Written evidence submitted by the National
Farmers' Union, Scotland
1. NFU Scotland (NFUS) represents 9,000 farmers,
crofters and growers across Scotland. We welcome the opportunity
to comment on the Draft Groceries Code Adjudicator Bill.
2. NFU Scotland has pushed for the creation of
a supermarket adjudicator since 2004.
3. In the main, supermarkets deal directly with
food and drink processors, not with farmers. However, the relationship
between supermarkets and their direct suppliers has a direct impact
on the economic viability of farm businesses. This relationship
can work very well, benefiting every link in the supply chain.
However, there is evidence that the imbalance in negotiating strength
between supermarkets and the rest of the supply chain can lead
to abuses of power. There has been no effective mechanism to address
these situations. The Scottish food industry, rural communities
and consumers therefore needs the introduction of an independent
ombudsman to enforce the Groceries Supply Code of Practice and
to police fair trade in the UK food supply chain.
4. In summary, the view of NFU Scotland is:
The GCA must
have the ability to act proactively.
The main body
of work for the adjudicator should be in monitoring patterns of
behaviour, as opposed to monitoring individual supplier-retailer
relationships.
NFU Scotland
believes a system of post-dispute monitoring by the adjudicator
is necessary.
The Groceries
Code Adjudicator must have the power to impose fines on retailers
who are found to be in breach of the Groceries code.
NFU Scotland
believes that annual reporting from the adjudication body needs
to go further than simply outlining how many investigations took
place over the year.
BACKGROUND
5. NFU Scotland welcomes the draft GCA bill,
as presented to Parliament in May 2011.
6. That being said, there are a number of areas
where NFU Scotland believes the bill is prohibitive in the pursuit
of a positive and effective role for the GCA. This submission
makes a number of recommendations to addresses those elements.
THE REMIT
OF AN
ADJUDICATOR AND
INITIATING AN
INVESTIGATION
7. NFU Scotland believes that to be effective,
the GCA must have the ability to act proactively.
8. Under the draft bill, the adjudicator relies
solely on evidence presented by suppliers (or publicly available
information) when deciding whether or not to initiate an investigation.
In this scenario, NFU Scotland believes that the likelihood of
a complaint being made by a single supplier under this draft bill
is small.
9. As a single retail contract may be supporting
a large proportion of a supplier business, a climate of fear undoubtedly
exists around making a complaint. Furthermore, supermarkets have
a preference to deal with just one or two suppliers within a commodity
and so it is difficult to see how anonymity can be protected should
a complaint come directly from a supplier. NFU Scotland believes
that it is for this reason that no complaints were made under
the former Supermarket code of practice.
10. As a result, NFU Scotland believes that the
main body of work for the adjudicator will be in monitoring patterns
of behaviour, as opposed to monitoring individual supplier-retailer
relationships.
11. Therefore, the role of the adjudicating body
should be defined in a way that allows credible evidence from
third parties to be used to initiate an investigation.
THIRD PARTY
REPORTING
12. To allow evidence from third parties to be
used to initiate an investigation offers a number of significant
benefits. Firstly, allowing third party reporting would help to
protect the anonymity of suppliers making a complaint. As mentioned
above, NFUS suspects that the lack of complaints currently made
are due to suppliers fearing retaliatory action from the retailer
to which they make a complaint. By allowing third parties to submit
credible evidence to the adjudicating body, the anonymity of suppliers
can be protected. This is essential to the success of the adjudicating
body.
13. A further benefit of third party engagement
may be that there is a positive impact in terms of resource efficiency
for the adjudicator. NFU Scotland understands from the draft bill
that the adjudicator is likely to have limited resources. Allowing
trade organisations and NGOs to assemble a body of evidence, for
presentation to the adjudicator, may relieve the initial administrative
body that comes from initiating an investigation.
PROTECTING ANONYMITY
14. NFU Scotland believes that protecting the
anonymity of suppliers is key to the entire adjudication process.
This will be particularly difficult in Scotland where in some
commodities there may be only one or two suppliers in a product
category to a retailer. If anonymity breaks down it would be easy
for suppliers to fall victim to retaliation from supermarkets,
damaging, and potentially ending, an important commercial relationship.
While de-listing would presumably result in a separate investigation
under the Groceries Code, it is arguable that a business relationship
would not survive this in any case. It is critical that the adjudicating
body at all times through the investigation process protects the
anonymity of suppliers.
15. NFU Scotland believes a system of post-dispute
monitoring by the adjudicator may be appropriate to prevent further
breaches if a supplier-retail business relationship has been harmed
in any way.
POWER TO
LEVY FINES
16. NFU Scotland believes that the Groceries
Code Adjudicator must have the power to impose fines on retailers
who are found to be in breach of the Groceries code. While "naming
and shaming" supermarkets will function as a deterrent to
some degree, NFU Scotland believe the general public will only
truly appreciate negative publicity if a "fine" amount
is attached. Without a system of fines, media attention is likely
to be minimal and so too the fear of reputation damage from the
retailers. These fines must be flexible enough to be considered
on a case by case basis, but large enough to function as a deterrent.
NFU Scotland believes that naming and shaming will only work if
carried out hand in hand with fining.
MEASURING EFFICIENCY
17. NFU Scotland believes that annual reporting
from the adjudication body needs to go further than simply outlining
how many investigations took place over the year. The report should
be as full and frank an account as possible that details resulting
outcomes from investigations. By simply outlining the number of
investigations that have taken place the analysis of the adjudicator's
effectiveness as a body may be skewed.
ADJUDICATOR STAFFING
18. The draft bill outlines that the intention
is to staff the adjudicating body by secondment by the Secretary
of State or the Office of Fair Trading. NFU Scotland requests
that staff from Defra are also considered for secondment. This
would ensure there are staff available with knowledge/experience
of the interests of growers/suppliers.
TIMESCALE
19. NFU Scotland is keen to stress the importance
of a rapid introduction of a Groceries Code adjudicator, and would
like to see the bill fast tracked within the next session.
15 June 2011
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