production costs reflect resource
intensity. Prices will in turn reflect these more realistic production
costs, and consumer behaviour will be influenced—or "nudged"—accordingly,
in the direction of more sustainable diets, to the benefit of
consumers and the wider public.
11. However, the fact that farmers are in a weak
bargaining position within food supply chains limits their capacity
to pass higher resource costs down to retailers—and so undermines
the potential impact on consumer behaviour. The viability of efforts
to place a higher value on natural resources, and the effectiveness
of these efforts in promoting sustainable consumption, depends
on ensuring that costs and rewards are shared fairly along the
value chain. By effectively addressing the unfair consequences
of farmers' relative weakness in their dealings with retailers,
the GCA can therefore support an important strand of the government's
sustainability agenda.
15 June 2011
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