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Justin King: Value with values - the case for a new dynamic between farmers and retailers

27 July 2012

Justin King City Food Lecture

At a time when people are starting to appreciate the significant differences between supermarkets when it comes to their relationships with British farmers, it’s worth considering the lessons to be learnt from the success of international fair trade.

Sainsbury's has long been a proud proponent of ethical trade. This week marks the fifth anniversary of our move to sell only Fairtrade bananas. It's no coincidence that our Development Group for dairy farmers is also celebrating its fifth year: in both cases a minimum price guarantees the farmer the costs of their production, and in both cases we pay a premium on top as an investment in higher standards and sustainability.

It's a premium we're happy to pay, because there's a clear business case for this kind of approach. It is sustainability in its truest form - safeguarding the supply of quality goods, and ensuring they are produced to the standards both we and our customers expect. Today's customers are increasingly looking for brands that offer values as well as value.

Our milk is all British, but of course our bananas come from further away. The year-round sunshine and white beaches of St Lucia may seem worlds apart from a Shropshire dairy farm, but in fact, there's much to unite the two industries. Both milk and bananas are fundamental parts of practically every customers' weekly shop, and are in the top five products we sell each week. They're products people expect to find at all times of the year, in all of our stores and to buy without paying over the odds. But customers don't want that value at any price. They trust Sainsbury's to ensure the right balance.

I feel huge pride in the role both our customers and individual farmers have played in the ethical trade movement. After the devastating impact of Hurricane Tomas in 2010, many St Lucian banana farmers showed great courage and resilience in restarting their production. When I visited earlier this year I was told time and again that without Fairtrade and Sainsbury's there would no longer be a banana industry in St Lucia - the minimum price and premium, plus the ongoing demand from our customers, is what gives farmers the confidence to invest. And assuring the St Lucian government of our ongoing commitment to the Windward Islands gave them confidence in moving ahead with a $2 million investment to help their farmers improve productivity and quality, and to speed the recovery process.

While many of the challenges facing farmers around the world are different from those in Britain, much is the same. They share a desire to work the land, and to safeguard the livelihoods of the generations to come. Like Fairtrade abroad, our Dairy Development Group was established to provide British farmers with security and incentives and help to farm more sustainably.

Five years on, as well as being the world's largest retailer of Fairtrade, we've invested £40 million through our Dairy Development Group, seeing significant advances in animal welfare and environmental standards. The surprise for some is that in doing so we have also saved our dairy farmers over £10 million, as we've helped them improve efficiency and lower costs, for example negotiating lower energy tariffs.

Over the last five years we have become the world's largest Fairtrade retailer. Domestically our approach has been used in nine different agricultural areas, from wheat and pork to eggs. Looking forward we have committed to hitting a billion pounds' worth of sales in fairly traded products, and doubling the amount of British food we sell by 2020 as part of our ground-breaking 20 by 20 Sustainability Plan.

These are demanding goals and we're not entirely sure, yet, how they will be achieved. But we do know that it's what our customers expect and what our farmers need - wherever they are in the world. We're also clear it will only be achieved by working in partnership; and our farmer Development Groups and Fairtrade enable us to do just that. We believe this is how we can sustain a future of farming that's in everyone's interests, and we believe that both our farming partners and our customers will see the value in these values.

This op ed originally appeared in the Daily Telegraph Online on 27 July 2012.