The Queen's speech: will the Groceries Code work?
Funds absorbed by the Groceries Code Adjudicator leave less money for retailers’ supply chains.
The way the Government implements the new Quango, the Groceries Code Adjudicator, will be a real test of its oft-stated commitment to better regulation. We already have the most regulated grocery sector in the world and the new Adjudicator has the potential to add unnecessary burdens to companies that have been key in creating jobs and helping hard-pressed consumers cope with the economic downturn.
It’s in retailers’ own interests to have excellent relationships with their suppliers. They depend on a successful and resilient supply chain to keep their shelves stocked with the produce consumers want to buy. This relationship is backed up by the Groceries Supply Code of Practice, which sets legal conditions on contracts with suppliers and includes the right to independent arbitration. It’s worth remembering the bulk of our products are sourced from large, often multi-national food companies, not direct from farmers. It seems bizarre these companies, many bigger than the retailers, require more protection.
The proposed Adjudicator is in danger of adding to the cost and bureaucracy of running a grocery business without adding to the strong protection which already exists for suppliers. As the Government pushes ahead with the legislation to create the Adjudicator, the priority must be to minimise the burden it threatens to impose.
It should only be able to pursue specific complaints from suppliers which have direct relationships with the retailers, and which are related to the Groceries Code. Allowing third party complaints would open retailers up to malicious campaigns and fishing expeditions from those without full knowledge of the agreements involved, at a great cost to all parts of the grocery supply chain. Funds absorbed by the Adjudicator leave less money for retailers to spend where it matters most – on investing in their supply chains and keeping costs down for consumers.
Andrew Opie is the British Retail Consortium Food Director.