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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

Alpaca settle in on Welsh hills

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A HERD of alpaca at Aberystwyth University’s upland research centre welcomed two new arrivals during the Covid-19 lockdown.
One male and one female baby alpaca, known as cria, were born at the Pwllpeiran Upland Research Platform and are settling down to life in the Cambrian Mountains.
They are the first cria to be born on the University’s land and to be registered under the centre’s new stud prefix ‘Peiran’.
Peiran Champagne and Peiran Cosmopolitan join a small herd of alpacas who arrived at Pwllpeiran in October 2019 as part of a new research project.
Scientists want to see whether the South American alpaca is suited to life in the Welsh hills and could provide new opportunities for uplands farming.
These long-necked animals, similar to the llama, are renowned for the quality of their fibre (wool) and are happy to feed on low quality grasses which are often snubbed by sheep.
The research project is being led by Dr Mariecia Fraser at the Pwllpeiran Upland Research Centre, which is part of the University’s Institute for Biological, Environmental and Rural Sciences (IBERS).
“These are changing times for Welsh upland farming, with the next round of support payments expected to push for a shift away from primary agricultural production towards nature conservation and carbon reduction. In setting up a research herd of alpacas at Pwllpeiran, we want to test whether the alpaca could offer hill farmers a viable alternative to sheep.
“As well as producing high quality fibre, camelids like alpacas have evolved adaptations to enable them to live off poor quality tussock grasses in the Andes, and are happy to tuck into invasive grasses such as Molinia. These forages grow in abundance on the Welsh uplands but tend to be shunned by native sheep. We’ll be looking at the impact of their grazing and how well they could fit in to traditional patterns of farming here,” said Dr Fraser.
The establishment of the initial research herd is being funded by the Joy Welch Educational Charitable Trust, which was set up by the Aberystwyth alumna in 1988.

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Farming

Beef calf registrations increase

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NEW figures released by the British Cattle Movement Service (BCMS) suggests that the number of beef calves registered in Wales in the first five months of 2020 is the highest it’s been for several years.
Across Britain there has been an overall rise of 1.2% in calves – both dairy and beef – registered between January and May 2020, compared to the same period last year. In Wales the figure is higher, with an increase of 3.1%.
According to analysis by Hybu Cig Cymru – Meat Promotion Wales (HCC) the statistics reflect a range of factors, including a trend of producing more cross-bred calves from the dairy herd.
Some of the beef breeds and cross breeds showing the biggest increases in terms of calf registrations in Wales include the Aberdeen Angus (up 11.7%) and Hereford (up 4.8%), whilst both Charolais and British Blue registrations are up just over 4%.
The 2020 figures are a contrast to the last five years, where BCMS calf registration data has indicated a flat picture in the Welsh beef registrations.
HCC market analyst Glesni Phillips said, “These figures could show a positive sign for the future of the beef industry in Wales, and reflect broader trends in both the beef and dairy sectors.
“This comes despite the beef sector being hit by uncertainty in recent times. A combination of market conditions led to low farm-gate prices last year, and demand fluctuated widely in the early stages of the Coronavirus lockdown as pubs and restaurants closed their doors.
“However, we’ve seen encouraging consumption figures throughout Britain in the second half of the spring, with great support from consumers for home-produced beef, with its high standards of welfare and environmental sustainability.”
One high-profile new entrant into the beef sector is international rugby referee Nigel Owens MBE, who has recently started his own ‘Mairwen’ herd of Hereford cattle in Carmarthenshire.
“Having worked at Wern Farm Drefach when I was younger it had always been a dream of mine to keep my own herd,” said Nigel, who has built up to around 30 cattle so far on a 116-acre holding, “and if anything the lockdown has given the chance to get things up and running more quickly, as we’ve been able to get on with fencing, hedge-laying and developing our soil and pasture.”
Nigel added, “Each breed has its supporters, but from an early age I recall visiting my uncle and aunt’s farm, Pentwyn in Llannon, who had a Hereford bull running with the dairy herd. My cousin Helen and Gwyndaf near Aberaeron who run the Creuddyn Hereford herd have also been a valuable source of advice. For me, the cattle have a calm nature and calve easily. They’ll also produce good-quality meat which is important as we develop the business in future.”

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Farming

New edition of Welsh meat ‘Bible’ launched

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HYBU Cig Cymru – Meat Promotion Wales (HCC) has launched the latest edition of its ‘Little Book of Meat Facts’, the annual digest of facts, figures and trends for the nation’s lamb, beef and pork industries.
Among the key figures in this year’s edition were that Welsh red meat production was worth an estimated £690 million in 2018, compared with £677 million the previous year.
In 2019, total throughput of cattle and calves in Welsh abattoirs stood at 147,600 head, with total beef production totalling 42,900 tonnes (up from 40,000 tonnes the previous year). Throughput of sheep and lambs stood at 3.3 million head, with total sheep meat production totalling 63,400 tonnes, compared with 60,800 in 2018.
France remained the largest destination for lamb exports, but with important growth in trade with Germany which is now in a clear second place. Beef and lamb exports were mostly to Europe, although with significant trade to other markets in the Middle East, East Asia and Canada.
The Little Book also contains information on what kinds of meat British consumers are buying and from which retailers, as well as data on key industry measures such as carcase classification.
HCC Data Analyst Glesni Phillips said; “We usually launch the Little Book of Meat Facts at the Royal Welsh Show, so that farmers and other stakeholders can browse the latest statistics.
“Of course, this year that’s not possible, so we’re launching it virtually and making it available on our website.
“What all the statistics show is that, despite uncertainty surrounding Brexit and now of course the disruption of COVID-19, the red meat sector is hugely important to the Welsh economy. It’s the backbone of rural communities, and also employs large numbers in auction markets, processing and the supply chain, as well as supporting brands which are symbols of our nation’s high-quality food across the world.”

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