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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

NFU Mutual warns on fire risk

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Fire: Tinder-dry weather risks crops

TINDER dry conditions are putting the UK countryside at high risk of devastating fires, warns NFU Mutual.

The leading rural insurer is concerned that the current heat wave could lead to grassland and arable crop fires, putting lives at risk and costing millions of pounds in damaged crops and machinery.

“The tinder dry conditions and continuing heat wave pose a major fire risk to the countryside, threatening crops, equipment and even personal safety. Every precaution needs to be taken by both farmers and visitors alike.

“The huge fires raging on Saddleworth Moor are a stark warning to the damage fires can cause in very dry conditions.

“Weeks of dry sunny weather mean that huge areas of land across the whole of the UK are at risk of fire – putting lives of people and animals at risk as well as destroying valuable crops,” said Tim Price, NFU Mutual Rural Affairs Specialist.

“In many parts of the country, it’s been the driest June for over a decade and the land is so dry that discarded matches and cigarette ends thrown down from cars can easily start a fire.

“With the hot, dry, weather predicted to continue we are making a plea to countryside dwellers and visitors to take extreme care to avoid starting a fire.”

Because of May and June’s good weather, harvesting is already under way, weeks earlier than usual, and NFU Mutual is urging farmers to reduce the risk of fire by making sure that fire extinguishers on combine harvesters are serviced before harvest starts, and to make sure regular maintenance and cleaning to remove chaff is carried out.

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Farming

Wayleave framework updated for broadband

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Mark Bridgeman, CLA: 'Agreement will speed up broadband delivery'

AN UPDATED wayleave framework has been developed by the CLA and NFU to pave the way for broadband infrastructure providers to speed up the roll-out of rural broadband while ensuring fair treatment for landowners.

The updated national Rural Communications Agreement, announced at the CLA Connected Countryside conference, includes advisory rates of payment for the installation of new underground digital infrastructure on private land, representing a 4% rise on previous rates set in 2012.

Available to all broadband infrastructure providers, the new wayleave agreement is designed to make it easier for landowners and broadband providers to reach agreement. The CLA represents 30,000 landowners, farmers and rural businesses across England and Wales.

CLA Deputy President Mark Bridgeman said: “People living and working in rural areas have fought long and hard for better broadband provision, and the wayleave agreement that we announce today will help speed up fixed line broadband delivery without eroding property rights. It creates a national framework that provides certainty for individual landowners and smooths the way for faster roll-out.

“This revised national Rural Communications Agreement is the culmination of more than a year’s work, and we are pleased to announce this positive step forwards. But there is more work to do: the CLA will keep the pressure on broadband providers to deliver the fast, affordable and reliable connections that the countryside needs, and we will hold Government to their promise of a Universal Service Obligation of 10Mbps by 2020.”

Gigaclear Chief Executive Matthew Hare said: “The rural network build programme that Gigaclear already has underway will reach over 300,000 homes and businesses by 2021. This agreement simplifies and streamlines the agreement of wayleave requests.”

NFU Vice President Stuart Roberts said: “We know how increasingly important rural broadband connection is to farmers and those with diversified businesses.

“We very much hope that this updated agreement will help to deliver broadband to rural areas which currently have poor, unreliable or non-existent broadband connection. Fast rural broadband is essential for our forward-thinking and dynamic farming industry, especially as we approach exiting the European Union.”

The updated agreement suggests advisory payment rates for installation of equipment that landowners can enter into with companies wishing to install a broadband network. The agreement also sets out the rights and responsibilities of both landowners and broadband operators. The suggested rates and agreements will help to cut down the time and cost of negotiating individual wayleaves, making it easier and more cost effective to get the infrastructure for broadband put in place.

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Farming

Minister kicks access issue into long grass

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No clarity on access to land: Government rejects fresh legislation

THE SUSTAINABLE M​ANAGEMENT of Natural Resources Consultation process has finally concluded, but there’s no sign of progress, according to Rebecca Williams, Director of CLA Cymru.

Saying that the time has come to make decisions, Ms Williams said: “How we manage our natural resources, must form part of our vision for a vibrant, sustainable, competitive rural economy delivering against a range of public goods.

Responding to the Welsh Government Environment Minister, Hannah Blythyn AM’s statement summarising the responses to the Sustainable Management of Natural Resources (SMNR) consultation, Rebecca Williams, Director CLA Cymru, said: “We have a unique opportunity to define the future of land management in Wales. Our government processes really must deliver better and faster results. We need to find answers to the vital questions in land management about how the Welsh Government’s Five Core Principles be delivered as a working plan.”

“Last year’s SMNR consultation addressed a very broad range of issues many of which were complex, others seemed disjointed from the main theme. This was an unwieldy and demanding exercise both for organisations and for individuals. The process was protracted, the outcome has been delayed. The substantial number of responses may be encouraging to the Government, but it does also bear witness to the level of concern about the potential vital impact the proposals may have on rural business and the countryside community. There is no doubt that greater subtlety and engagement is required in stakeholder-management.”

While there were over 19,000 responses to the consultation, over 16,000 of those were focussed on one issue – access to land. Of those 16,000 responses, only around 450 answered the questions posed by the consultation and there was a massive number of responses from individuals and campaign groups in favour of widening access to the countryside.

The Welsh Government has, however, shied away from specific legislation to provide greater rights for ramblers, canoeists, cyclists, and other groups in favour of achieving more access to Wales’ countryside.

In a written statement delivered to the Assembly on June 19, Environment Minister Hannah Blythyn said: “There were strong but differing views on how best to reform access legislation. We therefore believe that now is not the right time for substantive reform. But we are committed to exploring selected aspects of change where there was greater consensus, including on some of the administrative arrangements and multi-use paths. We will continue to facilitate further discussions through established groups such as the National Access Forum.”

Those remarks have been met with disappointment from Ramblers Cymru, the charitable organisation and campaign group that fights for walkers’ access to land.

Angela Charlton, Director of Ramblers Cymru told The Herald: “‘As Wales’ walking charity working to protect and expand the places people love to walk, Ramblers Cymru is disappointed that a year after this consultation was held, we are no clearer about Welsh Government’s ultimate vision for improving access to the Welsh outdoors.”

Ms Charlton drew attention to consultations not producing positive results in terms of policy or legislation, continuing: “We have had 2 major consultations on these issues in the last 3 years, and now face further consultation on as yet undefined changes.

“Through our campaign over 2,500 people took the time to support our call for increased and improved access and protection of our paths, and it is frustrating that we seem no closer to seeing the changes needed. We are however, pleased to continue engaging with Welsh Government to ensure Wales is a world class country for walking and will continue putting proposals forward to help achieve this.”

While the NFU noted the strength of the responses regarding access to land, NFU Cymru President, John Davies said: “The consultation contained a number of proposals that were extremely worrying to farmers including granting higher access rights which would have enabled cycling and horse riding on footpaths as well as extending and amending the list of restrictions on CRoW land. We, therefore, welcome the announcement from the Environment Minister that now is not the right time for substantive reform.”

John Davies continued: “We note, however, the Welsh Government is committed to exploring aspects of change where the consultation process showed greater consensus including some of the administrative arrangements and multi-use paths. We await information on what these specific areas will be and would highlight that, given 80% of the land area of Wales is agricultural land, farmers are key providers of the landscape and countryside upon which many access and recreational activities depend. Any reforms must consider the safety of access users and should not result in increased costs, burden and liabilities being placed on farmers in Wales.

“We are pleased that the consultation process revealed consensus in the area of keeping dogs on fixed length leads in the vicinity of livestock, which was a generally accepted proposal. The worrying of livestock by dogs is a key concern to our members and we would hope this is an area that can be progressed in the near future.”

FUW President Glyn Roberts said: ” The FUW welcome the news that the Welsh Government have decided now is not the right time for a substantive review to reform access legislation.

“Wales has approximately 16,200 miles of footpaths, 3,100 miles of bridle-paths, and 1,200 miles of byways, and since 1998 the area of land accessible by right to the public has increased threefold. The evidence makes it clear people are not using what is already there, so any changes should focus on increasing responsible use of existing access.”

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