Tesco should ensure 'fair farm-gate price'

Supermarkets should concentrate less on driving down prices and more on ensuring British farmers get a fair price for their produce, an MP told the Commons yesterday. Skip related content

Lindsay Hoyle (Lab, Chorley) opened an adjournment debate on supermarkets and regional farming by outlining some challenges faced in the industry.

These include as foot and mouth disease, bluetongue and challenges from supermarkets to reduce prices.

Hoyle spoke out in favour of the Competition Commission plan to introduce a watchdog to implement a local sourcing policy for the larger chains.

He used some statistics to further illustrate his point.

"£1 in every £8 in the UK is spent at Tesco," he told the House.

"However, the strength and the success of Tesco has allowed it to dominate the market, and it has the power to drive down prices.

"Because Tesco has such a dominant position and is so powerful, it ought to use that power not to drive down prices, but to ensure that a fair farm-gate price is paid to farmers in the UK.

"We should stand by our farmers."

He added: "The average net income of dairy farmers in Lancashire in 2002 was £32,700.

"By 2006 that had fallen to £13,300less than half."

Christopher Fraser (Con, South-West Norfolk) spoke about the need for supermarkets to value commitments to local produce and "put something back into the community".

He used Waitrose as an example of a company doing the right thing and pointed out that the farm-gate price that Waitrose pays for milk is at least 2p to 3p more than that of other supermarkets.

He argued that if some supermarkets are willing to do it others may join them.

This sentiment was supported by Hoyle.

"The issue is about the word 'local,' and ensuring that it means local and guarantees sustainability in that community," he said.

Hoyle cited Morrison's as an example of a large chain which supports farmers by its local policy to buy British meat, UK farm produce.

Hoyle encouraged this commitment to go further by allowing local communities to source meat for local supermarkets instead of transporting it to stores around the UK.

The minister for environment, food and rural affairs, Jim Fitzpatrick, responded by congratulating the farming industry for its resilience.

He pointed out that there are schemes which support local enterprise such as the European Union food name scheme.

The minister said marketing local and regional foods has a positive impact upon communities.

"Local food chains increase consumer choice and raise awareness of and interest in local food by helping to improve consumers' links with and understanding of the rural economy and food production," he told the House.

A planning application from Asda to open a store in Holyle's Chorley constituency was mentioned and the chain's support of the local food hub was seen as a positive example of the retailer's interest in local food.

The minister outlined that the market for local food was experiencing growth and that the government intended to provide support for local food chains.

"Research suggests that UK locally sourced food retail sales will total £6.2 billion by 2013, up from £4.7 billion in 2008a growth of some 31 per cent."

On the specific point of milk prices the minister referred said the Competition Commission had identified some adverse aspects of competition.

Among these were areas where the market structure does not work in the best interests of consumers.

Some areas were dominated by single retail chains restricting choice, local groceries markets were dominated by single retail chains and in some instances supermarkets were found to pass unacceptable risks or costs on to suppliers.

Recommendations include a new groceries supply code of practice for all supermarkets with a turnover of more than £1bn a year and the establishment of an ombudsman to oversee any conflict and ensure fair trading practices.

Fitzpatrick concluded: "The government are committed to fostering competitive markets that work in the best interests of consumers, including in the groceries market."