Growers and packers in horticulture and potatoes are being driven to their limits by short term, “hard-nosed” retailers and the NFU has pledged to help them take action.
An NFU investigation around the country claims that retailers have dealt so unfairly with producers that many are questioning whether they can survive. There are fears that imports could eventually dominate the UK market, which puts thousands of jobs at risk.
The main complaints relate to over-riders, verbal margin agreements, promotions and lack of contracts.
Some producers argued that they had been threatened with the loss of retail business unless they tolerated a doubling of over-riders. Others said they could not get finance for investment to increase production because a lack of any clear contract gave the banks no confidence.
Hayley Campbell-Gibbons, an NFU adviser, told fresh produce growers at a workshop that she had “ample fodder” to put to a grocery adjudicator but she preferred trying to set up a voluntary code of practice first to find a way forward.
She talked of retailers demanding in excess of 50 per cent verbal margin agreements even during periods of promotion. Some store groups were increasing the frequency, length and depth of promotions and growers were ending up shouldering the cost, she said.
“Contracts are sometimes offered but they are late in the day when the crop is just ready to harvest and so growers are held to ransom,” she added. She believes retailers will be motivated to change if they see their security of supply threatened.
The NFU is keen to get the horticulture sector better organized and it is making three recommendations to improve supply chain relationships.
The first is to make the sector less transactional and more collaborative. There needs to be more joint planning between the grower, the packer/processor and the retailer, and they need to share risks.
The second recommendation is for horticulture to kick the short termism habit and work towards retailer arrangements lasting three to four years.The final idea, which is more radical, is to look at ways to boost farm investment by getting others in the supply chain to offer new low interest loans.
Sarah Dawson, NFU horticulture and potatoes board chairman, believes one solution is for the sector to wise up to consumers.
“Retailers do care about what their customers care about,” she said. “We need to do the same and demonstrate our produce is fresher, has more nutrients and less preservatives and is tastier than imports. We also have to ask ourselves why we are still producing too much cauliflower that exceeds demand.”
The NFU is to launch a new consumer education tool this summer to promote British seasonal fruit and vegetables.
See our special pages on the NFU Conference and elections 2012