Climate of fear still exists
The National Farmers' Union (NFU) has poured cold water on the Office of Fair Trading's assessment of the Supermarkets Code of Practice by saying it doesn't go far enough.

The union, which lobbies the Government on behalf of suppliers, said the code still fails to address what its members claim is an uneven relationship with retailers.

NFU deputy president Peter Kendall acknowledged the OFT's recommendation that both retailers and suppliers should keep more written documents, but said the report still falls short of the mark in terms of the grocers' power. He said: 'A climate of fear still exists and the OFT's conclusions have by no means given supplier/retailer relationships a clean bill of health. I welcome the acknowledgement by the OFT that it has a role to play in informing and encouraging suppliers to use the code to make complaints where appropriate. However, there is little in this statement that will stop or reduce the bullying tactics that some companies apply to their suppliers. This is unlikely to be influenced other than by a tougher statutory code.'

Corporate recovery specialist Grant Thornton has backed the NFU's position. The company labelled the OFT ruling a whitewash and accused the regulator of papering over the cracks. Grant Thornton food and agribusiness recovery group head Duncan Swift said the food supply chain is under major financial distress, a result of the market power wielded by big multiples. He believes the OFT has failed to grasp the realities of supermarket relationships with suppliers because it looks only at existing contracts, which suppliers will prefer to stay silent about in order to keep. According to Swift, the investgation should have focused on failed contracts instead.

He said: 'The code is toothless and vague proposals to use it more effectively will not make it bite.'