It is difficult to get precise figures on the distribution of money between different parts of the UK food supply chain.
Farmers are located near the bottom, with agricultural wholesalers (input suppliers) below them, and all food and beverage manufacturers, caterers, retailers and consumers positioned above them . This is the story from farm to fork.
Everyone in the food supply chain gets a share of the total money spent on food. Unfortunately, farmers do not receive the full price of what consumers pay in or near the store.
In his book Feeding Britain, Professor Tim Lang calculates that the primary producer receives around 5% of the total money in the UK food supply chain. His main argument is that this should be at least doubled so that primary producers get a greater reduction in the final price. However, setting the rules to achieve this could arguably require significant government intervention and, in a free market economy like the UK, there could be little political appetite.
Farmers are “price takers” in the supply chain because they cannot set the price for their products. This makes them extremely vulnerable when tough times come, like right now with the cost of living crisis. Many pork producers are struggling to cope with soaring input costs because pork prices are so low.
Meanwhile, it was recently reported that Tesco’s profits tripled last year, citing its “significant bargaining power” with their suppliers as the reason. What should not be forgotten is that farmers are the essential base on which the supermarket depends and it is safe to say that agricultural businesses have not flourished at the same level as Tesco. This challenges the dynamics of financial distribution and the need for fairness within the supply chain so that farmers are not unfairly treated by the ‘bigger’ players.
Despite the recent revelation of Tesco’s profits, the exact figures on the distribution of the food supply are still unclear. This is mainly due to the fact that processors, supermarkets, etc. are very reluctant to disclose information about their profits or how much they earn for each product at each stage of the supply chain. It’s a battle that farm lobby organizations like ours, the Ulster Farmers’ Union, have been waging for years.
Transparency regarding the exact distribution of the food supply chain can help develop a new economic model that delivers fairly to all. With the phasing out of basic farm payments over the next seven years in England and changes likely to occur for farmers in Northern Ireland, this reiterates the need for positive change in the way the market works.
Our farmers are an irreplaceable asset in the food supply chain. Yet when the going gets tough, they are forced to absorb the extra expense as if it were their sole responsibility. It’s also somewhat inhumane when the big supermarket chains are making large sums of money while farming families are struggling to stay in business and pay the bills. It’s a problem that has been pointed out many times, but as Tim Lang has pointed out in his book, there are good reasons to overhaul the UK food system and although it’s not an easy task, progress must be done now.