Andrew Watts speaks to Simon Twigger, fresh food director for Sainsbury’s, about the company’s role in shaping the nature of supply chains

Grocery retailers are forever the recipients of farmer angst in some form and in nearly every case it comes down to price: producers typically want more than the retailer is prepared to pay. Rising feed and energy prices, the increasing cost of machinery and equipment plus a tightening supply of quality labour all compound the farmer’s woes.

For the supermarkets the intense competition and bitter rivalry between the main multiples has led to a ceaseless war, with price the main battleground. But in recent years and especially since the 2003 reforms of the Common Agricultural Policy, price has ceased to be the top priority, being superseded by security of supply. Other factors, such as the need for constant innovation in category development and quality of product, have also had a role to play in shaping the nature of supply chains – in short an advanced grocery industry needs an advanced supply chain. Achieving this needs buy-in at every stage.

“Customers are interested in where their product is going and farmers want to know where their product is going. You can’t do that without segregating product and producers. It’s not just milk – it’s the case across all categories,” says Simon Twigger, dairy category manager for Sainsbury’s. Implementing this approach is not a new concept, but it does mean that for a retailer to meet customer expectations it needs to be closer to the supply chain.

“Dairy is at quite an exciting stage in its development. It might not feel like it for a lot of farmers, but for us British dairying is changing because it’s beginning to deliver dividends along the supply chain. We’ve been able to link our dairy group to our beef supply through initiatives such as the black and white calf scheme and our veal scheme. All our veal is now British, for example. We’ve been able to bring the supply chain together, rather than deal with its components in isolation.”

At the heart of this is solid farmer involvement and having gained a closer understanding of the workings of farm businesses across several sectors it is able to use its expertise as a large business to identify efficiencies and improve a farm’s business performance. For Mr Twigger it is this bringing together of cultures and the vast opportunities this represents that makes his work at Sainsbury’s exciting.

Part of this culminated with the launch of its own animal welfare standard. A survey revealed that the welfare of farmed animals is a major concern of consumers, with 40% rating it their top priority. But there are other achievements and the dairy development group has identified future threats that, as partners, they can move to neutralise early.

“A lot of the farmers [on the steering group] raised concerns about their carbon footprint. The benefit of this exercise has shown the differing energy levels of various farms. Not only are they able to reduce the size of their carbon footprint, but benchmarking themselves against other members of the group has identified efficiencies and is helping to take costs out.” This has resulted in a net benefit of £1.66m in savings across the group – equivalent to £5,000 per farmer.
On the thorny issue of super dairies he is less assertive, saying it’s not an issue that Sainsbury’s has considered.

“We have our group of roughly 340 farmers and that is who we are working with.” For him it’s about making greater use of the milk produced in the UK, and dispelling some of the myths associated with dairy. “Human health and dairy is one area where there are conflicting messages. On the one hand you have the Food Standards Agency raising concerns around saturated fats, yet we know most people don’t consume enough calcium. If we let the saturated fat element dominate we are going to affect health in other ways.” To Mr Twigger, rectifying such miscon-ceptions will do more to promote the worth and importance of the UK dairy sector than fretting about scale or milk prices.