Groceries Code Adjudicator Bill [Lords]

Mark Spencer Excerpts

Monday 19th November 2012 Commons Chamber

[Jo Swinson]

I will happily confirm the reference in that clause:

“When carrying out an investigation the Adjudicator may consider any information that it seems appropriate to consider and is not limited to considering the information mentioned in subsection (1)”—

subsection (1), of course, lists a range of places from which information could be provided. The point of that phrasing is to ensure that the adjudicator has flexibility in considering information from whatever source. That includes, but is not limited to, information from trade associations, as the Chair of the Select Committee mentions, from a whistleblower, or others who might have concerns or evidence of malpractice about compliance with the code. We do have—

[Mr Mark Spencer (Sherwood) (Con)]

Will the Minister give way on that point?

[Jo Swinson]

I am still responding to the earlier question, but if the hon. Gentleman will have a little patience I will come to his intervention shortly.

On the other point raised by the hon. Member for West Bromwich West (Mr Bailey), there will obviously be a regular review of the adjudicator. That is appropriate in ensuring that it functions as it should and that any necessary changes can be made, but we will not prevent the adjudicator from properly considering information before the initial review is produced. I want to make a little progress and then I will take an intervention from my hon. Friend the Member for Sherwood (Mr Spencer).

The adjudicator will be funded by a levy from the 10 largest retailers and will have the power to investigate breaches and to impose sanctions against supermarkets found to have breached the code. Some Members have previously criticised the Bill as being anti-business. What is anti-business about ensuring that the grocery market works as well as it can, without being distorted by anti-competitive and unfair practices?

[Jo Swinson]

I will make a little progress, and then I will give way.

The direct or indirect suppliers who are among the potential beneficiaries of the Bill include fresh food intermediaries and food and drink manufacturers. That is why the Bill is supported by major business groups, including the Food and Drink Federation, the British Brands Group, the Association of Convenience Stores and the National Farmers Union. A fair market is one in which suppliers and supermarkets are free to innovate, expand and offer the widest possible choice to the consumer without fear of being disadvantaged by unfair dealings elsewhere.

[Mr Spencer]

The Minister refers to blacklisting, when suppliers will be disadvantaged by coming forward. Can she reassure the House about how she will achieve that when, for example, the number of suppliers in the east midlands for a specific vegetable will be limited, and it will be quite easy to identify which one is supplying that product to a particular supermarket?

[Jo Swinson]

Clause 18 provides that there is a duty on the adjudicator to protect confidentiality. That goes beyond not allowing publication of the name of the individual or supplier making the complaint. As my hon. Friend rightly says, there are circumstances where an investigation could, in effect, give away who had made the complaint. In that circumstance it would be possible for the adjudicator to undertake a slightly wider investigation in terms of geographic scope or the types of vegetable being investigated, so that it would not be possible to identify which individual or supplier had come forward and made a complaint.

--- Later in debate ---

[Jo Swinson]

Absolutely. Morally, it is incumbent on anyone who comes across evidence of appalling crimes, such as human trafficking, to ensure that it is presented to the appropriate authorities so that they can take action.

Even without fines, there are financial consequences for retailers who breach the code. There may be internal costs of complying with an investigation, such as the cost of sending senior executives to give evidence to the adjudicator. The adjudicator will have the ability to make a retailer who has breached the code pay the costs of the investigation. It is also our intention that the retailers who cause the adjudicator the most trouble should pay a greater share of the levy. Taken together, those factors will reward good behaviour and discourage non-compliance.

[Mr Spencer]

Will the Minister give way?

[Jo Swinson]

If the hon. Gentleman will forgive me, I will make a little progress, because he has already intervened.

It benefits no one to reach straight for fines before we have exhausted the other options. We seek to impose a proportionate and effective solution. A move straight to fines would risk creating an unnecessarily adversarial environment, which would ultimately detract from our key objective of achieving long-lasting change in the culture of retailers.

--- Later in debate ---

[Ian Murray]

That should be in the hands of the adjudicator. We are asking the adjudicator to do a job to assess whether someone has breached the code. The adjudicator should therefore be given the power to determine the sanction. If the sanction is to seek recommendations, then that is the sanction. If the sanction is to name and shame, then that is the sanction. If the sanction is a fine, we should leave that in the hands of the adjudicator to determine. That could be a debating point in Committee. The Minister is chuntering from a sedentary position, but the argument is whether financial penalties should be in the Bill. If they are, the Secretary of State could then propose that fines be within certain parameters, or up to the adjudicator, or a proportion or a multiple of the loss achieved by a particular supplier. There are a plethora of ways for an adjudicator to determine a financial penalty. [Interruption.] The Minister says, “I don’t know,” but the Government have not told us what they would propose. Yes, we do not know how much the fine should be. That would be up to the adjudicator, within parameters applied in respect of the Secretary of State, to determine how much a fine should be, and that should be in the Bill.

[Mr Spencer]

Does the hon. Gentleman agree that those charged with the responsibility for spreading the message of the naming and shaming will be the same publications taking the advertising revenue? I wonder how much enthusiasm to naming and shaming there will be from those publications, when that might put their own advertising revenue in jeopardy.

[Ian Murray]

That is a wonderful point, and I think we now have our second candidate for the Committee—or given that helpful comment, perhaps not. The hon. Gentleman is right: there is a conflict of interest. The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) mentioned the large full-page adverts that supermarkets produce relating to fair trade. Indeed, if it is about advertising revenues, there will be a conflict of interest, and I hope that the adjudicator would take that into account. If fines were included in the Bill, an adjudicator could balance up what would be the best punishment for a particular crime and deal with it in that way. By hamstringing the adjudicator from day one on fines, we are merely pushing down some of those routes by which questions would have to be answered.

Let me run through some of the issues relating to the adjudicator potentially being toothless, which is why we are calling for fines to be available to the adjudicator from day one. We are not the only people who are calling for that. In January 2009, the hon. Member for Somerton and Frome (Mr Heath)—the current Minister with responsibility for agriculture and food, who has been chuntering on about fines for the past few minutes—said, when he was an Opposition spokesperson all those many months ago, that there must be “an ombudsman with teeth” to ensure that farmers get a fair deal. I wonder whether he and his colleagues will support our amendments in Committee to give the adjudicator such powers, because they did not support them in the other place. He is not the only one. The hon. Member for Tiverton and Honiton (Neil Parish) said last year:

“I agree with my hon. Friend and other Members that the adjudicator must have real teeth so that they can take action to stop abuses.”—[Official Report, 5 April 2011; Vol. 526, c. 240WH.]

Just this weekend, a host of stakeholders wrote an open letter to The Sunday Telegraph. It is worth my quoting from it, because it touches on the crucial part of the Bill:

“Sir, Having got the Groceries Code Adjudicator Bill this far, the government will be scoring an own goal if it denies the supermarket watchdog the one tool that will make it effective: the power to levy fines from the outset. The evidence of supermarkets’ unfair treatment of suppliers—which includes farmers both here and in developing countries—is all too clear. Watering down the bill so that penalties only go as far as ‘naming and shaming’ will not be a sufficient deterrent and the Adjudicator risks failing in its job to hold supermarkets to account.”

That letter was signed by ActionAid UK, the National Farmers Union, the Federation of Small Businesses, the Campaign to Protect Rural England, the National Federation of Women’s Institutes, Traidcraft, the Tenant Farmers Association, the Country Land and Business Association, the Independent Fruit Growers Association, the Catholic Agency for Overseas Development, Friends of the Earth, War on Want, RedOrange and Great Glemham Farms. Clearly, then, there is a great movement to provide for fines in the Bill, and I cannot understand why the Government have not listened to the letter.

We are in danger of creating this toothless tiger—I have “tiger”, but it could be a dog, I suppose. Let us imagine an old-fashioned circus act. Where is the fear in a circus clown putting his head into a tiger’s mouth, only to have his neck viced by the tiger’s gums? There is no way we can put fear into the hearts of the supermarkets with an adjudicator that does not have the power to fine. Providing for fines in the Bill does not mean that fines should be imposed on retailers randomly—I hope there would never have been sufficiently serious breaches to require the invoking of the power—but allowing the adjudicator to have the power easily to hand might influence the retailers’ actions and go some way in preventing serious breeches of the code.

Clause 9 gives the adjudicator the power to fine retailers, subject to permission from the Secretary of State. Even if the adjudicator decided that the power to fine was necessary, several considerable hurdles would have to be jumped. First, the adjudicator, who would be best placed to decide whether fines were appropriate, would have to publish guidance in deciding the amount of financial penalty—a point that goes back to the Minister’s intervention. Secondly, once that had been given to the Secretary of State, he would have to consult stakeholders on the guidance. Finally, a statutory instrument would have to be presented to Parliament and passed by affirmative resolution. This hugely drawn-out process will do nothing to instil much-needed confidence in farmers and small businesses that might have been severely affected by a breach of the code by a retailer that the adjudicator thinks merits a fine.

We must trust the adjudicator to issue remedies fairly. By not providing in the Bill for the power to fine, the Government are in danger of scoring an own gaol, as said in The Sunday Telegraph letter from ActionAid. Indeed—if I may continue with the footballing analogy—a red card could be issued. It would be available to the adjudicator in the case of a penalty, but it would not be in its breast pocket, where it could be issued fast and effectively against the offender if necessary. Essentially, we are saying in the Bill that if the referee wants to issue a red card, he will have to ask the Football Association, after which the FA will consult on its use and then pass a new law to allow it to be used. I much suspect that the match would have finished many months before the decision is made.

The Business, Innovation and Skills Committee and the Environment, Food and Rural Affairs Committee have also said that the power to fine should be provided for in the Bill. Furthermore, in a recent joint statement, the Grocery Market Action Group, ably chaired by the hon. Member for St Ives and made up of 23 organisations from across the farming, international development, environmental and small business lobbies, called on the Government to give the adjudicator the power to levy fines. I ask the Minister, again, why she is not listening to the entire industry when it comes to fines.

I turn to the intermediaries. At the bottom of all this lies the nagging doubt that many of the alleged abuses will not be resolved even by the presence of a perfectly functioning adjudicator, because the problem is in the code itself, not its implementation. Central to this idea is the code’s limited scope—this point has been raised by voices across the sector—as much of the bad practice occurs at the level of intermediaries not covered by the code and therefore the adjudicator. For example, let us imagine that a supermarket has a ready meal supplier, but decides it wants fewer carrots in the ready meal and goes through the proper GSCOP processes to remove carrots. The supermarket can do that legitimately under the code, and that is only right. However, the ready meal supplier will buy those carrots from a carrot supplier, and could therefore dismiss one of its suppliers of carrots or change the terms of the contract without any recall to the groceries code. In that example, nothing would have gone wrong according to the groceries code, so we could see suppliers further down the chain being harmed quite considerably by the decision of an intermediary.

Equally, that binary view of the market seems inappropriate when the supplier is a huge manufacturer of branded goods, such as Unilever, Kraft, Nestlé or Coca-Cola, whose turnover may exceed that of even the retailer. We are protecting the relationship rather than the carrot producer further down the chain. The adjudicator will be required to recommend changes to the code to the Office of Fair Trading, yet the British Retail Consortium claims that the OFT has taken no action to offer feedback on the annual reports that its members have already submitted under GSCOP on their implementation of the code or even to publish them.

Many farmers and growers are currently not covered by the code, as they do not directly supply the 10 largest retailers. Nevertheless, they are often the ultimate victims of unfair behaviour and the transfer of risks and costs. We hope that ensuring that retailers comply with the code will resolve those issues. If, despite the adjudicator’s best efforts, those problems persist, primary producers will continue to struggle to make a fair return for their enterprises and consumers will continue to suffer from the subsequent lack of investment. That is why it is critical that the adjudicator should have the power in the Bill to keep the code live, to enable such issues to be dealt with if the adjudicator deems that to be necessary. May I ask the Minister what consideration she has given to those concerns and whether she will come back to us in Committee with an assessment of the issues affecting intermediaries?

Finally—

--- Later in debate ---

[Mr Bailey]

My hon. Friend makes an important point, which I was going to come on to. An individual’s shopping habits are determined by all sorts of factors. I do not know what evidence there is, but I would guess that the perception of value for money at different retailers is an important criterion. Other factors are accessibility and personal habits and traditions. I do not see that the publication of an adverse report by the groceries code adjudicator about a particular retailer would affect many people’s shopping habits and, therefore, the bottom line of that retailer.

[Mr Spencer]

Does the hon. Gentleman recognise that the opposite might be true, in that a supermarket whose brand is built around price point might gain kudos from squeezing its supply base so tight that it can deliver the lowest prices to the consumer?

[Mr Bailey]

The hon. Gentleman makes an interesting point. I am sure that one could develop an argument along those lines. I hesitate to do so because I have an innate faith in good will and do not believe that a supermarket would be so unscrupulous as to do that. Perhaps he does not share my innate faith in the good will of supermarkets.

--- Later in debate ---

[Andrew George (St Ives) (LD)]

It is a pleasure to follow the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey). It was interesting that in his introduction he declared an interest as a Labour and Co-operative party Member. It has been my privilege over many years to chair the Grocery Market Action Group, which has been mentioned in this debate. Reflecting on the discussion about naming and shaming, I should perhaps name and fame the stores that indicated that they would support the measures proposed in the Competition Commission’s report of April 2008 when we wrote to the stores that would be affected. Marks and Spencer, Waitrose and Aldi were the three stores that indicated that they would support the measures, with some reasonable conditions. In spite of my efforts to talk to the Co-op, I was surprised that it was not prepared to sign up at that stage. However, the regulation has been in place since February 2010, and there are opportunities now for all those stores to reflect on that.

Like others, I want to commend many people who have been the architects of this extremely welcome measure. The hon. Member for Ynys Môn (Albert Owen) has already been mentioned—indeed, I mentioned him in an intervention. His private Member’s Bill did a great deal to pave the way for the measure. Former Members, too, made significant contributions. In 1998, Colin Breed, the former Member for South East Cornwall, made a valiant effort to put the matter on the agenda. He undertook an inquiry, which stimulated a further inquiry by the Competition Commission, entitled, “Checking out the Supermarkets”. He stimulated much activity, which is reaping the appropriate reward today on the Floor of the House. The former Member for Stroud, David Drew, was also a significant contributor to the debate, as was the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who is not in his place, but was present earlier. I have had many conversations with the hon. Member for Tiverton and Honiton (Neil Parish), who has been a strong supporter of the proposal for a long time. I also commend the Minister for an excellent exposition of the purpose of the measure, and the Government’s strong support for what is now Government primary legislation, even though its origins were a private Member’s Bill under a previous Government.

I do not need to repeat much of the background to what we hope will be legislation in perhaps weeks—certainly not many months. It is worth reflecting on the fact that, when I was originally involved, and certainly when the former Member for South East Cornwall engaged in the work, there was no party political support for regulation, even among Liberal Democrats, who subsequently adopted the proposal in their 2005 manifesto. In those days, the proposal that there should be any regulation was advanced only against all the odds. Even the National Farmers Union proposed a buyer’s charter and set its face against regulation, even though I and others had proposed it. It has therefore taken many years and a glacial pace to achieve progress. To be in the position whereby the proposal had all-party support at the last general election was remarkable. The larger parties clambered on board at the last minute, only months before the election. However, we had almost created a “who blinks first” scenario as we went into the general election, and all parties came on board and supported the proposal.

Significant commendation should be given to Peter Freeman, chairman of the Competition Commission, and the whole commission, for an excellent inquiry, which commenced in 2006 and concluded in 2008. It considered all the evidence that many of us had been encouraging the competition authorities to scrutinise for many years. It reached the telling conclusion that, in some cases, as the Minister said, the supermarkets were guilty of transferring excessive risk and unexpected costs to suppliers, with the consequent detrimental knock-on effect on not only suppliers and their capacity to continue trading, but consumers and, indeed, innovation in the retail sector.

I do not approach the matter from the position that supermarkets are wicked. Their activities are entirely rational. Had all of us been in the same position, and we had not maximised all our market muscle to advance the interests of our company, and we had therefore lost market share in a cut-and-thrust market, we would have failed in our duties. However, the question is, “When does effective, clever and successful use of power become abuse?” The Competition Commission rightly identified that we have long passed the point at which that use of power has become abuse, as the many examples that have been given today show.

The previous Government rightly supported changes to the common agricultural policy, which forced farming to become much more market facing. Price support policies were done away with, the protections that farming was so used to in this country were no longer in place, and the industry needed to live or die by the marketplace. However, how could farmers and growers succeed or survive in that climate? I appreciate that many growers, pig farmers and others struggled to survive long before those changes. Nevertheless, leaving that aside, how could farmers survive when, as Prime Minister Tony Blair said, the supermarkets had got them in an arm lock? One could argue that they had got them in an even more painful position at times. The supermarkets were able to control market conditions, which was a conclusion of the previous Competition Commission report.

What are we trying to achieve? It has always been my view that if supermarkets have nothing to hide, they have nothing to fear from embracing the Bill. I have said to the supermarkets that, if they are clever, they should embrace the proposal and see it as something good. The hon. Member for Camborne and Redruth (George Eustice) suggested that there should be a panel to review the supermarkets’ success in applying the code. My view is that, if the supermarkets are prepared to embrace and invest in the proposal, there would be a fair trade regulator, which could give a mark to each supermarket to show whether it was a fair trader and grade it accordingly. Supermarkets could then perceive the code as a promotional tool rather than a stick with which to beat them.

Fining has predominated today’s discussions and will doubtless do so in Committee. After all these years, I do not want to risk any further delay in implementing the proposal. I would not like any amendment to the Bill to cause such delay. Will the fear of reputational damage be sufficient to persuade supermarkets to apply the code effectively and not to engage in the sort of practices that got us into the current position? Of course, I am on the side of those who want fining on the face of the Bill, but I believe that reputational damage has an impact. I remember the days when genetically modified technology was introduced and available to the supermarkets. Non-governmental organisations undertook a lot of campaigning, which dissuaded the supermarkets from putting GM products on their shelves. If there were adverse reports, the campaigning bodies—if they were doing their job—would draw the attention of customers and the public to the failure of those supermarkets.

[Mr Spencer]

On that point, there cannot be a more passionately felt issue than animal welfare. Does the hon. Gentleman acknowledge that the British pork industry had much higher standards of animal welfare than its counterparts in Europe, but that that made no difference to whether consumers bought British or foreign pork?

[Andrew George]

There is evidence and evidence to counter it on all sides, and that takes us to a point that the hon. Member for North Antrim (Ian Paisley) made earlier. Providing that customers who are buying British are reassured that it genuinely is British and not some kind of subterfuge, the point about animal welfare is relevant. Customers understand that significantly higher animal welfare standards have been in place in the UK for many years, particularly in the pig industry, and that is one of those reassuring messages. I agree, however, that it does not always work, particularly when the message becomes confused.

When I intervened on the Minister, I said that there was likely to be a lot of evidence of contraventions of the code from the time it was first put in place on 4 February 2010. My concern is that the position of adjudicator will be such that they will operate for only one day a week from the Department for Business, Innovation and Skills, and when they are fully operational, they will work three days a week with three or four members of staff. I also understand that the Gangmasters Licensing Authority already wants to present 1,000 pieces of evidence to the adjudicator, and I am concerned about whether sufficient resources will be in place to deal with all the work, cases and evidence that may be brought forward.

--- Later in debate ---

[Mr Mark Spencer (Sherwood) (Con)]

Let me first draw attention to my entry in the Register of Members’ Financial Interests. As a farmer, I am in the fortunate position of not supplying one of the major supermarkets, but I do, of course, know plenty of people in that position, including many of my constituents.

I broadly welcome the Bill. It is fantastic, it is timely, and the Government should be congratulated on the way in which they are addressing the current problem. It was with some frustration that I listened to the criticism from the Opposition Benches that it had taken two and a half years for legislation to be presented, given that, when in government, they presided over the rise of the supermarkets and the power that they gained.

[Fiona O’Donnell]

Rather than referring to “criticisms”, perhaps, in this new atmosphere, we could refer to suggestions for improvements—which, in all fairness, have come not just from Opposition Members but from Government Members.

[Mr Spencer]

I shall be talking about possible improvements. I think that there is a fair amount of cross-party agreement on the way in which the Bill can be improved. However, I also want to talk about some of the good practice that we see out there. We have heard a great deal of criticism of supermarkets and the way in which things work, but there are plenty of examples of supermarkets and farmers working closely together to improve the supply chain, add wealth to both businesses, and bring employment to rural areas. I think we should recognise that there is more to be celebrated than there is to be criticised, although we need to ensure that when things go wrong, there is a way of stepping in to sort them out.

When I embarked on my business career, my grandfather told me that the definition of a good deal was “a bit for me, a bit for you, and then another deal”. I think that we have reached a stage at which the supermarket sometimes wields too much power in the relationship, to the extent that I almost feel obliged to make it absolutely clear that some of the practices that I intend to highlight bear no resemblance to the activities of any of my constituents. There is a genuine fear out there of blacklisting and being removed from the stocking lists of supermarkets, such is their power.

I think it worth examining the practices that have gone on in the agriculture industry and its relationship with supermarkets. The first that springs to mind, which no one has mentioned so far today, is the operation of payment terms, which the supermarkets have stretched to a point at which big business is being financed by little business. That applies not only to agriculture, but to many other UK industries in which little suppliers are delivering products to big suppliers. The big suppliers do not pay for more than 90 days, and the smaller producers are forced to borrow from their banks in order —in effect—to lend the money to them.

One of the most shocking practices, to which other Members have referred, is the practice of rejecting loads of products when the price of the market goes through the roof, when there is over-supply, or when the weather changes, as in the case of the strawberry industry. There is real abuse of the system when supermarkets are able to reject a load that is perishable and cannot be returned without giving any recompense to the primary producer.

I am told that when a contract is being negotiated with a supermarket, the first line of the negotiation relates not to the retail price, the production price or even the wholesale price, but to the margin that returns to the supermarket. The primary producer must guarantee that margin. That cannot possibly apply to any other relationship between supply and retail. Whether the product is cauliflowers, carrots, plimsolls or widgets, if the supermarket decides to arrange a promotion and reduce its retail value, the primary producer will lose out while the margin of the supermarket will be protected and never squeezed.

[Huw Irranca-Davies (Ogmore) (Lab)]

Does the hon. Gentleman agree that those margins are seen not only in the direct relationship between producers and major retailers, perhaps on contract terms, but throughout the supply chain? Sometimes a retailer will say “Well, it’s nothing to do with us, guv”, but somewhere along the line an intermediary will be saying, “We want those margins.”

[Mr Spencer]

That is a valuable point. There have been a number of references to the dairy industry, and to small dairy farmers all over the United Kingdom. It should be borne in mind that very few small dairy farmers deal directly with the supermarkets. They nearly always negotiate through a dairy producer, someone who is making cheese or yoghurt, or even a bottling plant. The hon. Gentleman has made an important point, and we shall probably need to consider it once we have sorted out the Bill.

Another important topic is that of promotions. Many consumers will no doubt think that “buy one, get one free” offers and other promotions show supermarkets’ generosity, as they must be shrinking their margins. The truth, however, is that it is the primary producers who pick up the tab for the reduced price of the product, and they are often also asked to increase the supply of that product.

Earlier in the year a series of adverts ran on TV promoting asparagus at half price. The weather had been so shocking that I do not think there can have been a single blade of English asparagus on the market at that time. I almost shuddered for our asparagus producers. Many of them had obviously signed a contract to supply a supermarket, and an advertising spot had been booked six months in advance, without regard to the weather. When that time slot in the calendar came, the adverts rolled out and asparagus producers were probably having to buy asparagus from Mexico or Spain to meet their contracts to supply that promotion. There is no flexibility in the system, or common sense from some supermarket buyers.

The worst practice, however, is backdating. A primary producer can supply a supermarket for two years, let us say, and then the supermarket can suddenly say to that producer, “By the way, we’re backdating the price of all that product you’ve supplied to us for the last 12 months, and you owe us £50,000.” That primary producer is then faced with the prospect of either finding that money from somewhere—borrowing it or taking it out of their bank account—or reneging on the contract and never being dealt with again. That truly is an abuse of power. I hope the grocery ombudsman will be able to stop such practices.

Key issues are what tools will be available to the ombudsman and how he will make sure the code of practice is adhered to. That brings us to schedule 3 and the subject that has been dominating the debate: if the adjudicator cannot fine supermarkets, will he have sharp enough teeth to ensure that the code is adhered to? I do not ask the Minister to commit to anything in his winding-up speech, but I ask him to assure us that he will have an open mind and will consider the Committee’s deliberations, and be willing to make an amendment if he feels that that is the right thing to do.

I reiterate that there is much more good than bad in this Bill and it represents a great step forward. With the will of the House and a fair wind, I think we can get to the right place for the primary producers, and also for our consumers, who want good quality food in our supermarkets at the right price, and, crucially, at a price that is sustainable.

Small dairy farmers begin the process of producing milk by choosing an animal to breed. They then breed that cow, which takes nine months, bring that heifer to full production, which takes two years, and then, finally, they get milk from that animal. It takes four years of hard work and investment to get to the point of supplying any milk, therefore. In that time, supermarkets can change their contract on an hourly basis. The whole of the risk is with the primary producer, and at present there are occasions when the whole of the reward is with the retailer. I sincerely hope that we can start to redress the balance in that relationship, to the benefit of supermarkets, primary producers and consumers.

--- Later in debate ---

[Neil Parish]

My hon. Friend makes an excellent point. Much work was done by the previous farming and food Minister, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), to get voluntary dairy codes in place. The Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath) is carrying on that good work. The hon. Member for Brecon and Radnorshire (Roger Williams) said that we need to be sure that the groceries code adjudicator will be able to look at the voluntary codes and contracts. I repeat that it is essential that a share of the money that the consumer pays for his or her product goes to the processor and the producer.

We are moving into a world of some 7 billion people. That world does not have oceans of cheap food. In many ways, that is a good thing, but it is also difficult for consumers across the world. There are people in this country who are struggling to buy food and it is essential that they get a good deal. However, in order to get a good deal, we must ensure that the producer, be it of milk, beef, lamb, carrots, potatoes or other vegetables, gets a return. If they get a return on their investment, they will produce more food and do so efficiently. That is the way to ensure that we can deliver products at a good price on the supermarket shelf.

Some of the ways in which large buyers and retailers have abused their position over the years have made food prices higher rather than lower. In the short term, when the supermarkets have a price war that drives prices down, it seems like the consumer is getting a good deal, but it drives many people out of business, meaning that there is less production than there was before.

Until now it has been possible to go around the world and bring in the extra product that is needed. However, to take the meat sector, where is the beef that is out there in the world? Forty years ago, the Chinese were eating 500,000 tonnes of beef a year. Now, they are eating 5 million tonnes of beef a year. The UK produces about 1 million tonnes of beef, so one can see that instead of eating half as much beef as we produce, China is now eating five times that amount. All the beef that used to be sloshing around in Brazil and Argentina, which could once be bought cheaply and used, dare I say it, to drive down the price of beef in this country, is no longer there. That is why it is important not only to get things right for the consumer and the trade, but to ensure that we will have reasonably priced food in the future.

In the summer, 3,000 dairy farmers protested outside Westminster, and we had a huge meeting. It was absolutely right for the farmers to protest. They had some of the worst weather that I have seen in my lifetime, and the cost of producing milk went up while the price went down. However, is it right that those farmers with family farms have to march up the hill every time and show how desperate they are to make a fair living? Is it right that we have to use social media to name and shame supermarkets? Again, the hon. Member for Brecon and Radnorshire made that point. It is not right. There is something wrong with the process of trade in this country, and that is why the groceries code adjudicator is so important.

We set much store by the Bill. Other hon. Members referred to the common agricultural policy and the single farm payments. All Members want farmers to get more money and more of their income. Farmers would much rather have more of their income from the market—from what they produce—than from what they receive in the single farm payment. They would thus not be so vulnerable to the politics of not only Britain, but the European Union.

The rising population, the need to produce more food from the same amount of land throughout the world, global warming, and the fact that northern Europe and Britain will need to produce much more food, mean that we should be able to get a good price for that food. However, if we have not got the market right, the price of food will not go back to the producer, and we will not produce the amount of food that we need.

There is a need for food security, and a moral issue about producing food. Some people in the world cannot afford to eat and it is therefore important that we produce more food—sustainably, and in an environmentally and animal-welfare friendly way. That is what our consumers want: to be sure that, when they go to a supermarket or a small retailer, they get they get a fair deal, and that that also applies to the producer and the grower, not only in this country, but in developing countries. Our supermarkets often do not give producers throughout the world a fair deal. Let us hope that the groceries code adjudicator can do that.

We have rightly talked a lot about the retailer and the producer today, but we must remember that nearly 500,000 people in this country are involved in food processing, and 80% of the food that they process is grown and produced in this country. The Bill is therefore good not only for the producer but for the processor and I believe that, in the end, it will be good for our supermarkets.

Much as one would perhaps enjoy a major war with the supermarkets and the big retailers, it is ultimately not a war that we want because where do 70%, 80% or even 90% of the population buy their food? They buy it in supermarkets—they want to shop there. We must be sure that, when they shop, the groceries code adjudicator will have enough teeth to ensure that the consumer, the producer and the processor—everyone in the food chain—get a fair deal.

[Mr Spencer]

Does my hon. Friend acknowledge that farmers need to bear some of the responsibility? Many dairy farmers, instead of selling to a co-operative, decided to trade direct. If they stuck together, they would be much stronger. Some farmers almost pay gate money to obtain those direct contracts, and steal contracts from other farmers, thereby contributing to their own downfall.

[Neil Parish]

I welcome my hon. Friend’s intervention. I often say that farmers’ great strength is their independence, although that can also be their great weakness. I welcome the deal between Milk Link and Arla Foods because this country now has a co-operative that controls some 25% of the milk, giving it real clout in the marketplace. It is right for farmers to come together and co-operate, and the Bill will help such co-operation within the farming, processing and retail sectors. As I said, no retailer has anything to fear from the groceries code adjudicator if they have the correct practices, and that is right. Finally, I say again that the Government welcome this Bill, but the Business, Innovation and Skills Committee and the Environment, Food and Rural Affairs Committee must look to put real fines in place so that those who abuse the grocery trade can be brought to book, and not only named and shamed, but properly fined.