Call to curb power of the supermarkets

A stinging attack on the way supermarkets abuse their buying power, and the government’s failure to control them, was delivered by Duncan Swift, head of the food and agribusiness recovery group at Grant Thornton UK.

He said he and his team had been working for the last 12 years with food producers and processors who were in financial distress and he added: “In my personal experience the majority of that financial distress has been caused in large part, if not exclusively, by unreasonable supermarket buyer behaviour.”

Swift said the code of practice did not provide suppliers with any protection and outlined cases where companies had been forced to hand over six figure “supplier contributions” to the supermarkets or face losing their main customer. He said supermarkets were also extending their credit terms up to 100 days, causing suppliers cash flow problems and then charging extortionate amounts for early payment to firms that were in trouble.

There were also examples where orders were pulled at the last minute because the supermarket’s forecasts had been wrong, and the supplier was forced to trash the lot.

Swift said the Competition Competition pointed out the failings in the code in April 2008 and called for the appointment of an ombudsman, but one year on little progress has been made in setting one up.

He said the FWD had lobbied strongly in favour of the move but warned that wholesalers needed to ensure they all acted responsibly towards suppliers otherwise supermarkets would argue “why are we being forced to do this while other parts of the supply chain are not”.

He said the proposals were very positive and were just out of reach, but if pressure was kept up “we would prevail”.

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