Groceries Supply Code of Practice

Ben Lake Excerpts

Monday 22nd January 2024 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to serve under your chairmanship, Mrs Murray. I thank the hon. Member for Neath (Christina Rees) for securing this important debate and the petitioners for bringing it to the attention of the House. It is also a pleasure to follow my friend, the hon. Member for Totnes (Anthony Mangnall). I was struck by the constructive point he made about how, in the spirit of cross-party consensus and co-operation, we can address many of the concerns in rapid order. It is in that vein that I make my own remarks this afternoon.

The strengthening and broadening of the scope of the groceries supply code of practice is necessary; as has been rehearsed already by those far more eloquent than I, it is also very timely. It is important to emphasise at the outset that our farmers, including those in Ceredigion, find themselves in a situation of severe uncertainty. We have already heard quite a bit about the impact of inflation; I do not need to rehearse the statistics, other than to say that the spikes in input and production costs have been severe.

Although inflation in terms of many of those input costs has come down, they are not reducing—there has not been deflation. Many of our farmers are still struggling with heightened input costs. This is also a time when unfair and quite extraordinary trading practices have been exercised by too many of the large grocery industry businesses. As the hon. Member for North Shropshire (Helen Morgan) mentioned, there has been a pincer effect on many of our farmers, who find themselves vulnerable. It is timely that we should be debating some of these changes this afternoon.

Farmers across the United Kingdom, and specifically in my own constituency of Ceredigion, value certainty. The businesses are built on long-term models, due to the investments required in agriculture and the growing and production cycles. So, yes, as we have heard, farmers are particularly vulnerable to inflation spikes but also to the extraordinary and unfair trading practices that arise from the severe power imbalance that many Members have described in detail this afternoon.

The fact is that the buying power of the groceries sector affords it a significant ability to apply short-term pressures on suppliers and producers, without much understanding of the long-term consequences. We have seen that power dynamic play out to disastrous effect over the past 18 to 24 months, particularly in the horticultural and poultry sectors. Other sectors also complain of severe practices being aggressively applied by some of the larger companies. It is quite appalling to hear about people being told at the very last moment that they are no required to produce as much, and the hon. Member for Neath mentioned lettuces. Others are finding that their contracts or verbal agreements are being changed with little notice. Indeed, some growers find out the price they will be paid for their produce only when they come to harvest. For an industry that is so dependent on certainty and long-term planning, these practices are simply disastrous, so it is right that we debate ways to address them and to restore some balance of power across the supply chain.

The right hon. Member for, I believe, Vale of Clwyd—

[Mr David Jones]

Clwyd West.

--- Later in debate ---

[Ben Lake]

I hope the right hon. Gentleman can forgive me—Clywd West is the better of the Clywdian constituencies. He mentioned how dominant the larger grocery retailers are and that the UK food retail market is dominated by the nine to 14 largest supermarkets. They are the ones that seem to be deploying the most aggressive practices, but we also need to remember that consolidation in the processing sector over a decade or more means that it has an important role when it comes to buying directly from farmers. Many farmers in my constituency will not have a direct relationship with the supermarkets; they will sell their produce to an abattoir or to other processors, so it is important that those are also brought into scope. That link in the supply chain should be covered by regulation, so that we can ensure that some of these unfair practices are not deployed there as well.

I refer Members to the example of the dairy industry, where many people have suffered from consolidation. Consolidation in the processing sector has its benefits, but one downside is that it often leaves primary producers with less choice about whom to sell their produce to, and the problem is particularly acute in the dairy industry. If we were to extend the code, as many Members have called for this afternoon, it would not only ensure that we have a greater balance of power across the supply chain, but help to balance some of the risks throughout the supply chain—something other Members have mentioned.

Why should we be so concerned about this issue? The fact of the matter is that many of these awful practices are causing such strain for farmers across the UK that far too many are considering whether they have a future in the industry. Some 25% of dairy farmers are considering whether they will still be milking in a year’s time. The impact that that has on not just our productive capacity but our food security is quite severe. I agree with the hon. Member for Totnes that this should be a cause for real concern for Members of all political parties because, in a world with a changing climate, many growers and producers overseas will not be in a position to fill the gap if we lose our domestic productive capacity.

I will end by reiterating the call from the petitioners and the Riverford farming campaign not only to strengthen the Groceries Code Adjudicator so that it is empowered to take effective and, if needs be, punitive action against those committing unfair trading practices in the supply chain, but to extend the groceries supply code of practice to intermediaries as well. It beggars belief that we are here debating the importance and urgency of enshrining the simple principle that retailers should give suppliers certainty that they will buy what they agreed to buy, pay what they agreed to pay and pay on time. If we could make swift progress on this issue, it would go some way towards addressing a key concern for many of our farmers, and especially those in Ceredigion, about the future. In so doing, it would ensure that we have the productive capacity in the United Kingdom to safeguard our food security for the future.