Asda organic cuts raise price war fears

By FWi staff

ASDA is to slash up to 20% off prices in its organic range to attract more green shoppers, sparking fears of a price war between retailers.

Despite the cuts, Asda is willing to foot the bill for bringing down prices, says a spokeswoman.

“We are investing our profits to bring organic food costs down and make them more affordable.

“We want organic food to be widely available and not just the preserve of a privileged few.”

Soil Association boss Patrick Holden agrees with this objective, but says such cuts are unsustainable.

“Lower prices cant be met at the moment without squeezing producers margins. Currently they are enjoying a genuine premium for switching to organic.”

Other supermarkets are already feeling the downward pressure on prices, says Mr Holden, and this is finding its way back to producers.

“Our message to consumers is organic food should be sold at a fair price based on a true cost of production.”

He is also concerned that lowering prices will mean more imports, which might erode standards.

But Asda says that increasing consumption is the only way to expand the market and encourage more British farmers to switch to organic production.

It is also examining an initiative to help farmers pay for conversion, which was welcomed by Mr Holden.

One organic producer, commercial director of Sheepdrove Organic Farm, Peter Molesworth, was not convinced by Asdas cuts.

He reckons lower prices will stifle supply rather than increase it.

“We are very resistant to lower prices that might damage producers trying to break in to a market, which is under-supplied.”