Dáil Éireann debate -
Wednesday, 11 Feb 1998

Vol. 487 No. 1

Adjournment Debate. - Sale of Irish Beef by British Multiples.

Mr. Penrose

Thank you, a Leas-Cheann Comhairle, for permitting me time to raise this important matter on the Adjournment and the Minister for Agriculture and Food for coming to reply to it. It is important not only for farmers but consumers and the country as a whole. It has fairly serious implications because of the effect this type of unilateral action at national level can have on the European Community Framework for competition and the availability of a level playing pitch. As Labour Party spokesperson on agriculture, food and rural development and coming from a midland county where beef production is the paramount farming activity, anything that appears to impinge or have a negative influence on that activity can have a detrimental effect on confidence in an industry that has been rocking and reeling for the past four years.

The "Buy Home Produced Beef" campaign launched in Great Britain in recent weeks, focusing on the larger multiples, has created a major marketing problem for our beef industry. This occurs when the dry stock industry, made up of 120,000 dry stock farmers, is trying to come to terms with a dramatic fall in incomes and when winter fatteners are facing into their fourth year of income loss.

What we have witnessed is the spectacle of the renationalisation of the market for beef re-emerging within the EU. This happened in the French and German markets in 1996-97, reversing progress made in earlier years. In 1997 only about one third of our total beef exports were sold within the EU. This renationalisation policy makes a mockery of the proclamation of the European ideal which underpins the free movement of goods, capital and people under Article 48 of the Treaty of Rome.

This problem of renationalisation has now been accentuated by what has happened in the past two weeks or so in Great Britain where we have what amount to anti-competitive practices contrary to the spirit of Article 85 of the EU Treaty. These arise because a number of large retail multiples who previously sold Irish beef from their retail outlets appear to have entered into an agreement with their domestic suppliers whereby they sell only those suppliers' produce, which is to the detriment of other EU suppliers. This is clearly in breach of Article 85 which was designed to protect and guard against what is, in effect, a concerted practice to prevent competition.

What is happening in Great Britain is leading to a distortion of trade and intra community trade has been disrupted for some weeks. There was a significant trade between these undertakings and Irish suppliers and it is being disrupted for no apparent or stated reason other than nationalistic reasons. These are easy to decipher when one examines, even superficially, a recent advertisement placed by Tesco which indicates that it has a "pro-British" policy and will not "profiteer by opportunistically buying abroad". Irish beef is 20 per cent cheaper to purchase than its UK equivalent and is of the highest quality.

Total retail sales of fresh beef in Britain in 1997 amounted to 327,000 tonnes. Sales of fresh beef through Tesco, Sainsbury, ASDA, Safeway and Somerfield, totalling 200,000 tonnes, account for approximately 61 per cent of fresh meat sales in Britain. Tesco alone accounts for about 20 per cent of beef retail sales in Britain. These are significant figures in terms of the action now in train in Great Britain and the knock on effect for Irish farming. Irish supplies to these main multiples currently amount to an estimated 40,000 tonnes — 20 per cent of their total requirements or 5 per cent of the total market. The main retailers take the following percentages of retail fresh sales: Tesco takes 20 per cent; Sainsbury takes 14 per cent; ASDA takes 14 per cent; Safeway takes 8 per cent; Somerfield takes 6 per cent and others take 38 per cent. In the past year or so Safeway, Somerfield and Sainsbury have been the major purchasers of Irish beef in volume terms. I understand Somerfield is still buying our beef as of today.

What is happening in Britain amounts to a curtailment of choice for the consumer. This is tantamount to making the consumer's choice for him. This is an amazing usurpation of the "freedom to choose" principle and, in particular, where an excellent quality product such as Irish beef is available for the consumer to exercise his free choice as to whether he wishes to purchase it. British beef production will only meet about 78 per cent of British requirements and about 220,000 tonnes, or the equivalent of 22 per cent of their requirements, will have to be imported in 1998. We have traditionally been the leading supplier of this market and it is essential that we put in place a clearly focused strategy to ensure that our top quality beef is able to maintain its traditional presence on the UK market. We have an excellent quality product with a deep understanding of the market requirements and an ability to service this market.

I urge the Minister to meet the senior executives of all the major retail chains in Britain and to work in conjunction with Bord Bia, the meat producers and the farming organisations to launch a vigorous and sustained marketing campaign to regain sales of our beef to the major multiple retailers which have been a key traditional market for us. What we seek is a level playing pitch where the free market principle, the cornerstone of EU policies for many years, prevails. We want no more and we demand no less.

Mr. Walsh

I thank Deputy Penrose for his well researched contribution on this matter. Most of the major retail multiples in the UK have decided not to source beef from outside Britain for the duration of a recently launched British beef promotion campaign. I am very concerned at this development which presents an immediate difficulty for the beef industry. The beef industry has had a traditional and orderly outlet in the UK. It supplies up to 100,000 tonnes of beef each year, valued at about £200 million. The UK is a valuable market for high quality beef cuts and provides a good return to farmers. However, the major multiples have turned us out all of a sudden. Market share loss of the order of 100,000 tonnes or £200 million would have serious repercussions for Irish farming and the economy in general.

I am tackling this problem on a number of fronts. As an immediate response, I have instructed Bord Bia to intensify direct contact with the multiples concerned. I have met representatives of the largest of the UK multiples, Tesco, to explore ways of restoring normal trading practices. Tesco has a major involvement in the retail business in Ireland and it trades, as do other companies, in our open economy without hindrance in the interests of consumer choice. We have an open economy and export almost £5 billion in goods and services to the UK. We import in excess of that so there is a balance of trade in favour of Britain. Yet, as a member state of the EU we are entitled under Article 85 of the Treaty of Rome to unimpeded access to various markets. Our traditional market is in the UK. We were prevented from having that access two months ago with a blockade at the ports when good food was dumped into the sea. That blockade has extended to the boardrooms of the supermarkets.

At my request Bord Bia is preparing a detailed, costed and focused strategy to regain our position on the supermarket shelves. In the past ten days we have had two meetings in the Department with Bord Bia and representatives of farmers, producers and meat factories to address this problem.

At the political level I am using all appropriate contacts in the UK and the EU to express my deep concern about the campaign under way in Britain. This campaign has resulted in the decisions by supermarkets to remove Irish beef from their shelves. I understand and sympathise with the plight of farmers in the UK. However, the protest campaign is against the spirit of free trade embodied in the Treaty of Rome. Ireland has a long tradition of supplying top quality beef to the British market in an orderly manner. I am confident that the efforts now under way will lead to a restoration of normal trading.

The UK is not self-sufficient in beef so it will need to import beef. It is particularly reprehensible that some of the campaigns were so negative as to single out Irish beef for particular mention. That was preposterous and unfair. Such action goes against the Treaty of Rome, the spirit of free trade and the Common Agricultural Policy. We have a major task at the political, commercial and promotional levels. The task will require the deployment of a significant amount of additional resources. However, there is goodwill among British retailers and consumers and with a renewed and intensified promotional effort we can defend and, eventually, expand our market share in the UK.