Criticism of retail giant Tesco has been building as farmers have started to speak out about the superstore’s “bullying” tactics.
More producers have come forward to accuse the retailer of asking for up-front payments, loans to bolster profits and changes to contract terms in a bid to cut fresh produce prices and compete with budget stores following a Farmers Weekly investigation.
One producer, who asked not to be named, said he had been forced to sell land and property to make ends meet after his supply contract was suddenly withdrawn. He was delisted by the retailer after raising concerns about an issue in the supply chain.
Despite being given a minimum cash settlement by Tesco, the business was left struggling after the producer was unable to find other customers to take their produce.
“About 80% of my business was with Tesco,” he said. “I was growing 400 acres, but now I’m down to 25 acres.
“I’ve had to cut back and make staff redundant. It’s about ruined us, but I daren’t speak out.”
Tesco has also been accused of acting through third parties so it can distance itself from aggressive tactics.
One grower, who also asked to remain anonymous, said the company he supplied was told to take £500,000 off the price of the raw product – a cost cut which was handed straight back to producers.
“We had so much land and technology invested that we couldn’t do anything other than supply them,” they said.
Another supplier, who spoke to Farmers Weekly, said Tesco had “put a gun to the company’s head”.
“Basically, we had the choice of reducing our profits to nearly zero, or closing.
“We chose the former so we can fight another day, but there is massive resentment across the supply base.”
NFU president Peter Kendall said retailers, led by Tesco, must show responsibility towards suppliers by halting their “bully boy tactics” or risk damaging rural infrastructures.
Speaking at the Cardiff Business Club on Monday (17 November), Mr Kendall said supermarkets did not need to resort to “crippling squeeze tactics” in a bid to cut prices for consumers.
“While we fully recognise the plight of consumers and their need to buy good value food during the credit crunch, there is enough flexibility in the margin taken by retailers to offer competitive pricing without reducing the price paid to farmers, growers and other suppliers,” he said.
“A continuation of this policy will see the agricultural production base in this country irreparably eroded, with diabolical consequences for suppliers,” he added.