Groceries Code Adjudicator

David Chadwick Excerpts

Tuesday 25th February 2025 Westminster Hall

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

I beg to move,

That this House has considered the Groceries Code Adjudicator.

It is a pleasure to serve under your chairmanship, Mr Twigg.

There is a deep unfairness at the heart of our food system. That unfairness stems from the power imbalance between producers and retailers. At one end, the retailers we buy our food from are making huge profits. Last year, the big four supermarkets saw a 97% increase in their profits: Tesco made £2.3 billion, Asda made £1.1 billion and Sainsbury’s made £701 million. That is enough to convince anyone that there is enough money in the till to go around.

As we know, food prices have soared since 2022, yet Welsh farming incomes are actually falling. That is a sign of a food system that generates huge profits for the supermarkets and the big retailers, while the producers at the other end suffer what they must. Farmers and growers carry the risks of food production but do not receive a fair share of the rewards. The people who grow our food deserve to earn a decent living. That is why the Liberal Democrats will keep campaigning to level the metaphorical playing field for farmers.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

The Groceries Code Adjudicator was established by my party, the Liberal Democrats, during that sad time in Government. It was an extremely important achievement designed to protect the interests of farmers and food producers. Some hon. Members will know of my background as a director of the National Farmers Union, and my constituency of Tiverton and Minehead is home to some 1,600 farmers. In recognising that farmers are the lifeblood of the rural economy, would my hon. Friend agree that the GCA’s resources and scope must be expended to ensure it can exercise its investigative powers and correct the imbalance between our farmers and the big supermarket chains?

[David Chadwick]

I thank my hon. Friend for highlighting the achievements of the Liberal Democrats in power, particularly the fact that we have a long record of standing up for rural communities. The physical hills that Welsh farmers have to climb are getting steeper. Energy and fertiliser costs are rising, subsidy schemes are changing and farm incomes are falling. To make matters worse, the Government’s family farm tax threatens to further strain their livelihoods. Those are just a few of the battles that farmers face. Their industry deserves a fair market, and it is for that reason that the Liberal Democrats introduced the Groceries Code Adjudicator during the coalition years.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this debate forward. He is absolutely right to refer to the importance of the Groceries Code Adjudicator. In my constituency of Strangford, we are blessed to have many local suppliers and farmers, which have created jobs and opportunity. They supply to large shops and supermarkets, and are very much an integral part of the community. Does the hon. Gentleman agree that more needs to be done to ensure fair treatment, and to ensure that local suppliers can take advantage of fair payment and commission terms? We need fair play—and we need fair prices for the products we produce.

[David Chadwick]

Absolutely. We need greater transparency down the entire supply chain and fair conditions for everyone involved in the food system. The GCA was established in response to multiple scandals where large supermarkets used their market power to take advantage of local producers. It has helped to improve fairness in the food supply chain. Since its introduction in 2014, the Groceries Code Adjudicator has made significant progress, and the number of issues around the treatment of farmers by supermarkets and retailers has fallen. It is my belief, and that of many farmers and producers that I represent, that the Groceries Code Adjudicator needs to be strengthened and better resourced, and its remit expanded if we are to ensure fairness in our supply chain.

[Several hon. Members rose—]

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

I am grateful to my hon. Friend for giving way because he has come to a very important part of the debate. First, we need proper resourcing of the GCA as it currently exists. Secondly, there is a structural problem with the accountability chain here. The GCA effectively governs the relationship between the middle link, the processors and distributors and the supermarkets. The Agriculture Act 2020 deals with primary producers in that middle link. What we need now, surely, as well as extra resources, is a process by which the whole thing can be rewired together.

[David Chadwick]

I thank my right hon. Friend for his intervention. I agree wholeheartedly. He will be aware that the levy that supermarkets pay to fund the Groceries Code Adjudicator has not been increased since 2018, despite the massive increases in food prices and supermarket profits since then.

[Caroline Voaden (South Devon) (LD)]

In November 2024, research by Riverford Organic Farmers, based in my constituency of South Devon, showed that 61% of farmers are concerned that they will not be operating within the next year but only 25% of them believe the claims that the big six grocers support British farmers. Would my hon. Friend agree that the big six need to do more to support our farming sector?

[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.

--- Later in debate ---

[David Chadwick]

I thank the Minister for his response and his particularly generous offer to listen to further contributions about how we can strengthen the GCA.

I thank all hon. Members for their contributions. The hon. Member for Lichfield (Dave Robertson) talked about the issues facing dairy farmers, which are also relevant in my constituency, and the hon. Member for Salford (Rebecca Long Bailey) and the right hon. Member for Hayes and Harlington (John McDonnell) talked about the impact on the Bakers, Food and Allied Workers Union and people employed in that industry. That is a reminder of just how far-reaching the food system is for us all. It is particularly important for farmers and primary producers, but the importance of properly regulating those relationships extends further than just those areas.

I thank my hon. Friends the Members for St Ives (Andrew George) and for Westmorland and Lonsdale (Tim Farron) for their contributions. I am sure that they will join me in commending Roger Williams, the former Liberal Democrat MP for Brecon and Radnorshire, for the part that he played in securing the Groceries Code Adjudicator.

There is clearly broad consensus that the introduction of the Groceries Code Adjudicator has been a positive step forward for British farmers. Fairness in the agricultural supply chain is essential and benefits us all, whether we are consumers, farmers or communities relying on local produce. It is still my firm belief that we must do more to strengthen the current regulations and improve the resources behind them. We cannot afford to sit back and allow the power imbalance between producers and retailers to persist. We need to ensure that bullying behaviour by large corporations becomes a thing of the past.

There is still so much work to be done, and I am committed to continuing, throughout this Parliament, to press the Government to introduce stronger measures to protect farmers and producers, who are the cornerstone of rural communities and the rural economy that they support. Let us continue to work together to create a fairer and more sustainable food system that uplifts everyone, from the fields to the supermarket shelves.

Question put and agreed to.

Resolved,

That this House has considered the Groceries Code Adjudicator.