Supermarket Summit Critical
13/09/07

NFU Scotland has described the meeting with supermarket bosses and the rest of the food supply chain today (Thursday), hosted by the First Minister, as critical for consumers and the food and farming industries.

NFUS met the First Minister Alex Salmond and Cabinet Secretary Richard Lochhead last week to discuss the huge pressures facing the livestock industry, which is suffering from soaring production costs and unsustainable farmgate returns. The financial position of farmers could now be further hit with news of the possible re-emergence of foot and mouth in the south of England.

At the meeting last week, NFUS stressed the need for supermarkets to recognise that to secure the future supply of high quality Scottish produce for consumers, the supply chain had to work far more effectively.

NFUS President Jim McLaren said:

“We stressed very clearly last week to the First Minister and Cabinet Secretary that the future of local food production is under threat. Between 1998 and 2005, prices to farmers fell by 9% whilst our costs of production rose by 15%. That trend was bad enough, but it has become far worse over the last few months for the red meat sector with world grain shortages sending animal feed bills through the roof. With news now of foot and mouth’s possible re-emergence, the uncertainty amongst livestock producers is only increasing.

“The Scottish Government is taking a lead on this issue and that will be welcomed by farmers across the country. We need the big supermarkets to realise that because of the pressure on food producers, they will find the supply of high quality, Scottish food jeopardised and consumers will pay the penalty in reduced choice. The knock-on consequences for Scottish jobs in the food production and processing industries would be horrendous.

“You only need to look at the milk sector to find a warning sign for the whole food industry. It has taken the threat of milk shortages, both domestically and globally, to start driving the farmgate price back to a sustainable level. However, production capacity has been lost; the cows and farms simply aren’t there to increase production enough to satisfy demand. With world population increasing, securing domestic food production is a hugely important political issue once again – in the longer-term we just cannot rely on the rest of the world to feed us with their exports.

“The pigs and poultry sectors are the latest sector facing a precipice. Rocketing feed costs have driven farms into a dreadful financial position and we face losing our entire breeding herd. The situation in the beef and lamb sectors is also hugely worrying.

“None of this should lead to massive rises in food prices. The proportion of farmgate costs in the shelf price is small. A 30% rise in the farmgate pig price only equates to around 10 pence on a pack of bacon. This is as much about how the profits in the shelf price are distributed. In the last 20 years, farmers share of the shopping pound has dropped by 23%.

“We have been speaking on a daily basis to the supermarkets and I hope this initiative from the Scottish Government, which is hugely important, will add further momentum to the efforts to get a supply chain that fairly rewards all parts in it.”

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