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Supermarkets: Farmers

Answer

I have been asked to reply on behalf of the Department for Environment, Food and Rural Affairs.Grocery retailers purchase relatively little directly from UK farmers. For example, most fresh produce is supplied to grocery retailers through intermediaries such as packers, processors and fresh food wholesalers. Six large grocery retailers told the Competition Commission that the combined total value of their direct purchases from farmers amounted to approximately £295 million in 2006. This compares to £14.3 billion in total agricultural production annually and £16.7 billion in fresh food sales by these grocery retailers in total. However, the Competition Commission did find that all large grocery retailers have extensive buyer power in relation to some of their direct suppliers, and this allowed them to transfer ““excessive risks or unexpected costs”” to some of their suppliers. We are committed to setting up the groceries code adjudicator as soon as possible, to help remedy this imbalance, although the GCA will not have a direct remit over the price paid to the supplier.The Government believe that the market must drive both production and price levels and that this will ultimately help develop an efficient, profitable sector that can compete on the global market that we now operate in. Prices are a commercial matter, agreed by private negotiation within the parameters of competition law. Free and fair competition is the key to a healthy market. Retailers should not be prevented from securing the best deals and passing on benefits to consumers.

Secondary information

Type

Written question

Reference

97074; 541 c613-4W

Session

2010-12

Subjects

Prices Milk

Link

View this Written question on www.publications.parliament.uk