Tesco living in parallel universe, say farmers
Food producers hit back at boss of UK’S biggest supermarket after claim they are profiteering
FARMERS have accused the chairman of Tesco of living in a “parallel universe” after he suggested suppliers were gouging prices.
Minette Batters, president of the National Farmers’ Union (NFU), said food producers were “baffled” by claims of profiteering, insisting that soaring energy bills were to blame for their products costing more in shops.
It came after Sir John Allan, the chairman of Britain’s biggest supermarket, said the company had “fallen out with suppliers” and was trying “very hard to challenge cost increases”. He accused suppliers of taking advantage of surging inflation by raising prices.
The comments sparked a furious war of words with food companies and farmers. Ms Batters told the BBC’S Wake Up to Money podcast: “It was almost like he was living in a parallel universe.
“We are seeing wholesale gas prices 650pc higher than it was back in 2019 and the cost inflation on the back of that has been unprecedented. It has dwarfed any price increases to date.” Karen Betts, chief executive of the Food and Drink Federation, told BBC Radio 4’s Today programme: “Supermarkets are very tough on this. Most supermarkets are asking suppliers to open their books to justify exactly line by line where the cost increases are coming in.
“I think it is difficult for Tesco to come out and say they think companies might be profiteering. I think they absolutely have the evidence for every single price rise.”
Dr Judith Bryans, chief executive of Dairy UK, said dairy farmers and processors had experienced inflation “at every level”, including wages, packaging, transport and energy. She added:
“Dairy businesses have done all they can to absorb as much of the increased costs, but there is a very real limit and eventually costs have to be passed upwards through the supply chain.”
Tesco was caught in a row over price rises with Heinz last year, which saw the retailer temporarily halt sales of beans and ketchup. During an appearance on Sunday with Laura Kuenssberg, Sir John said there had been “very robust discussions” between Tesco and a number of suppliers.
He added: “We didn’t have Heinz soup and Heinz tomato ketchup for a spell last summer when they tried to put through a large price increase at that stage. That was eventually settled.
“We have fallen out with other suppliers. We try very hard, I think, to challenge cost increases.”
Retail analyst Ged Futter, a former senior buying manager at Asda, said he “couldn’t agree more” with Ms Batters’ comments. He told BBC Radio 4’s Today programme: “It is quite outrageous to be suggesting that suppliers are actually putting prices up higher than this. They are working as hard as they possibly can not to have to go there [and put up prices] but when your costs are increasing then you have to, otherwise, frankly, your business will go bust.
“What [Mr Allan] is failing to recognise is we are seeing inflation at levels we have never seen before. When prices are going up by 35pc, 45pc, 50pc in some categories, then that does mean that on shelf, it is realised at very high prices. What he also seems to forget is that the price on the shelf is the responsibility of the retailer, not the supplier.
“It is quite disingenuous to be talking about suppliers profiteering at this time.”