>>the code of practice must be made to work - NOW. Clive beddall, editor-at-large, william reed group
It is doubtful whether any issue within UK Grocery plc has spawned as much cynicism and hollow laughter as the DTI’s code of trading practice for the top four multiples and their suppliers. For, given the notable absence of a single formal complaint about buyer bullying, the idea has been a disaster.
But then, it was naivety of the most serious kind to assume that suppliers with allegations their businesses had suffered from intimidating buying procedures would ever have the nerve to raise their heads above the parapets.
So despite the fact that the Office of Fair Trading is currently conducting a “thorough review” of the code, it is hard to imagine just what draconian new rules could be
inflicted on the retail giants to give the code credibility.
Meanwhile, stories of bad practice - notably buyer bullying and excessive cash demands - albeit most of them circulated through whispers rather than open comment, are still being heard across the land, and not just involving the top four. Therefore, a radical redrawing of the code, to include not only the whole of food retailing and manufacturing, but foodservice too, must become a priority.
Significantly, the notion of an independent regulator or ombudsman to whom suppliers can complain anonymously without fear of instant retribution through delisting has raised its head again. And usually reliable Whitehall sources say that it has also been
mooted within the corridors of power, quite apart from the OFT review.
But, as I wrote when the idea was first suggested last autumn by that wise old industry owl Lord Haskins, while a regulator is an interesting idea in principle, it will not work in practice.
Manufacturers and producers would need a lot of convincing that their anonymity would be preserved if they took their complaints to a regulator, and currently many of them fear that a further consolidation within food retailing will weaken their negotiating strength.
We are told the OFT is waiting for the outcome of the Safeway saga before pronouncing on the matter. That is the wrong approach. For whatever happens to Safeway, the code issue has broader implications. Action should be taken now.
Looking at the wider picture, CAP reform is set to be a reality. As a result, while the whole of the farming industry - rather than just certain sections - prepares to move into a truly commercial environment, the structure of the agri-food trading platform takes on new importance, not only for the agriculturalists, but for manufacturers, wholesalers and retailers large and small. Thus, this brave new world means that more trust and understanding across the entire agri-food chain are vital if all players are to enjoy equal prosperity.
So it is inappropriate to have one set of trading rules for the top four multiples and for the rest of chain not to be subjected to the same criteria. A carefully crafted voluntary code, applied to all, would strengthen relationships across the chain, build confidence among the players and construct a more solid foundation for business in the new environment.
Instead of waiting for the OFT to publish its report, representatives of all the major links in the chain, from farmgate through to the point of consumer contact, should sit down to re-examine the idea. And who better to chair the whole thing than the astute architect of so much in UK food and farming, Sir Don Curry?
Believe it or not, the omens look to be good. Certain retail bosses, despite the fact that some of their younger buyers in particular persist in conducting their own intimidatory agendas when it comes to trading practice, are said to be supportive of a new all-industry review. And it is in all suppliers’ interests to sit at the same table.
It is doubtful whether any issue within UK Grocery plc has spawned as much cynicism and hollow laughter as the DTI’s code of trading practice for the top four multiples and their suppliers. For, given the notable absence of a single formal complaint about buyer bullying, the idea has been a disaster.
But then, it was naivety of the most serious kind to assume that suppliers with allegations their businesses had suffered from intimidating buying procedures would ever have the nerve to raise their heads above the parapets.
So despite the fact that the Office of Fair Trading is currently conducting a “thorough review” of the code, it is hard to imagine just what draconian new rules could be
inflicted on the retail giants to give the code credibility.
Meanwhile, stories of bad practice - notably buyer bullying and excessive cash demands - albeit most of them circulated through whispers rather than open comment, are still being heard across the land, and not just involving the top four. Therefore, a radical redrawing of the code, to include not only the whole of food retailing and manufacturing, but foodservice too, must become a priority.
Significantly, the notion of an independent regulator or ombudsman to whom suppliers can complain anonymously without fear of instant retribution through delisting has raised its head again. And usually reliable Whitehall sources say that it has also been
mooted within the corridors of power, quite apart from the OFT review.
But, as I wrote when the idea was first suggested last autumn by that wise old industry owl Lord Haskins, while a regulator is an interesting idea in principle, it will not work in practice.
Manufacturers and producers would need a lot of convincing that their anonymity would be preserved if they took their complaints to a regulator, and currently many of them fear that a further consolidation within food retailing will weaken their negotiating strength.
We are told the OFT is waiting for the outcome of the Safeway saga before pronouncing on the matter. That is the wrong approach. For whatever happens to Safeway, the code issue has broader implications. Action should be taken now.
Looking at the wider picture, CAP reform is set to be a reality. As a result, while the whole of the farming industry - rather than just certain sections - prepares to move into a truly commercial environment, the structure of the agri-food trading platform takes on new importance, not only for the agriculturalists, but for manufacturers, wholesalers and retailers large and small. Thus, this brave new world means that more trust and understanding across the entire agri-food chain are vital if all players are to enjoy equal prosperity.
So it is inappropriate to have one set of trading rules for the top four multiples and for the rest of chain not to be subjected to the same criteria. A carefully crafted voluntary code, applied to all, would strengthen relationships across the chain, build confidence among the players and construct a more solid foundation for business in the new environment.
Instead of waiting for the OFT to publish its report, representatives of all the major links in the chain, from farmgate through to the point of consumer contact, should sit down to re-examine the idea. And who better to chair the whole thing than the astute architect of so much in UK food and farming, Sir Don Curry?
Believe it or not, the omens look to be good. Certain retail bosses, despite the fact that some of their younger buyers in particular persist in conducting their own intimidatory agendas when it comes to trading practice, are said to be supportive of a new all-industry review. And it is in all suppliers’ interests to sit at the same table.
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