The Northern Ireland Assembly - Report on Retailing in Northern Ireland

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
INQUIRY INTO DEBT IN THE AGRICULTURE INDUSTRY
WRITTEN SUBMISSION BY: MUSGRAVE SUPERVALU-CENTRA

Musgrave SuperValu-Centra welcomes the opportunity to contribute to this very important forum and is confident that the aims of the committee can be achieved in terms of a pro-active, collective response from the industry to supporting and promoting local producers at retail level.

Musgrave SuperValu-Centra is in partnership with independent retailers, providing unrivalled distribution and an extensive retail support package to retailers who trade under our franchise brands SuperValu and Centra.
Entered NI Market in 1996 with the acquisition of 5 medium sized supermarkets.
Currently service 33 SuperValu supermarkets and 16 Centra stores, 49 retail outlets in all, 33 of which are locally, independently owned.
In the process of upgrading company owned stores in NI for sale to local, independent retail operators.
Store refurbishment plans entail considerable investment in service providers throughout the Province, as well as job creation in stores.
Combined retail t/o in NI in 1999 was £138 million stg, with group retailers servicing approximately 8% of the grocery market.
MSVC NI offices and distribution centres established in Fortwilliam and Mallusk.
119 company central-office and warehouse personnel are employed in NI, with a further 2,000 employed in independent and company-owned stores.
Independent grocery sector in ROI accounts for 48% of total sales, largely due to Musgrave Group Support, by comparison with around 29% independents’ shares in NI. MSVC expansion into NI market will start process of restoring balance between the multiple and independent sectors, ensuring healthy competition and choice in the marketplace.
Independent retailers re-invest in the local communities in which they make a living rather than withdraw profits to headquarters of a multi-national multiple group.

Blight problems experienced in the NI market necessitated the supply of ROI produce during 1999. Local sourcing is the preferred option which is only over-ridden when suitable supply is not available.

Collaborative projects with Ulster Pork & Bacon Forum and local suppliers, Fred C Robinson’s, to market local produce and build brand identity — in-store POS campaigns, national TV advertising and brochures for "Are You Pickin’ Ulster Pork?", campaign etc.
Supplier partnerships in NI include the development of Armagh Baked Ham exclusively for SuperValu and Centra by Mourne Country Meats.
Developed a gourmet tomato range exclusively with Greenmount College in Antrim.
Projects with Ulster Farmers Union — sponsored trade shows/potato conference — 24 Feb 2000, Balmoral Show etc.
UFU Chairman Will Taylor frequently attends local SuperValu store openings, as a guest of the independent owners, and has written a testimonial to SuperValu’s support of local producers.
Farming Life newspaper supplement sponsored for Balmoral Show organisers.
Sponsor "Insight" dedicated supplement in Ulster Grocer bi-monthly, highlighting joint business initiatives with NI producers and suppliers and providing editorial space to spokespersons of producer organisations.
Sponsored 1999 supplement in UK Grocer magazine promoting local NI supplier base and have committed to 2000 publication also.
MSVC £3,000 bursary for Food Safety (MSc) students at the Agriculture and Food Science centre in Queens University. Recognising that farm businesses need to enhance quality management systems to optimise competitiveness and profitability and also that students from farming backgrounds need financial support to counteract high "drop-out" rate due to financial constraints.
Musgrave SuperValu-Centra personnel make themselves available to NI producer groups and trade organisations to discuss business development and promotion.
£3,000 awards fund presented annually in association with NIFDA (Northern Ireland Food and Drink Association) to encourage the further career development of agri-food post-graduate students.

MSVC has been central to the establishment of NIIRTA, the Northern Ireland Independent Retail Trade Association, and commits to having the Association address measures for independent traders to develop business with local producers.
Identify key individuals from major organisations involved in producing, marketing, and retailing NI produce — eg: PONI assoc, major retailers, UFU, Govt agencies — and schedule a one day "think-tank" to present issues and examine solutions. MSVC would welcome the opportunity to be involved.
Formalise contact with existing marketing boards for the different sectors eg: LMC meat marketing board, NIFDA etc to address sectoral issues and promote produce at trade and consumer level through dedicated marketing campaigns carried throughout the retail industry.
Develop marketing boards, as required in other sectors, such as fruit and vegetable marketing or dairy produce.
MSVC would dedicate suitably qualified personnel to work with each board, and alongside other retail and trade representatives, to pursue the objectives of the marketing boards.
Establish a resource/Authority advising producers on how to satisfy current market demands, in terms of production, packing, distribution etc. The resources of highly experienced MSVC trading personnel could be made available to advise the authority.
In the ROI we have worked closely with the Irish Farmers Assoc to build producer groups capable of supplying modern retail and consumer demands. With the already high UFU producer group standards, similar trading relationships can be effected in NI.
We partner individual indigenous supplier companies to develop own-brand food lines for our stores — egg producers, dairy ranges etc — although new to the NI market, it is our intention to identify opportunities for similar trading and "mentoring" partnerships in the Province. (see Para 5:1 Mourne Country Meats).
We support Government in the ROI at a very practical level, on all food supply and producer issues. For example, in 1996 during the BSE scare, we headed a Govt expert group set-up to talk down the scare at consumer level and get Irish beef back on supermarket shelves.
The Musgrave Group Managing Director Seamus Scally is the only retail representative on a Government appointed "Agri-Food 2010" committee to address indigenous food supply and marketing. MSVC NI personnel could be made available to local Government on a similar basis.

Sheila Gilroy-Collins, Marketing Managing
Musgrave SuperValu-Centra Northern Ireland Tel: (232) 835021

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
INQUIRY INTO DEBT IN THE AGRICULTURE INDUSTRY
WRITTEN SUBMISSION BY: SAFEWAY

I refer to Dr Ian Paisley’s letter of 21st December addressed to my colleague Brian McColl. I am replying on behalf of Safeway.

1. It is difficult for us as retailers to comment on the prices which potato growers receive from the packers they supply. As you are no doubt aware, the supply chain for potatoes and other types of produce has three stages. The grower supplies the packer, who packs and transports the product to the retailer’s distribution centre (in our case our depot at Larne). The retailer then delivers to his own stores. The price we charge our customers, therefore, is driven by the price we have to pay the packers who supply us.

2. We do not have commercial relations with individual growers. However, what happens in the market place inevitably works its way back up the supply chain:

The potato market has been very unstable over the past 12 months. In the first quarter of 1999, potato prices were relatively high as a result of the poor crop of 1998. From May onwards, however, a bumper crop of new potatoes came on to the market and since then prices have fallen dramatically. In Northern Ireland our biggest volume line is the 2.5kg bag of white potatoes. Our retail price for this product in Northern Ireland has fallen from £1.89 to 0.95p, or by 50%, since last Spring.
In Northern Ireland, around 95% of the potatoes we sell are supplied to us by Glens of Antrim (GOA). The remainder are supplied by Bartletts, our Scottish supplier. Over the period since last Spring, while our retail price for 2.5kg whites has fallen by 50%, GOA’s price to us is down by only 38%. In Scotland, by contrast, we have been able to reduce our retail price to 0.65p per 2.5kg bag or (66%) because our major supplier, Bartletts, have cut their price to us by a similar percentage.
The reason, therefore, that Northern Ireland consumers are paying 0.30p more for a 2.5kg bag than Scottish consumers is not "profiteering" by retailers but the substantial difference in our supply terms between Northern Ireland and Scotland. Bartletts are currently supplying us at a price per case which is over one third lower than GOA.
The reason for the differential is not that GOA are making "excessive" profits. The problem for them is that Northern Ireland is a small, relatively high cost market in which to operate. GOA are obliged to trade on lower volumes and therefore higher overheads than they would if they were based on the mainland. They also have higher land costs and pay more for their seed. We estimate that they are working on an average net profit margin to sales of around 5%, which is about the same as our own net margin. Clearly we could reduce our prices to Northern Ireland consumers by sourcing all our potato supplies from Bartletts in Scotland but we have decided that we must continue to play our part in supporting the agricultural economy in Northern Ireland.

3. I cannot really comment on your point about the manufacture of crisps as GOA do not supply us with this product.

4. As far as our potatoes are concerned, the country of origin is always made clear on the bag as well as the variety.

I hope this information answers the concerns you have raised, but if there is anything further you need, please let me know.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
INQUIRY INTO DEBT IN THE AGRICULTURE INDUSTRY
WRITTEN SUBMISSION BY: SAINSBURY’S SUPERMARKETS LTD

1.1 Sainsbury’s Supermarkets Ltd (Sainsbury’s) is the largest subsidiary of J Sainsbury plc which also operates Savacentre hypermarkets, Homebase home and garden centres and Sainsbury’s Bank in the UK plus Shaw’s supermarkets in the US and Edge in Egypt.

1.2 Sainsbury’s sources products from over 2,000 suppliers who provide some 12,000 food lines and 9,000 non-food lines. Each week around nine million customers shop in over 400 Sainsbury’s supermarkets throughout the UK. Last year, Sainsbury’s sold over £11.5 billion worth of food in the UK. £6 billion worth of this was food from the UK.

1.3 Today Sainsbury’s has 100 suppliers in Northern Ireland, supplying fresh produce and product in stores to the Province and the rest of the United Kingdom. Sainsbury’s has committed to doubling the value of its existing business sourced from Northern Ireland to between £150 and £200 million over the next few years and the value is now £120 million. Around 150,000 customers shop in the stores each week.

1.4 Sainsbury’s potato supplier in the Province is Glens of Antrim based in Cushendall, Country Antrim. Glens employ 35 people and supply potatoes to all Sainsbury’s stores in the Province. The business is worth £1 million per annum.

1.5 On 20 June 1995 Sainsbury’s announced its intention to invest in Northern Ireland with an initial tranche of 7 stores costing £100 million and providing 2,200 full and part time jobs. Sixteen per cent of the first 1,000 jobs were from the long term unemployed.

1.6 There are five Sainsbury’s supermarkets and petrol filling stations: Ballymena (December 1996), Forestside, South Belfast (March 1997), Coleraine (December 1997), Craigavon (March 1998) and Newry (September 1998). Sainsbury’s in Armagh (December 1998) does not have a petrol filling station. Sainsbury’s in Strand Road, Londonderry opened on 25 January this year providing around 350 jobs (this store does not have a petrol station). There are seven Homebase stores in the Province as well.

1.7 Sainsbury’s currently awaits planning determination on a number of other applications including a flagship store Sprucefield, Lisburn and Newtownabbey. Further opportunities are being appraised to provide an ultimate portfolio in Northern Ireland of some 12-14 supermarkets.

1.8 This document outlines our Sainsbury’s policy on sourcing Northern Ireland produce; margins and pricing policy and our buying policy using a number of case studies including potatoes.

Sainsbury’s is committed to UK agriculture, working with farmers to ensure high-quality, value for money food is available to consumers. Like all supermarkets we do not buy direct from farmers, we buy meat from processors and fruit, vegetables and salads from packers and pre-packers.

2.1.1 Prior to Sainsbury’s announcement in June 1995 of its development plans for seven stores across Northern Ireland, the Company sourced £80 million worth of produce a year from Northern Ireland from 17 local suppliers. Sainsbury’s has committed to doubling the value of its existing business sourced from Northern Ireland to between £150 and £200 million over the next few years and the value is now £120 million.

2.1.2 Today Sainsbury’s has 100 suppliers in Northern Ireland, supplying fresh produce and product in stores to the Province and the rest of the United Kingdom. This is an example of the importance which the Company places on sourcing quality and will continue to work closely with the Industrial Development Board (IDB) and other agencies to increase the number of suppliers. No company is too small to supply Sainsbury’s. No fee is required from companies in order to become a Sainsbury’s supplier, and no penalty clauses are imposed in our supply contracts. The vast majority of our suppliers are free to trade with competitors. Legal disputes are rare.

2.1.3 It makes sound commercial sense to maximise local purchases for supply to our outlets in the Province, particularly on produce where there are both cost and freshness benefits in not having to transport goods several hundred miles from the mainland. Although there is strong demand in the Province for local products, we share the view of the General Consumer Council that consumers in the Province will buy local products only if they represent good value for money and good quality. Regarding the transportation of food, we estimate that we eliminated at least 1.6 million km last year, cut fuel consumption by 597,000 litres and cut CO2 emissions by 1,530 tonnes. Our suppliers also reduced food mileage by 480,000km.

To increase the supplying opportunities available to local producers, Sainsbury’s has been proactive in sourcing product from Northern Ireland including three ‘Meet the Buyer’ sourcing conferences. The first was held in Belfast in 1995 and smaller events were held in Londonderry in April 1996 and in Newry in May 1998. Potential suppliers met Sainsbury’s buyers on a one-to-one basis to talk about supplying opportunities.

2.2.1 In November 1999, we, along with the Londonderry Chamber of Commerce, ran a seminar to highlight supplying opportunities with Sainsbury’s both in Northern Ireland and throughout the UK for smaller companies in the area.

Three Northern Ireland companies – Glens of Antrim Potatoes (Cushendall, County Antrim), Sparky Pac (Comber, County Down) and Hughes Mushrooms (Dungannon, County Tyrone) became the first Northern Ireland ‘Partners in Produce’ when Sainsbury’s launched its Partnership in Produce initiative in Northern Ireland in November 1997.

2.3.1 Partners benefit by the partnership providing them with a planned market for their produce and the security of a financially sound trading relationship so that growing and packing can be planned against clear sales programmes and with the back-up of Sainsbury’s technological and research expertise.

2.3.2 Jobs have been created as a result of Sainsbury’s supplying opportunities in Northern Ireland. The major share turnover of Dungannon Meats, for example is with Sainsbury’s and as a result of this sustained level of business, Dungannon Meats now employs over 620 people and is one of the largest employers in the South Tyrone area.

2.3.3 We believe that the support we give to products through in-store promotion and our Partnership schemes is an effective way of helping the agricultural sector. If any supplier finds that his business is being diminished because of an initiative we are taking with other products in that same category, then we would work with him to try to develop his product range so that he had other means of increasing his income by, for example, spreading the product to more stores. It is of no benefit to Sainsbury’s to see one of our suppliers in financial difficulty. We want them to succeed as much as they do. We need suppliers who are investing for the future, investing in better quality and investing in new varieties to improve choice and quality and who ensure that welfare and health and safety issues are dealt with. Last Autumn, Dungannon Meats, announced a new scheme to use bull calves for beef products to help tackle the current crisis in the sector.

2.3.4 We have looked at the possibility of supporting farmers’ markets but we came up against a number of problems such as planning constraints restricting the use of our car parks for anything other than car parking.

In 1999 Sainsbury’s participated for the fourth year at Northern Ireland’s premier agricultural show – the Balmoral Show. The theme of Sainsbury’s stand was ‘supporting local growers and suppliers’, a reaffirmation of the Company’s commitment to Northern Ireland growers and suppliers and local sourcing in general.

2.4.1 At a reception for suppliers held at the stand, the Sainsbury’s Outstanding Supplier Achievement Awards for local suppliers were inaugurated. The awards are for local suppliers who achieve exceptional business growth with the supermarket. The Awards illustrate both Sainsbury’s and the award winners consistent commitment to quality last year. Dungannon Meats won the large company category and Glens of Antrim Potatoes won the small company award. Their combined growth in business with Sainsbury’s was 350 per cent. Glens of Antrim employ 35 people and supply potatoes to all Sainsbury’s stores in the Province. The business is worth £1 million per annum.

If there are suppliers and sources in Northern Ireland who are able to provide a product that is as good as one that we are already sourcing from the mainland or elsewhere then it makes sense in terms of freshness and delivery costs to develop that source. In February 1998 Sainsbury’s launched a major Supplier Development Programme to assist Northern Ireland food companies in the development of their business with Sainsbury’s. The programme, delivered by Leavercliff Associates, has given 27 local food companies a unique opportunity to understand how to work with and develop their business with Sainsbury’s.

2.5.1 The programme took the form of a series of seminars covering areas such as understanding the UK market and identifying and exploiting product opportunities. Companies were supported by a number of one-to-one sessions, which looked at logistics, financial analysis and technical requirements. This programme is now complete and has resulted in these suppliers growing their business with Sainsbury’s by around £12 million.

2.5.2 As a result of the Supplier Development Programme, Hughes Mushrooms of Dungannon is set to triple its business with Sainsbury’s and is on target to supply mushrooms to the value of almost £5.5 million to Sainsbury’s stores throughout the Province and across the rest of the UK.

2.5.3 The second Sainsbury’s Development Programme was launched in March 1999 and involved 10 additional local Sainsbury’s suppliers. Annual turnover by November 1999 had increased by 35 per cent for the suppliers involved. Forecast turnover for the next 12 months is predicted to be around 130 per cent.

A number of Northern Ireland companies who have become suppliers to Sainsbury’s since the company began trading in Northern Ireland have subsequently become suppliers to Sainsbury’s on the mainland. These include Tayto Crisps, Farm Fed Chickens, Irwin’s bread, Morrows Pate and Hughes Mushrooms. Size is not a barrier to supplying the mainland market.

2.6.1 The company has sourced products from Dungannon Meats, Cuan Oysters and Denny’s for around 20 years prior to developing stores in Northern Ireland. Farm Fed Chickens from Coleraine, Sainsbury’s only source of corn fed chicken, has almost doubled its business with Sainsbury’s since 1997 and recently won an additional contract expected to be worth £5 million annually with Sainsbury’s to supply its premium range of corn fed chicken to the company’s top 70 stores. Hughes Mushrooms will triple its business with Sainsbury’s over the next 18 months to around £4.7 million a year.

We are committed to supporting the local farming industry and have been labelling meat, fruit and vegetables as home-produced for many years. Therefore produce from Northern Ireland is marked ‘Product of Northern Ireland’. By the middle of this year we will have labelling of origin on the remaining fresh meat products which include ready meals, sandwiches and delicatessen products.

2.7.1 We are looking to extend regionality across the UK and ‘Products from Northern Ireland’ will be incorporated into this policy. Any future labelling will be as simple as possible for ease of recognition and designed with the customer in mind

3.1 Our primary aim is to deliver the very best competitive offer to our customers. In accordance with our view that the Province is part of a single national market we operate the same pricing policy in the Province as we do on the mainland, that is a national pricing policy with a few tweaks to reflect specific local trading conditions such as in the potato (see table 1), milk and bakery industries for example details of which are below. It is a popular misconception that retailers are making large profits at the expense of farmers.

3.1.1 The IGD announced recently the results of a survey into consumers attitudes to food prices and profits. It found that consumers had exaggerated views about profit levels. Consumers thought an average of 36 pence in every pound spent in food shops went in profit to retailers and 26 pence to manufacturers – the actual figures are 6.5p and 8.5p. [i.e. manufacturers profits are proportionately higher.]

3.1.2 The IGD research showed that there is little understanding of how industry makes or uses profits and there is an exaggerated view of how large profits are.

A large proportion of the cost which arises between the farm gate and the retail shop include the costs of sale and transport, processing, packing, distribution and retailing costs. Retailing costs include the cost of promotion, staff, depot and the cold chain. Processor costs have risen significantly due to additional food safety and hygiene requirements. These costs have been passed onto the retailer. We are looking ways in which these costs can be reduced without any detrimental impact on the safety and integrity of the food we sell.

3.2.1 It has been suggested that retailers put the price paid at the farmgate as well as the retail price on goods. The only price we pay is the one to our suppliers for packed produce and produce ready for retail sale. We are not involved in the price our suppliers pay to farmers. It would be far too complicated to have different labelling. If consumers are to understand what they are being presented with, then each added cost after the farmgate, be it added by the packer, abattoir, processor or retailer, would have to be explained. It is in our interests to have profitable farmers.

TABLE 1: List of commodities supplied by Northern Ireland supplier, Glens of Antrim Potatoes to stores in Northern Ireland all year compared to average prices of mainland suppliers.

	7/2/99 Cost £	Retail (pence)	%	7/8/99 Cost £	Retail (pence)	%	Present Cost £	Retai (pence)	%
Sainsbury’s Loose baking potatoes
Glen’s cost	11·3	49	42·3	9·6	39	38·5	7	55	33
Mainland	11·1	49	43·4	9·5	39	39·1	6·45	55	38·3
Sainsbury’s King Edwards 2·5kg								1·79	44·1
Glen’s cost	10	2.39	47·7	N/A	N/A	N/A	8	1·79	44·1
Mainland	10·06	2·39	47·4	8·06	1·99 (proma)		7·36	1·79	48·6
Sainsbury’s White Potatoes 2·5kg
Glen’s cost	9·02	1·69	33·3	6·5	95	14·5	6·25	95	17·8
Mainland	8·96	1·69	33·7	5·9	95	22·4	3·8	69	31·2
Sainsbury’s Maris Piper 2·5kg	10·6	2·39	44·6	11	1·99	30·9	8·3	1·49	30·4
Glen’s cost	10·6	2·39	44·6	11	1·99	30·9	8·3	1·49	30·4
Mainland	9·94	1·89	34·3	10·4	1·99	34·7	7·2	1·49	39·6
Sainsbury’s Red Potatoes 2·5kg
Glen’s cost	9·26	2·29	49·5	8·7	2·49	56·3	7	1·49	41·2
Mainland cost	9·3	2·29	49·2	9·02	2·49	54·7	6·44	1·49	45·9

Programming plans governing the amount of supply are agreed with produce suppliers. These plans are very beneficial to suppliers as it guarantees them a market for their product. Last year we launched an initiative with our three principal organic dairy suppliers and the Organic Milk Suppliers Co-operative. We have undertaken to pay a minimum price of 29·5 pence per litre over a five year rolling commitment. This is set against the purchase of minimum volumes raising to 155 million litres in 2003/4. We anticipate that organic milk will by then represent 15% of our total milk sales.

3.2.4 Sainsbury’s sources all its conventional milk in the Province from local dairies. When we opened our first store, representatives of the Dairy Industry highlighted their concerns to us over the possible impact on milk rounds in the Province. We made a concession, to raise the price we would charge for 4 pint milk from a mainland retail price of 83p to 89p.

Sainsbury’s bakery trade with Northern Ireland suppliers has increased by £0·5 million over the past year. This represents an increase of almost 17 per cent. Sainsbury’s is aware of the problems of the local bakery industry which far pre-date the arrival of Sainsbury’s in the Province. There has long been serious overcapacity in the industry which is inefficient and has been unable to make reasonable profits despite high retail prices. The IDB recognises that there is overcapacity in the industry and has said that it is "unable to finance a sector which was already over capacity" (20/11/99).

We do not sell Economy bread in Northern Ireland (sold at 17p on the mainland) because it is not possible to source this locally or to sell at this price. Our decision not to stock Economy bread reflects a need to recognise the sensitivities of this sector. We provide choice and value for money in the range of bread that we offer in the Province. We sell a standard white sliced loaf which is locally sourced at 35p (on the mainland the same loaf is sold at 39p). All key sliced lines are locally sourced which accounts for 75 per cent of our bread sales in the Province. Northern Ireland bakers sent around £1 million of bread to our mainland stores last year.

Sainsbury’s is committed to sourcing the core bread range from the Province and extending the range of regional lines as appropriate. Since 1997 a local baker, Irwins Bakery, has supplied bread and regional products to around 90 of our stores. This company has recently invested £5 million in a new state of the art bakery. Cake products have been the biggest growth area as additional regional suppliers have been taken on board to supply regional customer demand. Howell House bakery has shown significant progress and have returned growth of 250 per cent. Other successful local bakeries have updated their production methods, diversified towards the production of more sophisticated bread products (soda and potato farls) and have successfully exploited the demand for locally sourced products.

4.1 Seventy five per cent of the food and drink that Sainsbury sells is from the United Kingdom. In value terms, we sell about £120 million of British food and drink each week – over £6 billion per annum. Around 90 per cent of the food and drink that Sainsbury sells that could be sourced from the UK is from the UK.

4.1.1 We have to recognise that after quality, our customers rate choice as their top priority. It is our customers’ requirements on varieties for sale that determine what produce and products are made available. Customers not only want products which for climatic reasons are not produced in the United Kingdom such as bananas, avocados, kiwi fruit, and pineapples, but they also want authentic products for example real Parma Ham; products which are seasonally unavailable for example strawberries at Christmas; and products which can be produced more cheaply elsewhere, for example corned beef. The increasing interest in organic produce by consumers and the potential it offered to Northern Ireland farmers were highlighted at ‘Northern Ireland, the Organic Opportunity’ conference sponsored by Sainsbury’s.

4.1.2 Some customers want green beans, soft fruit and new seasons potatoes and lamb, for example, all year round. Either the UK alternative is not of the quality or price that they are looking for or there is no UK alternative. We cannot dictate to our consumers that they must only eat certain foods at certain times of the year. The fact is, consumers can choose to pay the cost of moving these products half way around the world and, from a competitive point of view, if we don’t offer them someone else will.

4.1.3 We do work with our suppliers to maximise availability to locally sourced produce in Northern Ireland to avoid importing from the mainland or elsewhere.

4.1.4 We have to import some products which could be produced in Northern Ireland but, for a number of reasons, are not. Organic food is a prime example. We import 70 per cent of the organic foods we sell. We have to do this in order to meet the ever growing demand for organics in the UK. By doing this, however, we are helping to establish the UK market. We hope that UK producers will eventually make this market their own, substituting with local products wherever they can. Imports of food and drink to the country are not new – for many decades we’ve been importing tea, coffee, cocoa and oranges, for example. Forty years ago we were importing tomatoes and we’ve been importing apples for a number of decades.

4.1.5 Very rarely we import products that we could buy in the United Kingdom. However, levels of supply have not always been what they are today. Take for example beef. We have sourced beef from Eire for 25 years. We first went to Eire because of shortfalls in the UK. We now have long established relationships with these suppliers and feel it would not make good business sense to drop them.

4.1.6 Lack of availability can be a problem. Recently we wanted to run a promotion for UK sourced Back Bacon but found that our suppliers could not obtain sufficient product to meet the increased customer demand that such a promotion would create. The supply just was not there. Our suppliers shared in our disappointment at not being able to get this promotion off the ground having themselves invested millions of pounds in new plants to process and pack pigmeat. Meat promotions can raise sales by 1000 per cent.

4.1.7 We did run the promotion but using bacon from the UK and other sources and sold 2 million packs in one week. 60 per cent of Sainsbury’s bacon is British compared with the national import level of 50 per cent.

Regarding prices for UK and imported goods, if there is a difference in the retail selling price of imported and domestically produced foods in our stores, it is because the cost price at which we have bought the products is different. Where costs are lower for imported product it is usually because their producers have the advantage of a better climate and/or lower input costs.

4.2.1 It would not be right for us to charge customers more for an imported product to protect a British one. Interestingly, whilst our customers are concerned about value for money, in a list of their priorities, cheapness was fifteenth.

5.1 Sainsbury’s is very supportive of initiatives designed to facilitate greater access to knowledge and improved understanding between the countryside, farmers, industry and retailers. For over 130 years Sainsbury’s has been committed both to supporting farming in the UK and to offering customers safe, high quality and value for money food. We have no intention of changing these long standing pledges and are fully engaged ensuring there is a successful future for farming in Northern Ireland and on the mainland.

5.2 Sainsbury’s believe that all parts of the food chain need to work closely together to resolve any perceived differences. Everything Sainsbury’s does as a business is driven by customer demand. Our view is that supermarkets are part of the solution to the present crisis in farming and not the cause of it.

In addition to our support for farmers we are also committed to the UK’s rural communities. Sainsbury’s SAVE scheme (Sainsbury’s Assisting Village Enterprises) scheme allows for the sale of Sainsbury’s branded goods via village stores, thereby helping their viability.

Ever since Sainsbury’s announced its intention to invest in Northern Ireland the Company began working with community groups and charities large and small. This diversity reflects Sainsbury’s strengths, not only as a company but also as a business which has its roots firmly in the community.

5.5 The Company has supported hundreds of charities and community groups around our stores from sponsoring the Belfast Festival at Queen’s to funding Worktrain Ballykeel Ltd in Ballymena, a partnership that provides community based education and training in a very deprived area of the town. Other examples of community involvement, both past and present include: Early Bird Montessori Playgroup, Armagh, County Armagh; Northern Ireland Council on Disability, Belfast; St Patrick’s Day Parade, Newry, County Down; Londonderry & Limavady Agricultural Show, County Londonderry; Newry Drama Festival; Antrim Games; City of Belfast International Rose Trials; Fire Victim Support Vehicle (across Northern Ireland); Loughgall Football Club.