Suppliers squeezed ahead of new supermarket code

22-02-2010 | UK Farmers Guardian

British supermarkets have been accused of making "pre-emptive strikes on suppliers" ahead of the introduction of the new Grocery Suppliers Code of Practice (GSCOP) this month.

NFU president Peter Kendall said he had heard reports over the fortnight leading up to the code's introduction on February 4 of "how suppliers to major retailers have faced some of the most unreasonable demands for retrospective payments and changes to trading terms we've ever seen".

This was the sort of "hugely damaging" behaviour the new code is designed to stamp out and showed exactly why it was needed, he said.

Kendall said the reports had come from farmers and processors across a range of sectors and involved a number of retailers, although he fell short of naming them.

However, Tesco was named by one anonymous supplier, who told Farmers Guardian they had recently received an email from a Tesco buyer informing them of a one-off 15% price cut to recoup reduced profits over Christmas due to poor weather.

"Recent reports to me about retailer behaviour in the supply chain have demonstrated nothing but bully-boy tactics," Kendall said.

"Retailers are effectively launching pre-emptive strikes on suppliers before the new GSCOP, and the protection it affords, comes into force. Squeezing the very life-blood out of British producers will only reduce supply and in the long-term, affect consumer choice," Kendall said.

A Tesco spokesman denied there had been 15% cuts across its supply base, but could not confirm or deny whether cuts had been imposed in individual cases. He said there was "strong co-operation" between Tesco and its suppliers.

The British Retail Consortium (BRC) did not deny Kendall's claims. BRC director-general Stephen Robertson said the effort and money "retailers are putting into demonstrating they meet the GSCOP's requirements and informing suppliers, shows they accept their responsibilities as major players in the supply chain".

"Retailers want successful, sustainable long-term relationships with suppliers. How else would they get the quantity and quality of goods their customers want," Robertson said.

The strengthened and extended GSCOP, which applies to the UK's 10 biggest retailers and is regulated by the Office of Fair Trading, contains an over-riding principle of fair dealing.

However, the Department for Business, Innovation and Skills (BIS) has launched a three-month consultation on the nature of the "enforcer" that will oversee the code, including whether it should be a new body or part of OFT. This will precede yet another consultation before the relevant legislation can be put in place.

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