Brown gives supermarkets thumbs-up

13 September 1999

Brown gives supermarkets thumbs-up

by Johann Tasker

AGRICULTURE Minister Nick Brown appears to have pre-empted a Competition Commission inquiry by claiming that Britains supermarkets offer value for money.

Mr Browns comments come mid-way through a Competition Commission inquiry into supermarket practices after the big retailers were accused of ripping off farmers.

Mr Brown said: While Im content to await the outcome of the inquiry, I believe the best protection consumers have against being ripped off is healthy competition.

I have no doubt whatsoever our big retail outlets compete ferociously with each other and are making big efforts to drive costs down, he said.

Mr Browns choice of words, reported in the The Grocer magazine, will infuriate farmers who maintain that supermarkets are driving them out of business.

The Competition Commission inquiry into the fairness of supermarket pricing was launched earlier this year following the Office of Fair Trading report.

At the time, John Bridgeman, director-general of Fair Trading, said he was unable to conclude that “there are no excessive profits in the [supermarket] sector”.

The Competition Commission has until April next year to report back on whether supermarkets are exploiting their position at the expense of farmers.

Producers claim that supermarkets are indulging in unfair practices by failing to pass on the fall in livestock prices to customers in the form of cheaper meat.

Some farmers have called for a system of dual price labelling so supermarkets have to display the price they pay to farmers alongside the price charged to customers.

But Mr Brown told The Grocer that it would be difficult to enforce such a system.

Im not sure this tells the consumer anything of importance, or indeed that its the best way of delivering the message for the farmer, he said.

It is not the first time The Grocer has reported controversial comments regarding supermarkets made by prominent people within the farming industry.

Farmers leader Ben Gill made similar comments to the magazine earlier this year.

Mr Gill, president of the National Farmers Union, dismissed the notion that supermarkets were profiteering by cashing in on low farm-gate prices.

His comments were reported in April by The Grocer under the headline “Superstores find an unexpected ally in Gill”.

Supermarket profits Britain were higher than in some other European countries, he said, but certainly less than other sectors of industry would require as reasonable.

Since then, however, the NFU has claimed that figures from the Ministry of Agriculture and the National Office of Statistics prove farmers are losing out.

NFU analysts calculated that the average UK farm-gate price of 166p/kg for lamb was marked up by 280% to an average retail price of 630p/kg during June.

The union also calculated that farm-gate beef prices were marked up during the same month from 173p/kg to 585p/kg before reaching customers shopping baskets.

Pigmeat was marked up by 224% from 86p/kg to 278p/kg, and milk was marked up by 253% from 17p per litre to 60ppl, the NFU said.

See more