For many commentators, this move was an inevitable extension of a well-documented trend. Consolidation, improvements in supply chain efficiencies and impressive advances in retailing have given rise to power shifting down the food chain.
We now find ourselves in a situation where truly world-class retailers are servicing consumers with a diverse range of quality products at affordable prices. For some farmers and growers this has also resulted in paralleled business growth, where mutually beneficial working relationships have been developed.
Unfortunately, others have found themselves on the lower extremities of an ever-increasing power gap in the food chain. Their ability to maintain their share of the retail value has diminished significantly as prices have been driven down to unsustainable levels.
The situation developed to such a degree, with more farmers leaving the industry, that it prompted an investigation by the Competition Commission. The result was a Code of Practice aimed at redressing the balance and giving suppliers greater certainty and security.
The effectiveness of the Code is still in dispute but the main point is there is general recognition something needs to be done.
As well as playing an integral role in instigating the code, the NFU has been working hard to improve relationships between farmers and retailers. For many farmers, this has meant bridging the gap in understanding of how retailers operate and what their needs are.
This process has also highlighted the need for retailers to improve their understanding of British farmers and growers and the plight of the industry. This has led to growth in the number of producer groups, partnerships, and supply chain forums set up by the retail sector to ultimately improve whole chain communication and understanding.
There is clear evidence that farmers must get a fair slice of the action'. Without a profitable British farm base, retailers will be unable to meet the ever-increasing demands of consumers. This has resulted in some advances in British supermarkets' sourcing of British products as well as initiatives to support British farmers and growers. For example, the NFU is grateful for the amount of support for the little red tractor logo long may it continue.
But no matter how improved this communication is, it does not get away from the fact that fewer outlets for British farmers and growers reduces the number of buyers through which they can sell their products.
About 75% of food is sold through the five major food retailers. Of this, 69% is sold through the big four. If two of the three known bids for Safeway go through, this could be reduced to three.
The NFU's preference will always be to maintain as many customers as possible with an even distribution of power. However, given the current situation we have to consider the likely outcomes for the ownership of Safeway. All bidders have referred to the need for some stores to be shed. Equally, different bidders have different strategies from low cost to higher quality. We need to be clear about what this means and how it will alter the shape of the retailing sector. It is therefore difficult at this stage for the NFU to comment on which option we would prefer. All we can do and will be doing is to repeat our preference, which is to see as many retailers as possible sharing the market as evenly as possible.
The final decision about who buys Safeway will rest with shareholders and the competition bodies. Whatever the outcome, the NFU's aims remain unchanged. We will continue to work with any new regime to further develop their UK sourcing policy and ultimately derive better returns for British producers. We need to develop real partnerships at every level of the business, to build trust and mutual understanding. This must be the critical content of the future, whatever the company mix.
{{COMMENT - GUEST }}
We now find ourselves in a situation where truly world-class retailers are servicing consumers with a diverse range of quality products at affordable prices. For some farmers and growers this has also resulted in paralleled business growth, where mutually beneficial working relationships have been developed.
Unfortunately, others have found themselves on the lower extremities of an ever-increasing power gap in the food chain. Their ability to maintain their share of the retail value has diminished significantly as prices have been driven down to unsustainable levels.
The situation developed to such a degree, with more farmers leaving the industry, that it prompted an investigation by the Competition Commission. The result was a Code of Practice aimed at redressing the balance and giving suppliers greater certainty and security.
The effectiveness of the Code is still in dispute but the main point is there is general recognition something needs to be done.
As well as playing an integral role in instigating the code, the NFU has been working hard to improve relationships between farmers and retailers. For many farmers, this has meant bridging the gap in understanding of how retailers operate and what their needs are.
This process has also highlighted the need for retailers to improve their understanding of British farmers and growers and the plight of the industry. This has led to growth in the number of producer groups, partnerships, and supply chain forums set up by the retail sector to ultimately improve whole chain communication and understanding.
There is clear evidence that farmers must get a fair slice of the action'. Without a profitable British farm base, retailers will be unable to meet the ever-increasing demands of consumers. This has resulted in some advances in British supermarkets' sourcing of British products as well as initiatives to support British farmers and growers. For example, the NFU is grateful for the amount of support for the little red tractor logo long may it continue.
But no matter how improved this communication is, it does not get away from the fact that fewer outlets for British farmers and growers reduces the number of buyers through which they can sell their products.
About 75% of food is sold through the five major food retailers. Of this, 69% is sold through the big four. If two of the three known bids for Safeway go through, this could be reduced to three.
The NFU's preference will always be to maintain as many customers as possible with an even distribution of power. However, given the current situation we have to consider the likely outcomes for the ownership of Safeway. All bidders have referred to the need for some stores to be shed. Equally, different bidders have different strategies from low cost to higher quality. We need to be clear about what this means and how it will alter the shape of the retailing sector. It is therefore difficult at this stage for the NFU to comment on which option we would prefer. All we can do and will be doing is to repeat our preference, which is to see as many retailers as possible sharing the market as evenly as possible.
The final decision about who buys Safeway will rest with shareholders and the competition bodies. Whatever the outcome, the NFU's aims remain unchanged. We will continue to work with any new regime to further develop their UK sourcing policy and ultimately derive better returns for British producers. We need to develop real partnerships at every level of the business, to build trust and mutual understanding. This must be the critical content of the future, whatever the company mix.
{{COMMENT - GUEST }}
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