Freshways Accused of Profiteering During Pandemic
Acton-based company charged care homes more while reducing farmers' payments
Freshways, the Acton based milk processing company, has been blasted by farmers and care homes who have accused them of profiteering during the coronavirus outbreak.
It is claimed they have significantly reduced the price paid to milk farmers while at the same time increasing what they are charging care homes and other customers.
Freshways says it is the largest independent family-run processor in the country and has a customer list including McDonald’s, British Airways and Costa Coffee. It directly employs over 1,500 people, 150 of whom have now been furloughed.
Managing director Bali Nijjar responded to the criticism, which was first brought to light by a report in the Daily Mail, by saying that the company had been struggling prior to the coronavirus outbreak and had no choice but to cut what they paid to their suppliers and increase the charge to their customers. He says that about 40% of their revenue disappeared but their costs remained the same.
He says that as well as trying to work with farmers 'in these horrendous times.' the company has been in touch with council leader Julian Bell and subsequently assisted Ealing Council with logistics and products. They say they also have been working with local charities including City Harvest and Emmaus House providing donations and storage facilities within their premises.
He added, "In reference to profiteering. This is insulting and a joke. The biggest issue in all of this is the general price of milk. At £1.10 for 4 pints, it is the cheapest liquid drink per litre available. Water costs more !!! That’s the crime.
"We have since day 1 of this crisis been in daily communication with the NFU, Defra and
Government ministers. We have made multiple suggestions to them for targeted support as we
are not able to access The Treasury’s general business loan schemes."
In addition he says that he is having to deal with staff absences due to coronavirus with two of his colleagues in critical condition in hospital on ventilators. One of those is his 38 year-old brother, who is the Operations Director for Freshways.
Prior to the lockdown, approximately half of the 40 million litres of milk produced every day were sold in restaurants and cafes with the rest sold in foodstores. Commercial sales of milk have halved since the current restrictions were put in place.
The milk farmers say that the prices paid by Freshways leaves them facing financial ruin and they are asking for government support to enable them to keep operating. They also allege their cash flow situation has been made worse by the failure of Freshways to pay them since February and that they have had to dispose of milk after Freshways failed to collect it as arranged.
Freshways MD Bali Nijjar with his customised gold Mercedes. Picture: Instagram
Freshways reduced the payments made to farmers by 2p a litre this month saying that the current crisis had brought them to the brink of collapse. They are also being asked to accept the ‘spot rate’ for 60% of the milk they sell to Freshways which is considerably below the contracted rates they should receive.
The Royal Association of British Dairy Farmers have said that other milk processors have been maintaining the prices paid to milk farmers at much higher levels than Freshways despite facing the same commercial pressures.
According to the report in the Daily Mail, nursing home chain ADL is threatening to report it to the Government’s Competition watchdog. They have a supply contract with Freshways buying between £15,000 and £20,000 worth of milk from the company. They allege Freshways are ‘trying to exploit customers during the virus outbreak’.
Pearl Jackson, ADL’s Operations Director, was quoted by the Daily Mail as saying ‘At the same time Freshways has been charging us more, it has also slashed the amount paid to farmers, it makes your blood boil. It’s disgusting greed.’
According to reports submitted to Companies House in 2018, the last set of accounts available, a parent company of Freshways paid out almost £1.4 million in dividends.
Bali Nijjar said, “Freshways, in common with many other businesses across the country, is experiencing unprecedented financial, commercial and operational challenges. We are working closely with our staff, farmers and customers to address these issues to ensure the immediate viability of the business. This involves many different and difficult decisions none of which can be viewed in isolation.
“Our absolute focus is to ensure that the business remains sustainable. In doing so, we will continue to be able to meet the needs of our customers, and provide a living for our 400 supplying farmers and 1,500 employees in the long term. In addition, we have been doing this whilst facing our own personal Covid-19 challenges.
"My main aim is to get my brother well and at the same time keep Freshways running. Failure is not an
option on either count!"
April 23, 2020