13 September 2000
Organic farmers fear price war

by Alistair Driver

FARMERS have warned of the dangers of a price war as supermarkets battle between themselves to win a share of the lucrative market for organic food.

The Soil Association said its fears were prompted by the supermarket giant Tesco which is set to cut the price of organic food by 12% in a move worth 5m.

The supermarket chain, which said it would fund the cost of the price cuts itself, will re-package organic foods and increase its range in a bid to boost sales.

The move follows an announcement by Iceland in June that it aims to become the first retailer in Britain to switch whole ranges of conventional food to organic.

Iceland said it would sell organic food at similar prices to conventional food.

The Soil Association, which represents organic farmers and suppliers, said it was concerned that other supermarkets will follow suit.

A price war could result in farmers being pushed down on price and an increase in the amount of imported organic produce entering the country, it said.

UK demand for organic food is growing at 40% a year. But around 70% of the organic food consumed in the UK is imported.

Responding to Tescos announcement, Soil Association director Patrick Holden said: “The last thing we want is a price war on organic food.”

“If supermarkets bring down prices by cutting their own profits that is marvellous, but we do not want to see pressure being put on farmers to cut corners.”

He used the threat of a price war to reiterate the associations calls for the government to pay more money to help farmers convert to organic production.

Money under the governments Organic Farming Scheme ran out last August and there will be no more available until next spring.

Mr Holden pleaded with supermarkets not to break the bond of trust being forged between consumers and farmers by forcing standards down.

“Until the government provides long-term support for organic farming, consumers depend on supermarkets to be responsible and strike a very delicate balance – offering sensibly priced food while, at the same time, providing a lifeline to British farmers.”

At a high profile event at Londons Savoy hotel, Tesco said its efforts would help British farmers meet increasing demand for home-grown organic produce.

It also announced 425,000 over five years to fund organic farming research covering livestock, arable and horticultural research at Newcastle University.

Tesco commercial director Andrew Batty said the supermarket is working with farmers to help reduce the UKs dependency on organic imports.

“Our customers are demanding more organic produce at better prices, so we are working with suppliers to help them scale up production, improve efficiency and add value to the supply chain.”