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Minister questions value of fining stores for unfair deals with farmers

By Western Morning News  |  Posted: November 27, 2012

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Farming Minister David Heath has played down the prospect of fining supermarkets that fail to offer farmers a fair deal.

Legislation to create a retail industry "watchdog" to crackdown on sharp practices when dealing with food and drink producers is making its way through Parliament, with ministers keen to deploy "name and shame" tactics to force big business to behave.

But a chorus of MPs has called for the adjudicator of the groceries industry code of practice to be given the power to issue tough financial penalties from day one.

Under the existing proposals, Business Secretary Vince Cable would have to agree to give the adjudicator the power – which would take at least six months to pass parliamentary hurdles.

In an interview with the Farmers Guardian magazine, the Farming Minister appeared to dismiss day one fines, despite conceding the Government is "listening".

Mr Heath said that the Department for the Environment and Rural Affairs (Defra) and business ministers would keep an "open mind on the issue" as the Bill enters its final stages.

But he said: "We need to be satisfied that having the ability to fine from the beginning actually makes the system more effective. We need to be persuaded it does not add complications without adding extra value to the process."

The Government's main concern is that financial penalties would be accompanied by a "potentially costly and time-intensive bureaucratic" legal appeals process.

"As soon as you get into legal challenges, you increase the timescale and the lack of clarity about the outcome," Mr Heath said.

He added that the benefit of fining supermarkets was "questionable" as they would barely make a dent in retailers' vast profits.

"Unless the fines are massively disproportionate, there is not much point," he said.

Mr Heath said retailers were "much more concerned about their reputation" and would fear damage to this more than fines.

The Government therefore still believes "naming and shaming" would be the adjudicator's "biggest and most important tool", claiming the summer's dairy protests showed "even the biggest companies retreat" in the face of consumer pressure.

An industry adjudicator was mooted as long ago as 2001, and could be in place next year. The most frequent complaints from farmers include supermarkets demanding one-off payments from suppliers to guarantee future business and forcing them to sell produce on two-for-one discounts.

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