No money in meat – Tesco
SUPERMARKET giant Tesco claims it makes no money out of red meat sales, despite a fall in market prices of 30% since the BSE crisis.
The firm has launched an independent study into the meat industry to establish where the profits are going. It will be carried out by an independent company, London Economics.
Terry Leahy, Tesco chief executive, said he commissioned the study following concerns in the farming industry about the low level of returns received by livestock farmers and the "apparent" difference between retail and livestock market prices.
Speaking at the Oxford farming conference on Monday, Mr Leahy said: "Some of you have commented on the mark-up we make on meat. I looked at some recent figures for beef and lamb and, after deducting our costs from the small gross margin, we are lucky to break even."
"No one seems to be making any money. You (farmers) say you dont. Our suppliers say they dont. We certainly dont," he said.
Mr Leahy would not be drawn on where he thought the profits had gone, telling journalists to wait for the results of the study.
But another Tesco official pointed out that prior to the BSE crisis the whole beast was utilised in some way. Now specified risk materials (SRMs) had to be removed and disposed of, with the costs spread right across the industry.
Consumers were also more discriminating than in the past, buying the best quality cuts and making it difficult for supermarkets to move the entire beast.
Tescos Terry Leahy questions where the profit goes in red meat.