The £1.4bn impact of extended producer responsibility fees, due to land on suppliers for the first time this week, has not even been discussed with supermarkets by many major manufacturers.
The shocking finding, released today from the Groceries Code Adjudicator‘s “deep dive” into its survey of suppliers, found food manufacturers had met a wall of silence, despite huge fears over the impact of the fees on food prices.
Experts from YouGov interviewed 28 major suppliers in depth on the back of the Adjudicator’s survey into supermarket behaviour under GSCOP. They found the vast majority had received no communication over EPR, its impact on inflation, or whether their costs would be covered by retailers and price hikes.
The first EPR invoices land with food manufacturers in the next few days, following a series of estimated averge bills issues by Defra over the past year-and-a-half, which have led to warnings from both retailers and suppliers of rising prices.
But speaking at today’s GCA suppliers conference in London, YouGov research manager Lois Harmer said: “There is growing concern among suppliers around EPR and the lack of communication with retailers.
“Many suppliers say they have no clarity on how suppliers will support them with these costs.
“And when interviews took place across June this year, many supermarkets said they had not even discussed this with suppliers yet.”
While Harmer said it was possible there had been more last-minute costs, she said uncertainty over EPR was a key driver in increasing “volatility” in the relationship between supermarkets and the supply chain, despite a picture of overall continued improved behaviour by retailers.
“One supplier said, on EPR, we’re at a point now where we’ve got nothing left to play with,” she told the conference.
Harmer said the packaging tax, as well as the growing impact of climate change, were both proving huge factors in an “increasingly erratic landscape” for suppliers.
“Suppliers are navigating cost price inflation, climate change, the residual cost of living crisis and also political and economic instability, all of which creates great instability on the supplier side,” she said.
One supplier described the industry climate as “like spinning plates, constantly fighting just to keep products on the shelf”.
One major supplier told The Grocer: “I find it truly shocking that as of June this year not one of the nearly 30 suppliers interviewed in this survey had been able to have detailed discussions with supermarkets over EPR.
“That is mind-blowing statistic given the impact on supply costs and prices everyone knows this is going to have.”
A spokesman for the GCA called on supermarkets to do more to communicate with their suppliers over the EPR issue.
“The designated retailers must manage the costs of extended producer responsibility in compliance with the Groceries Code, with clear and proactive communication to suppliers about the process and outcomes.”
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