Tesco tendering process under scrutiny

Tesco’s latest tendering process for liquid milk could see a 200m litre shift in liquid milk procurement away from Arla, according to the Farmers Union of Wales.

If confirmed, this change could further expose non-aligned producers to price falls if Arla was left to process the excess milk through the plant at Westbury.

Although no confirmation has been received by either Tesco or Arla, the FUW would urge Tesco to ensure that its liquid milk procurement process does not function to further depress the prices received by non-aligned producers.

The Union would also urge Tesco to bring clarity to this issue in order to allow dairy farmers time to assess their options.

Speculation over Tesco milk sourcing follows the announcement that this major retailer had breached the Groceries Code by making widespread delays and deductions to suppliers’ payments.

Following confirmation of the breach, the Groceries Code Adjudicator, Ms Christine Tacon, ordered Tesco to correct pricing errors within 7 days of notification and to cease the practise of making unilateral price deductions to suppliers’ payments.

However, the FUW was extremely disappointed to note that the large retailer would not be in receipt of a fine because the government failed to state the fine limit that could be imposed by the Groceries Code Adjudicator within the time frame of the Tesco investigation.

FUW Milk and Dairy Produce Committee Chairman, Rhydian Owen, said: “The FUW repeatedly called for the government to activate the Adjudicator’s power to fine in order to bring retailers exhibiting unfair practises to account and it is therefore infuriating that such powers were not allocated in time to see those breaches by Tesco properly penalised.

“The current speculation regarding Tesco’s liquid milk procurement further strengthens the FUW’s call for all dairy farmers to be included in the remit of the Groceries Code Adjudicator.

“At present, retailer aligned contracts only account for about four percent of the milk produced in Wales.”

The Serious Fraud Office is also currently investigating Tesco and the FUW will provide further information on the results of this investigation when it becomes available.

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