Consumers dont know who gets what

25 June 2001

Consumers dont know who gets what

By Isabel Davies

SHOPPERS are still confused about the amount of money farmers make from selling food to supermarkets, reveals new research.

Consumers believe that farmers make 14 pence profit out of every pound spent in a supermarket, according to the Institute of Grocery Distribution (IGD).

The Institute surveyed 1000 customers to find out how much they believed different parts of the food and grocery industry make from farming.

Respondents estimated that 37p out of every pound spent was profit for food retailers, while 33p was profit for manufacturers and 14p profit for farmers.

Most consumers said they often heard farmers say they did not make enough profit and this was probably true.

But some said they thought quite a lot of farmers “were doing all right” and were “better of than them”.

The IGD said that consumers had an inaccurate picture of the true situation.

Figures for farmers were hard to gauge but they certainly did not achieve a sector average of 14% profit, it said.

Average operating profits for the three leading retailers was 4.8p in every 1 and the average profit for the top 150 leading food manufacturers was 6.7p.

Farmers have long claimed that they are being ripped off by supermarkets which have massive buying power. The big retailers deny mistreating farmers.

A voluntary code of practice to ensure that supermarkets treat farmers fairly has been in preparation for more than a year but is not yet finalised.

Helen Lo, NFU head of food and marketing, said the survey demonstrated how consumers had no idea how much profit was actually made.

The solution was greater transparency so that people could identify at every stage whether value was being added, she said.

It was interesting consumers felt that food manufacturers made acceptable levels of profit because they didnt get media attention, said Ms Lo.

“The people in the middle dont get discussed. For example, no one questions in the livestock industry how much an abattoir or auctioneer makes.”

Institute of Grocery Distribution

National Farmers Union


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