A Worcestershire salad supplier has told FPJ that supermarket tactics are putting intolerable pressure on the supply chain. He urged suppliers to speak out to the Competition Commission or risk their future livelihoods.
The multiples came under fire on national TV on the BBC1 series Shopping the Supermarkets, in which the leading salad producer lashed out at Somerfield for its “deplorable” treatment of suppliers.
On the programme, screened last week, Nigel Drew at Worcestershire-based Hillhampton Salads, one of the three biggest producers of round lettuce in the UK and a Somerfield supplier for 26 years, claimed to have had firsthand experience of the “underhand dealings” conducted by the major retailers.
He took his case to the Competition Commission through the National Farmers’ Union (NFU).
Drew told FPJ: “The tactics used by the supermarkets are putting an intolerable downward pressure on prices - the situation is unsustainable.” Hillhampton Salads, which was one of three suppliers of round lettuce to Somerfield, was asked to pitch for sole supply of round lettuce into the chain for the 2006/07 season, according to Drew, which would total some 200,000 boxes a year.
He told FPJ: “To be in with the chance to supply 200,000 boxes a year is very good, but once we had got down to the price they were asking for it was arguable if we would have made any money on it.
“Somerfield wanted a lump-sum payment, which they called a long-term agreement, a five per cent retrospective rebate and a competitive price for the product,” he added.
“We went back to them with a quote and we were told it wasn’t keen enough but, after we went back and forth three or four times, we were told the price was where they wanted to see it and it was just a case of rubber-stamping it.
“But Somerfield then told the other two suppliers to base their quotes on mine, and they came back with their own offers,” he claimed.
Hillhampton Salads was told that its offer was unsuccessful and the programme of supply was split between two marketing companies.
Drew said this kind of process is causing “the gradual decimation of producers”. He said: “I was used as an instrument for prices to fall to an unacceptable level.
“Somerfield suggested that if we wanted to continue to supply them then we should start up a relationship with one of the marketing companies, which are almost an extension of the supermarkets themselves, but prices were beneath production costs.
“Growers are being forced through intermediaries with up to a 10-15 per cent charge - and that’s your profit margin. On top of that we have seen no material increase in prices and large increases in transport, packaging and wages costs.”
Drew urged suppliers to speak out about the situation: “People are very frightened to speak out because they live in fear of losing their businesses. The way Somerfield has behaved is nothing short of deplorable. But if no one says anything then nothing is going to change.”
Somerfield told FPJ: “The BBC documentary did not provide a true reflection of our relationship with the featured grower or with any of our fresh produce suppliers.
“...the film did not make it clear that Somerfield had granted the grower a full 12 months additional business after he failed to win the contract to supply our business.
“We are committed to supporting UK growers and farmers and to helping them build their businesses and sustained markets for their produce. Somerfield sources a high proportion of its fresh produce - currently 44 per cent - direct from farmers and growers, ensuring that we maintain a close relationship with primary producers - unlike many larger retailers.”
