How the supermarkets came to own UK agriculture

[Jackov Altraids]

I don't know much about horticulture, but I guess it started there. Fruit and vegetable contracts being offered which led to a consolidation of producers and limited marketing opportunities.
Enticing contracts which offered some safety from the ever volatile pork prices means there is virtually no market for pigs other than selling direct.
Chicken/ eggs are almost all supplied under full control of the supermarkets.
Before you think about going into dairy, you need to ask a processor [and by default, a supermarket] whether you can supply them. That would seem the ultimate control, especially with the threat of any contract being withdrawn if you don't jump through any hoop they might dream up.
This leaves beef and sheep as the only sectors with a relatively transparent 'market'.

Why do you think there is a sudden rush to bring in controls on transportation?
It is fine to transport a cow here from Germany to milk, or move a horse anywhere in the world to race. Banning moving an animal for a couple of hours to fatten or slaughter is not for animal welfare reasons.
The clue is in Tescos push to stop it's dairy farmers transporting any animals to anywhere but the nearest slaughter house. They want to stop live markets and have full control.
Just consider the implications of only being able to use your nearest abattoir. That is where we are headed.

Without buying any farms, risking any capital or employing any farmers, the supermarkets control the majority of the land in the UK.

 

[Kiwi Pete]

Hard to fault any of that .... unsure if "like" was the right choice.
At the very least it gives you job security, whether or not it provides enough profit to continue the more intensive production models remains to be seen

 

[jackrussell101]

I don't know much about horticulture, but I guess it started there. Fruit and vegetable contracts being offered which led to a consolidation of producers and limited marketing opportunities.
Enticing contracts which offered some safety from the ever volatile pork prices means there is virtually no market for pigs other than selling direct.
Chicken/ eggs are almost all supplied under full control of the supermarkets.
Before you think about going into dairy, you need to ask a processor [and by default, a supermarket] whether you can supply them. That would seem the ultimate control, especially with the threat of any contract being withdrawn if you don't jump through any hoop they might dream up.
This leaves beef and sheep as the only sectors with a relatively transparent 'market'.

Why do you think there is a sudden rush to bring in controls on transportation?
It is fine to transport a cow here from Germany to milk, or move a horse anywhere in the world to race. Banning moving an animal for a couple of hours to fatten or slaughter is not for animal welfare reasons.
The clue is in Tescos push to stop it's dairy farmers transporting any animals to anywhere but the nearest slaughter house. They want to stop live markets and have full control.
Just consider the implications of only being able to use your nearest abattoir. That is where we are headed.

Without buying any farms, risking any capital or employing any farmers, the supermarkets control the majority of the land in the UK.

A very insightful post and unfortunately on the mark.

Possible cereal markets operate with a little transparency. Certainly more than milk veg pigs etc.

I wonder if the internet may open up opportunities for farmers to sell direct in the future more. There was always talk Amazon were going to get into food.

Next door neighbours a horticulturist and says Lidl and Aldi are the best to deal with by a mile compared to the big 4, especially Sainsbury's.

 

[Tarw Coch]

Hard to fault any of that .... unsure if "like" was the right choice.
At the very least it gives you job security, whether or not it provides enough profit to continue the more intensive production models remains to be seen

As for Job security, fail to comply with jumping through the hoops and you could lose your contract.
I believe Tesco we’re comparing their milk suppliers annually, and those at the bottom are out,
If you can’t get in elsewhere you could be without a home for your produce.

It could be argued that those in a job have to comply with their employers wishes or they are out too but it is highly unlikely they will have tens, more likely hundreds of thousands tied up in assets to allow them to do that job and it’s probably much harder to get rid of an employee without claims of unfair dismissal

 

[Bogweevil]

Failure to support wholesale markets with top quality produce was a grave error by the horticulture industry undermining the main price setting mechanism.

Failure to embrace producer organisations was another error.

Lessons there for farmers?

 

[Bramble]

Tesco benchmark (based on KPI's not financials) all their dairy farmers and drop the bottom 5% every year.

The loss of the Tesco premium has cost a nearby farmer his dairy herd and most of his farm

 

[topground]

The various assurance schemes ( Red Tractor) will be the mechanism the British Retail Consortium seek use to bring the beef and sheep sector under their complete control. They seek vertical integration which is their prefferred business model where they dictate price and do not have to compete in an open and transparent market.
Whole Life Assurance will be the way that Supermarkets see their control of the market being delivered through Red Tractor. By a simple stroke of the pen an animal will not be whole life assured if it moves through a market and at a stroke the livestock markets are no longer viable. Supermarkets determine what moves where and when.
It has happened with the pig and poultry sector.
Beware it is but a short step for livestock farmers to become serfs at the mercy of the robber baron supermarket cartel.

 

[delilah]

Market share is the root of all evil.
The concentration of market share in food retailing was happening by stealth since WW2, as improved road networks allowed ambitious retailers to spread beyond their home turf.
The transformative years, however, were on Maggie's watch. At the height of her liberalization frenzy she was warned by one of her senior aides "Uncontrolled competition leads to a monopoly". She ignored him, and hence the market was left to get on with it.
That's why food mirrors banking and the utilities. A cartel. That presents a veneer of competition to the outside world, but behind closed doors runs the country. Too big to fail.
You can change it, but only by working with your allies are in the environmental and social justice movement.
https://thefarmingforum.co.uk/index.php?threads/tescorona.313517/

 

[Kidds]

Failure to support wholesale markets with top quality produce was a grave error by the horticulture industry undermining the main price setting mechanism.

So they should have taken a big price cut to supply the wholesale market who in turn supplied the greengrocer who was never going to be able to compete on price with the supermarkets? The trend for UK shoppers to shop in supermarkets put the greengrocers out of business so who do the horticulture industry supply to then?
Or are you saying we should have forced the supermarkets to source only through the wholesale markets?

For what it's worth, we stuck with the wholesale markets and hardly ever supplied the supermarkets directly. We concluded two years ago we were wasting our time and gave up altogether.

 

[ste stuart]

Whilst I agree with much of what has been said in a lot or respects do farmers think they deserve it any different? They won’t stick together as one united front and allow themselves to get walked all over.
It said time and time again but the french wouldn’t stand for it

 

[icanshootwell]

It,s another nail in the coffin for the smaller producer who don,t want to be tied into these schemes, before long the only outlet will be farmers markets. We all know it,s a numbers game for your chicken, pig producer, if supermarkets control beef and sheep as well, i for one won,t be fattening 1000 cattle just to make the no,s work.

 

[DrWazzock]

How many grain merchants are left? Maybe just two big players here. If they wanted, they could insist everything is grown on contract with a bespoke input package that you purchase from them as part of the deal. Not quite there yet, but edging closer. Same with beet. Only one buyer. Vertical integration indeed. What does that leave us with? A lot of capital tied up in production assets and often less than min wage. Certainly the commercial environment in which we operate has changed beyond all recognition.
I can only see direct sales helping maybe smaller niche producers who can set up shop near a busy main road.
Or maybe we need to set up a nationwide network of farmer owned retail outlets?
I have always said if we had a Union or cooperative that had a bit more gusto rather than just a willingness to please the supermarkets then we might be in a better place.
Other than that it might well the case that environmental schemes for the government actually offer us more independence and lower risk than commercial commodity production. Ironic that working for the state offers us more freedom and security than the private sector.

 

[Hilly]

I don't know much about horticulture, but I guess it started there. Fruit and vegetable contracts being offered which led to a consolidation of producers and limited marketing opportunities.
Enticing contracts which offered some safety from the ever volatile pork prices means there is virtually no market for pigs other than selling direct.
Chicken/ eggs are almost all supplied under full control of the supermarkets.
Before you think about going into dairy, you need to ask a processor [and by default, a supermarket] whether you can supply them. That would seem the ultimate control, especially with the threat of any contract being withdrawn if you don't jump through any hoop they might dream up.
This leaves beef and sheep as the only sectors with a relatively transparent 'market'.

Why do you think there is a sudden rush to bring in controls on transportation?
It is fine to transport a cow here from Germany to milk, or move a horse anywhere in the world to race. Banning moving an animal for a couple of hours to fatten or slaughter is not for animal welfare reasons.
The clue is in Tescos push to stop it's dairy farmers transporting any animals to anywhere but the nearest slaughter house. They want to stop live markets and have full control.
Just consider the implications of only being able to use your nearest abattoir. That is where we are headed.

Without buying any farms, risking any capital or employing any farmers, the supermarkets control the majority of the land in the UK.

It only happens because farmers allow it, then signing contracts with them and marketing survey etc etc big problem.

 

[bluebell]

when we had a pub some 20 odd years back we had a choice of about 6 major beer brewers to buy from plus lots of small sundries suppliers in small vans? now today thats all gone every county had major regional brewers ? wholesale trade like to many other businesses has gone ?

 

[Hindsight]

I don't know much about horticulture, but I guess it started there. Fruit and vegetable contracts being offered which led to a consolidation of producers and limited marketing opportunities.
Enticing contracts which offered some safety from the ever volatile pork prices means there is virtually no market for pigs other than selling direct.
Chicken/ eggs are almost all supplied under full control of the supermarkets.
Before you think about going into dairy, you need to ask a processor [and by default, a supermarket] whether you can supply them. That would seem the ultimate control, especially with the threat of any contract being withdrawn if you don't jump through any hoop they might dream up.
This leaves beef and sheep as the only sectors with a relatively transparent 'market'.

Why do you think there is a sudden rush to bring in controls on transportation?
It is fine to transport a cow here from Germany to milk, or move a horse anywhere in the world to race. Banning moving an animal for a couple of hours to fatten or slaughter is not for animal welfare reasons.
The clue is in Tescos push to stop it's dairy farmers transporting any animals to anywhere but the nearest slaughter house. They want to stop live markets and have full control.
Just consider the implications of only being able to use your nearest abattoir. That is where we are headed.

Without buying any farms, risking any capital or employing any farmers, the supermarkets control the majority of the land in the UK.

My view. It was the veg sector where it started 1984 or thereabouts. Bit earlier maybe. I was fresh out of college. I attended a meeting with my boss of local farmers pulled together by a local veg wholesaler/grower (so my boss could take a wee drink and I would drive him home). The wholesaler/grower was sounding out the local farmers about setting up a co-operative as he intended to supply JSainsbury who wanted him to invest in cool chain distribution. And EEC FEOGA funds as the vehicle to set up the packhouse and cold storage. As a fresh young lad I listened intently. I recall vividly the farmers all saying the supermarkets would not be satisfied until they owned their land. I recall the next day thinking why would they need to own land if they could control the market. It was a fascinating time.

 

[Hindsight]

Market share is the root of all evil.
The concentration of market share in food retailing was happening by stealth since WW2, as improved road networks allowed ambitious retailers to spread beyond their home turf.
The transformative years, however, were on Maggie's watch. At the height of her liberalization frenzy she was warned by one of her senior aides "Uncontrolled competition leads to a monopoly". She ignored him, and hence the market was left to get on with it.
That's why food mirrors banking and the utilities. A cartel. That presents a veneer of competition to the outside world, but behind closed doors runs the country. Too big to fail.
You can change it, but only by working with your allies are in the environmental and social justice movement.
https://thefarmingforum.co.uk/index.php?threads/tescorona.313517/

I thought the rise of supermarkets as Oligopolies and the retail market is an Oligopoly market. May seem and have some aspects of a cartel. Pedantic point really, so do ignore. Cheers

 

[Jackov Altraids]

It only happens because farmers allow it, then signing contracts with them and marketing survey etc etc big problem.

As @Kidds demonstrates above, it happens because a few farmers allow it for a short lived benefit. It is then a quick process of the rest being forced to join or be pushed out.
I believe Waitrose and Tesco already have a reasonably small number of producers contracted to supply the majority of their lamb and the current push by RT and the government will 'seal the deal'.
I fear the problem lies in the fact that many of us who work very long hours, have relied on our union to look after our industry. They have failed or been complicit in it's ruin.

 

[maen]

I think the coffee had been smelt!
If you take most of agriculture, it is being operated at less than commercial terms. Return on capital is very slim.
If you take eggs production, often once the housing and equipment is written off Packers will wish to drop the price. Then they entice new housing on better terms. This should be the time in the lifespan of a business for the best return. it is similar in other agricultural supply markets.

The fault is in the CONTRACTS. When considering to invest farmers are only given a supply contract, price is never mention or a pricing mechanism for that matter.

In the commercial world price and long term return on capital invested would be the only reason to invest. The retailers are securing supply at a cost they could never do it for themselves. Do not sell yourself short by doing so. The retailer gets access to your capital base at no cost to themselves.

 

[Wombat]

It only happens because farmers allow it, then signing contracts with them and marketing survey etc etc big problem.

Over the years farmers have spent so much time arguing over the size of their pie slice not the size of the pie, so this was always the way things would go.

 

[holwellcourtfarm]

I think the coffee had been smelt!
If you take most of agriculture, it is being operated at less than commercial terms. Return on capital is very slim.
If you take eggs production, often once the housing and equipment is written off Packers will wish to drop the price. Then they entice new housing on better terms. This should be the time in the lifespan of a business for the best return. it is similar in other agricultural supply markets.

The fault is in the CONTRACTS. When considering to invest farmers are only given a supply contract, price is never mention or a pricing mechanism for that matter.

In the commercial world price and long term return on capital invested would be the only reason to invest. The retailers are securing supply at a cost they could never do it for themselves. Do not sell yourself short by doing so. The retailer gets access to your capital base at no cost to themselves.

Interesting to contrast that with the "negotiations" around building new nuclear power stations where our government agree to underwrite the cost of construction and guarantee both a level of demand and an escalating price for output long term.....

Effect of strong buyer/ weak seller vs strong seller/ weak buyer.