Food firms should ‘help to fix supply chain’

By John Wood

- Last updated on GMT

Food manufacturers could help fix a 'dysfunctional supply chain', said the farming boss
Food manufacturers could help fix a 'dysfunctional supply chain', said the farming boss

Related tags: National farmers union, Price

A dysfunctional supply chain is threatening the future of many farms in Scotland, and food manufacturers can help fix it, according to Allan Bowie, president of National Farmers Union Scotland.

Downward pressure on prices from the big retailers has caused a crash in farm incomes with figures audited by the Scottish government showing they fell by 50% in the four years from 2010.

Factor in events during 2015, including floods, unseasonable weather affecting crop yields and the milk crisis, and the situation looks bleak, said Bowie.

‘Pressure on least cost’

“There’s pressure on least cost,”​ he told FoodManufacture.co.uk. “We totally understand that, but there’s undue pressure. The processors and manufacturers will buy raw ingredients knowing the end product has to meet a price point.

“But what determines those price points? Is it the quality of the food or is it the end user who says ‘We can import at this level therefore you have to match that’.”

Bowie said there was a need for greater partnership in the food chain. “Often the retailers know exactly what it cost the farmer to produce,”​ he said.

“A lot of aligned contracts have open book costing yet they barely give you more than the cost of production within many of these contracts.”

Many times processors and retailers bought food knowing that it was below, or well below, the cost of production, he claimed.

“The consumer needs to know where the margin is going because it is certainly not coming back to the farmer. Real partnerships would ensure everyone was getting a slice of the cake.”

‘Fair share of the margin’

“From a Scottish farming perspective we deliver traceability, trust, quality and provenance and we are not getting that ​back in value and a fair share of the margin.

“We take great pride in what we do, and consumers recognise that, but our food a lot of times is priced on commodities elsewhere in the world produced by farmers who don’t do what we do.”

He said he was asking food manufacturers to source Scottish and British to allow them to compete and to value the ingredients that they use.

“There are major companies who source for schools, hospitals and restaurants. Can that be done with British food, can that be done with Scottish food?”

He added: “This message is getting traction in food and drink. As a society we have to value food and its impact on the environment and it makes sense to support the businesses here in the UK.”

Meanwhile, the National Farmers Union warned this week that shortages of seasonal labour could drive up the prices​ of British fruit and vegetables.

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