UK Farmers call for greater retailer responsibility amid claims of aggressive tactics

Posted by Daniel Palmer on 17th November 2008

With Britain facing its sharpest economic downturn in 30 years, the National Farmers Union (NFU) is calling on the country’s largest retailers to take the lead in a new approach to corporate social responsibility, which would see fair pricing for both customers and suppliers put at the heart of their retail policy. The plea comes after accusations of major supermarkets becoming more aggressive in their demands of suppliers.

Mr Kendall will make the call for greater responsibility in a speech to the Cardiff Business Club in Cardiff today (November 17).

“The global economic turmoil we are currently seeing means Britain is facing its sharpest downturn for a generation, driven largely by short term greed in the financial sector. This has resulted in real damage in people’s confidence and belief in the free market system,” he will say. “The retailers, led by Tesco as the biggest and most successful, could go a long way to restoring public confidence in that free market system by demonstrating a new, fundamentally more responsible approach to retail policy.

“It is not inappropriate to ask, in the wake of the damage done by unfettered, greed-motivated behaviour by some in the financial sector, whether Tesco should continue to chase every last pound of dividend for shareholders at the potential expense of massive damage to the rural infrastructure in this country.”

Tesco has come under attack in the UK in recent weeks after changes were reportedly made to their trading terms. It has been alleged that they have offered alcohol suppliers ‘take it or leave it’ terms as they seek to reduce costs, as well as increasing, by 30 days, the time of payment to non-food suppliers. The UK’s largest retailer has been seeking to counter the impact of discount grocers in Britain, which threaten their market share, while also trying to make further inroads in the US and Asian markets.

“Competitive pricing for its customers can be achieved without resorting to the crippling squeeze tactics on suppliers which are yet again rearing their ugly head,” Mr Kendall adds. “We are receiving all too many complaints from suppliers, frightened of taking up their issues direct, who have had unilateral price cuts and demands for back payments and over-riders. Frankly, some of these can only be described as outrageous, bully-boy tactics, and they must not continue as we head into recession.”

“While we fully recognise the plight of consumers and their need to buy good value food during the credit crunch, there is enough flexibility in the margin taken by retailers to offer competitive pricing without reducing the price paid to farmers, growers and other suppliers. A continuation of this policy will see the agricultural production base in this country irreparably eroded with diabolical consequences for suppliers,” he will warn.

Mr Kendall acknowledged the positive work done in some areas of the supply chain, but added that these needed to become the norm, rather than the exception.

“The contribution farming makes beyond that of food production – shaping the environment, contributing to biodiversity, for example – is too important to throw away because of short term pressures, however great they are. A longer term view is what is needed, for farmers and for consumers.”