Groceries Code Adjudicator Bill [Lords]

Neil Parish Excerpts

Monday 19th November 2012 Commons Chamber

[Neil Parish (Tiverton and Honiton) (Con)]

It is a great pleasure to speak in this debate and to follow the hon. Member for East Lothian (Fiona O'Donnell), whose remarks I echo. This has been a great cross-party debate and Members want to make sure that the Bill is good and right. I also welcome the fact that Ministers from the Departments for Business, Innovation and Skills and for Environment, Food and Rural Affairs are at one on this. Even the Select Committees are united. There is parliamentary unity on the Bill, so this must be one of the greatest moments of all time.

I say to the Ministers that the Bill will need to have real teeth, for the simple reason that one of this country’s retail traders has more than 30% of the trade, a larger turnover than many small countries, and huge powers. It is a great idea to name and shame retailers, but we need to have the powers to fine them and to keep fining them. If they do not adhere in the first instance, there must be real pain, by which I do not mean tuppence ha’penny from the billions of pounds of turnover; the fine has to mean business. We have to turn this situation around.

I am not here to slam the supermarkets—they do a great deal of good—but we have to make sure that enough money cascades from what the consumer pays for his or her product at the supermarket back down to both the producer and the grower.

[Guy Opperman (Hexham) (Con)]

I endorse what my hon. Friend is saying and I know that the growers and producers in Northumberland will support this Bill wholeheartedly. What robust measures does he think would genuinely hold the supermarkets to account?

--- Later in debate ---

[Neil Parish]

I would like to see fines incorporated into the Bill—I am sure that the Government will listen when it is debated in Committee—so that there is real pain. I believe that the threat of fines, as well as that of naming and shaming, will help make sure that not too many of the large retailers will have to go before the adjudicator. If they have nothing to hide and if their retail trade practices are right, they will have nothing whatsoever to fear, either from the Bill or from potential fines.

It is not only the producer who is at risk in these trades. Many of the direct contracts that the supermarkets have with farmers in the dairy and meat trades are excellent. However, supermarkets may decide to have a price war and to reduce their prices, perhaps by using these products as loss leaders. That is wonderful for consumers, provided that it is the supermarkets who pay for those loss leaders, and that they do not go back down the chain and squeeze not only the producer, but the processor.

[Guy Opperman]

I know that my hon. Friend is a champion of the dairy industry. The Minister who will respond to this debate is the Minister who responded to the dairy debate in Westminster Hall. Does my hon. Friend agree that the dairy industry is the biggest example that we can cite of a price compromise affecting the farmer and the producer such that they effectively go out of business?

[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.