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The U.K.'s agriculture sector is set to undergo a "paradigm shift" in industry relationships which moves towards a more collaborative approach, the National Farmers' Union said Wednesday, with longer-term contracts, less tendering, and better planning.
"There will be a move away from a very short-termist approach to supply chain practice to a more collaborative, longer-term model which will help farmers, retailers and manufacturers to overcome some of the key challenges they are facing," said Tom Hind, the NFU's director of corporate affairs.
"More dedicated, structured relationships allow for greater innovation to be fostered," he told the Outlook for Agriculture 2012 conference.
There will likely be more consolidation at all levels of the supply chain, he said, and in manufacturing that will manifest itself in companies looking to offer a 'one stop shop' in key categories.
Retailers are also increasingly likely to move down the supply chain to invest in manufacturing, particularly with own-label products, Hind said, citing Safeway Inc. (SWY) and Kroger Co. (KR) as examples in the U.S., and Wm Morrison Supermarkets PLC (MRW.LN) in the U.K.
Such companies are also likely to target expansion into more global markets, Hind said, with 12 major international retailers already responsible for about 40% of global grocery sales. "It strikes me that the level will probably increase as some of our major retailers recognize their market here is not growing an awful lot and will look to expand overseas," he said.
-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289; firstname.lastname@example.org