Why is it so difficult to get some parliamentarians to understand how the world works?
“This House notes that large supermarkets sell bread at a price which is below cost in order to attract customers believes that this practice passes on the risks and costs to suppliers and is detrimental to the working conditions of those working in the baking industry.” That’s part of an Early Day Motion seeking MPs’ signatures now.
Incredible! At a time when all sorts of costs, including many set by politicians, are rocketing, supermarkets are being criticised for keeping down the shop price of bread! The great myth here is that, somehow, discounting is harming producers. It isn’t. It’s irrelevant. What matters to the bakery isn’t the retail price but how much it gets for its goods. If, as part of the competitive battle, a retailer wants to use some of its margin to cut the price of bread for under-pressure households - that’s good.
The authors of this EDM clearly don’t understand how the supply chain works - and they’re not unique in that. I listened to the Commons debating food prices for three hours. The word I didn’t hear was ‘customers’.
Publishing the inflation figures recently, the ONS recognised that downward pressure on inflation is coming from “falls in the cost of food due to significant and widespread discounting by supermarkets” (as well as good harvests for some produce).
Yet most MPs wheeled out their anti-supermarket, pro-Adjudicator prejudices, showing unrestrained enthusiasm for adding compliance costs that can only make it harder for the large grocers to go on delivering desperately needed value to shoppers.
Why do they find this myth of the downtrodden farmer so unshakeable? Only last week, Defra’s farm income figures revealed a wonderfully successful performance for several key parts of UK farming - with dairy farmers seeing incomes up 27% over the past 12 months. Even the NFU admitted the “strong year” forecast is “in contrast to the performance of the wider economy.”
Retail is pro-farmer. The direct relationships that many of our members have developed are about paying more to farmers who produce what customers want. Retailers pay the highest prices in the market for milk. Currently, the top 12 best-paying milk contracts are all contracts paid by retailers. It’s a chart retailers have topped for years.
Through dedicated supply chains retailers have led the UK and the world in building long-term sustainable relationships. But how about a proper debate that acknowledges supermarkets do not ‘control’ the market. Indeed, it seems to me that the customer is king.
How about recognising that supermarkets are not the only buyers of farm output, that retailers compete hard with manufacturers to win and retain the best suppliers (especially SMEs), and that on many key issues, such as country-of-origin labelling and stopping illegal eggs coming to the UK, they’re well ahead of the rest of the food industry.
I’m all in favour of debate and scrutiny but why are some politicians so resistant to the facts? Millions of shoppers (also known as voters) deserve better.