Supermarket code ignores below-cost sales

By John Farrant

THE long-awaited DTI Code of Practice for major supermarkets and suppliers has disappointed farmers and the egg sector by failing to address the key issue of below-cost selling.

The British Egg Industry Council believes that urgent Government action is required to ensure that the true cost of production is taken into account in negotiations.

The NFU points out that the Code only applies to the four major supermarkets and offers only very limited protection, but many farmers and growers supplying retailers do not supply them so they have gained nothing.

It intends to resurrect the voluntary code between suppliers and retailers devised last year.

Trade and Industry Secretary Patricia Hewitt approved the Code, seven months after the DTI received it from the Office of Fair Trading.

She claimed “It will give suppliers greater certainty and security, by putting contractual relations with supermarkets on a clearer and more predictable basis.”

Mark Williams, chief executive of the BEIC, said, “It is absolutely vital that egg producers and packers are paid a fair price for their eggs, which reflects the true costs associated with supplying a safe, high quality food.

“The current situation of being pressurised into selling eggs below cost of production may force producers to cut corners, which would not be in the consumers interest.”

The DTI code involving only Tesco, Sainsburys, Safeway and Asda, requires the retailers to enter into a written agreement with suppliers and to give reasonable notice before changing any conditions of the contract.