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Stackyard News Nov 05

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    Farmers Strike Highlights Need For Fair Trade

Consumers and politicians are being urged by Scotland's farming union to join the campaign to tackle the increasing power of the supermarkets. NFU Scotland is reiterating its call for urgent political action as some Scottish farmers start taking strike action and withholding produce to protest at unsustainable farmgate prices. A three-day strike has been organised by Farmers For Action starting today.

For a year now, NFUS has been urging Government and the Competition Authorities to tackle the imbalance of power within the food and drink supply chain which has seen supermarket margins increase on the back of reducing prices to farmers. NFUS is calling for a further Competition Commission investigation into the retail sector and the introduction of an independent watchdog to police fair trade between UK supermarkets and their suppliers.

NFUS has emphasised that some supermarket and supplier relationships work very well, but there is too much fear in the supply chain and there is no means of tackling abuses of power.

NFUS meetings with politicians at Holyrood start tomorrow and come ahead of action on Saturday when farmers will be speaking to shoppers around the country. Farmers will be in supermarkets highlighting the growing gap between the shelf price and the price paid to them (see notes for examples). Farmers will also be at some farmers markets thanking shoppers for their support for the markets and local produce and urging them to put pressure on politicians to address the power of the supermarkets.

NFUS President John Kinnaird said:

"As supermarket margins have grown, farmers have faced a destructive squeeze on their own businesses. Farmers are now saying enough is enough. It has now got to the point that farmers are starting strike action; withholding produce to protest at the unsustainable prices they are being paid. Many farmers are simply not in a position to take part in a strike as it adds to an already serious financial situation and causes real problems for those committed to supply contracts. Yet, the fact this is even being talked about should be a clear message that the current situation cannot continue.

"If supermarkets want to continue to increase their margins at farmers' expense, they could destroy much of our local food industry. We are already seeing local food processing facilities close and the financial squeeze which has seen a quarter of Scotland's dairy farms quit in the last five years is now being felt across all sectors of agriculture.

"The First Minister has recognised this problem and has already highlighted to supermarkets that they will be starved of supply if they starve farmers of a fair price. We now need action. I have already discussed this issue with Mr McConnell and tomorrow I begin a series of meetings with the major political parties.

"Around 80 per cent of the food and drink produced in this country is sold through the major supermarkets and the misuse of power must be addressed if we want to secure the future of Scotland's world famous food industry."

  • The three day strike is being organised by Farmers For Action.

  • NFUS is stressing that supermarket shoppers should not have to pay more at the tills to ensure farmers receive a sustainable price. There is enough in the supermarkets' shelf price to ensure everyone can make a living. The following examples highlight the gap between supermarket shelf price and farmgate price:

    • Milk is sold in supermarkets for around 54 pence per litre, farmers are paid 18 pence.
    • Potatoes are sold for around £550 per tonne in supermarkets, farmers are paid £95.
    • Carrots are sold in supermarkets for around £700 per tonne, farmers are paid £80.
    • Beef is sold in supermarkets for an average of £4.25p/kg, farmers are paid around £1.90p/kg.
    • Porridge oats are sold for around £570 per tonne in supermarkets, farmer are paid £70.
    • Strawberries are sold for around £3.00 per pound in supermarkets, farmers are paid £1.30.

  • One in four of Scotland's family dairy farms (700 businesses) have quit in the last six years. They receive around 18 pence per litre of milk produced. It costs around 19 pence to produce. There are 1450 dairy farms left in Scotland and the UK is forecast to face a milk shortage of one billion litres by 2007.

  • Three years ago, the Office of Fair Trading introduced a supermarket code of practice to ensure fair trade between the big four supermarkets. Not a single complaint has ever been formally lodged under the code because of the fear amongst suppliers of being de-listed if they complain at supermarket trading tactics.

  • NFUS conducted its own inquiry this summer with Scotland major food and drink processors. Whilst some were very positive about their relationship with supermarkets, NFUS was given alarming evidence of abuses of power and breaches of the Code. All evidence was submitted on condition of the strictest confidentiality. NFUS uncovered the following practices:

    • Loyalty payments (also known as slotting fees, charged to buy shelf space) are still demanded by major supermarkets. Non payment can result in the loss of business.
    • The fees charged for artwork and re-packaging of supermarket products are enforced on suppliers and not negotiated.
    • Supermarkets like to 'manage' the public statements of their suppliers.
    • The re-negotiation of supermarket contracts is not always determined by price and quality of service. There is evidence that contracts can be awarded to a supplier's competitor simply to reduce the original supplier's negotiating power and to maintain the supermarket dominant position.

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