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UK Suppliers Unaffected by Grocery Discounting—For Now

by APICS staff |   2014 | 14 | 8

Despite being in the middle of a supermarket discount war, many UK suppliers say they are breathing easy, Reuters reports. Major British chains Tesco, Asda, and Morrisons are slashing prices to compete with fast-growing Germany-based discounters. However, at least for now, these companies are not squeezing their suppliers for the reduced prices. 

“In the late 1990s, it would just be a case of ‘take your prices down,’” says Shore Capital analyst Clive Black in reference to how stores treated suppliers. “Retailers were fast growing ... and it made sense for the supplier to follow them. Today it’s a more involved conversation.”

Reasons for the power shift include a better regulatory environment for manufacturers, more purchasing outlets leveling the playing field, and higher consumer interest in food quality and traceability, particularly after horsemeat was discovered in processed beef meals in the United Kingdom last year.

“We have not been affected as yet by the supermarkets reducing their prices,” says dairy farmer Graham Walker. “There's no point worrying about it; you just have to work harder and become more efficient.”

Massive Canadian Grain Backlog After Record Harvest

A record-breaking harvest is overwhelming Canada’s grain transportation infrastructure and creating a massive backlog, and grain handlers are hoping to expand capacity, MSN Money reports. Viterra, CWB, and Cargill say they will implement measures such as boosting grain shipping through ports and building or expanding grain elevators.

“Our goal is to create the most efficient port terminal in Canada with unprecedented capability for processing a diverse range of commodities,” says Kyle Jeworski, North American chief executive at Viterra, a large Canadian grain handler. The terminal will move crops including peas, canola, flax, lentils, soybeans, and corn, but work will not be complete until 2016.

Claude Mongeau, chief executive of the Canadian National Railway Company, says they also are considering expanding capacity as long as the grain handlers are doing the same, and apologizes for the backlog, Reuters reports. “I’m sorry that we failed our customers, all of them, not just grain, [by] not being able to meet all their demands,” he says. “But I don't control the weather.”

Study Finds Conflict Minerals Compliance Lacking

Despite a looming deadline for Dodd-Frank regulations that require companies to report any conflict minerals in their supply chains, many businesses still lag behind in these efforts, a PWC study finds. The survey asked 700 stakeholders across 15 industries, with companies ranging in size from $1-to-2 billion. Key findings include the following:

  • About 25 percent of respondents are still in early stages of compliance.
  • Companies are not yet examining the entirety of their supply base in their investigations of conflict minerals.
  • Businesses are devoting human resources to the issue; 83 percent have at least one full-time staff person assigned to compliance efforts.
  • The majority of companies will not require an independent audit.
  • While 90 percent of organizations view these activities as a compliance exercise, many see the benefits of scrutinizing their supply chains.
  • About half of respondents wish to become conflict-free.

Dodd-Frank’s conflict mineral rules requires publicly traded companies to determine and disclose if any of their tantalum, tin, tungsten, and gold may have originated in the Democratic Republic of the Congo or nearby areas. Many companies are expected to file a conflict minerals report by May 31, 2014, though some businesses may be exempt for up to two years.

Lime Lovers Latest Victims of Food Shortages

Shortages and price spikes mean that some airlines are forced to stop serving the fruit in their beverage service, the Associated Press reports. “We temporarily pulled limes about two weeks ago due to skyrocketing lime prices,” says Halley Knigge, spokesperson for Alaska Airlines. Normally, the airline uses about 900 limes every day.

Average lime prices in the United States rose to 56 cents from 31 cents this time last year. Unrest from Mexican drug cartels, flooding, and a Californian drought are contributing to the three-year high, as well as increasing demand for food and drinks that use limes such as margaritas and tacos.

Meanwhile, Yahoo News reports that food price inflation is trending higher than overall inflation. According to the USDA, food prices will increase by 2.5–3.5 percent in 2014. This year, cattle shortages have led to record-high beef prices.

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