Farmer fury as Gill backs supermarkets

14 April 1999

Farmer fury as Gill backs supermarkets

By Johann Tasker

NFU President Ben Gill has enraged many of his fellow farmers after dismissing their allegations that supermarkets are profiteering by cashing in on low farm-gate prices.

Mr Gills comments – made during a week when Tesco announced massive profits – came just days after another major inquiry was launched into the £60 billion retail industry.

Mr Gill said he backed supermarkets claims that it was unfair to compare high food prices in Britain with lower food prices in the rest of Europe.

And he questioned farmers allegations that supermarkets were using their buying power to make high profits while pressurising farmer-suppliers into accepting low returns.

“There is no doubt the pro rata profits [British supermarkets] make compared to some other countries are greater,” said Mr Gill.

“But they are certainly less than other sectors of industry would require as a reasonable profit.”

Mr Gill said higher prices in this country were due to supermarkets selling better quality food rather than retailers ripping off farmers and consumers.

“Higher quality means an added cost which must be reflected,” he added.

“The baskets are not comparing like with like.”

Mr Gills comments appeared in The Grocer magazine under the headline “Superstores find an unexpected ally in Gill”.

They appear to contradict his previous calls for NFU members to work together and confront the strength of Britains biggest food retailers.

A separate story in the same issue claimed Mr Gill was widely regarded as one of the shrewdest visionaries in the food chain.

The NFU is well known to be wary of criticising the supermarkets which are increasingly becoming most larger farmers biggest customers.

A union spokesman described the headline as “rather sensational” although she added that comments accurately reflected the NFUs stance.

But the comments infuriated many farmers who have long claimed that supermarkets are making massive amounts of money at their expense.

“How he can say that I just dont know,” said Brian Thomas, a Welsh farmer near Carmarthen, who has seen sheep prices plummet by 30% in two years.

“The question I would ask Ben Gill is what sort of losses he thinks are reasonable for the industry he represents.”

Maurice Vellacott, who farms 80ha (200 acres) in Devon, said he, too, despaired of Mr Gills comments.

“This just reiterates the fact that traditional stockmen with traditional values have no-one fighting for them,” he said.

NFU member John Geldard, a livestock producer from Cumbria, said it was clear there was a big difference between the prices paid to farmers and the prices supermarkets charged consumers.

But farmers should work with supermarkets rather than against them, he added.

“Its all right criticising supermarkets for making big profits, but any good businessman would go out and take the opportunity to do so,” he said.

Michael Hart, founder of the grassroots Small and Family Farms Alliance, was angry that producers returns had dropped dramatically while retail prices remained the same.

“As far as I am concerned, that is profiteering,” he said.

“I accept that we have to deal with supermarkets, but that doesnt mean handing them everything on a plate.”

Britains biggest supermarket group, Tesco, yesterday reported an 8% increase in its annual profits to £881 million pounds.

The supermarket chains turnover of £18.5bn is bigger than the entire total output of British agriculture, which last year was less than £14bn.

Claims by farmers that supermarkets are profiteering have already resulted in a nine-month inquiry by the Office of Fair Trading inquiry.

The report to the inquiry, which was published last week, failed to clear Britains largest four supermarkets of profiteering and price-fixing.

John Bridgeman, director-general of Fair Trading, said he shared farmers concerns that supermarkets “tremendous” buying power “may become exploitative”.

And he referred the retail sector to the Competition Commission for a detailed investigation into profit levels.

“I have to conclude that there is a level of profitability which requires further investigation,” said Mr Bridgeman.

“The many responses from suppliers during our inquiry suggest that it is something to be looked at.”

The Competition Commission, formerly the Monopolies and Mergers Commission, now has 12 months to complete its own investigation.