Groceries Code Adjudicator

Ann Davies Excerpts

Tuesday 25th February 2025 Westminster Hall

[David Chadwick]

I thank my hon. Friend for her intervention. She is absolutely right to highlight the power imbalance between the producers and the retailers. It is quite right that she also focuses on the important research that has been done on this topic by organisations like Riverford. The evidence they have provided has been crucial in helping us push forward the campaign for fairer prices for producers.

It is my belief, and that of many farmers and producers I represent, that the Groceries Code Adjudicator needs to be strengthened, better resourced, and its remit expanded if we are to ensure fairness in our supply chain.

[Ann Davies (Caerfyrddin) (PC)]

As the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick) mentioned, Welsh Government figures show that income fell for Welsh farmers by 34% between April 2023 and March 2024 and the dairy income by 59%. Does he believe we should safeguard all future food production in Wales? Welsh farmers should be able to rely on a fair deal for the products and, as Elfyn Llwyd called for 10 years ago, the regulatory bodies should be made to support that.

[David Chadwick]

I thank the hon. Member for her intervention. She is absolutely right to draw attention to the plight of Welsh farmers. Their livelihoods are under threat. That is why it is so important that we ensure greater fairness in the supply chain for them, to ensure that they get a fair price for what they produce, and that the Government are fully aware of the impact the tax changes they wish to make will have on the rural communities we represent.

Rural communities are really suffering at the moment. We know that constituencies like my own are losing thousands of young people every year because there are fewer and fewer jobs to go around. The long-term consequences of that are terminal. That is why it is so important that we ensure that farming, the engine of the rural economy, continues to generate profit and jobs throughout the rural economy.

The GCA has improved the rights of farmers, but producers still report bullying behaviour by major suppliers. Just a few examples of the ongoing mistreatment of producers: a delay in payments—sometimes farmers and producers are not paid for up to and sometimes exceeding 45 days; no compensation for forecasting errors; de-listing; changes to orders placed and orders eventually accepted. It is a story of David versus Goliath.

With six major buyers and 14 retailers covered by the GCA, the supermarkets have often been accused of using their collective buying power to force thousands of farmers and producers to plough on with prices that have fallen below the cost of production. Supermarkets helped themselves to a 97% surge in profits in the last year alone. They passed on higher prices to customers during the inflationary crisis, yet they are not handing on a fair share of that to producers.

I am raising this issue after a local farmer told me how a supermarket went back on its pledge to buy animals he had spent years rearing, leaving him at a loss. That is not a small loss for a local farmer. The costs involved in raising livestock to maturity are immense, and the losses when supermarkets change their mind are damaging to local producers. A recent survey on behalf of Riverford found that 45% of farmers feared going out of business, with 75% of those asked saying that treatment by supermarket buyers was one of their top concerns. Research from Sustain has found that only 5% of farmers want to sell to supermarkets due to having little say over prices and not enough connection to shoppers.

The consequences of unfair practices extend far beyond individual farms. The UK’s food security is at risk when farmers are unable to make a living from their work. As more farmers are forced out of business, we become increasingly reliant on imported food, which can be subject to price fluctuations and supply chain disruptions. This brings me to the role of the Groceries Code Adjudicator. While the GCA and the groceries supply code of practice—I will refer to this as the code—are highly regarded among farmers and the rest of the industry, I often hear from local producers in my constituency that they feel that the GCA does not have all the powers it needs to fully level the playing field between farmers, producers and retailers.

Beyond powers, there remains work to be done on increasing awareness of the GCA among farmers. Although awareness of the GCA and its roles has increased since 2014, it has stalled recently, and a significant number of producers still do not fully understand its role. More worryingly, many farmers still feel reprisals for reporting breaches of the code. A staggering 67% of farmers have reported fearing being de-listed should they speak out about unfair practice by supermarkets. That means that there is almost certainly an under-reporting of incidents to the GCA, which undermines its effectiveness.

More needs to be done to improve confidence in the system for producers and to enable the GCA to instil understanding and trust in its role. That also extends to the requirement for the GCA to have received a complaint to launch a report. People I speak to in the industry would like the GCA to have the ability to launch its own investigations without having to wait for a farmer to report malpractice first. An example of using that power in practice could be launching an investigation into the recent issues with Amazon or concerns over the chicken meat supply chain.

The parameters of the GCA and the code are insufficient in an ever-changing food market. The inclusion of Amazon into the 14 suppliers covered by the GCA was a welcome move, but given Amazon’s low level of compliance with the code, it raises serious questions about whether other significant retailers who make less than £1 billion in revenue from the food system are falling through the gap. Likewise, there are serious concerns that food processors, packagers and manufacturers who act as the middle people between farmers and retailers are also falling through the gaps when it comes to regulation, despite collectively supplying over half of Britain’s food.

The GCA’s seven golden rules have been widely welcomed by the sector. To protect suppliers, the rules should be fully incorporated into the code, rather than only being guidelines. This needs to happen quickly, because suppliers are continuing to experience difficulties in cost price increase negotiations as a result of the ongoing inflation crisis we find ourselves in the middle of. The supermarkets are willing to use energy and fertiliser price inflation as justification for increasing prices for customers, but are seemingly unwilling to pay farmers a fair price that recognises those changes and the increased input costs for farmers.

The Government must strengthen the Groceries Code Adjudicator and the groceries code to ensure that we have true fairness across supply chains. First, the Government can improve the visibility of the GCA and awareness of its work. The GCA must give farmers the confidence to report issues and to know that they will be handled confidentially, especially as many farmers feel that they may be punished or blacklisted for making complaints. Secondly, the GCA only has seven members of staff, including the adjudicator himself, yet is responsible for regulating an industry worth billions of pounds.

The GCA’s reliance on temporary and seconded staff hinders its ability to enforce the code. Giving the GCA a dedicated staff team would allow it to respond effectively at all times and to build and retain specialist knowledge. Likewise, the GCA should not have to wait for a producer to report malpractice. If it suspects that retailers are not complying with the code, let it launch its own independent investigations.

We should also move to expand the remit, as over half of the food being supplied by packagers, processors, distributors and manufacturers and in several other key areas of the food supply chain still falls outside of the regulation. The seven golden rules have been rightly welcomed across the industry, but many concerns remain that those are only guidelines set by the GCA, rather than forming part of the code itself. Legally incorporating them into the code would help to ensure that producers are fully covered when it comes to reports of unfair cost-price negotiations.

Overall, the Groceries Code Adjudicator is improving the relationship between farmers and large retailers, but as our food market evolves, so too must the GCA. By expanding its remit, providing additional resources and enhancing its enforcement powers, the Government can ensure that the GCA truly works for farmers and producers, and ensures fairness in the food supply chain. Let’s give our food system the fair market it needs, let’s give our rural communities the support they need, and let’s make sure that the GCA remains a strong and effective safeguard for the future of our food system. I look forward to other hon. Members’ contributions and the Minister’s response.

Closure of High Street Services: Rural Areas

Ann Davies Excerpts

Wednesday 5th February 2025 Westminster Hall

[Jamie Stone]

That point is exceptionally well made. From little acorns, mighty oaks grow, and in the old days a good bank manager would specialise in spotting a potential business that was going to grow, which in turn benefited the bank. We all know of examples over the last 30 or 40 years where that happened.

Banking hubs are not a universal solution, however. In my constituency, the last bank branch in the county of Sutherland, Bank of Scotland in Golspie, is about to close. When it was looked at for a banking hub, it was deemed too small. There is not going to be a banking hub because it did not fit the stats. That means that the whole county of Sutherland—a vast county in the UK—will not have one single bank branch. As I say, access to cash is not the paramount function of banking services; cash access is just the tip of the iceberg in solving the problem of closed branches. It is the other functions I mention, such as face-to-face services, that provide the local community with an invaluable service. The economic impact of these closures cannot be overstated.

High streets are more than just retail hubs; they are engines of the local economy. Returning to my constituency, in the two large towns of Wick and Thurso, which are the largest population centres, high street businesses provide jobs. My two daughters have worked in shops in my hometown of Tain—one in a chemist, the other in a fruit and vegetable shop. The high street attracts visitors who contribute to the local economy—one thinks of Monmouth in that respect.

When these services disappear, so the jobs go. The threat of having to move south when the tourists leave at the end of the tourist season affects the highlands. I know of people who had a summer job; when the tourists go, away they go too, and they may not come back again. That casts that dark old shadow of highland and island depopulation, which the hon. Member for Na h-Eileanan an Iar (Torcuil Crichton) will know well. It haunts all of us in the more remote areas of Scotland.

[Ann Davies (Caerfyrddin) (PC)]

Carmarthenshire county council secured half a million pounds through the UK shared prosperity fund in August 2024 to carry out improvement works in Carmarthen town centre, along with match funding improvements in ten of our rural market towns. That money is being used to repair pavements, improve car park entrances and improve the attractiveness of the town centre—improvements that we hope will improve the footfall and tourism within these towns. As we know, however, SPF is due to end at the end of 2026. Does the hon. Gentleman agree that the Government should set out their plans for the replacement of the shared prosperity fund, to ensure that our high streets and town centres continue to receive the investment they need to improve and increase footfall?

[Jamie Stone]

That is a wise point, and I have no reason to doubt that there will be sympathetic ears on the Government Benches—at least, I very much hope so; I do not see why there would not be.

The closures I talk about and the jobs going discourage investment in our towns and regions. Why would a new business choose to set up shop in a town where the high street no longer has high levels of footfall? Why would they open a shop in that street if nobody is going to be there? Those ripple effects extend beyond immediate job losses; they discourage investment in the future.

With fewer businesses operating locally, supply chains are disrupted. This affects farmers, tradesmen and other small businesses who might well rely on high street outlets to sell their goods, and creates a vicious circle that is very hard to break. Money spent in the local economy stays in that local economy. A recent Visa study says that for every £10 spent at independently owned local businesses in the UK, around d £3.80 is retained within the local area. That means local banks, local solicitors and other people supplying that business.