UK fruit & veg growers have told The Grocer that they have been threatened with delistings from some of the major multiples if they ask for any more price increases to meet cost of production rises.
One industry source told The Grocer that retailers had “simply batted off any requests for cost increases post the Middle East”, which was particularly challenging for crops that were harvested in summer as pricing was done pre-season.
They added that the assumption of the retailers seems to be that prices are “bound to go back down again which we all know never really seems to happen, does it?”.
British Berry Growers chairman Nick Marston said it was “disappointing” that soft fruit sector growers were reporting that despite clear evidence of cost increases due to the conflict in the Middle East, retailers were not engaging on price increase discussions.
According to the latest data from Andersons, agricultural input inflation is at 8.6% annually, while agricultural output prices continue to run 2.1% lower than last year.
One major grower told The Grocer that they had seen production cost increases of between 5%-6% and 12% depending on the crop, largely driven by diesel prices.
However, only a couple of their retail partners had offered any sort of inflationary increase with most saying no to price rises and a few threatening delistings.
“It seems to me the retailers have really stepped up their unwillingness to reflect any inflation in the market,” they said. “There seems to be some real price pressure being pushed back onto the farmers and growers.”
The grower added this was made more difficult by the British season ending earlier this year, bringing European supply on to shelves earlier. However, retailers were refusing to pay “European prices because you should still be in British”.
Ged Futter, director at The Retail Mind, said he was also hearing that retailers were “being stubborn with regards to inflation” and warned it was a “bit short-sighted to threatened to delist”.
“All the talk is about dreadful harvests everywhere,” he said. “If that’s the case it means there isn’t enough to go round!”
It comes as a study from The Retail Mind revealed that while more than 85% of suppliers surveyed had passed on inflation to retailers this year, only one in five of those had been able to recover their costs.
British Retail Consortium director of food and sustainability Andrew Opie said it had been a “difficult year” and that “price pressure is enormous in supermarkets at the moment”.
“I’m really confident that where there’s a long-term strong relationship between groups of farmers, processors, packers and supermarkets, that’s going to continue, and we’ll see the investment going in,” he added.
“I expect all retailers to follow the GCA’s seven golden rules when conducting cost price negotiations, which I introduced to ensure suppliers can run their businesses without excessive risk,” said Groceries Code Adjudicator Mark White. “If a retailer delists a product, it must comply with the Groceries Code, including by providing reasonable notice.
“Any supplier with concerns about non-compliant de-listing can contact the GCA confidentially.”
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