Comment: Producers and middlemen alike come under pressure
IN ALL the views provided on why multinational company Vion, owner of Hall’s of Broxburn, has placed a “for sale” notice on all its UK operations, there seems to me to be one missing.
I have seen comments saying the company had never come to grips with union practices, others saying the management had taken its eye of the ball – but not one person has even suggested that yet another reason why the company might be retreating from these shores is because of the extreme purchasing power of the major retailers.
As is always the case in making such a point, hard evidence is scarce – not because it is not there, but because the big supermarkets ruthlessly suppress any negative views about their operations.
As a journalist with more than 20 years behind a keyboard, I have heard quite a few tales of their operations, but all coming with a cautionary “you cannot quote me on that” or “do not dare put that in print”.
That is no exaggeration. It is an understatement, with long-term friendships withering on the divide between my press work and my former friends wanting to continue to supply the big buyers.
Without revealing sources, there was the case of a delivery lorry from a pre-packer missing an allocated time at the distribution depot on account of a major accident blocking the road. The result was a massive fine for the pre-packer, based on a loss of profit through empty shelf space.
Or there was the major retailer who incorrectly over-ordered, but when supplied refused to countenance paying for the extra produce.
Or the many occasions where support for discounted sales campaigns are based on the suppliers cutting their prices – this not being an option but a requirement. These and many more tales fill my “you cannot put that into print” folder.
For those who do take a stand and make public comment, retribution is swift with their being delisted from the supply chain. Some brave individuals have done so, but most labour on, meeting increasingly stringent demands as the retailers strive for market share.
Currently, because of the rotten summer, every supplier is facing difficulties. In the red meat sector, beef prices may be at record levels and that is good news for the producers – but if these same producers look in their local supermarkets, they will see special offers all around the shop as the retailers fight for competitive advantage. This particular food chain sees processors being squeezed mightily at the present time.
Uncontracted potato prices are currently very high because of the record low yield this year, but pre-packers and growers who signed up to long-term contracts last spring are hurting like hell in delivering crops at what are now unsustainable prices because of the low yields. A similar story exists in the vegetable industry, with the primary producers and middle men getting squeezed.
We have already seen closures in the meat trade, but I believe there will also be casualties in the pre-packing sector unless the current equation changes.
The danger for Scottish and indeed UK agriculture is that if the big boys continue to squeeze the life out of the processors and pre-packers, it will in consequence badly damage primary production.
I hear you say that all will be well when the Groceries Code comes into being. The adjudicator will first of all speak severely to any retailer misusing buying power. Then if this verbal warning is ignored, there is the possibility of a fine being imposed. This last sanction was inserted last week by the politicians and was welcomed by the farming union leaders.
But having read the financial figures for most of the big retailers, a fine will be no more than a flea bite. They may not like it but it will hardly stop them in their bullying ways.
In fact, the basic weakness of the current plan is that anyone who is so minded as to complain will ensure that they are pretty quickly taken off the supplier list.
I also note – without a great deal of optimism – moves in Europe to curb retailer power, with the European Commission hoping to support competitiveness in the European agri-food supply chain.
In the meantime, the only antidote to supermarket power is consumer power. The milk industry managed it this summer with a high-profile campaign on the inequalities the milk producers were facing. The trouble is, such a campaign about meat and potatoes apparently does not have the same resonance with the general public.
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