Groceries Supply Code of Practice

Debate between John McDonnell and Greg Smith

Monday 22nd January 2024 Westminster Hall

[Greg Smith (Buckingham) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Murray, and to follow the powerful speech by the hon. Member for Ceredigion (Ben Lake). I thank the hon. Member for Neath (Christina Rees) for the powerful way in which she opened today’s debate on behalf of the Petitions Committee. As has been mentioned, the petition has been signed by over 112,000 people. Although I have no formal declaration of interest, I draw the House’s attention, for transparency’s sake, to the fact that my wife’s family are farmers and I chair the all-party parliamentary group on farming.

In fear of replicating some of the arguments that have already been made by other hon. Members, the point I really want to land today is that this is fundamentally about fixing a broken market. It is about ensuring that there can be a functioning market between our farmers and those that buy their produce—be that food processors, retailers or the supermarket giants. It is clear that we have a market that has become broken in many respects, and which needs extra regulation so our farmers have an extra tier of safety. The groceries supply code of practice should be a cornerstone of fair dealing in our agrifood supply chains.

Before I come on to those arguments, it is important to recognise the indisputable impacts of the covid-19 pandemic, coupled with the effects of Putin’s invasion of Ukraine. Those have resulted in a storm of challenges that have tested the resilience of all our farmers and our agrifood supply chain, and posed an existential threat to the very fabric of British agriculture. I see that in my own constituency: 335 square miles of north Buckinghamshire, where 90% of the land is agricultural. I talk to farmers regularly, and I have seen at first-hand the impacts that some of those hard-working farmers—deeply rooted in agriculture—are grappling with. The surge in input costs, not mirrored by a rise in prices from processors and retailers, has pushed many to a tipping point.

[John McDonnell (Hayes and Harlington) (Lab)]

I declare an interest as well, as I am a Riverford customer. The hon. Gentleman mentions the recent impact of external events, but does he recall that the adjudicator’s code was tested before these events, particularly with regard to below-cost selling and marketing in the baking sector, which had its ramifications for farmers as well? Although there were interventions by the ombudsperson at that time, the code was nevertheless found wanting in that instance, as evidenced by the submission made by the Bakers, Food and Allied Workers Union to the EFRA Committee last year.

[Greg Smith]

I am grateful to the right hon. Gentleman for his intervention. I do fundamentally agree with him that this problem predates covid and the war in Ukraine. The market has been broken in some sectors for a very long time; perhaps from even before the right hon. Gentleman’s time in this House, let alone mine. This code was meant to—I highlight the phrase “meant to”—fix some of these problems. However, it has not, and that is why we are in Westminster Hall this afternoon arguing, with a fair deal of consensus across the political divide, that action needs to be taken.

The Promar report of December 2023 attests to the severe cost increases within the horticulture sector: energy costs have soared by 218%, fertiliser by 47%, and labour by 24%. In addition, in 2023, for example, egg production in the poultry sector fell to its lowest level in over nine years, culminating in the evident shortage of eggs on the shelves in 2022 and 2023. Meanwhile these spikes—and this is the important bit—are not being reflected in the prices the tertiary sector is willing to pay. That blatant mismatch has all but erased profits, leaving consumers with stark consequences: a diminished output, shelf shortages and the regrettable loss of over 8,000 agricultural businesses in recent years.

The groceries supply code of practice was instituted with the aim of promoting a functioning market—a fair market. But, as I think we have all agreed this afternoon, its reach falls short, and its grasp lacks the precision needed for effective oversight. As it stands, the GSCOP regulates entities with a turnover exceeding £1 billion. That threshold, as others have said, is disproportionately high, leaving countless suppliers—and by extension, our farmers—unprotected. An adjustment is desperately needed. It is imperative that we prioritise lowering the threshold to, I would suggest, the NFU’s ask of £500 million; although we can always debate the precise numbers around that. That change would increase accountability and ensure more comprehensive coverage.

To secure our agricultural backbone, we must also adamantly support the extension of the GSCOP’s reach, if not for the sake of fairness in our markets and the wellbeing of our invaluable farmers, then for the preservation of our nation’s food security and rural economy. The reach must expand beyond supermarkets to encompass processors, the hospitality sector and manufacturers, which are key players in the supply chain that can exert just as much pressure on our farmers as the largest retail giants. The foundation laid by the Agriculture Act is robust, but it is not the only solution. It is but the ground upon which we must build that fairer market, and we must not falter in doing so.