Farmers attack OFT findings into deals with supermarkets

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The Independent Online

The farming industry condemned as a "whitewash" a report published yesterday by the Office of Fair Trading that concluded supermarkets treat their suppliers fairly.

The farming industry condemned as a "whitewash" a report published yesterday by the Office of Fair Trading that concluded supermarkets treat their suppliers fairly.

They said retailers had created a culture of fear that masked abuses of power and prevented farmers from coming forward through fear of losing key contracts.

The OFT concluded after a nine-month study that supermarkets were largely adhering to the voluntary code of conduct in the industry designed to ensure a fair deal for all. This verdict was met with derision by farming groups, environmentalists and financial advisers to the agricultural industry.

The OFT found evidence in 46 cases where the code of conduct appears to have been breached, 44 of which relate to Safeway with the rest discovered at Sainsbury. These involved the supermarket groups demanding lump sum payments from suppliers in return for continuing to do business with them.

Since Safeway's takeover by Morrisons, the practice has been stopped and the OFT accepted the incidents at Sainsbury's were isolated. Aside from this, the report found "little evidence" of breaches, but it did acknowledge it had been difficult to assess the effectiveness of the code, established in 2002, because no supplier complaints had been brought. "Suppliers should overcome the fear of complaining and use the code's dispute resolution procedure when they have concerns," the OFT said.

Tesco welcomed the report's findings and said it was appointing a code compliance officer to hear formal complaints from suppliers, anonymously if necessary. A spokeswoman for Sainsbury said it had worked hard to have "fair and constructive" relationships with suppliers that benefited its customers.

But Duncan Swift, of Grant Thornton, said: "The code is designed to protect supermarkets from criticisms and to brick-wall them from claims of abusive trade practices towards their suppliers. The code does not require the additional terms to which suppliers are often subject - such as continued business, paying for shelf space, promotional activity - to be confirmed in writing. If it did, we would be discussing what the industry already knows: evidence showing how the disproportionate power of the major multiples is damaging suppliers."

The National Farmers' Union (NFU) said the voluntary code was too limited. "The climate of fear that exists under the code needs to be addressed," Tim Bennett, its president, said. Farm, the independent farmers' group, called for a compulsory code to ensure fair practice. Friends of the Earth wants an ombudsman appointed to monitor the industry.

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