Agriculture Bill — House of Lords, 2020-07-16
Topic: Agriculture
Christopher Suenson-Taylor (Labour, Centre-left): In speaking to this very extensive group of amendments, I will speak to Amendments 195A to 195F in my name, and to Amendments 197 to 200 in my name and that of my noble friend Lady Jones of Whitchurch, with implications for Amendment 207 in the name of the noble Baroness, Lady McIntosh of Pickering These amendments are primarily focused on Clause 27, which deals with the "fair dealing" of agricultural producers in the agri-food supply chain. They come from my experience—as shown by my interests declared on the register—representing mostly dairy producers and dairy processors, and my directorship of a farmers’ co-operative that processes members’ milk and markets produce in the supply chain, and, crucially, from my understanding and experience of the disruption of the food chain following the difficulties of the Covid-19 pandemic I very much welcome the "fair dealing obligations" introduced into the Bill in the provisions of Clause 27 and others. The relative imbalance in market power between primary producers at the foot of the supply chain and those at the top of the chain, selling the finished product or meal to the consumer, has long been understood. What happens in between can be a murky business of relationships, given the many channels to the market and the perishable, short-shelf-life product with its various, highly regulated processes This imbalance in bargaining power was recognised again as recently as February 2018, in the Government’s response to the call for evidence in the case of extending the Groceries Code Adjudicator’s remit in the groceries supply chain. The Government recognised examples of unfair terms and unclear contracts that led to a general lack of trust and transparency, discouraging good relationships across the supply chain. That the Government recognise that the problem is ongoing, and are now addressing it in the Bill, is to be welcomed Clause 27 gives the Secretary of State powers to make regulations "in relation to contracts". My first amendment, Amendment 195A, is an amendment to the amendment of the noble Lord, Lord Empey—I thank him for his opening remarks—and the noble Earl, Lord Dundee, which seeks to replace "may" with "must" and to establish a timeframe of 12 months in which regulations must be introduced. Progress must be made swiftly; the problems are well known. The impacts of Covid-19 on the supply chain have also become well known and have been answered in the competitive legal structure in emergency regulations, but their effects have yet to be assimilated Amendments 195B, 195C, 195D and 195E are designed to be all-inclusive: first, across all business purchases; secondly, across all farming sectors listed in Schedule 1, and, thirdly, across all dealings between purchasers and sellers. Lastly, the Secretary of State must promote fair dealing outside of a contract, as well as within the terms of a contract A contract is often drawn up by the purchaser rather than the seller and may contain only necessary provisions around the supply and payment for an agricultural product. It is important that Clause 27 must not be interpreted only with regards to the dealings in a specific contract but encompass all dealings. It would be important for the regulations to address, as a baseline, good basic business practice of fair dealings, and then to address fair dealings in contracts. The regulations must go to the heart of the matter: an enforceable fair dealing code of practice Amendment 195 reflects on the disruption to supply relationships caused by the pandemic. The immediate closure of all food service sector outlets—canteens, restaurants, cafes, coffee shops and snack bars, which make up 50% of all food purchases made out of the home—cut off at a stroke all the supply lines. There was suddenly nowhere for food products in the food service sector to go. There was a relative rebalance to retailers and local outlets following this. The effect was for purchasers of primary products to push enterprise risk down to the producers and sellers of products—the farmer—citing force majeure as a reason to refuse contract fulfilment. I am pleased to say that retailers largely stood by their responsibilities to the supply chain This experience has severely affected the faith of sellers in fair dealings. Will provisions on fair dealings in Clause 27 be sufficient to deal with these experiences in the future? How will they deal with a similar possible disruption, whether in the extreme—as in the pandemic— or in many other examples which may be more localised and more specific to the food sector, as in Schedule 1, where purchasers may have difficulties making payments for produce? How will the balance of risk be assessed in these regulations? Will the provisions of the Bill cover the situation I think the Minister will agree that this is entirely different from circumstances covered under "Exceptional market conditions" in Clauses 18 to 20, in Chapter 2 of Part 2 of the Bill. These clauses give powers to the Secretary of State similar to those pertaining to the EU Commission: to step into the market to stabilise it where there are disruptions from extreme weather circumstances I turn now to Amendments 197 to 200, and my comments are also made in relation to Amendment 207, on the same issue, in the name of the noble Baroness, Lady McIntosh of Pickering. These amendments are made to probe the Minister on how these regulations will operate in the marketplace, how they will be governed and by what authority or office. Subsection 9 of Clause 27 states that powers under subsection 1(b), to make regulations for the enforcement of obligations imposed by fair dealings, can be conferred on "any person" who will have "discretion in dealing with any matter." I ask the Minister to explain who any such person may be, and how this discretion will be made effective. My noble friend Lady Jones and I have suggested the Groceries Code Adjudicator, to stimulate comment and debate The amendment of the noble Baroness, Lady McIntosh of Pickering, also suggests extension to the provisions of the Groceries Code Adjudicator Act 2013. I will not take up all the space on this subject, except merely to say that the exercise in the retail trade of fair dealing functions in relation to the 13 main retailers will be very different from what will be necessary across all sections and all sectors of the agri-food supply chain. The remit of the Groceries Code Adjudicator came out of two Competition Commission inquiries and considerable debate over the course of at least a decade. I pay great tribute to Christine Tacon, the adjudicator. She has operated with a very small office and has brought, over the seven years since enactment, a large understanding of responsible dealing in the retail supply chain, which, to some extent, has been embedded further down the supply chain by large retailers with exposure to the stock market and a recognition of reputational damage through strong audit and risk committees. It would be a very different experience across the whole agri-food supply chain, with thousands of sellers in business relationships with possibly up to 10,000 purchasers.