Tesco Ireland has agreed an open-ended deal with a group of vegetable growers in the Republic to buy 211,000kg of fresh produce a week at what are described as “above market” prices.
The deal marks a new departure by the company, which previously had agreed supply volumes through a third-party consolidator: a joint venture involving Total Produce and Gilfresh, based in Swords, County Dublin. According to Philip Cantillon, senior produce buyer with Tesco Ireland, the latest move “has strengthened the company’s relationship with growers” and also emphasised its commitment to Irish farming.
Twenty-five growers, most of them from north county Dublin, with others in counties Meath, Louth, Wexford, Cork and Offaly, have signed up for the deal. They will supply Tesco stores across the Republic with a wide range of vegetables, from broccoli, sprouts, cauliflower and carrots to celery, leeks, lettuce, peas, parsnips and tomatoes.
The value of the deal to the growers has not been disclosed “for commercial reasons” but a statement said the volume amounted to “11m kilograms per annum, approximately 1,400 lorries of produce”.
The announcement comes at a time when Tesco has been under severe criticism for allegedly squeezing Irish suppliers to help pay for wide-ranging price cuts, and also for opting to import cheaper foodstuffs from the UK while reportedly reducing the shelf space afforded local producers.
Tesco’s claim that it remains the world’s largest buyer of Irish food has failed to silence the critics. At a recent meeting of a parliamentary committee that is examining the retail trade, Colm Warren, a founder member of the now defunct Dublin-Meath Growers’ co-operative, blamed Tesco for its collapse and accused the multiple of acting ruthlessly, after the co-op had invested €5m to meet its supply demands.
At the same committee hearing horticulture minister Trevor Sargent acknowledged that suppliers have been afraid to speak out about the terms being imposed by multiples in case they are delisted. He said he favoured a statutory code of practice for the sector, backed up by a retail ombudsman, two measures currently being considered by government.
Another Tesco critic has been Padraig Walsh, president of the Irish Farmers’ Association (IFA), who has accused the company of jeopardising the survival of the fresh produce sector in the battle for market share and improved margins. The IFA had no involvement in the new supply deal, and a Tesco spokeswoman said the 25 growers had not been asked to take a cut in margins and were being paid above the market rate.
One of the growers, Dessie Farrell, who supplies leeks and parsnips to the company, said that “while the economic downturn puts pressure on profitability across the sector, Tesco Ireland continues to pay well for quality Irish produce”.
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