Food Products (Market Regulation and Public Procurement)

1st reading
Wednesday 19th March 2025 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:39

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That leave be given to bring in a Bill to make provision about the Groceries Code Adjudicator; to require co-ordination between the Groceries Code Adjudicator and the Agricultural Supply Chain Adjudicator; to make provision about public procurement in respect of British food products; to make provision about the labelling of food products; and for connected purposes.

I remind the House of my entry in the Register of Members’ Financial Interests.

In March 1917, at the height of the first world war, the then Prime Minister, David Lloyd George, sent a letter to an Orkney farmer, Charles Paterson. He wrote:

“In the nation’s interest I urge you, at whatever personal sacrifice, to overcome all obstacles, to throw your fullest energies into the work, and to influence and encourage all who assist you, so that every possible acre shall be sown.”

At that time, there was no question at the heart of Government about the vital importance of farmers in the isles and across the country. In the century since, farmers have continued to play their part in supplying the nation’s table, but their incomes have stagnated. The market for agricultural produce in the UK has not been a free market since at least the end of the second world war. Successive Governments have intervened through the payment of public subsidies to farmers, initially in the name of food security and more recently in the name of cheap food for consumers. That intervention has, over the years, distorted the market and allowed a range of unfair practices to be hardwired into the system.

As a consequence, the market today has a handful of behemoth retailers—the supermarkets—at the top, hundreds of thousands of farmers at the bottom and a variety of processors, distributors and others in the middle. Everyone takes their cut and then, at the end of it all, the farmers get whatever is left. The power imbalance between the supermarkets at the top and the farmers at the bottom is more pronounced than any other market I can think of, and it is well documented that those at the top who have the power wield it to their own advantage.

The extensive debate that we have had in this House in recent months has laid bare the shocking truth about the lack of profitability in farming. Just last week a new report from the Food, Farming and Countryside Commission found that real incomes for farmers had stayed stock-still for the past 50 years.

Shortly after the autumn Budget, a group of younger farmers in my constituency came to see me and brought with them their farm accounts. They were despondent in pointing out to me that their businesses earned a net profit of 0.7% on their capital. They were not much cheered when I pointed out that they were doing better than many of their contemporaries, as figures from the Department for Environment, Food and Rural Affairs show that the average return is as low as 0.5%. One of those farmers was the great-grandson of Charles Paterson, a seventh-generation farmer who works the same land as his great-grandfather. We really could not ask for a better illustration of the shift in priorities of our Governments over the past 100 years.

This cannot go on. Farmers are seeing a rapid withdrawal of funding support. In England, the accelerated withdrawal of basic payments, followed by the closure without notice last week of the sustainable farming incentives, has left many farmers desperately worried about the viability of their businesses. Elsewhere in the United Kingdom, the removal of the ringfencing of money given to devolved Administrations for agricultural payments leaves farmers there feeling vulnerable to adverse change. That is why this market now needs direct and meaningful intervention. Without it, we risk losing domestic food production and any notion of food security. If, as the Prime Minister says, food security is national security, his Government should act urgently to allow our farmers to get a fair price for the food they produce.

I was in government when the Groceries Code Adjudicator was set up. I do not think anyone believed that the GCA would be the last word in the regulation of the food supply chain, but we all took the view that it was better to have something than to have nothing. Twelve years on from its creation, the limitations of the adjudicator are apparent for all to see. The office has fewer than 10 staff, all seconded from other public bodies, and it is funded by a levy on supermarkets. To expect an operation of that size to take on some of the largest retail businesses in the country is laughable. It is hardly surprising, then, that businesses supplying supermarkets are reluctant to make complaints, especially when the office has not issued a single fine in its entire existence. Cases that are pursued end up with settlements and non-disclosure agreements.

Since publicising my Bill, I have spoken to a number of producers who have told me about their experience at the hands of supermarkets. Just yesterday, I spoke to a businessman who had been a supplier of Brussels sprouts to a large supermarket. His company had, on the basis of undertakings made to it by the retailer, invested significantly, borrowing £400,000 to build a state-of-the-art packing facility. In 2022-23, that one supermarket accounted for 47% of its business. Then, in February 2023, the company was told by the supermarket that its supply was no longer wanted for that season. For that business, the news was a hammer blow, and despite it being a prima facie breach of the groceries supply code of practice, the GCA initially declined to intervene.

I would love to say that this was an isolated incident, but the GCA annual survey conducted by YouGov suggests that it is not. It found that 42% of suppliers would not raise issues because they believed the retailer would find out and that there would be consequences. The experiences they described included de-listing without reasonable notice, undisputed invoices not being paid according to agreed terms, retrospective changes to supply agreements, running a promotional activity at the supplier’s expense, and much more.

Practice among supermarkets shows a wide variety of behaviours. Seven of the retailers were judged to have improved or at least stayed the same, with Sainsbury’s coming out on top with a net improvement score of 10.34%. Unfortunately, seven others—Home Bargains, ASDA, Tesco, Ocado, Iceland, Morrisons and Amazon— were scored as having worsened by varying degrees, with Amazon’s performance being judged to have worsened by a whopping 21.38%. Amazon was also scored as having complied with the code “consistently” or “mostly” only 46.96% of the time.

Yesterday’s Daily Telegraph reported that ASDA was threatening a “price war” to regain the market share it had lost in recent years. For farmers, that is a chilling prospect. If supermarkets are about to embark on a race to the bottom, we can be pretty sure that it will be farmers, not company executives or shareholders, who will be expected to take the hit.

It is not for us in Parliament to pick a winner in a fight between supermarkets, but they should know that we are watching. Any supermarket that thinks it can rebuild its balance sheet on the back of Britain’s farmers might find itself in front of the Environment, Food and Rural Affairs Committee, and it better have some good answers when it gets here.

My Bill has support from MPs across political parties; it is sponsored by Liberal Democrat, Labour, Conservative, Plaid Cymru, SNP, Green and Democratic Unionist Members. It also has wide geographical support, with sponsors from Shetland to Cornwall and across the four nations that make up the United Kingdom. I am grateful for the support I have received from the farming unions, the Country Land and Business Association, Scottish Land and Estates, the Tenant Farmers Association and the Countryside Alliance. That is a remarkable coalition of people who all understand that if we fail to act now, before too long there may be no industry left to protect.

Charles Paterson’s family in Orkney still works the same land to this day. If we want to keep farming communities alive for generations to come, however, we need to act now to make it happen. That is why the Bill is necessary and why I seek the leave of the House today to introduce it.

Question put and agreed to.

Ordered,

That Mr Alistair Carmichael, Jayne Kirkham, Sarah Bool, Jenny Riddell-Carpenter, Charlie Dewhirst, Sarah Dyke, Ann Davies, Seamus Logan, Ellie Chowns, Jim Shannon, David Chadwick and Tim Farron present the Bill.

Mr Alistair Carmichael accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 June, and to be printed (Bill 203).

National Insurance Contributions (Secondary Class 1 Contributions) Bill (Programme) (No. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7),

That the following provisions shall apply to the National Insurance Contributions (Secondary Class 1 Contributions) Bill for the purpose of supplementing the Order of 3 December 2024 (National Insurance Contributions (Secondary Class 1 Contributions) Bill: Programme):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Gen Kitchen.)

Question agreed to.