An investigation by the Grocery Code Adjudicator (GCA) on Tesco’s buying practices has now become a rallying cry for farmers against the company’s business practices - the top interested party being the Ulster Farmers Union (UFU).
“Every business has to make a profit... but power and dominance in the food sector comes with responsibilities, and the GCA report has made that clear,” UFU President Ian Marshall commented in news source News Letter.
The investigation was in response to recent questions raised about Tesco and other major retailers abusing their power within the supply chain as the local industry's biggest customers and their direct line to the mainstream market in the U.K.
In the GCA’s report it is revealed that a vast majority of Tesco’s invoices were left undisputed. Evidence has shown, however, that whenever a dispute arose over payments, the retailer would either delay or deduct payments, with suppliers not receiving payments for as long as two years.
“There was also extensive evidence that where payments were otherwise than for goods supplied or there was any disagreement over amounts due, this resulted in Tesco deducting or deferring payment of money that was owed to suppliers for goods supplied,” the report states. “Sometimes this involved significant amounts that were delayed for long periods of time. Even where a debt had been acknowledged by Tesco, the money was sometimes not repaid for over 12 months. I received evidence that some repayments were not made for nearly 24 months and on other occasions the supplier gave up pursuing the amount owed.”
“At a disadvantage, farmers pay the price because they are expected to deliver top-quality produce at prices below the cost of production,” Marshall added. He says the report found that Tesco's applying pressure to suppliers forced prices and suppliers’ margins down, creating losses for those providers.
Despite the report’s findings, Tesco will not be fined by the GSA, as the breaches of conduct took place before last year’s ruling that the association had the government’s consent to fine companies up to 1% of its annual revenue according to The Guardian.
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