As the members of Parliament on the EFRA select committee heard views this week on the draft Groceries Code Adjudicator Bill, growers and small-business leaders have voiced major concerns.

NFU president Peter Kendall has said he is “staggered” by the claims of retailers that the cost of the new adjudicator will lead to higher prices in store.

He said the £120,000 annual cost of the adjudicator “to demonstrate that they [retailers] are treating their suppliers fairly” was negligible when set against the salaries of the chief executives of some retailers covered by the code.

Speaking to MPs on the Efra Select Committee, who are conducting an inquiry into the draft Bill, Kendall emphasised it would need improving before beginning its parliamentary passage.

He said that the Adjudicator must have powers to launch proactive investigations, to take evidence of breaches of the groceries code from organisations such as the NFU, and to fine bad behaviour from the outset, none of which are included in the draft. “We do think it needs strengthening, both on being proactive and on fines,” Kendall told the committee.

The Forum for Private Business has also expressed its concern and said the adjudicator must have power to impose multiplier fines on supermarkets that repeatedly breach the code.

The forum was appealing to members of the Business Innovation and Skills (BIS) committee, which also met this week. “Mistreatment of smaller suppliers by supermarkets is a constant, pressing problem and awarding the ombudsman powers to impose financial penalties would be more likely to ensure compliance with the code,” said the forum’s head of campaigns, Jane Bennett. “As it stands the Bill does not allow the ombudsman to fine retailers in breach of the code but provides for this ‘if the secretary of state adds a power to do so’.

“We think this power must be a basic essential for the code to be effective and for the adjudicator to have any real teeth. We have to hit supermarkets which flout their responsibilities where it hurts.”

The forum is also concerned that, according to the wording of the Bill, the ombudsman will arbitrate disputes between large retailers and direct suppliers only - which risks leaving subcontractors further along the supply chain open to potential abuse at the hands of supermarkets.

The forum is also recommending that the new ombudsman should be funded by retailers, based on profit rather than turnover as has been suggested - in order that consumers do not end up footing the bill.