Speaking to FoodManufacture.co.uk as the Department for Business, Innovation & Skills announced plans to create a Groceries Code Adjudicator (GCA) to enforce the Groceries Supply Code of Practice (GSCOP), a spokeswoman said the 10 supermarkets covered by the code would only be expected to stump up around £120,000 each per year to fund the GCA.
But it would still play a “proactive as well as a reactive” role, she insisted.
“£1.2m might not sound like much, but you’d be surprised how far the money can go. The Advertising Standards Authority also has a very small budget but it manages to police all ads.”
However, the British Retail Consortium (BRC) told FoodManufacture.co.uk that the costs would quickly ratchet up for supermarkets.
A spokesman said: “We’ve always said that it’s not just the cost of funding the ombudsman or adjudicator – it’s the time and resource retailers will have to put in to respond to requests for information.”
It was also unclear what the precise remit of the adjudicator might be, although the “astonishingly low budget" [£1.2m a year] suggested that it would not be as wide as some in the trade predicted, he said.
“What’s not clear is whether it will be simply responding to complaints or actively searching out for alleged wrong-doing in order to justify its existence.”
BRC Director General Stephen Robertson added: “The code [GSCOP] only applies to suppliers who have a contractual relationship with retailers but there’s a real danger the new body will generate lots of correspondence from suppliers who aren’t covered. Administering those will still clock up costs.”
However, Food and Drink Federation director general Melanie Leech said the adjudicator would be “of particular help for smaller businesses” without imposing excessive costs on supermarkets.
“The pragmatic proposals outlined today will ensure that there is an effective, low-cost monitoring and enforcement body in place.”
The GCA, which will be housed within the Office of Fair Trading – but will not be answerable to the OFT’s board - will be tasked with monitoring and enforcing the GSCOP, which has been in place since February.
Establishing it will require primary legislation, so the Dept for Business wil be seeking approval to publish a draft Bill later this year in order to set it up, said Consumer Minister Edward Davey.
“We want to make sure that large retailers can't abuse their power by transferring excessive risks or unexpected costs onto their suppliers.
"These sorts of pressures are bad for producers and bad for consumers; ultimately they can lead to lower quality goods, less choice and less innovation.”