Asda has sparked a price war on bananas as it wiped 21p off a kilo of loose product from 85p to 64p last week sparking fears for the future of the Fairtrade sector.
The store’s 25 per cent reduction in banana prices is being funded entirely by the Wal-Mart group and Sainsbury’s and Tesco had both followed by Monday.
The move has been described as “lunacy” by operators within the trade who believe consumption will not be boosted as a result and who now fear for the impact on Fairtrade. “If bags of Fairtrade-branded fruit are selling for over 100p what will it do to them?” said one supermarket banana supplier. “With a 40-50p differential, this could end up knocking Fairtrade on the head. This could open up a whole can of worms.”
Fairtrade supplier Agrofair was critical of the development. “This decrease puts yet more pressure on producers who will not be able to sustain the price drop in the long term,” said the company’s commercial director Clive Marriott. “Although a reasonable proportion of Fairtrade shoppers will still buy Fairtrade, it is possible that it will have a negative impact if prices continue to be so much lower than Fairtrade.”
Another supplier to the multiples said: “This has got nothing to do with raising consumption. If there is an uplift in sales it will be nominal. The biggest uplift for volume at any retailer depends on positioning within store and the resource that is put behind the product to make sure that the fixture is packed with fruit continually. All Asda is doing is making a statement about its own value for money.”
Another example of the produce market under pressure comes from the mushroom sector. Ulster-based Hughes Mushrooms has contacted growers in the past month to warn of another reduction, further to the drop of 0.15p a lb earlier this year. The reasons cited by the firm are continual price promotion and constant demand for lower prices from customers, among other market factors. “Our average selling price has been reduced by as much as 0.08p a lb on a weekly basis resulting in high losses,” the firm wrote to growers. “We have been absorbing these losses hoping the situation would improve but there has been no improvement…prices [to growers] will have to be reduced by a further 0.02p a lb…while these conditions prevail we simply have no choice.”
Meanwhile, research carried out on behalf of investment firm Clerical Medical turned up startling warnings for the sector. Nearly 86 per cent of 3,000 shoppers who responded to the online survey feel we are blindly helping supermarkets monopolise the marketplace while three-quarters believe that by using the outlets they are adding to the decline of the High Street.
With regard to produce specifically, there appears little respite for suppliers already under so much downward pressure on price. Although 88.4 per cent would rather that supermarkets stocked more local produce that is in season, the research found that 52 per cent consider price the most important factor in their purchase of fruit and vegetables ahead of where and how the produce was grown.
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