Director-general of the British Retail Consortium Kevin Hawkins said this week that producers must do more to help themselves. He was speaking at a conference on supply-chain relationships in Scotland as the Competition Commission started gathering evidence for its nation-wide enquiry into the grocery market, also north of the border.
“We are now in a mature market, where food sales are unlikely to grow all that much,” said Hawkins. “That in turn means further pressure to reduce costs so that margins can be maintained….The competition is going to get fiercer and the farmers share of the value of food is declining. I do not see that changing, but there is scope for producers to do more to help themselves. Greater collaboration and stronger relationships with customers is an obvious avenue.”
Hawkins defended supermarkets by detailing the cost-burdens they operate under. He pointed out that labour is the key cost, especially given an increase in the minimum wage by 25 per cent over four years, and also that property rents have risen by 10 per cent and business rates by up to 12 per cent annually.. The most serious problems are in energy costs he said, which are now 50 per cent more than 12 months ago.
But National Farmers Union of Scotland deputy chief executive James Withers said that growers and farmers do not fear a tough trading environment. “We are not against big business, nor anti-supermarket - after all they are our biggest customers, selling three-quarters of all we produce. However, we are against abuse of power, and if left unchecked, not only will the farming and food industry suffer, but consumers will be the big losers.”
Meanwhile, Competition Commission chairman Peter Freeman has urged people to overcome their fears and come forward with evidence. “We would encourage people, despite the fear factor, to give evidence to us, we will not threaten their anonymity,” he said on a BBC radio programme this week.
An update of the commission’s progress towards making recommendations will be published by the end of year.
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