INTERVIEW: Groceries Code Adjudicator Christine Tacon
Newly appointed Grocery Code Adjudicator Tacon
The UK's first Groceries Code Adjudicator, Christine Tacon, is determined not to clip the wings of the free market and expects to use her investigative powers sparingly. Chris Mercer spoke to the woman with the power to fine retailers, following her appointment this week.
Retailers have been as diplomatic as dynamite in their hostility to the role that Christine Tacon is about to take up, even more so because, since December, they know they could face fines.
Just as problematic for Tacon, however, is the prospect of over-exuberant farmers and food processors eyeing an opportunity to knock the UK's largest grocers off their perch.
In this context, Tacon's appointment looks sensible on paper. She has travelled up and down the supply chain via 11 years in charge of the Co-operative Group's farming business, and via previous jobs at Mars and Anchor.
She is planning to strictly interpret the Groceries Supply Code of Practice when her ombudsman role is signed into law, scheduled for spring. "The code itself doesn't cover probably as much as everybody thinks it should," she tells just-food.
"It is really quite specific about what it's for," she says, adding: "I do think expectations have been built to it being an awful lot more."
She adds: "If somebody's agreed a price and that's written in the contract, they can't then come to me and say 'I haven't got enough money, they're not paying me enough'. It's much more about, if you've agreed a contract with someone then they can't come back and say we'd like a retrospective rebate, or we're going to tie these conditions to it."
Underlining the point Tacon says: "I'm not there to protect somebody who has agreed a contract that they can no longer afford to honour."
Given this tone, I'm interested to ascertain her view of last year's disputes over farmgate milk prices. These were only the latest eruption of long-standing tension over the distribution of proceeds through the dairy supply chain.
"My understanding of that situation is that the adjudicator would have no role," says Tacon. "Direct suppliers have competed very hard for the business with the retailers, and they've agreed those prices and then turned round to farmers and said 'this is all I can afford to pay you'.
"They all have different agreements. I don't think it was about retailers changing goalposts."
This isn't to say she is blind to a power imbalance in the UK's food supply chain. She accepts that retailers wielding "huge power" is a risk and she says she understands that smaller suppliers have been frightened to complain in the past.
"The retailers are so big now, if you're supplying any one of them it's terribly important for your business. If somebody turns round and asks you for more money, there's a temptation to say 'well, we'd better pay up then'.
"Clearly there's an imbalance. What we're saying is [that] when you negotiate, and you're competing against everybody else, that is open, that is the market working. We're there to make sure that if somebody's agrees to something then they know what they've agreed and there's nothing else coming."
Her role also encompasses certain dictatorial approaches by retailers, such as telling suppliers who they must buy packaging from; a process she understands was "endemic until fairly recently".
But, she suspects that there won't be too many investigations. "I don't expect to be dealing with a lot of cases. Since the Code came in (February 2010), it's very clear what retailers are and aren't allowed to do. If retailers haven't done a clean-up and they aren't checking now, then they're being quite naive."
She is, though, conscious of grey areas that commonly emerge around the fringes of any regulatory action. "I may end up spending more time interpreting the Code and saying, 'is this within the spirit of what the Code meant, and you've found a way round it'. I don't think the board of any business would be endorsing their buyers breaking the law."
How much evidence would it take to spark an investigation? Tacon says this is something she still needs to define fully in an upcoming guidance document. "If one supplier has got an issue, there's nothing to stop them complaining to the compliance officer in the retailer," she says.
Because most Groceries Code compliance officers sit within retailers' internal audit bodies, suppliers "can be fairly sure they're going to get an unbiased view", she adds. If not, she is allowed to arbitrate, at the cost of the retailer, and award compensation where necessary.
"The whole point of the investigations is where you've got a wealth of people saying it's going on and they're all too frightened to say 'investigate in my name', because [the retailers] will find out and they won't source from [them] in the future."
However, for individual suppliers, wouldn't the prospect of phoning a compliance officer connected with the retailer still deter them from speaking out? Tacon says it depends on the supplier. "Were not just talking small farmer here, it might be somebody who's bigger than the retailer itself," she says.
"If you're a multi-national company and you believe they've massively over-ordered on a promotion and [the retailer] is sitting on a lot of stock that you've sold them cheap and they're going to make money off in the future - that is prohibited in the Code and [the company] will say 'I want some of that back'."
At the same time, she accepts that her role requires some discretion. "I've got to make sure people feel they can come and tell me things," she says.
On a more general level, Tacon says she is keen to help get the industry off the nitty gritty and on to wider issues. "I think it's desperately important that our farming industry and our supply chain work to be more efficient. Having sat in the middle of it, there are gross inefficiencies going on," she says. A lot of this, she believes, is down to mistrust at different points in the chain.
If she can help improve trust, there might be more conversations about mutual challenges. "Look at the Institute of Mechanical Engineers' report on global food waste," she says. "That's what we should be talking about. If you focus on efficiency everybody's going to win. I feel much more passionate about the bigger picture."
This, Tacon feels, is where her strict remit as a one-day per week Groceries Code Adjudicator marries with other aspects of her professional life, which includes positions such as chair of UK Farming plc investment fund, a consultant to the Department for Environment, Food & Rural Affairs and chair of the BBC Rural Affairs Committee.
As part of her adjudicator role, Tacon will be able to propose extensions to the Groceries Supply Code. However, the adjudicator position will also be reviewed by the government after two years.
For now, Tacon will need to use all of her experience to engage the disparate voices in the UK's food supply chain.
Fonterra is ranked in the top 20 among dairy players. However, this is due for the most part to its strong presence in Australasia. The company is looking to diversify, investing in a China-based dair...
Dairy in Philippines industry profile provides top-line qualitative and quantitative summary information including: market size (value 2007-11, and forecast to 2016). The profile also contains descrip...
The GM debate has re-emerged in the UK in the last couple of weeks with the news four major supermarket operators will allow their suppliers to use GM feed for poultry and eggs....
Dairy in Australia industry profile provides top-line qualitative and quantitative summary information including: market size (value 2007-11, and forecast to 2016). The profile also contains descripti...
- Focus: The impact of Heinz's stevia ketchup
- M&A Watch: Why Danone/Lifeway deal could be next
- Focus: Gen Mills turns to M&A to bolster US ops
- Viewpoint: US health food in play - at a price
- Shopper trends: Some confidence but promos popular
- Burton's "eyeing" United Biscuits merger
- Premier Foods revamp creates three divisions
- Unilever to boost presence in Nigeria
- General Mills Q1 profits tumble
- Timeline: Latest on battle over Chiquita