The National Farmers' Union (NFU) has accused some of the UK's major retailers of abusing their power and creating an air of fear and oppression amongst suppliers.
In its submission to the Competition Commission over the investigation of the grocery market, the NFU claimed that if nothing was done to stop retailers, consumers would suffer as the availability and quality of food would plummet.
Although some supermarkets work well with suppliers, the market lacks transparency and supplier/producer margins are being squeezed through unsustainable downward pressure on price, said the NFU.
Re-tendering was a key concern for the union, which claimed that retailers frequently demanded millions of pounds of upfront payments from processors, in particular those in the milk and red meat sectors.
The NFU said that flat rate charges for customer complaints, regardless of whether or not the complaint was upheld, were another way in which retailers were taking advantage of suppliers.
Suppliers have been forced to scrap the Buyers Charter, a voluntary agreement on how retailer and supplier relationships should work, because retailers refused to cooperate, claimed the union. It accused retailers of not wanting to work in an open manner because a certain amount of 'fog' is good for business. It also blamed fierce competition among suppliers for price deflation, claiming this could affect product safety.
“We believe there is a real threat that long term damage could be done to the UK food chain supply base, if prices continue to fall without corresponding lower costs or improved efficiency,” said the union.