28th November 2017

Supply chains: Businesses fear of competition law

Businesses are cautious when it comes to working with rival firms to strengthen supply chains in case they fall foul of competition law, a study has revealed.

The Fairtrade Foundation carried out the research which has highlighted that the wariness between companies is hindering their ability to increase consumer choice through improved product quality and security of supply.

The Foundation has also uncovered potential missed opportunities to deliver social and environmental benefits for supply chain farmers.

It has urged the Government and Competition and Markets Authority (CMA) to encourage private sector partnerships to tackle supply chain issues which include climate change.

Tim Aldred, head of policy at Fairtrade Foundation, said: “The world faces tremendous challenges in producing enough food to feed a growing population. Unstable supply chains are causing food shortages all over the world and this trend is set to continue unless we act.

“By working together businesses can take the lead in mitigating the fall-out from increasingly fragile supply chains and, at the same time, embed sustainability at the heart of their operations.

“We encourage the Government and the CMA to do all they can to foster cooperation between businesses and companies to recognise the importance of collective action on this issue, in the long-term interests of both UK consumers and vulnerable farmers and workers growing the food we eat.”

The Foundation is calling for the CMA to issue guidance on how cross-business sustainability projects would be assessed under competition law.

In addition, it insists the CMA should also aim for a deeper embedding of sustainability aims in its own operations, and suggests the CMA starts to formally report on how it contributes to deliver long-term food security for Britain.

Fairtrade’s research comes around the same time as a new report by the Sustainable Food Trust which highlighted £120bn of annual hidden costs of food for the UK taxpayer. The report found that with £120bn spent on food each year by consumers, this means that British citizens are, in effect, paying for their food twice.

The most significant share of this amount reportedly comes from the damaging impacts of intensive food production methods, such as environmental pollution, soil degradation and biodiversity loss.

The Sustainable Food Trust also discovered taxpayer subsidies to farmers are the equivalent to just 2.5p of every pound spent on food in hidden ways.

Patrick Holden, The Sustainable Food Trust’s chief executive, said: “Those who pollute or degrade do not pay for the damage they cause. Conversely, those who farm more sustainably are forced to cover the higher cost of producing food in more beneficial ways.

“This means there is no business case for producers to adopt more sustainable approaches. The Government can and must factor in these hidden costs and benefits in developing post-Brexit food and farming policies.”