The UK’s National Farmers’ Union (NFU) has accused some of Britain’s major supermarkets of abusing their power by demanding payments for promotional activity and creating a climate of fear among suppliers.

“It cannot be in the consumer’s interest for high quality British food producers to be forced out of business by the abuse of supermarket power,” said NFU Deputy President Meurig Raymond. In its response to the Competitions Commission’s investigation of the grocery market the NFU identified malpractices allegedly committed by supermarket operators such as significant upfront payments demanded by retailers from suppliers in the tendering or re-tendering process; suppliers being required to pay retailers an annual payment based on a percentage of their turnover and retailers frequently changing the verbal terms of business at short notice, among other charges. “There is an obvious and very dangerous imbalance in the supply chain, that the Competition Commission really must get to grips with if serious damage to our food industry is to be avoided,” Raymond said.

Meanwhile, a Liberal Democrat MP, Andrew George, said the Competition Commission cannot ignore the fact that UK supermarkets have prospered while the farming sector has struggled in recent years. George has cited figures which showed that supermarket profits have more than quadrupled since 1988 while farmers share in a basket of food has declined from 47 per cent to just 36 per cent. Total income from farming has also declined by 22 per cent since 1988 with the average profit for a farmer just £7,544 in 2004.