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UK: Supermarket tsar could push up food prices
Supermarket chains will be punished for failing to pay a fair price for British farm produce under Conservative plans for a new "supermarket tsar".
Major chains have been accused of "bullying" in the past for using their monopoly power to push down prices at the farm gate then selling the food for a considerable profit later on.
The new "Supermarket Ombudsman" would name and shame those shops guilty of unfair dealing with both British suppliers and small farmers in the developing world.
The new body would be part of the Office of Fair Trading and also be able to levy fines. It would cost up to £5 million per annum and be paid for by a new tax on the 10 major grocery chains.
The National Farmers Union (NFU) welcomed the move as an opportunity to fight back against the increasing might of the supermarkets and get more locally-sourced food onto the shelves.
But retailers said the watchdog would be costly and bureaucratic and ultimately push up the price of food.
The idea of a supermarket ombudsman was first put forward by farmers more than five years ago. However it was not taken seriously until this summer when the Competition Commission recommended that the Government set up a watchdog to regulate a new code of conduct for supermarkets.
Lord Mandelson's Department for Business Innovation and Skills (DBIS) was due to report back on the recommendation at the end of last year but has so far failed to do so.
Speaking at the Oxford Farming Conference this week, Nick Herbert, the Shadow Secretary of State for the Environment, will announce Conservative plans to go ahead with the watchdog.
“While the Government dithers the Conservatives are clear: we will introduce an ombudsman to curb abuses of power which undermine our farmers and act against the long-term interest of consumers, " he said.
“As the Competition Commission has made clear, failure to do so could result in reduced investment by suppliers, lower product quality, and less product choice, with potentially higher prices in the long run.”
The new ombudsman would protect small suppliers from abuses like "retrospective discounting" which allows retailers to reduce the price at a later date if the product fails to sell and has driven many farmers to the edge of bankruptcy.
The watchdog will have teeth by naming and shaming supermarkets that fail to comply with the code of practice and issuing fines, although the level of the punishment has yet to be decided.
Terry Jones, Head of Government Affairs at the NFU, said it is not about "whingeing farmers" but getting the best deal for the customer.
He said ultimately prices for a variety of quality food will go down if more small suppliers can survive in the market.
"For the most part consumers get a cracking deal but if the continued abuse of suppliers goes on, consumers will ultimately lose out because you get a reduction in choice and availability," he said.
But Richard Dodd of the British Retail Consortium said there is already a voluntary code of conduct in place to ensure the larger chain stores treat suppliers fairly.
"The last thing we need is a new multi-million pound bureaucracy to regulate the relationship between supermarkets and suppliers. It is unnecessary. All it will do is pile a whole lot of new costs on to retailers which will ultimately filter through to customers in the form of higher prices."
Lord Mandelson's department said they are still considering the recommendation for a supermarket ombudsman. It is understood the major retailers have been lobbying hard against such a scheme
Hilary Benn, the Environment Secretary, will also be speaking at the Oxford Farming Conference. He will announce Government food strategy for the next 20 years including plans to teach children about where food comes from, advice to consumers to eat less meat, improved labelling on meat products and support for agricultural research including genetic modification (GM).
Source: telegraph.co.uk
Supermarket chains will be punished for failing to pay a fair price for British farm produce under Conservative plans for a new "supermarket tsar".
Major chains have been accused of "bullying" in the past for using their monopoly power to push down prices at the farm gate then selling the food for a considerable profit later on.
The new "Supermarket Ombudsman" would name and shame those shops guilty of unfair dealing with both British suppliers and small farmers in the developing world.
The new body would be part of the Office of Fair Trading and also be able to levy fines. It would cost up to £5 million per annum and be paid for by a new tax on the 10 major grocery chains.
The National Farmers Union (NFU) welcomed the move as an opportunity to fight back against the increasing might of the supermarkets and get more locally-sourced food onto the shelves.
But retailers said the watchdog would be costly and bureaucratic and ultimately push up the price of food.
The idea of a supermarket ombudsman was first put forward by farmers more than five years ago. However it was not taken seriously until this summer when the Competition Commission recommended that the Government set up a watchdog to regulate a new code of conduct for supermarkets.
Lord Mandelson's Department for Business Innovation and Skills (DBIS) was due to report back on the recommendation at the end of last year but has so far failed to do so.
Speaking at the Oxford Farming Conference this week, Nick Herbert, the Shadow Secretary of State for the Environment, will announce Conservative plans to go ahead with the watchdog.
“While the Government dithers the Conservatives are clear: we will introduce an ombudsman to curb abuses of power which undermine our farmers and act against the long-term interest of consumers, " he said.
“As the Competition Commission has made clear, failure to do so could result in reduced investment by suppliers, lower product quality, and less product choice, with potentially higher prices in the long run.”
The new ombudsman would protect small suppliers from abuses like "retrospective discounting" which allows retailers to reduce the price at a later date if the product fails to sell and has driven many farmers to the edge of bankruptcy.
The watchdog will have teeth by naming and shaming supermarkets that fail to comply with the code of practice and issuing fines, although the level of the punishment has yet to be decided.
Terry Jones, Head of Government Affairs at the NFU, said it is not about "whingeing farmers" but getting the best deal for the customer.
He said ultimately prices for a variety of quality food will go down if more small suppliers can survive in the market.
"For the most part consumers get a cracking deal but if the continued abuse of suppliers goes on, consumers will ultimately lose out because you get a reduction in choice and availability," he said.
But Richard Dodd of the British Retail Consortium said there is already a voluntary code of conduct in place to ensure the larger chain stores treat suppliers fairly.
"The last thing we need is a new multi-million pound bureaucracy to regulate the relationship between supermarkets and suppliers. It is unnecessary. All it will do is pile a whole lot of new costs on to retailers which will ultimately filter through to customers in the form of higher prices."
Lord Mandelson's department said they are still considering the recommendation for a supermarket ombudsman. It is understood the major retailers have been lobbying hard against such a scheme
Hilary Benn, the Environment Secretary, will also be speaking at the Oxford Farming Conference. He will announce Government food strategy for the next 20 years including plans to teach children about where food comes from, advice to consumers to eat less meat, improved labelling on meat products and support for agricultural research including genetic modification (GM).
Source: telegraph.co.uk
Publication date: 1/6/2010
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