The pursuit of cheap food coupled with the buying power of the big supermarkets is putting farming livelihoods at risk, the Church of England has told the Competition Commission.
Making farmers pay for supermarkets' own promotions is just one of a number of invisible and pernicious practices squeezing farm-gate prices.
While welcoming the broad findings in the Competition Commission's recent interim report, the Church argues that a wider debate is urgently needed on the effects of retailers extracting 'below cost' supply agreements from farmers and their effect on a sustainable and flourishing agricultural sector.
"The business practices of the major food retailers have placed considerable stress on the farming community through the use of methods which we believe to be unfair and of which consumers seem to be unaware," said the Rt Rev Michael Langrish, Bishop of Exeter, who chairs the Church's Rural Strategy Group.
"Farmers seem to be unwilling to complain or to expose these practices for fear that their produce may be boycotted by the major retailers. It is clear that the Supermarkets Code of Practice is not working."
The call for wider debate comes in the report Fairtrade begins at home: Supermarkets and the effect on British farming livelihoods submitted to the Competition Commission by the Church's Ethical Investment Advisory Group (EIAG).
It was researched and produced in response to concerns from members of the General Synod, the Church's 'Parliament', about the doubtful viability of many farming enterprises given the squeeze on farm-gate prices.
The report identifies a number of "invisible and pernicious practices" that the consumer is largely unaware of and which have been accepted by farmers as a fait accompli as part of the price of doing business.
Products labelled as British are often only processed or packaged here, obscuring the country of origin of the primary ingredients. The Church of England also criticised flexible contract terms that "seldom work to the advantage of the farmer", and said that flexible payment terms were subject to arbitrary change that "often put farmers to an increased cost or financial loss".
The Church also claimed that facilitation payments, deductions and a range of financial inducements were being paid to the retailer or processor at the farmer's expense and that there was "little evidence that retailers share the benefits of promotions with farmers, and much evidence that farmers, in the main, bear the costs".
The report looks particularly at the dairy industry and notes that retailer price competitiveness for a staple product has led to a significant reduction in the number of dairy herds, placing many of those remaining at the margins of economic viability. It recognises there have been some recent positive signs of change.
