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From the editor: Supermarket mega-merger poses serious questions for producers

The rise of supermarkets over the past 50 years and the power they wield has done as much to shape the fortunes of UK farming as any other factor.

Their rise has led to a shift in consumer buying habits, the closer of many local abattoirs and small retailers such as butchers, and has stretched the length of the supply chain.

 

But in recent years the power of the big four - Tesco, Sainsbury’s, Asda and Morrisons – has been challenged by the rise of Aldi and Lidl, and the announcement of a proposed mega-merger within the sector comes as the large retailers seek to redefine themselves for the future.

 

Sainsbury’s chief executive Mike Coupe might believe his firm’s merger with Asda will leave him ’in the money,’ as he sang before a TV interview this week, but many farmers will be concerned that more buying power at the top of the supply chain will put an extra squeeze on returns for producers and processors further down.

 

Decisions to make mergers as big as this are not done on a whim; they are done for commercial reasons and there will surely be a belief within the Sainsbury’s management team that cost savings can be gained from their supplier base in future.


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This poses fundamental concerns for a farming sector which has been squeezed for many years by the supermarkets; yet food production is still an area which is afforded very little protection by the likes of the Groceries Code Adjudicator (GCA). As the power of retailers grows, maybe it is time to look again at the GCA’s remit.

 

What the proposed deal also shows is that while much food marketing focuses on local provenance and British food, the average consumer still makes buying decisions based purely on price.

 

The price war between retailers in recent years has been bad enough, but what the Sainsbury’s/Asda deal must not herald is a deepening of that focus and a cut in standards. After all, previous food scandals have been blamed on a relentless attention to cost and that is not something retailers farmers or retailers need to happen again.

 

And finally, friendship forged on the back of traditional farming skills is at the heart of this week’s Farming: The Backbone of Britain spread. Take at look here

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