Growers hit by retailer's rebate demand on plants and flowers

NFU describes additional two per cent rebate demanded by Homebase as a 'low blow for growers'.

Homebase: extra rebate goes against code of good trading practice - image: Homebase
Homebase: extra rebate goes against code of good trading practice - image: Homebase

Homebase has upset its suppliers by demanding two per cent extra rebates, in a move that goes against the NFU code of good trading practice for plants and flowers published in October 2013.

The code states that "no price changes or equivalent of can be made once crops have been put into production" and "prices are for a season or volume with no unilateral changes imposed on the customer".

NFU horticultural adviser Dr Chris Hartfield said: "Following challenging trading in recent years, this action by garden and houseplant retailers will come as a low blow for growers. If this was happening with edibles, we suspect it would attract the serious attention of the groceries code adjudicator.

"When retailers ask suppliers to support their business with increased investment, through mechanisms like rebates, the question is whether or not this is a two-way street, which enables growers to also create businesses that are sustainable in the long term.

"Too much of the risk in this supply chain sits with growers and this is why we've produced a code of good trading practice, which aims to promote more sustainable trading relationships for flowers and plants. We would welcome the opportunity to discuss it with retailers."

British Protected Ornamentals Association (BPOA) chairman Ian Riggs said: "Regrettably the reality is this arbitrary action can be imposed without proper discussion or negotiation with grower suppliers, as contract prices have already been agreed. This case is a compelling reason for growers to work with the BPOA and NFU to ensure the principles of the code are adopted."

Growers and suppliers refused to put their names to comments for fear of being blacklisted, but one said one-third of suppliers will pay, one-third will haggle and one-third will not pay.

Bransford Webbs managing director and HTA ornamentals committee chairman Geoff Caesar said: "Homebase's business is not with the trade association so to expect the association to get involved in terms and conditions between retailer and supplier is difficult."

But he added that Homebase's move is "quite an issue if they have changed prices after agreeing them for the year" and said: "Suppliers struggle if agreements that have been made already are altered. If you're told a rebate level is a particular percentage, you offer prices and service to remain in business. This change could mean a doubling of rebate."

HTA horticulture head Raoul Curtis-Machin said: "We negotiate behind the scenes if there are issues between growers and retailers. We're not signing bits of paper if we don't think they are correct." The HTA and NFU will meet on 5 March to discuss workshops and the code of practice.

Hillivew Group managing director Boyd Douglas-Davies said: "You can't drop a diktat like that on suppliers a month before supply starts."

Retailers Changing terms of supplier deals

In a similar letter from Argos to suppliers, commercial director David Robinson said: "As we travel along this journey, it is vital that both Argos and its suppliers play their part in supporting this transformation, and hence with effect from 1 March 2014, we will be amending our standard trading terms to include an additional two per cent turnover rebate for orders placed on or after that date."

A Homebase representative said: "Our suppliers are very important to us. Payment is made in accordance with pre-agreed terms and reflects the markets in which we and our suppliers operate.

They added: "Details of these agreements are commercially sensitive and therefore will not be disclosed."

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