Potato production

Supermarket bosses have strongly denied exploiting farmers during the cost of living crisis, after being accused by MPs of “bullying” the supply chain to prop up their profits.

Senior figures from a raft of the UK’s leading supermarkets gave evidence to the Environment, Food & Rural Affairs (Efra) Committee’s ongoing inquiry into fairness in the supply chain, yesterday.

MPs on the committee accused supermarkets of not paying fair prices to farmers so they could keep prices down for shoppers during the height of the cost of living crisis.

However, supermarkets claimed they had invested tens of millions and worked with suppliers on flexible arrangements to help them through the crisis, as well as measures to help them cope with this year’s poor growing conditions because of high levels of rain.

“The last 18 months has been particularly challenging with input costs right across the supply base being challenged, not just the farming sector,” said Dom Morrey, commercial director for fresh food at Tesco.

“That has led to unprecedented discussions around price.

“Those talks have been open and transparent and we’ve responded quickly to address them and pay fair prices to our suppliers when they have asked for it.

“There are many examples across the past two years where we’ve responded to things that weren’t planned for.”

Tesco had given £12m in funding to support pig farmers and £20m during the crisis facing egg farmers, he said. The latest discussions included flexing the contract with long-term potato supplier Branston to help it cope with the impact of this year’s cold and wet weather on crops.

Waitrose commercial director Charlotte Di Cello said supermarkets had faced “extraordinarily challenging” market conditions affecting the supply chain during the cost of living crisis, but that it had led to greater levels of co-operation with suppliers.

“We’ve really lent on the relationship we’ve got with our suppliers and farmers,” she claimed.

“We have very transparent deals, which mean we will always pay the cost of production and help farmers make a living.”

However, MPs put to supermarket leaders claims made at a former hearing by Guy Singh-Watson, founder of Riverford Organic Farmers, that farmers were being routinely “bullied” by supermarket buyers in negotiations.

Asda chief commercial officer Kris Comerford said supermarkets were prevented from bullying suppliers by GSCOP and said Groceries Code Adjudicator Mark White had been in close contact with supermarkets and suppliers to ensure fair dealing.

“We have a very effective and active regulator in the form of the Groceries Code Adjudicator,” said Comerford.

“He speaks to us at executive level frequently and all of our suppliers know how to get hold of him. We would take any accusation of bullying very seriously.”

Several of the supermarkets said they supported farming unions who have called for measures, including changes to product specifications, to help them cope with the weather conditions.

Lidl GB chief commercial officer Richard Bourns told the committee: “I’m in complete agreement with the approach. It’s one of a number of measures we’ve taken to support the sector.

“We’ve amended specifications for parsnips and for carrots and swedes, among other things, in order to enable our producers to maintain their avenue to market.

“We don’t sell wonky lines so that’s a broadening of the specs of our core products.

“This is not the first instance of us working with our supply chain.”

Asda’s Comerford added: “It’s always a fine balance between availability on the shelf and what customers are prepared to buy.”

Later in the hearing, MPs turned their fire on supermarket profits, attacking retailers for posting a 97% surge in profits while evidence from consumer group Which? shows almost four out of five customers were extremely worried about food price inflation.

Barry Gardiner, Labour MP for Brent North, said: ”They [Which?] said one in five households are going without some foods and 13% of households have skipped meals.

“We have evidence that the top three supermarkets, in the post-pandemic years showed a 97% rise in their profits.

“In March 2023, the annual rate of food price inflation was the highest it had been for 45 years.

“This year on top of that there has been a further increase of 4%. Prices keep on going up.”

Labour MP for Liverpool, Ian Byrne, claimed food inflation was contributing to the massive rise in shoplifting.

Sainsbury’s chief food commercial officer Rhian Bartlett said: “We do see over multiple decades that shoplifting moves up and down with economic progress.”

But she defended the £701m profits Sainsbury’s posted, saying it had been hit with £1bn in cost price increases in the past year and was making only 3p for every £1 spent.

“We have been working really hard to try and manage the cost of living crisis,” she said.

Tesco’s Morrey added: “We have reduced the price of over 4,000 items in the past year by an average of 12%. We have been doing the right thing by cutting prices wherever we can and by paying our staff a good wage.”