He delivered the warning at the opening of the South-East Agri Expo in Kent, UK.
“I read a recent article in The Grocer in which Sainsbury’s chief Justin King said that ‘it’s not our role as retailers to accept these costs but our job to bear down on those costs’. Just how he will bear down on these costs isn’t clear, although you can read between the lines,” said Kendall.
“That same article filled me with a growing sense of unease,” he added. “It showed how a spiralling oil price is set to ‘wreak havoc in the food and drink industry’. On one hand, we have Dairy UK claiming a $10 per barrel increase will incur an additional annual cost of £48m for the dairy industry, in the shape of increased feed costs for farmers and an increase in packaging and distribution for the dairies.
“Meanwhile, I’ve had processors on the phone this week telling me that we have to push their customers for price increases. The inference is clear: unless the NFU pushes for an increase to the cost price that processors receive from their retail customers, they will have no option but to pass those cost increases in the form of lower prices back to farmer suppliers who can add them to the increases that they’re already experiencing in fuel and fertiliser bills.
“The market is failing, and farmers and growers are paying the price. While publicly listed companies pull rabbits out of hats – keeping prices low for consumers but still posting good returns for investors – behind the scenes, their supply base is being starved. It’s a supply chain devoid of innovation and investment and a poorer place for consumers – exactly what the Competition Commission warned us about in its final report into the grocery market nearly two years ago.”
As Philip Clarke takes over from Sir Terry Leahy as new chief executive at Tesco, Kendall added: “I wish him well. Commentators and analysts are keen to know how he will make his mark. But for me, it’s very simple: we need a new style of leadership in this market, where Mr Clarke and other retail CEOs take greater responsibility for the impacts that their buyers’ commercial decisions have back up the supply chain.”
© FoodBev Media Ltd 2020
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