Farmers and food companies have renewed calls for legislation to protect them from the retail giants, after the UK Groceries Code Adjudicator revealed Tesco’s high-handed and roughshod treatment of its suppliers.
Tesco is believed to be the world’s biggest buyer of Irish food and drink, taking €1.6 billion of produce per year, about €931 million of which is sold in Tesco stores overseas.
Tesco figures indicate that more than 13,000 Irish farm families supply produce to Tesco, which has a 28.1% share of the UK’s grocery market.
The government-appointed UK Groceries Code Adjudicator Christine Tacon started investigating Tesco practices in 2014.
This week, she revealed unreasonable practices and behaviours by the retailer, such as deliberately delaying payment to its suppliers in order to improve Tesco’s own finances.
Some suppliers were kept waiting up to two years, including one who waited 24 months for a £2m payment.
The adjudicator said Tesco knowingly obstructed payment to suppliers, and used this as leverage in negotiations to pressurise them into accepting harsher terms.
Some suppliers said they waived the debts owed by Tesco, because they didn’t want to hurt their longer-term relationship with the supermarket chain.
But wherever Tesco found any evidence of a supplier owing them money, it demanded payment within two weeks.
Some of these payment demands were found to be invalid.
The adjudicator found numerous instances of suppliers being overcharged or underpaid by Tesco, which then took too long to correct mistakes.
Evidence was also found of duplicate invoicing — Tesco deducting sums twice from suppliers’ accounts.
Supplier complaints were directed to Tesco’s Hindustan Service Centre in Bangalore, India, which did not have authority to resolve issues.
The Adjudicator said one supplier sent 40 emails in five months claiming a £5,000 refund, and Tesco didn’t respond until after the sixth emails.
Food and Drink Industry Ireland Director Paul Kelly said the Irish food industry has been campaigning for legislation here to protect suppliers from the very practices that the UK adjudicator highlighted.
IFA National Chairman Jer Bergin said there is a major imbalance of power in the food supply chain between a handful of giant retail chains on one hand, and processors, suppliers and primary producers such as farmers on the other.
He said large retailers often drive prices down to uneconomic levels, and even below the cost of production.
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