04 December 1998
Supermarkets slam MLC report

By Jonathan Riley

BRITAINS supermarket giants have hit back at claims that they have failed to pass on low livestock prices to their shoppers.

The Meat and Livestock Commission (MLC) alleged in its submission to the ongoing Office of Fair Trading investigation into supermarket profitability that the gap between farmgate and retail prices had widened significantly.

But the supermarkets countered by saying that additional health safeguards imposed during production added costs and explained away any apparent profit-making.

The latest MLC figures show the difference between the price paid by retailers to the processor for cuts and the selling price in their stores had also increased.

According to the report, since 1995 these retailer margins have increased for beef from £159/head to £308/head.

For lamb the increase has been from £13 to £29/head and pork has increased from £20 to £35/head.

During the MLCs groundwork for the submission, researchers also found that there was a wide variation in prices charged by different supermarkets.

“We would have liked supermarkets to reduce shelf prices to boost sale volumes,” said Bob Bansback, MLC corporate strategy director said:

“Although supermarkets have argued previously that this would have had only a minor positive impact on sales, every little helps.”

The report also showed that there had been some normal “levelling behaviour” in pricing policy which meant the retail price did not follow fluctuations in farmgate prices as closely as might be expected.

“This means at times the retailer margins appear to be larger than they actually are,” said Mr Bansback.

The supermarkets retailers hit back angrily at the report.

Tesco corporate affairs manager David Sawday said the farmgate returns and retail prices quoted by the MLC were unrepresentative.

Carcass yield estimates were also wrong and no account was taken of promotional price cuts, he said.

Asdas milk produce manager John Cleland said: “When the BSE crisis hit we stood by the British farmers and banned European meat.

“We have firmly supported British pork, and since August 1998 we have sourced solely British.”