A fair deal for farmers
Brian Ascroft's fingers are so green with the pigment of tomato plants that they look like vegetables. A craggy-faced man with a passion for his work, he has been growing tomatoes since 1960 at Croftpak Nurseries, on the Lancashire coast. He is a relatively small player, with just 1.5 acres of tomatoes under glass, but he still manages to supply all the speciality tomatoes for the 26 stores owned by Booths Supermarkets.
"I have a marvellous relationship with Booths," he says. "I speak with them every day. If I had a problem, I could even ring up Graham Booth, a Director." As it happens, he never needs to. Instead, he communicates with Chris Treble, Booths' fruit and vegetable buyer, who is as fulsome in his praise of Ascroft, and a handful of other growers who supply fresh produce, as Ascroft is in his praise of the retailer.
This would not be much of a story if it wasn't for the fact that a number of farmers and growers feel that they are being poorly treated by retailers. A recent Competition Commission report on supermarkets found that although the vast majority of small suppliers considered their relationship with retailers to be excellent or good, 5 per cent described them as poor or bad. "There appeared to us to be a climate of apprehension among many suppliers," noted the report. Complainants were extremely reluctant to be named, or even to name the retailers they were complaining about, not least because they feared being delisted, or given even worse terms of trade.
A rough deal
There are a variety of reasons why these farmers and growers feel they are being given a rough deal. The following stories illustrate some of them. A Cornish cauliflower grower who supplies a major retailer told the buyer that he had found a market for the share of his crop which was not of sufficiently high quality for the retailer, and which he normally left to waste in the fields. "If you sell them to anyone else," replied the buyer, "we won't take any from you again." Livestock producers, members of the same retailer's producer group, were informed, without notice, that they were going to be given 73p a kilo for their beef, rather than 90p as they had been promised. A flood of cheap Irish beef imports had enabled the local abattoir, supplier to the retailer, to drive down prices.
Another farmer tells the story of how he and his neighbour spent years rearing spring lamb to an exact specification for a particular retailer, who paid them a premium for doing so. Then the retailer found another source, tightened specifications even further and slashed the premium. Another grower put it like this: "They began by giving us premiums, but now it's all talk of penalties." All those quoted above spoke on condition that their identities would be protected.
One of the main complaints against retailers is that their buyers drive down prices, and they do so because it is in their best interests. "With many major retailers," says Chris Dee, Booths' Marketing Manager, "buyers will be incentivised according to profit yields. Obviously, keeping prices down is one way of increasing profits." Booths' small team of 10 buyers receives no such incentives, although like all the company's employees they benefit from an annual bonus based on the company's profits.
Retailers who are bent on keeping prices as low as possible for consumers - "Why pay more?" asks Tesco - are more likely to squeeze suppliers than the relatively up-market retailers like Booths, whose affluent clientele is more concerned with quality than cost. This is reflected in the buyers' attitudes. "I'm more interested in quality and provenance, on sourcing locally, than I am in price," says Phil Godwin, Booths' chilled goods buyer. "But obviously we are a business, and I want to get the best possible goods at a sensible price."
Valuable partnerships
Chris Treble describes his relationship with growers as a partnership: both need each other, and do the best to accommodate their respective needs. At the beginning of the year he and Ascroft sit down together and plan the precise quantities and types of tomatoes which Ascroft will grow. Then they negotiate a price. "I'll say I'd like so much," explains Ascroft, "and he'll say, 'No, that's too much. You can have this.' And then we'll agree a price." On one occasion, he recalls, Treble's predecessor actually gave him more than he asked for.
"We take everything Brian produces," says Treble. "He's so valuable, we'll even take his overproduction." And rather than demanding a fee for promoting Ascroft's tomatoes in store, as often happens, Booths pays for the promotion and advertising itself.
An hour's drive east of Ascroft's nursery life in the damp pastures of the Forest of Bowland is depressingly unprofitable for most farmers. However, 16 dairy farmers have recently signed a new deal with Booths, and this could help to ease their plight.
"We've been struggling for a while with the milk prices being so low," explains William Slinger, who helps to run the family farm on the edge of the village of Pendleton. "A couple of years ago I had this idea that instead of waving placards in supermarket car parks, we should go to the market and ask what the market wants." So he contacted Booths, and a few days later he and another farmer visited Chris Dee's at Booths' head office in Preston. They discussed selling Bowland lamb, then Dee suggested that Booths might be more interested in their milk.
Twenty years ago, explains Dee, nearly all milk was delivered to the doorstep in pint bottles. Since then the market has become much more diverse. Consumers can buy different types of milk in different sized bottles, and Dee felt there was scope for further differentiation. "I thought we could trade on the milk's provenance, sell it as something locally produced by Forest of Bowland farmers who were looking after their livestock and looking after a beautiful landscape."
William Slinger & Chris Dee
Slinger discussed this idea with his neighbours and they agreed that it would be worth their while if they made a premium of 2p a litre. Dee agreed to that, and this summer Bowland Fresh goes on sale in Booths stores at 35p a pint. This compares to 29p a pint for ordinary milk; 45p for Rachel's organic milk. Initially, Connect Plus Ltd, the company established by Slinger and the other farmers, will provide 12,000 litres of Bowland Fresh a week.
Trading up
"We want the consumer to trade up to Bowland Fresh," says Dee, "and our target is for 10 per cent of our milk sales to come from Connect Plus Ltd."
Before we leave the farm we head up the hills behind the village. Rain drips from the ash and oak, and curlews call from the moors. "It's too early to say how things will work out," says Slinger, "but as producers we couldn't have expected more support than we've been given by Booths." The retailer is spending a significant sum of money on promoting the milk, both in its stores and through other channels throughout the region.
"Our feeling," says Dee, "is that this sort of thing will never happen unless we help to make it happen." Supporting Bowland Fresh, he adds, is not an act of altruism. Dee believes that Booths' customers care about where their food comes from, and favour locally produced food. Booths has more than 30 Lancashire cheeses in its Lancashire stores. Dee acknowledges that a 2p a litre premium for Bowland Fresh is not particularly generous, but he believes that before long Bowland farmers will be able to produce cheese, yogurt and cream from their milk. "If that happens," he says, "they will undoubtedly make more money."
Posted: 01 Aug 2002