It is hoped new dairy contract legislation will open up a fairer supply chain for other sectors
Farmers and retailers will have to move past the ‘fat cat' profit row if there is to be any progress on a fairer supply chain, an industry leader has urged.
Rod Addy, director general of the Provision Trade Association, told members of the EFRA Committee which is looking into fairness in the supply chain, it was vital the industry moved away from the retailers versus supplier model if any solution was to be found.
"Retailers have to make a margin," he said. "If you look at the turnover they produce that margin seems like a lot but you have to consider the fact they are extremely large businesses and they have to reinvest.
"But the question is, could some of the profit be redistributed across the supply chain, then potentially yes it could and that is something we could look at. But while we are bogged down in the ‘Oh you are just fat cats making profit' argument we are never going to have a serious discussion."
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Mr Addy said what was required was a co-ordinated, UK-wide food policy covering the entire food supply chain. This would allow for longer, more flexible contracts which offered a greater amount of certainty for farmers.
The committee also questioned the panel, which also included Peter Dawson, policy and sustainability director at Dairy UK, whether the new dairy contract legislation would be significant for farmers.
The regulations, which have now been laid before Parliament, will help establish stability and accountability across the dairy supply chain by enabling farmers to challenge prices, stopping contract changes being imposed on farmers without agreement, and ensuring farmers are able to more easily raise concerns.
Mr Dawson said the sector was acting as ‘the guinea pig' and that everyone was watching keenly as to how it would work.
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While he welcomed the move, he revealed concerns around the role of the adjudicator and said it was essential the post was not allowed to be politicised nor become involved in price-setting.
He said: "We want the adjudicator to stick within the remit of interpreting the regulations.
He added that the sector's immediate ask of Defra was detail on how the regulations would be implemented as it could potentially disrupt milk contracts going forward which could ‘plunge the supply chain into further uncertainty' as contracts may no longer be legal under the new regulations.
Mr Addy said what was needed was not more legislation, but ‘joined-up' thinking and a concerted effort to make existing legislation work.
