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Farmers want supermarket ombudsman to set fair prices

Commission report stops short of appointment, but wants tighter controls

By Linda McKee

Published 31/10/2007

Farmers in Ulster today called for the appointment of a supermarket ombudsman to make sure that suppliers get a fair price from retailers.

It was expected that the Competition Commission would recommend the measure in a preliminary report on practices within the UK's retail sector.

But, while the commission advised that the voluntary Supermarkets Code of Practice (SCOP) needs to be tightened, with new arrangements for the way it is monitored, it stopped short of recommending the appointment of an ombudsman.

The commission raised concerns over the relationship between supermarkets and suppliers and said changes were needed to offer greater protection to suppliers. It warned that supermarkets are able to transfer risk and cost to suppliers through purchasing practices, such as retrospective changes to supply agreements, which could stifle investment in the supply chain.

Proposed changes to SCOP may see the rules extended to cover more than just the big four supermarket chains.

Dairy farmer Tom Elliott, who is deputy chairman of the Stormont agriculture committee, said it is vital that some sort of regulation is put in place to protect farmers - otherwise Ulster's local produce will go extinct.

"My main aim is the issue about the value of the products and how much they put back to processors and farmers. Clearly I've been in touch with the Competition Commission several times over the last number of months about it, " he said.

"What I would like to see is some type of ombudsman. It's vital that we get some type of regulation put in place to protect the primary producer.

"What's happening, especially in the red meat industry, is that there is no profit to the farmers, whereas retailers are making significant profits from it. There needs to be a fairer share of those profits going back to the primary producers.

" It's a difficult one to implement - how do they put it in place without government support? But unless something like that is put in place, we are not going to have our own local produce or our own beef enterprises any more. "

The commission said the UK's supermarket sector was lacking competition. Recommendations include reviewing the planning system to allow greater scope for developments on the edge of town centres, while maintaining constraints on out-of-town supermarkets.

The watchdog is also proposing that grocery retailers are prevented from "land banking" to stifle competition and is looking at barring the use of " restrictive covenants" on sale of land, under which land cannot be used by a rival supermarket.

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