Supermarket price wars ‘chilling prospect' for farmers, says MP in regulator bid

Independent

19-03-2025

Supermarket price wars are a 'chilling prospect' for food growers, an MP has said amid efforts to join up regulation covering shops and farmers.
Alistair Carmichael said the farm-to-fork pipeline needed 'direct action' from the Government and warned that 'without it, we risk losing domestic food production and any notion of food security'.
He urged MPs to back his Food Products (Market Regulation and Public Procurement) Bill, which secured its first reading on Wednesday, days after Asda bosses indicated the chain was planning to set up a grocery price war.
The chain's chairman Allan Leighton vowed last week to 'undertake a substantive and well-backed programme of investment in price, availability and the shopping experience', amid efforts to regain customers' trust in the brand.
Mr Carmichael told the Commons: '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 be expected to take the hit.'
The Liberal Democrat MP for Orkney and Shetland said it was 'not for' Parliament to 'pick a winner in a fight between supermarkets', but he warned that 'any supermarket that thinks it can rebuild its balance sheet on the back of Britain's farmers might find themselves in front of the Environment, Food and Rural Affairs Select Committee', which he chairs.
Mr Carmichael said his Bill, if agreed to, would require co-ordination between two existing watchdogs – the Groceries Code Adjudicator and the Agricultural Supply Chain Adjudicator.
It will next be listed for debate on June 20.
He previously described 'a bit of regulation at one end and a bit of regulation at the other and no wiring between the two and nothing actually even to join together the two bits of regulation'.
Supermarkets backtrack on the commitments they make to farmers without a reason and say 'we don't want your product any more', Mr Carmichael told the PA news agency, adding: 'That farmer or processor will probably have gone to some expense to market and batch and package their product in such a way that the supermarket demands but they'll pull the rug out from underneath you.'
He also said that if supermarkets decide to cut milk prices 'everybody then passes that on down the line to the family farmer, and the farmer essentially at the end of the day is left having to shrug his shoulders and just take the hit'.
The Groceries Supply Code of Practice (GSCOP) promotes 'fair dealing' and discourages supermarkets from demanding changes to their supply chains without 'reasonable notice'.
Mr Carmichael said farmers 'take it' because complaining to the Groceries Code Adjudicator, who is supposed to enforce the code, could mean they struggle to 'get back in' with the supermarkets and suffer 'bad long-term consequences'.
A new regulator could have built-in protections, including the power and resources to proactively investigate suspected breaches without the need for farmers to complain.
Asked whether shoppers will face higher prices amid efforts to pass a bigger share of sales to farmers, Mr Carmichael said: 'I don't think the people who can afford to be impacted by this are the consumers.
'I think that the people who are doing rather nicely out of this are the supermarkets and indeed some of the processors and distributors as well.
'So if you're going to find a way of improving the lot of the farmer you have to do it in a way that doesn't actually work to the detriment of the consumer, and that's why you've got to have a regulator that is big enough and has sufficient resource to be taken seriously by supermarkets.'
The MP said subsidies since the time of the Second World War have meant the food market had already experienced significant Government interventions.
Several organisation leaders have indicated their support for the proposal, including at the National Farmers' Union (NFU) and the Food, Farming and Countryside Commission.
Dr Charlie Taverner, farming futures policy lead at the Food, Farming and Countryside Commission, said: 'In our new report Paying the Price, we found that consolidation, driven by decades of government policy to cheapen food, means farmers have little bargaining power and big corporations have a disproportionate influence on government policy.
'This long-term squeeze on farming profits, with farmers' incomes having barely risen in 50 years, has had major costs to our health, the planet and rural communities.
'Alistair Carmichael's idea of a farm-to fork watchdog is exactly the kind of bold thinking our report recommends.'
NFU president Tom Bradshaw called for a 'policy which doesn't undermine' farmers, adding: 'Strengthening farmers' position means making our food system more resilient and provides a trading environment that remains competitive and innovative.'