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Farming

Farmers and SMEs concerned by supermarket merger

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Merging?: Mike Coupe (L) with Judith McKenna (Walmart) and Roger Burney (Asda)

THE TENANT F​ARMERS ASSOCIATION (TFA) is calling for the Government to rethink its refusal to extend the remit of the Groceries Code Adjudicator (GCA) in light of the proposed merger between Asda and Sainsbury’s.

The planned merger, which will probably be referred to the Competition and Mergers Authority, would create the UK’s largest supermarket chain. However, a merged company would still not be as big as Tesco was only a couple of years ago, when that company had over 30% of the UK’s supermarket retail share.

The combined strength of the merged business poses a threat to suppliers, who could find their margins squeezed as the company would be able to depress prices paid to primary producers by manufacturers. That prospect was well flagged up during a BBC News interview with Sainsbury’s CEO Mike Coupe.

Mr Coupe told the BBC that there will be no store closures and no in-store staff redundancies, the inference that can be drawn is that jobs will go both in administration and back office operations, as well as logistics. The most likely way to deliver savings would be to increase the company’s margin or arrangements with producers and suppliers. Mr Coupe told the BBC that the merged company would have the potential to reduce prices through supply chain efficiencies.

Unfair practices within the retail supply chain led the Government to establish the GCA in 2013 to oversee direct supply contracts between retailers and suppliers. However it recently refused to extend the remit to include oversight of relationships further upstream between farmers and processors which could be impacted by the dominance of retailers.

TFA Chief Executive, George Dunn said “The merger between Asda and Sainsbury’s announced this week should cause the Government to rethink its strategy here. When Sainsbury’s boss Mike Coupe pledged to cut prices on everyday products by 10%, alarm bells rang out across the industry. It is suppliers who will be expected to shoulder the cost of these savings.

“There is a growing recognition that the food supply chain in the UK is dysfunctional and all too often it is the farming community which bears the brunt of the problems that this produces. Poor returns, last-minute changes in orders and specifications, unfair competition from abroad and poor labelling are all contributing to the pressures at farm level,” said Mr Dunn.

“Given that the vast majority of farm produce passes through at least one processor, if not more, before it hits supermarket shelves, the Adjudicator is therefore unable to consider the impact of retailer activity on many farmers,” said Mr Dunn.

Speaking in the House of Commons on Monday (Apr 30), Business Minister, Andrew Griffiths MP, referred to the work of the Groceries Code Adjudicator, but failed to address why the Government had decided to do nothing to protect primary suppliers. This was despite being challenged by Labour’s Shadow Agriculture Minister, David Drew MP on how the Government planned to tackle further potential supply chain abuse between farmers, processors and retailers.

“The TFA agrees that the GCA has had a positive impact on the groceries market by ensuring that there is a greater focus on the principles of fair trading. Retailers are now more aware of the need to ensure that they are not using their dominant position within the supply chain to engage in inappropriate practices. However the extent of the influence of the GCA is limited by its current legislative powers both in terms of the scope of its remit and its ways of working. The Government needs to act now to ensure that appropriate mechanisms are in place to guard against future abuse in the light of further concentration in the retail sector,” said Mr Dunn.

“Well-meaning initiatives aimed at improving supply chain relationships on a voluntary basis have failed to have the necessary traction across the board. We must deepen and broaden the GCA’s powers to allow it to look at the whole of the supply chain and not just direct supply contracts to ensure fairness in supply chains.​”​

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said: “A merger of this size will concentrate a lot of power in the hands of one giant company, and it’s important that power isn’t misused to coerce small suppliers into accepting unfair contracts and poor payment terms.

“Those at the top of Sainsbury’s and Asda should explain how they plan to merge these two supply chains fairly, and give reassurance that cost savings won’t be achieved simply by milking their small suppliers for all they’re worth.

“When investigating this proposed merger, the Competition and Markets Authority should be looking for cast-iron commitments that a positive standard will be set for working with smaller suppliers.”

FUW President Glyn Roberts said: “The proposed merger will raise many concerns for farmers given the huge power a new mega company could exert over the supply chain.

“If the government were to allow such a merger, we would need to see a step change in regulation of the supply chain and the powers of the Groceries Code Adjudicator, otherwise there is a risk of severe abuses taking place which further undermine farmers and suppliers.”

NFU Cymru President John Davies said: “NFU Cymru and the NFU will be examining the details of this proposed merger between Sainsbury’s and Asda carefully and the further concentration of retail power it creates within the food supply chain. We will also seek clarity on what the structure of any merger will be.

“We will be requesting a meeting with Sainsbury’s and Asda to ensure that the commitment of the new business to British sourcing will not be affected. First and foremost the NFU Cymru and the NFU will be seeking to understand what potential impact a merger would have on our members – both those farmers who are directly part of these supply chains and those who could be affected by wider connotations.

“With just over 31% of the market potentially being held by one company the Competition and Markets Authority (CMA) is likely to consider the impact on shoppers – but that must also take account of changes to supply arrangements that could give rise to a reduction in choice and availability over the long term. The impact of the whole supply chain, all the way down to farm level, needs to be carefully assessed.

“NFU Cymru and NFU support any investigation by the CMA and we would aim to feed into this if approached.”

Welsh Liberal Democrat Spokesperson for Agriculture Cllr William Powell said: “Welsh farmers will be justifiably concerned this merger will produce a supermarket that is simply too powerful, leaving suppliers at its mercy.

“Farmers already work with tight profit margins and face the multiple challenges of Brexit, including diminishing farm support and obstacles to accessing the vital EU Single Market. This merger must not be allowed to threaten them further.”

Farming

Cattle prices exceed averages – and expectations

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BEEF cattle prices in England and Wales have hit the milestone of £4 per kilo, making this average the highest on record in a number of years.

The average deadweight price for steers for the week ending 24 April was 401.4p per kg which is 83p higher than this time last year and 67p above the five-year average.

Market prices at present are being influenced by a number of unique factors, including strong UK domestic retail demand, a lack of supply due to stockpiling in late-2020 ahead of the Brexit deadline, and changes in trade patterns caused by both Brexit and the Covid pandemic.

Whilst the impact of these factors on demand for beef in 2021 is unpredictable, newly released data from the British Cattle Movement Service (BCMS) suggests that no radical shift is likely in the supply of animals over the coming months.

During 2020, total calf registrations in GB were up marginally (0.5%) on 2019. In Wales, the figures show an increase of 1.4% in beef calf registrations, whilst dairy calf numbers increased by 3.2% on the year. For 2021 so far, beef calf registrations are currently trending 1.1% below last year.

Glesni Phillips is a Data Analyst at Hybu Cig Cymru – Meat Promotion Wales (HCC). She said: “As we approach the peak calving period for spring calving herds in Wales, it is expected that BCMS monthly registration figures will increase over the coming months.

“However, the suckler cow herd in the UK has been retracting in recent years and currently, it shows no signs of re-building quickly. Prime heifer slaughterings during 2020 and the first quarter of this year, for instance, are higher than recent historic levels.

“These figures would suggest that supply onto the domestic UK market will likely remain tight for some time. Domestic retail figures for beef are strong, and with barbeque season coming up we should continue to see good demand  for good quality, locally produced beef.”

A more detailed analysis of the BCMS calf registrations data is available in HCC’s latest Market Bulletin on the HCC website.

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Farming

NVZ rules driving family farms out of business

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GLAMORGAN beef and sheep farmers Richard Walker and his partner Rachel Edwards run Flaxland Farm – a 120-acre beef and sheep holding just outside of Barry, Glamorgan. The couple say they will have to give up keeping cattle if current Water Resources (Control of Agricultural Pollution) (Wales) Regulations are not adjusted to incorporate recommendations made by industry stakeholder groups.

Richard and Rachel keep 35 breeding cows and 130 breeding ewes and are at the end of their tether.

“We’ve had a session with Farming Connect to see what we need to be doing, and it didn’t really tell us anything we didn’t already know, apart from that we have enough ground to cope with how much slurry we produce. So we wouldn’t have to export. But we would have to cover one of the existing yards, which is an awkward shape, plus cover where we scrape slurry to, and also put in a slurry store. Which we don’t have at the moment,” said Rachel Edwards. 

“Judging on what the shed we had to put up recently has cost us, I don’t think we’ll have any change out of £50 thousand if we try to meet the requirements of the new regulations.  35 cows don’t bring in that sort of money. Where do you get that money from? And you still need to pay it back at the end if it’s borrowed. We’re looking at the kids probably still paying off what we’d spend. It would be far more stressful having to pay all that money back than getting rid of the cows. 

“These regulations are going to have a huge impact on our farm business. If nothing is done to amend or annul what we are facing now, I’ll have no choice but to get rid of the cattle. Trying to comply with these regulations is just going to be too expensive for us,” said Richard Walker.

Cabinet Secretary for Energy, Planning and Rural Affairs Lesley Griffiths announced the plans in a written statement in November last year, after which it became apparent that the majority of the plans had simply ‘been cut-and-pasted’ from the Nitrate Vulnerable Zone (NVZ) rules currently affecting just 2.4% of Wales.

While the Welsh Government announced in January that £11.5 funding would be made available to help farmers comply with the new rules – an allocation it had already announced previously in September 2020 – this represents just 3% of the £360 million the Welsh Government’s own impact assessment estimates the costs could be for Welsh farmers.

“There’s clearly nowhere near enough money to go around, and the total estimated bill is more than Wales’ annual farming budget.

“The margins are tight on lowland sucklers as it is. We’re looking at spending tens of thousands of pounds to comply. Is it really worth it?” adds Richard.

At Flaxland farm the muck gets spread on around 30 acres of fields in September when the fields are clear and it is left for a couple of months to rot down and go into the ground before being used as grazing for the new season lambs. 

“It saves us using artificial fertiliser. It’s organic fertilizer versus the artificial stuff which is £300 a tonne. We spread the slurry over winter, it helps the grass grow and we can turn the lambs and sheep out early. The spring lambs have fresh good grass and it hasn’t cost us a fortune in bagged fertiliser. 

“I look at what it does to my ground – new season lambs have lush green grass, a couple of inches tall and they rocket on it. We can produce 12 week old lambs ready for slaughter on grass and milk with no concentrate. Without it, the grass wouldn’t be as beneficial to the new season lambs as it is now. There would be a shortage of grass around February and March. The way we do things here works in rhythm with all the livestock and the environment. We also deal with the carbon footprint of our produce by selling our lambs locally to I.G. Nicholas butchers in Cowbridge, which means they have very few miles to travel from farm to plate,” said Richard.  

Being the third generation to farm the land, Richard says the farming system hasn’t changed much over the years and pollution here has never been an issue.

“I have had the cows all my life, my grandfather used to milk and they gave up milking in the 60s, and then we have had suckler cows ever since. The way we keep them hasn’t changed, back then it was open yards and they were fed on a concrete pad and whatever was left was scraped up and went out. It has never been an issue and we’ve never had a pollution incident here. The river near us has been tested many times and never comes back with any problems.

“I, like so many other farmers, take our responsibility to look after the environment, including our waters, very seriously. We have always been clear that one pollution incident is one too many and those who are guilty of polluting our rivers and watercourse should be held to account. Not many will argue with that. But to introduce these regulations across the whole of Wales, which goes against the recommendations the Welsh Government has received from their own task and finish group, beggars belief and will see many small and medium sized family farms go out of the cattle business,” he said.

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Farming

Small steps to improving pig fertility

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SIMPLE changes to pig management can result in significant improvements in fertility on units struggling with reproduction.

Factors influencing pig fertility are many and varied and can be due to infectious or non-infectious causes, says pig vet Dr Alex Thomsett, of The George Veterinary Group.

Non-infectious causes are often those that producers have more influences over and, in many cases, usually mean very simple changes, Dr Thomsett told farmers participating in a recent FarmingConnect webinar.

“A few small tweaks to management or the approach to reproduction on-farm can easily change a fairly difficult situation into a much better picture without going through a whole heap of blood sampling,’’ she said.

Among these is temperature stress; although this is more commonly associated with heat, cold can be a factor too.

Sows can find it difficult to adapt to changes in temperature and it can lead to more returns of service, poor cycling and higher numbers of abortions.

In outdoor herds, ensure pigs have mud wallows to dissipate heat and, to protect from direct sunlight, create shaded areas.

“This can be done very simply, with a few poles and a length of gale break or similar material,’’ Dr Thomsett advised.

Changes in day length can result in seasonal infertility in the autumn.

As this affects gilts, in particular, Dr Thomsett recommends selecting gilts that are early to go through puberty rather than those that are delayed.

Pigs need a minimum of 16 hours of daylight so ensure light exposure in housing is good – even cleaning whitewashed walls or lightbulbs can make a difference by better reflecting light at sow level on the back of the eye.

Light is more difficult to control in outdoor herds because this system is beholden to the time of the year and, for this reason, Dr Thomsett stressed that it was vital to get all the other issues around fertility working well, including nutrition.

Gilts need the right nutrition balance to prepare them to come into first service and to support them through the first service.

“Gilts and young females are still growing through their first pregnancy and it can often be forgotten that when a pig is lactating, her body is preparing for the next cycle’’, said Dr Thomsett.

In herds with longer lactation periods, Dr Thomsett suggests providing piglets with supplementary feeding to support the sow.

Mycotoxicosis is another consideration and can significantly interfere with herd fertility but Dr Thomsett said this is an unlikely cause if the farm has good quality sources of grain and straw.

Adding binders to feed is the best form of defence because these absorb harmful mycotoxins.

Vaccinations are an important tool for preventing infectious causes of infertility.

Ensure that the vaccination record of any bought-in stock is up to date and quarantine these animals, to ensure they are fit and healthy before entering the herd.

Carrying out a herd health check to establish health status and therefore which vaccinations are needed is greatly beneficial, said Dr Thomsett.

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