‘Old-fashioned price wars’ highlight lack of change in retail food market
Supermarket giant Tesco has come under fire after it demanded price cuts from suppliers in a bid to compete with budget retailers.
The retailer reportedly told suppliers they had until July 10 to agree to its demands, as part of a move to ‘everyday low pricing’ and fewer promotions.
George Dunn, Tenant Farmers Association (TFA) chief executive, said the industry had been ’lulled into a false sense of security’, in thinking things had changed in the retail food market.
“While there has been a greater degree of interest in provenance, food standards and food quality from consumers, retail barons are still fixated with driving down prices to unsustainable levels,” said Mr Dunn.
“British farmers produce food to some of the highest standards internationally, but this cannot be done if they are unable to secure a fair margin on that production.
“Retailers like Tesco should be looking at how they can cut costs in their own businesses, rather than trying to bully suppliers into accepting lower prices for high quality products.”
The TFA also expressed fears that some retailers will not hesitate to find ways of offering lower quality food to ‘trumpet their low-price credentials’, with price battles illustrating the need for legislative protection for the UK’s high environmental, animal welfare and food safety standards.
Mr Dunn added: “With the Agriculture Bill entering its House of Lords Committee stage this week, there has never been a better time for Parliament to ensure we have a resilient food system from farm to fork, with high standards and fair rewards for all throughout the food chain.
“We need greater transparency within the supply chain to understand where the value in the chain goes.
“We should not allow those with the biggest influence to cream off an unfair share of value, to the detriment of the rest of the food chain and to wider society.”
The NFU said producers needed fair returns to allow them to invest in their businesses and added any changes to Tesco suppliers terms and conditions should be in line with the Grocery Suppliers Code of Practice.
Tesco said it was speaking to its suppliers about how they can work together to ’continue giving our customers great value’.
“We do not believe that our customers should pay more for a brand in Tesco than anywhere else,” a spokesperson added.
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