Code of Practice Must Ensure that Retailers Pay Suppliers Promptly

IFA President John Bryan has welcomed the move by the Musgrave Group and said it could be the difference between viability and bankruptcy for many suppliers. He said, “Suppliers to Superquinn should have been looked after by the banks and the receiver in the initial deal, and the Government should have insisted on this.”

He said, “The Musgrave initiative reflects genuine concern for indigenous suppliers, and their purchase will keep the Superquinn brand in Irish hands.”

John Bryan called on the receivers to ensure that existing suppliers to Superquinn are supported and that payment for goods delivered is made immediately to assist cashflow, until the Musgrave Group take over and payment for outstanding debts are made.

The IFA President said there has to be a fundamental review of the credit term arrangements between supermarkets and suppliers that reduces the lengthy wait for payment. He said the Government must incorporate strict credit terms into the Code of Practice that reduces the exposure of suppliers.

“IFA has written to the Enterprise Minister Richard Bruton and is insisting on a much shorter payment period in the future. Under the existing conditions, retailers have been hoarding vast amounts of cash, while suppliers have to wait for payment of goods. This allows the supermarkets to earn substantial interest in the bank, but puts pressure on suppliers who have to meet their own bills.”

The IFA President said the Code of Practice must re-balance the relationship. “We have to see greater equity in the food supply chain. The credit terms forced on suppliers is indicative of the dominant position the retailers hold in the food chain. If the Code of Practice is to have any practical benefit, then it must address this issue and IFA is calling for regulations that ensure suppliers are paid within 21 days of delivery.”

Mr Bryan said farmers selling cattle can insist on payment on the day, and milk suppliers receive a cheque from their co-op each month. “Suppliers to supermarkets cannot be forced to accept a longer wait. Cashflow on farms is crucial and retailers cannot continue to force extended payment arrangements on suppliers. In addition, ‘retention of title’ should be automatic until goods delivered are paid for in full by retailers.”