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Sainsbury's Boss Calls for Shift in Grower-Retailer Dynamics to Fortify the UK's Food System

Sainsbury's has issued a call for a fundamental transformation in the dynamics between agricultural producers and retail entities.


Image courtesy of Sainsburys

At the prestigious City Food & Drink Lecture, hosted at the Guildhall in London, Simon Roberts, the Chief Executive Officer of Sainsbury's, underscored the necessity for a robust food system to underpin the production of high-quality foodstuffs.


Addressing the audience at the 23rd iteration of this annual lecture, Mr Roberts illuminated the fact that the sector employs 4.2 million individuals and commands an expenditure of £254 billion, yet it suffers from governmental neglect. He proposed the introduction of a ministerial role spanning multiple departments to ameliorate this situation.


Mr Roberts delineated the existing rift between retailers and their suppliers or agricultural producers, asserting that this situation warrants immediate change.


He championed the establishment of enduring partnerships, the enhancement of cooperative efforts, and the bolstering of resilience within a system that faced shortages in 2023 and is currently under the scrutiny of several supply chain evaluations by the Department for Environment, Food & Rural Affairs (Defra).


Roberts contended that governmental intervention could have been more substantial, as the solution does not lie in mere price inflation.


He remarked upon the significant decrease in the proportion of household income allocated to food purchases, from 31% in 1957 to a mere 12% and argued against the feasibility of reversing the incessant demand for fresh produce throughout the year.


Additionally, Roberts advocated for policy reforms, such as the provision of grants for technological advancements, the improvement of partnerships between growers and retailers, and the pursuit of sustainability, noting the sector's considerable lag in achieving scope 3 sustainability objectives.


He critiqued Defra for its insufficient focus on production, labelled the farm payment system as excessively complex, cautioned against the excessive removal of land from production, and underscored the necessity for political manifestos to contemplate the economic sustainability of the UK's food system.


A presentation featured Dr Clive Black of Shore Capital, who called for the creation of a ministry dedicated to food, akin to Bord Bia in Ireland.


Roberts also highlighted Sainsbury's initiatives to mitigate pressure points within the system, including the provision of a pre-harvest cost price increase to apple growers in response to a reduced harvest in the preceding season. In February, Sainsbury's unveiled a 'Best of British' webpage, showcasing 450 products.


During a panel discussion featuring NFU President Tom Bradshaw, a consensus emerged aligning with Roberts' viewpoints. Audience inquiries touched upon the concentration of power within food retail and its implications for production costs and shareholder dividends.


Roberts responded by stressing the imperative for a novel approach, including the fair compensation of farmers and the establishment of long-term contractual agreements.


Bradshaw voiced the agricultural community's discontent with retailers, accusing them of eroding the industry through disproportionate profits.


The panel concurred on the necessity of attributing greater value to food, contrasting the readiness to expend on luxury beverages with the unrealistic price expectations fostered by promotional offers, such as Aldi's Christmas carrot promotion, which, they argued, devalues vegetables and exacerbates affordability perceptions among economically disadvantaged segments of the population.


Roberts concluded by affirming Sainsbury's dedication to providing consumer choice and competitive pricing.

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