Fruit farmers lose out in supply chain

8 August 2007
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09 August 2007 | Paul Snell

The share of profits from supermarkets for UK fruit producers has declined in the past decade, a report has found.

A working paper published by the Competition Commission said although the cost of fruit had gone up in supermarkets, prices paid to producers remained static. For example, although the price of some apples in supermarkets has risen by 30 per cent, the amount paid to growers has stayed the same. In 1996 producers received 37 per cent of the price of pears. In 2005 this fell to 29 per cent. The study added increased sourcing from overseas had given supermarkets more buying power over their domestic suppliers. It concluded that although the UK remained a large consumer of fruit, it is increasingly reliant on overseas sourcing for its supply. Most fruit is sold to supermarkets through intermediary companies. Combined profits at the six largest fruit agents in the UK increased from £240 million in 1995 to £675 million in 2003. Fruit agents have also benefited from supermarkets increasing desire to source from one supplier. However, supermarkets told the Commission that not having alternative suppliers sometimes meant they had no choice but to accept price increases from their current providers. The working paper forms part of the investigation for the Commission's larger inquiry into the grocery market. The final report is expected in February 2008.

SMaug2007

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