NFU president Peter Kendall has called on EU policy makers to tackle the power imbalance in supply chains, to help farmers become more competitive. In a speech delivered to MEPs, European Commission officials and other stakeholders in the European Parliament, Mr Kendall said EU institutions should work together to improve farmers’ bargaining position.

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His statement came just days after the BBC’s Panorama program revealed that, not only are many of the big supermarkets squeezing farmers’ margins to fund their ‘price wars’, but some are also engaged in practices which mislead consumers, such as offering multi-buy deals which end up more expensive and raising prices only to drop them and advertise the savings.

Mr kendall said, “During times of economic hardship it is important to remember how important the agri-food sector is to the EU economy. We estimate some 40 million people – or one in six jobs in the EU – depend on agricultural production. The EU agri-food sector offers massive potential to stimulate further growth, create jobs and opportunities especially in rural areas. But it can only do so if we have fair, functioning supply chains.

“The reform of the CAP offers some opportunities to help strengthen the position of farmers in the market place. But going further, the EU needs to build on Member State initiatives such as the Grocery Supply Chain Code of Practice in the UK and consider how abuse of dominant market positions can be dealt with at an EU level.”

He went on to call for action to improve supply chain relationships, restructuring the supply chain along more equitable lines.  He concluded, “I believe the EU Commission will need to go further and consider the use of legislation to prevent bad practices.”

In the BBC’s Panorama program, Richard Perks, a retail analyst, questioned the notion of the ‘price war’, stating that advertised cost-cutting exercises can amount to nothing more than a cynical marketing ploy to boost the supermarkets profits, sometimes at a cost to suppliers and consumers, “If there was a price war going on at the moment we would have seen profits falling, or we would have severe warnings and that is just not happening. The name of the game is to be as clever as possible in how you promote and how you use your discounts and how you attract your customers.”

Commentators from a range of stances have called for supermarkets’ powers to be reined in. The largest four retailers in the UK account for 68 per cent of sales in the grocery market. Farming representatives, including the NFU have mounted a concerted campaign to ensure farmers are protected in the face of large retailers who are wont to use questionable business practices. The union has called for more punitive powers to be accorded to the supermarket ombudsperson, a role the government has promised to create to enforce the grocery supply chain code of practice.

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