Brexit is placing strain on the UK’s food sector. Fortunately, a regulator already exists that could support producers and traders through this period of uncertainty – if the government wants it to.
For many in the food sector, leaving the EU means confusion about the future of trade, regulation and the labour market. This is unwelcome for the many farmers and small food businesses that supply our supermarkets, since they are already dealing with uncertainty in day-to-day dealings with buyers that might include unfair hidden charges, last-minute order cancellations and late payments.
In Traidcraft’s experience, suppliers of perishable produce are particularly vulnerable to unfair trading practices. For example, if the price offered for a shipment is slashed at the last minute a perishables supplier may not be able to find an alternative buyer before their product is past its best and loses all value. The government isn’t able to offer much clarity on questions to do with Brexit, but what it can do is support the food sector by stamping out unfair purchasing practices such as those described above.
The solution is simple: we already have a Groceries Code Adjudicator (GCA), who has been in place since 2013. This regulator defines and polices ‘unfair dealing’, and has the power to fine supermarkets if they do not comply. The GCA demonstrated its use earlier this month by requiring Asda to reimburse suppliers for payments taken without a contract.
However, the GCA’s remit is too narrow, and only covers the purchasing practices of the UK’s largest 10 supermarkets with their direct suppliers. This means that the majority of the food supply sector, which may sell into the major multiples via a manufacturer or big brand, remains vulnerable to unfair purchasing practices.
The government is currently reviewing the role of the GCA, and has the opportunity to extend its powers to cover indirect suppliers. This would be particularly welcome for farmers and small businesses faced with navigating the chaos of Brexit. Concerns that an extended regulator would be paralysed by the size of its remit are ill-founded as the UK already regulates huge sectors such as utilities and finance.
The GCA has approached this challenge strategically: advertising its role, gathering information from a range of sources and prioritising which issues warrant further investigation. There is no reason why this same approach would need to change as the remit is widened. If resources are stretched, the act that set up the GCA already has provision for the appointment of Deputy Adjudicators.
The next few months will provide a clear indication of whether the government is serious in supporting food businesses operating in a competitive groceries sector, rather than one that is rigged against smaller businesses. The government needs to bring forward plans to extend the GCA, perhaps by including such a provision in a forthcoming post-Brexit bill covering trade or agriculture, or a bespoke GCA extension bill.
