“I have long expressed the view that the Groceries Code Adjudicator [GCA] – and by extension the Groceries Supply Code of Practice [GSCOP] – has no future,” said Duncan Swift, partner and head of the food advisory group with accountancy firm Moore Stephens, speaking at a seminar on the UK food supply chain in London last month, organised by the Westminster Food & Nutrition Forum.
Swift argued that the statutory review of the GCA, currently being undertaken by the Department for Business, Energy and Industrial Strategy (BEIS), would probably reach the same conclusion.
Swift referred to the very few interventions that had occurred since the GCA was set up in 2013. He said BEIS would use this to assess the GCA’s performance. Tacon had mainly applied “soft power” to discourage bad supermarket buyer behaviour, rather than investigations and arbitrations, he added.
Bad supermarket behaviour
He estimated that the number of cases the GCA had handled represented “less than 2%” of financial distress in food companies caused by bad supermarket behaviour. “We are not scratching the surface,” he suggested.
“Based upon [the GCA’s] original remit, I have to say there is a big question mark,” claimed Swift.
From its outset, Tacon’s role had been “designed to fail” and the GCA was doomed, argued Swift. His views were based on his background as a business rescue expert and licensed insolvency practitioner, with long experience of trying to save food and drink suppliers from closure following their dealings with supermarkets, he added.
“I see it as a sticking-plaster solution that is inappropriate to the size of the wound that the food supply chain is carrying.”
Too little for the task it faced
Swift argued that the GCA’s budget of £800,000 a year was 20% of what was originally envisaged to carry out the work required and, therefore, was far too little for the task it faced.
“The failure rate of UK corporate food producers has tripled in the five years to December 31 2015,” he added. “In the three years that pretty much matched Christine’s period in office, there have been over 400 failures.”
Over this same period there had probably been 1,200 food companies in total that had “experienced significant financial distress” of which around 400 was attributable to bad supermarket buyer behaviour, he claimed.
“In my experience, one-half of the number of cases I come across where there is acute financial distress, that cause is bad buyer behaviour that is contrary to the GSCOP.”
Meanwhile, Tacon has insisted there was “no evidence” of late payments by supermarkets to their suppliers, despite the Food and Drink Federation arguing the opposite.