27 May 2009

3 minute read

Europe

The summit, being held in Edinburgh today (Wednesday 27 May 2009) has been themed "Stability, Sustainability and Profitability". All parts of the dairy supply chain were invited by the Scottish Government to attend. While the dairy farming and milk processing sectors are well represented, the only major retailer in attendance will be Morrisons. In contrast, Tesco, Asda and Sainsbury refused to participate and even the umbrella organisation for major retailers, the British Retail Consortium, declined to attend. All have cited issues relating to competition law, described by NFUS as a complete ‘red herring’ given that the agenda for the summit has been cleared by Scottish Government lawyers, who will also attend the meeting.

NFU Scotland believes that the decision of most major retailers and their representative body to snub the Scottish dairy summit must galvanise all Scottish politicians into supporting the clear and urgent need for an Ombudsman to police the grocery sector in the UK.

NFUS President Jim McLaren said:

“This summit’s ambition was to set out a platform on which all parts of the dairy chain in Scotland – farmer, processor and retailer – could build a profitable future. That ambition has been undermined by the deeply disappointing refusal of Tesco, Asda and Sainsburys to participate. I congratulate Morrisons for being constructive enough to at least sit round the table and it is a pretty desperate state of affairs that their competitors have turned their backs. Given the crisis of confidence amongst Scotland’s dairy farmers, this lack of willingness of key major retailers to engage with other parts of the dairy supply chain to secure a better future for all is disrespectful and borders on belligerence.

“This smacks of retailers flexing their muscles, sending a clear message to all politicians that they do not need to be held to account for the way they go about their business. I believe they have scored an own goal and we now need all Scottish politicians to unite behind the urgent need for an Ombudsman to be established in the UK to police the grocery sector.

“The biggest supermarkets have all rejected the current proposal from the Competition Commission on the creation of an Ombudsman. The refusal of Tesco, Asda and Sainsbury to participate in this milk summit must surely show to politicians in Holyrood and Westminster that if major retailers will not willingly participate in the creation of an Ombudsman or even discuss these issues, then legislation is required to drag them to the table.

“Retailers account for 80 percent of all grocery sales in the UK and with great power must comes great responsibility. We know that the profit margins being made by major retailers on items fresh milk and quality cheese are soaring and contributing to the healthy profits being reported in the retail sector.

“By comparison, milk price cuts at the start of this year mean that most dairy farmers in Scotland are receiving a milk price that is below the cost of production. The sector does have some good news stories. Some retailers have gone some way to protecting their supplies of fresh liquid milk through improved relationships with dairy farmer suppliers. But those principles need to cut across all dairy products, including cheese, butter, cream, yoghurt, dairy desserts – even probiotic drinks.

“The purpose of this summit was not to berate supermarkets over their margins but to constructively discuss how all parts involved in the production of milk and dairy products – from the milking parlour to the shop shelf – could benefit from the profitability that clearly exists in the dairy sector. If major retailers are unable to sign up to that, then their various company pledges on corporate and social responsibility will be seen by consumers to be little more that spin.”

TheCattleSite News Desk