By Ewan Pate, farming editor

THE CURRENT system of regulating supermarkets is failing consumers, farmers and rural economies, according to a report published yesterday.

The report into the food supply chain, by the Scottish Parliament’s environment and rural development committee, fears that consumers may not be able to continue to access good quality Scottish produce if urgent action is not taken.

This is a significantly different approach to that taken in previous inquiries where only the effect on farm prices has been considered.

Although competition matters are reserved to Westminster, this report, which follows six months of intensive consultations, is bound to be considered by the Competition Commission in its current inquiry into supermarket power.

In the report, the Scottish Parliament calls on its own Executive to ensure farm businesses add value and sustain local economies.

It also calls on the Competition Commission to ensure greater transparency throughout the supply chain and to adopt a flexible long-term view when judging competition issues in the Scottish market.

Environment and rural development committee convener Sarah Boyack, commenting on the release of the report, said, “The committee recommends that the competition authorities must take a wide view of what is in the consumer interest.

“If focusing simply on the prices consumers have to pay now means that local farm businesses are undermined, then the freshness, quality and price of food available to consumers will suffer in the longer term.”

Evidence was also heard on how Scottish farm businesses can be supported to compete effectively.

Policy and funding support for sustaining the rural economy are areas devolved to the Scottish Parliament.

Ms Boyack continued, “There are many issues the Executive could also act on, and we have raised some of them repeatedly.

“The committee wants to see greater emphasis on support for farmers and producers to add value to primary produce and gain more market power.

“Improved support for collaboration in the supply chain, such as greater financial and political support for the development of agricultural co-operatives, is essential.

“We also want to see the Executive use public procurement much more actively and creatively to support local food economies.

“Using local-grown food locally has multiple benefits, supporting the rural economy and achieving environmental benefits such as reducing emissions.

“The Executive must work to give this perspective a much higher profile.”

The committee also urged the Competition Commission to consider an extended code of practice and an independent supermarket regulator.

This must be music to the ears of John Kinnaird, president of NFUS, who has repeatedly called for just such an appointment.

Yesterday he commented, “I take my hat off to MSPs for delving into this subject.

“They could easily have shirked this challenge given that competition issues are reserved. However, as we impressed upon them, the consequences of the destructive squeeze on the supply chain is being felt right across the country, particularly in rural communities.

“No one in the Scottish farming industry is looking for special favours, simply a supply chain which rewards quality and treats suppliers with respect.

“Too often, relationships between supermarkets and their suppliers are shaped by fear and, at worst, exploitation.

“There are some good examples of supermarkets working well with suppliers to the benefit of everyone in the supply chain, but that should be the norm.

“The Supermarket Code was a laudable attempt to bring the supermarkets to heel but it has failed because suppliers are too scared to complain.

“It must be strengthened and we need an independent auditor to police it.”

The parliament report goes further and suggests that public procurement policy should be positively skewed in favour of local produce.

“The current review of the Executive’s procurement strategy offers a perfect opportunity to do so,” the report says.

There is also a strong call for the Executive to look at over- regulation and especially asks it to compare the burden of red tape in Scotland compared to other EU countries.

The MSPs also ask why agricultural co-operatives have not developed in Scotland to the same extent as elsewhere in the world.

“The committee requests that the Executive supplies a specific response to this question,” concludes the report.