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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

Common export rules until 2020

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THE UK’s listed status application has been agreed by the European Union’s (EU) Member States after it met the animal health and biosecurity assurances required for a third country to export live animals and animal products.

This confirmation is part of the EU’s published no deal contingency planning – without it, exports of animal products and most live animals to the EU could not take place in the event of a no-deal exit from the EU.

It also means the movement of equines between the UK and the EU will also now continue in a no deal scenario, offering welcome reassurance to this sector.

Food and Animal Welfare Minister David Rutley said: “This is good news for UK businesses. It demonstrates our very high standards of biosecurity and animal health which we will continue to maintain after we leave the EU.

“If you or your business import or export animal and animal products or imports high-risk food then I urge you to visit our guidance pages on gov.uk for what you need to do to be ready to continue to trade post-Brexit.

“Our top priority remains to deliver a negotiated deal, but it is the job of a responsible Government to ensure we are prepared for all scenarios, including no deal.”

The EU’s Standing Committee on Plants, Animals, Food and Feed (SCoPAFF) confirmed the acceptance of the UK’s listed status application on Wednesday, April 9.

National listed status is the EU’s classification for non-Member States and the UK’s application, submitted in November 2018, has passed the high criteria on biosecurity measures for animal health and food hygiene.

UK exports of animals and their products to the EU will need to go through an EU Border Inspection Post and businesses will still require an Export Health Certificate (EHC) and meet its requirements. Our guidance remains to send an EHC with the export consignment and to send a copy of the EHC to the EU importer.

With listed status now confirmed, exporters will need to follow the EU rules for exports from third countries to the EU. Our guidance for importers and exporters is available on GOV.UK.

In a deal scenario, the UK will not need to be listed during the implementation period. To give certainty to businesses and citizens, common rules will remain in place until the end of the implementation period meaning businesses will be able to trade on the same terms as now up until the end of 2020.

Disruption for those businesses which import live animals, germinal products and certain animal products will also be minimised as they will now continue to have access to the TRACES (TRAde Control and Expert System) after the UK leaves the European Union until later this year. TRACES is the system used by importers to notify authorities of such imports from non-EU countries.

As originally planned, imports from non-EU countries will need to go through the UK’s new IPAFFS system from day one.

The National Sheep Association has welcomed the announcement which will allow UK sheepmeat exporters to continue to sell to the EU post-Brexit.

Eleanor Phipps of NSA comments: “NSA is very pleased to hear this news as it means there will be no period of lost trade. UK farmers can rest assured there will remain a market for their products in the EU from the point we leave, potentially as soon as this Friday.”

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Farming

Big agenda for sheep conference

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A NUMBER of the hot topics in food and farming will be up for debate at the National Sheep Association (NSA) Welsh Sheep Event in Glynllifon near Caernarfon on May 21.

As part of the event, Hybu Cig Cymru – Meat Promotion Wales (HCC) is working with the NSA to organise a series of discussion seminars, with expert keynote speakers from all over Wales and beyond ready to discuss the biggest issues of concern to sheep farmers.

One vital topic which will be addressed is the environmental credentials of Welsh farming.

While some media discussion of livestock farming has focused on its impact on deforestation and greenhouse gases in some parts of the world, HCC and others have pointed out that Welsh farming has a much more positive story to tell.

Rearing sheep and cattle on grassland, as is overwhelmingly the case in Wales, requires much fewer inputs in terms of water and supplementary feed, and grass-based farming systems can help to regenerate the soil and aid carbon sequestration.

Dr Prysor Williams from Bangor University is one of the guest speakers at May’s event. He said; “I’m looking forward to a lively discussion with farmers at the NSA event, bringing out how small on-farm changes can both increase efficiency and the farm’s environmental credentials. There will also be an opportunity to discuss how Welsh agriculture can deliver many environmental benefits compared to other production systems.”

The environment seminar will also include contributions from Glynllifon farm manager Rhodri Owen, and HCC’s Gwawr Parry who will discuss how genetic improvement could help secure a sustainable future for upland sheep farming.

Another session will concentrate on animal health, with a particular focus on how pro-active management of flock health can have a positive impact on farmers’ businesses. HCC’s Dr Rebekah Stuart will be joined on the panel by Dr Neil Paton of the Royal Veterinary College and Dr Peers Davies of Liverpool University, who will respectively discuss sheep scab and ‘iceberg’ diseases which can indicate wider flock health problems.

A third seminar will take a broad view of the future of the sheep sector after Brexit, with industry leaders Phil Stocker (NSA), Tim Render (Welsh Government) and Gwyn Howells (HCC) on hand to discuss the latest developments.

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Farming

WG’s access proposals concern farmers

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FARMERS ‘remain concerned’ over the access proposals contained within Welsh Government’s Taking Forward Wales’ Sustainable Management of Natural Resources consultation, says NFU Cymru.

A written statement by Deputy Minister for Housing & Local Government, Hannah Blythyn AM, provides the government’s response to the chapter four access proposals outlined in the 2017 Sustainable Management of Natural Resources (SMNR) consultation, with a ‘commitment to access reform’.

The Minister has indicated that she will progress significant changes to access rights and facilitate an assumption of non-motorised multi-use on access land and the public rights of way network. This will provide users, such as cyclists and horse riders, with many more opportunities to access the outdoors.

The Minister has also confirmed that minor technical reforms that were widely supported will be progressed as soon as a suitable legislative vehicle can be identified, including enforcing placing dogs on a short fixed lead in the vicinity of livestock at all times of year and amending the technical provisions around creating, diverting and extinguishing rights of way.

The Minister has announced an independent Access Reform Group will be established to consider in detail how the more significant changes to access rights should be implemented including multiuse paths and reducing restrictions on open access land.

NFU Cymru Rural Affairs Board Chairman Hedd Pugh said: “Following the closure of the SMNR consultation in autumn 2017, farmers have been waiting with bated breath to see how Welsh Government would consider the responses and move forward.

“The Minister’s written statement includes a number of non-controversial elements that we look forward to working on with the government, not least the proposals around enforcing short fixed-length leads on dogs in the vicinity of livestock all year round which will go some way to assist with concerns over increasing levels of worrying of livestock in Wales.

“There do, however, remain a number of areas of concerns for our members. Near the top of this list are changes to multi-user access rights on public rights of way and access land, in particular. These changes could see ‘thrill-seekers’, as the Minister has described them, being granted increased rights on farmland across Wales. It is important to recognise that access is not always responsible and it is farm businesses across Wales who bear a disproportionate burden of this.

“The proposals also do little to address farmers’ fears that they could end up incurring increased costs and liabilities as a result of extended access. Most farmers will be able to tell you of cases where anti-social behaviour and dog worrying, for example, has had an emotional and financial impact on their farm and yet they are the ones left holding the bill.

“We are pleased that the Minister confirmed to the National Access Forum meeting in Bangor yesterday that changes will be subject to a full regulatory impact assessment which will be necessary if full costs and impacts are to be understood.

“Farmers understand better than most the positive benefits of time spent outdoors in our wonderful Welsh countryside. Farmers manage over 80% of the land area of Wales, providing the backdrop for the Welsh tourism industry, and Wales is already home to more public rights of way per square km than any other UK nation. We want the public to enjoy access to the great outdoors, but this must be managed in a manner that is safe for the custodians of the land and access users.”

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