Farmers, Supermarkets and Food Supply Chains

Richard Foord Excerpts

Tuesday 16th May 2023 Westminster Hall

[Gordon Henderson]

I certainly agree with the hon. Gentleman, and it is not just livestock. In the garden of England—Kent—too many of our orchards have been dug up because they are not profitable any more. There is a growing lack of transparency in the communication received from retailers, in particular, and that leaves farmers in a vulnerable position. They have to absorb additional risk and are unable to plan and make important financial decisions during this extremely challenging period. If farmers and growers are unable to recoup costs, it will become unfeasible for them to run their businesses, resulting in a reduction in production. Ultimately, that will reduce competition.

I have spoken to a number of farmers in Kent, and I can cite examples of unfair practices by some retailers—particularly supermarkets. However, to do so would make it possible for those farmers to be identified, which they do not want for fear of losing business. That in itself is testament to the malign power of some supermarkets.

It is true that the groceries supply code of practice and the Groceries Code Adjudicator have had a transformative impact on the behaviour of buying teams and have helped to curb some of the worst abuses of market power. That is why I share the NFU’s view that any consideration of transferring the GCA’s functions to another public body, such as the Competition and Markets Authority, or removing it altogether, is misguided; that would have a hugely damaging impact on the groceries sector and, ultimately, consumers.

In my view, the farming industry is in crisis. In 2019, there were 149,000 registered agricultural businesses. In 2022, there were 142,000. That means that there are more than 7,000 fewer agricultural businesses today than in 2019.

[Richard Foord (Tiverton and Honiton) (LD)]

In the south-west of England, direct payments fell from 95% of total income from farming in 2016 to just 62% in 2021. Does the hon. Gentleman share my view that that is affecting not only regions such as Kent, but the south-west? Both have seen a dramatic reduction in total income from farming as a result.

[Gordon Henderson]

I do agree. We are all in this together. That is the old saying, and it is true. Farmers across the UK—not just in England or Wales—are struggling. Without sustained, consistent and responsible action from all parts of the supply chain, we risk deepening a crisis that will lead to a significant contraction in supply to the marketplace and reduced availability of British produce, ultimately leaving many farmers and growers with no other option than to leave the sector altogether, which is what is happening.

To create a fair supply chain that supports food security, the sector needs to ensure sustainable farm-gate prices. In all farming sectors, DEFRA lacks the data it needs to monitor the market sufficiently and ensure that it is working properly. Without better data, the Government are unaware of what is happening in the marketplace and are therefore in no position to assess the market effectively, as required by section 20 of the Agriculture Act 2020. The Government need to support and invest in sufficient market infrastructure to enable markets to work efficiently, equitably and in the interest of food security. DEFRA needs capacity and expertise to conduct investigations of actual and potential market issues, and farmers need a concerted joining up of policy across Whitehall to unlock growth in the sector.

Finally, I want to explain what the NFU would like the Government to do. I appreciate that the Minister probably knows, but, given the current crisis in farming, the wish list bears repeating. The NFU wants the Government to produce an enhanced, policy-focused food security report that looks beyond food supply and supermarket shelves to assess the short, medium and long-term health of the food sector. The report should be published annually, as opposed to the three-year commitment in the Agriculture Act.

The NFU wants the Government to use section 20 of the Agriculture Act to conduct an urgent value chain inquiry into market failure in the poultry, meat, eggs and horticulture sectors, and to use powers under section 29 of the Act to continue progress with the dairy contracts code, develop equivalent approaches for other sectors and ensure that all are fit for purpose before legislation is introduced.

The NFU wants the Government to cement the role of the Groceries Code Adjudicator and publicly set out their commitment to its independence and powers. The NFU also wants the Government to publicly commit to supporting the work of the Food and Drink Sector Council and deliver a clear mandate for Departments to support its ambitions for sustainable growth.

The NFU wants the Government to establish a regular food forum with the DEFRA Secretary and senior executives, to support business engagement across the food sector—a similar concept to the Prime Minister’s Business Connect platform. The NFU wants the Government to set out their plans to invest in agricultural technology and innovation centres that bring benefits to UK farming, for example by taking the opportunity created by the Genetic Technology (Precision Breeding) Act 2023.

The NFU wants the Government to ensure that food and farm businesses make a growing contribution to renewable energy generation and have affordable access to transmission infrastructure, improving the sector’s energy resilience and lowering greenhouse gas emissions from food. Finally, the NFU wants the Government to make changes to the planning system to permit development for the purposes of growing and processing fruit, veg, crops and livestock.

I thank Kent’s farmers and the NFU for feeding our nation. I assure them that they will always have my full support.