Why supermarkets are putting key industry at ‘financial risk’
Six in 10 farmers say they think their farms are at financial risk due to supermarket buying behaviour, while the industry has branded the current regulatory scheme “not fit for purpose”.
A survey conducted by veg box company Riverford found that 68 per cent of farmers say it has “never been harder” to make a living from farming, while 69 per cent believe the buying relationship between growers and retailers has deteriorated.
Almost all farmers surveyed (99 per cent) reported facing at least one ‘unfair’ practice.
These include canceled orders, late payments, and inappropriate, unfair or unprofitable pricing.
Supermarkets that reject products due to unreasonable requests such as specific colour, size or shape have also been cited as causing waste or a lower price that does not cover costs; There was no notification from buyers about the changed conditions.
Riverford said this was putting pressure on struggling growers; 82 per cent of respondents said unfair supermarket practices contribute to stress and poor mental health among the farming community.
The industry is calling for a single food supply chain regulator to protect growers, ensure supermarkets are treated fairly and address the “power imbalance” between the two.
A survey conducted for the study found that 76 per cent of farmers believe the current supply chain regulatory system does not protect farmers from unfair supermarket practices and is not fit for purpose.
Some 86 MPs have signed the Early Day Motion, which calls for combining existing supply chain watchdogs, currently split between two government ministries, into a stronger, more effective structure.
More than 3,000 people also wrote to MPs in support of better regulation.
Apple farmer Richard Stogdon, from Sussex, said the relationship between growers and supermarkets had “deteriorated significantly”, adding: “We are taking huge risks growing these crops.”
Haydn Evans, a dairy farmer from Carmarthen in Wales, said he successfully pressured his milk buyer to pass on a 1p per liter price increase from supermarkets, only to find out three months later that the buyer had been delisted.
He said: “Supermarkets know how much they charge and how vulnerable farmers are – they take advantage of the power imbalance.
“They know you always negotiate with both hands tied behind your back.”
Third-generation farmer Jonathan Hoskyns has also stopped supplying to supermarkets altogether, saying: “I don’t miss the stress and worry of not knowing what our fruit is worth until it’s all sold.”
Riverford’s research shows 65 per cent of farmers believe they have no choice but to accept supermarkets’ terms for fear of being delisted, while 76 per cent feel under financial pressure due to supermarket purchasing practices.
Riverford founder Guy Singh Watson said: “For three years our #GetFairAboutFarming campaign has been calling for a regulator with real teeth who can stand up to supermarkets and help address the massive power imbalance in our supply chains.
“More than 113,000 people supported the call and even Parliament debated it, but farmers are still being failed by a system that aims to protect them.
“The Supermarket Law Judge’s own research suggests that things are improving and may be the case for large companies with supermarket contracts, but our findings show that the opposite is true for the small and medium-sized family farms that produce most of our food.
The problem is worse than ever, with 69 per cent of farmers saying relations with supermarkets have worsened in the last two years.
“Farming shouldn’t feel like survival. It should be a livelihood to be proud of: producing good food, caring for the land and caring for the people who work it.
“How can farmers do what’s right for their land, their animals and the planet when they’re strapped for every penny and lack the funds and security to invest in good farming in the long term? And how can consumers, misled by supermarket farm washes, make good choices?”
Georgina Edwards, sustainable farming campaigner at food and farming alliance Sustain, said: “Riverford’s latest research clearly shows that farmers continue to be negatively affected by supermarkets’ unfair trading practices.
“Canceled orders at short notice and delayed payments are still damaging agricultural businesses and farmers’ mental health.
“It is extremely worrying that three quarters of farmers say retailers’ behavior is pushing farms towards more intensive, environmentally damaging practices.
“Without taking more assertive action to improve supply chain fairness, the government will fail to address the issue of farm profitability and support farmers in the transition to environmentally friendly farming methods.”
On Thursday, Environment Minister Emma Reynolds told the CLA Rural Enterprise conference that the Government was supporting the country’s farmers to stimulate growth; Rural Britain contributed £259bn to the economy and supported more than half a million businesses.
He said: “This Government sees the rural economy as fundamental to our growth mission. When rural Britain succeeds, the whole country succeeds.”
“From food production to nature conservation, we are driven by our ambitions to create a countryside where businesses thrive, good jobs are created and our communities are strengthened.”
Andrew Opie, director of food and sustainability at the British Retail Consortium, said: “We support stronger regulation across the supply chain, which is why we have backed the agriculture referee in supporting pig and poultry farmers.
“However, the Grocery Law Adjudication Authority (GCA) was established for the specific purpose of regulating supply chain relationships between supermarkets and their direct suppliers, following an extensive investigation by the Government’s competition regulator.
“Many farmers do not supply produce entering retail supply chains, but instead supply for hospitality, large food manufacturers or Government food purchases.
“Extending the GCA’s remit to cover these sectors would be unfair, goes beyond the regulator’s original recommendations and imposes unnecessary costs on supermarket supply chains.”
Censuswide surveyed 200 horticultural farmers who currently have direct contracts with supermarkets or have traded with supermarkets in the last five years, between 2-10 October.
