Groceries code boss says progress made

Forthcoming statutory review

Code is effective

Matter of trust

If the Groceries Code Adjudicator (GCA) is to be assessed three years after coming into existence, the food industry consensus would probably be ‘progress made, but room for improvement’.

The GCA’s YouGov annual survey, published in June, revealed a drop in the proportion of direct suppliers experiencing a problem with retailers for the third consecutive year – down to 62%, from 70% in 2015 and 79% in 2014.

While the prevailing view is that the behaviour of retailers has improved, a drilling down of the survey data reveals a number of supplier concerns that still need to be addressed.

And with the future of Christine Tacon’s role currently up for review, there has been growing clamour for her powers to be extended to cover the thousands of suppliers and/or primary producers operating in the UK.

But how effective are the current powers? Is it viable to broaden the Groceries Supply Code of Practice remit? And what should suppliers do to get the most out of the code in its present form?

Following an illustrious career that included 11 years at the helm of The Co-operative Group’s farming business, the largest of its kind in the country, Tacon knows as much about the food supply chain as anyone.

And while there have been some who have criticised her role as being largely toothless (the remit doesn’t cover pricing, for example) Tacon believes growing momentum for the code to be extended is a testament to the progress made.

“Rather than any discussion about my role being relevant at all, it seems that parties want me to take on a lot more, which I do take as some form of flattery,” she says.

“However, my role is paid for by the retailers, so if I’m regulating other businesses in the supply chain, who’s going to pay for it?

“There are all sorts of practicality issues involved with extending the code to thousands of suppliers.”

Forthcoming statutory review (Back to top)

Some of these issues will be looked at as part of the government’s forthcoming statutory review on the future of the GCA.

Due to be launched in July, a 12-week consultation period has been put on ice to later this month at the earliest, in the wake of the Brexit vote.

Tacon says her ability to do the job is unaffected by the consultation delay, or indeed, the decision to leave the EU.

“From a code point of view, Brexit shouldn’t have any impact. However, I am aware that some suppliers reliant on imports have tried to pass on cost increases to retailers, with varying success.

“So, if there’s something in the supply agreement that the retailer isn’t sticking to, that’s an issue.”

As a former farmer, Tacon has strong views on how Brexit will potentially impact the wider food industry.

“From personal experience, I know that it is very difficult to get UK nationals to pick fruit and prune trees for four months a year.

“Eastern European workers are just really committed to the job, and do it well,” she says.

“So, where agriculture is going to get its labour force from is concerning.”

Given the uncertain times ahead, it’s perhaps not surprising that the National Farmers Union in particular is keen to see the code extended.

Code is effective (Back to top)

However, Tacon believes the survey is evidence enough that the code is effective in its present form.

Tesco – severely reprimanded in January for three breaches of the code – was given a 60% net improvement supplier rating, while Aldi, Co-op, Lidl, Iceland and Sainsbury all recorded double-digit rating improvements.

“Asda was the only retailer that recorded a significant net rating loss – down 10%. I’m taking it up with them,” says Tacon.

Of the specific issues, delay in payments and variation of supply agreements and terms remained the two biggest supplier concerns.

However, no compensation for forecasting errors, variation of supply chain procedures and tying of third-party goods and services to payments had all crept up in significance.

“The survey allows me to tell each retailer how they compare across a wide variety of issues, and we flag up the worst performers across each issue in red. So we’re telling them which areas they should improve,” says Tacon.

But while the survey has its obvious benefits, Tacon remains concerned that more suppliers are not confident enough to report concerns to her directly.

“Very few people tell me things voluntarily. I don’t get missives coming into the office, I don’t get people ringing me up.

‘Matter of trust’ (Back to top)

“Yet, when I’m with suppliers, they will tell me everything – so it’s not a matter of trust,” she explains.

Another frustration for Tacon is that less than a third (35%) of suppliers claim to have been trained in the code.

“If you want to understand what the code is, and how it can protect you, then you need to be trained,” she maintains.

“I know that retailers ask for things in negotiations that they shouldn’t. But if you bat something code-related back, you are immediately in a much stronger position.

“Delays in payments is an often unappreciated area of the code. If you tell them you have delivered 1,000 units, and they say they only received 980, and don’t get paid for the other 20, that’s a delay in payment.”

Clear challenges remain, but with the general impression that the relationship between suppliers and retailers is getting better, might her role one day become irrelevant?

“I don’t know. We may get to the point where we can’t make any more improvement. But if the code is taken away, then things might start getting worse again,” she says.

“Whatever happens, my role is a four-year term, and it concludes next June. Then, the government and I need to both decide whether it should be extended.

“Given that so many groups are keen to have my powers increased, I like to think we’re on the right track.”

Meanwhile, watch Tacon explain why her work is “totally dependent on suppliers” telling her about unfair practices in this exclusive video interview.