Law to break supermarkets' grip on farmers

Special report: Foot and mouth disease
Special report: countryside in crisis

Kamal Ahmed and Sarah Ryle
The Observer, Sunday March 4 2001

A crackdown on the way Britain's biggest supermarkets use their power to manipulate the food industry is to be unveiled by the Government.

A legally enforceable code of conduct being drawn up by the Department of Trade and Industry and the Office of Fair Trading will demand that supermarkets have a fairer relationship with farmers, who complain they are bullied into providing food at very cheap prices by the large chains.

The need for cheap food has been cited as one of the reasons for the foot and mouth disease epidemic, which had yesterday spread to the Continent, prompting fears of a Europe-wide crisis.

Supermarkets - including Asda, Safeway, Tesco and Sainsbury's - will face heavy fines if they fail to stick to the new rules.

Last week, the Prime Minister Tony Blair admitted supermarkets had farmers 'in an armlock'.

The move comes as the agriculture crisis continues to grip the nation. The Government revealed yesterday that seven more cases of foot-and-mouth had been found - from Cornwall to Dumfries and Galloway - bringing the total number of cases to 51.

The chief veterinary officer, Jim Scudamore, said 45,000 cattle had now been slaughtered. Scudamore admitted that there were at least three more highly suspect cases. He could not say how long the crisis was likely to last.

The Government announced a new set of measures yesterday:

• Vets from Italy, Canada, America, Australia and New Zealand will fly to Britain this week to help overstretched British colleagues.

• £156 million of European Union payments to compensate farmers hit by the strong pound will be brought forward.

• Critics of the Government's food policy will be invited to a specially organised food summit to discuss radical changes.

• The Government's position on vaccinating sheep and cattle against foot and mouth will be reviewed, although it said it was unlikely it would change the 'no vaccination' position as it would harm exports.

Nick Brown, the Agriculture Minister, said he hoped that some domestic meat supplies would be able to start moving by tomorrow as supermarkets said stocks were running low.

The crisis means some supermarkets are preparing to ration supplies. All the major chains expect shelves to empty of British-produced fresh meat by Tuesday or Wednesday. A spokesman for Somerfield said certain red meats would run out in the next 24 hours.

The Government said that strictly controlled licences would be awarded to farms outside the foot and mouth exclusion zones. Haulage firms would then be allowed to take cattle to abattoirs, with the animals being slaughtered before entering the food chain.

Brown said it was time for a more fundamental look at the food industry. As well as the new code for supermarkets, the Government has said it would review 'just-in-time' supply chains which involve the movement of vast quantities of food very quickly around the country.

It will also look at the role of smaller, more locally based abattoirs, which would mean livestock being transported shorter distances.

The job of the dealers, who move animals to different markets across the country in a chase for the best price, will also be investigated. All three factors are thought to have played a part in the rapid spread of the disease.

The supermarket code of conduct, which will affect the five biggest supermarket chains, will demand that any disputes between farmers and supermarkets are settled by an ombudsman.

It will also say that food diversity is an important part of the food chain and that supermarkets should be aware of their role in maintaining healthy competition and diversity.

The National Farmers' Union welcomed the new code. 'Anything that is good for the food supply chain is ultimately good for the consumer,' said Ian Gardiner, NFU deputy director general.