While the groceries sector has made some positive changes around unfair trading practices, there are still challenges yet to be addressed, as was highlighted at this year’s annual Groceries Code Adjudicator (GCA) conference. The GCA’s role is to ensure compliance with, and where necessary, enforce the groceries supply code of practice, which aims to regulate the relationship between the UK’s top 10 supermarkets and their direct suppliers.
In January this year, the watchdog’s investigation into Tesco found the retailer had breached the code, reporting the supermarket had delayed millions of pounds worth of payments to suppliers and called for significant changes to be made. Since then things have improved and adjudicator Christine Tacon says culture change at the retailer, driven from the top, was key to its success in changing behaviour and turning around relationships with direct suppliers.
Retailers, on the whole, are now acting on issues raised by the supermarket watchdog and suppliers are starting to see the benefits, Tacon says. The GCA’s annual survey revealed 62% of suppliers said they had experienced an issue in the past year compared to 70% in 2015. This, alongside many of the findings from the YouGov survey is welcome news, however, disappointingly 47% of suppliers are still not reporting issues or breaches by supermarkets so this figure could well be higher. When supermarkets suddenly cancel orders, delay payments or overcharge them for certain costs, suppliers take vast hits to their businesses, but often they are still too scared of losing contracts to report them. This “fear factor” remains unchanged from last year, but Tacon says she is committed to changing this.
Another concern for Fairtrade, is how far the GCA’s remit is extended internationally. Only 54% of overseas direct suppliers were aware of the existence of the GCA compared with 94% inside the UK. In a speech to an audience of retailers and business leaders Tacon acknowledged she needed to do more to raise awareness overseas, and committed to do so by working with trade associations, retailers and government bodies like UKTI. Of course because her remit at present only covers direct suppliers, this wouldn’t make a difference to the farmers and workers in developing countries, as they are further up the supply chain and that, for us, is the major sticking point. How will these people, who are already vulnerable to poverty and rising costs or agricultural problems as a result of climate change, be protected, if they are powerless and voiceless in the face of big business that sets all the rules of trade?
At the Fairtrade Foundation, we would like to see supermarkets ensure the risk is not passed up the supply chain to exporters and farmers based in developing countries, who are at the sharp end of unfair trading. However, the GCA is reaching out to indirect suppliers. Anyone in the supply chain can report a problem to the GCA, and this message is clearly getting out there, as 62% of indirect suppliers said they would raise an issue compared with 41% in 2015. So as Fairtrade licensees do include some of the top retailers in the UK, we need to ensure this message gets to everyone in their supply chains. Along with other members of the Groceries Code Action Network (GCAN), an independent coalition of NGOs, unions and food associations, we would like fair trading practices, such as paying suppliers on time and in full, be enforced at every level of the supply chain.
The Fairtrade Foundation would like the GCA to gather stronger intelligence on the industry, and extend its remit to ensure that fair trading relationships are supported at all levels, including overseas. Soon the Department for Business, Innovation and Skills will open a review into the remit and role of the GCA and this is an opportunity for us all to highlight our views and experiences. We urge you all to do so.
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