Supermarkets deny fixing but wont lower retail price

22 February 2002

Supermarkets deny fixing but wont lower retail price

By Andrew Shirley

DESPITE vehemently denying recent allegations in the national press of price fixing, none of the major supermarkets are planning to reduce the price of milk in the near future.

The rigging claim was made by a former director of Sainsbury to The Sunday Times and listed a number of popular products, including milk, which, he said, the chain and its major competitor Tesco had agreed not to compete on to avoid a price war.

But, while insisting the accusation was groundless, a spokesman for Tesco, the UKs largest food retailer, said: "We are not putting any pressure on the dairies to cut prices and certainty wont be reducing our payments to them." Asda and Sainsbury said they too had no plans to make milk any cheaper.

Kevin Hawkins, communications director at Safeway, said the store saw no reason to reduce prices. But he added that if processors significantly cut their payments to farmers over the longer-term supermarkets would have to follow suit or risk accusations of profiteering.

While such a move, if true, would incur the ire of consumer groups and competition watchdogs it could, theoretically, offer some hope of stability to dairy farmers reeling from the latest round of price cuts. However, this seems unlikely. Even if the supermarkets do not lower retail prices more farm-gate cuts are in the pipeline. It is well known that processors margins have been slashed as they fight for market share.

Scotland-based Robert Wiseman Dairies recently announced a 0.6p/litre to take effect from the beginning of March, and has said a further fall is likely when prices are reviewed again in April.

Although much of Wisemans business is with liquid milk suppliers, it partially attributed the cuts to a collapse in the commodity market for milk products and bulk cream. A spokesman also blamed other companies for undercutting the market. "I would hope that farmers recognised swingeing cuts of 1.9p/litre by some co-ops were for competitive reasons."

Arla, the Scandinavian co-op, would not give any indication as to where it expected prices to go at the next review, and Express Dairies, which reduced its price to direct suppliers by 0.3p/litre, affective from mid-January, also refused to comment.

An industry source, however, reckoned if Wiseman carried out its intention to reduce rates in April competing companies would follow suit.

&#8226 Meanwhile, this months Milk Price Review reflects the many cuts made during January, which were reported on these pages.

To summarise, they include reductions from the big three co-ops (Milk Link 1.27p/litre; First Milk 1.9p/litre in the north and 1.37p/litre in the south; Zenith 1p/litre) as well as the 1.95p/litre cut made by the Milk Group and a 0.6p/litre reduction from Midlands Co-op.

Golden Vale trimmed its price by 1.1p/litre, and Nestle by just over 1p/litre. Bodfari paid 0.76p/litre less than in December, while Express lowered its price by 0.3p/litre from Jan 14.

All price changes adjusted to farmers weekly standard litre and daily collection. &#42

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