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NFUS Brands Supermarket Claims of “Squeezed Margins” as Laughable

NFU Scotland has echoed the comments from the Ulster Farmers Union, its sister organisation in Northern Ireland, in rubbishing the report from the British Retail Consortium (BRC) on food inflation.  The report infers that cattle prices in the UK have risen by 17% year on year and claims that “retailers’ margins continue to be squeezed”.

In fact recent reports have demonstrated increases in retailer margins, in several areas including dairy, whilst Scottish cattle prices are in fact down this year despite significant increases in production costs.

The farm unions believe the report, which was issued this week (Wednesday 3 November), presents a skewed picture of reality claiming that retailers have shielded consumers from the higher prices they are having to pay suppliers and are facing tough financial times as a result.

Vice-President of NFU Scotland, Allan Bowie said:

“The BRC are clearly spinning consumers a line on what is actually happening on farm, and consumers have the right to know the truth. 

“Retailers may say that they are shielding consumers from the full impact of increasing agricultural commodity costs, but actually we know first hand that their own margins are being maintained and expanded while they squeeze the margins for processors, who in turn squeeze any margin left for farmers on the ground. 

“Let’s be under no illusions here, retailers make massive margins on food that have been built up over the years.  They have much more flexibility than farmers do to react to fluctuation in prices. They are trying to lift the retail price under the rouse that they are paying processors and farmers more, which we know is simply not happening. 

“This idea that the farmers are getting substantially increased sums of money while the retailers margins are being squeezed is just laughable.  The figures used within the BRC report are clearly of world market prices that have little relevance to Scottish farmers who have seen a decrease of approximately £40 in the deadweight value of an average beef animal, and who are barely reaching prices achieved in 2008 for pigs.  Add to that the increasing input costs of fuel, fertiliser, bedding and feed which have soared and are set to continue to rise, farmers are certainly not seeing anything like the figures shown in the report and will be furious with claims that retailers are seeing their profits squeezed while they enjoy rising prices.

“Consumers will no doubt once again see the truth when the profit announcements of the supermarkets are made in the coming months.  Based on the BRC report, you would expect to  see a dramatic reduction in their profitability; but I won’t be holding my breath!”

Notes to Editors

Ends

Contact Wendy Fleming on 0131 472 4020

 

Date Published:

News Article No.: 157/10


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