U-turn as Tesco returns to auctions

3 December 1999

U-turn as Tesco returns to auctions

By Simon Wragg

TESCO is set to resume buying livestock from auction markets, effectively overturning its intention to source all supplies direct from farms by the end of 2001.

The move reflects increased confidence in farm assurance schemes aimed at guaranteeing quality livestock, said Steve Murrells, the companys meat manager.

But meat industry officials believe it marks an inevitable turnaround on policy as prime cattle become harder to find and confidence in producer clubs falls.

Tescos move is a classic reversal and is supply-driven, said Robert Forster of the National Beef Association.

“But it should be welcomed as increasing competition and allowing greater comparison of prices,” he said.

Like other retailers, Tesco has been forced to review policy after suppliers said they could not source enough cattle direct to meet demand.

St Merryn Meat – a main Tesco supplier – wrote to its producer club members recently calling for more cattle to be sent direct, rather than through markets.

Support among dedicated suppliers has dropped “dramatically” and unless numbers rose it would have “no option” but to seek alternative supplies.

This, say traders, suggests farmers are becoming increasingly wary of retailer-led producer clubs because of pricing policies.

Payments, often quoted for animals achieving the strict R4L carcass quality, are commonly based on an average auction price which include a wide variety of stock.

In some cases, differences can be worth 2-8p/kg, suggest traders.

David Williams, NFU livestock committee chairman, believes this has become a real bone of contention. “Producer club members are obviously disappointed.”

The decision by Tesco will allow its main Scottish supplier, McIntosh Donald, to use approved markets openly to top-up weekly kills.

Auctioneers suggest there is already anecdotal evidence suggesting buyers acting on behalf of retailer suppliers are back in markets.

Many people in the industry, including Chippenham-based auctioneer Peter Kingwell, would a formal return of the supermarkets to the live auction trade.

“We would be pleased to see them back,” he said.

Marts elsewhere might also benefit from the Tesco move which is initially restricted to auctions north of the border.

Assured British Meat – the government agency overseeing quality in the meat supply chain – hopes to complete a similar exercise across England and Wales.

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