UK: Sainsbury’s-Asda deal could hurt farmers?

The National Farmers Union (NFU) has warned that its members will feel the impact of any squeeze on suppliers that will result from the merger of Sainsbury’s and Asda, reported Reuters.

The organisation, which represents more than 55,000 farmers in England and Wales, made the remarks in a submission to the Competition and Markets Authority (CMA), which is investigating the proposed merger of Britain’s second and third largest grocers. The NFU stated that while it believed “healthy competition is good, severe market disruption is a concern of our members’ ability to survive.”

The CMA is currently probing the deal and seeking views from interested parties.

In oral evidence to the CMA, the NFU’s head of food and farming Philip Hambling said farmers were concerned whether the combined group could deliver its proposed 10% saving for shoppers without passing the pressure on to farmers.

“At a time when farms are already facing intense price pressure, the prospect of a further squeeze on price leaves farmers concerned about the potential impacts on their businesses,” he said.

“Continually squeezing margins can take away the ability of the food and farming industry to invest and improve quality, range and sustainability,” added Hambling.

Sainsbury’s and Asda’s key argument is that the deal would lower prices and improve the customer offer of both brands, while allowing suppliers to grow their businesses.

Both grocers have stated they believe the CMA will not insist on a level of store disposals that will make the deal—announced in April—unpalatable.

The CMA announced last month it expected to issue provisional findings early next year, ahead of a final report in March.