Jim Moseley, President of the Food and Drink Federation (FDF) and md of General Mills UK and Ireland said having a Groceries Code Adjudicator (GCA) would stop retailers from tearing up deals with suppliers "when a better offer comes along". This undermines their efficiency, causes them unnecessary cost and for some threatens their very existence.
It is particularly difficult for small- and medium-sized enterprises (SMEs), which form the majority of the 7,000 food and drink processing firms in the UK, said Jonathan Bye, md of soft drinks firm Vimto, and head of the FDF's SME forum.
Issue fines
Since the government issued a draft GCA Bill in May, a Select Committee of the Department for Business Information and Skills has issued a report recommending changes. These include giving the GCA the power to issue fines and allowing information from trade associations representing direct and indirect suppliers to trigger an investigation. To date, however, the government has not accepted the need for the last amendment, said legal firm Wragge & Co.
However, a number of senior industry figures have claimed that giving complainants anonymity would resolve issues of aggrieved suppliers not wanting to "raise their heads above the parapet" for fear of being victimised.
Bye said: "You don't just have the police there to investigate a crime, you have the police there to stop crimes being committed."
While the government has announced plans to introduce the GCA Bill as soon as Parliamentary time allows, Wragge said GCA was unlikely to be running before 2013 and probably even later.
Bye pointed to the imbalance of power between large retailers and SMEs. This often results in plans being agreed at the beginning of the year, with key performance indicators and targets set, "only to have the squeeze put on you at the end of the year if those targets haven't been met". "That makes life very difficult," said Bye. "For a small business it could make or break it.
Inefficiencies
Moseley said the volatile economic climate and market were making the situation worse by introducing inefficiencies into the supply chain when, for example, changes were suddenly made to promotional campaigns. This forced processors to carry more inventory and factories to be more flexible, producing to shorter lead times.
"That is putting cost in, which is frustrating when you want to be at your leanest possible and the very nature of the market is making it more expensive to operate," he said.