The renascent Co-op is riding the crest of a wave; in the face of negative growth for most retailers, the convenience group has seen encouraging sales growth in the last quarter. On top of that, at its inaugural Farming Conference in Manchester it signed up to the National Farmers Union (NFU)’s 11 commandments ensuring a better deal for British growers, suppliers, buyers and consumers of fresh produce. Produce Business UK was in Manchester to speak to the individuals behind the impressive revival
In today’s highly charged cultural and political world rhapsodising about British values can be something of a contentious subject – even more so since the momentous decision of the British population to vote for Brexit this summer.
And while the thorny issue of Brexit, the fall out from the events of June 23 and its implications for the British fresh produce industry continues to be a hot topic in the sector, extolling the manifold virtues of British produce, thankfully, is not. At a time when issues such as sustainability, provenance and traceability are increasingly forefront of consumers’ minds – at least that’s what many of us are told – pushing British produce has become paramount for retailers.
That’s why the rejuvenated Co-op has become the third retailer to sign up to the NFU’s Fruit and Vegetable Pledge. Following in the footsteps of discounters Aldi, the first to sign up last year, and Lidl, who followed suit in June this year, the convenience retailer made the announcement at its first Co-op Farming Conference, held at Lancashire County Cricket Club’s Old Trafford ground.
Produce in primary focus
Matt Hood, Co-op’s trading director for fresh & frozen, acknowledges that while the retailer’s commitment to British had in the last three to four years concentrated primarily on meat, produce is now a main focus. In supporting the farmers’ union-backed code he said the Co-op is now in a position to work far more closely with growers.
“We might not have been the first to sign up to it,” he concedes, “but in my view we are the first to do it properly. We tick all the things that the NFU wants. This reaffirms our commitment to UK sourcing.”
The intention of the pledge is to boost the profitability of British farmers, growers and suppliers. Its 11 points are simple, timely and transparent, outlining, among others, that retailers treat its suppliers fairly, build long-term relationships with growers (offering certainty and stability) and offer production programmes as far in advance as possible of the crop being required.
And in what will be music to the ears to all parts of the supply chain it lays bare a commitment to increasing the amount of British fresh produce available for customers.
Michael Fletcher, Co-op’s commercial director, says that on the back of the retailer’s pledge to invest £1.5bn into British sourcing over the next three years – which includes the introduction of three year contracts to many of its fresh produce suppliers – the Co-op’s support for the NFU’s pledge is more great news for British growers.
“We know our customers care about the provenance of their food and are keen to champion British products wherever they can,” he remarked in his opening statement to the 300 or so delegates present in Lancashire CCC’s The Point conference room. “By signing up to this charter, we’re giving them further assurance on the transparency of our supply chains and making it easier than ever for them to support British farmers and growers.”
Backing British
Ciara Gorst, Co-op’s senior agricultural manager, is another to speak of the boost this will give to British growers and suppliers. Reiterating this commitment to “Backing British”, she says there is a feeling of real momentum at the Co-op.
This point was underlined in the figures we reported on last week and released by Kantar Worldpanel, which demonstrate that Co-op outperformed the market in the 12 weeks ending 11 September 2016, with sales growth of 3.1%.
Gorst says the retailer is explicitly going back to its British agricultural roots. “Honesty, fairness and trust to our suppliers and their growers are at the heart of this NFU Pledge,” she says. “This only serves to protect and enhance British horticulture, alongside our £1.5billion investment to source own brand British meat, produce and dairy products.”
NFU support
Unsurprisingly, the NFU has been quick to note its appreciation for the Co-op’s stance. Guy Poskitt, NFU Horticulture Board vice chairman, says that in a week that saw farmers and politicians come together to Back British Farming, the Co-op’s commitment to British farming has been another boost.
“It is a real step forward when a retailer makes two commitments to British farming in one week,” he says. “With Co-op’s Fruit and Veg commitment, our British growers have a bright and prosperous future, one that they can thrive on and one that continues to offer British consumers high quality great British food.”
Fletcher believes that the Co-op’s commitment to UK farming had never been clearer. “In fact,” he says, “our position on British supersedes that of any other convenience retailer.”
NFU Pledge 1
Treat all of our suppliers fairly, at all times and in accordance with the Groceries Supply Code of Practice (GSCOP).
Co-op commitment
We’ll treat all of our suppliers fairly, at all times, and in accordance with the GSCOP. Meeting our obligations under GSCOP and our Terms and Conditions of Supply is just naturally how we choose to do business with all our suppliers.
NFU Pledge 2
Build long-term relationships with growers that offer greater certainty and stability.
Co-op commitment
We are committed to building long-term relationships with our suppliers and growers in order to offer greater certainty and stability. We are in the process of transforming our produce-sourcing model from short-term and transactional into long-term, strategic relationships. We have just agreed three-year contracts with a number of suppliers, with more in the pipeline. This will enable the suppliers and growers to plan and invest for continued growth.
NFU Pledge 3
Offer production programmes as far in advance as possible of the crop being required (ideally one year) with a commitment to purchase a proportion of the crop at a previously agreed price when it is ready to harvest.
Co-op commitment
A key element of our revised produce sourcing model is moving from annual tender cycles towards three-year agreements. This will mean suppliers will be able to agree production programmes with their growers in advance and with more certainty. Our three-year deals commit to a price for an agreed period based upon an anticipated volume requirement. Costs will move to reflect the commodity movement over the subsequent periods of contract. Volumes should not significantly change, but if there is a requirement, we will discuss and agree this in advance.
NFU Pledge 4
Offer greater price certainty to growers – either for a season, or on a specified volume of product, with no unexpected, unilaterally imposed changes.
Co-op commitment
We will offer greater price certainty with no unexpected unilaterally imposed changes. Our strategy is to complete one negotiation with our partner suppliers at the start of a longer-term contract and commit to a price for an initial period. Costs will move in line with the commodity of the subsequent period of contract. This arrangement should offer greater price certainty to our suppliers and, in turn, to their growers.
NFU Pledge 5
Pay all our suppliers on time, in full and always consult with suppliers in advance of any changes to payment terms and conditions.
Co-op commitment
We will pay all of our suppliers on time, in full and always consult with suppliers in advance of any changes to payment terms and conditions. Our payment terms and how we will manage variations to payment terms are written into our Terms and Conditions of Supply. This includes the requirement for us to discuss any changes in advance with our suppliers. We also work with smaller suppliers and growers to help them with preferential payment terms if appropriate.
NFU Pledge 6
Seek to plan promotional activity in advance with growers and seek to adopt a flexible, production-led approach to the timing of promotions as much as possible to help manage supply and demand.
Co-op commitment
To plan promotional activity in advance and seek to adopt a production led approach to timings of promotions as much as possible. We plan promotions with our suppliers as part of an annual seasonal rolling plan and challenge our suppliers to consult with their growers as part of this process. The plan is fluid based on expectations of product availability, but allows for some flexibility to help manage impact of unforeseen availability challenges/flushes.
NFU Pledge 7
Reduce wastage, eliminate costs and add more value to the supply chain by seeking out opportunities to utilise the whole crop and adopting realistic product specifications.
Co-op commitment
We will work closely with our suppliers and their growers to reduce wastage and eliminate costs by seeking out opportunities to utilise the whole crop and adopting realistic product specifications. We are committed to work collaboratively, with our long-term supplier partners and their growers, on initiatives that benefit the whole supply chain. Examples of this are adapting our specifications seasonally to reflect crop quality.
NFU Pledge 8
Communicate directly with our grower suppliers so that:
• They can better understand consumers’ needs therefore make informed production decisions and
• We can better understand the production challenges that growers face and be flexible to changes in supply.
Co-op commitment
We are committed to developing close, meaningful relationships with our suppliers, growers and have already made great progress in meeting this commitment over the past 12 months. Our intention is to work and communicate with produce growers in the same way we work with our protein producers. This is likely to involve creating grower groups, holding grower days on farm, extending the scope of our agriculture web pages, newsletters and agriculture shows to include produce. We believe we will better understand production challenges if we are on farm at key points in the production cycle. To make this happen, the Co-Op has re-organised the produce category team, doubling the number of specialist produce technical managers and investing in commercial resource.
NFU Pledge 9
Seek to adopt a joined-up business plan across all aspects of our business and throughout our supply chain so that retail buyers, intermediaries and growers are working together towards common goals for the fresh produce category.
Co-op commitment
To agree a joined-up business plan across all aspects of our business and throughout our supply chain so that retail buyers, suppliers and growers are working together towards common goals for the fresh produce category. This is the way we work with our protein strategic supply partners. We jointly agree and co-own a cross-functional Strategic Development Plan (SDP) that lays out the priorities for the immediate year and outlines the milestones for subsequent years. We are committed to invest time to build SDPs with our strategic partners and their growers that deliver benefits throughout the supply chain and for our customers. We will thrive for new ideas and innovation to ensure a sustainable future for all partners both current and new growers and suppliers who enter our supply chain.
NFU Pledge 10
When in season, commit to increasing the proportion of British fruit and vegetables that are available for consumers to buy.
Co-op commitment
Supporting British Farming is a cornerstone of our food strategy. When in season, we will always try to increase the proportion of British flowers, fruit and vegetables that are available for consumers to buy. We’ve been successful in increasing our British seasonal ranges by engaging in more strategic planning with suppliers to agree specifications and increase the volumes of crops that we’ll take in the future. For example, year to date, our British flower range has grown in volume by 83% versus total category of 18%.
NFU Pledge 11
Contribute to investment in horticultural research, development and product innovation that benefits consumers.
Co-op commitment
A key focus for our produce sourcing model is developing long-term relationships with suppliers and growers. We want to build confidence in our suppliers and their growers that we work with to invest and re-invest in a sustainable future. To encourage this way of thinking, we are taking a longer-term approach to initiatives that take time to see a commercial or customer benefit, such as varietal development and environmental sustainability. We will extend our current R&D programme and investment into produce as part of our commitment to British agriculture.
