Supermarkets must show responsibility towards suppliers by halting their “bully boy tactics”, or risk damaging the UK’s rural infrastructure, says the NFU.
Speaking at the Cardiff Business Club on Monday (17 November), NFU president Peter Kendall said supermarkets did not need to resort to “crippling squeeze tactics” in a bid to cut prices for consumers.
Instead retailers, led by Tesco, should demonstrate a more responsible approach in retail to give fairer prices to customers and suppliers.
“It is not inappropriate to ask, in the wake of the damage done by unfettered, greed-motivated behaviour by some in the financial sector, whether Tesco should continue to chase every last pound of dividend for shareholders at the potential expense of massive damage to the rural infrastructure in this country,” Mr Kendall told delegates.
“Competitive pricing for its customers can be achieved without resorting to the crippling squeeze tactics on suppliers which are yet again rearing their ugly head.”
Mr Kendall said the NFU had received too many complaints from suppliers who had seen “outrageous” demands for price cuts and back payments placed upon them.
“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.
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Once supplier, who asked not to be named, said: “They nearly just put our company out of business and put a gun to our 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.”
A Tesco spokesman said “usual negotiations” were being carried out with suppliers
“Commodity prices are starting to come down and it’s right to work with producers to see that is reflected in the price we pay so we can pass savings to consumers,” he said.
“All the negotiations have been carried out properly. It’s in our interests to have long-term relationships and a sustainable supply base and we won’t do anything to jeopardise that.”