NFU slams supermarkets in UK grocery chain probe

By Chris Mercer

- Last updated on GMT

Related tags Supply chain Supermarket

Consumers in Britain will be forced to buy lower quality and less
safe foods if supermarkets continue squeezing the supply chain as
they do now, the National Farmers' Union has told a Competition
Commission inquiry.

Peter Kendall, the Union's (NFU) president, and his team spent more than two hours submitting evidence to a Competition Commission panel, as part of the investigation into Britain's grocery market.

The NFU provided some of the harshest criticism the new inquiry has seen of the grip supermarkets hold on Britain's food supply chain.

"The main message from the NFU was that there is clear evidence of abuse of power within the supply chain and that the major retailers are in a dominant position,"​ said NFU director general Richard MacDonald.

He said current practices were not in the interests of quality, choice or safety, although also recognised that more consolidation was needed to make parts of the supply chain more efficient.

The dairy sector has played a central role in the debate over supermarket dominance of the supply chain in recent years.

Britain has the lowest farmgate milk prices in Western Europe, around 18 pence per litre and down from 25p per litre in 1996, according to figures from the Milk Development Council.

Britain's dairy processors, such as Dairy Crest and Arla Foods UK, say they have had to drop prices paid to farmers because of supermarket price pressure and soaring input costs.

Several farmers have, however, complained that they are paid below the cost of production. Up to 4,000 milk producers took part in an unofficial three-day strike last year.

Supermarkets, by contrast, have moved the other way. MDC figures show that retailers have increased profits on liquid milk by a quarter in the last 10 years, and more rapidly since 2003.

The retailers have rejected claims they abuse their power, and have re-iterated several times that they strive to build good working relationships with suppliers and farmers.

The Competition Commission is currently taking evidence from all parties involved in its grocery market investigation, but the final report is not expected until 2008.

It told the NFU this week that more concrete examples were needed to back up claims of unfair treatment at the hands of supermarkets. The NFU says farmers are frightened of speaking out publicly for fear of losing contracts with the major retailers.

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