In the week the Office of Fair Trading published an audit saying the multiples were largely complying with the supermarket code of practice, scorn has been poured on its findings by suppliers, producer organisations and service providers in the sector. John Smith of Re:fresh award-winning packer Greyfriars and a former Tesco mushroom supplier said: "The report has some value as it finds large areas of the code of practice are being addressed but key areas remain dubious and it is not as clear as the OFT and [auditor] PKF present it: the supermarkets' smoke and mirrors job has worked."
The audit, found that Tesco, Asda, Sainsbury's and Morrison's are by and large complying with the code, but that it is not being used to resolve disputes. Now the OFT is inviting comments and evidence on the findings of the audit and on the wider role of supermarkets - such as the effects of their entry into the c-store sector.
The compliance audit looked at a sample of 500 grocery supplier relationships with the big four supermarkets and found there was evidence of some breaches consisting of supermarket requests for over-riders but these related mainly to Safeway before its acquisition by Morrisons. "Suppliers appear not to have complained to the supermarkets about having to make the payments...said Sir John Vickers, OFT chairman in a statement.
"The code's success depends on it being used. The OFT believes that suppliers should overcome the fear of complaining and use the code's dispute resolution procedure when they have concerns about their dealings with supermarkets."
But audit and consultancy firm Grant Thornton says the OFT audit's findings ignore a reality of abusive trade practices.
"Urgent action is needed through a radical reform of this ineffective code and the introduction of a supermarket ombudsman," said Duncan Swift, head of GT's food and agribusiness recovery group.
The National Farmers Union of Scotland branded the audit a waste of time and calls for independent enforcement to protect suppliers' rights.
"The OFT has ducked this whole issue by hiding behind a code that suppliers are afraid to use," said NFUS president John Kinnaird.
And, Tesco used Tuesday's publication of the audit to announce that it is appointing a code compliance office to monitor relationships with its supplier base and to head up "the biggest supplier survey of its kind" by issuing questionnaires to all its suppliers for confidential feedback.
The OFT has now called for reactions to the audit, and for those with evidence of abuses to come forward by the end of May. Greyfriars's Smith has already submitted 13 pages of evidence relating to his and the experience of others at Tesco. An OFT spokeswoman told the Journal why this was not considered for the purpose of the PKF audit: "We were looking at the supermarkets dealings with suppliers from the supermarket end and we did not take evidence from suppliers. However we are now considering a complaint from Mr Smith."
Meanwhile, Smith appears to have stirred up a hornet's nest with his exposure of the practice of over-riders among the national media and he has given several interviews to radio, television and the print media this week. "I have spoken to dozens of Tesco suppliers inside fresh produce and only one has said they are happy about paying an over-rider," he told the Journal.
Smith and Greyfriars have gone on to grow their trade with Morrison's very successfully since losing the Tesco business last year. "This is a point of principle: I have nothing to lose and nothing to gain if over-riders are abolished," said Smith.
No comments yet