They don't go as far as the French but British farmers sure know how to moan when it comes to imports, ruthless buyers, tough store dealing, bargain prices, assurance costs and, yes, going bust. But have the recent efforts to pull the food chain together created better feeling? Gillian Law looks for signs of (perfect) harmony Farmers and supermarkets haven't been the best of friends in the past, to say the least. When The Grocer reported on food chain relationships two years ago, we discovered a lot of antagonism and misunderstanding on both sides, despite various government and industry initiatives to improve communication. So, have things got any better? Ian Gardiner, deputy director general of the NFU, thinks farmers are beginning to come to terms with selling to the supermarkets. And although initiatives from government and retailers help, the real driver has been harsh economic reality, he admits. "The tough times the pound has plunged farming into have made them realise they have to get closer to their customers ­ the retailers ­ if they're going to get hold of a greater share of the value," he says. "Not by blockading supermarkets, as some think, but by meeting those customers' requirements more closely. More than half of British farm produce goes to five or six retail outlets. Sensible farmers see they can no longer just produce their product and hope it'll sell. That's the road to ruin." There's been a dramatic improvement over the past five or six years, agrees NFU president Ben Gill. "That's typified by the fact we've got all the retailers signed to the British Farm Standard mark ­ they recognise the importance of it. It's simply been a matter of continual talking and explaining things. There was a point when some retailers said you don't need British agriculture at all, you can just import everything. "That's all very well in theory, but in practice nothing beats shorter supply chains for quality and value." It's an evolutionary thing, says David Hughes, professor of food marketing at Wye College, University of London, rather than something that can be fixed overnight. "Over the past 10 years, things have got better," he says. "The new generation of farmers is more commercially aware than the older guys. It's too late for some of them to change." Britain does have some "extraordinarily efficient farmers" today, he says, who have come to terms with globalisation and whose view of supermarkets is more progressive. "Those who learn to exploit the situation can do very well," Hughes argues. The problems are a historical hangover, he says, from the days when farmers produced what they liked producing and it was something of an irritation to them that they had to sell it. "They had some latitude because of agricultural policy ­ they really saw their market as Brussels," Hughes says. "A lamb producer in the early '90s got more returns from Brussels than from the market. That's changed and the better farmers understand that." Industry consultant Teresa Wickham was involved in the Strathclyde Food Project during the early '90s. "It was the first time the whole food chain had got together to talk and I think we achieved quite a lot," she says. Within a limited remit, yes, for the Strathclyde Project was really aimed at small food businesses, she says, and didn't fully reach the primary producers. The 1999 Food Project, chaired by Hazlewood Foods chairman Peter Barr, has taken things further. "For the first time, we got the NFU, the manufacturers, MAFF and the retailers in one meeting ­ and it nearly ended up in fisticuffs," says Barr. "But finally everyone started to work together on the major issues." Barr says it's no use everyone fighting their own corners. Initiatives such as the recent pig farmers' advertising campaign risk turning the public off altogether. "It's a global market and we have to work together," he argues. And it's no use just pointing the finger at retailers for selling imports. "I never thought I'd ever be defending the British supermarket," Barr sighs. "But they have backed the British farmer to the point where you could question the commerciality of it: they often buy British when imports would be cheaper." The '90s saw huge changes in the whole food industry, says Lord Jamie Lindsay, chairman of Assured British Meat. ABM has created a continuous chain of assurance for the meat industry but is now widening its remit to cover standards on all food products. It will be underpinning the new British Farm Standard mark. "There has been a huge amount of consolidation in all areas of the food chain," he says. "Everywhere except in farming itself, which [is still made up of] a large number of independent units that have little control and little leverage." Throughout the past decade, supermarkets grew in power and size, but that growth is now starting to slow, Lord Lindsay says, and increasing costs are getting pushed higher up the food chain to the farmers. However, both sides are making steps to improve the situation. "There's greater sensitivity among primary producers to the downstream priorities ­ farmers are starting to gear themselves to the needs of customers," he says. "There are three drivers: the retailers have gone back up the supply chain to arrange the quality and specifications they want; industry assurance schemes have helped to get whole chain buy-in; and economic pressure has helped focus farmers' minds." Patrick Davis, former head of Food from Britain, is now md of Group Cereal Services, the UK's biggest farming cooperative, and represents the interests of cereal producers. "Things have improved," he admits, "but there's still a long way to go." There are good examples in the horticultural sector of products being grown directly for the supermarkets, Davis says, but in other sectors, including his own, "there are still a lot of people growing grain and then hoping to sell it". Even when farmers have tried growing to order in the past, there can be a reluctance to continue. "It's once bitten, twice shy'," Davis says. "They put a lot of cost into growing what they're asked for and then get the same price as before." That's where partnership in a co-op can help, he says. With 800 members, Group Cereal Services has much more power than individual farmers and can initiate new projects. A recent success story is a specially grown grain for Warburtons Bakery. Group Cereal Services approached Warburtons two years ago with an idea for a new grain. Tests on 5,000 tonnes of the grain since grown have proved successful and Warburtons has ordered 30,000 tonnes for next year. So if relations are getting better, what can government, the retail trade and the farmers themselves do to keep going in the right direction? And how can they bring in those sectors that are still lagging behind? Industry group IGD has been running workshops to build farmers' understanding of consumers so that they know why the multiples are so demanding of their suppliers. As an independent body, IGD has had a very positive response to the initiative, says business manager David Hutchins. The workshops explain why it is necessary to respond quickly to an ever changing market and stress that cooperation along the food chain is essential. IGD is also helping put together a code of practice for the industry. Backed by Asda, Morrisons, Safeway, Sainsbury, Somerfield and Tesco, the move has come in response to a plea from agriculture minister Nick Brown and is aimed at improving practice before the Competition Commission imposes a regulatory code. Farmers really do want to work with their customers and are hungry for information on how they can do that, Wickham argues. From the moment she joined Safeway from the NFU, she says, she was bombarded with calls from farmers asking her to explain how the supermarkets work. "There's been a lot of confusion and confrontation because of that lack of understanding," Wickham says. "There's a lack of communication on both sides." The farming press hasn't helped either, she says, because it tends to ignore the whole retail issue in its coverage, "which is a missed opportunity". The tendency of farmers to blame supermarkets for their ills is natural, says Hughes, because the supermarkets are so much bigger and more powerful. The situation is exacerbated by the increased popularity of convenience foods, he says. Farmers today produce raw material to which other people add value "and the end prices can seem quite unfair to them". What they must do is learn to recognise where money is to be made and where to cut losses. Meanwhile, both farmers and multiples need to speed up the two-way flow of information so that each side can understand what's going on. Hughes is certainly no apologist for the supermarkets: "They're very big businesses and the lynchpin of the industry, but huge commercial size doesn't necessarily bring great wisdom or breed humility. They can be bullies and they can be arrogant. Constraining that dark side of their nature is one thing they should learn to do." Shadow agriculture minister Tim Yeo says he has some sympathy with farmers because the multiples do have enormous power and farm incomes have certainly fallen relative to prices instore. "But I also recognise that retailers are only doing what their consumers demand and they've done a very good job of it," he says. "My advice to farmers has always been the retailers have become rich and powerful through paying attention to consumer trends ­ farmers need to do the same'. Retailers are farmers' biggest customers, so they have to give them what they want." Yeo suggests one way to reduce the tension would be to publish regular price comparisons of farm gate and retail prices for a basket of groceries, with some explanation of the difference. A greater understanding of the retailers' cost structures might help farmers to work with them, he says. Another development that can give farmers an insight into retail is the growing number of farmers' markets. It all began with trial markets in Bath in 1997 and there are now 200 regular markets throughout the country. A National Association of Farmers' Markets is being launched officially this week. Co-ordinator Charlotte Bullock says the association wants to be a representative body, with the power to lobby where necessary, but also simply to keep the movement under some sort of control. An accreditation scheme is already needed, she says, because markets have sprung up where some sellers are not primary producers. A true farmers' market, Bullock argues, covers a defined local area and is made up of primary producers selling their own produce. This allows customers to talk to the people who actually grew and processed the food. Just as importantly, it gets the farmers talking to consumers. Instead of an anonymous, fickle' consumer, the end customer is a real person with real concerns. In an attempt to increase the amount of local produce sold in supermarkets, the Countryside Agency last week held a meeting with senior supermarket management to discuss what can be done. Speaking before the meeting, farming and forestry manager Richard Lloyd said he had no preconceived ideas but just wanted to see if common ground could be found. Sales of local produce could be a commercially sound move, he argued, as well as being good for the farming industry, for consumers and for the countryside generally. According to Wickham, the Countryside Agency is stepping in to fill an important role. "They've been asked by government to act as an umbrella', pulling together the individual initiatives going on around the country," she says. "There are a lot of intiatives bubbling away. They need to be made into a great lake if we're to improve consumer awareness. At the moment there's a whole mish-mash of people doing much the same thing." The future of farming will see increased polarisation, says Hughes. "There will be unequivocally commercial farmers who only do it to make money and stop if it's not making the returns they want, and lifestyle' farmers who will, perhaps unconsciously, discount their income in order to maintain the lifestyle," he argues. Those latter farmers, he says, will probably have to take on other work to supplement their incomes and will increasingly become stewards of the countryside', perhaps funded by taxpayers' money. "I'd certainly rather have my taxes pay them for that than to grow wheat for more than it's worth," he says. Hughes predicts that price will become less important for farmers in future and return on investment will be more vital. "Over the next decade there will be an increase in supply based agreements, with exclusivity clauses and loyalty traded for returns over the medium term," he says. "Instead of weekly negotiations on price, there'll be annual agreements on returns." {{FEATURES }}