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A Ãå±±½ûµØ fresh produce expert has spoken with the BBC about the impact of supermarket’s Christmas vegetable price wars.
With major supermarkets all offering cut-price veg as we approach the big day, BBC Radio Four’s Farming Today spoke with Harper Adams Professor of Crop Science Jim Monaghan about the impact of these festive price cuts on growers.
While retailers may be offering carrots for 15 pence – or even less – a kilo, he told the programme: “That’s not the cost of production, and that's not the cost that a supplier would supply the carrots to the supermarket.
“So how it works is the supermarket are buying out the contract price, and then they are selling it at a loss.
“In general, yes, they are taking the hit - I'm not part of the discussions, but I wouldn't be surprised if there were times when they asked for suppliers to share the Christmas joy.”
“I think they do have a choice, but there are close trading relationships and people are trying to do the best for each other, I suppose would be the way I'd present it.”
With these loss-leading prices, Professor Monaghan explained: “The supermarkets hope to make money out of this by increasing footfall.
“So, if you can attract customers in by really tight bargains, they're then going to spend their money on other things as well as just the vegetables.
"They're not going to be making money from the vegetables. That's clear.
“I think it would appear that the supermarkets are making a decision to not make money on these lines for the one to two weeks that they're doing it.
“You would hope that the deal with the supplier is that they don't take a hit - because the if you look at wholesale prices, you're making a significant reduction on the value of the crop.”
However, he warned retailers needed to be careful about the perceptions consumers develop about the price of fresh vegetables, and added: “Well, they're almost giving them away for free. And that's a challenge - that we value things when they are at that price.
“Now, it's very helpful for people who are struggling to Christmas to do their shopping. But it makes me go back to the days 15, 20 years ago when there was a price war on bananas, and people stopped valuing bananas. And we've never got that price back.
“I think two weeks at Christmas is not going to have that big impact. But it's still so seed in a customer's mind – ‘these products should be cheap.’
“The battle at the moment in the whole of the supply base is trying to get across to customers that when things are short, they should cost more. And when supply is plentiful, then we can look at promotions.”
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