Farmer-owner firm makes £0.5m loss

23 April 1999

Producers told avoid selling to supermarkets

By Simon Wragg

BEEF and sheep producers must widen their supply base and deal "as little as possible" with over-powerful supermarkets if they want to stay in business, warns Robert Forster, chief executive of the National Beef Association.

Speaking on Tuesday at the Ardingly Showground, West Sussex, he led a searing attack on supermarkets which, he claimed, had become too big "to be bouncing around our industry like loose cannons". He wanted their buying power to be capped.

The crowded hall of producers, invited by South East Marts, heard Mr Forster warn that retailers were out to deal with only the most efficient units. "They are taking the cherry-picking route, make no mistake. Nobody can survive unless efficient, but I hate to see the retailers steam-rolling philosophy that puts even moderately efficient units out of business."

Mr Forster insisted the time had come for retailers to "realise the wider responsibilities" which come with power.

Tesco director Steven Murrell was quick to quash accusations of profiteering. "Its a sad indictment when making net margins of 5.8% is a sin."

While accepting that both producers and retailers had to make sufficient margin to survive, Mr Murrell attacked Mr Forsters intention to drag producers back to traditional supply routes.

"The future of your business depends on whether you, like retailers, respond to consumer demand or listen to the solitary voice of one man seemingly determined to turn back the clock," he warned.

He dismissed the accusation that retailers were against live auctions. "Over 40% of lamb we sell comes through that route." And while not ruling out a return to the ringside he stated that the fluctuating prices of marts "was the bane of a retailers life".

Mr Forster also attacked the deadweight system. It was dogged with varying criteria which made it impossible for to compare returns. "We need transparency," he said.

Producers evidently wanted more help from the NBA. Accepting its warning to widen supply bases, many wanted help finding new markets. "It will be on a self-help basis," said Mr Forster. &#42

Farmer-owner firm makes £0.5m loss

FARMER-owned sundries and agchem supplier CWG made a trading loss of £571,000 in 1998 on sales of £21.9m. This compares with a profit of £111,000 on sales of £24m in 1997.

The loss of most of the arable team in 1997 hit sales in the first five months of the year, says CWG. It also blames exceptional costs, including year 2000 computer compliance, provision for bad debt and stock write-down, plus "substantially" higher pension scheme costs, for the loss.

Two acquisitions during the year, Farmscan and Pledge Animal Feeds, helped to increase sales of certain lines, including farm films, animal health products, feeds and equestrian goods. However, prices for many mainstream farming products fell.

Despite the loss, CWG retains net assets of £7.4m. Interest on shares is maintained at 4.5%. &#42

See more