Indicator 2.2

Issue: Trading integrity with the supply chain

Indicator: Standards and codes of practice

Rationale - why is this an important issue?

Many commentators have pointed to a large gap between corporate statements on trading practices and real-life practices by buyers, caused by inappropriate targets, lack of training, high staff turnover, and double standards applied to UK-sourced and imported produce.

What influence do SMs have in practical terms to address this issue, and what is the desired supermarket action on this?

Trading integrity with the supply chain. While UK competition regulations prohibit supermarkets from dictating terms of trade of their suppliers with farmers, an ‘ideal’ supermarket would commit via codes of practice, in the training and management of buyers, and in its selection and monitoring of first tier suppliers—to integrity in trading relations and fair pricing for produce, covering cost of production and a reasonable return on producers’ capital and labour. This should apply across the global supply base.

Country of Origin. Consumers expect meat labelled “produce of…”, “product of…”, “produced in …”, “origin:…”, “British”, “Scottish”, “Welsh” etc to come from animals that have been born, reared and slaughtered there, and have been subject to that country’s standards for animal welfare etc. Preston-based Booth’s Supermarkets have shown how a retailer can implement best practice on country of origin labelling. Such best practice has been spelled out in the Food Standards Agency’s October 2002 document on origin labelling. The FSA’s recommended best practice states that terms like “produce of…”, “product of…”, “produced in …”, “origin:…”, “British”, “Scottish”, “Welsh” etc “only be used where all the significant ingredients come from the identified country and all of the main production/manufacturing processes associated with the food occur within that place or country.” Origin labelling of meat introduces an additional complication because livestock may be born, reared and slaughtered in different countries. Beef and veal is already subject to detailed rules. The FSA recommends that labels for meat other than beef and veal (which are already subject to detailed rules) make clear when it comes from animals that have not been born, reared and slaughtered in the same country.

Margins on sustainable produce. Commitment to produce with improved sustainability, such as produce from organic production systems or Fairtrade labelled produce, is demonstrated by a commitment to market them with the same or lower profit margins as conventional produce, rather than treating them as high-value niche products.


How the indicator is measured

Code of Practices on relationships with suppliers. Supermarkets are asked if they have adopted the DTI Code of Practice on relationships with their suppliers, and/or whether they have an internal code which is more rigorous. They are also asked their buyers are trained to implement the code, and the company requires their 1st tier suppliers to in turn implement the code with their (ie 2nd tier) suppliers, including farmers.

Country of origin labelling. This issue will be addressed with one simple question to supermarkets, asking whether they have implemented FSA Best Practice on Country of Origin Labelling on meat and dairy, including Avoiding Misleading Labelling, and best practice on product origin and declaration of products and ingredients. Verification will be possible with shelf surveys, though the methodology has yet to be determined. Like terms of trade, this indicator has the advantage of being grounded in UK government policy, i.e. the FSA Country of Origin labelling guidelines.

Margins on sustainable produce. Supermarkets are asked if their companies are committed to not making higher profit margins on organic and Fairtrade produce compared to conventional produce.


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