The Ulster Farmers’ Union has praised the latest investigation into Asda by the Grocery Code Adjudicator (GCA) saying it is an ugly reminder to suppliers and farmers of what relationships with retailers could be like if left unchecked.
“The GCA plays a critical role in helping to ensure there is fairness in the supply chain,” said UFU president Barclay Bell. “Given the findings of this investigation it is clear that it is very much needed. In fact, we would argue that the GCA’s powers should be strengthened and the remit extended to include primary producers.” .
The comments were made following the publication of the GCA’s investigation into Asda’s treatment of suppliers under its “Project Renewal”, which aimed to increase the retailer’s price advantage over competitors and strengthen its competitive position.
According to the GCA, in early 2016 suppliers were asked by Asda for significant financial contributions to keep their business with Asda. In some cases, this was as much as 25% of the annual turnover of the stock keeping unit (SKU). If they were not successful in negotiating terms on which to remain listed, some reported being given non-negotiable periods of notice of de-listing, with periods of between four and eight weeks being reported to the GCA. Changes to terms of supply, including cost price reductions and routes to de-listing were presented to suppliers during the course of their existing agreements with Asda, as variations to agreed terms. Suppliers reported being given very little time to agree to any proposed changes, sometimes as little as 24 hours; in one case, overnight.
For too many years farmers have witnessed retailers abuse the power they had in the market, said Bell. “The Groceries Supply Code of Practice was brought in to prevent this and create a level playing field. These findings are a major setback to the industry’s relationship with ASDA and the integrity of the retailer has been damaged significantly. This is a very disappointing situation. While the majority of farmers in NI will not be directly impacted by the result of the ASDA investigation on the whole it is an important win. Individually and collectively, farmers seek to be valued and treated fairly in the supply chain; this result is a step towards redressing the power imbalance,” he said.
Asda’s grocery code compliance officer Sarah Dickson, said practices had since changed. “We have re-emphasised our commitment to a partnership-led approach to relationships with our suppliers, full compliance with GSCOP and a simple, efficient way of working together.
“We have also reduced our payment terms for small suppliers to 14 days and our larger suppliers are testing good faith receiving. We have made sure it is quicker and easier for suppliers to raise concerns with us by re-establishing a single supplier helpdesk,” Dickson added.