Horsing around with the food chain

Pamela Robinson asks whether we can continue buying cheap and cheerful products in our supermarkets

In early 2013 new cases of horsemeat and other ‘rogue’ ingredients were being discovered on the shelves of the major supermarkets almost every day. The question that emerged was, where does the true responsibility lie?

The EU has some of the most stringent food quality standards and testing regimes in the world, and the respective authorities, in the UK the Food Standards Agency, quickly galvanised into action. But consumers are naturally anxious and the situation is testing the relationship of trust between retailer and consumer. Key to maintaining a strong bond between both parties is for the retailers, and the industry at large, to be transparent and honest in their response to consumers’ concerns.

A retailer’s most cherished relationship is with their customer. The retailers involved and the industry body, the British Retail Consortium, were quick to act. Clearing the shelves of potentially contaminated product, taking out full-page apologies in the UK press and scouring the very supply chains the industry depends upon to offer good quality at reasonable prices.

However, the pressure on suppliers to ensure low prices in the UK grocery market has been mooted as a symptom of the problem. This follows two major inquiries by the UK Competition Commission in the last decade, the creation of a code of practice to regulate the relationship between the major supermarket groups and their suppliers, and the recent appointment of a Groceries Ombudsman.

Hence, it appears that the jury is still out in terms of where the true responsibility lies, with the retailer or upstream with the supplier. Regardless of how blame or responsibility is apportioned, recent events can in no way justify the substitution of cheaper raw materials in the food production process. Nevertheless, this incidence does highlight a growing concern that food in the UK is simply too cheap.

In this regard, our attention needs to be drawn to how the industry and the government balance the need to maintain low-cost food with the inherent complexity of the UK food chain. The management systems that retailers and manufacturers have in place to ensure quality and provenance in the chain may be sufficient to demonstrate ‘due diligence’ in the legal sense, but consumers expect greater traceability and reliability from their local trusted supermarket. This suggests a more comprehensive system of control and monitoring will be required in the future, which most likely will add cost to the weekly shop. And yes, this may lead to greater food inflation. However, if current investigations prove that the consequence of driving down prices on the high street is contamination in the food chain, then this outcome may well prove more palatable to consumers and government alike.

What outcome is likely from the on-going scrutiny of the cheap and cheerful products that the unknowing public have consumed in such large quantities during the last year or so? Following the recent tests of the potentially contaminated products and the attention drawn to the complexity of the food chain, a further question must be raised: is the ‘value for money proposition’ that the British consumer has become so accustomed to under threat?

The likely conclusion of the recent scandal, is that the opportunity to make a quick profit, albeit fraudulently, will be the motive behind the adulteration of the ‘value’ ready meal or burger.  However, the role of the supermarkets, the pressure they place on their suppliers and the intense cost-cutting mechanisms they employ in order to provide ever-cheaper foodstuffs to the consumer, has also been criticised. There has been much comment regarding the extent to which retailers and food processers will go to in order to secure the low-cost ingredients that help to maintain key price-points in the market. This includes the length of their supply chains.

Some retailers have acknowledged that a tighter testing regime will need to be adopted in the future, whilst others have committed to reintegrating the very operations they had previously outsourced – the savings no longer outweighing the cost. A lack of control and transparency in the food supply chain together with the danger of losing consumer trust has become too great a risk to bear. The loss of consumer confidence is not an option for the large supermarket groups that depend so heavily on consumer loyalty.

In spite of the huge economies of scale that their buying power offers, profit margins and targets are dependent on ensuring a strong relationship with their customers.  Subsequently, the question of where does responsibility lie, remains at the foot of the retailers and food processors door. After all, as many supermarket executives have themselves conceded, if their company name is on the tin or packet then they must be held accountable for the contents of that product.

It is envisaged, therefore, that this recent outbreak of adulteration in the food chain, will lead to greater governance in the supply chains that form such an integral link to providing good quality and reasonably priced food in the UK. Such systems of governance will require a more rigorous adherence by the industry, a renewed sense of self-regulation, and a more robust process of supervision by government institutions.

The adoption of an improved system of ‘checks’ and ‘balances’ in the supply chains that the market is so reliant upon will offer greater transparency and traceability. A consequence of which, it is hoped, is that British consumers will be reassured of the reliability and provenance of the food on their plate. However, whether this results in the demise of the cheap and cheerful processed ready meal or burger is yet to be seen.

Pamela Robinson is a lecturer at Birmingham Business School

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