Farmers dismayed by supermarkets' code of practice

The long-awaited code of practice for supermarkets was published yesterday, setting out new rules for doing business with farmers, food manufacturers and other suppliers.

The long-awaited code of practice for supermarkets was published yesterday, setting out new rules for doing business with farmers, food manufacturers and other suppliers.

The legally binding agreement was ordered after the Competition Commission published a report concluding that the big chains operated in a way that "distorted" a fair market. But farmers' leaders, industry groups and environmentalists were unhappy that concerns they expressed earlier this year when they studied a draft version of the code have not been addressed.

The code applies only to chains with more than 8 per cent of the market, namely Asda, Safeway, Sainsbury, Somerfield and Tesco. It aims to prevent them using their buying power to force unfair contracts on suppliers, and supermarkets that fail to keep its terms face unlimited fines.

Prices, payments, compensation, consumer complaints and third-party dealings are covered in the code. Among other measures, it bans stores from charging suppliers for displaying their goods in favourable positions and for the cost of price promotions such as "buy one, get one free".

But the National Farmers' Union said the code would leave farmers and growers "angry". The NFU president, Ben Gill, said: "The Department of Trade and Industry has taken seven months to deliver no changes to the flawed and ambiguous original document.

"It is a recipe for dispute, which is precisely what we intended to avoid. As it stands at the moment, the code will do little to reassure our members that it will give them any protection within their sector."

Adrian Bebb, food campaigner at Friends of the Earth, said: "It has been sneaked out in traditional New Labour fashion because it represents a surrender to the interests of big retailers and a sell-out of the needs of their suppliers."

Patricia Hewitt, the Secretary of State for Trade and Industry, said: "The success of the code depends on supermarkets and suppliers being reasonable with one another, and observing the spirit of the code. It can set a standard for the industry as a whole, enabling it to put its commercial relations on a better footing."