Scotland’s food and drink industry has issued a warning about the damaging ‘unintended consequences’ of John Swinney’s supermarket price cap plan.
The First Minister is under further pressure to scrap the proposal to force supermarkets to impose ‘price ceilings’ on between 20 and 50 essential items including milk, bread, eggs and chicken after industry body Scotland Food and Drink added its voice to the opposition to the scheme.
The body, which represents 450 Scottish food and drink firms, warned of the impact it could have on producers, manufacturers and supply chains.
It also said businesses must remain competitive and resilient to ensure there is a stronger food system in the long term.
Mr Swinney is expected to provide further detail on the proposal when he delivers his programme for government when MSPs return from the summer recess at the start of next month.
It comes as retailers also issued a direct warning to the First Minister about the potential consequences of the policy.
Iain Baxter, chief executive of Scotland Food and Drink, who has been directly engaging with the Scottish Government on the food price cap plan, said: ‘Food affordability remains high on the political agenda. We believe everyone in Scotland should have access to quality, nutritious and, where possible, locally-produced food.
‘However, policies designed to reduce costs for consumers must avoid unintended consequences for our producers, manufacturers and supply chains. Business competitiveness and resilience are essential if we want a stronger food system in the long term.’
John Swinney is expected to provide further detail on his price cap proposal when MSPs return from the summer recess
However, the First Minister is already under pressure to scrap his price cap plan
The Scottish Retail Consortium has this week written to Mr Swinney to urge him to ensure every policy in his programme for government is tested against whether it will ‘strengthen business competitiveness and unlock private sector investment’ and to plead with him not to ‘compound the costs crunch that retailers currently face’.
In the letter, David Lonsdale, director of the Scottish Retail Consortium, said the food price cap ‘is a proposal that we do not support and strongly urge you to nix it’.
He said Scottish shoppers already benefit from the most affordable prices in western Europe due to intense competition between retailers, while they are already incentivised to keep prices low or risk losing customers.
Mr Lonsdale said: ‘If a statutory price cap forces stores to sell items at a loss they will be compelled to recoup the cost elsewhere, either through higher prices on other items or by sourcing cheaper goods potentially with deleterious impacts for the Scottish supply chain.
‘A price cap would be burdensome to administer and experience from elsewhere suggests it can lead to frictions in store between customers and shopworkers. A price cap would do nothing to address the root causes of elevated prices: spiking global energy costs and extra domestic taxes and regulation.’
He said the proposal should be dispensed with and the Scottish Government should instead work with retailers and producers to lobby UK ministers to reduce energy costs for farming, food production, food distribution and refrigeration, to reduce cost burdens, and to target assistance on those who need it most through existing payments or food vouchers.
Scottish Conservative finance spokesman Craig Hoy said: ‘John Swinney must stop ignoring the growing concerns from the organisations who will bear the brunt if his bonkers plans to impose food price caps goes ahead.
‘The Scotland Food and Drink CEO is just the latest to warn about the unintended consequences of Swinney’s 1970s-style gimmick, including what it will do to those responsible for making Scottish products that are renowned across the world.
‘This SNP policy was designed to gain headlines during an election period without any thought being given how it would work in the real world.
‘Swinney and his SNP colleagues cannot continue to arrogantly believe they know better than farmers, retailers and those in the food and drink industry who have all voiced their opposition to his plans. He should ditch the proposals and instead focus on giving real support to businesses to help them grow Scotland’s economy.’
A Scottish Government spokesman said: ‘Helping people with the cost of living is a top priority for the Scottish Government which is why we are committed to a price cap on some essential food items. We will be taking forward a full consultation shortly.
‘The proposal is being informed by a full process of engagement with all relevant stakeholders, including retailers and farmers.’
