Tesco 'not giving UK farmers fair deal'

Farmers and environmentalists in the UK today accused supermarket giant Tesco of putting them out of business by paying them low prices for their produce.

They told directors of company that low prices paid to farmers for products such as milk were contributing to about 4,500 farmers going out of business every year.

They challenged Tesco to give them a fairer deal that would sustain rural communities and the environment.

Meanwhile, a spokesman for the Irish Farmers' Association (IFA) said their members' relationship with Tesco was "very positive" and characterised by "good negotiating".

"Tesco have come on a lot in terms of sourcing produce from Irish farmers and we are happy with our members' relationship with the company," said the spokesman.

There is not such harmony in Britain, however.

One farmer from Lincolnshire told the company’s annual meeting in central London that he was losing 2p on every litre of milk that left his farm due to low prices imposed by Tesco and other supermarkets.

He said Tesco should commit itself to providing farmers with “a fair farm date price for milk so that farmers could get a fair return on their investment”.

Another farmer told the meeting there was a huge amount of anecdotal evidence that supermarkets were “squeezing the heck out of farmers with low prices”.

He added: “With all this power that you have, should you not be treating farmers more fairly?”

Tesco also came under attack today for causing a reduction in the number of community post offices with its policy of taking over convenience stores.

Environmental lobby group Friends of the Earth said Tesco’s huge success had given it an extremely powerful position in the grocery market.

A leaflet handed out by members of the group outside the QE2 Conference Centre, where the meeting was taking place, read: “Friends of the Earth think Tesco is abusing this position and needs to be tamed by tighter regulations.”

Responding to the criticism, Tesco chief executive Terry Leahy said the company was doing all it could in the circumstances to help farmers to be successful, because Tesco had a vested interest in keeping a healthy supply chain.

He said the company was trying to source products from local domestic markets wherever it could instead of importing them.

But he added the firm’s actions were, at least in part, governed by factors outside its control such as exchange rates, Government policy and movement in global agricultural prices.

On the issue of post offices, chairman David Reid said the company was working as hard as it could to ensure that post offices continue to be available in their communities.

“We are not involved in the wholesale closure of post offices,” he said.