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NPA 'disappointed' at Government Adjudicator decision

16th Feb 2018 / By Alistair Driver

The NPA has said it is disappointed that the Government has rejected calls to extend the remit of the Groceries Code Adjudicator (GCA) beyond the top 10 supermarkets.

supermarket trolleyBut it has welcomed moves to ensure transparency within the supply chain and explore the possibility of new codes of conduct.

A number of organisations, including the NPA, called for the Adjudicator’s remit to be extended to cover smaller retailers, as well as processors, manufacturers and the food service sector, in response to a formal consultation on the GCA’s remit.

Announcing its response to the consultation process, the Government said that on the basis of the submissions, it felt any formal extension of the GCA’s remit ‘would not be appropriate at this time’.

“Although there are clearly a number of concerns relating to the experience of some farmers and growers in the supply chain, there is no clear evidence of systematic widespread market failures,” it said.

The Government acknowledged that a number of submissions highlighted the ‘unfair pressures placed on primary producers’, for example, through unfavourable contract terms, delays in payments, and short notice of price reductions and specifications.

But it said most large retailers ‘highlighted problems with extending the GCA’s remit and argued further intervention’ could dilute its effectiveness. There were concerns about funding and how any extended role for the GCA could be delivered in practice.

There will now be a further assessment from the Competition and Markets Authority into whether more grocery retailers could come under the remit of the GCA.

The Government’s announcement went beyond the GCA’s remit and also included:

  • A new 'collaboration fund’ of up to £10 million to help farmers and small producers compete alongside larger businesses by bringing together those interested in co-operation. The funding will help to formally establish, develop or expand the groups.
  • Compulsory milk contracts between producers and purchasers.
  • A requirement that slaughterhouses use a standard grid for the classification of sheep carcasses.
  • A commitment to work with industry to explore improving transparency and access to prices along the supply chain, to help farmers and small producers see if they are getting a fair deal for their products.
  • Tackling late payments by highlighting to farmers and small producers the role of the Small Business Commissioner.

NPA response

NPA chief executive Zoe Davies said: “It is disappointing that the Government did not extend the remit of the GCA, given the weight of calls from across the supply chain and beyond for the Adjudicator to be given more powers to protect primary producers.

“However, it is encouraging that it will be looking at improving transparency across the supply chain. We would certainly be happy to work with the Government to ensure the collection and dissemination of market data can be improved.

“The lack of transparency was one of the main issues we raised in our consultation, particularly around contract pricing and the lack of a price dispute resolution mechanism.

“We asked for a proper code of conduct and advice for producers on dispute resolution and we hope there can now be some progress on this.”

The NPA also welcomed the Government’s commitment to ‘explore the potential for different forms of contractual arrangements, especially long-term and forward contracts, which can help farmers to manage their cash flow and risk’.

“We are concerned, however, that the measures announced today largely ignore the food service sectors, which must be taken into account in any policies around supply chain fairness,” Zoe added.

“We also look forward to seeing how the pig industry will be able to take advantage of the new £10 million collaboration fund.”

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