Government rejects calls to extend remit of GCA
In October 2016, the government launched a call for evidence to explore extending the remit of the GCA, following pressure from MPs on the Environment, Food and Rural Affairs select committee.
The consultation’s conclusion, published today (February 16), said while most submissions felt the GCA had a positive impact on the commercial relationships in the sector, a number highlighted the “unfair pressures” placed on primary producers.
The report said: “There was not enough evidence to support extending the remit of the GCA, but some unfair trading practices were identified as part of this call for evidence.
“We will bring in a number of measures to help protect the rights of farmers and small producers, including a £10M collaboration fund, and compulsory dairy contracts and sheep carcase classification.”
Significant pattern
One of the main concerns raised in the consultation, the report stated, was a “significant pattern” of unfair or unclear terms and conditions in contracts between producers and processors, slaughterhouses or manufacturers.
It said this was particularly prominent in the dairy sector. The government revealed it was planning to introduce compulsory written contracts into the dairy sector in 2018, which it anticipated would be enforced by the Rural Payments Agency. It said it aimed to launch a consultation on the plans in March.
It also proposed to mandate the use of a carcase classification system in England, which would require slaughterhouses to follow a standard grid for the classification of sheep carcases, while payment per carcase would be made in a more “transparent manner”.
It said the plan was for the licensing and monitoring in abattoirs to be carried out by the Rural Payments Agency. This would need secondary legislation and an impact assessment, which would be launched in May 2018.
Lack of bargaining power
Another concern raised by the consultation, it said, was the lack of bargaining power of many small farmers. During 2018–2019, the government would begin to make available up to £10M of funding, through the Rural Development Programme for England, it added.
This fund would be intended “to support projects that enable farmers and growers to improve their efficiency and competitiveness, access new markets and strengthen their position in the supply chain through co-operation”.
Late payments formed another topic raised by the consultation. The government report said: “Late payments have no place in an economy that works for all.” The report added that the Small Business Commissioner would be taking on this issue.
The consultation also revealed concerns about the lack of transparency across the supply chain, with the report saying: “While information on farmgate prices is freely available, there is much less information on prices applied at the downstream stages of the groceries supply chain – in particular in the manufacturing, processing and foodservice sectors.”
It said it would work with the Agriculture & Horticulture Development Board and other industry bodies to consider if dissemination of data could be improved in the short term to improve risk management and business planning.
The government added that it would look into contractual good practice in the beef and dairy sectors, and it responded to concerns raised that some retailers could currently or in the near future hit the £1bn turnover limit to be covered by the GCA. The Competition and Markets Authority said it would review this information on an annual basis.
Christine Tacon, the GCA, said: “I welcome the government’s publication of its response to the call for evidence. I look forward to hearing from the Competition and Markets Authority about the process for designating any new large retailers and I encourage suppliers to take part in that process because the outcome will benefit them. As a result, more grocery retailers may find themselves regulated in the near future and I would urge them to think about what action they need to take to ensure they become Code-compliant.”
