Carmichael introduces Food Supply Chain Fairness Bill in Parliament

Orkney and Shetland MP, Alistair Carmichael, is today introducing the Food Supply Chain Fairness Bill in Parliament, as a Ten-Minute Rule Motion. 

Mr Carmichael is expected to say:

Mr Speaker, in March 1917 – at the height of the First World War – the Liberal Prime Minister David Lloyd-George sent a letter to an Orkney farmer, Charles Paterson. 

He wrote:

“In the nation’s interest I urge you, at whatever personal sacrifice, to overcome all obstacles, to throw your fullest energies into the work, and to influence and encourage all who assist you, so that every possible acre shall be sown.”

At that time there was no question at the heart of government about the “vital importance” of farmers in the isles and across the country.

In the century since, farmers have continued to play their part in supplying the nation’s table – but their incomes have stagnated.

The market for agricultural produce in the UK has not been a free market since at least the end of the Second World War.  Successive governments have intervened through the payment of public subsidies to farmers, initially in the name of food security and, more recently, in the name of cheap food for consumers.   That intervention has, over the years, distorted the market and allowed a range of unfair practices to be hard-wired into the system.

As a consequence, the market today has a handful of behemoth retailers – the Supermarkets – at the top; hundreds of thousands of farmers at the bottom, and a variety of processors, distributors and others in the middle.  Everyone takes their cut and then, at the end of it all, the farmers get whatever is left.

The power imbalance between supermarkets at the top and farmers at the bottom is more pronounced than any other market that I can think of, and it is well documented that those at the top who have the power wield it to their own advantage.  

Why wouldn’t they?

Mr Speaker, the extensive debate that we have had in this House in recent months has laid bare the shocking truth about the lack of profitability in farming. Just last week a new report from the Food, Farming and Countryside Commission found that real incomes for farmers have stayed stock-still for the past 50 years.

Shortly after the Autumn Budget, a group of younger farmers in my constituency came to see me and brought with them their farm accounts.  They were despondent in pointing out to me that their businesses earned a net profit of 0.7% on their capital.  They were not much cheered up when I pointed out that they were doing better than many of their contemporaries, as DEFRA figures say that the average return is as low as 0.5%.

One of those farmers was the great-grandson of Charles Paterson – a seventh-generation farmer who works the same land as his great-grandfather. You really could not ask for a better illustration of the shift in priorities for our government over the past hundred years. 

Mr Speaker, this cannot go on. Something has to change.  Farmers are seeing a rapid withdrawal of funding support.  In England the accelerated withdrawal of basic payments followed by the closure without notice last week of the Sustainable Farming Incentives has left many farms desperately worried about the viability of their businesses.  

Elsewhere in the UK, the removal of the ringfence of money given to devolved administrations for agricultural payments, leaves farmers there feeling vulnerable to adverse change.

That is why this market now needs direct and meaningful intervention.  Without it we risk losing domestic food production and any notion of food security.  If, as the Prime Minister says, food security is national security, then his government should act urgently to allow our farmers to get a fair price for the food they produce.

I was in government when the Groceries Code Adjudicator was set up.  I don’t think that anyone believed that the GCA would be the last word in regulation of the food supply chain but we all took the view that it was better to have something than to have nothing.

Twelve years on from its creation, the limitations of the Adjudicator are apparent for all to see. 

The office of the Groceries Code Adjudicator has fewer than ten staff, all seconded from other public bodies, and it is funded by a levy on supermarkets.  To expect an operation of that size to take on some of the largest retail businesses in the country is laughable.

It is hardly surprising then that businesses supplying supermarkets are reluctant to make a complaint, especially when the office itself has not issued a single fine in the entirety of its existence. 

Such cases as are pursued end up with settlements and non-disclosure agreements.

Since publicising my bill I have spoken to a number of producers who have told me about their experience at the hands of supermarkets.

Just yesterday I spoke to a businessman who had been a supplier of Brussels sprouts to a large supermarket.  His company had, on the basis of undertakings made to it by the retailer, invested significantly in their business, borrowing £400,000 to build a state-of-the-art packing facility.  In the year 2022 to 23 this one supermarket accounted for 47% of their total business.

Then, in February 2023 they were told by the supermarket that their supply was no longer wanted for the 2023-24 season.  

For that business the news was a hammer blow and despite it being a prima facie clear breach of the Groceries Supply Code of Practice the GCA initially declined to intervene.   

I would love to say that this was an isolated incident but the GCA Annual Survey conducted by YouGov suggests that it is not. 

42% of suppliers would not raise issues because they believed that the retailer would find out and that there would be consequences.  The experiences that they describe include :

• de-listing without reasonable notice
• Undisputed invoices not being paid according to agreed terms
• Retrospective changes to supply agreements
• Running a promotional activity at the supplier’s expense

And much more.

Practice amongst supermarkets shows a wide variety of behaviours.  

Seven of the retailers were judged to have improved or at least stayed the same, with Sainsbury’s coming out on top with a net improvement score of 10.34%

Unfortunately seven others including Home Bargains, ASDA, Tesco, Ocado, Iceland, Morrisons and Amazon were scored as having worsened by varying degrees, with Amazon’s performance being judged to have worsened by a whopping 21.38%.

Amazon was also scored as having complied with the code “consistently” or “mostly” only 46.96% of the time.

Mr Speaker, yesterday’s Daily Telegraph reported that ASDA was threatening a “price war” in order to regain market share that they had lost in recent years.  

For farmers that is a chilling prospect.  If supermarkets are about to embark on a race to the bottom then we can be pretty sure that it will be farmers, not company executives or shareholders who will take the hit.

Mr Speaker, it is not for us in Parliament to pick a winner in a fight between supermarkets but they should know that we are watching.  Any supermarket that thinks it can rebuild its balance sheet on the back of Britain’s farmers might find themselves in front of the EFRA Committee. They had better have good answers when they get here.

My bill has support from MPs across the political parties – it is sponsored by members from my own party, the Liberal Democrats, Labour, Conservative, Plaid Cymru, SNP, Green and Democratic Unionist Parties.  

It also has wide geographical support.  It has sponsors from Shetland to Cornwall and across the four nations that make up the United Kingdom.

I am grateful for the support I have received from the National Farming Unions, The Country Land and Business Association, Scottish Land and Estates, Tenant Farmers Association and the Countryside Alliance.

This is a quite remarkable coalition of people who all understand that if we fail to act now, before too long there may be no industry left to protect. 

Charles Paterson’s family in Orkney is still working the same farm to this day. If we want to keep farming communities alive for generations to come, however, we need to act to make it happen.