Although it is over a month since this very enlightening Conference, many of the discussions are still highly relevant. Fiona Gooch, Senior Policy Advisor at Traidcraft, talked with authority about the transparency of, and improvements to, retailers’ sourcing practises. As Grocery Code Adjudicator Christine Tacon’s role (otherwise known as the GCA or Supermarket Watchdog) is currently being statutorily reviewed by the government until 10th January 2017 under public consultation, it is well worth looking at what an extension of her role could do to improve accountability in the retail supply chain. To hear the full speech please listen in here.
Fiona stated that Traidcraft’s mission is to see trade organised in such a way that it fights poverty. They operate a Policy and Campaigns Unit as mainstream trade is not done optimally. Traidcraft brings products into the UK in a manner benefitting a defined group of people and finds it vital to define which groups will benefit in their supply chain. They choose to work with labour-intensive groups.
The predominant reality of supply chains is that you have to analyse where the power lies. In food and garment supply chains, the retailers push risks down the supply chain. They want lower prices, with fast and flexible production, high technical standards and good working conditions on the one hand and cheaper prices, immediate availability and demands for expedited air freight on the other. The producers and suppliers are put in an impossible situation. The garment industry sees many examples of short term contracts, no unions, cheap and migrant labour, sub-contracting and labour rights’ violations being hidden.
The way to get change is to analyse the supply chains and work out where the power is. In the case of food it lies with the supermarkets. To establish the problem, you need to look at their buying practises and that is why Traidcraft campaigned for the setting up of the role of Grocery Code Adjudicator, currently held by Christine Tacon. This key regulator has now been in place for three years. The 10 largest supermarkets systematically put down excessive unnecessary risks on to their suppliers. Suppliers to the supermarkets are afraid of complaining. She can initiate complaints and put down penalties or 1% of turnover, and can name and shame. She publishes her findings once a year.
Fiona made the noteworthy statement that retailers do not make or transform product. They buy goods, which are driven (by someone else often) to their warehouses and stored (probably by someone else) and place the goods on their shelves with about a 40% mark-up. The GCA enforces a Code of purchasing practises and has seen noted improvements due to her investigations. There have on some occasions been worsening situations. This goes to show that “transparency” is great but enforcement is the way to go.
The consultation of which we speak at the start of the article could well open up her powers. She can currently enforce on “first tier” relationships ie between the supermarkets and the importer, or the supermarket and the manufacturer. But the manufacturers can also exert massive pressure down the supply chain and the GCA’s powers need extending too to so-called “second-tier” relationships. Let’s hope the outcome is positive in January.