Environment, Food and Rural Affairs Committee
Oral evidence: Fairness in the food supply chain, HC 160
Tuesday 14 November 2023
Ordered by the House of Commons to be published on 14 November 2023.
Members present: Sir Robert Goodwill (Chair); Steven Bonnar; Ian Byrne; Geraint Davies; Rosie Duffield; Barry Gardiner; Dr Neil Hudson; Mrs Sheryll Murray; Julian Sturdy; Derek Thomas.
Questions 1 - 82
Witnesses
I: Vicki Hird, Head of Sustainable Farming, Sustain; and Dr Carrie Bradshaw, Lecturer in Law, University of Leeds and member of the Global Food and Environment Institute.
II: Ms Sue Davies, Head of Consumer Rights and Food Policy, Which?; Professor Charlotte Hardman, Professor of Psychology of Eating Behaviour, University of Liverpool; and Dr Francesca Pontin, Research Data Scientist, Consumer Data Research Centre, University of Leeds.
Written evidence from witnesses:
– Sustain
– Global Food and Environment Institute, University of Leeds
– Which?
– Consumer Data Research Centre, University of Leeds
Witnesses: Vicki Hird and Dr Carrie Bradshaw.
Chair: Welcome to the EFRA Select Committee’s first evidence session for our report on fairness in the food supply chain. We are looking at the supply chain from the farm, through the processor, to the supermarkets and ultimately to the consumer. Who is making the profits and who is not getting a fair deal?
We are very pleased to welcome our first two witnesses. Would you like to introduce yourselves for the record?
Dr Bradshaw: My name is Carrie Bradshaw. I am a lecturer in law at the University of Leeds. I specialise in law and policy on food waste, which is the angle at which I come in today. I am representing the GFEI, the University of Leeds interdisciplinary Global Food and Environment Institute, which was created to bring about transformative change to the food system so that it might work with nature to provide everybody with access to safe and nutritious food. I am very happy to be here. Thank you.
Chair: Leeds is in Yorkshire, by the way.
Dr Bradshaw: It is.
Vicki Hird: I am Vicki Hird. I am now the strategic lead on agriculture at the Wildlife Trusts, a federation of 46 trusts across the country and a central office. It has submitted evidence to this inquiry as well, but I am actually here as a representative of Sustain, the alliance for better food and farming. I was the head of farming there and produced this submission with about 105 members of the alliance who are concerned with better food and farming policy and practice.
Q1 Chair: You are both very welcome indeed. The Government define a resilient supply chain as one that has “an ability to recover from disruption and which can re-orientate to alternative outcomes when necessary”. Does that definition apply to the UK supply chain?
Vicki Hird: It is getting less and less resilient. I think there is a resilience that comes from being very efficient, but we have reached the point where our food system is so dependent on incredibly complex just-in-time systems, which are fine-tuned to reduce a certain amount of costs, labour and storage, but could now crumble. We have seen certain points at which it has crumbled, in terms of being able to deliver adequate food in the shops. I think that is going to increase as climate change impacts become more frequent, as we are already seeing.
I saw earlier today that Italy has had more frequent droughts just in the last two years than it was expecting. We are going to get more and more disruption as a result of climate change. The Panama canal not getting the ships through—these kinds of things are happening with more frequency.
Chair: And the Suez when the Ever Given got stuck.
Vicki Hird: Exactly. We have also had two big conflicts, one of which—well, both of which—will lead to higher energy prices. All that makes the system, which is highly dependent on fossil fuel for transport of the ingredients for our food system, incredibly vulnerable, so I do not think we are resilient.
Q2 Chair: Yes. Some of the motor manufacturers, for example, have tried to bring their supply chains closer to home. Could we do more of that in the UK, or are we limited by our climate?
Vicki Hird: I do not think we are limited. We could produce a huge amount more fruit and veg than we are producing now, but the retailers are bringing in produce—and have done so for the last 20 to 30 years—because it is cheaper. The standards, the labour costs and so on are cheaper, so they are bringing in more and more. As a result, you are seeing apple growers, for instance, saying that they are not going to carry on. They are grubbing up their trees or they are not buying replacement trees. That is going to become more frequent as these kinds of problems occur because their costs are going up. But I think we could do it—we really could.
I was just musing about the problems with the River Wye, which have a lot to do with the growth of chicken units along the river. They have grown exponentially in the last 10 years—it is quite staggering—to be nearer to the Avara factory in that region. There are pluses and disadvantages to that because what that has meant you have an incredible concentration of livestock producing an incredible amount of manure, which is now polluting the River Wye in a way that is no longer tenable. We have to do something urgent about it.
Do you move those chicken factories further away? I would say yes, we should have processing closer to the producers and reduce the distance that food has to travel, but building regional markets of diverse supply will take a lot of investment. It will take processing, abattoirs, food hubs—all those kinds of things that will allow farmers to sell more directly or have more control of the supply chain. That is one of the main solutions that we are calling for, but it will take investment.
Q3 Chair: When they had those unusual frosts in southern Spain and in north Africa at the turn of the year, I seem to get the impression that the UK big supermarkets were the ones short of food, but the smaller shops—
Vicki Hird: Yes, and the whole wholesale system was doing all right.
Q4 Chair: Why was that? Was it the inflexibility in the contracts or the fact that supermarkets were not able to move quickly in that situation?
Vicki Hird: There was a combination of things, but wholesalers probably had more direct relationship with their suppliers that they had built up over a long period. Supermarkets have very complex chains, dependent not on storage and therefore surplus being available whenever it is needed. It is a very just-in-time system, so if one part of that system breaks they find they do not have supply, whereas by their nature the wholesalers have a surplus and the storage facility within their system. But there are probably many other factors involved in that breakdown.
Chair: Dr Bradshaw, would you agree?
Dr Bradshaw: I would. I do not have a huge amount to add, other than to say that, if we think of the food system as being from farm to fork, we have a lot of waste across that system. That is an indicator of a lack of resilience and a lack of efficiency.
The Committee will already be aware that about 9.5 million tonnes of food is wasted annually after it leaves the farm. A central estimate—I should stress that this is an estimate—is that 3.6 million tonnes of food is wasted on farms every year. The levels of food waste are an indicator of some of the limitations of a system that is built to some extent on overproduction.
Q5 Chair: If we are to tackle the waste issue, is it at the farm level, where a few more bent carrots could go in, or is it at the supermarket level, where they may have stuff that they throw away? Or is it just people overstocking their fridges and throwing away those bananas that go black?
Dr Bradshaw: It is all of those things. I would highlight the complexity of the reasons why we have that food waste, but also the fact that food waste occurs at every stage of the supply chain—so on farms, yes. We do not really know how much there is on farms because there is a lack of measurement. As I said, the estimate is about 3.6 million tonnes of food waste annually, but it could be more. There is a reasonable amount in manufacturing and hospitality in the food sector, 1.5 million tonnes in manufacturing, 1.1 million tonnes in food services, 0.3 million tonnes in retail, and the largest proportion of that waste is wasted by households.
Q6 Mrs Murray: We mentioned imports briefly. The UK imports 46% of the food it consumes. What implications does this have for the potential vulnerabilities in our food supply chain? For example, you have already mentioned climate, economic and geopolitical shocks.
Vicki Hird: It is a problem for us in many ways and, as I said earlier, it is going to accelerate. One third of the imports are in areas of water stress. That is going to become more and more of a problem if we are not building up our own capacity to produce the diverse produce that we need. I am not saying that we are going to produce bananas or oranges, although that might be happening—I understand we are producing our own tea in Cornwall—but we could be producing so much more.
That is not to say that trade is a bad thing. Sustain and the Wildlife Trusts are not against trade, but trade should be done on a fair dealing basis. It should be where there is definite competitive advantage, and that advantage should not be based on trashing the environment or doing environmental harm. We could do an awful lot more here with the right regulation to protect nature and protect animal welfare by helping farmers to diversify what they are producing.
For instance, we have an incredible problem with vegetables and fruit. As I am sure you are aware, 85% of our fruit is imported. We could be producing a lot more here—things like blueberries. We have been producing a lot of blueberries here, but people are grubbing up their blueberry bushes because they cannot compete with the imports from Peru. Peru has a massive problem with drought, so there is something building up here that is severely problematic. We could be doing so much.
DEFRA is putting a lot of money into innovation, technology and robotics. It should be putting money into diversification for farmers to build up that capacity for use for our own blueberries, our own fruit and veg, where it makes sense, and having more mixed farming—livestock mixed with crops. That way, you are reducing reliance on fertilisers, which are also incredibly expensive and are getting more expensive.
We understand that the price of fuel is going to rocket now because of the Israel-Palestine issue. That means that farmers are going to be in deep trouble again with the costs that they incur on farms. All these things mean that we have to really look at this.
I am really pleased that this Committee is doing this inquiry. It is absolutely timely. I urge you to take a systemic approach in your recommendations and to cover the food supply chain, the farmers and consumers as well, because the other thing we do not have is a resilient diet. We need a resilient diet as well as a resilient food system. The diet that we have now is unbelievably costly, unbelievably unhealthy and bad for the environment. Sorry, there are many things in that!
Q7 Mrs Murray: That’s okay. Carrie, would you like to add anything?
Dr Bradshaw: I am not a trade lawyer, so I would hazard the limits of my expertise, but I would use food waste as an example of a lack of resilience: the longer the distances food has to travel, the greater the chance of waste. There is a bit of evidence that shorter food supply chains can be less wasteful. There is a question mark about the extent to which they can fill more than a niche market—but the more we import, the further food has to travel and the greater the scope for waste.
Q8 Mrs Murray: Thank you. Vicki, Sustain’s evidence to the Committee argues that the UK relies on importing food and feed from other countries experiencing water scarcity that are vulnerable to climate breakdown. Do you feel that climate change ranks among the potential risks to our food supply?
Vicki Hird: Absolutely, 100%.
Q9 Mrs Murray: Is it the prime factor? Are there others?
Vicki Hird: It depends. Policies that do not prioritise the right kind of agroecological food production and supply chains that support that—I could put those high up on the list. Climate change is very much up there, because it is affecting not only production ability, but our ability to move produce around the world. Our food system is very dependent on commodity systems.
You have products that are very similar, and they can be taken from anywhere. To produce your potato crisp product, you can get potatoes from anywhere. Our system is very dependent on fossil fuels and on overseas suppliers doing what we want, which makes us incredibly vulnerable.
Q10 Chair: Just to put the counterargument and play devil’s advocate to an extent, the Global Food and Environment Institute has made the point that, paradoxically, the more self-sufficient we are in a particular commodity, the less food security we have—for example, if we produce all our own eggs and we get bird flu, or we produce all own potatoes and we get a very wet autumn or potato blight. To what extent is there a balance between quite literally having all our eggs in one basket and having a diverse supply chain around the world?
Vicki Hird: Even having it around the world is putting it in difficult baskets, to use your analogy, because we are relying on certain countries like Morocco and southern Spain for our vegetables, and we saw how that broke down. Each country should be able to build up a resilient food system, both for its own consumption and for trading in products in which it makes sense to trade.
The key to reducing the vulnerability is diversity. Diversity is key to an awful lot of things. Where farmers are not dependent entirely on monocultures, but have a more diverse farming system in which they produce a variety of things, it will reduce the likelihood of spread of disease and of losing a whole crop to one disease.
It is easy for me to say that, but there are a lot of farmers doing this, and they are doing it very well, like organic farmers and Pasture for Life farmers. They are building in resilience by having diversity in their system, and that means they are not so vulnerable. However, I take your point, and we are not advocating not importing produce. It is just about producing or importing the right products and having terms of trade that are based on a set of core standards that we stand by, for instance on the environment, animal welfare and labour standards, so that we are not exporting bad production overseas. If we are importing, it should be based on strong environmental social standards.
Q11 Chair: Could supermarkets do more to promote seasonal crops? Many people do not understand what is in season.
Vicki Hird: They should. That is a really good point. They could be doing an awful lot through promotions and advice, like cooking cards and things like that. They could be doing an awful lot more by reducing the cosmetic specifications for farmers here and growers here and overseas.
The requirement for a very exacting size of carrot or apple with no blemishes leads to an awful lot of waste, which I am sure Carrie will speak about. It also leads to a lot of chemical use with fertilisers and the use of soils that are probably inappropriate for that. Vulnerable peat soils, which should be protected for their carbon and nature value, are being used with very rapid short-term tenancies to produce perfect-looking produce because it is great soil. We should be thinking about that when we are talking about what supermarkets can do.
The other side of it that I have forgotten to mention is promotion of foods. Supermarkets are promoting foods, which is encouraging people to over-buy or purchase the wrong things, and that is creating waste. It is also creating a problem for our national health.
We are looking for control of promotions, particularly of high-fat, sugary and salty foods. That all makes a difference to the environment, and it makes a difference to farmers. They have to produce very cheap raw materials for a processed food system; 54% of the food that we eat is highly processed. That is a problem for the environment, it is not great for farmers, and it is not great for our health.
Curbing promotions, marketing and advertising of those kind of products is part of a resilient food system. I know it might seem outwith the scope of what you are talking about, but I hope it is not, because it is very much part of the food system change that we need to see.
Q12 Chair: I had this conversation with somebody from Marks & Spencer—other supermarkets are available, of course. Marks & Spencer did an experiment with a courgette that had a little bit of physical damage. It was put in the tray with other courgettes and, despite the fact that it was replenished several times during the day, that courgette was still there at the end of the day. Is it the case that people may say, “We do not want perfect veg,” but when they go to pick them they will always—
Vicki Hird: They have been led to expect perfect veg and to fear unperfect veg. That can change. There is brilliant advertising, marketing and education. They have done an incredible job so they could do the reverse.
It is a massive problem. I don’t mean, “Let’s just have some ugly fruit promotions.” If you are talking to Ali Capper, she will be very clear that that is not part of the solution. During the covid and Ukraine shortages period, Waitrose did, to its credit, remove all its high specifications on size and appearance in order to cope with the fact that it needed a supply. I commend Waitrose for that, but it should be continued by all supermarkets and in educating consumers.
Q13 Ian Byrne: I will direct this one first to Vicki. Tesco, Sainsbury’s, Asda and Aldi have over 65% of the grocery market share in Great Britain, according to Kantar. The Global Food and Environment Institute argues that this is evidence of the UK’s food supply system being skewed toward the supermarkets. Some may say “the cartel”—I would not dare.
Sustain has suggested that producers are largely price takers and have limited bargaining power. In the face of what we have just outlined, how well are the interests of consumers and suppliers balanced? What steps could be taken to address the deficiencies and address that power imbalance?
Vicki Hird: It is a power imbalance, and it has been for a very long time. I have been in the business of talking about unfairness since, I think, 2004, when we took the Office of Fair Trading to court. We got farmers in front of it talking about the fact that it was stopping them being able to produce what they needed to produce. Back then, Tesco had its meteoric rise, and now we have many more supermarkets here, so it is still imbalanced—it is still incredibly biased in favour of the top nine or 10 supermarkets. Amazon is now here, which is another thing, but it is highly competitive.
You have the double whammy of farmers being price takers, but facing an incredibly competitive retail market. They will compete for every single footfall through that door. They do it through loss leaders and through all sorts of ways. You will have seen the “Unpicking Food Prices” report, which was done with a professor of accountancy at Plymouth University who looked at five different items to see where the money goes in the food chain.
We wanted to look at that in detail so we could understand and visualise what is going on. It was incredible. What that work showed—it was using aggregated data from industry and from Government, so it wasn’t snapshot or single items—was that they were getting less than 1% of the profits.
Q14 Chair: For carrots it was zero, wasn’t it?
Vicki Hird: It was zero for carrots. It was 0.05p on a block of cheese, and bread was 0.09p when they spent—
Ian Byrne: That was pre the energy crisis as well.
Vicki Hird: That was before then. We deliberately took the data before the Ukraine crisis. It would be far worse now. I have to say that I have never published a report that received as much coverage as “Unpicking Food Prices”, because it was really speaking to people—it was five everyday food items. Consumers want to support farmers, and they are very aware of the imbalance.
The Food, Farming and Countryside Commission has just done some research with consumers, and it is clear that the public want to support farmers better and have a more balanced relationship. From that work that we did, it is clear what we need: we need more transparency in the supply chain. The Agricultural Act did give powers to make the supply chain more transparent, because the food industry is very open about its costs but the rest of the supply chain is not.
We have the farm business survey, which exposes those costs. Lisa, the professor, says that it is incredible that we have a farm business survey, which tells the retailers precisely what farmers’ costs are, but we do not have a food business income survey. Why is this exposure—this transparency—so skewed toward farmers and not the rest of the supply chain?
Q15 Chair: I think it has do with the subsidies farmers get, so the Government know how much to give.
Vicki Hird: It is. You could argue that it has been used—well, not just now—in a way that really favours post-farm gate buyers and supermarkets. It is also manufacturers. What “Unpicking Food Prices” also showed was that there is a huge extraction of costs in between.
Lisa was particularly concerned about that, because it is hidden, and it means that it is very hard for the farm gate price to be reflected in the shelf price. It is a very big problem, a very complex problem and a very extractive problem, which really leaves farmers very much as price takers at a time when they have such huge costs.
Q16 Ian Byrne: What steps can we take to address the problem that Vicki has just outlined?
Vicki Hird: We think the golden rules that the Groceries Code Adjudicator designed to make the cost price increase negotiations fairer and more decent should be codified, and so does the NFU and others. That is one small thing that you could be calling for.
You also need to use transparency rules to understand where the costs are and whether these costs are fair, because I think our “Unpicking Food Prices” report showed that they are not. This isn’t fair, because farmers are exposed to so much risk, working with natural systems and climate change and with animals.
Having that transparency and then building up the alternative routes to market is another way we can see a greater power balance being returned to the farmer by being able to negotiate with buyers in a better trading system. There is a Better Food Traders network that is doing that, but is very small. We need it to expand, to scale up and to have many more opportunities for farmers to sell more directly or through traders who are totally farmer-focused, to sell to the consumer. Then they can talk to the consumer about why plums look this way, or why potatoes are not the size that you might expect.
That relationship would be much more intimate between consumer and farmer. I am not naive, though. We have supermarkets. There needs to be regulation of supermarkets and the supply chain in between, so the final thing would be the sector codes of practice, which are outlined in the Agriculture Act, section 29. We fought very hard for that, but we have not had any outcomes. Maybe we are talking about that next, but we really need to see some outcomes from that urgently, and for such codes of practice to be enforced.
Ian Byrne: Thanks, Vicki. Carrie, would you like to add anything?
Dr Bradshaw: Yes. In principle, we already have a solution: we have the groceries supply code of practice that is enforced by the Groceries Code Adjudicator. That entire intervention was based on concern that buyer power—the concentration of retailer power at the apex of the food supply chain—was ultimately a problem for consumers and was likely to lead to a lack of competition and less good a deal for consumers. In principle, we have an intervention there. I suspect you will want to ask me if it is effective.
Q17 Ian Byrne: Are you using it?
Dr Bradshaw: We do use it. I would say that there is a limited amount of research telling us how effective it is. We have statutory reviews by Government and YouGov undertakes surveys for them, which suggest some steady improvement in changing retailer practices, but the academic research—of which I would say there is very little—has some concerns about the regulatory design of the model. In particular, there is concern that the goal to protect consumers and to exert downward pressure on food prices means that consumers ultimately trump the interests of suppliers. There is a question mark over the extent to which this is an intervention that tackles the downward pressure on farmers that we see from that concentration of power in the supply chain.
I suspect you will already be aware—previous Committees have explored this—that there are concerns that the Groceries Code Adjudicator runs a compliance-oriented approach rather than a deterrence-based approach. There have been only two investigations, and it has never used its fining power.
There are benefits and risks to that. Some of the benefits, as I am sure the Groceries Code Adjudicator would tell you, are that it allows for more speedy and less expensive engagement with retailers on non-compliance with the code. The downside of that collaborative, softly-softly approach is perhaps—
Q18 Ian Byrne: Is it working?
Dr Bradshaw: I would be inclined to suggest that the evidence is limited that it does. There is a question mark: is it about the design of the intervention or is it about the enforcement process? There is some evidence of negotiated non-compliance. The Groceries Code Adjudicator will sometimes take a promise of future compliance as compliance. There is a little bit of evidence for that. Those are my concerns.
Q19 Ian Byrne: That builds into the next question. We have this regulator that is softly-softly. That is worrying, isn’t it? That is potentially where you go if you have concerns. We know that farmers and growers are reluctant to speak out about abusive practices and the massive power imbalances with the supermarkets and manufacturers, so how do we solve that issue if we have a regulation regulator that is softly-softly and is perhaps not doing what it should be doing?
Dr Bradshaw: I don’t know if those things are the same; I don’t know if softly-softly means it is not what it is supposed to be doing. There is a body of research to justify a compliance rather than stick-based approach, but yes, you are right that a fear factor remains. The Groceries Code Adjudicator would say that the proportion of suppliers saying the reason they would not come forward because they are afraid to has gone down steadily. I think it is by percentage points per year, so not drastically.
The Groceries Code Adjudicator emphasises confidentiality, and retailer code compliance officers promise confidentiality. The reality is that suppliers find that hard to believe. I agree with you that there is scope for a more deterrent-based approach to the regulation.
As I am sure you are aware, the Groceries Code Adjudicator is funded by a levy on retailers. That is approved by the Secretary of State every year. I do not have the precise figures to head, but I think you will find that the annual operating budget of the Groceries Code Adjudicator is less than the cost of an investigation into a retailer. I think it is over £1 million for an investigation, or perhaps less than £1 million—I will check those figures and come back to the Committee. There is a question of resource, but the Groceries Code Adjudicator might say, “If I needed more money, I would ask for it,” so there is a question mark about that.
We were discussing earlier that we do not know whether the funding model, where enforcement is paid for by the regulated community, affects that. I just do not know, but there is a reasonable question about having to go to your regulated community for funding.
Vicki Hird: Yes, I think what Carrie has said is absolutely spot on. I would be nervous about the funding coming via merging it—for instance with the CMA, which was on the table during the last review—because that would really undermine its ability to do a job that is really delicate. I know Mark would say that it is very delicate and complex, but the problem is that what you get is possibly not the action that you need. I have been at all the GCA annual conferences, and this year was the first time I have seen farmers and growers actually speaking out vehemently. Last year they were speaking out, but it was through anonymous chat.
At that point they were talking about Amazon coming under GSCOP, and they were very pleased because the behaviour of Amazon was clearly really poor. One of the problems with it all is that it is only covering those direct suppliers to the retailers, and most farmers are not direct suppliers. Some growers are and some farmers are, but mostly they are going through a process or a trader manufacturer. So we have to capture the problems along the chain and have a system that looks at where all the problems are and addresses them in a coherent way. Setting up a separate body, which is doing the bit in between—the intermediaries, like enforcing a code—you need that.
I campaigned years ago for the GCA. I do not want it removed. It is better than nothing, I would say, but you are absolutely right that it is not doing the job. That is partly because most suppliers are not direct suppliers. We need something in between, but that something in between needs to be coherent with the GCA work. They need to do their own research, on their own initiative, to investigate, because waiting for naturally reluctant farmers to come forward is a problem. We said at the beginning that you need to have the capacity to do your own investigation and look at the particular problems you have heard rumours of. If they cannot do that, we do not have an effective regulator.
Dr Bradshaw: Yes, and I would add that it is not just a regulator; it is also a statutory arbitrator. It is this dual combination, a new type of regulatory body. We have one for the pubs: the Pubs Code Adjudicator. The research on that described it as a bit two-faced, with a tension between the combined arbitration and regulatory roles. The evidence from the Pubs Code Adjudicator is that that model has not changed future behaviour or systems-based approach on problems that its users encounter, so there are question marks about the model.
Q20 Ian Byrne: That is a brilliant piece of evidence for the report. Vicki, Professor Lisa Jack has described the UK’s supermarket model as “balanced on a knife edge”. How can promoting fairness and sustainability be balanced with ensuring affordable food prices for consumers?
Vicki Hird: It is a very fair point. That is one of the reasons I asked Lisa to do this work, because it is clear that people think, “Oh, supermarkets bad, farmers great,” and that is the wrong thing. It is clearly now a poorly balanced system. They are on a knife edge, and they make most of their profits from high-value items like liquor, and confectionery and non-food items. However, they still need to have that turnover of the huge amount of produce that they turn over, which means that they get a tiny amount from each sale. Sorry, I have forgotten your question.
Dr Bradshaw: The balance of interests of suppliers.
Ian Byrne: How can promoting fairness and sustainability be balanced with the need for affordable food for consumers?
Vicki Hird: Yes. I think she was quite clear that the data shows that there is so much extraction of price in the system that it is very difficult to get a fair price for the consumer that is also fair for the producer. I should include fisher folk as well; it should cover farmers, fishers and growers. That is why I asked for transparency: because it is very hard to understand where the money goes, and right now we have a problem.
Q21 Ian Byrne: Consumers are paying through the nose for some items. The producers are not getting the moneys that potentially they should be getting. Where is the money going? Is that where the profiteering element comes into it from supermarkets?
Vicki Hird: There might be profiteering, but there is also a very costly chain and there is an awful lot of processing. If you look at the data—I have bought a few copies of the short paper if anybody wants them—on where the costs go. There are huge costs in the system of just transporting and the staffing and the retailing, and so on. There is not much at the end for the profits.
If you look at bread, the profit is 0.09p for the farmer, 2.22p for the baker and 1p for the retailer. That is not ultra-processed goods. Everybody needs bread, but still, there is something wrong where you have so little profit and so much in extractive systems. That is why we also call for alternative routes to market for farmers and to build up that sector; I think we are asking for 25% by 2030.
Q22 Chair: Thank you. If there are growers, or people in the processing system, who might want to communicate with us confidentially, we would treat that with absolute respect. Those people who are nervous to come forward or worried about the effect it might have on their relationship with the supermarket or processor that they are working with—we certainly would welcome that.
Vicki Hird: I can suggest some names of people who are prepared to come forward.
Chair: That is very helpful. Thank you.
Q23 Mrs Murray: Can I put this question to Carrie, and perhaps Vicki can come in afterwards if there is anything to add? Are the Government making the best use of the fair dealing clause in the Agriculture Act to promote fair contractual practices throughout the food supply chain?
Dr Bradshaw: The first thing to say is that the consultations and the powers in themselves are welcomed. There is strong support for a move away from a voluntary approach to this. I would not be alone in expressing concern about the pace with which they have been used.
Based on my own research, I have concerns about whether they are being used effectively to tackle food waste. These powers are part of Government policy on food waste. There was an indication in the resources and waste strategy that the Government would use these powers to tackle food waste on farms.
I see little evidence of that in the consultations, despite a lot of the concerns that suppliers were raising about the types of unfair trading practices we know cause food waste on farms. It might be worth asking the Government if it is on their radar. It may very well be on their radar, but that is not evident in the consultations.
I have some concerns about how the new powers and regulations under the powers would interact with the groceries supply code of practice. The powers are limited. We are where we are with the powers now. The obligations that could be imposed on them are potentially very broad, but they apply to a very narrow set of actors, mainly processors.
Something that is quite clear from the Government’s own consultations is that many of the pressures that primary producers face from manufacturers and processors—the types of practices these powers seek to address—originate with retailers, notwithstanding protections under the groceries supply chain of practice. I would like to see more thought given in the consultations to ensuring that there is even coverage between the two regimes as they coexist.
Mrs Murray: Vicki, do you have anything extra to say?
Vicki Hird: Just “Why are we waiting?” We have been expecting the dairy code for some time. The dairy industry is extremely poorly served by regulation at the moment. We were expecting that a long time ago and I am glad there is going to be an egg and horticulture inquiry, but why has it taken so long? The Act was passed in 2020.
Dr Bradshaw: Can I add another point?
Q24 Mrs Murray: Could you include it in your answer to my next question? I am very aware that we still have another panel to hear from.
How could the provisions in the Agriculture Act be better utilised to bring greater transparency and fairness to the food supply chain?
Dr Bradshaw: Enforcement will be important. There is no indication yet of who or what body will enforce these new regulations. That needs to be a body that is adequately funded. There are also powers in the Agriculture Act—the section 23 powers to make data orders. I do not know yet whether they are going to be used, but a good starting point would be using those powers.
Mrs Murray: Vicki, have you anything to add?
Vicki Hird: I agree on the data orders. We should absolutely be using those powers to understand where the money goes. Why is it so leaky and extractive? I definitely agree that the fair dealing codes of practice should work alongside the Groceries Code Adjudicator.
What I am slightly nervous of is whether they are being watered down in order to cope with the cost of living crisis and the industry in between, saying, “We cannot have Government interference in our contractual arrangements.” I hear that a lot, but we also hear a lot from the farmers and growers and from the public that they want the Government to intervene to make this a fairer supply chain. That is what section 29 is for, so we should see them as soon as possible.
Also, I have been told that there is going to be some enforcement personage. DEFRA will appoint somebody, and that probably rings alarm bells legally. I do not know how that would work, but I guess they could work alongside the Groceries Code Adjudicator. There are some really big questions about how that will combine with the GCA to deliver a fairer system, as Carrie was saying.
Dr Bradshaw: The devil will be in the detail, and we do not have the detail yet.
Q25 Dr Hudson: We have had some discussion already in this session about the Groceries Code Adjudicator and the groceries supply code of practice. I want to have some focused questions about those schemes and how we can improve them. How effective has the Groceries Code Adjudicator been in challenging and changing retailers’ behaviour towards their suppliers? Carrie, could you kick off with that one?
Dr Bradshaw: I will avoid repeating the points I have already made, but what I would say is that the evidence base for that is limited. We have some evidence from the YouGov polls that suggests an improvement, but we have an ongoing fear factor. I also think effectiveness depends on what you are judging it by. The purpose, arguably, of GSCOP, when you look at its origins, was to lessen the impacts on suppliers because it hurts consumers not to tackle downward pressure on the livelihoods of suppliers, per se.
There are question marks about its regulatory design. As I have already said to the Committee, and have put in written evidence, there are concerns that the adjudicator is under-resourced and might make greater use of its fining powers. In turn, that could alleviate some of the concerns around the fear factor.
Q26 Dr Hudson: Carrie, you mentioned that there remains an ongoing fear factor, which is potentially preventing suppliers from raising their issues with the Groceries Code Adjudicator. How could that fear factor be overcome?
Dr Bradshaw: It is an invidious problem, because even identifying it is a challenge. I have not seen a huge amount of research on this. I suspect lessons could be learned from other contexts, but supporting collective bargaining is potentially an option there, or changing the incentive structure for retailers with greater use of the fining powers and a more deterrent-based approach.
Some of the evidence submitted to the Committee suggested that retailers need better awareness of the impact of their buying decisions on buyers, so there could be some sort of information obligation. There is scope for that, but the incentive structures have to match it.
Q27 Dr Hudson: Vicki, what could be done to improve things?
Vicki Hird: I will not repeat the points I made about my own-initiative research, but I absolutely agree on fining. It is amazing that it has been in place now for 10 years and they have not implemented any fining. They have asked and got supermarkets to change their behaviours, but what we have seen over the last three years, with the cost price increase requests, is very illustrative that the relationship is not that much better.
Some of the relationships are completely broken between buyers and suppliers, and the cost price increase requests that were made legitimately on the higher costs, post-Ukraine, for fertilisers, fuel and so on were not being met—hence the golden rules. One option would be to make those golden rules legally binding. That would help those first suppliers, but again it does not cover the rest of the chain.
Q28 Dr Hudson: Vicki, in a previous answer you talked about direct suppliers as opposed to indirect suppliers. Extending the groceries supply code of practice to cover indirect suppliers, what benefits could that bring? If there are benefits, how could we go about achieving that?
Vicki Hird: Well, it would mean a change in the law. I think it would be extremely beneficial if we were able to do that. You are talking about hundreds of businesses as opposed to 14 retailers. It is a whole other ball game, but it would make a lot of sense because that would be a coherent approach.
Q29 Dr Hudson: Would there be widespread acceptance that that would be a good idea out there—that indirect suppliers would like to have skin in that game?
Vicki Hird: It is a strange arrangement at the moment, because the British Brands Group called for the Groceries Code Adjudicator originally and supports its existence, but equally it would be coming under a new set of rules that covered its members, so it would possibly be against that. You have that complication that suddenly those that are being helped by the GCA, in terms of trade—the Brands Group is very clear about how its members are hurt by what the supermarkets do—suddenly become part of the GCA. However, it would make a lot of sense because you would have a coherent semi-regulator in that sense.
Q30 Dr Hudson: Do you have anything additional to add on that?
Dr Bradshaw: Yes. A coherent regulator is the way to go, for the reasons I have already said and in my written evidence. I would caution against that necessarily being an extension of the Groceries Code Adjudicator. There are question marks over that approach. The Agriculture Act powers are a very different regulatory beast with a different regulatory purpose. We have two systems that will potentially coexist. It is not necessarily the case that GSCOP is the way to go.
Q31 Rosie Duffield: This is to both of you, to start with: the NFU among others has said that producers have experienced significant increases to their costs of production in recent years because of increased inflation and labour costs. I would add that I think my farmers would factor in fuel and the cost of rural crime as well. Do you think these are being reflected in increased farm gate prices?
Vicki Hird: As I said earlier, the cost price increase being met with a lack of response—the Groceries Code Adjudicator is very clear on that—is a big problem. Its last qualitative survey, as well as the YouGov survey, was very clear that there were major breakdowns in relationships because of that very issue. That is our food security—our nutritional security, as I prefer to call it. It is a really critical problem for this country that we are not addressing.
Rosie Duffield: We are putting so much pressure on our farmers and producers. We are not respecting them.
Vicki Hird: Absolutely, and that has implications for nature, for climate change adaptation and mitigation, and for animal welfare, because farmers find it very difficult to deal with those things and to invest in good systems if they are constantly squeezed. That squeeze has got so much harder after the Ukraine invasion and is going to get harder with the latest conflict, so it is absolutely critical we sort this out. I urge you to put the strongest pressure on the Minister who will come before you, and to ask how he is going to sort that out.
Dr Bradshaw: I make no comment on the empirical point, but what I would say is that the main intervention that we have, GSCOP, has no powers around price. Price determination is not within its remit. It is engaging in the processes through which prices are determined, but that is not a power it has.
Q32 Rosie Duffield: What impact are increased input costs having on farmers’ ability to invest in their businesses, including in new technologies? That is really key, isn’t it?
Vicki Hird: It is. They are all facing climate change impacts and they need to invest in nature-based solutions that will support them and reduce their costs. Integrated pest management can reduce the cost of pesticides while being beneficial for our natural environments. It is very difficult for them to even think about it, let alone do it, and invest in the monitoring systems or new technology or animal welfare-friendly approaches if they are not getting returns that reflect the cost of production now, let alone the cost of production as we go forward. I think that you will find that if the NFU speaks to you it is a really big problem, and it is more acute this year than ever before.
Q33 Rosie Duffield: Sustain has argued that there be little impact on many products and retail prices if farmers were paid more. Vicki, can you explain that a bit further?
Vicki Hird: As I showed in our data analysis, it is 0.09p on a loaf of bread that the farmer gets. If you double that it would be 0.18p, which to most consumers, however difficult their cost of living—I am sure you will hear more about that later—would not make a big difference. The problem is, it would make a big difference to unit profits for the retailer or for the manufacturer or baker in between, if they were to take the hit. We would argue that a lot of them are still making quite hefty profits and dividends to their shareholders, if that is relevant.
Given all the problems—not least the climate and nature problems—that we are facing, and the problems for consumers in having that resilient supply of food going forward, we would want to see more profit going to the farmer. Ideally, it would not increase prices to the consumer, but you can see from our data that it would not be a huge hike to double the profits to the farmers.
Q34 Rosie Duffield: Do you think consumers know that that tiny percentage is what farmers get?
Vicki Hird: No, absolutely not. The Food, Farming and Countryside Commission did some very detailed work talking to the public. The public were not aware of that, but they were very keen to make a fairer playing field for the farmers, for all sorts of reasons—environment, animal welfare, but also to be able to get good food.
Q35 Rosie Duffield: Thank you. I have one final question. Sustain has also argued that the structure of the UK’s food supply chain “creates a harmful cheap food expectation”. What effects do you think this expectation has on animal welfare and environmental standards? You have already touched on it, but I suspect we do need an entire inquiry on this.
Vicki Hird: It is a huge area. I hope you do emphasise it, because people sometimes think the environment is a separate thing. It is not. It is very much what we need to be able to continue to farm and to feed ourselves well and healthily.
We are losing our soil in all sorts of ways. The ELMS coming forward will help provide some of the public good, which will help farmers deliver that, but it has to be the market being fairer and supporting good agroeconomic and agroecological practices on farm.
We know that animal welfare is integral to good meat and good dairy products. A stressed animal is more likely to get diseases. We know diseases are a problem going forward as the world warms. All these things are very much part of the broken food system that I referred to at the beginning, and it is all predicated on being able to sort out the problem of a fair dealing system, which is why Sustain and Friends of the Earth have campaigned on it.
We did a survey of farmers in 2004, when farmers were saying they could not change their pesticide practices because of what the supermarkets were demanding. We then took the Government to court to get an inquiry. Here we are many years later, and we still do not have an adequate regulatory framework and support for good routes to market so that farmers could get more control of their price and the deal. That is a really exciting area to look at as well—things like regional and local food systems and wholesaler markets. It does not all have to go through supermarkets.
Q36 Chair: We produce wheat on our farm, and my merchant rang to say, “Great news—there is a drought in Argentina.” It is so far away from even the supermarkets that many of these commodities are not really affected by anything. The adjudicator could do anything that the Government could do.
Vicki Hird: That is absolutely true, and I would argue that the Government should be doing something about speculative markets in food commodity products, the way speculation increased the price of products after the Ukraine invasion and made a huge amount of profit. The financial speculation in commodity markets is something that nobody is doing anything about, and it would take international action.
I agree with you. It is a real problem in the system, because of what that has done to the commodities on which we rely for a large chunk of our food—as you say, the globally traded grains, proteins, fats and oils. When that money is extracted from the system by financial commodity speculators, you have a real problem. That may be a bit too big of an issue, but we should be having international attention on this.
Q37 Chair: I had this argument at the G20 with the Saudis, who were saying the same thing as you. Say that you have a pig producer who wants to sign a contract with Tesco or Sainsbury’s for next August and wants to buy some grain in July to feed the pigs, and you have a farmer with grain in his shed. There is a risk for the futures markets. Does it not provide some stability in markets from being able to trade forward and then fix your contract price to your feed price?
Vicki Hird: If you were regulating it so that it was doing a good job, providing that stability and the right products being available at the right time. What is happening is that some of the grain is being traded 11 times before it has even been harvested—sometimes even before it has been sown, as I understand it. The way in which that happens extracts value from the system globally and is not of benefit to the farmer, the consumer or the pigs.
Chair: Carrie, were you indicating that you wanted to come in on that?
Dr Bradshaw: It has drifted a little bit from the point I was going to make, but to add to Rosie’s point about the opportunity that the fair dealing powers are, they do apply to producers abroad.
Vicki Hird: I would argue that that has really been neglected in the way in which the Groceries Code Adjudicator operates. The overseas suppliers—
Dr Bradshaw: I don’t know about the groceries code, but certainly the new powers extend to agriculture producers abroad.
Vicki Hird: Yes—the GCA, but for direct suppliers.
Chair: That is helpful.
Q38 Derek Thomas: Can I come back to the example of bread that you gave, in terms of the impact on the retailer? You talked about the tiny amount that the farmer gets for the wheat, presumably, or the grain that they are selling to make that loaf of bread. Even if you were to do as you say and double it, it still would not solve the problem for the farmer.
Take milk, for example. I know that the price per litre seems to have been quite healthy, but now it is back to about 32p for many dairy producers. In the past, when Morrisons, for example, has put up the price per litre and passed that on to the consumer, the consumers seem to respect and respond to that when they know that it goes to the farmer, but it still would not cover the cost of production.
We have argued in the past, before food inflation, that people would be prepared to pay more for food if it went to the producer. Do we still believe the same today, when food inflation has been so horrendous?
Vicki Hird: It would be very difficult to argue that at the moment. What we know is that consumers want that fair dealing approach ensured by the Government, effectively. That is what they have said in the research—that they want that to happen. Whether they will be able to pay for higher prices is a really difficult thing because we know that inflation is still happening. Although it has slowed down, it will probably speed up again. It is a difficult time to be arguing that.
What would make it happen is if you had fewer intermediaries, and farmers were able to sell their grain to a baker who was selling direct.
Derek Thomas: This is your 25%?
Vicki Hird: Yes, so to get better food traders increasing their market share and taking market share from the—
Derek Thomas: During covid we did see some of that entrepreneurship happening, but not to the scale you need.
Vicki Hird: No.
Q39 Derek Thomas: It is interesting that we often just assume that consumers will always be the ones to pick up the bill to ensure that farm gate prices are right, but we do not really seem to understand or tackle properly, as you say, the bits in the middle where quite a lot of the money is being made. Unfortunately, that is hurting families but also making farms unsustainable.
Vicki Hird: That is the reason why I talk about transparency. We need that transparency and the data powers in the Agriculture Act that, as far as I am aware, have not been used yet. They could be used to identify where there are real problems and to identify opportunities to change things.
Q40 Derek Thomas: I definitely see that. I have a question about sudden shocks in food prices and the money in the system. What impact do power disparities in the food supply chain have on those lower down the food chain when these unexpected shocks occur?
Vicki Hird: Do you mean the impact on the farmers?
Derek Thomas: Presumably the farmers are the ones that are the most vulnerable. As we have heard, they put in their grain; they drill the fields; they purchase their piglets. In terms of these power disparities, you are right about the farm gate. The farmer struggles to argue for a better price from the supermarkets. How do we address that? When these unexpected shocks do occur, if the farmer is the weak link or the one who suffers most, what would solve that problem?
Vicki Hird: We have pointed out that transparency is a big part of it. We need stronger regulatory processes, through the new powers under the Agriculture Act to regulate those direct buyers so that they are playing fair. As Carrie was saying, they are unlikely to interfere in prices so they have to interfere in the negotiations. The best way that the Government can support better prices for farmers is probably to boost the alternative routes to market so that farmers are getting more, but not so that it means they are just exclusive and very expensive products for the elite—that is not what I am talking about.
At the moment, through its Bridging the Gap project, Sustain is looking at how you could find the means to inject the money at the right point in time so that consumers on low incomes can buy agroecological food and the farmers can make a fair deal. It is doing lots of pilots to find the best routes for that. Is it vouchers for people on incomes so they can buy local food, for example? Is it supporting food hubs, vegetable box schemes and farmers markets? Where should that money be injected, if it can be injected, to do that?
You could argue that it should not be down to the taxpayer to get that right if there are large profits being made in the system, and that transparency would probably expose some of that. There is also reducing the overprocessing, over-transporting and all of those things. Although the just-in-time system is still much of it, it is a very lean system in some ways. It is still incredibly complex, and more so since we started to get full of ultra-processed food. There are various things that need to happen, and I think that regulation, building the alternatives and transparency are three top points.
Q41 Derek Thomas: I might be misquoting you, but I think you said that retailers such as supermarkets have protected their own margins but have done what they can to keep the price down for consumers at the expense of the farm gate. Do you have a vast wealth of evidence?
Vicki Hird: I think that the evidence is clear from the Groceries Code Adjudicator survey. The work that he has been doing on cost price increase over the last few years has reflected the fact that the cost price increase requests that farmers and growers are making are not being met. It felt like it was an ugly situation, because supermarkets are just saying no. There is a big mental health issue in farming at the moment for many reasons, but this is a prominent reason. I am sure you will be aware that that is something that will affect our ability to feed ourselves, but it is also a horrible thing. It is a wellbeing issue for the rural communities.
One acute issue that we have not talked about—we were not going to, as you have other inquiries about it—is the cost of workers and the availability of workers for farming in the livestock sectors and in horticulture. That cost will go up because there are no available people. You could argue that that is a good thing, because they have been too low-paid for too long and in poor conditions, but that has to be met with the right prices from the retailer.
Q42 Derek Thomas: We did our own inquiry on the mental health. I have also mentioned the milk prices; I found an immediate impact on farmers’ anxiety levels because milk prices came crashing down so quickly. What can we learn about making the supply chain more resilient, looking at the shortages of fruit and vegetables earlier this year?
Dr Bradshaw: That is a bit beyond my expertise. I would say that a system that is built to some extent on overproduction means that there is waste when you have those shocks to the system. We saw that in the wake of the covid-19 pandemic and the shift of food out of wholesale. To tackle that, I would emphasise that the twin powers around fairness and data are important.
There is a lot of emphasis on the fair dealing powers, but the data powers could also be powerful to provide DEFRA and other organisations with information about the distribution of prices. Part of a resilient food supply chain is a fair distribution of the risks and the costs, and data is important to that.
Q43 Derek Thomas: Are you worried that we would see more examples of food shortages, for whatever reason? Weather is not exactly helping us here today. Even some of the cider crops, which are not essential to our diet, have been hampered by the weather recently. Other than what you have already said, how can we protect ourselves from that? Or do we—I do not want to misquote the former Secretary of State—just get used to again having stuff when it is available?
Vicki Hird: As I mentioned earlier, we do not have a resilient diet. Our diet is very dependent on the commodities and is ultra-processed, so we need to change our diets to reflect the ability of our farming and our farmland to produce foods in a way that maintains nature and tackles climate change. All of those things are part of the solution for a resilient food system. If we do not deal with them—if we do not sort out soil and water pollution and animal health and welfare—we will not have a resilient food system. However, for farmers to do that, they need to have a decent marketplace and to be rewarded for the types of things that they are delivering—both public rewards for public goods and private rewards. We are nowhere near that at the moment, are we? We need a strong farming system here.
With apples, I do not know whether you have seen that Riverford has started a petition. I think it has 78,000 signatures. It is a Government petition, so you will probably hear about it. One of the impetuses for it is that they are hearing from other growers—they retail fruit, vegetables, and meat as well as other things—that they will stop producing next year. Something like 40% of growers that they have spoken to will stop producing apples. They will just stop, because it is no longer viable. That means we will be importing more from overseas, which you might argue is a free trade environment that makes sense. I think that it is incredibly vulnerable, and it makes a huge difference when we are using land overseas for what we can produce here.
One of the final answers, which you would not have heard, is diversification of farming, moving away from monocrops. There would be so many benefits if we did that.
Dr Bradshaw: It is obviously a wicked problem, as you have alluded to, and they tend to require the pulling of multiple levers, regulatory or otherwise. I would not suggest that tackling unfair trading practices is anything resembling a silver bullet, but it is a good start. There is a real opportunity here with the proper design of these powers to achieve a better spreading of risk across the supply chain. That has multiple benefits.
Q44 Chair: One lasting impact of the pandemic seems to have been that when you go to the supermarkets, they are full of their employees putting things into boxes. If you drive around any area, it is full of Morrisons, Tesco and Asda vans delivering groceries. That obviously has a cost. Is it the case that the people going into the store are subsidising the deliveries or is it the other way around? I have a nasty feeling that, when I go to the supermarket, I am paying a bit more than I should have to, because I am subsidising all these deliveries for people who buy their groceries online. Should we ask that question of supermarkets?
Dr Bradshaw: I don’t know.
Vicki Hird: I would ask them. It is interesting, because they have these huge fulfilment centres that are doing a lot of this. Sometimes they are doing them in the store, as you described, but a lot of it is through these fulfilment centres, which in the past would have been storage. Now, because we have a just-in-time system, those centres are doing the picking and fulfilment rather than providing that buffer and that opportunity to store things when times are hard.
The whole just-in-time system is inherently risky. Sorry, it is going slightly off your point, but it is interesting that we have moved from having a system that stores things, and allows flexibility and build-up of stocks, to one that does not, which has this fast just-in-time delivery system with incredibly big risks involved in it.
That is true in all manufacturing with just-in-time, not just food—but when it comes to food, because you are playing with nature, animals and the weather, it has so many more implications for farmers. How can they possibly deliver just in time the amount of apples of the right size and so on? It just does not work, and yet it is made to work to deliver the kind of supermarkets that we have, and now these home delivery systems. I think that some people will have done some investigations into the fossil fuel implications of home deliveries.
Dr Bradshaw: Yes. What is the environmental impact of that?
Vicki Hird: A lot of them are now being done by electric vehicles. I would be interested in finding out if those home deliveries could be for farmers’ produce going through a better food trader so that the system is far reduced in complexity. However, I am not naive. We have the supermarkets where they are, but I think that somebody else has probably done an analysis of the full fossil fuel implications of those.
Chair: Thank you very much indeed. That has been very helpful evidence. I appreciate your time.
Witnesses: Ms Sue Davies, Dr Francesca Pontin and Professor Charlotte Hardman.
Chair: Welcome to the three witnesses on our second panel. Would you like to introduce yourselves?
Sue Davies: Good afternoon. I am Sue Davies. I am head of consumer rights and food policy at Which?, the consumer organisation.
Dr Pontin: Good afternoon. I am Dr Fran Pontin, research data scientist at the Consumer Data Research Centre based at the University of Leeds. We do a lot of research around smart data and how we can use it to generate impact for public good, with a lot of focus around the food system.
Professor Hardman: Good afternoon. I am Professor Charlotte Hardman. I am a professor of psychology at the University of Liverpool. My expertise is in the psychology of food choices and how we can use that knowledge to devise better interventions. I am here today representing my institution and also representing members of the Transforming UK Food Systems strategic priorities fund, which is a community of researchers working alongside UK Research and Innovation and a number of Government Departments to understand how we can make our food system more resilient and better for people and the planet. It is nice to be here—thank you.
Q45 Chair: In your opinion, Professor Hardman, how resilient is the UK’s food supply chain?
Professor Hardman: I want to echo the words of our previous panel members. It is working well enough in that it is providing us with food, but whether that is the right food that we need to consume is obviously debatable. It is a massive, complex piece of machinery with multiple actors, as we have heard. We import almost half of our food, and we are very reliant on imports. We only produce around a third of our fruit and vegetable supply. We are reliant on these just-in-time supply chains. I will not repeat what previous panellists have said, but there is a lot of vulnerability there.
Q46 Chair: Singapore imports 100% of its food and nobody seems to lose much sleep about that. Is this something that maybe we should not be quite as fixated on?
Professor Hardman: As our previous panel said, we should not lose imports, but we can also look at where we can diversify and where we can produce more within the UK. Some of the research we cite in our evidence is around the potential for UK horticulture, particularly growing more food in urban settings, such as allotments and community food.
Some of our research shows that if we were to use all of this space in our towns and cities, we could produce about eight times what we currently produce. That is an upward limit. We would need to balance that with not starting to plough up parks to grow potatoes, but I think that there is a lot of potential in the UK to look at where we can produce more food. There is a food production benefit, but we can also look at how food can benefit our communities, because food is so much more than just calories in. There are huge cultural, social and psychological aspects around food, and we see many examples in the community where food can act as a way of bringing people together very powerfully.
Q47 Chair: We have had some fairly major global events over the last few years: the pandemic, the conflict in Ukraine, the inflationary pressures we have seen that flow through some of those things, and also the warming climate and the way that the weather we get in this country is varying and the weather around the world is varying. Do Government need to reset the dial on the way that we look at food supplies, resilience and food security?
Professor Hardman: Yes, absolutely. We have seen how the weather can impact the foods that are available to us. We have seen that with southern Europe, for example—suddenly we cannot buy salad and fresh produce. I think it is about being mindful of where there are these vulnerabilities and thinking about how we can mitigate that. For example, we know leafy vegetables and salad grow well in urban settings. We can use hydroponics and aquaponics as an alternative way of producing these sorts of foods.
Some of our researchers looked at using things like hydroponics in urban settings and yields of things, such as salad vegetables, can be significantly higher. It is looking at what foods would grow well in this country and what else we will always need to import. It goes back to Vicki’s point about diversification being so important to protect us from some of these vulnerabilities.
Q48 Chair: I can remember when I first got involved in the farmers union, the big debate on salad crops was: who can give the biggest subsidies for their gas, the Dutch or the UK? It was all about how much gas we could use to heat our greenhouses. Then Spain and Portugal joined the European Union and all of a sudden it became unviable, because the fuel needed to transport goods from southern Spain was less than the fuel used in the greenhouses. That had a climate benefit. Do we sometimes need to forget about some of those economic pressures that mean you buy food from the cheapest place because that is the most effective and efficient place, and reset the dial again on our own security?
Professor Hardman: Yes, and I think that this is one of the huge challenges when we think about the food system, because it is such a complex piece of machinery. A good way to think about this is: what are the outcomes that we want to achieve? We want people to be healthier, we want to look after our environment, and we want our food system to be fair, but there is the economic side of it as well.
If we think about what outcomes we want to achieve, there will always be trade-offs, as you have articulated in that example. I think that there is probably that acceptance that if we think of all the outcomes that we want to achieve, we will probably never be 100% at all of those. We are probably looking at about 75%, so where are the trade-offs? How can we mitigate those trade-offs?
Q49 Julian Sturdy: Can we move on to access to affordable and healthy food? This first question is to all three of you: how well served are consumers by the current structure of the UK’s food supply chain?
Sue Davies: As we have already heard, the food system has been facing a number of huge challenges over the last few years, with the pandemic, the Ukraine war, the implications of EU exit and the impact of severe weather that has put a lot of pressure on the system.
From a consumer point of view, it has always been challenging for people to eat healthily, for a number of reasons. There are a number of barriers that make it easier to eat less healthily. All of these pressures and the impact that they have had on food price inflation has made it incredibly difficult for people to eat healthily.
We have done a lot of tracking of people’s experiences and have seen that there has been a lot of trading down. Some people are making some severe changes, such as having to skip meals, prioritise meals for other family members, and even rely on food banks. I think that there are particular issues for people who live in certain areas as well.
We have worked with the University of Leeds on developing the priority places for food index, which identifies the parts of the country where people are at most risk of food insecurity. As you will know, the Competition and Markets Authority recently looked at its first study of the grocery market. It is now looking at 10 more specific supply chains. It was interesting that it said that competition was generally working, but it was not working for everybody because there are some people who may not have the means to travel or access to online deliveries, so they are reliant on more expensive convenience stores and have to pay more for their food.
I think that there are a number of challenges that are making it difficult for people in general. We know that across the board people are saying, “I am finding it more difficult to eat healthily”, but for some people it is particularly challenging. It always has been, I think, but it is a particular issue with the food price rises that we have been seeing.
Dr Pontin: I would like to echo what Sue said and home in on those convenience and rural points. If you only have one supermarket or one convenience store as your only source of food, there is no food choice.
These are also the stores that are often left out of other legislation. The high fat, salt and sugar legislation does not cover convenience stores, because they have too small a floor area. Not only are there no products in there that are affordable, but the products that are there are the ones that are not good for you. It is a double whammy of lack of choice and pushing your choices in the wrong direction.
Professor Hardman: It is important to think about people’s food choices in the broader psychological, social and environmental context. When we talk about people experiencing economic hardship and poverty, this is all on a fabric of health: mental health, physical health, adversity, and stress. There is so much going on here.
Then you have these food choices strongly constrained, not just by the amount of money that somebody has but by their current situation. For example, if somebody is in a mental health crisis, that will severely impact their ability to plan, shop and prepare a healthy meal. It is important that we take these broader factors into account in addressing food choices, which are quite often the consequence of a whole lot of other entwined processes and contexts. That emphasises, again, the importance of this systems approach.
Q50 Julian Sturdy: Bearing in mind what you have all said and agreed on, does the structure of the food supply chain create an expectation from consumers of cheap food?
Sue Davies: From all of our research, I do not think that people necessarily expect food to be cheap. People expect UK food to be produced to high standards, they want to eat healthily, and they want to support sustainable choices. Over the last year or two, we have been doing regular tracking that has shown that food prices are a big worry for the majority of people.
The last survey that we did in August showed that 83% of people across the board were worried about food prices. Obviously, some people are affected a lot more, so it is a concern that is dominating a lot of people’s decisions about what they buy. That is where I think that it is important that the Government look at how they can support people and how the food sector, including supermarkets, can do more to make sure that people have access to affordable choices.
Q51 Julian Sturdy: Do you see any evidence of the supermarkets going down that route so far?
Sue Davies: They have taken some action. We have spoken to people and asked about the top actions they would like from supermarkets, and one of the things that people emphasise is having access to cheaper healthy options and having access to budget ranges. We know from our research that they tend to be absent in the convenience stores, as Fran was saying. We have encouraged them to provide a wider choice, but they haven’t. Only Morrisons has committed to doing that so far.
Q52 Julian Sturdy: It might be slightly off topic, but it seems to me that it is evident that some supermarkets are using this to promote loyalty. You can get good discounts, but you have to sign up to the loyalty schemes to get good discounts. Are they using this as an opportunity, shall we say?
Sue Davies: The development of loyalty pricing has been interesting. It has spread rapidly within the supermarket sector, but also to other retailers. It creates an interesting dynamic where you have this dual pricing whereby if you sign up to a loyalty card, you often get what appears to be a considerably cheaper deal than if you do not have the card. In order to get that card, you have to provide your email, or in some cases you have to be over 18. Some people who will go into those stores are paying a very different price.
We did an investigation in Which? magazine a couple of issues ago and highlighted some concerns about the way loyalty pricing was being done. We looked at the Tesco Clubcard and the Sainsbury’s Nectar pricing and monitored prices over six months. We found that in some cases the usual price would have gone up just before the loyalty price came in. In some cases, even though there was a loyalty price, you could go to another supermarket and get a cheaper deal. There are a lot of interesting things going on, and we feel it needs to be looked at in more detail to understand what is happening.
Q53 Julian Sturdy: It is quite confusing for the consumer.
Sue Davies: Yes, it is potentially very confusing.
Professor Hardman: Can I make a quick point about loyalty cards? They are trying to encourage loyalty to a particular supermarket. They are not well-suited to people who might be on a very limited budget and have to shop around. I feel that they work for some people but again not a solution for everybody.
Julian Sturdy: I was not promoting it! Dr Pontin, do you want to make any comments on that?
Dr Pontin: Just to echo that if we had greater transparency around the pricing, that would go a huge way to allowing us to be able to investigate to what extent these loyalty schemes are encouraging loyalty, affecting prices, and impacting people who are accessing them. At the moment, we do not actually know who is and is not using them for that exact reason. I think we need that transparency to be able to address some of those questions in the future.
Julian Sturdy: Thank you. I think we have probably covered it.
Q54 Chair: It is interesting what you were just saying, Sue, because I know that there are quite strict rules—if you offer a discount, you have to have had it at the previous price for so long, to show that is a price reduction. However, on the loyalty scheme, you can basically put up the price for everyone else and then keep the loyalty. It looks like the person with the loyalty scheme is getting a good deal, but they are actually only getting the deal that they had previously been getting.
Sue Davies: Yes. There is the pricing practices guide that sets out general rules around reference pricing, but this dual pricing is a relatively recent phenomenon and the guidance on it is not very clear. We think that that needs to be looked at.
We have also highlighted the unit price that helps you to compare what is the best deal on things that come in different sizes. Tesco was not putting that on its Clubcard pricing, even though Clubcard is its major type of promotion. We and the Competition and Markets Authority highlighted that, and Tesco has now said that it will include that for some of its simpler deals.
There is a lot of confusion in that whole area about that new type of pricing, which needs real clarity so that consumers can have confidence that it is genuine. Even if it is genuine, I think that there is a wider issue if some people are not able to take advantage of those offers. That needs to be looked at in more detail.
Q55 Ian Byrne: I will direct this one to Charlotte to begin with. We know the Food Foundation report in January 2023 said that just under 10 million people were in food poverty. If we look at the high rate of food price inflation, how has that affected those on lower incomes? You would assume many of them would be the 10 million, so what difference has it made?
Professor Hardman: I think the impact has been devastating. As you have articulated, we are already starting from this very high baseline of far too many people finding themselves experiencing food poverty and reliant on food banks, in many cases, or on other food charity sources. The Food Foundation data in September 2022, looking at households with children, indicates that around 25% are food-insecure—a higher figure than during lockdown. It is staggering. Some data it published with City University London, in March 2023, highlighted the impact of the cost of living crisis with food-insecure households reporting that they are buying less fruit, less vegetables and less fish.
We have also been echoing that evidence in our recent research from the FIO Food project, which is one of the Transforming UK Food Systems projects. In this project, we focused particularly on people who live with obesity because this is a vulnerable population who need to improve their diet. We particularly want to understand the constraints that this population are experiencing. Again, what we see here is evidence that people who are more impacted by the cost of living crisis are more likely to be food-insecure. Food insecurity is then associated with greater budgeting, more reliance on supermarket offers, and more use of energy-saving appliances, but more resourcefulness as well. That is important to highlight.
People who are on very limited budgets will often be incredibly resourceful. That goes back to my point about loyalty cards. People will shop around. They know food prices and they know where to get the cheapest food, but they are fighting a losing battle. We have also shown that this budgeting, in particular where people are cutting back, is unsurprisingly associated with a less healthy diet.
We need to do something to help people so that they do not have to cut back on those healthful items. The Food Foundation, in its report “The Broken Plate”, also showed this very eloquently. The poorest households have to spend an unsustainable amount of their disposable income on food, which is just not achievable.
Ian Byrne: Absolutely. Francesca, would you like to add anything to that?
Dr Pontin: No, I think Charlotte has put it really clearly.
Sue Davies: Our regular consumer insight tracker looks at how people are dealing with various financial pressures. They are, obviously, dealing with rising food price inflation, but also with many other costs going up as well. We have seen a lot of people saying that they have had to cut back, and 52% said that they are buying cheaper options.
Ian Byrne: Like processed food?
Sue Davies: We did not ask specifically about that, but you can assume a lot of people are going to have to buy cheaper products and compromise in many ways. I think that what is particularly worrying, as I mentioned, is that 15% of people are saying that they are skipping meals or having to prioritise meals for other family members.
In August last year, we asked whether people were finding it more difficult to eat healthily, and 46% of people said they were. That was much higher for people who are struggling the most financially; unsurprisingly, it was eight in 10. That was last August, and since then we have seen this record food price inflation. It is likely to be a lot worse, and we already know we have terrible problems with obesity and diet-related disease.
Q56 Ian Byrne: Absolutely. Francesca, I will just pick up a point. We are talking about switching diet because of affordability, if you look at people who are able to afford to switch their diet. Are we storing up a ticking time bomb from a health perspective for these millions of people in low-income families who now have to eat a worse diet? Is there any research to show that that could potentially be coming down the line?
Dr Pontin: Yes. We are just pushing the problem; we are not dealing with it now. Our health service will see the problem imminently. We are already seeing imminent effects. Mental health has already come up today. Further down the line, there is diabetes, obesity and cardiovascular disease. We already have incredibly high rates in this country. It will get a lot worse. There are also things like childhood attainment: we are seeing children not eating so they cannot concentrate in school. That will have a whole generational impact.
We are seeing that where people have that extra support to be able to afford these foods, they are using it. We did some research with Sainsbury’s on grocery distribution. We looked at topping up the Healthy Start vouchers. Sainsbury’s, out of pocket, added £2 on to the Healthy Start voucher scheme. We saw a real increase of 13 portions of fruit and vegetables when people were given that extra £2, and 98% of people used it as expected, on those extra fruit and vegetables. You could see that quite small amount having a real impact. There is so much we can do within that space.
Professor Hardman: I would just reiterate that the evidence is very strong that obesity is significantly associated with socioeconomic deprivation in high-income countries such as the UK. It was not always like that; in the 1950s, it was the other way around. If you were from an impoverished background, you were more likely to be underweight, so it has completely flipped around. When we look at low and middle-income countries such as China, we see a different pattern. Again, evidence shows that it is starting to flip around. There is something fundamental that has happened in the past 50 or so years. Our genes and our biology have not changed in that time, so it is about looking at our food environment and our society as a key contributor here.
Q57 Ian Byrne: What is the key dynamic? What has happened? Is it the introduction of ultra-processed food?
Professor Hardman: I think that the food environment in particular is something that has changed dramatically. Obviously, there are massive changes to our lifestyles. It is not just food; we are talking about food today, but we need to think about that other side of the energy balance equation. There is less opportunity to be active, and a much more sedentary lifestyle has proliferated. We can sit on our sofas and press a few buttons on our phone, and tasty energy-dense food arrives quickly. The way we live our lives has fundamentally changed.
Q58 Ian Byrne: It is a bit off topic, but I think there is a cultural perspective—a cultural shift. I was in France at the weekend, and there are huge food markets that have a totally different thought process; the first panel touched on that element of it. They are bringing food into communities. It was amazing what was on offer. It really blew my socks off, and it was really busy. They were all shopping. Is there anything we can do, as a Government or as a Parliament, to cultivate that?
Professor Hardman: Absolutely, and we see this happening in communities all over the country. We see farmers’ markets and we have amazing community food projects happening. You can be in some of the most deprived areas in the country and there will be a community garden there with residents who are passionate about improving their community. It is about looking at how we can capitalise on and support that, but it is also about looking at the proliferation of unhealthy food outlets.
I know colleagues will be able to talk much more about this, but where we see inequalities in health, obesity, mental health and health outcomes, we often also see them in the food environment. We have areas that are classed as food deserts, where you have a whole row of fast food takeaways and convenience stores. It is difficult to access the foods that we need to eat. When you have people who are experiencing physical and mental health challenges, it is an impossible situation. We have talked about transport; transport links can be really poor. There are just so many barriers.
Q59 Ian Byrne: Absolutely. Sue, what mechanisms could the Government put in place to help consumers in the event of a future shock to the food supply chain? Maybe it is a question of changing legislation on the right to food and all those sorts of things.
Sue Davies: Yes. I think action is needed on several levels. At the moment, while we are still in this crisis—and although food price inflation is starting to drop, we know that people are still struggling—the Government can persuade the supermarkets to do more to support people.
As I mentioned, we think there are some straightforward things that can be done, such as looking at the availability of healthier, cheaper options within some of the convenience stores, particularly in the priority places for food insecurity that we have identified through our index. There is also more around price transparency, which they have started, but which we think needs to be speeded up to help people now.
Also, the Government can look at some of the ways they can support people. Some of these recommendations were set out in the independent review that the Government commissioned from Henry Dimbleby, but there are things like uprating the Healthy Start scheme. There are a couple of problems with Healthy Start, in that there is still relatively low take-up. It is at about 70% now, so it is improving, but it varies around the country.
We have done some calculations on the value of it. Because food price inflation has been going up so much, the value does not buy you anywhere near as much. The things that Sainsbury’s are doing to add top-ups, for example, are good, but the Government should be uprating it. There is also eligibility for free school meals, for example, and there is the whole regulatory space. We are seeing people trading down. It is important that they know that they can still have confidence in what they are buying.
Just last week, the Food Standards Agency and Food Standards Scotland published their annual report on food standards, which said that they are concerned about the drop in environmental health, trading standards officers, and delays to border controls that potentially increase the risk of problems with food standards.
I suppose the other thing is that fundamentally—for the reasons you heard about from your earlier panel—we have to have a national food strategy that is about making sure that we have a more resilient and sustainable food system that will withstand these shocks better, so that we are not constantly in a cycle of trying to deal with these issues.
Dr Pontin: Charlotte has covered what we can do outside that supermarket food system, and Sue has talked about how we can improve it in the short term. I think that Government legislation would help. Supermarkets are almost calling out for it, which is surprising.
I work closely with a lot of the health and sustainability leads within those organisations and they have to make a business case to be able to push it through. Something like the high fat, salt and sugar legislation enables them to do that, and they get a whole business priority by having that greater legislation. They also have to deal with competition law between each other and they run as a business, so being able to push those things through from the top as well as from consumer pressures would help them to have a more universal approach and tackle it head on.
Professor Hardman: I think that the message from consumers is that price is a massive issue and they want support, cheaper food and so on. I think Healthy Start vouchers can deliver towards that. Obviously, as Sue has mentioned, uptake can be quite low, and they are not available to everybody, of course.
Another potential issue with vouchers is where you spend them. While vouchers might deal with affordability, we need to deal with access as well. To give an example from Liverpool, there is the Queen of Greens, a mobile greengrocer that goes around some of the food desert areas we have, and people can spend their vouchers there. That is a nice joined-up example tackling both affordability and accessibility.
We need to urgently look at our food environment and some of the legislation around fast food restaurants and takeaways. What are some of the priority pieces of legislation that could be put in place to support community food projects and community growers, for example? The Right to Food legislation, which is being led by Pam Warhurst, would give local residents more ownership and ability to take hold of land in their local communities and use it for things like food growing and providing food, which are powerful ways of bringing people together. We know that green spaces have a huge benefit for mental health and wellbeing, which is another major challenge that we need to deal with.
Q60 Mrs Murray: Sue, you mentioned the priority places for food index, which has found that there are areas in the UK where people are experiencing difficulty in accessing affordable food. We were straying into this area in some of the answers to the last question.
Other than high rates of food price inflation, what barriers affect people’s ability to access affordable food? For instance, in my constituency, I have towns that have only one supermarket, and it is a long way to travel to another one in rural Cornwall. Would you consider that to be one obstacle? It would be good to hear what you think.
Sue Davies: Yes, definitely. If I talk a bit about it, I am sure Fran will be able to add more. We were pleased to collaborate with the consumer data research centre at Leeds in developing the priority places for food index. The rationale behind that was that we know that everybody is being hit by high food prices, but we know that some people will be hit particularly hard, and if there is a way to identify where those people are, it is easier to target interventions.
Our Affordable Food for All campaign particularly focused on what supermarkets can do. The index brings together a range of different indicators for risk of food insecurity, some of which are about personal circumstances and about income. It brings together a range of factors relating to fuel poverty, for example, and whether or not you are getting particular types of family support, such as eligibility for free school meals, and looks at access issues as well. Is it, as you say, that you have access to a limited range of shops within your area? Is it difficult for you to shop online? Is there poor public transport within the area?
We are bringing together that range of indicators to help identify, for a relatively small geographical area, how that compares around the UK. We have had to do it slightly differently because of the datasets for each nation, but we have identified the places that come out as the 20% most poorly performing—what we call the priority places. These are the places we think are priorities for intervention.
The beauty of the index is that you can then overlay where there are retail shops in those places. You can see that there is a Tesco or a Co-op there and see what type of store that is. We have provided this to the supermarket, saying, “You know which stores are in the priority places, and therefore you know which stores to prioritise in being able to help people to have access to affordable food.”
It also has wider value. Fran has been doing a lot of work with local authorities and many charities. You can identify similarities with different priority places and identify what interventions might be most effective in order to support people and help them, so it is something that we need to continue to look at and use as a way to target interventions and share best practice.
Dr Pontin: Yes, it is very much about being able to see that small area. We have produced an interactive map as well. It goes down to lower-layer super output area, which is around 650 households on average, so it is quite a small, granular level to indicate that risk. You can hover over and not just see what the overall risk is and compare it to the country, but actually see what is driving that risk. For example, in Cornwall and in the more rural constituencies, we often see that it is that lack of access to supermarket food, or reduced access paired with socioeconomic factors. They might not be the most socioeconomically deprived areas in the UK or the poorest access areas, but when you combine them together, that is pushing up their food insecurity risk.
We have been doing a lot of work with local authorities to validate that what we have pulled together through open data is what we are seeing on the ground, and we have found that to be the case. It is also being used by lots of local authorities to underpin their local food strategies, for example, and to target intervention. It is also being used by charity sectors and even food redistribution charities to work out where they can start to push that food redistribution across the system, including with overhead regional groups. It is great to see that people are using it and there is that demand for that level of insight and information.
I know the Food Foundation is calling for tracking, and it is doing its national surveys to try to track food insecurity across the UK, but currently we do not have a measure of food insecurity, so that is also where it is incredibly valuable.
Q61 Mrs Murray: It would be fair to say, then, that obviously living in rural areas does prohibit consumers from accessing affordable food and healthy food on occasions, but you are looking at tools to help people with that.
Dr Pontin: Very much so, yes. We can look at what is driving that. It might well be that a lot of supermarkets have expanded their online deliveries to meet those needs, but that is price-prohibitive, especially in more rural areas where delivery prices can be astronomical.
We see initiatives such as the one we mentioned in Liverpool where we have local food vans going around, and we are seeing that action being taken locally to distribute that. Morrisons has expanded its range of budget lines in convenience stores, so where there is a Morrisons convenience store, it is now serving its community much better with budget line availability.
Q62 Dr Hudson: We have covered some of this, so maybe this will be the quickfire round. In some of the previous questions, we have gone into the comparisons between big supermarkets and smaller convenience stores. The British Retail Consortium argues that “retailers are trying to do everything they can to maintain healthy choices in all their stores but there are inevitably differences in choice and offers between a large supermarket and a small convenience store.”
On the other hand, I represent a very rural area, and the chief executive of the Association of Convenience Stores has commented that convenience stores play an important part in rural and isolated communities, so there is a real balance. What differences do you feel consumers experience when shopping at convenience stores, compared with larger supermarket stores?
Sue Davies: Generally, people will have to pay more. We did an investigation earlier in the year which we called “Cost of Convenience”. We looked at a shop of about 70 or 75 products in a Tesco Express. We found that you would be paying about £50 a week more for that than you would in a big Tesco, which works out at well over £800 a year more. The Competition and Markets Authority, when it did its initial review of the grocery market, said that although competition was working, it was not working for people who have to rely on these convenience stores because they are paying more.
We have asked people what support they want from supermarkets, and one of the top things that comes out is that people think they should be providing more budget ranges. That is why we have been saying to the supermarkets, “Can you provide a wider range of budget ranges that support a healthy choice?” Not that everything has to be healthy, but you should be able to go into convenience stores and buy a range that enables you to go home and make a healthy meal.
We did an audit earlier this year where we sent mystery shoppers into different-sized supermarket stores. We thought that there would be few budget ranges, but we did not expect that out of the 35 convenience stores—Tesco Express, Sainsbury’s and Morrisons—there were 30 that had none of our essential range of budget items, and the other five only had one.
We have been trying to persuade the supermarkets to stock more of them. We completely get that they are smaller stores and do not have that much shelf space, but they are making decisions about what to stock, and it seems incredible that we could not find any of these quite basic items. We were pleased that Morrisons has said that it will be rolling it out.
Q63 Dr Hudson: In those studies, you are talking about the convenience option of Tesco’s and supermarkets. Have you done studies getting a little bit further afield into the more isolated rural areas, where there may not be a Tesco or a Sainsbury’s? Have you done any research at all looking at those convenience stores or small rural outlets that may be an independent producer, or not necessarily part of a chain?
Sue Davies: We have not looked specifically at those, I am afraid. I would not want to make assumptions, but generally if you are relying on some of those smaller stores, you probably are having to pay more. But we have not looked across the full range of convenience stores.
Q64 Dr Hudson: If you stick with the big guys—your Tesco, your Co-op, your supermarkets—how rurally disparate do they get out? Do you see some of their rural stores as well?
Sue Davies: Yes, definitely. Using the priority places index was the other surprising thing, because we have been saying, “If you cannot do this in all your stores, do it in those stores that we have identified as priority places,” and they do have a presence in many of those locations that we have identified. It is something we know there is consumer support for, so it is something we think that they should be able to do.
Q65 Dr Hudson: Thank you. Fran, do you have anything to add on that? Also, in one of your previous answers you talked about the limited budget options in convenience stores having an impact on consumers’ ability to choose a healthier type of product. Could you factor that into your comments on the previous question, please?
Dr Pontin: Yes. I will answer that bit first and then go back.
We are talking about budget lines for things like tins of tomatoes, milk and butter—really basic stuff that you would need to make a meal—but they are not even having access to that. If you live in central London, for example, you probably have several supermarkets that you can easily access, so you can shop around for deals, use loyalty schemes and make choices. When you do not have that choice, you are relying on that provider for maybe three weeks out of four in the month. You might be able to travel further occasionally, using public transport for example, but most of the time that is what you are relying on. That is especially the case for fresh items and fresh produce that go off quickly. They will not last that long, so your choice is very limited if you have only one convenience store in your locality.
Within the priority places for food index, we have not just covered car access. We have also covered access by public transport, with journey time statistics, as well as access to other food sources like markets and non-traditional food sources, especially given the diversity of the population in the UK. These are places where non-white British communities often shop around to get their food, so it is important we consider that as well. We are not just thinking about supermarkets.
Q66 Dr Hudson: As well as the consumer survey side of things, in the academic world, have you done much work in rural areas in terms of seeing if there is a difference between rural availability and town and city?
Dr Pontin: It comes back to that data transparency point. It is very difficult to get the transparency around data to be able to look at those differences. As you pointed out, often the big supermarkets may not be the convenience stores in those most rural locations. Establishing the relationships and being able to work with those more independent retailers—it is difficult enough building that trust and establishment to work with supermarkets.
Q67 Dr Hudson: Could you suggest a way we could evaluate that?
Dr Pontin: Improving data transparency in the food system. People are happy and willing to evaluate it, and there is the academic want and need to evaluate that data. It is just getting hold of it and establishing it that is, at the moment, not possible.
Q68 Dr Hudson: Would you agree—and I will flip that over to Charlotte—that if we could do that, that would give equality of opportunity and access to healthy food for people both in rural and urban areas?
Professor Hardman: Absolutely. We have to understand how, and take this place-based approach in a way. There are standard principles, but then there are also the nuances associated with rural versus urban. We are talking a lot at the moment about availability in local stores. That is key, of course, but we also have to think about demand.
We talk about convenience stores, and often a lot of what they sell are convenience foods, but a lot of those types of foods meet the needs of people who might be struggling and might not have access to cooking facilities, time or skills. If you are living somewhere and you have a kettle, then that is what you are using. Things like Pot Noodle are the options that are available to you.
While we absolutely need to assure that a wide range of healthy, nutritious foods are available, we also need to match that with demand. We are looking at where people are living and what access to cooking and food preparation facilities they have. Again, food insecurity is so key here. We know that people are not wanting to buy loads of fruit and veg because it is going to go off.
Often when people are shopping for food, they are looking for things like shelf life. What can I put in my cupboard that is going to protect me from potential food shortages? “Buy one, get one free” offers feed into that, because they will typically be on processed, longer shelf-life products. It is about understanding the psychology of some of these consumer behaviours and matching that up with a food environment that makes available the healthy foods that we need to be eating.
Q69 Dr Hudson: Coming back to matching that food environment, Fran, you said that because of floor size and space, convenience stores are exempt from certain regulations in terms of what they can and cannot offer.
Dr Pontin: The newly introduced—well, it was over a year ago now—high fat, salt and sugar regulation, which is about product placement of those types of products on the end of aisles and in supermarket entrances, only applies to stores with a certain number of staff or a certain footprint of selling space.
There is not only less choice, but when people are walking in there, it has that convenience aspect to it. They are not seeing all the advertising that would be in the large supermarket. That convenience food is very much, presumably, designed to be sold to them.
Q70 Dr Hudson: Do you have a ballpark figure? Do you know how big you are talking in terms of that floor space?
Dr Pontin: I think it is 185 square metres, but I can get back to you on that.
Dr Hudson: That would be helpful. We probably have that somewhere in our brief.
Dr Pontin: Yes.
Q71 Dr Hudson: Further to that, under the Price Marking Order, currently small stores, including most convenience stores, are exempt from having to display unit pricing information. Is that having an effect on consumers’ ability to access healthy and affordable food?
Sue Davies: We think that the whole area of unit pricing needs an overhaul, and that is set out within the Price Marking Order. Unit pricing is the smaller price, which gives you the price by weight or volume. It is a valuable tool because sometimes you might think the bigger pack will be better value, but it is not the better value. You need to compare.
The Price Marking Order is quite outdated. When it was developed, the small shop exemption was intended for small and one-off shops, but since then we have had the rise of the supermarket chain convenience store. They are technically exempt from providing it. Some do provide it, but then it means that there is no enforcement within those stores.
We found problems across the board. There can be inconsistencies in the way the unit prices are shown, and there can also be issues with legibility. Sometimes you have to search to find it and sometimes it is just missing, and it is not included on promotions. I mentioned the loyalty card issue before, but often it is other types of promotions. The Government have just consulted on updating that. We think it needs to move quite quickly, because people need to be able to take advantage of it, and there are lots of different units that are set out, which creates quite a bit of confusion at the moment.
Q72 Dr Hudson: I guess a lot of this labelling and structure is easier for the convenience stores that are affiliated to the big boys—the Tesco, the Sainsbury’s and so on. If we come back to my original point about how some of these independent rural community shops are a lifeline, we have to be very careful not to make it so overly burdensome on them that it makes them think, “Do you know what? I cannot keep operating in this situation.” It is a balance, isn’t it? These are a lifeline to rural communities. How do we get it right to make sure that they are able to deliver good food?
Sue Davies: With the Price Marking Order, you could update that small shop exemption to make sure that it was based on turnover, number of stores nationally or number of employees, so that you were including those chain supermarkets that were not intended to be exempted, because it was not anticipated that they would be around at that point. If they are doing it for other stores, you should, of course, be doing it. Particularly if the convenience stores are more expensive, you should be able to easily compare the price and see what the best value is.
Chair: We were checking that the floor area of retail stores that do not have to display unit pricing is 280 square metres. There is a different area for things like somebody opening in the evening and that sort of thing, but that is very useful. Barry, we have saved the best until last.
Q73 Barry Gardiner: My apologies for arriving late; I hope I will not be reprising anything you have already said. Do any of you know how many miles it is from Peru to London? It is 5,959 miles. Last year we imported more of our avocados from Peru than from anywhere else.
What I am trying to get at is that I do not understand why, if I were to go to that village in Sheryll’s constituency and buy an avocado in her solitary local supermarket shop, I would pay 50% more simply because my avocado had to travel from London down to Cornwall, which is 300 miles as opposed to the 5,959 miles it has already travelled from Peru. Your survey said that two thirds of the public thought that supermarkets were ripping them off. They are, aren’t they? It cannot possibly cost half as much again to transport an avocado from London to Cornwall as from Peru to London.
Sue Davies: This model of supermarket convenience stores has evolved where their model is that they say their costs are higher in these convenience stores, and therefore the prices are more expensive. We are in very different times now, where we know that people are really struggling. We have seen from our regular consumer trackers that there has been a big drop in trust in supermarkets.
Supermarkets usually compare pretty well with other sectors and are still higher, but it is usually the travel sector or banking, for example, where there are lower levels of trust. We have seen a drop of 20 points over the last couple of years. That is because people feel—well, I am feeling the pain, but the supermarkets are not.
Q74 Barry Gardiner: We also had the figures that showed the price gouging that they had engaged in and showed that supermarkets had been taking increased profits, but I do not want to go down that road, because we have already discussed that with the previous Secretary of State at a previous hearing.
I want to ask you about choice. There has been a lot of talk today about the lack of choice that is being provided to our constituents by supermarkets, particularly in their express and smaller retail outlets. Yet whenever anybody raises the question of why there could not be mandatory obligations on the supermarkets to do certain things, people then say, “You cannot tell people what to do, you cannot take away choice from them. That is their freedom to price it as they see fit.” But it is our constituents—their customers—who are being denied choice, because there is not a regulatory framework that ensures that they get choice.
Is there not something about the way in which we regulate these supermarkets that you could offer this Committee as a suggestion that would enable us, as regulators, to ensure that choice was available to all our constituents no matter where they live—whether they are in Cornwall in Sheryll’s constituency, or in mine in Brent North?
Sue Davies: Certainly there are a range of things that supermarkets can be doing. We have talked a lot about convenience stores. The way supermarkets choose to use their promotions and what they put on promotion is also critical. We need recommendations that drive the supermarkets to be taking more action. As Fran was saying, there is some areas where having a level playing field that takes that competitive element out would be really helpful.
Q75 Barry Gardiner: You know the way the supermarkets are using their promotions: the stuff they promote is the high fat, salt, sugar stuff instead of the roughage, the fruit, the veg. You have the figures, haven’t you, Professor Hardman, from the survey that you did. Do you want to give them to us?
Professor Hardman: Which one are we talking about exactly? Sorry.
Barry Gardiner: The one where you spotted 52% of the—
Professor Hardman: That’s actually Which? data, but yes.
Barry Gardiner: You did it in your thing, but it was Which? data.
Sue Davies: I think it is in our evidence. I should just put in a caveat that that was a few years ago. We have not done it recently, but the general point still stands. We know from all of our consumer research that people get frustrated, that they feel that a lot of the promotions are on the unhealthy foods, and they want far more on the healthy food.
Q76 Barry Gardiner: Some 52% percent of confectionery was on promotion, compared to a third of fresh fruit and vegetables, 30% of fresh fruit and 34% of vegetables. Where was it promoted in the store? It is not just that it is on promotion, is it? It is about location, location, location.
Sue Davies: Definitely, yes.
Barry Gardiner: It is the pester power of kids—having it by the checkout so that parents are constantly nagged, “Please buy me something that is completely unhealthy.”
Sue Davies: It is quite incredible that the HFSS restrictions that were due to come in were delayed. The rationale for delaying them was generally because of the cost of living crisis and pressures, when this is precisely the time when we know that people are struggling to eat healthily because they are on tight budgets. You do not want the promotions to be encouraging your children to be asking for the unhealthy food.
Barry Gardiner: I thought that was odd as well. I am glad you raised that point. Would it be something that you would urge this Committee to have as one of its recommendations: that we ask the Government to blinking well get on with it?
Sue Davies: Definitely. Some supermarkets are doing it voluntarily, but a lot are not. It is really important to have recommendations around the nature of promotions within the stores; around more generally encouraging more healthy choices; and around how they make their decisions about where they are going to stock the healthier products at a lower price. With the priority places for food index, presumably they have this data themselves anyway, but we have given them a transparent set of data, which helps identify these are the stores to start with as absolute priorities. If we do it in those stores, we will help people who are likely to be struggling the most.
Dr Pontin: At the University of Leeds, we are involved in some work that is evaluating that legislation across four of the big five supermarkets and across the 10 domains of the priority places for food index to see whether those impacts have been equitable, and it has worked. That is only on phase one, that placement, because the Government evaluation of it is not due until 2027. This is the first time that supermarkets want us to evaluate it, because they want to see if it has worked or not, because they have put a huge amount of money into it. The general consensus so far is that it has had a positive impact.
Q77 Barry Gardiner: What you are saying is that if you promote healthy food, it works. That’s it in a nutshell. Is that right?
Dr Pontin: Yes. What we have seen in supermarkets, if you use price promotion from the trials we have done in supermarkets, is that it works to promote healthy food.
Q78 Barry Gardiner: Do you want to give us the stats on that?
Dr Pontin: Yes. The £2 top-up for the Healthy Start voucher increased fruit and veg portions by 13.1 portions per basket. We also did reduce the price of fruit and vegetables for 60p in Sainsbury’s again. We did that both in 2020 and in 2021, which was obviously during the covid lockdowns, and we saw a 58% increase during the lockdown period and a 78% uplift on fruit and veg sales during the 2020 period.
Q79 Barry Gardiner: There is lots that this Committee could be recommending in its report. Thank you very much. Just one final thing: given that you have talked about having the basics for people to go home and cook a healthy meal, wouldn’t it make sense to teach kids how to cook a healthy meal, as an integral part of education?
Professor Hardman: Yes, absolutely. We talk in our evidence about the importance of a whole-school approach to food. Cooking is very important, of course, but it is not just cooking; it is growing and understanding the food system. In our BeanMeals project, for example, we are doing some work on getting UK-grown beans into school meals. Alongside that, there is a whole programme of enrichment activities around teaching children about the environmental impact of food as well as health. Schools are a good place we can work, but there are lots of challenges, including time and resources. It is not currently part of Ofsted, for example, but there is a key opportunity to foster these habits and behaviours, which we hope can then be maintained.
Q80 Chair: I absolutely agree with that point. It is interesting. I had a cup of tea a while ago with Sir John Armitt, who delivered the Olympic Park. There were a lot of allotments on the park, and they were worried that the working-class people who live in Stratford would lose their allotments and be unable to supply their food. They were surprised that the majority of people with allotments drove down from Islington, and the traditional skills of growing allotments have disappeared in a generation or so.
Professor Hardman: If you look in community food projects, the skillsets are there. I am part of a food growers’ network in Liverpool, and I am amazed by the skills that are there in horticulture and growing food. These skills need to be supported and built upon.
Q81 Chair: It is only people like me and Jeremy Corbyn now who are growing our own vegetables.
I have one last question. The King has today launched the coronation food project, which is aimed at reducing food waste. We touched on food waste in the first session. Does the current structure of the food supply chain encourage greater levels of food waste? If so, how could this be addressed?
Dr Pontin: I can come in on that. Last week I was down at Good Food Oxfordshire, which is a network across all the councils in Oxford to improve the food system. I said I was coming here today, and they wanted me to raise the fact that they are seeing a reduction in the surplus they have access to, and it is not being kept local. It is being moved across the country. They were pointing out that a lot of them started as sustainability-focused organisations wanting to repurpose surplus, but increasingly they are having to pivot towards addressing food poverty. They are saying that one should not be used to necessarily solve the other. They both need solutions. While it can work in the short term, more thought needs to be put into the long-term impact of using sustainability to address food poverty and vice versa.
Chair: In Pimlico, where I have a flat, they seem to have surrendered and said, “We are just going to collect your food waste and compost it,” which is almost feeding into that. Barry is going to have the last word.
Q82 Barry Gardiner: Never the last word. I have a question about food waste, which is particularly relevant to what you have said about the way it used to be used for food banks and so on. Is it just my imagination, or are the big supermarkets now selling more of their produce that is best before tomorrow? Every time I go to the supermarket now, I have to rifle through, because most of the stuff has a very short life on its labelling.
I wonder if that is contributing to food waste, because people are buying stuff, taking it home, and then in two or three days’ time they find it is out of date. They are throwing stuff away that may be perfectly serviceable, but the label is saying it was best before two days ago.
Sue Davies: That is not something that we have looked into, but it sounds like that should be a Which? investigation, and maybe we can answer that.
Barry Gardiner: Great. If I can energise you to a new investigation, Sue, that would be wonderful.
Sue Davies: There is the wider issue that there is still a lot of confusion about “use by” and “best before” and getting people to understand the difference. Obviously “use by” is the critical one and there has been a shift to trying to make sure that they are used in the right way. “Best before” can still sometimes be useful in helping you to manage, for example, if you are buying a loaf of bread, how long that is going to last, but there is sometimes still confusion about the different date markings and what they mean.
Chair: Thank you very much indeed. In fact, thank you to all five of our female experts. Men can be experts too, but we really appreciate your time.