Wednesday, October 04, 2006

Tescopoly, where every little hurts

"Every little helps", goes Tesco’s marketing slogan. Which is alright if you’re a shareholder but not so good if you’re a dairy farmer, fruit grower, small shopkeeper, someone who enjoys the character of a local community or who cares about the environment. Then it’s more like "every little hurts".

Yesterday the supermarket giant, which controls 30% of the food retail market in Britain, announced profits of more than £1,000 million for the last six months and also announced plans for world domination.

The phenomenal growth of Tesco’s profits is undoubtedly at the expense of its suppliers. In Britain, for example, dairy farmers are being forced out of business at the rate of 40 a week. In the last decade, the average retail price for a litre of milk has risen from 41 to 48 pence whilst the price the farmer gets has fallen from 24 to 18 pence, below the cost of production.

Chief executive, Sir Terry Leahy denied supermarkets like Tesco’s are killing off the high street. But with £1 in every £7 spent on food going into Tesco coffers, and a new Express store opening every day, the effects are self-evident. In the five years to 2002, 50 specialised stores including butchers, bakers, fishmongers and newsagents closed every week. In January 2006, the All-Party Parliamentary Small Shops Group released a report on High Street Britain: 2015, predicting that independent shops could disappear from the high street altogether inside a decade.

Stalham, in Norfolk, is probably typical of many small towns, which have seen their high streets change dramatically since the arrival of Tesco. The local paper reports that where once the town boasted a baker, fishmonger and greengrocer alongside the still-existing hardware store, butcher and general shop, those have now been replaced by estate agents and takeaways. A small Somerfield and Co-op have been turned into a factory shop and funeral parlour
respectively. The Tesco-isation of the high street is repeated across East Anglia and nationally.

Last year, Friends of the Earth, in an investigation of Tesco’s power, reported that it planned to open more than 100 new stores in 2005/06. Its world-wide reach is growing rapidly with over 200 new stores planned outside the UK, from Japan to Poland. There are even industry rumours of an entry into the US. The report noted: "Our environment is paying the price of Tesco’s success. Its stores are energy-intensive eyesores. Its food is flown from all over the world and trucked around the UK, contributing to climate change. And the company’s demand for ingredients like palm oil is turning natural forests into wildlife deserts." Surveys have shown that at the height of the UK apple season, more than half of Tesco's apples are imported because they are cheaper.

ActionAid investigated conditions for South African fruit workers in its report Rotten Fruit. This detailed how Tesco is pushing down prices below cost of production, forcing suppliers to rely on cheap seasonal labour, paying poverty wages, and exposing workers, particularly women, to unacceptable working and living conditions. Tesco makes about £1m a week from banana sales, yet all is not well in the plantations that supply them. Between January 2002 and January 2004, Tesco cut the retail price of loose conventional bananas by over 30%.

Some campaigners are hoping that the Competition Commission’s current inquiry into the power of supermarkets will come up with some answers. They shouldn’t hold their breath. An earlier report gave the big supermarkets a clean bill of health. So long as Tesco, Sainsbury, Asda and the rest are run for profit then suppliers, communities and the environment will inevitably suffer. No amount of "going green" or "corporate social responsibility" cosmetics by Tesco and the rest will alter that iron law of capitalism.

Paul Feldman, communications editor

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