Select Committee on Administration Appendices to the Minutes of Evidence


APPENDIX 17

Memorandum submitted by Tesco Stores Ltd (Q23)

INTRODUCTION

Tesco is the largest food retailer in the United Kingdom, with 15.8 per cent of the food market. Tesco is British agriculture's biggest customer, and would agree that retailers should be encouraged to support British farming. We are the largest retailer of milk products in the UK.

The table below shows the sales of various dairy products as a percentage of total food sales:


Product
Percentage of Total Food Sales

Milk (long life and chilled)
2.5 per cent
Butter
0.5 per cent
Cheese
3 per cent

TERMS OF REFERENCE

(i) The terms of reference of the committee refer firstly to the efficiency and effectiveness of the marketing arrangements for buying and selling milk. Tesco purchases milk from processors rather than directly from farmers or through farmers' groups. Therefore we would not wish to comment in detail on this issue, as we believe we are not in the best position to comment authoritatively on these matters.

(ii) With regard to the activities of Milk Marque, Tesco find that Milk Marque and our other suppliers now meet our requirements for traceability, as they are able to confirm the source (ie the farm) of all the milk which is delivered to a particular silo. Tesco keeps records of the supply chain back to the processor, and we require our suppliers to keep records of the individual farms from which they obtain their supplies.

Animal welfare is very important, partly through consumer expectations, and partly because of its impact on food safety issues. Animal welfare covers ethical issues such as the treatment and health of farm animals and their quality of life. Farm assurance means that a farm is operating in accordance with an agreed code of practice setting out requirements for animal welfare. Tesco and Milk Marque are discussing the establishment of a mutually satisfactory code of practice and farm assurance schemes. Tesco would also support a national scheme which set industry-wide standards, and is co-operating with the National Farmers Union in the development of its code of practice.

(iii) We read with interest the University of Manchester's 1998 evaluation of the milk quota system. In particular, the conclusion that non-producing quota holders who are renting or who have previously sold quota, resulted in milk producers paying an annually recurring cost of 2.5 pence on every litre of milk produced in the UK to those no longer producing or to those in the process of downsizing. This represents a total cost of 12 per cent of the total annual British milk revenue.

16 June 1999


 
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