Retailers and other food businesses must be prepared to ask tougher questions about whether certain deals are “too good to be true” and create buyer incentives based on “thoughtful procurement” instead of just price.
That is one of the key messages of Professor Chris Elliott’s interim report on the UK food system, which was commissioned by Defra and the Department of Health in the wake of the horsemeat scandal and published today (12 December).
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“The culture of adversarial procurement of products across the supply chain has contributed to a belief that the lower the price the better, and bonuses are often awarded for such delivery,” Elliott said in his review. This needed to change if future food crimes were to be avoided, he added, recommending the industry should instead create incentives and bonus schemes that rewarded “thoughtful” buying.
Companies should also have an obligation to ask “searching questions” about whether certain deals were “too good to be true”, but consumers and consumer champions should also be expected to use common sense and question deals.
To illustrate how unrealistic some retail buyers’ expectations were, Elliott cited the case of a meat supplier who was asked to produce a ‘gourmet’ burger for less than 30p – a price that could only be achieved by using lower-quality meat and other “murky” practices (see below).
How to produce a ‘gourmet’ burger for less than 30p
As well as considering good industry practice, of which there is much, part of my task as Reviewer has been to look at the murkier practices that go on often unnoticed within food supply chains. One supplier of carcase meat and meat products told me in confidence of a meeting with a retailer in which they were asked to produce a 4oz ‘gourmet‘ burger for a unit price of under 30p. The supplier believed that by using the cheapest beef available priced at 264p/kg – the meat being from older cow rather than prime young beef - and factoring in fixed costs including labour, packaging and transport, the lowest possible unit price for the burger would be 59p. To produce a 4oz ‘gourmet‘ burger at a cost price of less than 30p, the supplier calculated that the average price of beef would need to be just 85p/kg.
With the help of the supplier and my subject matter experts I have considered how it would be possible to produce a ‘gourmet’ burger to this price specification. A simple way to reduce the average price would be to switch to beef supplied from premises that were not EU approved at approximately 140p/kg. Use of offal, such as heart meat, which trades at between 70-110p/kg, would drop the cost even further, while using mechanically separated meat (MSM), which trades at market prices of around 120p/kg and must be clearly labelled as MSM, is another possible means of driving down the unit cost. Of course, where a product – irrespective of price - is made with meat from approved EU premises and is correctly labelled it would be entirely legitimate (although in this particular example I very much doubt the description ‘gourmet’ could be applied), but anecdotal evidence from producers suggests that as raw material passes through many different hands, descriptions may have changed by the time the finished product finally reaches the shelf.
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