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Justin King`s speech - NFU Conference 2007

by 5m Editor
26 February 2007, at 7:22pm

UK - Speaking on the first day of the NFU Annual Conference in Birmingham , Justin King, Chief Executive of Sainsbury’s, spoke of his optimistic vision and support for British farming.

He called for British farmers to continue to work in partnership with Sainsbury’s to deliver the quality products that customers are seeking. He went on to say that Sainsbury’s is committed to understanding the needs of Britain’s farmers and growers and will be investing in UK dairy farming.

“I have a great feeling of optimism about the future of British farming. The theme of this conference is “Farming for the Future”. I believe there is much to be proud of and to applaud. We know that British consumers value British products, though not at any cost of course. Country of origin alone is not a key driver when the customer makes their purchasing decision. But at Sainsbury’s we know that fresh, tasty, healthy products are important to our customers and that they believe British products can, often fulfil these qualities, uniquely well.

Customers are showing a greater interest in food and its origins. It is clear from the wider debate now taking place that issues of food provenance, the Environment and ethical sourcing are more in the customer’s mind than ever. This, I believe, is a huge opportunity for Sainsbury’s and quality British farmers. But it’s not about subsidising farming. It’s about connecting producers to consumers.”

Justin noted that environmental issues are high on everyone’s agenda and that farmers need to think about this too:
“Increasingly our customers at Sainsbury’s will be demanding to know not just about the environmental impact of supermarkets but of the farmers who grow the products they buy. We know there are few straightforward answers. Many of our customers believe that buying products that have been produced closer to home are better for the planet. But this is not always the case. We know, for example, that for most months of the year the carbon footprint of roses from Kenya is less than that of roses from Europe because European roses will be grown under glass with artificial light and heat for much of the year. But few customers may realise this.”

Justin called for the whole food chain to work together to reach consensus on carbon labelling:
“At Sainsburys we will continue to be at the forefront of communicating to our customers in ways that help them make informed choices. It has been suggested that one way to help customers is by putting an “air mile” sticker on products. But that may not be helpful. Just because a product has been air freighted, does not mean it is worse overall for the environment as Kenyan roses demonstrate.

As a responsible retailer, it is our role to help guide customers through the complex and evolving Environmental agendas. It is clear there is no quick fix solution and we will stay at the forefront of this debate. It is still unclear how analysis such as LCA’s (Lifecycle Assessments) can be presented in a way that will help consumers. We will support a consensus on how this might be labelled and will work with the IGD and others to bring this about.

Justin touched on organic farming pointing out that Sainsbury’s are big supporters of organic with around 30% of the market and provide a wide range of organic products:
“Unlike some of our competitors, all of our own-brand organic milk as well as our beef, fish, poultry, pork and eggs are British. We are committed to developing and supporting British organics, as evidenced by our Farm Promise milk and our Beef contracts. Organic is therefore a growing and important part of our business though it is still only 2-3 % of our sales.”

He went on to defend those customers, who are still the vast majority - who choose to buy conventional products:
“It disappoints me when the representatives of the organic movement seek to demonise conventionally produced products. It is unfair on those customers who buy conventional products to make them feel that they are not doing the best for themselves or their families.

Justin noted that it is in the interests of the UK to have vibrant rural communities with farmers at their heart. Strong, competitive farming businesses are good for their local communities and for the wider farming community:
“Its one of the reasons why we launched our Farm Connections scheme with ABP, the Red Meat Industry Forum and the Regional Development Agencies, to give our beef farmers computers, software and training to help them be more competitive. So far 350 farmers have signed up and we have extended to Wales too. So far it is mainly Beef farmers but we are looking to extend to Lamb too”

Justin referred to Sainsbury’s track record in buying British : “100% of Sainsburys poultry come from British farms. This is true all year round, even at Christmas. All of the protein in our Taste the Difference range is British with the exception of products like Parma Ham. All of our fresh primal pork and ham (own-brand and branded) is now sourced from suppliers that meet British welfare standards. 96% of Sainsburys primal beef comes from the UK and Ireland, and for most of the year the figure is 100%. 70% of Sainsburys primal lamb is British. The remaining 30% comes from New Zealand when lamb is out of season here. All of Sainsburys milk, cream, butter and eggs are British.”

And he announced that all of Sainsbury’s rotisserie chickens – just under 10million of them - will be British by late summer, and all deli counter hams and cooked meats that can be sourced from Britain will be 100% British by the end of 2007. Justin reiterated Sainsbury’s commitment to working in partnership with farmers.

“Under our Partnership in Livestock scheme we work with our processors and farmers to better understand the challenges facing the beef industry. We have had about 10 years experience of our Beef Partnership in Livestock programme, connecting all parts of the supply chain.

The Partnership approach has worked well for beef. Our Dairy Development Group has, in effect, extended the partnership concept to milk. We have now set up a Lamb Partnership in Livestock scheme and are in the process of doing so for Pork. “

To help Sainsbury’s take forward partnerships with British farmers, Justin announced the appointment of Annie Graham into a new role at Sainsbury’s as Agricultural Manager with responsibility for the day-to-day relationship between Sainsbury’s and our Dairy and Beef farmers.

Justin took the opportunity to confirm Sainsbury’s support for the British Dairy industry :
“At Sainsburys we cannot prop up inefficient businesses. Nor can we try to buck the market. The price we pay for milk must be based on the market place. We buy our liquid milk from two processors that consistently pay towards the upper end of prices to farmers.

But we do recognise and understand the particular challenges of the Dairy industry. It is in the interests of our customers to ensure a strong, vibrant and profitable Dairy industry for the long term. So we do want to invest in the British Dairy industry. All of Sainsbury’s own-brand milk – conventional as well as organic - comes from British farmers and we want that to continue.

Last October we announced the setting up of Sainsburys Dairy Development Group under which we will work with around 450 dairy farmers from the direct groups of DairyCrest and Robert Wiseman. Those farmers will supply all of Sainsbury’s total conventional milk requirements of 420m litres of fresh milk each year. This new Dairy Development Group was supported by the renewing of our contracts for fresh liquid milk for a further 18 months with both processors.

Let me be clear about our vision for the Group. Our intention is to help create a sustainable British liquid milk supply by working closely with the whole supply chain including our processors and the farmers in the Group.

It is important for Sainsburys, our processors and farmers in our Group to sit round the table to better understand the costs involved in supplying our milk.
And to understand better how we can help our farmers to be sustainable businesses.

I have been asked if we will pay a premium for the milk from the Sainsburys Dairy Development Group. We have said we are open to this, but we are only prepared to pay a premium to farmers in our Group for additional benefits that will be valued by our customers.

These benefits will have to be tangible, but there will have to be tangible benefits for the customer. So our questions would be: Can the customer see a benefit? Are they prepared to pay more for a differentiated product? Are farmers in our Group prepared to work with our processors and us to create a new specification for Sainsburys liquid milk?

If the answers are Yes, then we are willing to invest in the Group to deliver that specification and benefits for both farmers and our customers.”

Justin announced the setting up of 12 regional champions working in Sainsbury’s Trading teams, who will be responsible for developing our regional sourcing programme through these road shows.

Finally Justin welcomed the NFU’s proposal for a new “Responsibility Index” to measure UK retailers :
“I believe that all I have been talking about is consistent with the measures that the NFU are developing for the Index. Sainsbury’s would be delighted to be the first retailer to trial the Index for the NFU.”.

5m Editor