Retail fears for farmers

For just over 10 years now we have been supplying the famous orange supermarket with our milk.

So, as you might imagine, it was with some trepidation I read the news that Sainsbury’s is to merge with long-term rivals ASDA and leap-frog Tesco to become the biggest supermarket retailers in the UK.

Understandably this has been met with grave concern from the agricultural community, especially after it was announced that shoppers could expect a 10% discount in the overall cost of their weekly shop.

The consensus is that those savings will be made at the farmers’ end of the supply chain.

But can we really be too shocked by the news of this merger? Does it not paint a picture of the wider issues around where consumers choose to do their shopping in 2018?

Rewind around a decade ago, just before the financial crisis. All four of the main players in the UK supermarket game at the time were booming and large megastores were popping up all over the place.

This was to service a consumer base with disposable incomes that in general was loyal to one store and would make the trip there once a week.

While there was good competition between these shops at the time, they were all operating on very similar models and there appeared to be enough room for them all to operate comfortably.

Fast forward to 2018 and the situation couldn’t be much different. Even 10 years after the financial crisis consumers are still feeling the pinch on incomes, and the massive growth of the German retailers and others means they have ditched their previous loyalties and are instead seeking out the cheapest deals, regardless of the name above the door.

This change in consumer trends was largely unforeseen by the original top four supermarkets and I believe this news of a potential merger is not as out of the blue as some are making out.

Instead, I’d say it is a delayed reaction from the parties involved to the changing circumstances around them.

The truth is that as long as the British consumer is demanding cheap food, then the supermarkets will do all they can to accommodate them.

Once again it comes down to the majority of consumers’ main concern being getting what they want at the cheapest possible price, and other concerns such as provenance and quality taking an increasing back seat.

And that continues to be one of the biggest threats to UK agriculture as we approach the post-brexit world.

So while the teams at ASDA and Sainsbury’s (or Sasda) are starting to figure out how they’ll ever get orange and green to work out ok, we as an industry are again faced with the question of how do we get the great British consumer to value our products enough to pay a fair price?

Picture: Gareth Jennings. David Lawrie of Cuthill Towers farm, Milnathort.