The widespread use of ‘middlemen’ supermarket suppliers means downstream producers remain exposed to sharp buying practices, two years after the issue was first put to the Groceries Code of Adjudicator, campaigners have warned.
The Grocer first reported on how so-called ‘first tier’ distributors were being employed by retailers in fresh produce supply chains to circumvent the Groceries Supply Code of Practice back in January 2024.
The GCA then said it was investigating the claims shortly afterwards. However, the issue persists and is threatening the viability of many farmers and growers, campaign group Transform Trade has warned.
There remained “significant policy gaps” when it came to fair dealing with often small producers outside the UK, said the group’s senior policy advisor Fiona Gooch.
These ‘second tier’, indirect suppliers were not covered by GSCOP, and had no recourse if relationships with powerful ‘first tier’ distributors broke down, she added, while calling on both the regulator and government to probe the issue further.
First tier suppliers now had “huge buying power, since they are now buying not just the entire shelf requirement for one retailer but several retailers’ requirements”, Gooch claimed.
In some cases, supermarkets had effectively outsourced their traditional buying practices for more than half of a particular category’s shelf space to these suppliers, she added, “so should also be covered by GSCOP”.
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And it was easier for these businesses to pass the “pain” of any changes to purchasing and pricing decisions to unprotected tier two suppliers, than push back against their retail partners – a process which is covered by GSCOP – as it was “not in their interests to complain about the retailers’ behaviour”.
“It is a failing that such suppliers are not covered the fair dealing buying rules that other businesses in the supply chain are covered by,” Gooch pointed out.
The Grocer this week spoke to an Egypt-based farmer who agreed to grow, pack and export 1,000 tonnes of onions (worth £550k) for a UK-based importer and distributor supplying several UK supermarkets in 2024, only for the distributor to cancel the agreement at short notice, just as the producer was due to ship.
The importer said the shipment had been rejected as the distributor said the grower had not fulfilled additional due diligence requirements (imposed towards the end of the growing cycle) and offered to settle the dispute for just £57k.
The grower told The Grocer he believed – due to the fact onions had become available on the open market at a lower price – that the importer wanted to renege on the agreement after sourcing cheaper produce elsewhere.
While it found a UK solicitor and issued a pre-court action letter to the importer, he was ultimately unable to afford the substantial cost of taking the UK importer to court – something Gooch suggested the importer would have anticipated.
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After approaching the GCA, the grower was advised his complaint was out of scope of GSCOP. Upon approaching the retailers directly, he was offered “sympathy”, but no further action.
‘Devastating’ effect on business
“This has had a devastating effect on our business, we’ve had to make layoffs, sell our packhouse and start all over again,” the grower said.
His experience was “not unique”, said Gooch, with Transform Trade aware of a number of similar experiences faced by other overseas producers.
“We are all dependent on buying food from supermarkets and want growers to be treated fairly for the hard work that they do,” she added.
“No practical redress has been available to this Egyptian grower or other growers. This is very damaging, not only to growers, but also the UK’s reputation.”
It was time for the UK government to update and expand the remit of the GCA “to cover all relationships within supply chains serving the UK market, to ensure there are fair business to business transactions underpinning how food is brought to supermarkets”, Gooch urged.
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The current regulatory framework for fair dealing “fails to recognise that excessive risks and unexpected costs get passed along supply chains”, she added.
It was also “ludicrous” for the same supply chain “to have two regulators both overseeing fairness in business to business practices”, citing the presence of the GCA and the agricultural Supply Chain Adjudicator – which currently regulates the milk and pig markets, and is expected to expand to cover areas such as eggs and fresh produce in due course.
The “narrow approach” by Defra also left the business relationships involved in bringing the majority of products to UK retailers’ shelves out of scope of being protected by, and “exposed to the type of unscrupulous practices experienced described by this grower”, she pointed out.
In response, Groceries Code Adjudicator Mark White this week said he had “discussed with designated retailers the importance of ensuring there can be no suspicion that they are using intermediaries to circumvent the Groceries Code”.
He added: “If any supplier has concerns about the role of intermediaries, I want to hear from them. The GCA protects the confidentiality of suppliers that report issues.”
On announcing the GCA’s 2026 survey this week, with a promise to “act” on any claims of unfair practices, White said the number of suppliers reporting a code issue fell from 33% in 2024 to 30% last year, while average code compliance across the retailers rose.
A spokesman for Defra said its supply chain fairness review of the fresh produce sector was “still underway and not subject to a deadline”.
Regulations “will be introduced in due course as we carefully consider the feedback given to us”.
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