Suppliers in the fresh produce sector have little to gain from any competition investigation into the UK retail market.
The National Farmers’ Union has welcomed and backed the proposal to refer the grocery market to the Competition Commission, but it is questioning whether the terms of reference are broad enough.
Peter Kendall, president, said: “We’re worried and concerned about the narrowness of that review. I am not sure the scope of it will adequately address the concerns of many farmers and growers. What we really need to see is a thorough review of competition policy across the supply chain. This should not just be about the big four retailers.”
The majority of the OFT’s concerns appear to be focused on the multiples’ move into the convenience sector and the issues surrounding the planning regime and the land-bank amassed by the big four retailers, although the investigation may well look into the supermarkets buying power and pricing policies.
However, Kendall questioned the effectiveness of further regulation: “It is not the only answer. We need to work with the retailers to explain the costs and specialisation that go into UK farming.
“We would like to see more of the Waitrose style deal; a model where you are paid fair prices for achieving certain standards. We are seeing some of that, with the Asda milk price for example.”
Nigel Jenney, chief executive of the Fresh Produce Consortium, said: “We would welcome any ongoing monitoring of the industry to ensure it is fair and equitable for all. As previously suggested, written terms and conditions should be provided between the buyers and sellers in the supply chain and these should be improved and developed in line with any report’s findings.”
Tesco is finding itself increasingly isolated in the wake of the OFT announcement, with its main rivals, Asda, Sainsbury’s and Waitrose breaking ranks to welcome the report. Previously all the major retailers had stuck to the line that the consumer was the ultimate regulator.
While both Asda and Sainsbury’s said they felt another investigation was unnecessary, they welcomed the fact it highlighted the concerns over planning - Tesco is being called upon to reveal the extent of its land holdings, with some reports suggesting it accounted for 81 per cent of the land owned, but not yet developed by the major retailers.
However, any investigation by the Competition Commission will take up to two years, and the cost could run into millions. The big concern for embattled suppliers in the fresh produce industry is - can they expect any change?
According to the industry response on freshinfo, the answer is no - around 63 per cent believe an inquiry will provide no respite.
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